Astaldi, the Italian multinational construction company, filed on Friday (28 September) for concordato in bianco. This is an in-court restructuring proceeding under the Italian Bankruptcy Law, which imposes a standstill period for up to six months. Astaldi's reference to certain provisions in the Bankruptcy Law indicates that it intends to use the standstill period to prepare for a concordato preventivo filing. Astaldi again delayed publication of its 30 June 2018 financial report, and said that it would voluntarily migrate from the "Star" segment of the Borsa Italiana to the general MTA segment. The full text of the announcement is available here.
Astaldi's 620m RCF matures in 2019, and its 750m bonds mature in 2020. Astaldi had previously announced a 300m capital raise plan, conditioned on the sale of its stake in the Third Bosphorus Bridge. This plan stalled after the sale was delayed amidst the recent economic uncertainty in Turkey. Astaldi announced that its new preliminary restructuring proposal contemplates a lease of its business units to two new Astaldi SPVs, new super senior funding and a capital raise.
In this report, we will discuss:
Key takeaways for bondholders; Concordato in bianco; and Concordato preventivo. Key takeaways for bondholders
Court-supervised standstill period: Under the court-supervised concordato in bianco proceeding, there is a standstill period for up to a maximum of six months. Management remains in place, but is under the supervision of a judicial commissioner. The standstill grants the debtor breathing space to negotiate its restructuring plan.
Bondholders can be bound in to the plan: Astaldi has announced it intends, ultimately, to file for concordato preventivo. This court-supervised process will take much longer to finalise than a debt restructuring agreement would have taken. But the concordato preventivo permits Astaldi to bind bondholders into the restructuring. This would not have been possible under the debt restructuring agreement provisions of the Bankruptcy Law. It can be seen as a sign that the company intends to include bondholders in its plan and deal with the 750m bond maturity in 2020.
Bondholder cram-down and priming risk: A concordato preventivo may be approved by a majority of the classes of creditors. Thus bondholders could be placed in a separate class, with the plan approved without their class's specific consent. In a separate class, bondholders could face adverse outcomes...