Farstad secures standstill agreement with lendersCompany News // July 5, 2016
Farstad Shipping has entered into a standstill and deferral agreement with its lenders as it seeks a long-term solution to its financial situation. The company said it is pursuing various options to strengthen its financial position and capital structure including evaluating potential strategic alternatives.
As a first step of a financial restructuring of the Farstad group, on 30 June Farstad and a majority of its secured lenders reached the above-mentioned agreement. Pursuant to the agreement, the relevant lenders have agreed to a postponement of all amortisations of the Farstad group falling due to them in the period from and including 1 July 2016 until 1 October 2016, and a defeasance (a provision that voids a bond or loan when the borrower sets aside cash or bonds sufficient enough to service the borrower’s debt) of all financial covenants during the same period of time. The company will continue its operations, subject to certain restrictions to ensure the interest of its lenders.
In a statement, the company said: “Farstad, together with its financial and legal advisors, will in the upcoming months work closely with investors, strategic partners and lenders to find a solid financial platform for the long-term operations of the group. In parallel Farstad continues the work to optimise its operating model, fleet composition and fleet utilisation, as well as operating cost improvements.”