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    Polarcus restructures its balance sheet

    Company News // January 7, 2016

    Polarcus Limited has reached agreement with key stakeholders for a long-term restructuring of its balance sheet. The stakeholders – the company’s banks, certain bondholders and shareholders – have entered into written agreements with the company committing them to support the restructuring.

    The balance sheet of the company will be significantly improved. Doing so will reduce the company's debt level significantly, with renegotiated lease terms and the introduction of new call option prices for the bonds corresponding to a potential debt reduction of US$280 million. In addition, debt service payments during the next two years will be reduced by approximately US$140 million.

    The company’s bank facility will be extended from 30 June 2017 to 30 June 2022. There will be no amortisation until 1 January 2018 and interest payments will continue as normal. The liquidity covenant will be reduced from US$25 million to US$10 million, providing the company with additional financial flexibility in future. A working capital facility is to be extended to 1 July 2018, and a credit facility will be amended to make it more accessible. Adjustments will also be made to the company’s bonds and unsecured bonds.

    In addtion, Polarcus said the restructuring will see charter rates for Polarcus Nadia and Polarcus Naila reduced by approximately 75 per cent from current levels until 1 January 2018 with an increase thereafter representing a reduction of approximately 20 per cent from current levels, subject to the company being able to service its bank debt in full at the time of any such increase. The purchase options will be removed from the sale-leaseback agreements, which will permit a reclassification from financial leases to operational leases, reducing the group’s financial indebtedness by US$167 million. The term of the charter periods for the vessels will be extended by two years.

    The restructuring provides that all trade creditors will be unimpaired and will continue to be paid in full.

    Completion of the restructuring proposal is subject to the approval of an EGM of the company where a majority of the shareholders present and voting must vote in favour of the proposal. This EGM is expected to take place on or about 27 January 2016.

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