Oslo-listed Siem Offshore is closing in on a long-term financial restructuring that will almost wipe out existing shareholders.

European lenders will own 96% of the offshore support vessel company through a debt swap.

Largest shareholder Kristian Siem's Siem Industries will see its stake cut from 83% to 30%, as it converts some bond debt into stock.

The company has been working on a "consensual" financial restructuring since the first quarter of last year in dire OSV markets.

Siem Offshore said on Friday that it is in the final stages of negotiations with its European banks and expects to sign a formal term sheet shortly.

Bondholders to vote

The plan involves about $268m of debt being converted into shares: bonds of $129m, secured bank debt worth $132m and hedging liabilities of $7m.

Bondholders are being summoned to a meeting on 5 February to approve the deal.

Key bondholders representing a "substantial" slice of two issues are supporting the restructuring, the shipowner said.

The NOK 350m ($41m) SIOFF 01 bondholders will receive a payment of $4m, with the rest being swapped for stock at NOK 0.10 each, compared with a share price of NOK 0.71 on Friday.

Holders of the NOK 760m SIOFF 02 bond will receive shares, but no cash.

The remaining secured debt will be serviced in full, with maturity in December 2024.

But the overall deal hinges on a similar agreement with Brazilian banks, with which talks continue.

Brazilian block

The group admitted it is exploring alternative options with a view to excluding Brazilian development bank BNDES and Banco do Brazil from the consensual process.

The final amount of converted debt will depend on the marked to market values of the group's hedging agreements, potential divestment of vessels and potential conversion of debt owed to the Brazilian lenders.

Big Norwegian OSV groups Solstad Offshore and Havila Shipping completed restructurings last year, but DOF Group remains in talks with lenders. France's Bourbon Maritime has also been taken over by banks.

Over the last five years, Siem Offshore has cut its fleet from 46 to 32 vessels and reduced debt by $500m.

Siem Offshore has made $600m in impairments since the downturn started in 2015.

The company has been vocal in calling for consolidation among OSV owners to help them out of a tough period.

Offshore

Kristian Siem loses control of Siem Offshore as banks move in