J. Lauritzen A/S Investor Presentation re. Consent Solicitation and Tender Offer

Transcription

1 J. Lauritzen A/S Investor Presentation re. Consent Solicitation and Tender Offer February Oceans of know-how

2 Continued dry bulk market deterioration has impacted capital structure - Dry Bulk outlook: 217 to be as challenging as 215 and J. Lauritzen works on several initiatives to further strengthen capital structure and reduce financial obligations Selected key figures $m Baltic Dry Index EBITDA EBIT Result for the year Special items, net 175 Jan/11 Jan/12 Jan/13 Jan/14 Jan/15 Jan/16 Jan/17 Source: Bloomberg The very challenging market conditions, in particular for dry bulk shipping have resulted in negative return on J. Lauritzen s business activities for the past six years We have responded by adjusting our business portfolio, reduced of debt, secured long-term financing and intensified the efforts to create value from operational excellence Limited operational cash flow generation near-term but improvements scheduled to come slowly in subsequent years. However, not a pace commensurate with current debt repayments and charter obligations 2

3 J. Lauritzen has adapted decisively to the market situation - Strong support from Lauritzen Fonden has enabled a significant balance sheet improvement - Next step is an agreement with financing providers Continued delevering of balance sheet Key developments Shift towards an asset-light and customer-centric dry bulk chartering operation has enabled a significant deleveraging of the balance sheet Total assets reduced from $2.7bn as of 211 to $617m as of Q4 216 Nominal NIBD reduced by almost 9% in the same period Illustrations (all figures in $m) Total Assets Net debt Divestment of non-core assets Strong support from Lauritzen Fonden $181m capital structure improvement made possible by a highly supportive owner Sale of Hafnia Tankers and Danish Ship Finance shareholdings Sale of Axis Offshore shares and bonds also reduces future capital commitments $19m in equity injection Transfer of the purchase obligation of two ethylene gas carriers reduced capital commitments by $56m, while retaining commercial and technical management in Lauritzen Kosan 16 Sale of assets 19 Equity issue 56 Transfer of purchase obligations 181 Total support Postponement and cancellation of newbuilding obligations Sales and cancellation of newbuildings, postponement of deliveries and adjustments to leasing obligations have significantly eased J. Lauritzen's funding requirements and liquidity situation Only one part-owned newbuilding with delivery in 218 remains (in addition to eight time-chartered newbuildings) 9 Commitment own NBs, 215 Commitment own NBs, Q4-16 3

4 Process objectives 1. Maintain balance sheet liquidity near term 2. Source equity contribution from Lauritzen Fonden to enhance credit profile of business 3. Optimise debt structure for sustainability in the medium-term 4. Extend maturity of financing and reduce amortization burden 5. Reduce future financing risk and credit exposure 4

5 Summary of Proposed Solution - Combination of $3m new equity + senior debt amendment + partial bond buyback & extension Summary of Proposed Solution Highlights: Significant support from Lauritzen Fonden Partial deleveraging and capital structure derisking Preserved balance sheet cash position Support to headline terms agreed with Lauritzen Fonden and certain secured creditors Shareholder support Vessel loans NOK Bond Cross-currency swap Other $3m to be provided by Lauritzen Fonden, applied pro rata in repayment of bond and swap MTM $-for-$ guarantee of senior lenders amortisation deferrals until maturity of term loans; swap counterparties to benefit from second-ranking lien on guarantee until maturity of the swap c. $11m cash equity to be provided in partial repayment of Dan Swift facility (+ 3-year amortisation holiday agreed) Extension of vessel loan maturities to 221 Q2-Q3 (excluding two loans, maturing in during 221Q4 223) Average 5% amortisation relief over 48 months with partial front loading of reduced payments and subsequent catch-up Covenant amendments: minimum liquidity covenant of the higher of $25m and 1% of consolidated interest bearing debt, grandfathering of operating lease treatment under equity ratio and working capital ratio Bond reduced through a tender of bonds for a nominal amount up to the NOK equivalent of $2m net of 95.% Maturity extended for the residual amount of the bond to October 221 Covenant amendments: $25m minimum liquidity covenant, grandfathering of operating lease treatment under equity ratio Blend-and-extend swap structure Swap partially closed out and remaining notional extended until October 221 Restrictions on new long term time-charters Quarterly cash sweep to prepay senior creditors. The cash sweep is only triggered if the cash balance exceeds a defined threshold. Total amount of cash swept over the life of the facilities shall not exceed the quantum of deferred loan repayments and any loss on the cross-currency swaps Support from each stakeholder group inter-dependent to implement the proposed plan Note 1 Assumes cancellation of bonds held in JL Treasury 2 Transaction costs include 5bps consent fee to banks in return for participation in the amended capital structure 3 Grandfathering of operating lease treatment in order to cater for new IFRS 16 accounting standard 5

6 Proposal to NOK bondholders - Combination of approximately $2m tender + partial bond extension - Financial covenants to be addressed to match relative size of balance sheet NOK Bonds Tender Offer and Consent Solicitation Highlights: Bondholders significantly de-risked through tender of c. $2m of bonds Covenants amended to an appropriate level relative to size of balance sheet Preserves liquidity through reduced interest costs Improved relative position due to reduction of bond debt Tender Offer and Consent Solicitation a) Tender offer b) Consent Solicitation Bondholders are offered a choice between (a) cash and (b) extension notes: a) Selling their bonds for cash proceeds in the Tender Offer; or b) Submitting a voting instruction in the Consent Solicitation JL will tender for a nominal amount up to the NOK equivalent of $2m net of fees. Investors who tender will receive the tender cash price of 95% and the Amendment Fee of 2%. Tendering Investors will automatically submit a vote in favour of the consent solicitation and also be eligible for the Early Consent fee of 1% The acceptance in the tender offer will be capped at the NOK equivalent of $2m net of fees. If tender instructions exceed the NOK equivalent of $2m net of fees, such Bondholders will be downscaled on a pro-rata basis in the acceptance. If Bondholders representing less than the NOK equivalent of $2m net of fees in nominal terms tender, then all non-tendering Bondholders will be taken out on a pro-rata basis for an amount equal to the NOK equivalent of $2m net of fees minus the amount received in the tender acceptance. Bondholders will then also receive a cash element in return for their tendered holdings Amendments to loan agreement: Maturity date amended from 24 October 217 to 24 October 221 (4 year extension) Minimum free cash amended from $5m to $25m Amendment of the equity ratio definition to include grandfathering of operating lease treatment (to cater for new IFRS 16 accounting standard). Covenant to remain at 3% American call at par until maturity date Allow a partial early call (ensuring a cash take-out of an amount equal to the tender cap less the tender take-up) at a price of 95% Amendment Fee Upon approval of the Consent Solicitation by the Bondholders Meeting, all Bondholders will be paid an Amendment Fee of 2% Early Consent Fee Early Consent fee: 1% Bondholders who tender their bonds in the Tender Offer will be eligible for the Early Consent Fee Bondholders who consent to the Consent Solicitation will be eligible for the Early Consent Fee if the Consent is received by the Tender and Paying Agent before March 8th, 12: CET Note: 1. Please see Tender Offer and Consent Solicitation Memorandum for further details 2. Fee payments and the Tender will be conditional on the passing of the resolution and on the implementation of the resolution 3. Conditions precedent to effectiveness as outlined on page [8] 6

7 Notable impact on JL s repayment profile from proposal - Partial repayment of JLA 2 and the connected hedging by a total c. $3m and extension of remainder - Extending bank facility maturities to 221Q2-Q3 and remaining bonds to Oct Repayment relief of avg. 5% during four years with partial front loading of payments. Catch-up subsequently Outstanding debt in $m, at end-of-year Repayment profile in $m Current debt profile Current repayment profile Bank loans Bonds Repayments Bullets (bank loans) Bond maturity Proposed debt profile 25 2 Proposed new repayment profile Bank loans Bonds Repayments Bullets (bank loans) Bond maturity Deferrals: Secured loans c. $68m (repayments). Cross-currency swaps c. $2m. Bond debt c. $3m Note: Data as per end-year 216 All numbers shown are forecasts and can change (reflecting full participation by all lenders) Non-USD debt at hedged value. Bond debt at hedged value less JL s own bond holding. 7

8 Envisaged time line - Closing conditions below must be met to implement and close the financing proposal February-17 March-17 April-17 M T W T F S S M T W T F S S M T W T F S S Announcement and Annual Report Consent Period End of tender period and early consent fee deadline Bondholders meeting Est. completion date Closing conditions Est. completion date Shareholders Lauritzen Fonden (as owner of the issuer) has subscribed for (and paid) new equity to be issued by the issuer April 217 Vessel Loans Commitment to a financing offer is confirmed from secured lenders representing at least $2m (approx. 8%) of the consolidated secured bank debt. The financing offer shall comprise: A reduction of the amortisation schedule by an average of 5%, over a four-year period compared to existing amortisation schedules on the secured bank debt An extension of bank debt facilities from the original maturities in 219 and 22 to 221Q2-Q3 Covenant amendments: $25m minimum liquidity covenant, grandfathering of operating lease treatment under equity ratio April 217 Bondholders Receipt of tender offer from the bondholders representing a nominal amount of up to approximately $2m Evidence that a resolution has been passed at a Bondholders Meeting adopting: A 4 year extension of the bonds to 24 October 221 Amendment of minimum free cash covenant and pre-ifrs 16 grandfathering in relation to the calculation of equity ratio March 14th Swap providers Extension of cross-currency swaps for the hedging of the remaining notional amount of the bonds April 217 Long stop date set to 14 th June 217 8

9 Summary - The proposal is a balanced and consensual approach ensuring a suitable capital structure for JL Partial deleveraging and capital structure de-risking Strong support from Lauritzen Fonden with c. $3m equity contribution, applied pro-rata towards repayment of MTM (c. $1m) and NOK bond (c. $2m) Secured lenders to contribute by c. $68m in loan amortization deferrals and c. $2m in derivative contracts deferrals / extensions Adjustment of financial covenants to fit a slimmed and trimmed business model and balance sheet - thereby avoiding disruptive covenant breaches Partial repayment of NOK bond in an amount equal to c. $2m and deletion of NOK53m of bonds held in treasury in order to improve future liquidity through reduced interest costs Bondholders benefit from the reduced principal amount which improve prospect for full recovery 9

10 Disclaimer This presentation contains forward-looking statements concerning J. Lauritzen A/S ( J. Lauritzen, JL or the Group ) and its financial condition, results of operations and business. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning J. Lauritzen s potential exposure to market risks and statements expressing management s expectations, beliefs, estimates, forecasts, projections and assumptions. There are numerous factors that could affect J. Lauritzen A/S future operations and could cause J. Lauritzen A/S results to differ materially from those expressed in the forward-looking statements included in this presentation. All forward-looking statements contained in this presentation are expressly qualified by the cautionary statements contained or referenced to in this statement. Undue reliance should not be placed on forward-looking statements. Each forward-looking statement speaks only as of the date of this presentation. J. Lauritzen does not undertake any obligation to publicly update or revise any forward-looking statement as a result of new information or future events other than required by applicable law. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this presentation. While the information in the presentation is believed to be accurate, no representation or warranty, express or implied, is or will be made in relation to the accuracy or completeness of this presentation or any other written or oral information transmitted or made available to any person or its advisors in connection with any investigation of the Group and no responsibility or liability is or will be accepted by the Group or any of their respective affiliates and representatives. In particular, no representation or warranty, express or implied, is or will be given as to the achievement or reasonableness of any statements, estimates and projections with respect to the anticipated future performance of the Group and the market for the Group s products and services. 1