Havila Kystruten Refinances Ships Because of Russian Sanctions

Norway’s Havila Kystruten reports it has signed term sheets with lenders for refinancing for its fleet of four cruise ships it is building for a new Norwegian coastal cruise service. The company had been forced to seek a new financing agreement after it found itself unwittingly caught in the sanctions placed against Russian-owned financial institutions after the invasion of Ukraine.

Havila had an agreement with divisions of GTLK to finance the construction of four 15,400 gross ton ships being built by the Tersan shipyard in Turkey. The vessels are registered in Norway and operate under Norwegian regulations but are on long-term charters to Havila from GTLK. 

In April, the company encountered problems when the insurance on the first vessel was withdrawn because of the Russian ownership. The Havila Capella was out of service for two months while the company went to court and sought an exemption from the Norwegian government. The shipyard supplied bridge financing so that the company could take delivery of the second cruise ship, Havila Castor.

“It is with great relief to have the refinancing of our ships in place. It has been a demanding period with a lot of uncertainty for the company, employees, and not least our guests. We are happy to have found a solution,” says Bent Martini, CEO of Havila Kystruten. 

He said that the terms provide a total of EUR 370 million and cover payment to Tersan on delivery of the third and four vessels, Havila Polaris and Havila Pollux, as well as redemption of existing debt related to all ships. The redemption of debts to GTLK will take place by a further agreement with the new lenders in accordance with permission obtained from the Norwegian authorities and in compliance with international sanctions regulations.

Havila also announced new delivery dates for the next ships saying that they have also experienced some delays for critical components. The Havila Polaris is now expected to enter service by December 29, 2022, and the Havila Pollux by March 22, 2023.

The four ships are identical in design each powered by a combination of LNG and batteries. In June, the second of the class set a new record operating on a Norwegian fjord on its battery power. The company suffered multiple setbacks and delays after winning a contract from the Norwegian government to split the coastal voyage service with long-time operator Hurtigruten. Havila entered service in December 2021.