AusGroup noteholders give it more time to wrap up documentation

By Angela McDaniels

Tacoma, Wash., Nov. 7 – AusGroup Ltd. has been given more time by noteholders to finalize some documentation, according to a company news release.

More specifically, the company received letters of consent from one or more noteholders representing 10% of the notes to extend the documentation date for restructuring documents that require the consent of third parties to Dec. 19 from Nov. 4.

As previously reported, the company announced on Sept. 13 that it anticipated difficulty in repaying the notes at maturity and therefore was seeking consents to extend the maturity and make other changes to the notes.

The holders of S$97.75 million, or 88.86%, of the S$100 million outstanding notes voted in favor of amendments to the notes at a meeting held at 11 p.m. ET on Oct. 4.

The company sought and received a waiver for any non-compliance or potential non-compliance with various provisions of the trust deed and the notes and the approval of noteholders to

• Extend the maturity date to Oct. 20, 2018 from Oct. 20, 2016;

• Increase the interest rate from 7.45% to 7.95% beginning Oct. 20 and to 8.45% beginning Oct. 20, 2017;

• Change the frequency of interest payments to monthly from semiannually beginning Nov. 20;

• Withdraw funds from the interest service reserve account to make the interest payment due Oct. 20;

• Withdraw the remaining amount in the reserve account and use those funds, along with surplus cash, to redeem at least S$4 million of the notes on Nov. 20;

• Add a make-whole premium to any redemption made after Nov. 20 such that the total interest amount paid from the original maturity date to the redemption date is equal to 9.45% per year on the original principal amount of the notes;

• Add a redemption option for all, but not only some, of the notes in the event of the sale of any of the company’s Port Melville assets. A premium of 10% of any capital gains valued on such sale would be payable to noteholders on a pro rata basis;

• Change the special quorum requirements to two-thirds of the bonds from 75%; and

• Add Ezion Offshore Logistics Hub Pte. Ltd. and Ezion Offshore Logistics Hub (Tiwi) Pty. Ltd. as additional obligors.

Background

The company provides services to the energy, mineral and industrial sectors in South East Asia and Australia. It said that construction activities by energy and mining companies have decreased since 2014 as a result of depressed oil and commodity prices, and the company has transitioned from predominately serving and supporting capital expenditure expansion in the mining sector to catering to operational expenditure and maintenance services in the oil and gas segments.

In 2014, in an effort to diversify, the company entered the onshore and offshore marine services business via the acquisition of Port Melville. It issued the notes and used the proceeds for the acquisition. The beginning of full port operations has suffered due to continued delays in environmental and regulatory approval processes, according to the noteholder notice.

On May 14, the company disclosed in its financial results that its consolidated total equity had fallen to A$148 million, less than the A$160 million required by the trust deed for the notes.

In addition, the interest coverage ratio for the June 30 test period was less than 2 to 1, and the company said it did not make the required deposit to the interest service reserve account in light of a limited amount of cash on hand and its operational and other requirements.

West Perth, Australia-based AusGroup is the parent company of AusGroup Singapore Pte. Ltd.

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