Griffin Coal mining restructure
When Griffin Coal Mining Company collapsed in January 2010, Administrators faced the prospect of a fire sale and the loss of 400 jobs. Corrs worked with the Administrators to stabilise the company and secured funding to keep it operating.
The administration and subsequent sale of Griffin Coal was one of the largest administration sales in Australia in 2010 and delivered a fantastic result to creditors.
When part of Ric Stowe’s Devereux Group, the Griffin Coal Mining Company, collapsed in January 2010, Administrators faced the prospect of a fire sale and the loss of 400 jobs if the business could not stabilise and secure financing to keep operating.
With the help of Griffin’s two largest bondholders, the equivalent of Chapter 11 debtor-in-possession financing was arranged – the first time DIP financing had been secured from the US market by an Australian company. This allowed the company to operate for more than a year, allowing restructuring and sale strategies to be considered and implemented.
A complex structure was created with KordaMentha, UBS and Macquarie to sell Griffin’s coal assets (the largest in Western Australia) separately from its power assets, involving the use of deeds of company arrangement and for the first time the creation of two pools of distribution within a deed of company arrangement. Critical operational matters such as port access and coal supply contracts also had to be resolved as part of the sale. The coal assets were sold to Lanco Infratech, the largest ever Indian investment into Australia.
Sale proceeds of the Griffin coal and power assets are anticipated to provide a return to creditors of between 90-100 cents (for each dollar) – a fantastic result given the bonds had traded in the 40c region only two years previously.
The administration and subsequent sale of Griffin Coal was one of the largest administration sales in Australia in 2010 with the enterprise value of the transaction to be around A$2 billion.