VALLIANZ Holdings Limited said its subsidiary, Rawabi Vallianz Offshore Services Limited (RVOS), intends to enter into a refinancing exercise for the bulk of its bank loans amounting up to 1.1 billion Saudi riyal (US$293.3 million).
These loans are currently secured on RVOS' fleet of 20 vessels comprising mainly anchor handling tugs and platform support vessels with an aggregate net book value of about 1.52 billion Saudi riyal.
RVOS is a company incorporated in the Kingdom of Saudi Arabia to provide offshore marine support services. It is 50 per cent owned by Vallianz and 50 per cent by Rawabi Company Holding Limited (RHL), which owns 20.1 per cent stake in Vallianz.
The refinancing will involve the transfer of the vessels by RVOS to Rawabi Vallianz International Company Limited (SPV), a joint venture newly formed between Vallianz and RHL, for a total of US$410 million.
With the transfer, ownership of the vessels and the bank loans will be transferred from RVOS to SPV. RVOS will lease back the vessels from SPV for a term of five years and in return, RVOS will pay to SPV quarterly charter rates sufficient to cover the financing obligations of SPV arising from a sukuk financing.
The group has appointed authorised banks in Saudi Arabia to jointly lead and manage a Saudi riyal-denominated sukuk of up to SAR1.1 billion to refinance the bank loans.
Vallianz said this exercise will result in lower cost to the group, improve the group's cash flow as well as open new avenues of funding through the sukuk financing for its operations in the Middle East.