Viking Supply Ships A/S (VSS), a Swedish company supplying vessels to the international oil and gas industry, has called its bondholders to ease their stance regarding the financial restructuring of the company, otherwise bankruptcy will be the only option.
Namely, Viking says that it has made repeated attempts to engage in a dialogue with the bondholders in the bond issue “Viking Supply Ships A/S 2012-17 FRN”.
“The process towards the banks has been very constructive and a framework for a solution is agreed in all material respects subject to agreement with the bondholders. The discussions with the bondholders, however, have been quite challenging,” the company said on Monday afternoon.
The company says it has been in contact between with the committee of three core bondholders, where it “on several occasions” offered a solution which has involved a deferral of the maturity of the bonds, as demanded by the secured creditors, and part of the interest payments being made in-kind as a part of a global solution for the restructuring of the Group balance sheet.
“Since the recovery of the unsecured creditors in the event of a bankruptcy is likely to be extremely limited, or in effect zero, VSS believes this proposal, which does not involve any reduction of any part of the bondholders’ claim, to be a fair and attractive offer. This offer has, however, on several occasions been flatly rejected by the above-mentioned committee of bondholders,” VSS said.
According to the shipowner, the bondholders have expressed that the only solution they are willing to discuss is one where the bonds are redeemed in cash, albeit at a somewhat discounted price.
The amount of new equity raised, as demanded by the secured creditors, will allow for necessary working capital and early repayment of secured loans in exchange for eased amortization over the next four years. However, Viking says, if the bondholders do not move from this position, it will not be possible to arrive at a restructuring which will allow VSS to survive as a going concern.
“VSS would therefore strongly encourage the bondholders to engage in a constructive dialogue on realistic premises to seek to find a solution which will allow a financial restructuring of VSS. VSS is willing to explore various alternatives, including a conversion of bonds into shares in Viking Supply Ships AB, listed on NASDAQ OMX Stockholm segment Small Cap, at present market values, respectively 36% of par value and SEK 1.70 per share, but is not in a position to offer redemption for cash. However, shares received can be freely sold by the recipients. Should a solution not be reached the only realistic outcome is bankruptcy of VSS,” the company said.
VSS added it would soon summon to a bondholder meeting to provide an updated status of the company, as well as present a restructuring proposal to the holders of the bond.
To remind, Viking Supply Ships (VSS) recently has finalized the in-principle agreement with the banks regarding the company’s revised long-term financial platform.
Also, Norseman Offshore, the owner of the anchor handling tug supply (AHTS) vessel Odin Viking which is on a bareboat charter with VSS, in June filed an application for bankruptcy against VSS with the Maritime and Commercial High Court in Copenhagen only to withdraw it several days later. The petition was made on the basis of unpaid hire in an aggregate amount of approximately $2.5 million.
Offshore Energy Today Staff