Titan is now asking note holders to swap their existing notes for new notes “with an extended maturity and terms designed to allow the Group to take the steps necessary to transform its business and to give the Group the flexibility to invest in its marine service segment and onshore storage business”, it said in an announcement on Tuesday. The exchange offer also includes a cash payment and new shares “that potentially allow exchanging holders of Existing Notes to benefit if the Group is able to restructure its business and grow it successfully”, it added. Titan said the financial year 2008 and the first half of 2009 “saw continued deterioration of the Group’s financial condition, attributable to unfavourable market conditions” and the discontinuation of its oil trading business. It said expansion of the Group’s marine services and oil storage business segments had soaked up funds and would still require “significant capital expenditures if they are to achieve their full potential”. “Without funds from new notes, Titan could be in danger of losing control of China StorageCo, the subsidiary through which it owns on-shore storage terminals”.
Currently controlled by Titan with a 50.1% holding, lack of funds could reduce its holding to 45.55%, making Warburg Pincus, which currently has a 49.9% ownership in China StorageCo, the controlling shareholder