Genco emerges from Chapter 11 bankruptcy, reducing debt $1.2 billion

By Kali Hays

New York, July 9 – Genco Shipping & Trading Ltd. has completed its financial restructuring and emerged from Chapter 11 bankruptcy, according to a July 9 news release from the company.

As a result of the restructuring, Genco received an infusion of $100 million in new equity capital through a fully backstopped rights offering, reduced its outstanding debt by about $1.2 billion, reduced its annual interest payment obligations by more than $40 million and eliminated $192.8 million annually in amortization payments.

The company “deleveraged its balance sheet on an expedited timeframe, preserving its ongoing business operations, enhancing the reorganized company’s financial flexibility and positioning it for long-term success,” according to the release.

“Today marks the start of a new chapter for Genco and we are well positioned for growth and success,” chief financial officer John C. Wobensmith said.

As previously reported, Genco filed for bankruptcy in accordance with a restructuring support agreement with some of the lenders under its $1.1 billion 2007 secured credit facility, its $253 million secured credit facility and its $100 million secured credit facility and some holders of its 5% convertible senior notes due Aug. 15, 2015.

The company’s pre-packaged plan of reorganization was confirmed on July 2 by the U.S. Bankruptcy Court for the Southern District of New York.

The terms of the restructuring include the following:

• The 2007 facility lenders will convert all of their pre-bankruptcy senior secured debt into 81.1% of the equity of the reorganized company;

• All of the company’s obligations under the $253 million and $100 million facilities will be replaced by new senior facilities with extended maturity dates through August 2019 and covenant modifications;

• Genco’s obligations under the convertible senior notes will be converted into 8.4% of the equity of the reorganized company;

• All other general unsecured claims will be reinstated and paid in the ordinary course of business;

• All equity interests in the company will be cancelled, with holders receiving seven-year warrants for 6% of the new Genco equity that would otherwise be provided to the holders of 2007 facility claims and convertible note claims; and

• Genco will conduct a $100 million rights offering for 8.7% of the equity of the reorganized company. The 2007 facility lenders will have the right to participate in up to 80% of the rights offering, with their portion backstopped by some of the lenders, and eligible holders of convertible notes will have the right to participate in up to 20% of the rights offering, with their portion backstopped by some of the noteholders.

Genco, a New York-based transporter of iron ore, coal, grain, steel products and other drybulk cargoes, filed for bankruptcy on April 21. The Chapter 11 case number is 14-11108.

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