Altera Infrastructure and certain of its subsidiaries, a supplier of infrastructure assets to the offshore energy industry, executed a restructuring support agreement (RSA) with approximately 71% of Altera’s funded debt obligations, which includes Brookfield and a super-majority of its bank lenders. All in, the RSA has been signed, or agreed to in principle by, holders of 80% of its funded debt obligations, which includes approximately 91% of its bank lenders pending certain creditors’ internal credit approval processes. The terms of the RSA establish the framework for a consensual and comprehensive financial restructuring that will deleverage Altera’s balance sheet and best position Altera for long-term growth and success. To implement the balance-sheet restructuring, Altera has commenced a Chapter 11 process in the United States Bankruptcy Court for the Southern District of Texas.
The RSA contemplates, among other things, addressing more than $1 billion of secured and unsecured holding company debt, $400 million of preferred equity, and $550 million of secured asset-level bank debt (including unsecured guarantees of such debt issued by Altera Infrastructure), a comprehensive reprofiling of Altera’s bank loan facilities to better align cash flow with debt service obligations and the continued support of Altera’s equity sponsor, Brookfield. In addition, Altera has obtained a commitment from Brookfield for a $50 million debtor in possession financing to help fund Altera’s restructuring process and ensure ordinary course operations remain unimpaired during the Chapter 11 process.
In conjunction with the petitions Altera has filed a series of motions, which, once approved by the court, will enable the company to operate its business in the ordinary course without interruption. These motions will also allow Altera to continue to honor obligations to its employees, customers and suppliers on previously agreed upon schedules and terms on an uninterrupted basis.
“We enter into this phase of our balance-sheet restructuring with the support of the majority of Altera’s secured lenders and equity sponsor Brookfield,” Ingvild Sæther, CEO of Altera Infrastructure Group, said. “We are confident that this Chapter 11 process will result in a comprehensive recapitalization transaction that will not only stabilize liquidity, but also deleverage our balance sheet and better position Altera for future growth.
Kirkland & Ellis is serving as the company’s restructuring counsel, Jackson Walker is serving as local counsel, FTI Consulting is serving as financial advisor, Evercore Group is acting as investment banker and Stretto is acting as claims and noticing agent.
