Denmark: TORM Reaches Conditional Standstill and Framework Agreement in Principle
TORM announce that it has reached a conditional agreement with the Coordination Committee of its bank groups regarding a deferral of installments and covenant standstill on its ship financing until 30 April 2012.
The unconditional standstill is expected to be renewed within days. In addition, TORM has reached a conditional framework agreement in principle with the Coordination Committee and its major time charter partners regarding a long-term financing solution. It will, amongst other things, provide TORM with a working capital facility and substantial amortization and covenant relief under the existing credit facilities.
As mentioned earlier TORM has been in constructive dialogue with the time charter partners regarding the restructuring of its charter-in agreements. The conditional agreement with the major time charter partners will permanently amend the contracts and realign the charter-in rates to the current market level or allow for termination. The major time charter partners have agreed to realign rates to the current market level until 30 April 2012, whilst finalizing the conditional agreement.
The banks and the time charter partners will, if final agreements are concluded, in aggregate receive a significant equity stake in TORM A/S in exchange of the concessions made according to the long-term financing solution. Thus, it is expected that the new shares in TORM A/S will have a substantial dilutive effect on the existing shareholders. The exact consequences for the existing shareholders will be presented to them when the final agreements have been concluded. The conditional framework agreement is inter alia subject to negotiation of outstanding terms and conditional on final approval by all parties involved, including approval by the general meeting and subject to the Board of Directors’ continued fiduciary duties.
Source: TORM, April 5, 2012