CECO waived too

Camillo Eitzen & Co (CECO) has passed the first mile marker in its restructuring plan on the same day as unit Eitzen Chemical secured a landmark agreement with its banks.

Peter Knudsen.

Oslo-listed CECO has signed a waiver on loans of over $130m and hopes to participate in Eitzen Chemical’s upcoming equity issue, blocking any potential takeover from Clipper.

CECO says the new agreement replaces temporary deals with expire today and includes reduced covenants and revised repayments to give the company a “robust financial platform”.

Peter Knudsen, CEO of the company, told TradeWinds: “We have delivered on all the promises we made to the banks. We have cancelled the newbuildings and have no more capex. Now the banks have delivered for us which is very positive.”

He says the new pact is linked to a $137m loan taken out by CECO subsidiary Eitzen Gas. However, CECO still has to strike a deal with its bondholders and complete its own equity issue before it is out of the woods.

Fortunately the sentiment in the capital markets is more positive than it was six months ago, the CEO explains

Knudsen said in a statement: “The financial restructuring of CECO is progressing positively and the company is working actively to secure capital to both satisfy the lenders, as well as participate in the expected share issue in Eitzen Chemical.”

After its own success with its lenders today, Eitzen Chemical is gearing up for a $100m share issue which will complete its restructuring.

Knudsen admits Eitzen Chemical could be vulnerable to a takeover if CECO doesn’t take part in the issue, but adds it will be among the runners if possible.

He said: “Any listed company can be subject to a takeover. That is the music we have to face. There is another big shareholder in Eitzen Chemical, Clipper owns slightly less than 30%, so there is another important player in this picture.

“If we can only participate on a limited basis, or not at all, the consequence would be that we would lose control or lose our controlling position. That goes without saying. However, our objective is to participate.”

CECO owns just over 50% of Eitzen Chemical so will need to take part in the offer on a pro-rata basis to maintain is dominant position.

As TradeWinds reports today Eitzen Chemical has cleared the second hurdle in its attempts to restructure.

Its banks have agreed to let the Oslo-listed shipowner put off all instalment payments for more than three years and all but eliminated covenants on loans of more than $700m.

(Click here for related article).

This is the second reprieve for Eitzen Chemical after its bond holders approved a similar scheme earlier this week.

As a condition of the plan, the company will also put all new investment and dividend payments on ice until the end of 2012.

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