Deal paves the way for further Hong Kong and BVI schemes to be used to restructure foreign law governed debt
Stephenson Harwood's restructuring and insolvency practice has successfully completed the restructuring of Winsway Enterprises Holdings Limited. The team was led by restructuring and insolvency partner and head of finance, Sue Moore, from the firm's London office, and restructuring and insolvency partner Jamie Stranger, from the firm's Hong Kong office.
Winsway is one of China's biggest coking-coal companies and is listed on the Hong Kong Stock Exchange and incorporated in the BVI. The company issued US$500 million of New York law governed notes in 2011, which matured in April this year when approximately US$350 million of debt remained outstanding.
Falling commodities prices and a challenging Chinese economy led to the group encountering financial difficulties. Consequently, advisers were appointed to explore restructuring solutions in early 2015, and by the end of the year a restructuring plan was agreed. Under this plan, noteholder claims were to be written off in exchange for cash, post-restructuring equity and contingent value rights, with the cash consideration being funded by a rights issue. The restructuring was implemented by parallel schemes of arrangement in Hong Kong and the BVI coupled with Chapter 15 recognition in respect of the Hong Kong scheme in the United States.
"This is one of the first restructurings of groups operating predominantly in the PRC to have progressed to this stage, and the restructuring is particularly notable because the Hong Kong Court was content to follow the approach of the English Court in Magyar Telecom," Sue Moore said. "Also, schemes of arrangement have, to date, been rarely used in the BVI, which is another significant aspect of this matter, in that it demonstrates that the BVI Court was likewise content to sanction a scheme dealing with New York law governed debt."
"Given the likelihood of more restructurings of off-shore debt of PRC groups listed in Hong Kong, it is helpful that the Hong Kong Court has shown a willingness to follow the approach of Magyar," Jamie Stranger said. "It paves the way for further Hong Kong schemes to be used to restructure foreign law governed debt."
The Stephenson Harwood team was co-led from the London and Hong Kong offices, with lawyers from the Stephenson Harwood (Singapore) Alliance and Chinese associated firm Wei Tu providing support on Singaporean and PRC issues respectively. Sue and Jamie were supported by a large team including Libby Elliott, James Watson, Stephen Davis and Nicole Schaillee (London), Mark Reed, Paul Westover, Eloise Fardon, Rosy Chan and Veronica So (Hong Kong), and Elaine Beh, Terence Seah and Douglas Koh (Singapore).