Linklaters advises banks on unique Energis administration

Linklaters has consolidated its position in the restructuring market by completing its work on the Energis administration.
The firm advised a consortium of banks on the prepackaged administration of the listed company. It is thought to be the first time that a transaction of this type has been completed in the UK.
Linklaters, led by restructuring and insolvency partner Richard Holden and banking partner Tom Wells, advised the Royal Bank of Scotland and Barclays, as well as 13 other financial institutions, including a steering group consisting of JPMorgan, Bank of America and Dresdner Bank, on the complex restructuring of telecoms company Energis Group.
The banks stepped in to bail out the troubled company by forming a new venture named Chelys in order to acquire the UK business of Energis Group, and injected £150m of their own money into the project. The banks have also individually negotiated amendments of an outstanding £677m of debt owed by the UK business and drawn up new banking facilities.
Chelys's incoming chairman is Archie Norman, the Conservative MP and former chairman of Asda, who has also invested in the new company.
Macfarlanes, led by senior and corporate partner Robert Sutton and partners John Dodsworth (corporate) and Julian Howard (debt finance), acted for Norman as well as providing advice to Chelys on the new banking facilities offered and the restatement of existing facilities.
Clifford Chance, led by corporate partner Mark Poulton and restructuring partner Mark Hyde, advised Energis Group, which has been a client of the firm for around four years.
The transaction, which completed on 16 July 2002, is thought to be unprecedented as it is the only prepackaged administration of a listed company. This means vast disclosure obligations that do not occur with a non-listed company have to be managed. The deal was struck within an hour of administrator Ernst & Young being appointed.
The other novel factor surrounding the deal was that, rather than a debt-for-equity swap, the banks supported the transaction by putting in their own fresh capital.
“People talk about prepackaged administrations all the time,” said Holden at Linklaters. “But there's been very few of them.”
One of the few took place last December, when Enron Direct was eventually put into administration by PricewaterhouseCoopers just hours before it was sold to Centrica.
“The transaction was very difficult to achieve because there were so many different interests pulling in different directions,” explained Holden. “For this type of deal to work, you need a business where someone's willing to take a view about the long-term future. That's why having Archie Norman involved helps.”
The committee of Energis bondholders was advised by the London office of US firm Bingham McCutchen, led by restructuring partner James Roome. The bondholders and shareholders have 8.25 per cent voting rights in the company. The banks' debts will take priority, followed by the bondholders' and, last of all, the shareholders'.