Tallink gets €61-million loan payment holiday

Tallink CEO Paavo Nõgene.
Tallink CEO Paavo Nõgene. Source: Siim Lõvi/ERR

Estonian shipping line Tallink has received a €61-million payment holiday with its creditors, adding to the €100-million loan it has already obtained from the state. The company says that it is not out of the woods financially yet.

Tallink board chair Paavo Nõgene said that the payment holiday will significantly improve the company's financial situation in the wake of the coronavirus pandemic, but that difficulties have not been overcome.

Tallink also hopes to open two new routes to the islands of Åland/Ahvenanmaa, an autonomous zone belonging to Finland, and Gotland (Sweden), he said.

Nõgene: Loan agreement relief improves liquidity

Nõgene told ERR that, from the beginning, Tallink has been concerned that not only the state should help the company during a crisis.

"We have interacted with all our existing loan partners, asking for a payment holiday this year, which the loan partners have nicely also granted, and this year's payments will be added to the last payments of all loan agreements."

"We have raised additional liquidity of €20 million with Danske Bank. We are about to finish concluding a loan agreement with [state loan authority] KredEx. Operations are currently being carried out by drafting collateral agreements, and the main agreement has been agreed. So news about how Tallink will improve its liquidity will definitely come in the near future, in addition to KredEx," he went on.

Stock exchange confirms loan payments holiday

According to a Tallinn stock exchange announcement, Tallink amended the loan agreements entered into with its banks, and received payment leave.

"The change in repayment schedules will significantly improve Tallink's liquidity position and give the company greater flexibility in maintaining sufficient working capital in a difficult economic environment," the stock exchange said in its statement, ERR's online news in Estonian reports.

Tallink chief: The crisis is far from over

Nõgene noted that on the current basis, Tallink could not say its difficulties have been overcome and that no additional state support is needed.

On May 8, the Estonian government decided to give Tallink a €100 million loan with a three-year term, to be repaid in a lump sum upon maturity, though receiving the loan has been delayed.

Tallink had originally asked for €150 million.

"This crisis is far from over; in the field of tourism this crisis is just beginning to start, and in negotiating this crisis, it will take a very long time for the market to recover. Tallink's needs have been clearly greater than we have asked for from the state. In all the activities we do not know what will happen in the autumn, what will happen in the winter, if and to what extent people will travel, and how it will be possible to open routes.

"We are actually getting used to those lines every day, starting with Estonia, Finland and Latvia. So, precisely when Tallink's operations will fully recover, it is certainly too early to say at present, and we depend very clearly on the epidemiological situation here," he went on.

New destinations: Aland and Gotland

Nõgene said that Tallink will start sailing to Aland/Ahvenanmaa, on June 19 this year.

"Since it is not possible to travel to Stockholm for obvious reasons, since everyone coming from there should be quarantined, we have certainly found alternatives. We have had links to Åland before; last year there was a special cruise and certainly Åland, and the destination is undiscovered for many Estonians. It will be possible to go for one whole day, or stay there for a week. A ship will travel there once a week," he said.

While the coronavirus infection rate in Sweden stands at about 70 new infections per 100,000 inhabitants over the last two weeks, according to Nõgene, on Gotland, a Swedish island, the figure is less than two.

"It is three times lower than in Estonia and five times lower than Finland's rate. We have asked the government to analyze the island of Gotland separately for this criterion.

"If this rate of infection falls below these criteria, established or 15 infections per two-week average per 100 000 inhabitants, then Tallink is ready to offer trips to Gotland from 5 July."

Estonia's borders have been open to travelers from EU and EEA nations, since June 1, without having to undergo a 14-day quarantine period, provided the countries of origin meet the benchmark of 15 or fewer COVID-19 infections recorded per 100,000 inhabitants, over the preceding 14-day period. Countries currently not meeting the requirement include the U.K. and Spain, as well as Sweden.

Nõgene: State loan did not take undly long

Paavo Nõgene did not think that the preparation of the state loan agreement had taken an unusually long time.

Paavo Nõgene did not think that the preparation of the state loan agreement had taken an unusually long time.

"No [it didn't]. The terms of the main agreement and the wording of the agreement have been agreed. As we provide guarantees for quite a number of ships, it takes some time to set up guarantees for these vessels in different foreign jurisdictions, and this is a perfectly normal activity," he said.

As for another proposed Tallink project, redeveloping the Linnahall in Tallinn, and when this might be back on the agenda, Nõgene said it was hard to assess.

"This very clearly depends on when the core business is recovering and in what form it is recovering," he said.

In late February, shortly before the pandemic began, Tallink announced it was to develop the iconic Linnahall, at an estimated cost of €300 million, with a passenger harbor planned as well as a conference center, concert hall, hotel and shopping center.

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Editor: Andrew Whyte

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