Arctic Oil Shipper Primorsk Files for Bankruptcy
Source: Dow Jones News
Primorsk International Shipping Ltd., which operates a fleet of ice-class oil tankers in the Arctic, has filed for bankruptcy protection after reaching the terms of a debt-for-equity swap with bondholders.
The oil shipper, registered in Cyprus, has been in talks with a group of Norwegian bondholders on the terms of a debt restructuring for more than a year, said Holly Etlin, the company's chief restructuring officer, in an affidavit filed Sunday with the U.S. Bankruptcy Court in New York.
Primorsk has struggled in recent years after undertaking an ill-timed expansion that loaded the company up with too much debt at the same time when global markets crashed, significantly reducing world trade. Since 2010, the company has been selling vessels and repaying the debt it took a decade ago.
A group of senior bank lenders balked at the bondholder deal and has demanded Primorsk sell its entire fleet of vessels. Last week, the lenders seized a Primorsk bank account in London and demanded full payment of some $262.2 million in loans, prompting the chapter 11 filing Friday.
The shipper, which is profitable, and its bondholders say the company is worth far more than the liquidation value of its fleet if it can restructure its debt and revamp charter rates via its bankruptcy case.
"The restructuring would involve the conversion of all of the outstanding Norwegian bonds into approximately 75% of the equity of the reorganized debtors pursuant to a chapter 11 plan of reorganization," Ms. Etlin said.
Under a chapter 11 plan that would require court approval, the senior lenders would receive replacement senior secured bonds, paying interest at a new rate to be determined, court papers said.
The remaining 25% in the reorganized company is earmarked for the company's management and owners. Primorsk is owned by Apington Investments Ltd., a British Virgin Islands holding company, which is controlled by Russian shipping executive Alexander Kirilichev.
Founded in 2004, Primorsk owns nine double-hulled ships capable of transporting crude oil in extreme Arctic conditions that operate in Russian, Canadian U.S. and European waters. The company charters its vessels to BP, Chevron, Lukoil and other major oil companies.
Two sister companies—which didn't file for bankruptcy protection and are also owned by Apington—provide management and other services for oil shipper. Prisco (Singapore) Pte Ltd. is Primorsk International's managing agent and crews for the vessels are sourced by Primorsk Shipping Corp. and trained at the Russia-based Prisco Training Centre in Nakhodka on the coast of the Sea of Japan.
Primorsk International intends to continue operating during it chapter 11 case. The company has filed a number of routine requests to pay its vendors, suppliers and crew members during its case. It isn't seeking approval of a bankruptcy loan and will pay its advisers form existing cash and operations.
The law firm of Sullivan & Cromwell is handling Primorsk's chapter 11 case and AlixPartners is providing restructuring advice.
Judge Martin Glenn, who will oversee the case, has scheduled an initial hearing for Wednesday in Manhattan bankruptcy court.
Write to Patrick Fitzgerald at patrick.fitzgerald@wsj.com
(END) Dow Jones Newswires
January 18, 2016 21:15 ET (02:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Source: Dow Jones News
Primorsk International Shipping Ltd., which operates a fleet of ice-class oil tankers in the Arctic, has filed for bankruptcy protection after reaching the terms of a debt-for-equity swap with bondholders.
The oil shipper, registered in Cyprus, has been in talks with a group of Norwegian bondholders on the terms of a debt restructuring for more than a year, said Holly Etlin, the company's chief restructuring officer, in an affidavit filed Sunday with the U.S. Bankruptcy Court in New York.
Primorsk has struggled in recent years after undertaking an ill-timed expansion that loaded the company up with too much debt at the same time when global markets crashed, significantly reducing world trade. Since 2010, the company has been selling vessels and repaying the debt it took a decade ago.
A group of senior bank lenders balked at the bondholder deal and has demanded Primorsk sell its entire fleet of vessels. Last week, the lenders seized a Primorsk bank account in London and demanded full payment of some $262.2 million in loans, prompting the chapter 11 filing Friday.
The shipper, which is profitable, and its bondholders say the company is worth far more than the liquidation value of its fleet if it can restructure its debt and revamp charter rates via its bankruptcy case.
"The restructuring would involve the conversion of all of the outstanding Norwegian bonds into approximately 75% of the equity of the reorganized debtors pursuant to a chapter 11 plan of reorganization," Ms. Etlin said.
Under a chapter 11 plan that would require court approval, the senior lenders would receive replacement senior secured bonds, paying interest at a new rate to be determined, court papers said.
The remaining 25% in the reorganized company is earmarked for the company's management and owners. Primorsk is owned by Apington Investments Ltd., a British Virgin Islands holding company, which is controlled by Russian shipping executive Alexander Kirilichev.
Founded in 2004, Primorsk owns nine double-hulled ships capable of transporting crude oil in extreme Arctic conditions that operate in Russian, Canadian U.S. and European waters. The company charters its vessels to BP, Chevron, Lukoil and other major oil companies.
Two sister companies—which didn't file for bankruptcy protection and are also owned by Apington—provide management and other services for oil shipper. Prisco (Singapore) Pte Ltd. is Primorsk International's managing agent and crews for the vessels are sourced by Primorsk Shipping Corp. and trained at the Russia-based Prisco Training Centre in Nakhodka on the coast of the Sea of Japan.
Primorsk International intends to continue operating during it chapter 11 case. The company has filed a number of routine requests to pay its vendors, suppliers and crew members during its case. It isn't seeking approval of a bankruptcy loan and will pay its advisers form existing cash and operations.
The law firm of Sullivan & Cromwell is handling Primorsk's chapter 11 case and AlixPartners is providing restructuring advice.
Judge Martin Glenn, who will oversee the case, has scheduled an initial hearing for Wednesday in Manhattan bankruptcy court.
Write to Patrick Fitzgerald at patrick.fitzgerald@wsj.com
(END) Dow Jones Newswires
January 18, 2016 21:15 ET (02:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
