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HSH Delaware Files Reorganization Plan to Amend Agreement With Lenders
HSH Delaware GP LLC, a company created in 2006 along with affiliates to buy a part of German bank HSH Nordbank AG, filed a reorganization plan to repay lenders from selling the bank shares.
HSH Delaware filed for bankruptcy after failing to get lenders to refinance its credit agreement, according to court documents. It said it would use the bankruptcy process as a “breathing spell” to negotiate with the lenders and prevent the “fire-sale” of the HSH Nordbank shares.
The company, based in Wilmington, Delaware, listed as much as $500 million in both assets and debt in Chapter 11 documents filed Jan. 21 in U.S. Bankruptcy Court.
HSH Delaware and its affiliates were created to buy a 26 percent stake in HSH Nordbank, the world’s largest shipping financier, from WestLB AG for about 1.25 billion euros ($1.76 billion), court papers show. The purchase was partially funded by a 375 million euro loan ($477 million) from ABN Amro Bank NV.
J.C. Flowers & Co. advised HSH Delaware and its affiliates on the purchase. The company and its affiliates’ beneficiaries are primarily investors in J.C. Flowers Fund II, according to court documents.
Amending Terms
Under the proposal filed Aug. 13, HSH Delaware would modify its credit agreement with lenders, extending the maturities of the facility and amending the terms under which the HSH Nordbank shares could be sold. The amended credit agreement would give the lenders the right to demand payment of the amounts outstanding beginning Dec. 31, 2014. Unsecured creditors would be paid in full. The company wants to seek court approval of the restructuring plan at an Oct. 19 hearing.
“The transactions contemplated by the plan will settle all outstanding disputes with the lenders regarding the credit agreements,” lawyers for the company said in court papers. HSH Delaware believes the “proposed restructuring will maximize the value” of its assets “for the benefit of all stakeholders.”
Lenders, claiming to hold more than 99 percent of the total debt in the case, sought the appointment of a Chapter 11 trustee to take over and manage the bankruptcy case, court papers show.
The lenders argued HSH Delaware’s primary asset, the HSH Nordbank stock, was worth less than the debt, according to court documents. HSH Delaware challenged the lenders assertion, and said “the value of the Nordbank shares can be maximized so as to satisfy in full the lenders’ claims” and “provide a sizeable recovery for” equity holders. The lenders and the company agreed to postpone a hearing on the trustee pending the outcome of the plan.
The case is In re HSH Delaware GP LLC, 10-10187, U.S. Bankruptcy Court, District of Delaware (Wilmington).
To contact the reporter on this story: Michael Bathon in Wilmington, Delaware, at mbathon@bloomberg.net.
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