Rickmers Trust Proposes to Issue Units in Debt Restructuring

  • Rickmers says may propose winding up if note restructure fails
  • Marco Polo Marine, KS Energy among companies seeking leniency

A Singapore-based shipping trust that operates container ships is seeking to issue new units in the trust to pare obligations, as debt woes in the industry and city-state spread.

Rickmers Trust Management Pte., the trustee-manager of Rickmers Maritime, proposes to issue 1.32 billion new units in the value of S$60 million ($44.4 million) to pay down a S$100 million debenture maturing in May 2017, it said in an exchange filing Thursday. The debt conversion plan also involves swapping the remaining S$40 million of the securities into new notes maturing in 2023. The trust said last week it was seeking leniency from creditors on about $253 million of borrowings due in 2017 to avoid potential liquidation or judicial management.

Slowing economic growth and a mountain of debt have claimed casualties including South Korea’s biggest container line Hanjin Shipping Co. Container throughput in Singapore shrank 8.7 percent in 2015 as global trade slowed, while slumping crude prices have hurt firms that service the energy industry.

“The proposal that we are presenting is equitable,” Soeren Andersen, chief executive officer of Rickmers Trust, said in a separate statement Thursday. “This would give the trust more time to weather the depressed market, and underpins its solvency.”

Industry Stresses

Strains among peers in the city-state are swelling as Marco Polo Marine Ltd., KS Energy Ltd. and other oil and gas services providers have asked for more time to repay debts. Energy-services provider Swiber Holdings Ltd. filed to operate under court supervision in late July after running out of cash to pay lenders and bondholders, while Keppel Corp. and Sembcorp Marine Ltd., the world’s biggest builders of oil rigs, have both reported a plunge in profits.

Rickmers Trust may propose to wind up the trust if a successful restructuring of the notes can’t be achieved and if it "is of the opinion that it is impracticable or inadvisable to continue the Trust," according to the statement.

Polaris Shipmanagement Co. and Rickmers Second Invest GmbH, which hold 34.2 percent of the shipping trust, have indicated that they support the debt-for-equity swap, the filing shows.

In case unitholders don’t approve the proposed plan at an extraordinary general meeting, Rickmers is floating an alternative plan to restructure the notes. That plan entails issuing 175.9 million new units at S$0.341 each, according to the filing.

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