EMS Seven Seas seeks OK to convert 12% bonds due 2014, issue shares

By Toni Weeks

San Luis Obispo, Calif., April 11 - EMS Seven Seas ASA will call a general meeting on May 22 regarding its 12% senior unsecured callable bond issue due 2014, according to a notice by trustee Norsk Tillitsmann.

Based on its unaudited Q4 2013 report published in late February, the company said it needs to restructure its balance sheet by reducing its outstanding debt and payment obligations.

The company is seeking approval to issue shares and to have the right to convert remaining bonds into shares, with gross proceeds for the transactions of up to NOK 218.4 million. It plans to sell the shares at a price of NOK 2, which will be payable in cash or with bonds. The cash proceeds from the share issue will be used to repay bonds. If there are any shares not subscribed for, the company plans to call the bonds at par, with payment made in shares or in cash.

EMS Seven Seas said it estimates that a minimum NOK 184 million of the bond issue will be repaid or converted into shares in the share issue. After the share issue is completed, any remaining part of the bond issue will be amended into standardized bilateral loan agreements between the company and the applicable bondholder, with inter alia a term of four years and a fixed coupon of about 5%.

If approved, the transactions are expected to be carried out in May or June.

According to the notice, the company needs to complete the share issue so that it has sufficient financing for the coming 12 months. It is asking bondholders to (i) waive all accrued interest to date for the bonds, (ii) waive accrued interest for the bonds going forward until maturity, (iii) waive the 1% premium on the company's call option so that the bonds may be redeemed at par and (iv) allow the company to repay bonds at par value with payment in kind in the form of shares via the share issue.

EMS Seven Seas said it has received letters of undertaking from bondholders representing about 98% of the bonds regarding the adoption of the proposal. Of those majority bondholders, it has received undertakings from bondholders representing about 82% of the share capital of the company to approve the proposal at the general meeting.

A bondholders meeting to approve the proposal will take place on April 24 in Oslo. Bondholders representing at least half of the voting bonds must be represented at the meeting, and two-thirds of the voting bonds represented at the meeting must vote in favor of the resolution.

Lysaker, Norway-based EMS Seven Seas, formerly Eitzen Maritime Services, provides repair, rescue, certification, insulation and cleaning services to shipowners.

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