SeaBird bondholders approve restructuring proposal at Feb. 18 meeting

By Marisa Wong

Madison, Wis., Feb. 18 – SeaBird Exploration plc’s bondholders voted in favor of a restructuring proposal at a meeting held on Wednesday.

There were sufficient bondholders present at the meeting to form a quorum, and the proposed resolution obtained 100% of the votes, according to a notice from bond trustee Nordic Trustee ASA.

The bond meeting and the proposed restructuring and waiver of defaults was announced on Feb. 11, as previously reported.

Previous announcements

SeaBird had reached an agreement on the principal terms of a consensual restructuring of its balance sheet that will provide the company with additional funding. 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.

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. All participants will also receive one three-year warrant for each share subscribed at the same share price.

The bondholders will use NOK 2.26 million in a bond service account to subscribe for the new money equity.

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, the company said last month.

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.

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.

About $16.2 million of the outstanding amount under SeaBird’s senior secured callable bond issued in 2011 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.

Roughly $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.

A total of $3.39 million of accounts payable for bunkers will be rolled into tranche B, and the remaining $2.35 million will be converted into a new credit facility for bunker purchase.

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.

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.

Default details

Nordic Trustee said SeaBird is in default on its unsecured loan with Perestroika as a result of non-payment, which triggered a cross default under the bond issue.

Other defaults include covenant breaches, failure to make monthly bond service payments and breaches of other bond agreement obligations.

The company asked the bondholders to waive the defaults to allow it to implement the restructuring.

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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