Pressures mount in the hard-pressed offshore marine sector, with Marco Polo Marine seeking to restructure its debt, while beleaguered Rickmers Maritime Trust continues the race against time to secure its financial lifeline.
Marine logistics company Marco Polo, which is going to the extent of offering to use land it owns in Batam as loan collateral, yesterday launched a consent solicitation exercise to delay repayment for its $50 million series 001 notes that are due to mature next month.
The group wants approval from note holders to defer repayment of the notes, which came with a fixed rate of 5.75 per cent, from Oct 18 this year to Oct 18, 2019.
It also hopes to obtain a waiver for any non-compliance or potential non-compliance with various provisions of the trust deed, and to obtain approval to amend this deed.
Marco Polo said it is looking to offer part of its land in Batam, where its shipyard is located, as collateral to note holders. It is also in talks to include the remaining part of the land, which is being used to back its loan with one of its lenders, as a second mortgage.
Rickmers Maritime Trust revises restructuring plan
The combined value of the two land parcels would be enough to cover the $50 million bond charge, group chief executive Sean Lee said yesterday, adding that note holders will not have to take a haircut on their investment.
The proposal that we are presenting is equitable. If accepted, it would make way for a new facility... This would give the trust more time to weather the depressed market, and underpins its solvency.
MR SOEREN ANDERSEN, chief executive of the trustee-manager for Rickmers Maritime Trust.
Instead, the company is proposing to pay note holders an additional interest of 1.5 per cent over two instalments - with 0.5 per cent per year in advance of the original maturity date - Oct 18 this year - and the remaining 1 per cent per year, payable in arrears, on Oct 18 next year.
Note holders will vote on the debt restructuring proposal on Oct 14.
The Straits Times understands that Marco Polo's largest note holders are entities owned by UOB and DBS, which together hold more than half the total bond value.
Marco Polo is but one of several companies in the sector left bleeding by the oil price slump and struggling to restructure debt.
Included with its proposal to note holders was also a lengthy statement detailing the risk factors that it faces, such as "a substantial doubt about the group's ability to continue as a going concern".
The company, which reported a net loss of $7.5 million for the nine months to June 30 this year, said it expects to record net losses for the full year ending on Sept 30, mainly due to lower vessel utilisation and charter, as well as lower revenues from its shipbuilding business. It also expects to be highly leveraged for the next few years.
Meanwhile, container ship operator Rickmers Maritime Trust has announced a revised restructuring plan for its $100 million 8.45 per cent notes due next year, after taking feedback from an informal meeting with note holders last week.
It is now proposing a partial redemption of $60 million of the principal sum in exchange for 60 per cent of the enlarged units of the trust - for which it plans to issue 1.32 billion new units, representing 150 per cent of the trust's current units.
The partial redemption will reduce the outstanding principal sum under the notes to $40 million, repayable in Nov 2023, said the trustee-manager in a statement yesterday.
The Straits Times understands that more than 30 note holders had formed a steering committee after the informal meeting. They have also engaged law firm Rajah & Tann Singapore, which will meet with note holders at 9.30am tomorrow.
Mr Soeren Andersen, chief executive of the trustee-manager, noted one of the key suggestions raised at the meeting was for a more substantial debt to equity swap, which requires unitholder approval at an extraordinary general meeting.
Mr Andersen said: "The proposal that we are presenting is equitable. If accepted... (it) would give the trust more time to weather the depressed market, and underpins its solvency."
The trust, earlier this month, said it had received a firm offer for a restructured secured amortising term loan facility of up to US$260.2 million (S$352.5 million) to refinance all of its outstanding debt - but only if the notes are successfully restructured.
Trust sponsor Rickmers Holding, which holds 34.2 per cent of its units, has said it will vote in favour of the resolution to issue the 1.32 billion new units.
Mr Terence Lin, assistant director of bonds and portfolio management at fund researcher iFast, noted that Rickmers' new terms are "significantly improved" on those proposed originally, which would mean note holders take a haircut of as much as 60 per cent on their investment, and get just about 20 per cent of the trust in equity.
"If the $40 million in new bonds are eventually repaid... note holders could be looking at a much smaller haircut."
As a simplified form of calculation, 60 per cent of Rickmers is worth about $24 million today, which, together with $40 million in bond principal, would imply a haircut of about 36 per cent, Mr Lin noted.