Norwegian gas carrier owner IMSK is facing the end of the road after its banking syndicate, led by Nordea, called in a $34.92m loan.
Chief financial officer Bente Flo has filed an affidavit with a Singapore court informing it that it is no longer feasible to proceed with the financing restructuring that had envisaged the formation of a new company and a reduced holding for the Skaugen family.
The board is now considering available options, but chief executive Morits Skaugen expects liquidation to follow.
In a letter to shareholders, Skaugen said: “It is with the greatest frustration that I have to announce that we have not succeeded in refinancing our company.
“We have had too many opponents who did not want this and would not enter into dialogue and therefore in a collaboration.”
Skaugen said he and his colleagues felt the same as “all others who suffer from this — our bondholders who have believed in us and supported us and our fellow shareholders — and I apologise to you all. I really regret it.”
The company had worked hard to make the refinancing succeed, but “the responsibility is mine alone, and me and my family are losing most of us all”.
I apologise to you all... One has to choose his creditors with care, I once heard. I did not follow this thought in action
“In recent months, we have not had the dialogue with our first-priority bank consortium, which one should expect.”
Wall of silence
Proposals were largely met with silence or verbal indications that they were not satisfactory, Skaugen added, but “it has not been clear to us at any time what could have been satisfactory”.
“That the first-priority banks wanted their money back was clear, but we hoped they would work with the customer to get this done.”
He accused his creditors of helping maximise the loss of value for all: “One has to choose his creditors with care, I once heard. I did not follow this thought in action.”
Norwegian investor Christen Sveaas is a friend of Skaugen. Earlier this year, he injected equity into a new IMSK company, Norgas Carriers, that was set up as part of the restructuring.
On the collapse of IMSK, he told TradeWinds: “It is very sad.”
Asked whether he has contemplated giving further support to IMSK, Sveaas did not reply.
IMSK, which operates a fleet of seven LPG and LNG vessels, said it had made several attempts to negotiate with the syndicate of lenders represented by Nordea as the agent and Swedbank. They hold mortgages over two working Somargas vessels, which were each valued at $30m without employment and up to $60m with long-term deals in place.
A request for a 12-month runway to refinance the loans was never offered, with three months being the most available, IMSK claimed.
Flo said Nordea had refused to extend the loan period and had insisted that IMSK continue to service interest payments and amortisation before it would even begin to negotiate.
“Given the current earnings of such ships in the spot LPG markets, it was not possible to pay both interest and amortisation,” she added.
Nordea representatives took a summer holiday from early July and were not contactable until the first half of August, according to Flo.
Enforcement notice
Then, on 15 August, with no warning, Nordea sent a notice of enforcement for $2m that it has held in a pledged account to be applied against the outstanding loan, as well as demanding immediate repayment of the $34.92m outstanding amount, plus interest.
“The Nordea syndicate’s volte-face and enforcement actions caused the IMSK Group significant difficulties,” Flo said.
A funding proposal submitted on 25 August, if accepted by Nordea, would probably have allowed IMSK to operate as a going concern and facilitated a successful restructuring for the IMSK Group, she added. But this was turned down.
The company was in dire need of working capital and without it can no longer put the two Somargas vessels to use.
One of the ships suffered damage to its propeller recently and was on its way to a shipyard on 15 August, but arrived with no funds for the repair. Nordea has now demanded the vessels be sold in Gibraltar and Singapore, but no arrests have been made.
“In light of the foregoing, the IMSK Group has turned down voyages for the Somargas vessels and left them off-hire at their last ports of call in order to reduce expenditure and conserve cash for the IMSK Group,” Flo said.
