New York-listed Hoegh LNG Partners said it has entered into a deal with its lenders to defer the maturity date of the commercial tranche of its Lampung FSRU debt facility.
This deal gives the limited partnership more time to conclude a refinancing of this tranche.
To remind, Hoegh LNG Partners has recently filed a countersuit against Indonesian state-owned gas firm PT Perusahaan Gas Negara (PGN), a unit of Pertamina, over issues related to the Lampung FSRU charter.
The vessel serves a 20-year charter deal with PGN LNG, a unit of PGN, off the southeast coast of Sumatra in Indonesia. Parent Hoegh LNG manages the FSRU while its MLP Hoegh LNG Partners owns it.
Hoegh LNG Partners has not completed the ongoing refinancing of the PGN FSRU Lampung credit facility.
This is due to the “failure by the charterer of the PGN FSRU Lampung to consent to and countersign certain customary documents related to the new credit facility,” Hoegh LNG Partners previously said.
These circumstances have left the partnership exposed to having to arrange alternative refinancing, or rearrange the existing refinancing, in the short term in advance of the commercial tranche of the Lampung facility’s maturity on September 29.
Maturity date moved to January 14
“The lenders have agreed to defer the maturity date of the commercial tranche from September 29, 2021 until January 14, 2022,” Hoegh LNG Partners said in a statement on Wednesday.
Subject to commitment letters and a term sheet for a refinancing of the commercial tranche, which the firm has to complete by December 29, the maturity date will automatically move to March 29, 2022, according to the partnership.
Moreover, Hoegh LNG Partners said there would be a gradual step-up in the interest margin with up to 235 basis points increase.
“As a condition for the deferred maturity date, no shareholder loans may be repaid and no dividends may be paid to the partnership by the subsidiary borrowing under the Lampung facility, PT Hoegh LNG Lampung,” it said.
As a consequence, no cash flow from the FSRU would be available for the partnership prior to the deferred maturity date.
However, this limitation does not prohibit the partnership from paying the current distributions to preferred and common unitholders, it said.
“Considering various options”
As previously disclosed, the export credit tranche of the Lampung facility matures in 2026. However, the partnership says it may be called if it does not refinance the commercial tranche at its maturity date and in accordance with the terms of the facility.
This clause continues to apply for the deferred maturity date, the partnership said.
The deferred maturity date gives the partnership more time to refinance the Lampung facility.
“The partnership is considering various options and expects that the terms of any refinancing, if the partnership is successful in finalizing such refinancing, are likely to be less favorable than the terms of the existing Lampung facility,” it said.
Regarding the previously announced notice of arbitration served by the charterer on August 2, both parties have been continuing to perform their respective obligations under the lease and maintenance agreement for the FSRU, the partnership said.
Hoegh LNG Partners said it can not provide any assurance at this time as to the outcome of the dispute with PGN, or of the discussions with lenders.
In the event that the partnership is unable to refinance the Lampung facility or if the outcome of such dispute is unfavorable to the partnership, it could have a “material adverse impact on its business, results of operations, financial condition and ability to pay distributions to unitholders,” it said.