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COURT: Nova Austral presents restructuring plan focused on debt-for-equity conversion

Nova Austral has presented its debt restructuring plan at the Juzgado de Letras y Garantias de Porvenir, in Porvenir, Chile, according to a court document.

The Chilean-based Norway-listed salmon farmer’s main proposal to secured financial creditors is a debt-to-equity conversion.

The company is proposing a USD 486m capital increase, through the issuance of 772m of new shares, according to the plan.

Part of the new shares will be subscribed by DNB Bank, which will convert its debt into 357m shares, with a proportion of five shares per USD 1 in credits.

Bondholders will have the right to convert their credits into 415m new shares, at a proportion of one share per USD 1 in claims.

Nova Austral reported USD 559.7m in debt in its bankruptcy protection request (reorganizacion concursal) filed on 20 June, after it failed to finalize an out-of-court restructuring agreement.

Of the total debt, 86.5% is in the hands of two creditors. Nordic Trustee, the trustee of the bonds issued by the company, is the largest creditor, with USD 415.5m, followed by DNB Bank, with USD 69.1m, as reported.

Nova Austral’s original USD 300m 8.25% 2021 bond was extended to 2026 and divided into two tranches during a 2020 out-of-court restructuring, as reported.

The current shareholders will sell their shares in two subsidiaries – Nova Austral Spain and Albain Holdco – to the two creditors.

If secured creditors opt to not convert debt into equity, the company will start a sale process. The credits would be paid in a single installment, on 31 August 2023, with the proceeds of the sale, according to the plan.

Nova Austral also intends to raise a USD 20m debtor-in-possession (DIP) facility to obtain funding to maintain its businesses. The first tranche of the DIP facility, totaling USD 5m, will be offered to the company 30 days after the capital increase. The second, of USD 15m, within 60 days after the capital increase.

The DIP loan will be repaid on 31 December 2027 in a single installment. The 4% interest rate will be paid annually, starting on 31 January 2024.

creditor meeting is scheduled to occur virtually at 9am local time on 16 August.