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Thursday, 18 September 2014

RESTRUCTURING: BLT delays crucial creditor vote - UPDATE

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Troubled Indonesian shipping company Berlian Laju Tanker has secured a 100-day extension ahead of a crucial creditor vote that had been scheduled to take place in the Central Jakarta Commercial Court today. With the threat of liquidation looming, the last-minute reprieve gives BLT more time to secure support for a debt restructuring that promises local lenders a higher recovery rate.

Source: Berlian Laju Tanker

Chemical tanker MT Widawati, one of the newest vessels in Berlian Laju Tanker’s fleet.

Creditors were approached yesterday and agreed to extend the company’s existing PKPU, or debt moratorium, for another 100 days.

BLT had been set to ask creditors to vote today on a plan that would term out most of its debt to 12 years. For that proposal to go through, however, BLT needed a majority vote from a quorum of 50% of creditors representing two thirds of creditor claims across secured and unsecured debt.

Within the new timeframe, restructuring adviser Borrelli Walsh is now expected to put together an alternative restructuring plan.

Based on the restructuring plan currently on the table, secured mandated leads on the company’s US$685m loan, which was prefunded last February and closed last September, will recover 122% of the US$596.1m outstanding over 12 years under a terming out of the facility. The leads on the loan include BNP Paribas, SNB Bank, ING, NIBC Bank, Nordea Bank Finland and Standard Chartered.

Preferential treatment

Indonesian lenders, however, are in line for higher returns. So it is proposed that BCA will recover 146% of principal over just four years, while Bank Mandiri will recover 212% over 12 years. By contrast, offshore creditors Mitsui and Bank of Tokyo Mitsubishi-UFJ will recover 138% and 120%, again over 12 years. Meanwhile holders of the BLT 7.5% due 2014 bond – with US$400m outstanding – are being asked to waive 60% of their claim on principal with the remaining 40% of principal to be settled with a 44% haircut, meaning a proposed final settlement of US$134.4m, to be redeemed in 12 years.

The 60% waived principal can be converted into equity under the terms of the plan. Bondholders will also have the alternative of recovering 116% of the remaining principal if they agree to term out the debt to 15 years. The same terms are being proposed on the company’s US$125m and US$43m convertible bonds. The BLT composition plan states that in the event of liquidation, creditors are likely to achieve a 43.8% settlement, based on an independent valuation of the company’s fleet of US$625.6m and a 50% discount of this amount based on a 35% liquidation price and including fees paid out by BLT to creditors for not arresting its ships, which reduces the fleet’s value by a further 25%.

Should BLT’s restructuring plan win approval, there are plans to reduce staff by 35% to 166 employees and close the company’s Dubai and Xiamen offices.

(Updates throughout with details of PKPU extension.)

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