Blom asks to extend bond maturity by a quarter, pay interest in kind

By Susanna Moon

Chicago, March 21 - Blom ASA is asking bondholders for more time to complete a restructuring and has proposed extending the bond maturity by three months until June 4, 2012.

The company also seeks holder approval to pay interest due April 4 in kind.

A meeting will be held in Oslo on April 4 to seek bondholder approval for the proposed amendments.

The proposal requires votes from two-thirds of holders at the meeting, and there must be holders of at least half the bonds represented.

Blom had a very challenging 2011, according to a notice to bondholders from bond trustee Norsk Tillitsmann ASA. The operating profit was negative, and the company wrote down the value of several assets. Consequently the equity was negative by NOK 194 million at the end of 2011.

Blom said it started a restructuring process that it expects to complete by the first half of the year.

The issuer has been in discussions with bondholders to strengthen the capital structure of the company by increasing the equity ratio. The bondholders are prepared to participate in the process in order to reestablish a sound balance sheet and secure sufficient liquidity for the company to follow its normal business plans, the notice said.

Previous extensions

In October 2011, Blom received bondholder approval to restructure its floating-rate senior secured bonds originally due Sept. 25, 2012, including the extension of the maturity date to Sept. 25, 2014.

Holders of more than 99% of the bonds voted in favor of the proposed amendments, which also included changes to

• Allow the company to redeem the bonds in whole or in part at any time at par plus accrued interest;

• Add a cash sweep feature that would obligate the company to redeem a portion of the bonds following any quarter in which its free cash and cash equivalents exceeded NOK 80 million. The first possible redemption under this new feature would be in June 2012;

• Not allow the company or any party over which it has "decisive influence" to acquire and own the bonds;

• Require the company to maintain a minimum interest coverage ratio of 1 to 1. The company would be allowed to remedy a potential breach of this covenant by making an interest payment in kind. However, it will only have this option twice; and

• Delete the book equity ratio clause entirely.

According to a September notice to bondholders from Norsk Tillitsmann, a restructuring of the current amortization plan and covenants was needed because the company's current cash generation was insufficient to meet the amortization plan.

At least half of the outstanding bonds had to be represented at the meeting, and at least two-thirds of the bonds represented at the meeting had to vote in favor of the restructuring in order for it to pass.

The company said on Sept. 25 that holders of more than 50% of the bonds had already agreed to vote in favor of the restructuring.

In March, the bondholders approved a restructuring that involved a NOK 50 million one-year bond loan and a rights issue that together yielded NOK 64 million of proceeds.

Olso-based Blom provides geographical information and services.

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