Genco files for bankruptcy protection

New York-listed Genco said it is moving ahead with its previously announced restructuring plan with the support of its lenders and noteholders.

The restructuring support agreement with certain of the lenders involves $1.1bn secured credit facility entered into in 2007, $253m secured credit facility, $100m secured credit facility, as well as certain holders of the company's 5% convertible senior notes due 15 August 2015.

The plan has the support of 100% of the 2007 facility lenders, 100% of the $253m facility lenders and the $100m facility lenders, and over 83% of the noteholders.

John C. Wobensmith, chief financial officer of Genco, said: “We believe the financial restructuring will provide an expedited path to significantly strengthen Genco's balance sheet and improve the company's financial flexibility.

“Our operations are strong, and once our restructuring is completed, we believe we will be well-positioned for continued growth and success. We continue to leverage our efficient cost structure and opportunistic time charter approach to manage through the drybulk shipping cycle,” he said.

To implement the terms of the restructuring, Genco and 57 of its direct and indirect subsidiaries will need to file the pre-packaged plan of reorganisation and related disclosure statement.

As previously announced by the bulk vessel owner, some of the terms of the restructuring include converting the 2007 credit line into 81.1% of the equity of the reorganised company.

The entirety of the company's obligations under the $253m and $100m facilities will be replaced by new senior facilities with extended maturity dates through August 2019 and certain other covenant modifications.

The terms also include a $100m rights offering for 8.7% stake in the new Genco. The 2007 facility lenders will have the right to participate in up to 80% of the rights offering.

“We look forward to continuing to provide our chartering customers the same high quality, reliable shipping services they've come to consistently expect from Genco,” Wobensmith said.