Stricken offshore firm Swiber in talks for possible $285.4m rescue by Mideast investor
Sign up now: Get ST's newsletters delivered to your inbox
The Swiber office building at International Business Park on July 28, 2016.
PHOTO: ST FILE
Follow topic:
SINGAPORE (THE BUSINESS TIMES) - Debt-laden offshore and marine group Swiber Holdings, currently in judicial management, has started discussions with a third party with a view to set out the broad terms of a possible restructuring deal in a term sheet.
If signed, the term sheet will then form the general basis for negotiations of the definitive transaction agreements for the investment.
The potential investor is a Middle East-based oil and gas conglomerate, offshore support vessel owner Swiber said in a bourse filing on Wednesday night (April 15).
The potential investment is aligned with the Middle Eastern firm's strategy for the region, Swiber's judicial managers understand.
As part of the proposed deal terms, the conglomerate will invest a total of US$200 million (S$285.4 million) cash in a new wholly-owned subsidiary to be incorporated by Swiber and/or in Swiber's existing wholly-owned unit Equatoriale Energy Pte Ltd (EEPL).
The potential investor has proposed to do this by injecting an initial US$10 million through the subscription of new shares in the new subsidiary, making up about 80 per cent of this subsidiary's enlarged share capital.
Subsequently, the balance of US$190 million will be invested by way of subscribing, in tranches, for new shares in the new subsidiary and/or EEPL.
The potential deal will also have a debt restructuring component. This includes the new subsidiary issuing redeemable convertible bonds to certain secured creditors, to address Swiber Holdings' liabilities to those secured creditors.
These bonds will be convertible into shares which will constitute about 10 per cent of the new subsidiary's enlarged share capital if the bonds are converted.
For the unsecured creditors of Swiber Holdings and Swiber Offshore Construction (SOC), the new subsidiary will issue to the creditors shares making up about 12.6 per cent of its enlarged share capital to the creditors.
Before the closing of the initial US$10 million investment, the Swiber group will also conduct an internal restructuring.
This will see the group transferring certain assets, including secured and unsecured vessels, a secured leasehold property, shares in certain subsidiaries, and some contracts and intellectual property to the new subsidiary.
On April 5, the Middle Eastern conglomerate had sent a preliminary and non-binding expression to Swiber regarding the potential investment, which is subject to satisfactory due diligence, the receipt of necessary approvals and the signing of definitive transaction agreements.
Swiber emphasised that as at April 15, no definitive or binding agreements - including any term sheet - have been signed in connection with the possible restructuring deal.
The court in January extended the judicial management periods for Swiber and SOC to April 30, 2020.
Trading in Swiber shares has been suspended since 2016.
