Rand receives more time to deliver financials, expects more defaults

By Angela McDaniels

Tacoma, Wash., June 2 – Rand Logistics, Inc. received waivers of its failure to deliver its audited financial statements for the fiscal year ended March 31 by May 31, according to an 8-K filing with the Securities and Exchange Commission.

The waivers were received June 1 from the lenders under the company’s first- and second-lien credit agreements. Bank of America, NA is the agent for the first-lien credit agreement. For the second-lien credit agreement, Guggenheim Corporate Funding, LLC is the agent and Lightship Capital LLC is the lender.

The waiver period ends on the earliest to occur of June 14, any other event of default under the credit agreements, the commencement of any legal proceeding by any of the credit parties that would enjoin the lenders from enforcing their rights under the waivers and three business days following the termination of negotiations among the first-lien credit parties and the second-lien lender of a potential recapitalization transaction involving the company.

The waivers provide for an event of default if the company has not agreed to a recapitalization transaction with the second-lien lender by June 30.

The terms of a potential recapitalization transaction have not yet been proposed by the company or the second-lien lender.

The company said the occurrence of certain events, which under the waivers would result in the reinstatement of an event of default, including termination of the applicable waiver termination date on June 14, is certain to occur.

In addition, certain actions required under the waivers in order to avoid a further or additional event of default, including that the company and the second-lien lender agree to the terms of a recapitalization transaction, are not entirely within the company's control.

As such, the company anticipates additional events of default to arise under the credit agreements.

The company also anticipates that an additional event of default will occur upon delivery of its audited financial statements for the fiscal year ended March 31 as a result of the application of certain accounting procedures that will require the company's long-term debt to be reclassified as short-term debt and the inclusion of a qualified audit opinion as a result thereof.

The company intends to pursue additional waivers for any such further or additional events of default and believes that such waivers will be forthcoming provided it continues to maintain satisfactory financial and operating performance and no other unrelated events of defaults occur under the credit agreements.

The company said the failure to obtain a waiver or other accommodation from its lenders in the event of a default under the credit facilities would likely have a material adverse effect on the company and its business, operations and financial performance and viability.

Based in New York, Rand provides bulk freight shipping services in the United States and Canada.

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