Waste Disposal - Financial Restructuring of Cory Environmental

Cory Environmental (2015)

Allen & Overy advised the senior co-ordinating committee in the restructuring of Cory Environmental. Cory Environmental is one of the largest recycling and waste management companies in the UK. The debt restructuring was implemented pursuant to an English scheme of arrangement and a pre-packaged administration sale of the group to a lender-owned vehicle.

Cory Environmental operated landfill sites across the UK, a waste collections business and the Riverside Resource Recovery energy from waste facility. Under the debt restructuring and pre-pack administration sale, Cory’s capital structure was restructured with some debt converted into equity in the group and with a retranching and extension of remaining debt into opco and junior debt. Flexible interest and pay-if-you-can provisions were included to assist Cory in managing its cashflows. In addition, the restructuring included the provision of new LC and RCF facilities that were vital to Cory’s business.

Without the implementation of this scheme, Cory would not have been able to manage its senior debt repayments and would have faced administration. The restructuring therefore provided Cory with a stable platform to be able to continue as a going concern. The lender group was a diverse group including par lenders and funds that had bought into the debt sub-par and these different perspectives, different capital regimes and commercial drivers, coupled with the financing needs of the business (in particular the need for continued LC facilities), created a challenging backdrop against which to find a transaction that was acceptable to the entire lender group.

The new opco and junior debt included obligations on the group to (a) divest its landfill and gas and waste collections business within a certain time period following the completion of the restructuring to reduce the group’s LC exposure and leverage and (b) refinance the facilities financing the Riverside Resource Recovery energy from waste facility to release cashflows to repay the new facilities. These business have been successfully sold and, in 2017, the Riverside facilities were successfully refinanced.

“Demonstrates the flexibility and effectiveness of the UK scheme of arrangement”

Ian Field (Partner, London Restructuring) commented: “The successful restructuring of Cory Environmental once again demonstrates the flexibility and effectiveness of the UK scheme of arrangement, this time in the waste management sector, delivering a deal that brought together the different objectives of the par and distressed investors.”

The A&O team

The London restructuring team was led by partners Ian Field and Carolyn Conner, assisted by associates Nicholas Lister, Siàn Perez and Hannah Valintine.

The London banking team was led by partner Andrew Castle, assisted by associates Henry Sohn, Emma Avery and Andrew Daidone.

The London corporate team was led by partner George Knighton and Richard Evans, assisted by associate Chloe Bowskill.

Specialist environmental law advice was provided by partner Matthew Townsend, assisted by associate Tom D’Ardenne.