The large degree of uncertainty surrounding Torm's capital structure, and thus the carrier's de facto maneuverability, could be replaced with a long-term agreement concerning the tanker carrier's capital conditions within the next six months.
In any case, this seems to be the message between the lines when CEO Jacob Meldgaard is asked to assess the possibilities of securing an agreement with the five banks - including Danske Bank - that currently control the carrier.
Torm has extended the agreement with the compan's lenders by six months, and before this time is up, the carrier could have managed to land a deal:
"I find that everyone involved in the work, the board and the lenders are interested in landing a deal within this extension period," Jacob Meldgaard tells ShippingWatch.
The interim report published by Torm earlier today, Thursday, states that the carrier has made a principal agreement with its lenders to extend the existing working capital facility by six months, to March 31st 2015, in order to support "progress in the recapitalization process."
Majority shareholder exit
"Given the current limited draw, Torm has requested that the facility be reduced from USD 100 million to USD 50 million. The extension is subject to continued progress in the recapitalization process. Final implementation of the extension is expected before 30 September 2014," says Torm in the report.
A long-term deal could likely mean that one or more private equity funds would buy the carrier's USD 1.73 billion debt from the banks, which would then have to decide where their pain threshold lies in terms of a haircut in this debt - that is, how low a price are they willing to sell their stakes for. When the restructuring agreement was signed almost two years ago, 14 banks from all over the world were part of the deal to save Torm from a collapse. But today this number has been reduced to five, with only one non-European bank left. One bank that has already opted to divest its claim is Nordea, which sold its loans at a price of around USD 65 per USD 100 in loans. This was deemed a fairly low price at the time.
On the plus side for Torm, a private equity fund will be looking at the positive cash flow and an operation that generates a solid profit. According to several sources, the parties are in frequent contact with - and are also occasionally meeting with - capital interests, though the parties have yet to reach an agreement.
The final deal with the banks, in place today, was signed on October 2nd 2012. This deal also resulted in a de facto break from Greek shipowner Gabrial Panayotides, former majority shareholder in Torm.