Lenders to support Polarcus’ restructuring
Marine seismic survey specialist Polarcus has received support from lenders for its proposed debt restructuring.
The company, whose earnings have been negatively affected by the cuts in spending by the oil companies over the past 18 months, on Wednesday said that banks, lease providers and certain bondholders and shareholders, have entered into written agreements with Polarcus committing them to support the restructuring.
This means that restructuring will reduce the company’s debt level with renegotiated lease terms and the introduction of new call option prices for the bonds corresponding to a potential debt reduction of $280 million. In addition, debt service payments during the next two years will be reduced by approximately $140 million, Polarcus said.
In a presentation issued in addition to the restructuring deal announcement, Polarcus explained that it has succeeded in reducing cost to a level where the operations are cash positive, however, before debt service. Furthermore, Polarcus said that without addressing the heavy debt service, the company is likely to run out of cash during 2016.
According to the company, the restructuring will reduce the debt service with over $70 million in 2016, which will reduce the vessel cash break-even cost per day of $201,000 per day to $142,000 per day.
The proposed restructuring is subject to the approval of an EGM of the company where a majority of the shareholders present and voting must vote in favour of the proposal. The meeting is scheduled for January 27, 2016.
Marine seismic acquisition companies across the board have been hit hard by low oil prices and cuts in spending by the oil and gas companies. This has lead to more vessels being available for any seismic job available out there, which in turn lead to a downwards pressure on vessel dayrates. While Polarcus has managed to reach agreements with lenders, another (formerly) Oslo-listed seismic player Dolphin Geophysical, in December filed for bankruptcy, after its restructuring attempt failed.