Rickmers to hold make-or-break EGM on Oct 31 to pass debt-to-equity swap plan, adds offer to return $500,000 cash

A group of bondholders of Rickmers Maritime Trust filing an acceleration notice with the trustee of Rickmers to demand 100% of their principal and coupon immediately, on Sept 28, 2016.
A group of bondholders of Rickmers Maritime Trust filing an acceleration notice with the trustee of Rickmers to demand 100% of their principal and coupon immediately, on Sept 28, 2016.ST PHOTO: JAMIE KOH

SINGAPORE - The trustee manager of embattled container ship operator Rickmers Maritime announced on Friday (Oct 7) the convening of an extraordinary general meeting (EGM) on Oct 31 to seek approval for a debt-to-equity proposal.

The EGM will also consider a resolution to authorise the winding-up of the trust if the debt restructuring plan is voted down and if necessary.

The trustee manager also announced a special coupon payment of S$500,000 payable to noteholders in the event of a successful restructuring. This means each holder of S$250,000 in principal will get S$1,250 in cash.

Said Mr Soeren Andersen, chief executive officer of Rickmers Trust Management (RTM): "While this is not a material sum in the context of the face value of the MTNs (medium-term notes), it is material to the current cash position of Rickmers Maritime. This is the maximum we are able to offer noteholders considering our liquidity needs to continue to operate. This will mean the business will have to manage its working capital even more tightly but we wanted to make every effort to add a cash element to our exchange offer."

The cash payment is an 11th hour attempt to sweeten RTM's proposed swap of the S$100 million principal 8.45 per cent notes due next May for S$40 million due November 2023, and exchanging the rest for 60 per cent of the trust, after issuing 1.32 billion new units.

Many note holders had been unhappy with this offer, saying there would still be no cash on the table for them. Last month, a group of retirees, businessmen and others who have each sunk S$250,000 or more into the Rickmers bonds demanded to get their principal back in full, with interest, immediately.

"We understand that noteholders and unitholders are disappointed in this very difficult situation faced by Rickmers Maritime," said Mr Andersen in the statement on Friday.

He added: "It is our duty to try to create a future for the business and provide a platform to improve their returns. Despite continued attempts to improve the terms to noteholders e.g. through intense engagements with our senior lenders, the terms have to remain largely as presented on 22 September 2016. While it will significantly dilute unitholders, it also holds the best chance of achieving a successful restructuring which preserves value for them."

RTM said Rickmers Maritime will be able to continue to operate on a going-concern basis if the notes are successfully restructured.

It said the overall face value of the trust's debts would be reduced by S$60 million, and the maturity of the notes would be extended from May 2017 to November 2023. In addition, the trust's interest costs per year under the notes would decrease from S$8.45 million currently to between S$1.08 million and S$2.08 million.

RTM also said a successful restructuring would enable Rickmers Maritime to obtain a new amortising term loan facility of up to US$260.2 million to refinance US$197.7 million and US$67.8 million of the trust's present outstanding debt repayable in 2017 and 2018, respectively.