Krillsea allocates sale proceeds to bondholders: 85% for PIK, 15% bonds, 15% to callable floaters

By Jennifer Chiou

New York, Nov. 14 - Krillsea Group AS announced that it has set the bondholder funding arrangement for the proceeds from the sale of its krill trawl vessel. Affected securities include the company's NOK 26,886,731 of 15% senior secured bonds due 2011, NOK 53 million of floating-rate senior secured PIK bonds due 2012 and NOK 40 million of floating-rate callable senior secured bonds due 2012.

As announced at the end of October, the company received bondholder support for the sale of the vessel and a write-down of claims if the company pursues a voluntary winding-up.

According to a notice from trustee Norsk Tillitsmann ASA, of the NOK 17,903,630 of proceeds, NOK 10,096,276 will be allocated to holders of the floating-rate senior secured PIK bonds, NOK 5,121,809 will be allocated to holders of the 15% senior secured bonds and NOK 2,685,544 will go to holders of the floating-rate callable senior secured bonds due 2012.

The payment date is slated for Nov. 16.

The trustee added that it has held onto NOK 250,000 of the funds to meet a potential future cost.

Meeting and vote

As previously reported, the proposal passed at a meeting in Oslo on Oct. 31 with the following percentage of votes:

• 90.48% of the company's 15% senior secured bonds, the second-priority II bonds;

• 87.52% of its floating-rate senior secured PIK bonds, the second-priority I bonds; and

• 92.95% of the floating-rate callable bonds, the third-priority bonds.

In September, bondholders rejected a proposal to sell the M/S Thorshovdi krill trawl vessel for NOK 130 million to Aker BioMarine Antarctic II AS.

Krillsea said at that time that no other buyer has materialized. A group of bondholders has accepted a sale of the vessel to Aker BioMarine on the condition that NOK 20 million of the proceeds be distributed to the bondholders. The group holds more than two-thirds of each series of bonds.

In addition, Aker BioMarine will pay NOK 442,129.33 as partial repayment of funding extended by the bondholders. The mortgages over the vessel in favor of the bondholders will be discharged accordingly.

The company sought formal reconfirmation of the sale at the bondholder meeting for the sake of order.

Bondholders were asked to approve the following:

• The sale of the vessel;

• Under a funding arrangement established by the holders of the second-priority I bonds, up to NOK 3 million of the proceeds from the first-priority inventory claim has been set aside to be used to cover company administration expenses. This funding will be repaid 150% from the sale proceeds;

• 85% of the remaining net proceeds will be distributed pro rata to the holders of the second-priority bonds, and the rest of the net proceeds will be distributed pro rata to the holders of the third-priority bonds.

The holders of the second-priority I bonds may in addition receive proceeds from the sale of inventory included in the existing loan security for this bond;

• The acceleration of the bond issues and the granting to the issuer of a standstill in order to avoid bankruptcy. The company said the acceleration was needed in order to establish a basis for receiving the sale proceeds; and

• The write-off of claims against the issuer. Without the vessel, the issuer may have no more value, and no further proceeds may be expected for the bondholders. In order to avoid bankruptcy proceedings, a controlled winding-up of the issuer may take place. Alternatively, this process may be accomplished by the sale of the issuer.

The company said that in the case of a voluntary winding-up, it may be necessary for the bondholders to accept a write-down of the remaining bond claims against the issuer. By approving the proposal, bondholders gave the trustee the authority to make such a write-down.

At least half of the bonds had to be represented at the meeting, and the holders of at least two-thirds of the bonds represented at the meeting had to vote in favor of the proposal in order for it be approved.

Krillsea Group, formerly Krill Seaproducts AS, operates a krill fishery in the Antarctic Ocean and makes food and feeds using krill. It is based in Fosnavag, Norway.

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