Max Two updates holders of 5.7% notes due 2024 of financial position

By Marisa Wong

Los Angeles, Dec. 23 – Max Two Ltd. issued a notice to holders of its €100 million 5.7% secured notes due 2024 (ISIN: XS0201817292) to update holders on developments with the company’s financial position.

In response to the non-payment of the scheduled principal payment and scheduled coupon payments that were due on the interest payment dates falling on March 30, 2022 and Sept. 30 and as disclosed in the announcement dated July 15, the issuer has been undertaking a review with its advisers of its financial position, as well as its rights and obligations under the notes.

Since the non-payment of principal and interest originally due on March 30, 2022, the issuer has engaged with noteholders representing about 80.1% of the principal amount outstanding, according to Friday’s notice.

As part of the review, the issuer has identified that it had not received payment in full of some break costs payable to it as a result of the early prepayment of some windfarm loan agreements. Taking into account the accrued interest received by the issuer with respect to the early prepayment of each of those loans, the issuer estimated that the outstanding amount of break costs not received was €2,170,111.21.

The issuer said it also identified over-payments to noteholders relating to the early prepayment of some other windfarm loan agreements during the period from April 2016 to March 2020, which have in part contributed to the shortfall between the issuer’s assets and its liabilities to noteholders. The issuer has calculated that the sum of these over-payments is in aggregate €318,866.02.

On Dec. 22, the issuer received an aggregate amount of €2,024,955.54, representing the unpaid break costs for loans advanced to the Marao borrower, the Montemuro borrower and the Penedo Ruivo borrower. This amount has been credited to the cash pooling account.

The issuer said it has not yet received the unpaid break costs for the working capital facility agreements advanced to those same three borrowers.

The issuer said it continues to liaise with noteholders to recover the break costs not yet received in order to maximize funds available to discharge secured claims.

As of Dec. 22, accrued but unpaid transaction costs amount to roughly €1.1 million, and the amount standing to the credit of the cash pooling account is €5,230,845.11.

Based on the above, the directors of the company believe that there remains a shortfall between the issuer’s assets and its liabilities to noteholders.

As a result of the continuing event of default under the notes, a trigger event is also continuing under the cash management agreement, and accordingly withdrawals from the cash pooling account may only be made by the issuer upon the instruction of the trustee or the collateral agent.

After receipt of the break costs described above, the issuer and noteholders now intend to take steps to apply the amounts standing to the credit of the cash pooling account to redeem the notes early and discharge accrued but unpaid transaction costs.

The issuer said it will make further announcements to noteholders on the timing and process to achieve such settlement, including the convening of a noteholder meeting to consider and, if appropriate, approve an extraordinary resolution approving the terms of that settlement and the amounts payable to noteholders and other creditors.

Max Two is a fund based in St. Helier, Jersey.

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