Seatrade Maritime is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Torm granted breathing room until restructuring decision

Torm granted breathing room until restructuring decision
Torm has obtained forbearance from a "sufficient number of its lenders" on default events through until its latest restructuring is agreed, or 23 April 2015.

The agreement buys the Danish company an extra few weeks to gather signatures for its new restructuring agreement, as lenders agreed not to enforce their contractual rights should the company slip into default.

A restructuring agreement signed in October 2014 is due to expire on 31 March 2015, at which point the company is due to start paying down its loans, which could push Torm into default.

The struggling tanker and dry bulk outfit ended 2014 with $1.4bn in debt, and a fleet market value of $859m. "In essence, this gap of 5$68m is the core of TORM’s financial issues," chairman Flemming Ipsen stated in the company's Board of Directors' Report.

The three steps involved in the proposed restructuring involve a writing down of debt to asset values, shaving $568m off total debt in exchange for warrants totaling 7.5% of Torm's share capital.

Step two allows lenders to convert debt to equity, with Torm expecting banks to equitise around 5% of their debt and funds to convert 100%, which would mean a total of around 35% of outstanding debt.

The third and final step would see private equity form Oaktree contribute 31 tankers to the Torm fleet in exchange for a controlling equity stake in the company.

The vessels include 22 MR tankers and three LR2s, plus a further six MR newbuildings due for delivery this year and next. The 22 on the water vessels were sold to Oaktree during 2013 and 2014 as banks exercised the rights they gained during a previous restructuring to force vessel sales.