Shipbuilder and vessel charterer ASL Marine's bid to defer payment on its $150 million fixed rate notes has met with support from note holders so far, in contrast to the experience of some industry peers.
Other issuers in the troubled offshore and marine sector have vexed note holders for taking advantage of the weak financing environment to push them into accepting less favourable returns.
"The feedback has been very encouraging. There were a lot of questions asked but they also understand that there has been a liquidity crunch, so going to the banks to ask for fresh money becomes more difficult,"ASL chairman and managing director Ang Kok Tian told The Straits Times yesterday after engaging with note holders at informal meetings over the last two weeks.
ASL has a $100 million, 4.75 per cent note due on March 28 next year and another $50 million, 5.35 per cent note due on Oct 1, 2018.
On Nov 29, it said it was not likely to be able to repay note holders on agreed dates given liquidity constraints amid the oil price rout.
ASL has won no meaningful new shipbuilding orders since May and, in the 12 months to June 30, faced an asset conversion cycle 1.8 times as long as it was two years ago.
The company could also be in breach of its financial covenants if conditions worsen and it is forced to take impairments, it said.
Although the formal terms of the consent solicitation exercise have not been published, the firm said it is looking to extend the maturities on the notes by three years or more.
This could come with a coupon step-up of 0.5 per cent per annum and a redemption of 2.5 per cent of the notes principal every six months, subject to further discussion with the lending banks, it said.
Meanwhile, ASL has got the three local banks to agree to give it conditional access to a $99.9 million five-year club term loan facility.
It is also in the process of completing a rights issue to raise up to $24.95 million. The Ang family, who together hold a 67 per cent stake in ASL, have committed to subscribe for all of their rights entitlements, effectively giving ASL a cash injection of $16.8 million.
ASL will get its rights issue proceeds later this month.
Mr Ang said ASL hopes to launch its formal consent solicitation exercise, in which note holders will vote on the restructuring by Dec 31.
The counter fell 0.2 cent or 1.45 per cent to close at 13.6 cents yesterday.