S&C Advises the Ambatovy Project on Restructuring Plans

On November 26, Mr. Justice Hildyard of the High Court of England & Wales sanctioned the restructuring plans of Ambatovy Minerals Société Anonyme and Dynatec Madagascar Société Anonyme ("the Project") under Part 26A of the Companies Act 2006.

The Project is a large-tonnage nickel and cobalt mining enterprise located in Madagascar and S&C has been involved with the Project's financing arrangements and financial restructurings since 2004.

The Plans provide for the restructuring of $2.3 billion of debt, discharging and releasing approximately $2 billion of debt held by various entities, including export credit agencies in Japan, Korea and Canada, multilateral lenders from Europe and Africa and an international syndicate of commercial banks in return for a cash settlement payment equal to 2.2 per cent. of the amount discharged, making this one of the most ambitious Plans since their introduction in 2020. The Plans will result in the complete removal of the third party project finance lenders, the Sponsors retaining 100 per cent of the equity in the Project and the preservation of c. 10,000 jobs.

The key terms of the Plans involve:

• the injection of $140 million of new money by the Sponsors on a super senior secured basis;
• the amendment and extension of $80 million of existing super senior debt on the same terms as the new money;
• a write-down to zero of $842 million of senior debt in return for a 5.45 per cent. cash payment;
• a write-down to zero of $818 million of "recovery financing" debt in return for a 0.05 per cent. cash payment; and
• the write down of $565 million "2021 new money" debt owed to the Sponsors in return for a reinstatement of $210 million as new junior debt.

The Plans were approved by three of the four classes of creditor, with the sole dissenting class being "crammed down" using the Court's cross-class cram down powers. The reasoned judgment is to follow from Hildyard J.

To date, there have been c. 37 restructuring plans under Part 26A of the Companies Act. S&C has advised in various substantial capacities (as creditor and/or challenger) on five of these plans - a 14 per cent. market share. This was the first time that S&C has advised the plan companies. It was the first restructuring plan involving a borrower under a limited recourse project financing and also the first to use recently injected super senior new money provided by shareholders as the cramming class.

The London-based S&C team advising the Project includes Stewart Robertson, Chris Howard, Jonathon Hannah, Anna Delaud, Hattie Middleditch, Qingyang Song, Hannah Cockle and Gabriela Necula, as well as trainee solicitors Guilherme da Cunha Cardoso and Alex Goulding. The S&C team worked alongside Daniel Bayfield KC and Jon Colclough of South Square as Counsel to the Project and DC Advisory as financial advisers to the Project.