Norway's offshore service vessels (OSVs) supplier Solstad Offshore and its creditors have agreed on a draft restructuring plan, which includes converting 10 billion crowns ($962.17 million) of debt into equity, the company said on Tuesday.
The large majority of stakeholders, including secured lenders, leasing companies, industrial shareholders and key bondholders plan to sign a binding agreement by the end of April, the Oslo-listed firm added in a statement.
"We are entering a period where global offshore activity is likely to be reduced with the impact of the COVID-19 virus and drop in the oil price," Chief Executive Lars Peder Solstad said.
"A successful implementation of the restructuring will enable the company to better meet the challenges of the current markets and position the company well for the coming years."
Investment firms of Norwegian billionaire Kjell Inge Roekke and Norwegian-born shipping tycoon John Fredriksen have 20.07% and 13.59% stakes in the company, while the Solstad family firm Soff Invest owns 6.47%, shareholder data on the company's website shows. In addition, Roekke's Ocean Yield has 3.03%.
The company became the largest OSV supplier in the North Sea after a series of mergers following the previous oil market downturn in 2014-2016.
The debt to be converted to equity consists of secured debt, leasing obligations, bond obligations and other unsecured debt, and all will have the same conversion rate, the company said.
Following the restructuring, the existing shares will represent 0.4%, and the converted debt will represent at least 65-75% of the company's shares, it added.
Existing industrial shareholders including Solstad's chief executive would be offered share subscription rights so they could retain up to a third of the shares in the restructured company, according to the plan.
The remaining shareholders would receive an offer to subscribe to 2% of the shares.
Solstad Offshore also plans to sell or scrap 37 older vessels, keeping a fleet of about 90 vessels under the plan.
($1 = 10.3932 Norwegian crowns)
(Reporting by Nerijus Adomaitis; Editing by Ken Ferris)