Sevan Marine to close first part of restructuring this month

By Jennifer Chiou

New York, Nov. 23 - Sevan Marine ASA announced that the first parts of its previously announced restructuring plan will be completed on Nov. 30.

As already reported, bondholders voted in favor of the plan at a meeting on Nov. 10 in Oslo.

The bonds covered by the meeting were the company's NOK 870 million of floating-rate senior secured callable bonds due 2012, $270 million of floating-rate senior secured callable bonds due 2013, NOK 700 million of 14% callable senior unsecured bonds due 2014, NOK 625 million of senior secured bonds due 2015, $100 million of senior secured bonds due 2015 and 15% callable senior secured bridge loan bonds due 2012.

According to a company release, the first closing will include the following:

• The company's Hummingbird and Piranema floating production storage and offloading units will be sold to Teekay Corp. Along with the Voyageur, the sale price was to be $668 million, of which $438 million was to be used to settle the secured bonds;

• The unsecured bonds will be settled in full via (a) either the transfer of the issuer's 96 million shares in Sevan Drilling to the unsecured special-purpose vehicle or the payment of the unsecured bondholders of the balance of the proceeds received from a sale of the shares after all of the debt under the bridge loan bonds has been repaid and (b) the issue to the unsecured bondholders of 10% of the pro forma share capital of the issuer following the restructuring by way of a debt-for-equity conversion;

• Teekay will subscribe for $25 million of Sevan shares, giving it 40% of the issuer's post-restructuring shares. In addition, up to $25 million of new shares will be offered to existing shareholders and the unsecured bondholders, giving them 40% of the issuer's post-restructuring shares; and

• The reduction of the company's share capital will come by way of a reduction of the par value of each share to NOK 0.04 from NOK 0.20 in addition to the implementation of a reverse share split at a ratio of 100:1, resulting in a par value of each share of NOK 4.00.

Under the originally announced plan, before Teekay purchases the Voyageur floating production storage and offloading unit, it will extend a bridge loan to Sevan, which will use the proceeds to complete the upgrade of the unit.

As noted, affirmative votes were needed from the holders of two-thirds of the bonds of each class represented at the meeting earlier this month.

Equity notice submissions

On Nov. 16, the company announced that its unsecured bondholders did not meet the 50% requirement for unsecured equity notice submissions needed to require holders of the company's secured bonds to purchase the unsecured holders' stock. Secured bondholders, therefore, are not required to or entitled to acquire those shares.

At a meeting on Aug. 5, the bondholders voted in favor of a proposal to, among other things, defer interest payments and to introduce a standstill period until Sept. 30 in order to allow the issuer to continue its operations while seeking to reach an agreement with its major stakeholders about a long-term restructuring solution.

On Oct. 18, the issuer and the holders of more than two-thirds of the outstanding bonds of each series agreed on the terms of the restructuring, and the bondholder group agreed to support the implementation of the plan under a lock-up agreement.

As noted, the standstill period will continue until the restructuring is completed.

Sevan Marine is an offshore drilling company based in Arendal, Norway.

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