Pacific Radiance gets noteholders' support for debt revamp

Singapore

PACIFIC Radiance's noteholders have granted the listed offshore support vessel group the vote needed to push through a debt restructuring plan.

On Friday, noteholders representing 94.28 per cent in value of those voting and present, voted in favour of the restructuring proposal for the S$100 million notes maturing this August. Holders of S$17 million in outstanding notes did not exercise their rights to vote. Still, Pacific Radiance has cleared the bar by winning a majority vote in excess of the requisite 75 per cent value of the issued notes.

The listed offshore support vessel (OSV) group has gone through a failed consent solicitation exercise (CSE) in February and made efforts to sweeten the terms in its second CSE before managing to win over the requisite vote.

The revised proposal tabled for the vote on Friday encompassed two options for noteholders. The first includes a partial cash redemption of S$15 million and equity swap for notes held to shares at a conversion price of 10.1 Singapore cents.

For the second option, the notes issuer threw in a cash payout component and bonus shares that are subject to certain conditions in addition to the issuance of new convertible bonds to replace the existing notes. These convertible bonds can be converted to shares at 11.2 Singapore cents. Both options allow noteholders to receive warrants pegged at an exercise price of 2.8 Singapore cents.

Prior to Friday's vote, some analysts had recommended noteholders to back the restructuring proposal, even it wasn't ideal. OCBC credit analyst Wong Hong Wei described the proposal as "a bittersweet deal" offering "poor recoveries" for noteholders.

Still, he recommended that noteholders accept the proposal because they stand to see "significantly worse-off recoveries" in a liquidation scenario, given Pacific Radiance's assets have already been pledged to bank loans.

Friday's vote outcome effectively paves the way for Pacific Radiance to proceed with the restructuring of its bank loans via a scheme of arrangement. Pacific Radiance has said it would be seeking debt forgiveness and debt-to-equity swap of US$211 million in bank loans.

It will repay US$100 million of loans with cash to be raised from the issuance of new equity. The Business Times earlier reported that Pacific Radiance had sought to tap billionaire Sam Goi for its new equity raising exercise.

The OSV group has indicated that, post-restructuring, some US$121 million of loans will be retained on its balance sheet.

OCBC Research's Mr Wong projected that with the reduced bank debts and no further plans to acquire new vessels, it is unlikely Pacific Radiance will have to undertake another debt revamp in order to stay in business.

Pacific Radiance's executive chairman, Pang Yoke Min described Friday's CSE outcome as "a vote of confidence" in the OSV group's business.

He said the group is grateful to the support granted by noteholders. The restructuring of notes "is a critical step for ... the overall restructuring of the group".

"Once this is completed, alongside the scheme of arrangement we are pursuing and the injection of new equity, the group will emerge with a strengthened balance sheet and enhanced liquidity."

Hit by overcapacity in the OSV market, Pacific Radiance recently posted a net loss of US$7 million for the three months ended June 30, 2018. The OSV counter has been on voluntary trading suspension since late February.