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TORM lenders waive default as part of restructuring deal negotiations
By Caroline Salls
Pittsburgh, Jan. 28 – TORM A/S’ majority lenders waived milestone events of default as part of ongoing negotiations regarding a proposed restructuring agreement between the company, lenders representing 61% of TORM’s ship financing and Oaktree Capital Management, according to a news release.
At this stage, the company said the restructuring is expected to result in lenders initially writing down the debt to current asset values in exchange for warrants and possibly electing to convert part of the remaining debt into new equity.
TORM said Oaktree will contribute product tanker vessels in exchange for a controlling equity stake in the combined company, which will reinforce TORM’s position as one of the largest owners in the product tanker segment. The agreement also calls for a new working capital facility.
According to the release, the restructuring is expected to result in a substantial dilution of existing shareholders. Shareholders are currently expected to retain roughly 1% to 2% of the company’s ordinary share capital.
TORM said it still expects to be able to present the final restructuring plan and transaction structure no later than first quarter.
“The recent strong product tanker freight rates are naturally encouraging, but TORM will not be able to repay its debt through the ordinary course of business,” chairman Flemming Ipsen said in the release.
“Therefore, it is positive that the waiver will give TORM the opportunity to finalize a restructuring agreement.”
TORM is a Copenhagen-based carrier of refined oil products and is involved in the dry bulk market.
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