Viking Supply Ships issues update on restructuring effortCompany News // July 5, 2016
Viking Supply Ships, which has been in a dialogue with its creditors with a view to agreeing a restructuring of the company, has issued a further update on the process.
In a statement, the company said it has made repeated attempts to engage in a dialogue with the bondholders in the bond issue Viking Supply Ships A/S 2012-17 FRN. It said the process with its banks has been very constructive and a framework for a solution has been agreed in all material respects subject to agreement with bondholders. The discussions with the bondholders, however, have been 'quite challenging.'
In the statement, Viking Supply Ships said there has been contact between the company and a committee of three core bondholders. The company has, on several occasions, offered a solution which has involved a deferral of the maturity of the bonds, as demanded by the secured creditors, and part of the interest payments being made in-kind as a part of a restructuring of the group's balance sheet.
Viking Supply Ships said it believes this proposal, which does not involve any reduction of any part of the bondholders' claim, is a fair and attractive offer, but it has been flatly rejected by the above-mentioned committee of bondholders.
The bondholders have expressed their belief that that the only solution they are willing to discuss is one where the bonds are redeemed in cash, albeit at a somewhat discounted price. The amount of new equity raised, as demanded by the secured creditors, will allow for necessary working capital and early repayment of secured loans in exchange for eased amortization over the next four years.
Viking Supply ships says that, if the bondholders do not move from this position, it will not be possible to arrive at a restructuring solution that will allow it to survive as a going concern. It therefor strongly encourages bondholders to engage in a constructive dialogue on 'realistic premises' to seek a solution which will allow a financial restructuring to take place.
The company said it is willing to explore various alternatives, including a conversion of bonds into shares in Viking Supply Ships AB, which is listed on NASDAQ OMX Stockholm segment Small Cap, at present market values, but is not in a position to offer redemption for cash. It notes that shares received can be freely sold by the recipients, and says that it such a solution cannot be reached the only realistic outcome is bankruptcy.
With this in mind the company plans to issue a summons to a bondholder meeting at which it will provide an update on the status of the company, and present a restructuring proposal to the bondholders.