Product tanker owner and operator Hafnia Limited has refinanced two existing facilities with a Poseidon Principles-aligned loan from 10 banks that is structured to adjust the loan margin depending on the company’s improvement in emissions-related key performance indicators
Hafnia Limited has raised its ESG profile and sent a clear signal to investors and clients on its commitment to decarbonisation by linking a loan to its fleet’s emissions performance.
Hafnia Limited had an existing US$676M facility becoming due in March 2022 (consisting of a US$576M loan and a US$100M revolving credit facility) and a US$128M facility due in December 2023.
These have been refinanced through a seven-year US$374M sustainability-linked senior secured term loan and revolving credit facility (SLL) with a syndicate of 10 banks. The syndicate includes ABN AMRO, BNP Paribas, DBS Bank, ING Bank, IYO Bank, Oversea-Chinese Banking Corporation (OCBC Bank), Skandinaviska Enskilda Banken, Société Générale, Standard Chartered Bank, and United Overseas Bank, all of which acted as mandated lead arrangers. Standard Chartered Bank also acted as facility co-ordinator and agent.
The facility has an annual sustainability margin adjustment mechanism that depends on Hafnia’s continuous improvement in emissions-related key performance indicators (KPIs). These KPIs include IMO’s decarbonisation target and are aligned with the Poseidon Principles.
Hafnia has engaged Sustainalytics, a global leader in ESG data and research, to confirm that the SLL’s structure will support Hafnia’s sustainability strategy. ING Bank and OCBC Bank acted as joint sustainability co-ordinators for the SLL.
This is Hafnia’s first syndicated sustainability-linked facility and one of the largest of its kind in the shipping sector.
Hafnia chief financial officer Perry van Echtelt said “We greatly appreciate the strong support from our banks and are proud to collaborate with them on shipping’s decarbonisation. This facility demonstrates Hafnia’s access to highly competitive funding and enduring commitment to decarbonising shipping.”
Standard Chartered Bank global head of shipping finance Abhishek Pandey said, “We are very proud to play an integral role in this sustainability-linked ship financing for Hafnia, which reinforces our commitment to our client’s sustainability journey.”
OCBC Bank’s head of global corporate banking Elaine Lam said, “We are delighted to support Hafnia on its maiden sustainability-linked loan as joint sustainability co-ordinator. Shipping is vital to global economic growth, so it is heartening to see Hafnia commit to decarbonising its fleet by harnessing new technologies and improving efficiency. We believe this milestone transaction will inspire more peers to create a sustainable and low-carbon shipping industry. Sustainable finance, such as this SLL, is critical to accelerate the industry’s transition.”
“ING shares Hafnia’s vision for a low-carbon future as a Poseidon Principles signatory. As a leading bank in both sustainable finance and shipping finance, we are grateful for the opportunity to help Hafnia on its journey towards a greener future with its first sustainability-linked loan, together with a broad syndicate of lenders,” said ING Wholesale Banking chief executive for Asia Pacific Remko Witteveen.
Hafnia has moved to switch to alternative marine fuels. It has two LNG dual-fuel LR2 tankers on order at Guangzhou Shipyard International in China as part of its Vista joint venture with CSSC Shipping and has invested in a methanol production facility in the port of Kalama in the US state of Washington.
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