Fairstar seeks OK to waive put option, covenant defaults; meeting set

By Susanna Moon

Chicago, Oct. 9 - Fairstar Heavy Transport NV will hold a meeting in Oslo on Oct. 22 to ask bondholders to waive a put option and covenant defaults under its NOK 206 million of outstanding senior bonds due 2013.

The company also will ask bondholders to add an option to refinance by prepaying the notes at 104 plus accrued interest to the settlement date.

In exchange for the waivers, the company will agree to deposit on each interest payment date the interest due on the next payment date and that the book equity to capital employed ratio covenant be 40% as of Sept. 30, to be tested again in the third quarter and the reporting dates after that, according to a notice from trustee Norsk Tillitsmann ASA.

The company is in the process of delisting from Oslo Bors, which constitutes a delisting event under the notes and a put option, the trustee noted.

The defaults under the terms of the notes that would be waived are the following:

• Fairstar failed to provide compliance certificates for the first and second quarters of 2012;

• It breached the book equity to capital employed ratio covenant for the first and second quarters of 2012;

• It breached the interest coverage ratio covenant as of Sept. 30;

• It entered into a shipbuilding contract that may be a breach of one of the bonds' clauses;

• It received notice of default from ING Bank NV under a facility agreement; and

• It breached a clause of a $600,000 promissory note issued to Cadenza Management Ltd.

In order to approve the measure, the company must secure votes from the holders of two-thirds of the bonds represented at the meeting, and in order to form quorum, half of the bonds must be represented at the meeting.

Previous put option

On June 13, Fairstar said holders may put its senior bonds due 2013 due to a change of control that occurred under the note terms when a majority of the company's shares were acquired by Dockwise Ltd.

The notes were putable at 104 plus accrued interest, and the put option had to be exercised within two months of May 15, according to a press release from Dockwise.

Dockwise also began a voluntary offer to purchase the notes as an alternative to the put option. It ran until July 16.

The purchase price for the voluntary offer was an amount that was higher than NOK 520,000 per bond, corresponding to 104, the price at which the bonds could be put back, according to the release.

Dockwise acquired the company's shares through its wholly owned subsidiary Dockwise White Marlin BV, the notice said.

The bonds were issued in 2010.

Fairstar Heavy Transport is a Rotterdam, Netherlands-based provider of long-distance ocean transportation services for the offshore and onshore industries.

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