- Co-head of firm’s investment banking restructuring vertical
- More than eight years of experience in restructuring
- Specializes in advising companies and creditor groups in special situations
In August, Carl Marks Advisors reached a close on a deal for a power plant just south of the Mexican border, near Ciudad Juarez. The government-owned utility had awarded the project to a Mexican subsidiary of Abengoa S.A. in 2015.
Shortly after obtaining a bridge loan and beginning construction, the Spanish energy conglomerate entered into insolvency proceedings, threatening the 25-year power purchase agreement with the Comisión Federal de Electricidad (CFE), and the future of the project generally.
The lenders called in Carl Marks, a hybrid investment bank-consultancy with a specialty in distressed M&A, to explore options for salvaging their interest in the plant, known as Norte III.
“One of the key components of that transaction was reestablishing credibility with [CFE],” said Scott Webb, co-head of the firm’s investment banking restructuring vertical. “The terms of the [power purchase agreement] were violated previous to our involvement, however CFE continued to support the project. That was all contingent on a process being put in place that they believed in to bring the project back to commercial viability.”
Earlier attempts to put the project on the market had been unsuccessful. Carl Marks “took it a step beyond what the original marketing had done,” Webb said, and presented potential buyers with two options: partnering with the original sponsor or acquiring the plant outright.
Webb traveled to Mexico City a dozen times over the course of a year, “to get in front and spend some face time with CFE as well as the original sponsor, making sure the lines of communication were open with all those constituencies.”
The winner was a joint bid from Macquarie Group and Techint Engineering and Construction. The buyers were able to secure new financing, including from the bridge lenders, and the original loan was restructured. With Techint taking over as contractor, work could resume on what will be the largest combined cycle gas turbine plant in Mexico when it’s completed.
Webb, who joined the firm in 2007 after a year at a now-defunct boutique bank, found his way to Carl Marks because of its dual nature.
“It was a frothy market and there was a lot of [job] availability,” he recalled. “I identified the potential benefit of having both sides of the economic equation covered, consulting and investment banking. If there was a change in the market, you would have an opportunity to carry on with stable business. It ended up being a very fortunate stumbling stone into the restructuring world, which I think has an added layer of complexity which I find very stimulating.”
Photo of Scott Webb courtesy of Carl Marks Advisors