Maritrans secured an $85 million credit facility on Nov. 27 to support additional funding needs at lower pricing. Walter Bromfield, treasurer, explained the company tapped the bank debt market to refinance $66 million in debt--a portion of which was a $33 million indenture with a fixed rate of 91/ 4%. By replacing the bonds with floating-rate debt, the company was able to finance its debt at a cheaper rate. The new deal is priced against a grid based on performance beginning at LIBOR plus 41/ 2%. In addition to the bonds, a $33 million revolver was also part of the overall refinancing on the deal. "This was an opportunity to lower the cost while increasing the financing," said Bromfield.
Maritrans is in the middle of a 73-year project to build and operate petroleum transport vessels for U.S. domestic trade. Bromfield said the additional financing will in part go toward adding capacity to the fleet. Despite the tough market conditions, Bromfield says he's happy with the package the company got. "It's an excellent deal," he said.
Mellon Bank is the lead and secured the deal, which did not go out to bid, due to a longstanding relationship with the company. "We had a comfort with each other," Bromfield said. The deal expires in 2006. It breaks down into a $45 million term loan and a $40 million revolver.
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