Eagle Bulk announced that the Company has instituted a dividend policy and a USD 50 million share repurchase program in conjunction with the closing of a USD 400 million comprehensive refinancing.
Under the dividend policy, the Board of Directors intends to authorize the payment of quarterly cash dividends equal to a minimum of 30% of net income, but not less than $0.10 per share. The first dividend is scheduled to be based on the Company’s Q3 2021 financial results, with payment in November. Purchases under the share repurchase program will be at the Company’s discretion. The Refinancing, which closed on October 1, 2021, has significantly improved the Company’s capital structure and increased financial flexibility, resulting in a reduction of approximately USD 8 million in annual interest expense, as well as an extension of the nearest bank debt maturity to the end of 2026.
Eagle’s CEO, Gary Vogel, commented, “Today’s announcement is the culmination of a five-year transformation of Eagle that has resulted in a substantially larger and more efficient fleet, as well as a stronger balance sheet. As we plan to take delivery of the 29th vessel acquired during this period, which was purchased in May, we are pleased to be in the position to start returning capital to shareholders. Based on our positive market outlook, which is supported by historically strong supply-side fundamentals, we believe the dividend policy authorized by Eagle’s Board of Directors will enable the Company to return significant cash to our shareholders, while providing the flexibility to continue to de-lever and pursue accretive growth opportunities.”
The new USD 400 million senior secured credit facility (the “Facility”) is comprised of a USD 300 million term loan and a USD 100 million revolving credit facility which will both be secured by 49 vessels. The Facility bears an interest rate of LIBOR plus a margin of between 2.10% and 2.80%, depending on leverage and meeting certain sustainability-linked criteria, including alignment of fleetwide carbon intensity with a decarbonization trajectory consistent with IMO targets.
Proceeds from the Facility were used to repay all amounts outstanding under three existing facilities: Eagle Bulk Holdco LLC Revolving Credit Facility (due in December 2021), Eagle Bulk Shipco LLC Senior Secured Bonds (due in November 2022), and Eagle Bulk Ultraco LLC Credit Facility (due in January 2024). Following the Refinancing, USD 50 million remains available under the new revolving credit facility and four of the Company’s vessels are outside of the Facility’s collateral package and are unencumbered.
Crédit Agricole Corporate & Investment Bank, Danish Ship Finance A/S, DNB Markets Inc., Nordea Bank Abp, Filial I Norge, and Skandinaviska Enskilda Banken AB (PUBL) acted as Lenders, Mandated Lead Arrangers, and Bookrunners. Deutsche Bank AG and ING Bank N.V., London Branch, acted as Lenders. Credit Agricole is also Structurer, Facility Agent, and Sustainability Coordinator.