Mercuria Back in Pole Position with Improved Offer to Buy Aegean

Monday December 17, 2018

Mercuria Energy Group look to be back in pole position to buy Aegean Marine Petroleum Network, having submitted an improved offer to restructure the bunker supplier.

It comes after what was seen as a more favourable bid to buy Aegean was made last Thursday by Oaktree Capital Management and Hartree Partners that also sought to replace Mercuria as Aegean's debtor-in-possession (DIP) lenders.

As indicated in court documents filed Saturday, Mercuria's new offer has improved provisions for unsecured creditors to recover their claims, and perhaps crucially is now backed by a group of Aegean's creditors that were unsupportive of its initial plans.

The Oaktree / Hartree offer is now terminated and the pair are said to be withdrawing their interest in Aegean.

Chapter 11

After stepping in to save the bunker supplier in the summer, Mercuria had been tipped as favourite to buy Aegean after becoming the supplier's DIP lenders as part of its Chapter 11 restructuring process.

In November the Swiss commodity trader placed an initial "stalking horse" bid to buy the business valued at $681 million.

While that plan was opposed by a group of Aegean's creditors, in court documents filed Saturday Aegean / Mercuria say that just prior a December 7 hearing on the contested plans, an agreement in principle was reached with the creditor committee that saw their differences resolved.

It was then that Oaktree Capital Management and Hartree Partners entered the picture, who presented an alternative plan that was ultimately deemed by Aegean and the creditors committee to be a better proposal than Mercuria's initial offer.

It was this offer that was submitted last Thursday but it failed to gain court approval.

Sources at the time also told Ship & Bunker that Oaktree and Hartree had threatened to walk away from the deal, a fact seemingly now confirmed with Saturday's filing saying that following the hearing "Oaktree / Hartree indicated that they no longer supported the restructuring transactions contemplated under the Oaktree / Hartree RSA and were 'withdrawing from the contest' to sponsor a chapter 11 plan and fund the Debtors' cases."

Mercuria then submitted its improved proposal and Restructuring Support Agreement (RSA) that is now backed by the creditors committee which "the Debtors believe to the best available option for providing their estates with the necessary liquidity to fund these chapter 11 cases, maximizing creditor recoveries, and positioning the Debtors for long-term success."

"In short, the RSA enables the parties to avoid months of highly contentious, potentially value destructive litigation in favor of global peace."

Key changes in Mercuria's improved offer are:

  • the provision of $40 million in cash to fund general unsecured creditor claims, up from Mercuria's initial $15 million and $30 million in the Oaktree / Hartree offer
  • 100% of the proceeds from Aegean's litigation claims going to pay unsecured credit claims via a Litigation Trust, less repayment of monies loaned to the Litigation Trust plus $3 million. Mercuria's initial offer had all proceeds from litigation claims going to Mercuria, while the Oaktree / Hartree offer essentially saw them keeping 25% of proceeds until claims were paid.
  • Renders all other secured and unsecured creditors unimpaired, matching the Oaktree / Hartree offer.
  • Does not include a break-up free or prepayment premium - both Mercuria's initial offer the Oaktree / Hartree offer included in $19 million break-up fee / prepayment premium
  • Restructuring will now be via a Chapter 11 reorganization plan, as per the Oaktree / Hartree offer. Mercuria had initially proposed a 363 sale/auction process.

With objections to Mercuria's new offer due by January 4, 2019, the plan seeks to enter into force no later than January 15, 2019 and envisages Aegean emerging from Chapter 11 in the first half of 2019.