Danish shipping company J. Lauritzen Group has agreed upon main terms for a new financing package from banks and its owner, Lauritzen Fonden.
With the new financing package, the firm intends to improve the capital structure and ensure the continuing financing in 2017. In addition, J. Lauritzen plans to meet its obligations and comply with loan agreement covenants.
”In early 2017, a number of organisational and cost adjustments were implemented in order to improve our competitive position, and main terms for a new financing package were agreed with our core lenders,” Mads P. Zacho, J.Lauritzen’s CEO, said.
“These initiatives follow a very tough year for global shipping where dry cargo markets fell to historic lows in February 2016 and where the serious market decline for large gas carriers was increasingly felt in the segments for smaller gas carriers,” Zacho added.
The main terms of the financing include capital injection from Lauritzen Fonden, modification of the repayment schedule and amendments to existing loan facilities’ covenants.
As part of the financing package, the firm said that a bond issue of around USD 20 million will be used to repay debt in exchange for extension of the maturity on the loan from October 2017 to October 2021.
The financing package needs to be supported by lenders and approved by bondholders.
The announcement comes on the back of the company’s results for 2016 which show that J. Lauritzen suffered a loss of USD 45.6 million in 2016, considerably trimmed from a loss of USD 313.4 million posted in 2015 amid catastrophic year for dry bulk shipping.
In January 2017, prompted by the ongoing market weakness, the company carried out cost reductions and organisational changes, which when fully implemented by the end of 2017 will result in the redundancy of around 15% of the land-based workforce.
In its outlook for 2017, the company said it expects another challenging year for its businesses.
The company expects EBITDA to be within the range of USD 40 million loss, “which is better than in 2016, however not satisfactory.”
Depreciation and special items are expected to be at levels similar to 2016.