Ad hoc group of bond creditors in discussions with Stoneway Capital Corporation and other stakeholders discloses certain information provided to creditors
NEW YORK, May 18, 2020 /PRNewswire/ -- An ad hoc group of note holders (the "Forbearing Holders") holding a substantial majority of 10.000% Senior Secured Notes due 2027 (the "Notes") issued by Stoneway Capital Corporation ("Stoneway," and, together with its subsidiaries and parent entities, the "Company") entered into discussions (the "Forbearance Discussions") with respect to a standstill and forbearance agreement as a result of, among other issues, the Company's failure to timely pay principal and interest on the Notes on March 1, 2020. In connection with the Forbearance Discussions, the Forbearing Holders received certain information relating to the Company set forth herein and in the Annexes hereto.
The Forbearing Holders have a standstill and forbearance agreement (the "Forbearance Agreement") in place with the Company, Gramercy Energy Secured Holdings II LLC (the "Gramercy Lenders") and Gemcorp Fund I Limited and Gemcorp Multi Strategy Master Fund SICAV SCS (the "Gemcorp Lenders" and, together with the Gramercy Lenders, the "Mezzanine Lenders") and the Company dated as of May 18, 2020, and is governed by New York law.
Pursuant to the Forbearance Agreement, the parties agreed, among other things, to refrain from taking any enforcement action, including the initiation of insolvency proceedings, with respect to outstanding events of default under the financial indebtedness of the Company and its affiliates. The Mezzanine Lenders and the Forbearing Holders will continue to exercise control over, and may take actions in respect of, certain assets of the Company in respect of which control was asserted prior to May 18, 2020. The Forbearing Holders will continue to fully control certain onshore collateral accounts (the "Collateral Accounts") pledged to them under the applicable depositary agreement. Moreover, the Forbearing Holders agreed to allow Argentine operating companies to make withdrawals from the Argentine onshore accounts for operating expenditures in the ordinary course of business.
Further, the Forbearing Holders agreed to permit the disbursement of certain amounts from the Collateral Accounts for legal and other fees and expenses incurred by the parties to the Forbearance Agreement and their advisors.
In consideration of the Forbearing Holders' and Mezzanine Lenders' forbearance, the Company agreed to certain governance changes including (i) a unanimous consent requirement with respect to board decisions of its Argentine subsidiaries relating to, among other matters, the issuance of securities or related instruments; incurrence of debt; material expenditures; material sales, acquisitions, or changes to the Company's business or organization; and other actions outside of the course of ordinary business or in respect of material contracts, negotiations, pending actions or proceedings (the "Governance Changes"); (ii) a grant to Forbearing Holders of the right to appoint an observer at the boards of the Company and its Canadian subsidiaries; and (iii) a requirement for board meetings for decisions in respect of such Governance Changes, in which such observer will also have a right to attend. The Company also agreed to (i) request express written consent of the majority of the Forbearing Holders prior to entering into settlement agreements in connection with certain pending disputes involving the Company (the "Duro Arbitration" and the "Siemens Disputed Matters," respectively); (ii) refrain from modifying certain wholesale demand contracts with the Wholesale Electricity Market Administrative Company (Compañía Administradora del Mercado Mayorista Eléctrico S.A. or "CAMMESA") (the "PPAs") or, subject to certain exceptions, enter into additional forbearance agreements without the prior express written consent of the majority of the Forbearing Holders; (iii) carry out monthly cash sweeps, subject to an agreement on a minimum liquidity amount for operating expenses, which the parties have agreed to determine in good faith, beginning May 31, 2020, through which excess cash held by the Company's Argentine subsidiary guarantors will be transferred to the Collateral Accounts; (iv) provide weekly cash reports upon request by the advisors of the Forbearing Holders; and (v) provide copies of all filings in connection with the Duro Arbitration and the Siemens Disputed Matters.
The standstill period began on May 18, 2020 and will end on the earlier of (a) a 30-day period (to be automatically extended for two consecutive 30-day periods unless advance notice is provided otherwise) and (b) the date on which the Forbearance Agreement ceases to be in effect as a result of (i) certain automatic termination events ("Automatic Termination Events"); (ii) individual holder termination events ("Individual Holder Termination Events"), which provide each individual Forbearing Holder the right, upon two business days prior written notice, to withdraw from the Forbearance Agreement; or (iii) majority holder termination events ("Majority Holder Termination Events"), which provide a majority of the Forbearing Holders the right, upon two business days prior written notice, to terminate the Forbearance Agreement.
Automatic Termination Events include, but are not limited to: (i) bankruptcy filings or insolvency proceeding initiated or ratified by the Company; (ii) bankruptcy orders entered against either the Company or a substantial part of its property; (iii) certain out-of-court liquidation appointments in respect of the Company or a substantial part of its assets; and (iv) public statements made by the Company repudiating the validity or enforceability of the Notes or documents related thereto. Individual Holder Termination Events include, but are not limited to: (i) a change of control; (ii) legal proceedings initiated by revolving credit lenders; (iii) a default, breach, termination or similar event with respect to the Company's obligations under the PPAs; (iv) an official declaration that the PPAs are unenforceable; (v) failure by CAMMESA to make payments under the PPAs within a specified period; and (vi) less than 66 2/3% of the Notes outstanding are beneficially held by the Forbearing Holders. Majority Holder Termination Events include, but are not limited to: (i) certain defaults under the Notes' indenture; (ii) certain regulatory actions or legal proceedings; and (iii) certain adverse outcomes related to the Duro Arbitration and Siemens Disputed Matters. In addition, upon the occurence of a Majority Holder Termination Event, the Mezzanine Lenders have the right to terminate the Forbearance Agreement upon two business days prior written notice.
Finally, as part of the Forbearance Discussions, the Company and the Mezzanine Lenders, respectively, have agreed to either (i) publicly disclose this information or (ii) allow the Forbearing Holders to do so.
Annex A –FTI Financial Documents
Annex B – Mezzanine Loan Documents
B-1: Summary of Mezzanine Loan Facility
Annex D – TMF and UMB Account Statements
SOURCE Stoneway Capital Corporation
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