Connecticut-based operator of dry bulkers Eagle Bulk Shipping has entered into a series of refinancing transactions totalling USD 265 million.
As a result of these transactions, agreed through its wholly-owned subsidiaries Eagle Bulk Shipco and Eagle Shipping, the company has extended the maturities of the outstanding debt of its subsidiaries through 2022 and achieved additional financial flexibility with respect to its free cash flow.
Specific benefits associated with the refinancing transactions include extension of tenor on all outstanding debt through 2022, payoff of the PIK note bearing a cost of approximately 15%, reduction of annual interest expense by approximately USD 2.6 million, elimination of exposure to rising interest rates on approximately 60% of company’s debt and facilitating the potential payment of dividends and alternate uses of cash flow, including fleet expansion.
“The successful refinancing of our balance sheet on favorable terms is a strong endorsement by our lenders and the capital markets of the company’s business model,” Gary Vogel, Eagle Bulk’s CEO, said.
“Through this process, we have also created the financial flexibility to pursue accretive opportunities and explore other ways to return value to our shareholders,” Vogel added.
Each of the following financial transactions closed on December 8, 2017:
The net proceeds of USD 195 million from a previously announced offering by Eagle Shipco of senior secured bonds with a coupon of 8.25% due November 28, 2022 were distributed to the company upon the satisfaction of certain conditions precedent.
Eagle Shipping entered into a USD 65 million credit agreement consisting of a term loan facility in an aggregate principal amount of up to USD 60 million and a revolving credit facility of up to USD 5 million. The credit agreement matures on the earlier of five years from the initial borrowing date under and December 8, 2022.
The net proceeds from the bonds, the credit agreement and cash on hand were used to repay in full the amounts outstanding under the prior credit facilities.
Eagle Shipco entered into a revolving credit facility in an aggregate amount of up to USD 15 million. The super senior facility matures on the earlier of December 8, 2022 and three months prior to the final maturity of the bonds.