The long-lasting survival efforts finally saw the light. China Aviation Oil (Singapore) Co., Ltd. ("CAO"), which suffered huge losses due to speculative trading in oil derivatives, announced its restructuring plan on February 8.
In front of the shareholders is a set of comprehensive debt and equity restructuring plan proposed by CAO. Apart from the debt restructuring plan, the plan also includes key steps such as the merger of 5 shares and 1 share, and the issuance of new shares and convertible bonds.
5 shares and 1 share + directional issue of new shares
In order to introduce strategic investors’ funds and business cooperation, and to resolve part of the debt out of cash repayment, CAO proposes that: 5 shares of common stock will be combined into one share, to the group company, BP Asia Investment Co., Ltd. and Temasek’s non-direct subsidiary Aranda. Investment companies and other creditors issue new shares and issue debt-to-equity shares to group companies (or their designated units).
For joint stocks, the directors of CAO consider this way: If the current amount of issued shares is maintained, the trading price per share may be very low after the stock trading is finally lifted, and the trading volume of each stock transaction will be very small. The cost has increased relative to the transaction price.
While issuing new shares to strategic investors, China Aviation Oil can undoubtedly enrich its capital and obtain huge investments to improve its operations.
According to the investment agreement and the subscription agreement signed on December 5, 2005, the group companies, BP Asia Investment Co., Ltd. and Aranda Investment Co., Ltd. injected 130 million U.S. dollars into CAO, and will subscribe for about 488.9 million shares and 1.446 new shares issued by CAO respectively. Billion shares and 33,611,200 shares, according to the company's share capital after the reorganization plan, will account for 34.44%, 20% and 4.65% of the company's shares, respectively.
In addition, the Group will abandon approximately US$111.2 million in unpaid shareholder loans and approximately US$113.2 million (approximately 92.56%) of the company’s previously announced but unpaid dividends worth US$11,090,500. The balance was converted into nearly 29,881,300 new shares of CAO, equivalent to 4.13% of the company's shares. Other creditors under the debt restructuring plan will subscribe for 72.282 million new shares, accounting for approximately 10% of the restructuring plan.
The Group of Strategic Investors and BP Asia Investment Co., Ltd. have submitted a commitment letter to CAO that includes the terms of the sale restriction, and promised that the company’s investment shares, dividend conversion shares and BP investment of the group company shall not be disposed of within six months from the performance date. Shares, and within the next 6 months, maintain no less than 50% of the group company investment shares, group company dividend conversion shares and BP investment shares.
On the 27th of last month, the SGX has approved in principle the listing of new shares in the reorganization plan.
Debt restructuring plan marathon
Compared with other steps, CAO's debt restructuring marathon has already started running.
On January 24, 2005, CAO submitted a debt restructuring plan to the Singapore High Court. According to feedback from creditors, the company revised the reorganization plan on May 12th to increase the total amount of debt recoverable by creditors.
The revised debt restructuring plan was approved by the Singapore High Court on June 13.
According to the debt restructuring plan, CAO will receive 130 million U.S. dollars from the holding company China Aviation Oil Group Corporation (hereinafter referred to as “Group Companyâ€) and new strategic investors, of which 30 million U.S. dollars will be used as liquidity funds of the company. The remaining US$100 million is used to pay a portion of the advance cash distributions to creditors (excluding group companies) under the debt restructuring plan.
The creditors (excluding the group companies) under the debt restructuring plan will be paid by the creditors with 130 million U.S. dollars in cash, and the remaining principal and interest of the debt will be repaid to the creditors in instalments in five years after the reorganization, and the group company will provide guarantees.
The group company will abandon at least 55% of the company’s shareholder’s borrowings and unpaid dividends, and convert the remaining debt into company’s shares.
Restructured financial position
If the restructuring plan is successfully implemented, CAO will issue new shares in accordance with the reorganization plan. How will this affect the assets of CAO?
According to the company's pre-audit financial report for the third quarter of 2005, CAO’s net tangible assets per share will increase from S$0.69 to S$0.16; earnings per share will be reduced from S$0.0075 to S$0.0113.
In addition, China Aviation Oil's introduction of BP Asia Investment Co., Ltd. also comes from business strategy considerations. Pursuant to the Investment Agreement, CAO, a subsidiary of BP, and BP Singapore Pte. Ltd. ("BPS") signed a business cooperation agreement on December 5, 2005: BPS will provide the company with trade expertise and Other services to improve the company's trade and risk management system, at the same time, BPS will enjoy the priority of providing aviation fuels to CAO in accordance with the terms of the business cooperation agreement with better conditions than those obtained by CAO in the open tender. .
In front of the shareholders is a set of comprehensive debt and equity restructuring plan proposed by CAO. Apart from the debt restructuring plan, the plan also includes key steps such as the merger of 5 shares and 1 share, and the issuance of new shares and convertible bonds.
5 shares and 1 share + directional issue of new shares
In order to introduce strategic investors’ funds and business cooperation, and to resolve part of the debt out of cash repayment, CAO proposes that: 5 shares of common stock will be combined into one share, to the group company, BP Asia Investment Co., Ltd. and Temasek’s non-direct subsidiary Aranda. Investment companies and other creditors issue new shares and issue debt-to-equity shares to group companies (or their designated units).
For joint stocks, the directors of CAO consider this way: If the current amount of issued shares is maintained, the trading price per share may be very low after the stock trading is finally lifted, and the trading volume of each stock transaction will be very small. The cost has increased relative to the transaction price.
While issuing new shares to strategic investors, China Aviation Oil can undoubtedly enrich its capital and obtain huge investments to improve its operations.
According to the investment agreement and the subscription agreement signed on December 5, 2005, the group companies, BP Asia Investment Co., Ltd. and Aranda Investment Co., Ltd. injected 130 million U.S. dollars into CAO, and will subscribe for about 488.9 million shares and 1.446 new shares issued by CAO respectively. Billion shares and 33,611,200 shares, according to the company's share capital after the reorganization plan, will account for 34.44%, 20% and 4.65% of the company's shares, respectively.
In addition, the Group will abandon approximately US$111.2 million in unpaid shareholder loans and approximately US$113.2 million (approximately 92.56%) of the company’s previously announced but unpaid dividends worth US$11,090,500. The balance was converted into nearly 29,881,300 new shares of CAO, equivalent to 4.13% of the company's shares. Other creditors under the debt restructuring plan will subscribe for 72.282 million new shares, accounting for approximately 10% of the restructuring plan.
The Group of Strategic Investors and BP Asia Investment Co., Ltd. have submitted a commitment letter to CAO that includes the terms of the sale restriction, and promised that the company’s investment shares, dividend conversion shares and BP investment of the group company shall not be disposed of within six months from the performance date. Shares, and within the next 6 months, maintain no less than 50% of the group company investment shares, group company dividend conversion shares and BP investment shares.
On the 27th of last month, the SGX has approved in principle the listing of new shares in the reorganization plan.
Debt restructuring plan marathon
Compared with other steps, CAO's debt restructuring marathon has already started running.
On January 24, 2005, CAO submitted a debt restructuring plan to the Singapore High Court. According to feedback from creditors, the company revised the reorganization plan on May 12th to increase the total amount of debt recoverable by creditors.
The revised debt restructuring plan was approved by the Singapore High Court on June 13.
According to the debt restructuring plan, CAO will receive 130 million U.S. dollars from the holding company China Aviation Oil Group Corporation (hereinafter referred to as “Group Companyâ€) and new strategic investors, of which 30 million U.S. dollars will be used as liquidity funds of the company. The remaining US$100 million is used to pay a portion of the advance cash distributions to creditors (excluding group companies) under the debt restructuring plan.
The creditors (excluding the group companies) under the debt restructuring plan will be paid by the creditors with 130 million U.S. dollars in cash, and the remaining principal and interest of the debt will be repaid to the creditors in instalments in five years after the reorganization, and the group company will provide guarantees.
The group company will abandon at least 55% of the company’s shareholder’s borrowings and unpaid dividends, and convert the remaining debt into company’s shares.
Restructured financial position
If the restructuring plan is successfully implemented, CAO will issue new shares in accordance with the reorganization plan. How will this affect the assets of CAO?
According to the company's pre-audit financial report for the third quarter of 2005, CAO’s net tangible assets per share will increase from S$0.69 to S$0.16; earnings per share will be reduced from S$0.0075 to S$0.0113.
In addition, China Aviation Oil's introduction of BP Asia Investment Co., Ltd. also comes from business strategy considerations. Pursuant to the Investment Agreement, CAO, a subsidiary of BP, and BP Singapore Pte. Ltd. ("BPS") signed a business cooperation agreement on December 5, 2005: BPS will provide the company with trade expertise and Other services to improve the company's trade and risk management system, at the same time, BPS will enjoy the priority of providing aviation fuels to CAO in accordance with the terms of the business cooperation agreement with better conditions than those obtained by CAO in the open tender. .
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