Singapore-based Rickmers Trust Management (RTM) has met the conditions required to exit the inter-creditor deed it signed with three syndicates of lending banks in June 2010.
The company is the trustee manager of Rickmers Maritime, which is listed on the mainboard of the Singapore Stock Exchange.
The intercreditor deed was originally signed in order to restructure RTM’s obligations to its lenders after it failed to meet its value-to-loan (VTL) covenant requirement. RTM attributes this failure to “the significant drop in vessel values amid the shipping downturn” at that time.
RTM said exiting the deed will allow it to negotiate individually with each banking syndicate in order to meet borrowing obligations and term out its maturity profile without needing unanimous agreement from all syndicates.
The exit will lift the financial constraints on RTM, which will regain the first right to cash inflows from equity fund raising and prepayment step-up through excess cash generation.
“It is a significant development for Rickmers Maritime to finally achieve trust exit from the inter-creditor deed after five years,” said Soeren Andersen, CEO of RTM, in a statement. “This move complements our efforts to preserve cash to weather further market volatility, and improves our financial flexibility to be well-placed for growth when the shipping market improves.”
Subsequent to the exit, RTM is now VTL compliant. Its VTL covenant waiver is due to expire on December 31 this year and will not need to be renewed.