Gener8 Maritime has secured a term loan facility worth around $60,174,000 from Blue Mountain Capital to fund the payments remaining on one of the NYSE-listed company’s VLCC newbuildings, ostensibly Gener8 Strength, which is due for delivery in 2016.
Citibank acted as a facility and collateral agent for the loan. BlueMountain partner Ethan Auerbach is a director at Gener8.
The Peter Georgiopoulos-led company drew down the maximum amount from the facility on October 23, two days after signing the note and guarantee agreement, according to a SEC filing from Gener8 today.
The Citibank facility is secured on a first lien basis by a pledge by Gener8’s subsidiary GNRT Sub VII of its interest in Gener8 Strength LLC plus a pledge by GNRT Strength itself, which is a registered company intended to own a vessel – presumably the Gener8 Strength VLCC under construction at China’s Shanghai Waigaoqiao Shipbuilding.
GNRT Sub VII is required to use “commercially reasonable” efforts to obtain a credit facility with export credit insurance support from China Export and Credit Insurance Corporation. This extra finance will be used to fund post-delivery financing of up to six newbuildings “as promptly as practicable”.
In early June, Gener8 signed non-binding letters of intent with banks in China and South Korea to provide two new export credit facilities, which together will provide almost $1.4bn in financing for Gener8’s 21 VLCC newbuildings.
The proceeds from the Chinese credit facility will be used to repay the Citibank loan, which will mature on October 21, 2016 or on the same date in 2020 if Gener8 does not default on payments and meets other extension conditions within one year of its being agreed.
The loan will be repaid in quarterly installments until October 2016 date, or in 19 equal quarterly installments until the 2020 date, if the tenor is extended.
The Citibank facility bears interest at a rate per annum based on LIBOR plus a margin of 3.75% per annum, Gener8 said.