Displaying: Capital Structure Advisory

December 2013

$29.6 billion Chapter 11 Re- organization; $17 billion merger with US Airways Group

Chapter 11 Reorganization and merger with US Airways Group
Exclusive Investment Banker to the Official Committee of Unsecured Creditors of AMR Corporation on its $29.6 billion Chapter 11 Reorganization and $17.0 billion merger with US Airways Group

On December 9, 2013, AMR Corporation (“AMR”), the parent company of American Airlines Inc., successfully completed its Chapter 11 Reorganization. As part of the reorganization, AMR also completed its $17.0 billion merger with US Airways Group (“US Airways”). Operating under the American brand, the combined American – US Airways (“American Airlines Group”) created the world’s largest airline.

AMR filed for Chapter 11 bankruptcy protection on November 29, 2011, with reported assets and liabilities of $24.7 and $29.6 billion, respectively. Shortly thereafter, the Official Committee of Unsecured Creditors (the “UCC”) was formed by a highly diverse group of nine creditor constituencies. The UCC quickly became an influential factor in the reorganization and this group was seen as a pivotal piece to any plan of action. The UCC advocated for a broad review of strategic options, including possible merger opportunities. Moelis & Company was instrumental in designing and creating a process that allowed for engagement between AMR and US Airways despite initial reluctance on the part of AMR. Over the course of the intensive US Airways – AMR diligence process, Moelis & Company evaluated the pro forma business plan, assessed the need for DIP and exit financing, and helped drive parties to a mutually agreeable expectation of synergies and negotiated relative deal economics, while continually working with advisors to resolve complex social and employee issues. On February 14, 2013, AMR and US Airways announced that their respective boards of directors had unanimously approved a definitive merger agreement between the two companies.

The merger delivered far superior returns to creditors and investors as compared to the company’s initial plan for a standalone option, and resulted in par plus accrued recoveries to $29.6 billion in creditor claims. Shareholder value in excess of $10 billion was created, versus the equity market cap of approximately $85 million at the time of the Chapter 11 filing. Moelis & Company represented a driving force in the initial consideration and ultimate consummation of the merger, building consensus amongst various parties to consider and pursue a single, value maximizing plan of action. This transaction demonstrates Moelis & Company’s ability to deliver superior results for our clients; the reorganization and merger achieved full recoveries for unsecured creditors, significant recoveries for shareholders and the unique occurrence of pre-petition convertible notes converting into pre-petition equity.

December 2013

£1.5 billion

Exclusive Financial Advisor to the Ad Hoc Committee of Lower Tier 2 Noteholders of The Co-operative Bank on its £1.5 billion recapitalization

On December 20, 2013, Co-operative Group Limited (the “Group”) and The Co-operative Bank p.l.c. (the “Bank”) completed the revised recapitalization plan for the Bank. The plan was announced on November 4, 2013 and included a Liability Management Exercise (the “LME”) structured for the different classes of bondholders and preference shareholders, a capital injection from the Group of £333 million, and a capital raise of £125 million underwritten by the Lower Tier 2 Noteholders (the “LT2 Group”). The plan enables the Bank to continue its unique mission as a UK bank committed to the values and ethics of the co-operative movement. The LME received overwhelming support from bondholders with 97.6% of lower tier 2 security holders and 99.9% of tier 1 and upper tier 2 security holders voting in favor. The recapitalization represents the first successful consensual creditor bank bail-in in the United Kingdom, without taxpayer support.

October 2012

£1.1 billion

Financial Advisor to the Cross-Holder Committee of Travelodge Hotels Group on its £1.1 billion restructuring

On October 12, 2012, Travelodge Hotels Group (“Travelodge”), the second largest budget hotel operator in the UK, completed its financial restructuring after nine months of complex negotiations led by the Cross-holder Committee (“CHC”) of lenders. The financial restructuring included an operational restructuring which was effected by way of a Company Voluntary Arrangement (CVA), an in-court mechanism for distressed companies to formalize compromise agreements with their creditors, as well as a Scheme of Arrangement, to restructure 505 leases across the UK. As a result of the restructuring, the CHC lenders ultimately received 100% ownership of Travelodge in exchange for £75 million of new money, rollover of their senior debt and full equitization of their Mezz and PIK holdings. Total leverage was reduced by approximately 6 turns. The restructuring of Travelodge represents the largest hotel sector restructuring in Europe in 2012 and one of the largest and most complex CVAs ever completed in the UK, based on size, number of properties and asset values. Additionally, the Travelodge CVA achieved the highest approval rate for any CVA in the UK, as of 2012, with a 97% majority in the first vote and 95% majority in the second vote; landlords overwhelmingly supported the CVA with 95% voting in favor. Moelis & Company was instrumental in driving all aspects of Travelodge’s financial and operational restructuring and acted as financial advisor to the CHC.

May 2012

$1.5 billion

Chapter 11 Reorganization
Financial advisor to General Maritime Corporation on its $1.5 billion Chapter 11 Reorganization

On May 17, 2012, General Maritime Corporation (“General Maritime”), a leading crude and products tanker company, successfully emerged from Chapter 11 Bankruptcy. The consensual reorganization among debtors, creditors and plan sponsor significantly strengthened the company’s balance sheet and enhanced its strategic flexibility. General Maritime filed for Chapter 11 protection on November 17, 2011, after securing a lock-up with over 2/3 of its senior secured first lien lenders and plan sponsor on the terms of a comprehensive financial restructuring. As a result, the debtors were able to expeditiously engage with the remaining key creditors to secure a global settlement allowing for an exit from Chapter 11 within six months. As part of the plan of reorganization, General Maritime reduced its debt burden by approximately $600 million and received a $175 million new equity investment from the plan sponsor. Moelis & Company acted as financial advisor to General Maritime on the expeditious six-month Chapter 11 process, which minimized operational disruption and represented the largest Chapter 11 Bankruptcy restructuring in the shipping industry in 2012. Additionally, General Maritime is the first major global shipping operator to successfully attract new capital and emerge from Chapter 11 with a significantly deleveraged capital structure.

June 2011

$9.4 billion

Sale of U.S assets and platform to Blackstone Real Estate Partners VI, L.P.
Trusted advisor to Centro Properties Group

On March 1, 2011, Centro Properties Group (“Centro” or “CNP”), Australia’s largest manager of retail property investment syndicates with 123 shopping centers in its Australian portfolio as well as 600 retail locations in the United States, announced the sale of its U.S. assets and platform, and intention to pursue a debt restructuring and a potential merger of its Australian interests. CNP and its managed funds entered into a binding stock purchase agreement to sell the Centro U.S. platform to BRE Retail Holdings, LLC, an affiliate of Blackstone Real Estate Partners VI, L.P. for an enterprise value of approximately $9.4 billion. Proceeds will be used to repay debt in accordance with CNP’s existing Stabilization Agreement.

On August 9, 2011, Centro announced that it had entered into an Implementation Agreement which sets out the terms of a restructuring proposal as agreed between more than 83% of CNP’s senior lenders as well as three funds in which CNP manages and holds investment interests: Centro Retail Trust (“CER”), Direct Property Fund (“DPF”) and Centro Australia Wholesale Fund (“CAWF”). The proposal involves a A$5.0 billion merger of the Centro Group’s Australian assets in conjunction with the cancellation of CNP’s senior debt of A$3.4 billion.

Moelis & Company brought together an integrated team of professionals in the U.S. and Australia with backgrounds in Restructuring, Mergers and Acquisitions and Real Estate to drive effective results. Moelis & Company acted as joint sale advisor to Centro on the sale of its U.S. interests and continues to act as restructuring advisor to CNP.

March 2011

$24.9 billion

Trusted advisor to the Government of Dubai

Moelis & Company advised the Government of Dubai on the $24.9 billion restructuring of Dubai World, as well as the $23.7 billion restructuring of Nakheel.

Dubai World’s rapid expansion started in early 2005 with a large number of debt-financed acquisitions and investments of companies and real estate projects across the world. Dubai World’s wholly owned subsidiary Nakheel, the largest real estate developer in Dubai, witnessed a period of unprecedented growth in property prices and excessive speculative activity. By the end of 2008, Dubai World and Nakheel had significant levels of financial and non-financial liabilities on their respective balance sheets totaling $49 billion. The highly complex capital structure included over 100 financial institutions and more than 65 different debt tranches comprising a mix of Islamic and non-Islamic financing.

A combination of excessive leverage, the collapse in Dubai’s real estate market and the tightening of international liquidity markets led the Government of Dubai to announce a six-month “standstill” for Dubai World and Nakheel debt obligations on November 25, 2009. Moelis & Company secured the role as exclusive financial advisor to the Government of Dubai on the $24.9 billion restructuring of Dubai World and the $23.7 billion restructuring of Nakheel. One week later, the Government of Dubai formally announced the need to restructure its liabilities at Dubai World and Nakheel, marking the beginning of the Dubai World restructuring process.

Moelis & Company was instrumental in establishing the UAE’s first insolvency reorganization regime (“Decree 57”) which was a hybrid of a US Chapter 11 Bankruptcy Code and a UK Scheme of Arrangement. This regime underlined the need to protect Dubai World and its subsidiary assets from aggressive foreign creditor actions. Importantly, it provided the ability to maintain jurisdiction in the UAE, if required, allowing the Government of Dubai to retain full control of the restructuring process. Following the establishment of this new insolvency regime, Moelis & Company played a key role in raising $10 billion of financing from the Abu Dhabi Government to support the Dubai World and Nakheel restructuring plans.

The Dubai World restructuring achieved over 99% lender consent in nine months, reaching 100% in 11 months, and the transaction successfully closed in June 2011. It was followed by the closing of the Nakheel restructuring in August 2011. Moelis & Company successfully advised the Government of Dubai on tactics and strategies in dealing with an array of stakeholders including banks, trade contractors and foreign governments.​