Ropes & Gray Advises on Towergate Restructuring and Acquisition of Majority Stake by Unsecured Noteholders

Ropes & Gray has advised the ad hoc committee of holders of Towergate Finance plc’s New York law-governed 10.5% senior unsecured notes in connection with the restructuring of the Towergate Group’s c. £1.05bn debt obligations and related acquisition by senior unsecured noteholders of more than 80% of the equity of the restructured Group. The members of the ad hoc committee were Highbridge Principal Strategies, LLC, KKR Credit Advisors (US) LLC and Sankaty Advisors, LLC. Towergate is Europe’s largest independently owned insurance intermediary.

The restructuring was the outcome of intensive negotiations among the Towergate Group’s stakeholders undertaken in light of the expectation that the Group would default under its debt obligations in February 2015. Initially, the Group announced a restructuring it had agreed with its senior secured creditors which, if implemented, would see them take ownership of the restructured Group. Within days, however, the ad hoc committee of senior unsecured noteholders successfully reached agreement with the Group and senior secured creditors on the terms of a substitute “composite” restructuring that would see senior unsecured noteholders acquire more than 80% of the restructured Group in exchange for a new money investment of close to £300 million.

The composite restructuring has been implemented pursuant to parallel English law schemes of arrangement for senior secured creditors and senior unsecured noteholders which were sanctioned by the English High Court and obtained Chapter 15 recognition from the U.S. Bankruptcy Court on March 27, 2015. Uniquely, the senior secured scheme provided for different outcomes depending on whether conditions to the composite restructuring, including FCA approval, were satisfied. As such conditions were satisfied, the composite restructuring successfully completed on April 2, 2015. 

Pursuant to the composite restructuring, the senior unsecured notes have been fully equitized and the claims of senior secured creditors exchanged for a combination of equity, replacement debt and cash. In addition to the new money investment by senior unsecured noteholders, senior secured creditors have injected new money in the form of new £75 million super senior notes. The restructuring and related new money investment has resulted in a significantly deleveraged capital structure and additional liquidity for the Towergate Group.

Ropes & Gray deployed a multidisciplinary cross-office team, which included London-based counsel Andrew Howard (tax) and Boston-based partners Craig Marcus (corporate) and David Saltzman (tax) and counsel Deidre Johnson (antitrust).

Houlihan Lokey provided financial advice to the senior unsecured ad hoc committee. The Towergate Group was represented by Linklaters and Rothschild, and senior secured creditors were represented by Sullivan & Cromwell and Moelis.

The transaction is the latest in a series of domestic and international special situations transactions undertaken by Ropes & Gray’s London office, including the financial restructurings of Samos Servicios y Gestiones, Peermont Group, LDK Solar, Suzlon Energy, Barchester Healthcare, McCarthy & Stone, Ainscough Crane Hire and KCA Deutag, the acquisitions of the Lundy and Cooper loan portfolios from Lloyds Banking Group, and the distressed acquisitions of Avant Homes and New Century Care Group.