Blom negotiates restructuring proposal, seeks bondholder vote April 24

By Caroline Salls

Pittsburgh, April 3 - Blom ASA is asking bondholders to vote on a proposed restructuring, according to a notice to the holders of Blom's senior 2009 bond issue 2009/2012 and senior bond issue 2011/2012 from bond trustee Norsk Tillitsmann.

The trustee said a majority of the bondholders, including Folketrygdfondet and other large bondholders that control a total of 63.5% of Blom's NOK 300 million bond loan, have been part of restructuring talks and are prepared to vote for the proposal at a bondholders' meeting.

Under the proposed restructuring, the 2009 bond issue would be converted into Blom shares.

As an alternative, the trustee said the 2009 bondholders would be offered the right to exchange their bonds for new 2% subordinated convertible bonds due April 30, 2017 at an exchange ratio of 31 new bonds for every 100 of existing bonds converted.

The initial conversion price for the new convertible bonds will be 20% above the volume-weighted average trading price of Blom's shares on the first two trading days after an extraordinary general meeting scheduled for April 25.

The exercise period on the new bonds will run through April 30, 2014.

Exchange offer

The exchange offer is subject to a maximum principal amount of NOK 40 million, meaning the maximum size of the new subordinated convertible bond loan will be NOK 12.4 million.

If more than NOK 40 million of the 2009 bonds are tendered in the exchange offer, the number of 2009 bonds exchanged will be rounded down in proportion to the number of bonds tendered by each bondholder.

The company will launch the exchange offer on April 10, and the offer will expire on April 19.

If the proposal is approved, all 2009 bonds that have not been acquired by Blom through the exchange offer will be converted into shares of the company at a conversion price of NOK 10 per share.

Norsk Tillitsmann said accrued interest would also be part of the conversion, meaning the minimum amount to be converted if all bonds are converted would be NOK 306.13 million and the maximum amount would be NOK 346.13 million.

2011 bond changes

In addition, the terms of the 2011 bond issue would be amended, as follows:

• The maturity date will be extended to April 30, 2015 from June 4, 2012;

• The margin will be changed to 5.5% from 11%;

• An existing intercreditor agreement will terminate upon conversion of the 2009 bonds;

• A €5 million guarantee from Blom CGR SpA will be released;

• A bank account pledge will be released; and

• The trustee will be authorized to enter into an intercreditor agreement with Blom that includes provisions for full subordination of the 2011 bonds, except for payment of ordinary interest if no default has occurred, and no enforcement rights on the 2011 bond issue while the new bond issue is outstanding.

Short-term financing

Blom would also obtain additional short-term financing, according to the notice. Specifically, the trustee said the company could issue new bonds or seek other forms of short-term financing during 2012 in the maximum amount of NOK 30 million.

The short-term financing would have a term of no longer than nine months.

If the short-term financing is secured through a new bond issue, the 2011 bondholders will have a preferential right to subscribe for those bonds.

A joint bondholders' meeting will be held on April 24.

Oslo-based Blom provides geographical information and services.

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