Golar LNG Partners says it faces a 'liquidity shortfall' if a bond due to be redeemed next month is not pushed back.
It wants to extend the $150m senior unsecured bond (GOLP02) maturing on 22 May by 18 months to November 2021 and increase the coupon from 4.4% to 6.25% per annum.
It is also seeking to extend a second $250m unsecured bond (GOLP02) by the same period to November 2022 and increase the coupon from 6.25% to 8.1%.
The company has summoned bondholders to a meeting on 21 April 2020 in Oslo at which the proposal will be considered.
Golar LNG Partners said a group of investors holding about 40% of each of GOLP02 and GOLP03 have committed to support the amendment proposal.
DNB Markets, Nordea, Danske Bank and SEB have been retained as advisors to the US-listed master limited partnership.
“The amendments of GOLP02 and GOLP03 are mutually dependent on both proposals being adopted at the bondholders’ meeting,” the company said.
Golar LNG Partners said its original intention had been to redeem the GOLP02 bonds on their current maturity date.
“Preparations for this, as well as a refinancing of the GOLP03 Bonds, have been ongoing over the past several months,” it said.
“However, with the turmoil in the Nordic and international capital markets due to the global Covid-19 pandemic and the ongoing oil price war, a refinancing of the bonds in the capital markets is currently not possible.”
On Wednesday, Golar LNG Partners slashed its dividend by 95% from $0.4042 to $0.0202 in a move that will enable it to retain about $109m of cash flow annually.
The company said this would allow it to “focus its capital allocation on debt reduction”, thus strengthening its balance sheet, while providing “enhanced financial flexibility to consider its capital allocation priorities over time”.
Golar LNG Partners said the reduction would also result in lower breakeven recontracting rates across its fleet.
Debt ratio to be cut
Fearnley Securities said it sees Golar Partners generating about $165m of cash flow from operations through to the end of 2022, creating a cushion against about $135m of annual debt amortisation.
It also sees the net interest-bearing debt to Ebitda ratio reducing to below three times by the end of 2022, and liquidity increasing to around $250m.
"Our assumptions on FSRU contracts remain unchanged; $70,000 per day time charter rate on Spirit ($20m Ebitda), starting first quarter 2021, and $90,000 per day on Igloo on an extension in Kuwait in first quarter 2022," it added.
"Should these not materialise, our cash flow estimates would reduce by circa $40m per year."
Fearnley sees the company's main priority now as the $500m bank maturity in the first quarter of 2021 and the combined $400m of maturity for bonds in late 2021 and late 2022.
