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TheStreet Open House

TORM Signs Restructuring Agreement With Its Banks And Time Charter Partners

COPENHAGEN, Denmark, Oct. 2, 2012 (GLOBE NEWSWIRE) -- "The restructuring agreement secures TORM substantial deferral of bank debt, new liquidity and savings from the restructured time charter book. This will enable TORM to become cash flow positive even at the current rate levels. The Company now has time to further secure the future, long-term capital structure. It has taken extraordinarily long time to reach this agreement and inflicted very high costs on the Company, but TORM will now be able to continue its business even in a continued difficult market," says Chairman of the Board N. E. Nielsen.

"I am extremely satisfied that an out-of-court agreement has been signed. It has been a long process, but I am very pleased that our long-standing time charter partners and the banks have been supportive. TORM's organization now looks forward to devoting all of its focus solely on the customers and operations again," says CEO Jacob Meldgaard.

* * *

Highlights of the restructuring

  • Current shareholders retain 10.0% ownership, compared to 7.5% communicated earlier  
  • USD 100 million in new working capital facility available until 30 September 2014  
  • Maturities for the existing bank debt of USD 1.8 billion are extended until 31 December 2016 with new uniform covenants and terms, and are divided into three tranches  
  • Deferral of installments on the entire bank debt until 30 September 2014 and reduced repayments until 31 December 2016  
  • Interest on existing debt is only paid if TORM has sufficient liquidity until at least 30 June 2014 with potential extension to 30 September 2014  
  • Interest margin will be approximately 240 basis points on average for the existing bank debt  
  • Mark-to-market savings estimated at approximately USD 270 million from amended time charter agreements  
  • TORM expects to be cash flow positive even at the current rate levels  
  • TORM anticipates technical completion of the agreement within approximately four weeks subject to certain common closing conditions  
  • TORM forecasts a loss before tax of USD 350-380 million for the financial year of 2012 excluding accounting effects from the execution of the restructuring, further vessel sales and potential impairment charges

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