June 30, 2025 -- Austal Limited (Austal) (ASX: ASB) has completed the final funding piece of its $1.2 billion capital expansion program in the United States, securing $488 million in credit facilities from a group of Tier 1 financial institutions, including Australian and international banks and Export Finance Australia (EFA).
Austal continues to invest in its shipbuilding and submarine capabilities with two major expansion projects currently underway in the USA, the Final Assembly 2 (FA2) project and the submarine Module Manufacturing Facility 3 (MMF3) project.
The new debt facilities will be used alongside Austal’s $220 million capital raise in April 2025 and US$450 million in MMF3 funding from General Dynamics Electric Boat to fund the capital expansion program and provide working capital.
The new debt facilities comprise bilateral arrangements with each lender under a common terms deed, replacing the Company’s existing syndicated facilities which were established in 2015, extended at various stages, and due to mature in April 2026. The new structure delivers better overall pricing, longer tenors (5-10 years), fewer covenants and provides Austal with enhanced financial flexibility and capacity to deliver its $14.5 billion orderbook and pursue growth opportunities.
The Export Finance Australia loan facility for FA2 has been credit approved for up to US$150 million, subject to completion of finance documentation and satisfaction of conditions precedent.
At a glance
- Company
- Austal Limited
- Ticker
- ASX: ASB
- Announcement
- Financing
- Location
- United States
Key figures
- New credit facilities
- $488 million
- U.S. capital expansion program
- $1.2 billion
- April 2025 capital raise
- $220 million
- MMF3 funding from General Dynamics Electric Boat
- US$450 million
- FA2 Export Finance Australia loan facility, credit approved up to
- US$150 million
- Tenors of new facilities
- 5-10 years
People
- Paddy GreggChief Executive Officer
Products and programs
Austal Limited Chief Executive Officer Paddy Gregg said: “The successful refinancing of the Company’s debt facilities positions Austal for the tremendous growth opportunities ahead and reflects Austal’s growth and track record of performance. We received very strong support for this refinancing. Existing and new lenders participated, and better terms and longer tenor were achieved.
“Austal possesses an exceptional pipeline of long-term defence work in the US, which will be complemented by the Strategic Ship Building Agreement in Australia. The Company now has a stronger balance sheet with enhanced liquidity at a lower cost, longer tenor, and with superior flexibility to support this growth. With this capital expansion and working capital funding in place and funded through a combination of debt, equity and cashflow, we can focus on efficient construction of both FA2 and MMF3, the vessels we have been contracted to build, and winning new work.”
In addition, Austal has negotiated $634 million of contingent instruments with several of the credit providers as well as other US-based Tier One financial institutions to backstop Austal’s existing $136 million in Go Zone Bonds through Letters of Credit as well as commercial guarantees where required.
Austal’s existing $280 million Syndicated Facility Agreement, which included a $65 million sublimit available for cash loans (currently nil drawn), will be terminated.
Austal was advised by Barrenjoey and Norton Rose Fulbright.
This ASX announcement has been approved and authorised for release by Austal Limited CEO Paddy Gregg.
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Further Information
Contact: Austal
Phone: 61 8 9410 1111
Fax: 61 8 9410 2564
Email:[email protected]
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Questions around this news
What does the new refinancing provide for Austal?
The release says the company secured $488 million in credit facilities from Australian and international banks and Export Finance Australia. The facilities replace its existing syndicated arrangements and have terms of five to 10 years, with fewer covenants and improved pricing. Austal says the funding will support its U.S. expansion program and working capital, while offering greater financial flexibility.
How do bilateral facilities under a common terms deed work?
With bilateral facilities, a borrower enters into a separate lending arrangement with each lender rather than borrowing under one syndicated loan shared by a lender group. A common terms deed sets out provisions that apply across those separate arrangements, helping align key terms while leaving each lender’s facility distinct.
What is Export Finance Australia’s role in the announced funding?
The release says Export Finance Australia’s loan facility for the Final Assembly 2 project has received credit approval for up to US$150 million. The financing remains subject to final documentation and satisfaction of conditions precedent. EFA is also among the institutions included in the group providing Austal’s new credit facilities.
What are contingent instruments and letters of credit used for?
Contingent instruments are commitments that may require a financial institution to pay or provide support if specified conditions arise. A letter of credit is one such instrument: it gives a beneficiary assurance of payment if the applicant fails to meet an obligation and the letter’s conditions are satisfied. The release says these instruments will support existing Go Zone Bonds and commercial guarantees.
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- Austal Australasia awarded approx A$270 million contract to design and construct 130 metre 'hydrogen ready' high speed ferry
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