Abu Dhabi-base Gulf Marine Services, (GMS), a leading provider of self-propelled and self-elevating support vessels for the offshore oil, gas, and renewables sectors, said it has reached an agreement with three banks to refinance its current bank debt.

The bank – First Abu Dhabi Bank, cand HSBC Bank – two of which are current lenders, will have an equal participation to the term loan and to the working capital facility.

The facility will consist of a term loan of an amount equivalent to $250 million in United Arab Emirates dirhams (AED) as a well as a working capital facility of an amount equivalent to $50 million, also in Dirhams.

The loan will have a tenor of five years from the facility agreement date, and about 80% of the term loan will be amortised quarterly over five years with a 20% balloon. Exposure to the AED will be hedged in full.

The GMS board has also approved a dividend policy dedicating 20%-30% of annual adjusted net profit towards distributions to shareholders in the forms of dividends and potentially share buyback provided all bank covenants are met and other plans permit.

GMS is also taking this opportunity to confirm it is maintaining its adjusted Ebitda guidance for the 12 months ending December 2024 in the range of $92 million to $100 million, as first announced on February 28, 2024.

“We are also working on revisiting our Ebitda guidance for 2025 towards year end,” said Mansour Al Alami, GMS Executive Chairman.

“I am delighted to finally announce this deal for a $300 million facility today. This is yet another testimony of the progress achieved by GMS in the past couple of years. It signals a new dawn for us and the start of a new journey.

“It acknowledges our recent years track record and will enable us to achieve our long-term objectives on growth and on shareholders rewards, without jeopardising our commitment to deleveraging.

“I would like to thank all those who worked hard to get it done. “As we have made an early settlement towards our debt last week, our current net debt is $234 million, down from $267.3 million as of December 31 2023.

“GMS continues to monitor the positive changes to its shareholders register. We welcome our new investors and are pleased to see institutions showing increasing interest, higher than we’ve been seeing in a while.

“The deal allows us to plan for improving shareholders value by investment in growth and for shareholders rewards by reducing restrictions on dividend payment and share buyback.

“GMS will look to add opportunistically and on favourable terms assets that could have an immediate impact on building the backlog and the profitability.”

Alex Aclimandos, GMS Chief Financial Officer, said: “This landmark transaction will have significant advantages to all stakeholders. The financing costs, currently standing at 300 bps (+ SOFR) will gradually go down to 225 bps (+EIBOR) when net leverage gets below 2.0 times.

“At transaction date expected net leverage levels, the financing costs will be at 250 bps plus Eibor. This will provide additional cash liquidity to GMS. The surplus liquidity the deal provides will accelerate the achievement of GMS goals.

“While we maintain our focus on deleveraging the business to levels providing agility, the transaction enables us to achieve shareholder growth. It allows us to lease or to acquire new vessels to fuel the topline, and removes most restrictions related to direct payment to shareholders, either via share buyback or via dividend payment.

“We expect the transaction to close before December 31, 2024.

“We will be announcing our reviewed results in approximately 4-5 weeks. As we stand, our preliminary unaudited and unreviewed results show our adjusted first half EBITDA are on track to be within the earlier provided guidance for the year.

“Our backlog as of August 1, 2024 stands at $414.5 million.” – TradeArabia News Service