AlIco Finance Group refinancing and receivership

When Allco Finance Group collapsed under the weight of more than $1 billion of debt, its financiers and receivers faced the challenge of restructuring, refinancing and enforcing against a group comprising more than 850 companies. It was also critical to keep the company’s assets available for sale.

Corrs worked with Ferrier Hodgson to achieve this and secure the sale of Allco’s US$3 billion aviation business, the largest and most complex asset within the Allco Group.

The collapse of Allco Finance Group presented an extremely complex task for its financiers and receivers, with restructuring, refinancing and enforcing against a group comprising more than 850 companies, as well as numerous on and off balance sheet tax structures in jurisdictions across the globe.

Corrs undertook legal due diligence of the group, documented the revised facility arrangements around an asset realisation program combined with new facilities, a new package of covenants and the taking of security in jurisdictions around the world.

Corrs’ role was central to the transaction, coordinating and managing a global team that included lawyers in the UK, Europe, Asia and the US to successfully protect the position of the bank syndicates through the restructuring phase and into the enforcement phase.

The deal involved advising on diverse global asset sales across the aviation, shipping, rail, infrastructure and financial services industries – both pre and post enforcement. The largest and most difficult sale involved US$3 billion in aviation assets, including interests in 69 aircraft financing transactions. It was further complicated by parties associated with the transactions having interests that did not necessarily align with the receivers’ goals.

Corrs worked closely with Allco’s financiers and the Ferrier Hodgson team to retain and manage the existing business and achieve the final sale. Court proceedings were instigated to maintain the assets available for sale by the receivers, and to restructure certain Allco group companies through a complicated deed of company arrangement and associated creditors trust.

The Allco receivership, of which this successful asset sale was just one component, was one of the three largest receiverships in Australia in 2009. The receivership continues today, as assets continue to be realised and as various recovery actions are contemplated.

Australasian Legal Business Awards 2012 Insolvency and Restructuring Deal of the Year - Centro restructure

The successful restructure of the Centro Group was one of the most complex restructurings in Australian corporate history and the largest restructuring in Australia undertaken during 2011. The headstock debt entities in the Centro Group had senior secured debt of at least A$2.9 billion maturing in December 2011.

Centro’s assets were worth substantially less than that debt and unless the proposed restructure took place, Centro would have become insolvent. Corrs advised one of Centro’s junior creditors, JPMorgan Chase Bank N.A (JPM) on the restructure. This included the successful challenge by JPM in the NSW Supreme Court against the senior lenders’ attempt to direct the junior lenders how to vote at the scheme meeting.

Centro Properties restructuring

When Centro Properties collapsed, the restructuring had to be innovative to cover more than 600 shopping centres in the US and Australia and stakeholders with significantly divergent interests. The solution, a conversion of more than $1 billion in debt into a ‘hybrid instrument’, set a precedent as an alternative to allowing a company to fall into insolvency.

Corrs’ pivotal role for the US lenders involved bringing together stakeholders to facilitate new money facilities and the splitting of security pools, including three sets of lenders in the US and Australia.

A key task was to re-work documentation to reflect asset realisation and then a stabilisation strategy. The transaction was complicated by the cross-border enforcement and documenting of inter-creditor arrangements under US and Australian law, and by the negotiation of a restructure against the uncertainty of the formal insolvency of trust structures.

Corrs’ role continues today in advising some of the US lenders as the restructure unfolds.

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.