Business Context and Reporting Period
Company: Genco Shipping & Trading Limited
Filing Type: Form 8-K (Current Report)
Date of Report: September 23, 2010
Event: Completion of acquisition of a new vessel.
Key Financial Metrics
- Asset Acquisition: Genco Brittany, a 57,981 dwt Supramax vessel.
- Purchase Price: Approximately $35.7 million.
- Financing Sources: Available cash, proceeds from concurrent offerings of 5.00% Convertible Senior Notes (due 2015) and common stock, and cash from operations.
- Debt Facility: $253 million secured term loan facility entered into on August 20, 2010.
- Planned Refund: Genco intends to use the term loan facility to refund $21.5 million associated with this purchase.
Material Changes and Transactions
The company took delivery of the Genco Brittany, marking the eleventh of 13 vessels to be acquired under agreements with Setaf SAS, its subsidiaries, and parent company Bourbon SA. Three additional vessels under these agreements are scheduled for delivery and will be immediately resold to Maritime Equity Partners, LLC (controlled by Chairman Peter C. Georgiopoulos) at Genco's purchase price.
Outlook and Management Commentary
Management indicates a strategy of fleet expansion through the acquisition of Supramax vessels. The transaction was funded through a mix of recent capital market activities (convertible notes and equity) and operational cash flow. The company plans to optimize its capital structure by utilizing its new secured term loan facility to refund a portion of the cash used for this specific acquisition.
Investor Verification Checklist
- Verify the terms and status of the remaining two vessels to be acquired from the Setaf/Bourbon agreements.
- Confirm the execution of the resale agreement for the three vessels to Maritime Equity Partners, LLC.
- Review the specific terms of the $253 million secured term loan facility entered into on August 20, 2010.
- Assess the impact of the $35.7 million cash outflow on current liquidity ratios.