GMS looks to the future with hope as it strikes a multimillion-dollar bank deal for debt refinancing

UAE-based Gulf Marine Services (GMS), a provider of self-propelled and self-elevating support vessels for the offshore oil, gas, and renewables sector, has sealed a deal with three banks to refinance its bank debt.

The facility consisting of a term loan in United Arab Emirates Dirhams (AED) equivalent to $250 million and a working capital facility in AED equivalent to $50 million is to be provided by First Abu Dhabi Bank, Commercial Bank of Dubai, and HSBC Bank, each with equal participation in both financial instruments.

The loan is set to be repaid over five years from the agreement date, with 80% of the term loan amortized quarterly throughout the period with a 20% balloon payment. GMS expects the exposure to the AED to be hedged in full.

GMS Executive Chairman, Mansour Al Alami, noted: “As we have made an early settlement towards our debt last week, our current net debt is $234 million, down from $267.3 million as of December 31st, 2023. GMS continues to monitor the positive changes to its shareholders register. We welcome our  new investors and are pleased to see institutions showing increasing interest, higher than we’ve been seeing in a while.

“The deal allows us to plan for improving shareholders value by investment in growth and for shareholders rewards by reducing restrictions on dividend payment and share buyback. GMS will look to add opportunistically and on favorable terms assets that could have an immediate impact on building the backlog and the profitability.”

Furthermore, the GMS board approved a dividend policy allocating 20%–30% of annual adjusted net profit to distributions to shareholders in the forms of dividends and potentially share buyback, subject to meeting all bank covenants and other conditions.

The UAE player also confirmed its plan to keep its adjusted EBITDA guidance for the 12 months ending December 2024 in the $92-100 million range, as first announced in February. In parallel, the firm intends to revisit its EBITDA guidance for 2025 later this year.

Alex Aclimandos, GMS Chief Financial Officer, said: “While we maintain our focus on deleveraging the business to levels providing agility, the transaction enables us to achieve shareholder growth. It allows us to lease or to acquire new vessels to fuel the topline, and removes most restrictions related to direct payment to shareholders, either via share buyback or via dividend payment.

“We expect the transaction to close before December 31st, 2024. We will be announcing our reviewed results in approximately 4-5 weeks. As we stand, our preliminary unaudited and unreviewed results show our adjusted first half EBITDA are on track to be within the earlier provided guidance for the year. Our backlog as of August 1st 2024 stands at $414.5 million.”

In June, the firm inked a deal for the second phase of a four-year contract for one of its vessels in the Middle East. While neither the client’s nor the vessel’s name has been disclosed, the firm shared that its backlog amounted to $431.2 million as of June 1, 2024. The contract for the first phase was closed in March.