Offshore drilling services provider Seadrill Ltd. agreed to a debt-to-equity exchange with certain bondholders as part of its broader debt restructuring plan.
The company agreed to issue a total of 7.5m new equity shares having par value of $2 per share in exchange for $50m principal amount of the 5.625% Senior Unsecured notes due 2017.
Settlement of this offer was expected to occur on 13 June 2016, upon which the company would have a total of 508,444,280 shares of its common stock outstanding.
Source: Seadrill Ltd. Press Release
South Korea’s central bank unexpectedly cut the benchmark seven-day repurchase rate to 1.25%, a new record low, to aid indebted companies in their restructuring plans. The South Korean won moved sharply lower.
The decision to cut benchmark rates was projected by only Goldman Sachs of 18 economists surveyed while others saw a reduction in the next couple of months.
South Korea’s sovereign yield dropped to a record low this month after minutes of the May meeting showed a board member called for lower rates while the government and central bank planned to create a KRW 11tn ($9.5bn) fund to facilitate corporate restructuring.
The board’s May minutes showed several members were worried about downside risks from the corporate overhaul such as unemployment and declining investment.
The government’s plans to aid corporate restructuring would support its ailing shipbuilders
who had slashed jobs and were in process of restructuring their debt.
Hercules Offshore Inc. filed for bankruptcy protection, its second in just under a year after it could not find itself a buyer in the last few months amid a depressed market for oil drilling services.
According to CEO Troy Carson, the company was planning to sell off its assets in a ‘controlled-manner’ as it had the support of almost all the top lenders that helped it out of bankruptcy in November 2015.
A voting report stated that Hercules received support from lenders holding more than $249m in first-lien loans.
Hercules was said to court its stockholders, promising a “meaningful recovery” if they agreed to go along with the new plan. The company’s stock was created in the previous bankruptcy, when bondholders agreed to take equity in lieu of collecting their debts of $1.2bn.
According to court documents, shareholders were being offered between $12.5m and $41m, depending on how Hercules’s asset sales go, if they supported the bankruptcy wind-down plan. Otherwise, a negative vote would result in a recovery ranging from nothing to $27m.
Hercules’ international subsidiaries wouldn’t be included in the U.S. bankruptcy, but they would be part of the final sale process.
On 23 May 2016, Chaparral Energy received commitment from banks to provide it funding of $100m as part of the restructuring process.
Chaparral would continue to engage with all its lenders to achieve an agreement on terms of its restructuring.
The company provided a version of its restructuring proposal to certain members of an ad hoc committee of unsecured noteholders but after evaluating, the noteholders rejected the proposal.
It appears that the terms of the consensual restructuring may or may not involve an equity offering.
South Korean integrated logistics and container-freight transport company Hyundai Merchant Marine Co.’s bondholders plan to decide whether to approve the company’s debt restructuring offer during a two-day meet which continues till Wednesday.
During the meeting, Hyundai Merchant would propose a plan to swap more than half of its debt of approximately KRW 800bn ($672m) for equity and the payment of the remaining debt after two years.
Previously, creditors, led by state-run Korea Development Bank, agreed to swap KRW 680bn worth of debt for the company’s equity, as part of efforts to keep it afloat. Hyundai Merchant had debts of about KRW 5.2tn as of 31 March 2016.
The debt recast is one of the key prerequisites for the company to be put under a creditor-led rehabilitation scheme.
As part of its restructuring, Hyundai Merchant was in final talks with owners of its chartered ships to cut leasing rates, whose outcome may come out later this week. According to creditors, high charter rates were negatively impacting the company’s financial health, and a cut in the leasing rates was one of the key preconditions for the survival of the shipper.
Hyundai Merchant paid a total of KRW 1.9tn won to 22 owners of chartered ships in 2015, which accounted for 32% of its annual sales of KRW 5.8tn.
Creditors have also demanded that the shipper be included in a global shipping alliance to stay competitive. However, the company may be excluded from joining the group unless it cuts its charter rates and reschedules its debt.
Hyundai Merchant stated that its inclusion into a global shipping alliance would be guaranteed if it successfully negotiates charter rate cuts and its debt recast is approved by its creditors and bondholders.
Source: Yonhap News Agency
Bankrupt Spanish renewable energy company Abengoa SA‘s subsidiary was seeking court approval for more time to control its restructuring case, saying that it was not currently in position to fully evaluate claims against it or prepare a reorganization plan.
Abengoa Bioenergy US Holding LLC said in court papers it needs a 120-day extension to its exclusivity period to give it until 21 October 2016 to file a reorganization plan.
Kaisa Group, the Shenzhen-based property developer which defaulted on its USD-denominated bonds, reached a debt restructuring agreement approved by bondholders at meetings held by courts in Hong Kong and the Cayman Islands.
Based on an agreement reached last week, the company restructured nearly RMB 17bn in offshore debts.
According to lawyers involved, 96% of shareholders by value attended the restructuring meeting and more than 99% voted to back the plan, exceeding the 75% threshold as per local law.
There remains a final legal process to obtain the US court’s recognition of Hong Kong and the Cayman Islands court sanctions, as the company was using US law to deal with offshore creditors.
The company expects the offshore restructuring to be completed by the end of June 2016.
Kaisa was on the verge of bankruptcy last year due to a liquidity crunch, but the situation improved after the Shenzhen government partially lifted the sales ban on its developments.
However, more than 1,000 apartment units owned by the company in Shenzhen remain seized.
Kaisa’s shares in Hong Kong have been suspended since March 2015.
Source: South China Morning Post
According to an announcement in the New York court, bankrupt solar power producer SunEdison allowed its unsecured creditors to investigate its bankruptcy amid an agreement the company reached with its junior creditors on its finance package.
SunEdison, carrying debt of $16bn at the time of filing for bankruptcy. The troubled company hasn’t yet filed audited financial statements for 2015.
It appears that during court proceedings, creditor’s evaluation of SunEdison’s financial affairs revealed little information regarding SunEdison’s subsidiaries that were not involved in the bankruptcy.
In exchange for the right to investigate, SunEdison’s unsecured creditors agreed to withdraw opposition to the company’s $300m bankruptcy financing package.
SunEdison’s yieldcos or its most significant creditors, TerraForm Power Inc. and TerraForm Global Inc., reached an agreement designed to make sure the company that once owned them would be able to meet its obligations to them.
The committee investigation would replace a probe SunEdison had earlier requested, one that creditors declared to be too limited in scope and budget.
In addition, SunEdison’s bankruptcy financers, which are also the company’s senior lenders, agreed to free up for junior creditors up to $50m of insurance coverage available under the company’s officers and directors liability insurance coverage.
SunEdison’s scheduled hearing on Thursday in a New York bankruptcy court on its $300m bankruptcy loan was postponed until Friday.
Some of SunEdison’s creditors and its so-called yieldcos, TerraForm Global Inc. and TerraForm Power Inc., had objected in court papers to the debtor-in-possession loan, which includes features that may help a group of lenders recoup their initial investment.
According to SunEdison’s attorney Jay Goffman, a deal on the DIP loan was expected by Friday.
SunEdison filed for bankruptcy in April after its ambitious growth plan proved unsustainable. It received approval from a judge last month to tap some of the DIP loan.