Keppel associate Floatel in talks to extend lapsed debt-payment agreement

Floatel said the group's vessels and business continue to operate as normal.
Floatel said the group's vessels and business continue to operate as normal.PHOTO: KEPPEL FELS

SINGAPORE (THE BUSINESS TIMES) - The forbearance agreement between Floatel International and an ad-hoc committee (AHC) of holders of its U$400 million (S$543.8 million) senior secured, first-lien 9 per cent bonds has been extended again, this time to Sept 15, from Aug 31.

The AHC holds more than 56 per cent of the Oslo-listed bonds' outstanding amount.

Floatel, an associate company of Keppel Corp, announced the standstill extension on Tuesday in an update about its discussions with secured financial creditors.

Signed in April, the forbearance agreement has been extended several times, and relates to about U$22.8 million in coupon payments due under both the first-lien and second-lien bonds.

Aside from the first-lien bonds, Floatel also has U$75 million in second-lien 12.75 per cent bonds and is the borrower under a U$150 million term loan and U$100 million in undrawn revolving credit facilities with a syndicate of bank lenders.

Floatel on Tuesday said its payment agreement with the bank lenders - where certain expenses in respect of Floatel Endurance and the bank collateral companies are covered by proceeds in blocked accounts - has lapsed in accordance with the terms of the agreement.

It is in constructive discussions with the lenders on an extension, it said. The group's vessels and business continue to operate as normal, it added.

In July, Keppel posted a second-quarter net loss of $697 million, anchored by massive impairments of $919 million, which included the conglomerate's $227 million share of Floatel's impairment of vessels and a $10 million fair value loss on the investment in Floatel.

Keppel's financial results led to it breaching the material adverse change clause in Temasek Holdings' $4 billion partial offer, which the investment firm later withdrew.

 
 

Meanwhile, in June, Keppel said Floatel would conduct an independent review of its business plan, which may include a review and update of the assumptions used in the impairment assessment of its vessels.

Shares of Keppel ended Monday at $4.58, down $0.05 or 1.1 per cent.