Otium seeks to extend NOK 100 million bonds due 2015 by two years

By Toni Weeks

San Luis Obispo, Calif., March 17 – Otium AS is calling a meeting of its bondholders to extend the maturity date and make other amendments on its NOK 100 million senior unsecured bond issue due March 31, 2015, according to a notice from trustee Nordic Trustee ASA.

Specifically, the issuer is proposing to make the following changes:

• Extend the maturity date by two years to March 31, 2017;

• Pay interest in cash or in kind, with interest due on the original maturity date to be paid in cash.

For cash payments, the interest rate would be three-month Nibor plus 500 basis points, payable annually. For PIK payments, the interest rate would be three-month Nibor plus 800 bps, payable upon redemption of the bonds or at maturity;

• Amend the call option structure so that the call price gradually increases from the first year until maturity.

The call price would be 102 in the first year, stepping up to 103 on July 31, 2016, to 105 on Oct. 31, 2016 and to 107 on Jan. 31, 2017. The bonds will mature on the extended maturity date at 107% of par; and

• Change the denomination of each bond to NOK 1 from NOK 1,000.

The company said it has been adversely affected by a combination of negative mark-to-market valuations on an interest-rate swap, loss on financial investments, cost overruns and significant delayed asset realizations, which have led to a weakened balance sheet and a restrained liquidity situation for the group on a consolidated basis.

According to Otium, bondholders representing more than 67% of the bond issue have committed to voting in favor of the proposals.

The bondholders meeting is on March 31 in Oslo.

The issuer is also offering to buy back the bonds at 30% of par plus accrued interest. The offer is open from March 18 until March 30, with settlement to occur March 31. The buyback offer is conditional on the bondholders voting in favor of the proposals.

To approve the resolution, bondholders representing more than two-thirds of the bonds must be represented in person or by proxy. In order to have a quorum, at least half of the voting bonds must be represented at the meeting.

Fearnley Securities AS and SpareBank1 Markets AS are the advisers.

Otium is a property developer in the residential, commercial and leisure market. The company was incorporated in 1987 and is based in Stavanger, Norway.

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