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Global Ship Amends Credit, Suspends Dividends

NEW YORK (AP) ¿ Global Ship Lease Inc. said Friday it has amended its $800 million credit facility to waive a loan-to-value restriction until April 2011 and will suspend dividends.

Shares of the Marshall Islands-incorporated company fell 22 cents, or 10.5 percent, to $1.88 in morning trading.

Global Ship said it amended the credit facility to waive a loan-to-value covenant up to and including November 2010. The company said it would be able to borrow enough money to buy the CMA CGM Berlioz, a container ship scheduled for delivery later this month, and cancel undrawn commitments of about $200 million.

Global Ship said it will also suspend dividends to common shareholders and use cash flow to prepay borrowings under the credit facility. The company said it could resume dividends after loan-to-value is at or below 75 percent, when prepayment of borrowings would be fixed at $10 million per quarter.

Global Ship paid a fourth-quarter dividend of 23 cents per share in March, but in April announced it would suspend its first-quarter dividend.

The company said it also agreed to defer redemption of $48 million in preferred shares it holds until the credit facility matures in 2016.

Borrowing against the facility will carry interest of the London Interbank Offered Rate, or Libor, plus 3.5 percent through November 2010, and after that a rate of Libor plus 2.5 percent to 3.5 percent, depending on the loan-to-value ratio.
Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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