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Bond issuers may wish to pursue an unmodified reverse Dutch auction for debt repurchases, an effective but underutilised transaction template that is gaining popularity.

By Francesco Lione, Tom D. Evans, David J. Walker, and Catherine Campbell

During the second half of 2022, amid ongoing market dislocation and as debt trading prices shrunk, paring back financial obligations by repurchasing debt at a discount became an increasingly attractive option for PE-owned businesses. Beyond the more commonly encountered issues that companies must navigate when embarking on debt repurchases (see Navigating Debt Repurchases in Europe: What You Need to Know), borrowers have taken a fresh look at liability management templates. Dealmakers have deployed unmodified reverse Dutch auctions with increasing frequency — a development that we see continuing to gain traction as long as the current economic slowdown and tight financing conditions persist.

By John Houghton and Marc Hecht

Latham lawyers, John Houghton and Marc Hecht, discuss insights gained from Latham’s work on major schemes of arrangement over the past few years, including Bibby Offshore, PrivatBank, DTEK, and Avangardco.

The Debtwire podcast covers many of the scheme considerations stakeholders face, with particular reference to DTEK’s hat-trick of schemes as well as the recent “loan to own” scheme in Bibby Offshore. The speakers also share their views on trends and potential challenges for…

By Aaron Franklin

The United States has the deepest, most liquid capital markets in the world, attracting issuers from across the globe. To sell to US investors, these issuers must comply with US securities laws, entailing a more rigorous diligence and disclosure process. Issuers must weigh the benefits of increased demand against the additional costs, but the outcome should not depend on whether the bonds will be green or otherwise have sustainability credentials.

The US securities laws that apply to bond deals include a variety of rules on who can issue and purchase bonds, such as the registration requirements in the Securities Act of 1933, the Trust Indenture Act of 1939, and the Investment Company Act of 1940. But the real concern for bond issuers and underwriters is the threat of investors claiming securities fraud under the Securities Exchange Act of 1934, using “Rule 10b-5.” In general, a plaintiff is entitled to damages under Rule 10b-5 if a bond issuer or underwriter misrepresented or omitted a material fact in connection with the purchase or sale of the bond, with the intent to deceive or with recklessness, and the plaintiff lost money by relying on that misrepresentation or omission. This right to litigate for “material omissions” does not exist in most other jurisdictions, even where contractual fraud claims are possible. To avoid lawsuits under Rule 10b-5, issuers and underwriters (and their legal counsel) typically spend more time and effort (relative to deals not sold to US investors) investigating the affairs of the issuer and ensuring the offering disclosure is sufficiently robust.

UK-based offshore and subsea oil & gas services company solidifies its position and completes ownership transfer to noteholders in major company milestone.

By John Houghton and Marc Hecht

The recent Bibby Offshore recapitalisation[1] is as fair and equitable a restructuring as the media has seen, offering creditors an example of what an effective restructuring requires. This case study exemplifies the key points that companies facing unpredictable market conditions must consider:

  • The correct restructuring solution
  • Deft management of shareholder dynamics
  • Careful handling of stakeholder expectations