ATHENS – TOP Ships Inc. (NASDAQ:TOPS), an international operator of ECO tanker vessels, has announced the completion of several sale and leaseback financing agreements with major Chinese financiers. The deals encompass the refinancing of four of its tankers and the expected refinancing of another by May 2024.
The transactions, which include two 157,000 dwt Suezmax tankers and two 300,000 dwt VLCC tankers, have already been concluded, while the refinancing for a 50,000 dwt MR product tanker is anticipated to finalize between March and May. The completed deals have released $47.9 million in proceeds after debt repayment, with $43.9 million used to fully redeem the company's outstanding Series F perpetual preferred shares, resulting in significant cashflow savings.
The redemption of the Series F shares, which carried a 13.5% annual dividend and over 36 million votes, was approved by the independent board members. President, CEO, and Director Evangelos Pistiolis commented on the financial impact of the transactions, noting the cash released is about 77% of the company's current market capitalization and that the fleet's leverage remains conservative at approximately 45%.
The Suezmax tankers' financing agreements span ten years, featuring buyback options and a mandatory buyback at the end of the term for $19 million per vessel. These agreements generated $82 million, with $61.2 million used for previous debt repayment. The deals for the Suezmax tankers carry an interest rate of 2.65% plus term SOFR for one tanker and 2.5% plus term SOFR for the other, with an annual amortization of $2.2 million per vessel.
The VLCCs' eight-year financing agreements include a fixed bareboat hire rate of $7.3 million per annum, covering both interest and repayment, and a buyback obligation at the end of the term for $37.5 million per vessel. The VLCC agreements resulted in $125 million, with $97.9 million used to repay existing debts.
Lastly, the MR product tanker's financing agreement, expected to yield $28 million, will be used primarily to repay the vessel's current financing facility. This seven-year agreement includes a buyback option at its conclusion for $14 million, with an interest rate of 2.6% plus term SOFR and a $2 million annual amortization schedule.
The financing agreements contain standard covenants and default clauses, including a maximum net debt to fleet market value ratio of 75% and a minimum liquidity requirement of $0.5 million per vessel at the company level.
The information in this article is based on a press release.
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