Efforts to restructure troubled marine engineering group Swiber Holdings got a leg up after containership operator Seaspan said it would move ahead with an up to US$200 million investment in the Singapore company.
“This is an important milestone in the complex exercise to get Swiber on the road to recovery. We are particularly delighted to work with a company of Seaspan’s reputation and the confidence it has placed in Swiber going forward,” Bob Yap, Swiber’s judicial manager and the head of restructuring at KPMG in Singapore, said in the statement.
“We believe this investment by Seaspan will result in a better recovery to all stakeholders compared to winding-up,” Yap said.
The investment will be in two tranches, Swiber said in a filing to SGX on Saturday.
New York Stock Exchange-listed Seaspan will pay an initial tranche of US$10 million on the deal’s closing in exchange for an 80 percent interest in a new holding company, called New Swiber, which will own certain assets of the existing Swiber Group, including five vessels, the filing said.
Seaspan will also provide management services to New Swiber for an annual fee of US$750,000 or 3 percent of New Swiber’s book value, whichever is higher, it said.
Swiber has proposed transferring its SGX listing status to New Swiber.
Equatoriale Energy stake
The second tranche of US$190 million will be used to subscribe for preference shares of Equatoriale Energy, a wholly owned subsidiary of Swiber, once its LNG-to-power project in Vietnam secures its development stage and achieves project milestones, the filing said.
The LNG power plant is expected to cost around US$1 billion to build, it said.
Equatoriale Energy will also be part of the New Swiber group, it said.
The investment is subject to conditions, including receiving approval from creditors, regulators and shareholders, Swiber said.
Under the restructuring proposal, some of Swiber’s secured creditors will be issued US$120 million worth of five-year zero-coupon secured redeemable convertible bonds from New Swiber, the filing said.
New convertible bonds
That would allow the restructured company to continue to operate key assets, including specialized construction vessels and its headquarters building in Singapore, which are secured to those secured creditors, the filing said.
On conversion, the secured creditors would be entitled to 10 percent of New Swiber’s shares, which would reduce Seaspan’s stake to 72.0 percent, it said.
In addition, Swiber’s unsecured creditors, existing shareholders and certain management and professionals involved in the company’s judicial management will receive 14 percent, 3 percent and 3 percent stakes, respectively, in New Swiber after the initial investment, it said.
Once the convertible bonds are converted to shares, those stakes would fall to 12.6 percent, 2.7 percent and 2.7 percent respectively, it said.
Under the deal, Seaspan will also be given a call option to acquire all of Equatoriale Energy if the initial tranche isn’t completed, Swiber said.
The terms of the investment have been modified since it was originally announced in October 2018, which had originally called for a US$20 million first tranche and a US$180 million second tranche, the filing said.
Seaspan is a charter owner and operator of containerships, with a fleet of 112 containerships, while its chairman, David Sokol, has power industry experience, the filing said.