DIC is challenging Oaktree plan to seize control of Almatis after unit violated loan terms.
Dubai International Capital got a boost in its efforts to keep its Almatis alumina making unit, with backing for a $685 million debt refinancing that would repay senior lenders including Oaktree Capital Management.
Dubai International is challenging a plan by Oaktree, the biggest of Almatis’s senior lenders, to seize control of Almatis after the German unit violated loan terms last year.
JPMorgan Chase & Co and Bank of America Merrill Lynch are preparing final term sheets and underwritten commitments for $350 million of senior secured notes and a $50 million revolving credit, Dubai International said in a letter yesterday to the company’s senior lenders.
At the same time, Blackstone Group LP’s unit GSO Capital Partners LP has agreed to arrange $185 million of senior subordinated securities and plans to manage the sale of another $100 million of senior secured debt for Frankfurt based Almatis, the company said.
Dubai International, an investment fund owned by Dubai’s ruler, is urging Almatis’s senior lenders to vote against the restructuring plan proposed by Los Angeles based Oaktree.
The UAE based fund is seeking to retain its controlling stake in Almatis by repaying all $675 million in senior loans, while giving equity to junior lenders in return for canceling their debt.
In a letter, Anand Krishnan, chief executive officer, Dubai International, said: “The refinancing proposal seeks a consensual outside of bankruptcy deal that avoids a lengthy and expensive contested Chapter 11 process."
Dubai International said it also plans to inject $100 million of capital into Almatis as part of the refinancing proposal, according to the letter.
Almatis breached its debt covenants last year as the global economic slowdown hurt demand for its products.
Oaktree, the biggest senior lender, rallied support in July for a takeover after the debt breach. Lenders to a company that violates loan conditions can demand immediate repayment.
Two thirds of senior lenders to Almatis in March have already voted in favor of Oaktree’s proposal to take over the company in exchange for writing down more than half its debt.
Oaktree’s plan would cut Almatis’s debt to about $420 million and give it protection from other creditors under Chapter 11 of the US bankruptcy code.
A Dutch court earlier this month ruled against Dubai’s petition to prevent Oaktree from seizing Almatis in a debt restructuring.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.