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November 29, 2013
06:12 EDTTRMDTORM reaches agreement in principle with Oaktree on sale of four product tankers
One of TORM's banks has today exercised the specific option rights granted in connection with the Restructuring Agreement. This entails a sales process for the four MR product tankers financed by this bank facility. The vessels are TORM Alexandra, TORM Agnete, TORM Arawa, and TORM Anabel. Consequently, TORM has concluded an agreement in principle to sell the four MR product tankers to entities controlled by Oaktree Capital Management. The agreement is expected to be implemented in the near future, pending internal approval processes with the parties involved and other relevant parties. According to the agreement, Oaktree will place the four vessels plus two additional vessels under TORM's commercial management in a revenue sharing scheme and utilize TORM's integrated operating platform for technical management of the four vessels. TORM will retain an upside potential through a profit split mechanism if Oaktree generates a return above a specified threshold. The four vessels will be delivered to Oaktree during 1H14. The transaction is expected to lead to an impairment of $55M, which will be recognized in the financial statements in Q4, where the vessels will be treated as assets held for sale. Upon completion of the transaction, TORM's liquidity position is expected to improve by $13M and the associated vessel financing will be fully repaid thereby reducing the company's debt by $107M.
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