Eagle Bulk lowers cost, pushes debt out to 2022 with December refi

By Devika Patel

Knoxville, Tenn., Feb. 13 – Eagle Bulk Shipping Inc. completed a recent refinancing in December in which it issued a new $200 million 8¼% five-year senior secured Norwegian bond and negotiated new credit facilities and a revolver, using the proceeds to pay down previous credit facilities, leaving about 60% of the company’s debt with a fixed-rate coupon, a reduced cost on its debt and its debt maturities pushed out to 2022.

“We did a recent refinancing,” chief executive officer Gary Vogel said at the Stifel 2018 Transportation and Logistics Conference in Miami on Tuesday.

“We issued $200 million U.S. dollar-denominated Norwegian bonds and, at the same time, a new first lien credit facility which replaced both the Legacy first lien facility that the company had, as well as the capital brought in as part of the balance sheet recapitalization.

“That was paper, second lien paper, which was a PIK note in excess of 15% at the time.

“It reduced the cost of our debt but as well it pushed out the debt maturity significantly.

“In 2019, we had the maturity of the first lien previously, $200 million, and then we had that PIK note maturing in the first quarter of 2020.

“That’s now all been pushed out to 2022 and at a lower cost,” Vogel said.

The new bond is fixed, leaving the company with about 60% of its debt at fixed-rate coupons.

Vogel said that the company’s balance sheet is “well-capitalized.”

On Nov. 16, Eagle Bulk priced $200 million of 8¼% five-year senior secured bonds.

The notes were sold by way of private placement to qualified institutional buyers or non-U.S. investors under Regulation S by its subsidiary Eagle Bulk Shipco LLC.

On Dec. 11, subsidiary Eagle Shipping LLC fully repaid its outstanding first- and second-lien credit facilities, each dated March 30, 2016, and entered into a $65 million credit agreement, while Eagle Bulk Shipco entered into a $15 million revolving credit facility.

Eagle Shipping’s credit agreement consists of a $60 million term loan and a $5 million revolving credit facility, each with five-year maturities and interest of Libor plus 350 basis points.

Eagle Shipco’s revolver matures on the earlier of Dec. 8, 2022 and three months prior to the final maturity of the $200 million 8¼% bonds.

The Eagle Shipco revolver bears interest at Libor plus 200 bps.

The Eagle Shipping term loan and revolver proceeds were used along with proceeds of the new bonds and cash on hand to repay amounts outstanding under the prior credit facilities, including accrued interest.

Eagle Bulk is a Stamford, Conn., company that owns dry bulk vessels and transports bulk cargoes.

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