Joel R. Glucksman
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Genco Shipping & Trading Ltd., owned by New York shipping tycoon Peter Georgiopoulos, is planning to file for protection under Chapter 11 of the bankruptcy law in a debt-for-equity deal that the company has already reached with creditors, according to The Wall Street Journal. Genco now has until April 21 to file in order to stay in compliance with a default waivers agreement from lenders that will expire at that point.
Genco and its lenders are planning to enter bankruptcy with a prepackaged plan of reorganization, according to the news source. The agreement has the support of three groups of lenders and some of the company’s bondholders, who have pledged not to object to the plan. Should the plan be approved, Genco’s $1.06 billion credit facility will be converted into 81.1 percent equity in the new company. Convertible bondholders will receive 8.4 percent of Genco’s new equity, and current equity holders will receive seven-year warrants for 6 percent of the new equity at a $1.295 billion valuation.
Shares in the company have fallen 39 percent this year, according to Bloomberg Business. Genco deferred filing its annual report for 2013 because of the restructuring talks, but estimated a net loss of $157 million last year. In February, Genco hired Blackstone Group LP to advise it on a possible restructuring as a result of a supply glut in its industry that pushed rates down. In 2012, the company lost $158 million. In cash assets and equivalents, the company held $109.5 million in September of 2013.
Before the filing, shares rose by 1.3 percent to $1.53, according to the news source, suggesting some confidence in the deal.
- Practices: Bankruptcy & Creditors' Rights, Corporate Transactions & Business, Bankruptcy Litigation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
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