Genco Seeks Relief in Chapter 11 amid USD 1.2 Bln Debt

GENCO AUGUSTUS
Under the Chapter of the U.S. Bankruptcy Code, a debtor is provided (generally) for reorganization, usually involving a corporation or partnership. A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time.
The decision is consistent with its previously disclosed Restructuring Support Agreement with certain of the lenders under the companys $1.1 billion secured credit facility entered into in 2007, its $253 million secured credit facility, and its $100 million secured credit facility, as well as certain holders of the companys 5.00% Convertible Senior Notes due August 15, 2015.
All operating entities are expected to continue normal operations during the pendency of the financial restructuring, according to the company. Baltic Trading and its direct and indirect subsidiaries are not included in the court-supervised restructuring, Genco said adding that Baltic Trading is a separate public company from Genco, with an independent Board of Directors and separate financing. Baltic Trading is expected to continue operating in the normal course.
Today, with the strong support of our lenders and noteholders, we are moving forward with our previously announced restructuring plan, said John C. Wobensmith, Chief Financial Officer. We believe the financial restructuring will provide an expedited path to significantly strengthen Gencos balance sheet and improve the Companys financial flexibility. Our operations are strong, and once our restructuring is completed, we believe we will be well-positioned for continued growth and success. We continue to leverage our efficient cost structure and opportunistic time charter approach to manage through the drybulk shipping cycle.
The terms of the restructuring include, among other things:
Genco expects that cash on hand, cash from operating activities, and cash expected to be made available under a cash collateral order will be sufficient to fund its projected cash needs during its financial restructuring, and therefore does not intend to seek debtor-in-possession (DIP) financing, the company said.
Genco is waiting for court approval to proceed with its restructuring plan.
Kramer Levin Naftalis & Frankel LLP is serving as legal advisor and Blackstone Advisory Partners LP is serving as financial advisor to the company.

Press Release, April 22, 2014, Image: Shispotting