Rickmers tries to win over bond holders

Mr Andersen says Rickmers "understands that note holders and unit holders are disappointed".
Mr Andersen says Rickmers "understands that note holders and unit holders are disappointed".ST PHOTO: MARCUS TAN

Debt-hit firm to offer small cash handout to bond holders if restructuring succeeds

Debt-ridden container ship operator Rickmers Maritime has reiterated that it cannot give bond holders a better restructuring alternative.

But in a last-ditch attempt to sway them yesterday, Rickmers said it would give each holder of $250,000 in principal a cash handout of $1,250 if a restructuring is successful.

Mr Soeren Andersen, chief executive of Rickmers Trust Management, said: "While this is not a material sum in the context of the face value of the notes, this is the maximum we are able to offer note holders, considering our liquidity needs to continue to operate... We wanted to make every effort to add a cash element to our exchange offer."

Last month, Rickmers proposed swapping the principal on $100 million of notes paying 8.45 per cent due next May for $40 million due November 2023. Note holders would also get about $26.4 million worth of new units in the trust.

Before bond holders vote on that plan, however, unit holders must first agree to a 60 per cent reduction in their equity interest at a meeting on Oct 31.

  • $1,250

    Amount of cash handout that Rickmers said it would give each holder of $250,000 in principal if a restructuring is successful.

The business trust is asking unit holders to approve the issue of 1.32 billion new units to note holders. It is also seeking approval to wind up the trust if a restructuring is unsuccessful.

BEST IT CAN DO

While this is not a material sum in the context of the face value of the notes, this is the maximum we are able to offer... We wanted to make every effort to add a cash element to our exchange offer.

MR SOEREN ANDERSEN, chief executive of Rickmers Trust Management, on the offer to holders of its bonds.

Mr Andersen said: "We understand that note holders and unit holders are disappointed in this very difficult situation faced by Rickmers Maritime... While (the plan) will significantly dilute unit holders, it also holds the best chance of achieving a successful restructuring which preserves value for them."

Rickmers Holding, which holds 34.2 per cent of units in the trust, has undertaken to vote in favour of the issue of 1.32 billion new units.

Rickmers Maritime units closed up 0.1 cent or 2.5 per cent at 4.1 cents yesterday.

A version of this article appeared in the print edition of The Straits Times on October 08, 2016, with the headline 'Rickmers tries to win over bond holders'. Print Edition | Subscribe