Agreement paves way to NS refinancing

Dec 22, 2015 at 06:59 pm by Staff


Ahead of next month's extraordinary general meeting, Norske Skog has agreed new financial plans with its major lenders.

The agreement covers new exchange offer and refinancing terms with GSO Capital Partners and Cyrus Capital Partners, which through their funds hold a substantial part of the outstanding 2016 and 2017 notes.

A new exchange offer and refinancing aims to strengthen the group's financial position through maturity extension and debt reduction. Norske Skog will terminate the exchange offer it launched on November 17.

The new exchange offer to holders of the senior notes due in 2016 and 2017, offers a mix of 'qualified securitisation financing' (QSF) notes due in 2026, new unsecured notes due in June 2019 (2016 notes) and December 2026 (2017 notes), perpetual notes and an offer to subscribe for new equity.

There are a variety of conditions, with subscription rights for new equity not transferable, and minimum participation levels of 90 per cent for the 2016 notes and 75 per cent for the 2017 notes specified. If all note holders participate, the new exchange offer is expected to reduce net debt by about NOK 1 billion and reduce annual cash interest payments by around NOK 150 million.

Norske Skog says it does not expect to have the cash to repay the 2016 and 2017 notes held by investors who choose not to participate, if the minimum levels are not met.

President and chief executive Sven Ombudstvedt says the agreement with GSO and Cyrus creates an opportunity to benefit from expected cyclical improvement and enable further work to restructure and consolidate the European publication paper industry. "An unsuccessful exchange offer would raise the prospect of the contingency plan for a comprehensive balance sheet restructuring to be implemented, with the potential for significant loss in value for all stakeholders," he says.

"A successful completion of the new exchange offer would materially strengthen our medium-term capital structure by realising immediate de-leveraging, substantially improve our equity position, reduce the cash interest level and materially extend debt maturities."

Norske Skog says it will make a separate announcement about the the formal commencement of the new exchange offer and the termination of the existing exchange offer in early January 2016.

The extraordinary general meeting is to be held on January 6.


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