Jasper Investments gives details on consensual separation of subsidiary

By Toni Weeks

San Luis Obispo, Calif., Nov. 19 – Jasper Investments Ltd. clarified some details in the planned consensual separation of subsidiary Jasper Explorer plc, which was announced on Tuesday.

As previously reported, bondholders representing a requisite majority of Jasper Explorer’s 13½% senior secured bonds due 2016 issued a non-binding proposal on Monday in respect of the settlement of the obligations of some of the company’s subsidiaries under the bond terms.

The “consensual separation plan” targets the transfer of Jasper Explorer Pte. Ltd., the owner of the Jasper Explorer vessel, and Jasper Drilling Pte. Ltd. to a special-purpose vehicle controlled by bondholders. The new entity, called “Newco,” will own and operate the Jasper Explorer vessel.

Bond trustee Nordic Trustee ASA then issued the terms of the consensual separation plan.

As previously reported, Jasper Investments will initially transfer its entire ownership in all of its subsidiaries to Borrelli Walsh Asset Management Ltd. Following the transfer, Jasper Explorer and Jasper Drilling will be transferred to NewCo from Borrelli Walsh to facilitate continued operation of the vessel. Bondholders will provide funding to NewCo sufficient to meet its near-term funding requirements. Jasper Investments will pay Borelli Walsh a fixed sum encompassing fees, costs and expenses in connection with the winding down of the transferred subsidiaries other than Jasper Explorer and Jasper Drilling.

As already noted, any recoveries from the subsidiaries retained by Borrelli Walsh will be distributed amongst it and NewCo. The company explained in Wednesday’s announcement that Borelli Walsh will receive 20% of these recoveries, and NewCo will receive the remaining 80%. Jasper Investments will not receive any of the recoveries.

Also, the company wanted to clarify that the $6 million principal amount of bonds currently held by the group are a portion of the five-year $165 million senior secured bonds issued by Jasper Explorer. As noted on Tuesday, the company will procure the transfer of half, or $3 million, to NewCo and retain the balance.

Pursuant to the separation plan, the relevant subsidiaries of the company will be discharged from their obligations under the bond terms. These subsidiaries are Jasper Explorer plc, Jasper Offshore (Cyprus) Ltd., Jasper Explorer Pte. Ltd. and Jasper Drilling Pte. Ltd.

Following the completion of the separation plan, the company will not have any subsidiaries or operating business.

The company’s majority shareholder, Morton Bay (Holdings) Pte. Ltd., which holds about 80.8% of the issued shares of Jasper Investments, has indicated, along with the company’s board, that it is supportive of a consensual transfer of the company’s subsidiaries pursuant to the consensual separation plan.

The board plans to undertake further discussions with the trustee and/or bondholders to finalize the settlement plan and enter into definitive agreements.

Latest decisions

As previously reported, on Nov. 11, the trustee said in light of the discussions around the consensual separation plan, it was not seeking immediate repayment of the amount due under the bonds. In addition, the trustee did not take any steps to remove chief executive officer Paul Carsten Pederson from the board of directors of either company.

In addition, the trustee announced on Nov. 4 that Jasper Cosmopolitan will not be proceeding with the proposed disposal of the Jasper Cosmopolitan vessel. However, in Wednesday’s notice, the company said that Jasper Cosmopolitan and Yiulan Shipyard are still engaged in discussions to continue marketing the vessel collaboratively. In the event that a sale of the vessel has not been arranged, title in the vessel will be transferred to the shipyard and/or the builder.

More background

Nordic Trustee ASA, the trustee for Jasper Explorer plc 13½% bonds, issued a standstill letter on behalf of bondholders expressing their support of the obligors of the notes continuing to operate as going concerns despite the anticipated breaches of the liquidity and interest payments under the terms of the notes, subject to some conditions.

If the conditions were satisfied, the trustee said it did not intend to declare the bonds due and payable or begin enforcement proceeds or proceedings for an insolvency or reorganization protection in respect of the obligors.

The standstill letter, which was issued on Sept. 9, was directed to the relevant subsidiaries of Jasper Investments who are obligors under the terms of the bonds. Those subsidiaries are Jasper Explorer, Jasper Offshore (Cyprus) Ltd., Jasper Explorer and Jasper Drilling.

As previously noted, the company reported on Aug. 25 that its consent solicitation to change the terms of the bonds had failed.

Jasper Explorer had asked bondholders to waive the requirement to retain a minimum of $10 million of available free cash and to extend the next interest payment date to March 27, 2015 from Nov. 27.

At a bondholder meeting on Aug. 19 in Oslo, there were not enough bondholders present to form a quorum, no valid resolution was made, and the proposed resolution obtained zero percent of the votes.

On Aug. 4, the company said that it has not registered any revenue since its drillship came off hire at the end of February, that it used a major portion of its unrestricted cash to make the interest payment due on the bond in May and that it needs to use its currently restricted cash to cover ongoing operational costs and general and administrative expenses.

Jasper Explorer is a wholly owned subsidiary of Jasper Offshore (Cyprus) Ltd., which is part of Singapore-based Jasper Investments Ltd., a holding company that principally invests in offshore oil and gas drilling.

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