Bumi Armada gets breathing space as it refinances debt

Malaysia’s offshore energy vessels and services provider Bumi Armada has signed documentation related to its short-term corporate debt refinancing.

Armada Kraken FPSO / The image has been cropped / Image source: kees torn / Flickr. Shared under CC BY-SA 2.0 license

Bumi Armada on Wednesday said it had refinanced its unsecured term loans of $380 million (approximately RM1,569 million) and revolving credit facilities of $280 million (approximately RM1,156 million) into a single facility consisting of Tranche 1 facility of $260 million (approximately RM1,074 million), and Tranche 2 facility of $400 million (approximately RM1,651 million).

The loans will be repayable over two and five years respectively, from the closing date of the Facility Agreement. The closing of the facility agreement is subject to the satisfaction of certain conditions precedent which are procedural in nature, Bumi Armada said.

Leon Harland, Executive Director and Chief Executive Officer of Bumi Armada said: “The refinancing of the short-term corporate debt alleviates one of the Group’s main current exposures. The new facility better aligns the corporate debt profile with the cash flow profile of the Group’s main FPO business.”

He said Bumi Armada must now focus on maximizing its revenue while continuing to manage its operational costs, as well as to find additional value via asset sales or other structural improvements.

Harland, which is expected to leave the company in May, said: “As part of this, the [Offshore Marine Services] assets together with certain [Floating Production & Operation] vessels which are idle will be disposed of assuming commercially acceptable sale terms can be obtained. Surplus funds from operations and part of the proceeds from certain strategic initiatives including monetization of assets and new project financing will be used to repay the Loans.”

Bumi Armada’s 2018 performance was previously described as financially challenging, largely marked by the difficulties encountered on the Kraken FPSO in the North Sea and the ongoing low utilization of its OSV fleet.

Harland in March said the company continued to review its OSV fleet requirements and had several vessels under discussion for disposal.

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