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Alvarez & Marsal is Restructuring Advisor on Eagle Bulk Shipping’s Restructuring Agreement

August 08, 2014, 06:50 AM
Filed Under: Bankruptcy

Editor's Note: This news posting is a detailed update to the original news story posted on August 7, 2014.

Eagle Bulk Shipping Inc. ("Eagle Bulk" or "the Company")announced that it has entered into a Restructuring Support Agreement ("RSA") with lenders (the "Lenders") holding more than 85% of the loans outstanding under its Fourth Amended and Restated Credit Agreement, dated June 20, 2012 (the "Credit Agreement"), regarding the terms of a balance sheet restructuring that will strengthen Eagle Bulk's financial position, reduce its debt obligations by approximately $975 million, and significantly enhance liquidity.

To implement the restructuring, Eagle Bulk, the parent company, has commenced a voluntary "prepackaged" chapter 11 case in the United States Bankruptcy Court for the Southern District of New York (the "Court"). The prepackaged case, which excludes all of the Company's operating and management subsidiaries, is intended to facilitate a prompt exit from the financial restructuring process without disruption to Eagle Bulk's business.

In conjunction with the prepackaged case, Eagle Bulk also filed its proposed plan of reorganization (the "Plan") and related disclosure statement. The Company has already received affirmative votes for the Plan from Lenders holding more than 85% of the loans outstanding under its Credit Agreement, constituting more than two-thirds of the total Lenders thereunder, amounts sufficient under applicable law for the Court to confirm the Plan.

Eagle Bulk has also obtained a commitment for up to $50 million of debtor-in-possession ("DIP") financing from certain of its Lenders which, subject to Court approval, will significantly enhance liquidity.

During the process, Eagle Bulk intends to continue normal day-to-day operations, including:

  • Honoring all customer arrangements in the ordinary course of business;
  • Payment of amounts owed to the Company's vendors, suppliers, and business partners; and,
  • Uninterrupted payment of wages, salaries, and other compensation to the Company's crew, employees, and independent contractors.

Eagle Bulk's management will remain in place and Sophocles N. Zoullas will remain Chairman and Chief Executive Officer of the reorganized Eagle Bulk.

"With an expedited restructuring process now underway, we are pleased to have the ongoing support of our Lenders, with whom we will work in partnership to recapitalize Eagle Bulk's balance sheet and significantly reduce the Company's debt load," Mr. Zoullas commented. "We continue to benefit from a world-class, highly-efficient and versatile fleet, and a deep and experienced management team. Upon emergence from the process, we will continue to build on these competitive advantages and further grow our leadership position in the dry bulk market.  We are grateful for the strong support from our Lenders, and look forward to the emergence of an Eagle Bulk that is well-positioned for many years of success."

Mr. Zoullas concluded, "We expect our business activities to continue in the normal course during the restructuring process. The Company's reputation has been built on superior industry relationships and operational excellence – attributes that we will build on moving forward."

Under the terms of the Plan, the Lenders will convert their debt into 99.5% of the new equity in the reorganized Eagle Bulk, subject to dilution, and receive a cash distribution from the proceeds of an exit financing facility. All existing equity interests in Eagle Bulk will be cancelled, with such equity interests receiving, subject to dilution, 0.5% of the new equity in the reorganized Eagle Bulk and seven-year warrants to acquire an additional 7.5% of the new equity in the reorganized Eagle Bulk.

To further ensure that its suppliers, chartering counterparties, business partners, crew members, and employees are unaffected by the restructuring process, Eagle Bulk is seeking customary "first day" motions with the Court to authorize continued payments in the ordinary course of business. 

Eagle Bulk's legal advisor is Milbank, Tweed, Hadley & McCloy LLP, its financial advisor is Moelis & Company, and its restructuring advisor is Alvarez & Marsal.

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