8-K
International Seaways, Inc. (INSW)
United
States
Securities
and Exchange Commission
Washington, D.C. 20549
FORM
8-K
CURRENT
REPORT
**Pursuantto Section 13 OR 15(**d) of the
Securities
Exchange Act of 1934
May 25, 2022 (May 20, 2022)
Date of report (Date of earliest event reported)
INTERNATIONAL
SEAWAYS, INC.
(Exact name of Registrant as Specified in Its Charter)
| 1-37836-1 | |
|---|---|
| Commission File Number | |
| Marshall Islands | 98-0467117 |
| --- | --- |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
600 Third Avenue,39th Floor
New York, New York 10016
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number,
Including Area Code: (212) 578-1600
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the<br>Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting material pursuant to Rule 14a-12 under the<br>Exchange Act (17 CFR 240.14a-12) |
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| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b)<br>under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c)<br>under the Exchange Act (17 CFR 240.13e-4(c)) |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Symbol | Name of each exchange on which registered |
|---|---|---|
| Common Stock (no par value) | INSW | New York Stock Exchange |
| 8.5% Senior Notes due 2023 | INSW - PA | New York Stock Exchange |
| Rights to Purchase Common Stock | N/A true | New York Stock Exchange |
Section1 – Registrant’s Business and Operations
| Item 1.01 | Entryinto a Material Definitive Agreement. |
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On May 20, 2022, International Seaways, Inc. (“INSW” or the “Company”), International Seaways Operating Corporation (the “Borrower”) and certain of their subsidiaries entered into a credit agreement (the “Credit Agreement”) comprising $750 million of secured debt facilities (the “Facilities”) with Nordea Bank Abp, New York Branch (“Nordea”), Crédit Agricole Corporate & Investment Bank (“CA-CIB”), BNP Paribas, DNB Markets Inc. and Skandinaviska Enskilda Banken AB (PUBL) (or their respective affiliates), as mandated lead arrangers and bookrunners; Danish Ship Finance A/S and ING Bank N.V., London Branch (or their respective affiliates), as mandated lead arrangers; and National Australia Bank Limited, as co-arranger. Nordea is acting as administrative agent, collateral agent and security trustee under the Credit Agreement, and CA-CIB is acting as sustainability coordinator. Capitalized terms used in this paragraph and elsewhere not otherwise defined herein shall have the meanings set forth in the Credit Agreement.
The facilities consist of (i) a 5-year senior secured term loan facility in an aggregate principal amount of $530 million (the “Term Loan Facility”) and (ii) a 5-year revolving credit facility in an aggregate principal amount of $220 million (the “Revolving Facility”and, together with the Term Loan Facility, the “Facilities”). The Term Loan Facility contains an uncommitted accordion feature whereby, for a period of up to 24 months following the closing date, the amount of the loan thereunder may be increased up to an additional incremental $250 million (in increments of at least $10 million) for the acquisition of Additional Vessels, subject to certain conditions.
The Term Loan Facility and the Revolving Facility are secured by a first lien on 55 of the Company’s vessels (the “Collateral Vessels”), along with their earnings, insurances and certain other assets. In addition, both facilities are secured by liens on certain additional assets of the Borrower.
On May 24, 2022, the available amount of $530 million under the Term Loan Facility was drawn in full, and $70 million of the $220 million available under the Revolving Facility was also drawn. Those proceeds, together with available cash, were used (i) to repay the $163 million outstanding principal balance under the $390 Million Facilities (defined below in Item 1.02); (ii) to repay the $284 million outstanding principal balance under the $525 Million Facilities (defined below in Item 1.02); (iii) to repay the $128 million outstanding principal balance under the $360 Million Facilities (defined below in Item 1.02); and (iv) to pay certain expenses related to the refinancing, including certain structuring and arrangement fees, legal and administrative fees.
Interest on the Facilities is calculated based upon Adjusted Term SOFR plus the Applicable Margin (each as defined in the Credit Agreement). The Applicable Margin is 2.40%. The Facilities also include a sustainability-linked pricing mechanism. The adjustment in pricing will be linked to three factors:
| · | a Fleet<br>Sustainability Score Target, reflecting the carbon efficiency of the INSW fleet as it relates to reductions in CO2 emissions<br>year-over-year, such that it aligns with the International Maritime Organization’s 50% industry reduction target in GHG emissions<br>by 2050, to be calculated in a manner consistent with the de-carbonization trajectory outlined in the Poseidon Principles (the global<br>framework by which financial institutions can assess the climate alignment of their ship finance portfolios relative to established de-carbonization<br>trajectories); |
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| · | a Sustainability-Linked<br>Investment Target, reflecting targeted spending of $3 million per annum on investments in energy efficiency improvements, decarbonization,<br>and other environmental, social and corporate governance-related initiatives; and |
| --- | --- |
| · | a Lost<br>Time Incident Frequency Target, reflecting performance against a Lost Time Incident Frequency average published by Intertanko. |
| --- | --- |
The Company will be required to deliver annually, commencing in July 2023, a sustainability certificate for the preceding calendar year setting out the sustainability-related calculations required under the Credit Agreement. If INSW achieves all of the targets set out in the Credit Agreement, the Applicable Margin will be decreased by 0.05% per annum, while if INSW fails to achieves any of the targets set out in the Credit Agreement, the Applicable Margin will be increased by that same amount (but in no case will any such adjustment result in the Applicable Margin being increased or decreased from the otherwise-applicable Applicable Margin by more than 0.05% per annum in the aggregate).
The Term Loan Facility amortizes in 19 quarterly installments of approximately $30.6 million (other than the final payment of $9.8 million) commencing November 20, 2022 . The maturity date of each of the Revolving Facility and the Term Loan Facility is May 20, 2027. The maturity dates for the Facilities are subject to acceleration upon the occurrence of certain events (as described in the Credit Agreement).
The Facilities contain customary representations, warranties, restrictions and covenants applicable to the Company, the Borrower and the subsidiary guarantors (and in certain cases, other subsidiaries), including financial covenants that are consistent with existing financial covenants in the $390 Million Facilities and require the Company (i) to maintain a minimum liquidity level of the greater of $50 million and 5% of the Company’s Consolidated Indebtedness; (ii) to ensure the Company’s and its consolidated subsidiaries’ Maximum Leverage Ratio will not exceed 0.60 to 1.00 at any time; (iii) to ensure that Current Assets exceeds Current Liabilities (which is defined to exclude the current potion of Consolidated Indebtedness); and (iv) to ensure the aggregate Fair Market Value of the Collateral Vessels will not be less than 135% of the aggregate outstanding principal amount of the Term Loans and Revolving Loans.
| Item 1.02 | Terminationof a Material Definitive Agreement. |
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On May 24, 2022, the following events took place:
| · | the<br>previously disclosed secured term loan and revolver facilities, dated as of January 23, 2020 (as amended from time to time, the “$390Million Facilities”), among INSW (as guarantor), the Borrower, certain INSW subsidiaries, Nordea, as administrative agent,<br>and other lenders party thereto, were terminated in accordance with their terms; |
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| · | the previously disclosed secured term loan and<br>revolver facilities, dated as of December 23, 2019 (as amended from time to time, the “$525 Million Facilities”), among<br>Diamond S Shipping Inc. (“DSSI”), certain DSSI subsidiaries, Nordea, as administrative agent, and other lenders party<br>thereto, and the related guarantee thereof by INSW, were terminated in accordance with their terms; and |
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| · | the previously disclosed secured term loan and<br>revolver facilities, dated as of March 27, 2019 (as amended from time to time, the “$360 Million Facilities” and, together<br>with the $390 Million Facilities and the $525 Million Facilities, the “Prior Facilities”), among DSSI, certain DSSI<br>subsidiaries, Nordea, as administrative agent, and other lenders party thereto, and the related guarantee thereof by INSW, were terminated<br>in accordance with their terms. |
| --- | --- |
Section 2 – Financial Information
| Item 2.03 | Creationof a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
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The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03 as if fully set forth herein. In addition, in connection with its entry into the Credit Agreement, on May 20, 2022, the Company also terminated its existing interest rate hedging arrangements in respect of the Prior Facilities. The Company, the Borrower and their subsidiaries intend to enter into new hedging arrangements in connection with the Facilities.
Section 7 – Regulation FD
| Item 7.01 | RegulationFD Disclosure. |
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On May 25, 2022, the Company issued a press release announcing the entry into the Credit Agreement and the other transactions described in Items 1.01 and 1.02 above, a copy of which is attached hereto as Exhibit 99.1. The information contained in Exhibit 99.1 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Section 9 – Financial Statementsand Exhibits
| Item 9.01 | FinancialStatements and Exhibits. |
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(d) Exhibits
Pursuant to General Instruction B.2 of Form 8-K, the following exhibit is furnished with this Form 8-K.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release dated May 25, 2022. |
| 104 | Cover<br>Page Interactive Data File (embedded within the Inline XBRL Document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| INTERNATIONAL SEAWAYS, INC. | |||
|---|---|---|---|
| (Registrant) | |||
| Date: May 25, 2022 | By | /s/ James D. Small III | |
| Name: | James D. Small III | ||
| Title: | Chief Administrative Officer,<br> Senior Vice President, Secretary and General Counsel |
EXHIBIT
INDEX
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release dated May 25, 2022. |
Exhibit 99.1
INTERNATIONAL SEAWAYSANNOUNCES REFINANCING AND CLOSING OF
NEW SENIOR SECURED SUSTAINABILITY-LINKEDCREDIT FACILITY
New York, NY – May 25, 2022 – International Seaways, Inc. (NYSE: INSW) (the “Company” or “INSW”), one of the largest tanker companies worldwide providing energy transportation services for crude oil and petroleum products, today announced that it has closed on a new senior secured credit facility (the “Facility”) with an aggregate capacity of $750 million, composed of a term loan of $530 million and a revolving credit facility of $220 million, of which $70 million was drawn on May 24, 2022. The Facility matures in May 2027.
The proceeds from the Facility were used to repay three existing senior debt facilities aggregating $575 million at the time of closing.
Jeff Pribor, the Company’s CFO, commented, “We are pleased to close on this new facility, which delivers a number of financial benefits to INSW. The Facility extends the maturity profile of our senior debt by more than two years, reduces our average interest rate on senior debt by about 15 bps, saves approximately $1 million on quarterly amortization payments, and saves approximately $60 million in 2022 through the updated schedule of mandatory repayments. We are proud to partner with our top-tier banking group and we’d like to thank them for their continued support.”
The Facility’s covenant package is similar to the existing facilities and contains enhanced sustainability-linked features. The feature includes the same key performance indicator outlined in the Poseidon Principles based on a decarbonization trajectory and two other indicators that monitor green spending, aimed to improve energy efficiency and reduce emissions, as well as lost time incident frequency rates.
“International Seaways remains committed to staying at the forefront of ESG,” added Lois Zabrocky, President and CEO commenting on the Company’s dedication to environmental, social and governance initiatives. “Our enhancement of the sustainability-linked features in this facility demonstrates our continued leadership in advancing initiatives that improve the environment and the lives of our seafarers.”
Nordea Bank Abp, New York Branch (“Nordea”), Crédit Agricole Corporate & Investment Bank (“Crédit Agricole”), DNB Markets, Inc, Skandinaviska Enskilda Banken AB (PUBL) and BNP Paribas acted as Mandated Lead Arrangers and Bookrunners. Nordea acted as Administrative Agent. Crédit Agricole acted as Sustainability Coordinator. Danish Ship Finance A/S, ING Bank N.V., London Branch and National Australia Bank Limited are also lenders under the Facility.
About International Seaways, Inc.
International Seaways, Inc. (NYSE: INSW) is one of the largest tanker companies worldwide providing energy transportation services for crude oil and petroleum products in International Flag markets. International Seaways owns and operates a fleet of 80 vessels, including 13 VLCCs (including three dual-fuel, LNG-powered newbuilds to be delivered in the first quarter of 2023), 13 Suezmaxes, five Aframaxes/LR2s, eight Panamaxes/LR1s, 39 MR tankers and two Handysize tankers. International Seaways has an experienced team committed to the very best operating practices and the highest levels of customer service and operational efficiency. International Seaways is headquartered in New York City, NY. Additional information is available at https://www.intlseas.com.
Forward-Looking Statements
This release contains forward-looking statements. In addition, the Company may make or approve certain statements in future filings with the U.S. Securities and Exchange Commission (SEC), in press releases, or in oral or written presentations by representatives of the Company. All statements other than statements of historical facts should be considered forward-looking statements. These matters or statements may relate to the consequences of the Company’s merger with Diamond S and plans to issue dividends, its prospects, including statements regarding vessel acquisitions, expected synergies, trends in the tanker markets, and possibilities of strategic alliances and investments. Forward-looking statements are based on the Company’s current plans, estimates and projections, and are subject to change based on a number of factors. Investors should carefully consider the risk factors outlined in more detail in the Annual Report on Form 10-K for 2021 for the Company, the Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, and in similar sections of other filings made by the Company with the SEC from time to time. The Company assumes no obligation to update or revise any forward-looking statements. Forward-looking statements and written and oral forward-looking statements attributable to the Company or its representatives after the date of this release are qualified in their entirety by the cautionary statements contained in this paragraph and in other reports previously or hereafter filed by the Company with the SEC.
Investor Relations & Media:
Tom Trovato, International Seaways, Inc.
(212) 578-1602
ttrovato@intlseas.com
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