EOAL Cyprus gets bondholder approval to reduce insurance, sell vessel

By Toni Weeks

San Diego, Aug. 7 - EOAL Cyprus Holdings Ltd. received enough consents from the holders of its $88 million of 15% senior secured callable bonds due 2014 and $20 million of 20% super senior secured callable bonds due 2013 to amend the loan agreements for the bonds, according to a notice from bond trustee Norsk Tillitsmann ASA. Both resolutions obtained 100% of the votes at separate meetings held Tuesday in Oslo.

As previously reported, EOAL Cyprus solicited consents to reduce the amount of insurance on its ARV1 vessel, which is located in Angolan waters, while efforts were made to relocate it. New insurance was needed beginning Aug. 1 as a result of the vessel's location, and the company said a reduction in the premium it paid would allow it to preserve liquidity.

The amended loan agreement will allow EOAL Cyprus to reduce the hull and machinery insurance amount to less than 120% of the amount outstanding under the finance documents, or to $50 million from $114 million. In addition, the insurance for war risks will be reduced to $50 million.

The company also amended the loan agreements such that the sale of Normandy would not trigger a mandatory prepayment event under which the company would be required to redeem the 15% bonds at 108% of par and the 20% bonds at par plus a premium.

The company wanted to sell the vessel for scrap and release the security for the bonds related to the vessel. EOAL Cyprus said no maintenance had been done on the vessel since 2008, it was likely in an advanced state of disrepair, the company lacked funds to support basic care and maintenance procedures, and the insurer wished to cancel the protection and indemnity insurance that it currently provided for the vessel.

The company said it did not expect significant proceeds from the sale of the vessel once all port and mooring fees have been paid, but any leftover proceeds would be retained as working capital.

In order to have a quorum at the meetings, at least half of the bonds needed to be represented in person or by proxy at the meeting, and bondholders representing at least two-thirds of the bonds represented at the meeting needed to vote in favor of the proposals in order for them to pass.

At the time the trustee announced the meeting, the company said the member of an ad hoc committee of bondholders holding more than two-thirds of the bonds had agreed to vote their bonds in favor of the proposal.

EOAL Cyprus is a subsidiary of Equinox Offshore Accommodation Ltd. Equinox provides solutions to offshore accommodation and logistics needs and is incorporated in Singapore.

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