Data as at: 23/05/2024

Gearing

Gearing policy

The Company does not intend to employ any long-term or structural borrowings, save in limited circumstances, such as, temporarily, on acquiring vessel owning entities which are leveraged with debt and prior to the post-acquisition repayment of such debt. The Company does, however, expect to utilise short term borrowing, including but not limited to the Revolving Credit Facility, which the Group has entered into to assist with the acquisition of vessels, and the repayment of debt on certain vessels.

Borrowing limits

At the maximum draw down under the New Facility, the Company’s borrowings would represent just under 40% of its Gross Assets. Accordingly, in order to facilitate the Proposed Acquisition, it is also proposed that the Company would increase its current gearing limit within its Investment Policy to 40% of gross assets on an exceptional basis, with a commitment to bring gearing back within the current limit of 25% of gross assets within 18 months of the entry into of such facility through a combination of vessel sales and cash generation.

Ways in which investment companies can magnify income and capital returns, but which can also magnify losses.

At its simplest, gearing means borrowing money to buy more assets in the hope the company makes enough profit to pay back the debt and interest and leave something extra for shareholders.

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how gearing works table

However, if the investment portfolio doesn’t perform well, gearing can increase losses. The more an investment company gears, the higher the risk.

Investment companies can usually borrow at lower rates of interest than you’d get as an individual. They also have flexible ways to borrow – for example they might get an ordinary bank loan or, for split capital investment companies, issue different classes of share.

Not all investment companies use gearing, and most use relatively low levels of gearing.

An indication of the maximum and minimum levels that the company would expect to be geared in normal market conditions.

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