Seismic services player SeaBird Exploration has obtained all consents required for its comprehensive restructuring announced in May.
As a result of significant market uncertainty, contracting lead times, deteriorating orderbook as well as upcoming debt maturities in 2017 and 1Q 2018, SeaBird has been looking for a refinancing solution since the beginning of this year.
On May 26 the company announced a proposal that if completed would facilitate a comprehensive restructuring of the group’s balance sheet, reducing the company’s debt by $22 million and lease obligations by $10.4 million. The remaining debt under the SBX04 bond loan and the Glander credit facility would be a total of $5 million and the remaining lease obligations, payable in kind until maturity, would be $2.4 million.
On Tuesday, SeaBird informed it has signed an agreement with Glander whereupon $1.9 million of the principal amount and all accrued interest as of June 3, 2017, owed to Glander under the Glander credit facility will be irrevocably repaid and discharged upon the issuance of SeaBird shares to Glander at NOK 5.00 per share and that the remaining claim of Glander under the Glander credit facility of $440,591 will be amended with the maturity date being extended until June 30, 2020, no principal payments until June 30, 2020, and the introduction of payment-in-kind interest for all interest payments to be made under the Glander credit facility.
The company has also entered into an addendum to the Munin charter contract pursuant to which the charter period for the Munin charter contract will be extended to June 30, 2020, the charter hire will be reduced to $2,088 per day for the period from June 3, 2017 until June 30, 2020 and where the new charter hire can, at the company’s discretion, be accumulated and not paid in cash before June 30, 2020. The difference between the new charter hire of $2,088 per day and the remaining and unpaid previous charter hire will be converted into SeaBird shares at NOK 5.0 per share in accordance with the terms of the restructuring.
As a consequence, all consents for the restructuring have now been obtained, and the company will proceed with the conversion into equity of the SBX04 Tranche B, the Glander claim and the Munin claim as approved by the SBX04 bondholders in the bondholder meeting on June 2, 2017 and the SBX shareholders in the EGM on June 13, 2017.
The company will effectuate the closing of the restructuring and issue the new shares as soon as practically possible. As a consequence of the restructuring, SeaBird said it will reduce its debt and lease burden by approximately $37.5 million, have $5.7 million in outstanding financial debt and have no significant debt maturities until June 30, 2020.
However, the company requires additional funding for working capital purposes and it continues its efforts to obtain new equity financing and is in active dialogue with potential capital sources. SeaBird noted that there can be no guarantee that sufficient additional financing is available in a timely manner, and the absence of additional financing would have the effect that the company will be unable to continue operations.