Norwegian offshore vessel owner Havila Shipping has struck a debt restructuring deal with lenders, conditional upon approval from formal bodies.
At January 1, 2020, Havila's outstanding debt was NOK 4,222 million (around $410 million), which for each vessel will now be split into an interest-bearing tranche and a non-interest-bearing tranche.
The sizing of the interest-bearing tranche is based on the expected debt service capacity of each vessel during the restructuring period
Debt higher than the expected interest-bearing tranche will be non-interest-bearing. The total amount of interest-bearing debt will be NOK 3,103 million as of 02.01.2020 and the non-interest-bearing tranche will be NOK 1,119 million.
Payment of interest and installments will, for each vessel, be limited by the respective vessel profit and will be paid quarterly. If a vessels’ income is insufficient to serve the interest-bearing tranche, the calculated interest and missing installment will be transferred to the non-interest-bearing tranche. There will be a quarterly downward adjustment of the interest-bearing tranche according to a twelve-year repayment profile (one vessel has a profile of eleven years).
As the agreements require new liquidity, Havila said, in a market where new capital is scarce, the company has agreed with Havila Holding AS payment of a convertible liquidity loan of NOK 100 million. The loan can or shall be converted to shares in order to maintain the relative shareholding in the company.
"The restructuring agreements will contribute to maintaining a liquidity position of NOK 175 million throughout the duration of the agreement," Havila Shipping said.
The agreement is for a period of five years, starting 02.01.2020 and ending 31.12.2024. Each lender can extend the period with one year until 31.12.2025.
At the end of the restructuring period, all interest-bearing debt will fall due, while non-interest-bearing debt will be converted to shares in the company.
Lenders can take over vessels
The restructuring agreements contain regulations where the company guarantees operational expenses for each vessel for a period of six months and lay-up costs for a period of eighteen months.
For vessels with insufficient income to cover operating expenses and that have no firm contract, the lender can assume ownership of such vessels at a value of the remaining interest-bearing debt.
One option for the lender is to offer financing of the vessel’s operational and/or lay-up costs for a period. Such financing, will at the end of the restructuring period, be converted to equity.