Cecon refinancing and restructuring deal puts company 'back on track'

By Caroline Salls

Pittsburgh, Oct. 13 - Cecon ASA's board of directors has approved a term sheet negotiated with a bondholder group and some shareholders to refinance and restructure the company's outstanding debt and provide new funds to allow it to take advantage of the offshore deepwater construction market, according to a company news release.

"We can now focus on retaining the position Cecon historically has had in the offshore construction market," chief executive officer Terje P. Tellefsen said in the release.

"The markets that Cecon operate within look quite strong for the coming years, and we are well positioned to take advantage of this.

"This also gives us the ability to seek a solution around the completion of the vessels under construction in Canada.

"Cecon is back on track with this agreement."

Cecon's current bond debt consists of a five-year $100 million bond loan issued by Cecon Shipping 1 AS and Cecon Shipping 2 AS and a one-year $12.5 million bond loan issued by Cecon ASA.

In addition to the loans, the company owes accrued interest to the bondholders.

Restructuring terms

Under the term sheet:

• The holders of the existing bond loans will receive partial settlement of their loans and accrued interest. A restated and amended five-year $73.13 million bond loan will be issued to existing holders of both bond loans, representing a combination of $65 million from the five-year loan and $8.13 million from the one-year loan.

Interest on the amended bond loan will be 8%;

• A total of $56.11 million, including calculated interest based on an anticipated closing date of Nov. 30, will be settled by issuance of 49.5 million new shares; and

• The company will raise between $5 million and $7 million of new capital through a private placement of a bond with attached warrants. The bond and warrants will have two-year terms.

The coupon of the bonds will be 5%, and the exercise price of the warrants will be NOK 0.65. Depending on the total amount issued, the maximum number of warrants will be 65 million.

Cecon said the minimum $5 million issue has been pre-subscribed.

According to the release, the transactions are subject to bondholder approval and shareholder approval to issue the warrants attached to the new bonds.

The company said a number of shareholders, including management, have agreed to support and vote in favor of this term sheet.

Cecon is an independent subsea installation contractor located in Arendal, Norway.

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