TORM's Restructuring Agreement Becomes Effective
As previously reported, TORM has obtained the creditor consents necessary to implement its Restructuring through an English law Scheme of Arrangement (cf. announcement no. 15 of 25 June 2015). The Scheme has now been sanctioned by the High Court of England and Wales and the sanction order has today been lodged with the Companies House. The Scheme has thus become effective.
Disclosures pursuant to the Restructuring Agreement
Earlier this year, TORM entered into a Restructuring Agreement to memorialize the support of certain of its lenders for the Restructuring (cf. announcement no. 8 of 27 March 2015). As required by TORM’s finance documents and in connection with negotiations regarding the Restructuring Agreement, TORM provided its lenders certain confidential information concerning TORM, including weekly cash flow projections and a February 2015 liquidity analysis. In addition, certain documents produced by the Company for the Scheme of Arrangement are nonpublic.
The information posted on the Company’s investor website referenced herein is being furnished to satisfy the Company’s public disclosure obligations of all material information under the Restructuring Agreement.
Explanatory Statement and Scheme Terms
In connection with the Scheme of Arrangement process, TORM has produced an “Explanatory Statement”, dated 9 June 2015, which sets forth a summary of the material terms of the Scheme of Arrangement and the ancillary agreements related thereto. The Explanatory Statement amongst other things contains a liquidation analysis, which states that in a forced sale liquidation under Danish law, the net shortfall for the Scheme Creditors with outstanding amounts under the Existing Facilities of USD 1,418m is estimated to be approximately USD 600m.
The Explanatory Statement and the detailed Scheme Terms have now been made public on TORM’s website at http://www.torm.com/investors/RA-disclosures.
Liquidity analysis dated 6 February 2015 As part of the restructuring negotiations, TORM was asked to make a liquidity analysis based on certain agreed assumptions as per 6 February 2015. This information is only being released in connection with TORM’s disclosure obligations under the Restructuring Agreement and the information does not necessarily reflect TORM’s current view of its financial projections or prospects.
The liquidity analysis dated 6 February 2015 is attached to the announcement and can also be found on http://www.torm.com/investors/RA-disclosures.
Estimate for the first half year of 2015
TORM estimates a positive EBITDA of USD 95-100m and a profit before tax of USD 5-10m forthe six months ended 30 June 2015.
At the completion of the Restructuring, TORM will provide full-year guidance. The Restructuring will be accounted for as a reverse acquisition in accordance with IFRS 3, “Business combinations”, which means that for financial reporting purposes, Oaktree Capital Management via OCM (Gibraltar) Njord Midco Ltd. (“Njord”) and its subsidiaries is considered to be the accounting acquirer and as such, the continuing reporting entity.
Consequently, the prospective consolidated financial information for the full year 2015 will reflect the activities of Njord only during the period from 1 January 2015 and until completion of the Restructuring, whereas the period from completion of the Restructuring and until 31 December 2015 will reflect the combined activity of TORM and Njord.
As of 30 June 2015, TORM’s available liquidity was cash and cash equivalents of USD 89m.
With the current freight rate environment and taking into account the completion of the Restructuring, TORM expects to remain cash generative at the operating level during the remainder of 2015. In addition, TORM will obtain a new Working Capital Facility of USD 75m upon completion of the Restructuring Agreement.