Krillsea gets bondholder OK of vessel sale, possible claims write-down

By Susanna Moon

Chicago, Oct. 31 - Krillsea Group AS received bondholder support for the sale of its krill trawl vessel and a write-down of claims if the company pursues a voluntary winding-up, according to a notice from trustee Norsk Tillitsmann ASA.

The proposal passed at a meeting in Oslo on Oct. 31 with the following percentage of votes:

• 90.48% of the company's NOK 26,886,731 15% senior secured bonds due 2011 (the "second-priority II bonds");

• 87.52% of its NOK 53 million floating-rate senior secured PIK bonds due 2012 (the "second-priority I bonds"); and

• 92.95% of its NOK 40 million floating-rate callable senior secured bonds due 2012 (the "third-priority bonds").

As previously reported, in September, bondholders rejected a proposal to sell the M/S Thorshovdi krill trawl vessel for NOK 130 million to Aker BioMarine Antarctic II AS.

Krillsea said no other buyer has materialized. A group of bondholders has accepted a sale of the vessel to Aker BioMarine on the condition that NOK 20 million of the proceeds be distributed to the bondholders. The group holds more than two-thirds of each series of bonds.

In addition, Aker BioMarine will pay NOK 442,129.33 as partial repayment of funding extended by the bondholders. The mortgages over the vessel in favor of the bondholders will be discharged accordingly.

The sale has been completed, but the company sought formal reconfirmation of the sale at the bondholder meeting for the sake of order, according to the notice.

Proposal

Bondholders were asked to approve the following:

• The sale of the vessel;

• Under a funding arrangement established by the holders of the second-priority I bonds, up to NOK 3 million of the proceeds from the first-priority inventory claim has been set aside to be used to cover company administration expenses. This funding will be repaid 150% from the sale proceeds;

• 85% of the remaining net proceeds will be distributed pro rata to the holders of the second-priority bonds, and the rest of the net proceeds will be distributed pro rata to the holders of the third-priority bonds.

The holders of the second-priority I bonds may in addition receive proceeds from the sale of inventory included in the existing loan security for this bond;

• The acceleration of the bond issues and the granting to the issuer of a standstill in order to avoid bankruptcy. The company said the acceleration was needed in order to establish a basis for receiving the sale proceeds; and

• The write-off of claims against the issuer. Without the vessel, the issuer may have no more value, and no further proceeds may be expected for the bondholders. In order to avoid bankruptcy proceedings, a controlled winding-up of the issuer may take place. Alternatively, this process may be accomplished by the sale of the issuer.

The company said that in the case of a voluntary winding-up, it may be necessary for the bondholders to accept a write-down of the remaining bond claims against the issuer. By approving the proposal, bondholders gave the trustee the authority to make such a write-down.

At least half of the bonds had to be represented at the meeting, and the holders of at least two-thirds of the bonds represented at the meeting had to vote in favor of the proposal in order for it be approved.

Krillsea Group, formerly Krill Seaproducts AS, operates a krill fishery in the Antarctic Ocean and makes food and feeds using krill. It is based in Fosnavag, Norway.

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