Oaktree to strengthen its grip on TORM

Nov 02 2014


TORM has agreed with a group of its lenders and Oaktree Capital Management to look at restructuring of the company by which Oaktree could takeover the effective ownership of the Danish company.

The final terms of the proposed transactions will be subject to further negotiations between the relevant parties, TORM said.

At this stage, the restructuring is expected to stipulate that the lenders will initially write down the debt to the current asset values in exchange for warrants and may elect to convert part of the remaining debt into new equity in the company.

Under the terms of the proposed agreement, Oaktree would contribute product tankers in exchange for a controlling equity stake in the combined company, which would reinforce TORM’s position as one of the largest owners in the product tanker segment.

 

The negotiations could also lead to a new working capital facility.

 

It is also expected that the restructuring will result in a substantial dilution of TORM’s existing shareholder base. The consequences of the restructuring plan will be presented to the shareholders when the proposed implementation structure is agreed upon.

 

The final implementation of any restructuring would be subject to stakeholder approvals and certain conditions precedent, including required approvals from public authorities.

 

TORM, together with the group of lenders and Oaktree, will seek to agree on the final terms and implement the proposed restructuring, including soliciting support from the current shareholders and the broader lender group, the company said.

 

The company said that it expects to be able to present the final restructuring plan and transaction structure no later than first quarter of next year.

 



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