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IHC Seeks Unusual Lender Cramdown and Board Structure

Posted on January 26, 2023

Article written by DredgeWire

As reported by the Dutch paper FD, and Royal IHC itself, the company is seeking to force via a special court proceeding three of the nine banks in its loan consortium to agree to a debt restructuring agreed to by the other six. The company has described the proceeding as a “pre- insolvency procedure.”

As part of the restructuring, the company’s major shareholder HAL would buy the profitable subsidiary IQIP for between €300 and €350 million, injecting needed liquidity into the company and retiring bank debt. According to FD, if this process is not resolved soon, the company will face liquidity issues in just weeks.

In a deviation from normal Dutch corporate governance procedures, HAL would assume a major role in corporate governance with a HAL Director acting as Chair of the Royal IHC Supervisory Board.

Royal IHC released its 2021 financials only this week showing a loss of €63million and a positive EBITDA of €15.7 million. This was the fifth consecutive loss year with cumulative net losses over that period totaling close to €700 million.

New orders at the company have dropped steadily three years in a row from €1.15 billion in 2018 to just €322 million in 2021. Simultaneously year-end backlog has dropped from €1.2 billion to just €237 million as of 12/31/22.

As DredgeWire first reported months ago, Royal IHC has already announced 250 layoffs.

Royal IHC is reportedly in the hunt for a large order for submarines from the Dutch government though that could be years away.

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