Tanker high tide still not enough to lift Torm

At an Extraordinary General Meeting today (EGM), Torm's board approved new Articles of Association which allow its restructuring to progress.

In an assessment of the market as part of a summary of an EGM, chairman Flemming Ipsen stated: "We are pleased with the relatively high freight rates for the product tankers at the moment. It should, however, be noted that even with the recent tailwind, TORM will not be able to pull through its financial difficulties without the Restructuring, which is under implementation."

Despite the company returning a profit in the first quarter, its first in five years, the company is struggling under negative equity and an over-leveraged capital structure.

Oaktree Capital Management, Torm, and some of the company's creditors, have entered into a restructuring agreement which will reduce the company's debt to under 65% of its asset value.

The six step restructuring is due to proceed as following, and be completed on 13 July 2015.

Step one will involve the write down of $536m of debt by lenders. Step two offers the ability to convert some of Torm's remaining debt into shares, with an overall limit in place. Step three will see Oaktree exchange 25 product tankers and six MR newbuildings for shares. Step four is a new capital working facility of $75m from some of its lenders. Step five is a new set of Articles of Association, which were approved today, and step six will be the issuing of new A shares which will leave current shareholders with less than 1% of the company.

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