Business Context and Reporting Period
This Form 8-K filing by GENCO SHIPPING & TRADING LTD reports a corporate event dated January 9, 2009. The company, incorporated in the Republic of the Marshall Islands, operates in the shipping and trading sector.
Key Financial Metrics and Obligations
The filing details a new derivative instrument rather than standard operating financial results.
- New Obligation: Entered into an interest rate swap transaction with DnB NOR Bank ASA, New York Branch.
- Notional Amount: $100,000,000.
- Effective Date: January 22, 2009.
- Termination Date: January 22, 2014.
- Fixed Rate: Effectively fixes the annual interest rate on the covered debt to 2.05% plus the applicable margin under the credit facility.
- Existing Debt Context: The swap covers a portion of the company's $1.4 billion credit facility (entered July 20, 2007).
- Prior Derivatives: The company holds nine other interest rate swap transactions with an aggregate notional amount of $681,233,000.
Material Changes
The primary material change is the creation of a direct financial obligation to hedge floating rate interest risk. This transaction locks in a fixed rate component for $100 million of the company's debt exposure, altering the interest cost structure for the specified period.
Outlook, Risks, and Management Commentary
Purpose: The transaction was executed to mitigate floating rate interest risk on debt outstanding or expected to be outstanding under the $1.4 billion credit facility.
Risks and Contingencies:
- The company remains ultimately obligated for all amounts due and payable under the credit facility, notwithstanding the swap terms.
- The company may enter into additional swap transactions in the future.
Financial Results: The filing text does not provide clear values for revenue, profit, cash flow, margins, or liquidity positions for the reporting period.
Investor Verification Checklist
- Verify the current utilization rate of the $1.4 billion credit facility to confirm the $100 million exposure is active.
- Review the "applicable margin" under the credit facility to calculate the total effective interest rate (2.05% + margin).
- Assess the counterparty risk associated with DnB NOR Bank ASA.
- Check subsequent filings for any additional swap transactions mentioned as a possibility.