Australian meat and livestock distributor Wellard said that it has extended ship finance repayment schedules for two of its vessels, the 12,665 GT Ocean Ute and the 33,774 GT Ocean Drover.
The live cattle exporter said in a press note that it has reached a conditional agreement with Ruchira Ships Limited to extend by 24-28 months the repayment schedules for the above mentioned vessel duo until December 2021.
Originally, AUD 20 million was due to be paid between now and December 2019.
Ruchira effectively provides vessel finance on each of these vessels through a sale and leaseback contract. If the agreement becomes unconditional (on Ruchira obtaining board approval), there will no longer be near-term balloon payments due in the first half of FY2020 on the bareboat charter arrangements for these vessels.
A standstill arrangement which includes a waiver of existing defaults has also been reached with Ruchira.
Both Ruchira and the noteholders will waive all existing covenant breaches, further improving Wellard’s compliance profile and its ongoing financial restructure is further advanced, with lower monthly repayment obligations and improved cashflow.
Wellard Executive Chairman, John Klepec said “Wellard is pleased to have had the ongoing cooperation of Ruchira to achieve these arrangements. They represent further evidence of progress in our financial restructure, and provide a clear path forward for the company.”
“Immediate and significant cash flow benefits will result from lowering the amortization payments and deferring until December 2021 the requirement to buy back the M/V Ocean Drover and M/V Ocean Ute.”
The M/V Ocean Ute and M/V Ocean Drover are owned by Ruchira and leased back to Niuyang Express Pte Ltd (Niuyang P/L) and Ocean Drover Pte Ltd (Drover P/L) respectively, both of which are wholly owned Wellard subsidiaries.