Board Of Directors' Report At TORM's Extraordinary General Meeting On 9 January 2013
New financial covenants
New financial covenants will apply uniformly across the bank debt facilities and will include:
- Minimum liquidity: Cash plus the available part of the new USD 100 million working capital facility must exceed USD 50 million to be tested from 31 December 2012. This will later be adjusted to a cash requirement of USD 30 million by 30 September 2014 and USD 40 million by 31 March 2015.
- Loan-to-value ratio: A senior loan tranche of USD 1,020 million has been introduced out of the total bank debt of USD 1,793 million as of 30 June 2012. The senior tranche must have an initial agreed ratio of loan to TORM's fleet value based on broker valuations (excl. vessels under finance leases) at 85% to be confirmed from 30 June 2013. This will gradually be stepped down to 65% by 30 June 2016. The remaining bank debt of USD 773 million has been divided into two additional debt tranches, both with collateral in the Company's fleet.
- Consolidated total debt to EBITDA: Initial agreed ratio of a maximum of 30:1 to be tested from 30 June 2013, gradually stepped down to a 6:1 ratio by 30 June 2016.
- Interest cover ratio: Agreed EBITDA to interest ratio of initially a minimum of 1.4x by 30 June 2014, gradually stepped up to 2.5x by 31 December 2015.
Additional material covenants
The terms of the credit facilities will include a catalogue of additional covenants, including amongst others:
- A change-of-control provision with a threshold of 25% of shares or voting rights.
- No issuance of new shares or dividend distribution without consent from the banks.
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