![]() The Trustee focused on the covenant in the indenture that prohibits the Company from incurring additional debt. The Trustee alleged that (1) consummating and closing the transactions contemplated by the QSF Exchange Offer would cause irreparable harm to holders of the Secured Notes, and (2) the Secured Notes trustee would more likely than not succeed on the merits in a claim that the Exchange Offer and the issuance of the QSF Notes violates the terms of the indenture governing the Secured Notes. The trustee for holders of the Secured Notes (the “ Trustee”) filed suit against Parent, Company and the subsidiary guarantors initially seeking a preliminary injunction against the QSF Exchange Offer. The QSF Exchange Notes were to be guaranteed by Parent and would be secured by certain receivables of the subsidiary guarantors that do not otherwise secure the Secured Notes. Among other things, the consideration payable in exchange for each series of Parent Notes included new senior secured notes to be issued by the Company in aggregate principal amount of €110,000,000 (the “ QSF Exchange Notes”). In January 2016, after struggling to execute on earlier attempts to refinance the Parent Notes given their near-term maturities, Parent and the Company launched an exchange offer (the “ QSF Exchange Offer”) to the holders of the Parent Notes. The Secured Notes benefit from guarantees of Parent and certain subsidiaries of the Company and are secured by all share capital issued by any subsidiary that is a guarantor and certain assets of the subsidiary guarantors. The Parent Notes do not have the benefit of any collateral or guarantees and have no obligors other than the Parent. In addition, in February 2015 the Company issued €290,000,000 senior secured notes due 2019 (the “ Secured Notes”). Parent is the issuer of two series of senior unsecured notes: €121,421,000 senior notes due 2016 (the “ 2016 Notes”) and €218,106,000 senior notes due 2017 (the “ 2017 Notes” and together with the 2016 Notes, the “ Parent Notes”). As of September 30, 2015, Parent and the Company had approximately €990,000,000 of debt. ![]() ![]() Norske Skogindustrier ASA (“ Parent”) and Norske Skog As (the “ Company”), through their operating subsidiaries, operate a global publication paper company that produces newsprint and magazine paper, with paper mills around the world. Given the increasing need for companies in distressed industries to exchange debt and extend maturities, parties facing a potential debt exchange should consider the Norske Skog court’s indenture analysis. ![]() ![]() While the Court’s decision is in the context of a preliminary injunction motion, the opinion provides useful guidance for parties potentially undertaking a refinancing exchange offer, and for parties who may seek to challenge such an exchange. Norske Skogindustrier ASA 1 could be an important consideration for future drafting and interpretation of debt agreements. The recent decision by the United States District Court for the Southern District of New York in Citibank, N.A. Resources : Clients & Friends The Southern District of New York’s Norske Skog Decision: What Constitutes A Refinancing May Be In The Eye of The Beholder ![]()
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