Investor Presentation
Risk factors (cont'd)
If a subsidiary, which shares have been pledged in favour of the Secured Parties is subject to any foreclosure, dissolution, winding-up, liquidation, recapitalisation, administrative or other bankruptcy or insolvency proceedings, the shares
that are subject to such share pledge may then have limited value because all of the subsidiary's obligations must first be satisfied, potentially leaving little or no remaining assets in the subsidiary for the Secured Parties. As a result, the
Secured Parties may not recover full value (or any value in the case of an enforcement sale) of the shares. In addition, the value of the shares subject to pledges may decline over time.
Furthermore, the value of the intercompany loans, which are subject to security in favour of the Secured Parties, is largely dependent on the relevant debtor's ability to repay such intercompany loans. Should the relevant debtor be
unable to repay its debt obligations upon an enforcement of a pledge over the intercompany loan, the Noteholders may not recover the full or any value of the security granted over the intercompany loan.
If the proceeds of an enforcement are not sufficient to repay all amounts due under or in respect of the Notes, then the Noteholders will only have an unsecured claim against the Company and its remaining assets (if any) for the
amounts which remain outstanding under or in respect of the Notes.
Corporate benefit limitations in providing security and guarantees for third parties
Some of the security granted pursuant to the Terms and Conditions is granted by subsidiaries of the Company. If a limited liability company guarantees or provides security for another party's obligations without deriving sufficient
corporate benefit therefrom, the granting of the guarantee or security will require the consent of all shareholders of the grantor and will only be valid up to the amount the company could have distributed as dividend to its shareholders at
the time the guarantee or the security was provided. If no corporate benefit is derived from the provided guarantee or security, such guarantee or security will be limited in validity. Consequently, the security granted by a subsidiary of
the Company could therefore be limited, which would have an adverse effect on the Secured Parties' security position.
Risks related to the intercreditor arrangements
The Company have incurred additional debt under a super senior revolving credit facility (the "Super Senior RCF") which, in accordance with the terms of the Intercreditor Agreement (as defined below), ranks senior to the Notes.
Further, the Company may incur certain additional financial indebtedness which will benefit from the same security and hence rank pari passu with the Notes. The relation between the Secured Parties is governed by an intercreditor
agreement (the "Intercreditor Agreement") between, among others, the Company, the Security Agent and the Secured Parties.
The Security Agent shall take enforcement instructions primarily from the agent (representing the Noteholders) (the "Agent"). However, if the Agent wish to take enforcement actions, consultation with the other Secured Parties must (if
not agreeing upon the proposed enforcement actions) first take place for a period of 30 days after which the Agent (representing the Noteholders) may instruct the Security Agent to take such actions. The other Secured Parties may
thus delay enforcement which in the Noteholders' view is necessary. Furthermore, it is possible that the Security Agent will act in a manner that is not preferable to the Noteholders. In some situations (for example where another
Secured Party has requested enforcement actions to be taken but the Noteholders have not provided any enforcement instruction to the Security Agent within three months after the end of the 30 day consultation period, or where the
Noteholders' requested enforcement actions have not resulted in any enforcement proceeds becoming available for the Security Agent), the other Secured Parties may give enforcement instructions to the Security Agent.
If the outstanding obligations of the Group towards other Secured Creditors than the Noteholders increase, there is a risk that the security position of the Noteholders is impaired. Furthermore, there is a risk that the security will not at all
times cover the outstanding claims of the Secured Creditors.
The Intercreditor Agreement also contains provisions regarding the application of proceeds from an enforcement of security where any agent will receive payments first, secondly any creditor under any super senior debt (including
liabilities under super senior hedges), thirdly any creditor pro rata under any senior debt (including the Noteholders) and lastly any creditor under any shareholder, intercompany and subordinated debt. There is a risk that the
enforcement proceeds will not be sufficient in order for the Company to satisfy the waterfall provisions above.
Subject to the prior consent of the agent representing the RCF Creditor, the pledged intragroup loans may be converted to equity and/or repaid and therefore released from the transaction security. Since the Noteholder will receive
proceeds from any enforcement only after the obligations of the RCF Creditor and any hedging providers secured on a super senior basis have been repaid in full, there is a risk that the agent representing the RCF Creditor consents to
such conversion or prepayment in a manner that may be detrimental to certain Noteholders and their interests, resulting in the Noteholders losing a direct claim against the relevant debtor under such intragroup loan.
Security over assets granted to third parties
The Group may, subject to certain limitations from time to time, incur additional financial indebtedness and provide additional security for such indebtedness. If security is granted in favour of a third party the Noteholders will, in the event
of bankruptcy, reorganisation or winding-up of the Company, be subordinated in right of payment out of the assets being subject to security provided to such third party debt provider. In addition, if any such third party debt provider
holding security provided by the Group were to enforce such security due to a default by any Group Company under the relevant finance documents, such enforcement could have a material adverse effect on the Group's assets,
operations and, ultimately, the financial position of the Noteholders.
SUPPORTING MATERIALS | POLYGON 55View entire presentation