On June 7, 2021, Grindrod Shipping Holdings Ltd. with Crédit Agricole Corporate and Investment Bank, DVB Bank SE (formerly known as DVB Bank SE Singapore Branch) and Standard Chartered Bank, Singapore Branch (the “$100 Million Facility”).
The changes related to the $100M Facility are effective June 7, 2021 and generally:
- changed the amount of the minimum book value asset agreement; and
- documented the transfer to NIBC Bank NV of the commitment initially provided by lenders DVB Bank SE and Standard Chartered Bank, Singapore Branch
The purpose of the changes was to document the transfer of the bank’s commitment and to align the minimum book value of net assets commitment across our various credit facilities.
Credit Facility Changes
Book Value Net Worth Covenant
The Book Value Net Assets Agreement was revised to change the Minimum Book Value Net Assets Agreement dated January 1, 2021 to not less than the lower of (a) the aggregate amount of US$200 million plus 25% of the amount of positive retained earnings (defined below)( accrued from June 30, 2019) and 50% of each capital increase (defined below); and (b) $275 million. For the purposes of the foregoing, “positive retained earnings” means the positive retained earnings of Grindrod Shipping and its subsidiaries on a consolidated basis reported twice annually as of June 30 and 31 Amount in dollars) of proceeds from equity raised by Grindrod Shipping (excluding the effect of capital raised by its subsidiaries) as evidenced in its most recent financial statements as at 30 June or 31 December respectively.
There were no changes to the following covenants:
- the Cash and Cash Equivalents Agreement, which requires the Company to hold cash and cash equivalents (specified for certain credit facilities, including cash restricted in certain securities accounts) of at least US$30 million;
- the debt-to-market-adjusted fixed asset ratio agreement, which requires a debt-to-market-adjusted fixed asset ratio of no more than 75%, where the definition of “debt” excludes lease obligations under International Financial Reporting Standards 16 (“IFRS 16”) and the definition of “tangible assets” without right-of-use vessels;
- the working capital covenant, which requires positive working capital such that consolidated current assets (excluding adjustments for IFRS 16) must exceed consolidated current liabilities (excluding adjustments for IFRS 16) as reported in the most recent financial statements as at 30 June and December 31; and
- the covenant minimum collateral value ratio of 135% for the life of the loan.
The financial covenants in the credit facilities are consistent for all credit facilities following the effective date of the changes described above (except for differences in the determination of cash and cash equivalents and the minimum collateral value ratio covenant, each as described above).
Source: Grindrod Shipping Holdings Ltd.