LPC-Lenders set to take control of UK’s Cory Environmental

Under the terms of the debt for equity swap, Cory’s 44 million pounds of junior debt will be written off and its existing 353 million pounds of senior debt will be converted into a 200 million pounds term loan and an 85 million pounds PIK tranche, two sources close to the situation said.

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In addition, Barclays and Commerzbank have underwritten a 30 million pounds revolving credit facility and a 75 million pounds letter of credit.

A 20 million pounds new money facility has also been put into place, one of the sources said.

The existing lenders, which include SVP Global and a coordinating committee of lenders comprising Barclays, Commerzbank, BNP Paribas and EQT Partners, have agreed to the deal which is expected to enter a lock up phase by June 22.

The deal will then be pushed through using a scheme of arrangement which is expected to launch next month, the sources said.

Second round bids from buyers interested in acquiring the firm were submitted to the company on May 22, but at a bank meeting on June 8 lenders decided that these offers were not high enough.

The coordinating committee of senior lenders is being advised by law firm Allen & Overy, while SVP is being advised by Gleacher Shacklock.

SVP, one of the largest lenders to Cory having bought into the debt since the end of last year, did not join the coordinating committee because it also holds a piece of Cory’s junior debt, and the junior debt holders had their own coordinating committee, which was advised by law firm Freshfields.

The price of Cory’s debt has suffered as a result of the landfill tax over the last few years and the senior debt was trading at 58.4 percent of face value on Europe’s secondary loan market in January 2014. The value has increased up to around 84 percent following SVP and European fund EQT Partners buying into the debt, but slipped down to 80.6 on June 9 — the day after the bank lender meeting.

Cory owns nine landfill sites across the UK, and has contracts for recycling, street cleaning and waste collection stretching from Lincolnshire to Cornwall. It is best known for operating barges on the River Thames from Central London out to the Mucking Marshes landfill site.

Cory did not immediately respond to a request to comment.

(Editing by Christopher Mangham)

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