Genco enters support agreement to be implemented via Chapter 11 case

By Caroline Salls

Pittsburgh, April 3 - Genco Shipping & Trading Ltd. entered into a restructuring support agreement with some of the lenders under its pre-bankruptcy senior facilities and some holders of its 5% convertible senior notes due Aug. 15, 2015, according to an 8-K filed Thursday with the Securities and Exchange Commission.

The supporting creditors agreed to vote to accept a plan of reorganization based on the support agreement, to support approval of a related disclosure statement and cash collateral order and not object to or support any objection to the plan, disclosure statement or cash collateral order.

The plan would be implemented through a Chapter 11 bankruptcy filing.

The support agreement provides for a termination fee of $26.5 million payable to supporting 2007 facility lenders and the supporting noteholders if the agreement is terminated under specified circumstances and the company completes an alternative transaction.

Plan terms

The terms of Genco's plan would include the following:

• A $100 million rights offering for 8.7% of the equity in reorganized Genco, subject to dilution by new Genco warrants and management incentive plan warrants. Eligible 2007 facility lenders will have the right to participate in up to 80% of the rights offering, and this portion will be backstopped by supporting 2007 facility lenders, and eligible convertible noteholders will have the right to participate in up to 20% of the rights offering. That 20% portion will be backstopped by the supporting noteholders;

• Conversion of the full 2007 facility into 81.1% of the new Genco equity, subject to dilution by the new warrants;

• Replacing the company's $253 million facility and $100 million facility with new senior secured credit facilities or amending the facilities to provide for extended maturity dates through August 2019, as well as other covenant modifications;

• Payment of the claim under the company's outstanding swap in full through mutually acceptable treatment;

• The unimpairment of all general unsecured creditors' claims;

• The conversion of the convertible note claims into 8.4% of the new equity, subject to dilution by the warrants;

• The cancellation of all equity interests in the company, with holders to receive seven-year warrants for 6% of the new equity struck at a $1.3 billion equity valuation; and

• The establishment of a management equity incentive plan under which the directors, officers and other management of reorganized Genco will receive 1.8% of the shares of the new equity, subject to dilution by warrants, six-year warrants struck at a $1.62 billion plan equity value representing 3.5% of the new equity, six-year warrants struck at a $1.81 billion plan equity value representing 3.5% of the new equity and six-year warrants struck at a $2.20 billion equity value, representing 5% of the new equity.

The incentive plan will vest over three years in equal proportions. The incentive plan warrants will be exercisable on a cashless basis and will be subject to dilution by the exercise of subsequent tranches of warrants.

Genco is a New York-based transporter of iron ore, coal, grain, steel products and other drybulk cargoes.

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