As the North Sea offshore vessel sector struggles with its latest downturn, major player Solstad Offshore has signed a refinancing deal that will see its banks take over in a NOK 10.9bn ($1.07bn) debt-for-equity swap.
The offshore vessel owner said all of its creditors had now agreed to the plan, except for three financiers involved with its Solship Invest 3 and Farstad Shipping units.
The debt that will be swapped into shares consists of secured lending, leasing obligations, bonds and other unsecured debt.
"It has been a long process leading up to this important milestone, and we are grateful to the stakeholders for their continued support and trust in our company," chief executive Lars Peder Solstad said.
"This agreement will be important for our clients, employees, financial creditors and shareholders, as it reduces uncertainty and will allow us to focus even more on our core activities, which are delivering high-quality services to our clients."
He added that Solstad Offshore will be in a "much better position" to handle challenges from the coronavirus pandemic and the oil price slump.
New loan over four years
The remaining secured debt will be included in a fleet loan maturing after four years and worth $886m.
Solstad’s new owners will now look to sell or scrap 37 non-core ships to leave a fleet of 90 units.
A total of NOK 900m of the new loan will be secured against these vessels held for sale.
Closing of the restructuring is expected to take place in July 2020, but this can be extended to 8 November.
Talks with the three non-participating creditors are ongoing. Their inclusion is not considered essential to the deal.
Solstad has been working to secure a vital refinancing with creditors since 2018, as it faced an ongoing liquidity crunch arising from the previous downturn in the offshore sector.
Big guns can buy stock
The company's current structure dates from 2017, when John Fredriksen's Deep Sea Supply and domestic owner Farstad Shipping were merged into Solstad in a deal involving tycoon Kjell Inge Rokke. Solstad had already taken over Rem Offshore, following a slump in the OSV market.
Their combined stakes will shrink to 0.4%. But these "industrial shareholders", including Lars Peder Solstad, will continue to support the company and will be offered the chance to subscribe for shares so as to retain an ownership of up to 33% in Solstad.
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%.
VesselsValue rates the fleet as being worth $1.34bn.
