Eitzen restructuring complete; bank, bond debt converted and repaid

By Caroline Salls

Pittsburgh, Jan. 27 – Eitzen Chemical ASA’s restructuring was completed on Tuesday, with roughly $850 million of bank and bond debt being converted and $43 million repaid with the proceeds from a new $100 million revolving credit and term loan facility, according to a company news release.

As result of the conversion of the bank and bond debt, Eitzen said the holders of the converted debt now own 98% of its outstanding shares.

The company said the debt leverage of its balance sheet is now one of the lowest in the industry, and its operating capabilities will enable it to explore and exploit opportunities in the market, including new investments, mergers and acquisitions.

As part of the completion of the restructuring, Eitzen said the previous holders of debt in the company subscribed for new shares in accordance with a resolution to increase the share capital made by shareholders at a Jan. 14 meeting.

According to the release, a total of 552.24 million new shares were subscribed for at an average subscription price per share of NOK 7.37. The subscription price for each previous lender varies depending on an agreed valuation of that lender’s holding of debt. The total share capital increase is NOK 552.24 million, plus a premium of NOK 3,516,753,385. The new shares will not be listed.

As previously reported, Eitzen entered into a plan support agreement with the majority of its banks and bondholders and its largest shareholder that called for the conversion of $850 million of bank and bond debt and the repayment of $46 million.

The company said it will adopt a new name, Team Tankers International, and reincorporate in Bermuda as part of the restructuring.

Restructuring terms

The terms of the agreement include the following:

• Roughly $32 million of outstanding debt under some of the group’s bank facilities will be repaid in cash;

• All outstanding debt under the group’s remaining bank facilities will be converted into new equity representing 94.5% of the outstanding shares at completion of the conversion;

• The total amount of outstanding debt under the group’s bond loans, less $13.5 million, will be converted into new equity representing 3.5% of the outstanding shares at completion of the conversion. The remaining amount under the bond loans will be repaid in cash;

• Skandinaviska Enskilda Banken AB (SEB) will exchange its entire claim under one of the bank facilities for a sale-leaseback agreement involving three of the company’s existing vessels. The company said it is expected to recognize an estimated impairment of $90 million in the fourth quarter, which will align the book value of the vessels to current broker valuations.

Final settlement of the arrangement with SEB is subject to completion of the debt conversion;

• The company has entered into a term sheet with SEB and NIBC Bank NV regarding a $100 million credit facility, including a $66.7 million term loan facility and a $33.3 million revolving credit facility.

Subject to approval of a new lender by all lenders, the facility may be increased by up to $50 million, to be split with up to $33.3 million on the term loan facility and up to $16.7 million on the revolving facility; and

• In a voluntary offer, Team will acquire all existing shares in Eitzen and all consideration shares issued in the debt conversion in exchange for shares in Team to be listed on Oslo Bors, or, alternatively, Oslo Axess.

The company’s financial adviser is Evercore and its legal counsels are Wiersholm, Wikborg Rein and Willkie Farr & Gallagher, the release said.

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

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