11. Long-Term Debt

Description of our Debt Obligations

2015 Debt Facility

In March 2015, we entered into a $758 million debt financing facility (the “2015 Debt Facility”) with four separate tranches. Commercial debt financing (“Commercial Financing”) of $249 million is being provided by ABN AMRO Capital USA LLC (“ABN”); ING Bank N.V., London Branch, (“ING”); DVB Bank S.E. (“DVB”); Citibank (“Citi”); and Commonwealth Bank of Australia, New York Branch, (“CBA”), (collectively the “Commercial Lenders”), while the Export Import Bank of Korea (“KEXIM”) is directly providing $204 million of financing (“KEXIM Direct Financing”). The remaining $305 million of financing is being provided under tranches guaranteed by KEXIM of $202 million (“KEXIM Guaranteed”) and insured by the Korea Trade Insurance Corporation (“K-sure”) of $103 million (“K-sure Insured”). Financing under the KEXIM guaranteed and K-sure insured tranches will be provided by certain Commercial Lenders; Deutsche Bank AG; and Santander Bank, N.A. The debt financing will be secured by, among other things, eighteen of the Company’s VLGC newbuildings, and will represent a loan-to-contract cost ratio before fees of approximately 55%.

The 2015 Debt Facility contains various covenants providing for, among other things, maintenance of certain financial ratios and certain limitations on payment of dividends, investments, acquisitions and indebtedness. A commitment fee is payable on the average daily unused amount under the 2015 Debt Facility of 40% of the margin on each tranche. Additionally, we incurred approximately $13.4 million of debt issuance costs associated with the 2015 Debt Facility, which have been deferred and are amortized over the life of the agreement and are included as part of interest expense. Certain terms of the borrowings under each tranche of the 2015 Debt Facility are as follows:

		Term	Interest Rate Description(1)	Interest Rate at March 31, 2015(2)
Tranche 1	Commercial Financing	7 years	London InterBank Offered Rate (“LIBOR”) plus a margin(4)	3.02%
Tranche 2	KEXIM Direct Financing	12 years(3)	LIBOR plus a margin of 2.45%	2.72%
Tranche 3	KEXIM Guaranteed	12 years(3)	LIBOR plus a margin of 1.40%	1.67%
Tranche 4	K-sure Insured	12 years(3)	LIBOR plus a margin of 1.50%	1.77%

(1)

The interest rate of the 2015 Debt Facility on Tranche 1 is determined in accordance with the agreement as three or six month LIBOR plus the applicable margin and the interest rate on Tranches 2, 3 and 4 is determined in accordance with the agreement as three month LIBOR plus the applicable margin for the respective tranches.

(2)

The set LIBOR rate in effect as of March 31, 2015 was 0.27%.

(3)

The KEXIM Direct Financing, KEXIM Guaranteed, and K-Sure tranches have put options to call for the prepayment on the final payment date of the Commercial Financing tranche subject to specific notifications and commitments for refinancing/renewal of the Commercial Financing tranche.

(4)

The Commercial Financing tranche margin over LIBOR is 2.75% and is reduced to 2.50% if 50% or more but less than 75% of the vessels financed in the 2015 Debt Facility are employed under time charters as defined in the agreement and to 2.25% if 75% or more of the vessels financed in the 2015 Debt Facility are employed under time charters as defined in the agreement. As of March 31, 2015, the set margin was 2.50%.

On March 26 2015, we made our initial drawdown under the 2015 Debt Facility of $81.2 million, including $2.5 million of deferred financing fees, which was secured by the Comet and the Corvette and was divided into the four separate tranches. As of March 31, 2015, $676.8 million was available to be drawn.

Royal Bank of Scotland plc. (“RBS”) secured bank debt

As discussed in Note 1, the Company assumed the debt obligations associated with the financing of the vessels that were acquired through the acquisition of CMNL, CJNP and CNML. The prior loan arrangements associated with those vessels required approval from the lenders to sell the vessels and agreement from the lenders to transfer the borrowings to another party. As a consequence, the Company and the lender negotiated new borrowing terms in connection with this transaction. The new terms are described below. The total borrowings outstanding immediately prior to the debt modification and immediately after remained the same.

CMNL, CJNP, CNML and Corsair as joint and several borrowers (Borrowers), and Dorian LPG, Ltd as parent guarantor entered into a loan facility of $135,224,500 (the “RBS Loan Facility”), which replaced the prior borrowing arrangements of the Predecessor. The RBS Loan Facility is divided into three tranches. Tranche A of $47.6 million, Tranche B of $34.5 million and Tranche C of up to $53.1 million and is associated with each of the Captain John NP, Captain Markos NL and the Captain Nicholas ML, respectively.

Tranche A is payable in twelve equal semi-annual installments each in the amount of $1,700,000 that commenced on September 24, 2013 plus a balloon of $27,200,000 payable concurrently with the last installment on March 24, 2019.

Tranche B is payable in eleven equal semi-annual installments each in the amount of $1,278,500 that commenced on November 17, 2013 plus a balloon of $20,456,000 payable concurrently with the last installment on November 17, 2018.

Tranche C is payable in fourteen equal semi-annual installments each in the amount of $1,827,500 that commenced on January 21, 2014 plus a balloon of $27,520,000 payable concurrently with the last installment July 21, 2020.

The interest rate on the RBS Loan Facility increased in accordance with the loan agreement from LIBOR plus a margin of 1.5% per annum to LIBOR plus a margin of 2.0% per annum on September 26, 2014, concurrent with the delivery of the Corsair. The margin will increase to 2.5% on September 26, 2015 until maturity.

The RBS Loan Facility is secured by first priority mortgages on the vessels financed and first assignments of all freights, earnings and insurances.

The RBS Loan Facility also requires the Borrowers to maintain a minimum market adjusted security cover ratio equal to at least 125% of the aggregate of the outstanding loan balance and 50% of the related swap exposure up to September 2014 or 100% thereafter. In the event of non-compliance the Borrowers will be required within one month of being notified in writing by the lender to make such prepayment. In the event the lender agrees to release Corsair or another borrower approved by the lender from joint and several liabilities under the agreement, the minimum market adjusted security cover is adjusted to 175% and the margin will be increased to 2.75%.

The RBS Loan Facility also contains customary covenants that require the Company to maintain adequate insurance coverage and to obtain the lender’s prior consent before changes are made to the flag, class or management of the vessels, or enter into a new line of business. The RBS Loan Facility also requires that Dorian Holdings maintain a minimum ownership percentage. The loan facility includes customary events of default, including those relating to a failure to pay principal or interest, a breach of covenant, representation and warranty, a cross-default to other indebtedness and non-compliance with security documents, and prohibit the Borrowers from paying dividends. However, the RBS Loan Facility permits the Borrowers to make expenditures to fund the administration and operation of Dorian LPG.

Debt Covenants: The following financial covenants are the most restrictive from the 2015 Debt Facility and the RBS Loan Facility which the Company is required to comply with, calculated on a consolidated basis, determined and defined according to the provisions of the loan agreement:

RBS Loan Facility Covenants

The ratio of cash flow from operations before interest and finance costs to cash debt service costs shall not be less than 1:1;

Minimum shareholders’ equity, as adjusted for any reduction in the vessel fair market value, shall not be less than $85 million;

Minimum cash balance of $10 million at the end of each quarter and minimum cash balances of $1.5 million per mortgaged vessel in a pledged account with the lender at all times;

The ratio of Total Debt to Shareholders Funds shall not exceed 150% at all times;

The ratio of the aggregate market value of the vessels securing the loan to the principal amount outstanding under such loan, plus 100% of the related swap exposure, at all times shall be in excess of 125%; and

No dividends shall be paid in excess of free cash flow if an event of default is occurring.

2015 Debt Facility Covenants

The ratio of current assets divided by current liabilities shall always be greater than 1.00;

Maintain minimum stockholder’s equity at all times equal to the aggregate of (i) $400,000,000, (ii) 50% of any new equity raised after loan agreement date and (iii) 25% of the positive net income for the immediately preceding financial year;

Minimum interest coverage ratio of consolidated EBITDA to consolidated net interest expense must be maintained (i) greater than or equal to: 1.00 for the 12-month period starting in the calendar quarter following the one in which delivery of the first ship occurs, (ii) 1.50 in the subsequent year, (iii) 2.00 in the third year following the initial period, and (iv) 2.50 thereafter;

The ratio of consolidated net debt to consolidated total capitalization shall not exceed 0.60 to 1.00;

Minimum cash balance must be the higher of (a) the aggregate of (i) $25 million and (ii) $1,100,000 for every vessel delivered and financed by the 2015 Debt Facility and (b) 5% of the consolidated interest bearing debt outstanding of the Company;

Fair market value of the mortgaged ships plus any additional security shall be at least 135% of the outstanding loan balance;

No dividends shall be paid if an event of default has occurred and is continuing, or if an event of default would result therefrom, or if we are not in compliance with any financial covenants or any payment of dividends or any form of distribution or return of capital would result us not being in compliance with any of the financial covenants.

We were in compliance with the financial covenants as of March 31, 2015.

Debt Obligations

The table below presents our debt obligations:

RBS secured bank debt	March 31, 2015	March 31, 2014
Tranche A	40,800,000	44,200,000
Tranche B	30,684,000	33,241,000
Tranche C	47,622,500	51,277,500
Total	119,106,500	128,718,500

2015 Debt Facility
Commercial Financing	26,695,381	—
KEXIM Direct Financing	21,890,212	—
KEXIM Guaranteed	21,655,293	—
K-sure Insured	10,996,041	—
Total	81,236,927	—
Total debt obligations	200,343,427	128,718,500

Presented as follows:
Current portion of long-term debt	15,677,553	9,612,000
Long-term debt—net of current portion	184,665,874	119,106,500
Total	200,343,427	128,718,500

Future Cash Payments for Debt

The minimum annual principal payments, in accordance with the loan agreements, required to be made after March 31, 2015 are as follows:

Year ending March 31:
2016		15,677,553
2017		15,677,553
2018		15,677,553
2019		63,333,553
2020		9,720,553
Thereafter		80,256,662
Total		200,343,427