Otium seeks to convert bonds into preferreds as part of restructuring

By Angela McDaniels

Tacoma, Wash., July 2 – Otium AS is seeking approval to restructure its senior bond issue, according to a notice from trustee Nordic Trustee ASA.

The company said it is experiencing a challenging liquidity and financial position with difficult market conditions and has therefore begun discussions with its lenders about a restructuring.

The restructuring is expected to include a conversion of all the company’s unsecured debt, including the bonds, into new preference shares. Otium said it will have a right, and the purpose will be, to redeem these preferreds.

The company expects the restructuring to also include liquidity loans from banks, project ring-fencing, intra-group service arrangements, divestiture of mature projects, negative pledge arrangements and establishment of an ad hoc credit group. Following completion of the restructuring, the company will seek new capital through equity injections.

The details of the restructuring have not been finalized.

“The company recognizes that the above may not provide sufficient basis for bondholders to make an informed commercial decision on whether to support the restructuring and will as soon as possible call for a separate information meeting in this respect to be held in advance of the bondholders’ meeting,” the company said in the notice.

Bondholders will vote on whether to approve the restructuring at a meeting in Oslo on July 16.

In order to form a quorum, at least half of the bonds must be represented at the meeting. In order for the proposal to pass, it must be approved by the holders of more than two-thirds of the bonds represented at the meeting.

Prior consent solicitation

As previously reported, the company received bondholder approval in March to

• Extend the maturity date of the bonds to March 31, 2017 from March 31, 2015;

• 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 is three-month Nibor plus 500 basis points, payable annually. For PIK payments, the interest rate is 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 is 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.

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

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.