Dorian LPG has successfully refinanced part of an existing $758m loan, extending its maturity by three years and winning Sweden’s SEB and France’s Credit Agricole as new lenders.
The company also announced a $71.5m sale-and-leaseback agreement for the 84,000-cbm VLGC Cresques (built 2015), with an unidentified Japanese financing house.
“Against the backdrop of volatile credit markets, we completed two important transactions that lowered our Libor margins and improved terms,” commented John Hadjipateras, chairman and chief executive of Dorian LPG.
The loan refinancing concerns a major $758m debt deal, which the company concluded in 2015 to fund the construction of 16 of its LPG ships in South Korea — almost all at Hyundai Heavy Industries.
A $249m tranche of that loan was provided by a consortium of commercial banks consisting of ABN Amro, Citi, ING, DVB and the Commonwealth Bank of Australia.
Credit Agricole and SEB have joined that group as well, Dorian LPG announced on Wednesday.
The move was supported by “core lenders” ABN, Citi and ING, Dorian chief financial officer Ted Young said in the statement.
As part of the refinancing, the maturity of the $249m "commercial" tranche of the $758m loan is extended by three years to March 2025.
Furthermore, annual principal amortisation payments on the tranche are reduced from $12.3m to $600,000 and Libor margins drop by at least 25 basis points, subject to conditions.
The company also said that it obtained an additional $25m revolving credit facility and that it would seek lender agreement to relax some financial covenants.
No changes were made to the remaining part of Dorian LPG’s $758m loan, which consists of tranches maturing in 2027, funded or guaranteed by the Export Import Bank of Korea and the Korea Trade Insurance Corporation.
Sale and leasebacks
The sale-and-leaseback deal to refinance the VLGC Cresques generates $52.5m in cash proceeds, $28.5m of which Dorian LPG used to repay part of the 2015 loan, the company said.
Under the terms of the deal, Dorian LPG is obliged to buy back the ship in 2032 but also has an early option to do so from April 2023 onwards.
The Hadjipateras company will pay its Japanese financiers $285,000 a year on principal amortisation, as well as a floating interest rate of one-month Libor plus 2.5%.
“Our long-term financing of the Cresques reflects the continued importance of a track record of safety and financial responsibility and the value of relationships in accessing financing sources in Japan,” company CFO Young said.
According to its filed annual statements, Dorian LPG has similar Japanese financing arrangements in place for another six of its ships.
The company's lending terms do not prevent it from buying back its own shares.
Share buybacks and scrubbers
Dorian LPG revealed on Tuesday it repurchased 3m shares of its common stock in the first quarter at an average price of $10.77 apiece.
This brought its total stock repurchasing to $49.3m.
Dorian LPG did not say whether it will buy back more of its own shares but it has ample scope to do so if it wants to, under its current $100m share-repurchase programme.
Dorian LPG increased the volume of that scheme by $50m as early as February.
Its decision to do so reflected its “constructive view of the industry outlook” and its “disciplined approach to capital allocation where we see discounts to our intrinsic value", the company said at the time.
Dorian LPG on Tuesday also provided an update to its scrubber retrofit schedule.
Following completion of such works for the 84,000-cbm Cratis (built 2015) and the 84,000-cbm Cheyenne (built 2015), which are now both back in service, Dorian LPG has installed scrubbers on nine VLGCs.
That stands to increase to 10 as scrubber retrofits will begin next week on the 84,000-cbm Constitution (built 2015), alongside scheduled special survey works, the company said.
New York-listed Dorian said earlier this year it intended to have 12 ships outfitted with scrubbers, but warned of installation delays due to the coronavirus pandemic.
Dorian LPG has 22 modern LPG ships in its fleet. Most of them are trading in the Helios LPG Pool.
