Dynagas LNG Partners LP, an international owner and operator of liquefied natural gas (LNG) carriers, announced that it has entered into definitive documentation with leading international banks for a syndicated $675 million senior secured term loan. The Credit Facility will be secured by, among other things, first priority mortgages on the six LNG carriers in the Partnership’s fleet.
Borrowings under the Credit Facility, together with cash on hand, will be utilized to repay in full the Partnership’s existing indebtedness, consisting of the Partnership’s outstanding $470 million Senior Secured Term Loan B upon closing of the Credit Facility and the $250 million aggregate principal amount under the Partnership’s 6.25% senior unsecured notes upon its maturity date of 30th of October 2019.
The Credit Facility is repayable over five years in 20 consecutive quarterly payments (plus a balloon payment in year five) based on a 14 year amortization profile and has a margin of LIBOR plus 300 basis points. The terms of the Credit Facility include financial covenants providing for the maintenance of maximum leverage ratios and minimum liquidity covenants, including the requirement for the Partnership to maintain a minimum cash balance of $50 million throughout the life of the Credit Facility in a restricted collateral account.
Under the terms of the Credit Facility, the Partnership will be restricted from paying distributions to its common unit-holders while borrowings are outstanding under the Credit Facility. Scheduled distributions to the preferred unit-holders under the existing Series A Preferred Units and Series B Preferred Units will not be restricted provided there is no event of default while the Credit Facility remains outstanding.
The Partnership expects the financing to close before the end of September, subject to customary closing conditions.
Tony Lauritzen commented: “We are pleased to enter into this transformative re-financing. The Credit Facility provides the Partnership with reduced cost of debt relative to the existing one and a simplified debt structure with a clear and viable path towards deleveraging through a significant increase in debt amortization. The Partnership has in place long term charter contracts with international energy companies, generating cash flows that will be channeled towards the amortization requirements of the Credit Facility, building equity value over time. As a result of this global refinancing and broader strategic realignment, the Partnership is better positioned for future growth initiatives as global LNG markets continue their robust development.”