What you might want to be aware of regarding Eagle's restructured debt...from a prominent freight industry brokerage house
In the immediate term, the restructuring gives Eagle Bulk some breathing room, but the delayed imposition of the above mentioned covenants might force them into another restructuring during 2013. Here’s why:
Minimum Interest Coverage Ratio
Effective June 30, 2013 and requires that Eagle Bulk generate a trailing four quarter EBITDA at least 1.3 times its trailing four-quarter cash interest expense. For the third quarter of 2012, Eagle Bulk is estimated to have a cash interest expense of US $13.2 million. To meet the minimum interest coverage, Eagle Bulk must generate EBITDA in excess of US $17 million. In the second quarter 2012, EBITDA was just under US $10 million.
Begins September 30, 2013 and states Eagle Bulk’s debt outstanding must not exceed 13.9 times its trailing four-quarter EBITDA. The current debt outstanding of US $1.1 billion would indicate a required minimum average quarterly EBITDA in excess of US $20.3 million starting with the fourth quarter of 2012.
States Eagle Bulk must maintain minimum liquidity of US $22.5 million (US $0.5 million per vessel). As of June 30th , 2012, Eagle Bulk had liquidity reserves of US $37.1 million, US $20 million credit facility plus US $17.1 million cash. Taking out US $5.8 million for unpaid financing costs, leaves the company with just under a US $8 million unrestricted cash cushion.
Eagle Bulk’s restructuring was executed quicker than some of the others which have occurred in the industry and it did so while staying out of court proceedings. Initially, it appeared the lenders were willing to provide flexible terms for a mutually beneficial restructuring. However, we see the details of the deal, including delayed covenants, are just as important to consider as the major terms of the deal related to principal payments, interest and maturity. Eagle Bulk bought itself some time to evaluate further options but it is by no means sitting comfortably to ride out the remaining depressed freight rate environment in the dry bulk market.
why does every one of your posts reference the Q2 numbers when Q3 numbers have been out for months now ? trying to spin it your way ? you're trying to convince others you're Warren Buffet but your singing like Jonny Cash. a bunch of words stitched together to cry your song. u must be one of these shorts soon to get pounded. u must not have much of an imagination to envision what is next here
To back and read this board's history. If you think I'm getting pounded for being short at $2/share, then you are a 2-bit investor. I'm publicly on the record to short it when it was trading at $24/share.
I haven't refered to Q2 numbers once. I posted a reprint from a brokerage house to point out that Eagle will once again be in default of their "new" relaxed loan covenants in less then 4 months. Ignore it at your own peril. Q3's "cash flow" was a whopping $2.6M but only because the bank decided to forgoe the principal payments due under the loan agreement. You obviously are having trouble seeing the financial position this company is in. If you can't repay the bank, equity isn't worth anything. Its basic Finance 101.