TORM Shareholders Left With Pennies, Banks Gain 92.5% After Capital Injection

COPENHAGEN (Dow Jones)–Financially strapped Danish shipping company Torm A/S (TORM.KO) said Monday a planned liquidity injection would result in its bank group holding 92.5% of the company’s shares and voting rights.

It said current shareholders would be left with a total stake of 7.5%, if its banks and time charter partners sign a conditional agreement in principle for a $300 million capital increase that would allow Torm to continue operations.

Torm has amassed debts of DKK10 billion, and is operating in the red, posting a loss after tax last year of $453 million mainly because of a sharp drop in shipping rates. To stem its cash outflows, it has cut costs and discontinued its ship-building program.

It has been in talks with its banks since October to reach a longer-term financing solution.

The shipper’s current majority shareholder, Greek investor Gabriel Panayotides, had transferred his voting rights to company Chairman N.E. Nielsen ahead of Monday’s annual general shareholders meeting, and has said he, along with his two representatives on Torm’s supervisory board, won’t stand for re-election.

“The company’s present situation is such that if the current freight rate levels prevail, it is imperative for the company to reach a solution as soon as possible to avoid running out of liquidity,” Nielsen told shareholders at Monday’s meeting.

As part of the financing plan, the nominal value of the company’s issued shares would be reduced to DKK0.01 each, from DKK5.

Torm didn’t give a timeframe for the planned capital increase, but said it will inform the market in due time.

-By Flemming Emil Hansen, Dow Jones Newswires

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