DOF Subsea to ask bondholders to OK minimum cash covenants alignment

By Caroline Salls

Pittsburgh, June 25 – DOF ASA announced Tuesday that DOF Subsea AS will ask holders of all three of its bond loans to approve a change to its minimum cash covenants in order to align the DOF Subsea group’s liquidity covenants for all of its debt facilities, including the bond loans.

According to a news release, bondholder meetings will be held for DOF Subseas’ senior unsecured bond issue 2013/2020, 9½% senior unsecured bond issue 2017/2022 and senior unsecured bond issue 2018/2023.

DOF Subsea said it is requesting that all its minimum cash covenants are aligned to be measured using the proportional consolidation method, which implies a change for bonds to the method already applied by banks, with a common threshold of NOK 400 million.

The company said this change implies an increased amount from NOK 300 million for the DOFSUB07 bond, no change for the DOFSUB08/09 bonds and most banks, and a reduction from NOK 500 million for some banks.

If these changes are approved, DOF said the group believes that it has established a satisfactory short-term platform, which may contribute to finding a long-term financing solution for the group and relevant stakeholders.

DOF said the group has found that regular rollover or refinancing of existing loan facilities is very challenging. The company announced on May 22 that the group would likely be in breach of its financial covenants soon and unable to repay or roll over some of its existing loans when they fall due.

According to the release, the group commenced a dialogue with the involved parties in order to reach agreements to solve the situation. Based on those talks, the group has obtained an extension of a loan until the end of November and is working on solutions in order to reduce the refinancing risk and further stabilize the liquidity situation.

DOF said these events have, in the group’s view, highlighted the need to align loan covenants as much as possible, as DOF Subsea currently has deviating requirements for minimum cash in several of its bank debt agreements and also for its bond loans.

DOF is a Storebo, Norway-based company that provides services to the global oil and gas industry.

© 2015 Prospect News.
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