As announced during its Full Year 2018 Earnings, SBM Offshore signed a new five-year sustainable Revolving Credit Facility* (RCF) agreement on February 13, 2019. This is the first RCF linked to sustainability performance in the oil and gas services industry. The newly announced RCF replaces the previous US$1bn RCF and includes an uncommitted option to increase borrowing by a further US$0.5bn. The RCF may be used to finance engineering, procurement and construction (EPC) activities, working capital, bridge for long-term financing needs, and/or general corporate purposes.
What sets this RCF apart from comparable RCF facilities is the linkage between the Company’s sustainability performance and the interest margin on the RCF, and that it has been structured without a restrictive leverage covenant to allow the Company more flexibility in matching its funding needs with its business model.
The sustainability performance adjustment allows for the RCF’s margin to increase or decrease depending on the Company’s environmental, social and governance (ESG) performance as measured by Sustainalytics**.
In the new RCF, the leverage covenant of the former RCF has been replaced by an innovative Lease Backlog Cover Ratio (LBCR). The LBCR links availability of the RCF to the future contracted cash flows of a defined portfolio of operational FPSOs in the Company’s backlog.
Further details about the RCF can be found in the Annual Report 2018
The Company was able to structure this unique and innovative RCF with the continued support of 11 leading international banks who have provided the RCF. ING Bank acted as coordinator, documentation agent and facility agent, Rabobank acted as sustainability coordinator and ABN AMRO Bank and MUFG Bank acted as modelling banks.
*An RCF is a mechanism by which the Company has access to a committed credit facility on relatively short notice and is able to utilize the funds for various purposes.
** Sustainalytics, an independent specialist, is a leading, global provider to investors of environmental, social and governance (ESG) research and ratings.