Minority Shareholders Oust DOF Board Over Reorganization Plan
In a surprise development that throws into question the financial reorganization of troubled offshore operator DOF, the company reported that its minority shareholders succeeded in ousting the board of directors and replacing them with a new five-member board. The minority shareholders have been rebelling against a financial reorganization of the Norwegian company that would have nearly wiped out the value of their investments.
The dissent shareholder group led by Bjarte Brønmo and Georg Wilhelm Bjørnestad of Sans Invest had called for an extraordinary general meeting of the shareholders in mid-November days after they were successful in voting down the proposed reorganization plan. The company warned that it spent three years negotiating the debt-to-equity swap to lower its current $2 billion in debt to a more manageable $1.3 billion. In the process the current bondholders and secured lenders would end up with nearly all the company’s equity, leaving the minority investors with between 1 and 4 percent of the equity.
Brønmo and Sans moved in recent days to acquire additional shares of DOF while arguing that market conditions had changed since the company began negotiating the reorganization. There were also calls of unfair preferential treatment for the company’s existing largest shareholder Helge Møgster, which responded by saying that there was no agreement or arrangement regarding preferential treatment. The creditor group also insisted there was no room for further negations pressing management to proceed with the deal.
During yesterday’s vote, 57.7 percent of the shares were cast for the new board of directors which will be headed by Leif Salomonsen, a reorganization specialist. Bjarte Brønmo, who says he is now the second-largest shareholder of DOF will join the board along with executives and investment bankers Beatriz Malo de Molina, Merete Haugli, and Tore Grøttum.
The new Chair of DOF's Board of Directors, Leif Salomonsen, issued a statement after the vote saying, "The Board of directors will start work immediately. Task number one is to get a complete overview of the work which has been done so far, the plans that are in place, and then gradually form an opinion on how to proceed. As part of this, the Board will work closely with the company's management, its creditors, and other stakeholders that are central to the company's future."
DOF on December 2 had petitioned the Norwegian courts to proceed with the reorganization without the consent of the minority shareholders saying it was the only option for the company. At the beginning of November, DOF entered into a standstill agreement with the bondholders for its three bond loans for the suspension of all payment obligations, and that was recently extended till March 31, 2023. Management has raised the specter of a bankruptcy filing if the reorganization did not proceed.
The company currently has a fleet of nearly 60 purpose-built offshore vessels, including subsea vessels, anchor handling tug supply vessels, and platform supply vessels, primarily serving the offshore oil and gas sector. DOF reported that it was benefitting from the recent improvement in the offshore sector securing multiple new jobs in the Atlantic region with an undisclosed operator in West Africa as part of an integrated field support vessel contract. They also reported a charter for the recently acquired CSV Havila Phoenix and reported that they had taken steps to ensure the continuity of the business during the reorganization.