Olympic Subsea aims to delay listing under 3% bonds, 0% convertible

By Susanna Moon

Chicago, Nov. 26 – Olympic Subsea ASA is asking to postpone listing of its shares under the terms of its NOK 300 million 3% senior bonds and NOK 60 million 0% senior convertible bonds, each due July 31, 2022.

Specifically, the company is asking for the required majority of holders to approve an extension in listing the shares by 24 months to a new deadline of 48 months after the issue date, according to a notice by Nordic Trustee AS.

“After the severe downturn in the oil service industry,” the company completed a financial restructuring in January 2017 after an agreement between the shareholders and creditors was reached.

The new bond loans have 5.5-year maturities and required Olympic Subsea to list its common shares at a recognized exchange such as Oslo Bors, Oslo, Axess or Merkur Market within 24 months after the issue or by Jan. 31, 2019.

The listing requirement was “based on the assumption that the oil service sector would experience a gradual improvement going forward. The market recovery has however been slower than first anticipated and listed oil service peers are currently priced at distressed levels, with market capitalizations at historically low levels,” the notice said.

Although the company “has been successful in terms of utilization of the fleet, the challenging market has caused a drop in earnings and a negative net profit during the first half 2018 of negative NOK 107 million.”

“The bond loans are currently being traded significantly below par value,” with the last trades of the 3% bonds at about 22% and the convertibles at about 52% of par, the release said.

“The equity value in the company is thus likely to be purely option based, and represents an insignificant value. The possibility of raising new equity in today’s market in connection with the listing is also deemed unlikely.”

“As it currently stands, the only marketplace available to the company for a listing is Merkur Market. Shares listed on Merkur Market are usually listed at a discount and experience very low liquidity, and thus a further discount to book values.”

As a result, the company said it was in the best interest of bondholders, shareholders and the company itself by postponing the listing of the shares and keeping the company private until the underlying market improves.

The company expects the market to recover on a medium- to long-term basis.

With that in mind, “the pre-money valuation will likely be higher than if the company is already listed on Merkur Market (at a discount), improving the chances of getting full recovery under the bond loans,” the release said.

Also, being listed also comes at a cost in terms of the actual listing costs and for the allocation of ongoing resources, according to the company.

If listed on Merkur Market, the shares in the company are “expected to be highly illiquid, making it challenging to get out of positions if needed.”

Olympic owns and rents ships and is based in Fosnavag, Norway.

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