International Seaways closed on senior secured credit facilities in an aggregate principal amount of $390 million.
The facilities consists of a five-year $300 million senior secured term loan facility, a five-year $40 million revolving credit facility, of which $20 million has been drawn, and a 2.5-year $50 million senior secured term loan credit facility.
The proceeds from the facilities were used to refinance $385 million existing high-cost secured and unsecured debt of the company and its subsidiaries. This included repaying the company’s 2017 Term Loan facility and its senior secured credit agreement with ABN and repurchasing the company’s outstanding 10.75% subordinated notes.
“We are pleased to have closed on these attractive new credit facilities, reflecting our strong execution over the past three years and the continued support of an expanded top-tier banking group. The new credit facilities will reduce annual interest expense by approximately $15 million, by lowering our average interest rates on the refinanced portion of our debt by 3.5%, and our overall average interest rates by 2.0%, while enabling INSW to maintain one of the lowest leverage ratios in the industry and low cash break evens,” said Jeffrey Pribor, International Seaways CFO.
Borrowings under the core term loan facility and the core revolving facility initially bear interest at LIBOR plus 2.60%, while borrowings under the transition facility bear interest at LIBOR plus 3.50%. The margin on the core facilities may adjust by 0.20%, based on whether the company meets certain leverage ratios. The Company currently anticipates the margin on the core facilities will decrease to 2.40% by the third quarter of 2020.
Nordea Bank, New York Branch, ABN AMRO Capital USA, Crédit Agricole Corporate & Investment Bank, DNB Capital and Skandinaviska Enskilda Banken acted as mandated lead arrangers and bookrunners. Nordea acted as administrative agent.
In addition, the core facilities include a sustainability-linked pricing mechanism, which will be a first of its kind for a NYSE-listed ship owner and operator, which has been certified by an independent, leading firm in ESG and corporate governance research as meeting sustainability-linked loan principles. The adjustment in pricing will be linked to the carbon efficiency of the INSW fleet as it relates to reductions in CO 2 emissions year-over-year, such that it aligns with the International Maritime Organization’s 50% industry reduction target in GHG emissions by 2050. This key performance indicator is calculated in a manner consistent with the de-carbonization trajectory outlined in the Poseidon Principles, the global framework by which financial institutions can assess the climate alignment of their ship finance portfolios.
International Seaways is one of the largest tanker companies worldwide providing energy transportation services for crude oil and petroleum products in International Flag markets.