Key project financings and restructurings

Author: | Published: 1 Aug 2012
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Key project financing

Alstom-Bharat Forge JV Mundra SEZ project financing

LAW FIRMS

Bharucha & Partners
Lenders

Luthra & Luthra
Alstom Bharat Forge Power

Norton Rose
Lenders

Why: This involved two inter-linked project finance transactions for the US$1.2 billion Alstom-Bharat Forge JV companies in the Mundra special economic zone (SEZ). Alstom Bharat Forge Power and Kalyani Alstom were granted financial facilities of up to Rs 3,625 crores by a syndicate of banks led by Axis Bank and ICICI Bank. This was for manufacturing super critical and sub critical steam turbines, generators and associated auxiliaries and systems. The deal involved complex issues with respect to the inter-linking of term facilities and working capital facilities, in particular the waterfall mechanism and the priority of distribution of the cashflow between the term lenders and the working capital lenders.

Hindalco Industries – Mahan Aluminium Project

LAW FIRMS

Amarchand Mangaldas
Hindalco Industries

Dhir and Dhir Associates
Borrower

Why: This balance sheet financing of a greenfield project involved financing the development, design, procurement, ownership, construction, commissioning, operation and maintenance of the Mahan Aluminium Project in Madhya Pradesh, which is a unit of Hindalco Industries. The project cost of Rs 10,500 crores, including a debt financing of Rs 7,875 crores, was financed by a consortium of no fewer than 31 banks. It involved a complicated ring financing structuring of obligations and with innovatively implementing the traditional principles of corporate financing and project financing.

ICICI / Bank of India – GMR Infrastructure Singapore

LAW FIRMS

Allen & Overy
ICICI Bank and Bank of India

Norton Rose
Lenders

Trilegal
Lenders

White & Case
GMR Energy (Singapore)

Why: ICICI Bank and Bank of India acted as lenders on facilities provided to GMR Singapore to support its equity contributions to GMR Singapore subsidiary, GMR Energy (Singapore), which is involved in the development of a power plant in Jurong Island, Singapore. The letter of credit facilities included ICICI's US$170 million and S$35 million facility, and BOI's S$200 million facility. The complex LC structure, which included a reduction mechanism, had to tie in with the underlying project documents – especially the sponsor support agreement pursuant to which GMR Singapore was required to make equity contributions to GMR Energy.

Jhajjar Power project financing

LAW FIRMS

Amarchand Mangaldas
Lenders

Clifford Chance
CLP Holdings

Linklaters
Lenders

Why: In January 2011, CLP Power India's 1,320MW Jhajjar power plant refinancing successfully completed with a US$288 million syndicated loan. It was the first coal-fired generation project in India to be project financed by commercial banks, and the second with international bank participation since the Dabhol power project a decade earlier. This project, one of India's huge greenfield power projects, is also China Development Bank's and The Export-Import Bank of China's first limited resource project financing in India.

Jayaswal Neco Industries financing

LAW FIRM

Khaitan & Co
Consortium of lenders

Why: Jayaswal Neco Industries obtained a rupee term loan facility of Rs 1,800 million from a consortium of lenders, led by ICICI Bank and including non fund based financial assistance, for backward integration of steel manufacturing capacity in Chattisgarh. Counsel assisted in structuring of the transaction, drafting and finalising the financing and security documents, and providing limited due diligence. The company successfully emerged from the voluntary CDR process under the guidance of the RBI and has subsequently managed to turn around and be profitable, and even arrange for additional funding.

OPIC SunEdison Gujarat project financing

LAW FIRMS

AZB & Partners
Borrowers

Skadden
Borrowers

Trilegal
Overseas Private Investment Corporation

White & Case
Lenders

Why: Solar energy services provider SunEdison secured credit facilities for funding the project cost of two 5MW photovoltaic solar power plants in Gujarat, India. Overseas Private Investment Corporation (OPIC), the development finance institution of the US Government, provided the funding as a term loan on the basis of certificates of participation (CoPs) issued by it to eligible investors in the US. This was one of the first financings done in India through a CoP structure by OPIC, which also guaranteed the CoPs. Counsel was involved in due diligence of the project and drafting and reviewing the finance documents for the transaction.

Reliance/WRSS power transmission lines – Gujarat

LAW FIRMS

Allen & Overy
Lenders

Trilegal
Lenders

Why: This US$60 million project financing facility was in connection with the strengthening of power transmission lines in Gujarat, India under the Western Region System Strengthening Scheme-II (WRSS). Reliance Infrastructure wholly owned subsidiary, Western Region Transmission (Gujarat), borrowed the facility for funding the project cost of strengthening the transmission lines. The WRSS transmission system is the first project in India awarded on a 100% private ownership basis. Counsel had to deal with complex issues relating to security creation, permissions and clearances from the regulatory authorities, ensuring bankability of the project and protecting the lenders' interests.

Shapoorji Pallonji road project financing

LAW FIRMS

AZB & Partners
Borrower

Clifford Chance
Lenders

Jones Day
Borrower

Phoenix Legal
Lenders

Why: Indian construction company Shapoorji Pallonji & Co entered into a facility agreement for a 65-kilometre toll road in Kashmir, India. The requirement was wholly in rupees, but Shapoorji took advantage of the lower US dollar/ rupee exchange rate (with swaps) by entering two facilities – one domestic (Rs 5.5 billion) and one international (US$350 million). The US dollar facility is a first for the highway sector in India, and it is the first time the company had attempted a loan facility such as this. Shapoorji Pallonji & Co is the flagship company of the Shapoorji Pallonji Group, which is owned by Tata Group's largest shareholder Pallonji Mistry.

KEY RESTRUCTURINGS

GTL Group debt restructuring

LAW FIRMS

Alliance Legal
GTL Group companies

Luthra & Luthra
Creditors

Wadia Ghandy & Co
GTL Group companies

Why: The corporate debt restructuring (CDR) of the debt of the global group of companies of network services company GTL involved two public listed companies, GTL Limited, GTL Infrastructure Limited and SPV, Chennai Network Infrastructure Limited. Challenges for counsel included: issuance to the CDR lenders of hybrid instruments, convertible into equity shares; moratorium on interest payment; and promoter contribution in the form of investment in the companies. Not only was the restructuring high in value but also involved complex steps and processes with the lenders of the company who had executed the inter creditor agreement with the RBI.

HPCL-Mittal Energy refinancing

LAW FIRMS

Amarchand Mangaldas
Lenders

Luthra & Luthra
HPCL-Mittal Energy

Why: This involved the refinancing of the existing term loan availed by HPCL-Mittal Energy for part financing certain project costs for implementation of its 9MMTPA (million metric tonne per annum) greenfield refinery project located at Bhatinda in the State of Punjab. The documentation involved extensive negotiations on the standard loan conditions so that they suited the requirements of the current stage of the project. The loan agreement had to be structured to inter-connect it with the financing and security documents entered into with foreign currency lenders and working capital lenders. HPCL-Mittal Energy is a JV between Hindustan Petroleum Corporation Limited and Lakshmi N Mittal Group company Mittal Energy Investment Singapore.

HPCL-Mittal Pipelines refinancing

LAW FIRMS

Amarchand Mangaldas
Lenders

Luthra & Luthra
HPCL-Mittal Pipelines

Why: Earlier in the year, HPCL Mittal Energy wholly owned subsidiary HPCL-Mittal Pipelines secured a Rs 14.88 billion (US$332 million) loan through bookrunner SBI as it refinanced the completed 1,014 km cross-country crude oil pipeline from Mundra port to Bathinda in Punjab. As above, the refinance facility agreement had to deal with the challenge of structuring the financing documents to inter-connect them with the financing and security documents entered into with various foreign currency lenders. And given that the standard loan terms required specific carve-outs, the financing and security documents were extensively negotiated in order to tailor-make them to suit the requirements post construction phase of the project.

Share / Asmitha debt restructuring

LAW FIRM

Trilegal
Share, Microfin and Legatum

Why: Three Hyderabad based microfinance institutions (MFIs), Spandana Sphoorty Financial, Share Microfin and Asmitha Microfin, delayed merger plans to create Asia's largest microfinance lender in order to first restructure the debt portfolios of Share and Asmitha. As NBFCs, Share and Asmitha had diversified loan portfolios and had raised debt capital from over 30 financial institutions each. Both entities had also raised substantial equity capital from non-resident PE investors. Counsel advised on RBI regulations pertaining to NBFCs, State regulations relating to MFIs, rules and regulations pertaining to the CDR mechanism set out by the RBI and the CDR Cell, and foreign exchange regulations.

Soma-Isolux NH One Tollway

LAW FIRMS

India Law Services
Consortium of 17 banks

Latham & Watkins
Cofides

R&A Legal
Grupo Isolux Corsan

S&R Associates
Cofides

Uria Menendez
Grupo Isolux Corsan

Why: This involved the restructuring of Spanish infrastructure company Grupo Isolux Corsan's Rs 4,518 crore (US$997 million) investments into SPV Soma-Isolux NH One Tollway, operator of a 291-kilometre six-lane highway in northern India. Structured across three phases and including a consortium of 17 banks, the restructuring involved the intra-group transfer of shareholding of Grupo Isoluz Corsan in order to receive additional investment. Soma-Isolux NH One Tollway is a consortium between Indian firm Soma Enterprises and Grupo Isoluz Corsan and is funded by Spain's state-owned institute Cofides, which provides financial support for projects where there is a Spanish interest.

Uttam Galva Steels debt consolidation and refinancing

LAW FIRM

Luthra & Luthra
Lenders

Why: Steel products manufacturer and exporter Uttam Galva Steels received a facility of Rs 1,400 crores (US$286 million) from a syndicate of banks led by SBI for the purpose of refinancing certain existing loans of the company and for meeting its general capital expenditure requirements. The deal involved: the structuring of the security package to make the creation and perfection of security cost efficient; several intricately complicated issues relating to prepayment of advances made by certain existing lenders of the company; the treatment of certain existing lenders who were not being prepaid; and, the sharing of the security package with such existing lenders.

Wockhardt restructuring

LAW FIRMS

DSK Legal
FCCB holders

DH Law Associates
Sun Pharma Global

Juris Corp
FCCB holders

Majmudar & Partners
Wockhardt Limited

Singhi & Co
CDR lenders

Why: Following a series of aggressive global acquisitions in recent years (some of which didn't work well), Indian pharmaceutical company Wockhardt Limited's debt burden was such that it began to default on its foreign currency convertible bonds (FCCBs) held by foreign investors. This was an unprecedented case where the Bombay High Court heard a winding up petition for alleged non-payment of amounts arising out of foreign currency derivative transactions and FCCBs. Counsel managed to procure a favourable order and secure more time for the company to make the outstanding payments on the FCCBs.

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