US shipping company Matson has entered into a private placement commitment letter under which it expects to issue $75m of 11-year final maturity senior unsecured notes within the next 90 days.
The notes are expected to have a weighted average life of approximately 8 years, a fixed interest rate of 3.37 percent, and financial and other covenants that are substantially the same as the covenants in the company’s existing outstanding senior unsecured notes.
The company will use the proceeds of the notes to pay down the company’s revolving credit facility and for general corporate purposes.
“We are pleased to lock-in this tranche of long-term fixed rate debt that fits well with Matson’s fleet renewal financing strategy,” said Joel Wine, Matson’s Senior vice president and chief financial officer.
“As we undertake the construction of our Aloha Class and Kanaloa Class vessels, we expect to fund progress payments through a combination of cash flow from operations, borrowing availability under our $400m unsecured revolving credit facility, and periodic issuance of long-term debt, which could include Title XI U.S. Government guaranteed vessel finance bonds, to pay down revolver borrowings and better match Matson’s long-term liabilities with these long-lived vessel investments,” Wine added.