Copenhagen-based shipping company TORM has today entered into an agreement with a group of its current lenders, representing 61% of TORM’s ship financing, and Oaktree Capital Management (Oaktree) regarding a possible restructuring of TORM.
Debt-stricken TORM said that the final terms of the proposed transactions to implement the restructuring are yet to be determined.
“At this stage, the restructuring is expected to stipulate that the lenders will initially write down the debt to the current asset values in exchange for warrants and may elect to convert part of the remaining debt into new equity in the company.
Oaktree would contribute product tanker vessels in exchange for a controlling equity stake in the combined company,” Danish shipping company said in a release.
The agreement also envisages a new working capital facility.
According to the company, it is expected that the restructuring will result in a substantial dilution of the existing shareholders in TORM.
The final implementation of any restructuring would be subject to stakeholder approvals and certain conditions precedent, including required approvals from public authorities.
TORM expects to be able to present the final restructuring plan and transaction structure no later than first quarter of 2015.