Tallink stays afloat through debt restructuring

TALLINN - Estonian shipping company Tallink Grupp has reached an agreement with international lenders to reduce the amount of repayment of the main part of its loans over the next two years, reports news agency LETA. The company will end up paying a higher interest rate on the balance of the loans. “The repayment restructuring significantly improves Tallink’s liquidity position and gives more flexibility for Tallink to maintain sufficient working capital for meeting present and future needs,” said Tallink’s board member Janek Stalmeister.

“It was agreed with the lenders that the loan repayments and the reduction of the group’s overall debt will be kept a high priority.” When it is reasonable, and possible, for the shipper, early prepayment conditions of the deferred loan portions will be applied. Until the deferred portions are repaid, Tallink will need the approval of the current lenders for any new company investments, dividend distributions and new commitments out of the ordinary course of its business. At present no such investments, distributions or commitments are being planned. The publicly listed company notified the Tallinn bourse that it, together with its subsidiaries and all its 15 lending banks, have jointly signed amendments to all of Tallink’s loan agreements under the restructuring.

Changes to the loan repayment schedules for the 2009/2010 and 2010/2011 financial years mean that principal repayments will occur only in the first and fourth financial quarters, with no repayments occurring in the second and third financial quarters, which is the low season for operations. The change means that the initially agreed loan principal repayments will be reduced by 50 percent for the next two years. The reduced portion will be deferred until August 2012 and will be thereafter repaid during the remaining term of the loans.

The loans’ final maturities and interest payment frequencies remain unchanged. The interest rates were increased, but it is estimated that Tallink’s interest expenses in the 2009/2010 financial year will still be lower compared to the 2008/2009 financial year. As a result of the repayment restructuring, Tallink will repay bank loans in the amount of 60 million euros during the current 2009/2010 financial year. In addition, the availability of current overdraft credit lines were extended for another two years.