Eagle Bulk Shipping extends loan forbearance period to March 1

By Marisa Wong

Morgantown, W.Va., Feb. 22 – Eagle Bulk Shipping Inc. further amended its forbearance and standstill agreement to extend the forbearance period to 6 a.m. ET on March 1, according to an 8-K filing with the Securities and Exchange Commission.

The expiration of the forbearance period was extended from Feb. 23 and, before that, from Feb. 9 and Feb. 2.

As previously reported, Eagle Bulk entered into the forbearance and standstill agreement on Jan. 19 with ABN Amro Capital USA LLC as agent.

The company had reported in its quarterly filing violations in the provision of shipping services for third-party charterers with respect to the transportation of cargo, all of which occurred under a different senior operational management team.

In discussions, the lenders said the company could not draw from the revolving credit facility under the loan agreement, including for purposes of making the quarterly repayment installment due on Jan. 15.

As a result of this position, the company entered into the forbearance agreement.

Under the terms of the forbearance, the lenders agreed to forbear from exercising some of their rights for one or more events of default that exist as a result of the company’s disclosure and the subsequent event of default that occurred as a result of the company’s failure to pay the quarterly repayment installment due Jan. 15.

The company said it entered into the forbearance agreement for time to evaluate potential financing alternatives to enhance its liquidity, with the objective of reaching agreement by the end of the forbearance period.

The company also said it is in discussions with some of its shareholders and lenders for financing alternatives but that there can be no assurance that it will reach any agreement with any of its shareholders or lenders to structure any financing by the end of the forbearance period or that the forbearance agreement will be further extended.

The forbearance period will now expire on the earliest of 6 a.m. ET on March 1; the occurrence of any event of default under the loan agreement other than a specified default; the failure to comply with the covenants of the forbearance; or the failure of the representations and warranties made by the company and the guarantors set forth in the forbearance agreement to be true and correct in any material way.

In return for the original forbearance, the company agreed to pay all amounts payable under clause 21.2 or clause 21.3 of the loan agreement, which included costs and expenses for the negotiation, preparations and execution of the forbearance as well as legal fees and other expenses.

Eagle Bulk is a Marshall Islands corporation based in New York that owns dry bulk vessels and transports bulk cargoes.

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