Quintana Maritime Limited has agreed to a transaction with Glitnir Finance AS, subject to negotiation of final documentation and satisfaction of closing conditions, involving the sale and lease-back of seven of its oldest Panamax ships: Coal Glory
, built in 1995, and Iron Man, Linda Leah
, Barbara, Coal Age, Fearless I, and King Coal, all built in 1997. The sale and lease-back transaction is expected to produce net proceeds of approximately $250 million, and the Company expects to operate the ships for eight years, paying an average daily bareboat charter rate of approximately $12,700 for each vessel. The transaction is expected to close before the end of July 2007.
Quintana will retain commercial and technical control of these seven vessels, which will remain in the Company's fleet over the next eight years. If the transaction is completed as currently contemplated, Quintana intends to allocate $185 million of the net proceeds to the repayment of debt outstanding under its revolving credit facility. In connection with this repayment, the Company expects to renegotiate its mandatory annual capital repayments of debt in order to reduce the payments by $9.0 million in the last six months of 2007, $17.0 million in 2008 and $11.5 million each year from 2009 through the maturity of the revolving credit facility in September 2014. Quintana expects to retain the remaining proceeds from the sale and lease-back transaction of approximately $65 million in cash.
The sale transaction is expected to produce a non-operating book loss of approximately $10.0 million, after write-offs of unamortized dry docking costs and expenses of approximately $7.0 million, which will be amortized over the eight-year lives of the bareboat charters.