King & Wood Mallesons (KWM) advised Tiger Resources Limited (Tiger) on the restructuring of its secured debt facilities which implemented on 11 June 2020.
The restructuring used an Australian creditors' scheme of arrangement ("scheme"). The scheme meeting was convened on 23 December 2019 and the scheme was approved by the Federal Court of Australia on 21 February 2020.
A combined Restructuring and M & A team advised Tiger, led by National Head of Restructuring Tim Klineberg and M & A Partner Daniel Natale with support from Senior Associates Mark Vanderneut and Andrew Vincent and Solicitor Jeremy Yam.
Commenting on the deal Tim Klineberg said: "this transaction has been highly significant and is a strong example of the Australian courts demonstrating their willingness to support novel scheme structures and move swiftly when a company's solvency position requires urgency."
Tiger is the first guarantor of secured debt borrowed to successfully compromise the debt and its guarantees using an Australian scheme. The scheme also successfully varied the English law governed financing documents, applying principles previously used to vary New York law governed agreements. Those outcomes were achieved despite a spirited challenge by the minority secured creditor, International Finance Corporation (IFC) including a contested hearing before Justice Gleeson of the Federal Court of Australia.
Tiger's scheme has implemented a comprehensive restructuring of the secured facilities combined with achieving Tiger's other objectives, including:
- de-listing from the ASX
- a change of majority ownership
- a cleaner balance sheet to support potential further investment in its Kipoi copper project in the Democratic Republic of Congo (DRC).
"The approval of the novel Tiger scheme has further expanded the scope of the Australian creditors' scheme as a procedure to restructure cross-border debt" Mr Klineberg said. "Schemes are particularly important in Australia since we do not have other debtor-controlled restructuring procedures like the US Chapter 11 or the English company voluntary arrangement. Tiger's outcome shows what is possible using Australian creditors' schemes".
KWM Public Mergers & Acquisitions partner Daniel Natale also advised on the scheme. He noted that "Schemes are an important part of the toolkit for companies, and their lenders, that are looking to cut their debt burden whilst achieving other objectives including changing shareholder profiles and governance structures. We expect these types of transactions to become more common through 2020 as COVID-related reforms roll off."
KWM continues to advise on many complex and large-scale restructurings across the APAC region,
including the complex balance sheet restructure for Paladin Energy Limited and advising the large syndicate of lenders on their circa $3billion exposure to the Arrium administration - one of the largest and most complex in Australian history.