Restructuring plan agreed with lenders
Reference is made to prior information provided regarding the ongoing financial process of Prosafe SE (“Prosafe” or the “Company”) with its lenders.
Prosafe is pleased to announce that it has received support from the lenders of Prosafe SE and Prosafe Rigs Pte. Ltd. as part of a comprehensive and significant restructuring of the group’s financial debt (the “Transaction”). The Company has received an acknowledgment of credit approval (under certain conditions) in support of the Transaction of ca. 79% on the $ 1,300 million facility and the $ 144 million facility with additional credit approvals expected by mid-June 2021.
The terms of the Operation will result in significant deleveraging of the balance sheet with approx. 75% reduction in debt, corresponding reduction in annual debt service, a sufficient cash balance and all in all a significantly improved balance sheet and financial flexibility.
Highlights of the proposed financial restructuring:
- Significant debt reduction: California. $ 1,100 million of total debt reduction (amount subject to closing schedule and accrued interest on that date). Recovery under the $ 1,300 million facility and the $ 144 million facility of $ 250 million and $ 93 million, respectively.
- Important track: No mandatory debt maturity until December 2025.
- Reduced interest charges: California. $ 9 million in annual post-transaction debt service charges.
- Financial flexibility: no fixed amortization on reestablished credit facilities. All capital repayments before maturity are made via a new group cash transfer mechanism.
- Liquidity margin: Sufficient liquidity well in excess of the agreed minimum cash commitment.
- Equitization: California. $ 1,100 million debt reduction on the Company’s bank facilities (amount submitted at closing and accrued interest at that date), outstanding interest rate swaps, other financial liabilities and liabilities to be capitalized at closing in 99% of the shareholders’ equity of Prosafe SE.
- Implementation: As Prosafe does not receive unanimous support from all stakeholders for the restructuring, the Company intends to implement the transaction using a Singapore scheme of arrangement combined with other arrangements as necessary. The Operation will also require the approval of the shareholders of the Company at an extraordinary general meeting. Notice of such a meeting will be published in due course.
Jesper K. Andresen, CEO of Prosafe, said: “Supporting a complete restructuring of our lenders is a key step in the process of implementing a sustainable financial solution. We are pleased to have achieved this goal in a consensual manner among our lenders, which reflects the strong support we received throughout the process and which allowed us to continue our business as usual and protect and generate the value. Pending the remaining credit approvals and a possible Singapore Scheme of Arrangement combined with other arrangements to complete the implementation, Prosafe will continue to position the business and focus on protecting and creating value for all. its stakeholders ”.
Detailed terms of the restructuring:
Modified and updated US $ 1,300 million facility
- Cash: $ 38 million subject to registered collateral / set-off rights to be used as cash redemption at par on completion
- Debt repayment: $ 250 million
- Maturity: December 2025
- Interest rate: L + 2.50% payable in cash
- Equitization: remaining balance of approx. 1,000 million dollars to be capitalized in exchange for ca. 89% equity (assuming a total capitalization of $ 45 million Westcon Tranche)
Modified and updated USD 144 million facility
- Cash: $ 9 million in cash subject to registered collateral / set-off rights to be used as repayment at par on completion
- Debt repayment: $ 93 million
- Maturity: December 2025
- Interest rate: L + 2.50% payable in cash
- Equitization: remaining balance of USD 37 million to be capitalized in exchange for approx. 3% of equity
Liabilities related to interest rate swaps
- To be fully privatized in exchange for approx. 2% of equity
Cosco seller credit for the Notos safe
- Unless consensual agreement with Cosco ca. 20 million USD to be fully capitalized in exchange for approx. 2% of equity
Westcon Tranche and Westcon Concession
- A Westcon tranche of USD 45 million (contingent liability) is included in the agreement with the lenders. The Company will make cash payments on the Westcon tranche only to the extent that it receives proceeds from the Westcon Court matter, while any remaining portion would be fully capitalized. If the judgment of the Gulating Court of Appeal in favor of Westcon (the “Westcon Claim”) becomes final pending the Supreme Court ruling, the Westcon tranche will likely be capitalized in favor of the lenders under the the $ 1,300 million facility.
- NOK 245 million of the Westcon Claim is secured by a bank guarantee and will be covered by the Company’s liquidity following a final enforceable judgment in Westcon’s favor up to this amount.
- Any unsecured portion of Westcon’s claim beyond the guaranteed amount of NOK 245 million provided to Westcon must be capitalized in exchange for ca. 3% of equity (estimate)
Credit from the seller Cosco for the safe euro
- No modification of the terms of the Eurus Promissory Note because the restructuring does not include the borrowing entity
Convertible bonds and existing shareholders
- Convertible Bonds will be converted into shares
- Convertible bond holders and existing shareholders will jointly own 1% of the capital
- Reference is also made to updates from the Company, no later than May 27, 2021, regarding the protection of the Singapore moratorium as part of the ongoing financial process to facilitate the protection of going concern value pending release. finalization of the negotiations on the modalities with its main creditors and, thereafter, the implementation of the agreed solution. Prosafe’s goal is to continue operating normally during this final phase of discussions and the implementation process. To the extent that a fully consensual solution is not feasible, the intention is to implement a solution using a Singapore scheme of arrangement combined with other arrangements, to the extent necessary.
The Company will make the appropriate announcements as the implementation of the Operation progresses. Please monitor the Prosafe SE website for any announcements or updates on the process.
Moelis & Company is acting as financial advisers, and Schjødt and Clifford Chance are acting as legal advisers to Prosafe in connection with the restructuring.
Prosafe is a leading owner and operator of semi-submersible accommodation vessels. The company is listed on the Oslo Stock Exchange with the ticker code PRS. For more information, please refer to www.prosafe.com.
Stavanger, June 4, 2021
For more information, please contact:
Jesper K. Andresen, CEO
Telephone: +47 51 65 24 30 / +47 907 65 155
Stig Harry Christiansen, Deputy Managing Director and Chief Financial Officer
Telephone: +47 51 64 25 17 / +47 478 07 813
This information is considered inside information in accordance with the EU Market Abuse Regulation and is subject to disclosure requirements in accordance with Section 5-12 of the Norwegian Securities Act.
This stock market announcement was published by Cecilie Helland Ouff Senior Manager Corporate Finance and Treasury at Prosafe on June 4, 2021 at 08:00 CEST.