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Law360, London (September 9, 2020, 1:24 PM BST) -- A judge approved ED&F Man's plans to refinance more than $1 billion in debt on Wednesday, affording the financial services giant breathing room with its creditors after its plans to sell off its brokerage business stalled amid the pandemic.
The High Court has approved a refinancing packaging that will save the financial services giant from insolvency proceedings and defer its debt. (AP Photo/Kirsty Wigglesworth)
David Allison QC, representing ED&F Man, told the High Court on Wednesday that the plan gives creditors the best chance of righting the company's financial position, as well as a full return on their investment. The new terms offer creditors a better return than they would otherwise receive, even if the company's fortunes falter, Allison said.
Judge Meade said there was "exceptional support for the scheme" and that the plan was "reasonable" given the "severe" danger the company faced.
The new terms of the scheme, which was approved by creditors, mean unsecured creditors would be granted secured assets in exchange for new loans.
ED&F Man had put the brokerage division, which processes trades and other financial brokering services, up for sale in 2019 alongside agricultural and manufacturing businesses in countries including Mexico, Ukraine and Israel.
There was strong initial interest, but the COVID-19 pandemic deflated the global market and derailed the sale, Allison said.
The company began negotiating with creditors in May and gave them formal notice of Tuesday's hearing in July. Allison warned that the plan was a better alternative to insolvency, where creditors were likely to receive between £0.19 and nearly £0.30 for every £1 ($1.31) loaned.
The court gave the company permission to approach creditors in August. At the time, a spokeswoman for ED&F Man said that its agricultural commodities and exchange access businesses were strong, and that refinancing would steady the entire corporate group for the next three years.
Allison told the court on Wednesday that most of the creditors met and voted unanimously in favor of the plan, with no objections.
ED&F Man is represented by Allison and Ryan Perkins of South Square, instructed by Clifford Chance LLP.
Note holders are represented by Akin Gump. A group of lenders are represented by Allen & Overy.
The case is In The Matter of ED&F Man Treasury Management PLC and in the Matter of the Companies Act 2006, case number CR-2020-003261, in the High Court of Justice, Business and Property Courts of England and Wales.
--Editing by Ed Harris
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