NASDAQ-listed Genco Shipping & Trading has eased the terms of its refinancing with lenders after failing to secure $125m in equity financing, and has offered to dispose of up to 10 vessels in order to reach the target.
On June 10, Genco and a consortium of its lenders signed a commitment letter for a $400m senior secured term loan facility, with which to refinance six existing loan facilities.
The consortium of lenders comprises Nordea Bank Finland (New York branch); Skandinaviska Enskilda Banken, DVB Bank SE, ABN AMRO Capital USA, Crédit Agricole Corporate and Investment Bank; Deutsche Bank Filiale Deutschlandgeschäft, Crédit Industriel et Commercial, and BNP Paribas.
The shipping company has received grants or extensions of waivers for the loan facilities’ collateral maintenance covenants, which on Thursday were were extended until September 30 via an amendment to the commitment letter.
The waivers for Genco’s minimum cash covenants were granted subject to the company’s cash and cash equivalents being at least $25m and within its maximum leverage ratio until September 30 this year.
Genco’s ability to borrow from the new $400m facility is subject to a number of conditions including the completion of at least $125m in equity financing in a private placement.
On June 8, Genco entered into separate equity commitment letters with institutional investors for a combined $62.5m, falling short of its $125m target.
Funds managed by affiliates of Centerbridge Partners signed up for around $31.2m in equity; affiliates of Strategic Value Partners for $17.3m, and funds managed by affiliates of Apollo Global Management for approximately $14m.
The investors’ deadline to enter into a definitive purchase agreement for the equity has been extended from June 30 until August 15.
Genco has said it intends to use $37m of the $125m financing to repay its debt; $83m for general corporate purposes and $6m for transaction fees and expenses.
In order to secure the remaining $62.5m in equity financing, Genco has offered to the sell or scrap 10 vessels (including the Genco Marine, which was sold for demolition in May). The shipping company estimates this would incur an impairment charge of around $67m and generate $16m in cash.
Among the other terms, Genco has offered to reduce the minimum liquidity under the refinanced facilities from $52.5m to $21.5m until December 31, 2018.
On Wednesday, Genco also signed a commitment letter to amend its $98m facility, which will provide for covenant relief until September 30 this year.