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U.S. Shipping Lowers Rates

14 May 2004

U.S. Shipping, a portfolio company of Sterling Investment Partners, has completed a new $225 million credit facility to purchase a vessel from Exxon Mobil for $33 million and refinance existing debt.

U.S. Shipping, a portfolio company of Sterling Investment Partners, has completed a new $225 million credit facility to purchase a vessel from Exxon Mobil for $33 million and refinance existing debt. The new credit, led by CIBC World Markets, will also enable the refined oil transportation company to increase cash reserves for future growth purposes. "The facility lowered our cost of capital by consolidating our debt and has allowed us to have available cash for future expansion," said Al Bergeron, U.S. Shipping's cfo.

The new loan comprises a $200 million term loan and $25 million revolver priced at LIBOR plus 2 1/4% and replaces a previous $130 million credit facility priced at LIBOR plus 3 1/4 %. "We felt that the market right now was very attractive," said Bergeron. The company also feared higher rates in the future, he added. In addition to the cut in pricing, the new deal also offers a less restrictive covenant package, according to Bergeron. The previous facility was also led by CIBC. U.S. Shipping decided to stick with CIBC because the company was pleased with the bank's service, he noted.

Along with the refinancing, the new facility will be used to retire a $29 million 9-12% note from Amerada Hess Corp. due in 2011. The new loan, will also pay down a $15 million loan from Bank of Tokyo-Mitsubishi, which financed the purchase of a vessel in 2003.

14 May 2004

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