Oaktree in Torm restructuring deal

Mikkel Stern-Peltz
20 April 2015

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Oaktree Capital Management will take over distressed Danish shipping company Dampskibsselskabet Torm as part of a major restructuring deal.

The company's management said it had gained support from 92% of creditors to go through with a transaction that will see Oaktree provide Torm with 31 new vessels in return for shares in the company.

The business reportedly faced near-certain bankruptcy if a refinancing deal had not been arranged.

Around $500m of Torm's $1.4bn debt pile will be written off as part of the restructuring, bringing its debt in line with the value of its fleet – reported to be around $900m.

Following the write-down, Torm's banks and other creditors will be offered a debt-for-equity swap, although analysts predict their shares will be diluted down to a total of around 1-2%.

The main holders of Torm's debt are 40 US hedge and distressed debt funds and six banks. HSH Nordbank, Danske Bank, Deutsche Bank, DBS Bank, SEB and Nordea had all lent money to the shipping company for the purchase of ships in the past five years.

Before the restructuring, the largest shareholders in Torm were HSH Nordbank with 13.7%, Danske Bank with 11.5%, Nordea with 11.3%, Deutsche Bank with 6.2%, and DBS Bank with 5.5%.

The deal was announced in October last year, but required support from at least 75% of the company's creditors. Torm's management said it expects to reach full support for the deal, but would otherwise seek a scheme of arrangement under British law to complete it.

The business first underwent a previous debt restructuring in 2012, in which a number of bank creditors took a 70% stake in the company, including HSH Nordbank, Danske Bank and Nordea. Torm had struggled in the wake of the financial crisis, and was forced to sell a number of its vessels below market price.

Company
Dampskibsselskabet Torm is the owner and operator of 80 refined oil product tankers and bulk carriers, founded in Copenhagen in 1889.

The company has been listed on the Copenhagen Stock Exchange since 1905 and employs around 3,000 people. Its current market cap is around DKK 300m and it had revenues of $993m in 2013, making a net loss of $162m.

People
Jacob Meldgaard is the CEO of Torm.