Dockwise has agreed with HAL on extension of $ 50m in preference shares that were issued to HAL in May 2012 as part of the financing of the Fairstar acquisition. These shares were meant to act as bridge equity, with an option for Dockwise to redeem them in cash at any time prior to 1 October 2012 or to convert them into common shares after 1 November 2012.
Why?Management indicates (1) they are preparing a refinancing of existing debt facilities of Dockwise and Fairstar, which is expected to be realized in 2013, and (2) the discovery of a third new build vessel at Fairstar and ongoing discussions with the yard on the final design and conditions of contract. This should be valid reason to delay a potential buy back of the preference shares, as a buy back would be a more elegant solution than conversion into common shares.
New terms:Subject to approval during an EGM, the preference shares will be extended until May 2013, under the same terms and conditions as approved at the 9 May 2012 AGM, with Dockwise getting the option to start (partial) conversion of preference shares into common shares during windows in December 2012, March 2013 and May 2013 and with Dockwise and HAL having the option to modify and/or extend the relevant dates and periods with a maximum of 12 months (until June 2014) with mutual consent.
No major impact on estimates.