Philly Shipyard signed a commitment letter with Caterpillar Financial Services for a $150 million loan facility to finance the construction of four next generation 50,000 dwt product tankers, designated as Hulls 025-028.

The facility will be subject to a maximum borrowing amount of $75 million per vessel and secured by a first lien on the four vessels. The loans will accrue interest at three-month LIBOR plus 3.00% as defined in the commitment letter.

Philly Shipyard expects to enter into definitive agreements for this facility in Q1/16. The facility will be a continuation of the cooperation between Philly Shipyard and Cat Financial, which will include a total of 26 vessels, including both product tankers and containerships, and span a period of 15 years when Hull 028 is delivered.

All four vessels to be financed by this facility are currently under contract with Philly Tankers. As previously announced by the company, the shipbuilding contract for each of these vessels will be assigned at delivery by Philly Tankers to a subsidiary of Kinder Morgan.

Philly Shipyard is a U.S. commercial shipyard that constructs vessels for operation in the Jones Act market.