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Viking Supply Ships plans rights issue to secure greater liquidity

Mon 25 Sep 2017 by David Foxwell

Viking Supply Ships plans rights issue to secure greater liquidity
Viking Supply Ships is a well-known owner and operator of ice-class offshore vessels

Viking Supply Ships AB said it plans to undertake a rights issue to obtain sufficient liquidity for its subsidiary, Viking Supply Ships A/S.

Viking Supply Ships AS is in breach of its covenants under the loan agreements with its banks. Due to the weak market conditions, it has registered a breach on its 12-month rolling EBITDA ratio, which ought to be positive, as well as its minimum liquidity covenant, which should be above US$7M at all times.

The company is in dialogue with its lenders to find a solution to the situation, a key element of which is a requirement for an injection of capital, in order to be compliant with its loan agreements and to have sufficient working capital going forward.

Viking Supply Ships AB says it intends to call an extraordinary general meeting of shareholders (EGM) at which the board of directors will propose a rights issue of new shares in the company, raising approximately Skr120M (US$15M) in gross proceeds. The rights issue is expected to be carried out during Q4 2017. The EGM is expected to be held in Gothenburg at the beginning of November 2017.

The company’s majority shareholder, Kistefos, currently holds 75.3% of all shares and 71.2% of all votes in the company, and has declared that it will vote in favour of the rights issue at the EGM and will subscribe for its pro rata portion of the rights issue as well as guarantee subscription of the remainder of the rights issue.

The company intends to reinvest the proceeds of the rights issue in the subsidiary, subject to certain conditions being met by the lending banks.

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