(Updates with agreement in third paragraph.)
July 15 (Bloomberg) -- Windsor Petroleum Transport Corp., citing a drop in oil exports and a worldwide tanker glut, sought bankruptcy protection to restructure more than $188 million of debt.
Windsor, a subsidiary of billionaire John Fredriksen’s oil- shipping company Frontline Ltd., listed debt of more than $100 million and assets worth about $50,000 in a Chapter 11 petition filed yesterday in U.S. Bankruptcy Court in Wilmington, Delaware. The company operates four very large crude carriers.
The filing came a day before Windsor officials were slated to make a $14 million payment on more than $188 million of debt, according to Tradewinds, an oil-shipping newsletter. Windsor officials said in a release they’ve reached an agreement with noteholders of more than 70 percent of the company’s 7.84 percent secured notes to swap debt for equity. The company will wipe out $188.5 million of bonds under trusteeship of Bank of New York Mellon Corp.
“All operating entities are expected to continue normal operations during the pendency of the financial restructuring,” the company said in a statement today. Eight Windsor units also sought bankruptcy protection, according to court filings.
The oil shipper owns four carriers: Pioneer, Progress, British Pride and British Purpose. The ships were built to carry oil exclusively for BP Plc., Paul Leand Jr., Windsor’s restructuring adviser, said in court filings. Leand is a managing director of AMA Capital Parters LLC.
BP officials had canceled their exclusive charters for some of the tankers beginning in 2011 while contracts on the use of others are set to expire in 2015, according to Leand. That left Windsor officials scrambling to move spot-market oil, the adviser said.
Windsor also was buffeted by a drop in oil shipments from the Organization of the Petroleum Exporting Countries because of decreased demand from the U.S., Leand said.
“The increased supply of international crude and product tankers currently in the market, together with the decreased demand for international oil tanker services over the last four years, caused charter rates to plummet,” Leand said in court filings.
The deal with noteholders will help reorganize the company’s balance sheet and give Windsor “a strong operating platform,” company officials said in the release.
Windsor’s bankruptcy filing comes about seven months after Fredriksen’s Frontline, which operated Windsor’s four tankers, underwent an internal reorganization that involved selling vessels, paring commitments for new ships and eliminating debt.
Officials of Bermuda-based Frontline said in December they split the company to withstand the worst shipping rates since 1999. The company raised $285 million from the sale of shares.
The case is Windsor Petroleum Transport Corporation, Case No. 14-11708, U.S. Bankruptcy Court District of Delaware (Wilmington).