REG - Harland & Wolff - New Debt Facility

Harland & Wolff groupAnnouncement

09/03/2022 07:00

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RNS Number : 1599E  Harland & Wolff Group Holdings PLC  09 March 2022

09 March 2022

 

Harland & Wolff Group Holdings plc

("Harland & Wolff" or the "Company")

Announcement of $70 million Green Corporate Debt Facility

 

Harland & Wolff Group Holdings plc (AIM: HARL), the UK-quoted company
focused on strategic infrastructure projects and physical asset lifecycle
management, is pleased to announce that it has entered into a group-wide $70
million Green Term Loan Facility (the "Facility") with affiliates of
Riverstone Credit Partners, LLC ("RCP") , a dedicated credit investment
platform managed by Riverstone Holdings LLC ("Riverstone") and focused on
entities engaged in building infrastructure and providing infrastructure
services to generate, transport, store and distribute both renewable and
conventional sources of energy, as well as entities focused on or otherwise
engaged in the energy transition from fossil-based, to a zero-carbon economy.
The Facility will be used to support growth in the business and supplement the
Company's working capital requirements.

 

The Facility will be split into two tranches:

·      A committed facility of $35 million

·      An uncommitted accordion facility of up to $35 million

 

The Facility matures on 09 September 2023 and will attract an interest rate of
the published 90 day Secured Overnight Financing Rate (the "SOFR") plus 9% per
annum, with the floor of the SOFR set at 1%. The Company may elect to extend
the maturity date by six months at a time up to three times for a final
maturity date no later than 09 March 2025. These extensions are subject to an
extension fee of 0.50% for the first extension option and 1% for each of the
second and third extension options, in addition to pro forma covenant
compliance and certain other usual and customary conditions.

 

The Facility has been structured as a Green Loan following the Green Loan
Principles published by the LMA, APLMA, and LSTA and a Sustainability-Linked
Loan with performance indicators focused on social responsibility. The Company
is incentivised to upscale its group-wide apprenticeship programme aimed at
the local communities in which Harland & Wolff operates. Harland &
Wolff plans to build on its success to-date and seeks further contracts within
the renewables and "green maritime" sectors, such as fabrication contracts for
offshore wind and hydrogen projects, new vessel builds, retrofits with
sustainability credentials and other such contracts that would promote the UK
Government's agenda to achieving Net Zero by 2050.

 

Proceeds from the Facility will be utilised to fund working capital and CAPEX
associated with the fabrication of wind turbine generator jackets for the NnG
offshore wind project, to fully repay the existing £2 million Asset Backed
Loan ("ABL") at Harland & Wolff (Belfast) Limited, to fund an interest
reserve account, and to pay transaction fees & expenses. The Facility also
includes an uncommitted accordion feature of $35 million, for a total
borrowing capacity of up to $70 million, and may be utilised to fund the
Company's incremental working capital and CAPEX requirements associated with
new contracts.

 

The Company will also grant Riverstone detachable warrants over new ordinary
shares in the Company ("Warrants") as part of this transaction. A total of
10,419,766 Warrants will be issued as part of this transaction. Each warrant
will carry an exercise price of 14.25 pence per share, which is the closing
price of the Company's shares on 08 March 2022, being the latest practicable
date prior to this announcement. The Warrants are exercisable at any time
after the Facility has been put in place but must be exercised before 36
months from today's date.

 

The Facility will be securitised against substantially all the assets of the
Company, including land, property, plant and machinery and receivables.

 

In addition, an agreement has been reached with the vendors of Harland &
Wolff (Appledore) Limited in relation to the outstanding deferred
consideration payable by the Company. Under the terms of the revised payment
schedule, the Company will pay the vendors instalments as follows:

 

·      31 March 2022: £500,000

·      30 June 2022: £500,000

·      25 August 2022: £2.50 million (£2.10 million in cash and £0.40
million in the Company's shares)

·      25 February 2023: £2 million (£1.60 million in cash and £0.40
million in the Company's shares)

 

Until the deferred consideration has been paid in full, Riverstone will take
second charge on the assets of Harland & Wolff (Appledore) Limited with
the current vendors retaining a first charge on the assets.

 

John Wood, Group CEO of Harland & Wolff, comments: "I am delighted to have
entered into this Facility with Riverstone, a significant and much respected
global asset management firm and specialist in our key sectors. The shared
interests of the two groups now present a very real increased growth
opportunity for Harland & Wolff and we are poised for the financial year
2022 to be a transformational one for the Group. Critically, this Facility now
provides Harland & Wolff with the financial resources and flexibility to
not only fast track its existing order book but also prepare itself for
upcoming key contract wins. This is a major milestone for the Group. I look
forward to working very closely with Riverstone in the months ahead and use
this partnership to grow our business across all our sites."

 

Jamie Brodsky, Partner at Riverstone and Co-Head of RCP, said, "we are pleased
to partner with Harland & Wolff on this financing and to support the
Company's continued development. Our capital is best suited backing dynamic
companies pursuing transformational opportunities. Harland & Wolff
combines a mix of highly strategic infrastructure and operational expertise;
and with a strong macro backdrop, the Company is ideally positioned to grow
its core business lines. We are equally as excited about being able to provide
a financing classified as both a Green and Sustainability Linked Loan, with
proceeds primarily used to facilitate the fabrication of offshore wind
development, while simultaneously having a positive impact on the local labour
force and communities involved."

 

This announcement contains inside information.

For further information, please visit www.harland-wolff.com
(http://www.harland-wolff.com/)  or contact:

 

 Harland & Wolff Group Holdings plc                                        +44 (0)20 3900 2122

 John Wood, Chief Executive Officer                                        investor@harland-wolff.com (mailto:investor@harland-wolff.com)

 Seena Shah, Head of Marketing & Communications                            media@harland-wolff.com (mailto:media@harland-wolff.com)

 Cenkos Securities plc (Nominated Adviser & Broker)                        +44 (0)20 7397 8900

 Stephen Keys / Callum Davidson / Dan Hodkinson (Corporate Finance)

 Michael Johnson (Sales)

 

About Harland & Wolff

Harland & Wolff is a multisite fabrication company, operating in the
maritime and offshore industry through five markets: commercial, cruise and
ferry, defence, energy and renewables and six services: technical services,
fabrication and construction, decommissioning, repair and maintenance,
in-service support and conversion.

 

Its Belfast yard is one of Europe's largest heavy engineering facilities,
with deep water access, two of Europe's largest drydocks, ample quayside and
vast fabrication halls. As a result of the acquisition of Harland & Wolff
(Appledore) in August 2020, the company has been able to capitalise on
opportunities at both ends of the ship-repair and shipbuilding markets where
there will be significant demand.

 

In February 2021, the company acquired the assets of two Scottish-based yards
along the east and west coasts. Now known as Harland & Wolff (Methil) and
Harland & Wolff (Arnish), these facilities will focus on fabrication work
within the renewables, energy and defence sectors.

 

In addition to Harland & Wolff, it owns the Islandmagee gas storage
project, which is capable of providing 25% of the UK's natural gas storage
capacity and which would benefit the Northern Irish economy as a whole when
completed.

 

About Riverstone

Founded in 2000, Riverstone is an investment firm focused on executing private
equity and credit investments in energy, power, decarbonization and
infrastructure. To date, the Firm has raised approximately $43 billion of
capital, which it has deployed across its platform to over 200 portfolio
companies since inception.

 

RCP is the dedicated credit investment platform of Riverstone. Since
inception, RCP has committed approximately $4.6 billion of capital to over 60
portfolio companies. In addition to its two institutional credit funds, RCP
manages Riverstone Credit Opportunities Income Plc, a closed-ended investment
company listed on the London Stock Exchange under the symbol RCOI.

 

For more information about Riverstone and RCP, please visit
www.riverstonellc.com (http://www.riverstonellc.com) . For more information on
RCOI, please visit www.riverstonecoi.com (http://www.riverstonecoi.com) .

 

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