HDY advises SC Lowy Consortium in Australia on the restructure of transport services group McAleese
The McAleese Group restructure was a break out deal for the SC Lowy Consortium in Australia and was watched with interest within the industry.
The consortium of special situation investors, led by SC Lowy out of Hong Kong, included Remagen Capital and one of the world's largest hedge funds based in the US.
The restructure involved two distinct phases drawing upon many different areas within the Firm.
During the first phase HDY supported the Consortium through:
- negotiating a heads of agreement for the acquisition by the SC Lowy Consortium of McAleese's secured debt from its par lenders
- undertaking due diligence on the underlying McAleese corporate group and business
- completion and satisfaction of the interconditional debt acquisition which included implementing a balance sheet restructure of the group through a combination of debt for equity swap and recapitalisation of the group through a secured convertible notes and options issue
- negotiating a new finance package, including resized term debt and working capital facilities, which were in place and existed simultaneously with the existing finance
- negotiating a parallel finance and security package supporting the underwritten recapitalisation.
When the directors of the group appointed voluntary administrators, McGrathNicol, to the group in August 2016 it was obvious further restructuring was required. HDY again assisted the Consortium in structuring and negotiating operational funding during the structural restructure of the McAleese Group.
The second phase of restructuring was effected through three interconditional deeds of company arrangement (DOCAs) proposed by the SC Lowy Consortium. The DOCA strategy adopted provided a quick and efficient approach to effect a balance sheet and structural restructure. Implementing an integrated and interconditional 3 DOCA distribution model allowed the new Rivet Group to emerge from administration operationally ready.
The implementation of the DOCAs resulted in the transfer of the viable business of McAleese into a new group, the Rivet Group. This allowed the gradual realisation of the remaining assets in a run-off process run by the deed administrators, retaining more than 1,300 employees, payment of all entitlements to employees who were not retained, a dividend paid to unsecured creditors and finally a debt for equity swap which saw all of the issued share capital in the new Rivet Group and the residual McAleese Group transferred to the SC Lowy Consortium. The second phase of restructuring was implemented on 21 December 2016 after the creditors of the McAleese Group voted in favour of the DOCAs proposed by the SC Lowy Consortium.
Patrick O'Grady and Cameron Cheetham supported by senior associate, Sarah Williams Hart, led the HDY team which included lawyers from the Banking Turnaround and Insolvency, Tax, WRS, Environment and Corporate groups.
Patrick O'Grady said "we take great pride in having supported our clients to navigate the various regulatory and execution risks to achieve such a great outcome for so many stakeholders in this highly complex transaction.
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