Essar Global Fund Ltd, a part of Ruias controlled Essar group, has infused over $150 million through its affiliates into Trinity Coal Corp, to reorganise the US-based subsidiary which has coal mines in Kentucky and West Virginia.
With this, debt-laden Trinity Coal has also resolved more than $325 million of claims successfully which pulls it out of bankruptcy.
This in effect makes for a re-acquisition of Trinity Coal by Essar. The group had acquired Trinity Coal in March 2010 from energy and commodities focused PE firm Denham Capital for $600 million through its arm Essar Minerals.
However, a consortium of lenders to Trinity Coal approached a US bankruptcy court seeking appointment of a Chapter 11 trustee. They said they have lost faith in Essar’s ability to turn around the company.
In the US, under Chapter 11, a trustee is appointed to run the business as an interim move. When a firm enters bankruptcy proceedings it tries to get a chance to restructure the operations either by liquidating assets or getting fresh resources. Typically, the promoters let go of the asset and the proceeds from the asset sale is distributed among the lenders.
In this case, Essar decided to put fresh money which gave it 100 per cent of the common reorganised equity capital under the plan.
Trinity Coal was able to garner acceptance of the restructuring plan by 96 per cent of the creditors who voted, representing more than $326 million of aggregate claims on the firm.
Moelis & Company acted as the advisor and investment banker to Trinity Coal for the restructuring. Curtis, Mallet-Prevost, Colt & Mosle LLP, was Trinity Coal’s bankruptcy counsel in New York and Bingham Greenebaum Doll LLP was its counsel in Lexington, Kentucky.
“Trinity’s recapitalisation was facilitated by a dual-track global 363 sales process and standalone reorganisation plan that ultimately resulted in maximising the value to all Trinity stakeholders while enhancing the company’s liquidity and financial flexibility,” Moelis & Company's managing director Jared J Dermont said in the statement.
(Edited by Joby Puthuparampil Johnson)