International Seaways, Inc. (NYSE:INSW) Files An 8-K Entry into a Material Definitive Agreement

International Seaways, Inc. (NYSE:INSW) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01

On January 23, 2020, International Seaways, Inc. (“INSW” or the “Company”), International Seaways Operating Corporation (the “Borrower”) and certain of their subsidiaries entered into a credit agreement (the “Credit Agreement”) comprising $390 million of secured debt facilities (the “Facilities”) with Nordea Bank Abp, New York Branch (“Nordea”), ABN AMRO Capital USA LLC (“ABN”), Crédit Agricole Corporate & Investment Bank, DNB Capital LLC and Skandinaviska Enskilda Banken AB (PUBL), or their respective affilates, as mandated lead arrangers and bookrunners, and BNP Paribas and Danish Ship Finance A/S, as lead arrangers. Nordea is acting as administrative agent, collateral agent and security trustee under the Credit Agreement, and ABN is acting as sustainability coordinator.

The facilities consist of (i) a 5-year senior secured term loan facility in an aggregate principal amount of $300 million (the “Core Term Loan Facility”); (ii) a 5-year revolving credit facility in an aggregate principal amount of $40 million (the “Core Revolving Facility”); and (iii) a senior secured term loan credit facility with a maturity date of June 30, 2022 in an aggregate principal amount of $50 million (the “Transition Facility”). The Core Term Loan Facility contains an uncommitted accordion feature whereby, for a period of up to 18 months following the closing date, the amount of the loan thereunder may be increased up to an additional incremental $100 million for the acquisition of Additional Vessels, subject to certain conditions.

The Core Term Loan Facility and the Core Revolving Facility are secured by a first lien on 14 of the Company’s vessels built in 2009 or later (the “Core Collateral Vessels”), along with their earnings, insurances and certain other assets, while the Transition Facility is secured by a first lien on 12 of the Company’s vessels built in 2006 or earlier (the “Transition Collateral Vessels”), along with their earnings, insurances and certain other assets. In addition, both facilities are secured by liens on the collateral relating to the other facilities, as well as certain additional assets of the Borrower.

On January 28, 2020, the available amount under the Core Term Loan Facility and the Transition Facility was drawn in full, and $20 million of the $40 million available under the Core Revolving Facility was also drawn. Those proceeds, together with available cash, were used (i) to repay the $331 million outstanding principal balance under the Jefferies Facilities (defined below in Item 1.02), (ii) to repay the $23 million outstanding principal balance under the ABN Facility (defined below in Item 1.02), (iii) to repurchase the $28 million outstanding principal amount of the Company’s 10.75% subordinated notes due 2023 issued to an indenture dated June 13, 2018 with GLAS Trust Company LLC, as trustee, as amended, and (iv) to pay certain expenses related to the refinancing, including certain structuring and arrangement fees, commitment, legal and administrative fees.

Interest on the Core Term Loan Facility and the Core Revolving Facility (together, the “Core Facilities”) is calculated based upon LIBOR plus the Applicable Core Margin (each as defined in the Credit Agreement). The Applicable Core Margin is currently 2.60%, but will be adjusted down or up by 0.20% based on the Company’s total leverage ratio, with a leverage ratio of less than 4.0:1 reducing the Applicable Core Margin to 2.40% and a leverage ratio of 6.0:1 or greater increasing the Applicable Core Margin to 2.80%. The Company currently anticipates that the margin on those facilities will be decreased by 0.20% starting during the third quarter of 2020. Borrowings under the Transition Facility bear interest at LIBOR plus 3.50% (subject to increase to 4.00% after 18 months if 40% or more of the Transition Facility remains outstanding).

The Core Facilities also include a sustainability-linked pricing mechanism. The adjustment in pricing will be linked to the carbon efficiency of the INSW fleet as it relates to reductions in CO emissions year-over-year, such that it aligns with the International Maritime Organization’s 50% industry reduction target in GHG emissions by 2050. This key performance indicator is to be calculated in a manner consistent with the de-carbonization trajectory outlined in the Poseidon Principles, the global framework by which financial institutions can assess the climate alignment of their ship finance portfolios relative to established de-carbonization trajectories. The Company will be required to deliver a sustainability certificate commencing with the year ending December 31, 2021; if the fleet sustainability score in respect of the relevant year is lower than the fleet sustainability score for the prior year, the Applicable Core Margin will be decreased by 0.025% per annum, while if the score is higher than that of the previous year, the Applicable Core Margin will be increased by that same amount (but in no case will any such adjustment result in the Applicable Core Margin being increased or decreased from the otherwise-applicable Applicable Core Margin by more than 0.025% per annum in the aggregate).

The Core Term Loan Facility amortizes in 19 quarterly installments of approximately $9.5 million commencing June 30, 2020 and matures on January 23, 2025, with a balloon payment of approximately $120 million due at maturity. The Core Revolving Facility also matures on January 23, 2025. The Transition Facility amortizes in 10 quarterly installments of $5 million commencing March 31, 2020 and matures on June 30, 2022. The maturity dates for the Facilities are subject to acceleration upon the occurrence of certain events (as described in the Credit Agreement).

The Facilities contain customary representations, warranties, restrictions and covenants applicable to the Company, the Borrower and the subsidiary guarantors (and in certain cases, other subsidiaries), including financial covenants that require the Company (i) to maintain a minimum liquidity level of the greater of $50 million and 5% of the Company’s Consolidated Indebtedness; (ii) to ensure the Company’s and its consolidated subsidiaries’ Maximum Leverage Ratio will not exceed 0.60 to 1.00 at any time; (iii) to ensure that Current Assets exceeds Current Liabilities (which is defined to exclude the current potion of Consolidated Indebtedness); (iv) to ensure the aggregate Fair Market Value of the Core Collateral Vessels will not be less than 135% of the aggregate outstanding principal amount of the Core Term Loans and Revolving Loans and the aggregate Fair Market Value of the Transition Collateral Vessels will not be less than 175% of the aggregate outstanding principal amount of the Transition Term Loans, respectively; and (v) to ensure the ratio of Consolidated EBITDA to Consolidated Cash Interest Expense will not be lower than (A) 2.25:1.00, for the period commencing on January 28, 2020 and ending on June 30, 2020 and (B) 2.50:1.00 at all times thereafter. Capitalized terms used in this paragraph and elsewhere not otherwise defined herein shall have the meanings set forth in the Credit Agreement.

On January 28, 2020, the following events took place:

The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03 as if fully set forth herein. In addition, in connection with its entry into the Credit Agreement, the Company is also amending its existing interest rate hedging arrangements in respect of the Jefferies Facility to transfer such arrangement to one or more lenders and to decrease the notional hedged amount to an amount of $250 million and extend the term of such hedging arrangement to coincide with the maturity of the Core Term Loan Facility.

On January 28, 2020, the Company issued a press release announcing the entry into the Credit Agreement and the other transactions described in Items 1.01 and 1.02 above, a copy of which is attached hereto as Exhibit 99. The information contained in Exhibit 99 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Section 9 – Financial Statements and Exhibits

(d) Exhibits

to General Instruction B.2 of Form 8-K, the following exhibit is furnished with this Form 8-K.

Press Release dated January 28, 2020.


International Seaways, Inc. Exhibit
EX-99 2 tm206055d1_ex99.htm EXHIBIT 99 Exhibit 99     INTERNATIONAL SEAWAYS ANNOUNCES REFINANCING AND CLOSING OF NEW SENIOR SECURED CREDIT FACILITIES   Refinancing Reduces Annual Interest Expense by $15 Million   New York,…
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About International Seaways, Inc. (NYSE:INSW)

International Seaways, Inc. and its subsidiaries own and operate a fleet of oceangoing vessels. The Company’s oceangoing vessels engage in the transportation of crude oil and petroleum products in the International Flag trades. The Company’s segments are International Crude Tankers and International Product Carriers. Its 55-vessel fleet consists of Ultra Large Crude Carrier (ULCC), Very Large Crude Carrier (VLCC), Aframax and Panamax crude tankers, as well as long range 1 (LR1), LR2 and medium range (MR) product carriers. Its International Crude Tankers segment is made up of a ULCC and a fleet of VLCCs, Aframaxes, and Panamaxes. Its International Product Carriers segment consists of a fleet of MRs, LR1s and an LR2 engaged in the transportation of crude and refined petroleum products. Through joint venture partnerships (the JVs), it has ownership interests in approximately four liquefied natural gas carriers and approximately two floating storage and offloading service vessels.

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