Project Debt Buyback

Project Overview

With the single largest stakeholding in a restructured petrochemical complex, the Client requested us to assist it in acquiring additional holdings, both equity and debt in the target company in order to move it into a control position throughout the capital structure.

Challenges

• The Company had a diverse shareholder group with differing and at times conflicting interests. The shareholder group, most of whom were looking for an exit, included founders, creditors, and strategic investors.
• The Company was in need of working capital funding, but without the support of the shareholders it was not viable to obtain funding from third-party sources. The shareholders as a group were not able or willing to provide the necessary support.
• Trust issues among shareholders, combined with the absence of a single controlling shareholder, further complicated the Company’s governance and the restart of the plant.
• Notwithstanding the capabilities of the plant and an attractive market for its products, the financial position of the Company would continue to deteriorate because of these issues.

Our Approach

• Assisted with the development and evaluation of the share and debt buyback, value proposition and overall value capture strategy;
• Assisted the Client with the negotiation of key commercial terms with both equity and debt sellers and advised on the structuring and execution;
• Reviewed and advised on the valuation of the buyback securities through the various stages of the process;
• Analyzed the corporate structure and governance of the Company as dictated by its Articles of Association and advised the Client on alternative strategies for revising and managing governance; and
• Assisted with the implementation of changes to the board and the governance of the Company through amendments to the Articles of Association.

Outcome