October 14, 2005
Grain cargo for Maritrans tanker
Maritrans (NYSE:TUG) says it has booked a grain cargo voyage to Sri Lanka for its tanker ALLEGIANCE.
The ALLEGIANCE is a single-hulled tanker that, in accordance with the Oil Pollution Act of 1990, will be removed from oil-carrying service as of December 2005.
Maritrans has been considering alternative cargoes, including grain, MTBE and ethanol, in an effort to extend the life and contribution from the tanker. This voyage is expected to earn an accretive rate in excess of the vessel's breakeven costs.
The ALLEGIANCE has been engaged to carry grain under a U.S. government charter in support of U.S. foreign aid relief efforts. The ALLEGIANCE will load in November and is scheduled to return to the U.S. by mid-January.
Maritrans also announced the completion of an agreement with its existing lenders, which amends its $40 million revolving credit facility. The amended facility allows for $60 million of borrowing capacity, with the ability to increase the amount to $120 million through additional bank commitments in the future. The agreement also extends the term of the commitments under the facility to October 2010, from January 2007.
Citizens Bank of Pennsylvania led the transaction and was joined by Bank of America, N.A., Hibernia National Bank and Sun Trust Bank, all of whom were participants in the previous facility.
Jonathan Whitworth, Chief Executive Officer of Maritrans, commented, "We appreciate the ongoing support from our banking partners, highlighting the confidence they place in Maritrans and our strategy. The amended facility provides Maritrans with increased financial flexibility as we continue to position the company for growth and enhanced industry leadership."
The amended facility provides more favorable interest rates and covenants that are less restrictive than the previous credit facility. The interest rate under the amended credit facility will be at prime or LIBOR plus an applicable margin that varies between 75 and 150 basis points, based on the company's financial performance. The facility continues to be secured by first preferred ship mortgages on certain fleet vessels.