Kuwait Pipe Industries and Oil Services Company (KPIOS) has signed a KWD 130 million ($445.4m) debt settlement agreement with its commercial lenders, which is aimed at restructuring capital at the loss-making welded pipemaker. The move will also pave the way for a capacity expansion.

The transaction, in which Gulf Bank acted as lead bank, is still subject to shareholder approval and envisages KPIOS becoming 'commercial debt'-free and 80% bank-owned. The deal comprises a debt-to-asset swap, followed by a debt-to-equity swap through a capital increase of around KWD 90m. The remainder of the debt will be written off. The transaction is scheduled for execution in the second quarter of 2015.

“Today marks the end of the company’s difficult situation and allows us to focus on growing our core business,” says KPIOS board member and restructuring committee head, Abdulkareem Abdullah Al-Mutawa in a statement sent to Kallanish. “We now expect to focus on our operations and complete the establishment of a new production line, which will add 100,000 tonnes/year to the current capacity.”

KPIOS has a 225,000 t/y capacity of helical submerged arc welded pipe at its site in Safat, Kuwait City, producing pipe with a 152-2,032mm outside diameter and a wall thickness of 4.8-25.4mm. It also has polyethylene, polypropylene and epoxy pipe-coating lines, and can produce 5,000 t/y of pressure vessels. Hot rolled coil is sourced from China, Korea, Europe and elsewhere.

KPIOS’s net loss deepened to KWD 18.1m in 2013 from KWD 6.9m a year earlier. Kuwait’s Capital Markets Authority delisted KPIOS from the nation’s stock market in August after the pipemaker failed to write off accumulated losses. The firm had appointed an advisor to restructure its debts in mid-2013.