Financing linked to compliance with sustainability targets.
The new agreement, that reschedules its revolving credit lines with DNB Bank, Rabobank and Santander, will grant additional liquidity to the company for the next five years, and is the first that meets the five characteristics to be recognised as a “Sustainability Linked Loan” by the Loan Market Association (LMA) and the Loan Syndications and Trading Association (LSTA), which require linking margins to compliance with progress on specific sustainability metrics negotiated with creditors.
A statement issued by the company, and attributed to CEO Manual Ossa, explained, “In this new agreement, tranche C for $100 million and tranche D for $35 million are granted for term of five years, with a three-year grace period, two reductions of 10 per cent each at the end of the third and fourth year, and a final amortization at the end of the fifth year for the remaining 80 per cent.”
“The interest rate for the agreed financing facilities C and D is based on Libor rate plus an applicable variable margin, which can fluctuate between 2.25% and 3.7% per annum and is subject to the ratio of net interest-bearing debt to twelve months rolling EBITDA.”
In this new financing, the margin will also be based on compliance with the Sustainability targets established in the same agreement, which include 5 independently certified annual indicators:
(i) the gradual reduction of greenhouse gases;
(ii) the percentage of ASC certified biomass;
(iii) the amount of marine ingredients used in diets per kilo of salmon produced;
(iv) the proportion of non-hazardous solid waste that has been recycled;
(v) the labor accident rate.
Achievement of these Sustainability Objectives will allow Salmones Camanchaca to reduce its financial costs by up to five basis points and contribute to its salmon farming sustainability goals.
This modification of the refinancing agreement will suitably shift the amortization schedule of Salmones Camanchaca, which now extends until November 2026, thus improving the cash flow profile for the next five years.