Offshore vessel operator Farstad Shipping is pushing forward with its previously announced restructuring plan trying to find a solution for its debt problems with help from Siem Industries.
Farstad, the owner of 55 vessels, has been working on an overall restructuring plan to enhance its financial position to enable long-term operations for the company.
Earlier this month, Farstad and Siem entered into a non-binding letter of intent for the financial restructuring, with Siem, or a fund managed by Siem, as a key equity investor.
On Thursday, November 24 Farstad, represented by its independent board members, and Siem Oilservice Invest Holdings Limited signed a binding term sheet for a restructuring of Farstad.
According to the term sheet, Farstad will issue a minimum of 702 000 000 ordinary shares for a total subscription of minimum NOK 1 billion at a price per share of approximately NOK 1.4245. Siem will underwrite NOK 1 billion of the cash issue, and subscribe for and be allocated a minimum number of new shares so that Siem owns 50,1% of the shares in Farstad, post restructuring.
Tyrholm & Farstad, the largest shareholder of Farstad, is cooperating with Siem for the restructuring and will be offered a preferential right to subscribe 105 300 000 new shares for a subscription of NOK 150 million. The rest of the new shares will be offered to a mix of existing shareholders and other stakeholders to be finally agreed.
Siem will carry out a mandatory offer for the existing shares of Farstad. A substantial majority of the senior secured lenders are supportive to the binding term sheet. The senior secured lenders will be requested to convert parts of the group’s secured debt into equity in Farstad and provide amortization deferrals so as to provide the company with a financial runway throughout 2021.
The bondholders in Farstad’s bond loans will be requested to convert all outstanding amounts, in total NOK 1.4 billion, under the bond loans into equity in Farstad. Certain other creditors will also be requested to contribute in the restructuring.
The head office and center of operation of Farstad will remain in Ålesund.