Jack-up operator Gulf Marine Services (GMS) has signed agreements with its banks to restructure its debt facilities.
The restructuring is designed to provide GMS with a sustainable capital structure to enable it to “execute” its business plan and further “deleverage” the business through cash flow generation, the company said.
With the new agreements in place, GMS intends to seek shareholder approval to undertake a share capital increase before the end of 2020.
The company is aiming to raise net proceeds of at least $75m (€65m) to “strengthen its balance sheet and avoid the issuance of warrants and incurrence of PIK interest”, as a condition of its renewed financing facilities.
The restructuring includes renewed existing term loan facilities totalling $391m with an extended maturity to 30 June 2025.
The renewed facilities will result in a $136m reduction in fixed amortisation payments through 2022.
The cash interest margin is consistent with the prior facilities and is indexed to the net leverage of the company.
The facilities will have “enhanced liquidity” through a new $50m working capital facility that will replace the existing working capital facilities, with a term extended to 30 June 2025.
The facilities will have an increased financial covenant “headroom” that provides GMS with “greater financial flexibility”.
If GMS meets certain conditions subsequent, including raising at least $75m of net proceeds from an equity capital raise, then no additional interest will be payable by the company and no equity linked instruments will be issued to the banks.
GMS chief executive Tim Summers said: “Our organisation is gaining in confidence, with substantial operational progress and material cost synergies delivered to date in 2020.
“We are now focused on rewarding the trust our shareholders have placed in the board and management team.”