Hurtigruten has a debt of NOK 26 billion

The case in summary: The Hurtigruten group’s own annual accounts show a total debt of over NOK 26 billion, while the values ​​in the company are NOK ten billion lower. A plan to restructure the debt and save the company from bankruptcy was negotiated in February this year. A group of creditors has been transferred certain financial rights and partial management control in connection with the debt negotiations. Foreign media claim that the company has already changed owners, which both Hurtigruten’s Norwegian company and their British owners, TDR Capital, reject. Finance professor Karin Thorburn at the Norwegian School of Economics believes that the company is still legally owned by the British and Norwegian owners, but that a change of ownership is probably underway. She receives support from BI professor Paul Ehling, who believes that the company is in reality in the control of creditors, but that the change of ownership has not formally been completed. The summary is made by an AI service from OpenAI. The content is quality assured by news’s ​​journalists before publication. – If you have higher debts than values, many people can get burned. In the end, it is the creditors who are entitled to the values, says professor of finance at the Norwegian School of Economics, Karin Thorburn. A plan to restructure the debt and save the company from bankruptcy was negotiated in February this year. Hurtigruten Norge confirms to news that a group of creditors has been transferred certain financial rights, and partial management control, in connection with the debt negotiations. Foreign media claim an agreement that has been concluded shows that the company has changed owners. Both Hurtigruten’s Norwegian company and their British owners TDR Capital deny to news that the company has been sold, or that assets in the company have been transferred to creditors. The chairman of Hurtigruten Group, Trygve Hegnar, emphasizes in an e-mail to news that there has not been a change of ownership in the company, as Bloomberg claims. This is the Hurtigruten group: The traditional group was bought in 2014 by a British capital fund, TDR Capital, for NOK 5.7 billion. TDR also took over the debt of NOK 4.2 billion, which was refinanced in a bond loan. The Hurtigruten Group is today the parent company of several subsidiaries, the most important of which are: the traditional Hurtigruten, which together with Havila Kystruten operates the coastal route agreement along the coast. an expedition company called HX Hurtigruten Expeditions, founded in 2021. Hurtigruten Destinations, which owns hotels and locations on Svalbard in addition to tourism companies and properties in Sør-Varanger. Until February this year, the company was owned by the holding company Topico AS, which in turn was 80 percent owned by the British investment company. In addition, Petter Stordalen and Trygve Hegnar, among others, have smaller ownership positions in the company. Ownership will now be transferred to a new company called Hurtigruten Newco Group. Struggling financially According to Hurtigruten Group’s own annual accounts, the total debt in the group at the turn of the year had reached over NOK 26 billion. The values ​​in the company are estimated at around NOK 16 billion. The latest quarterly accounts show a deficit in the group of NOK 880 million in the second quarter of 2024, which means that the company is struggling to service the loans. In February, Hurtigruten Group, which owns both the Norwegian Hurtigruten and the expedition company, agreed with a group of creditors to restructure 15 of the 26 billion kroner the company has in debt. In the restructuring, large parts of the debt – approximately NOK 11.5 billion, and the ownership of the company – were transferred to a new holding company. Karin Thorburn is a professor at the Department of Finance at the Norwegian School of Economics. Photo: Marit Hommedal Hurtigruten’s Norwegian company confirms to news that the negotiations are a process in several stages, where they are now in “positive discussions” with creditors, to secure refinancing of NOK 3 billion due in February 2025. It is not known who these creditors are, but according to an international credit analysis company, it should be a number of well-known American credit and investment companies. From 2023 to the second quarter of 2024, the company reports via its own quarterly reports that debt is on the way down in the company, from a peak of NOK 26 billion. Hegnar: – The same owners According to the agreement, which news has reviewed, increasingly greater rights in the company, in the form of a pre-emption-like agreement, are to be transferred to the creditors. Hurtigruten and the owners confirm to news that a transfer of these rights, corresponding to 51 per cent, has been completed. Trygve Hegnar is chairman of the Hurtigruten Group, and owns part of the company: – The company still has the same owners, he emphasizes to news. Photo: Julia Kirsebom Thommessen Finance professor Karin Thorburn believes that the company is still legally owned by the British and Norwegian owners, but that the company is in trouble. – I have primarily seen such financial instruments in connection with acquisitions of listed companies, says Karin Thorburn to news. Neither Hurtigruten nor TDR Capital wish to comment on news’s ​​case. They nevertheless emphasize in emails to news that the transfer of these rights does not mean that ownership has been transferred. – Unfortunately, we cannot provide any information about the restructuring because some of the loans are listed on the stock exchange, writes Hurtigruten Group chairman Trygve Hegnar to news in an e-mail. Øyvind Sandnes Will transfer ownership rights while the debt is restructured According to the agreement between the company and a group of lenders and creditors, entered into on 23 February, debt corresponding to eleven billion kroner was transferred from the companies to a new owner company – Hurtigruten Newco. The new loans must give a return to the creditors, or be repaid. Got a pre-emption-like agreement According to the agreement, so-called CVRs were also issued, which means “conditional right to values”, which can normally be traded and, under certain conditions, converted into an ownership share in the company. Control of CVR means, according to the agreement, that one gets a certain management control over the company, with the right to appoint board representatives. In the same way that a right of first refusal gives the buyer a priority to buy a company, CVRs allow the holder to convert rights into shares or securities under certain circumstances. Has not yet changed ownership 51 percent of the CVRs have now been transferred to a group of creditors, while the company is negotiating to extend or restructure the debt – on a debt of NOK three billion that falls due in February 2025. According to the agreement, a majority of the CVR the owners redeem their ownership rights in the company under certain conditions: If a group, other than the current owners, gains decisive ownership or influence in the company (Change of Control). If a sale of a larger part of the group’s assets is carried out. BI professor: – They have been in trouble for a long time BI professor, Paul Ehling, has assisted news in understanding the agreement entered into between the company and creditors. – In the agreement, the lenders get a right of first refusal, an option, to take over the company if certain events occur. Ehling believes that Hurtigruten Group was close to bankruptcy in February and believes that the company is in reality in the control of creditors, and that the agreement reflects this. Paul Ehling is professor of finance at BI Business School. Photo: private At the same time, he emphasizes that the creditors’ most important objective is to ensure that the loans are repaid: – Creditors are hardly interested in the company going bankrupt, nor do they necessarily have a desire to take over the company in the process. The last point of conflict, according to the agreement, is a short-term debt of NOK 3 billion due in February 2025, which must be renegotiated. – Therefore, real ownership of the company will be determined based on whether they come to an agreement on the short-term debt, Ehling believes. – The agreement ensures a transfer of rights Professor Karin Thorburn has also reviewed the agreement that was entered into in February. She says the financial instrument used in the agreement gives rights to take over ownership at a later date. Legally speaking, the original owners still own the company: – The reason is that the owners and creditors must solve the problem of how the company is to be restructured. In addition, they must reach an agreement on who will own the equity, and how the debt will be handled, before they transfer ownership. Thorburn emphasizes that in the event of a change of ownership, all debts will probably become due. If no one picks up the bill, the company will go bankrupt and its assets will be sold. – Therefore, this agreement will ensure a transfer of rights in the company, which can actually result in a change of ownership, without the debt falling due during the process. On 15 July, the long-time head of the Hurtigrute Group, Daniel Skjeldam, resigned as managing director. Photo: Stian Lysberg Solum / NTB Why is Hurtigruten in trouble? In 2015, when TDR Capital took over the company, the debt in the group was NOK 4.2 billion. According to E24, the debt in 2018 had reached NOK 7.2 billion. In 2020, the debt had risen to over NOK 13 billion, and in the last four years the debt has grown by between NOK 3-4 billion each year. In February, it was decided that the separation of the HX Hurtigruten expedition will be carried out during the year. The venture, spearheaded by former CEO Daniel Skjeldam, was primarily aimed at the Chinese market. Editor in Helgelands Blad, Morten Hofstad, has followed the company over several years. He believes that a combination of the pandemic and a failed venture into the shipping market has worsened the situation for the company – from serious to precarious. – The big problems started when the pandemic came. But the idea of ​​an expedition company was probably stillborn when it was conceived. Morten Hofstad is a former financial journalist and today an editor at Helgeland’s newspaper. He believes that the situation for the traditional company seems to be dramatic. Photo: Freddy Samson Fagerheim Hofstad believes the idea of ​​the expedition company arose when the coastal route agreement with the state was split in two, between Hurtigruten and Havila. He believes that the change led to several of Hurtigruten’s ships having to be taken out of the route along the coast, and an expedition venture was therefore the solution. – Competing with the big cruise lines has proven to be extremely demanding, he points out. Karin Thorburn thinks it may be appropriate to sell the expedition part, before they carry out a change of ownership in the Hurtigruten Group. – But, that remains to be seen, she emphasizes. Hi! Do you have any tips or input on this topic? Published 03.10.2024, at 17.37 Updated 03.10.2024, at 20.47



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