Covenant waivers and amendments in bank syndicate facility
Fred. Olsen Energy ASA ("FOE" or the “Company”) is pleased to announce that approval has been obtained from its syndicate banks, subject to satisfactory documentation, to certain amendments to the original USD 2 billion credit facility agreement dated June 2014 (the "Facility"). A formal agreement by way of an amendment to the Facility is expected to enter into force prior to 31 December 2016.
As per the key terms of such amendment the following covenants will be temporarily waived until 30 June 2018:
Interest cover ratio
with the effect that:
The minimum cash covenant will be set at USD 80 million.
The scheduled amortizations of USD 95.5 million in January 2017 and July 2017, in total USD 191 million, shall be prepaid before end of 2016. Other amortizations of the Facility are unaffected by the agreement, hence the original amortization schedule will be restored from 2018.
The available amount under the revolving credit facility of USD 210 million will be reduced by 50% and the remaining 50% will be temporarily suspended during the waiver period.
The interest margin under the Facility will increase from 2.3% to 2.7% until 30 June 2018.
The waiver of the leverage ratio and interest cover ratio covenants will be conditional upon similar covenant waivers being accepted by the bondholders in FOE05 (ISIN: NO 0010704125) in line with procedural rules for bondholder meetings. The Company will accordingly initiate further dialogue with FOE05 bondholders as soon as possible.
Subject to the bondholders’ approval of the relevant covenant waivers, this arrangement with the syndicate banks will provide the Company with operational and financial flexibility, and additional time to further develop and optimise its financing structure. During this period, it is estimated that the liquidity position of the Company will remain well above the applicable minimum cash covenant.