Eitzen Chemical, committee agree in principle to restructure bond loan

By Caroline Salls

Pittsburgh, Oct. 5 - Eitzen Chemical ASA has entered into a financial restructuring agreement in principle with a steering committee established by its bank syndicates and representatives of the largest holders of its bond loan, according to a company news release.

Eitzen said the agreement, which is expected to provide for normal operations for several years, builds on a restructuring agreement announced on Aug. 9 but includes a restructuring of the outstanding bond loan to secure a longer grace period.

According to the release, the agreement keeps terms of the Aug. 9 agreement in principle intact. This includes an extension of the existing senior bank debt to May 2016 and no fixed installments until April 2015.

In addition, the new agreement allows for deferral of some bank debt installments in 2015 and 2016.

Eitzen said this latest agreement in principle allows for the existing bond debt to be split in two instruments, with $50 million to be converted into a second-lien mortgage instrument and the remaining $60 million to remain as an unsecured loan.

The unsecured note will be callable by the company into $10 million of equity in a future stock issue, the release said, and the second-lien instrument will also include $30 million of converted senior bank debt.

The agreement is subject to formal approval by the banks' credit committees and a bondholder meeting.

In anticipation of a definitive agreement, Eitzen said the banks have granted a waiver of the current minimum cash covenant and loan-to-value covenant until the end of October.

Also in anticipation of completion of the agreement, the trustee of the bond loan and the banks' steering committee have agreed to give the company a grace period for payment of interest until the end of October.

Eitzen said deferred interest for the bank debt and bond loan will be handled according to the new financial plan.

The company said holders of a majority of its unsecured bonds have agreed to vote in favor of the proposed restructuring at a bondholders' meeting.

ABG Sundal Collier has acted as adviser to the company, Alix Partners as adviser to the banks and AMA Capital Partners as adviser to the bondholders.

Eitzen Chemical is a marine transportation services provider based in Oslo.

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