Business Context and Reporting Period
Company: GENCO SHIPPING & TRADING LTD
Filing Type: Form 8-K (Current Report)
Date of Report: September 7, 2007
Reporting Period: Event date September 7, 2007; Swap effective date October 1, 2007.
Key Financial Metrics and Obligations
This filing details a specific financial hedging transaction rather than comprehensive financial results. Key metrics include:
- Interest Rate Swap Notional Amount: $75,000,000
- Fixed Interest Rate: 4.56% plus applicable margin
- Underlying Credit Facility: $1.4 billion (entered July 20, 2007)
- Existing Swap Portfolio: Seven prior transactions totaling $556,233,000
- Counterparty: DnB NOR Bank ASA, New York Branch
Material Changes
The Company entered into a new interest rate swap transaction to mitigate floating rate interest risk on $75,000,000 of debt under its $1.4 billion credit facility. This adds to the existing portfolio of seven swap transactions previously disclosed in the Form 10-Q filed on August 9, 2007.
Outlook, Risks, and Management Commentary
- Purpose: To fix the annual interest rate payable on a portion of the Company's debt.
- Terms: The swap runs from October 1, 2007, to December 31, 2009. The Company makes quarterly fixed payments, while the Counterparty makes quarterly floating payments.
- Risk Disclosure: Notwithstanding the swap, the Company remains ultimately obligated for all amounts due under the credit facility.
- Future Activity: The Company may enter into additional swap transactions in the future.
Investor Verification Checklist
- Verify the total outstanding debt under the $1.4 billion credit facility to assess the proportion of debt now hedged.
- Confirm the "applicable margin" added to the 4.56% fixed rate to determine the total effective interest cost.
- Review the Form 10-Q filed on August 9, 2007, for details on the existing $556,233,000 in swap transactions.
- Monitor future 8-K filings for additional swap transactions as noted by management.