16 Nov 2016

CU LAB: Atlas Iron: the state of play

There are lessons for boards and restructuring specialists in the Atlas Iron restructure, says Cameron Belyea.

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There's probably three main reasons why Atlas Iron was a very successful restructure:

  • first of all, you had a very consistent board and management team who knew what they were going to do through what became a three-year process;
  • two, you had a very good and early engagement with your stakeholders which is absolutely critical so the communication piece was onboard from day one; and
  • three, you had a value piece, you could actually offer something to those who were a key part of the successful turnaround.

So let me elaborate.

In the early days David Flanagan, who was the CEO and one of the early founders of the Board, engaged advisers who were turnaround specialists, and identified the problem iron ore prices had collapsed and suddenly, they needed to bring costs down, and they needed to build equity up again.

They then engaged with the stakeholders, who were two groups: the first was the contractors and the second group senior debt holders.  Those senior debt holders allowed an operational turnaround to take place through 2015.  After that had been obtained it was then possible to do a senior led debt restructure which was the scheme arrangement in April 2016. 

The lessons that we learn from the Atlas restructure are twofold:

  • number 1 is early engagement with key advisers; and
  • number two is open and transparent communication with your key stakeholders.