New World Resources tender offer revised, contingency plan announced

By Caroline Salls

Pittsburgh, July 2 – New World Resources plc and New World Resources NV agreed to revised terms for a senior unsecured note cash tender offer included in its restructuring transaction, according to a company news release.

The agreement was reached with a joint committee of holders of New World’s senior secured notes and senior unsecured notes as well as some individual noteholders.

New World said the change ensures that the transaction is fully funded.

The revised agreement is supported by the holders of 62% of the senior secured notes, 37% of the senior unsecured notes and majority shareholder BXR Mining BV, all of which executed new lock-up agreements. The previous lock-up agreement dated June 2 has been terminated.

According to the release, a new early bird consent fee is offered and will be payable on all notes locked up by noon ET on July 11.

Alternative plan

In addition, the company said it has agreed to alternative restructuring terms with some holders of senior secured notes in case the required votes to support the restructuring are not obtained from senior unsecured noteholders and shareholders.

As part of this contingency plan, New World launched a sale process for operating subsidiaries OKD as and NWR Karbonia SA to ensure the continuation of the operation of these assets if the transaction is not supported by the unsecured noteholders and shareholders.

The sale process will end if the unsecured noteholders and shareholders approve the restructuring transaction.

Specifically under the alternative plan, New World said shares will be transferred to special-purpose vehicles, and the senior secured notes will be exchanged in return for the issuance of €450 million of new debt instruments.

The alternative restructuring plan will not compromise or seek to amend the terms of the senior unsecured notes, which will remain liabilities of the company, the release said.

The company said holders of existing senior secured notes can participate in cash in 90% in the vehicle’s equity, in a total amount of €85 million, and a third party may also participate in that equity.

If the alternative plan is to be implemented via a pre-packaged U.K. administration, the company would hire PricewaterhouseCoopers LLP as the prospective administrator.

Commitment underwritten

New World said it also secured underwriting of a €25 million capital commitment required for the restructuring, which was one condition of its completion. The transaction is still subject to approval of holders of existing senior secured notes, senior unsecured notes and shareholders, as well as an agreement with lenders to provide an export credit agency-backed loan.

To obtain the equity commitments, the terms of the senior unsecured notes cash tender offer were revised so the €30 million tender offer will be at a fixed price of 25% of par.

Also under the revised tender offer, proceeds will first be allocated to holders of senior unsecured notes that provide at least their share of the new cash equity and the super senior credit facility. These noteholders may tender an amount of senior unsecured notes up to the lesser of their existing senior unsecured notes holdings and 4 times the equity they invest multiplied by the proportion that the total amount of that holder’s senior unsecured notes bears to the total holdings of senior secured and senior unsecured notes.

To the extent the senior unsecured notes cash tender offer is oversubscribed, each participant will be scaled back to their tender amount as a proportion of the total senior unsecured notes tender offer. No more than €120 million of face value of bonds may be repurchased as part of the senior unsecured notes tender offer.

Second, proceeds will be allocated across all remaining senior unsecured notes tendered in the cash offer.

Equity structure

New World said the structure planned for €150 million of new equity being invested as part of the transaction includes a €118 million rights issue – which includes a €75 million investment from BXR through a commitment to take up its share in the rights issue and a fully underwritten €43 million rights issue remainder, in which minority shareholders will be able to participate fully – and the placement of €32 million committed by the backstop parties.

The company said existing shares will be diluted as a result of the transaction, especially for shareholders who do not take up their rights.

The new equity being invested will represent 96%, and the currently outstanding 264 million shares will equate to 4%, of the total enlarged number of shares in the capital of New World Resources plc after the transaction.

The transaction is expected to close at the end of September.

New World Resources is an Amsterdam-based central European coal producer with operations in the Czech Republic.

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