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Altera Emerges from Bankruptcy with Long-Term FPSO Charter

Altera ends bankruptcy and charters FPSO
Petrojarl Knarr, one of the company's primary assets, starts a new long-term charter to Equinor (Altera)

Published Jan 9, 2023 5:59 PM by The Maritime Executive

Altera Infrastructure emerged from Chapter 11 bankruptcy with a dramatically reshaped balance sheet and a new focus on growth including a major FPSO deal to drive the company’s future earnings. The operator of floating product and storage units, offshore support vessels, and shuttle tankers reports it emerged from the United States Bankruptcy Court for the Southern District of Texas on January 9 into a stronger oil and gas market five months after it filed a prepackaged bankruptcy with the support of its investors.

The company was launched in 2020 after the former Teekay Offshore Partners was acquired by a Toronto private equity firm Brookfield Business Partners. While the operations include a fleet of 41 vessels not all the companies in the group were involved in the bankruptcy which focused on the production assets. 

The process was engineered to restructure and significantly deleveraged Altera’s balance sheet by equitizing more than $1 billion in junior debt obligations while also addressing $400 million of preferred equity and $550 million of secured asset-level bank debt. Altera's CFO Jan Rune Steinsland told the Norwegian media outlet Finansavisen that none of the 23 banks and export credit institutions that were involved in the process took losses nor did any of the companies’ suppliers.  

The restructuring was completed approximately five months after the Chapter 11 filing with the support of substantially all of Altera’s lenders, including Brookfield Business Partners. They were able to restructure Altera’s bank loan facilities with the company saying it better aligned cash flow with debt service obligations. They also raised $94 million in capital through an equity rights offering.

“We are pleased to announce the consummation of our financial restructuring. Our goal was to better position Altera for growth and a sustainable future, and the restructuring has done just that,” said Ingvild Sæther, President and Chief Executive Officer of Altera Infrastructure Group.

One of the key outcomes of the completion of the proceedings is that Altera was able to execute a bareboat charter for the Petrojarl Knarr FPSO vessel, which was considered to be the debtors’ most significant asset, and served as one of the key drivers in the restructuring. Equinor has chartered the 840-foot vessel which was built in 2014 for a minimum of nine years with options for up to a total of 25 years. 

The FPSO unit came off contract in May 2022 after seven years in Norway’s Knarr field. It will be undergoing upgrades to be undertaken by Drydocks World shipyard in Dubai. It will then be positioned in the Rosebank an oil and gas field approximately 80 miles off the coast of the Shetland Islands.

The portion of Altera’s fleet involved in the proceedings focused on the company’s oil production ships, including Petrojarl I, Petrojarl Knarr, Voyageur Spirit, and Piranema Spirit, as well as the storage ships and eight ocean-going tugs. Altera Shuttle Tankers in Norway was not included in the proceedings.