Navigator Gas Holdings is asking its bondholders to help it through some relatively lean times as it sets sights on completion of an ethylene export terminal in Texas later this year.
Navigator wants holders of $100m in Norwegian bonds due in 2022 to grant it relief on an interest coverage ratio and to extend a restriction on paying dividends.
The concessions would put the bonds in line with terms of Navigator’s senior credit facilities as it already has negotiated amendments with its lenders, according to a filing today with the Oslo Stock Exchange.
In return for the changes, Navigator is offering holders of the unsecured bonds a one-time 0.5% amendment fee on the face value of the bonds.
New York-listed Navigator says “a group of larger bondholders” already has given approval to the changes.
It did not quantify the approvals already in hand, but typically a vote of two-thirds of all bonds outstanding is required to enact such changes.
Companies usually seek to win approval of as many holders as possible even beyond the two-thirds threshold, a bond-market source said.
Navigator once thought the amendments obtained from lenders would see it through the completion of the terminal — in which it holds a 50/50 joint venture stake — without asking bondholders for help. But that changed this year after two loss-making quarters to begin 2019, the filing states.
Navigator said sanctions placed on Venezuela and the resulting impact on its vessels weighed heavily on back-to-back losses of $3.3m and $3.1m in the first two quarters.
“The market headwinds have put pressure on the company’s financial performance to an extent that…(it) expects the interest coverage ratio at the end of each such quarter will be substantially near the required minimum under the bond terms,” Navigator tells holders.
Bank terms had required the ratio of earnings before interest, taxes, depreciation and amortisation (Ebitda) to be 2.5 to 3 times interest expense, depending on the facility. These were amended to 2 times through September 2020.
Dividends were prohibited through 31 December 2020.
Navigator is asking bondholders to lower the interest-coverage ratio from 2.25 to 2 times, with a corresponding dividend ban.
Navigator expects to comply fully with all other covenants, the letter states.
“The company expects the strain on its financial performance to be temporary in nature supported by the terminal commencing operations and an expectation for gradual improvements in charter rates,” Navigator states.
The Texas terminal is expected to be operational by the end of the year, with a refrigerated storage tank to be functioning by late 2020, about a quarter ahead of plan. The facility is fully financed, Navigator says.
Navigator is the owner and operator of the world’s largest fleet of handysize liquefied gas carriers. The fleet consists of 38 semi- or fully-refrigerated liquefied gas carriers, 14 of which are ethylene and ethane capable.
