When Global Container Terminals Inc. acquired its terminals at the height of the market in 2006, the highly-leveraged transaction was premised on the idea that container trade growth would reduce its debt ratio.
“The acquisition plan and credit facilities did not provide a contingency for the worst economic recession since the 1930s,” said Lori Janson, GCT’s director of corporate communications.
That problem would fall squarely on the plate of Brian Pettipas, the company’s CFO since 2007. Watching the high volume decline, he came to a simple and harrowing conclusion: GCT was on a trajectory to default on its credit facilities by June 2010.
Faced with the options of refinancing US$1.88 billion in debt – a virtual impossibility, given the meltdown in the debt markets – or seeking syndicate support to amend credit facilities, Pettipas honed in on the latter option.
He proceeded to lead a 14-month process to amend the company’s debt facilities with an international syndicate of 40 banks, many of which were suffering financially and looking to exit the port sector.
“What resulted was a successful credit amendment in which the shareholder reconfirmed confidence in the business by providing additional capital, the cost of debt was held in check, financial covenants were relaxed, and the banking syndicate agreed to release significant real estate collateral so that GCT could enter into the strategic sale/leaseback transaction with the Port Authority of New York and New Jersey,” Janson said.
