LONDON (Reuters) - Debt-laden steel trader Stemcor, one of Britain’s largest private companies, plans to split its holding company and its core trading business into two separate entities as part of a $2 billion debt restructuring.
Stemcor secured an ‘agreement in principal’ earlier this year with its creditors under which U.S. distressed investment fund Apollo (APO.N) swapped its debt for equity in Stemcor, giving it a majority stake.
Further to that agreement, Stemcor’s former holding company will now be split off into an entity called Moorgate Industries Ltd which will hold a troubled Indian ore asset. That will be separate from its core trading business, which will be known as Stemcor Global Holdings Ltd.
The split and debt restructuring is pending court approval -- expected in October -- but has the formal support of Stemcor’s lenders.
“I am grateful for the unwavering support of our lenders, customers and suppliers during the restructuring process. Without the constraints of an onerous capital structure, Stemcor will be able to pursue exciting growth initiatives,” said chief executive Julian Verden in a statement.
Stemcor, formerly controlled by the Oppenheimer family, was hard hit by the 2008 financial crisis and accumulated a large debt pile when it bought an iron ore asset in India.
The company was facing a December maturity on a $1.15 billion syndicated trade finance loan that it signed in March 2014 with lenders -- including ABN AMRO Bank, HSBC (HSBA.L), ING ING.AS, Natixis (CNAT.PA), Societe Generale (SOGN.PA) -- as part of a restructuring. It also had a separate $1.3 billion debt, mostly accumulated in buying the India iron ore asset.
Under the above restructuring plan, Moorgate Industries Ltd will own the India iron ore asset, while Stemcor Global Holdings will own the core trading and distribution business. Stemcor has appointed Scott MacDonald as executive chairman.
Reporting by Maytaal Angel; Editing by Mark Potter