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New York IPO candidate Dynagas LNG in loan breach

New York IPO candidate Dynagas LNG in loan breach
Dynagas LNG Partners has filed papers for a $150m initial public offering (IPO) on the NASDAQ exchange revealing that its accountants have "expressed substantial doubt" on its ability to continue as a going concern.

The listing hinges on a proposed $262m senior secured revolving credit facility with an affiliate of Credit Suisse, which will be used alongside IPO earnings to repay all outstanding debts, including loans attached to the three-strong initial fleet.

The company is currently in breach of minimum liquidity requirements on the credit facility related to the vessel Ob River, and according to the firm's SEC filing, "our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern."

"As of June 30, 2013 and December 31, 2012, we were in breach of the minimum liquidity requirement relating to our $193m Ob River Credit Facility, which requires us to maintain minimum liquidity of $30m," the IPO filing said.

As of June 30, 2013, Dynagas LNG Partners had restricted cash of $2.8m, down from $6.8m at the start of the year. Total outstanding debt under the three credit agreements totalled $348.2m at the end of September this year, including $43.3m due for repayment within 12 months.

The initial fleet for the listed entity will comprise the LNG carriers Clean Energy, Ob River, and Clean Force, which will be acquired from the company's sponsor Dynagas Holding in exchange for shares.

Built in 2007 and 2008, the 150,000 cu m trio includes two ice classed vessels, of only five LNG carriers with such accreditation currently in the global fleet. The company's initial fleet currently has an average outstanding charter term of 3.6 years.

Dynagas LNG partners will also receive the right to purchase a further seven vessels from Dynagas Holding; three vessels delivered earlier this year which are already on charter, and a further four which are expected to be delivered by Hyundai Heavy Industries in 2014 and 2015. "We intend to increase the size of our fleet by making other acquisitions," Dynagas LNG states in its SEC filing.

Joint book runners on the deal are Credit Suisse, Bank of America Merrill Lynch, Morgan Stanley and Barclays.