Genco Shipping & Trading Ltd. (GNK), the operator of dry-bulk cargo ships, said it’s reached a restructuring agreement with a majority of lenders that gives it a road map for a Chapter 11 bankruptcy reorganization.
The pact includes converting a 2007 credit line into 81.1 percent of the equity in the restructured company, according to a Genco regulatory filing today. About $1.1 billion was outstanding on that loan on Sept. 30, data compiled by Bloomberg show. The company’s $125 million of convertible securities would be swapped for 8.4 percent of the equity according to the filing. Current equity holders will receive seven-year warrants for a 6 percent stake.
The shipper said yesterday in a filing it needed to reach a “definitive agreement” by April 4 to keep new accords with lenders in place. New York-based Genco hired Blackstone Group LP in February to advise it on a possible restructuring after its industry suffered from a supply glut that pushed rates down.
Genco rose 1.3 percent to $1.53 at the close in New York, before the filing. The shares have plunged 39 percent this year.
The company deferred filing its annual report for 2013 because of the restructuring talks, it said in a March 17 filing. It estimated a net loss of $157 million for last year, little changed from $158 million the year before. Its cash and equivalents were $109.5 million in September, Bloomberg data show.
Genco’s $125 million of senior unsecured convertible bonds due next year rose 2.5 cents to 84.5 cents on the dollar to yield 18.4 percent today, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.