More than 65% of the company's secured bondholders and major shareholders to support proposal
After weeks of serious discussions with its stakeholders, Norske Skog today presented a final recapitalisation proposal. The key elements of the proposal are:
-The issuance of a new senior secured €250 million bond loan carrying 8.5 % interest with a 2022 maturity to the owners of the €290m bond loan and the €100m NSF facility. The new bond loan will have the same collateral security as today's secured debt. The existing claims of the secured bond loan holders and NSF lenders in excess of €250m, including accrued interest, will be converted to equity.
-The conversion into equity of all outstanding unsecured bond debt amounting to approximately €500m including accrued interest.
- After such conversions, the equity ownership of Norske Skogindustrier ASA will be split as follows: secured note holders 91.0 %, unsecured noteholders 6.3 %, existing shareholders 2.7 %
- The board will propose an equity offering by Norske Skogindustrier ASA of up to approximately NOK500m with preferential rights for existing unsecured bondholders and shareholders, allocated by approximately NOK300m to the unsecured bondholders and approximately NOK200m to the shareholders. If fully subscribed, this will entail an increase in their ownership interest from 9 % to approximately 28 %. The subscription price will be set at a valuation of 6x the revised 2017 GOE guidance of €75m.
- Warrants will be issued for up to 10 % of the equity in Norske Skogindustrier ASA to those who have subscribed to the above equity offering. The warrants entitle the holders to subscribe for shares if the sum of the group's average net debt and market value exceeds €525 million in a consecutive period of 6 months prior to 30 June 2019. The subscription rights expire worthless on 30 June 2019 if not exercised. If the proposal is successful, the transaction will reduce the group's gross debt from approximately NOK9bn to approximately NOK3bn. Annual cash interest costs will be reduced from approximately NOK600m to approximately NOK200m. The bondholders have 7 business days, until Thursday 19 October 2017 (17:00 CET), to accept the proposal.
Norske Skog's chairman Christen Sveaas said that although the new proposal also would result in significant losses for the group's bondholders and material dilution for its shareholders, all other options would be worse for the unsecured bondholders and the shareholders. If the recapitalization proposal was effected, it would provide a solid platform for the company's seven business units in the future, he added.
