Otium bondholders vote in favor of amended restructuring proposal

By Marisa Wong

Madison, Wis., July 21 – Otium AS received the necessary votes to amend the agreement governing its senior bonds due 2017, according to a notice from trustee Nordic Trustee ASA.

As previously announced, Otium asked bondholders to approve an amended restructuring plan.

Bondholders had voted against the original restructuring proposal at a meeting in Oslo on July 16. Another meeting was held on July 21.

At the latest meeting, there were sufficient bondholders to form a quorum, and the proposed resolution obtained 88.84% of the votes, the trustee said.

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

The company previously said the proposal was discussed with the representatives of the holders of a “substantial majority” of the voting bonds, who stated that they would vote in favor of the proposal.

Background

The company and bondholder representatives continued to discuss a possible restructuring following the July 16 meeting. Based on these discussions, the bond trustee convened a new meeting so that the bondholders could vote on the amended terms.

The amended restructuring still includes 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’ terms prior to amendment, the interest rate was 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 were proposed:

• The issuer currently holds NOK 50 million of the bonds (plus accrued PIK bonds). As part of the restructuring, 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 also includes 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.

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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