Polarcus has gained full support from key stakeholders to move forward with the restructuring of the company in an effort to reduce its debt.
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The Polarcus Nadia. Image courtesy of Polarcus. |
Key stakeholders consisting of the company’s banks, lease providers, and certain bondholders and stakeholders entered into a deal with Polarcus for restructuring support that will see the company’s balance sheet “significantly improved.”
“The restructuring will reduce the company's debt level significantly with renegotiated lease terms and the introduction of new call option prices for the bonds corresponding to a potential debt reduction of US$280 million,” Polarcus said in a statement. “In addition, debt service payments during the next two years will be reduced by approximately $140 million.”
The deal includes several changes to be made to financing agreements, and enables the board of directors to allow Polarcus to continue its operations.
As part of the restructuring, the company’s bank facility will be extended from 30 June 2017 to 30 June 2022. The liquidity covenant will be reduced from $25 million to $10 million, providing Polarcus with additional financial flexibility in its future operations.
In sales and leaseback, charter rates for seismic vessels Polarcus Naila and the Polarcus Nadia, which is currently cold stacked, will be reduced by about 75% from current levels until 1 January 2018. An increase is expected thereafter that will still represent a reduction of approximately 20% from current levels.
“The purchase options will be removed from the sale-leaseback agreements which will permit a reclassification from financial leases to operational leases reducing the group's financial indebtedness by $167 million,” Polarcus said.
The completion of the restructuring is subject to several terms and conditions.
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