Nyrstar: Signing of Lock-Up Agreement and Conclusion of Capital
Structure Review
Regulated Information – Inside Information
Nyrstar: Signing of Lock-Up Agreement and Conclusion of Capital
Structure Review
15 April 2019 at 8:00 CEST
Nyrstar NV (“Nyrstar” or the “Company”, and,
together with its subsidiaries (the “Operating Group”), the
“Group”) today provides an important update on its Capital
Structure Review process which has now been concluded.
Introduction
Nyrstar initiated a review of its capital
structure (the “Capital Structure Review”) in October 2018 in
response to the challenging financial and operating conditions
being faced by the Group. As previously announced, these conditions
included substantial working capital and liquidity outflows
experienced during the fourth quarter of 2018 and first quarter of
2019 necessitating the raising of urgent short term funding.
Combined with the Group’s materially reduced Underlying EBITDA
performance in 2018 and the maturity of certain liabilities during
2019, these factors resulted in the need to reconsider the Group’s
capital structure.
The Capital Structure Review identified a very
substantial additional funding requirement that the Group is unable
to meet without a material reduction of the Group’s indebtedness.
As a consequence, the Capital Structure Review has necessitated
negotiations between the Group’s financial creditors in order to
develop a deleveraging and funding plan as part of a comprehensive
balance sheet recapitalisation. Alternatives to such a
recapitalisation would place the future of the Group and its
stakeholders at severe risk.
After careful consideration of all available
alternatives, Nyrstar announces that it has now entered into a
lock-up agreement (the “Lock-Up Agreement”) with representatives of
its key financial creditor groups. The Lock-Up Agreement sets out
the terms for the recapitalisation of the Group (the
“Recapitalisation Terms”). This marks a crucial development for
Nyrstar and, once implemented, secures the Group’s continuing
operation for the benefit of its stakeholders, including customers,
suppliers, and its 4,100 employees.
The Recapitalisation Terms include, amongst a
number of other steps, a sale by the Company of the Operating Group
at fair market value at the time of the sale (i.e.
pre-restructuring) to a newly incorporated English subsidiary of
the Company (“NewCo”) and one or more schemes of arrangement under
the UK Companies Act 2006. Upon implementation of the
Recapitalisation Terms, Trafigura Group Pte. Ltd. (together with
its affiliates, “Trafigura”) will be issued 98% of the outstanding
share capital of NewCo and will as a result become the owner of 98%
of the equity of the Operating Group, with the Company owning the
balance.
Support for the Lock-Up
Agreement
The Lock-Up Agreement has been entered into by
the Company (and relevant subsidiaries) with representative lenders
across each of its key financial creditor groups, who have been
closely involved in the constructive discussions on the proposed
terms of the recapitalisation. The Group is now seeking additional
consents from its creditors and is engaging with relevant parties
that are required to fully implement the Recapitalisation Terms, as
further described below.
As of the date of this announcement, the Lock-Up
Agreement has been signed by noteholders representing 44.8% in
aggregate across the Group’s €500 million 6.875% senior notes due
in 2024 with ISIN XS1574789746 and XS1574790835 (the “2024 Notes”),
€340 million 8.5% senior notes due in 2019 with ISIN XS1107268135
and XS1107268564 (the “2019 Notes”), and €115 million convertible
bonds due in 2022 with ISIN BE6288132101 (the “Convertible Bonds”,
and together the “Notes” and the “Noteholders”). Reference is made
to the separate publication on the Company’s website of the
information that has been made available by the Group to such
consenting Noteholders (see:
www.nyrstar.com/en/investors/results-reports-and-presentations).
The Lock-Up Agreement has been negotiated and
agreed in full cooperation with the coordinating committee of the
Group’s bank lenders (the “Bank Coordinating Committee”)
representing the following facilities (the “Bank Facilities”):
- The €600m revolving structured commodity trade finance facility
agreement originally dated as of 28 January 2010 between,
among others, Nyrstar and Deutsche Bank AG, Amsterdam Branch as
Facility Agent and Security Agent (“SCTF”)
- Certain unsecured bank facilities (together the “Unsecured
Facilities”), with an aggregate principal amount outstanding of
around €238m comprising:
- the Prepayment Agreement dated 24 April 2018 with Politus B.V.
as buyer (the “Politus Prepayment”)
- the Common Terms Agreement dated 5 September 2014 with Hydra
Limited (the “Hydra Prepayment”)
- certain unsecured bilateral prepayment and working capital
facilities (together the “Bilateral Facilities”)
The Bank Coordinating Committee has indicated
its support for the Recapitalisation Terms and the Group’s lenders
across the Bank Facilities will now be requested to provide their
formal approvals by entering into the Lock-Up Agreement in parallel
with the Noteholder approval process.
The Lock-Up Agreement is fully supported by
Trafigura including in its capacity as lender under the USD650
million Trade Finance Facility Agreement (the “TFFA”), as bridge
finance provider (see below) and as future majority owner of the
Operating Group in accordance with the Recapitalisation Terms.
Operation of the Lock-Up Agreement,
Standstill and Implementation of the Recapitalisation
Terms
The Lock-Up Agreement obliges, subject to its
terms and certain conditions, each of the parties to it (or
becoming party to it) to take such action or provide such approvals
as required to implement the Recapitalisation Terms.
The obligations of the parties under the Lock-Up
Agreement will automatically terminate on the earliest of:
- Implementation of the Recapitalisation Terms
- The Restructuring Long Stop Date of 30 August 2019, which may
be extended with the consent of Nyrstar, Trafigura, the Bank
Coordinating Committee and a representative group of
Noteholders
- Unless otherwise agreed, 29 April 2019 to the extent that the
relevant majorities of creditors under the affected financing
arrangements have not acceded to the Lock-Up Agreement. The
relevant majorities are creditors holding: 75% by value of each of
(i) the 2019 Notes and the 2024 Notes in aggregate,(ii) the
Convertible Bonds, (iii) the SCTF, (iv) the Politus Prepayment, and
(v) the Hydra Prepayment and each of the respective lenders under
the Bilateral Facilities. With respect to (iii), (iv) and (v) above
a majority in number is also required.
The Lock-Up Agreement requires the parties to
proceed expeditiously with the steps required to implement the
Recapitalisation Terms.
During the period in which the Lock-Up Agreement
is in effect, the parties have agreed to the suspension and
deferral of certain amounts otherwise falling due under the Group’s
debt facilities. These amounts include any principal or interest
payment under the Notes and the Unsecured Facilities, including any
accrued coupons or interest.
It is hoped and anticipated that, in the best
interests of the Group, implementation of the Recapitalisation
Terms can occur on a fully consensual basis across the Group’s
creditors. However, the Recapitalisation Terms also contain
provision for one or more creditor schemes of arrangement under the
UK Companies Act 2006. The schemes of arrangement allow for the
Recapitalisation Terms to be implemented upon obtaining the
necessary majority creditor consents (being 75% by value and a
majority by number of those creditors voting in each scheme class).
The UK establishment of NewCo helps to facilitate the UK scheme
processes and is therefore required by creditors. The
Recapitalisation Terms (including the sale by the Company of the
Operating Group to NewCo) do not require the consent of the general
meeting of shareholders. Therefore it is not required nor expected
that a general meeting of the Company’s shareholders will be held
in relation to the Recapitalisation Terms.
Implementation of the Recapitalisation Terms
will ensure the continuing operations of the Operating Group for
the benefit of all stakeholders; failure to implement the
Recapitalisation Terms is highly likely to lead to the insolvency
of the Company and the Group, which is anticipated to result in
material harm to the Group’s customers, suppliers and 4,100
employees, very substantial loss of value to the financial
stakeholders, and a total loss to shareholders.
USD250 million Bridge Finance Facility in conjunction with
the Lock-Up Agreement
In conjunction with entering into the Lock-Up
Agreement, Trafigura will provide up to USD250 million through a
committed term loan facility (the “Bridge Finance Facility”) to
strengthen the Group’s liquidity position and provide for its
interim funding requirements prior to completion of the
implementation of the Recapitalisation Terms. Under the Lock-Up
Agreement, entry into the Bridge Finance Facility and subsequent
funding are subject to certain conditions. It is anticipated that
the Bridge Finance Facility will be entered into within the next
few days, with funding very soon thereafter.
The Bridge Finance Facility will benefit from
certain asset and share security and will have a final maturity
date of 30 August 2019 and an interest rate of LIBOR plus a margin
of 5% per annum. The Bridge Finance Facility’s asset and share
security will include guarantees from the Company, Nyrstar Sales
& Marketing AG and the Group’s US, Canadian and Belgian
principal operating companies, a pledge of the shares of NewCo and
share pledges of and asset security over the Group’s US, Canadian
and Belgian principal operating companies.
The necessary Noteholder consents have been
sought and committed to by consenting Noteholders under the Lock-Up
Agreement in order to permit the incurrence of, and security
interests attaching to, the Bridge Finance Facility.
Principal Recapitalisation Terms –
Trafigura
Under the agreed Recapitalisation Terms:
- Trafigura will become the owner of 98% of the shares of the
Operating Group by a share issuance by NewCo
- The reinstatement of the Bank Facilities on the terms and in
the amounts described below and guaranteed by Trafigura
- Issuance by Trafigura of the securities in the amounts
described below to Noteholders in consideration for the discharge
of the Notes
- Funding by Trafigura of the USD250 million Bridge Finance
Facility
- Reinstatement by Trafigura of the USD650 million TFFA
- Providing by Trafigura of the ongoing funding requirements for
the Operating Group
- 2% equity participation (indirect) in the Operating Group
retained by the Company
The Operating Group will also provide certain
funding towards the continued operating costs of the Company.
Principal Recapitalisation Terms – Bank
Facilities
SCTF (as defined above)
- The SCTF will be reinstated in the amounts set out as follows
(the “Reinstated SCTF”):
- 100% of the principal amount outstanding for those lenders
participating in their pro rata share of up to €100 million of the
New Revolving Facility (see below)
- 85% of the principal amount outstanding for those lenders not
participating in their pro rata share of the New Revolving
Facility
- The Reinstated SCTF will be divided equally between a revolving
borrowing base facility and a term loan facility with a bullet
maturity and benefit from comprehensive asset security over the
European subsidiaries of the Operating Group and a corporate
guarantee by Trafigura, in addition to the existing borrowing base
security over certain inventories and receivables of the Operating
Group
- The Reinstated SCTF will have a 5 year maturity and an interest
margin of LIBOR/EURIBOR + 1% per annum
Unsecured Facilities
- The Politus Prepayment, the Hydra Prepayment and the Bilateral
Facilities will be amended and reinstated in the aggregate amounts
set out as follows (the “Reinstated Unsecured Facilities”) (the
exact allocation per facility varies according to agreement reached
between those facilities):
- 47.5% of the principal amount outstanding for those lenders
participating in their pro rata share of up to €60 million of the
New Revolving Facility
- 35% of the principal amount outstanding for those lenders not
participating in their pro rata share of the New Revolving
Facility
- The Reinstated Unsecured Facilities will have a 5 year maturity
and an interest margin of LIBOR + 1.5% per annum
- The Reinstated Unsecured Facilities will benefit from a
corporate guarantee by Trafigura
New Revolving Facility
- Up to €160 million new revolving credit facility (the “New
Revolving Facility”) provided by lenders under the SCTF and
Unsecured Facilities in the proportions described above
- The New Revolving Facility will have a 4 year maturity and an
interest margin of LIBOR/EURIBOR + 1.25% per annum
- The New Revolving Facility will share the same security and
guarantee package as the Reinstated SCTF except for having second
ranking security over the inventory and receivables securing the
borrowing base which, after the discharge of the borrowing base
tranche of the Reinstated SCTF, shall rank pari passu with the
security for the term loan tranche of the Reinstated SCTF
Principal Recapitalisation Terms –
Notes
The Notes will be treated equally with one
another with each Noteholder receiving its pro-rata share of the
consideration set out below:
- €262.5 million Perpetual Resettable Step-up Subordinated
Securities issued by Trafigura Group Pte Ltd.
- Maturity: no fixed maturity date
- Interest: 7.5% per annum with step up margin of 3% applied
after 5 years
- Other terms and conditions based on Trafigura’s perpetual
securities issued under an offering memorandum dated 15 March
2017
- €80.6 million (USD equivalent) Guaranteed Senior Notes issued
by Trafigura Funding S.A. under the EUR 3 billion Euro Medium Term
Note Programme (and consolidated with the USD400 million notes
issued on 19 March 2018)
- Maturity: 19 March 2023
- Interest: 5.250% per annum
- Guaranteed by Trafigura Group Pte. Ltd., Trafigura Trading LLC
and Trafigura Pte Ltd
- €225 million (USD equivalent) Guaranteed Zero Coupon Commodity
Price Linked instrument issued by a new subsidiary of Trafigura
- Maturity: 7 years following the Issue Date
- Early Repayment: quarterly calculated by reference to 5% of
250,000 tonnes multiplied by the excess of the average zinc price
during that quarter over USD2,500/t up to a cap of USD2,900/t plus
10% of 250,000 tonnes multiplied by the excess of the average zinc
price during the quarter over USD2,900/t
- All payments guaranteed by Trafigura Group Pte. Ltd., Trafigura
Trading LLC and Trafigura Pte Ltd
- In addition, any Noteholder acceding to the Lock-Up Agreement
on or before 25 April 2019 (and subject to certain other
requirements) will receive a cash settled fee of 150bps of the
principal amount of its Notes on implementation of the
Recapitalisation Terms.
- Lucid Issuer Services Limited (“Lucid”) is acting as
information and tabulation agent on behalf of the Group. For access
to the Lock-Up Agreement and instructions on the delivery of
consents, Noteholders should refer to the information issued via
the clearing systems or to Lucid via their website (details
below).
Principal Recapitalisation Terms –
TFFA
Under the Recapitalisation Terms, all security
and guarantors supporting the TFFA will be released. Its term will
be extended to a new 5 year maturity.
Principal Recapitalisation Terms –
Bridge Finance Facility
Under the Recapitalisation Terms, all security
and guarantors supporting the Bridge Finance Facility will be
released. It will be converted to an unsecured on-demand
intercompany debt with no fixed maturity, and, at Trafigura’s
option, will be equitised or subordinated.
Principal Recapitalisation Terms –
Unaffected Facilities
Existing debt and working capital facilities not
specifically referenced above will remain unaffected by the
Recapitalisation Terms and will continue to operate on their
existing terms throughout the period of the Lock-Up Agreement and
following the implementation effective date. This includes the
AUD291 million perpetual securities issued by Nyrstar Port Pirie
which are unaffected by the Lock-Up Agreement and in relation to
which, the Company remains in constructive discussions with the
South Australian Government.
Principal Recapitalisation Terms –
Equity
The Recapitalisation Terms provide for a sale by
the Company of the Operating Group to NewCo, following which
Trafigura will be issued 98% of the outstanding share capital of
NewCo. The Company will continue to be a holding company, holding
2% of the equity (indirect) in the Operating Group for the benefit
of existing shareholders, released of liabilities for existing
financial indebtedness and guarantees of commercial agreements. The
Operating Group will also provide certain funding towards the
continued operating costs of the Company.
In view of the material principal impairment of
the Group’s senior ranking debt facilities, including the €955
million unsecured Notes, and the significant funding requirements
of the Group, as previously announced, current shareholders will be
very materially diluted, resulting in very limited economic
recovery to the shares that will depend on any distributions made
to the Company on the 2% participation that the Company will hold
in the Operating Group.
The Company has decided to voluntarily apply,
and to make implementation of the Recapitalisation Terms
conditional on, the procedure provided for in article 524 of the
Belgian Companies Code, in the interest of all stakeholders of the
Group, including the Company’s shareholders. The independent expert
appointed during this process will also review the price at which
the Company will sell the Operating Group to NewCo. The annual
report on the financial year ending on 31 December 2019 will
contain the disclosures provided in article 524 of the Belgian
Companies Code.
Shareholders are reminded that, as previously
announced, the Annual General Meeting will take place on Tuesday 25
June 2019, at 11:00 a.m. CEST.
Lucid contact details for
Noteholders
Sunjeeve Patel / Victor Parzyjagla
Website: www.lucid-is.com/nyrstar
Telephone: + 44 20 7704 0880
Email: nyrstar@lucid-is.com
About Nyrstar
Nyrstar is a global multi-metals business, with
a market leading position in zinc and lead, and growing positions
in other base and precious metals, which are essential resources
that are fuelling the rapid urbanisation and industrialisation of
our changing world. Nyrstar has mining, smelting and other
operations located in Europe, the Americas and Australia and
employs approximately 4,100 people. Nyrstar is incorporated in
Belgium and has its corporate office in Switzerland. Nyrstar is
listed on Euronext Brussels under the symbol NYR. For further
information please visit the Nyrstar website: www.nyrstar.com.
For further information contact:
Anthony Simms Head of
Investor Relations T: +41 44
745
8157
M: +41 79 722 2152
anthony.simms@nyrstar.com
Franziska Morroni Head of
Communications
T: +41 44 745
8295
M: +41 79 719
2342
franziska.morroni@nyrstar.com
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