Grupo Isolux Corsan restructuring agreement approved by Madrid court

By Caroline Salls

Pittsburgh, Oct. 28 – Grupo Isolux Corsan SA’s master restructuring agreement was approved by the Madrid Mercantile Court, ratifying the support of more than 92% of the company’s financial creditors, according to a news release.

Isolux said three debt tranches are set by the restructuring agreement, including a €200 million new-money tranche A, which can be increased by €75 million; a €550 million, which can be increased up to €750 million, which is viewed as sustainable debt in accordance with the group’s capacity to generate cash; and a €1.4 billion tranche C, which will be partially converted into equity through different instruments.

In addition, the company said its new management team implemented a divestment plan in order to stabilize the group’s financial situation. The recent $25 million sale of the Argentinian Loma Blanca wind farm was the first relevant transaction within this plan.

According to the release, the court’s approval of Isolux’s refinancing agreement guarantees the continuity of the group’s restructuring process. The company said the short-term goal of this process is to recover normal levels of operations, while the medium-term target is to bring the group back to profitability.

As previously reported, under the restructuring, the 6 5/8% senior notes due 2021 issued by Grupo Isolux Corsán Finance BV will be replaced by new securities to be issued by the parent company.

The restructuring includes the injection of €200 million into the company via a new term loan.

Interest is at Euribor plus 500 basis points in cash and a further 500 bps in kind.

Existing bank and bond creditors will be rolled over into this second tranche.

The bond tranche will pay a coupon of 3% in the first two years and 6% in years three through five, according to a term sheet.

The loan tranche will pay interest at Euribor plus 225 bps in the first two years and Euribor plus 550 bps in the remaining three years.

Isolux Corsan’s remaining €1.2 billion of debt is considered non-sustainable. Of the total, €95 million will be converted into equity, a further €143 million will be a facility C convertible into equity and the remainder will be a profit-participating loan.

No interest will be paid in the first three years. For the final two years, interest will be 1%.

Along with the commercial efforts to increase its order book, Isolux said the group is reducing costs, especially overheads, in order to gain efficiency and adjust them to the conditions of the various markets in which it operates.

The company’s board has been composed of nine directors since the July restructuring approval application, including seven independent directors and two executive ones. The new chairman of the board is Nemesio Fernandez-Cuesta.

Isolux Corsan operates in energy, construction and industrial services. It is based in Madrid, Spain. The company filed for bankruptcy on July 29 in the U.S. Bankruptcy Court for the Southern District of New York under Chapter 15 case number 16-12202.

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