Matson Navigation Co. has entered a series of debt financing agreements as part of a previously announced plan to separate the company from Alexander & Baldwin’s Hawaii-based land businesses.
The division of Alexander & Baldwin into two publicly traded companies is expected to be completed by early in the third quarter, Alexander & Baldwin said.
“Matson will be well capitalized, with a strong balance sheet and credit profile, thereby providing stability and the financial flexibility to pursue future growth opportunities,” said Matson President Matt Cox.
Joel Wine, senior vice president, chief financial officer and treasurer of Alexander & Baldwin Holdings, Inc. and senior vice president and chief financial officer of Matson Navigation, said Matson “has achieved successful long-term debt financing agreements at a time when long-term rates are near historic lows.”
A new $375 million unsecured revolving senior credit facility with a syndicate of banks has an option to increase the facility's capacity by another $75 million. The facility has a five-year term maturing in June 2017, with an initial stated interest rate of London Interbank Offered Rate (LIBOR) plus 1.5 percent. Matson expects approximately $75 million will be drawn from the new credit facility immediately after the separation.
Matson will issue new senior unsecured term notes totaling $170 million with a weighted average coupon of 3.97 percent. The notes have final maturities of 11 years, 15 years and 20 years, with an overall weighted average life of approximately 9.3 years.
The initial draw on the $375 million unsecured revolving senior credit facility and the proceeds from the $170 million of new senior unsecured notes will be used to repay an existing revolver, to fund a contribution to Alexander & Baldwin as part of separation and to fund general corporate purposes of Matson.
In addition, $56 million in privately placed notes secured by Matson’s Manulani vessel will be assigned to Matson. There is no change to Matson Navigation's existing $74.8 million of Title XI secured debt.
"With the exception of the existing Title XI debt, Matson's debt structure will be unsecured and all long-term debt will be amortizing, which will allow Matson to avoid large bullet debt maturities,” Wine said. “Additionally, the new revolving credit facility will enhance Matson's liquidity profile and provide financial resources to continue to fund our future operational and growth initiatives."