Rem Offshore’s restructuring receives bondholder approval at meeting

By Angela McDaniels

Tacoma, Wash., Sept. 6 – The holders of Rem Offshore ASA’s senior bonds due 2018 and senior bonds due 2019 approved a restructuring, according to a notice from bond trustee Nordic Trustee ASA.

Bondholders voted at a meeting 8 a.m. ET on Sept. 6 in Oslo. There were enough bondholders present to form a quorum. The proposed resolution obtained 96.76% of the votes cast by the 2018 bondholders and 94.01% of the votes cast by the 2019 bondholders.

The bondholder meeting was originally scheduled for Aug. 26. The company rescheduled the meeting after deciding to make clarifications and amendments to the terms of the restructuring in light of its planned acquisition by Solstad Offshore AS.

In the amended term sheet, the company said the restructuring of the bonds will not occur if the effective date for the restructuring transactions has not occurred by Dec. 31 – extended from Sept. 30.

In addition to voting on the restructuring, bondholders voted on whether to grant waivers of the market-adjusted equity ratio covenant and the minimum value ratio covenant of the bond agreement for the bonds due 2018 and the preservation of equity and financial covenants in the bond agreement for the bonds due 2019. The waivers will end on the earlier of the effective date of the restructuring – i.e., the date on which all of the conditions to the restructuring have been met – and Dec. 31.

To approve the proposal, the holders of more than two-thirds of the bonds for each of the issues represented at the meeting had to vote in favor of the proposal. In order to have a quorum, at least half of the bonds for each of the issues had to be represented at the meeting.

Restructuring terms

The main terms of the restructuring are as follows:

• All accrued and not yet due interest will be canceled and discharged, including interest due in September and December.

• NOK 513.5 million, or 65%, of the bonds will be converted into shares in consideration for 40% ownership of the company (fully diluted). The conversion will be made pro rata between the two bond series and pro rata among the holders of each series. The conversion price will be NOK 3.73005;

• The remaining NOK 276.5 million of bonds will be exchanged for new second-lien bonds, and the NOK 60 million of bonds due 2018 owned by the company will be canceled;

• The company will conduct a private placement of NOK 150 million of new equity with its largest shareholder at a subscription price of NOK 0.87 per share. The company will consider but is not obligated to conduct a subsequent equity offering of up to NOK 20 million for the purpose of giving existing shareholders not participating in the new equity the chance to subscribe for new shares;

• NOK 60 million of the proceeds from the new equity will be used to buy back new second-lien bonds in a reverse Dutch auction within 30 days after the closing of the restructuring;

• The amortization of the company’s bank facilities will be reduced by an average of 88% for 3.5 years from the second half of 2016 to the end of 2019, all bank maturities will be extended by 42 months, and the financial covenants will be amended; and

• The existing newbuilding contract with Vard Group AS will be canceled in consideration for an ownership share of 4% in Rem Offshore (fully diluted).

The company expects these transactions to improve its liquidity by about NOK 3.6 billion over a 3.5-year period and reduce its net interest-bearing debt by around NOK 900 million.

The company’s acquisition by Solstad Offshore will happen after the restructuring. Shareholders will receive 0.0696 share of Solstad Offshore per Rem Offshore share.

New bond terms

Under the terms of the proposed restructuring, the NOK 276.5 million of new second-lien bonds will be issued at par and have a tenor of eight years.

The interest rate will be 5%, payable annually in kind.

The new bonds will be secured by a first-lien pledge over all shares issued by Rem Maritime and a second-lien mortgage over the vessel Rem Star and relevant insurance.

The new bonds will be callable in full, but not in part, at any time at par plus accrued interest.

The company will have the option to settle the new bonds at maturity in shares.

Holders will have a change-of-control put option, and the company will be required to use the proceeds of any sale of the Rem Star vessel to prepay the bonds at par.

The new bonds will have no financial covenants.

ABG Sundal Colllier ASA is acting as manager.

Rem Offshore is a fishing and supply shipping company located in Fosnavaag, Norway. Skudeneshavn, Norway-based Solstad Offshore's fleet is engaged in the offshore petroleum industry.

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