Emeco published a supplemental disclosure for its revised restructuring scheme on 23 February 2017
Emeco announced that on 10 February 2017 Black Diamond – the beneficial owner of 33% of Emeco Notes – will be buying all 24.6% of Ascribe’s Emeco Notes (the “Trade”). This will result in Black Diamond holding approximately 57.7% of Emeco Notes following the settlement date, expected to be on 1 March 2017.
There are no changes to the revised proposed scheme, as mentioned in our recent note published on 14 February 2017.
According to the supplemental disclosure, the only change to Noteholders following settlement of the Trade is that Noteholders will now receive 13% (previously 21%) of total shares of Emeco, excluding Black Diamond.
Emeco understands that Ascribe will vote in favour of the Scheme Resolution, as the latter retains the right to vote the Emeco Notes – the voting entitlement record date was 30 Jan 2017.
Emeco directors continue to recommend that noteholders vote in favour of the Scheme.
Noteholder options as per the revised restructuring scheme are:
- Approve the scheme and receive Tranche B Notes and common stock. Liquidation firm Ferrier Hodgson estimates this option should give Noteholders a going concern basis of 100 cents per dollar, in a combination of Tranche B Notes and new Emeco shares
- Approve the scheme and receive a cash alternative equal to 50% of the principal outstanding, under interest in the Emeco Notes
- Do not approve the scheme. Ferrier Hodgson estimates that in event of a wind up, Noteholders would receive 34 to 55 cents per dollar
We see no reason to disagree with the directors. As such, our opinion is that option one – “Approve the scheme and receive Tranche B Notes and common stock” – is the best outcome for current Noteholders.
The supplemental disclosure is available here.