Genco Shipping details post-reorganization plan effective date actions

By Caroline Salls

Pittsburgh, July 15 – Genco Shipping & Trading Ltd. detailed the actions taken on and after the July 9 effective date of its plan of reorganization in an 8-K filed Tuesday with the Securities and Exchange Commission.

The company said it entered into amended and restated term loan facilities on July 9, which amend the company’s pre-bankruptcy credit facilities, included a paydown of amounts due on the pre-bankruptcy loans between Genco’s bankruptcy filing and the effective date, relief from compliance with financial covenants governing maximum leverage ratio, minimum consolidated interest coverage ratio and consolidated net worth through the quarter ending March 31, 2015 and a fleet-wide minimum liquidity covenant that requires the company to maintain cash of $750,000 per vessel for all vessels, excluding those owned by Baltic Trading Ltd.

The maturity dates of the pre-bankruptcy facilities were extended to Aug. 31, 2019, and the interest rate was increased to Libor plus 350 basis points.

According to the 8-K, a $100 million pre-bankruptcy credit agreement with Credit Agricole CIB, which was used to purchase five vessels, was amended through a $73.6 million senior financing facility.

In addition, a $253 million pre-bankruptcy credit agreement with agent Deutsche Bank Luxembourg SA, which was used to acquire or refinance the acquisition costs of 13 vessels was amended through a $175.7 million senior financing facility.

Stock, shares issued

Also on the plan effective date, new seven-year Genco equity warrants were issued and distributed to holders of the company’s old common stock, which was cancelled on the effective date.

The warrants are exercisable for one share of new Genco common stock on a cashless basis at an exercise price of $20.99 per share.

Meanwhile, the reorganized company distributed 50.06 million shares, representing 81.1% of its new common stock to holders of 2007 pre-bankruptcy facility claims on July 10 and 5.16 million shares, representing 8.4% of the new stock, to holders of convertible note claims.

In accordance with the plan, Genco conducted a fully backstopped rights offering to acquire 8.7% of the new common stock at a subscription price of $18.62537 per share, for a total subscription price of $100 million.

With all conditions satisfied, reorganized Genco said it issued 5.31 million rights offering shares to holders of 2007 facility claims and 63,773 backstop shares to the rights offering backstop parties.

Management update

Genco said the initial members of its new board of directors are Peter C. Georgiopoulos, Ian Ashby, Eugene I. Davis, James G. Dolphin, Michael J. Leffell, William Manuel and Bao D. Truong.

On the effective date, reorganized Genco also adopted a post-emergence management incentive program, which provides for the distribution of new common stock and warrants to the participating officers, directors and other management.

The incentive plan warrants will be issuable in three tranches, which are exercisable for 2.38 million, 2.47 million and 3.71 million shares and have exercise prices of $25.91, $28.73 and $34.19, respectively.

Genco, a New York-based transporter of iron ore, coal, grain, steel products and other drybulk cargoes, filed for bankruptcy on April 21 in the U.S. Bankruptcy Court for the Southern District of New York. The Chapter 11 case number is 14-11108.

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