SeaBird negotiates restructuring based on $8.5 million of new equity

By Kali Hays

New York, Jan. 29 – SeaBird Exploration plc has reached an agreement on the principal terms of a consensual restructuring of its balance sheet that will provide the company with additional funding, according to a Thursday news release.

Parties to the restructuring agreement include 75.7% of SeaBird’s bondholders, its convertible loan lender Perestroika AS, some trade creditors and the company’s restructuring advisers.

As previously reported, the company is in default on its existing bonds and loans and said that it now “requires new sources of funds to sustain its operations.”

Under the restructuring agreement, a minimum of $8.5 million in new equity is to be raised from “certain investors” at NOK 0.10 per share, which will entitle each new share subscriber to a three-year warrant to subscribe for another share at the same share price.

The new equity minimum is a condition of the restructuring, but the company said that it has received stakeholder subscription commitments totaling $6.5 million, with the remaining $2 million guaranteed under a guarantee consortium with a 2.5% guarantee commission.

Lender Perestroika will subscribe for $2.5 million and guarantee $1 million, according to the release.

“In order to eliminate the need for the use of the guarantee, the company intends to seek further subscriptions for new equity for a period from Jan. 29 to Feb. 2.”

New bond issue

As part of the restructuring, SeaBird will issue a new three-year secured bond in two tranches. Tranche A will be in the amount of $5 million and carry interest of 12%, while tranche B will be in the amount of $24.34 million and carry interest of 6% to be secured against assets of the SeaBird group, according to the release.

Interest on the bond is to be paid quarterly and the first principal payment is expected in the first quarter of 2015 in the amount of $2 million.

Approximately $16.2 million of the outstanding amount under SeaBird’s senior secured callable bond issued in 2011 and 2015 will be rolled into the new bond issue, and the remaining $64.7 million of the outstanding amount will be converted into equity at NOK 0.30 per share.

About $3 million of the company’s convertible loan with Perestroika will also be rolled into the new bond issue, and the remaining $11.9 million of the loan will also be converted into equity at NOK 0.30 per share.

Trade creditor claims of the Munin Explorer, Geo Pacific, Hawk Explorer and Voyager Explorer will be partially converted into the new bond issue or a credit line facility, partially converted into new equity and/or partially written down under the ongoing charter obligations to include certain amendments that will result in an annual pre-tax cash flow improvement of more than $9 million, according to the release.

Restructuring advisory fees totaling $700,000 will be rolled into the new bond issue, while $2.8 million in fees will be converted into new equity at NOK 0.30 per share.

In order to implement the new share issue, SeaBird will hold an extraordinary general meeting whereby a class of new preference shares will be issued for a limited period of time. Company shares issued as new equity and through conversion of debt will be issued at a price of 500 times the subscription price per ordinary share during this time.

To facilitate the conversion of new preference shares into ordinary shares, an additional extraordinary general meeting will be held, during which SeaBird will reduce the nominal value of its shares from $0.10 to $0.0001 and the authorized share capital of the company will be increased to a higher amount to be divided into ordinary shares of $0.0001 each.

According to the release, the completion of the restructuring is subject to approval from a required number of shareholders, and there can be no enforcement action taken by any creditor on any material claim against SeaBird.

ABG Sundal Collier Norge ASA, Fearnley Securities AS and RS Platou AS act as financial advisers to the company. Advokatfirmaet Schjodt AS and Montanios & Montanios act as Norwegian and Cypriot legal counsel to the company, respectively.

SeaBird provides marine seismic data and associated products and services to the oil and gas industry. It maintains offices in the British Virgin Islands, Dubai and Oslo.

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