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And then on top of the $50 warrant value you have to pay $19/sh to convert to the new common! Get out while you can before this goes to court on June 4, you can sell GNKOQ on the OTC pinkies as long as it exists - who is buying and why is what I wonder?
Read the 8K. If you can see something in there that suggests a better outcome, please post it and explain how it works.
It does,t always go like that now does it.
and when is the last time you have been to a library?
plus regardless that you haven't read it the company is far from bankrubt when you take in all the entities but but the ROI is twenty plus years and growing and that is the problem with public companies in general and that is why they are set up the way they are to protect all who invest in them. The capex requirement are huge or they wouldn't be here if banks had such a sense of humor about what they are doing.
Insiders buy high take advantage of loop holes were they don't get shelved a perk you could say along with fractional shares from dumping millions and millions of shares onto the market.
When your broker starts to tell you no to buy after the first thousand you pick up or tells you to sell after your now holding millions of shares take notice they are trying to tell you something that they know but don't really want to explain for some reason to you.
Many a investor will find an investor close to 65 years old and strike a deal to buy shares for that person giving them selves a 4 to 5 % of the take cause they only have to wait five years but you got to pick the ones with the slowing capex expenditure and that can be tough to find.
Thanks Yoda. Still pondering if/when to dump it - hit $2.14 today - but who the heck is buying stock in a company that's going under? Common stock is going to be near worthless, the debtors will own almost all of the company:
Class 11 – Equity Interests in Genco.
(a) Classification: Class 11 consists of Equity Interests in Genco.
(b) Treatment: On the Effective Date, Equity Interests in Genco shall be cancelled and discharged and shall be of no further force and effect, whether surrendered for cancellation or otherwise and holders of Equity Interests shall not receive or retain any property under the Plan on account of such Equity Interests in Genco. Notwithstanding the foregoing, on or as soon as practicable after the Effective Date, holders of Equity Interests in Genco shall receive, in exchange for the surrender or cancellation of their Equity Interests in Genco, their Pro Rata share of the New Genco Equity Warrants, which warrants shall come from amounts which holders of Prepetition 2007 Facility Claims and Convertible Note Claims would otherwise be entitled to under the Plan.
Retailers get some tiny pro-rata number of warrants, which graciously allow you to have to spend even MORE money if you want to convert to the new GNK shares:
Subscription Ratio. Each holder of a Prepetition 2007 Facility Claim that is a Rights Offering Record Date Holder will receive its Pro Rata share of the Lender Rights to purchase shares of New Genco Common Stock, and each Eligible Noteholder will receive its Pro Rata share of the Noteholder Rights to purchase shares of New Genco Common Stock. Each Right will entitle its holder to purchase one share of New Genco Common Stock at a subscription price of $18.62537.
Good explanation of how Chapter 11 works here:
http://www.sec.gov/investor/pubs/bankrupt.htm
Found another PDF from:
http://www.gencorestructuring.com/plan.php
Looks like bailout time comes by June 2nd, 2014 or thereabouts:
The deadline for the Company and other Supporting Creditors to reply to objections, if any, (the “Reply Deadline”) for June 2, 2014 at 4:00 p.m. (prevailing New York time); and
? The Combined Hearing at a time convenient for the Court on or about June 4, 2014.
You won't find it on line but at a library
Baloney. The entire contents of the National Library of Congress has been scanned and is available on the internet, and Britannica ceased paper encyclopedia publishing because EVERYTHING can be found online (and everyone, for that matter).
Every stock is different but on avg 6-12 months. Prepackaged like this one might be quicker. AAMRQ lasted several years. They will let us know when the symbol is going to change but it isnt going to be anytime soon. My guess this moves up from here if you are in. But I wouldnt quote me on that. I am only saying that because of OSGIQ ( formerly OSG )
Good Luck !
Fwiw I dont know any as of right now but I will be trading it most likely
You won't find it on line but at a library or through information provided by a mutual fund institution or broker if they are good but reading sec rules online you won,t find a thing about it.
revenue is revenue as well as equity is the amount of capital share holders have invested. You can't have negative earnings you can have a negative cash flow.
You have to break down the capital surplus into its components that make up the capital surplus goodwill, cash, and then there is the debt, common stock, retained earnings and other equity plus your retained earnings that is the reflection of the amount of goodwill that the intrinsic value represents.
The question is time and debt once the shares are converted and of course dilution should you try to get greedy but because it is debt there is interest that will be kept as well in the capital surplus that can be figured out on the amount of unsecured debt owed.
Is this a good company well she is no Coke and personally one would be better putting it a term deposit but we are not here for that but to give hope that things will be better as when there are less ships and more demand but the bottom is now is that a lot of countries that were never in shipping are now in it running old ships that should be diving reefs but they are keeping prices low.
Not sure where you get this but the shares will be canceled when the bk is over and a new symbol is appointed to it. Thats how a bk works, It has nothing to do with you me or anyone's age lol
Glad you said it - I thought that "age clause" was rather odd Your explanation makes much more sense. Question I have is how long do the Ch 11 proceedings take normally, and when does GNKOQ stop trading on the pinks? I was determined do dump it this morning, but it's up AGAIN - hate to bail too early and unnecessarily increase my losses, but don't want to gamble and risk losing every penny either!
It is noted in the sec rules but can be found in other places as well but hey there is no for sure,for sure your going to get your money back sometimes you only end up with a fraction of the dollar you spend take Kodak recipients of yesterday and who knows about tomorrow. Now those individuals could reinvest having first rights and all but if they are at 65 and who knows what another five years may bring so as you can see it is a crap shoot for sure.
Best to stay aloof and trade her but thank god for the pensioners who keep these stocks alive for us traders along with the institutions who manage there money for them.
The sad thing is the majority of them just get caught in the cycle. They reinvest wait five years and there again below there investment input unless things really turns around for the company they invested in and of course there are many factors one major one is fractional shares buying stock when there are billions being traded and buying to many at the low.
Buy a few thousand for a hundred bucks and so what the cost is more then what you have invested on that 100 dollars in what ever year you retire can be worth a 1000 times that but buy millions of millions of shares and you will be diluted to were that same capital you invested could be worth maybe a 100% in that same time period and if that is twenty years for someone 45 years old well inflation has taken all your 100% up side never mine the tax's that has to be paid on those small gains going back some 20 years.
Not sure where you get this but the shares will be canceled when the bk is over and a new symbol is appointed to it. Thats how a bk works, It has nothing to do with you me or anyone's age lol
Thanks for the info - where did you get it? In the SEC filing or elsewhere? Screw waiting almost 15 yrs to get shares back, I'm dumping them on the OTC market at -80% loss as soon as I can verify what you've written is true - don't have enough money tied up in it to make waiting worth it. TIA
The shares do get cancelled until you reach the age of 65 or if your over 65 then you must wait 5 years then you get them back.
Now should you not reach 65 or the min 5 year wait requirement your next of kin will get them when they reach 65 or the 5 year wait requirement if over 65
Buy buy when she is low low but not to many due too fractional shares dilution.
Common shareholders now have the right to buy back 6% of what they previously owned.
What does that mean? I just stumbled upon this bankruptcy news 15 mins ago - did retail get totally wiped out? TDA shows GNKOQ symbol and the supposed value of the shares I hadn't dumped yet, but that can't be right. CRAP!!!
We can soon start the BS on its recovery of the common shares he he he
I love the ups and down of the market
GNK delisted from the NYSE to the OTC. New ticker GNKOQ:
http://www.otcbb.com/asp/dailylist_detail.asp?d=04/21/2014&mkt_ctg=NON-OTCBB
Whatever you got out at, you did better than those who has stayed in will do.
Glad I got out all I can say about that.
Common shareholders now have the right to buy back 6% of what they previously owned.
Genco Shipping Files for Chapter 11 Bankruptcy >GNK
New York shipping tycoon Peter Georgiopoulos's Genco Shipping & Trading filed for Chapter 11 bankruptcy-court protection, with a prepackaged restructuring plan that was negotiated with creditors and unveiled earlier this month.
The company claimed assets worth $2.45 billion and debts of $1.48 billion , according to filings with the U.S. Bankruptcy Court in Manhattan .
Genco's plans to restructure, as described in documents filed with the U.S. Securities and Exchange Commission earlier this month, include converting a $ 1.06 billion credit facility to 81.1% equity in the new company.
Two other senior credit facilities--worth $253 million and $100 million , respectively--will be amended to extend the maturity dates to August 2019 .
Convertible bondholders would receive 8.4% of Genco's new equity. General unsecured claims wouldn't be reduced, and current equity would receive seven- year warrants for 6% of Genco's new equity struck at a $1.295 billion valuation.
Genco is also planning a $100 million rights offering for its reorganized equity, which would be backstopped 80% by the credit facility lenders and 20% by bondholders, meaning those groups have agreed to buy any unpurchased shares.
The company's restructuring plan is subject to bankruptcy-court approval.
Mr. Georgiopoulos has faced headwinds with another company where he is chairman: General Maritime Corp. , which emerged from bankruptcy in 2012 after lowering its debt and receiving a $175 million investment from Oaktree Capital Management LP .
Genco , which is also based in Manhattan , transports iron ore, coal, grain, steel products and other dry bulk cargo world-wide.
Other shipping companies, including Excel Maritime, Overseas Shipholding Group and TMT Group , have filed for Chapter 11 bankruptcy recently, amid an industrywide slump.
Write to Stephanie Gleason at stephanie.gleason@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
04-21-14 1225ET
Copyright (c) 2014 Dow Jones & Company, Inc.
They are taking their sweet time getting the 8K out.
Chapter 7 means you walk away from all debts and start with clean slate- Means shareholders are farthest from any concern of said corp if they do this if they are nto honoring their current Debtors contracts/ banks, etc etc...
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 16, 2014 (April 14, 2014)
GENCO SHIPPING & TRADING LIMITED
(Exact Name of Registrant as Specified in Charter)
Republic of the Marshall Islands
001-33393
98-043-9758
(State or Other Jurisdiction of Incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)
299 Park Avenue
12th Floor
New York, NY
(Address of Principal Executive Offices)
10171
(Zip Code)
Registrant’s telephone number, including area code: (646) 443-8550
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
Equity Commitment Agreement
On April 16, 2014, Genco Shipping & Trading Limited (the “Company”) and certain of its subsidiaries (collectively, the “Debtors”) entered into an Equity Commitment Agreement with parties comprised of (i) certain lenders under the Credit Agreement dated as of July 20, 2007 (as amended to date), by and among the Company as borrower, the banks and other financial institutions named therein as lenders, Wilmington Trust, N.A., as successor administrative and collateral agent and other parties thereto (“the “2007 Facility”) and (ii) certain holders of the 5.00% Convertible Senior Notes due August 15, 2014 issued pursuant to that certain Indenture dated as of July 27, 2010, between the Company as issuer and The Bank of New York Mellon as trustee, (the “Convertible Notes”) all of whom were parties (the “Commitment Parties”) to the Restructuring Support Agreement entered into on April 3, 2014 (the “Support Agreement”).
Under the Equity Commitment Agreement, the Commitment Parties have agreed to purchase their pro rata share of any unsubscribed shares that are issued pursuant to a $100 million rights offering (the “Rights Offering”), that the Company expects to conduct under a prepackaged plan of reorganization under chapter 11 of the Bankruptcy Code (the “Plan”). Specifically, $80 million of such Rights Offering shares will be offered to eligible lenders under the 2007 Facility, and $20 million of such Rights Offering shares will be offered to eligible holders of the Convertible Notes.
The Company and the Commitment Parties have made customary representations and warranties and covenants in the Equity Contribution Agreement including among others, a covenant by the Company to conduct its business in the ordinary course during the time between the execution of the Equity Commitment Agreement and the transactions contemplated thereby.
The obligations of each Commitment Party to consummate the transactions contemplated by the Equity Contribution Agreement are subject to specified conditions including Bankruptcy Court approval of the Plan, the Company’s compliance with the Plan, the occurrence and expiration of the Rights Offering, the execution of the Registration Rights Agreement (as defined in the Equity Contribution Agreement), and the absence of any circumstances constituting a “Material Adverse Effect” (as defined in the Equity Contribution Agreement). The obligations of the Company to consummate the transactions contemplated by the Equity Contribution Agreement is subject to specified conditions including that the Restructuring Support Agreement shall not have been terminated by the Company pursuant to certain sections therein.
The Equity Contribution Agreement may be terminated in a number of circumstances, including by mutual consent, breaches of representations, warranties, or covenants after the expiration of the applicable cure period, the occurrence of one or more events that would reasonably be expected to have a material adverse effect, dismissal of any Debtor’s chapter 11 case or conversion of the same into a chapter 7 case, appointment of an examiner or trustee with expanded powers to oversee or operate the debtors in the chapter 11 cases; failure of the closing date under the Equity Contribution Agreement to occur within 60 days after the date that the Debtors file voluntary chapter 11 petitions; and termination of the Support Agreement.
Under the Equity Commitment Agreement, the Company is obligated to reimburse or pay the reasonable, actual and documented out-of-pocket costs and expenses incurred in connection with the Rights Offering, the equity commitment and other transactions contemplated in the Equity Commitment Agreement of the named legal counsel and financial advisors of the Commitment Parties, incurred prior to the earlier of the termination of the Equity Contribution Agreement or the effective date of the Plan. The Company is not obligated to pay a commitment fee.
The foregoing description of the terms of the Equity Commitment Agreement is qualified in its entirety by reference to such agreement, a copy of which is attached as Exhibit 10.1 and is incorporated into this Current Report on Form 8-K by reference.
Amendment to Shareholder Rights Agreement
On April 14, 2014, the Company entered into a Second Amendment to Shareholders Rights Agreement with Computershare Shareowner Services LLC, as Rights Agent (the “Second Amendment”). The Second Amendment amends the Shareholder Rights Agreement, dated as of April 11, 2007, between the Company and the Rights Agent, which was amended by a First Amendment to Shareholders Rights Agreement dated as of October 24, 2011 (collectively, the “Rights Agreement”). The Second Amendment provides exceptions for transactions contemplated under the Support Agreement and eliminates certain outdated exceptions. The foregoing description of the Second Amendment is qualified in its entirety by reference to the Second Amendment, which is attached as Exhibit 4.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 3.03. Material Modifications to Rights of Security Holders.
See the disclosure set forth under “Item 1.01. Entry into a Material Definitive Agreement — Amendment to Shareholder Rights Agreement,” which is incorporated into this Item 3.03 by reference.
Item 7.01. Regulation FD Disclosure.
Unaudited Financial Projections
The Company does not as a matter of course make public long-term projections as to future revenues, earnings or other results due to, among other reasons, the uncertainty of the underlying assumptions and estimates. However, for purposes of the Disclosure Statement to be provided to certain of the Company’s creditors under the Support Agreement, the Company’s management prepared unaudited financial projections, which are set forth in Exhibit 99.1 to this Current Report on Form 8-K (the “Financial Projections”). The Financial Projections include the (i) Projected Consolidated Balance Sheet of Reorganized Genco, (ii) Projected Consolidated Cash Income Statement of Reorganized Genco, and (iii) Projected Consolidated Cash Flow Statement of Reorganized Genco. As a condition to confirmation of the plan of reorganization contemplated under the Support Agreement (the “Plan”), chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) requires, among other things, that the bankruptcy court
determine that confirmation is not likely to be followed by the liquidation or the need for further financial reorganization of the debtor. In connection with the development of the Plan, and for purposes of determining whether the Plan satisfies this feasibility standard, the Company’s management has, through the development of the Financial Projections, analyzed the Debtors’ ability to meet their obligations under the Plan and to maintain sufficient liquidity and capital resources to conduct its business subsequent to its emergence from these Chapter 11 Cases. The Financial Projections were also prepared to generally assess the value of the reorganized Debtors, determine the value of the new common stock of Genco to be distributed under the Plan, and assist those holders of allowed claims entitled to vote on the Plan in determining whether to accept or reject the Plan.
For the purpose of demonstrating Plan feasibility, the Company prepared the Financial Projections with the assistance of its professional advisors. The Financial Projections present, to the best of the Company’s knowledge, the reorganized Debtors’ projected financial position, results of operations, and cash flows for the four fiscal years 2014 through 2018 and reflect the Debtors’ assumptions and judgments as of April 2014.
The Financial Projections are based on the assumption that the effective date of the Plan will occur on or about June 30, 2014. If such effective date is significantly delayed, additional expenses, including professional fees, may be incurred and operating results may be negatively impacted. It is also assumed that the Company will conduct operations substantially similar to its current business.
The Financial Projections were not prepared with a view toward complying with accounting principles generally accepted in the United States of America (“U.S. GAAP”), the published guidelines of the Securities and Exchange Commission (“SEC”) regarding projections or the guidelines established by the American Institute of Certified Public Accountants for the preparation and presentation of prospective financial information. The Company’s independent accountants have not compiled, examined, or performed any procedures with respect to the Financial Projections, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and they assume no responsibility for, and disclaim any association with, the unaudited financial projections. Financial projections of the type summarized below are based on estimates and assumptions that are inherently subject to significant economic, industry and competitive uncertainties and contingencies, all of which are difficult to predict and many of which are beyond the Company’s control. The Financial Projections are not fact and should not be relied upon as being indicative of future results which could differ materially from actual performance and results.
A chapter 11 proceeding is viewed as a significant threat to the continuing operations of our international business. The Company has recently experienced dislocation in its business operations caused by the uncertainty of its financial restructuring process and the potential of a bankruptcy filing, and there is no assurance that we will be able to avert loss or reduction in business from our customers. Furthermore, the drybulk industry has historically been and continues to be subject to significant volatility due to continuously evolving dynamics as they relate to the supply of vessels and demand for shipping services. The unpredictable nature of factors, such as weather, seasonal demand for resources and asymmetrical timing of vessel deliveries results in significant freight volatility and could cause actual results to differ.
The Financial Projections do not fully reflect the application of fresh start accounting, which, if required pursuant to U.S. GAAP, is not anticipated to have a material impact on the underlying economics of the Plan. Any formal fresh-start reporting adjustments that may be required in accordance with Statement of Position 90-7 Financial Reporting by Entities in Reorganization under the Bankruptcy Code, including any allocation of the Company’s reorganization value to the Company’s assets in accordance with the procedures specified in Financial Accounting Standards Board Statement 141, will be made after the Company emerges from bankruptcy.
The Financial Projections were prepared solely for use in the Disclosure Statement, and are subjective in many respects and thus subject to interpretation. While presented with numeric specificity, are necessarily based on a variety of estimates and assumptions which, though considered reasonable by the company’s management, may not be realized, and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the company’s control. The Financial Projections are not necessarily indicative of current values or future performance, which may be significantly more favorable or less favorable. The Company cautions that no representations can be made as to the accuracy of these financial projections or to the company’s ability to achieve the projected results. Some assumptions inevitably will not materialize. Further, events and circumstances occurring subsequent to the date on which these financial projections were prepared may be different from those assumed or, alternatively, may have been unanticipated and, thus, the occurrence of these events may affect financial results in a material and possibly adverse manner. Furthermore, the unaudited financial projections do not necessarily reflect current estimates or assumptions Company management may have about prospects for the Company’s business, changes in general business or economic conditions, or any other transaction or event that has occurred or that may occur and that was not anticipated at the time the financial projections were prepared.
Except as otherwise noted, the Financial Projections do not necessarily take into account any circumstances or events occurring after the date they were prepared. Except as may be required in the Chapter 11 Case, the Company does not intend to update or revise any of the Financial Projections to reflect circumstances existing after the date such projections were prepared or to reflect the occurrence of any particular events. The Financial Projections are forward-looking statements.
Readers of this Form 8-K are cautioned not to rely on the Financial Projections and are urged to review the Company’s most recent SEC filings for additional information on factors which may cause the Company’s future financial results to materially vary from the unaudited financial projections. In addition, such readers are also urged to review the Company’s most recent SEC filings for a description of the Company’s reported results of operations, financial condition and capital resources during the fiscal year ended December 31, 2013. None of the unaudited financial projections should be viewed as a representation by the Company or any of its advisors or representatives that the projections or forecasts reflected therein will be achieved. The inclusion of the Financial Projections in this Form 8-K should not be regarded as an indication that the Company or any other recipient of this information considered, or now considers, this information to be necessarily predictive of actual future results nor construed as financial guidance, and they should not be relied on as such.
Liquidation Analysis
As part of the Disclosure Statement, the Company was additionally required to include a summary of the liquidation values of the Company’s assets in a hypothetical chapter 7 liquidation where a trustee appointed by the Bankruptcy Court would liquidate the assets of the bankruptcy estates of the Company and its subsidiaries filing Chapter 11 petitions (the “Debtors”) to demonstrate that the values provided under the Plan are not less than the value that could be obtained in a chapter 7, which is set forth in Exhibit 99.2 to this Current Report on Form 8-K (the “Liquidation Analysis”). Underlying the Liquidation Analysis are a number of estimates and assumptions that, although developed and considered reasonable by the Company’s management, are inherently subject to significant economic and competitive uncertainties and contingencies beyond the control of the Company and its management. The Liquidation Analysis is also based on assumptions with regard to liquidation decisions that are subject to change. Accordingly, the values reflected might not be realized if the Company was, in fact, to undergo such a liquidation. The chapter 7 liquidation period is assumed to be a period of 6 months, allowing for, among other things, the (i) discontinuation of the Company’s operations, (ii) sale of assets and (iii) collection of receivables.
The Liquidation Analysis is an estimate of the proceeds that may be generated as a result of a hypothetical chapter 7 liquidation of the Debtors’ assets. Numerous estimates and assumptions underlie the liquidation analysis regarding proceeds that, although developed and considered reasonable by the company’s management and advisors, are inherently subject to significant economic, competitive, and operational uncertainties beyond the control of the Company or a chapter 7 trustee. Additionally, various liquidation decisions upon which certain assumptions are based are subject to change. There can be no assurance that the assumptions and estimates employed in determining the liquidation values of the Debtors’ assets will result in an accurate estimate of the proceeds that would be realized if the Debtors underwent an actual liquidation.
Actual results of a chapter 7 liquidation may or may not approximate the estimates and assumptions represented in the liquidation analysis. The actual amount of claims against the Debtors or their estates could vary significantly from the estimates set forth in the Liquidation Analysis, depending on the claims asserted during the pendency of the hypothetical chapter 7 case. Similarly, the liquidation value of the Debtors’ assets could vary significantly from the estimates set forth in the Liquidation Analysis, depending on the value recouped by the trustee and the costs of administering the estates during the liquidation. Accordingly, the Company’s actual liquidation value is speculative in nature and could vary materially from the estimates provided in the Liquidation Analysis.
Valuation of the Reorganized Debtors as of June 30, 2014
The Debtors’ financial advisor, Blackstone Advisory Partners LP (“Blackstone”), has estimated the post-confirmation enterprise value of the reorganized Debtors to be approximately $1.48 billion. In developing this estimate, Blackstone considered, among other things, vessel appraisals and other valuation methodologies as well as the reorganized Debtors’ equity interests in Baltic Trading Limited and Jinhui Shipping & Transportation Limited and the $100 million of cash invested through the Rights Offering. Given the approximately $250 million of debt projected to be on the balance sheet of the reorganized Debtors, the implied equity value of the Reorganized Debtors is approximately $1.23 billion. The Reorganized Debtors will issue approximately 61.7 million primary shares of the common stock of reorganized Genco valued at $20.00 per share (prior to dilution) in order to satisfy claims pursuant to the Plan.
Under the Plan, holders of equity interests in Genco are entitled to receive warrants to purchase 6% of common stock of reorganized Genco (subject to dilution). Such warrants, which are effective for a period of 7 years from the effective date of the Plan, are exercisable at a cash-less strike price of a total equity value of $1,295 million. This strike prices equates to approximately $20.99 per share of reorganized Genco common stock. The estimated value of such warrants is approximately $30 million to $36 million based on the Black-Scholes pricing model. After accounting for such warrants, the implied share price of reorganized Genco common stock would range from approximately $19.42 to $19.52 before accounting for any subsequent dilution from the Management Incentive Program contemplated under the Plan.
The foregoing estimates of the post-confirmation equity value of the reorganized Debtors and the share price of reorganized Genco common stock are based on a number of assumptions, including no material adverse changes in the spot rate market, no further ship arrests, the continuing employment of the Debtors’ vessels, the continuing service revenue from Baltic Trading Limited and Maritime Equity Partners LLC, the completion of the Rights Offering, and the Plan becoming effective in accordance with the estimates, and other assumptions.
The foregoing valuation assumptions are not a prediction or reflection of post-confirmation trading prices of reorganized Genco’s common stock. Such securities may trade at substantially lower or higher prices because of a number of factors. The trading prices of securities issued under a plan of reorganization are subject to many unforeseen circumstances and therefore cannot be predicted.
The information set forth under this Item 7.01, including Exhibits 99.1 and 99.2 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, as amended, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Probably a wise decision.
Especially when you read this part of the 8K.
Valuation of the Reorganized Debtors as of June 30, 2014
The Debtors’ financial advisor, Blackstone Advisory Partners LP (“Blackstone”), has estimated the post-confirmation enterprise value of the reorganized Debtors to be approximately $1.48 billion. In developing this estimate, Blackstone considered, among other things, vessel appraisals and other valuation methodologies as well as the reorganized Debtors’ equity interests in Baltic Trading Limited and Jinhui Shipping & Transportation Limited and the $100 million of cash invested through the Rights Offering. Given the approximately $250 million of debt projected to be on the balance sheet of the reorganized Debtors, the implied equity value of the Reorganized Debtors is approximately $1.23 billion. The Reorganized Debtors will issue approximately 61.7 million primary shares of the common stock of reorganized Genco valued at $20.00 per share (prior to dilution) in order to satisfy claims pursuant to the Plan.
Under the Plan, holders of equity interests in Genco are entitled to receive warrants to purchase 6% of common stock of reorganized Genco (subject to dilution). Such warrants, which are effective for a period of 7 years from the effective date of the Plan, are exercisable at a cash-less strike price of a total equity value of $1,295 million. This strike prices equates to approximately $20.99 per share of reorganized Genco common stock. The estimated value of such warrants is approximately $30 million to $36 million based on the Black-Scholes pricing model. After accounting for such warrants, the implied share price of reorganized Genco common stock would range from approximately $19.42 to $19.52 before accounting for any subsequent dilution from the Management Incentive Program contemplated under the Plan.
The foregoing estimates of the post-confirmation equity value of the reorganized Debtors and the share price of reorganized Genco common stock are based on a number of assumptions, including no material adverse changes in the spot rate market, no further ship arrests, the continuing employment of the Debtors’ vessels, the continuing service revenue from Baltic Trading Limited and Maritime Equity Partners LLC, the completion of the Rights Offering, and the Plan becoming effective in accordance with the estimates, and other assumptions.
The foregoing valuation assumptions are not a prediction or reflection of post-confirmation trading prices of reorganized Genco’s common stock. Such securities may trade at substantially lower or higher prices because of a number of factors. The trading prices of securities issued under a plan of reorganization are subject to many unforeseen circumstances and therefore cannot be predicted.
I let go of my shares alreaady as this thing seems to be losing traction as nobody knows what will be said by the Judge or happen in next 2 weeks....
Though I have been through many various reorgs over past couple decades, always the shareholder was hurt, never recouping even at break-even, I have to say, with GNK's initial plan of giving shareholders warrants (like big funds/bankers are getting) was a surprise....
However, last evening's SEC release now mentions possibility of going from C11 to C7 and that bothers me to see now mentioned in any context....
No....Not short. Not long either. That's a fools errand IMHO.
Steady T
Are you short here....?
In past years when I was in similar position, Warrants were priced at the last trading day's price of that stock before the new stock / reorg structure went into place, and thus, you had ability to buy new stock later at that final settlement price- and in those cases, when trading resumed on new stock, it was into much higher double digits, and thus, you could exercise your warranst for equal share sof stock at the lwoe rprice, already locking in profit as the current price then wa smuch higher...
BUT, anything is possible and can happen at anytime as everyone saw last Friday morning in fact.
Past BK deals where I was involved in such as CIT, GM, and others where shareholders were NOT given any consideration for their investments made, those Insiders/management guys were given special stock/warrants of which they could exercise only after new reorg was in place and stock traded under its ticker. Why so many like myself got pisssed in CIT deal for instance when Icahn came in seeing all those SOB's getting $Millions more afterwards for ruining those companies & jobs doing that then...
Would you put numbers to this theory and show how anyone can make money?
Start with the present share price of $1.90 and show what price the warrants would have to be priced at and what sell price they would have to achieve to make a profit.
I have given the numbers as I see it and so far no one has disputed them or shown any errors.
Be positive perhaps. Anything is possible.
This reorg DOES incldue shareholders of date and why so many shares are being scarfed up by large hands; in fact, other day, I posted article showing there will be 4 major entities who hold a majority of shares if nothing changes right now and reorg goes on as planned, etc..
The Warrants give people right to purchas stock later, and as projections from the reorg are it will be trading at huge multiples, will give right to sharehodlers of warrants toe xercise them and buy said stock at discounted rate from PPS at that time.
I had warrants in past years form other deals and they are not a bad thing as so many posters seem to liek to go on relentlessly about.Can lock ina tidy future profit if you own lots of warrants or the stock right now prior reorg finalization, and why as I believe, we see so many stock shares being bought still after friday...
Sounds just like the Obama Administration, don't it? Here in NC, just revealed over 36,000 illegal votes made by NC people who voted for Obama in 2 States now, and as close the election was, had He and his People played honestly, he would NOT be President right now...
Please explain why this stock should go up?
Aside from a short squeeze, which I'm all in favor of, there is nothing in it for the present shareholders.
Steady, remember what happened last Friday am when premarket was minus 30cents... GNK blew open at 9:30am and upward and tripped circuit breakers and large hands were scooping up shares. Every day since, GNK has closed in green and higher.
Then remember what that whistleblower Wall Street Insider trader said last week to regarding "US market is rigged", and has book out now too, and stated thru HFT systems they can make any market do at will regardless of fundamentals or facts the public sees...
There is a reason all GNK shares are being bought up as why it has closed even higher EOD every day since last week too. This certianly is NOT dropping to "0" as so many shortseller daytrader types post relentlessly on yahoo or here...
According to the 10K they lose a little on each ship, but they make it up in volume.....See the BK er 10K for details.
Is there still a massive glut of ships?
Just wonderin'
Well said IMO. Been in GNK for a while trading around a core which I dumped on crazy Monday took a small loss over all but IMO this company needs transparency which I do not feel management is willing to give.
GLTY
So the way this will work looks like this.
When the number of "new" shares is determined, that number will be divided into $1,295 million. The resulting number will be the warrant strike price.
Notice that number has nothing to do with whatever the actual share price is.
Existing shareholders will own no stock in the new company. They will have the right to purchase shares by exercising the warrants priced on the above formula.
The number of warrants that will be issued is 6% of the total number of shares in the "new" common stock.
Until the number of "new" shares is determined there is no way to compute the number of warrants you will receive or their price.
If you assume that the number of shares is equal to the present number of 43 million shares, then 6% of 43 mil = 2.58 mil warrants will be issued.
So, a shareholder that presently holds 10,000 shares will receive 600 warrants in place of his 10,000 shares.
Assume his cost basis for those 10,000 was $3 his total investment was $30,000. To get back to even on his investment those 600 warrants will have to be worth $50 ea.
Assuming those warrants are priced at close to the share price, which is a generous assumption, The share price would have to make an astronomical gain for the shareholder to just break even.
This is a truly dismal picture.
From the 10K
Going Concern
Weak industry conditions have negatively impacted our results of operations and cash flows and may continue to do so in the future. These factors raise substantial doubt about our ability to continue as a going concern. The accompanying financial statements have been prepared on the basis of accounting principles applicable to a going concern, which contemplates the realization of assets and extinguishment of liabilities in the normal course of business. Our ability to continue as a going concern is contingent upon, among other things, our ability to: (i) develop and successfully implement a restructuring plan within the timeframe of the Relief Agreements and the Restructuring Support Agreements, (ii) comply with the covenants contained in the Cash Collateral Order, including compliance with the approved budget and the payment of fees, expenses, and interest thereunder, and in any post-restructuring financing, (iii) reduce debt and other liabilities through the restructuring process, (iv) return to profitability, (v) generate sufficient cash flow from operations, and (vi) obtain financing sources to meet our future obligations. The realization of our assets and the satisfaction of our liabilities are subject to uncertainty. Any restructuring plan could materially change the amounts and classifications of assets and liabilities reported in the historical consolidated financial statements. Further, the Chapter 11 Case could materially change the amounts and classifications reported in the consolidated historical financial statements, which do not give effect to any adjustments to the carrying value of assets or amounts of liabilities that might be necessary as a consequence of confirmation of a plan of reorganization. Moreover, in the Chapter 11 Case, we may sell or otherwise dispose of or liquidate assets or settle liabilities, subject to the approval of the bankruptcy court or as otherwise permitted in the ordinary course of business (and subject to restrictions contained in the Cash Collateral Order) for amounts other than those reflected in the accompanying consolidated financial statements. The accompanying consolidated financial statements do not include any direct adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities or any other adjustments that might be necessary should the Company be unable to continue as a going concern or as a consequence of the Chapter 11 Case.
From the latest 8K
. the cancellation of all equity interests in the Company, with such equity interests receiving seven year warrants for 6.0% of the New Genco Equity struck at a $1,295 million equity valuation (the “New Genco Warrants”).
quote
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...shareholders will be protected by the warrants when process starts in next few weeks.
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How are shareholders being protected when they are going from owning 100% of the company down to 6% of the company.
If you mean they aren't being totally wiped out, yeah that's true. They are only being 94% wiped out.
Not the sort of "protection" I want.
Having a warrant entitles you to buy stock. In this case, buying back stock that you already have paid for once. It doesn't matter what price the warrants are, it's still buying back stock that you have already paid for.
The support for this share price defies understanding.
Unless there are people that think the short squeeze isn't over, it makes no sense.
Shareholders just lost 96% of the company and in return have the privilege of getting warrants which means they can spend more money to buy back a small part of what they previously owned.
I followed most of that, but what mechanism will reduce the share count other than an RS?
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http://www.gencoshipping.com/index.html
Genco Shipping & Trading Limited engages in the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk carrier vessels. It transports iron ore, coal, grain, steel products, and other drybulk cargoes. The company principally charters its vessels to trading houses, including commodities traders; producers; and government-owned entities. As of December 31, 2007, Genco Shipping owned a fleet of 28 drybulk carriers consisting of 5 Capesize, 6 Panamax, 3 Supramax, 6 Handymax, and 8 Handysize drybulk carriers, with an aggregate carrying capacity of approximately 2,020,000 deadweight tons. The company was founded in 2004 and is based in New York, New York.
At Genco Shipping & Trading Limited our Chairman and board of directors have substantial experience in the shipping industry.
Our management team is based in New York City and includes several executives with extensive experience in the shipping industry who have demonstrated substantial ability in managing the commercial, technical and financial aspects of our business.
We believe that we possess a number of strengths that provide us with a competitive advantage in the drybulk shipping industry.
We own a modern, high-quality fleet of drybulk carriers. We have a modern fleet consisting of vessels with an average age of 6.42 years as of June 30, 2008 as compared to the average age of approximately 15 years for the world fleet. We believe that owning a modern, high-quality fleet: reduces operating costs and fuel consumption; allows us to secure favorable financing terms by enabling lenders to feel secure with their collateral; makes our fleet more reliable by reducing the likelihood of breakdowns and off-hire; provides us with a competitive advantage in securing favorable time charters from charterers who prefer vessels that have greater fuel efficiency than older vessels and can serve with fewer interruptions due to breakdowns.
Our fleet includes six groups of sister ships. Sister ships can use similar spare parts, and their crews are interchangeable. We believe that maintaining a fleet that includes sister ships increases our revenue generating potential by improving our operational and scheduling flexibility and reduces costs by creating economies of scale in the maintenance, supply and crewing of our vessels. We also believe that having sister ships makes our fleet more attractive to time charterers because they can interchange cargoes among the sister ships.
We benefit from strong relationships with members of the shipping and financial industries. We have developed strong relationships with major international charterers, shipbuilders and financial institutions that we believe are the direct result of the quality and experience of our management team. In addition, we have developed a strong relationship with Wallem, an international vessel management company with over 35 years of experience that currently manages 211 vessels with a carrying capacity totaling in excess of 16 million dwt while meeting strict quality control standards. We currently contract with Wallem for the technical management of the vessels in our fleet. We believe that these relationships will lead to greater charter opportunities for our vessels.
We maintain commercial management of our fleet in-house, thereby benefiting from the substantial experience of our management team in the shipping industry while avoiding brokerage commissions to related parties. It also serves to prevent conflicts of interest because, unlike transactions involving brokers, our employees do not have a personal financial interest in the charter contracts.
Our Business Strategy
Our strategy is to manage and expand our fleet in a manner that enables us to pay dividends to our shareholders. To accomplish this objective, we intend to maintain a modern, high-quality fleet that meets or exceeds stringent industry standards and complies with charterer requirements that are required before a vessel owner can secure employment for its vessels. In addition, we intend to maintain the high quality of our existing fleet and subsequent acquisitions by maintaining, through our technical manager, a rigorous and comprehensive maintenance program, including supervision of our independent third party technical manager by our own staff. Additionally, our technical managers maintain the quality of our vessels by carrying out regular inspections, both while in port and at sea. We believe that this ongoing maintenance program can ultimately reduce periods of off-hire and increase revenues.
Pursue an appropriate balance of time and spot charters.
Maintain low-cost, highly efficient operations.
Capitalize on our management team's reputation for high standards of performance, reliability and safety.
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