Stoneway Capital’s Chapter 11 plan confirmed by bankruptcy court

By Sarah Lizee

Olympia, Wash., May 12 – Stoneway Capital Ltd. received confirmation of its Chapter 11 plan from the U.S. Bankruptcy Court for the Southern District of New York, according to an order filed Thursday.

As previously reported, the company said the plan represents the conclusion of months of arms-length negotiation and structuring discussions among the debtors, with the steering committee of an informal group of holders of the debtors’ 10% senior secured notes due 2027 and the lenders under both the debtors’ prepetition term loan facility and $16.5 million super-priority secured debtor-in-possession financing facility, who are also the holders of about $1.36 million in unsecured prepetition promissory notes issued by the debtors.

The plan is centered on one or more sale transactions under which a newly formed entity, SCC UK, will acquire the business enterprise of the debtors, including substantially all of the assets of Stoneway Capital Corp. and all of the partnership interests in Stoneway Energy International LP and Stoneway Energy LP, in exchange for consideration to be distributed to the estates of the debtors under the plan.

Under the plan, each eligible holder of an allowed senior notes claim will receive from Stoneway Capital Corp. a pro rata distribution of $300 million of first-lien secured notes and $162.5 million of second-lien secured notes to be issued by SCC UK.

Each eligible holder of an allowed term loan facility claim will receive from one of the parent group debtors a pro rata share of $10 million of the new first-lien notes and non-convertible preferred equity of SCC UK.

Subject to the DIP lenders having entered into the agreement to compromise DIP facility claims in lieu of payment in full in cash of those claims, all outstanding principal and interest under the DIP facility will be satisfied through the distribution by Stoneway Capital Corp. to the holders of DIP facility claims $16.5 million of super-priority first-lien secured notes to be issued by SCC UK and any accrued interest on the DIP facility that results in the principal exceeding $16.5 million being paid in full in cash.

Subject to the DIP lenders having entered into the DIP facility claims treatment agreement, each holder of an allowed promissory note claim will receive new super-priority first-lien notes in an amount equal to the amount of its allowed promissory note claim, either from Stoneway Capital Corp. or from one of the parent group debtors.

The plan provides for the payment in full in cash of all allowed general unsecured claims, except for general unsecured claims against GRM Energy Investment Ltd., Stoneway Capital Ltd., Stoneway Group LP and Stoneway Power Generation Inc., which will receive no recovery under the plan.

Holders of allowed claims under the debtors’ guarantees of debt under the Argentine revolving credit facilities against the acquired debtors will have their claims reinstated.

Following the closing of the sale transactions, each holder of an allowed Argentine revolving credit facility guaranty claim against the non-acquired debtors will receive a replacement new Argentine revolver guaranty.

The plan provides for the cancellation and discharge on the effective date of the DIP facility, the senior notes, the term loan facility and the promissory notes.

It also provides for the amalgamation under Canadian law of Stoneway Capital Corp., Stoneway Power, and non-debtor Stoneway Arrangeco to form an amalgamated entity, SCC Amalco, under a Canada Business Corporations Act plan of arrangement.

The plan will also provide for the wind down and dissolution of GRM, Stoneway Capital Ltd., Stoneway Group LP and SCC Amalco.

Holders of other secured claims will receive payment in full in cash, the collateral securing their claims, or reinstatement.

Holders of other priority claims will receive payment in full in cash.

Holders of other intercompany claims and section 510(b) will have their claims canceled with no distribution.

Intercompany interests and GRM interests will be canceled or liquidated with no distribution.

Stoneway is a privately held New Brunswick, Canada, company based in Buenos Aires and established in 2016 for the purpose of constructing, owning and operating power plants to provide electricity to the wholesale electricity market in Argentina through indirect subsidiaries. The company filed bankruptcy on April 7, 2021 under Chapter 11 case number 21-10646.

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