Hogan Lovells advises senior lenders on Smile Telecoms' restructuring implemented through High Court sanction of restructuring plan and cross-class cram-down

14 May 2021 – The sanction of the Virgin Active restructuring plan, where we act for the senior lenders follows hot on the heels of another cutting edge restructuring plan where Hogan Lovells has undertaken a major role.  We  advised African Export-Import Bank (as lender and in its capacity as agent for a syndicate of African financial institutions acting as senior lenders) in relation to the financial restructuring of Smile Telecoms Holdings Limited (Smile), and its subsequent implementation through a restructuring plan under part 26A of the English Companies Act 2006.  Smile is the holding company of a group which operates an internet and telecommunications business across Tanzania, Nigeria, Uganda, and the DRC.  This restructuring plan was the first for a cross border African business.

Smile has been negatively affected since 2016 by destabilising macroeconomic factors (including the devaluation of the Nigerian naira) and operational issues arising from funding issues, which were exacerbated by the effects of the COVID-19 pandemic. 

Smile proposed the restructuring plan as a means of streamlining the implementation of its financial restructuring, the key terms of which had previously been agreed between the company and our senior lender clients.

The restructuring provided for the injection of US$62m super senior funding by Al Nahla, Smile's majority shareholder, via a newly-incorporated Luxembourg vehicle to implement a proposed business plan for the group's Nigerian business so as to manage it on an orderly going concern basis.  The plan also provides for certain amendments to the lenders' senior facilities in order to facilitate the super senior funding.

The plan was sanctioned by Trower J on 30 March, one of the first restructuring plans in respect of which the court has used the new cross-class cram-down mechanism, following the adjournment of the original sanction hearing on 19 March pending confirmation that the new money funding condition could be met.  It was the first of a number of restructuring plans that the London Business Restructuring and Insolvency practice of Hogan Lovells are involved in to be sanctioned under the new process.

We have advised the senior lenders on financings in relation to Smile Telecoms for a number of years and this matter is an excellent example of our ability to provide our clients with full service financing support at all stages of the corporate lifecycle, from lending negotiations to navigating nascent restructuring processes.  This matter also illustrates the strength of our multidisciplinary Africa finance practice.

The London team was led by Business Restructuring and Insolvency partner Joe Bannister, and Banking partner Andrew Taylor. The advisory team included Russell Green (counsel, Banking), Lucy Xu (senior associate, Business Restructuring and Insolvency), and Luke Hiller-Addis (associate, Business Restructuring and Insolvency).  

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