Germany's MPC Container Ships (MPCC) is seeking to avoid a mandatory offer for the company as it launches its financial restructuring.
The Olso-listed feedership owner has said it needs to sell $15m of shares to prevent a potential bankruptcy and a fire sale of some of its 68-strong fleet in the coronavirus downturn.
The company has called an extraordinary meeting for 13 July to push a range of refinancing measures through.
The company wants authority to issue convertible loans of up to NOK 1bn ($103m) to shareholders wishing to take part in the placement, but whose acquisitions of stock may take them above the 33% threshold for a mandatory offer.
The largest shareholder, Star Capital, would exceed the 33% ownership threshold if it took more than 75% of the $15m sale, Fearnley Securities calculates.
When the loans are converted, the share capital may be increased by up to NOK 100m.
MPCC is also asking shareholders to approve a capital increase of up to NOK 100m to allow it to conduct a repair offering for shareholders not allocated stock in the $15m placement.
The terms of the initial placement have not yet been decided. MPCC said that to retain flexibility, it is seeking authorisation for the sale of up to 400m shares at up to NOK 10 each — a potential $417m raise.
And the company said it also wants to carry out a reverse stock split, turning 10 shares into one, "in order to facilitate orderly trading and pricing of the company's shares".
"In our view the proposal is constructive from a bondholder’s perspective, as it reduces liquidity uncertainty and depicts a potential runway to a normalised market where the bonds can be refinanced," Fearnley said.
Deep discount on shares
Fearnley has a buy rating on the stock, with a target price of NOK 17, against a current trading level of NOK 6.06 on Monday.
The investment bank added: "Our equity recommendation rests on MPCC’s steep discount to steel (circa 65%) and the longer-dated option on the charter market."
MPCC is also seeking to amend $200m of bonds to ease covenants and extend maturity, as well as raising $7m through other measures including asset disposals.
The shipowner believes the moves will give it enough cash for 18 months of operations.
The company has warned it "will experience liquidity shortfall already in July 2020, resulting not only in covenant breaches but also operational liquidity issues".
MPCC admitted the minimum liquidity covenant could be breached next month. It is asking for a temporary waiver.
The company had already revealed talks with creditors and shareholders to strengthen the balance sheet in the downturn.
