Cecon seeks to extend 25% bonds, make interest payment in kind

By Angela McDaniels

Tacoma, Wash., April 21 - Cecon ASA is soliciting bondholder consent to extend the maturity date of its $10 million 25% secured bonds due April 30, 2010 by one year and to pay the interest due on April 30 in kind, according to a company news release.

Interest would accrue at the regular rate during the extension and would be payable on the new maturity date.

Cecon said that given its current liquidity position, the changes will be necessary for it to continue its operations.

The company is also seeking to convert the bonds to subordinated bonds and to remove the requirements that it provide a share pledge over all of its shares in Davie Yards Inc. and that it use the proceeds of the sale of such shares to make mandatory prepayments of the bonds.

Davie Yards has filed for creditor protection under the Canadian Companies' Creditors Arrangement Act. The company is constructing three vessels for Cecon and has suspended further production activities on the first vessel to be delivered.

The company argued that after taking into account the little to non-existent value of the Davie Yards shares and the fact that Cecon would have to incorporate a new Norwegian limited liability company at the cost of approximately NOK 120,000 to create the share pledge, "it does not appear to be in the interest of neither Cecon nor the bondholders to create such a share pledge."

Bondholders will vote on the changes at a meeting at 7 a.m. ET on May 6 in Oslo.

At least half of the bonds must be represented in person or by proxy at the meeting in order to reach a quorum, and consents are needed from the holders of at least two-thirds of the bonds represented at the meeting in order to make the changes.

Bondholders who wish to attend the meeting are asked to notify trustee Norsk Tillitsmann ASA (+47 22 87 94 00 or mail@trustee.no) by 10 a.m. ET on May 5.

Cecon is an independent subsea installation contractor located in Arendal, Norway.

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