Norske Skog Asks Unsecured Bondholders to Extend Maturitiesby and
Norske Skogindustrier ASA asked holders of bonds due in the next two years to extend maturities and write down the value of their notes to avoid a broader restructuring.
The Norwegian papermaker wants holders of its 108 million euros ($115 million) of unsecured notes maturing in 2016 to switch into new securities due June 2019 at a 10 percent discount to face value, according to a company statement. Investors in its 212 million euros of unsecured notes maturing in 2017 were offered a mix of new bonds due in June 2026 and perpetual notes with a 25 percent writedown. Investors have until Dec. 16 to agree to the swap.
“A successful exchange will protect the value for all stakeholders,” Norske Skog said in a press release. “An unsuccessful exchange would raise the prospect for implementation of a contingency plan” that “would likely result in a comprehensive balance sheet restructuring and a significant or total loss in value for 2016 and 2017 notes.”
Norske Skog ended negotiations with material holders of the bonds without agreement in October and said it was considering several options to reduce debt. Blackstone Group LP’s GSO Capital Partners, the largest owner of the 2017 notes, had proposed extending their holdings until after 2019, while a group of secured bondholders including BlueCrest Capital Management, Marathon Asset Management and Sampo Oyj presented competing plans to swap debt for equity, people familiar with the matter said last month.
Part of the interest on the unsecured notes investors would receive in the exchange will be paid with more debt, the company said in Tuesday’s statement. New perpetual notes will receive 2 percent cash interest, which can be deferred in whole or in part until December 2114. The bonds will still rank below the company’s senior secured notes maturing 2019, 2021 and 2023.
Norske Skog said it’s also asking holders of bonds due 2016, 2017, 2021 and 2023 to agree to amend terms and conditions, as it seeks to change the governing law to English from New York. The company’s management will be available for one-to-one meetings in London next week and will host meetings in New York next month, it said.
“If the transaction is successfully completed, we can avoid a comprehensive balance sheet restructuring in the foreseeable future,” Sven Ombudstvedt, Norske Skog’s president and chief executive officer, said in the press release. “The sharp weakening of the Norwegian krone has increased the net interest bearing debt and squeezed our book equity to an unacceptable level.”