Diana Containerships pays $85 million to refinance term loan with RBS

By Susanna Moon

Chicago, July 5 – Diana Containerships Inc. paid $85 million to settle its $148 million term loan facility with Royal Bank of Scotland plc, according to a 6-K filing with the Securities and Exchange Commission.

The outstanding balance was $128.9 million as of June 30, the filing noted.

The company said it refinanced the RBS loan with proceeds of $75 million under two new secured loan facilities with Addiewell Ltd., an unaffiliated third party, in the amount of $35 million and with Diana Shipping Inc. in the amount of $40 million, along with $10 million of cash on hand.

The company also refinanced its $42.6 million unsecured loan facility dated May 20, 2013 with Diana Shipping. The $82.6 million new secured loan with Diana Shipping includes the existing loan and the new loan used to refinance the company’s RBS loan.

Interest on the new loans is 6% for the first 12 months, 9% for the next three months and 12% for the remaining three months.

The new loans will mature in 18 months and are secured by first- and second-priority mortgages over the company’s 11 containerships.

There is a discount premium amount of $10 million and $5 million for the loans with Addiewell and Diana Shipping, respectively.

The new facilities include financial covenants that require the repayment of the loans with proceeds from the sale of assets of the company, proceeds from the issuance of new equity and proceeds from the exercise of existing warrants to purchase the company’s series B convertible preferred shares.

“We are very pleased with the full and final settlement of the RBS loan which adds a substantial amount of equity value to the company’s shareholders,” Symeon Palios, director, chief executive officer and chairman of the board, said in the company’s press release.

“In addition, the new loans will provide the company the flexibility to take advantage of the improving market conditions of the containership segment, as well as to use alternative ways to reduce the leverage on its balance sheet.”

The company entered into the $148 million secured loan facility with RBS on Sept. 10, 2015.

Diana Containerships is an Athens-based provider of shipping transportation services through its ownership of containerships.

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