Havyard seeks covenant change under notes due 2020 as ‘safety measure’

By Susanna Moon

Chicago, Dec. 10 – Havyard Group ASA is asking for bondholder support to amend the book equity covenant under its NOK 131 million senior bonds due June 13, 2020 “as a safety measure.”

Specifically, the issuer is seeking to amend the clause so that the group must maintain on a consolidated basis a book equity of at least NOK 400 million, according to a notice from trustee Nordic Trustee ASA.

“The severe downturn in the oil service industry the past few years resulted in a ripple effect in the yard industry with significantly lower activity levels in general,” the release offered as background for the proposal.

“The issuer has been through a challenging period but has been successful in attracting new business from new segments during the period, especially related to seafood, offshore wind and ferry industry, leaving the current order book at record high levels, equally approximately NOK 5.1 million.”

“Although activity levels picked up during 2018, it has not been sufficient to return to profitability,” the release noted.

As of the third quarter, book equity was NOK 453 million, “which leaves little headroom to the minimum book equity covenant of NOK 450 million,” the release said.

A bondholders meeting has been scheduled for Dec. 27 in Oslo.

To approve the changes, bondholders representing at least two-thirds of the bonds must vote in favor of it. To form a quorum, at least one-half of the bonds must be represented.

The amendment fee will be 1.5%.

The issuer has received support for the proposal from “major bondholders,” according to the notice.

Fearnley Securities AS (+47 22 93 6377 or ibd.dcm@fearnleys.no) is the financial adviser.

As reported March 30, the company received holder support to amend the bond issue 2014/2017 to extend the term to June 13, 2020 from 2018 and to raise interest by 125 basis points to Nibor plus 825 bps, effective beginning March 13.

The notes were issued in 2014.

The fully integrated ship technology company’s headquarters are in Fosnavag, Norway.

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