Havila Kystruten AS Strengthens Financial Position Through Debt Refinancing
Havila Kystruten AS, often referred to as Havila Kystruten, has taken a significant step forward by engaging in a comprehensive refinancing plan for its outstanding debt totaling EUR 456 million. The anticipated closing of this agreement is aimed for soon, providing the Company with essential financial restructuring.
Long-Term Financing for Stability and Flexibility
This innovative transaction is set to offer the Company a long-term financing solution, extending for 15 years. Such a lengthy commitment is designed to grant the Company both stability and flexibility, which is crucial in today’s dynamic market. Additionally, this arrangement opens up opportunities for further refinancing options during the facility period, thereby potentially enhancing financial maneuverability.
Details of the Refinancing Arrangement
The EUR 456 million facility will replace about EUR 331 million of senior secured bonds, which includes both accrued interest and call premiums, alongside EUR 116 million of unsecured shareholder loans. Furthermore, the refinancing is expected to generate approximately EUR 4 million in additional liquidity for the Company.
One of the most notable outcomes of this refinancing is a substantial reduction in the Company’s effective interest costs, decreasing from high double-digit rates to an all-in cost of around 10 percent. Call options are available starting from the third year of the agreement, allowing flexibility for the Company as market conditions evolve.
A Structured Financial Lease Facility
The debt refinancing takes shape as a structured 15-year financial lease facility. This lease is offered by a wholly owned subsidiary of Havila Holding AS, the Company’s majority shareholder. The structure of the facility is divided into a senior EUR tranche of 250 million, a senior USD tranche of 105 million, and a junior EUR tranche of 116 million. This ensures alignment with the Company’s revenue sources and the residual value of its vessels.
To elaborate, the financial lease facility features a daily cost equivalent of EUR 150,000. This comprises a fixed portion related to the senior tranches and a variable component linked to the junior tranche, which can be paid in cash or in kind (PIK) at the Company's discretion. Such details are important as they provide insight into the operational flexibility that the financial lease arrangement offers.
Avoiding New Equity Issuance
Importantly, this refinancing arrangement allows for the full repayment of existing bond debts, which were due to mature in early 2027, along with existing shareholder loans set to mature in the following years. Notably, the transaction does not entail the issuance of new equity or convertible instruments, ensuring that the Company maintains control over its capital structure.
Focusing on Operations and Future Opportunities
This strategic refinancing not only ensures that Havila Kystruten is fully financed during its ongoing contracts with the Norwegian government for coastal operations, it also secures a long-term commitment from its majority owner. This financial stability allows the Company to concentrate on enhancing operations and effectively prepare for upcoming governmental contract renewals related to the Coastal Route.
Optimizing for Future Performance
Havila Kystruten perceives this refinancing as a foundational step that can be revisited for optimization or further refinancing as the Company solidifies its operational framework and proves its business model post ramp-up.
Board Approval and Expert Guidance
The Board of Directors has given its approval for this refinancing strategy, deeming it the most beneficial option following an extensive analysis of alternative financing structures. It’s worth noting that members of the board representing Havila Holding AS abstained from the decision-making process regarding this refinancing.
In facilitating this transaction, the Company partnered with Wiersholm as legal advisors and Svalner Atlas for guidance on the aspects related to the transaction.
Contact Information
For further inquiries, please contact:
Chief Executive Officer: Bent Martini, +47 905 99 650
Chief Financial Officer: Aleksander Røynesdal, +47 413 18 114
Frequently Asked Questions
What is the purpose of Havila Kystruten's refinancing?
The refinancing aims to restructure the Company's outstanding debt and provide long-term financial stability and flexibility.
How much debt is being refinanced by Havila Kystruten?
The refinancing agreement totals EUR 456 million, comprising senior secured bonds and unsecured shareholder loans.
What are the benefits of the new financing arrangement?
This new agreement reduces the effective interest costs and allows the Company to avoid new equity issuance.
Who approved the refinancing plan?
The Board of Directors of Havila Kystruten approved the refinancing package after assessing various financing options.
How will the refinancing impact the Company's operations?
The refinancing allows Havila Kystruten to focus on optimizing its operations and preparing for future contracts under the Coastal Route.
