Financial advisor to FMS Wertmanagement (FMS), the German government’s wind-up institution, in its capacity as creditor in the restructuring of the complex £1.6bn credit structure of the main PropCo of private hospitals let to and operated by the OpCo BMI Healthcare which was the largest private hospital operator in the UK.
Financial advisor to FMS in its capacity as the largest single creditor in the second restructuring of the same credit structure. We were subsequently instructed by FMS to run a sales process of its c.£430m exposure.
The PropCo debt was one of the most complex structures seen in the European real estate space, comprising multiple tranches across two CMBS transactions and various loans as well as interest rate swaps. The large number of creditors, the nature of these counterparties, and the potential conflicts of interest created by various cross-holdings across the credit structure created additional complexity. The PropCo creditors took over ownership when the debt failed to repay in 2013, and this was followed by restructuring negotiations between senior and junior PropCo creditors. The client was in both camps and, despite forming part of the co-ordinating committee of junior creditors advised by another investment bank, the client engaged us to provide it with separate, independent advice on the restructuring.
Following the first restructuring, a new rent deal was meant to be negotiated between the OpCo tenant and the PropCo, however these negotiations failed leading to a second restructuring of the PropCo, and we were engaged again by FMS but this time to advise exclusively on the restructuring negotiations.
- We successfully navigated our client through the complex restructuring negotiations (over a c.2-year period) and were instrumental in protecting the client’s junior debt positions, which were key to achieving its objective of maximising recoveries.
- This included negotiating a >25% stake in a new, higher-ranking loan tranche, providing it with certain entrenched rights, including in light of potential future restructurings.
- During the restructuring negotiations, we were also appointed by the loan servicer acting on behalf of senior creditors, to place c.£250m of new super-senior debt in the structure.
- We successfully navigated our client through the complex restructuring negotiations a second time, making use of the voting protections created as part of the first restructuring.
- This included the negotiation of preferential equity-like consent and control rights not available to other creditors in the structure (including over the OpCo, that was taken over as part of the restructuring). The transaction also involved amendments to the leases to OpCo (including reductions in rent but increases in the lease term), a recapitalisation of OpCo and additional tranches of new money debt.
- Following the completion of the restructuring the combined OpCo and PropCo were sold triggering a repayment of the debt.