Willkie Advises on Recapitalization of the Lecta Group

July 17, 2020

A cross-border multidisciplinary Willkie team advised a group of underwriters on the recapitalization of Lecta.

On July 16, the successful completion of the Lecta Group’s recapitalization was announced. A cross-border multidisciplinary Willkie team advised a group of underwriters comprising certain holders of Lecta Limited’s (the “Company”) senior secured notes, junior notes and equity on the successful completion of the recapitalization of the company, one of the largest paper manufacturers in Europe.

The recapitalization follows the balance sheet restructuring of the Lecta group of companies (the “Group”) which completed in February 2020 and on which Willkie advised a coordinating committee of noteholders. Click here to read Willkie’s February 5, 2020 announcement.

The restructuring resulted in a significant deleveraging of the group and the simultaneous provision of new liquidity. However, the group has recently been impacted by the COVID-19 pandemic and, in addition, began to be faced with tighter working capital terms. Despite extensive actions taken by the group to create operational efficiencies and to preserve liquidity, the company engaged with securityholders and other stakeholders, including relationship banks, regarding a possible recapitalization in May 2020.

Willkie negotiated and executed a fully committed and underwritten offer of new securities to qualifying securityholders in the Company in order to raise approximately €100,000,000 for the group. The terms of the recapitalization comprised: (i) the write-down and cancellation of the junior notes issued as part of the prior restructuring, (ii) the issue of new shares in the Company, (iii) the issue of new senior secured notes, (iv) the issue of new warrants entitling holders to subscribe for shares in the Company at a later date, and (v) the entry into new confirming line and term loan facilities with a Spanish relationship bank, the latter in part guaranteed by the Spanish government pursuant to the range of measures it introduced in response to the COVID-19 pandemic.

The group now emerges from the successful completion of the recapitalization with an enhanced, sustainable balance sheet and solid liquidity position which will enable it to move forward and implement its business plan.

The cross-border multidisciplinary Willkie team, led out of London by restructuring partner Graham Lane, included attorneys from Willkie’s Corporate & Financial Services, Capital Markets, Finance, tax, antitrust and competition and compliance, investigations and enforcement teams across Willkie’s London, Paris and Milan offices with further assistance from Willkie’s New York office.

The Willkie deal team consisted of partners Graham Lane (London, Business Reorganization & Restructuring), Jennifer Tait (London, Capital Markets), Gavin Gordon (London, Corporate & Financial Services). Associates Jason Taylor, John Lambillion and Amelia Doughty also assisted.

Willkie was assisted on the transaction by Cuatrecasas, Gonçalves Pereira (advising with respect to Spanish law) and Loyens & Loeff (advising with respect to Luxembourg law).