Fri 04/23/2021 08:39 AM
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Relevant Documents:
Annual Report 2020
COLG Perpetual Hybrid Bond
COLG14 Bond Due 2022
COLG16 Bond Due 2024
State Guaranteed Loan and Tap Issue Announcement

The bonds of Color Group, the owner of Norwegian cruise and passenger ferry company Color Line, rose a couple of points after the group announced it received an offer for a NOK 150 million three-year loan (€14.9 million) from the state guaranteed loan scheme, with installments commencing after one year, sources told Reorg. In addition, the group is considering a hybrid tap issue of up to NOK 300 million to which subsidiaries controlled by parent company ON Sunde have presubscribed, and have been allocated a minimum of NOK 100 million. Continue reading as our EMEA Core Credit team analyzes and reviews Color Group and its potential participation in the Norwegian state guaranteed loan scheme, and request a trial for access to the linked documents as well as our analysis and reporting on hundreds of other stressed, distressed and performing credits.

The news has alleviated some investors’ concerns over the group’s liquidity after its financial performance was hit badly by a 67% year-over-year drop in the amount of passengers during 2020.

Color’s senior unsecured NOK 800 million FRN bond due 2024 is quoted at 87.5, up from about 85 yesterday, while the group’s NOK 900 million FRN note due 2022 is quoted in the mid-90s. Color Group’s NOK 500 million perpetual bond paying a coupon of 3M NIBOR+12% is quoted at 101.5.

Color Group, which through Color Line primarily offers transport between Norway and Sweden, Denmark, Germany and the Netherlands, saw its turnover decrease to NOK 2.6 billion in 2020 compared with NOK 5.3 billion in 2019. Of this figure, freight revenue accounted for NOK 505 million and cost compensation paid out by the Norwegian government accounted for NOK 246 million. The company reported an operating loss before depreciation, amortization and other exceptional items of NOK 47 million in 2020, compared with a profit of NOK 1.105 billion in 2019.

The group also recorded a negative NOK 807 million cash flow from operations in 2020.

The group’s liquidity position at the end of 2020 including cash and headroom under facilities amounted to NOK 700 million. One source estimated Color Group currently burns about NOK 100 million per month on operational costs and debt payments. However, Color Group has benefited from a six-month deferral of installments in June agreed with its banks and credit institutions. The agreement was extended for another six months in October 2020 while a holiday on amortization payments ending in June of this year extended further in the event of a downturn, sources added. Additionally, the group secured covenant amendments until June 2021.

The additional cash announced today through the state-guaranteed loan scheme and potential tap issuance should contribute to a liquidity runway until when most of the company's routes are expected to be running again, sources said.

In April 2020, the group increased its unsecured bond loan COLG14, which matures in September 2022, by NOK 300 million. The bond was issued at 85% of par value and in September 2020, the group issued another instrument, a NOK 500 million perpetual bond with an initial repayment option in December 2024. The company is planning to refinance ordinary loan payments due in September 2021.

Total outstanding net bond loans amounted to NOK 2.648 billion at the end of 2020. The group’s short-term debt due to be paid in 2021 is NOK 1.08 billion.

In response to the crisis the group has laid up two vessels, the M/S Color Fantasy and the M/S Color Magic. It has been operating just three ships in freight mode since January 2021. Sources highlighted that the vessels are “warm-stacked” so can go into operation relatively swiftly. The group also introduced cost reduction measures to lower the cost base by NOK 250 million with the full effect of the reduced level being achieved from 2021 onward.

Color Line, the operating company owned by Color Group, operates seven vessels and transports passengers as well as freight. The ships feature hotel accommodation, restaurants, conference facilities, shops and entertainment. The industrial family-owned investment company ON Sunde owns a 70% stake in Color Group.

The company’s capital structure is below:

Color Group AS


EBITDA Multiple

(NOK in Millions)





Secured Bank Debt due 2021 1



M/S Color Secured Loan due 2021 2



Secured Bank Debt 2


Total Secured Debt



COLG 14 Senior Unsecured Bond due 2022 3



Reference Rate + 3.200%

COLG 15 Senior Unsecured Bond due 2023 3



Reference Rate + 3.200%

COLG 16 Senior Unsecured Bond due 2024 3



Reference Rate + 2.800%

Total Unsecured Debt



Lease Liabilities


Total Leases



COLG 17 Subordinated Perpetual Bond - First Redemption in 2024 4


Total Subordinated Debt



Total Debt



Less: Cash and Equivalents


Net Debt



Operating Metrics






Other Liquidity


Plus: Cash and Equivalents


Total Liquidity


Credit Metrics

Gross Leverage


Net Leverage


EBITDA is the company's reported figure. Reorg EBITDA is the company's 2019 figure, as reported. Cash comprises NOK 577M of cash, and NOK 53.4M of market-traded shares. Other liquidity comprises total reported liquidity reserves less cash.
1. Book value of total assets pledged as security for secured bank debt is NOK 5.821 billion. Bank debt is secured by means of mortgages on ships and other assets. Calculated as total mortgage debt less amounts due in 2021.
2. Book value of total assets pledged as security for secured bank debt is NOK 5.821 billion. Bank debt is secured by means of mortgages on ships and other assets.
3. Reference rate is NIBOR.
4. First repayment option in December 2024.

-- Aurelia Seidlhofer, Thomas Baker
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