Norway: Sevan Marine Seeking Ways to Avoid Bankruptcy

 

The Board of Directors of Sevan Marine ASA continues to hold constructive dialogue with bondholders and other relevant parties regarding a global restructuring of the Company’s balance sheet. In particular, the Board is in dialogue with the advisors to Norsk Tillitsmann ASA (the bond trustee for the Company’s bond issues) and an informal group of the Company’s largest bondholders.

The dialogue with the bondholder group regarding a global restructuring currently assumes that the restructuring would involve:

  • a full equitisation of the Company’s existing unsecured bonds;
  • a partial but reasonably material equitisation of each of the series of the Company’s existing secured bonds;
  • a corresponding substantial dilution of the Company’s existing shareholders;
  • a capital raise for the Company, likely in the form of new equity, currently estimated to be at least USD 200 million, to be funded primarily by bondholders, but with a right for existing shareholders to participate;
  • extension of maturities for the Company’s existing secured bonds; and
  • a revision of interest rates and amortization schedules of the Company’s secured bonds to correspond with the Company’s cash flow profile and debt service capacity.

The above assumptions, and the detailed terms and conditions of a global restructuring proposal, remain to be finally determined and negotiated, and will, inter alia, be affected by the contents of a revised business plan currently being prepared by the Company, and the final cost estimate and schedule developments for the FPSO Sevan Voyageur upgrade project. Any global restructuring proposal will be subject to obtaining necessary agreements with, and consents from, the Company’s bondholders, shareholders and other key stakeholders and counterparties to the Company and its subsidiaries.

The Company continues to be under serious short term liquidity pressure, and the Board is currently in discussions regarding bridge financing of at least USD 35 million. Further, the Company intends to request deferrals of interest payments due under the relevant bond loans up to at least end of September 2011, and bondholders who have been approached on a confidential basis have expressed their support in principle to such proposal. The Board is optimistic that its short-term liquidity issues will be resolved and that a long-term solution to the financial challenges facing the Company can be obtained by the end of September 2011.

As for the FPSO Sevan Voyageur upgrade project, further detailed project reviews and assessments have identified additional costs to be incurred by the Company, resulting in a current cost estimate for the project in the range of USD 160-170 million. The increase from the previously announced cost estimate of USD 135 million is mainly a result of time related costs due to additional delays, certain increased procurement costs for equipment, yard services and additional contingencies. First oil is currently expected to take place during the second quarter of 2012. The review is ongoing in close cooperation with the charterer.

The Company’s financial situation remains challenging. In connection with the ongoing processes, renewed scrutiny and assessment of booked assets has been required. The Board has initiated a process to impairment test the Company’s asset base, which is expected to result in substantial write-downs in the closing of half-year accounts of 2011.

Notwithstanding the ongoing dialogue with lenders, FPSO Sevan Voyageur stakeholders and others, no assurance can be given that a viable global solution can be found in a timely manner, failing which the Board will be required to file for bankruptcy.

Source: Sevan Marine, July 11, 2011;

Share this article

Follow Offshore Energy Today

One thought on “Norway: Sevan Marine Seeking Ways to Avoid Bankruptcy”

Comments are closed.

Events>

<< Jul 2019 >>
MTWTFSS
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30 31 1 2 3 4

Uganda International Oil and Gas Summit 2019

Uganda International Oil & Gas Summit will once again examine the industry’s developments…

read more >

8th OIL & GAS AFRICA 2019 CONFERENCE

OIL & GAS AFRICA is one of the most prime regional & international Oil and Gas conferences in East Africa…

read more >

Gas Indonesia Summit 2019

Gas Indonesia Summit & Exhibition is returning for the fourth edition in Jakarta…

read more >

Shanghai Int Petrochemical and Offshore Oil & Gas and Chemical Industry Technology and Equipment Exhibition 2019

cippe Shanghai has attracts both…

read more >

Jobs>

Looking to fill a job opening?

By advertising your job here, on the homepage of OffshoreEnergyToday.com, you'll reach countless professionals in the sector. For more information, click below...

apply

Looking to fill a job opening?

By advertising your job here, on the homepage of OffshoreEnergyToday.com, you'll reach countless professionals in the sector. For more information, click below...

apply

Looking to fill a job opening?

By advertising your job here, on the homepage of OffshoreEnergyToday.com, you'll reach countless professionals in the sector. For more information, click below...

apply