Lamprell (ticker: LAM), a leading provider of diversified engineering and contracting services to the onshore and offshore oil & gas and renewable energy industries, announced that it has signed binding commitment letters and detailed heads of terms for the arrangement of a new secured banking facility with a reduced number of five core lending banks.
This new arrangement significantly simplifies the Company’s lending structure and rationalises the covenants to a common basis.
The new US$181 million facility arrangement is comprised of a US$100 million term loan (‘Facility A’), a US$60 million term loan (‘Facility B’) and a US$21 million revolving credit facility (‘RCF’). All are scheduled to mature in June 2016 although Facility A amortises over the loan period and Facility B is subject to a one-year optional extension.
The new facility will replace the Group’s existing funded facilities and will sit alongside the continuing bilateral unfunded facilities, which are used for the issue of bonds and guarantees. This arrangement is subject to final documentation and to a number of conditions precedent, which are expected to be completed in June or July 2013.
The blended average interest margin for Facility A, Facility B and the RCF is estimated to be 6.7%. Facility B interest costs increase incrementally from July 2014, however, upon repayment of Facility B, the margins in Facility A and the RCF will reduce. The new facility will contain a more suitable covenant package for the business, including gross debt to EBITDA, interest cover, net worth of the Group and annual capital expenditure covenants.
The financial terms for the new facility arrangement have been factored into the Group’s forecasts for 2013 and therefore the Board maintains its expectations for the full year.
Frank Nelson, Chief Financial Officer, Lamprell, said:
“This new facility arrangement will provide a solid platform to Lamprell in its efforts to deliver stability and security of funding for the business in the medium term, by enabling the Group to work with a reduced number of five core lenders on the basis of common and simplified financing terms. This has been achieved as a result of the positive support of our key relationship banks and is welcome at a time when the Company is focussing on its core business areas and is looking to grow based on its competitive advantage in the market.”
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Press release, June 18, 2013; Image: lamprell