Business Context and Reporting Period
Company: GENCO SHIPPING & TRADING LTD
Filing Type: Form 8-K (Current Report)
Date of Report: September 6, 2005
Event: Creation of a direct financial obligation via an interest rate swap transaction.
Key Financial Metrics
This filing does not report revenue, profit, cash flow, or general liquidity metrics. It specifically details a hedging instrument related to existing debt:
- Notional Amount: $106,233,000
- Underlying Debt: Outstanding or future debt under the credit facility entered on July 29, 2005.
- Fixed Rate Component: 4.485% (plus applicable margin under the credit facility).
- Swap Term: September 14, 2005 to July 29, 2015.
- Counterparty: DnB NOR Bank ASA, New York Branch.
Material Changes
The Company entered into an interest rate swap to mitigate floating rate interest risk. This transaction effectively converts the interest rate on $106,233,000 of debt from a floating rate to a fixed rate of 4.485% plus the applicable margin. The filing notes that the Company remains ultimately obligated for all amounts due under the existing credit facility regardless of the swap terms.
Outlook, Risks, and Management Commentary
Purpose: Risk mitigation against floating rate interest fluctuations.
Structure: The Company will make quarterly fixed rate payments to the Counterparty, while the Counterparty will make quarterly floating rate payments to the Company.
Risk Note: The swap does not eliminate the underlying debt obligation; the Company is ultimately liable for all amounts due under the credit facility.
Investor Verification Checklist
- Verify the total outstanding balance under the July 29, 2005 credit facility to confirm the percentage of debt now hedged.
- Confirm the specific "applicable margin" under the credit facility to calculate the total effective interest rate.
- Review the credit facility terms to understand the Company's ultimate liability if the swap counterparty defaults.
- Check subsequent filings for any amendments to the swap or the underlying credit facility.