Höegh LNG Partners completed the refinancing of the commercial tranche of the ’PGN FSRU Lampung’ debt facility and the refinancing of the ’Neptune’ debt facility, just before the holiday break.
The company had come under pressure from US law firms who were trying to organise class actions on behalf of shareholders against the company giving a deadline of 28th December.
On 24th December, the Partnership closed a refinancing of the commercial tranche's outstanding amount of $15.5 mill in full. The refinanced ’PGN FSRU Lampung’ debt facility's commercial tranche will be amortised with equal quarterly instalments to zero by June, 2026, subject to a cash sweep mechanism.
This facility included certain restrictions on the use of cash generated by the FSRU, as well as the cash sweep mechanism. Until the pending arbitration with the FSRU’s charterer has been terminated, cancelled or favourably resolved, no shareholder loans will be serviced and no dividends will be paid to the Partnership by the subsidiary borrowing under the Lampung facility, PT Hoegh LNG Lampung.
Furthermore, each quarter, 50% of the ’PGN FSRU Lampung's’ generated cash flow after debt service must be applied to pre-pay outstanding loan amounts under the refinanced facility, applied pro rata across the commercial and export credit tranches.
The remaining 50% will be retained by PT Hoegh LNG Lampung and pledged in favour of the lenders until the pending arbitration has been determined one way or another.
As a consequence, no cash flow from the FSRU will be available for the Partnership until the arbitration has been resolved. However, this limitation does not prohibit the Partnership from paying distributions to preferred and common unitholders, the company stressed.
The refinanced commercial tranche bears interest at a rate equal to three months LIBOR plus a margin of 3.75%, whereas the export credit tranche continues to bear interest at a rate equal to three months LIBOR plus a margin of 2.3%. Borrowings under the export credit tranche continue to be hedged with interest rate swaps, while the refinanced commercial tranche is unhedged.
Höegh has provided a guarantee in favour of the interest rate swap providers and the lenders of the commercial tranche and the export credit tranche.
‘Neptune’ loan replacement
Meanwhile, the ’Neptune’ is owned by SRV Joint Gas Ltd, a joint venture owned 50% by the Partnership. The new ‘Neptune’ facility, which closed on 30th November, 2021, has an initial loan amount of $154 mill, which is scheduled to be fully amortised with quarterly debt service for eight years based on an annuity repayment profile.
This facility replaces the balloon amount of $169 mill that was repaid under the previous debt facility secured by the ’Neptune’. The loan amount’s difference was mainly financed by cash held by the joint venture and subordinated shareholder loans from the shareholders, including a new subordinated shareholder loan of $3 mill from Höegh.
It bears interest at a rate equal to three months LIBOR plus a margin of 1.75%. The interest rate swaps entered into under the previous ’Neptune’ debt facility have a remaining tenor of eight years and have been novated from the previous group of swap providers to the new lenders and restructured to match the new facility's loan amount and amortisation plan.
Höegh and the other SRV Joint Gas shareholders have provided guarantees for the facility in favour of the lenders and swap providers. These guarantees are capped at $15 mill in total, of which the Partnership is liable for up to $7.5 mill.
The Partnership and the other shareholders have also pledged their shares in the joint venture as security for the facility.
Höegh also issued an update on the ‘Cape Ann’, which is owned by SRV Joint Gas Two Ltd, another 50% owned joint venture. The existing debt facility matures on 1st June, 2022 and the documentation for the refinancing of this facility is ongoing, the Partnership said.
On 15th December, 2021, the new loan agreement was signed for its refinancing. Subject to customary closing conditions, the closing and the drawdown under the new facility are expected to occur on or about the maturity date of the existing facility this year.