Norwegian offshore support vessel owner DOF Group has told investors it faces an even worse shareholder wipe-out or potential bankruptcy if a $1.9bn restructuring vote does not go its way.
The Oslo-listed company agreed to a vital long-term refinancing deal with a “substantial” group of creditors in June that will see existing shareholders emerge with just 4% of the group after a debt-for-equity swap.
In an update, the company said it has continued to receive support from financial creditors and the largest shareholder, Norwegian shipping tycoon Helge Mogster.
“Good progress is being made to agree the necessary documents for the completion of the restructuring,” the owner said.
DOF expects an extraordinary general meeting to vote on the plan will be held in the week starting 7 November.
But a group of minority shareholders have banded together to fight the proposals. At last count, they had what they claim is a combined blocking stake of 34%.
DOF revealed it has also been involved in “good faith discussions” to agree on alternative steps if the vote does not go in its favour.
Reconstruction proceedings would be opened under the Norwegian Reconstruction Act, involving a portion of “direct financial indebtedness” being converted into equity.
No other liabilities would be affected, but investors would retain only 1% of the company.
The move would need a 50% plus one share majority at another shareholders’ meeting.
Bankruptcy is the final option
If the reconstruction proposal cannot be forced through, bankruptcy proceedings will be opened.
Creditors have agreed to establish a new company to make an offer to acquire the entire business in that case.
No cash consideration will be offered and shareholders will be completely wiped out.
“The board of directors and management of DOF firmly believe that it is in the best interest of DOF’s shareholders that the restructuring is implemented on a consensual basis and that the shareholders will obtain the best recovery by supporting the restructuring at the extraordinary general meeting of DOF,” the company said.
All the options are designed to avoid any interruption to the operations of the group and to avoid losses for clients.
In August, DOF said second-quarter earnings were hit by the strength of the US dollar against a background of improving offshore vessel markets.
The net loss was NOK 1.3bn ($123m), down from a profit of NOK 580m in the same period of 2021.
DOF is the last major Norwegian OSV group to agree on refinancing after years of dire markets.
