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Genco Shipping & Trading Agreement Filed

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Genco Shipping & Trading filed with the U.S. Bankruptcy Court a motion for entry of an order (a) authorizing the assumption of the Restructuring Support Agreement (RSA) (b) approving payment of the termination fee and (c) granting related relief. The agreement states, “After months of extensive, arms–length and multi–party negotiations, the Debtors entered into the RSA with its secured lenders under all three of its prepetition secured credit facilities – who collectively have claims in excess of $1.3 billion – and an ad hoc group of the Debtors’ largest unsecured creditor constituency, the Convertible Notes. The RSA establishes the framework and support for a prepackaged plan of reorganization (the “Prepack Plan”) that will dramatically deleverage the Company’s significant financial obligations and provide immediate new liquidity through a fully back stopped $100 million rights offering. With the overwhelming support of all of its creditor constituencies, the RSA paves the way for a settlement that allows the Company to exit chapter 11 expeditiously–and thereby preserve business operations–and provides the best available opportunity for the Company to maximize value for the estates. Importantly, the RSA is supported by substantially all of the holders (over 98%) of claims outstanding under the 2007 Credit Facility, 100% of claims outstanding under the $253 Million Credit Facility, 100% of claims outstanding under the $100 Million Credit Facility, and the majority (over 82%) of the claims outstanding under the Convertible Notes, in each case measured by principal amount outstanding. The assumption of the RSA ensures that the agreement that forms the foundation for a consensual restructuring continues to be valid and enforceable against all signatories and continues to provide the Debtors with the benefits they bargained for there under, including a deleveraged balance sheet, amended ongoing credit facilities, and an opportunity for all stakeholders to maximize recoveries while permitting the Debtors’ global businesses to proceed swiftly towards confirmation and emergence from bankruptcy as a healthier and more viable competitor. In accordance with the terms of the RSA, the Company and the Supporting Creditors finalized the terms of the Prepack Plan and the accompanying Disclosure Statement prior to filing the Chapter 11 Cases and commenced solicitation of votes on the Prepack Plan from creditors entitled to vote on April 16, 2014. The Prepack Plan (which was contemplated by the RSA) (i) eliminates approximately $1.2 billion of the Company’s debt, (ii) provides the Company with $100 million of additional new money liquidity through a fully–backstopped rights offering, and (iii) extends the maturity dates of the Company’s $253 Million Facility and the $100 Million Facility. In exchange for the conversion of 100% of their debt to equity, the lenders under the 2007 Credit Facility will receive 81.1% of Reorganized Genco’s equity and the right to participate in 80% of the Rights Offering, and eligible holders of the Convertible Notes will receive 8.4% of the Reorganized Company’s equity and the right to participate in up to 20% of the Rights Offering.”

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