Analysis

posted on 04 March 2008 12:07

---

A reconstruction proposal from Tandberg Data's financial advisors, Arctic Securities, proposes a debt for equity swap to bondholders and says bankruptcy is a possible outcome if they don't agree.

This proposal follows on from Tandberg Data's last quarterly report revealing a dreadful financial situation.

There are several bond holders who have made loans to Tandberg, including Imation, which lent $4 million. The bondholders' loans are secured against Tandberg assets. One bond of about $6 million matures on April 1st, 2008, and another for around $17 million at the end of the year. Currently the company would find it difficult to make the repayments due on those dates, hence the urgent need for the debt structure restructuring to be completed quickly.

The restructuring elements include a refinancing of the secured debt, a loan extension, a 50 percent conversion to shares of a 151 million Norwegian kronor (NOK) bond and the raising of NOK100-150 million in a new share issue.

The bondholders need to be in agreement for the restructuring to go ahead and a bondholders meeting will take place on March 10th, followed by an extraordinary general meeting of the company two days later to set the seal on the agreement and enable Tandberg Data to move forward instead of being wound up.

The advisors say that, in the event of a bankruptcy, the repayment rate of the NOK151 million loan is likely to be at a discount to its face value, meaning the holders will lose money.

It is also suggested by the advisors that there would be no little or no money left to pay unsecured creditors in that situation.