Keppel associate Floatel's bonds forbearance agreement extended to Aug 31

THE forbearance agreement between Floatel International and an ad-hoc committee (AHC) of holders of its US$400 million senior secured, first-lien 9 per cent bonds has been extended again, this time to Aug 31, from Aug 15.

The AHC holds more than 56 per cent of the Oslo-listed bonds' outstanding amount.

Floatel, an associate company of Keppel Corp, on Sunday announced the standstill extension in an update about its discussions with secured financial creditors.

Aside from the first-lien bonds, Floatel also has US$75 million in second-lien 12.75 per cent bonds and is the borrower under a US$150 million term loan and US$100 million in undrawn revolving revolving credit facilities with a syndicate of bank lenders.

Signed in April, the forbearance agreement has been extended several times, and relates to about US$22.8 million in coupon payments due under both the first-lien and second-lien bonds.

Floatel on Sunday said it remains in "constructive negotiations" with its key stakeholders, including the AHC and all bank lenders under the credit facilities, for a financial restructuring.

The company also reiterated that its payment agreement with the bank lenders - where certain expenses in respect of Floatel Endurance and the bank collateral companies are covered by proceeds in the blocked accounts - is operational.

The group's vessels and business continue to operate as normal, Floatel added.

Last month, Keppel posted a second-quarter net loss of S$697 million, anchored by massive impairments of S$919 million, which included the conglomerate's S$227 million share of Floatel's impairment of vessels and a S$10 million fair value loss on the investment in Floatel.

Keppel's financial results led to it breaching the material adverse change clause in Temasek Holdings' S$4 billion partial offer, which the investment firm later withdrew.

Meanwhile, in June, Keppel said Floatel would conduct an independent review of its business plan, which may include a review and update of the assumptions used in the impairment assesment of its vessels.

Shares of Keppel fell S$0.05 or 1 per cent to trade at S$4.77 as at 1.01pm on Monday.