Capital Product Partners secures US$460m refinancing

News | 1 August 2017

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Greek shipping company Capital Product Partners (CPP) has entered into a firm offer letter for a senior secured term loan facility of up to US$460m.

The facility has a six-year tenor and will be used to refinance four out of five of CPP’s existing credit facilities, which have a combined total value of US$580.6m.

Upon completion of the refinancing, CPP’s debt will be approximately US$475.8m, comprising of the new refinancing and a 2015credit facility from ING.

Jerry Kalogiratos, chief executive and chief financial officer of the partnership's general partner said, “We strongly believe that this transaction will further strengthen our balance sheet and will be an important cornerstone, as we turn our attention to growth.

“We aim, subject to market conditions and the availability of financing, to further increase the long-term distributable cash flow of the Partnership by pursuing additional accretive transactions.”

The facility has two tranches – tranche A amounts to the lower of US$259m and 57.5% of the value of 11 of CPP’s vessels with an average age of three years.

Tranche A shall be repaid in 24 equal quarterly instalments of up to US$4.8m, in addition to a balloon instalment of US$143m upon the final quarterly instalment.

Tranche B amounts to the lower of US$201m and 57.5% of the value of 24 of CPP’s vessels with an average age of 10.3 years.

Tranche B shall be repaid fully in 24 equal quarterly instalments of up to US$8.4m.

“We believe that the dual tranche structure of our new facility greatly mitigates the refinancing risk for the partnership in the future, as the tranche collateralised by close to two thirds of our vessels will be fully amortising without a balloon payment at maturity of the loan,” said Kalogiratos.

“The only bullet payment upon maturity of our new facility is therefore expected to amount to US$143m, compared to assumed net book value of the collateral fleet of US$846.1m, assuming solely, for this purpose, depreciation and amortisation in line with our accounting policies and no write offs through 2023.”

HSH Nordbank and ING Bank are mandated as lead arrangers and bookrunners, with BNP Paribas and the National Bank of Greece as arrangers.

The closing of the credit facility is subject to finalisation.

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