Sea Containers appeals U.K. pension ruling, closes on $145 million DIP facility

By Caroline Salls

Pittsburgh, July 24 - Sea Containers Ltd. has appealed the determination notices it received by the U.K. pensions regulator under which the company must financially support its Sea Containers 1983 Pension Scheme and Sea Containers 1990 Pension Scheme, according to a company news release.

The company said the pension regulator's ruling goes against public policy by giving the pension trustees support that may disadvantage other creditors in Sea Containers' Chapter 11 case.

"The company takes its pension obligations very seriously, but these obligations have to be balanced against the company's obligations to other creditors," Sea Containers said in the release.

In addition, Sea Containers said it believes that the existing services agreement that provides for the support of the parent company's services subsidiary already provides enough financial support to the pension schemes.

The company said dispute resolution is under way to determine the scope of this agreement, and Sea Containers said it is confident that this will result in a settlement between the bondholders and pension trustee creditors.

At the pension support hearing, Sea Containers said it argued that because compliance with the U.K. pension scheme funding laws would be subject to U.S. bankruptcy court approval, compliance would not be within the company's control, and other creditors were likely to oppose the ruling.

In addition, Sea Containers said it closed on its $145 million debtor-in-possession facility, which will be used to repay existing debt of subsidiary Sea Containers SPC to avoid a foreclosure by SPC's lenders.

As previously reported, the DIP facility also provides a $25 million revolving credit facility to be used for working capital during the company's Chapter 11 case.

Sea Containers, a Hamilton, Bermuda-based provider of passenger and freight transport and marine container leasing, filed for bankruptcy on Oct. 15, 2006 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 06-11156.

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