Far-Eastern Shipping circulates letter for scheme of arrangement

By Angela McDaniels

Tacoma, Wash., Sept. 29 – Far East Capital Ltd. SA has circulated a practice statement letter for a proposed scheme of arrangement to implement the restructuring of its $550 million 8% senior secured notes due 2018 and $325 million 8¾% senior secured notes due 2020, according to a notice from Far-Eastern Shipping Co. plc.

As previously reported, the issuer did not pay the interest when due on the notes on May 4, 2016, Nov. 2, 2016 or May 2, 2017.

As of Sept. 29, the holders of 84.93% of the outstanding notes have signed or acceded to a standstill and lock-up agreement in order to facilitate the restructuring to be implemented by the proposed scheme.

On Sept. 6, the company said the holders of 47.34% of the outstanding notes had entered into the lock-up agreement.

Under the lock-up agreement, the noteholders agreed to forbear from taking any enforcement actions on the basis of identified events of default and to take actions to support the restructuring.

Any other noteholders who accede to the lock-up agreement by Oct. 4 will still be eligible for lock-up fees.

The restructuring terms include a one-time cash payment of $547.5 million, net of the total amount of lock-up fees accrued and paid until Sept. 30 and 50% of the lock-up fee accrued and paid for the month of October, in full satisfaction of the group’s obligations under the notes.

The restructuring also gives noteholders who sign the lock-up agreement a share of a $2.5 million one-off cash fee.

Noteholders who sign the lock-up agreement before Oct. 4 will receive a lock-up fee in the amount of 1.15% of the principal amount held by the relevant noteholder, 0.65% per month beginning with September of the principal amount of the bonds held by each consenting holder until the earlier of the date the lock-up agreement terminates and Oct. 31, for any months following and including November until the month in which the lock-up agreement terminates and 0.70% per month of the principal amount of the notes held by each consenting holder.

The restructuring is subject to the company raising new equity investment and/or debt financing and the holders of at least 75% of the notes supporting the restructuring pursuant to a U.K. scheme of arrangement.

The lock-up agreement will terminate on Oct. 31.

The group believes that the restructuring will deleverage it to a sustainable level, allowing it to remain “operationally competitive and ensuring the viability of the business going forward.”

The company said the agreement is the result of its negotiations with an ad hoc group of noteholders following a strategic review of its capital structure in May 2016, after it was affected by the weakening of the Russian macroeconomic environment and ruble devaluation.

The information agent for the restructuring is Lucid Issuer Services Ltd. (fesco@lucid-is.com).

Far-Eastern Shipping is a shipping company based in Moscow.

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