General Maritime Corp. recently amended its July 2004 credit agreement to allow for greater flexibility in paying quarterly dividends to shareholders. The move was driven by a debt reduction push that that whittled the company's debt to total capital to 33% and debt to EBITDA to one to one. "Very low for a shipping company," Jeffrey Pribor, cfo and v.p said of the debt levels. "We decided to pursue a strategy to utilize our cash generation since we couldn't go paying down debt forever. We decided to additionally use cash to return to shareholders." Pribor said good market conditions and business strategy generated the cash flow to pay down the debt. Revenue in 2004 was $701.3 million, up from $454.5 million in 2003.
Prior to the amendment, the $825 million facility limited dividends to $1 million during each calendar year. Now the potential for quarterly dividends will be based on its EBITDA after net interest expense and a fleet maintenance and renewal reserve. The amendment also allows the company to use up to $50 million of its $600 million revolver for letters of credit.
Oaktree Capital Management has a 25% stake in the company, while Fidelity Investments and Neuberger Berman also have limited investments. Nordea leads the facility that consists of a five-year, $225 million term loan and a five-year, $600 million revolver. Pricing on both tranches is LIBOR plus 1%. Those terms have not changed.
The 2004 loan was a new facility that refinanced old debt. Nordea has been the traditional lender to the company, providing it loans since General Maritime's inception in 1997, Pribor said. Citibank, HSH Nordbank, Dresdner Bank, Bank of Scotland and the Royal Bank of Scotland, were co-arrangers on the 2004 facility (LMW, 7/16).
Looking forward, Pribor said the company, a provider of international seaborne oil transportation services, is going to continue utilizing acquisitions, although he said there is nothing he can comment on now. "We grow by consolidating," he said. "We have, in the history of the company, grown from one ship to 47 ships in eight years and would like to continue that pattern of growth while, through the dividend strategy, allowing shareholders to participate in our profitability."