Norwegian Energy seeks OK on payment deferrals, waivers on bond issues

By Toni Weeks

San Luis Obispo, Calif., Dec. 4 – Norwegian Energy Co. ASA, or Noreco, is seeking bondholder approval for a deferral of installment payments due Dec. 9 on two of its bond issues and for certain waivers for those bond issues plus two others, according to a notice from bond trustee Nordic Trustee ASA.

The company would like to defer the amortization payment for its

• NOK 600 million senior secured bond issue due 2017, of which NOK 587,727,992 remains outstanding; and

• NOK 1,399,050,000 senior secured bond issue due 2016, of which NOK 1,372,119,743 remains outstanding.

The company is also seeking certain waivers for the above two bond issues as well as its

• NOK 736,155,000 second-lien bond issue due 2020, of which NOK 722,335,880 remains outstanding; and

• NOK 450 million convertible bond issue due 2018, of which NOK 368,941,139 remains outstanding.

If approved at separate bondholders meetings on Dec. 18 in Oslo, payments of NOK 87.7 million and NOK 473.1 million on the 2017 and 2016 issues, respectively, would be deferred until Feb. 28, and the event of default arising by not making the Dec. 9 payments would be waived.

As a condition to the payment deferral and waiver of event of default, the company would be required to pay interest due Dec. 9 on all four bond series no later than three business days following approval of the waiver and deferral. The company would also be required to adhere to new restructuring covenants, with an event of default to occur following a five-business-day grace period for failure to comply with the covenants.

Additionally, the company is seeking bondholder approval from all four series to amend the notice period for a bondholders meeting to a minimum of five business days prior to the date of the bondholders meeting for which summons have been dispatched or prior to the new amortization date.

According to a company announcement, there have been negative developments in the performance of Noreco’s producing fields, challenging the company’s ability to meet cash covenants at the end of 2014 and through 2015.

On Nov. 19, the company announced it would seek a deferral of the installments under the two bond issues, saying that it is unable to make such payments without breaching its cash covenants at the end of 2014 and through 2015 and “without prejudicing certain groups of creditors.”

Noreco said in the notice that approval of the proposals will allow the company to continue operations as a going concern while it continues to explore alternatives and prepare solutions to create or preserve value for all stakeholders.

The payment deferral needs to be approved by two-thirds of the outstanding bonds represented and voting at the bondholders meeting for each of the two relevant bond series and by 50% of the outstanding 2020 bonds. The waiver of the event of default will need to be approved by bondholders representing at least two-thirds of the outstanding bonds represented and voting at the meeting for each of the four bond series.

The waiver to amend the notice period for a bondholders meeting also needs to be approved by bondholders representing at least two-thirds of the outstanding bonds.

In order to have a quorum, at least half of the voting bonds must be represented at the relevant bondholders meeting.

If the proposals are not adopted by all bond series, the bond agreements will remain unchanged.

Arctic Securities AS (attn: Kristian Pande Horn at 47 21 01 32 74 or Birgitte Franing at 47 21 01 32 33) and Pareto Securities AS ( attn: Petter Sagfossen at 47 22 87 87 48 or Petter Omsted at 47 22 87 87 77) are acting as financial advisers for the company and may be contacted with questions. In addition, questions may be directed to Nordic Trustee (attn: Fredrik Lundberg or Lars Erik Laerum at mail@nordictrustee.com or 47 22 87 94 00).

Norwegian Energy is a Stavanger, Norway-based oil and gas company.

© 2015 Prospect News.
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