Otium seeks bondholder approval of amended restructuring proposal

By Angela McDaniels

Tacoma, Wash., July 17 – Otium AS is asking the holders of its senior bonds due 2017 to approve an amended restructuring plan, according to a notice from trustee Nordic Trustee ASA.

As previously reported, bondholders voted against the original restructuring proposal at a meeting in Oslo on July 16.

The company and bondholder representatives have continued to discuss a possible restructuring. Based on these discussions, the bond trustee will convene a new meeting so that the bondholders can vote on the amended terms.

The restructuring will still include a conversion of the company’s unsecured debt, including 44% of the debt under the bond issue and accrued interest, into new preference shares. There will be a moratorium for 24 months on the remaining NOK 6 million of bonds not converted, and the interest rate will be Nibor plus 200 basis points, payable in kind, for the duration of the moratorium.

Under the bonds’ current terms, the interest rate is three-month Nibor plus 500 bps for cash payments and three-month Nibor plus 800 bps for PIK payments.

The new preference shares will only rank behind the company’s secured debt and any new equity (A shares) that may be injected into the issuer. Otium said it will have a right, and the purpose will be, to redeem the new preference shares.

Changes

The following new elements are proposed:

• The issuer currently holds NOK 50 million of the bonds (plus accrued PIK bonds). As part of the restructuring, it is proposed that these bonds (the “consideration bonds”) be distributed pro rata to the bondholders and converted into preference shares;

• The new preference shares will be granted a pro rata preferential right to subscribe for any new A shares in any future share issue in in the issuer;

• The existing share capital, which following completion of the restructuring will be subordinated C shares, will be written off by 50%; and

• As an alternative to converting their consideration bonds into preference shares, bondholders may choose to sell their consideration bonds against a consideration of 15% of their face value. The acquisition of any such consideration bonds will be funded by other financial creditors.

Like before, the restructuring will 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 creditor group.

Bondholders will vote on whether to approve the amended restructuring at a meeting in Oslo on July 21.

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.

The company said the proposal has been discussed with the representatives of the holders of a “substantial majority” of the voting bonds, who have stated that they will vote in favor of the proposal.

The restructuring will also be subject to shareholder approval.

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

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