Behind the $2.5b deal to refinance Gladstone project
THE refinancing of Wiggins Island Coal Export Terminal has been described as the "largest and most significant" of its kind in the Australian infrastructure market in recent years.
Involved in the US$2.5 billion refinancing deal were 22 financiers, advised by Allens, and the five miners that ship coal out of the US$3.5 billion WICET, advised by Ashurst.
Unable to begin repayments on the multi-billion dollar debt due on September 30, the owners had the option of refinancing, or winding up the business.
After two years of negotiations, last month a New South Wales court approved WICET's refinancing plan to extend its payments until 2026.
Law firm Allens has revealed the complexities of the deal, describing it as one of the "largest and most significant" restructuring and refinancing transactions in recent years.
The refinance was challenging because of several issues, including the collapse of three of the eight take-or-pay shippers (Bandanna Energy, Cockatoo Coal and Caledon Coal) that were included in the original financing structure.
Allens said financing of coal assets had also been a "generally difficult market" in the past few years. The Sydney-based company said the deal was unique because the senior financiers could not reach a unanimous agreement, in relation to the terms of the debt repayment extension.
"With the support of a majority of its senior financiers, WICET sought court approval for the refinancing using a solvent creditors' scheme of arrangement to bind all senior financiers," Allens said.
"While rarely used in this context, it shows that a solvent refinancing can be achieved with less than unanimous support of a class of creditors, even when particular terms of the restructure (such as the extension of the maturity date), would ordinarily require 100 per cent creditor consent under the terms of the facility documentation."
Partner Nick Adkins, who led the Allens team, said it was a huge effort over several years and they were "extremely proud" to successfully refinance the debt. Partner Chris Prestwich, who led the creditors' scheme, said it would be interesting if a similar strategy was used in other future transactions.