Business Context and Reporting Period
This Form 6-K filing by Toro Corp. (Toro) covers the month of December 2024, specifically reporting on transactions executed on December 11 and December 12, 2024. Toro is a foreign private issuer with its principal executive office in Limassol, Cyprus. The filing details significant related-party transactions with Castor Maritime Inc. (Castor), a Nasdaq-listed company controlled by the same Chairman and CEO as Toro.
Key Financial Metrics and Transaction Values
- Preferred Share Investment: Toro agreed to purchase an additional 50,000 Series D Preferred Shares of Castor for an aggregate cash consideration of $50,000,000.
- Term Loan Facility: Toro entered into a $100,000,000 senior term loan facility with Castor.
- Collateral Value: The Term Loan is secured by 10 vessels owned by Castor subsidiaries, valued at approximately $235 million based on third-party valuations.
- Interest Rate: The Term Loan bears interest at the Secured Overnight Financing Rate (SOFR) plus 1.80% per annum.
- Loan Tenor: The Term Loan has a duration of 5 years.
Material Changes and Transaction Details
This filing represents a material expansion of Toro's financial relationship with Castor. Key changes include:
- Increased Equity Stake: Following this transaction, Toro will beneficially own all 100,000 outstanding Series D Preferred Shares of Castor (combining this purchase with a prior $50 million purchase in August 2023).
- Amended Share Terms: Castor amended the Series D Preferred Shares to reset the conversion date to January 1, 2026, require a minimum conversion block of 500 shares, and introduce a redemption feature allowing Castor to redeem shares if the outstanding count drops to 30,000 or less.
- Lock-up Period: Toro is restricted from disposing of the Series D Preferred Shares for 180 days post-closing.
Outlook, Risks, and Management Commentary
The transactions were approved by independent and disinterested members of the boards of both companies, following recommendations from special committees. Toro's special committee was advised by an independent financial advisor. The filing notes that Toro's obligation to fund the Term Loan is subject to customary conditions precedent, which may be waived at Toro's sole discretion. The filing incorporates by reference a press release and the full legal agreements (Exhibits 99.1, 99.2, and 99.3) for complete terms.
Investor Verification Checklist
- Verify the closing date and actual funding of the $50 million preferred share purchase and the $100 million term loan.
- Review the full Share Purchase Agreement (Exhibit 99.1) and Term Loan Facility Agreement (Exhibit 99.2) for specific covenants and conditions precedent.
- Confirm the current market valuation of the 10 vessels securing the loan to assess collateral adequacy relative to the $100 million exposure.
- Monitor the 180-day lock-up period expiration for potential changes in Toro's equity position in Castor.
- Assess the impact of the related-party nature of these transactions on Toro's liquidity and capital allocation strategy.