Lamprell an engineering and contracting services to the onshore and offshore oil & gas and renewable energy industries, has signed binding commitment letters and detailed heads of terms for the arrangement of a new secured banking facility with a reduced number of five core lending banks.
This new arrangement significantly simplifies the Company’s lending structure and rationalizes the covenants to a common basis.
The new $181 million facility arrangement is comprised of a $100 million term loan (‘Facility A’), a $60 million term loan (‘Facility B’) and a $21 million revolving credit facility (‘RCF’). All are scheduled to mature in June 2016 although Facility A will amortise over the loan period and Facility B is subject to a one-year optional extension.
The new facility will replace the Group’s existing funded facilities and will sit alongside the continuing bilateral unfunded facilities, which are used for the issue of bonds and guarantees. This arrangement is subject to final documentation and to a number of conditions precedent, which are expected to be completed in June or July 2013.
The blended average interest margin for Facility A, Facility B and the RCF is estimated to be 6.7%. Facility B interest costs increase incrementally from July 2014, however, upon repayment of Facility B, the margins in Facility A and the RCF will reduce. The new facility will contain a more suitable covenant package for the business, including gross debt to EBITDA, interest cover, net worth of the Group and annual capital expenditure covenants.
The financial terms for the new facility arrangement have been factored into the Group’s forecasts for 2013 and therefore the Board maintains its expectations for the full year.
The company appointed Frank Nelson as Chief Financial Officer earlier this year. “I am pleased that Mr Nelson has agreed to join the Board and to take on the role of Chief Financial Officer on a longer-term basis as he has been instrumental during the last six months in the process of stabilising the business and repositioning it for future growth,” said John Kennedy, chairman of Lamprell.
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