On December 14, 2016, Tervita Corporation (“Tervita”), a leading environmental solutions provider, implemented its court-approved plan of arrangement under the Canada Business Corporations Act (the “Plan”). The Plan implemented a recapitalization transaction that resulted in a reduction of Tervita’s total debt from approximately $3.6 billion to approximately $475 million. The recapitalization transaction successfully decreased Tervita’s long-term debt, which will provide the company with greater flexibility and the working capital necessary to pursue new opportunities for growth.
The recapitalization transaction was implemented pursuant to a Support Agreement between Tervita and an ad hoc group of unsecured noteholders (the “Plan Sponsors”). The Plan involved, among other things, (i) the payment in full in cash of approximately $850 million in secured claims, (ii) the exchange of approximately $200 million in secured claims held by the Plan Sponsors for 48 per cent of the total equity value of recapitalized Tervita, (iii) the exchange of approximately $650 million in unsecured note claims for 2.5 per cent of the total equity value of recapitalized Tervita, (iv) the exchange of approximately $325 million in subordinated note claims for $25 million in cash, (v) a rights offering of up to $410 million in consideration for 48 per cent of the total equity value of recapitalized Tervita, which was fully backstopped by the Plan Sponsors, (vi) the cancellation of all existing equity in exchange for 20 per cent of the net proceeds of a certain litigation, (vii) an offering of 7.625 per cent senior secured notes due 2021 in the aggregate principal amount of US$360 million and (viii) the negotiation of a $200-million credit facility with a syndicate of lenders led by The Toronto-Dominion Bank as administrative agent. The senior secured notes were offered and sold in the United States to qualified institutional buyers and in the United States and Canada through a syndicate of broker dealers led by J.P. Morgan Securities LLC, and including Barclays Capital Inc., Deutsche Bank Securities Inc., CIBC World Markets Corp. and TD Securities (USA) LLC (the “Dealers”).
Tervita Corporation was represented by Rob Van Walleghem, QC, Kris Hildebrand and Steve Smyth.
Osler, Hoskin & Harcourt LLP acted as co-counsel to Tervita on the recapitalization transaction, senior notes offering and credit facility with a team led by Marc Wasserman and Michael De Lellis (restructuring/insolvency) and Andrea Whyte (corporate), which included Martino Calvaruso and Michael Shakra (restructuring/insolvency), Miju Damodar and Justin Sherman (corporate), Rob Lando (securities), Firoz Ahmed and Ted Thiessen (taxation), Colin Feasby and Melissa Burkett (litigation) and Lorne Carson, Martha Martindale and Bryce Kustra (corporate lending).
Fasken Martineau DuMoulin LLP acted as co-counsel to Tervita on the recapitalization transaction with a team led by John Grieve, which included Travis Lysak, Kibben Jackson, Danielle Toigo and Fergus McDonnell (insolvency), Michael Black (energy/corporate) and Brent Lewis (banking); and Canadian counsel to Tervita on the senior notes offering, with a team led by Sarah Gingrich and Georald Ingborg, which included Sandra Malcolm, Perry Feldman and Mitchell Barnard (securities), Jon Holmstrom and KC Miu (banking) and Clarke Barnes (tax).
In connection with the recapitalization transaction, Latham & Watkins LLP acted as Tervita’s US legal advisor and its financial advisor was Barclays Capital Inc.
Stikeman Elliott LLP acted as counsel for the Board of Directors of Tervita Corp. with a team that included Simon Romano, John Lorito and Lindsay Gwyer.
Bennett Jones LLP acted as counsel to the Plan Sponsors with a team led by Kevin Zych and Sean Zweig (restructuring/insolvency), which included John Mercury, Pat Maguire, Kris Hanc and Helen Cox (corporate/securities), Darcy Moch (tax), Chris Simard (litigation), Mark Rasile (corporate lending), Carl Cunningham (employment) and Brad Gilmour and Brandon Mewhort (environmental). Davis Polk & Wardwell LLP acted as US counsel to the Plan Sponsors with a team led by Damian Schaible, which included Steven Szanzer (restructuring/insolvency) and Kirtee Kapoor, Bryan Quinn and Donald Lang (corporate/securities). Moelis & Company LLC and Peters & Co. Ltd. acted as financial advisors to the Plan Sponsors.
Goodmans LLP represented the Ad Hoc Committee of Term Loan Lenders and Secured Noteholders with a team that included Robert Chadwick, Brendan O’Neill and Chris Armstrong (restructuring) and David Conklin (litigation).
In connection with the senior secured notes offering, the Dealers were represented in the United States by Simpson Thacher & Bartlett LLP with a team that included Art Robinson, Patrick Baron, Josephine Djekovic and Elisha Graff and in Canada by Blake, Cassels & Graydon LLP with a team that included Linc Rogers (insolvency), Aimee Yee and Jennifer Ruddick (banking), Catherine Youdan, Gerald Gaunt and Rob Seager (securities) and Bryan Bailey (tax).