Loan extension for Nordic Shipholding
Following successful negotiations between the major shareholder, management and the lenders, an agreement has been reached with the lenders for an extension of the Company’s loan facility by another year to 31 December 2021.
This loan extension and restructuring gives the Company more time to explore various scenarios, including the possibility of a merger, that to date have been negatively impacted by the effects of the Covid-19 pandemic.
In order to conclude the restructuring, the Company has agreed to pursue the sale of two vessels, i.e. the Nordic Hanne and Nordic Pia. Consequently, the Nordic Pia is now reclassified as asset-held-for sale, together with the Nordic Hanne. In this connection, the Group will recognise a further impairment loss of USD 2.0 million. In addition, the major shareholder has agreed to extend their banker’s guarantee in the amount of USD 3.85 million until early 2022.
The restructuring also contains deadlines for the above actions to be completed within the first half of 2021.
Key elements of the restructuring also include re-instatement of quarterly instalments from December 2020, but at the same time covenants securing a minimum liquidity in the Company have been agreed, which – barring unforeseen circumstances – should allow the Company to safely continue its operation. Finally, a value-to-loan covenant has been introduced, whereas the loan interest margin will remain unchanged.
The restructuring is subject to documentation, which is expected to be finalized before the end of 2020.
For the rest of 2020, the Group’s five vessels will continue to be commercially deployed on a pool basis (including the vessels designated for sale). Although the product tanker market is still influenced by the aftermath of the inventory build-up earlier in the year, the TCE revenue for 2020 is forecast to remain in the region of USD 27.0 million to USD 29.0 million, unchanged from previous announcement.
After accounting for operating expenditure budgeted by the respective technical managers, the Group’s forecasted EBITDA (earnings before interest, tax, depreciation and amortization) for 2020 is in the range of USD 13.0 million – USD 15.0 million, unchanged from previous announcement.
Taking the above impairment loss into account, a total impairment loss of USD 12.6 million will be included in the annual result for 2020. Including this additional impairment loss, the result before tax is forecast to be a loss of USD 7.0 million – USD 9.0 million revised downwards from a loss of USD 5.0 million – USD 7.0 million. The outlook for 2020 does not take into account any further impairment or write-back of impairment of vessels’ carrying values.
The Company’s 2020 annual report is expected to be released on 24 March 2021.
Source: Nordic Shipholding