Eagle Bulk Shipping Inc. Reaches Comprehensive Agreement With Lenders
Thursday, 21 June 2012 | 00:00
Eagle Bulk Shipping Inc. announced that it has reached an agreement with a syndicate of its lenders led by Royal Bank of Scotland plc. This agreement resolves all outstanding issues with the Company's lenders and significantly improves the Company's position amid the ongoing, cyclical downturn in the shipping markets. Highlights of the agreement include the following: • Permanently waives any purported defaults or events of defaults.
• $1,129,478,742 presently outstanding under the existing revolver will convert into a term loan, with a maturity set to December 31, 2015. Subject to certain conditions, the amendment provides an option to the Company to extend the maturity date an additional 18 months to June 30, 2017.
• Eagle Bulk will receive a new liquidity facility in the aggregate amount of $20,000,000.
• The amendment requires no fixed repayments of principal until maturity, and is subject to a quarterly sweep of cash in excess of $20,000,000.
• All amounts presently outstanding under the existing credit agreement will bear interest at LIBOR plus a cash margin of 3.50% and a payment-in-kind ("PIK") margin of 2.50%. This aggregate margin can be reduced if Company leverage is lowered.
• Replaces all existing financial covenants and substitutes them with new covenants that phase-in over the next three years.
• Permits within certain parameters for the purchase or sale of vessels and management of third party vessels.
Sophocles N. Zoullas, Eagle Bulk's Chairman and Chief Executive Officer, commented, "We are pleased to have reached this comprehensive agreement with our syndicate, with whom we have worked constructively and cooperatively. Eagle Bulk is confident that the agreement materially improves the Company's current business prospects, and enhances our competitiveness as the market stabilizes," Mr. Zoullas concluded.
Other pertinent terms of the agreement include:
• All capitalized interest will be evidenced by PIK loans, which will mature on the extended maturity date of either December 31, 2015, or June 30, 2017. Upon maturity, Eagle Bulk retains several options to repay the PIK loans, including cash repayment or conversion of outstanding amount to Cumulative Convertible Preferred Stock.
• Provides that any Cumulative Convertible Preferred Stock issuable upon conversion of the PIK Loans will bear interest at a coupon rate equal to the lower of (i) the trailing twelve month dividend yield of the S&P US Preferred Stock Index as of the last business day of the month immediately preceding the date of issuance or (ii) the interest rate on the senior debt incurred in any refinancing of the term loan component plus 200bps, and will include customary default in payment of dividend provisions.
• Provides that any Cumulative Convertible Preferred Stock issuable upon conversion of the PIK Loans will have a maturity of five years but may be converted into shares of the Company's Common Stock at the option of the Company.
• The issuance of warrants to the lenders which are convertible into shares of common stock equal to 19.99% of the Company's outstanding common stock on June 20, 2012, with a strike price of $0.01 per share. One-third of the warrants are exercisable immediately, one third when the Company's stock price reaches $10.00 per share and one third when the Company's stock price reaches $12.00 per share. Unexercised warrants expire on June 20, 2022.
Source: Eagle Bulk Shipping