Gulf Navigation Holding, a shipping and shipping company listed on the Dubai Financial Market, announced that it has completed the repayment of a $2.7 million loan on one of its vessels.
The loan was financed by ‘Rasmala’ at an interest rate of 12%, according to a report by WAM. Thus, after the discharge of the mortgage, the entire proceeds of this vessel will be paid to the company without any deductions, which will improve its profitability and cash flow.
The achievement is a continuation of the company’s efforts to reduce its financing costs, following its announcement last August that it had refinanced five petrochemical tankers on new preferential terms with a major Chinese lender.
The five-year refinancing agreement was signed at a low interest rate not exceeding 4%, which allowed the company to fully meet all of its obligations to certain lenders and reduce the total cost of loan.
The company further clarified that it was able to reduce funding costs by 40% compared to 2020. In addition, premium costs amounted to AED 35 million ($9.53 million) per year by the end of 2020, and this figure is expected to be reduced to AED 24 million by the end of 2022 and continue to decline to AED 18 million by the end of 2023.
The company’s total debt was AED 433 million at the end of 2020, compared to AED 294 million currently. The company believes that these measures will have a positive impact on its results in the third quarter of this year.
Thanks to the strict measures imposed by the board of directors and its cost control policy, the company now has two ships without any commitment or loan, which is a great achievement, since all its ships have always been mortgaged by lenders in the past.
Currently, the company has reached a stage where it would be able to refinance its assets when needed, or sell ships to replace them with new builds that could win long-term contracts.
Source: Trade Arabia