Content area
Abstract
A corporate debt restructuring is never completely straightforward, but when the company in question -- Arqiva, the UK'S largest broadcast equipment operator -- also has L2.6 billion of significantly out-of-the-money interest rate and inflation swaps, all with looming simultaneous mandatory break clauses, it becomes a unique challenge. It took the best part of two years to find a solution, as well as the combined efforts of 19 banks, dozens of lawyers, and Arqiva and its adviser, Rothschild Group. But the derivatives book was arguably the biggest headache: if dealers exercised the breaks, forcing the company to settle the mark-to-market value, which stood at L1.5 billion at the point of refinancing, it would have been a blow to the company's creditworthiness, threatening the ability to find new investors or lenders. On this point, HSBC played the lead role, acting as the sole hedge co-ordinator, in addition to a number of roles in the issuance of new senior and high-yield bonds.