Baltic Horizon Fund Seeks Early Redemption and Waivers
Introduction to Baltic Horizon Fund's Bond Alterations
Baltic Horizon Fund is making significant strides as it navigates its financial structure. The fund has officially asked for a temporary waiver concerning the debt service coverage ratio covenant related to its EUR 42 million floating rate bonds with a maturity date in 2028. This decision signifies Baltic Horizon Fund's proactive approach in managing its obligations and ensuring the sustainability of its financial performance.
Details of the Request
The current outstanding nominal amount of the bonds stands at EUR 22 million, following a mandatory redemption of EUR 20 million which was in line with the bond terms. The circumstances within the Baltic economies continue to influence the fund's strategies, prompting Baltic Horizon Fund to approach bondholders with a request to modify the covenant governing the debt service coverage ratio.
Specific Changes Proposed
To better accommodate the current economic climate, Baltic Horizon Fund proposes to reduce the debt service coverage ratio conditions for 24 months, starting from a date in the upcoming autumn until 2026. They have affirmed to bondholders that fulfilling their monetary obligations as per the terms and conditions remains intact and unaffected.
Mandatory Early Redemption Proposal
In addition to seeking the waiver, Baltic Horizon Fund plans to introduce a requirement for early redemption of the bonds, specifically focusing on EUR 3 million by late 2025. This step is critical to maintaining liquidity while adjusting to market conditions and providing assurance to investors about the fund’s commitment to managing its capital effectively.
Engagement with Bondholders
The bond manager, Northern Horizon Capital AS, has proactively engaged with bondholders, communicating the proposed amendments and receiving preliminary favorable feedback. Now, they are proceeding to the formal consent phase, which is necessary to solidify these changes as per the established Terms and Conditions.
Voting Participation Guidelines
Holders listed in the bondholders' registry by the end of the business day prior to the initiation of the written consent procedure will have the right to vote on these amendments. A notice will be circulated to all eligible holders explaining the voting mechanics, where votes can be submitted via mail, courier, or email.
Requirements for Decision-Making
To efficiently process these changes, a minimum of 55% of bondholders must participate in the vote, and a supermajority of at least two-thirds must be in favor for the decision to pass. Following the receipt of sufficient consents, the proposed amendments will be enacted, and all holders, including those who oppose, will be bound by the new terms.
Financial Implications of the Changes
The adjustments being considered involve introducing amendment fees, totaling EUR 295,000 across multiple requests for amendments. This financial strategy ensures that the holders are compensated fairly for their consent, highlighting the fund’s transparency in financial dealings.
Conclusion
Baltic Horizon Fund is clearly navigating through a challenging economic environment with strategic foresight. By facilitating early redemption and adjusting the bond terms, the fund aims to enhance its operational flexibility and bolster investor confidence in its management. The outcomes of the upcoming decisions will certainly play a vital role in the fund’s future endeavors.
Frequently Asked Questions
What is the primary purpose of Baltic Horizon Fund's requests?
The requests aim to secure temporary waivers on bond conditions to adapt to current economic conditions while facilitating early bond redemptions.
Who is responsible for communicating with bondholders?
Northern Horizon Capital AS serves as the fund manager and is charged with the responsibility of engaging and communicating with bondholders regarding decisions.
What conditions are being amended in the bond terms?
The debt service coverage ratio is being adjusted to different thresholds ranging from 1.10 to 0.75 and eventually 1.20 by late 2026.
What is required for the proposed amendments to be approved?
A quorum of at least 55% participation and two-thirds favorable voting from the bondholders is required to pass the proposed amendments.
Who can participate in the voting process?
Only the holders who were recorded in the bondholders' registry before the initiation of the voting process can vote on the proposed changes.
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