Altera Infrastructure said it has missed a bond payment as the New York-listed shipowner engages in talks with lenders over its debt.
As the talks take place, the Brookfield Asset Management-controlled company is preparing a potential filing for Chapter 11 bankruptcy protection to tackle its debt load, sources told Reorg.
Altera and Brookfield did not immediately respond to TradeWinds’ requests for comment by phone or email.
The owner of shuttle tankers and offshore vessels, which is based in the UK city of Aberdeen, said in an earnings report that it has opted not to make a 15 July interest payment on its senior unsecured bonds, although the payment remains subject to a 30-day grace period.
The company said it is in talks with secured lenders, with loans backed by its vessels to “better align terms of its debt with expected cash flows”.
Those talks are focused on its business segments in floating production, storage and offloading units, floating storage and offloading units, towage vessels and units for maintenance and safety. Its shuttle tanker fleet was not listed in the asset-level finance talks.
Meanwhile, the shipowner is engaged in talks with Brookfield Business Partners, a unit of Toronto private equity firm Brookfield Asset Management that is a secured lender and controlling shareholder after buying out Teekay Corp in May 2019, when Altera was known as Teekay Offshore Partners.
Altera said it also expects to engage with other lenders to address unsecured debt.
The company said it has already struck a 16 June deal with some of its lenders to defer payments until 12 August.
As TradeWinds reported, Altera reported a $40m loss for the second quarter, down from $28.5m a year earlier, as impairment charges dragged the company into the red.
Altera said in its earnings report that it had total liquidity of $186m as of 30 June — a $55m decrease from a year earlier. Its balance sheet showed $2.42bn in total borrowings.
In its annual report filed in March, Altera said Brookfield held 98.7% of its outstanding shares and 100% of its general partner. It added that it owed $797m to the company.
The missed interest payment impacts a $276m series of bonds that carry an 8.5% coupon interest rate and mature in July 2023.
Data from the US Financial Industry Regulatory Authority shows that the last trade for the bonds changed hands at just $51.12 on 29 July — down from $52.86 at the end of June and an offering price of $100.
Brookfield Business Partners has hired law firm Paul Weiss and investment bank Ducera Partners, according to Reorg, a restructuring-focused news and business intelligence firm.
The outlet also reported that bank lenders are advised by law firm Norton Rose Fulbright and investment bank PJT Partners, and Altera has tapped law firm Kirkland & Ellis and investment bank Evercore.
Unsecured noteholders have law firm Wachtell, Lipton, Rosen & Katz and investment bank Houlihan Lokey in their corner, Reorg reported.