Gulf Marine Services (GMS) has reached a deal with its banks to restructure its debt, three weeks ahead of schedule, pushing out maturities until June 2025.
The change reduces fixed amortisation payments by around $136 million. The company had previously warned that a failure to renegotiate its $391mn of debt would raise “going concern” worries.
In particular, it said, the deal provides for a “sustainable capital structure” that will allow GMS to continue with the execution of its business plan. This should see it paying down debt through generating cash from operations.
The agreement is in line with the restructuring deal set out on March 31.
In addition to extending the maturity and reducing amortisation payments, GMS has also secured a new $50mn working capital facility, replacing its existing facility. The term of this debt is also scheduled for June 2025. GMS said it had also received headroom on its financial covenants, providing more flexibility.
Should GMS raise at least $75mn of net proceeds from an equity raise, no additional interest will be payable and it will not have to issue “equity-linked instruments” to its banks. Failure to raise this cash may see various warrants issued to them.
The company is working on plans for an equity raise to satisfy these conditions by the end of 2020.
“GMS is moving from strength to strength. Today’s announcement, ahead of schedule, of a revised debt structure, provides the platform for GMS to sustain its upward trajectory and take advantage of opportunities as oil and gas markets stabilise,” said the company’s executive chairman Tim Summers.
The company has struggled in recent times but has seen off a bid from a competitor, Seafox International, with support from its shareholders.