Local investors team up with principal shareholder Stig Remøy in a restructuring and refinancing solution for Olympic Ship AS. The agreement enables the company to continue its operations and is accepted by the secured lenders, yard creditors and more than two thirds of the bondholders in the two bond loans issued by the company.
A new subsea company will be established as the key element of the new solution. In addition, new equity of NOK 400 million will be issued, loan terms will be renegotiated and the maturity profile for the loans will be changed. The solution implies that the company’s total interest bearing debt will be reduced from NOK 5.5 billion to NOK 3.8 billion.
- We have achieved a long term and sustainable solution, safeguarding the main parts of our business and employees. As part of the solution, we will form a new entity in the Olympic family, with adequate funding to survive through the downturn in the market. This new company, Olympic Subsea AS, has been refinanced until the end of 2021, says Olympic’s CEO Stig Remøy.
Mr Remøy injects new equity and becomes majority shareholder(70%) of the new company, supported by three local investors participating through the investment companies Seriana AS, Marin Group AS and Omega Maritime AS
- We are very pleased that we found a local solution with investors who know our business and our market. This will give stability and predictability in a turbulent market, while at the same time positioning the company for new growth when the market starts growing again, says Mr Remøy.
The local investors are also satisfied with the new set up and emphasize their role as financial investors.
- We have made this investment based on our perception of Olympic as an interesting and forward-looking shipping company. We do of course also give weight to the fact that this is a local company operating in a sector, which we know very well, says Seriana ‘s representative Mr Pål Huse.
- The investment in Olympic fits well into our investment strategy. The company represents a sector that we know well. We also find it important that the unique maritime cluster in Norway can be maintained, says CEO Svein-Rune Gjerde of Marin Group AS.
Olympic Ship AS announced in July that they had initiated a process to find permanent solutions for the demanding financial situation following the difficult market situation. The plan includes a number of important elements, which in total represents a solution that has been accepted by all parties concerned.
Last Tuesday, Olympic announced that Swire Pacific will acquire the vessel «Olympic Athene» from Olympic. In addition, one of the secured lenders will take over the vessels «Olympic Commander», «Olympic Poseidon» and «Olympic Hera». The sale of the four vessels is part of the solution agreed between the company and the lenders.
This means that Olympic will no longer be able to offer employment to the crew on these vessels. All in all Olympic expects that 80 employees will be redundant, while others could be temporary redundant.
- I regret that we are forced to discharge so many good employees, and we would really have wanted to avoid this situation. At the same time, we must accept that this solution enables us to keep the majority of our staff. This has been an important goal for us during the process, although we feel sorry for those colleagues who will not be part of the future Olympic, says Mr Remøy.
The sale of Olympic Athene will have a positive liquidity effect on group level of NOK 70 million after repayment of debt, while the other vessels are expected to have a neutral liquidity effect.
Eleven modern subsea vessels from Olympic Ship AS’ fleet will be acquired by the new entity, Olympic Subsea AS. This company will be funded with new equity from Olympic’s existing and new, local investors. Olympic Subsea AS acquires the 11 vessels from the Olympic Shipgroup, and Olympic Ship AS becomes a subsidiary of the new Olympic Subsea AS. Five PSV’s (supply vessels) and three ATHS will remain in Olympic Ship AS.
New group structure
Olympic Subsea AS becomes the new parent company in the Olympic Group and provide Olympic Ship with a calculated funding amount to cover a potential capital requirements until 2020.
Olympic Subsea AS will raise total equity of NOK 400 million. The new company will allocate funds to cover the PSV and AHTS operations until 2020, but will not have other financial obligations towards Olympic Ship.
New terms for secured bank debt
Olympic Subsea will be responsible for the secured bank debt related to subsea vessels, amounting to approximately NOK 2.8 billion. Amortization on all secured bank facilities will be significantly reduced through 2020, and all maturities postponed until September 2021. In addition, financial covenants in all facilities will be amended. The total positive liquidity effect for the Group is approximately NOK 1.5 billion.
Refinancing of bond loans
The holders of OLSH02 and OLSH03 will have their holdings converted into two new bonds to be issued by OLSUB, being a subordinated mandatory convertible bond in the amount of NOK 60 million and a senior unsecured bond of NOK 300 million. Both new bonds will have a maturity in 5.5 years from issuance. The convertible bond can be converted into an ownership of 13% in Olympic Subsea AS. The senior unsecured bond, which will bear interest at 3% PIK can be called after two years at 65% of par, after three years at 75% of par, and after four years at 85% of par.
Changed terms of payment agreed with yard creditors
Debt towards yard creditors, in aggregate NOK 89.5 million, is extended until 30 September 2021 as part of the refinancing of the Group. No interest will accrue in the period.
The completion of the Restructuring is subject to several terms and conditions, including inter alia, approval by the requisite bondholder meetings and by an Extraordinary General Meeting of the Company (EGM) and final documentation and agreements with the relevant stakeholders. The Company will call for meetings of all two bondholder groups, which the Company anticipates will be held on or about 22 December 2016. The changes require the approval of 2/3 of the bondholders in each bond issue.
While Olympic is confident that the Restructuring proposal is the best available solution for all stakeholders and the Company, there can be no guarantees that final approvals, agreements and documentation will be reached or consummated.
The Company has retained Fearnley Securities and EY as financial advisors and Wiersholm as legal advisor to assist the Company in its process to address the contemplated long term financing solution of the Group.