Seanergy Maritime announced that it has entered into a definitive agreement with one of its senior lenders for the early termination of a credit facility, which is expected to result into a material gain and equity accretion for the Company.
Upon completion of the transaction, the gain to the Company is estimated to be approximately $11.4 million, which represents a reduction of approximately 29% of the outstanding facility. In addition, this transaction is expected to result in an accretion of more than 30% to the total equity of the Company on an adjusted basis1.
Stamatis Tsantanis, CEO of Seanergy commented: “We are very pleased to announce another important transaction for the Company, which should result in significant accretion for our shareholders. Not only are we growing our fleet but we are streamlining our capital structure to be in a position to further capitalize on a strengthening dry bulk market. In the past six months Seanergy has successfully raised funds from the equity capital markets and used this capital for highly accretive and productive purposes to grow its platform and enhance shareholder value:
- We acquired two high-quality Capesize vessels at what we believe to be the lowest value paid by any of our public peers for similar ships in the last 5 years and grew our fleet’s cargo-carrying capacity by 30%.
- We agreed to the foregoing material reduction of one of our credit facilities that should have a direct positive effect on our capital structure resulting in $11.4 million in equity gains for our shareholders.
Seanergy has become a notable player in dry bulk shipping by focusing predominantly on Capesize vessels. We strongly believe that the Capesize segment represents the best fundamentals of the dry bulk industry. We have been fully consistent in our business strategy and we shall continue to actively pursue transactions that are projected to further enhance shareholder value.”
The applicable credit facility is secured by one of the Company’s modern Sungdong Capesize vessels. Under the terms of the agreement, the Company may, until September 29, 2017, satisfy the full amount of the facility by making a prepayment of the outstanding facility amount reduced by approximately 29%. The Company plans to fund the prepayment with cash on hand and amounts drawn down under a new loan facility which the Company will seek to enter into2. Subject to entering into the new loan facility, the overall bank indebtedness of the Company should be reduced by approximately 10%. The relevant gain from the expected early termination is expected to be recorded upon closing of the transaction in the second or third quarter of 2017.
|(amounts in $ thousand)||Actual
|Secured long-term debt, net of deferred finance costs||177,208||215,008||192,631|
|Unsecured convertible promissory notes||822||822||822|
|Common stock & Additional paid-in capital||350,722||369,091||369,091|
The above table sets forth our capitalization as of September 30, 2016:
- on an actual basis.
- on an as adjusted basis, to give effect to:
1. $18.1 million of net proceeds from public equity offerings.
2. $37.9 million of borrowings under secured loan facilities to partially fund the acquisition of the Lordship and the Knightship and for working capital.
3. $0.4 million of non-cash stock-based compensation amortization and loan repayment.
- on an as further adjusted basis to give effect to:
1. $39.4 million early termination of a loan facility, as discussed in this release.
2. $11.4 million gain from the early termination of the loan facility discussed in this release.
3. $17 million new uncommitted loan facility2.
2 Assuming approximately 60% of the prepayment is funded by the new loan facility. There can be no assurance that the Company will successfully enter into such new loan facility on favorable terms or at all, or that the transaction described above will close and result in the projected financial effects.