FOMENTO DE CONSTRUCCIONES Y CONTRATAS SA V BLACK DIAMOND OFFSHORE LTD AND OTHERS

[2016] EWCA Civ 1141, Court of Appeal (Civil Division), Senior President of Tribunals Lord Justice Ryder, Lord Justice Christopher Clarke and Lord Justice Hamblen, 22 November 2016

Contracts - Loan note - Whether an event of default had occurred

The claimant ("FCC") was a leading publicly quoted Spanish company with nearly 94,000 employees based in over 50 countries. It specialised in, inter alia, construction and city sanitation services. FCC's borrowing included two major elements. First, on 27 October 2009 it offered for sale, and later issued, €450 million 6.5 per cent unsecured convertible notes, subject to English law and jurisdiction and originally due for repayment in 2014, subsequently extended to 2020. The Notes were subordinated to seven Senior Liabilities whose principal amounts amounted to some US$3.6 billion. Secondly, on 24 March 2014 FCC entered into a Syndicated Finance Agreement ("SFA") in an amount of some €4.5 billion, subject to Spanish law and jurisdiction and divided into two tranches. Tranche A was in the amount of some €3.16 billion. Tranche B was convertible into shares in the initial amount of some €1.35 billion. On 14 November 2014 FCC announced its intention to carry out a further restructuring under a New Framework Restructuring Agreement ("the Agreement"). The restructuring was to relate only to Tranche B. It would adversely impact the interests of the Tranche B debt holders in that €900 million of debt was to be repurchased at a 15 per cent discount and payment in kind interest, running at between 11 and 16 per cent, was to be reduced to 5 per cent.