Investors holding Rickmers Maritime bonds voted yesterday to reject the troubled ship operator's debt reorganisation plan that would have forced them to take a steep loss on their investment.
Rickmers, which is swimming in an ocean of debt amid a depressed charter market, needed to get bond holders on board before bank lenders would allow it to draw on a US$260.2 million ($376 million) facility for refinancing.
Bond holders were asked to swap the principal on $100 million of notes paying 8.45 per cent, due next May, for $40 million due in November 2023 - with a step-up interest from 2.7 per cent to 5.2 per cent to be paid from 2019 to 2023.
They would also be issued new units in the trust.
But many bond holders have voiced their reluctance to accept what they felt was an "inequitable" offer from the start, and yesterday voted heavily against the proposed debt deal.
Out of 315 votes cast - representing 78.8 per cent of the $100 million notes - 212 votes, or 67.3 per cent, rejected the proposed debt deal, with just 103 votes, or 32.7 per cent, in favour.
Rickmers unit holders had earlier given their approval for the trust to be liquidated in the event of an unsuccessful restructuring.
Mr Soeren Andersen, the chief executive of the trustee-manager, told The Straits Times in a statement: "We are disappointed with the outcome of today's note holders meeting.
"We are not keen on liquidation, as it is the most value-destroying option for everyone. It is a last resort and we are doing all we can to avoid it. But if we continue to have to sell vessels for working capital, our asset base will eventually diminish."
He added that Rickmers has met two financial advisers, representing two groups of bond holders, over the past two weeks, and will consider alternative proposals from them.
Yesterday's vote was the second attempt at getting bond holders to pass the deal, after a meeting on Nov 9 failed to reach a quorum.
The impasse between Rickmers and bond holders has dragged on for more than three months.
The Securities Investors Association (Singapore) was asked by the Monetary Authority of Singapore in late October to act as a mediator.
Rickmers Maritime units last traded at 26 cents before trading was suspended on Nov 15, the day it defaulted on a $4.26 million interest payment to bond holders.
