Singapore’s Otto asks holders to extend 7% notes, waive put option

By Angela McDaniels

Tacoma, Wash., June 29 – Otto Marine Ltd. subsidiary Otto Marine Services Pte. Ltd. began a consent solicitation for its S$70 million of 7% fixed-rate notes due 2016, according to a company announcement.

Ocean International Capital Ltd. has proposed buying all of the shares of Otto Marine it does not already own for S$0.32 per share and delisting the company from the Singapore Exchange. Ocean International Capital is a special-purpose vehicle owned by Datuk Seri Yaw Chee Siew, a controlling shareholder of Otto Marine.

A pre-condition of Otto Marine’s application for delisting is the receipt of noteholder consent for the following:

• To extend the maturity date of the notes from Aug. 1, 2016 to Feb. 1, 2017 or the date on which the delisting of the company has been completed, whichever is earlier;

• To waive compliance with certain covenants that may be breached as a result of the delisting and sale;

• To agree not to exercise or to waive their option to put the notes back to the issuer upon a delisting of the company.

The company has entered into an agreement with RHB Bank for a S$73 million loan and plans to use S$70 million of the proceeds to redeem all of the notes at par. This is conditioned on the delisting of the shares.

The company said that if the delisting proposal does not happen, it will consider alternative sources of funding, including, but not limited to, undertaking a rights issue, seeking financing from banks and/or the sale of vessels.

In connection with the issue of the notes, a credit enhancement feature was introduced in the form of an interest reserve account. The funds credited into the account serve as security for the payment of the interest and principal amounts under the terms of the notes. Currently, the amount in the account is S$4.95 million.

As part of the consent solicitation, the issuer is seeking consent to withdraw any amount in the account for the purpose of making the interest payments due for the period from Aug. 1 to the date of redemption of the notes and the remainder toward the payment of consent fees.

The bondholder meeting will be held at 5 a.m. ET on July 15.

The company is offering a 0.5% consent fee for holders who consent by 5 a.m. ET on July 11 and a 0.3% consent fee for holders who consent after that time but prior to 5 a.m. ET on July 13. The consent fees will be paid on the earliest of Feb. 1, 2017, the delisting redemption date and such other date on which the notes become due and payable.

DBS Bank Ltd. and Overseas-Chinese Bank Corp. Ltd. are the solicitation agents.

Singapore-based Otto Marine is a shipping-focused offshore marine group that operates offshore support vessels.

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