The long-running dispute over the restructuring of Almatis Group could finally be settled this week after more than a year of negotiations, proposals and counter-proposals.
Last month a judge in the US Bankruptcy Court of the Southern District of New York gave the go-ahead for the Dutch company to emerge from Chapter 11 bankruptcy protection.
While the restructuring has involved an array of leading international firms, one in particular stands out. Ropes & Gray’s London office, set up less than a year ago by City stalwarts Maurice Allen and Mike Goetz, managed to bag a role advising hedge funds GoldenTree Asset Management and Sankaty Advisors.
The London office’s newcomer status has proved no obstacle to landing roles on some of the biggest cases around thanks to its growing roster of clients. One of its biggest mandates came only weeks after the City base was opened, when Allen and Goetz advised Liberty Global on its e3.5m (£2.97m) acquisition of Unitymedia. This came about as a result of their longstanding relationship with the company’s general counsel Jeremy Evans.
Its involvement in the Almatis restructuring came via London-based partner Jonathan Bloom, who was poached from White & Case last October. Bloom worked with GoldenTree extensively during his time at White & Case and has continued the relationship at Ropes & Gray.
His work on the Almatis restructuring has already helped secure another mandate. The firm is representing the mezzanine lending committee, which includes GoldenTree and BlackRock, in drilling contractor KCA Deutag’s ongoing debt negotiations.
For Bloom the Almatis restructuring was a chance to team up with his former colleagues at White & Case, who represented Blackstone Group’s GSO Capital Partners in the provision of $400m (£252.43m) of financing behind the restructuring.
The story behind the restructuring dates back to 2007, when Almatis, which has operations in the Netherlands, Germany and the US, was bought by Dubai International Capital (DIC), the international investment arm of Dubai Holding, for a reported $1.2bn. DIC was advised on the purchase by Linklaters Dubai partner Scott Campbell and London partners Ian Bagshaw and Richard Youle.
It proved to be poor timing for DIC. The financial crisis hit soon after and demand for alumina, a product used in the production of aluminium, fell off a cliff. By the beginning of 2009 the Dutch company was in major trouble and in June defaulted on its debt.
Over the next few months Almatis’s management, represented by De Brauw Blackstone Westbroek, attempted to hammer out an agreement with DIC and its lenders.
By the end of the year DIC had finalised a proposal that included offering junior lenders a 40 per cent stake in Almatis in a debt-for-equity swap and injecting $50m of capital in return for retaining a 60 per cent stake in the company.
The deal failed to receive the support of two-thirds of senior lenders and was also rejected by junior lenders. At the time DIC had its own problems as a result of Dubai’s financial crisis. As one partner explains: “They [DIC] were in financial trouble and had to divide their attention between various portfolios. Almatis was probably not at the top of their agenda at the time.”
The overwhelming rejection of DIC’s plan left the door open for Oaktree Capital Management, which owned 46 per cent of the senior debt, to put forward its own restructuring plan.
Oaktree’s proposal would have seen Almatis’s debt halved to around $422m under prepackaged Chapter 11 proceedings, leaving it with an 80 per cent stake in Almatis. While the other lenders, which included UBS, Commerzbank and Babson Capital, would have taken a hit, the plan initially had the backing of Almatis and the majority of lenders.
As one source points out: “At that point in time it was the only option on the table.”
In order to go ahead with Oaktree’s plan Almatis first needed permission to file for Chapter 11 protection in the US. DIC, represented by Weil Gotshal & Manges London partner Mike Francies, opposed the plan and in March filed an unsuccessful petition at the Enterprise Chamber of the Investment Court of Appeal in the Netherlands to prevent it from going ahead. Almatis was represented in the court by De Brauw partners Ruud Hermans and René Clumpkens.
In April this year Almatis entered Chapter 11 protection. Several hearing dates to confirm Oaktree’s plan were postponed and in July the situation took another twist, when DIC, by now beginning to recover from its earlier financial troubles, came back with a new and improved plan funded by GSO, GoldenTree and Sankaty.
Under DIC’s new proposals the group’s senior lenders will be repaid in full and the junior lenders will exchange their claims for new instruments and a 40 per cent equity stake in Almatis. DIC will retain a 60 per cent stake in Almatis, and the plan also sets aside 10 per cent of the new company’s shares for Almatis’s management.
Under the new terms GSO will provide $400m of senior secured notes, while GoldenTree and Sankaty will between them provide e110m. The deal also includes a $50m revolving credit facility from Bank of America Merrill Lynch and JPMorgan, represented by Latham & Watkins partner Reena Gogna.
On 3 August all parties agreed on DIC’s new plan and Almatis was given permission to withdraw from Oaktree’s prepackaged restructuring. On 20 September Almatis received permission to emerge from Chapter 11 protection, with that expected to have taken place prior to press time.
For those involved in the deal it is the culmination of more than a year of complex and often highly fraught negotiations.
“One partner I worked with said this was the most complicated case he’d worked on in 26 years as a lawyer,” says De Brauw’s Hermans. “It’s been highly complex, because you’re constantly switching between different legal systems, but it’s been a great case to work on.”
Almatis restructuring: the Key players
Almatis Group: De Brauw Blackstone Westbroek partners Ruud Hermans and René Clumpkens; Gibson Dunn & Crutcher partners Michael Rosenthal and Greg Campbell; Linklaters partner Robert Elliott.
Dubai International Capital: Weil Gotshal & Manges partner Mike Francies.
Senior lenders’ coordinating committee, including UBS, Commerzbank and Bank of Ireland: Allen & Overy partners Ian Field and Rob Abendroth and senior counsel John Kibler.
Oaktree Capital Management: Kirkland & Ellis partners Kon Asimacopoulos, Jamie Sprayregen, Adam Paul and Leo Plank; Loyens & Loeff partner Hendrik Van Druten.
Junior Lenders, including Babson Capital, Permira and Alcentra: Freshfields Bruckhaus Deringer partners Chris Howard, Farah Ispahani and Thijs Eelco van der Stock and associates Sean Lacey, Amy Beckingham and Adam Babiker.
GSO Capital Partners: White & Case partners Mark Glengarry, David Becker and Philip Broke.
GoldenTree Asset Management and Sankaty Advisors: Ropes & Gray partners Jonathan Bloom and Alyson Allen, counsel Dan Martin and associate Robert Haak.