Stemcor Said to Seek Debt Extension as Goldman Plans Asset Sale
Stemcor Holdings Ltd. is asking lenders for more time to repay a $850 million loan as adviser Goldman Sachs Group Inc. (GS) prepares to market the company’s Indian assets for sale, according to two people with knowledge of the matter.
The London-based steel trader has asked lenders to extend a standstill pact expiring next week to Sept. 16, said the people, who asked not to be identified because negotiations are private. Goldman Sachs will draw up proposals to dispose properties including an iron ore mine, pipeline and steel plant.
Stemcor is seeking more time to repay the credit line it was unable to refinance before it matured this month amid falling sales and lower demand for steel. The company hired Zolfo Cooper LLP’s Simon Freakley as chief restructuring officer, people familiar with the matter said May 28, and met with lenders yesterday to disscuss a restructuring.
Stemcor will start reporting a 13-week cash forecast and more details of its inventories in order to become more transparent to its lenders, said the people. Some banks may seek more cash from the company’s majority owners, the Oppenheimer family, to inject equity into the business, the people said.
Charles Armitstead, a London-based Stemcor spokesman who works for Pendomer Communications LLP, declined to comment. Goldman Sachs spokeswoman Joanna Carss declined to comment on the bank’s advisory role or potential asset sales.
The Bank of N.T. Butterfield & Son Ltd. has accelerated repayment on mortgages on 11 of Stemcor’s properties as the lender has categorized the loan standstill agreement an event of default, the people said. The company is in discussions with Butterfield to resolve the acceleration, under which the bank is demanding a full repayment of the debt.
Mark Johnson, a Bermuda-based spokesman for Butterfield Bank, declined to comment on the mortgage debt.
Stemcor’s standstill, under which banks agree not to demand repayment of the loan for a specified period of time, also applies to a one-year $225 million loan raised by Stemcor’s Asian unit Stemcor SEA Pte Ltd., the people said.
Zolfo Cooper’s Freakley was hired as CRO of Hibu Plc (HIBU), the U.K. yellow pages publisher involved in a 2.1 billion-pound ($3.4 billion) debt restructuring, in December. Companies involved in debt restructuring processes often hire people from accountancy firms or advisory businesses to lead negotiations and help manage organizational changes.
PricewaterhouseCoopers LLP and Allen & Overy LLP are advising the banks, people familiar with the matter said May 28.
Stemcor reported a loss last year as sales fell to about 5 billion pounds from about 6 billion pounds a year earlier, according to a statement on its website. Reduced demand for steel in recession-hit Europe drove down the prices of hot-rolled coil, a benchmark steel product.
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