Odfjell is stepping up its efforts to reach climate targets.
The Oslo-listed chemical tanker owner has released a customised transition finance framework aimed at supporting the funding of the company’s energy transition.
“As the focus on reducing climate footprints grows across industries worldwide, so do the expectations for transition plans and concrete actions from banks and investors,” Henriette Bergesen, finance manager, said in a statement.
The framework serves as a holistic approach to transition investments, capturing both small and large decarbonisation projects, according to the company.
“We appreciate this strong interest from our funding sources and have decided to respond by piloting a new financial instrument,” she said.
The framework can be used for both bonds and loans.
“It ensures accountability in utilising financial resources, ensuring that the funds invested in us go to eligible projects linked to our transition plan,” Bergesen said.
Funds under the framework could be used for initiatives such as vessel-specific retrofits, research and development, zero-emission capable newbuilds and vessel life-extension programmes.
“Capital markets play an important role in the decarbonisation of shipping,” said Gustav Sannem, vice president of finance.
The new framework has been developed with support from DNB as a transition finance adviser.
A second-party opinion from DNV is supporting the framework.
“By issuing this new framework, we hope to contribute to the development of sustainable financing and set a high standard for climate initiatives in the shipping industry for others to follow,” Sannem concluded.
The framework has already been used for the company’s first transition finance loan facility together with a refinancing for six super-segregators.
The new transition term loan facility amounts to $30m and will have a lower interest rate than Odfjell’s sustainability-linked loans.
The refinancing was $100m and consists of a regular revolving credit facility.
“We received a competitive rate on the whole financing,” Bergesen told TradeWinds.
ABN Amro, Danske Bank, DNB, SEB and SpareBank 1 SR-Bank participated in the financing.
DNB also acted as arranger, coordinator and agent for the transition term loan facility, the bank said in a post on LinkedIn.
Odfjell targets cutting greenhouse gas emissions by 50% by 2030 compared to 2008.
It has also set the goal of operating a zero-emission capable fleet from 2050.
The transition finance framework complements Odfjell’s sustainability-linked finance framework, which was first issued in 2021.
All new loans in 2023 were issued using that framework.
At the end of 2023, these loans made up 65% of total interest-bearing debt.
