They have already been through the restructuring process and failed miserably at it! They had to forfeit their ships and they will end up forfeiting the 3 ships they financed this year! And you all say "Why would they be buying ships if they were going under?" Because the company is a scam! Here's the 20F...
Due to the previously disclosed economic conditions and operational difficulties of the Company, during 2011 we entered into restructuring discussions with each of the lenders under our facility and credit agreements, the holders of our 7% senior unsecured convertible notes (the “7% Notes”) and the counterparties to our capital leases (collectively, the agreements governing such debt, the “Financing Documents”). As part of those discussions, we appointed Moelis & Company (“Moelis”) to act as our financial advisors in respect of an overall restructuring proposal with respect to the Financing Documents. On November 8, 2011, we and Moelis presented to each of the lenders under the Financing Documents a commercial presentation which set out a comprehensive global restructuring proposal (the “Restructuring Proposal”), and which included, among other things, proposed amendments to the Financing Documents (including amortization relief and reset of financial covenants). The aim of the restructuring was to increase liquidity, normalize trade vendor payments and deleverage the Company on a going forward basis. We have completed the restructuring efforts for the Syndicate Facility Agreement, Kamsarmax Syndicate Facility Agreements, Eurobank Credit Facility, Northern Shipping Fund LLC Capital Lease Obligation, Portigon AG (formerly, West LB Bank) Credit Facility, Piraeus Bank Credit Facilities, Handysize Syndicate Facility Agreement, Lemissoler Maritime Company W.L.L. Capital Lease Obligation (all references to the Lemissoler Maritime Company W.L.L. Capital Lease Obligation refer to the agreement entered into with Prime Mountain Shipping Ltd, Prime Lake Shipping Ltd, Prime Time Shipping Ltd and Prime Hill Shipping Ltd, the four affiliate companies of Lemissoler Maritime Company W.L.L., in November 2010, for the sale and immediate bareboat leaseback of four dry bulk vessels comprised of three Capesize vessels, the Brazil, the Australia, and the China, as well as the Panamax vessel Grand Rodosi) and the 7% Notes, subject, in the case of the Syndicate Facility Agreement, to the final payment of outstanding fees. However, due to the recent economic conditions of the country of Cyprus and the acquisition of the Greek branch of Cyprus Popular Bank Public Co. Ltd. by Piraeus Bank A.E. (“Piraeus Bank”), we have experienced difficulties with our restructuring efforts with Piraeus Bank (CPB loan) and, as a result, the restructuring has been delayed. Due to these difficulties, we have chosen to treat our negotiations with Piraeus Bank (CPB loan) separately from our restructuring efforts with our other lenders. We remain in restructuring negotiations with Piraeus Bank (CPB loan) outside of the Restructuring Proposal. In addition, while we have completed our restructuring efforts with the lenders under the Syndicate Facility Agreement, we continue to have an outstanding liability of $0.1 million under the Syndicate Facility Agreement related to loan fees outstanding. While the proceeds from the sale of the four LR1 vessels under the Syndicate Facility Agreement were used to repay the outstanding amounts owed and fees under the agreement, we have nevertheless not been formally discharged and released of any and all of our obligations in respect of the Syndicate Facility Agreement due to this outstanding liability.
During 2011 and 2012 we sold, disposed of or handed control over to our lenders a total of 20 vessels and hulls under construction (or the ownership of the shipowning subsidiaries) in connection with our restructuring. To the extent that we have sold vessels, the sale proceeds have been used to repay the related debt.
Since June 2011, we have defaulted under each of our Financing Documents in respect of certain covenants (including, in some cases, the failure to make amortization and interest payments, the failure to satisfy financial covenants and the triggering of cross-default provisions). To date, we are in default under our credit agreements with Piraeus Bank (CPB loan), Portigon AG and Mojave Finance Inc. Credit Facility and the 4.5% Senior Convertible Note due in 2022 issued to Prime Shipping Holding Ltd (“Prime”)(an affiliate of Lemissoler Maritime Company W.L.L. (“Lemissoler”) )(“4.5% Note”) and 7% Notes. These lenders have continued to reserve their rights in respect of such defaults. They have not exercised their remedies at this time; however, they could change their position at any time. As such, there can be no assurance that a satisfactory final agreement will be reached with these lenders, or at all. Refer to “Item 5.-Operating and Financial Review and Prospects-Liquidity and Capital Resources” for a discussion of the various Financing Documents and outstanding debt.
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