Introduction
Reference is made to the stock exchange notice issued by Havila Shipping ASA (the " Issuer ") on 9 November 2016 regarding the proposed restructuring plan (the " Havila Restructuring Plan ") and the alternative plan presented by a group of bondholders in HAVI08 (the " Bondholder Group ") in the stock exchange notice dated 11 November 2016 (the " HAVI08 Restructuring Plan ").
The board of directors of the Issuer have received a letter from the Bondholder Group dated 11 November 2016 (the " HAVI08 Letter ") addressing the arguments for the HAVI08 Restructuring Plan and why it should be considered preferable compared to the Havila Restructuring Plan.
The HAVI08 Letter, which is enclosed to this stock exchange notice, has been reviewed and considered by the board of directors of the Issuer, and subsequently the Issuer has the following remarks:
Havila Restructuring Plan
Firstly the Issuer wants to repeat and emphasize that the Havila Restructuring Plan is supported by the secured and unsecured banks, and likewise the majority shareholder of the Issuer which have confirmed substantial contribution in fresh cash equity contribution as a part of the restructuring. The majority of the stakeholders in the Issuer are consequently supporting the Havila Restructuring Plan.
Conversion of unsecured debt to equity
The Bondholder Group has, according to a non-disclosure agreement, since April 2016 been included in discussions and considerations of various, alternative solutions for the restructuring of the Issuer - including conversions of all unsecured debt. Until submission of the HAVI08 Letter, conversion of all unsecured debt to equity in the Issuer on terms acceptable to the secured banks has been refused by the bondholders. The Bondholder Group has instead of full conversion of unsecured debt either claimed additional / partial cash payment or that a part of the unsecured debt is being maintained.
With reference thereto, and the fact that creditors holding approximately 50 % of the unsecured debt are supporting the Havila Restructuring Plan, it seems unlikely that the unsecured creditors as a group will accept conversion of unsecured debt to equity in the Issuer on terms as set out in the HAVI08 Restructuring Plan.
Equity to be provided to the Issuer
The Issuer has the clear understanding that the secured banks - as a general principle - will require fresh equity in form of cash to be provided in a restructuring case like the one on-going for the Issuer, and is therefore assuming that this will be required for approving any alternative proposal of restructuring of the Issuer.
In discussion of various alternatives for the restructuring of the Issuer, the unsecured creditors - including the Bondholder Group - have been requested to confirm fresh equity in form of cash to be provided to the Issuer as part of the restructuring. Except for the uncommitted indications as set out in the HAVI08 Letter, the Bondholder Group has so far rejected that they will provide equity in form of cash to the Issuer.
In order to equalize the equity contribution, the Bondholder Group indicates in the HAVI08 Letter that NOK 22 million can be provided as fresh equity in form of cash to the Issuer. Contrary to the Havila Restructuring Plan, which provides cash contribution of NOK 164 million, the cash contribution as set out in theHAVI08 Letter is not included in the HAVI08 Restructuring Proposal and neither confirmed to be committed.
Repair issue The Issuer has noted that the HAVI08 Restructurings Proposal does not provide a repair issue towards the shareholders of the Issuer. The Issuer is of the opinion that the HAVI08 Restructuring Proposal therefore may be challenged by the shareholders of the Issuer, since equal treatment is not secured by the proposal.
Contribution from secured and unsecured lenders
The HAVI08 Restructuring Plan is based on the assumption that the secured and unsecured banks' contribution to the restructuring of the Issuer as set out in the Havila Restructuring Plan, such as conversion of secured debt and due interest to equity, deferred instalments for a period of 4 years, coverage of cost on non-core vessels / non performing vessels and conversion of uncovered debt on non-core vessels and non-performing vessels to equity, will be maintained or included as a viable element in the HAVI08 Restructuring Plan. As of today, the Issuer has no information confirming that the secured and unsecured banks will maintain their contribution to the restructuring of the Issuer if the Havila Restructuring Plan does not obtain the required support from unsecured lenders.
Cash payment and warrants
The Issuer is willing to grant the unsecured lenders a cash payment of 15 % of the principal amount in combination with warrants which can provide an ownership interest of up to 21 % (before repair issue and conversion of debt related to non-performing vessels - if relevant) in the Issuer. Having in mind that the present equity is lost and the unsecured debt is challenged, and the fact that part of the secured debt is partly being converted to equity, the Issuer is of the opinion that the proposal as set out in the Havila Restructuring Plan, under the present circumstances, clearly should be considered as fair treatment of unsecured debt.
Preliminary conclusions
With reference to the above, it is the opinion of the Issuer that the HAVI08 Restructuring Plan is incomplete, purely conditional, and does not include committed, required and viable elements from all stakeholders for the restructuring of the Issuer.
Pursuant thereto, and the fact that HAVI08 is representing less than 10 % of the total debt of the Issuer, the Issuer, as of today, is of the opinion that the HAVI08 Restructuring Plan will not obtain the support of the secured and unsecured banks, and therefore will fail - even though the plan should be supported from bondholders at the announced bondholders' meeting in HAVI08 on the 24 November 2016.
Consequently the board of directors of the Issuer take notice of the proposal, but cannot confirm support to the HAVI08 Restructurings Plan as it is presented in the Summons of 10 November 2016 and explained in the HAVI08 Letter, unless the required contribution from all stakeholders is secured.
Contact persons for further information are:
Njål Sævik Chief executive officer +47 909 35 722 njaal@havila.no
Arne Johan Dale Chief financial officer +47 909 87 706 ajd@havila.no
This information is subject to the disclosure requirements pursuant to section 5 -12 of the Norwegian Securities Trading Act.
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