Marine Subsea lacks quorum, will not make change to 9% bond agreement

By Angela McDaniels

Tacoma, Wash., Dec. 16 - Marine Subsea Cyprus Holding Ltd.'s latest consent solicitation for its 9% bonds due 2019 was not successful, according to a notice from bond trustee Norsk Tillitsmann ASA.

At a meeting on Dec. 16, bondholders were asked to approve an amendment that would have replaced the definitions of guarantors and parent in the bond agreement with "N/A."

All of the votes cast at the meeting were in favor of the change, but not enough bondholders were present to form a quorum. The bond agreement will remain unchanged.

As previously reported, the company received bondholder consent to cancel the bonds once its planned restructuring is completed. At a bondholder meeting on Dec. 13, 99.06% of the votes were cast in favor of that proposal.

Bondholders approved a restructuring proposal in November. Originally, the restructuring was going to be conditional on the holders of at least 50.1% of the bonds entering into a bond purchase agreement with African Offshore Cyprus Holding Ltd. Now that the bonds are going to be canceled, bondholders will no longer be asked to enter into that agreement.

At the Dec. 13 meeting, the holders also approved a change to the allocation dates. The restructuring is now expected to be completed by Dec. 20, later than originally anticipated. As a result, the allocation dates were changed to Dec. 13, if the completion has occurred prior to that date, Jan. 9, Feb. 24 and the date falling three months after the day immediately proceeding the date on which the restructuring is completed.

Restructuring

Parent company Marine Subsea AS planned to sell its shares in Marine Subsea Cyprus to a newly formed entity, African Offshore Services AS, for $90 million. According to a previous notice, the parent company's board concluded that Marine Subsea Cyprus "had no value net of debt" and so the sale was meant to "conserve value for all creditors."

Pareto Project Finance AS was unable to acquire financing for the full $90 million, so the plan was revised.

A new silent limited partnership was incorporated under the name Offshore Accommodation IS, with Offshore Accommodation AS as its general partner, to purchase three offshore barges from some Marine Subsea Cyprus subsidiaries.

Pareto received commitments for $74 million of financing for the purchase. The payment for the barges will be $74 million in cash and 40% of the partnership shares in Offshore Accommodation IS. The shares and about $59 million of the cash payment will be distributed to the bondholders.

The shares will be distributed on the revised allocation dates.

In addition, Marine Subsea Cyprus will pay to the bond trustee on the bondholders' behalf $150,000 per week from Aug. 31 until the restructuring is complete.

After the cash payments are made and the shares are distributed, the principal amount of the bonds will be reduced by $75 million.

The company originally issued $246 million of the bonds.

Oslo-based Marine Subsea is an international offshore support company with a main focus in West Africa.

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