Kristiansand, Norway, headquartered Siem Offshore Inc. says it has made “good progress” in its restructuring discussions with its secured lenders in Europe and leading bondholders, but cautions that the plan is also dependent on support from its Brazilian banks.
The restructuring plan involves conversion of debt to equity and a reduction of future scheduled interest and amortization payments. The restructuring will lead to a significant dilution of the existing equity.
Siem Offshore says that the contemplated restructuring plan will significantly strengthen its balance sheet and create a stronger financial platform to continue to support its clients, preserve backlog and to meet the challenges in an extended downturn in the offshore supply market.
The company is targeting approval of the restructuring plan for January 2021.
Siem Offshore says that the plan is dependent on participation by its Brazilian banks, BNDES and Banco do Brasil. Several alternative solutions have been presented to the Brazilian banks. These solutions would ensure continued performance of the existing contracts in Brazil and support the credits provided by BNDES and Banco do Brasil.
“There is no guarantee of a constructive response from the Brazilian banks,” says the company. “Their support however, is in their interest and would preserve value for BNDES and Banco do Brazil. A rational behavior therefore suggests that a contribution to the Plan by the Brazilian banks would be forthcoming. The alternative will be value destructive for the Brazilian banks.