TOKYO-Mitsui OSK Lines, Ltd. (MOL; President & CEO: Junichiro Ikeda) today announced that it has entered into an agreement to procure ¥100 billion through a hybrid loan (the “Hybrid Loan”)as follows.
To date, MOL has implemented business structural reforms mainly in dry bulkers and containerships. It has focused on making a swift recovery to a growth trajectory, enhancement of its earnings base targeting the next midterm management plan, and restructuring of its financial base to ensure stable, sustainable growth. MOL decided to pursue fund procurement through the Hybrid Loan that allows it to balance growth strategies on one hand and financial health on the other.
As credit rating agencies are expected to recognize the Hybrid Loan as an equity credit characteristics similar to equity instruments, this allows MOL to effectively strengthen its financial position while avoiding equity dilution.
Outline of the Hybrid Loan
|(1)||Signing date||: September 30, 2016|
|(2)||Loan amount||: ¥100 billion|
|(3)||Maturity date||: October 7, 2076
Some or all of the principal amount can be repaid before the maturity date, after five years from the loan execution date, upon agreement with the lenders. (*)
|(4)||Use of proceeds||: MOL will use the funds to invest in its growth and enhance the company’s earnings base to boost its business competitiveness, in addition to raising funds for vessel-related facilities, mainly in the LNG carrier and offshore businesses.|
a) The lenders may receive repayment of the Hybrid Loan after general creditors are fully repaid in case liquidation proceedings, bankruptcy proceedings, or rehabilitation proceedings, or similar proceedings outside Japan are set to begin.
b) Any provision of the loan agreement shall not in any sense be amended if such an amendment would bring any disadvantage to the company’s general creditors.
|(6)||Limitation related to interest||:|
Payment of interest on the Hybrid Loan shall be defined in the provision of payment limitations that the payment of interest may be deferred, at the discretion of MOL, or in case certain events defined in the agreement occur.
(*) MOL intends to raise funds that credit rating agencies have approved the same or higher equity credit as the Hybrid Loan.