Thu 09/10/2020 06:49 AM
About €90 million of French pipe manufacturer Vallourec’s €1.724 billion RCF traded in the low 60s yesterday, sources told Reorg. More supply of Vallourec’s bank debt is likely to come to market next week, sources added. The company’s RCF matures in February 2021. Continue reading for the EMEA Core Credit by Reorg team's update on the Vallourec financial restructuring, and request a trial to access Reorg's coverage of thousands of other financial restructurings. 

The group is seeking lenders' consent to appoint a mandataire ad hoc without this constituting an event of default. The mandataire would facilitate negotiations with all stakeholders of the group. Management told Reorg it aimed to complete its debt restructuring talks by February, to coincide with the RCF maturity.

The bondholders currently hold the right to choose whether or not to waive the event of default under their indenture that would be triggered by the appointment. The bankruptcy event of default would cause the notes to be immediately accelerated, without need for noteholder instruction, however a simple majority of noteholders could waive the event of default. The bondholders therefore hold a key negotiation power and are in a tricky position as to whether they should waive the event of default without getting anything in return or risk potentially not having a seat at the table during reconciliation talks.

A small group of hedge funds that previously bought a significant portion of Vallourec’s RCF is working with Houlihan Lokey and Gibson Dunn, as reported. Hedge funds including Bybrook, Apollo, SVP and Sculptor have been buying into the bonds. Sculptor also has cross-holdings with the RCF.

Vallourec’s €550 million 6.625% notes due 2022 are quoted at 49. The company’s capital structure is below:

Vallourec financial restructuring capital structure from EMEA Core Credit by Reorg

-- Connor Lovell, Aurelia Seidlhofer
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