Performance Shipping Announces Commitment Letter from Alpha Bank to Refinance Debt
Performance Shipping Inc. an international shipping company focused on the ownership of tanker vessels, has taken a significant step in strengthening its financial position by announcing that it has received and accepted a signed commitment letter from Alpha Bank A.E. The commitment outlines terms for a new loan facility that will be used to refinance an existing US$29.75 million loan. The refinancing, which will be conducted through two wholly owned subsidiaries of the company, marks a notable financial milestone in the Company’s ongoing strategy to optimize its capital structure.
The refinancing arrangement is subject to customary closing conditions, including the execution of a definitive loan agreement. Once finalized, the new facility will fully replace the current debt maintained with Alpha Bank, which is secured by the Company’s two Aframax tanker vessels, the M/T P. Long Beach and the M/T P. Aliki.
Details of the New Loan Facility
Under the proposed terms outlined in the commitment letter, the new facility will carry an interest rate of SOFR (Secured Overnight Financing Rate) plus 1.90% per annum. This rate represents a meaningful reduction in financing costs for Performance Shipping, especially when compared to the terms of the outgoing facility. The Company anticipates a 23% reduction in average interest margins, reflecting a substantial improvement in financial efficiency.
The loan is structured with a repayment schedule spanning five years, with 20 consecutive quarterly installments of US$1.05 million each. Upon completion of the final scheduled installment, a balloon payment of US$8.75 million will be due, scheduled for mid-2030. This structure effectively extends the Company’s debt maturity timeline by more than two and a half years, allowing for increased financial flexibility and reduced refinancing pressure in the near term.
CEO Commentary: Strengthening Relationships and Financial Position
In a statement commenting on the refinancing initiative, Andreas Michalopoulos, Chief Executive Officer of Performance Shipping, emphasized the importance of the Company’s ongoing partnership with Alpha Bank and the strategic value of the new financing terms:
“The commitment letter from Alpha Bank underscores our Company’s strong and enduring relationships with its lenders. The competitive terms of this refinancing loan facility reflect both our robust financial position and the continued confidence and support of our lending partners. Indicatively, our financing costs will be significantly reduced, with average payable margins decreasing by 23% compared to the existing loan agreements, while the amortization profile remains unchanged. Additionally, with the extension of loan maturities by more than two and a half years, the Company has no substantial debt maturities scheduled prior to mid-2030.”
Michalopoulos also noted that this development comes at a time when Performance Shipping continues to focus on operational excellence, asset value preservation, and long-term shareholder value creation. The favorable interest terms not only reflect improved credit conditions but also validate the Company’s disciplined approach to capital management.
Strategic Importance of the Refinancing Deal
This refinancing represents more than just a financial transaction—it is a strategic maneuver aimed at reinforcing Performance Shipping’s balance sheet while providing greater predictability in debt service obligations. As a capital-intensive industry, the shipping sector is particularly sensitive to fluctuations in financing costs and interest rates. Lowering the average cost of capital positions Performance Shipping more competitively in the global tanker market.
Moreover, the amortization profile of the new facility—retaining the same structure as the previous loan but extending the maturity horizon—enables the Company to manage its cash flows more effectively, freeing up capital for potential investments, fleet enhancements, or shareholder returns.
By aligning the maturity schedule with mid-2030, the Company now avoids any significant debt repayments in the medium term. This timing is particularly advantageous given the current volatility in global interest rates and capital markets. The extended maturity provides management with increased flexibility to navigate both market opportunities and potential macroeconomic headwinds.
Refinancing in the Context of Tanker Market Dynamics
Performance Shipping’s move comes amid a cautiously optimistic environment in the tanker shipping industry. With global oil demand gradually recovering and seaborne crude and product trade rebounding post-COVID-19 and geopolitical disruptions, asset values and charter rates have shown signs of stability and, in some segments, growth.
The Aframax segment, in which Performance Shipping operates, has benefited from increased regional trades and a diversification of energy supply routes, especially in response to sanctions and reshuffling of traditional trade lanes. Fleet consolidation, limited newbuilding deliveries, and stricter environmental regulations have also contributed to a more favorable supply-demand balance.
Within this context, having a robust capital structure with favorable loan terms becomes increasingly critical. The new facility ensures that Performance Shipping can focus on operational priorities and market opportunities without being constrained by near-term debt service burdens.
About Performance Shipping Inc.
Headquartered in Greece, Performance Shipping Inc. is a publicly traded shipping company specializing in the ownership of high-quality tanker vessels that transport crude oil and petroleum products. The Company’s current fleet includes several Aframax tankers, which are widely used in regional and transcontinental crude oil transportation.
Performance Shipping operates with a focus on safety, reliability, and operational efficiency, and maintains long-standing relationships with reputable charterers, technical managers, and financial institutions.
About Alpha Bank A.E.
Alpha Bank A.E. is one of the largest financial groups in Greece, offering a wide range of financial services including corporate lending, investment banking, and ship financing. Known for its deep experience in maritime finance, Alpha Bank has built strong ties with many Greek and international shipping companies, supporting their strategic growth through tailored financial solutions.
As Performance Shipping proceeds toward finalizing the refinancing agreement, the Company appears well-positioned to capitalize on future opportunities in the global tanker market. By proactively managing its debt profile, reducing interest expenses, and reinforcing relationships with financial partners, the Company continues to execute a prudent and forward-looking financial strategy.
While execution of the final loan agreement and satisfaction of all closing conditions remain pending, the acceptance of the commitment letter is a clear indication of progress. Investors and stakeholders alike will be watching closely as the Company enters the next phase of its financial evolution.