Norton Rose gears up to fight for bondholders over Corus

Norton Rose is set to enter the increasingly fraught battle to reorganise troubled steelmaker Corus after the firm won a role acting for the secured bondholders.

The Norton Rose team, led by international securities partner Christian Parker, was appointed by an ad hoc committee of bondholders which hold £150m worth of secured debt.

It is understood that Norton Rose was first consulted in September last year by a Corus bondholder. Since then, Corus, which was formed in 1999 following the merger of British Steel and Dutch group Hoogovens, has seen its troubles multiply, leaving it in negotiations with its banks as it nears the January 2004 maturation date on its E1.4bn (£961.6m) credit facility.

Last month, the UK steel operation’s attempt to sell off an aluminium business for £543m was thwarted by the company’s Dutch supervisory board. As a result, in March, investment bank Houlihan Lokey Howard & Zukin sent out a circular to bondholders to convene a conference call to discuss Corus’ position. Both Houlihan Lokey and Cadwalader Wickersham & Taft were present at the call, where secured and unsecured creditors voiced their concerns.

Subsequently, the secured bondholders committee elected Norton Rose as counsel and Cadwalader’s Andrew Wilkinson was instructed by the junior, or unsecured noteholders. The Dutch bondholders are being represented by Bingham McCutcheon.

There has been speculation that the secured bondholders, which bought the £150m of debt in 1991, would attempt to exit their investment ahead of the 2016 maturity date.

However, such a move could be opposed by the junior bondholders, which want to see Corus restructured, preferring the banks, represented by Clifford Chance, to direct funds to the company rather than buying out the senior bondholders. Also, because the debt held by the bondholders represented by Norton Rose was originally secured on assets in Corus’s UK business, they rank higher than the senior banks and junior holders. This means that in the event of the company’s collapse the secured bondholders would be paid first.