Dynagas LNG improves financial profile through $675 million term loan

By Devika Patel

Knoxville, Tenn., Sept. 27 – Dynagas LNG Partners LP has streamlined its debt structure and improved its financial profile with a $675 million senior secured term loan that will help the company de-lever.

“Subsequent to the quarter, on Sept. 25, 2019, the partnership successfully closed and funded a syndicated five-year $675 million senior secured term loan with leading international banks,” chief executive officer Tony Lauritzen said Friday on the company’s earnings conference call for the second quarter ended June 30.

“Borrowings under the senior secured loan have already been utilized to repay in full on Sept. 25 the partnership’s outstanding $470 million senior secured term loan B and, together with cash on hand, will be utilized to repay in full the partnership’s $250 million senior unsecured notes at their maturity date on Oct. 30, 2019.

“Pursuant to the terms of the $675 million senior secured term loan, the partnership will not declare or pay distributions to common unitholders while borrowings are outstanding under the senior secured term loan.”

The loan’s terms will help the company gradually de-lever as it increases debt amortization to about 7% of total debt outstanding.

“The new term loan is repayable over five years in 20 consecutive quarterly payments plus a balloon payment in year five based on a 14-year amortization profile and has a margin of Libor plus 300 basis points, significantly reducing our cash interest expense,” chief financial officer Michael Gregos said on the call.

“The terms of the term loan include financial covenants providing for the maintenance of maximum leverage ratios and minimum liquidity covenants, including the requirement for the partnership to maintain a minimum cash balance of $50 million throughout the life of the credit facility in a restricted collateral account.

“This global refinancing streamlines our debt structure and significantly improves our financial profile as debt amortization increases from less than 1% of total debt outstanding to about 7% of total debt outstanding, resulting in a gradual deleveraging of the business and allowing the partnership to build equity value over time.”

The credit facility provides the partnership with a “reduced cost of debt relative to the existing one and a simplified debt structure,” Lauritzen said in a press release.

Total outstanding debt as of June 30 was $720.4 million.

DynaGas is a Monaco-based growth-oriented limited partnership focused on owning and operating LNG carriers.

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