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Allens advises on refinancing of US$3.5bn Wiggins Island Coal Export Terminal

2 October 2018

Allens has advised a syndicate of 22 financiers on the refinancing of the US$2.5 billion senior project financing facilities for the US$3.5 billion Wiggins Island Coal Export Terminal (WICET) project in Gladstone, Queensland.

Over the past two years Allens has worked closely with the financing syndicate and its advisers McGrath Nicol, and WICET and its advisers Houlihan Lokey, as they navigated through a variety of issues which made the refinancing challenging, including the insolvency of three of the eight take-or-pay shippers that underpin the financing structure and a difficult market for the financing of coal assets generally.

The transaction is one of the largest and most significant restructuring and refinancing transactions in the Australian infrastructure market in recent years, and had some unique features, including the following:

  • As the senior financiers could not reach unanimous agreement in relation to the terms of the extension, with the support of a majority of its senior financiers, WICET sought court approval for the refinancing using a solvent creditors' scheme of arrangement to bind all senior financiers.

While rarely used in this context, it shows that a solvent refinancing can be achieved with less than unanimous support of a class of creditors, even when particular terms of the restructure (such as the extension of the maturity date), would ordinarily require 100 per cent creditor consent under the terms of the facility documentation.

  • Needing to complete the senior debt refinancing in the context of a very complex capital structure, which includes both mezzanine debt (GiLTS) and preference shares (WIPS) which would remain in the structure following the refinancing.

This shows the importance of ensuring when multi-layered financing structures are being put in place that senior debt holders are in a position to implement a refinancing of this type without any formal consent from other layers of the capital structure.

'This has been a huge team effort, over several years, and we are extremely proud to have worked with a great group of financiers and WICET to assist in navigating the project through the various challenges it faced and complete the successful senior refinancing,' said Partner Nick Adkins, who led the team from Allens.

'The use of a creditors' scheme of arrangement in this manner is quite rare in the Australian market, and it will be interesting to see if it is deployed in similar transactions in the future,' said Partner Chris Prestwich, who led the creditors' scheme and other restructuring aspects of the transaction.

The transaction adds to Allens' extensive track record in the financing and refinancing of large-scale infrastructure projects, with the firm also currently advising the financiers to the Sydney Light Rail Project and the financiers to the new Royal Adelaide Hospital PPP, among many other projects.

Allens legal team Nicholas Adkins (Lead Partner), Chris Prestwich (Partner), Michael Gibling (Senior Associate), Jacques McElhone (Associate), Luke Leybourne (Associate) and Kate Buchanan (Lawyer)

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Notes for editors.

Allens is a commercial law firm working throughout Australia and Asia. Through its integrated alliance with Linklaters it provides clients access to 40 offices in 28 countries around the world.