EXHIBIT 2.1
SUBORDINATED CONVERTIBLE LOAN FACILITY AGREEMENT
USD 89,000,000
DATED July 13, 1999
Frontline Ltd.
as Borrower
Metrogas Holdings Inc.
as Lender
I N D E X
1. LOAN FACILITY 3
2. STATUS OF THE LOAN 3
3. INTEREST 3
4. DEFAULT INTEREST 4
5. REPAYMENT 4
6. CONVERSION 4
7. CONDITIONS FOR PAYMENT 5
8. COVENANTS 5
9. EVENTS OF DEFAULT 5
10. PAYMENTS - SET-OFF 6
11. ASSIGNMENT 6
12. NOTICES AND CORRESPONDENCE 7
13. GOVERNING LAW AND JURISDICTION 7
Schedules
1. LIST OF CREDITORS
2. FORM OF LETTER TO AGENTS FOR CREDITORS
2
This Subordinated Convertible Loan Facility Agreement (the
"Agreement") is entered into on July 13, 1999 between:
(1) FRONTLINE LTD., a company organised and existing pursuant
to the laws of Bermuda (the "Borrower");
and
(2) METROGAS HOLDINGS INC., a company organised and existing
pursuant to the laws of the Republic of Liberia (the
"Lender").
W H E R E A S:
(A) The Borrower is indebted in the principal amount of USD
89,000,000 (the "Loan") to the Lender;
(B) The Borrower and the Lender wish to record the terms and
conditions of the indebtedness described in (A) above.
THE PARTIES HAVE AGREED as follows:
1. LOAN FACILITY
1.1 The Lender will continue to make the Loan available to the
Borrower on the terms and conditions set out herein.
2. STATUS OF THE LOAN
2.1 The Loan and interest thereon shall be subordinated in
right of payment at all times (including but not limited to
the event of bankruptcy, liquidation, winding-up,
dissolution or other similar proceedings in respect of the
Borrower) to the claims of those creditors of the Borrower
whose claims are set out in Schedule 1 hereto (the
"Creditors").
3. INTEREST
3.1 The Loan shall carry interest at a rate of 8% p.a. Interest
shall be calculated based on the actual days elapsed and a
360-day year.
3.2 Interest shall be added to the Loan every 12 months,
commencing on the date occurring 12 months after the date
hereof.
3.3 Interest added to the Loan as described in Clause 3.2 above
shall carry interest as if it were part of the Loan.
Interest accrued on such interest amounts shall carry
interest and be added to the Loan in the same manner.
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3.4 Interest shall not be paid other than as expressly
stipulated in this Agreement.
4. DEFAULT INTEREST
In the event of any payments hereunder not being received
on the due date therefor (each such amount being a
"Defaulted Amount"), interest will be payable by the
Borrower from the due date until the date that payment is
received, at a rate of 9% p.a. (for such periods as the
Lender in its sole discretion shall decide). Interest
charged under this Clause 4 shall be added to the Defaulted
Amount on the last day of the period decided by the Lender
until the Defaulted Amount has been repaid in full.
5. REPAYMENT
5.1 The Loan or part thereof shall only be repaid under the
following circumstances:
5.1.1 Should the Borrower prior to or in connection with its
annual shareholders' meeting to be held in 2002 increase
its share capital through an issue of shares against cash,
an amount equal to the net cash amount paid for such shares
shall promptly upon receipt thereof by the Borrower be
applied against payments of amounts outstanding hereunder.
5.1.2 If the Borrower sells part or all of its shares in ICB
Shipping AB, an amount equal to 50% of the net sales
proceeds obtained for such shares less any debt secured
thereby shall be applied against payment of amounts
outstanding hereunder.
5.2 Any amounts received by the Lender pursuant to Clauses
5.1.1 or 5.1.2 above shall firstly be applied against the
Loan, thereafter against interest accrued on the Loan.
6. CONVERSION
6.1 To the extent amounts outstanding hereunder have not been
repaid pursuant to Clause 5 above prior to the Borrower's
annual shareholders' meeting in 2002, the Borrower shall as
soon as practicable following such date repay the Loan by
issuing to the Lender shares in the Borrower in an amount
equal to the Loan as full settlement of the Loan. The issue
price of each such share shall be the average trading price
of the shares during the 15 trading days immediately prior
to such issue.
6.2 The Lender hereby agrees to accept the shares described in
Clause 6.1 above as full settlement of the Loan.
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6.3 Simultaneously with the issue of the shares described in
Clause 6.1 above the Borrower shall make a cash payment to
the Lender of any and all interest accrued on the Loan.
7. CONDITIONS FOR PAYMENT
7.1 The parties agree that, unless the Creditors have given
their prior written consent, the payments described in
Clauses 5.1.1, 5.1.2 and 6.3 above may only be made to the
extent the Borrower, immediately following such payments,
is in compliance with all covenants set out in the loan
agreements governing the claims of the Creditors, such
compliance to be evidenced in form and substance to the
reasonable satisfaction of the Creditors prior to any
payment.
7.2 Should any amount be outstanding hereunder after the
Borrower's annual shareholders' meeting in 2002 due to the
circumstances described in Clause 7.1 above, such amount
shall promptly become due and payable when the Borrower,
after having made the relevant payment, will be in
compliance with the covenants described above.
8. COVENANTS
8.1 The Borrower undertakes with the Lender that, unless the
Lender has given its prior written consent to the contrary,
it will, in the loan period:
8.1.1 Promptly inform the Lender about any event which
constitutes or may constitute an event of default, or which
may adversely affect the Borrower's ability fully to
perform its obligations hereunder.
8.1.2 Deliver to the Lender the Borrower's annual audited
accounts as soon as practicable after the same have been
issued and in any event not later than 150 days after the
end of the relevant financial year, (b) a quarterly
financial report in a form satisfactory to the Lender no
later than 60 days after expiry of the relevant quarter and
(c) such other information about the Borrower's business
and financial condition as the Lender may reasonably
require.
9. EVENTS OF DEFAULT
9.1 Each of the following events shall, subject to Clause 7.1
above, constitute an Event of Default:
9.1.1 The Borrower fails to pay any amount payable by it pursuant
to the provisions of this Agreement when due, unless such
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failure is due to technical breakdown or communication
error, in which case the Borrower shall be granted 3
Banking Days to remedy such default.
9.1.2 If the Borrower is unable or admits in writing its
inability to pay its lawful debts as they mature, or makes
a general assignment to the benefit of its creditors.
9.1.3 If the Borrower enters into composition proceedings,
bankruptcy, insolvency or similar proceedings or any order
shall be made by any competent court or resolution passed
by the Borrower for the appointment of a receiver or a
similar authority.
9.1.4 Any other material loan, guarantee or other obligation of
the Borrower is declared, or is capable of being declared
due prematurely by reason of default, or the Borrower fails
to make payment in respect thereof on the due date for such
payment, or security for any such other loan, guarantee or
indebtedness becomes enforceable.
9.2 Acceleration. Upon the occurrence of any Event of Default,
the Lender may, subject to compliance with the provision of
Clauses 2.1 and 7.1 hereof, forthwith notify the Borrower
in writing whereupon all amounts outstanding hereunder
shall become immediately due and payable.
10. PAYMENTS - SET-OFF
10.1 Taxes. All payments to be made by the Borrower under this
Agreement shall be made in USD to the Lender as directed by
the Lender and shall be made without set-off or
counterclaim of any kind and without any deductions for,
and free and clear of any taxes. In the event that the
Borrower is required by law or regulation to deduct or
withhold any taxes the sum to be paid shall be increased by
such amount as shall be necessary to ensure that the amount
received by the Lender after such deduction or withholding,
is equal to the amount which would have been received under
this Agreement had no such deduction or withholding been
required.
11. ASSIGNMENT
11.1 Borrower. The Borrower may not assign any of its rights or
obligations hereunder to others.
11.2 Lender to other financial institutions. The Lender may,
subject to the prior written approval of the Borrower (such
approval not to be unreasonably withheld), assign all or a
part of its rights and obligations hereunder to any third
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party. The Lender will give the Creditors 7 days' prior
written notice of any such assignment.
11.3 Subsequent payments. In the event of a transfer of all or a
part of the Lender's rights hereunder, the Borrower shall
subsequently make all payments under this Agreement ratably
to the Lender and the assignee(s).
12. NOTICES AND CORRESPONDENCE
Every notice or demand under this Agreement shall be in
writing, but may be given or made by fax which shall be
sent to the Lender and the Borrower at their respective
addresses, being in respect of the Lender at:
Metrogas Holdings Inc.
c/o Seatankers Management Co. Ltd
Att.: Xxxxxxxx Xxxxxx
Fax No.: + 000 00 00 000
and in respect of the Borrower at:
Frontline Ltd
c/o Frontline Management AS
Att.: Chief Financial Officer
Fax No.: + 00 00 00 00 00
or to such other address or fax number as may from time to
time be notified by the relevant party.
13. GOVERNING LAW AND JURISDICTION
This Agreement shall be governed by and construed in
accordance with Norwegian law, and the parties hereby
irrevocably submit to the non-exclusive jurisdiction of the
Norwegian courts, the venue to be Oslo City Court.
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THIS AGREEMENT has been entered into on the date stated on the
first page hereof.
For and on behalf of
Frontline Ltd.
Signature: /s/ Tor Olav Troim
_____________________________
Name in
block letters: TOR OLAV TROIM
Title: Director
For and on behalf of
Metrogas Holdings Inc.
Signature: /s/ Xxxxxx Xxxx
_____________________________
Name in
block letters: XXXXXX XXXX
Title:As per special authority
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SCHEDULE 1
LIST OF CREDITORS
LOANS FOR WHICH GREENWICH / METROGAS'S LOAN IS TO BE SUBORDINATED
Org.amount Agent Signed Due
420m USD Skandinaviska Enskilda Xxxxxx
XX 20.11.96 28.11.03
217.5m SEK Christiania Bank og Kreditkasse
ASA 01.07.97 06.07.01
35m USD The Bank of Nova Scotia 13.07.98 13.07.07
47.5m USD Hamburgische Landesbank
Girozentrale 29.12.98 04.01.09
105m USD Midland Bank plc 01.12.97 29.05.08
100m USD Midland Bank plc 01.07.97 07.07.07
100m USD Chase Manhattan International
Limited 17.12.97 22.12.07
27.5m USD Nederlandse
Scheepshypotheekbank N.V.
acting through its Norwegian
Branch Nedship Bank (Nordic) as
agent 17.12.97 19.12.04
40m USD De Nationale Investeringsbank
N.V. 30.03.99 30.06.06
40m USD De Nationale Investeringsbank
N.V. Expected Seven years
to be from
signed in drawdown:
July 1999 ca 07-2006
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SCHEDULE 2
FORM OF
LETTER TO AGENTS FOR CREDITORS
[Letterhead of Frontline]
To: [Name of Agent Bank]
July 13, 1999
Dear Sirs
LETTER OF UNDERTAKING
We have made on July 13, 1999 a Subordinated Convertible Loan
Facility Agreement for USD 89,000,000 (the "Subordinated
Agreement") with Metrogas Holdings Inc. as lender. The terms of
the Subordinated Agreement have been agreed by you as agent for
the account of the lenders under the loan agreement dated [
] and made between [ ] the ("Loan
Agreement").
We hereby undertake with you that we will not without your prior
written consent (such consent not to be unreasonably withheld)
either make any amendment to the terms of the Subordinated
Agreement or cancel the Subordinated Agreement and that we will
notify you of the occurrence of an Event of Default (as defined
in the Subordinated Agreement) as soon as we become aware
thereof.
We confirm that a breach of this undertaking will constitute an
Event of Default under the Loan Agreement.
This Letter of Undertaking shall be governed by Norwegian law.
Yours faithfully
Frontline Ltd.
By: _____________________
Tor Olav Troim
Director
We confirm our agreement to the issuance by Frontline Ltd. of the
above Letter of Undertaking.
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Date: July 13, 1999
Metrogas Holdings Inc.
By: ________________________
Xxxxxx Xxxx
As per special authority
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02089006.AB3
