Genco $400 million term loan refinances six facilities; others amended

By Wendy Van Sickle

Columbus, Ohio, Nov. 15 – Genco Shipping & Trading Ltd. entered into a six-year $400 million senior secured term loan facility on Thursday, the proceeds of which were used Tuesday to refinance six other credit facilities, according to an 8-K filing with the Securities and Exchange Commission.

Those six credit facilities are Genco’s $100 million, $253 million, $44 million and $22 million term loan facilities, its $148 million credit facility and its 2015 revolving credit facility.

The new facility is intended to address previously disclosed liquidity and covenant compliance issues, according to the filing.

The banking group incudes Nordea Bank Finland plc, New York Branch, Skandinaviska Enskilda Banken AB, DVB Bank SE, ABN Amro Capital USA LLC, Credit Agricole CIB, Deutsche Bank AG, Credit Industriel et Commercial and BNP Paribas.

The new facility matures on Nov. 15, 2021.

Other terms include the following:

• An interest rate of Libor plus 375 basis points with an option to pay 150 bps of that rate in kind through Dec. 31, 2018;

• Reduction of the minimum liquidity requirement, assuming a fleet of 60 vessels, to $21.5 million through Dec. 31, 2018, stepping up to $28.6 million through Dec. 31, 2019 and then to $42.7 million for the remainder of the facility;

• Elimination of a maximum leverage covenant from the prior facilities that was based on the market value of the company’s vessels;

• Scheduled amortization of $100,000 per quarter through Dec. 31, 2018, of $30 million per year from March 31, 2019 through Dec. 31, 2020 and of $74 million a year thereafter, subject to adjustment for certain prepayments;

• Excess cash flow from Genco’s collateral vessels is now subject to a cash sweep of 100% of excess cash flow through Dec. 31, 2018, 75% of excess cash flow through Dec. 31, 202, and the lesser of 50% of excess cash flow or an amount reflecting a 15-year average vessel age repayment profile thereafter;

• No collateral maintenance testing prior to June 30, 2018 and collateral maintenance testing with gradually increasing thresholds thereafter; and

• Other covenants including debt to total book capitalization and minimum working capital.

The new facility requires the company to sell six of its vessels, one of which is currently under contract to be sold. Genco previously sold four of its vessels.

2014 term loan changes

Also on Tuesday, Genco entered into supplemental agreements with the lenders under its 2014 term loan facilities to state that the company’s collateral maintenance covenants will not be tested through Dec. 30, 2017 and that the minimum collateral value to loan ratio will be 100% from Dec. 31, 2017, 105% from June 30, 2018, 115% from Dec. 31, 2018 and 135% from Dec. 31, 2019.

The supplemental agreements also amended minimum liquidity requirements and restrictions on incurring debt, making investments and paying dividends in line with the new credit facility.

$98 million facility amendment

Additionally on Tuesday, Genco amended and restated its $98 million credit facility to address covenant compliance and liquidity issues.

Amendments include the following:

• Reduction of the minimum liquidity requirement to match the new facility;

• Netting of certain amounts against the measurement of the collateral maintenance covenant, which remains in place with a 140% value to loan threshold;

• Permitting a portion of amounts required to be maintained under the minimum liquidity covenant to be used to prepay the facility to maintain compliance with the collateral maintenance covenant under some conditions;

• Elimination of the original maximum leverage ratio and minimum net worth covenants; and

• Restrictions on incurring debt, making investments and paying dividends in line with the new credit facility.

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

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