Debt revamp: how issuers can better win noteholders' support

IT has come to surprise many seasoned financiers how badly issuers have been struggling to gain the support of noteholders in their restructuring exercise amid the protracted downturn in the offshore & marine (O&M) industry. Outside of Singapore, the problem appears more manageable. As said by Geir Sjurseth, DvB Bank managing director of global offshore finance, holders of unsecured notes elsewhere understand better that debt not backed by collaterals would have to rank at the 'bottom of the ladder' or be subordinated to other debtholders.

In Singapore, debt restructuring exercises involving haircuts to the principal values of note issues invariably end in a stalemate for the listed companies. In the case of Rickmers Maritime, holders of S$100 million medium-term notes maturing in May 2017 have further resisted a revised offer to partially exchange their notes for substantial equity in the shipping trust.

This prompted one frustrated equity investor to ask: What more do the noteholders want before coming on board a debt restructuring process necessary to see a listed company survive this protracted winter?