Global Ship Lease obtains waiver of revolver's loan-to-value covenant

By Angela McDaniels

Tacoma, Wash., Dec. 1 - Global Ship Lease, Inc. said its lenders agreed to waive the requirement under its $800 million revolving credit facility to conduct loan-to-value tests until Nov. 30, 2012.

The credit facility requires the loan-to-value ratio, which is the ratio of outstanding borrowings to the charter-free market value of the secured vessels, to be 75% or less, according to a company news release.

The company believes it would not be in compliance with this requirement as of Nov. 30 due to a downturn in the containership market and the consequent impact on vessel values.

During the period of the waiver, the interest rate will be Libor plus 350 basis points and the company will be unable to pay dividends to common shareholders.

In addition, cash flow will be used to prepay borrowings under the credit facility each quarter. The prepayment due on Dec. 31 will be the amount of cash in excess of $20 million as of Nov. 30.

If the loan-to-value ratio as of Nov. 30, 2012 is not greater than 75%, the margin will become 300 bps (or 250 bps if the ratio is no more than 65%), dividends can be paid and the prepayment of borrowings will become fixed at $10 million per quarter.

The company must pay a waiver fee of 0.2%.

ABN Amro Bank NV is the agent.

Global Ship Lease is a containership charter owner based in London and incorporated in the Marshall Islands.

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