Paladin Energy Limited, an Australian listed company with substantial uranium and mining assets in Namibia, Malawi, Canada and certain Australian states, was placed into administration in July 2017 after one of its major customers, Electricité de France (EDF) advised Paladin it was not prepared to enter into a standstill agreement and required repayment of US$277 million under its Long Term Supply Agreement with the company.
The restructure, proposed by an ad-hoc committee of Paladin’s bondholders represented by Gilbert + Tobin, was undertaken by way of a Deed of Company Arrangement that provided for the extinguishment of two major claims against the company (EDF’s claim, along with the US$378 million claim of two tranches of Paladin’s bonds), an underwritten US$115 million high yield secured note offering, a court approved transfer of 98% of the issued capital of the company to those holding those extinguished claims and new investors, acquisition of the secured facility to the group and a change of the board of directors.
Gilbert + Tobin’s Restructuring + Insolvency team advised on all aspects of the restructure, including the Deed Administrators’ 444GA Court application, objections to the DOCA from EDF, various ASIC, ASX, FIRB and Namibian regulatory relief applications as well as the company’s application for reinstatement to official quotation on the ASX.
Lead partner, Dominic Emmett said he was delighted to have assisted the Paladin bondholders on this restructure, which resulted in a fantastic outcome for the company and continues to pave the way for creditors of listed companies pursuing debt-for-equity transactions without shareholder approval nor the need for the 75% in value threshold to be met for each class of creditors that a creditors scheme involves.
“In addition, unlike a lot of recent 444GA DOCAs which have used 444GA to effect a sale of a business to a DOCA proponent and in doing so create a pot of funds to be divided amongst the company’s creditors under a creditors’ trust, this 444GA DOCA – like Mirabela before it – effected a true debt-for-equity swap and balance sheet restructure. It kept trade and operational creditors whole and had the added benefit of being able to provide new note investors (most of whom were existing financiers) with an equity sweetener as additional partial consideration for investing new funds in the company”, said Emmett.
Key members of the Gilbert + Tobin teams advising on the transaction included partners Sarah Turner and David Josselsohn, special counsel Rachel Jones, and lawyers Spiro Papadolias, Jessica Arscott, Anna Ryan, Lisa Hamilton, Vern Lim and Adrian Zhang.
Gilbert + Tobin worked closely with the Paladin bondholders’ UK and HK legal advisers, Kirkland & Ellis in relation to the high yield note offering components of the transaction and the ad-hoc committee’s financial adviser, led by Richard Tucker of 333 Capital in relation to all aspects of the transaction.
Gilbert + Tobin was awarded the Insolvency & Restructuring Law Firm of the Year (Australia) 2017 at the Finance Monthly Law Awards and won Insolvency & Restructuring Deal of the Year at the 2017 Australasian Law Awards. Dominic Emmett is consistently ranked as one of Australia’s leading insolvency and restructuring lawyers in major legal directories including Chambers Global for Restructuring/Insolvency.