12 December 2017
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Nam Cheong sweetens terms for US$336m debt restructuring

Business Times
06 Dec 2017
Tan Hwee Hwee

Nam Cheong on Tuesday publicly unveiled the revised terms for its debt restructuring, though these are still some way off from some noteholders' expectations.

The Singapore-listed offshore support vessel released its first proposed terms for the restructuring of US$336 million unsecured debt and note issuances in early September. Those terms have been improved upon and simplified in its revised proposal that was tabled with its scheme of arrangement filed with Singapore's High Court.

The revised proposal calls for 35 per cent of the unsecured debt, which are deemed non-sustainable, to be converted to equity at US$1 to 30 shares, compared to US$1 to 17 shares tabled in September.

It has also removed an immediate share conversion option initially proposed for the restructuring of the remaining US$220 million debt. Debt-holders now get to choose between two options for this sustainable portion, converting to a term loan facility to be repaid in stages from 2021 to 2024; or cashing out at a recovery rate of between 5 US cents and 20 US cents for every US$1 sustainable debt held.

But one retail noteholder Ong CP said the revised conversion ratio is still way off the mark from the expectations he and his fellow noteholders have shared at the informal noteholders meeting held in September.

He explained that the revised ratio implied a conversion share price of 3.3 US cents, which is three times the rights share subscription price.

Nam Cheong said the rights shares will be priced at 1.4 Singapore cents, or at 30 per cent discount on its last traded price of 2 Singapore cents before it entered into a trading suspension. The company had clarified that the rights issue to raise new money is offered to all existing shareholders - and not just to anchor shareholder, Tiong Su Kouk. Mr Tiong had pledged to pump another RM50 million new equity into the listed entity.

Mr Ong stressed that he and his fellow noteholders are seeking only for a fair deal and not objecting to swapping debt for equity. The Malaysian noteholder also said he got hold of the scheme document carrying the revised terms only last Friday. This leaves a tight window to respond by the stipulated Dec 14 deadline for submitting the voting instruction form if he so wishes to appoint a proxy for the scheme meeting on Jan 24.

The Business Times understands that the revised terms were presented to an Oct 27 court hearing during which the notes trustees and the informal steering committee for noteholders were also present.

The scheme document or explanatory note carrying the revised terms was sent on Nov 23 to the registered noteholders or mostly banks, which then forwarded it to the individual noteholders. Nam Cheong is also said to have lined up briefings with several groups of noteholders on Wednesday.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.