Global Ship Lease makes refi of 9 7/8% notes due 2022 a top priority

By Devika Patel

Knoxville, Tenn., March 5 – Global Ship Lease, Inc. plans to make refinancing its 9 7/8% first priority secured notes due 2022 a top priority after having refinanced most of its secured debt last quarter.

“We refinanced all of our significant 2020 debt maturities, proving our access to commercial lenders and along the way reducing our cost of debt, which remains a core focus for us in 2020,” executive chairman George Youroukos said on the company’s fourth quarter and year ended Dec. 31, 2019 earnings conference call on Thursday.

The company mainly refinanced its 9 7/8% senior secured notes and management plans to make refinancing the remaining balance a “top priority.”

“We’ve also remained very active in strengthening our balance sheet and reducing our cost of capital as we work to put ourselves in a position to fully refinance our outstanding 9.875% senior secured notes,” chief executive officer Ian J. Webber said on the call.

“We’ve opportunistically refinanced $268.5 million of senior secured debt during the year and an additional $46 million in February of this year, so just last month, extending all of our significant 2020 maturities to at least 2024.

“The one remaining 2020 maturity is a Citibank facility associated with the senior secured notes with a modest balance at year-end.

“We capitalized on our strong banking relationships to raise $59 million of new senior secured debt at L plus 3.9,” Webber said.

“We’re utilizing proceeds [from a $50.7 million oversubscribed and upsized equity sale] primarily to de-lever and provide the equity for our acquisitions.

“In December, we tapped the unsecured debt market, issuing 8% senior unsecured notes which mature in 2024 for net proceeds of $29.6 million, with a fully utilized greenshoe.

“The use of proceeds of this issue was explicitly for the partial repayment, which we completed last month, of senior secured notes,” Webber said.

“Across 2019 and early 2020, we redeemed approximately $63 million of our senior secured notes, the 9 7/8 notes, reducing the outstanding amount from $340 million to just under $277 million.

“The complete refinancing of this remaining balance remains a top priority for Global Ship Lease,” Webber said.

The company garnered a ratings upgrade last quarter as well.

“Our credit rating was upgraded by S&P in the autumn last year to B+ with a stable outlook,” Webber said.

Cash and cash equivalents were $138,024,000 as of Dec. 31, 2019, compared to $82.06 million as of Dec. 31, 2018.

Net long-term debt was $809,357,000 as of Dec. 31, 2019, compared to $813.13 million as of Dec. 31, 2018.

On Nov. 14, Global Ship Lease priced a $27.5 million offering of $25-par senior notes due Dec. 31, 2024 at par with a coupon of 8%.

There was a $4,125,000 greenshoe, which was exercised in full on Dec. 2, 2019, increasing the size of the issue to $31.63 million.

B. Riley FBR, Inc., Ladenburg Thalmann & Co. Inc., Janney Montgomery Scott LLC and William Blair & Co., LLC were the joint bookrunners.

Dividends are payable quarterly on the last day of February, May, August and November, commencing Feb. 29, 2020.

The notes are redeemable on or after Dec. 31, 2021 and prior to Dec. 31, 2022 at 102%, on or after Dec. 31, 2022 and prior to Dec. 31, 2023 at 101% and on or after Dec. 31, 2023 at par. The notes are also redeemable prior to Dec. 31, 2021 after a change-of-control event at 104%.

Proceeds were earmarked to repay a portion of its 9.875% first priority secured notes due 2022.

Global Ship Lease is a London-based container ship leasing company.

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