GNK

Business Context and Reporting Period

Company: GENCO SHIPPING & TRADING LTD
Filing Type: Form 8-K (Current Report)
Date of Report: August 14, 2018
Event: Entry into a Material Definitive Agreement (New Credit Facility)

Key Financial Metrics and Facility Terms

This filing details a new financing arrangement rather than periodic operating results. Key financial terms of the New Credit Facility include:

• Total Commitment: $108,000,000
• Loan-to-Value Limit: Borrowings per vessel capped at 45% of appraised value
• Interest Rate: LIBOR + 250 basis points (through Sept 30, 2019); LIBOR + 225 to 275 basis points thereafter (based on net indebtedness to EBITDA ratio)
• Maturity Date: August 14, 2023
• Amortization: Scheduled to reach nil when collateral vessels average 20 years of age; estimated quarterly payments of $1,600,000 commencing Dec 31, 2018, with a final balloon payment.
• Collateral: Four Capesize and two Ultramax vessels

Material Changes and Usage of Proceeds

The Company entered into this facility to finance a portion of the purchase price for six vessels (four Capesize, two Ultramax) previously agreed upon in June and July 2018. As of the filing date, the Company had taken delivery of one Ultramax and two Capesize vessels, with the remaining three expected in Q3 2018. This facility replaces or supplements prior financing needs for these specific acquisitions.

Guidance, Covenants, and Risks

Financial Covenants:

• Minimum Liquidity: Unrestricted cash must exceed the greater of $30 million or 7.5% of total indebtedness.
• Minimum Working Capital: Current assets (excl. restricted cash) minus current liabilities (excl. current portion of long-term debt) must be not less than zero.
• Debt to Capitalization: Total indebtedness to total capitalization ratio must not exceed 70%.
• Collateral Maintenance: Aggregate appraised value of collateral vessels must be at least 135% of the outstanding loan principal.

Dividend Restrictions: Dividends are permitted subject to customary conditions, limited to 50% of consolidated net income for the preceding quarter if the collateral maintenance test ratio is 200% or less. Risks: Forward-looking statements are subject to risks including the ability to fulfill financing conditions, completion of vessel documentation, and seller performance.

Investor Verification Checklist

• Verify the final delivery dates and appraised values of the remaining three vessels to ensure compliance with the 45% loan-to-value cap.
• Monitor the Company's unrestricted cash levels to ensure they meet the minimum liquidity covenant (greater of $30M or 7.5% of debt).
• Review the Company's total indebtedness to confirm the debt-to-capitalization ratio remains below 70%.
• Confirm the collateral maintenance ratio stays above 135% to avoid covenant breaches.
• Check subsequent filings for the actual drawdown amounts against the $108 million commitment.