EXCEL Maritime has agreed a bankruptcy plan with lenders that lays out an overhaul of its ownership, according to recently released court documents.
Gabriel Panayotides, chairman of Excel’s board of directors, will walk away with a 7%-10% ownership stake in the reorganised company and the vast majority of shares will go to Excel’s secured lenders.
The plan represents a drastic turnaround on the part of Mr Panayotides, who would have owned 75% of Excel under the company’s original proposal, filed when Excel entered bankruptcy on July 1.
The catalyst for that dramatic swing was that hedge fund firms purchased Excel’s bank debt in the secondary market from traditional European lenders, according to market sources.
That group, led by Oaktree Capital Management, will receive 83.3% ownership in Excel when it exits bankruptcy.
The alternative investors bought pieces of the $771m term loan from the original holders, such as agent bank Nordea Bank, HSH Nor Bank, and BNP Paribas, allowing the new players to drive the negotiations with Excel.
The hedge funds played a strategy ripped from the distressed investor’s play book: purchase debt at a discount and convert it to equity during a restructuring.
If approved, post-bankruptcy Excel will carry only $300m of debt on its balance sheet, versus almost $1bn of total debt when the company filed for Chapter 11.
With less total debt, the company will improve its cashflow when the dry bulk market appears to be strengthening.
Mr Panayotides’ 10% stake will come only after he provides an equity injection of $25m-$35m through Ivory Shipping, an entity he and his family control.
He will use $20m sitting in escrow to fulfil that obligation and will keep his position overseeing the operations for the company, as well as a seat on the board.
Excel posted its new proposed disclosure statement with the US Bankruptcy Court for the Southern District of New York today.
From Lloyds List
GENCO Shipping & Trading has invited pitches from restructuring financial advisors, ahead of a March 31 amortisation payment, that included advisors from Jefferies and Evercore Partners, according to an advisory source and a news report.
As the pitches unfold, lenders have started to organise and the ad hoc group is working with Houlihan Lokey, according to a hedge fund analyst and the Debtwire news report.
Debtwire first reported the competition between Jefferies and Evercore and the news that restructuring advisors from Houlihan Lokey are working with lenders.
Market sources on Wednesday were not surprised by the new behind-the-scene manoeuvres, particularly after relationship bank DnB Nor Bank sold its $520m piece of the company’s $1.01bn revolving credit facility.
The new holders of the bank debt are preparing for negotiations with the company ahead of the $55m amortisation payment, due in the first quarter of next year.
An auction for a $76.7m piece of the revolving facility was scheduled to be held yesterday, at a price of 91.5-92.5 cents on the dollar, according to the Debtwire report.
George Soros’ investment fund has waded into the dry-bulk space, unveiling small holdings in six New York-listed bulker owners.
The Hungarian-American billionaire and Democratic Party-leaning philanthropist reported owning slices of bulker owners such as DryShips, Baltic Trading and Diana Shipping, according to a quarterly filing with the US Securities and Exchange Commission (SEC).
While the stakes are worth only a combined $4.89m, they are in the hands of an investor whose moves are closely watched on Wall Street and whose accounts contained no traditional shipping companies in the prior quarter.
Soros Fund Management’s largest shipping holding was in DryShips at the end of the third quarter.
The firm reported buying more than 590,000 shares in the George Economou-led owner during the period, a stake worth $1.97m at today’s prices.
Soros also bought more than 77,900 shares in Diana Shipping, which is worth about $938,000, and nearly 53,600 shares in Navios Maritime Partners, valued at $889,000.
The company bought smaller stakes in Baltic, Navios Maritime Holdings, and Safe Bulkers.
Soros also picked up a tiny stake in one tanker owner with 75,000 shares of Ireland’s Ardmore Shipping.
Maybe if your Worldcom, Enron, Lehman, Bear Stearns, or some other BS company, but to the vast majority of lenders and borrowers, the market works on the premise that the face value of the loan PLUS the accrued interest gets paid back.
Any discount reflects the NPV of the payment timing and the credit risk factor. Clearly RBS has voted with its wallet - getting 88% of what Eagle owes today is a better deal then who the heck knows what in 2015.
THE piece of Eagle Bulk term loan that Royal Bank of Scotland sold last week has landed with Oaktree Capital Management, after the hedge fund giant scooped up the majority of the amount traded, a hedge fund analyst and an advisory source have revealed.
RBS, which originally committed $776.5m of the loan, sold its entire position last week.
Bank of America emerged as the initial buyer, although at the time, it was unclear whether the bank had held on to the loan or transferred a portion to a third party.
That third party has since been identified as a group of hedge funds led by Oaktree and including Centerbridge Partners.
This would not be the first time that Centerbridge has invested in a shipping company. The hedge fund is a lender to Overseas Shipholding Group, which filed for Chapter 11 protection in 2012.
Representatives from Oaktree and Centerbridge did not respond to requests for comment.
So genius, please tell me why the bank would choose to sell the loan at a discount to face value instead of just collecting the full face value from the debtor?
What's the difference between the book value of their assets and the market value of their assets? And how much debt do they owe on those assets? What can you buy replacement assets for compared the Eagle? When does the LTV covenant come into play? All questions you might want to know the answers to before betting on this being a below book value play. The only reason there hasn't been a write down in the book value is Eagle somehow convinced their auditor that the long term fair value market was $18k/day. Kind of ludicrous when you think that you can buy the BSI TC AVG at under $11k/day all the way out to 2019. At those forward rates, Eagle doesn't pay its bills.
Reported as per standards, so its just an issue of valuation timing. KLC share price likely will be under some pressure as lock up periods expire on mandatory holding period on the debt/equity swaps. Eagle needs the cash, but the balance sheet upside leverage may mean they just hold it. Could easily rebound and then some over the long run. Will be interesting to see what KLC price and volume does after the lockup expires.
KLC settlement resulted in an investment valued on their balance sheet at 33.939M at the end of Q2. KLC share price has fallen from 63,600 KRW to 42,000 KRW. A strengthening KRW during the quarter reduced the impact of the lower investment value by providing a $1.4M gain (unless management hedges the FX exposure). Therefore could be $11.4M if no currency contribution.
In the Supramax sector, the “Imperial Spirit” (53,466 dwt 2005 Imabari) is rumoured sold at US$ excess 18 mill. We would put the price in line with the last done m/v “Darya Shakti” (56,050 dwt 2004blt Mitsui) at US$ 18 mill.
In the Handymax sector, Japanese owners are reported to have sold the “Star Sea Cosmos” (48,893 dwt 2000 IHI) to a Greek investor for a firm price in the region of US$ 13.0 mill.
Basis latest market, I get about $822 million fleet value versus a End of Year (2013) fleet debt (long term+pik) of 1.174B. That's about $350M of equity that needs to be made up in 2014 for Eagle. That's a 41% jump in a depreciating asset.
You read it here first! A year before its released anywhere else! George spends $1.5 billion buying new ships in his private vehicle, which means Dryships will be buying them for $3 billion a year from now!
George Economou-led Cardiff Marine’s speculative capesize investment is being tipped to balloon to more than $1.5bn in value as the owner opens up talks in China for more vessels.
On the back of a hot trading market, the Greek owner has signed up for two 208,000-dwt Newcastlemax bulkers with options for two more at state-owned Shanghai Waigaoqiao Shipbuilding (SWS), where he has built before.
That comes on top of what is understood to be four firm and two optional Newcastlemaxes placed at Singapore-listed Chinese yard Yangzijiang Shipbuilding.
It is also understood that Cardiff has now opened up talks with Hudong-Zhonghua Shipbuilding on an unspecified number of additional orders.
The market in the Far East has been buzzing with talk that Economou could be looking to take his order tally up to 30 vessels in China.
Can't seem to find any reference to this on Eagle's website, but according to Tradewinds (23 August - page 11, yes, I'm a little behind on my vacation catch up reading because the market is nuts), Eagle settled one of the shareholder lawsuits and made some major concessions.
Soph's sideshow company (Delphin) must pay Eagle ~$250k, non-executive director's salaries will be cut from an average of $432k to $240k, and will be future benchmarked against director's salaries at 5 other companies, and all executive stock options granted from 2008 to 2011 have been cancelled.
Surprised they haven't filed this with the SEC.