Siem Offshore has Terms for European Restructuring Diluting Shares
Siem Offshore reported that it making process with its restructuring. The company reports that it has reached terms with the European banks and is calling bondholders to a special meeting. However, the company has yet to reach terms with its Brazilian banks for their participation in the restructuring and raised the possibility of restructuring without their participation.
In a stock exchange announcement, they said, “SIOFF is pleased to announce that it is in the final stages of negotiations with the European banks and expects to sign a formal term sheet for the restructuring of the group's credit agreements with these lenders shortly.”
The company has been working with key bondholders of its two outstanding bond issues and released the terms of the agreement along with a call for a special meeting to be held on February 5 for the bondholders to approve the terms. The Company has obtained confirmation from key bondholders representing a substantial share of all bonds that they support the restructuring process of the Group and that they will vote in favor of the proposal. Further, the European banks have confirmed their support of the bond restructuring proposal.
The terms of the restructuring calls for the company’s debt to be reset at $268 million made up of two nearly equal shares of bond and secured bank debt. There will be a $4 million cash payment to the first series of bonds with the remainder of the claim and all of the second series being converted to equity in the restructured company. There will also be an extension of maturity for secured facilities due before December 31, 2024.
The existing shareholders of Siem Offshore, including Kristian Siem, however, will be substantially diluted in the transaction. The existing shares are expected to represent approximately 4 percent of the company while the converted debt, including the bondholders, will represent approximately 96 percent of the company’s shares after restructuring. Upon completion of the restructuring, Siem Industries is expected to hold approximately 30 percent of the shares.
“While the negotiations with the Brazilian banks continue, the group is exploring alternative options with a view to consummate the restructuring without the consensual participation of BNDES and Banco do Brazil.” Siem’s said in their filing. They reported that discussions are however continuing with the Brazilian banks to secure their participation in the restructuring.
The components of the restructuring are subject to credit and internal approvals with the stakeholders. The agreements with the European banks and the bondholders are further mutually conditional and subject to a satisfactory refinancing solution with the Brazilian banks.
A year ago, Siem Offshore had announced that it would need to seek a restructuring of its debt based on the prolonged downturn in the offshore sector.