Ropes & Gray Acts for Mezzanine Lenders in Securing KCA Deutag Debt Restructuring Plan

Ropes & Gray recently advised certain mezzanine lenders to KCA Deutag oil services group (the “Group”), including funds managed by EIG Management Company LLC and GoldenTree Asset Management LP, in connection with the Group’s recent financial restructuring.  The Aberdeen, Scotland-based company is one of the largest international land drilling contractors outside the Americas. Houlihan Lokey Europe Limited acted as financial advisers to the mezzanine lenders.

The Ropes & Gray team was led by partner Jonathan Bloom. A team of U.S. colleagues supported the effort, including partners David Saltzman and Howard Glazer.

The restructuring saw cancellation of the Group’s US$585.9 million mezzanine facilities and an injection of US$550 million in new money from the mezzanine lenders and the Group’s incumbent sponsor, funds advised by Pamplona Capital Management LLC. The mezzanine lenders will hold 60 percent of the equity in the restructured Group, with the remainder held by Pamplona. The new money will be used in part to prepay the Group’s US$1.5 billion senior facilities and fund its ongoing capital expenditure and liquidity requirements.

The mezzanine lenders had initially put a proposal to the Group and its senior lenders for a mezzanine-led restructuring, implemented through an innovative creditor-led scheme of arrangement, before agreeing to terms with Pamplona near the end of January. The subsequent joint proposal was accepted by the vast majority of the senior lenders in early February and implemented through an administration sale of the assets of the mezzanine borrower, Turbo Beta plc, on 30 March 2011.

“We’re delighted to have assisted the mezzanine lenders in such a complex restructuring.  Asset managers and hedge funds continue to serve as a viable source of liquidity in the primary and secondary markets, and we remain committed to actively representing them and their interests,” said Mr. Bloom.

The firm has handled a number of recent high-profile transactions, including representing:

• Liberty Global Inc. in connection with the financing for its approximate €3.16 billion (US$4.48 billion) acquisition of Germany's third-largest cable TV operator Kabel BW Erste Beteiligungs GmbH, from Swedish private equity group EQT Partners AB;
• Sankaty Advisors and GoldenTree Asset Management, as Euro note purchasers in connection with the issuance of €110 million eight-year senior secured notes that refinanced the debts of the world's largest specialty alumina products producer, Almatis, resulting in the company's exit from bankruptcy;
• AMP Capital Investors, AXA Mezzanine, CELF Investment Advisors, CVC Cordatus, European Capital, European Credit Management, GSC European CDO, MV Credit as second lien and mezzanine lenders in connection with the negotiation with Carlyle (as sponsor) of the financial restructuring of the French/US group Zodiac Marine & Pool Group;
• Telenet Finance III Luxembourg S.C.A. and Telenet Group Holding N.V. on the issuance of €300 million 6⅝ percent senior secured notes due 2021;
• TPG Capital on its US$1.6 billion acquisition of Ontex N.V.; and
• Berkshire Partners US$1.1 billion acquisition of Skillsoft plc.

Ropes & Gray, a global law firm with more than 1,000 lawyers and professionals, has been recognized as having one of the world’s leading private equity practices. The opening of Ropes & Gray’s London office marked the firm’s fourth move into key geographic markets in the past two years, following openings in Tokyo, Hong Kong and Chicago, which allows the firm to serve clients from bases in major world private equity and finance centers and to provide global execution of transactions.