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1 - GENERAL INFORMATION
The accompanying condensed consolidated financial statements include the accounts of Genco Shipping & Trading Limited (“GS&T”) and its direct and indirect wholly-owned subsidiaries, including Baltic Trading Limited (collectively, the “Company”). The Company is engaged in the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk carrier vessels. GS&T is incorporated under the laws of the Marshall Islands, and as of September 30, 2016, is the sole owner of all of the outstanding shares or limited liability company interests of the following subsidiaries: Genco Ship Management LLC; Genco Investments LLC; Genco RE Investments LLC; and the ship-owning subsidiaries as set forth below under “Other General Information.” As of September 30, 2016, Genco Ship Management LLC is the sole owner of all of the outstanding limited liability company interests of Genco Management (USA) LLC.
On April 15, 2016, the shareholders of the Company approved, at a Special Meeting of Shareholders (the “Special Meeting”), proposals to amend the Second Amended and Restated Articles of Incorporation of the Company to (i) increase the number of authorized shares of common stock of the Company from 250,000,000 to 500,000,000 and (ii) authorize the issuance of up to 100,000,000 shares of preferred stock, in one or more classes or series as determined by the Board of Directors of the Company. The authorized shares did not change as a result of the reverse stock split. Following the Special Meeting on such date, the Company filed Articles of Amendment of its Second Amended and Restated Articles of Incorporation with the Registrar of Corporations of the Republic of the Marshall Islands to implement to the foregoing amendments. Additionally, at the Special Meeting, the shareholders of the Company approved a proposal to amend the Second Amended and Restated Articles of Incorporation of the Company to effect a reverse stock split of the issued and outstanding shares of Common Stock at a ratio between 1-for-2 and 1-for-25 with such reverse stock split to be effective at such time and date, if at all, as determined by the Board of Directors of the Company, but no later than one year after shareholder approval thereof.
On July 7, 2016, the Company completed a one-for-ten reverse stock split of its common stock. As a result, all share and per share information included for all periods presented in these condensed consolidated financial statements, with the exception of any share information for Baltic Trading, reflect the reverse stock split. Refer to Note 6 — Net Loss per Common Share and Note 18 — Stock-Based Compensation.
On October 13, 2016, Peter C. Georgiopoulos resigned as Chairman of the Board and a director of the Company. The Board of Directors appointed Arthur L. Regan, a current director of the Company, as Interim Executive Chairman of the Board. In connection with his departure, Mr. Georgiopoulos entered into a Separation Agreement and a Release Agreement with the Company on October 13, 2016. Under the terms of these agreements, subject to customary conditions, Mr. Georgiopoulos is to receive an amount equal to the annual Chairman’s fee awarded to him in recent years of $500 as a severance payment and full vesting of his unvested equity awards, which consist of grants of 68,581 restricted shares of the Company’s common stock and warrants exercisable for approximately 213,937 shares of the Company’s common stock with an exercise price per share ranging $259.10 to $341.90. Refer to Note 18 — Stock-Based Compensation. The agreements also contain customary provisions pertaining to confidential information, releases of claims by Mr. Georgiopoulos, and other restrictive covenants.
Liquidity, Going Concern, and Reclassification of Debt to Current
For purposes of preparing financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), the Company is required to disclose if it is in compliance with covenants under all of its nine credit facilities on a quarterly basis. Pursuant to the Second Amended Commitment Letter, the Amended $98 Million Credit Facility Commitment Letter and the waiver entered into for the 2014 Term Loan Facilities (refer to Note 8 — Debt for defined terms), the collateral maintenance and maximum leverage requirements under all nine of the Company’s credit facilities have been waived through September 30, 2016, with the exception of the Amended $98 Million Credit Facility Commitment Letter, which reduced the collateral maintenance requirement from 140% to 120% and the 2014 Term Loan Facilities, for which the waivers were extended through November 15, 2016, except that such extended waivers under the 2014 Term Loan Facilities will be void if Sinosure gives written notice to the agent bank that it does not approve the waivers. Each of the Company’s credit facilities contain cross default provisions that could be triggered by the Company’s failure to satisfy or waive its collateral maintenance and maximum leverage covenants once the waivers expire. Given the existence of the cross default provisions and the absence of any current solution which would cure the noncompliance for at least the next twelve months, absent entering into the New Facility (see Note 8 — Debt), the Company has determined that it should classify its outstanding indebtedness as a current liability as of September 30, 2016 and December 31, 2015.
Persistent weak drybulk industry conditions and historically low charter rates have negatively impacted the Company’s results of operations, cash flows, and liquidity and may continue to do so in the future. The negative impact on the Company’s liquidity, together with a continued decline in vessel values, presents difficulties for remaining in compliance with its credit facility covenants relating to minimum cash, leverage ratios, and collateral maintenance (refer to Note 8 — Debt), which could potentially result in defaults and acceleration of the repayment of its outstanding indebtedness. These factors, as well as recurring losses from operations and negative working capital, raise substantial doubt about the Company’s 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. The Company’s ability to continue as a going concern is contingent upon, among other things, its ability to: (i) develop and successfully implement a plan to address these factors, which may include refinancing the Company’s existing credit agreements, or obtaining further waivers or modifications to its credit agreements from its lenders, or raising additional capital through selling assets (including vessels), reducing or delaying capital expenditures, or pursuing other options that may be available to the Company which may include pursuing strategic opportunities and equity or debt offerings or potentially seeking protection in a Chapter 11 proceeding; (ii) return to profitability, (iii) generate sufficient cash flow from operations, (iv) remain in compliance with its credit facility covenants, as the same may be modified, and (v) obtain financing sources to meet the Company’s future obligations. Refer to “Commitment Letter” section in Note 8 — Debt for a discussion of the New Facility for an aggregate principal amount of up to $400,000. The realization of the Company’s assets and the satisfaction of its liabilities are subject to uncertainty. The accompanying condensed 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, except in regards to the classification of outstanding indebtedness as described above.
Merger Agreement with Baltic Trading
On April 7, 2015, the Company entered into a definitive merger agreement with Baltic Trading Limited (“Baltic Trading”) under which the Company acquired Baltic Trading in a stock-for-stock transaction (the “Merger”). Under the terms of the agreement, Baltic Trading became an indirect wholly-owned subsidiary of the Company, and Baltic Trading shareholders (other than the Company and its subsidiaries) received 0.216 shares of the Company’s common stock for each share of Baltic Trading’s common stock they owned at closing, with fractional shares to be settled in cash. Upon consummation of the transaction on July 17, 2015, the Company’s shareholders owned approximately 84.5% of the combined company, and Baltic Trading’s shareholders (other than the Company and its subsidiaries) owned approximately 15.5% of the combined company. Shares of Baltic Trading’s Class B stock (all of which are owned by the Company) were canceled in the Merger. The Company’s common stock began trading on the New York Stock Exchange after consummation of the transaction on July 20, 2015. The Boards of Directors of both the Company and Baltic Trading established independent special committees to review the transaction and negotiate the terms on behalf of their respective companies. Both independent special committees unanimously approved the transaction. The Boards of Directors of both companies approved the Merger by a unanimous vote of directors present and voting, with Peter C. Georgiopoulos, former Chairman of the Board of each company, recused for the vote. The Merger was approved on July 17, 2015 at the 2015 Annual Meeting of Shareholders (the “Annual Meeting”).
Prior to the completion of the Merger, the Company prepared its condensed consolidated financial statements in accordance with U.S. GAAP and consolidated the operations of Baltic Trading. The Baltic Trading common shares that the Company acquired in the Merger were previously recognized as a noncontrolling interest in the consolidated financial statements of the Company. Under U.S. GAAP, changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary are considered equity transactions (i.e. transactions with owners in their capacity as owners) with any difference between the amount by which the noncontrolling interest is adjusted and the fair value of the consideration paid attributed to the equity of the parent. Accordingly, any difference between the fair value of the Company’s common shares issued in exchange for Baltic Trading common shares pursuant to the Merger was reflected as an adjustment to the equity in the Company. No gain or loss has been recognized in the Company’s Condensed Consolidated Statement of Comprehensive Loss upon completion of the transaction.
Acquisition of Baltic Lion and Baltic Tiger
Additionally, on April 7, 2015, the Company entered into an agreement under which the Company acquired all of the shares of two single-purpose vessel owning entities that were wholly owned by Baltic Trading, each of which owned one Capesize drybulk vessel, specifically the Baltic Lion and Baltic Tiger, for an aggregate purchase price of $68,500, subject to reduction for $40,563 of outstanding first-mortgage debt of such single-purpose entities that was guaranteed by the Company. For further details, refer to the “Impairment of vessel assets” Section in Note 2 — Summary of Significant Accounting Policies. These transactions, which closed on April 8, 2015, were accounted for pursuant to accounting guidance under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, “Business Combinations” (“ASC 805”), for transactions among entities under common control. Accordingly, the difference between the cash paid to Baltic Trading and the Company’s carrying value of the Baltic Lion and Baltic Tiger as of the closing date of $590 was reflected as an adjustment to Additional paid-in capital in the Condensed Consolidated Statement of Equity when the sale was completed on April 7, 2015. The independent special committees of both companies’ Boards of Directors reviewed and approved these transactions.
Other General Information
Below is the list of the Company’s wholly owned ship-owning subsidiaries as of September 30, 2016:
Wholly Owned Subsidiaries |
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Vessel Acquired |
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Dwt |
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Delivery Date |
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Year Built |
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Genco Reliance Limited |
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Genco Reliance |
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29,952 |
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12/6/04 |
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1999 |
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Genco Vigour Limited |
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Genco Vigour |
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73,941 |
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12/15/04 |
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1999 |
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Genco Explorer Limited |
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Genco Explorer |
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29,952 |
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12/17/04 |
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1999 |
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Genco Carrier Limited |
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Genco Carrier |
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47,180 |
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12/28/04 |
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1998 |
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Genco Sugar Limited |
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Genco Sugar |
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29,952 |
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12/30/04 |
(3) |
1998 |
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Genco Pioneer Limited |
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Genco Pioneer |
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29,952 |
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1/4/05 |
(4) |
1999 |
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Genco Progress Limited |
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Genco Progress |
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29,952 |
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1/12/05 |
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1999 |
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Genco Wisdom Limited |
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Genco Wisdom |
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47,180 |
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1/13/05 |
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1997 |
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Genco Success Limited |
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Genco Success |
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47,186 |
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1/31/05 |
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1997 |
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Genco Beauty Limited |
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Genco Beauty |
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73,941 |
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2/7/05 |
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1999 |
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Genco Knight Limited |
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Genco Knight |
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73,941 |
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2/16/05 |
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1999 |
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Genco Leader Limited |
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Genco Leader |
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73,941 |
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2/16/05 |
(5) |
1999 |
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Genco Prosperity Limited |
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Genco Prosperity |
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47,180 |
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4/4/05 |
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1997 |
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Genco Muse Limited |
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Genco Muse |
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48,913 |
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10/14/05 |
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2001 |
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Genco Acheron Limited |
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Genco Acheron |
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72,495 |
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11/7/06 |
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1999 |
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Genco Surprise Limited |
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Genco Surprise |
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72,495 |
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11/17/06 |
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1998 |
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Genco Augustus Limited |
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Genco Augustus |
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180,151 |
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8/17/07 |
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2007 |
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Genco Tiberius Limited |
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Genco Tiberius |
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175,874 |
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8/28/07 |
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2007 |
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Genco London Limited |
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Genco London |
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177,833 |
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9/28/07 |
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2007 |
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Genco Titus Limited |
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Genco Titus |
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177,729 |
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11/15/07 |
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2007 |
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Genco Challenger Limited |
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Genco Challenger |
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28,428 |
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12/14/07 |
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2003 |
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Genco Charger Limited |
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Genco Charger |
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28,398 |
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12/14/07 |
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2005 |
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Genco Warrior Limited |
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Genco Warrior |
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55,435 |
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12/17/07 |
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2005 |
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Genco Predator Limited |
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Genco Predator |
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55,407 |
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12/20/07 |
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2005 |
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Genco Hunter Limited |
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Genco Hunter |
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58,729 |
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12/20/07 |
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2007 |
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Genco Champion Limited |
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Genco Champion |
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28,445 |
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1/2/08 |
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2006 |
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Genco Constantine Limited |
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Genco Constantine |
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180,183 |
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2/21/08 |
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2008 |
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Genco Raptor LLC |
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Genco Raptor |
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76,499 |
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6/23/08 |
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2007 |
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Genco Cavalier LLC |
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Genco Cavalier |
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53,617 |
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7/17/08 |
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2007 |
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Genco Thunder LLC |
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Genco Thunder |
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76,588 |
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9/25/08 |
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2007 |
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Genco Hadrian Limited |
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Genco Hadrian |
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169,694 |
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12/29/08 |
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2008 |
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Genco Commodus Limited |
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Genco Commodus |
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169,025 |
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7/22/09 |
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2009 |
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Genco Maximus Limited |
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Genco Maximus |
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169,025 |
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9/18/09 |
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2009 |
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Genco Claudius Limited |
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Genco Claudius |
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169,025 |
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12/30/09 |
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2010 |
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Genco Bay Limited |
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Genco Bay |
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34,296 |
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8/24/10 |
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2010 |
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Genco Ocean Limited |
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Genco Ocean |
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34,409 |
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7/26/10 |
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2010 |
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Genco Avra Limited |
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Genco Avra |
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34,391 |
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5/12/11 |
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2011 |
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Genco Mare Limited |
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Genco Mare |
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34,428 |
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7/20/11 |
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2011 |
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Genco Spirit Limited |
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Genco Spirit |
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34,432 |
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11/10/11 |
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2011 |
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Genco Aquitaine Limited |
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Genco Aquitaine |
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57,981 |
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8/18/10 |
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2009 |
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Genco Ardennes Limited |
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Genco Ardennes |
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57,981 |
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8/31/10 |
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2009 |
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Genco Auvergne Limited |
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Genco Auvergne |
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57,981 |
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8/16/10 |
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2009 |
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Genco Bourgogne Limited |
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Genco Bourgogne |
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57,981 |
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8/24/10 |
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2010 |
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Genco Brittany Limited |
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Genco Brittany |
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57,981 |
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9/23/10 |
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2010 |
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Genco Languedoc Limited |
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Genco Languedoc |
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57,981 |
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9/29/10 |
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2010 |
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Genco Loire Limited |
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Genco Loire |
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53,416 |
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8/4/10 |
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2009 |
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Genco Lorraine Limited |
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Genco Lorraine |
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53,416 |
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7/29/10 |
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2009 |
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Genco Normandy Limited |
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Genco Normandy |
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53,596 |
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8/10/10 |
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2007 |
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Genco Picardy Limited |
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Genco Picardy |
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55,257 |
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8/16/10 |
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2005 |
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Genco Provence Limited |
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Genco Provence |
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55,317 |
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8/23/10 |
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2004 |
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Genco Pyrenees Limited |
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Genco Pyrenees |
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57,981 |
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8/10/10 |
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2010 |
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Genco Rhone Limited |
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Genco Rhone |
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58,018 |
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3/29/11 |
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2011 |
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Baltic Lion Limited |
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Baltic Lion |
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179,185 |
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4/8/15 |
(1) |
2012 |
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Baltic Tiger Limited |
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Genco Tiger |
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179,185 |
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4/8/15 |
(1) |
2011 |
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Baltic Leopard Limited |
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Baltic Leopard |
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53,447 |
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4/8/10 |
(2) |
2009 |
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Baltic Panther Limited |
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Baltic Panther |
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53,351 |
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4/29/10 |
(2) |
2009 |
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Baltic Cougar Limited |
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Baltic Cougar |
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53,432 |
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5/28/10 |
(2) |
2009 |
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Baltic Jaguar Limited |
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Baltic Jaguar |
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53,474 |
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5/14/10 |
(2) |
2009 |
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Baltic Bear Limited |
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Baltic Bear |
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177,717 |
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5/14/10 |
(2) |
2010 |
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Baltic Wolf Limited |
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Baltic Wolf |
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177,752 |
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10/14/10 |
(2) |
2010 |
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Baltic Wind Limited |
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Baltic Wind |
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34,409 |
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8/4/10 |
(2) |
2009 |
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Baltic Cove Limited |
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Baltic Cove |
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34,403 |
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8/23/10 |
(2) |
2010 |
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Baltic Breeze Limited |
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Baltic Breeze |
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34,386 |
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10/12/10 |
(2) |
2010 |
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Baltic Fox Limited |
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Baltic Fox |
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31,883 |
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9/6/13 |
(2) |
2010 |
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Baltic Hare Limited |
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Baltic Hare |
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31,887 |
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9/5/13 |
(2) |
2009 |
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Baltic Hornet Limited |
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Baltic Hornet |
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63,574 |
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10/29/14 |
(2) |
2014 |
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Baltic Wasp Limited |
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Baltic Wasp |
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63,389 |
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1/2/15 |
(2) |
2015 |
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Baltic Scorpion Limited |
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Baltic Scorpion |
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63,462 |
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8/6/15 |
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2015 |
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Baltic Mantis Limited |
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Baltic Mantis |
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63,470 |
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10/9/15 |
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2015 |
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(1) |
The delivery date for these vessels represents the date that the vessel was purchased from Baltic Trading. |
(2) |
The delivery date for these vessels represents the date that the vessel was delivered to Baltic Trading. |
(3) |
The Genco Sugar was sold on October 20, 2016. Refer to Note 20 – Subsequent Events. |
(4) |
The Genco Pioneer was sold on October 26, 2016. Refer to Note 20 – Subsequent Events. |
(5) |
The Genco Leader was sold on November 4, 2016. Refer to Note 20 – Subsequent Events. |
The Company formerly provided technical services for drybulk vessels purchased by Maritime Equity Partners (“MEP”). Peter C. Georgiopoulos, former Chairman of the Board of Directors of the Company, is a director of and has a minority interest in MEP. These services included oversight of crew management, insurance, drydocking, ship operations and financial statement preparation, but did not include chartering services. The services were initially provided for a fee of $750 per ship per day plus reimbursement of out-of-pocket costs and were provided for an initial term of one year. On September 30, 2015, under the oversight of an independent committee of our Board of Directors, Genco Management (USA) LLC and MEP entered into certain agreements under which MEP paid $2,178 of the amount of service fees in arrears (of which $261 was paid in 2016 by the new owners of five of the MEP vessels sold in January 2016 as described below) and the daily service fee was reduced from $750 to $650 per day effective on October 1, 2015. During January 2016, five of MEP’s vessels were sold to third parties and were no longer subject to the agency agreement. Based upon the September 30, 2015 agreement, termination fees were due in the amount of $296 which was assumed by the new owners of the five MEP vessels that were sold and were paid in full during February 2016. Additionally, during the three months ended September 30, 2016, the remaining seven of MEP’s vessels were sold to third parties, and the agency agreement was deemed terminated upon the sale of these vessels. Based upon the September 30, 2015 agreement, termination fees were due in the amount of $830, which was assumed by the new owners of the seven MEP vessels that were sold and were paid in full as of September 30, 2016. Refer to Note 7 – Related Party Transactions for amounts due to or from MEP as of September 30, 2016 and December 31, 2015.
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2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP which includes the accounts of GS&T and its direct and indirect wholly-owned subsidiaries, including Baltic Trading. All intercompany accounts and transactions have been eliminated in consolidation.
Basis of presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of management of the Company, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and operating results have been included in the statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2015 (the “2015 10-K”). The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the operating results to be expected for the year ending December 31, 2016.
Segment reporting
The Company reports financial information and evaluates its operations by charter revenues and not by the length of ship employment for its customers, i.e., spot or time charters. Each of the Company’s vessels serve the same type of customer, have similar operations and maintenance requirements, operate in the same regulatory environment, and are subject to similar economic characteristics. Based on this, the Company has determined that it operates in one reportable segment, after the effective date of the Merger on July 17, 2015, which is engaged in the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk carrier vessels. Prior to the Merger, the Company had two reportable operating segments, GS&T and Baltic Trading.
Vessels, net
Vessels, net is stated at cost less accumulated depreciation. Included in vessel costs are acquisition costs directly attributable to the acquisition of a vessel and expenditures made to prepare the vessel for its initial voyage. The Company also capitalizes interest costs for a vessel under construction as a cost which is directly attributable to the acquisition of a vessel. Vessels are depreciated on a straight-line basis over their estimated useful lives, determined to be 25 years from the date of initial delivery from the shipyard. Depreciation expense for vessels for the three months ended September 30, 2016 and 2015 was $17,077 and $19,172, respectively. Depreciation expense for vessels for the nine months ended September 30, 2016 and 2015 was $54,752 and $56,869, respectively.
Depreciation expense is calculated based on cost less the estimated residual scrap value. The costs of significant replacements, renewals and betterments are capitalized and depreciated over the shorter of the vessel’s remaining estimated useful life or the estimated life of the renewal or betterment. Undepreciated cost of any asset component being replaced that was acquired after the initial vessel purchase is written off as a component of vessel operating expense. Expenditures for routine maintenance and repairs are expensed as incurred. Scrap value is estimated by the Company by taking the estimated scrap value of $310 per lightweight ton (“lwt”) times the weight of the ship noted in lwt.
Vessels held for sale
On September 30, 2016, the Board of Directors authorized the sale of the Genco Sugar and Genco Pioneer. As such, these vessel assets have been classified as held for sale in the Condensed Consolidated Balance Sheet as of September 30, 2016. Refer to Note 4 — Vessel Acquisitions and Dispositions and Note 20 — Subsequent Events for additional information.
Deferred revenue
Deferred revenue primarily relates to cash received from charterers prior to it being earned. These amounts are recognized as income when earned. Additionally, deferred revenue includes estimated customer claims mainly due to time charter performance issues. As of September 30, 2016 and December 31, 2015, the Company had an accrual of $398 and $498, respectively, related to these estimated customer claims.
Voyage expense recognition
In time charters, spot market-related time charters and pool agreements, operating costs including crews, maintenance and insurance are typically paid by the owner of the vessel and specified voyage costs such as fuel and port charges are paid by the charterer. There are certain other non-specified voyage expenses, such as commissions, which are typically borne by the Company. At the inception of a time charter, the Company records the difference between the cost of bunker fuel delivered by the terminating charterer and the bunker fuel sold to the new charterer as a gain or loss within voyage expenses. Additionally, the Company records lower of cost or market adjustments to re-value the bunker fuel on a quarterly basis. These differences in bunkers, including lower of cost or market adjustments, resulted in a net loss of $390 and $3,099 during the three months ended September 30, 2016 and 2015, respectively. These differences in bunkers, including lower of cost or market adjustments, resulted in a net loss of $4,195 and $6,957 during the nine months ended September 30, 2016 and 2015, respectively. Additionally, voyage expenses include the cost of bunkers consumed during short-term time charters pursuant to the terms of the time charter agreement.
Other operating income
During the three and nine months ended September 30, 2016, the Company recorded other operating income of $0 and $182, respectively. There was no operating income earned during the three and nine months ended September 30, 2015. Other operating income recorded during the nine months ended September 30, 2016 consists primarily of $157 received from Samsun Logix Corporation (“Samsun”) pursuant to the revised rehabilitation plan that was approved by the South Korean courts on April 8, 2016. Refer to Note 17 — Commitments and Contingencies for further information regarding the bankruptcy settlement with Samsun.
Impairment of vessel assets
During the three months ended September 30, 2016 and 2015, the Company did not record any impairment of vessel assets in accordance with ASC 360 — “Property, Plant and Equipment” (“ASC 360”). During the nine months ended September 30, 2016 and 2015, the Company recorded $69,278 and $35,396, respectively, related to the impairment of vessel assets in accordance with ASC 360.
At June 8, 2016, the Company determined that the scrapping of nine of its vessels, the Genco Acheron, Genco Carrier, Genco Leader, Genco Pioneer, Genco Prosperity, Genco Reliance, Genco Success, Genco Sugar, and Genco Wisdom, was more likely than not pursuant to the Commitment Letter entered into for the New Credit Facility as defined and disclosed in Note 8 — Debt. Therefore, at June 8, 2016, the time utilized to determine the recoverability of the carrying value of the vessel assets was significantly reduced. After determining that the sum of the estimated undiscounted future cash flows attributable to the aforementioned nine vessels did not exceed the carrying value of the vessels at June 8, 2016, the Company reduced the carrying value of the nine vessels to their net realizable value, which was based on the expected net proceeds from scrapping the vessels. This resulted in an impairment loss of $67,594 during the nine months ended September 30, 2016.
At March 31, 2016, the Company determined that the scrapping of the Genco Marine was more likely than not based on discussions with the Company’s Board of Directors. Therefore, at March 31, 2016, the time utilized to determine the recoverability of the carrying value of the vessel asset was significantly reduced. After determining that the sum of the estimated undiscounted future cash flows attributable to the Genco Marine did not exceed the carrying value of the vessel at March 31, 2016, the Company reduced the carrying value of the Genco Marine to its net realizable value, which was based on the expected proceeds from scrapping the vessel. This resulted in an impairment loss of $1,684 during the nine months ended September 30, 2016. On April 5, 2016, the Board of Directors unanimously approved scrapping the Genco Marine and the sale of the Genco Marine to the scrap yard was completed on May 17, 2016.
At March 31, 2015, the Company determined that the sale of the Baltic Lion and Baltic Tiger was more likely than not based on Baltic Trading’s expressed consideration to divest of those vessels. Therefore, at March 31, 2015, the time utilized to determine the recoverability of the carrying value of the vessel assets was significantly reduced. Similarly, after determining that the sum of the estimated undiscounted future cash flows attributable to the Baltic Lion and Baltic Tiger would not exceed the carrying value of the respective vessels at March 31, 2015, the Company reduced the carrying value of both vessels to their estimated fair value, which was determined primarily based on appraisals and third-party broker quotes. This resulted in an impairment loss of $35,396 during the nine months ended September 30, 2015. On April 8, 2015, the Baltic Lion and Baltic Tiger entities were sold to GS&T. Refer to Note 1 — General Information for details pertaining to the sale of these entities.
Loss on disposal of vessels
During the three and nine months ended September 30, 2016, the Company recorded $0 and $77 related to the loss on the sale of the Genco Marine, respectively. During the three and nine months ended September 30, 2015, the Company recorded $0 and $1,210 related to the loss on sale of vessels related to the sale of the Baltic Lion and Baltic Tiger entities to GS&T from Baltic Trading on April 8, 2015, respectively.
Noncontrolling interest
Net loss attributable to noncontrolling interest during the three and nine months ended September 30, 2015 of $7,178 and $59,471, respectively, reflects the noncontrolling interest’s share of the net loss of the Company’s subsidiary, Baltic Trading, prior to the Merger on July 17, 2015, which owned and employed drybulk vessels in the spot market, in vessel pools or on spot market-related time charters. The spot market represents immediate chartering of a vessel, usually for single voyages. Refer to Note 1— General Information for details pertaining to the Merger.
Investments
The Company holds an investment in the capital stock of Jinhui Shipping and Transportation Limited (“Jinhui”) and in Korea Line Corporation (“KLC”). Jinhui is a drybulk shipping owner and operator focused on the Supramax segment of drybulk shipping. KLC is a marine transportation service company which operates a fleet of carriers which includes carriers for iron ore, liquefied natural gas and tankers for oil and petroleum products. The investments in Jinhui and KLC have been designated as Available For Sale (“AFS”) and are reported at fair value, with unrealized gains and losses recorded in equity as a component of accumulated other comprehensive income (loss) (“AOCI”). The Company classifies the investments as current or noncurrent assets based on the Company’s intent to hold the investments at each reporting date.
Investments are reviewed quarterly to identify possible other-than-temporary impairment in accordance with ASC Subtopic 320-10, “Investments — Debt and Equity Securities” (“ASC 320-10”). When evaluating its investments, the Company reviews factors such as the length of time and extent to which fair value has been below the cost basis, the financial condition of the issuer, the underlying net asset value of the issuer’s assets and liabilities, and the Company’s ability and intent to hold the investment for a period of time which may be sufficient for anticipated recovery in market value. Should the decline in the value of any investment be deemed to be other-than-temporary, the investment basis would be written down to fair market value, and the write-down would be recorded to earnings as a loss. Refer to Note 5 — Investments.
Income taxes
Pursuant to certain agreements, GS&T technically and commercially managed vessels for Baltic Trading until the Merger, as well as provides technical management of vessels for MEP in exchange for specified fees for these services provided. These services are performed by Genco Management (USA) LLC (“Genco (USA)”), which has elected to be taxed as a corporation for United States federal income tax purposes. As such, Genco (USA) is subject to United States federal income tax on its worldwide net income, including the net income derived from providing these services. Genco (USA) has entered into a cost-sharing agreement with the Company and Genco Ship Management LLC, collectively Manco, pursuant to which Genco (USA) agrees to reimburse Manco for the costs incurred by Genco (USA) for the use of Manco’s personnel and services in connection with the provision of the services for both Baltic Trading and MEP’s vessels.
Total revenue earned by the Company for these services during the three months ended September 30, 2016 was $1,016 of which $0 eliminated upon consolidation. After allocation of certain expenses, there was taxable income of $829 associated with these activities for the three months ended September 30, 2016. This resulted in estimated tax expense of $417 for the three months ended September 30, 2016. Total revenue earned by the Company for these services during the three months ended September 30, 2015 was $1,012 of which $184 eliminated upon consolidation. After allocation of certain expenses, there was taxable income of $593 associated with these activities for the three months ended September 30, 2015. This resulted in estimated tax expense of $269 for the three months ended September 30, 2015.
Total revenue earned by the Company for these services during the nine months ended September 30, 2016 was $2,240 of which $0 eliminated upon consolidation. After allocation of certain expenses, there was taxable income of $1,619 associated with these activities for the nine months ended September 30, 2016. This resulted in estimated tax expense of $766 for the nine months ended September 30, 2016. Total revenue earned by the Company for these services during the nine months ended September 30, 2015 was $5,692 of which $3,235 eliminated upon consolidation. After allocation of certain expenses, there was taxable income of $3,323 associated with these activities for the nine months ended September 30, 2016. This resulted in estimated tax expense of $1,499 for the nine months ended September 30, 2016.
Prior to the Merger, Baltic Trading was subject to income tax on its United States source income. However, as a result of the Merger, Baltic Trading should qualify for the Section 883 exemption of the U.S. Internal Revenue Code of 1986 (as amended) in 2016 and in future taxable years as long as GS&T qualifies for the Section 883 exemption. As such, during the three and nine months ended September 30, 2016, there was no United States income tax recorded for Baltic Trading. During the three and nine months ended September 30, 2015, Baltic Trading had United States operations that resulted in United States source income of $583 and $1,348, respectively. Baltic Trading’s estimated United States income tax expense for the three and nine months ended September 30, 2015 was $23 and $54, respectively.
Recent accounting pronouncements
In August 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” This ASU adds or clarifies the guidance in ASC 230 – Statement of Cash Flows regarding the classification of certain cash receipts and payments in the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2017, and for interim periods within those years and early adoption is permitted. This ASU shall be applied retrospectively to all periods presented, but may be applied prospectively from the earliest date practicable if retrospective application would be impracticable. The Company is currently evaluating the impact of this adoption on its consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which replaces the existing guidance in ASC 840 – Leases. This ASU requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize a straight-line total lease expense. This ASU is effective for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years. Lessees and lessors will be required to apply the new standard at the beginning of the earliest period presented in the financial statements in which they first apply the new guidance, using a modified retrospective transition method. The requirements of this standard include a significant increase in required disclosures. The Company is currently evaluating the impact of this adoption on its consolidated financial statements.
In January 2016, the FASB issued ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). This ASU will require that equity investments are measured at fair value with changes in fair value recognized in net income (loss). ASU 2016-01 will be effective for annual periods beginning after December 15, 2017, and interim periods within those years. The Company is currently evaluating the impact of this adoption on its consolidated financial statements.
In August 2015, the FASB issued ASU No. 2015-15 (“ASU 2015-15”), which amends presentation and disclosure requirements outlined in ASU 2015-03, “Interest-Imputation of Interest (ASC Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,” (“ASU 2015-03”) by clarifying guidance for debt issuance costs related to line of credit arrangements by acknowledging the statement by SEC staff that it would not object to presentation of debt issuance costs related to a line of credit arrangement as an asset, and amortizing them ratably over the term of the line of credit arrangement, regardless of whether there were any borrowings outstanding under the agreement. Issued in April 2015, ASU 2015-03 required debt issuance costs related to a recognized debt liability to be presented on the balance sheet as a direct deduction from the debt liability, similar to the presentation of debt discounts. Prior to the issuance of ASU 2015-03, debt issuance costs were required to be presented as deferred charge assets, separate from the related debt liability. ASU 2015-03 does not change the recognition and measurement requirements for debt issuance costs. ASU 2015-03 is effective for fiscal years beginning after December 15, 2015, and early adoption is permitted. The Company adopted ASU 2015-03 during the three months ended March 31, 2016 on a retrospective basis. Refer to Note 8 – Debt.
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle is that a company should recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, and shall be applied either retrospectively to each period presented or as a cumulative effect adjustment as of the date of adoption. On July 9, 2015, the FASB voted to defer the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date. The FASB also permitted early adoption of the standard, but not before the original effective date of December 15, 2016. The Company is evaluating the potential impact of this adoption on its consolidated financial statements. Subsequent to the issuance of ASU 2014-09, the FASB issued the following ASU’s which amend or provide additional guidance on topics addressed in ASU 2014-09. In March 2016, the FASB issued ASU No. 2016-08, “Revenue Recognition - Principal versus Agent” (reporting revenue gross versus net). In April 2016, the FASB issued ASU No. 2016-10, “Revenue Recognition - Identifying Performance Obligations and Licenses.” Lastly, in May 2016, the FASB issued No. ASU 2016-12, “Revenue Recognition - Narrow Scope Improvements and Practical Expedients.” The Company is evaluating the potential impact of this adoption on its consolidated financial statements.
|
3 - CASH FLOW INFORMATION
For the nine months ended September 30, 2016, the Company had non-cash investing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $45 for the Purchase of vessels, including deposits and $18 for the Purchase of other fixed assets. Additionally, during the nine months ended September 30, 2016, the Company had non-cash investing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in Prepaid expenses and other current assets consisting of $58 associated with the Sale of AFS securities.
Professional fees and trustee fees in the amount of $243 were recognized by the Company in Reorganization items, net for the nine months ended September 30, 2016 (refer to Note 16 — Reorganizations Items, net). During this period, $173 of professional fees and trustee fees were paid through September 30, 2016 and $117 is included in Accounts payable and accrued expenses as of September 30, 2016.
For the nine months ended September 30, 2015, the Company had non-cash investing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $363 for the Purchase of vessels, including deposits and $49 for the Purchase of other fixed assets. Additionally, for the nine months ended September 30, 2015, the Company had non-cash financing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $14 associated with the Payment of deferred financing fees. Lastly, for the nine months ended September 30, 2015, the Company had non-cash financing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $82 associated with the Cash settlement of non-accredited Note holders. During the nine months ended September 30, 2015, the Company increased the estimated amount of non-accredited holders of the Convertible Senior Notes, which was discharged on July 9, 2014 when the Company emerged from bankruptcy (the “Effective Date”), that are expected to be settled in cash versus settled with common shares.
Professional fees and trustee fees in the amount of $1,006 were recognized by the Company in Reorganization items, net for the nine months ended September 30, 2015 (refer to Note 16 — Reorganizations Items, net). During this period, $1,162 of professional fees and trustee fees were paid through September 30, 2015 and $157 is included in Accounts payable and accrued expenses as of September 30, 2015.
During the nine months ended September 30, 2015, the Company made a reclassification of $19,043 from Deposits on vessels to Vessels, net of accumulated depreciation, due to the completion of the purchase of Baltic Wasp and Baltic Scorpion. No such reclassifications were made during the nine months ended September 30, 2016.
During the nine months ended September 30, 2016 and 2015, cash paid for interest, net of amounts capitalized, was $19,408 and $11,543, respectively.
During the nine months ended September 30, 2016 and 2015, cash paid for estimated income taxes was $512 and $1,369, respectively.
On May 18, 2016, the Company issued 666,664 restricted stock units, or 66,666 restricted stock units on a post-reverse stock split basis, to certain members of the Board of Directors. The aggregate fair value of these restricted stock units was $340. Refer to Note 18 — Stock-Based Compensation.
On February 17, 2016, the Company granted 408,163 and 204,081 shares of nonvested stock, or 40,816 and 20,408 shares on a post-reverse stock split basis, under the 2015 Equity Incentive Plan to Peter C. Georgiopoulos, former Chairman of the Board of Directors, and John Wobensmith, President, respectively. The grant date fair value of such nonvested stock was $318. Refer to Note 18 — Stock-Based Compensation.
On July 13, 2015 and July 29, 2015, the Company issued 16,188 and 58,215 restricted stock units, respectively, or 1,619 and 5,821 shares on a post-reverse stock split basis, respectively, to certain members of the Board of Directors. The aggregate fair value of these restricted stock units was $113 and $416, respectively, and 1,619, 2,328 and 3,493 restricted stock units vested on July 17, 2015, February 17, 2016 and May 18, 2016, respectively. Refer to Note 18 — Stock-Based Compensation.
|
4 - VESSEL ACQUISITIONS AND DISPOSITIONS
On September 30, 2016, the Board of Directors unanimously approved the sale of the Genco Sugar and Genco Pioneer and these vessel assets have been classified as held for sale in the Condensed Consolidated Balance Sheet as of September 30, 2016. Refer to Note 20 — Subsequent Events for details of the sales.
On April 5, 2016, the Board of Directors unanimously approved scrapping the Genco Marine. On May 17, 2016, the Company completed the sale of the Genco Marine. The Company realized a net loss of $77 and had net proceeds of $1,923 from the sale of the vessel, including costs incurred to deliver the vessel to the buyer, during the nine months ended September 30, 2016. The Company reached an agreement on May 6, 2016 to sell the Genco Marine, a 1996-built Handymax vessel, to be scrapped with Ace Exim Pte Ltd., a demolition yard, for a net amount $2,187 less a 2.0% broker commission payable to a third party.
On November 13, 2013, Baltic Trading entered into agreements to purchase up to four 64,000 dwt Ultramax newbuilding drybulk vessels from Yangfan Group Co., Ltd. for a purchase price of $28,000 per vessel, or up to $112,000 in the aggregate. Baltic Trading agreed to purchase two such vessels, which have been renamed the Baltic Hornet and Baltic Wasp, and obtained an option to purchase up to two additional such vessels for the same purchase price, which Baltic Trading exercised on January 8, 2014. These vessels were renamed the Baltic Mantis and the Baltic Scorpion. The first of these vessels, the Baltic Hornet, was delivered to Baltic Trading on October 29, 2014. The Baltic Wasp was delivered to Baltic Trading on January 2, 2015. The Baltic Scorpion and the Baltic Mantis were delivered to the Company on August 6, 2015 and October 9, 2015, respectively. The Company has utilized a combination of cash on hand, cash flow from operations as well as debt, including the $148 Million Credit Facility and the 2014 Term Loan Facilities as described in Note 8 — Debt, to fully finance the acquisition of these Ultramax newbuilding drybulk vessels. On December 30, 2014, Baltic Trading paid $19,645 for the final payment due for the Baltic Wasp which was classified as noncurrent Restricted Cash in the Condensed Consolidated Balance Sheets as of December 31, 2014 as the payment was held in an escrow account and was released to the seller when the vessel was delivered to Baltic Trading on January 2, 2015.
Refer to Note 1 — General Information for a listing of the delivery dates for the vessels in the Company’s fleet.
Capitalized interest expense associated with the newbuilding contracts entered into by Baltic Trading for the three months ended September 30, 2016 and 2015 was $0 and $100, respectively, and $0 and $363 for the nine months ended September 30, 2016 and 2015, respectively.
|
5 – INVESTMENTS
The Company holds an investment in the capital stock of Jinhui and the stock of KLC. Jinhui is a drybulk shipping owner and operator focused on the Supramax segment of drybulk shipping. KLC is a marine transportation service company which operates a fleet of carriers which includes carriers for iron ore, liquefied natural gas and tankers for oil and petroleum products. These investments are designated as AFS and are reported at fair value, with unrealized gains and losses recorded in equity as a component of AOCI. At September 30, 2016 and December 31, 2015, the Company held 10,235,100 and 15,706,825 shares of Jinhui capital stock, respectively, which is recorded at its fair value of $6,127 and $12,273, respectively, based on the last closing price during each respective quarter on September 30, 2016 and December 30, 2015, respectively. At September 30, 2016 and December 31, 2015, the Company held 3,355 shares of KLC stock which is recorded at its fair value of $64 and $54, respectively, based on the last closing price during each respective quarter on September 30, 2016 and December 30, 2015.
The Company reviews the investment in Jinhui for indicators of other-than-temporary impairment in accordance with ASC 320-10. Based on the Company’s review, it deemed the investment in Jinhui to be other-than-temporarily impaired as of June 30, 2016 and December 31, 2015 due to the duration and severity of the decline in its market value versus its cost basis and the absence of the intent and ability to recover the initial carrying value of the investment. As a result, the Company recorded an impairment charge in the Condensed Consolidated Statement of Operations of $2,696 during the nine months ended September 30, 2016. The Company will continue to review its investments in Jinhui and KLC for impairment on a quarterly basis. There were no impairment charges during the three months ended September 30, 2016 and $32,536 of impairment charges during the three and nine months ended September 30, 2015. The Company’s investment in Jinhui is a Level 1 item under the fair value hierarchy, refer to Note 10 — Fair Value of Financial Instruments.
The unrealized gain (losses) on the Jinhui capital stock and KLC stock are a component of AOCI since these investments are designated as AFS securities. As part of fresh-start reporting, the Company revised its cost basis for its investments in Jinhui and KLC based on their fair values on the Effective Date. As a result of the other-than-temporary impairment of the investment in Jinhui, the cost basis for the investment in Jinhui going forward will be based on its fair value as of June 30, 2016.
Refer to Note 9 — Accumulated Other Comprehensive Income (Loss) for a breakdown of the components of AOCI, including the effects of any sales of Jinhui shares and other-than-temporary impairment of the investment in Jinhui.
|
6 - NET LOSS PER COMMON SHARE
The computation of basic net loss per share is based on the weighted-average number of common shares outstanding during the reporting period. The computation of diluted net loss per share assumes the vesting of nonvested stock awards (refer to Note 18 — Stock-Based Compensation), for which the assumed proceeds upon vesting are deemed to be the amount of compensation cost attributable to future services and are not yet recognized using the treasury stock method, to the extent dilutive. Of the 164,910 nonvested shares outstanding, including RSUs, at September 30, 2016 (refer to Note 18 — Stock-Based Compensation), all are anti-dilutive. Of the 2,852,487 of MIP Warrants and 3,936,761 of equity warrants outstanding at September 30, 2016, all are anti-dilutive. The Company’s diluted net loss per share will also reflect the assumed conversion of the equity warrants issued on the Effective Date and MIP Warrants issued by the Company (refer to Note 18 — Stock-Based Compensation) if the impact is dilutive under the treasury stock method.
On July 7, 2016, the Company completed a one-for-ten reverse stock split of its common stock. As a result, all share and per share information included for all periods presents in these condensed consolidated financial statements reflect the reverse stock split.
The components of the denominator for the calculation of basic and diluted net loss per share are as follows:
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
|
||||
|
|
September 30, |
|
September 30, |
|
||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding, basic: |
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding, basic |
|
7,245,268 |
|
6,982,434 |
|
7,228,660 |
|
6,361,518 |
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding, diluted: |
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding, basic |
|
7,245,268 |
|
6,982,434 |
|
7,228,660 |
|
6,361,518 |
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of warrants |
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of restricted stock awards |
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding, diluted |
|
7,245,268 |
|
6,982,434 |
|
7,228,660 |
|
6,361,518 |
|
|
7 - RELATED PARTY TRANSACTIONS
On October 13, 2016, Peter C. Georgiopoulos resigned as Chairman of the Board and a Director of the Company, refer to Note 1 — General Information. The following represent related party transactions reflected in these condensed consolidated financial statements:
The Company incurred travel and other office related expenditures from Gener8 Maritime, Inc. (“Gener8”), where the Company’s former Chairman, Peter C. Georgiopoulos, serves as Chairman of the Board. During the nine months ended September 30, 2016 and 2015, the Company incurred travel and other office related expenditures totaling $73 and $76, respectively, reimbursable to Gener8 or its service provider. At September 30, 2016 and December 31, 2015, the amount due to Gener8 from the Company was $18 and $8, respectively.
During the nine months ended September 30, 2016 and 2015, the Company incurred legal services (primarily in connection with vessel acquisitions) aggregating $0 and $18, respectively, from Constantine Georgiopoulos, the father of Peter C. Georgiopoulos, the former Chairman of the Board. At September 30, 2016 and December 31, 2015, the amount due to Constantine Georgiopoulos was $11 and $11, respectively.
The Company has entered into agreements with Aegean Marine Petroleum Network, Inc. (“Aegean”) to purchase lubricating oils for certain vessels in its fleet. Peter C. Georgiopoulos, former Chairman of the Board of the Company, is Chairman of the Board of Aegean. During the nine months ended September 30, 2016 and 2015, Aegean supplied lubricating oils and bunkers to the Company’s vessels aggregating $1,189 and $1,330, respectively. At September 30, 2016 and December 31, 2015, $211 and $219 remained outstanding, respectively.
During the nine months ended September 30, 2016 and 2015, the Company invoiced MEP for technical services provided, including termination fees, and expenses paid on MEP’s behalf aggregating $2,225 and $2,508, respectively. Peter C. Georgiopoulos, former Chairman of the Board, is a director of and has a minority interest in MEP. At September 30, 2016, $39 was due to MEP from the Company. At December 31, 2015, $603 was due to the Company from MEP. Total service revenue earned by the Company, including termination fees, for technical service provided to MEP for the nine months ended September 30, 2016 and 2015 was $2,240 and $2,457, respectively.
|
8 – DEBT
Long-term debt consists of the following:
|
|
September 30, |
|
December 31, |
|
||
|
|
2016 |
|
2015 |
|
||
|
|
|
|
|
|
|
|
Principal amount |
$ |
548,276 |
$ |
588,434 | |||
Less: Unamortized debt issuance costs |
|
|
(7,821) |
|
|
(9,411) |
|
Less: Current portion |
|
|
(540,455) |
|
|
(579,023) |
|
|
|
|
|
|
|
|
|
Long-term debt |
|
$ |
— |
|
$ |
— |
|
|
|
September 30, 2016 |
|
December 31, 2015 |
|
|||||||||
|
|
|
|
|
Unamortized |
|
|
|
|
Unamortized |
|
|||
|
|
|
|
|
Debt Issuance |
|
|
|
|
Debt Issuance |
|
|||
Principal |
Cost |
Principal |
Cost |
|||||||||||
$100 Million Term Loan Facility |
|
$ |
54,330 |
|
$ |
955 |
|
$ |
60,100 |
|
$ |
1,201 |
|
|
$253 Million Term Loan Facility |
|
|
130,043 |
|
|
2,010 |
|
|
145,268 |
|
|
2,528 |
|
|
$44 Million Term Loan Facility |
|
|
36,438 |
|
|
473 |
|
|
38,500 |
|
|
584 |
|
|
2015 Revolving Credit Facility |
|
|
51,294 |
|
|
— |
|
|
56,218 |
|
|
— |
|
|
$98 Million Credit Facility |
|
|
98,271 |
|
|
1,994 |
|
|
98,271 |
|
|
2,368 |
|
|
$148 Million Credit Facility |
|
|
131,394 |
|
|
519 |
|
|
140,383 |
|
|
639 |
|
|
$22 Million Term Loan Facility |
|
|
17,500 |
|
|
299 |
|
|
18,625 |
|
|
376 |
|
|
2014 Term Loan Facilities |
|
|
29,006 |
|
|
1,571 |
|
|
31,069 |
|
|
1,715 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt |
|
$ |
548,276 |
|
$ |
7,821 |
|
$ |
588,434 |
|
$ |
9,411 |
|
During the three months ended March 31, 2016, the Company adopted ASU 2015-03 (refer to Note 2 – Summary of Significant Accounting Policies) which requires debt issuance costs related to a recognized debt liability to be presented on the condensed consolidated balance sheets as a direct deduction from the debt liability rather than as a deferred financing cost assets. The Company applied this guidance for all of its credit facilities with the exception of the 2015 Revolving Credit Facility and the revolving credit facility portion of the $148 Million Credit Facility, which represent revolving credit agreements which are not addressed in ASU 2015-03. Accordingly, as of September 30, 2016, $7,821 of deferred financing costs were presented as a direct deduction within the outstanding debt balance in the Company’s Condensed Consolidated Balance Sheet. Furthermore, the Company reclassified $9,411 of deferred financing costs from Deferred Financing Costs, net to the Current Portion of Long-Term Debt as of December 31, 2015.
Commitment Letter
On June 8, 2016, the Company entered into a Commitment Letter (the “Commitment Letter”) for a senior secured loan facility (the “New Facility”) for an aggregate principal amount of up to $400,000 with Nordea Bank Finland plc, New York Branch, Skandinaviska Enskilda Banken AB (publ), DVB Bank SE, ABN AMRO Capital USA LLC, Crédit Agricole Corporate and Investment Bank, Deutsche Bank AG Filiale Deutschlandgeschäft, Crédit Industriel et Commercial, and BNP Paribas. The New Facility is intended to refinance the Company’s $100 Million Term Loan Facility, $253 Million Term Loan Facility, $148 Million Credit Facility, $22 Million Term Loan Facility, $44 Million Term Loan Facility and 2015 Revolving Credit Facility, each as defined below (collectively, the “Prior Facilities”). The New Facility is subject to definitive documentation, and the Company’s ability to borrow under the New Facility is subject to a number of conditions, including the completion of an equity financing satisfactory to the lenders with gross proceeds to the Company including the equity commitments described below of at least $125,000, amendment of the Company’s other credit facilities on terms satisfactory to the lenders and other customary conditions. As a condition to the effectiveness of the Commitment Letter, the Company entered into separate equity commitment letters for a portion of such financing on June 8, 2016 with each of the following: (i) funds or related entities managed by Centerbridge Partners, L.P. or its affiliates (“Centerbridge”) for approximately $31,200, (ii) funds or related entities managed by Strategic Value Partners, LLC (“SVP”) for approximately $17,300, and (iii) funds managed by affiliates of Apollo Global Management, LLC (“Apollo”) for approximately $14,000, each of which are subject to a number of conditions. Additionally, pursuant to the Commitment Letter, the waivers with regard to the collateral maintenance covenants under the $100 Million Term Loan Facility, $253 Million Term Loan Facility, $148 Million Credit Facility, $22 Million Term Loan Facility, $44 Million Term Loan Facility and the 2015 Revolving Credit Facility, as defined below, were initially extended to July 29, 2016 subject to the entry into a definitive purchase agreement for the equity financing referred to above by June 30, 2016.
On June 30, 2016 the Company entered into an amendment and restatement of the Commitment Letter (the “Amended Commitment Letter”). This amendment extended the collateral maintenance waivers under the Prior Facilities through 11:59 p.m. on September 30, 2016, which were further extended to October 7, 2016 pursuant to an additional agreement entered into with the lenders on September 30, 2016. On October 6, 2016, the collateral maintenance waivers were further extended through November 15, 2016 pursuant to the Second Amended Commitment Letter (as defined below). Additionally, the Second Amended Commitment Letter (as defined below), as well as the Amended $98 Million Credit Facility Commitment Letter (refer to the “$98 Million Credit Facility” section below) provided for waivers of the Company’s company-wide minimum cash covenants, so long as cash and cash equivalents of the Company are at least $25,000, and of the Company’s maximum leverage ratio through November 15, 2016. Lastly, the collateral maintenance waivers and maximum leverage ratio waivers under the 2014 Term Loan Facility were extended through November 15, 2016 pursuant to a waiver entered into on October 14, 2016. In addition, from August 31 through November 15, 2016, the amount of cash the Company would need to maintain under its minimum cash covenants applicable only to obligors in each Prior Facility would be reduced by up to $250 per vessel, subject to an overall maximum cash withdrawal of $10,000 to pay expenses and additional conditions. The effectiveness of such new waivers and waiver extensions was conditioned on extension of the equity commitment letters entered into on June 8, 2016 as described above through September 30, 2016, which were so extended by amendments entered into on June 29, 2016. The Amended Commitment Letter also conditioned such waivers on the Company entering into a definitive purchase agreement or file a registration statement for an equity financing by 11:59 p.m. on August 15, 2016. Pursuant to additional agreements entered into with the lenders on August 12, 2016, August 30, 2016, September 14, 2016 and September 30, 2016, the deadline to enter into a definitive purchase agreement or file a registration statement for an equity financing was further extended to October 7, 2016. Stock purchase agreements were entered into on October 6, 2016 pursuant to the Second Amended Commitment Letter as defined below.
On October 6, 2016, the Company entered into a second amendment and restatement of the Commitment Letter (the “Second Amended Commitment Letter”). This amendment further extended the collateral maintenance waivers under the Prior Facilities through November 15, 2016. As a condition to the effectiveness of the Second Amended Commitment Letter, the Company entered into stock purchase agreements (the “Purchase Agreements”) effective as of October 4, 2016 with funds or related entities managed by Centerbridge, SVP and Apollo (the “Investors”) for the purchase of the Company’s Series A Convertible Preferred Stock for an aggregate of up to $125,000 in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended. The Series A Preferred Stock to be sold pursuant to the Purchase Agreements will be automatically and mandatorily convertible into the Company’s common stock, par value $0.01 per share, upon approval by the Company’s shareholders of such conversion. The purchase price of the Series A Preferred Stock under each of the Purchase Agreements is $4.85 per share. An additional 1,288,660 shares of Series A Preferred Stock are to be issued to Centerbridge, SVP and Apollo as a commitment fee on a pro rata basis. The purchase price and the other terms and conditions of the transaction were established in arm’s length negotiations between an independent special committee of the Board of the Directors of the Company (the “Special Committee”). The Special Committee unanimously approved the transaction.
Under the Purchase Agreements, Centerbridge made a firm commitment to purchase 6,597,938 shares of Series A Preferred Stock for an aggregate purchase price of $32,000, SVP made a firm commitment to purchase 7,628,866 shares of Series A Preferred Stock for an aggregate purchase price of $37,000, and Apollo made a firm commitment to purchase 3,587,629 shares of Series A Preferred Stock for an aggregate purchase price of $17,400. In addition, Centerbridge, SVP and Apollo have agreed to provide a backstop commitment to purchase up to 3,402,062, 2,371,134 and 2,185,568 additional shares of Series A Preferred Stock, respectively, for $4.85 per share. To the extent the Company agrees to issue Series A Preferred Stock in an additional private placement to third parties, the aggregate amount purchased by Centerbridge, SVP and Apollo may be reduced pro rata by up to $38,600 in Series A Preferred Stock.
Subsequently, on October 27, 2016, the Company entered into a stock purchase agreement (the “Additional Purchase Agreement”) with certain of the Investors; John C. Wobensmith, the Company’s President; and other investors for the sale of shares of Series A Preferred Stock for an aggregate purchase price of $38,600 at a purchase price of $4.85 per share. The purchase price and the other terms and conditions of these transactions were established in arm’s length negotiations between an independent special committee of the board of directors of the Company (the “Special Committee”) and the investors. The Special Committee unanimously approved the transactions.
Collateral Maintenance and Maximum Leverage Ratio Compliance
The Company is required to be in compliance with covenants under all of its nine credit facilities on a quarterly basis. Pursuant to the Second Amended Commitment Letter, the Amended $98 Million Credit Facility Commitment Letter (as defined below), and the waiver entered into for the 2014 Term Loan Facilities (as described below), the collateral maintenance requirements and maximum leverage requirements under all nine of the Company’s credit facilities has been waived through November 15, 2016, with the exception of the $98 Million Credit Facility Commitment Letter which reduced the collateral maintenance requirement from 140% to 120% and the 2014 Term Loan Facilities, for which the waivers were extended through November 15, 2016, except that such extended waivers under the 2014 Term Loan Facilities will be void if Sinosure gives written notice to the agent bank that it does not approve the waivers. Each of the Company’s credit facilities contain cross default provisions that could be triggered by the Company’s failure to satisfy its collateral maintenance and maximum leverage covenants once the waivers expire. Given the existence of the cross default provisions, the Company believed it was probable that it would not be in compliance with certain covenants at measurement dates within the next twelve months absent entering into the New Facility described above. As such, the Company has determined that it should classify its outstanding indebtedness as a current liability as of September 30, 2016 and December 31, 2015.
Amendment and Consent Agreements Related to the Merger
On July 14, 2015, Baltic Trading and certain of its wholly owned subsidiaries entered into agreements (the “Amendment and Consent Agreements”) to amend, provide consents under, or waive certain provisions of the $22 Million Term Loan Facility (as defined below), 2014 Term Loan Facilities (as defined below) and the $148 Million Credit Facility (as defined below) (each a “Facility” and collectively the “Facilities”). The Amendment and Consent Agreements implemented, among other things, the following:
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The existing covenants measuring collateral maintenance under the 2014 Term Loan Facilities were amended as follows: the minimum fair market value of vessels pledged as security (together with the value of any additional collateral) is required to be (i) for the period from June 30, 2015 up to and including December 30, 2015, 125% of the amount outstanding under such Facilities; (ii) for the period from December 31, 2015 up to and including March 30, 2016, 130% of such amount; and (iii) for the period from March 31, 2016 and thereafter, 135% of such amount. |
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The existing covenant measuring collateral maintenance under the $22 Million Term Loan Facility was amended so that through and including the period ending June 30, 2016, the minimum fair market value of vessels mortgaged under such Facility is required to be 110% of the amount outstanding under such Facility. |
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Under the $148 Million Credit Facility, the existing covenant measuring collateral maintenance was amended so that through and including the period ending December 31, 2015, the minimum fair market value of vessels mortgaged under such Facility is required to be 130% of the amount outstanding under such Facility and thereafter, 140% of such amount, except that for the period through and including the period ending December 31, 2015, such percentage was increased to 140% at the time of funding of the term loan for the Baltic Scorpion on August 3, 2015. |
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The calculation of the minimum consolidated net worth was reduced by $30,730 to $270,150 under each Facility to account for the reduction of equity due to the impairment associated with the sale of the Baltic Tiger and Baltic Lion vessels. |
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The measurement of the maximum leverage ratio under each Facility was amended to exclude from the numerator thereof (which is the amount of indebtedness included in the calculation of such financial covenant) any committed but undrawn working capital lines. |
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Under the $148 Million Credit Facility, following consummation of the Merger on July 17, 2015, the amount of cash to be held by the administrative agent under such Facility (or otherwise remaining undrawn under certain working capital lines) for each collateral vessel mortgaged under such Facility, as required under the under the minimum liquidity covenant under such Facility, was amended to an amount of $750 per vessel. |
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Following completion of the Merger on July 17, 2015, all corporate wide financial covenants of Baltic Trading are to be measured on a consolidated basis with the Company (the “Consolidated Covenant Amendments”). |
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Waivers or consents under the Facilities to permit the delisting of Baltic Trading’s stock on the New York Stock Exchange (which constitutes a change of control under each such Facility) and the termination of the Management Agreement, dated as of March 15, 2010, by and between GS&T and Baltic Trading. |
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Waivers or consents under each of the Facilities to permit the Merger. |
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Waivers or consents to certain covenants under each of the Facilities to the extent such covenants would otherwise be breached as a result of the Merger. |
On July 17, 2015, when the Merger was completed, the Company executed a guaranty of the obligations of the borrowers (other than to the extent the Company was a borrower) under each of the Facilities. The execution of the guarantees, together with certain other items that were previously delivered, satisfied all conditions to the effectiveness of all provisions of the Amendment and Consent Agreements.
$98 Million Credit Facility
On November 4, 2015, thirteen of the Company’s wholly-owned subsidiaries entered into a Facility Agreement, by and among such subsidiaries as borrowers (collectively, the “Borrowers”); Genco Holdings Limited, a newly formed direct subsidiary of Genco of which the Borrowers are direct subsidiaries (“Holdco”); certain funds managed or advised by Hayfin Capital Management, Breakwater Capital Ltd, or their nominee, as lenders; and Hayfin Services LLP, as agent and security agent (the “$98 Million Credit Facility”).
The Borrowers borrowed the maximum available amount of $98,271 under the facility on November 10, 2015. As of September 30, 2016, there was no availability under the $98 Million Credit Facility. As of September 30, 2016 and December 31, 2015, the total outstanding net debt balance was $96,277 and $95,903, respectively.
Borrowings under the facility are available for working capital purposes. The facility has a final maturity date of September 30, 2020, and the principal borrowed under the facility will bear interest at LIBOR for an interest period of three months plus a margin of 6.125% per annum. The facility has no fixed amortization payments for the first two years and fixed amortization payments of $2,500 per quarter thereafter. To the extent the value of the collateral under the facility is 182% or less of the loan amount outstanding, the Borrowers are to prepay the loan from earnings received from operation of the thirteen collateral vessels after deduction of the following amounts: costs, fees, expenses, interest, and fixed principal repayments under the facility; operating expenses relating to the thirteen vessels; and the Borrowers’ pro rata share of general and administrative expenses based on the number of vessels they own.
The Facility Agreement requires the Borrowers and, in certain cases, the Company and Holdco to comply with a number of covenants substantially similar to those in the other credit facilities of Genco and its subsidiaries, including financial covenants related to maximum leverage, minimum consolidated net worth, minimum liquidity, and dividends; collateral maintenance requirements; and other customary covenants. The Company is prohibited from paying dividends under this facility until May 1, 2017. Following May 1, 2017, the amount of dividends the Company may pay is limited based on the amount of the loans outstanding under the 2015 Revolving Credit Facility (as defined below) and the $98 Million Credit Facility, as well as the ratio of the value of vessels and certain other collateral pledged under the $98 Million Credit Facility. The Facility Agreement includes usual and customary events of default and remedies for facilities of this nature. As of September 30, 2016 and December 31, 2015, the Company had deposited $9,750 that has been reflected as restricted cash. Restricted cash will be released only if the underlying collateral is sold or disposed of.
Borrowings under the facility are secured by first priority mortgage on the vessels owned by the Borrowers, namely the Genco Constantine, the Genco Augustus, the Genco London, the Genco Titus, the Genco Tiberius, the Genco Hadrian, the Genco Knight, the Genco Beauty, the Genco Vigour, the Genco Predator, the Genco Cavalier, the Genco Champion, and the Genco Charger, and related collateral. Pursuant to the Facility Agreement and a separate Guarantee executed by the Company, the Company and Holdco are acting as guarantors of the obligations of the Borrowers and each other under the Facility Agreement and its related documentation.
On June 29, 2016, the Company entered into a commitment letter (the “$98 Million Credit Facility Commitment Letter”) which provides for certain covenant relief through September 30, 2016. For such period, compliance with the company-wide minimum cash covenant has been waived so long as cash and cash equivalents of the Company are at least $25,000; compliance with the maximum leverage ratio has been waived; and the ratio required to be maintained under the Company’s collateral maintenance covenant will be 120% rather than 140%. An amendment to the $98 Million Credit Facility Commitment Letter was entered into on September 30, 2016 (the “Amended $98 Million Credit Facility Commitment Letter”) which extended these covenant reliefs through November 15, 2016. Refer to the “Commitment Letter” section above for further discussions about the company-wide minimum cash covenant.
As of September 30, 2016, after giving effect to the modification of the collateral maintenance covenant as described above, the Company believed it was in compliance with all of the financial covenants under the $98 Million Credit Facility pursuant to the terms of the Amended $98 Million Credit Facility Commitment Letter. However, as of September 30, 2016, the Company believed it was probable that the Company would not be in compliance with certain covenants at measurement dates within the next twelve months absent entering into the New Facility described above. As such, the net debt outstanding under this facility of $96,277 has been classified as current liability in the Condensed Consolidated Balance Sheet as of September 30, 2016.
2015 Revolving Credit Facility
On April 7, 2015, the Company’s wholly-owned subsidiaries, Genco Commodus Limited, Genco Maximus Limited, Genco Claudius Limited, Genco Hunter Limited and Genco Warrior Limited (collectively, the “Subsidiaries”) entered into a loan agreement by and among the Subsidiaries, as borrowers, ABN AMRO Capital USA LLC, as arranger, facility agent, security agent, and as lender, providing for a $59,500 revolving credit facility, with an uncommitted accordion feature that has since expired (the “2015 Revolving Credit Facility”). On April 7, 2015, the Company entered into a guarantee of the obligations of the Subsidiaries under the 2015 Revolving Credit Facility, in favor of ABN AMRO Capital USA LLC.
Borrowings under the 2015 Revolving Credit Facility were permitted for general corporate purposes including “working capital” (as defined in the 2015 Revolving Credit Facility) and to finance the purchase of drybulk vessels. The 2015 Revolving Credit Facility has a maturity date of April 7, 2020. Borrowings under the 2015 Revolving Credit Facility bear interest at LIBOR plus a margin based on a combination of utilization levels under the 2015 Revolving Credit Facility and a security maintenance cover ranging from 3.40% per annum to 4.25% per annum. The commitment under the 2015 Revolving Credit Facility is subject to quarterly reductions of $1,641. Borrowings under the 2015 Revolving Credit Facility are subject to 20 equal consecutive quarterly installment repayments commencing three months after the date of the loan agreement, or July 7, 2015. A commitment fee of 1.5% per annum is payable on the undrawn amount of the maximum loan amount.
Borrowings under the 2015 Revolving Credit Facility are to be secured by liens on each of the Subsidiaries’ respective vessels; specifically, the Genco Commodus, Genco Maximus, Genco Claudius, Genco Hunter and Genco Warrior and other related assets.
The 2015 Revolving Credit Facility requires the Subsidiaries to comply with a number of customary covenants including financial covenants related to collateral maintenance, liquidity, leverage, debt service reserve and dividend restrictions.
On April 8, 2015, the Company drew down $25,000 on the 2015 Revolving Credit Facility for working capital purposes and to partially fund the purchase of the Baltic Lion and Baltic Tiger from Baltic Trading. Additionally, on July 10, 2015 and October 14, 2015, the Company drew down $10,000 and $21,218, respectively, on the 2015 Revolving Credit Facility for working capital purposes. As of September 30, 2016, the Company has utilized its maximum borrowing capacity. At the September 30, 2016 and December 31, 2015, the total outstanding debt balance was $51,294 and $56,218, respectively.
On April 7, 2016, the Company entered into a waiver agreement with the lenders under the 2015 Revolving Credit Facility to postpone the due date of the $1,641 amortization payment due April 7, 2016 to May 31, 2016. As a condition thereof, the amount of the debt service required under the 2015 Revolving Credit Facility was $3,241 through May 30, 2016. Refer to the “Commitment Letter” section above for additional waivers entered into by the Company which have extended the waivers of certain financial covenants through November 15, 2016.
As of September 30, 2016, the Company believed it was in compliance with all of the financial covenants under the 2015 Revolving Credit Facility, other than covenants that had been waived by its lenders as of such date pursuant to the Second Amended Commitment Letter. However, as of September 30, 2016, the Company believed it was probable that the Company would not be in compliance with certain covenants at measurement dates within the next twelve months absent entering into the New Facility described above. As such, the debt outstanding under this facility of $51,294 has been classified as current liability in the Condensed Consolidated Balance Sheets as of September 30, 2016.
$100 Million Term Loan Facility
On August 12, 2010, the Company entered into the $100 Million Term Loan Facility. As of September 30, 2016, the Company has utilized its maximum borrowing capacity of $100,000. The Company has used the $100 Million Term Loan Facility to fund or refund the Company a portion of the purchase price of the acquisition of five vessels from companies within the Metrostar group of companies. As of September 30, 2016, there was no availability under the $100 Million Term Loan Facility. At September 30, 2016 and December 31, 2015, the total outstanding net debt balance was $53,375 and $58,899, respectively.
On the Effective Date, the Company entered into the Amended and Restated $100 Million Term Loan Facility and the Amended and Restated $253 Million Term Loan Facility. The Amended and Restated Credit Facilities included, among other things:
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A pay down as of the Effective Date with respect to payments which became due under the prepetition credit facilities between the Petition Date and the Effective Date and were not paid during the pendency of the Chapter 11 Cases (refer to Note 16 – Reorganization Items, net for discussion of Chapter 11 Cases) ($1,923 for the $100 Million Term Loan Facility and $5,075 for the $253 Million Term Loan Facility). |
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Extension of the maturity dates to August 31, 2019 from August 17, 2017 for the $100 Million Term Loan Facility and August 15, 2015 for the $253 Million Term Loan Facility. |
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Relief from compliance with financial covenants governing the Company’s maximum leverage ratio, minimum consolidated interest coverage ratio and consolidated net worth through and including the quarter ending June 30, 2015 (with quarterly testing commencing June 30, 2015). |
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A fleetwide minimum liquidity covenant requiring maintenance of cash of $750 per vessel for all vessels owned by the Company (excluding those owned by Baltic Trading). |
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An increase in the interest rate to LIBOR plus 3.50% per year from 3.00% previously for the $100 Million Term Loan Facility and the $253 Million Term Loan Facility. |
The obligations under the Amended and Restated $100 Million Term Loan Facility are secured by a first priority security interest in the vessels and other collateral securing the $100 Million Term Loan Facility. The Amended and Restated $100 Million Term Loan Facility requires quarterly repayment installments in accordance with the original terms of the $100 Million Term Loan Facility.
On April 30, 2015, the Company entered into agreements to amend or waive certain provisions under the $100 Million Term Loan Facility and the $253 Million Term Loan Facility (the “April 2015 Amendments”) which implemented the following, among other things:
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The existing covenant measuring the Company’s ratio of net debt to EBITDA was replaced with a covenant requiring its ratio of total debt outstanding to value adjusted total assets (total assets adjusted for the difference between book value and market value of fleet vessels) to be less than 70%. |
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Measurement of the interest coverage ratio under each facility is waived through and including December 31, 2016. |
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The fleetwide minimum liquidity covenant has been amended to allow up to 50% of the required amount of $750 per vessel in cash to be satisfied with undrawn working capital lines with a remaining availability period of more than six months. |
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The Company agreed to grant additional security for its obligation under the $253 Million Term Loan Facility. Refer to the $253 Million Term Loan Facility section below for a description of the additional security granted for this facility. |
Consenting lenders under the $100 Million Term Loan Facility and the $253 Million Term Loan Facility received an upfront fee of $165 and $350, respectively, related to the April 2015 Amendments.
In October 2015 and April 2015 the Company added two unencumbered vessels, the Genco Prosperity and Genco Sugar, respectively, as additional collateral to cover the previous shortfalls in meeting the collateral maintenance test.
A waiver was entered into on March 29, 2016 which required the Company to prepay the $1,923 debt amortization payment due on June 30, 2016 and which waived the collateral maintenance covenant through April 11, 2016. On April 11, 2016, the Company entered into additional agreements with the lenders under the $100 Million Term Loan Facility which extended the waiver through May 31, 2016. Pursuant to additional agreements with the lenders under the $100 Million Term Loan Facility entered into on May 31, 2016, June 3, 2016 and June 8, 2016, the waiver was further extended through June 10, 2016. Refer to the “Commitment Letter” section above for additional waivers entered into by the Company which have extended the waivers of certain financial covenants through November 15, 2016.
As of September 30, 2016, the Company believed it was in compliance with all of the financial covenants under the $100 Million Term Loan Facility, other than covenants that had been waived by its lenders as of such date pursuant to the Second Amended Commitment Letter. However, as of September 30, 2016, the Company believed it was probable that the Company would not be in compliance with certain covenants at measurement dates within the next twelve months absent entering into the New Facility described above. As such, the net debt outstanding under this facility of $53,375 has been classified as current liability in the Condensed Consolidated Balance Sheets as of September 30, 2016.
$253 Million Term Loan Facility
On August 20, 2010, the Company entered into the $253 Million Term Loan Facility. As of September 30, 2016, the Company has utilized its maximum borrowing capacity of $253,000 to fund or refund to the Company a portion of the purchase price of the 13 vessels purchased from Bourbon SA during the third quarter of 2010 and first quarter of 2011. As of September 30, 2016, there was no availability under the $253 Million Term Loan Facility. At September 30, 2016 and December 31, 2015, the total outstanding net debt balance was $128,033 and $142,740, respectively.
As of September 30, 2016 and December 31, 2015, the Company has deposited $9,750 that has been reflected as Restricted cash. Restricted cash will be released only if the underlying collateral is sold or disposed of.
Refer to the “$100 Million Term Loan Facility” section above for a description of the Amended and Restated $253 Million Term Loan Facility that was entered into by the Company on the Effective Date as well as a description of the April 2015 Amendments that were entered into by the Company on April 30, 2015. The obligations under the Amended and Restated $253 Million Term Loan Facility are secured by a first priority security interest in the vessels and other collateral securing the $253 Million Term Loan Facility. The Amended and Restated $253 Million Term Loan Facility requires quarterly repayment installments in accordance with the original terms of the $253 Million Term Loan Facility.
In order to maintain compliance with the collateral maintenance test, during July 2015, the Company added five of its unencumbered vessels, the Genco Thunder, the Genco Raptor, the Genco Challenger, the Genco Reliance and the Genco Explorer, as additional collateral under this facility. Additionally, the Company was also in communication with the facility’s agent and prepaid $1,650 of the outstanding indebtedness on July 29, 2015, which the lenders agreed would reduce the schedules amortization payment of $5,075 that was due in October 2015.
A waiver was entered into on March 11, 2016 which required the Company to prepay the $5,075 debt amortization payment due on April 11, 2016 and which waived the collateral maintenance covenant through April 11, 2016. On April 11, 2016, the Company entered into additional agreements with the lenders under the $253 Million Term Loan Facility which extended the waiver through May 31, 2016. Pursuant to additional agreements with the lenders under the $253 Million Term Loan Facility entered into on May 31, 2016, June 3, 2016 and June 8, 2016, the waiver was further extended through June 10, 2016. Refer to the “Commitment Letter” section above for additional waivers entered into by the Company which have extended the waivers of certain financial covenants through November 15, 2016.
As of September 30, 2016, the Company believed it was in compliance with all of the financial covenants under the $253 Million Term Loan Facility, other than covenants that had been waived by its lenders as of such date pursuant to the Second Amended Commitment Letter. However, as of September 30, 2016, the Company believed it was probable that the Company would not be in compliance with certain covenants at measurement dates within the next twelve months absent entering into the New Facility described above. As such, the net debt outstanding under this facility of $128,033 has been classified as current liability in the Condensed Consolidated Balance Sheets as of September 30, 2016.
$44 Million Term Loan Facility
On December 3, 2013, Baltic Tiger Limited and Baltic Lion Limited, wholly-owned subsidiaries of Baltic Trading, entered into a secured loan agreement with DVB Bank SE for a term loan facility of up to $44,000 (the “$44 Million Term Loan Facility”). Amounts borrowed and repaid under the $44 Million Term Loan Facility may not be reborrowed. The $44 Million Term Loan Facility has a maturity date of the sixth anniversary of the drawdown date for borrowings for the second vessel to be purchased, or December 23, 2019. Borrowings under the $44 Million Term Loan Facility bear interest at the three-month LIBOR rate plus an applicable margin of 3.35% per annum. A commitment fee of 0.75% per annum is payable on the unused daily portion of the credit facility, which began accruing on December 3, 2013 and ended on December 23, 2013, the date which the entire $44,000 was borrowed. Borrowings are to be repaid in 23 quarterly installments of $688 each commencing three months after the last drawdown date, or March 24, 2014, and a final payment of $28,188 due on the maturity date.
Borrowings under the $44 Million Term Loan Facility are to be secured by liens on the Company’s vessels to be financed or refinanced with borrowings under the facility, namely the Genco Tiger and the Baltic Lion, and other related assets. Upon the prepayment of $18,000 plus any additional amounts necessary to maintain compliance with the collateral maintenance covenant, the Company may have the lien on the Genco Tiger released. Under a Guarantee and Indemnity entered into concurrently with the $44 Million Term Loan Facility, the Company agreed to guarantee the obligations of its subsidiaries under the $44 Million Term Loan Facility.
On December 23, 2013, Baltic Tiger Limited and Baltic Lion Limited made drawdowns of $21,400 and $22,600 for the Genco Tiger and Baltic Lion, respectively. As of September 30, 2016, the Company has utilized its maximum borrowing capacity of $44,000 and there was no further availability. At September 30, 2016 and December 31, 2015, the total outstanding net debt balance was $35,965 and $37,916, respectively.
On June 8, 2016, the Company entered into an amendment to the $44 Million Term Loan Facility which provided for cross-collateralization with the $22 Million Term Loan Facility. Pursuant to this amendment, the security coverage ratio (collateral maintenance calculation) was revised to include the fair market value of the Genco Tiger, Baltic Lion, Baltic Fox and Baltic Hare less the outstanding indebtedness under the $22 Million Term Loan Facility as the total security effective June 30, 2016. Refer also to the “Commitment Letter” section above for additional waivers entered into by the Company which have extended the waivers of certain financial covenants through November 15, 2016.
As of September 30, 2016, the Company believes it was in compliance with all of the financial covenants under the $44 Million Term Loan Facility, other than covenants that had been waived by its lenders as of such date pursuant to the Second Amended Commitment Letter. However, as of September 30, 2016, the Company believed it was probable that the Company would not be in compliance with certain covenants at measurement dates within the next twelve months absent entering into the New Facility described above. As such, the net debt outstanding under this facility of $35,965 has been classified as a current liability in the Condensed Consolidated Balance Sheets as of September 30, 2016.
On April 8, 2015, the Company acquired the entities owning the Baltic Lion and Baltic Tiger and succeeded Baltic Trading as the guarantor of the outstanding debt under the Baltic Trading $44 Million Term Loan Facility. Refer to Note 1 — General Information for further information regarding the sale of these entities to the Company.
2010 Credit Facility
On April 16, 2010, Baltic Trading entered into a $100,000 senior secured revolving credit facility with Nordea Bank Finland plc, acting through its New York branch (as amended, the “2010 Credit Facility”). An amendment to the 2010 Credit Facility was entered into by Baltic Trading effective November 30, 2010. Among other things, this amendment increased the commitment amount of the 2010 Credit Facility from $100,000 to $150,000. An additional amendment to the 2010 Credit Facility was entered into by Baltic Trading effective August 29, 2013 (the “August 2013 Amendment”). Among other things, the August 2013 Amendment implements the following modifications to the 2010 Credit Facility:
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The requirement that certain additional vessels acquired by Baltic Trading be mortgaged as collateral under the 2010 Baltic Trading Credit Facility was eliminated. |
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Restrictions on the incurrence of indebtedness by Baltic Trading and its subsidiaries were amended to apply only to those subsidiaries acting as guarantors under the 2010 Credit Facility. |
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The total commitment under this facility was reduced to $110,000 and will be further reduced in three consecutive semi-annual reductions of $5,000 commencing on May 30, 2015. |
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Borrowings bear interest at an applicable margin over LIBOR of 3.00% per annum if the ratio of the maximum facility amount of the aggregate appraised value of vessels mortgaged under the facility is 55% or less, measured quarterly; otherwise, the applicable margin is 3.35% per annum. |
· |
Financial covenants corresponding to the liquidity and leverage under the $22 Million Term Loan Facility (as defined below) have been incorporated into the 2010 Credit Facility. |
On December 31, 2014, Baltic Trading entered into the $148 Million Credit Facility. Refer to the “$148 Million Credit Facility” section below. Borrowings under the $148 Million Credit Facility were used to refinance Baltic Trading’s indebtedness under the 2010 Credit Facility. On January 7, 2015, Baltic Trading repaid the $102,250 outstanding under the 2010 Credit Facility with borrowings from the $148 Million Credit Facility.
$22 Million Term Loan Facility
On August 30, 2013, Baltic Hare Limited and Baltic Fox Limited, wholly-owned subsidiaries of Baltic Trading, entered into a secured loan agreement with DVB Bank SE for a term loan facility of up to $22,000 (the “$22 Million Term Loan Facility”). Amounts borrowed and repaid under the $22 Million Term Loan Facility may not be reborrowed. This facility has a maturity date of the sixth anniversary of the drawdown date for borrowings for the second vessel to be purchased, or September 4, 2019. Borrowings under the $22 Million Term Loan Facility bear interest at the three-month LIBOR rate plus an applicable margin of 3.35% per annum. A commitment fee of 1.00% per annum is payable on the unused daily portion of the credit facility, which began accruing on August 30, 2013 and ended on September 4, 2013, the date on which the entire $22,000 was borrowed. Borrowings are to be repaid in 23 quarterly installments of $375 each commencing three months after the last vessel delivery date, or December 4, 2013, and a final payment of $13,375 due on the maturity date.
Borrowings under the $22 Million Term Loan Facility are secured by liens on the Company’s vessels purchased with borrowings under the facility, namely the Baltic Fox and the Baltic Hare, and other related assets. Under a Guarantee and Indemnity entered into concurrently with the $22 Million Term Loan Facility, the Company agreed to guarantee the obligations of its subsidiaries under the $22 Million Term Loan Facility.
On September 4, 2013, Baltic Hare Limited and Baltic Fox Limited made drawdowns of $10,730 and $11,270 for the Baltic Hare and the Baltic Fox, respectively. As of September 30, 2016, the Company has utilized its maximum borrowing capacity of $22,000 and there was no further availability. At September 30, 2016 and December 31, 2015, the total outstanding net debt balance was $17,201 and $18,249, respectively.
On June 8, 2016, the Company entered into an amendment to the $22 Million Term Loan Facility which provided for cross-collateralization with the $44 Million Term Loan Facility. Pursuant to this amendment, the security coverage ratio (collateral maintenance calculation) was revised to include the fair market value of the Baltic Fox, Baltic Hare, Genco Tiger and Baltic Lion less the outstanding indebtedness under the $44 Million Term Loan Facility as the total security effective June 30, 2016. Additionally, this amendment increased the collateral maintenance requirement to 125% from 110% commencing July 1, 2016. Refer also to the “Commitment Letter” section above for additional waivers entered into by the Company which have extended the waivers of certain financial covenants through November 15, 2016.
As of September 30, 2016, the Company believes it was in compliance with all of the financial covenants under the $22 Million Term Loan Facility, other than covenants that had been waived by its lenders as of such date pursuant to the Second Amended Commitment Letter. However, as of September 30, 2016, the Company believed it was probable that the Company would not be in compliance with certain covenants at measurement dates within the next twelve months absent entering into the New Facility described above. As such, the net debt outstanding under this facility of $17,201 has been classified as a current liability in the Condensed Consolidated Balance Sheets as of September 30, 2016.
Refer to “Amendment and Consent Agreements Related to the Merger” section above for discussion of the amendments, consents and waiver agreements entered into on July 14, 2015 by Baltic Trading related to the $22 Million Term Loan Facility. Upon the completion of the Merger on July 17, 2015, the Company executed a guaranty of the obligations of the borrowers under the $22 Million Term Loan Facility.
2014 Term Loan Facilities
On October 8, 2014, Baltic Trading and its wholly-owned subsidiaries, Baltic Hornet Limited and Baltic Wasp Limited, each entered into a loan agreement and related documentation for a credit facility in a principal amount of up to $16,800 with ABN AMRO Capital USA LLC and its affiliates (the “2014 Term Loan Facilities”) to partially finance the newbuilding Ultramax vessel that each subsidiary acquired, namely the Baltic Hornet and Baltic Wasp, respectively. Amounts borrowed under the 2014 Term Loan Facilities may not be reborrowed. The 2014 Term Loan Facilities have a ten-year term, and the facility amount is to be the lowest of 60% of the delivered cost per vessel, $16,800 per vessel, and 60% of the fair market value of each vessel at delivery. The 2014 Term Loan Facilities are insured by the China Export & Credit Insurance Corporation (Sinosure) in order to cover political and commercial risks for 95% of the outstanding principal plus interest, which was recorded in deferred financing fees. Borrowings under the 2014 Term Loan Facilities bear interest at the three or six-month LIBOR rate plus an applicable margin of 2.50% per annum. Borrowings are to be repaid in 20 equal consecutive semi-annual installments of 1/24 of the facility amount plus a balloon payment of 1/6 of the facility amount at final maturity. Principal repayments commenced six months after the actual delivery date for each respective vessel.
Borrowings under the 2014 Term Loan Facilities are secured by liens on the vessels acquired with borrowings under these facilities, namely the Baltic Hornet and Baltic Wasp, and other related assets. The Company guarantees the obligations of the Baltic Hornet and Baltic Wasp under the 2014 Term Loan Facilities.
On October 24, 2014, Baltic Trading drew down $16,800 for the purchase of the Baltic Hornet, which was delivered on October 29, 2014. Additionally, on December 30, 2014, Baltic Trading drew down $16,350 for the purchase of the Baltic Wasp, which was delivered on January 2, 2015. As of September 30, 2016, the Company had utilized its maximum borrowing capacity and there was no further availability. At September 30, 2016 and December 31, 2015, the total outstanding net debt balance was $27,435 and $29,354, respectively.
A waiver was entered into on June 30, 2016 with the lenders under the 2014 Term Loan Facilities which waived the collateral maintenance covenant through September 30, 2016. On August 9, 2016, the Company entered into waiver agreements which extend the existing collateral maintenance covenant through October 15, 2016 and provided for waivers of the maximum leverage ratio covenant through such time. On October 14, 2016, these waivers were further extended to November 15, 2016.
As of September 30, 2016, the Company believed it was in compliance with all of the financial covenants under the 2014 Term Loan Facilities, other than covenants that had been waived pursuant to the waiver agreements entered into on August 9, 2016 and October 14, 2016. However, as of September 30, 2016, the Company believed it was probable that it would not be in compliance with certain covenants at measurement dates within the next twelve months absent entering into the New Facility described above. As such, the net debt outstanding under this facility of $27,435 has been classified as a current liability in the Condensed Consolidated Balance Sheets as of September 30, 2016.
Refer to “Amendment and Consent Agreements Related to the Merger” section above for discussion of the amendments, consents and waiver agreements entered into on July 14, 2015 by Baltic Trading related to the 2014 Term Loan Facilities. Upon the completion of the Merger on July 17, 2015, the Company executed a guaranty of the obligations of the borrowers under the 2014 Term Loan Facilities.
$148 Million Credit Facility
On December 31, 2014, Baltic Trading entered into a $148,000 senior secured credit facility with Nordea Bank Finland plc, New York Branch (“Nordea”), as Administrative and Security Agent, Nordea and Skandinaviska Enskilda Banken AB (Publ) (“SEB”), as Mandated Lead Arrangers, Nordea, as Bookrunner, and the lenders (including Nordea and SEB) party thereto (the “$148 Million Credit Facility”). The $148 Million Credit Facility is comprised of an $115,000 revolving credit facility and $33,000 term loan facility. Borrowings under the revolving credit facility were used to refinance Baltic Trading’s outstanding indebtedness under the 2010 Credit Facility. Amounts borrowed under the revolving credit facility of the $148 Million Credit Facility may be re-borrowed. Borrowings under the term loan facility of the $148 Million Credit Facility may be incurred pursuant to two single term loans in an amount of $16,500 each that were used to finance, in part, the purchase of two newbuilding Ultramax vessels that the Company had agreed to acquire, namely the Baltic Scorpion and Baltic Mantis. Amounts borrowed under the term loan facility of the $148 Million Credit Facility may not be re-borrowed.
The $148 Million Credit Facility has a maturity date of December 31, 2019. Borrowings under this facility bear interest at LIBOR plus an applicable margin of 3.00% per annum. A commitment fee of 1.2% per annum is payable on the unused daily portion of the $148 Million Credit Facility, which began accruing on December 31, 2014. The commitment under the revolving credit facility of the $148 Million Credit Facility is subject to equal consecutive quarterly reductions of $2,447 each beginning June 30, 2015 through September 30, 2019. Borrowings under the term loan facility of the $148 Million Credit Facility are subject to equal consecutive quarterly installment repayments commencing three months after delivery of the relevant newbuilding Ultramax vessel, each in the amount of 1/60 of the aggregate outstanding term loan. All remaining amounts outstanding under the $148 Million Credit Facility must be repaid in full on the maturity date, December 31, 2019.
Borrowings under the $148 Million Credit Facility are secured by liens on nine of Company’s existing vessels that have served as collateral under the 2010 Credit Facility, the two newbuilding Ultramax vessels noted above, and other related assets, including existing or future time charter contracts in excess of 36 months related to the foregoing vessels.
The $148 Million Credit Facility requires the Company to comply with a number of customary covenants substantially similar to those in the 2010 Credit Facility, including financial covenants related to liquidity, leverage, consolidated net worth and collateral maintenance.
As of September 30, 2016, there was no availability under the $148 Million Credit Facility. As of September 30, 2016 and December 31, 2015, the outstanding debt under the revolving credit facility of the $148 Million Credit Facility was $100,319 and $107,658, respectively. Additionally, as of September 30, 2016 and December 31, 2014, the outstanding net debt under the term loan facility of the $148 Million Credit Facility was $30,556 and $32,086, respectively.
On January 7, 2015, Baltic Trading drew down $104,500 from the revolving credit facility of the $148 Million Credit Facility. Using these borrowings, Baltic Trading repaid the $102,250 outstanding under the 2010 Facility. Additionally, on February 27, 2015, Baltic Trading drew down $10,500 from the revolving credit facility of the $148 Million Credit Facility.
On August 3, 2015 and October 7, 2015, the Company drew down $16,500 on the term loan facility on each date for the purchase of the Baltic Scorpion and Baltic Mantis, respectively. Refer to Note 4 — Vessel Acquisitions and Dispositions.
A waiver was entered into on April 12, 2016 which extended the cure period for the collateral maintenance covenants to May 31, 2016. Pursuant to additional agreements with the lenders under the $148 Million Credit Facility entered into on May 31, 2016, June 3, 2016 and June 8, 2016, the waiver was further extended through June 8, 2016. Refer to the “Commitment Letter” section above for additional waivers entered into by the Company which have extended the waivers of certain financial covenants through November 15, 2016.
As of September 30, 2016, the Company believed it was in compliance with all of the financial covenants under the $148 Million Credit Facility, other than covenants that had been waived by its lenders as of such date pursuant to the Second Amended Commitment Letter. However, as of September 30, 2016, the Company believed it was probable that it would not be in compliance with certain covenants at measurement dates within the next twelve months absent entering into the New Facility described above. As such, the net debt outstanding under this facility of $130,875 has been classified as a current liability in the Condensed Consolidated Balance Sheets as of September 30, 2016.
Refer to “Amendment and Consent Agreements Related to the Merger” section above for discussion of the amendments, consents and waiver agreements entered into on July 14, 2015 by Baltic Trading related to the $148 Million Credit Facility. Upon the completion of the Merger on July 17, 2015, the Company executed a guaranty of the obligations of the borrowers under the $148 Million Credit Facility.
As per the Amendment and Consent Agreements, the collateral maintenance increased to 140% from 130% upon the funding of the initial term loan draw down on the facility. During August 2015, the Company added two of its unencumbered Handysize vessels, the Genco Progress and Genco Pioneer, as additional collateral to cover any potential shortfall of the collateral maintenance test. The Genco Pioneer was subsequently sold on October 26, 2016 to a third party and the net proceeds were utilized to pay down debt under the $148 Million Credit Facility, refer to Note 20 — Subsequent Events. Additionally, during December 2015, the Company added two of its unencumbered Panamax and Handymax vessels, the Genco Wisdom and Genco Leader, respectively, as additional collateral to cover any potential shortfall of the collateral maintenance test. The Genco Leader was sold on November 4, 2016 to a third party and the net proceeds will be utilized to pay down debt under the $148 Million Credit Facility, refer to Note 20 — Subsequent Events.
Interest rates
The following table sets forth the effective interest rate associated with the interest expense for the Company’s debt facilities noted above, including the cost associated with unused commitment fees. The following table also includes the range of interest rates on the debt, excluding the impact of unused commitment fees, if applicable:
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
||||
|
|
September 30, |
|
|
September 30, |
|
||||
|
|
2016 |
|
2015 |
|
|
2016 |
|
2015 |
|
Effective Interest Rate |
|
4.47 |
% |
3.55 |
% |
|
4.40 |
% |
3.54 |
% |
Range of Interest Rates (excluding impact of unused commitment fees) |
|
3.13% to 6.96 |
% |
2.78% to 3.93 |
% |
|
2.69% to 6.96 |
% |
2.73% to 3.93 |
% |
|
9 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The components of AOCI included in the accompanying Condensed Consolidated Balance Sheets consist of net unrealized gains (losses) from investments in Jinhui stock and KLC stock.
Changes in AOCI by Component
For the Three Months Ended September 30, 2016
|
|
Net Unrealized |
|
|
|
|
Gain (Loss) |
|
|
|
|
on |
|
|
|
|
Investments |
|
|
AOCI — July 1, 2016 |
|
$ |
(26) |
|
|
|
|
|
|
OCI before reclassifications |
|
|
316 |
|
Amounts reclassified from AOCI |
|
|
— |
|
Net current-period OCI |
|
|
316 |
|
|
|
|
|
|
AOCI — September 30, 2016 |
|
$ |
290 |
|
Changes in AOCI by Component
For the Three Months Ended September 30, 2015
|
|
Net Unrealized |
|
|
|
|
Gain (Loss) |
|
|
|
|
on |
|
|
|
|
Investments |
|
|
AOCI — July 1, 2015 |
|
$ |
(26,360) |
|
|
|
|
|
|
OCI before reclassifications |
|
|
(6,880) |
|
Amounts reclassified from AOCI |
|
|
33,223 |
|
Net current-period OCI |
|
|
26,343 |
|
|
|
|
|
|
AOCI — September 30, 2015 |
|
$ |
(17) |
|
Changes in AOCI by Component
For the Nine Months Ended September 30, 2016
|
|
Net Unrealized |
|
|
|
|
Gain (Loss) |
|
|
|
|
on |
|
|
|
|
Investments |
|
|
AOCI — January 1, 2016 |
|
$ |
(21) |
|
|
|
|
|
|
OCI before reclassifications |
|
|
(2,385) |
|
Amounts reclassified from AOCI |
|
|
2,696 |
|
Net current-period OCI |
|
|
311 |
|
|
|
|
|
|
AOCI — September 30, 2016 |
|
$ |
290 |
|
Changes in AOCI by Component
For the Nine Months Ended September 30, 2015
|
|
Net Unrealized |
|
|
|
|
Gain (Loss) |
|
|
|
|
on |
|
|
|
|
Investments |
|
|
AOCI — January 1, 2015 |
|
$ |
(25,317) |
|
|
|
|
|
|
OCI before reclassifications |
|
|
(7,923) |
|
Amounts reclassified from AOCI |
|
|
33,223 |
|
Net current-period OCI |
|
|
25,300 |
|
|
|
|
|
|
AOCI — September 30, 2015 |
|
$ |
(17) |
|
|
|
|
Reclassifications Out of AOCI |
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
|
Affected Line Item in |
|
||||||||
|
|
September 30, |
|
September 30, |
|
the Statement Where |
|
||||||||
Details about AOCI Components |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
Net Loss is Presented |
|
||||
Net unrealized loss on investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized loss on sale of AFS investment |
|
$ |
— |
|
$ |
(687) |
|
$ |
— |
|
$ |
(687) |
|
Other income (expense) |
|
Impairment of AFS investment |
|
|
— |
|
|
(32,536) |
|
|
(2,696) |
|
|
(32,536) |
|
Impairment of investment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reclassifications for the period |
|
$ |
— |
|
$ |
(33,223) |
|
$ |
(2,696) |
|
$ |
(33,223) |
|
|
|
|
10 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values and carrying values of the Company’s financial instruments at September 30, 2016 and December 31, 2015 which are required to be disclosed at fair value, but not recorded at fair value, are noted below.
|
|
September 30, 2016 |
|
December 31, 2015 |
|
||||||||
|
|
Carrying |
|
|
|
|
Carrying |
|
|
|
|
||
|
|
Value |
|
Fair Value |
|
Value |
|
Fair Value |
|
||||
Cash and cash equivalents |
|
$ |
40,028 |
|
$ |
40,028 |
|
$ |
121,074 |
|
$ |
121,074 |
|
Restricted cash |
|
|
19,815 |
|
|
19,815 |
|
|
19,815 |
|
|
19,815 |
|
Floating rate debt |
|
|
548,276 |
|
|
548,276 |
|
|
588,434 |
|
|
588,434 |
|
The fair value of the floating rate debt under the $100 Million Term Loan Facility and the $253 Million Term Loan Facility are based on rates obtained upon our emergence from Chapter 11 on the Effective Date and there were no changes to rates pursuant to the April 2015 Amendments. The fair value of the floating rate debt under the $44 Million Term Loan Facility is based on rates that Baltic Trading initially obtained on the effective date of this facility, and there were no changes pursuant to the Guarantee and Indemnity entered into by the Company during April 2015. The fair value of the floating rate debt under the 2015 Revolving Credit Facility and the $98 Million Credit Facility are based on rates the Company recently obtained upon the effective date of these facilities on April 7, 2015 and November 4, 2015, respectively. The fair value of the $148 Million Credit Facility, $22 Million Term Loan Facility and the 2014 Term Loan Facilities is based on rates that Baltic Trading initially obtained upon the effective dates of these facilities which did not change pursuant to the Amendment and Consent Agreements effective on July 14, 2015. Refer to Note 8 — Debt for further information. The carrying value approximates the fair market value for these floating rate loans. The carrying amounts of the Company’s other financial instruments at September 30, 2016 and December 31, 2015 (principally Due from charterers and Accounts payable and accrued expenses), approximate fair values because of the relatively short maturity of these instruments.
ASC Subtopic 820-10, “Fair Value Measurements & Disclosures” (“ASC 820-10”), applies to all assets and liabilities that are being measured and reported on a fair value basis. This guidance enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumption (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 requires significant management judgment. The three levels are defined as follows:
· |
Level 1—Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these instruments does not entail a significant degree of judgment. |
· |
Level 2—Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. |
· |
Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
As of September 30, 2016 and December 31, 2015, the fair values of the Company’s financial assets and liabilities are categorized as follows:
|
|
September 30, 2016 |
|
||||
|
|
|
|
|
Quoted |
|
|
|
|
|
|
|
Market |
|
|
|
|
|
|
|
Prices in |
|
|
|
|
|
|
|
Active |
|
|
|
|
|
|
|
Markets |
|
|
|
|
Total |
|
(Level 1) |
|
||
Investments |
|
$ |
6,191 |
|
$ |
6,191 |
|
|
|
December 31, 2015 |
|
||||
|
|
|
|
|
Quoted |
|
|
|
|
|
|
|
Market |
|
|
|
|
|
|
|
Prices in |
|
|
|
|
|
|
|
Active |
|
|
|
|
|
|
|
Markets |
|
|
|
|
Total |
|
(Level 1) |
|
||
Investments |
|
$ |
12,327 |
|
$ |
12,327 |
|
The Company holds an investment in the capital stock of Jinhui, which is classified as a long-term investment. The stock of Jinhui is publicly traded on the Oslo Stock Exchange and is considered a Level 1 item. The Company also holds an investment in the stock of KLC, which is classified as a long-term investment. The stock of KLC is publicly traded on the Korea Stock Exchange and is considered a Level 1 item. Cash and cash equivalents and restricted cash are considered Level 1 items as they represent liquid assets with short-term maturities. Floating rate debt is considered to be a Level 2 item as the Company considers the estimate of rates it could obtain for similar debt or based upon transactions amongst third parties. The Company did not have any Level 3 financial assets or liabilities as of September 30, 2016 and December 31, 2015.
|
11 - PREPAID EXPENSES AND OTHER CURRENT AND NONCURRENT ASSETS
Prepaid expenses and other current assets consist of the following:
|
|
September 30, |
|
December 31, |
|
||
|
|
2016 |
|
2015 |
|
||
Lubricant inventory, fuel oil and diesel oil inventory and other stores |
|
$ |
10,318 |
|
$ |
10,478 |
|
Prepaid items |
|
|
2,448 |
|
|
3,917 |
|
Insurance receivable |
|
|
1,283 |
|
|
2,738 |
|
Other |
|
|
3,023 |
|
|
4,236 |
|
Total prepaid expenses and other current assets |
|
$ |
17,072 |
|
$ |
21,369 |
|
Other noncurrent assets in the amount of $514 at September 30, 2016 and December 31, 2015 represent the security deposit related to the operating lease entered into effective April 4, 2011. Refer to Note 17 — Commitments and Contingencies for further information related to the lease agreement.
|
12 - DEFERRED FINANCING COSTS
Deferred financing costs include fees, commissions and legal expenses associated with securing revolving-debt facilities and other debt offerings and amending existing revolving-debt facilities. These costs are amortized over the life of the related debt and are included in interest expense. Refer to Note 8 — Debt for further information regarding the existing revolving debt facilities.
Total net deferred financing costs consist of the following as of September 30, 2016 and December 31, 2015:
|
|
September 30, |
|
December 31, |
|
||
|
|
2016 |
|
2015 |
|
||
|
|
|
|
|
|
|
|
2015 Revolving Credit Facility |
|
$ |
1,254 |
|
$ |
1,254 |
|
$148 Million Credit Facility |
|
|
2,774 |
|
|
2,774 |
|
Total deferred financing costs |
|
|
4,028 |
|
|
4,028 |
|
Less: accumulated amortization |
|
|
1,340 |
|
|
734 |
|
Total |
|
$ |
2,688 |
|
$ |
3,294 |
|
During the three months ended March 31, 2016, the Company adopted ASU 2015-03 (refer to Note 2 – Summary of Significant Accounting Policies) which requires debt issuance costs related to a recognized debt liability to be presented on the Condensed Consolidated Balance Sheets as a direct deduction from the debt liability rather than as a deferred financing cost assets. The Company applied this guidance for all of its credit facilities with the exception of the 2015 Revolving Credit Facility and the revolving credit facility portion of the $148 Million Credit Facility, which represent revolving credit agreements which are not addressed in ASU 2015-03. Accordingly, as of September 30, 2016, $7,821 of deferred financing costs were presented as a direct deduction within the outstanding debt balance in the Company’s Condensed Consolidated Balance Sheet. Furthermore, the Company reclassified $9,411 of deferred financing costs from Deferred financing costs, net to the Current portion of long-term debt as of December 31, 2015. Refer to Note 8 — Debt for further information.
Amortization expense for deferred financing costs, including the deferred financing costs recognized net of the outstanding debt, was $737 and $637 for the three months ended September 30, 2016 and 2015, respectively, and $2,195 and $1,688 for the nine months ended September 30, 2016 and 2015, respectively. This amortization expense is recorded as a component of Interest expense in the Condensed Consolidated Statements of Operations.
|
13 - FIXED ASSETS
Fixed assets consist of the following:
|
|
September 30, |
|
December 31, |
|
||
|
|
2016 |
|
2015 |
|
||
Fixed assets, at cost: |
|
|
|
|
|
|
|
Vessel equipment |
|
$ |
1,127 |
|
$ |
1,086 |
|
Furniture and fixtures |
|
|
462 |
|
|
462 |
|
Computer equipment |
|
|
142 |
|
|
142 |
|
Total costs |
|
|
1,731 |
|
|
1,690 |
|
Less: accumulated depreciation and amortization |
|
|
660 |
|
|
404 |
|
Total |
|
$ |
1,071 |
|
$ |
1,286 |
|
Depreciation and amortization expense for fixed assets for the three months ended September 30, 2016 and 2015 was $97 and $83, respectively. Depreciation and amortization expense for fixed assets for the nine months ended September 30, 2016 and 2015 was $289 and $200, respectively.
|
14 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
|
|
September 30, |
|
December 31, |
|
||
|
|
2016 |
|
2015 |
|
||
Accounts payable |
|
$ |
4,835 |
|
$ |
8,271 |
|
Accrued general and administrative expenses |
|
|
5,780 |
|
|
5,745 |
|
Accrued vessel operating expenses |
|
|
11,065 |
|
|
13,451 |
|
Total |
|
$ |
21,680 |
|
$ |
27,467 |
|
|
15 - REVENUE FROM TIME CHARTERS
Total voyage revenue includes revenue earned on time charters, including revenue earned in vessel pools and spot market-related time charters, as well as the sale of bunkers consumed during short-term time charters. For the three months ended September 30, 2016 and 2015, the Company earned $37,871 and $49,167 of voyage revenue, respectively, and for the nine months ended September 30, 2016 and 2015, the Company earned $89,461 and $116,548 of voyage revenue, respectively. Included in voyage revenue for the three and nine months ended September 30, 2016 was $869 and $1,499 of profit sharing revenue, respectively. There was no profit sharing revenue earned during the three and nine months ended September 30, 2015. Future minimum time charter revenue, based on vessels committed to noncancelable time charter contracts as of October 26, 2016, is expected to be $8,148 for the remainder of 2016 and $2,592 for the year ended December 31, 2017, assuming off-hire due to any scheduled drydocking and that no additional off-hire time is incurred. For drydockings, the Company assumes twenty days of offhire. Future minimum revenue excludes revenue earned for the vessels currently in pool arrangements and vessels that are currently on or will be on spot market-related time charters, as spot rates cannot be estimated, as well as profit sharing revenue.
|
16 - REORGANIZATION ITEMS, NET
On April 21, 2014 (the “Petition Date”), GS&T and its subsidiaries other than Baltic Trading and its subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief (the “Chapter 11 Cases”) under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). The Company subsequently emerged from bankruptcy on July 9, 2014, the Effective Date. Refer to the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2015 for further detail regarding the bankruptcy filing.
Reorganization items, net represents amounts incurred and recovered subsequent to the bankruptcy filing as a direct result of the filing of the Chapter 11 Cases and are comprised of the following:
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
|
||||||||
|
|
September 30, |
|
September 30, |
|
||||||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
||||
Professional fees incurred |
|
$ |
70 |
|
$ |
169 |
|
$ |
192 |
|
$ |
644 |
|
Trustee fees incurred |
|
|
13 |
|
|
5 |
|
|
51 |
|
|
362 |
|
Total reorganization fees |
|
$ |
83 |
|
$ |
174 |
|
$ |
243 |
|
$ |
1,006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reorganization items, net |
|
$ |
83 |
|
$ |
174 |
|
$ |
243 |
|
$ |
1,006 |
|
|
17 - COMMITMENTS AND CONTINGENCIES
Effective April 4, 2011, the Company entered into a seven-year sub-sublease agreement for additional office space in New York, New York. The term of the sub-sublease commenced June 1, 2011, with a free base rental period until October 31, 2011. Following the expiration of the free base rental period, the monthly base rental payments were $82 per month until May 31, 2015 and thereafter will be $90 per month until the end of the seven-year term. Pursuant to the sub-sublease agreement, the sublessor was obligated to contribute $472 toward the cost of the Company’s alterations to the sub-subleased office space. The Company has also entered into a direct lease with the over-landlord of such office space that will commence immediately upon the expiration of such sub-sublease agreement, for a term covering the period from May 1, 2018 to September 30, 2025; the direct lease provides for a free base rental period from May 1, 2018 to September 30, 2018. Following the expiration of the free base rental period, the monthly base rental payments will be $186 per month from October 1, 2018 to April 30, 2023 and $204 per month from May 1, 2023 to September 30, 2025. For accounting purposes, the sub-sublease agreement and direct lease agreement with the landlord constitutes one lease agreement. As a result of the straight-line rent calculation generated by the free rent period and the tenant work credit, the monthly straight-line rental expense for the term of the entire lease from June 1, 2011 to September 30, 2025 was $130 prior to the Effective Date. On the Effective Date, a revised straight-line rent calculation was completed as part of fresh-start reporting. The revised monthly straight-line rental expense for the remaining term of the lease from the Effective Date to September 30, 2025 is $150. The Company had a long-term lease obligation at September 30, 2016 and December 31, 2015 of $1,688 and $1,149, respectively. Rent expense pertaining to this lease for the three months ended September 30, 2016 and 2015 was $452 and $452, respectively, and $1,356 and $1,356 for the nine months ended September 30, 2016 and 2015, respectively during both periods.
Future minimum rental payments on the above lease for the next five years and thereafter are as follows: $269 for the remainder of 2016, $1,076 for 2017, $916 for 2018, $2,230 annually for 2019 and 2020 and a total of $11,130 for the remaining term of the lease.
On August 10, 2016, the Company settled its outstanding lease liability related to its previous office space which the Company had filed a motion to reject in the bankruptcy proceedings. The motion was accepted on the Effective Date upon the Company’s emergence from Chapter 11. The settlement of this claim resulted in a gain that was recorded in rent expense in the amount of ($116) during the three and nine months ended September 30, 2016.
During the beginning of 2009, the Genco Cavalier, a 2007-built Supramax vessel, was on charter to Samsun when Samsun filed for the equivalent of bankruptcy protection in South Korea, otherwise referred to as a rehabilitation application. On July 3, 2015, Samsun filed for rehabilitation proceedings for the second time with the South Korean courts due to financial distress. On April 8, 2016, the revised rehabilitation plan was approved by the South Korean court whereby 26% of the remainder of the $3,979 unpaid cash claim settlement from the prior rehabilitation plan, or $1,035, will be settled pursuant to a payment plan over the next ten-year period. The remaining 74% of the claim will be converted to Samsun Shares. Refer to Note 2 — Summary of Significant Accounting Policies for Other Operating Income recorded during the three and nine months ended September 30, 2016.
|
18 - STOCK-BASED COMPENSATION
On July 7, 2016, the Company completed a one-for-ten reverse stock split of its common stock. As a result, all share and per share information included for all periods presented in these condensed consolidated financial statements reflect the reverse stock split.
On October 13, 2016, Peter C. Georgiopoulos resigned as Chairman of the Board and a director of the Company. In connection with his departure, Mr. Georgiopoulos entered into a Separation Agreement and a Release Agreement with the Company on October 13, 2016. Under the terms of these agreements, subject to customary conditions, Mr. Georgiopoulos is to receive an amount equal to the annual Chairman’s fee awarded to him in recent years of $500 as a severance payment and full vesting of his unvested equity awards, which consist of grants of 68,581 restricted shares of the Company’s common stock and warrants exercisable for approximately 213,937 shares of the Company’s common stock with an exercise price per share ranging $259.10 to $341.90. The Company is currently evaluating the effect on its consolidated financial statements during the three months ended December 31, 2016.
2014 Management Incentive Plan
On the Effective Date, pursuant to the Chapter 11 Plan, the Company adopted the Genco Shipping & Trading Limited 2014 Management Incentive Plan (the “MIP”). An aggregate of 9,668,061 shares of Common Stock were available for award under the MIP prior to the Company’s reverse stock split, which is equivalent to approximately 966,806 shares on a post-split basis. Awards under the MIP took the form of restricted stock grants and three tiers of MIP Warrants with staggered strike prices based on increasing equity values. The number of shares of common stock available under the Plan represented approximately 1.8% of the shares of post-emergence Common Stock outstanding as of the Effective Date on a fully-diluted basis. Awards under the MIP were available to eligible employees, non-employee directors and/or officers of the Company and its subsidiaries (collectively, “Eligible Individuals”). Under the MIP, a committee appointed by the Board from time to time (or, in the absence of such a committee, the Board) (in either case, the “Plan Committee”) may grant a variety of stock-based incentive awards, as the Plan Committee deems appropriate, to Eligible Individuals. The MIP Warrants are exercisable on a cashless basis and contain customary anti-dilution protection in the event of any stock split, reverse stock split, stock dividend, reclassification, dividend or other distributions (including, but not limited to, cash dividends), or business combination transaction.
On August 7, 2014, pursuant to the MIP, certain individuals were granted MIP Warrants whereby each warrant can be converted on a cashless basis for the amount in excess of the respective strike price. The MIP Warrants were issued in three tranches for 2,380,664, 2,467,009 and 3,709,788 shares. Following the Company’s reverse stock split, these MIP warrants are exercisable for approximately 238,066, 246,701, and 370,979 shares and have exercise prices of $259.10 (the “$259.10 Warrants”), $287.30 (the “$287.30 Warrants”) and $341.90 (the “$341.90 Warrants”) per whole share, respectively. The fair value of each warrant upon emergence from bankruptcy was $7.22 for the $259.10 Warrants, $6.63 for the $287.30 Warrants and $5.63 for the $341.90 Warrants. The warrant values were based upon a calculation using the Black-Scholes-Merton option pricing formula. This model uses inputs such as the underlying price of the shares issued when the warrant is exercised, volatility, cost of capital interest rate and expected life of the instrument. The Company has determined that the warrants should be classified within Level 3 of the fair value hierarchy by evaluating each input for the Black-Scholes-Merton option pricing formula against the fair value hierarchy criteria and using the lowest level of input as the basis for the fair value classification. The Black-Scholes-Merton option pricing formula used a volatility of 43.91% (representing the six -year volatility of a peer group), a risk-free interest rate of 1.85% and a dividend rate of 0%. The aggregate fair value of these awards upon emergence from bankruptcy was $54,436. The warrants vest 33.33% on each of the first three anniversaries of the grant date, with accelerated vesting upon a change in control of the Company.
For the three and nine months ended September 30, 2016 and 2015, the Company recognized amortization expense of the fair value of these warrants, which is included in the Company’s Condensed Consolidated Statements of Operations as a component of General, administrative and management fees, as follows:
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
|
||||||||
|
|
September 30, |
|
September 30, |
|
||||||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
||||
General, administrative and management fees |
|
$ |
2,442 |
|
$ |
5,646 |
|
$ |
9,973 |
|
$ |
22,134 |
|
Amortization of the unamortized stock-based compensation balance of $5,132 as of September 30, 2016 is expected to be expensed $1,523 and $3,609 during the remainder of 2016 and during the year ending December 31, 2017, respectively. The following table summarizes the warrant activity for the nine months ended September 30, 2016:
|
|
|
|
Weighted |
|
Weighted |
|
||
|
|
Number of |
|
Average Exercise |
|
Average Fair |
|
||
|
|
Warrants |
|
Price |
|
Value |
|
||
Outstanding at January 1, 2016 |
|
5,704,974 |
|
$ |
303.12 |
|
$ |
6.36 |
|
Granted |
|
— |
|
|
— |
|
|
— |
|
Exercisable |
|
(2,852,487) |
|
|
303.12 |
|
|
6.36 |
|
Exercised |
|
— |
|
|
— |
|
|
— |
|
Forfeited |
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
Outstanding at September 30, 2016 |
|
2,852,487 |
|
$ |
303.12 |
|
$ |
6.36 |
|
The following table summarizes certain information about the warrants outstanding as of September 30, 2016:
|
|
|
Warrants Outstanding, |
|
Warrants Exercisable, |
|
||||||||||
|
|
|
September 30, 2016 |
|
September 30, 2016 |
|
||||||||||
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
Weighted |
|
Average |
|
|
|
Weighted |
|
Average |
|
||
Weighted |
|
|
|
Average |
|
Remaining |
|
|
|
Average |
|
Remaining |
|
|||
Average |
|
Number of |
|
Exercise |
|
Contractual |
|
Number of |
|
Exercise |
|
Contractual |
|
|||
Exercise Price |
|
Warrants |
|
Price |
|
Life |
|
Warrants |
|
Price |
|
Life |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
303.12 |
|
2,852,487 |
|
$ |
303.12 |
|
3.86 |
|
5,704,974 |
|
$ |
303.12 |
|
3.86 |
|
The nonvested stock awards granted under the MIP will vest ratably on each of the three anniversaries of August 7, 2014. The table below summarizes the Company’s nonvested stock awards for the nine months ended September 30, 2016 which were issued under the MIP:
|
|
|
|
Weighted |
|
|
|
|
Number of |
|
Average Grant |
|
|
|
|
Shares |
|
Date Price |
|
|
Outstanding at January 1, 2016 |
|
74,040 |
|
$ |
200.00 |
|
Granted |
|
— |
|
|
— |
|
Vested |
|
(37,020) |
|
|
200.00 |
|
Forfeited |
|
— |
|
|
— |
|
|
|
|
|
|
|
|
Outstanding at September 30, 2016 |
|
37,020 |
|
$ |
200.00 |
|
The total fair value of MIP restricted shares that vested during the nine months ended September 30, 2016 and 2015 was $190 and $2,662, respectively. The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date.
For the three and nine months ended September 30, 2016 and 2015, the Company recognized nonvested stock amortization expense for the MIP restricted shares, which is included in General, administrative and management fees, as follows:
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
|
||||||||
|
|
September 30, |
|
September 30, |
|
||||||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
||||
General, administrative and management fees |
|
$ |
996 |
|
$ |
2,304 |
|
$ |
4,069 |
|
$ |
9,031 |
|
The Company is amortizing these grants over the applicable vesting periods, net of anticipated forfeitures. As of September 30, 2016, unrecognized compensation cost of $2,094 related to nonvested stock will be recognized over a weighted-average period of 0.85 years.
2015 Equity Incentive Plan
On June 26, 2015, the Company’s Board of Directors approved the 2015 Equity Incentive Plan for awards with respect to an aggregate of 4,000,000 shares of common stock, or 400,000 shares following the Company’s reverse stock split (the “2015 Plan”). Under the 2015 Plan, the Company’s Board of Directors, the compensation committee, or another designated committee of the Board of Directors may grant a variety of stock-based incentive awards to the Company’s officers, directors, employees, and consultants. Awards may consist of stock options, stock appreciation rights, dividend equivalent rights, restricted (nonvested) stock, restricted stock units, and unrestricted stock. As of September 30, 2016, the Company has awarded restricted stock units and restricted stock under the 2015 Plan.
Restricted Stock Units
The Company has issued restricted stock units (“RSUs”) under the 2015 Plan to certain members of the Board of Directors, which represent the right to receive a share of common stock, or in the sole discretion of the Company’s Compensation Committee, the value of a share of common stock on the date that the RSU vests. The RSUs generally vest on the date of the Company’s annual shareholders meeting following the date of the grant. As of September 30, 2016 and December 31, 2015, 3,138 and 0 shares, respectively, of the Company’s common stock were outstanding in respect of the RSUs. Such shares will only be issued in respect of vested RSUs when the director’s service with the Company as a director terminates.
The RSUs that have been issued to certain members of the Board of Directors generally vest on the date of the annual shareholders meeting of the Company following the date of the grant. The table below summarizes the Company’s RSUs for the nine months ended September 30, 2016:
|
|
|
|
Weighted |
|
|
|
|
Number of |
|
Average Grant |
|
|
|
|
RSUs |
|
Date Price |
|
|
Outstanding at January 1, 2016 |
|
5,821 |
|
$ |
71.50 |
|
Granted |
66,666 | 5.10 | ||||
Vested |
|
(5,821) |
|
|
71.50 |
|
Forfeited |
|
— |
|
|
— |
|
|
|
|
|
|
|
|
Outstanding at September 30, 2016 |
|
66,666 |
|
$ |
5.10 |
|
The total fair value of the RSUs that vested during the nine months ended September 30, 2016 and 2015 was $30 and $116, respectively. The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date. On February 17, 2016, the vesting of 23,286 outstanding RSUs, or 2,328 outstanding RSUs on a post-reverse stock split basis, were accelerated upon the resignation of two members on the Company’s Board of Directors.
The following table summarizes certain information of the RSUs unvested and vested as of September 30, 2016:
Unvested RSUs |
|
Vested RSUs |
|
||||||||
September 30, 2016 |
|
September 30, 2016 |
|
||||||||
|
|
|
|
Weighted |
|
|
|
|
|
||
|
|
Weighted |
|
Average |
|
|
|
Weighted |
|
||
|
|
Average |
|
Remaining |
|
|
|
Average |
|
||
Number of |
|
Grant Date |
|
Contractual |
|
Number of |
|
Grant Date |
|
||
RSUs |
|
Price |
|
Life |
|
RSUs |
|
Price |
|
||
66,666 |
|
$ |
5.10 |
|
0.63 |
|
7,440 |
|
$ |
71.18 |
|
The Company is amortizing these grants over the applicable vesting periods, net of anticipated forfeitures. As of September 30, 2016, unrecognized compensation cost of $213 related to RSUs will be recognized over a weighted-average period of 0.63 years.
For the three and nine months ended September 30, 2016 and 2015, the Company recognized nonvested stock amortization expense for the RSUs, which is included in General, administrative and management fees as follows:
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
|
||||||||
|
|
September 30, |
|
September 30, |
|
||||||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General, administrative and management fees |
|
$ |
86 |
|
$ |
235 |
|
$ |
320 |
|
$ |
235 |
|
Restricted Stock
Under the 2015 Plan, grants of restricted common stock issued to executives and Peter C. Georgiopoulos, the Company’s former Chairman of the Board, vest ratably on each of the three anniversaries of the determined vesting date. The table below summarizes the Company’s nonvested stock awards for the nine months ended September 30, 2016 which were issued under the 2015 Plan:
|
|
|
|
Weighted |
|
|
|
|
Number of |
|
Average Grant |
|
|
|
|
Shares |
|
Date Price |
|
|
Outstanding at January 1,2016 |
|
— |
|
$ |
— |
|
Granted |
|
61,224 |
|
|
5.20 |
|
Vested |
|
— |
|
|
— |
|
Forfeited |
|
— |
|
|
— |
|
|
|
|
|
|
|
|
Outstanding at September 30, 2016 |
|
61,224 |
|
$ |
5.20 |
|
There were no shares that vested under the 2015 Plan during the nine months ended September 30, 2016 and 2015. The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date.
For the three and nine months ended September 30, 2016 and 2015, the Company recognized nonvested stock amortization expense for the 2015 Plan restricted shares, which is included in General, administrative and management fees, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
|
||||||||
|
|
September 30, |
|
September 30, |
|
||||||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
||||
General, administrative and management fees |
|
$ |
60 |
|
$ |
— |
|
$ |
150 |
|
$ |
— |
|
The Company is amortizing these grants over the applicable vesting periods, net of anticipated forfeitures. As of September 30, 2016, unrecognized compensation cost of $168 related to nonvested stock will be recognized over a weighted-average period of 2.13 years.
Baltic Trading Limited
On March 13, 2014, Baltic Trading’s Board of Directors approved an amendment to the Baltic Trading Limited 2010 Equity Incentive Plan (the “Baltic Trading Plan”) that increased the aggregate number of shares of common stock available for awards from 2,000,000 to 6,000,000 shares. Additionally, on April 9, 2014, at Baltic Trading’s 2014 Annual Meeting of Shareholders, Baltic Trading’s shareholders approved the amendment to the Baltic Trading Plan. When the Merger was completed on July 17, 2015, the 1,941,844 nonvested shares issued under the Baltic Trading Plan vested automatically and received the same consideration in the Merger as holders of Baltic Trading’s common stock. Refer to Note 1 — General Information for further information regarding the Merger.
The total fair value of shares that vested under the Baltic Trading Plan during the nine months ended September 30, 2015 was $2,913. The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date.
For the three and nine months ended September 30, 2016 and 2015, the Company recognized nonvested stock amortization expense for the Baltic Trading Plan, which is included in General, administrative and management fees, as follows:
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
|
||||||||
|
|
September 30, |
|
September 30, |
|
||||||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
||||
General, administrative and management fees |
|
$ |
— |
|
$ |
3,665 |
|
$ |
— |
|
$ |
5,273 |
|
|
19 - LEGAL PROCEEDINGS
In April 2015, six class action complaints were filed in the Supreme Court of the State of New York, County of New York. On May 26, 2015, the six actions were consolidated under the caption In Re Baltic Trading Ltd. Stockholder Litigation, Index No. 651241/2015, and a consolidated class action complaint was filed on June 10, 2015 (the “Consolidated Complaint”). The Consolidated Complaint is purported to be brought by and on behalf of Baltic Trading’s shareholders and alleges that the then-proposed July 2015 merger did not fairly compensate Baltic Trading’s shareholders and undervalued Baltic Trading. The Consolidated Complaint names as defendants the Company, Baltic Trading, the individual members of Baltic Trading’s board, and the Company’s merger subsidiary. The claims generally allege (i) breaches of fiduciary duties of good faith, due care, disclosure to shareholders, and loyalty, including for failing to maximize shareholder value, and (ii) aiding and abetting those breaches. Among other relief, the complaints seek an injunction against the merger, declaratory judgments that the individual defendants breached fiduciary duties, rescission of the merger agreement, and unspecified damages.
On July 9, 2015, plaintiffs in that action moved to enjoin the merger vote, scheduled to take place on July 17, 2015. The motion was thereafter fully briefed and argued on July 15, 2015. The motion to enjoin the vote was denied on July 15, 2015 (the “Preliminary Injunction Denial”). Plaintiffs sought an emergency injunction and temporary restraining order from the New York State Appellate Division, First Department the following day, on July 16, 2015. The Appellate Division denied the request, and the vote, and subsequent merger, proceeded as scheduled on July 17, 2015. Plaintiffs thereafter withdrew that appeal.
On June 30, 2015, Defendants had moved to dismiss the Consolidated Complaint in its entirety. Plaintiffs subsequently served an Amended Consolidated Complaint, and Defendants directed their motion to dismiss to that amended complaint. The motion to dismiss was granted and the Amended Consolidated Complaint was dismissed with prejudice on August 29, 2016 (the “Dismissal Decision”).
On September 29, 2016, plaintiffs filed a Notice of Appeal with the Supreme Court of the State of New York, County of New York, which recites their appeal of the Dismissal Decision, “including ... and as referenced in” the Dismissal Order, the Preliminary Injunction Denial.
From time to time, the Company may be subject to legal proceedings and claims in the ordinary course of its business, principally personal injury and property casualty claims. Such claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. The Company is not aware of any legal proceedings or claims that it believes will have, individually or in the aggregate, a material effect on the Company, its financial condition, results of operations or cash flows besides those noted above.
|
20 - SUBSEQUENT EVENTS
On October 8, 2016, the Company reached an agreement to sell the Genco Pioneer, a 1999-built Handysize vessel, to a third party for $2,650 less a 5.5% broker commission payable to a third party. The sale was completed on October 26, 2016. On October 26, 2016 the Company utilized the net proceeds to pay down $2,504 on the $148 Million Credit Facility as the Genco Pioneer was a collateralized vessel under this facility.
On October 10, 2016, the Company reached an agreement to sell the Genco Sugar, a 1998-built Handysize vessel, to a third party for $2,450 less a 5.5% broker commission payable to a third party. The sale was completed on October 20, 2016. On October 21, 2016, the Company utilized the net proceeds to pay down $2,315 on the $100 Million Term Loan Facility as the Genco Sugar was a collateralized vessel under this facility.
On October 24, 2016, the Board of Directors unanimously approved selling the Genco Leader, a 1999-built Panamax vessel, and on October 25, 2016, the Company reached an agreement to sell the Genco Leader to a third party for $3,470 less a 3.0% broker commission payable to a third party. The sale was completed on November 4, 2016. The Company will utilize the net proceeds to pay down $3,366 on the $148 Million Credit Facility as the Genco Leader is a collateralized vessel under this facility.
On October 27, 2016, the Company received $777 from Samsun as full and final settlement of the outstanding claim that was approved by the South Korean court on April 8, 2016, refer to Note 17 — Commitments and Contingencies. This represents the net present value of the remainder of the $1,035 cash settlement that was originally going to be paid over the next ten-year period. This will be recorded as Other operating income during the fourth quarter of 2016.
|
Principles of consolidation
The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP which includes the accounts of GS&T and its direct and indirect wholly-owned subsidiaries, including Baltic Trading. All intercompany accounts and transactions have been eliminated in consolidation.
Basis of presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of management of the Company, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and operating results have been included in the statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2015 (the “2015 10-K”). The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the operating results to be expected for the year ending December 31, 2016.
Segment reporting
The Company reports financial information and evaluates its operations by charter revenues and not by the length of ship employment for its customers, i.e., spot or time charters. Each of the Company’s vessels serve the same type of customer, have similar operations and maintenance requirements, operate in the same regulatory environment, and are subject to similar economic characteristics. Based on this, the Company has determined that it operates in one reportable segment, after the effective date of the Merger on July 17, 2015, which is engaged in the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk carrier vessels. Prior to the Merger, the Company had two reportable operating segments, GS&T and Baltic Trading.
Vessels, net
Vessels, net is stated at cost less accumulated depreciation. Included in vessel costs are acquisition costs directly attributable to the acquisition of a vessel and expenditures made to prepare the vessel for its initial voyage. The Company also capitalizes interest costs for a vessel under construction as a cost which is directly attributable to the acquisition of a vessel. Vessels are depreciated on a straight-line basis over their estimated useful lives, determined to be 25 years from the date of initial delivery from the shipyard. Depreciation expense for vessels for the three months ended September 30, 2016 and 2015 was $17,077 and $19,172, respectively. Depreciation expense for vessels for the nine months ended September 30, 2016 and 2015 was $54,752 and $56,869, respectively.
Depreciation expense is calculated based on cost less the estimated residual scrap value. The costs of significant replacements, renewals and betterments are capitalized and depreciated over the shorter of the vessel’s remaining estimated useful life or the estimated life of the renewal or betterment. Undepreciated cost of any asset component being replaced that was acquired after the initial vessel purchase is written off as a component of vessel operating expense. Expenditures for routine maintenance and repairs are expensed as incurred. Scrap value is estimated by the Company by taking the estimated scrap value of $310 per lightweight ton (“lwt”) times the weight of the ship noted in lwt.
Vessels held for sale
On September 30, 2016, the Board of Directors authorized the sale of the Genco Sugar and Genco Pioneer. As such, these vessel assets have been classified as held for sale in the Condensed Consolidated Balance Sheet as of September 30, 2016. Refer to Note 4 — Vessel Acquisitions and Dispositions and Note 20 — Subsequent Events for additional information.
Deferred revenue
Deferred revenue primarily relates to cash received from charterers prior to it being earned. These amounts are recognized as income when earned. Additionally, deferred revenue includes estimated customer claims mainly due to time charter performance issues. As of September 30, 2016 and December 31, 2015, the Company had an accrual of $398 and $498, respectively, related to these estimated customer claims.
Voyage expense recognition
In time charters, spot market-related time charters and pool agreements, operating costs including crews, maintenance and insurance are typically paid by the owner of the vessel and specified voyage costs such as fuel and port charges are paid by the charterer. There are certain other non-specified voyage expenses, such as commissions, which are typically borne by the Company. At the inception of a time charter, the Company records the difference between the cost of bunker fuel delivered by the terminating charterer and the bunker fuel sold to the new charterer as a gain or loss within voyage expenses. Additionally, the Company records lower of cost or market adjustments to re-value the bunker fuel on a quarterly basis. These differences in bunkers, including lower of cost or market adjustments, resulted in a net loss of $390 and $3,099 during the three months ended September 30, 2016 and 2015, respectively. These differences in bunkers, including lower of cost or market adjustments, resulted in a net loss of $4,195 and $6,957 during the nine months ended September 30, 2016 and 2015, respectively. Additionally, voyage expenses include the cost of bunkers consumed during short-term time charters pursuant to the terms of the time charter agreement.
Other operating income
During the three and nine months ended September 30, 2016, the Company recorded other operating income of $0 and $182, respectively. There was no operating income earned during the three and nine months ended September 30, 2015. Other operating income recorded during the nine months ended September 30, 2016 consists primarily of $157 received from Samsun Logix Corporation (“Samsun”) pursuant to the revised rehabilitation plan that was approved by the South Korean courts on April 8, 2016. Refer to Note 17 — Commitments and Contingencies for further information regarding the bankruptcy settlement with Samsun.
Impairment of vessel assets
During the three months ended September 30, 2016 and 2015, the Company did not record any impairment of vessel assets in accordance with ASC 360 — “Property, Plant and Equipment” (“ASC 360”). During the nine months ended September 30, 2016 and 2015, the Company recorded $69,278 and $35,396, respectively, related to the impairment of vessel assets in accordance with ASC 360.
At June 8, 2016, the Company determined that the scrapping of nine of its vessels, the Genco Acheron, Genco Carrier, Genco Leader, Genco Pioneer, Genco Prosperity, Genco Reliance, Genco Success, Genco Sugar, and Genco Wisdom, was more likely than not pursuant to the Commitment Letter entered into for the New Credit Facility as defined and disclosed in Note 8 — Debt. Therefore, at June 8, 2016, the time utilized to determine the recoverability of the carrying value of the vessel assets was significantly reduced. After determining that the sum of the estimated undiscounted future cash flows attributable to the aforementioned nine vessels did not exceed the carrying value of the vessels at June 8, 2016, the Company reduced the carrying value of the nine vessels to their net realizable value, which was based on the expected net proceeds from scrapping the vessels. This resulted in an impairment loss of $67,594 during the nine months ended September 30, 2016.
At March 31, 2016, the Company determined that the scrapping of the Genco Marine was more likely than not based on discussions with the Company’s Board of Directors. Therefore, at March 31, 2016, the time utilized to determine the recoverability of the carrying value of the vessel asset was significantly reduced. After determining that the sum of the estimated undiscounted future cash flows attributable to the Genco Marine did not exceed the carrying value of the vessel at March 31, 2016, the Company reduced the carrying value of the Genco Marine to its net realizable value, which was based on the expected proceeds from scrapping the vessel. This resulted in an impairment loss of $1,684 during the nine months ended September 30, 2016. On April 5, 2016, the Board of Directors unanimously approved scrapping the Genco Marine and the sale of the Genco Marine to the scrap yard was completed on May 17, 2016.
At March 31, 2015, the Company determined that the sale of the Baltic Lion and Baltic Tiger was more likely than not based on Baltic Trading’s expressed consideration to divest of those vessels. Therefore, at March 31, 2015, the time utilized to determine the recoverability of the carrying value of the vessel assets was significantly reduced. Similarly, after determining that the sum of the estimated undiscounted future cash flows attributable to the Baltic Lion and Baltic Tiger would not exceed the carrying value of the respective vessels at March 31, 2015, the Company reduced the carrying value of both vessels to their estimated fair value, which was determined primarily based on appraisals and third-party broker quotes. This resulted in an impairment loss of $35,396 during the nine months ended September 30, 2015. On April 8, 2015, the Baltic Lion and Baltic Tiger entities were sold to GS&T. Refer to Note 1 — General Information for details pertaining to the sale of these entities.
Loss on disposal of vessels
During the three and nine months ended September 30, 2016, the Company recorded $0 and $77 related to the loss on the sale of the Genco Marine, respectively. During the three and nine months ended September 30, 2015, the Company recorded $0 and $1,210 related to the loss on sale of vessels related to the sale of the Baltic Lion and Baltic Tiger entities to GS&T from Baltic Trading on April 8, 2015, respectively.
Noncontrolling interest
Net loss attributable to noncontrolling interest during the three and nine months ended September 30, 2015 of $7,178 and $59,471, respectively, reflects the noncontrolling interest’s share of the net loss of the Company’s subsidiary, Baltic Trading, prior to the Merger on July 17, 2015, which owned and employed drybulk vessels in the spot market, in vessel pools or on spot market-related time charters. The spot market represents immediate chartering of a vessel, usually for single voyages. Refer to Note 1— General Information for details pertaining to the Merger.
Investments
The Company holds an investment in the capital stock of Jinhui Shipping and Transportation Limited (“Jinhui”) and in Korea Line Corporation (“KLC”). Jinhui is a drybulk shipping owner and operator focused on the Supramax segment of drybulk shipping. KLC is a marine transportation service company which operates a fleet of carriers which includes carriers for iron ore, liquefied natural gas and tankers for oil and petroleum products. The investments in Jinhui and KLC have been designated as Available For Sale (“AFS”) and are reported at fair value, with unrealized gains and losses recorded in equity as a component of accumulated other comprehensive income (loss) (“AOCI”). The Company classifies the investments as current or noncurrent assets based on the Company’s intent to hold the investments at each reporting date.
Investments are reviewed quarterly to identify possible other-than-temporary impairment in accordance with ASC Subtopic 320-10, “Investments — Debt and Equity Securities” (“ASC 320-10”). When evaluating its investments, the Company reviews factors such as the length of time and extent to which fair value has been below the cost basis, the financial condition of the issuer, the underlying net asset value of the issuer’s assets and liabilities, and the Company’s ability and intent to hold the investment for a period of time which may be sufficient for anticipated recovery in market value. Should the decline in the value of any investment be deemed to be other-than-temporary, the investment basis would be written down to fair market value, and the write-down would be recorded to earnings as a loss. Refer to Note 5 — Investments.
Income taxes
Pursuant to certain agreements, GS&T technically and commercially managed vessels for Baltic Trading until the Merger, as well as provides technical management of vessels for MEP in exchange for specified fees for these services provided. These services are performed by Genco Management (USA) LLC (“Genco (USA)”), which has elected to be taxed as a corporation for United States federal income tax purposes. As such, Genco (USA) is subject to United States federal income tax on its worldwide net income, including the net income derived from providing these services. Genco (USA) has entered into a cost-sharing agreement with the Company and Genco Ship Management LLC, collectively Manco, pursuant to which Genco (USA) agrees to reimburse Manco for the costs incurred by Genco (USA) for the use of Manco’s personnel and services in connection with the provision of the services for both Baltic Trading and MEP’s vessels.
Total revenue earned by the Company for these services during the three months ended September 30, 2016 was $1,016 of which $0 eliminated upon consolidation. After allocation of certain expenses, there was taxable income of $829 associated with these activities for the three months ended September 30, 2016. This resulted in estimated tax expense of $417 for the three months ended September 30, 2016. Total revenue earned by the Company for these services during the three months ended September 30, 2015 was $1,012 of which $184 eliminated upon consolidation. After allocation of certain expenses, there was taxable income of $593 associated with these activities for the three months ended September 30, 2015. This resulted in estimated tax expense of $269 for the three months ended September 30, 2015.
Total revenue earned by the Company for these services during the nine months ended September 30, 2016 was $2,240 of which $0 eliminated upon consolidation. After allocation of certain expenses, there was taxable income of $1,619 associated with these activities for the nine months ended September 30, 2016. This resulted in estimated tax expense of $766 for the nine months ended September 30, 2016. Total revenue earned by the Company for these services during the nine months ended September 30, 2015 was $5,692 of which $3,235 eliminated upon consolidation. After allocation of certain expenses, there was taxable income of $3,323 associated with these activities for the nine months ended September 30, 2016. This resulted in estimated tax expense of $1,499 for the nine months ended September 30, 2016.
Prior to the Merger, Baltic Trading was subject to income tax on its United States source income. However, as a result of the Merger, Baltic Trading should qualify for the Section 883 exemption of the U.S. Internal Revenue Code of 1986 (as amended) in 2016 and in future taxable years as long as GS&T qualifies for the Section 883 exemption. As such, during the three and nine months ended September 30, 2016, there was no United States income tax recorded for Baltic Trading. During the three and nine months ended September 30, 2015, Baltic Trading had United States operations that resulted in United States source income of $583 and $1,348, respectively. Baltic Trading’s estimated United States income tax expense for the three and nine months ended September 30, 2015 was $23 and $54, respectively.
Recent accounting pronouncements
In August 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” This ASU adds or clarifies the guidance in ASC 230 – Statement of Cash Flows regarding the classification of certain cash receipts and payments in the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2017, and for interim periods within those years and early adoption is permitted. This ASU shall be applied retrospectively to all periods presented, but may be applied prospectively from the earliest date practicable if retrospective application would be impracticable. The Company is currently evaluating the impact of this adoption on its consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which replaces the existing guidance in ASC 840 – Leases. This ASU requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize a straight-line total lease expense. This ASU is effective for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years. Lessees and lessors will be required to apply the new standard at the beginning of the earliest period presented in the financial statements in which they first apply the new guidance, using a modified retrospective transition method. The requirements of this standard include a significant increase in required disclosures. The Company is currently evaluating the impact of this adoption on its consolidated financial statements.
In January 2016, the FASB issued ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). This ASU will require that equity investments are measured at fair value with changes in fair value recognized in net income (loss). ASU 2016-01 will be effective for annual periods beginning after December 15, 2017, and interim periods within those years. The Company is currently evaluating the impact of this adoption on its consolidated financial statements.
In August 2015, the FASB issued ASU No. 2015-15 (“ASU 2015-15”), which amends presentation and disclosure requirements outlined in ASU 2015-03, “Interest-Imputation of Interest (ASC Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,” (“ASU 2015-03”) by clarifying guidance for debt issuance costs related to line of credit arrangements by acknowledging the statement by SEC staff that it would not object to presentation of debt issuance costs related to a line of credit arrangement as an asset, and amortizing them ratably over the term of the line of credit arrangement, regardless of whether there were any borrowings outstanding under the agreement. Issued in April 2015, ASU 2015-03 required debt issuance costs related to a recognized debt liability to be presented on the balance sheet as a direct deduction from the debt liability, similar to the presentation of debt discounts. Prior to the issuance of ASU 2015-03, debt issuance costs were required to be presented as deferred charge assets, separate from the related debt liability. ASU 2015-03 does not change the recognition and measurement requirements for debt issuance costs. ASU 2015-03 is effective for fiscal years beginning after December 15, 2015, and early adoption is permitted. The Company adopted ASU 2015-03 during the three months ended March 31, 2016 on a retrospective basis. Refer to Note 8 – Debt.
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle is that a company should recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, and shall be applied either retrospectively to each period presented or as a cumulative effect adjustment as of the date of adoption. On July 9, 2015, the FASB voted to defer the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date. The FASB also permitted early adoption of the standard, but not before the original effective date of December 15, 2016. The Company is evaluating the potential impact of this adoption on its consolidated financial statements. Subsequent to the issuance of ASU 2014-09, the FASB issued the following ASU’s which amend or provide additional guidance on topics addressed in ASU 2014-09. In March 2016, the FASB issued ASU No. 2016-08, “Revenue Recognition - Principal versus Agent” (reporting revenue gross versus net). In April 2016, the FASB issued ASU No. 2016-10, “Revenue Recognition - Identifying Performance Obligations and Licenses.” Lastly, in May 2016, the FASB issued No. ASU 2016-12, “Revenue Recognition - Narrow Scope Improvements and Practical Expedients.” The Company is evaluating the potential impact of this adoption on its consolidated financial statements.
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Below is the list of the Company’s wholly owned ship-owning subsidiaries as of September 30, 2016:
Wholly Owned Subsidiaries |
|
Vessel Acquired |
|
Dwt |
|
Delivery Date |
|
Year Built |
|
|
|
|
|
|
|
|
|
|
|
Genco Reliance Limited |
|
Genco Reliance |
|
29,952 |
|
12/6/04 |
|
1999 |
|
Genco Vigour Limited |
|
Genco Vigour |
|
73,941 |
|
12/15/04 |
|
1999 |
|
Genco Explorer Limited |
|
Genco Explorer |
|
29,952 |
|
12/17/04 |
|
1999 |
|
Genco Carrier Limited |
|
Genco Carrier |
|
47,180 |
|
12/28/04 |
|
1998 |
|
Genco Sugar Limited |
|
Genco Sugar |
|
29,952 |
|
12/30/04 |
(3) |
1998 |
|
Genco Pioneer Limited |
|
Genco Pioneer |
|
29,952 |
|
1/4/05 |
(4) |
1999 |
|
Genco Progress Limited |
|
Genco Progress |
|
29,952 |
|
1/12/05 |
|
1999 |
|
Genco Wisdom Limited |
|
Genco Wisdom |
|
47,180 |
|
1/13/05 |
|
1997 |
|
Genco Success Limited |
|
Genco Success |
|
47,186 |
|
1/31/05 |
|
1997 |
|
Genco Beauty Limited |
|
Genco Beauty |
|
73,941 |
|
2/7/05 |
|
1999 |
|
Genco Knight Limited |
|
Genco Knight |
|
73,941 |
|
2/16/05 |
|
1999 |
|
Genco Leader Limited |
|
Genco Leader |
|
73,941 |
|
2/16/05 |
(5) |
1999 |
|
Genco Prosperity Limited |
|
Genco Prosperity |
|
47,180 |
|
4/4/05 |
|
1997 |
|
Genco Muse Limited |
|
Genco Muse |
|
48,913 |
|
10/14/05 |
|
2001 |
|
Genco Acheron Limited |
|
Genco Acheron |
|
72,495 |
|
11/7/06 |
|
1999 |
|
Genco Surprise Limited |
|
Genco Surprise |
|
72,495 |
|
11/17/06 |
|
1998 |
|
Genco Augustus Limited |
|
Genco Augustus |
|
180,151 |
|
8/17/07 |
|
2007 |
|
Genco Tiberius Limited |
|
Genco Tiberius |
|
175,874 |
|
8/28/07 |
|
2007 |
|
Genco London Limited |
|
Genco London |
|
177,833 |
|
9/28/07 |
|
2007 |
|
Genco Titus Limited |
|
Genco Titus |
|
177,729 |
|
11/15/07 |
|
2007 |
|
Genco Challenger Limited |
|
Genco Challenger |
|
28,428 |
|
12/14/07 |
|
2003 |
|
Genco Charger Limited |
|
Genco Charger |
|
28,398 |
|
12/14/07 |
|
2005 |
|
Genco Warrior Limited |
|
Genco Warrior |
|
55,435 |
|
12/17/07 |
|
2005 |
|
Genco Predator Limited |
|
Genco Predator |
|
55,407 |
|
12/20/07 |
|
2005 |
|
Genco Hunter Limited |
|
Genco Hunter |
|
58,729 |
|
12/20/07 |
|
2007 |
|
Genco Champion Limited |
|
Genco Champion |
|
28,445 |
|
1/2/08 |
|
2006 |
|
Genco Constantine Limited |
|
Genco Constantine |
|
180,183 |
|
2/21/08 |
|
2008 |
|
Genco Raptor LLC |
|
Genco Raptor |
|
76,499 |
|
6/23/08 |
|
2007 |
|
Genco Cavalier LLC |
|
Genco Cavalier |
|
53,617 |
|
7/17/08 |
|
2007 |
|
Genco Thunder LLC |
|
Genco Thunder |
|
76,588 |
|
9/25/08 |
|
2007 |
|
Genco Hadrian Limited |
|
Genco Hadrian |
|
169,694 |
|
12/29/08 |
|
2008 |
|
Genco Commodus Limited |
|
Genco Commodus |
|
169,025 |
|
7/22/09 |
|
2009 |
|
Genco Maximus Limited |
|
Genco Maximus |
|
169,025 |
|
9/18/09 |
|
2009 |
|
Genco Claudius Limited |
|
Genco Claudius |
|
169,025 |
|
12/30/09 |
|
2010 |
|
Genco Bay Limited |
|
Genco Bay |
|
34,296 |
|
8/24/10 |
|
2010 |
|
Genco Ocean Limited |
|
Genco Ocean |
|
34,409 |
|
7/26/10 |
|
2010 |
|
Genco Avra Limited |
|
Genco Avra |
|
34,391 |
|
5/12/11 |
|
2011 |
|
Genco Mare Limited |
|
Genco Mare |
|
34,428 |
|
7/20/11 |
|
2011 |
|
Genco Spirit Limited |
|
Genco Spirit |
|
34,432 |
|
11/10/11 |
|
2011 |
|
Genco Aquitaine Limited |
|
Genco Aquitaine |
|
57,981 |
|
8/18/10 |
|
2009 |
|
Genco Ardennes Limited |
|
Genco Ardennes |
|
57,981 |
|
8/31/10 |
|
2009 |
|
Genco Auvergne Limited |
|
Genco Auvergne |
|
57,981 |
|
8/16/10 |
|
2009 |
|
Genco Bourgogne Limited |
|
Genco Bourgogne |
|
57,981 |
|
8/24/10 |
|
2010 |
|
Genco Brittany Limited |
|
Genco Brittany |
|
57,981 |
|
9/23/10 |
|
2010 |
|
Genco Languedoc Limited |
|
Genco Languedoc |
|
57,981 |
|
9/29/10 |
|
2010 |
|
Genco Loire Limited |
|
Genco Loire |
|
53,416 |
|
8/4/10 |
|
2009 |
|
Genco Lorraine Limited |
|
Genco Lorraine |
|
53,416 |
|
7/29/10 |
|
2009 |
|
Genco Normandy Limited |
|
Genco Normandy |
|
53,596 |
|
8/10/10 |
|
2007 |
|
Genco Picardy Limited |
|
Genco Picardy |
|
55,257 |
|
8/16/10 |
|
2005 |
|
Genco Provence Limited |
|
Genco Provence |
|
55,317 |
|
8/23/10 |
|
2004 |
|
Genco Pyrenees Limited |
|
Genco Pyrenees |
|
57,981 |
|
8/10/10 |
|
2010 |
|
Genco Rhone Limited |
|
Genco Rhone |
|
58,018 |
|
3/29/11 |
|
2011 |
|
Baltic Lion Limited |
|
Baltic Lion |
|
179,185 |
|
4/8/15 |
(1) |
2012 |
|
Baltic Tiger Limited |
|
Genco Tiger |
|
179,185 |
|
4/8/15 |
(1) |
2011 |
|
Baltic Leopard Limited |
|
Baltic Leopard |
|
53,447 |
|
4/8/10 |
(2) |
2009 |
|
Baltic Panther Limited |
|
Baltic Panther |
|
53,351 |
|
4/29/10 |
(2) |
2009 |
|
Baltic Cougar Limited |
|
Baltic Cougar |
|
53,432 |
|
5/28/10 |
(2) |
2009 |
|
Baltic Jaguar Limited |
|
Baltic Jaguar |
|
53,474 |
|
5/14/10 |
(2) |
2009 |
|
Baltic Bear Limited |
|
Baltic Bear |
|
177,717 |
|
5/14/10 |
(2) |
2010 |
|
Baltic Wolf Limited |
|
Baltic Wolf |
|
177,752 |
|
10/14/10 |
(2) |
2010 |
|
Baltic Wind Limited |
|
Baltic Wind |
|
34,409 |
|
8/4/10 |
(2) |
2009 |
|
Baltic Cove Limited |
|
Baltic Cove |
|
34,403 |
|
8/23/10 |
(2) |
2010 |
|
Baltic Breeze Limited |
|
Baltic Breeze |
|
34,386 |
|
10/12/10 |
(2) |
2010 |
|
Baltic Fox Limited |
|
Baltic Fox |
|
31,883 |
|
9/6/13 |
(2) |
2010 |
|
Baltic Hare Limited |
|
Baltic Hare |
|
31,887 |
|
9/5/13 |
(2) |
2009 |
|
Baltic Hornet Limited |
|
Baltic Hornet |
|
63,574 |
|
10/29/14 |
(2) |
2014 |
|
Baltic Wasp Limited |
|
Baltic Wasp |
|
63,389 |
|
1/2/15 |
(2) |
2015 |
|
Baltic Scorpion Limited |
|
Baltic Scorpion |
|
63,462 |
|
8/6/15 |
|
2015 |
|
Baltic Mantis Limited |
|
Baltic Mantis |
|
63,470 |
|
10/9/15 |
|
2015 |
|
(1) |
The delivery date for these vessels represents the date that the vessel was purchased from Baltic Trading. |
(2) |
The delivery date for these vessels represents the date that the vessel was delivered to Baltic Trading. |
(3) |
The Genco Sugar was sold on October 20, 2016. Refer to Note 20 – Subsequent Events. |
(4) |
The Genco Pioneer was sold on October 26, 2016. Refer to Note 20 – Subsequent Events. |
(5) |
The Genco Leader was sold on November 4, 2016. Refer to Note 20 – Subsequent Events. |
|
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
|
||||
|
|
September 30, |
|
September 30, |
|
||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding, basic: |
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding, basic |
|
7,245,268 |
|
6,982,434 |
|
7,228,660 |
|
6,361,518 |
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding, diluted: |
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding, basic |
|
7,245,268 |
|
6,982,434 |
|
7,228,660 |
|
6,361,518 |
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of warrants |
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of restricted stock awards |
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding, diluted |
|
7,245,268 |
|
6,982,434 |
|
7,228,660 |
|
6,361,518 |
|
|
|
|
September 30, |
|
December 31, |
|
||
|
|
2016 |
|
2015 |
|
||
|
|
|
|
|
|
|
|
Principal amount |
$ |
548,276 |
$ |
588,434 | |||
Less: Unamortized debt issuance costs |
|
|
(7,821) |
|
|
(9,411) |
|
Less: Current portion |
|
|
(540,455) |
|
|
(579,023) |
|
|
|
|
|
|
|
|
|
Long-term debt |
|
$ |
— |
|
$ |
— |
|
|
|
September 30, 2016 |
|
December 31, 2015 |
|
|||||||||
|
|
|
|
|
Unamortized |
|
|
|
|
Unamortized |
|
|||
|
|
|
|
|
Debt Issuance |
|
|
|
|
Debt Issuance |
|
|||
Principal |
Cost |
Principal |
Cost |
|||||||||||
$100 Million Term Loan Facility |
|
$ |
54,330 |
|
$ |
955 |
|
$ |
60,100 |
|
$ |
1,201 |
|
|
$253 Million Term Loan Facility |
|
|
130,043 |
|
|
2,010 |
|
|
145,268 |
|
|
2,528 |
|
|
$44 Million Term Loan Facility |
|
|
36,438 |
|
|
473 |
|
|
38,500 |
|
|
584 |
|
|
2015 Revolving Credit Facility |
|
|
51,294 |
|
|
— |
|
|
56,218 |
|
|
— |
|
|
$98 Million Credit Facility |
|
|
98,271 |
|
|
1,994 |
|
|
98,271 |
|
|
2,368 |
|
|
$148 Million Credit Facility |
|
|
131,394 |
|
|
519 |
|
|
140,383 |
|
|
639 |
|
|
$22 Million Term Loan Facility |
|
|
17,500 |
|
|
299 |
|
|
18,625 |
|
|
376 |
|
|
2014 Term Loan Facilities |
|
|
29,006 |
|
|
1,571 |
|
|
31,069 |
|
|
1,715 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt |
|
$ |
548,276 |
|
$ |
7,821 |
|
$ |
588,434 |
|
$ |
9,411 |
|
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
||||
|
|
September 30, |
|
|
September 30, |
|
||||
|
|
2016 |
|
2015 |
|
|
2016 |
|
2015 |
|
Effective Interest Rate |
|
4.47 |
% |
3.55 |
% |
|
4.40 |
% |
3.54 |
% |
Range of Interest Rates (excluding impact of unused commitment fees) |
|
3.13% to 6.96 |
% |
2.78% to 3.93 |
% |
|
2.69% to 6.96 |
% |
2.73% to 3.93 |
% |
|
Changes in AOCI by Component
For the Three Months Ended September 30, 2016
|
|
Net Unrealized |
|
|
|
|
Gain (Loss) |
|
|
|
|
on |
|
|
|
|
Investments |
|
|
AOCI — July 1, 2016 |
|
$ |
(26) |
|
|
|
|
|
|
OCI before reclassifications |
|
|
316 |
|
Amounts reclassified from AOCI |
|
|
— |
|
Net current-period OCI |
|
|
316 |
|
|
|
|
|
|
AOCI — September 30, 2016 |
|
$ |
290 |
|
Changes in AOCI by Component
For the Three Months Ended September 30, 2015
|
|
Net Unrealized |
|
|
|
|
Gain (Loss) |
|
|
|
|
on |
|
|
|
|
Investments |
|
|
AOCI — July 1, 2015 |
|
$ |
(26,360) |
|
|
|
|
|
|
OCI before reclassifications |
|
|
(6,880) |
|
Amounts reclassified from AOCI |
|
|
33,223 |
|
Net current-period OCI |
|
|
26,343 |
|
|
|
|
|
|
AOCI — September 30, 2015 |
|
$ |
(17) |
|
Changes in AOCI by Component
For the Nine Months Ended September 30, 2016
|
|
Net Unrealized |
|
|
|
|
Gain (Loss) |
|
|
|
|
on |
|
|
|
|
Investments |
|
|
AOCI — January 1, 2016 |
|
$ |
(21) |
|
|
|
|
|
|
OCI before reclassifications |
|
|
(2,385) |
|
Amounts reclassified from AOCI |
|
|
2,696 |
|
Net current-period OCI |
|
|
311 |
|
|
|
|
|
|
AOCI — September 30, 2016 |
|
$ |
290 |
|
Changes in AOCI by Component
For the Nine Months Ended September 30, 2015
|
|
Net Unrealized |
|
|
|
|
Gain (Loss) |
|
|
|
|
on |
|
|
|
|
Investments |
|
|
AOCI — January 1, 2015 |
|
$ |
(25,317) |
|
|
|
|
|
|
OCI before reclassifications |
|
|
(7,923) |
|
Amounts reclassified from AOCI |
|
|
33,223 |
|
Net current-period OCI |
|
|
25,300 |
|
|
|
|
|
|
AOCI — September 30, 2015 |
|
$ |
(17) |
|
|
|
|
Reclassifications Out of AOCI |
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
|
Affected Line Item in |
|
||||||||
|
|
September 30, |
|
September 30, |
|
the Statement Where |
|
||||||||
Details about AOCI Components |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
Net Loss is Presented |
|
||||
Net unrealized loss on investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized loss on sale of AFS investment |
|
$ |
— |
|
$ |
(687) |
|
$ |
— |
|
$ |
(687) |
|
Other income (expense) |
|
Impairment of AFS investment |
|
|
— |
|
|
(32,536) |
|
|
(2,696) |
|
|
(32,536) |
|
Impairment of investment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reclassifications for the period |
|
$ |
— |
|
$ |
(33,223) |
|
$ |
(2,696) |
|
$ |
(33,223) |
|
|
|
|
|
|
September 30, 2016 |
|
December 31, 2015 |
|
||||||||
|
|
Carrying |
|
|
|
|
Carrying |
|
|
|
|
||
|
|
Value |
|
Fair Value |
|
Value |
|
Fair Value |
|
||||
Cash and cash equivalents |
|
$ |
40,028 |
|
$ |
40,028 |
|
$ |
121,074 |
|
$ |
121,074 |
|
Restricted cash |
|
|
19,815 |
|
|
19,815 |
|
|
19,815 |
|
|
19,815 |
|
Floating rate debt |
|
|
548,276 |
|
|
548,276 |
|
|
588,434 |
|
|
588,434 |
|
|
|
September 30, 2016 |
|
||||
|
|
|
|
|
Quoted |
|
|
|
|
|
|
|
Market |
|
|
|
|
|
|
|
Prices in |
|
|
|
|
|
|
|
Active |
|
|
|
|
|
|
|
Markets |
|
|
|
|
Total |
|
(Level 1) |
|
||
Investments |
|
$ |
6,191 |
|
$ |
6,191 |
|
|
|
December 31, 2015 |
|
||||
|
|
|
|
|
Quoted |
|
|
|
|
|
|
|
Market |
|
|
|
|
|
|
|
Prices in |
|
|
|
|
|
|
|
Active |
|
|
|
|
|
|
|
Markets |
|
|
|
|
Total |
|
(Level 1) |
|
||
Investments |
|
$ |
12,327 |
|
$ |
12,327 |
|
|
|
|
September 30, |
|
December 31, |
|
||
|
|
2016 |
|
2015 |
|
||
Lubricant inventory, fuel oil and diesel oil inventory and other stores |
|
$ |
10,318 |
|
$ |
10,478 |
|
Prepaid items |
|
|
2,448 |
|
|
3,917 |
|
Insurance receivable |
|
|
1,283 |
|
|
2,738 |
|
Other |
|
|
3,023 |
|
|
4,236 |
|
Total prepaid expenses and other current assets |
|
$ |
17,072 |
|
$ |
21,369 |
|
|
|
|
September 30, |
|
December 31, |
|
||
|
|
2016 |
|
2015 |
|
||
|
|
|
|
|
|
|
|
2015 Revolving Credit Facility |
|
$ |
1,254 |
|
$ |
1,254 |
|
$148 Million Credit Facility |
|
|
2,774 |
|
|
2,774 |
|
Total deferred financing costs |
|
|
4,028 |
|
|
4,028 |
|
Less: accumulated amortization |
|
|
1,340 |
|
|
734 |
|
Total |
|
$ |
2,688 |
|
$ |
3,294 |
|
|
|
|
September 30, |
|
December 31, |
|
||
|
|
2016 |
|
2015 |
|
||
Fixed assets, at cost: |
|
|
|
|
|
|
|
Vessel equipment |
|
$ |
1,127 |
|
$ |
1,086 |
|
Furniture and fixtures |
|
|
462 |
|
|
462 |
|
Computer equipment |
|
|
142 |
|
|
142 |
|
Total costs |
|
|
1,731 |
|
|
1,690 |
|
Less: accumulated depreciation and amortization |
|
|
660 |
|
|
404 |
|
Total |
|
$ |
1,071 |
|
$ |
1,286 |
|
|
|
|
September 30, |
|
December 31, |
|
||
|
|
2016 |
|
2015 |
|
||
Accounts payable |
|
$ |
4,835 |
|
$ |
8,271 |
|
Accrued general and administrative expenses |
|
|
5,780 |
|
|
5,745 |
|
Accrued vessel operating expenses |
|
|
11,065 |
|
|
13,451 |
|
Total |
|
$ |
21,680 |
|
$ |
27,467 |
|
|
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
|
||||||||
|
|
September 30, |
|
September 30, |
|
||||||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
||||
Professional fees incurred |
|
$ |
70 |
|
$ |
169 |
|
$ |
192 |
|
$ |
644 |
|
Trustee fees incurred |
|
|
13 |
|
|
5 |
|
|
51 |
|
|
362 |
|
Total reorganization fees |
|
$ |
83 |
|
$ |
174 |
|
$ |
243 |
|
$ |
1,006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reorganization items, net |
|
$ |
83 |
|
$ |
174 |
|
$ |
243 |
|
$ |
1,006 |
|
|
|
|
|
|
Weighted |
|
|
|
|
Number of |
|
Average Grant |
|
|
|
|
Shares |
|
Date Price |
|
|
Outstanding at January 1, 2016 |
|
74,040 |
|
$ |
200.00 |
|
Granted |
|
— |
|
|
— |
|
Vested |
|
(37,020) |
|
|
200.00 |
|
Forfeited |
|
— |
|
|
— |
|
|
|
|
|
|
|
|
Outstanding at September 30, 2016 |
|
37,020 |
|
$ |
200.00 |
|
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
|
||||||||
|
|
September 30, |
|
September 30, |
|
||||||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
||||
General, administrative and management fees |
|
$ |
996 |
|
$ |
2,304 |
|
$ |
4,069 |
|
$ |
9,031 |
|
|
|
|
|
Weighted |
|
|
|
|
Number of |
|
Average Grant |
|
|
|
|
RSUs |
|
Date Price |
|
|
Outstanding at January 1, 2016 |
|
5,821 |
|
$ |
71.50 |
|
Granted |
66,666 | 5.10 | ||||
Vested |
|
(5,821) |
|
|
71.50 |
|
Forfeited |
|
— |
|
|
— |
|
|
|
|
|
|
|
|
Outstanding at September 30, 2016 |
|
66,666 |
|
$ |
5.10 |
|
The total fair value of the RSUs that vested during the nine months ended September 30, 2016 and 2015 was $30 and $116, respectively. The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date. On February 17, 2016, the vesting of 23,286 outstanding RSUs, or 2,328 outstanding RSUs on a post-reverse stock split basis, were accelerated upon the resignation of two members on the Company’s Board of Directors.
The following table summarizes certain information of the RSUs unvested and vested as of September 30, 2016:
Unvested RSUs |
|
Vested RSUs |
|
||||||||
September 30, 2016 |
|
September 30, 2016 |
|
||||||||
|
|
|
|
Weighted |
|
|
|
|
|
||
|
|
Weighted |
|
Average |
|
|
|
Weighted |
|
||
|
|
Average |
|
Remaining |
|
|
|
Average |
|
||
Number of |
|
Grant Date |
|
Contractual |
|
Number of |
|
Grant Date |
|
||
RSUs |
|
Price |
|
Life |
|
RSUs |
|
Price |
|
||
66,666 |
|
$ |
5.10 |
|
0.63 |
|
7,440 |
|
$ |
71.18 |
|
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
|
||||||||
|
|
September 30, |
|
September 30, |
|
||||||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General, administrative and management fees |
|
$ |
86 |
|
$ |
235 |
|
$ |
320 |
|
$ |
235 |
|
|
|
|
|
Weighted |
|
|
|
|
Number of |
|
Average Grant |
|
|
|
|
Shares |
|
Date Price |
|
|
Outstanding at January 1,2016 |
|
— |
|
$ |
— |
|
Granted |
|
61,224 |
|
|
5.20 |
|
Vested |
|
— |
|
|
— |
|
Forfeited |
|
— |
|
|
— |
|
|
|
|
|
|
|
|
Outstanding at September 30, 2016 |
|
61,224 |
|
$ |
5.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
|
||||||||
|
|
September 30, |
|
September 30, |
|
||||||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
||||
General, administrative and management fees |
|
$ |
60 |
|
$ |
— |
|
$ |
150 |
|
$ |
— |
|
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
|
||||||||
|
|
September 30, |
|
September 30, |
|
||||||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
||||
General, administrative and management fees |
|
$ |
— |
|
$ |
3,665 |
|
$ |
— |
|
$ |
5,273 |
|
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
|
||||||||
|
|
September 30, |
|
September 30, |
|
||||||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
||||
General, administrative and management fees |
|
$ |
2,442 |
|
$ |
5,646 |
|
$ |
9,973 |
|
$ |
22,134 |
|
|
|
|
|
Weighted |
|
Weighted |
|
||
|
|
Number of |
|
Average Exercise |
|
Average Fair |
|
||
|
|
Warrants |
|
Price |
|
Value |
|
||
Outstanding at January 1, 2016 |
|
5,704,974 |
|
$ |
303.12 |
|
$ |
6.36 |
|
Granted |
|
— |
|
|
— |
|
|
— |
|
Exercisable |
|
(2,852,487) |
|
|
303.12 |
|
|
6.36 |
|
Exercised |
|
— |
|
|
— |
|
|
— |
|
Forfeited |
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
Outstanding at September 30, 2016 |
|
2,852,487 |
|
$ |
303.12 |
|
$ |
6.36 |
|
The following table summarizes certain information about the warrants outstanding as of September 30, 2016:
|
|
|
Warrants Outstanding, |
|
Warrants Exercisable, |
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September 30, 2016 |
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September 30, 2016 |
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Weighted |
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Weighted |
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Weighted |
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Average |
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Weighted |
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Average |
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Weighted |
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Average |
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Remaining |
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Average |
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Remaining |
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Average |
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Number of |
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Exercise |
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Contractual |
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Number of |
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Exercise |
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Contractual |
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Exercise Price |
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Warrants |
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Price |
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Life |
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Warrants |
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Price |
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Life |
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$ |
303.12 |
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2,852,487 |
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$ |
303.12 |
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3.86 |
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5,704,974 |
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$ |
303.12 |
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3.86 |
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