Norway’s TTS asks to cut coupon on convertibles, extend by 21 months

By Susanna Moon

Chicago, March 8 – TTS Group ASA said it is asking for bondholder approval to amend its NOK 95,345,000 8% convertible callable unsecured subordinated bonds because it is unable to repay the bonds at maturity on April 18, 2017.

Specifically, TTS is seeking to cut the coupon to 10% from 12% and to extend the convertibles by 21 months to Jan. 18, 2019 from April 18, 2017, according to a company notice.

The issuer also is offering a voluntary repurchase of up to 10% of the bond issue 2011/2016.

The changes require bondholder consents at a meeting set for March 22 in Oslo as well as shareholder approval at a meeting set for March 30.

The company said that a majority of the bondholders plan to vote for the proposed changes.

The company’s share price of NOK 3.90 as of March 7 “is at a level where the bonds are currently trading out of the money in relation to current conversion price of NOK 4.97 per share,” according to the bondholder summons by Nordic Trustee ASA as trustee.

TTS lacks the liquidity or “balance sheet strength” needed to repay the bonds, despite its efforts to sell off non-core assets, the trustee noted.

“Due to continued challenging markets with low visibility, the financial performance has been weaker than expected. This, combined with the company’s restructuring initiatives has led to substantial impairment of fixed assets and goodwill over the last years, which has negatively impacted the issuer’s financial position,” the trustee explained.

The debt and bond facilities with Nordea and DNB, which were renewed in the fourth quarter of 2016 for two new years, include “strict” financial covenants that require renewal or refinancing of the bonds by March 30, the trustee notice said.

Buyback, other details

In the buyback offer, the issuer is proposing to purchase up to NOK 9,534,500 of the outstanding bonds at par.

If the bonds tendered falls short of the cap, the difference between the tendered amount and NOK 9,534,500 will be allocated to investors accepting the buyback offer, the trustee noted.

The deadline for the buyback offer is 6 a.m. ET on March 22, with cash settlement set for three business days after the bondholder meeting.

Pareto Securities AS (+47 22 87 87 70) is the adviser.

To pass, bondholders of at least two-thirds of the bonds represented at the meeting must vote for the proposed amendments. To form a quorum, at least one-half of the voting bonds must be represented at the meeting.

TTS is a Bergen, Norway-based company that designs, develops and supplies equipment for the marine and oil and gas industries.

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