With reference to company announcement no. 15 dated 29 September 2014, TORM has today entered into an agreement with a group of its current lenders, representing 61% of TORM’s ship financing, and Oaktree Capital Management (Oaktree) regarding a possible restructuring of TORM, the company said in its press release.
The final terms of the proposed transactions to implement a restructuring of TORM will be subject to further negotiations between the relevant parties. At this stage, the restructuring is expected to stipulate that the lenders will initially write down the debt to the current asset values in exchange for warrants and may elect to convert part of the remaining debt into new equity in the Company. Oaktree would contribute product tanker vessels in exchange for a controlling equity stake in the combined Comp any, which will reinforce TORM’s position as one of the largest owners in the product tanker segment.
The agreement also envisages a new working capital facility. It is expected that the restructuring will result in a substantial dilution of the existing shareholders in TORM. The consequences of the restructuring will be presented to the shareholders when the proposed implementation structure is agreed upon. The final implementation of any restructuring would be subject to stakeholder approvals and certain conditions precedent, including required approvals from public authorities.
TORM, the group of lenders and Oaktree will work together to agree on the final terms and implement the proposed restructuring, including soliciting support from the current shareholders and the broader lender group. TORM expects to be able to present the final restructuring plan and transaction structure no later than first quarter of 2015.