Nova Austral files reorganization proposal; creditors meeting Thursday

By Marisa Wong

Los Angeles, Nov. 8 – Nova Austral SA issued an update on Wednesday relating to the judicial reorganization proceeding before the Court in Porvenir in Chile first announced on June 2.

The company said it has now filed a revised reorganization agreement with the court.

Background

As the company previously communicated, the financial creditors of the company have been unable to agree on a consensual restructuring proposal. As a result, the company requested the initiation of judicial reorganization proceedings in Chile on June 21, and the court issued the reorganization resolution on July 7.

On Aug. 1 the company presented its first draft of the restructuring plan, which was supposed to be voted at a creditors’ meeting to be held on Aug. 16. The court subsequently postponed the creditors’ meeting on multiple occasions; as of Oct. 26, the next meeting was pushed to Nov. 9.

The company said it has subsequent to the Oct. 26 meeting continued its dialogue with key creditors and made further amendments and revisions to the proposal for a reorganization agreement under the reorganization proceeding in close corporation with those key creditors, and the revised reorganization agreement has now been filed with the court.

Terms of proposal

The main terms of the revised reorganization agreement are as follows for the various classes of creditors:

For secured financial creditors:

• All outstanding amounts under the existing secured bonds of the company will be discharged in full;

• Credits under the existing secured revolving credit facilities of the company will be divided into two tranches, the revolving credit tranche and the subordinated tranche;

• All outstanding amounts under the subordinated tranche will be discharged in full;

• The amounts under the revolving credit tranche will be further divided into two tranches, a tranche A in the amount of $25 million and a contingent tranche in the amount of $30 million;

• Tranche A will be rescheduled with a single installment with maturity on April 30, 2027, bearing interest of 10% per annum, payable quarterly in kind. Tranche A will be secured with the same collateral and guarantees from the company’s subsidiaries as the existing secured revolving credit facility;

• The contingent tranche will be rescheduled into a bullet maturing on Nov. 30, 2122, however, contingent on certain mandatory repayment events. The contingent tranche will be subordinated to tranche A, not accrue interest and be unsecured; and

• A working capital financing of up to $15 million, where the secured financial creditors will have preferential right to participate. The working capital financing will be paid in full on Nov. 30, 2026 and accrue fixed interest at the rate of SOFR plus a margin of 300 basis points, payable semiannually on a “pay-if-you-can” basis. The working capital financing commitment will be underwritten by a group of lenders, which in exchange will be entitled to acquire 5% of the company’s shares.

For secured feed suppliers:

• Partial capitalization of 45% of debt, and the creditors will receive equivalent to 5% of the company’s shares, awarded to each creditor pro rata on their participation;

• Remaining outstanding debt to be rescheduled with a revised payment plan over five years, bearing no interest; and

• Existing biomass collateral to remain in favor of the secured feed suppliers.

As for unsecured creditors, for those unsecured creditors classified as critical for the company’s business, the total amount of credit shall be rescheduled in 30 equal and successive monthly instalments, the first of which shall be paid on the 10th day of the month following the sixth month from the effective date of the reorganization agreement.

The remaining unsecured creditors will be presented to alternatives. Either (i) a payment of 100% of the outstanding debt, limited to $20,000 with all surplus amount being deemed canceled, or (ii) discharge of 70% of the outstanding debt, with the remaining 30% to be paid after 10 years from the effective date of the reorganization agreement.

In consideration of the financing commitments and obligations assumed by the financing creditors, the shareholders of the company undertake to transfer 45% of the company’s shares to the tranche A creditors, 50% of the company’s shares to the backstopping lenders under the new working capital facility and 5% to the secured feed suppliers.

The company said it encourages any stakeholder to review the revised reorganization agreement in full.

The result from the creditors’ meeting will be made public once it has been adjourned.

Further information can be obtained from chief executive officer Nicolas Larco (nicolas.larco@novaustral.cl).

The salmon farmer is based in Chile.

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