The long-term survival of Norwegian shipowner Solstad Offshore has moved a step closer with the news that billionaires John Fredriksen and Kjell Inge Rokke will subscribe for new shares in its restructuring.
The world's biggest owner of high-end offshore support vessels (OSVs) has confirmed the investors will boost their shareholdings back up again after their equity is wiped out through a $1.1bn debt to equity swap with banks.
Bondholders have voted in favour of the deal, and Solstad has now secured credit committee approvals from the "vast majority" of its lenders, the OSV owner said.
The company expects the remaining banks to fall into line as "internal processes" are completed over the next week.
Rokke's Aker Capital and Fredriksen's Hemen Holding, classed as "industrial shareholders", will buy stock, as well as companies controlled by chief executive Lars Peder Solstad, representing the Solstad family.
"We highly appreciate the support given by a wide range of stakeholders to Solstad Offshore, including both secured and unsecured lenders, bondholders and industrial shareholders," the CEO said.
"The continued support of all these important stakeholders, combined with an excellent fleet of vessels, a highly competent organisation and presence in the most important geographical markets and segments, will position the company well to meet the uncertain market conditions ahead."
The shipowner had warned last week of "unsustainable" finances if it could not complete the refinancing in a downturn prolonged and worsened by the coronavirus crisis and the oil price fall.
It has negative equity of $645m.
The company has been working to secure a vital refinancing with creditors since 2018, as it faced an ongoing liquidity crunch.
The OSV outfit current structure dates from 2017, when Fredriksen's Deep Sea Supply and domestic owner Farstad Shipping were merged into Solstad in a deal involving tycoon Rokke. Solstad had already taken over Rem Offshore, following the slump in the OSV market.
Cheap shares?
The industrial shareholders can retain an ownership of up to 33% in Solstad through the share issue.
Other shareholders will be offered a chance to buy 2%.
This will cost NOK 70m ($7.21m) for the total 35% slice, against a fleet value of $1.32bn, as assessed by VesselsValue.
Rokke is the biggest shareholder, currently with a 35.6% direct stake plus another 5% through his shipowning company, Ocean Yield. Fredriksen has 24.12% and the Solstad family controls 11.5%.
Their stakes will fall to 0.4% following the debt swap.
The refinancing will see 37 non-core ships sold, leaving Solstad with about 90 units.
The remaining secured debt will be included in a fleet loan maturing after four years and worth $886m.
Closing of the deal is expected to take place in July, but there is a "long-stop" date of 8 November.
The net loss in the first quarter was NOK 2.25bn, up from a deficit of NOK 528m in 2019.
A big chunk of this — NOK 1.39bn — arose from currency losses as the krone fell against the US dollar.
