Volstad gets nod to amend, partially redeem 2013/2018 callable bonds

By Wendy Van Sickle

Columbus, Ohio, March 16 – Volstad Shipping AS said it received bondholder approval to amend its NOK 275 million second-lien callable bond issue 2013/2018 to allow for early partial redemption of the bonds and conversion of remaining bonds into equity interest in the company, according to a notice from trustee Nordic Trustee ASA.

The company had said it sought the changes as it struggles during the oil and offshore support industry downturn.

At a bondholder meeting on Wednesday, a resolution containing the amendments passed with 90.14% of the votes in its favor. The measure required approval from bondholders representing at least two-thirds of the voting bonds represented at the meeting. In order to establish a quorum, at least half of the voting bonds had to be represented at the meeting.

In its summons to the meeting, the company had said the downturn in the markets for oil service and offshore support service vessels through 2015 and into this year has resulted in numerous laid-up vessels throughout the industry and “the competition for contracts is fierce.”

Two of the company’s three large platform supply vessels are laid up, and no employment has been found for its new-build subsea vessel that is under construction in Turkey and scheduled to be delivered March 28. Also, another subsea vessel was contracted to DeepOcean AS through Sept. 29, 2016, but DeepOcean in February sent Volstad a termination notice, which Volstad disagrees with and intends to pursue damages from.

The termination severely pressured Volstad’s current and projected cash flow, threatening the company’s continued existence unless agreements with creditors are made, according to the summons.

After initiating talks with a majority of the 2013/2018 bondholders, the company proposed an early redemption of the bond at 36% of par plus an equity interest in the company’s oil service vessels, which the company plans to separate from its fishery assets in a restructuring, the steps of which have not yet been clarified.

The resolution

Bondholders approved amendments to the bond agreement that will

• Forgive and discharge all unpaid interest on the bonds up to and including the effective date;

• Waive all events of default through the effective date;

• Allow the issuer to redeem in cash 80%, or NOK 220 million, of the bonds at a price of 45% to be distributed equally among all bondholders within five days of the effective date;

• Permit a reorganization under which the assets and liabilities of Volstad an transferred to a separate offshore entity;

• Convert remaining bonds into a subordinated unsecured debt instrument with no coupon but rights of payment equal to (a) prior to reorganization, net proceeds from the oil service vessels and the new build will first be used to repay debt and at any time thereafter 49.9% of the surplus shall be distributed to bondholders, (this will not apply to a sale as part of the reorganization) and (b) after reorganization, an amount equal to 49.9% of any dividend paid from the offshore entity;

• Establish a maturity of the remaining NOK 55 million bonds that is three years from the effective date, at which point they will be converted into shares of the offshore entity if the reorganization has occurred or into Volstad Shipping if it has not. The issuer will have the option to offer to redeem the bonds at par at maturity.

The bondholders also consent3e to a delisting of the bonds from Nordic ABM and to change their status to unsecured subordinated obligations.

Volstad retained ASG Sundal Collier ASA as its financial adviser in the amendment process. Questions may be directed to Sundal Collier’s fixed-income sales department at +47 22 01 06 32 or to its debt capital markets department, Kjetil Myklebust, +47 22 01 6193, or Olga Nygard, +44 22 01 6186.

Based in Alesund, Norway, Volstad Shipping owns three large platform vessels, two subsea vessels and one factory trawler.

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