Wellard Limted has this afternoon announced it is selling one of its live export vessels to major shareholder Heytesbury Company.
The announcement has also ended the voluntary trading halt that has been placed on Wellard Limited shares since Monday.
In today’s update to the ASX, Wellard said it has signed a transaction term sheet as part of its overall strategy to recapitalise its business and restructure its operations, including its position with its noteholders.
Wellard Ltd said in today’s statement that the sale and leaseback of the MV Ocean Swagman represents ‘a further significant step’ in its ongoing restructure plan to reduce debt levels and improve financial and operating flexibility.
“Importantly, Wellard retains management of and access to a fleet of four specialist livestock vessels while releasing significant equity without shareholder dilution.
“When completed, the group’s overall debt will be reduced from approx. US$85M to approx. US$64.0M. It will reduce future finance servicing obligations, in turn improving Wellard’s cashflow.
“The proceeds from the sale will be used to fully pay out the remaining US$6.0M Wellard owes to the vessel’s financier, Nord LB; US$10M will be paid to Convertible Noteholders; and the balance to other vessel financiers and transaction costs.
“The outstanding balance owed to the Note Holders will be US$5.5M. The M/V Ocean Swagman (launched 2009) is the sister ship of the M/V Ocean Outback (launched 2010), which was sold for US$26M in 2017.
“The Company will book an accounting loss on sale of approx. US$7.6M.
“The Company will continue to address the need for further balance sheet restructure, and is actively considering all options to achieve that objective.”
Wellard’s Executive Chairman, John Klepec said the transaction reduces Wellard’s debt profile and provides additional time and ability to restructure the Company’s balance sheet.
“Heytesbury’s purchase of the M/V Ocean Swagman provides an attractive opportunity for Wellard to realise the equity value in the ship while retaining continued use of the vessel for chartering or exporting opportunities .
“Heytesbury has a deep understanding of the business, and we look forward to continuing our very productive working relationship.
“Wellard will now be able to reduce and retire debts. We will also pay out Nord LB.
“There is still more work to do on the balance sheet to get it to a level where it needs to be, and this remains a priority for the Company.
“The sale of the M/V Ocean Swagman and the ongoing cooperation of our Convertible Noteholders under the renewed standstill agreement will make additional restructure initiatives more attractive to investors.”
Source: Wellard Ltd