UPDATE 2: 8:54 a.m. ET 7/30/2020
: Intesa SanPaolo, Dexia, BBVA and Erste Abwicklungsanstalt (holding former WestLB exposure) have all traded out of Bluewaters Power’s A$384 million ($274.35 million) due Aug. 4 syndicated term loan, said two sources familiar.
The trades mean that 13 out of 15 lenders have sold their holds in the Western Australia based coal fired power provider, ahead of the imminent loan maturity.
Erste Abwicklungsanstalt held around A$31 million of the loan, BBVA around A$22 million, Intesa around A$28 million and Dexia around A$36 million, according to the sources.
The latest trades out of the debt stack were legacy European holders from an originally around A$1 billion mix of senior and mezzanine project financings, which was put in place in 2013 when Sumitomo Corp and The Kansai Electric Company Inc acquired Bluewaters Power out of administration, as reported
Today’s trades include a legacy WestLB hold, through Erste Abwicklungsanstalt, which was established in 2009 to take over and wind up WestLB exposure and non-strategic business and assets, according to the sources.
Remaining holders of the debt are said to be DZ Bank and SPT Infrastructure Finance, the sources said.
UPDATE 1: BNP Paribas, KBC Bank Sell ~A$18M Holds in Bluewaters Power’s A$384M Syndicated Loan UPDATE 1: 3:48 a.m. ET 7/30/2020
: BNP Paribas and KBC Bank have both sold their respective around A$18 million ($12.9 million) holds of Bluewaters Power’s A$384 million due Aug. 4 syndicated term loan in secondary trades, said three sources familiar with the matter.
BNP sold its hold directly via its trading desk to a hedge fund, said the sources. KBC Bank sold its hold to Bank of America Merrill Lynch, they added. Elliott Advisors was end-buyer of the KBC Bank piece, said two of the sources. Oaktree Capital Management and Davidson Kempner Capital Management have been reported as buyers of the debt, as reported.
The two latest debt trades continue the rapid exodus of long-standing European and Australian lenders to the West Australian coal-fired power provider, which has seen around 48% of the debt traded since late last week, based on Reorg’s reporting, with trades primarily through Deutsche Bank, BAML and SC Lowy to distressed debt funds, as reported.
Original Story 3:33 a.m. UTC on July 29, 2020OCBC Sells Bluewaters Power Loan Hold, Intesa Expected to Auction Today or Tomorrow; Standstill Anticipated With Maturity Next Week
Oversea Chinese Banking Corporation (OCBC) is the latest bank to sell its hold in Bluewaters Power’s A$384 million ($274.1 million) syndicated loan due Aug. 4, with Intesa SanPaolo also expected to sell its debt either today (July 29) or tomorrow, said three sources with knowledge.
OCBC had an around A$18 million exposure to the loan, while Intesa holds around A$28 million two of the sources said.
ANZ (A$36 million), Societe Generale (A$31 million), Bank of Ireland (A$28 million), National Australia Bank ($22 million) and Westpac Banking Corp (A$14 million) have all so far sold their exposure to the syndicated loan, all at pricing heard to be in the low 70s.
Combined with OCBC’s sale, around 40% of the debt has rapidly changed hands in a series of trades since Friday last week. Deutsche Bank, Bank of America Merrill Lynch and SC Lowy have all been involved in trades, as reported, but end-buyers are said to include hedge funds, including Oaktree Capital Management - which acquired the ANZ piece, as reported - and according to reports in Australian press, Davidson Kempner Capital Management.
With bank buyers potentially fronting for hedge funds, and an imminent maturity deadline approaching, two sources involved in discussions on refinancing the debt - talks which were in process before the secondary loan trades - said their expectation was for a standstill or forbearance period to be put in place in order to conduct negotiations.
Currently the names and plans of new holders of the debt are not known, the two sources said. While those plans could include a loan to own strategy or debt for equity swap, buyers of the debt could also profit from a quick return on their investments if the Bluewaters sponsors - Sumitomo Corporation and The Kansai Electric Power Corporation Inc - offer a higher price to buy back the debt than they have offered previously.
The sponsors opened their offer to buy back the debt at 50 cents on the dollar, but had upped that to around 66 cents on the dollar. However, buyers of the bank debt may have in mind a refinancing event on the same credit in 2015, when A$330 million of an originally around A$1 billion loan package used to acquire Bluewaters Power out of administration was refinanced through a corporate guaranteed intercompany loan from Sumitomo and Kansai Electric, as reported.
As reported, equity holder Sumitomo Corp had previously asked, in return for buying back the debt, to be treated pari passu with other lenders. Lenders also took a negative view of the unilateral exercise of step-in rights over coal supply from the Griffin Coal mines: while they were not in disagreement with the action, their consent was not acquired before the action was taken.