Jack-Up InvestCo 3 seeks OK to delay payments on 11% bonds due 2018

By Toni Weeks

San Luis Obispo, Calif., June 2 – Jack-Up InvestCo 3 plc is seeking approval from holders of its 11% senior secured callable bond issue due 2018 of a proposal that will bolster the company’s liquidity until its three-year charter for the vessel Wind Server begins in January 2016.

According to a notice from bond trustee Nordic Trustee ASA, the commencement of the time charter was delayed by about one year, and although the group said its current financial condition is sound, its liquidity over the next 12 months is dependent on its utilization of the group’s fleet.

The company is thus seeking consents for the following:

• A postponement of the €2 million and €3.5 million payments due in July and January 2016, respectively, until the bond’s maturity date in January 2018, at which time the full €27 million amount will be due;

• A release and permitted repayment to the guarantor of the cash, currently €1.3 million, that was already paid to service the amortization payment due in July;

• A temporary waiver until the Wind Server starts its charter, and in no case longer than July 3, 2016, of the requirement that the guarantor transfer excess cash from the operation of the vessel to the issuer as shareholder loans; and

• A temporary waiver until the vessel is accepted under the Siemens time charter, but in no case longer than July 3, 2016, of the requirement that the issuer hold a cash amount equal to or greater than the reserve amount on the collection account before the issuer may repay any shareholder loans to the guarantor.

As compensation for passing the proposals, the company is offering the following:

• An increase in interest on the bonds to 11˝% beginning Jan. 3, 2016, stepping up to 12% on July 3, 2016, to 12˝% on Jan. 3, 2017 and to 13% on July 3, 2017;

• An increase in the redemption price of all amortization payments, including the balloon repayment at maturity, to 101.25% of par; and

• A 1.25% increase of all call option redemption prices, resulting in call prices of 109% to 110.25% from Jan. 3, 2016 to July 2, 2016, 107% to 108.25% from July 3, 2016 to Jan. 2, 2017, 105.5% to 106.75% from Jan. 3, 2017 to July 2, 2017 and 104% to 105.25% from July 3, 2017 to Jan. 2, 2018.

Jack-up InvestCo said that investors representing more than 23% of the total outstanding amount of the bond issue have expressed their support for the proposal.

The company will hold a bondholder meeting on June 16 in Oslo to approve the proposal. Bondholders representing at least two-thirds of the bonds represented in person or by proxy at the meeting must vote in favor of the resolutions. In order to have a quorum, at least half of the voting bonds must be represented at the meeting.

The issuer is based in Malta. The notes are guaranteed by DBB Jack-up Services A/S, a Aarhus, Denmark-based provider of services to the offshore wind industry.

© 2015 Prospect News.
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