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RPT-Australia's McAleese in recap talks with distressed credit firm
March 31, 2016 / 11:06 PM / 2 years ago

RPT-Australia's McAleese in recap talks with distressed credit firm

(Repeats story published on March 31)

By Sharon Klyne

SYDNEY, March 31 (Reuters Basis Point) - Troubled logistics and transport firm McAleese Ltd said on Thursday it entered into exclusive negotiations until April 15 with a consortium led by distressed debt fund manager SC Lowy for new capital to repair its balance sheet.

The firm has been the target of distressed hedge funds after it struggled to recover from a major industrial accident in October 2013 as well as poor trading conditions that have hurt its industrial and resource clients, including Atlas Iron Ltd .

McAleese also said the voluntary suspension in the trading of its shares is expected to remain in place for an additional period of up to one month to seek to finalise the SC Lowy proposal. The company last traded at 6 Australian cents on February 26. Moelis & Co is advising McAleese.

The transport firm last tapped the loan markets in November 2013 when Australia and New Zealand Banking Group, HSBC and Westpac Banking Corp jointly provided a A$325 million ($248.95 million) dual-tenor loan with term and revolving credit tranches, according to Thomson Reuters LPC data.

Some A$175 million of the revolver will mature in November this year and A$150 million in term debt matures at the end of November 2017, the data shows.

The recapitalisation proposal is subject to approval from McAleese’s creditors which, the company said on January 28, had waived the breach of its financial covenants under the loan agreement.

The term loan is attracting average bid-offers in the secondary market at around 55 percent to 65 percent of par value according to the data.

McAleese is the latest Australian company to announce a recapitalisation with alternate capital providers as commercial lenders are more wary about extending funding to resource companies and resource-related service providers.

Australian miner Arrium Ltd announced recently a $927 million capitalisation with an affiliate of US private equity giant Blackstone Group.

Beleaguered Atlas Iron is striving to complete a major restructuring, under which lenders would cancel about half its debt and extend the maturity date in exchange for 70% of the company’s shares and options on issue. ($1 = 1.3055 Australian dollars) (Additional reporting by Jim Regan of Reuters)

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