Capital/Financing Update • Jun 19, 2020
Capital/Financing Update
Open in ViewerOpens in native device viewer
Denne melding til obligasjonseierne er kun utarbeidet på engelsk. For informasjon på norsk - vennligst kontakt Nordic Trustee AS
Oslo, 19 June 2020
Important notice: Due to the outbreak of the corona virus Covid-19 bondholders are encouraged to abstain from appearing in person at the bondholder meeting, and instead to participate by proxy as described below. The Issuer may be prevented from arranging the meeting as a physical meeting. Bondholders should note that additional information on proceedings of the meeting may be given on short notice and announced on the Issuer's profile on www.stamdata.no and the Issuer's website.
Nordic Trustee AS (the "Bond Trustee") is the appointed bond trustee for the holders of the bonds (the "Bondholders") in the above mentioned bond issue with ISIN NO 0010805872 (the "Bonds" or the "Bond Issue") issued by MPC Container Ships Invest B.V. as issuer (the "Issuer").
All capitalized terms used but not defined herein shall have the meaning assigned to them in the bond terms for the Bond Issue made between the Bond Trustee (on behalf of the Bondholders) and the Issuer on 20 September 2017 (as amended from time to time, the "Bond Terms"). References to clauses and paragraphs are references to clauses and paragraphs in the Bond Terms.
The information in this summons and its appendices regarding the Issuer and the conditions in the markets where the Issuer operates have been provided by the Issuer. The Bond Trustee expressly disclaims any liability whatsoever related to such information. Bondholders are encouraged to read this summons in its entirety.
The Issuer is a wholly-owned subsidiary of MPC Container Ships ASA (the "Parent"), a company listed on the Oslo Stock Exchange. The Parent is the holding company of three wholly-owned operating subsidiaries and a 50% ownership in a JV structure, each of whom (via subsidiaries) owns and operates its respective part of the Parent group's 68 high-specification feeder containerships ranging from 1,000 - 3,000 TEU capacity. The Parent group is one of the most active feeder tonnage providers with 67 charter fixtures concluded YTD 2020 with 35 different counterparties (~15% market share in the container feeder segment).
The ongoing Covid-19 pandemic has had, and is expected to continue to have significant negative impact on the global economy and container shipping industry, leading to sharply reduced cargo volumes. Idle containership capacity has increased from 6.0% at the end of 2019 to ~11.5% mid-May 2020, and feeder charter rates continue to trend lower, with rates for 2,000 TEU vessels currently at USD 6,900/day, down 26% compared to primo 2020. Consequently, the sale and purchase market is currently almost non-existing and strong downward pressure on vessel values is expected in the short- to medium-term.
By reason of the adverse market effects of Covid-19 with resulting commercial, operational and financial challenges, a restructuring of the Bonds is required as there is a requirement to strengthen the liquidity and an imminent risk of breaching financial covenants. Consequently, the Parent has initiated dialogue with creditors and shareholders to reach a solution that secures a financial runway to weather the Covid-19 turmoil and market downturn.
In light of the above, the Parent has developed a restructuring and recapitalization plan to strengthen the balance sheet and bridge the short-term liquidity requirement. This plan includes the following key components:
The Parent believes that this plan is accretive for the Bondholders, as liquidity in the Issuer Group is urgently needed and the Proposal (as defined below) will substantially improve the liquidity situation. This is expected to prepare the Issuer Group to weather the challenging, but temporarily impact of Covid-19 to the market and the Issuer Group's operations. According to management's assessment, this is expected to create a stable runway for at least the next 18 months, thus enabling the Issuer Group to preserve its asset values.
Based on today's financial projections, the Issuer and the Parent will experience liquidity shortfall already in July 2020, resulting not only in covenant breaches but also operational liquidity issues. In the absence of an adequate restructuring of the Parent and the Issuer, as required, it cannot be excluded that the Issuer and the Parent will have to execute fire-sales of vessels and/or file for bankruptcy with adverse effect for all stakeholders.
For further information about the Issuer, its business and financials, please read the presentation to the Bondholders dated 19 June 2020 (attached to the press release from the Issuer made public on www.newsweb.oslobors.no (the "Presentation")) together with this summons letter.
Based on the above, the Presentation and the further terms and conditions set out herein, the Issuer proposes that the Bond Terms, where relevant, are amended as follows (the "Proposal"):
(a) Initial Cash Equity: An initial gross cash contribution of minimum USD 15,000,000 (or NOK equivalent thereof) (in the form of equity, convertible loan, other subordinated capital or a combination thereof) shall be injected into the Parent, of which USD 12,000,000 (or NOK equivalent thereof) (the "Initial Issuer Equity") initially shall be further injected into the Issuer as equity (as conditions for the Effective Date, as defined below).
An additional amount equal to 50% of the proceeds, however limited to a maximum of USD 1,500,000, raised in any subsequent repair offering following and in connection with the Initial Cash Equity shall be injected into the Issuer as equity, no later than 10 business days after receipt of such repair offering proceeds by the Parent.
(b) Additional Cash Equity: Additional cash contribution exceeding the Initial Issuer Equity may be injected into the Issuer as equity with the Issuer's right to increase the Available Amount as per section (e)(ii) (Liquidity remedy) below.
provided, that for the purpose of sections (i) and (ii) above the applicable amount (the "Available Amount") which can either be applied as PIK Interest payment pursuant to section (i) above and/or be released from the Disposal Account pursuant to section (ii) above, shall in aggregate be limited to the sum of:
provided further that for the purpose of section (i) above, the maximum aggregate PIK Interest shall not exceed 50% of the Available Amount.
(j) Distributions: The Issuer shall not, and shall ensure that no other Issuer Group Company will, make any Distributions during the term of the Bonds, other than Permitted Distributions (as defined in the Amendment Agreement (as defined below)).
(k) Call options (increase): The terms of the existing Call Option in Clause 10.2 (Voluntary early redemption) of the Bond Terms shall apply until (but excluding) the Interest Payment Date falling 42 months after the Issue Date. Thereafter, at an increased price, the Issuer may redeem all or parts of the Outstanding Bonds together with accrued interest thereon on any Business Day, as follows:
The amendments to the Bond Terms proposed in (a) – (m) above shall, together with the amendments and adjustments to the Bond Terms necessary to implement the Proposal, be incorporated in the Bond Terms in the form set out in Appendix 1 through an amendment agreement (the "Amendment Agreement").
By adopting the Proposal set forth to the Bondholders in this summons the Bondholders approve to waive any Event of Default which has occurred, but which would not have occurred if the Proposal had become effective prior to the occurrence of such Event of Default.
Save for the waiver of the financial covenants and the amendments relating to the minority shareholding of the Vessel Owning Companies (each of which shall be effective from 30 June 2020 when/if the Proposal is approved by the requisite majority of Bondholders), the amendments to the Bond Terms contemplated by the Proposal (when approved by the Bondholders' Meeting) shall become effective from the date of which the following conditions precedent have, in the Bond Trustee's sole discretion, been satisfied, delivered or waived (the "Effective Date"):
Amendment Agreement, any confirmations of security, and any other Finance Documents, evidencing such individuals' authorisation to execute such Finance Documents on behalf of the Issuer and each other Obligor and provider of security has been received;
always provided that the Bond Terms will remain unchanged (as if the resolution in the Bondholders' Meeting had not been made) if the conditions precedent for the Effective Date set out above have not been satisfied (or waived by the Bond Trustee, in its sole discretion).
The request for acceptance of the Proposal is presented to the Bondholders without further evaluation or recommendations from the Bond Trustee. Nothing herein shall constitute a recommendation to the Bondholders from the Bond Trustee. The Bondholders must independently evaluate whether the Proposal is acceptable and vote accordingly on the Bondholders' Meeting.
For further information about the Issuer, please visit the Issuer's website http://mpc-container.com/.
The Issuer has engaged DNB Markets (a part of DNB Bank ASA) ("DNB Markets") and Pareto Securities AS ("Pareto") as the Issuer's financial advisors(the "Advisors") with respect to the Proposal. Bondholders may contact the Advisors for further information as follows:
DNB Markets: Att: Bond Syndicate [email protected]
Pareto: [email protected]
The Advisors are acting solely for and relying on information from the Issuer in connection with the Proposal. No due diligence investigations have been carried out by the Advisors with respect to the Issuer, and the Advisors do not assume any liability in connection with the Proposal (including but not limited to the information contained herein).
The Issuer is of the opinion that the Proposal constitutes a balanced and fair proposal, which will continue to protect the Bondholders in downside scenarios and reward them for their support thereof. The Issuer has requested the Bond Trustee to summon a Bondholders' Meeting for the Bond Issue to consider the Proposal as set forth in this summons.
Bondholders are hereby summoned to a Bondholders' Meeting:
| Time: | 3 July 2020 at 13:00 hours (Oslo time), |
|---|---|
| Place: | The premises of Nordic Trustee AS, |
| th floor Kronprinsesse Märthas Plass 1, 0160 Oslo - 7 |
Approval of the summons.
"The Proposal (as defined in Section 2 of this summons) and the proposed amendments to the Bond Terms as set out and defined in Appendix 1 to the summons to this Bondholders' Meeting is approved, subject to the conditions set out in Section 3 of this summons.
The Bond Trustee is authorised to take any action, negotiate, finalize, enter into and deliver the Amendment Agreement and any other agreements, notices, arrangements or other documentation as it deems necessary or desirable to effect the Proposal in its sole discretion in accordance with the decisions made by the Bondholders' Meeting."
***
To approve the Proposal through the above resolution (the "Resolution"), Bondholders representing at least 2/3 of the Voting Bonds represented in person or by proxy at the Bondholders Meeting must vote in favour of the Resolution. In order to have a quorum, at least 5/10 of the Voting Bonds must be represented at the meeting. If the Resolution is not adopted, the Bond Terms will remain unchanged.
Please find attached a Bondholder's form from the CSD ("VPS"), reflecting your holding of Bonds on record at the date set forth thereon. The form will serve as proof of your ownership of Bonds and of your voting rights at the Bondholders' Meeting. If the Bonds are held in custody - i.e. the owner is not registered directly in the VPS - the custodian must confirm; (i) the identity of the owner of the Bonds, (ii) the aggregate nominal amount of the Bonds and (iii) the account number in VPS on which the Bonds are registered.
The individual Bondholder may authorise the Bond Trustee to vote on its behalf, in which case the Bondholder's form also serves as a proxy. A duly signed Bondholder's form, authorising the Bond Trustee to vote, must then be returned to the Bond Trustee before the relevant Bondholders' Meeting is scheduled (by scanned e-mail, telefax or post – please see page 1 hereof for further details).
At the Bondholders' Meeting votes may be cast based on Bonds held at close of business on the day prior to the date of the Bondholders' Meeting. In the event that Bonds have been transferred to a new owner after the Bondholder's form was distributed, the new Bondholder must bring to the Bondholders' Meeting or enclose with the proxy, as the case may be, evidence which the Bond Trustee accepts as sufficient proof of the ownership of the Bonds.
For practical purposes, we request those who intend to attend the Bondholders' Meeting, either in person or by proxy other than to the Bond Trustee, to notify the Bond Trustee by telephone or by e-mail ([email protected]) within 16:00 hours (4 pm) (Oslo time) the Business Day before the Bondholders' Meeting takes place. Please note that those who intend to register their proxies electronically with VPS must do so within 20:00 hours (8 pm) (Oslo time) the Business Day before the meeting takes place.
Yours sincerely Nordic Trustee AS
Olav Slagsvold
Enclosed:
Appendix 1: Amendments to the Bond Terms Appendix 2: Bondholder's Form
By accepting the Proposal, the Bondholders accept and instruct the Bond Trustee to enter into an amendment agreement to the Bond Terms including the following amended terms:
(a) The defined term "Ahrenkiel Ownership Interest" is amended and replaced to read as follows:
""Vessel Manager Ownership Interest" means an ownership interest of no more than 0.1 per cent, held by (i) Ahrenkiel Steamship GmbH & Co. KG or its Subsidiaries and/or (ii) any other Vessel Manager."
(b) The defined term "Bonds" is amended to read as follows:
""Bonds" means the debt instruments issued by the Issuer pursuant to these Bond Terms, including (for the avoidance of doubt) (i) any Additional Bonds and (ii) any additional Bonds issued pursuant to paragraph (b) of Clause 9.2 (Payment of interest)."
(c) The defined term "Maturity Date" is amended to read as follows:
""Maturity Date" means 22 March 2023."
(d) The defined term "Margin" is amended to read as follows:
""Margin" means from and including:
""Additional Cash Equity" means any cash equity in excess of USD 12,000,000 (or NOK equivalent thereof) injected into the Issuer after the Effective Date.
""Available Amount" means the Total PIK/Release Amount minus the aggregate amount for the time being of:
""Effective Date" shall have the meaning ascribed to such term in the Amendment Agreement no. [2] to these Bond Terms dated [ ] 2020 and entered into between the Issuer and the Bond Trustee."
""PIK Interest" shall have the meaning assigned to it in Clause 9.2."
""Total PIK/Release Amount" means the amount equal to the sum of the aggregate of:
"9.2 Payment of interest
"10.1 Redemption of Bonds
The Outstanding Bonds will mature in full on the Maturity Date and shall be redeemed by the Issuer on the Maturity Date at a price equal to 103 per cent. of the Nominal Amount."
"(a) The Issuer may redeem all or part of the Outstanding Bonds (the "Call Option") on any Business Day with settlement from (and including):
(i) the First Call Date to, but not including, the Interest Payment Date falling 36 months after the Issue Date at a price equal to 103.25% of the Nominal Amount for each redeemed Bond;
"(g) Disposals
after which any remaining funds on the Disposal Account if less than USD 1,000,000 may be released to the Issuer Group.
(b) Notwithstanding paragraph (a) above, provided no Event of Default has occurred and is continuing, the Issuer is permitted to withdraw from the Disposal Account (for application towards general corporate purposes of the Issuer Group) any amount paid into the Disposal Account following a sale of any Vessels, in a maximum total amount up to the Available Amount."
The Issuer shall comply (or procure the compliance) with these Financial Covenants at all times, and:
If and to the extent the Parent completes a subsequent repair offering following and in connection with the Initial Cash Equity (as defined in the Amendment Agreement no. [2] to these Bond Terms dated [ ] 2020 and entered into between the Issuer and the Bond Trustee) an amount equal to 50% of the net proceeds, however limited to a maximum of USD 1,500,000, raised in such repair offering shall be injected into the Issuer as equity, no later than 10 business days after receipt of such repair offering proceeds by the Parent."
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.