DOF Reorganization Proceeding Without Minority Shareholder Consent
Norwegian offshore vessel operator DOF is turning to the courts in Norway to force through the financial reorganization of the company after its minority shareholders rejected the proposed agreement during a shareholder meeting in mid-November. The company reported that it spent more than three years working on the terms of comprehensive restructuring but unlike industry peers, the deal has not proceeded due to the shareholders’ objections.
“The board of directors is of the view that there is no other available solution that ensures the continued operations in the group than the agreed restructuring,” they said announcing that a filing has been made with the district court in Hordaland, Norway. “It has also been made clear by the group's financial creditors that implementation of the restructuring must take place in accordance with the restructuring agreement,” the company explained while emphasizing that no alternate terms would be available.
As management explained to its minority investors, the restructuring consists of a range of pieces that would reduce the financial obligations and permit the company to be able to better compete with peers, many of which also went through a financial restructuring or bankruptcy. Caught in the middle between the dissenting minority shareholders, which the company notes have failed to present an alternative plan since the November 11 vote, they are asking the court to proceed with the reconstruction process. The group has already taken the first steps at restructuring saying it would provide to continue the business during the process or in the event of a subsequent bankruptcy.
The terms of the agreement include implementing a $580 million debt-for-equity swap, roll over $70 million in bond debt, and consolidate most of subsidiary DOF Subsea's debts into a single loan. This would reduce DOF's $2 billion debt load down to a more manageable $1.3 billion, but in the process the current bondholders and secured lenders would end up with nearly all the company’s equity.
The minority shareholders would be reduced to a maximum of four percent of the company and it might be as low as one percent unless otherwise agreed by the financial creditors. The minority shareholders of DOF are questioning the principle of equal treatment of all the shareholders of the company. DOF and its main shareholder, Helge Møgster, have said that there is no agreement or arrangement regarding preferential treatment of the main shareholder compared to other shareholders irrespective of how the restructuring is implemented.
The financial creditors of the group have made it clear that there is no room for the shareholders to negotiate a more favorable solution than the proposal that was presented at the November shareholder meeting. Further, the group's financial creditors are advising the board that implementation of the restructuring must commence in accordance with the restructuring agreement.
DOF has begun the process of transferring the majority of its business, assets, and contractual liabilities to its wholly-owned subsidiary DOF Services AS while petitioning the court. The company reports it is also moving forward with its business reporting that it has secured multiple new jobs in the Atlantic region with an undisclosed operator in West Africa as part of an integrated field support vessel contract. They also reported a charter for the recently acquired CSV Havila Phoenix.