It is not the first time that the banks and financial institutions behind Torm's billion-dollar debt have tried to secure a deal to sell of the debt and thus ensure the carrier a long-term ownership and financing structure.
But the new agreement on the table now, signed by the remaining five key banks of the 13 parties in the original restructuring agreement, means that Torm is closer to a deal that could ensure the carrier's future than ever before.
The five banks - Danske Bank, HSH, SEB, HSBC and DBS (Singapore) - have reached an agreement and have already signed a deal stating how the debt should be adjusted, at what price, and how the future ownership should be designed.
The banks own around 60 percent of the debt, and as such they have the final say in terms of finding a long-term structure for the carrier, but it is expected that Torm will try to bring the US-based hedge funds on board that previously acquired debt from the banks which opted to divest their stakes. These included Nordea, as the bank earlier this year sold its stake at around USD 65 per USD 100, a price that was deemed fairly low by players in the market. Deutsche Bank was another of the original banks that later opted to withdraw from the group.
Meeting with hedge funds
As such, the coming time will be spent on meetings with the remaining funds besides Oaktree, which has already agreed to back the proposal.
During the past many months, the number of banks has been axed down to the current group of five - a group that originally counted banks from a long list of countries. According to sources, this process has helped pave the way for an agreement that, with the exception of DBS in Singapore and Asian HSBC (The Hong Kong and Shanghai Banking Corporation), involves European banks today. The five banks have spent time pinpointing a price level for their debt that would constitute the best business deal for them.
Torm CEO Jacob Meldgaard has been asked again and again when he expected to land a deal with the consortium of banks. He has repeatedly answered that the process was moving along, but following the recent 2nd quarter interim report in August, he said he expected to land a deal within the next six months.
Breakwater and Oaktree
Oaktree is a key player when it comes to Torm's future. The equity fund has already acquired 22 ships from the Danish carrier, furthermore leaving Monaco-based Celsius to oversee management of the vessels, which is done through a commercial and technical management agreement with Torm where the ships continue to operate.
Investment company Breakwater Capital in London, headed by Jeppe Jensen and Andreas Povlsen (who runs Celsius together with Michael Valentin), has invested in a significant part of the former Torm product tankers, with Oaktree Opportunistic Fund as the other owner.
The fund manages around USD 24 billion in capital.