Port of Tallinn Issuing Bonds to Buy New Ferries
Estonian state-owned Port of Tallinn and Swedbank have inked an agreement for issuing bonds worth EUR 80 million (USD 88.1 million) which will be used for partial financing of the port’s ferry project.
The port did not specify the exact purpose of the loan, but the local media report that the money will be used for the purchase of new ferries for island routes.
Until now, the ferry project has been financed by short-term loans and by the company’s own free cash flow and it will be refinanced now as long term.
In addition, up to EUR 124 million in total is planned to be borrowed as long-term capital for the project.
According to Port of Tallinn’s Chief Financial Officer Marko Raid, the current bond issue is of importance for the port as the previous ten-year financing contract with a local bank was signed almost ten years ago in 2007 and in the meanwhile, during the years of economic crisis, the port has not received a proposal from any local bank offering such a long-term contract with fixed interest margins under suitable conditions.
“Regarding the participation activity and competitiveness of the financing competition held in June, I’m pleased to note that the ability of local banking market to offer long-term financing is today recovering to the pre-crisis level,“ Raid said.
The funding is said to be the largest financial transaction ever for the Port of Tallinn.
In November next year, which is the deadline to redeem three debt instruments, the port authority said it plans to refinance bonds in an even bigger amount – up to EUR 105 million.
The estimated debt burden of the port by the end of this year is EUR 250 million.