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Swiber Holdings signs investment agreement with NY-listed Seaspan, getting up to US$200m shot in the arm
BELEAGUERED Swiber Holdings announced on Saturday that New York-listed box ship player Seaspan Corporation will be investing up to US$200 million in the marine engineering group, in what it says is a “significant step forward” in its restructuring.
This shot in the arm for Swiber comes after over two years in judicial management.
Both Swiber and Seaspan said that in executing the investment agreement, they have modified certain terms previously announced in October 2018 when the parties signed a term sheet.
Firstly, an initial investment tranche of US$10 million (previously US$20 million) will be unlocked upon closing in exchange for an 80 per cent shareholding interest in a new holding company to be incorporated into which certain assets of the existing Swiber Group will be transferred.
Secondly, upon securing the development stage LNG-to-power project in Vietnam and achieving major project milestones, a subsequent tranche of US$190 million (previously US$180 million) will be used to subscribe for preference shares in Swiber’s wholly-owned subsidiary, Equatoriale Energy, which will also form part of the New Swiber group.
The proposed investment by Seaspan is subject to several conditions, including securing the necessary approvals from creditors, regulators and shareholders.
If the restructuring is successful, certain secured creditors of Swiber will be issued 5-year zero coupon secured redeemable convertible bonds amounting to US$120 million in New Swiber. This will allow New Swiber and the restructured New Swiber group to continue to operate the Swiber Group’s key assets, which include certain specialised construction vessels and its headquarters building at 12 International Business Park, Singapore, which are currently secured to such secured creditors.
It is proposed that the unsecured creditors of Swiber, existing shareholders and certain management and professionals involved in the judicial management of Swiber will receive new shares in New Swiber, which will constitute 14 per cent, 3 per cent and 3 per cent shareholding interest, respectively in New Swiber following completion of the initial investment.
The secured creditors who will be issued the bonds will, upon conversion of such bonds, be entitled to new shares in New Swiber which will constitute 10 per cent of the enlarged total issued shares of New Swiber, and on a fully diluted basis, Seaspan’s shareholding interest in New Swiber will be reduced to 72 per cent.
The shareholding interests of the unsecured creditors of Swiber, existing shareholders, and certain management and professionals involved in the judicial management of Swiber will be reduced to 12.6 per cent, 2.7 per cent and 2.7 per cent, respectively.
As part of the deal, Seaspan will be granted a call option to acquire all the shares of Equatoriale Energy, which option will be exercisable if the initial investment does not complete due to, among others, the conditions not being fulfilled by the prescribed long stop date.
Judicial manager Bob Yap, who is also head of restructuring at KPMG in Singapore, said that the recent development is an “important milestone” to get Swiber on the road to recovery and that they are “delighted” to work with a company of Seaspan’s reputation.
He added: “There’s still more work to be done and we believe this investment by Seaspan will result in a better recovery to all stakeholders compared to winding-up.”
The judicial managers previously announced on Nov 26, 2018 that the Singapore High Court had granted an extension of time for a creditors’ meeting to be held by May 31, 2019.