Diana Shipping has received notification from lender BNP Paribas that it is in breach of its $165m loan agreement signed on July 22, 2015.
The NYSE-listed company gave no explanation as to how its covenant with the bank was breached when it disclosed the matter to the US SEC today, but data shows it is likely to be a decline in asset values.
The facility was secured against 70% of the market value of 18 Diana bulk carriers: Oceanis, Alcyon, Nirefs, Triton, Dione, Danae, Norfolk, Protefs, Thetis, Erato, Calipso, Clio, Salt Lake City, Naias, Sideris GS, Semirio, Boston and Alcmene.
Online platform VesselsValue.com estimates the vessels’ collective market value at some $200m as of July 22 last year, of which 70% is equal to $140m. Today, VV estimates the 18 bulkers’ total market value has fallen to $122.87m.
Diana drew down the full $165m from the facility on July 24, 2015, and used the cash to pay off its revolving credit facility with the Royal Bank of Scotland.
The company has been repaying the loan in quarterly installments of $2.5m, due for the first eight repayments, which will be followed by a number of $5m and $7m installments until the final balloon payment of $69m is due in July 2020.