Nynas AB announced a proposal Monday to restructure its debts to lenders and to repay other creditors, a major step toward completing the court-supervised reorganization that it filed for less than 11 months ago.
The proposal, which according to Nynas has the support of major creditors, would allow the company’s lenders to choose to immediately receive 25% of the money owed to them by Nynas or to receive 65% over a period of more than five years. Other creditors would be fully repaid – either immediately if they are owed less than 100,000 Swedish krona (U.S. $11,464) or within 12 months for those owed more than that amount.
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The proposed resolution, referred to as a composition proposal, still must be approved by creditors, who have a number of weeks to decide. Nynas said the proposal is endorsed by the court-appointed administrator of the company’s case, as well as investors that are standing by to support the company.
“Provided that the composition proposal is approved, as can be expected given the support by the administrators and the major creditors, the likelihood of reaching a final agreement within short regarding long-term ownership and financing of Nynas is deemed very high,” the company said in a news release.
Stockholm-based Nynas is one of the world’s largest suppliers of naphthenic base stocks. When it filed for reorganization protection last year, the company was a joint venture between Petroleos de Venezuela S.A., the national oil company of Venezuela, and Finnish refiner Neste. At that time Nynas said it had been caught up in economic sanctions that the United States imposed against Venezuela and that these had damaged its business.
Nynas escaped those sanctions after PdVSA sold 70% of its 50.001% stake in the company to a Swedish foundation. Last month Neste agreed to sell its stake to Bitumina, a United Arab Emirates bitumen producer.
Nynas officials declined to estimate how much its debt would be reduced by the composition proposal, noting that the amount will depend on the options chosen by lenders. At the end of last year the company reported long-term liabilities of 7 billion krona and short-term liabilities of 3.6 billion krona.
A Nynas spokesman said the composition proposal was formulated to address the debt that the company carried when it filed for reorganization and was not adjusted for impacts of the COVID-19 pandemic. Nevertheless, officials contend that the proposal for large creditors – once accepted – will put the company on sound footing.
“No one knows exactly what is happening next year,” Director of Communications Hans Ostlin told a reporter. “But this proposal substantially improves our balance sheet. We will come out much stronger than when we entered reorganization.”