Tue 10/12/2021 07:57 AM
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Moby is in negotiations with its bank lenders and the judicial commissioners of Tirrenia AS, a company in extraordinary administration, to find an agreement on the Italian shipping group’s restructuring plan, sources told Reorg. Moby’s subsidiary CIN owes €180 million in unsecured debt (deferred payment) to the Italian state for the acquisition of Tirrenia in 2012, at the time of its privatization.

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At the end of September, Moby entered into a non-binding memorandum of understanding (MoU), with an ad hoc group of bondholders comprising Cheyne Capital, Aptior Capital and BlueBay. The group holds more than 33% of the outstanding amount of the company's €300 million 7.75% senior secured notes due 2023, which are now quoted at 53.

According to the MoU, the ad hoc bondholders group would be available to provide the company new super senior money in the range of €50 million to €75 million, although the amount can change depending on the performance of the business and the negotiations with other creditors, sources said. All Moby’s creditors would be allowed to take part in the new money provision, sources added.

In regard to the company’s governance, one of the most problematic aspects of the negotiations with creditors, sources told Reorg that the Onorato family, which founded and runs the company at the moment, will still be involved in the day-to-day operations of the business, although some governance mechanisms of the group will change too. In this regard, Moby’s founder Vincenzo Onorato announced yesterday evening that he will resign as president of the group, reiterating that his companies are “solvent.”

Should the company find an agreement with its bank lenders and Tirrenia AS, it may proceed to a revision of the terms of its previous concordato plans, sources said.

Moby’s concordato will need to be approved by a simple majority of the company’s creditors (and of its classes). If Moby doesn’t secure an agreement with its creditors, the company may file for extraordinary administration, an insolvency procedure applicable to large-scale businesses with significant indebtedness which are taken over by Italy’s Ministry of Economic Development.

According to Italy’s bankruptcy law, competing concordato proposals can be presented by creditors holding at least 10% of the company’s debt only if the shareholder’s proposal doesn’t imply a recovery of at least 30% for unsecured creditors.

According to the last version of the company’s concordato, filed in mid-June, secured financial creditors would get a 9% recovery, down from the previous 13% to 19% recovery, on the part of their credit not covered by the value of the fleet, which is the bonds’ collateral. The recovery of other unsecured creditors would drop to 12% from the previous 15%.

Under that plan, the governance of the company would be “strengthened” while the main stakeholder Vincenzo Onorato will inject €6 million (versus the previous €2 million) in the group, which will be allocated to creditors. Also, Moby’s tugboat division will have to be sold before year-end, with proceeds placed in an escrow account and distributed to creditors after the homologation of the restructuring process. To read about the previous version of Moby and CIN concordato plans, click HERE and HERE.

In July, Moby’s board of directors changed with the appointment of Roberta Casali and Lanfranco Senn as new independent members. Meanwhile, CIN’s shareholders appointed a new board of directors composed of Pietro Maria Putti as chairman, Massimo Mura and Matteo Savelli as directors, and Giuliano Lemme and Andrea Maria Azzaro independent directors.

According to a previous version of Moby’s workout plan, from February 2021, the company envisaged the creation of a new shipco, with the participation by the fund Europa Investimenti, which would buy the group’s fleet and lease it back to Moby, as well as the sale of about eight vessels of Moby’s and CIN’s fleet in five years’ time. The proposal was rejected by the company’s ad hoc group, which sent a counterproposal at that time, whose details can be found HERE.

A later version of the plan, filed in April 2021 and now discarded, saw Europa Investimenti acquiring CIN’s fleet (excluding vessels Beniamino Carnevale and Isola di Capraia) and repaying CIN’s secured creditors with €77 million, which correspond to the value of CIN’s assets used as collateral for the company’s debt. The plan also contemplated the discharge of the mortgage security on the company’s ships and the subsequent leaseback of the fleet to CIN through a bareboat agreement. This concordato’s original idea was to have CIN finally buy back a portion of the fleet while the rest would have been sold by Europa Investimenti in the market.

As reported, founder Vincenzo Onorato and CEO Achille Onorato are under investigation for alleged fraudulent bankruptcy in the court of Milan. The investigation focuses on about €12 million of private expenses which have been allegedly conducted using the company’s money and might have contributed to its financial distress. The expenses concern the purchase of a house and the lease of an aircraft and some cars, the reports state. Other expenses include some financing to political parties.

Meanwhile, Moby sued bondholder Antonello Di Meo, Morgan Stanley and Morgan Stanley employees Massimo Piazzi and Dov Hillel Drazin in the Southern District of New York for “attempting to illegally acquire control” of the Italian ferry company and its Italian concordato by purchasing a controlling stake in Moby’s bonds at a “substantial discount using inside information.” The company also sought an injunction barring the defendants, which Moby says hold 26.33% of senior secured notes, from “acquiring, selling or otherwise trading any notes issued by Moby,” “attaching any Moby assets” or “otherwise interfering with Moby’s restructuring,” which the company says will soon include a chapter 15 filing in the U.S.

In support of these allegations, Moby relied on “recordings of conversations by Di Meo and Morgan Stanley” with an unnamed “global third-party investigative services firm” between May 19 and Aug. 22. Transcripts of these recordings are attached as an exhibit to a declaration from Moby’s counsel, with excerpts quoted in Moby’s memorandum.

On Oct. 3, Moby withdrew its application for a temporary restraining order and preliminary injunction. In February 2021, Moby filed a similar lawsuit against its ad hoc bondholder group at that time in New York State Supreme Court, which was also subsequently withdrawn.

Moby filed for creditor protection under concordato in bianco on June 29, 2020. The company is advised by PwC and Gianni Origoni Grippo Cappelli & Partners. The ad hoc bondholder group is working with Houlihan Lokey, Chiomenti and Gatti Pavesi Bianchi as financial and legal advisors, respectively. Moby’s bank lenders hired KPMG as their financial advisor and Gattai Minoli Agostinelli & Partners as their legal advisor.

On Sept. 10, 2019, Moby’s ad hoc bondholder group filed a bankruptcy petition in the Bankruptcy Court in Milan alleging that the company would not be able to pay the full amount of the notes due in February 2023. The court subsequently dismissed the petition and ruled that Moby was not insolvent, as reported. However, the judge added that the company would need to be closely monitored and called for a financial restructuring of the group.

The group’s capital structure as of September 2019 is below:








































































































































































Moby


09/30/2019

EBITDA Multiple

(EUR in Millions)

Amount

Price

Mkt. Val.

Maturity

Rate

Yield

Book

Market


Senior Secured Bank Debt Incl. RCF 1

171.4


171.4

Feb-2021

Euribor + 3.000%


€300M Senior Secured Notes

294.4


294.4

Feb-2023

7.750%


Total Secured Debt

465.8

465.8

4.8x

4.8x

Unsecured Deferred Payment for Tirrenia

180.0


180.0




Other Financial Liabilities

3.5


3.5




Total Other Debt

183.5

183.5

6.6x

6.6x

Total Debt

649.2

649.2

6.6x

6.6x

Less: Cash and Equivalents

(56.2)

(56.2)

Net Debt

593.0

593.0

6.1x

6.1x

Operating Metrics

LTM Revenue

606.8

LTM Reported EBITDA

97.7


Liquidity

RCF Commitments

60.0

Less: Drawn

(59.0)

Plus: Cash and Equivalents

56.2

Total Liquidity

57.2

Credit Metrics

Gross Leverage

6.6x

Net Leverage

6.1x

Notes:
1. In February 2019, Moby repaid €50M of the senior bank debt under the terms of the Credit Facility Agreement



--Luca Rossi
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