U.S. Shipping amends plan terms in connection with support agreement

By Caroline Salls

Pittsburgh, July 21 - U.S. Shipping Partners, LP has agreed to amend the treatment of its senior secured lenders under its pre-packaged plan of reorganization in connection with an amended plan support agreement with a majority of the lenders and the company's second-lien noteholders, according to an 8-K filed with the Securities and Exchange Commission.

As previously reported, holders of more than two-thirds of the company's credit agreement and about 70% of its 13% senior secured notes due 2014 have agreed to support the proposed plan.

Under the plan changes, the company's senior secured lenders will receive $225 million of new senior secured term notes due Aug. 7, 2013, $75 million of new junior secured term notes due Aug. 7, 2013 and all of the reorganized company's class A common stock, which will represent half of the company's outstanding common stock.

The senior notes will bear interest at a rate of Libor plus 730 basis points, subject to a 2% Libor floor, and the junior notes will bear interest at Libor plus 50 basis points, subject to a 2% Libor floor.

Under the original plan, the lenders were slated to receive a total of $332.6 million in new term loans, plus an amount equal to the termination obligation under the company's interest rate swaps. First-lien debtholders were also slated to receive 50% of the new equity under the original plan.

The new term loan notes were previously scheduled to bear interest at either Base rate plus 400 basis points or Libor plus 500 bps, with a 2% Libor floor, at the company's option.

Also under the plan:

• Holders of the company's second-lien notes will receive shares of class B common stock, representing half of the reorganized company's outstanding stock;

• Holders of existing common units, subordinated units and general partnership interests will receive no distribution;

• Senior secured lenders that are not U.S. citizens will receive a combination of class A common stock and warrants to purchase class A common stock, and second-lien noteholders that are not U.S. citizens will receive a combination of class B common stock and warrants to purchase class B common stock.

The warrants will have an exercise price of $0.001 per share and will expire on Dec. 31, 2029; and

• Reorganized U.S. Shipping will adopt a management equity plan under which members of management will receive 18.18% of the class B common stock, representing 10% of the reorganized company's outstanding common stock.

U.S. Shipping is an Edison, N.J.-based provider of long-haul marine transportation services. It filed for bankruptcy on April 30 in the U.S. Bankruptcy Court for the Southern District of New York. Its Chapter 11 case number is 09-12711.

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