Restructuring High Yield Bonds

Our trainer is a consultant, public speaker and author with expertise in private equity, debt advisory, restructuring and infrastructure. He is a Senior Advisor to KPMG Finland, a Senior Advisor to Reorg EMEA Covenants, the leading provider of information to the European High Yield community, and a Senior Consultant to Grant Thornton UK.

Training programmes are provided to a wide range of blue-chip clients in Europe, Africa, the Middle and Far East, North America and Australasia. In-house clients include banks (BNP Paribas, Société Générale, ING, Barclays Capital, Bank of China, RBS, SEB); lawyers (Baker & McKenzie, Skadden Arps, Sullivan & Cromwell, Cadwalader, Latham & Watkins, Weil, White & Case); advisory firms (Lazard, PWC, M&A International, KPMG, EY, Deloitte); PE firms (Cinven, Advent, Barings Asia, Waterland); corporates (Siemens, Airbus, Turkcell, Candy Crush, Gunvor, Statkraft) and governmental bodies (the UKLA, the EBRD, the ECGD, Omani Oil Corp.)

He qualified in South Africa both as a Chartered Accountant, with Deloitte and as a lawyer with Hofmeyr where he was involved in structuring several high-profile project financings including BMW 3 Series, Ford Sierra, GM, Sappi and Mondi.

When he moved to London and joined Lazard Brothers as a corporate finance executive he was involved in a wide range of public and private transactions. Subsequently, he joined Hoare Govett as an assistant director where he acted as an advisor to smaller listed companies and was involved in several syndicated Euro-Equity Initial Public Offerings.

In 1991 he joined ABN Amro’s cross-border M&A team before being transferred to MeesPierson Corporate Finance as a Director in Cross-Border M&A where he was also involved in several deals in Central Europe. During this time he was a member of the EU-PHARE programme and advised the Estonian government on its privatisation programme.

He is the Programme Director at the City Business School, London, for Infrastructure Finance for the M. Sc. programme in Business Administration and Finance.

He is a member of the Institute of Chartered Accountants in England & Wales and the South African Institute of Chartered Accountants. He completed a BA and an LLB at the University of Natal and a B. Compt. (Hons) at UNISA.

• Global nature – High Yield Bonds have migrated from the US market and are now increasingly used as a major high-yield debt financing option by issuers across the globe. However, since they are mainly issued subject to New York law the methods used to restructure them are heavily influenced and driven by US Regulations such as Tender & Exchange Offers and Consent Solicitations. The course thus provides participants with insight into these tools and techniques and the regulatory challenges firms need to navigate in these complex restructurings.
• Review of key Covenants – understanding the key indenture covenants found in High Yield Bonds and how they are structured is essential to anyone seeking to restructure High Yield Bonds. Participants will learn which covenants matter in a restructuring scenario.
• Co-ordinating Bondholders – restructuring listed securities (i.e. High Yield Securities Bonds) requires a completely different approach to restructuring loans. Being on the Ad Hoc steering committee increases potential liability for insider trading. Getting it wrong can entail both civil and criminal liability for market abuse. The programme guides the various strategies investors and their advisors can adopt to navigate this tricky area.
• The Liquidity challenge – access to additional cash resources represents one of the more challenging aspects of restructurings. The training analyses the various options available to raise cash and the pros and cons of each (hint; this requires a sound understanding of the indenture covenants re debt incurrence, disposals and liens).
• Liability management – restructuring bonds make use of a wide range of techniques unique to that market, many of them driven by US regulatory requirements. Tender/Exchange Offers are widely used, often in conjunction with, Consent Solicitations. Market Purchases and Redemptions are other, less frequently used, options but all of these options require a sound knowledge of the regularity requirements to avoid potential criminal and civil liability.
• Coercive Exchange offers – these are widely used to deal with recalcitrant issuers or investor holdouts. Advisors have employed sophisticated game theory techniques to minimise Holdouts and improve the chances of implementing the Exchange offer. The course reviews some of the key cases which have made use of these techniques.
• Multiple Pathways – English Schemes of Arrangement are accessible to issuers outside the UK and have been widely used to restructure bonds (e.g. Syncreon, Agrokor & Nyrstar). Similar considerations apply to Chapter 11, which can also be accessed by non-US firms (e.g. Truvo). The programme reviews how both these techniques have been used in some of the landmark cases and also considers the pros and cons of each approach.
• Forum Shopping – has become topical with the use of English Schemes of Arrangement used to restructure bonds of non-UK-based issuers. The programme looks at two landmark cases (Nobel and Codere) to consider the current state of play.

• Our trainer has deep experience in restructuring high-yield debt funds having been involved in restructurings for over 30 years.
• The trainer has had exposure to restructuring high-yield debt securities from a global perspective having been involved in restructurings in the UK, Europe and Africa.
• The trainer has been involved in high-yield trading restructurings from both debtor and creditor sides and his career also includes stints in commercial and investment banking, accountancy, tax and law thus providing insight from a wide range of perspectives.
• They have also provided high-yield junk bonds restructuring training to a wide range of blue-chip clients including the EIB, the EBRD, Deloitte, and Robeco.
• Through the trainer's role as a Senior Consultant to Grant Thornton and as a Senior Advisor to KPMG Finland, he retains exposure to high-yield bond market restructurings.

“The market selloff over the past two weeks has pushed €22.7bn of High Yield Bonds into stressed and distressed territory” [Source: Credit Rubric]. Whilst oil and gas have been hit hardest, the collapse in market sentiment has not been confined to specific sectors or even names.

Restructuring High Yield Bond Analysis poses a range of challenges not found in dealing with purely loan-driven structures; custody chains mean that noteholders are more difficult (and take longer) to identify; the listed nature of notes means that all stakeholders need to be aware of market abuse aspects; the machinery for instituting action in bonds is more convoluted than loans since notes are invariably governed by NY State law restructurings may need to take account of compliance with onerous U.S. securities’ laws and last, bond restructurings often use different tools not available in loan structures, such as Exchange offers and consent solicitations (which can be used to covenant strip notes in certain circumstances). The market has also experienced an increase in coercive exchange offers where parties have made use of innovative solutions to encourage holders to accept and discourage holdouts from remaining on the sidelines. DTEK’s triple-track Exchange offer, Scheme and consent solicitation is an excellent example.

This high-yield bonds training programme summarises the methods and tools that have been used to restructure bonds and reviews some of the topical and innovative solutions that have been used to address these more complex restructurings. English schemes of arrangement have gained increasing traction in the bond markets, as they have in the loan markets, and appear to have emerged as the primary pathway of choice in several recent restructurings for foreign companies. Despite this, Chapter 11 does offer some solutions. Our high-yield bonds training will illustrate these methods with discussions of recent landmark restructurings including; Agrokor, Nyrstar, Syncreon and Metinvest’s Standstill Scheme.