Under the terms of the restructuring lenders have agreed to write down the company’s debt from US$1.4bn to approximately US$561m in exchange for warrants and an optional debt for equity swap.
The first step of the restructuring saw lenders write down debt by US$536m to an estimated US$873m, which gives the company a loan-to-value ratio of approximately 100%.
In return lenders received warrants exercisable any time between one and five years after completion of the restructuring and representing 7.5% of the post-completion share capital.
Following the debt writedown the lenders also had the option to elect to exchange further debt for new equity in Torm. The remaining debt after the optional exchange amounts to approximately US$561m and was reinstated on the terms agreed to in a new term facility that matures on or around July 13 2021.
As part of the restructuring, OCM Njord Holdings (Njord Luxco), a wholly owned subsidiary of Oaktree Capital Management, has contributed a fleet of 25 on-the-water and six new building product tankers to Torm’s group and a cash injection of US$55m in return for a 62% majority shareholding in the company.
A group of lenders has also provided a new US$75m working capital facility which is secured by the same assets but ranks ahead of the new term facility, with respect to the proceeds of enforcement of the collateral. Like the new term loan, the working capital facility matures on or around July 13 2021.
Following the restructuring Torm expects a positive Ebitda in the range of US$170m–$210m and a profit before tax in the range of US$100m–$140m for full-year 2015, assuming a product tanker market at the same level as in the first half of 2015.
Chairman of Torm’s board, Flemming Ipsen, said, “I am proud that Torm, its lenders and Oaktree have successfully negotiated and implemented this comprehensive restructuring. Thereby, we have created one of the largest owner-operators of product tankers globally, and we expect Torm to deliver strong, positive financial results already this year after an extended period of financial difficulties”.
On June 26, lenders to the troubled firm approved a scheme of arrangement that allowed Torm to push the restructuring deal through. Restructuring advisers Moelis was mandated by the company in August 2013 to advise on the restructuring of its debt.
