Sevan Marine to hold meeting for approval of $36.1 million bond issue

By Jennifer Chiou

New York, July 26 - Sevan Marine ASA announced that bond trustee Norsk Tillitsmann gave notice of an Aug. 9 meeting for holders of its NOK 625 million of senior secured bonds due 2015 and its $100 million of senior secured bonds due 2015 at the request of holders.

Holders of those securities are being asked for consents and approvals to pave the way for the company's previously announced agreement to issue $36.1 million of 15% bonds at a discounted price of 97.

According to a Norsk Tillitsmann release, holders representing more than 10% of the outstanding bonds requested the meeting in order to ensure that any restructuring process is in their best interests.

As already reported, proceeds from the offering are slated for short-term working capital needs into September. This is pending a final resolution of the ongoing restructuring discussions with bondholders and other stakeholders.

The requesting bondholders said that that the new bonds "would be issued to the detriment of the remaining bondholders," adding that the new bonds have only been allocated to a select group of investors.

Specifically, the group said that the bonds would mainly benefit those with a security in the Sevan Voyager.

The bondholders are asking for a separate committee of holders, which would automatically become the board of directors for the holding company of Sevan Hummingbird FPSO in case of an exercise of the underlying mortgage rights of the bonds.

The committee will be appointed by Morten E. Astrup and consist of at least three members.

The holders are asking that the committee be authorized to agree on a course of action in case the bondholders have to exercise underlying mortgage rights.

On June 22, the company said that it was in the process of seeking a restructuring of its debt, noting that it had secured an extension of the grace period for the June 22 payment of the interest due on its NOK 700 million of senior bonds.

According to a prior release, the company and its subsidiaries were continuing to explore measures to address their immediate liquidity needs.

At least $30 million from the planned offer will be used for the FPSO Sevan Voyageur upgrade project.

The coupon will be payable upon repayment of the bonds, which will come due in July 2012. The securities may be called at any time at 107.5% of par during the first six months and at 103.75% after that.

The prior release added that the bonds are subject to mandatory redemption upon the completion of a long-term restructuring resolution in which the company raises new capital in an amount of at least $175 million.

The bonds will be secured by a first-priority pledge over the company's shares in Sevan Drilling ASA.

The completion of the issue is subject to, among other things, standstill agreements with the bank financiers and charterers of the FPSO Sevan Voyageur until the end of September.

The company previously said that it is "optimistic that a long-term solution to the current financial challenges" will be reached by the end of September.

Questions may be directed to Astrup at 44 20 7409-3373 or morten@stormcapital.co.uk.

Sevan Marine is a Norwegian offshore drilling company.

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