COURT: Boart Longyear debt-restructuring schemes win court approval

22 August 2017

An Australian court this morning approved Boart Longyear’s amended schemes of arrangement that are supported by previously dissenting secured noteholder First Pacific Advisors (FPA).

 

Giving his order at the hearing, which Debtwire attended, Justice A Black of the Equity Division of the New South Wales Supreme Court gave parties until 2:30pm Sydney time today to review the judgement. When the hearing resumes at 2.30pm, counsels for the parties will make applications, if any, for a stay on the judgement and indicate if they intend to appeal it.

 

In terms of legal costs, Robert Austin, lawyer for minority shareholder Anthony Maurici who has been opposing the recapitalisation, is requesting that the proponents of the schemes pay Maurici’s costs. However, Boart’s lawyer Michael Izzo argued that the company and other supporters of the schemes should not bear the full costs because the second court hearing was adjourned several times at Austin’s request instead of being completed within a day as is usually the case.

 

All parties are to furnish their submissions regarding the legal costs by 29 August, and any submissions in reply by 5 September.

 

The US-based drilling- and equipment-service provider announced on 9 August that it reached an agreement with FPA, under which the company’s 10% secured noteholders will receive a total 4% of Boart’s post-recapitalisation equity, among other amendments. Secured noteholders were to receive no equity under the original schemes. In return, FPA agreed to withdraw its opposition to the restructuring and support the amended schemes. The amended schemes are an outcome of a court-ordered mediation between the litigants, as reported.

 

The legal challenge to the company’s schemes began on 4 May when Los Angeles-based FPA, which holds around 29% of Boart’s 10% secured notes, opposed the schemes at the first court hearing.

 

Under the restructuring proposal, supported by the company’s main creditors and shareholders Centerbridge PartnersAres Management and Ascribe Capital, Boart’s USD 195m, 10% due-2018 secured notes and USD 190m secured term loans were treated as one class. However, the scheme provides materially better treatment to Centerbridge than it does for holders of the due-2018 notes, FPA alleged.

 

However, the NSW Supreme Court on 10 May allowed Boart to convene the meetings and an appeal to this order by FPA was also rejected on 26 May by the NSW Appeals Court. Subsequently, the company on 30 May won the requisite creditor vote for its schemes. Meanwhile, FPA filed a petition in the High Court of Australia on 29 May, seeking special leave to appeal the New South Wales Court of Appeal’s decision.

 

Boart’s schemes hit another legal hurdle early June when entities of Maurici filed for an injunction against presenting the recapitalisation proposals at an AGM, arguing that the schemes are unfair to shareholders not associated with the three creditor-shareholders. The court dismissed the minority shareholder’s petition on 13 June, hours before the AGM was to be held in Melbourne.

 

The company won the shareholder approval for recapitalisation, but both FPA and Maurici entities continued with their objection during the second court hearing. FPA withdrew its opposition after the schemes were amended, but Maurici entities kept with its opposition to the schemes.

 

CLICK HERE for Justice Black's judgement today.
CLICK HERE for Justice Bathurst's 26 May judgement dismissing FPA's appeal.
CLICK HERE for Justice Black's 10 May judgement.
CLICK HERE for Debtwire's Chapter 15 Case Profile for Boart.
CLICK HERE for all Boart Longyear Chapter 15 filings on Debtwire Dockets.