The new board of Norwegian shipowner DOF Group has come up with a final plan to save the company and some of its shareholders’ equity.

But the proposal covers the same ground as a negotiated refinancing rejected last November by rebel shareholders who installed the new directors — only on slightly worse terms.

DOF said the $2.25bn deal will be sent to the court overseeing its “reconstruction”, as well as financial creditors.

An extraordinary general meeting will be called if both these groups support it.

The proposal has already won the backing of DOF’s biggest shareholder, tycoon Helge Mogster’s Mogster Offshore, which owns 31.6%.

Existing shareholders will retain 3.75% of a “strengthened” DOF after debt is converted into equity.

The rejected plan would have seen that figure at 4%, but the court restructuring will leave investors with just 1%.

“The proposal is otherwise identical to the previous proposal,” the board admitted.

“The company will continue its operations and the shareholders will retain a share of the value creation that many expect will occur going forward,” the directors said.

“Based on preceding dialogue, the board considers that the current proposal is a reasonable compromise that should receive a sufficient majority among the company’s creditors and shareholders,” they added.

Bankruptcy threat

But the board warned: “If the proposal is not adopted, there will be no prospect that the company will be able to achieve a reconstruction and the court will probably open bankruptcy after a report from the reconstruction committee.”

Business will continue but all shareholder value will be lost, it added.

The new proposal might explain the decision last week by leading rebel shareholder Bjarte Brondmo to quit the board.

He has argued there is no reason to restructure the debt and wipe out shareholders in improving offshore markets. Rebels also argue that the fleet is greatly undervalued.

“The board believes that it would be impossible to achieve acceptance among the creditors for more than 3.75% to the existing shareholders,” said chairman Leif Salomonsen, a corporate restructuring expert.

Ship sales and stock issues not possible

The board had explored debt refinancing, ship sales and stock issues.

“Unfortunately, none of these solutions have been possible to realise,” the board said.

The statement said if banks and bondholders do not take part, the reconstruction officer will ask Hordaland District Court to suspend the restructuring process and open bankruptcy proceedings.

The issue of solvency will be key here.

The court will have to decide whether the group’s assets are worth more than the debt — and whether that value can be realised.

Shipbrokers Fearnleys and Clarksons have been brought in to assess the fleet, and a final report by accountants Deloitte is pending.

“The board would have liked to see the shareholders retain a larger share of the company than the reconstruction suggests.

“If it had been possible to turn back the clock and restart negotiations with the creditors today, this might have been possible,” Salomonsen said.

“However, it is a fact that the DOF Group has approximately NOK 25bn in debt on which, for the most part, neither interest nor instalments have been paid for more than two years,” he added.

The chairman described the company as being in “overtime” and needing a solution immediately.