Global Ship Lease amends loan, waiving loan-to-value requirement

By Sara Rosenberg

New York, Aug. 21 - Global Ship Lease Inc. amended its $800 million credit facility, waiving the loan-to-value covenant through Nov. 30, 2010, with the next loan-to-value test scheduled for April 30, 2011, according to a 6-K filed with the Securities and Exchange Commission on Friday.

Additionally, the amendment allows the company to draw sufficient funds under the facility for the purchase of the CMA CGM Berlioz, a 2001-built 6,627 TEU container vessel that is scheduled to be delivered later this month, for $82 million from CMA CGM.

The purchase will be funded by up to $42 million drawn under the credit facility, no less than $20 million of available cash and the balance of no more than $20 million as a newly created over advance portion borrowing under the facility.

The first repayment of the over-advance loan will be due in November and be in an amount equal to free cash in excess of $20 million as determined as at the end of October. The second payment will be due in February 2010 on the same basis, with free cash determined as at the end of January 2010. The loan must be fully repaid by June 30, 2010.

Amounts borrowed will be priced at Libor plus 350 basis points through Nov. 30, 2010. Thereafter, pricing can range from Libor plus 250 bps to 350 bps depending on the loan-to-value ratio.

In connection with the amendment, undrawn commitments of about $200 million will be canceled after the purchase of the CMA CGM Berlioz, and Global Ship Lease will suspend dividends to common shareholders, using its cash flow to prepay loan borrowings.

Dividend payments can be resumed once loan-to-value is at or below 75%, at which point the prepayment of borrowings becomes fixed at $10 million per quarter.

Also, CMA CGM has agreed to defer redemption of the $48 million preferred shares it holds until after the final maturity of the credit facility in August 2016 and to retain its current holding of common shares in Global Ship Lease until at least Nov. 30, 2010.

The amendment was completed on Aug. 20.

Fortis Bank is the agent on the deal.

Global Ship Lease is a London-based containership charter owner.

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