We Have Seen the Future And It May Look Like This

Although not directly related to shipping, Norwegian Energy Company (“NORECO”) is an independent E&P company, which issued high yield bonds in the Norwegian market. NORECO recently agreed to the early redemption of 20% of the outstanding bonds at par value in exchange for the removal of the market adjusted equity ratio in the loan agreement.

The company’s liquidity position was strong with nearly NOK 1 billion in cash at the end of the 2nd quarter. However, as the Market Adjusted Equity Ratio covenant in the loan agreement has been negatively affected by the significant fall of the company’s share price, Noreco could have been forced to issue new equity, despite a strong liquidity position, in order to reach covenant compliance. The buyback was a very tidy solution for both

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