Torm to regain top-ranking among global tankers
The belief in a future and the belief in a future as one of the world's biggest product tanker carriers have returned at Torm following years characterized by a massive downturn and huge deficits.
The carrier - headquartered in the shipping cluster of Hellerup, north of Copenhagen - can look forward to receiving many more ships from Oaktree than the current 22 ships that the US-based private equity fund already owns in the Torm fleet, as ShippingWatch has learned from several sources familiar with the process - and this process is now focused on landing a deal with Oaktree, the bank group and shareholders that could finally resolve the carrier's debt and let Torm heave a sigh of fresh air.
One of the biggest in the world
A fleet growth of this size will bring Torm back as one of the world's biggest product tanker carriers after the massive debt burden has, for a long time, been overshadowing daily management at the old carrier.
However, before this happens there are a series of conditions that need to be settled, but the mere fact that Torm has issued a brief to the stock exchange stating that the agreement that was brought into play in late September is starting to materialize can only be interpreted as a positive sign for the carrier and its employees.
First of all, Torm needs to secure an agreement with the banks that currently own the carrier's USD 1.4 billion debt. The banks must agree to a billion dollar impairment, the value of Torm's fleet today. The agreement will involve an impairment in one form or another - a fact that the banks which have divested their claims in the carrier have already accepted - but as part of the current draft, the five remaining banks will have to reduce their debt ratio from 140 percent to 100 percent.
Who wants to convert?
Secondly, banks and funds will need to decide whether - and if so, to what extent - they wish to convert their debt to equity through the subscription rights they can achieve by reducing the value of their debt.
And finally, Oaktree - in return for becoming primary shareholder in the company - will place more ships in Torm's fleet in order to make it one of the biggest players within its segment.
However, this entire maneuver will dilute the current shareholders significantly, several of which - such as Torm's former majority shareholder, Greek Gabriel Panayotides - have already seen their stakes reduced drastically in relation to the first restructuring. Then there are the time-charter companies that received a stake in the company following the 2012 restructuring, the five banks that own Torm's debt, as well as the remaining banks that still own shares but no longer have claims to debt in the carrier.
Torm currently has 45 owned vessels, so the addition of significantly more vessels than the 22 ships owned by Oaktree is something that will be felt - and then there are the potential new time-charter deals. Furthermore, the deal also contains the prospect of new working capital, though how much remains subject to negotiation.
Torm expects these matters clarified by early 2015, at the latest.
US-based equity fund could be new owner of Torm
Five banks have signed the Torm agreement
Torm lenders present proposal for debt restructuring
