Reuters: Bankruptcy News: UPDATE 1-Torm in lifeline talks with two investor groups

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UPDATE 1-Torm in lifeline talks with two investor groups Mar 27th 2012, 12:45 Tue Mar 27, 2012 8:45am EDT * Torm in talks on $100-200 mln of capital * Investors propose full settlement of debt * Investors would get major stake in Torm * Shares up 6.7 pct (Adds details, quotes, share price) COPENHAGEN, March 27 (Reuters) - Indebted Danish shipping company Torm A/S said it is in talks with two international groups of investors on an injection of between $100 million and $200 million in capital as a lifeline to help it avoid bankruptcy. If the talks lead to an agreement, the new investors would get a significant shareholding in Torm, with the final ownership structure to be negotiated, it said on Tuesday. Torm, a dry-bulk and tanker operator controlled by Greek shipping tycoon Gabriel Panayotides, did not identify the investors, but said they were two separate groups, each with its own business model. Torm is one of several shipping companies brought to the brink of, or into, bankruptcy by a slump in the sector - now into its fourth year - caused by a global economic slowdown, weak demand for cargo and a glut of ships. That combination has knocked freight rates to loss-making levels for many companies. "A very important step has been taken, and the risk of an in-court solution in Denmark or anywhere else will be eliminated if and when the conditions in these proposals have been fulfilled," Torm Chairman N.E. Nielsen said in a statement. Torm is in talks with 15 banks on a deal for its $1.87 billion in debt after the latest repayment standstill expired on March 15. The investors have proposed that the lenders would grant Torm a further breathing space on the debt, but "the banks are to expect to receive full and satisfactory settlement of their outstanding loans to the company," Torm said. The terms being negotiated would decrease Torm's share capital, while, at the same time, allowing existing shareholders to subscribe for new shares and other stakeholders, such as banks and charter partners, to become shareholders, it said. Shares in Torm, which lost nine-tenths of their value last year and have been volatile at low levels in 2012, jumped 6.7 percent to 3.20 crowns by 1205 GMT, putting the company's market capitalisation at about $41.8 million, dwarfed by its debt. "This looks like good news for investors," said Sydbank senior analyst Jacob Pedersen. "The possibility that I really thought was exhausted, namely that they would get some investors to put some money into Torm, seems to be coming true." "But it is difficult for me to see that the amount to be injected will rescue very much," Pedersen added. "What they need is to get some of the debt written down." Torm said it had cut costs significantly and planned more cash and cost-improving steps over the next three years. It has already abandoned a programme to build new ships and is trying to renegotiate contracts with owners of chartered-in tonnage, the company said. Earlier on Tuesday, smaller Danish company Nordic Tankers moved to split itself in two, agreeing to sell its chemical tankers arm for $30 million to secure its future, while negotiating a loan repayment freeze for its remaining assets for another year. ($1 = 5.5795 Danish crowns) (Reporting by John Acher; Editing by Erica Billingham) Link this Share this Digg this Email Reprints

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