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1 - GENERAL INFORMATION
The accompanying consolidated financial statements include the accounts of Genco Shipping & Trading Limited (“GS&T”), its wholly-owned subsidiaries, and its subsidiary, 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 December 31, 2014, is the sole owner of all of the outstanding shares of the following subsidiaries: Genco Ship Management LLC; Genco Investments LLC; Genco RE Investments LLC; and the ship-owning subsidiaries as set forth below. As of December 31, 2014, Genco Ship Management LLC is the sole owner of all of the outstanding shares of Genco Management (USA) Limited.
Bankruptcy Filing
On April 21, 2014 (the “Petition Date”), GS&T and its subsidiaries other than Baltic Trading Limited 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 Debtors continued to operate their businesses in the ordinary course as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. Through the Chapter 11 Cases, the Debtors implemented a Prepackaged Plan of Reorganization of the Debtors Pursuant to Chapter 11 of the Bankruptcy Code (the “Prepack Plan”) for which the Company solicited votes from certain classes of its creditors prior to commencement of the Chapter 11 Cases in accordance with the Restructuring Support Agreement that the Debtors entered into with certain of its creditors on April 3, 2014. The Company subsequently emerged from bankruptcy on July 9, 2014.
The filing of the Chapter 11 Cases constituted an event of default with respect to each of the following agreements or instruments:
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· |
the Credit Agreement, dated as of July 20, 2007 (as amended to date), by and among the Company as borrower, the banks and other financial institutions named therein as lenders, Wilmington Trust, N.A., as successor administrative and collateral agent, and the other parties thereto, relating to approximately $1,055,912 of principal plus accrued and unpaid interest, fees, costs, and other expenses (the “2007 Credit Facility”); |
|
· |
the Loan Agreement, dated as of August 20, 2010 (as amended to date), by and among the Company as borrower, Genco Aquitaine Limited and the other subsidiaries of the Company named therein as guarantors, the banks and financial institutions named therein as lenders, BNP Paribas, Credit Agricole Corporate and Investment Bank, DVB Bank SE, Deutsche Bank AG Filiale Deutschlandgeschaft, Skandinaviska Enskilda Banken AB (publ) as mandated lead arrangers, BNP Paribas, Credit Agricole Corporate and Investment Bank, DVB Bank SE, Deutsche Bank AG, Skandinaviska Enskilda Banken AB (publ) as swap providers, and Deutsche Bank Luxembourg S.A. as agent for the lenders and the assignee, relating to approximately $175,718 of principal and accrued and unpaid interest, fees, costs, and other expenses (the “$253 Million Term Loan Facility”); |
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· |
the Loan Agreement, dated as of August 12, 2010 (as amended to date), by and among the Company as borrower, Genco Ocean Limited and the other subsidiaries of the Company named therein as guarantors, the banks and financial institutions named therein as lenders, and Credit Agricole Corporate and Investment Bank as agent and security trustee, relating to approximately $73,561 of principal plus accrued and unpaid interest, fees, costs, and other expenses (the “$100 Million Term Loan Facility”); |
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· |
the Indenture and First Supplemental Indenture relating to $125,000 of principal plus accrued and unpaid interest outstanding of the Company’s 5.00% Convertible Senior Notes (the “2010 Notes”) due August 15, 2015 (the “Indenture”); and |
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· |
the outstanding interest rate swap with DNB Bank ASA, relating to a liability position of $5,622. |
As a result of the filing of the Chapter 11 Cases, all indebtedness outstanding under the 2007 Credit Facility and the Indenture was accelerated and became due and payable, and indebtedness under the other agreements and instruments described above were accelerated and become due and payable upon notice to the Company, subject to an automatic stay of any action to collect, assert, or recover a claim against the Company or the other Debtors and the application of the applicable provisions of the Bankruptcy Code.
On July 2, 2014, the Bankruptcy Court entered an order (the “Confirmation Order”), confirming the First Amended Prepackaged Plan of Reorganization of the Debtors Pursuant to Chapter 11 of the Bankruptcy Code (the “Plan”). Capitalized terms used but not defined below shall have the meanings given to them in the Plan. On the July 9, 2014 (the “Effective Date”), the Debtors completed their financial restructuring and emerged from Chapter 11 through a series of transactions contemplated by the Plan, and the Plan became effective pursuant to its terms. References to “Successor Company” refer to the Company after July 9, 2014, after giving effect to the application of fresh-start reporting (see “Financial Statement Presentation” section below). References to “Predecessor Company” refer to the Company prior to July 9, 2014.
Key components of the Plan included:
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· |
The conversion of 100% of the Claims under the 2007 Credit Facility into 81.1% of the Successor Company Common Stock (subject to dilution by the warrants issued under the Plan). On the Effective Date, the 2007 Credit Facility was terminated, and the liens and mortgages thereunder were released. Refer to Note 10 — Debt for further information. |
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· |
The conversion of 100% of the Claims under the 2010 Notes into 8.4% of the Successor Company Common Stock (subject to dilution by the warrants issued under the Plan). On the Effective Date, the 2010 Notes and the Indenture were fully satisfied and discharged. Refer to Note 11 — Convertible Senior Notes for further information. |
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· |
A fully backstopped Rights Offering for approximately 8.7% of the Successor Company Common Stock, in which holders of 2007 Credit Facility Claims were entitled to subscribe for up to 80% of the Successor Company Common Stock offered, and holders of the 2010 Notes Claims were entitled to subscribe for up to 20% of the Successor Company Common Stock being offered under the Rights Offering for an aggregate subscription price of $100,000. |
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· |
The amendment and restatement of the $253 Million Term Loan Facility and the $100 Million Term Loan Facility as of the Effective Date, with extended maturities, a financial covenant holiday and certain other amendments, as discussed further in Note 10 - Debt. |
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· |
The cancellation of the common stock of the Predecessor Company as of the Effective Date, with the holders thereof receiving warrants to acquire shares of the Successor Company Common Stock. Each of the Successor Company’s Equity Warrants is exercisable for one share of the Successor Company’s Common Stock, and holders received an aggregate of 3,938,298 of the Successor Company’s Equity Warrants for the common stock of the Predecessor Company. The Successor Company’s Equity Warrants in the aggregate are exercisable for approximately 6% of the Successor Company Common Stock (subject to dilution). |
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· |
Reinstatement, non-impairment or payment in full in the ordinary course of business during the pendency of the Chapter 11 Cases of all Allowed General Unsecured Claims, including Allowed Claims of trade vendors, suppliers, customers and charterers, per the approval by the Bankruptcy Court. |
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· |
The non-impairment of all other General Unsecured Claims under Section 1124 of the Bankruptcy Code. |
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· |
The establishment of the Genco Shipping & Trading Limited 2014 Management Incentive Plan (the “MIP”), which provides for the distribution of the Successor Company’s MIP Primary Equity in the form of shares representing 1.8% of the Successor Company’s Common Stock and three tiers of the Successor Company’s MIP Warrants (“MIP Warrants”) with staggered strike prices based on increasing equity values to the participating officers, directors, and other management of the Successor Company. These awards were made on August 7, 2014. Refer to Note 24 — Stock-Based Compensation. |
Registration Rights Agreement
On the Effective Date, the Successor Company and the Registration Rights Parties entered into the Registration Rights Agreement. The Registration Rights Agreement provided the Registration Rights Parties who receive 10% or more of the Successor Company’s Common Stock under the Plan with demand and piggyback registration rights. All other Registration Rights Parties have piggyback registration rights only.
Reorganization Value
The Plan as confirmed by the Bankruptcy Court estimated the reorganization value of the Debtors to be $1.23 billion. This reorganization value was determined by, among other things, vessel appraisals and other valuation methodologies as well as the Debtors’ equity interests in Baltic Trading and Jinhui Shipping, $100,000 of cash invested through the Rights Offering and approximately $250,000 of debt projected to be on the balance sheet of the Debtors. It also assumed that the Debtors would issue approximately 61.7 million primary shares of New Genco Common Stock valued at $20.00 per share (prior to dilution) in order to satisfy claims pursuant to the Plan.
The foregoing estimates of the post-confirmation equity value of the Debtors and the share price of New Genco Common Stock were based on a number of assumptions, including no material adverse changes in the spot rate market, no further ship arrests, the continuing employment of the Debtors’ vessels, the continuing service revenue from Baltic Trading and MEP, the Rights Offering, and other assumptions. Such valuation assumptions are not a prediction or reflection of post-confirmation trading prices of the Debtors’ common stock. Such securities may trade at substantially lower or higher prices because of a number of factors. The trading prices of securities issued under a plan of reorganization are subject to many unforeseen circumstances and therefore cannot be predicted.
Successor Company Equity Warrant Agreement
On the Effective Date, pursuant to the Plan, the Successor Company’s Equity Warrants totaling 3,938,298 were issued pursuant to the terms of the Successor Company’s Equity Warrant Agreement (the “Equity Warrants”). Each of the Equity Warrants has a 7-year term (commencing on the day following the Effective Date) and are exercisable for one share of the Successor Company’s Common Stock. The Equity Warrants are exercisable on a cashless basis at an exercise price of $20.99 per share. The Successor Company’s Equity Warrant Agreement contains customary anti-dilution adjustments 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.
The Equity Warrants were distributed to holders of the common stock of the Predecessor Company, which was cancelled as of the Effective Date. Shares of common stock of the Predecessor Company issued to directors, officers and employees of Genco under compensatory plans that were unvested as of the Effective Date were deemed vested automatically on the Effective Date, so that all Equity Warrants received in exchange were therefore deemed vested. Refer to Note 24 — Stock-Based Compensation for further information.
Financial Statement Presentation
Upon the Company’s emergence from the Chapter 11 Cases on July 9, 2014, the Company adopted fresh-start reporting in accordance with provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 852, “Reorganizations” (“ASC 852”). Upon adoption of fresh-start reporting, the Company’s assets and liabilities were recorded at their value as of the fresh-start reporting date. The fair values of the Company’s assets and liabilities in conformance with ASC 805, “Business Combinations,” as of that date differed materially from the recorded values of its assets and liabilities as reflected in its historical consolidated financial statements. In addition, the Company’s adoption of fresh-start reporting may materially affect its results of operations following the fresh-start reporting dates, as the Company will have a new basis in its assets and liabilities. Consequently, the Company’s historical financial statements may not be reliable indicators of its financial condition and results of operations for any period after it adopted fresh-start reporting. As a result of the adoption of fresh-start reporting, the Company’s consolidated balance sheets and consolidated statements of operations subsequent to July 9, 2014 will not be comparable in many respects to our consolidated balance sheets and consolidated statements of operations prior to July 9, 2014.
Under ASC 852, fresh-start reporting is required upon emergence from Chapter 11 if (i) the value of the assets of the emerging entity immediately before the date of confirmation is less than the total of all post-petition liabilities and allowed claims; and (ii) holders of existing voting shares immediately before confirmation receive less than 50% of the voting shares of the emerging entity. Accordingly, the Company qualified for and adopted fresh-start reporting as of the Effective Date. Adopting fresh-start reporting results in a new reporting entity with no beginning retained earnings or deficit. The cancellation of all existing shares outstanding on the Effective Date and issuance of new shares of the reorganized entity caused a related change of control of the Company under ASC 852.
The following fresh-start balance sheet illustrates the financial effects on the Company of the implementation of the Plan and the adoption of fresh-start reporting. This fresh-start balance sheet reflects the effect of the completion of the transactions included in the Plan, including the issuance of equity and the settlement of old indebtedness.
The effects of the Plan and fresh-start reporting on the Company’s consolidated balance sheet are as follows:
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Fresh-Start Adjustments |
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Predecessor |
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Debt Discharge |
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Reinstatement of |
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Revaluation of |
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Successor |
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Assets |
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Current assets: |
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|
|
|
|
|
|
|
|
|
|
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Cash and cash equivalents |
|
$ |
48,551 |
|
$ |
87,526 |
|
$ |
— |
|
$ |
— |
|
$ |
136,077 |
|
|
Restricted cash |
|
9,975 |
|
— |
|
— |
|
— |
|
9,975 |
|
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Due from charterers, net |
|
13,194 |
|
— |
|
— |
|
— |
|
13,194 |
|
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Prepaid expenses and other current assets |
|
30,800 |
|
— |
|
— |
|
(41 |
) |
30,759 |
|
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Time charters acquired |
|
— |
|
— |
|
— |
|
450 |
|
450 |
|
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Total current assets |
|
102,520 |
|
87,526 |
|
— |
|
409 |
|
190,455 |
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Noncurrent assets: |
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|
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|
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|
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Vessels, net |
|
2,604,731 |
|
— |
|
— |
|
(1,065,882 |
) |
1,538,849 |
|
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Deposits on vessels |
|
28,658 |
|
— |
|
— |
|
2,317 |
|
30,975 |
|
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Deferred drydock, net |
|
16,584 |
|
— |
|
— |
|
(16,396 |
) |
188 |
|
|||||
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Deferred financing costs, net |
|
18,953 |
|
(11,893 |
) |
— |
|
— |
|
7,060 |
|
|||||
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Fixed assets, net |
|
4,053 |
|
— |
|
— |
|
(3,443 |
) |
610 |
|
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Other noncurrent assets |
|
514 |
|
— |
|
— |
|
— |
|
514 |
|
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Restricted cash |
|
300 |
|
— |
|
— |
|
— |
|
300 |
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Investments |
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51,804 |
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— |
|
— |
|
— |
|
51,804 |
|
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Goodwill |
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— |
|
— |
|
— |
|
166,067 |
|
166,067 |
|
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Total noncurrent assets |
|
2,725,597 |
|
(11,893 |
) |
— |
|
(917,337 |
) |
1,796,367 |
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Total assets |
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$ |
2,828,117 |
|
$ |
75,633 |
|
$ |
— |
|
$ |
(916,928 |
) |
$ |
1,986,822 |
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Liabilities and Equity |
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Current liabilities not subject to compromise: |
|
|
|
|
|
|
|
|
|
|
|
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Accounts payable and accrued expenses |
|
$ |
60,333 |
|
$ |
(1,086 |
) |
$ |
6,478 |
|
$ |
— |
|
$ |
65,725 |
|
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Current portion of long-term debt |
|
4,250 |
|
— |
|
27,992 |
|
— |
|
32,242 |
|
|||||
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Deferred revenue |
|
997 |
|
— |
|
— |
|
— |
|
997 |
|
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Time charters acquired |
|
16 |
|
— |
|
— |
|
(16 |
) |
— |
|
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Total current liabilities not subject to compromise |
|
65,596 |
|
(1,086 |
) |
34,470 |
|
(16 |
) |
98,964 |
|
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Noncurrent liabilities not subject to compromise: |
|
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|
|
|
|
|
|
|
|
|
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Long-term lease obligations |
|
2,670 |
|
— |
|
— |
|
(2,670 |
) |
— |
|
|||||
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Long-term debt |
|
161,500 |
|
— |
|
214,289 |
|
— |
|
375,789 |
|
|||||
|
Total noncurrent liabilities not subject to compromises |
|
164,170 |
|
— |
|
214,289 |
|
(2,670 |
) |
375,789 |
|
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|
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|
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Total liabilities subject to compromise |
|
1,443,446 |
|
(1,194,687 |
) |
(248,759 |
) |
— |
|
— |
|
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|
|
|
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|
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|
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Total liabilities |
|
1,673,212 |
|
(1,195,773 |
) |
— |
|
(2,686 |
) |
474,753 |
|
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|
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|
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Equity: |
|
|
|
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|
|
|
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Genco Shipping & Trading Limited shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
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|
Predecessor Common stock |
|
445 |
|
(445 |
) |
— |
|
— |
|
— |
|
|||||
|
Predecessor Additional paid-in capital |
|
849,130 |
|
(849,130 |
) |
— |
|
— |
|
— |
|
|||||
|
Successor Common stock |
|
— |
|
603 |
|
— |
|
— |
|
603 |
|
|||||
|
Successor Additional paid-in capital |
|
— |
|
1,232,397 |
|
— |
|
— |
|
1,232,397 |
|
|||||
|
Accumulated other comprehensive income |
|
30,357 |
|
4,574 |
|
— |
|
(34,931 |
) |
— |
|
|||||
|
Retained (deficit) earnings |
|
(57,463 |
) |
936,774 |
|
— |
|
(879,311 |
) |
— |
|
|||||
|
Total Genco Shipping & Trading Limited shareholders’ equity |
|
822,469 |
|
1,324,773 |
|
— |
|
(914,242 |
) |
1,233,000 |
|
|||||
|
Noncontrolling interest |
|
332,436 |
|
(53,367 |
) |
— |
|
— |
|
279,069 |
|
|||||
|
Total equity |
|
1,154,905 |
|
1,271,406 |
|
— |
|
(914,242 |
) |
1,512,069 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Total liabilities and equity |
|
$ |
2,828,117 |
|
$ |
75,633 |
|
$ |
— |
|
$ |
(916,928 |
) |
$ |
1,986,822 |
|
(a)Debt Discharge and Equity Issuance — This column reflects the following adjustments pursuant to the Plan:
|
· |
The discharge of the outstanding debt under the 2007 Credit Facility of $1,055,912. |
|
· |
The discharge of the long-term interest payable due pursuant to the 2007 Credit Facility of $13,199. |
|
· |
The discharge of the 2010 Notes liability of $117,473 and the bond coupon interest of $1,105. |
|
· |
Receipt of the $100,000 rights offering pursuant to the Plan. |
|
· |
The payment of interest expense accrued up until the Effective Date of $1,772, $59 and $156 for the 2007 Credit Facility, the $100 Million Term Loan Facility and the $253 Million Term Loan Facility, respectively. |
|
· |
The paydown on the Effective Date of $1,923 and $5,075 for the $100 Million Term Loan Facility and $253 Million Term Loan Facility, respectively, which were due on the Effective Date as they were not paid during the pendency of the Chapter 11 Cases. |
|
· |
The adjustment of net unamortized deferred financing fees of $15,383 for the 2007 Credit Facility, the 2010 Notes as well as the $100 Million and $253 Million Term Loan Facilities prior to the amendments and restatements as per the Plan. |
|
· |
The payment of deferred financing fees of $3,490 for the Amended and Restated $100 Million and $253 Million Term Loan Facilities. |
|
· |
Adjustment of equity of $1,271,406 to adjust for the cancellation of the old equity of the Predecessor Company and the issuance of the new equity for the Successor Company. |
(b)Reinstatement of Liabilities — This column reflects the reinstatement of the remaining Liabilities subject to compromise for the Predecessor Company which were not already adjusted in the Debt Discharge and Equity Issuance column. It includes the following adjustments:
|
· |
The reclassification of the debt outstanding under the Amended and Restated $100 Million Term Loan Facility. This includes $7,692 of current long-term debt and $63,946 of long-term debt. |
|
· |
The reclassification of the debt outstanding under the Amended and Restated $253 Million Term Loan Facility. This includes $20,300 of current long-term debt and $150,343 of long-term debt. |
|
· |
The reinstatement of $5,622 related to the termination of the interest rate swap agreement with DNB Bank ASA. |
|
· |
The reinstatement of the $815 lease obligation. |
|
· |
The reinstatement of $41 of pre-petition accounts payable due to vendors in the United States. |
(c)Revaluation of Assets and Liabilities — Fresh-start reporting adjustments are made to reflect asset values at their estimated fair value, including:
|
· |
Adjustment of $179 to prepaid amounts for the Predecessor Company. |
|
· |
Adjustment to reflect the fair value of time charters acquired of $434. |
|
· |
Adjustment of $1,083,404 to reflect the fair value of vessel assets, vessel deposits, drydocking assets and other fixed assets as of the Effective Date. |
|
· |
Adjustment of $2,670 to reflect the fair value of the Company’s current lease agreement which was previously recorded as long-term lease obligations. As of the Effective Date, the lease agreement has been valued at below market, therefore we have recorded in Prepaid expenses and other current assets an asset of $138 which will be amortized over the remaining life of the lease agreement. |
|
· |
An adjustment of $166,067 to reflect the reorganization value of the Successor Company in excess of the fair value of assets, net of liabilities. |
Other General Information
At December 31, 2014, 2013 and 2012, GS&T’s fleet consisted of 53 vessels.
Below is the list of GS&T’s wholly owned ship-owning subsidiaries as of December 31, 2014:
|
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 |
|
1998 |
|
Genco Pioneer Limited |
|
Genco Pioneer |
|
29,952 |
|
1/4/05 |
|
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 |
|
1999 |
|
Genco Marine Limited |
|
Genco Marine |
|
45,222 |
|
3/29/05 |
|
1996 |
|
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 |
|
5/12/2011 |
|
2011 |
|
Genco Mare Limited |
|
Genco Mare |
|
34,428 |
|
7/20/2011 |
|
2011 |
|
Genco Spirit Limited |
|
Genco Spirit |
|
34,432 |
|
11/10/2011 |
|
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 |
|
3/29/2011 |
|
2011 |
On May 28, 2013, Baltic Trading Limited (“Baltic Trading”) closed an equity offering of 6,419,217 shares of Baltic Trading common stock at an offering price of $3.60 per share. Baltic Trading received net proceeds of $21,564 after deducting underwriters’ fees and expenses.
On September 25, 2013, Baltic Trading closed an equity offering of 13,800,000 shares of Baltic Trading common stock at an offering price of $4.60 per share. Baltic Trading received net proceeds of $59,474 after deducting underwriters’ fees and expenses.
On November 18, 2013, Baltic Trading closed an equity offering of 12,650,000 shares of Baltic Trading common stock at an offering price of $4.60 per share. Baltic Trading received net proceeds of $55,125 after deducting underwriters’ fees and expenses.
Baltic Trading was a wholly-owned indirect subsidiary of GS&T until Baltic Trading completed its initial public offering, or IPO, on March 15, 2010. As of December 31, 2014 and 2013, Genco Investments LLC owned 6,356,471 shares of Baltic Trading’s Class B Stock, which represented an 10.85% and 11.05% ownership interest in Baltic Trading, respectively, and 64.60% and 65.08% of the aggregate voting power of Baltic Trading’s outstanding shares of voting stock, respectively. Additionally, pursuant to the Subscription Agreement between Genco Investments LLC and Baltic Trading, for so long as GS&T directly or indirectly holds at least 10% of the aggregate number of outstanding shares of Baltic Trading’s common stock and Class B stock, Genco Investments LLC will be entitled to receive an additional number of shares of Baltic Trading’s Class B stock equal to 2% of the number of common shares issued in the future, other than shares issued under Baltic Trading’s Equity Incentive Plans. As such, when Baltic Trading closed the equity offerings of 6,419,217 shares on May 28, 2013, 13,800,000 shares on September 25, 2013 and 12,650,000 shares on November 18, 2013 as noted above, GS&T was issued 128,383, 276,000 and 253,000 shares, respectively, of Baltic Trading’s Class B Stock which represents 2% of the number of common shares issued.
Below is the list of Baltic Trading’s wholly owned ship-owning subsidiaries as of December 31, 2014:
|
Baltic Trading’s Wholly Owned |
|
Vessel Acquired |
|
Dwt |
|
Delivery Date |
|
Year |
|
|
|
|
|
|
|
|
|
|
|
Baltic Leopard Limited |
|
Baltic Leopard |
|
53,447 |
|
4/8/10 |
|
2009 |
|
Baltic Panther Limited |
|
Baltic Panther |
|
53,351 |
|
4/29/10 |
|
2009 |
|
Baltic Cougar Limited |
|
Baltic Cougar |
|
53,432 |
|
5/28/10 |
|
2009 |
|
Baltic Jaguar Limited |
|
Baltic Jaguar |
|
53,474 |
|
5/14/10 |
|
2009 |
|
Baltic Bear Limited |
|
Baltic Bear |
|
177,717 |
|
5/14/10 |
|
2010 |
|
Baltic Wolf Limited |
|
Baltic Wolf |
|
177,752 |
|
10/14/10 |
|
2010 |
|
Baltic Wind Limited |
|
Baltic Wind |
|
34,409 |
|
8/4/10 |
|
2009 |
|
Baltic Cove Limited |
|
Baltic Cove |
|
34,403 |
|
8/23/10 |
|
2010 |
|
Baltic Breeze Limited |
|
Baltic Breeze |
|
34,386 |
|
10/12/10 |
|
2010 |
|
Baltic Fox Limited |
|
Baltic Fox |
|
31,883 |
|
9/6/13 |
|
2010 |
|
Baltic Hare Limited |
|
Baltic Hare |
|
31,887 |
|
9/5/13 |
|
2009 |
|
Baltic Lion Limited |
|
Baltic Lion |
|
179,185 |
|
12/27/13 |
|
2012 |
|
Baltic Tiger Limited |
|
Baltic Tiger |
|
179,185 |
|
11/26/13 |
|
2011 |
|
Baltic Hornet Limited |
|
Baltic Hornet |
|
63,574 |
|
10/29/14 |
|
2014 |
|
Baltic Wasp Limited |
|
Baltic Wasp |
|
63,389 |
|
1/2/15 |
|
2015 |
|
Baltic Scorpion Limited |
|
Baltic Scorpion |
|
64,000 |
|
Q2 2015 (1) |
|
2015 (1) |
|
Baltic Mantis Limited |
|
Baltic Mantis |
|
64,000 |
|
Q3 2015 (1) |
|
2015 (1) |
(1)Built dates and delivery dates for vessels being delivered in the future are estimates based on guidance received from the sellers and the respective shipyards.
The Company provides technical services for drybulk vessels purchased by Maritime Equity Partners (“MEP”). Peter C. Georgiopoulos, Chairman of the Board of Directors of GS&T, controls and has a minority interest in MEP. These services include oversight of crew management, insurance, drydocking, ship operations and financial statement preparation, but do not include chartering services. The services are provided for a fee of $750 per ship per day plus reimbursement of out-of-pocket costs and was provided for an initial term of one year. MEP has the right to cancel provision of services on 60 days’ notice with payment of a one-year termination fee upon a change in control of the Company. The Company may terminate provision of the services at any time on 60 days’ notice.
On February 28, 2012, the Company closed on an equity offering of 7,500,000 shares of common stock at an offering price of $7.10 per share. The Company received net proceeds of $49,874 after deducting underwriters’ fees and expenses.
|
|||
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which include the accounts of GS&T, its wholly-owned subsidiaries and Baltic Trading, a subsidiary in which the Company owns a majority of the voting interests and exercises control. All intercompany accounts and transactions have been eliminated in consolidation.
Basis of reporting
The consolidated financial statements have been prepared on a going concern basis as the Company believes that internally generated cash flow and cash on hand will be sufficient to fund the operations of the Company’s fleet, including its working capital requirements, for the next twelve months, subject to the resolution of the foregoing issue related to the Company’s credit facilities, refer to Note 10 — Debt. The Company’s current and future liquidity will greatly depend upon the Company’s operating results. The Company’s ability to continue to meet its liquidity needs is subject to, and will be affected by; cash utilized in operations; the economic or business environment in which the Company operates; weakness in shipping industry conditions; the financial condition of the Company’s customers, vendors and service providers; the Company’s ability to comply with the financial and other covenants of its post-restructuring indebtedness; and other factors. Additionally, the Chapter 11 Cases, including the fact that the Company has been subject to bankruptcy proceedings, and related matters could negatively impact the Company’s financial condition.
Business geographics
The Company’s vessels regularly move between countries in international waters, over hundreds of trade routes and, as a result, the disclosure of geographic information is impracticable.
Vessel acquisitions
When the Company enters into an acquisition transaction, it determines whether the acquisition transaction was the purchase of an asset or a business based on the facts and circumstances of the transaction. As is customary in the shipping industry, the purchase of a vessel is normally treated as a purchase of an asset as the historical operating data for the vessel is not reviewed nor is it material to the Company’s decision to make such acquisition.
When a vessel is acquired with an existing time charter, the Company allocates the purchase price to the vessel and the time charter based on, among other things, vessel market valuations and the present value (using an interest rate which reflects the risks associated with the acquired charters) of the difference between (i) the contractual amounts to be paid pursuant to the charter terms and (ii) management’s estimate of the fair market charter rate, measured over a period equal to the remaining term of the charter. The capitalized above-market (assets) and below-market (liabilities) charters are amortized as a reduction or increase, respectively, to revenues over the remaining term of the charter.
Segment reporting
The Company has two reportable segments, GS&T and Baltic Trading, which are both engaged in the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk carrier vessels. Refer to Note 3 — Segment Information for further information.
Revenue and voyage expense recognition
Since the Company’s inception, revenues have been generated from time charter agreements, pool agreements and spot market-related time charters. A time charter involves placing a vessel at the charterer’s disposal for a set period of time during which the charterer may use the vessel in return for the payment by the charterer of a specified daily hire rate, including any ballast bonus payments received pursuant to the time charter agreement. Spot market-related time charters are the same as other time charter agreements, except the time charter rates are variable and are based on a percentage of the average daily rates as published by the Baltic Dry Index (“BDI”). Voyage revenues also include the sale of bunkers consumed during short-term time charters pursuant to the terms of the time charter agreement.
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. These differences in bunkers resulted in a net (gain) loss of $852 during the period from July 9 to December 31, 2014 for the Successor Company. During the period from January 1 to July 9, 2014 and during the years ended December 31, 2013 and 2012, the Predecessor Company recorded net (gains) losses of ($252), ($567) and ($1,714), respectively. Additionally, voyage expenses include the cost of bunkers consumed during short-term time charters pursuant to the terms of the time charter agreement.
The Company records time charter revenues over the term of the charter as service is provided. Revenues are recognized on a straight-line basis as the average revenue over the term of the respective time charter agreement. The Company records spot market-related time charter revenues over the term of the charter as service is provided based on the rate determined based on the BDI for each respective billing period. As such, the revenue earned by the Company’s vessels that are on spot market-related time charters is subject to fluctuations of the spot market. The Company recognizes voyage expenses when incurred.
Four of the Company’s vessels, the Genco Ocean, Genco Bay, Genco Avra and Genco Spirit, were chartered under spot market-related time charters which include a profit-sharing element. The time charters for the Genco Ocean and Genco Bay ended during August 2013 and March 2013, respectively. The time charters for the Genco Avra and Genco Spirit ended during March 2014 and November 2014, respectively. Under these charter agreements, the rate for the spot market-related time charter was linked with a floor of $9 and a ceiling of $14 daily with a 50% profit sharing arrangement to apply to any amount above the ceiling. The rate was based on 115% of the average of the daily rates reflected in the daily reports of the Baltic Handysize Index.
At December 31, 2014 and 2013, eight and five of GS&T’s vessels were in vessel pools, respectively. Additionally, at December 31, 2014 and 2013, five and four of Baltic Trading’s vessels were in vessel pools, respectively. At December 31, 2014, GS&T and Baltic Trading had five and two vessels, respectively, operating in the Clipper Logger Pool, a vessel pool trading in the spot market for which Clipper Group acts as the pool manager. Additionally, at December 31, 2014, GS&T and Baltic Trading had two and three vessels, respectively, operating in the Bulkhandling Handymax A/S Pool, a vessel pool trading in the spot market for which Torvald Klaveness acts as pool manager. Lastly, as of December 31, 2014, GS&T had one vessel operating in the Navig8 Bulk Pool, a vessel pool trading in the spot market for which Navig8 Inc. acts as the pool manager. At December 31, 2013, GS&T and Baltic Trading had two and two vessels, respectively, operating in the Clipper Logger Pool. Additionally, at December 31, 2013, Baltic Trading had two vessels operating in the Bulkhandling Handymax A/S Pool. Lastly, at December 31, 2013, GS&T had three vessels operating in the LB/IVS Pool, a vessel pool trading in the spot market for which Lauritzen Bulkers A/S acts as the pool manager. Under pool arrangements, the vessels operate under a time charter agreement whereby the cost of bunkers and port expenses are borne by the pool and operating costs including crews, maintenance and insurance are typically paid by the owner of the vessel. Since the members of the pool share in the revenue less voyage expenses generated by the entire group of vessels in the pool, and the pool operates in the spot market, the revenue earned by these vessels is subject to the fluctuations of the spot market. The Company recognizes revenue from these pool arrangements based on its portion of the net distributions reported by the relevant pool, which represents the net voyage revenue of the pool after voyage expenses and pool manager fees.
Other operating income
During the period from July 9 to December 31, 2014, the Successor Company recorded other operating income of $530. During the period from January 1 to July 9, 2014 and during the years ended December 31, 2013 and 2012, the Predecessor Company recorded other operating income of $0, $121 and $265 respectively. Other operating income recorded by the Successor Company during the period from July 9 to December 31, 2014 and by the Predecessor Company during the year ended December 31, 2012 consists of $530 and $263, respectively, related to installments due from Samsun Logix Corporation (“Samsun”) pursuant to the rehabilitation plan which was approved by the South Korean courts. Other operating income recorded by the Predecessor Company during the years ended December 31, 2013 and 2012 also included $21 and $2, respectively, related to the settlement due from Korea Line Corporation (“KLC”) pursuant to the rehabilitation plan which was approved by the South Korean courts. Lastly, other operating income during the year ended December 31, 2013 included $100 related to the receipt of 3,355 shares of stock of KLC as part of the aforementioned rehabilitation plan. This investment has been designated as Available for Sale (“AFS”). Refer to Note 22 — Commitments and Contingencies for further information regarding the bankruptcy settlements with Samsun and KLC and Note 7 — Investments for further information regarding the investment in KLC shares.
Due from charterers, net
Due from charterers, net includes accounts receivable from charters, net of the provision for doubtful accounts. At each balance sheet date, the Company records the provision based on a review of all outstanding charter receivables. Included in the standard time charter contracts with the Company’s customers are certain performance parameters which, if not met, can result in customer claims. As of December 31, 2014 and 2013, the Company had a reserve of $1,588 and $632, respectively, against the due from charterers balance and an additional accrual of $662 and $536, respectively, in deferred revenue, each of which is primarily associated with estimated customer claims against the Company including vessel performance issues under time charter agreements.
Revenue is based on contracted charterparties. However, there is always the possibility of dispute over terms and payment of hires and freights. In particular, disagreements may arise concerning the responsibility of lost time and revenue. Accordingly, the Company periodically assesses the recoverability of amounts outstanding and estimates a provision if there is a possibility of non-recoverability. The Company believes its provisions to be reasonable based on information available.
Inventories
Inventories consist of consumable bunkers, lubricants and victualling stores, which are stated at the lower of cost or market value and are recorded in Prepaid expenses and other current assets. Cost is determined by the first in, first out method.
Vessel operating expenses
Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance, the cost of spares and consumable stores, and other miscellaneous expenses. Vessel operating expenses are recognized when incurred.
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 that 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 period from July 9 to December 31, 2014 for the Successor Company was $36,265. Depreciation expense for vessels for the period from January 1 to July 9, 2014 and for the years ended December 31, 2013 and 2012 for the Predecessor Company was $71,756, $133,562, and $133,111, 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 cost of steel times the weight of the ship noted in lightweight tons (lwt). Effective July 9, 2014, on the Effective Date, the Company increased the estimated scrap value of the vessels from $245 per lwt to $310 per lwt prospectively based on the 15-year average scrap value of steel. The change in the estimated scrap value will result in a decrease in depreciation expense over the remaining life of the vessel assets. During the period from July 9 to December 31, 2014, the increase in the estimated scrap value resulted in a decrease in depreciation expense of $1,540 for the Successor Company. The decrease in depreciation expense resulted in a $0.03 change to the basic and diluted net loss per share during the period from July 9 to December 31, 2014. The basic and diluted net loss per share would have been ($3.05) per share if there was no change in the estimated scrap value.
Fixed assets, net
Fixed assets, net are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are based on a straight line basis over the estimated useful life of the specific asset placed in service. The following table is used in determining the typical estimated useful lives:
|
Description |
|
Useful lives |
|
|
|
|
|
|
|
Leasehold improvements |
|
Lesser of the estimated useful life of the asset or life of the lease |
|
|
Furniture, fixtures & other equipment |
|
5 years |
|
|
Vessel equipment |
|
2-15 years |
|
|
Computer equipment |
|
3 years |
|
Depreciation and amortization expense for fixed assets for the period from July 9 to December 31, 2014 for the Successor Company was $119. Depreciation and amortization expense for fixed assets for the period from January 1 to July 9, 2014 and for the years ended December 31, 2013 and 2012 for the Predecessor Company was $458, $1,481 and $888, respectively.
Deferred drydocking costs
The Company’s vessels are required to be drydocked approximately every 30 to 60 months for major repairs and maintenance that cannot be performed while the vessels are operating. The Company defers the costs associated with the drydockings as they occur and amortizes these costs on a straight-line basis over the period between drydockings. Costs deferred as part of a vessel’s drydocking include actual costs incurred at the drydocking yard; cost of travel, lodging and subsistence of personnel sent to the drydocking site to supervise; and the cost of hiring a third party to oversee the drydocking. If the vessel is drydocked earlier than originally anticipated, any remaining deferred drydock costs that have not been amortized are expensed at the end of the next drydock.
Amortization expense for drydocking for the period from July 9 to December 31, 2014 for the Successor Company was $330. Amortization expense for drydocking for the period from January 1 to July 9, 2014 and for the years ended December 31, 2013 and 2012 for the Predecessor Company was $3,738, $5,700, and $5,064, respectively. All other costs incurred during drydocking are expensed as incurred.
Goodwill
The Company follows the provisions of ASC Subtopic 350-20, “Intangibles - Goodwill and Other” (“ASC 350-20”). This statement requires that goodwill and intangible assets with indefinite lives be tested for impairment at least annually or when there is a triggering event and written down with a charge to operations when the carrying amount of the reporting unit that includes goodwill exceeds the estimated fair value of the reporting unit. If the carrying value of the goodwill exceeds the reporting unit’s implied goodwill, such excess must be written off.
The Company recorded Goodwill of $166,067 upon adoption of fresh-start reporting in accordance with provisions of ASC 852 as of the Effective Date. Pursuant to the Company’s annual goodwill impairment testing performed as of December 31, 2014, it was determined that the entire amount of this goodwill was impaired. Refer to Note 5 — Goodwill Impairment.
Impairment of long-lived assets
The Company follows ASC Subtopic 360-10, “Property, Plant and Equipment” (“ASC 360-10”), which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. If indicators of impairment are present, the Company performs an analysis of the anticipated undiscounted future net cash flows of the related long-lived assets. If the carrying value of the related asset exceeds the undiscounted cash flows, the carrying value is reduced to its fair value. Various factors including anticipated future charter rates, estimated scrap values, future drydocking costs and estimated vessel operating costs are included in this analysis.
For the periods from July 9 to December 31, 2014 and from January 1 to July 9, 2014 and during the years ended December 31, 2013 and 2012, no impairment charges were recorded on the Company’s long-lived assets.
As part of fresh-start reporting, the Company revalued its vessel assets at their fair values as of the Effective Date and the losses were recorded in Reorganization items, net in the Consolidated Statements of Operation.
Deferred financing costs
Deferred financing costs, included in other assets, consist of fees, commissions and legal expenses associated with securing loan facilities and other debt offerings and amending existing loan facilities. These costs are amortized over the life of the related debt and are included in interest expense.
Cash and cash equivalents
The Company considers highly liquid investments such as money market funds and certificates of deposit with an original maturity of three months or less to be cash equivalents.
Investments
The Company holds an investment in the capital stock of Jinhui Shipping and Transportation Limited (“Jinhui”) and in 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 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 issuers 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 7 — Investments.
Income taxes
Pursuant to Section 883 of the U.S. Internal Revenue Code of 1986 (as amended) (the “Code”), qualified income derived from the international operations of ships is excluded from gross income and exempt from U.S. federal income tax if a company engaged in the international operation of ships meets certain requirements (the “Section 883 exemption”). Among other things, in order to qualify, the Company must be incorporated in a country that grants an equivalent exemption to U.S. corporations and must satisfy certain qualified ownership requirements.
GS&T is incorporated in the Marshall Islands. Pursuant to the income tax laws of the Marshall Islands, GS&T is not subject to Marshall Islands income tax. The Marshall Islands has been officially recognized by the Internal Revenue Service as a qualified foreign country that currently grants the requisite equivalent exemption from tax. GS&T is not taxable in any other jurisdiction, with the exception of Genco Management (USA) Limited as noted below.
GS&T will qualify for the Section 883 exemption if, among other things, (i) GS&T stock is treated as primarily and regularly traded on an established securities market in the United States (the publicly traded test”), or (ii) GS&T satisfies one of two other ownership tests. Under applicable Treasury Regulations, the publicly-traded test cannot be satisfied in any taxable year in which persons who actually or constructively own 5% or more of our stock (“5% shareholders”), together own 50% or more of GS&T’s stock for more than half the days in such year (the “five percent override rule”), unless an exception applies.
Based on the ownership and trading of GS&T stock in 2014, management believes that GS&T satisfied the publicly traded test and qualified for the Section 883 exemption in 2014. However, as a result of the restructuring of GS&T’s indebtedness pursuant to the Plan, 5% shareholders may beneficially own more than 50% of GS&T stock for more than half of 2015. As a result, the five percent override rule may apply, and management believes that GS&T would have significant difficulty in satisfying an exception thereto. It is also not clear whether GS&T will satisfy one of the other two ownership tests. Thus, GS&T may not qualify for the Section 883 exemption in 2015. Even if GS&T does qualify for the Section 883 exemption in 2015, there can be no assurance that changes and shifts in the ownership of GS&T stock by 5% shareholders will not preclude GS&T from qualifying for the Section 883 exemption in future taxable years.
If GS&T does not qualify for the Section 883 exemption, GS&T’s U.S. source shipping income, i.e., 50% of its gross shipping income attributable to transportation beginning or ending in the U.S. (but not both beginning and ending in the U.S.) would be subject to a 4% tax without allowance for deductions (the “U.S. gross transportation tax”).
Baltic Trading is also incorporated in the Marshall Islands and its stock is primarily traded on an established securities market in the U.S. However, GS&T has indirectly owned shares of Baltic Trading’s Class B Stock which has provided GS&T with over 50% of the combined voting power of all classes of Baltic Trading’s voting stock since Baltic Trading’s IPO was completed on March 15, 2010. As a result, Baltic Trading’s Class B Stock will not be treated as regularly traded and Baltic Trading will not satisfy the publicly traded test (and cannot satisfy one of the other two ownership tests). Thus, Baltic Trading does not qualify for a Section 883 exemption. As such, Baltic Trading is subject to U.S. gross transportation income tax on its U.S. source shipping income.
During the period from July 9 to December 31, 2014, Baltic Trading had U.S. source shipping income of $450. Baltic Trading’s estimated U.S. gross transportation income tax expense for the period from July 9 to December 31, 2014 was $18. During the period from January 1 to July 9, 2014 and during the years ended December 31, 2013 and 2012, Baltic Trading had U.S. source shipping income of $965, $832 and $690, respectively. Baltic Trading’s U.S. gross transportation income tax expense for the period from January 1 to July 9, 2014 and for the years ended December 31, 2013 and 2012 was $39, $34 and $28, respectively.
In addition to GS&T’s shipping income and pursuant to certain agreements, GS&T technically and commercially manages vessels for Baltic Trading, and provides technical management of vessels for MEP in exchange for fees. These management services are performed by Genco Management (USA) Limited (“Genco (USA)”), which has elected to be classified (and taxed) as a corporation for U.S. federal income tax purposes. As such, Genco (USA) is subject to U.S. federal net income tax (currently imposed at graduated rates of up to 35%) on its worldwide net income, including the net income derived from providing these management 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 management services for both Baltic Trading and MEP’s vessels.
Total revenue earned by the Successor Company for management services during the period from July 9 to December 31, 2014 was $3,893, of which $2,309 was eliminated upon consolidation. After allocation of certain expenses, there was taxable net income of $2,178 associated with these activities for the period from July 9 to December 31, 2014. This resulted in estimated U.S. federal net income tax expense of $978 for the period from July 9 to December 31, 2014.
Total revenue earned by the Predecessor Company for management services during the period from January 1 to July 9, 2014 and during the years ended December 31, 2013 and 2012 was $3,857, $7,856 and $6,110, respectively, of which $2,156, $4,571 and $2,816, respectively, was eliminated upon consolidation. After allocation of certain expenses, there was taxable net income of $1,723 associated with these activities for the period from January 1 to July 9, 2014. This resulted in estimated U.S. federal net income tax expense of $776 for the period from January 1 to July 9, 2014. After allocation of certain expenses, there was taxable net income of $4,235 associated with these activities for the year ended December 31, 2013. This resulted in estimated U.S. federal net income tax expense of $1,864 for the year ended December 31, 2013. After allocation of certain expenses, there was taxable net income of $2,655 associated with these activities for the year ended December 31, 2012. This resulted in estimated U.S. federal net income tax expense of $1,194 for the year ended December 31, 2012.
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. Refer to “Revenue and voyage expense recognition” above for description of the Company’s revenue recognition policy.
Comprehensive income
The Company follows ASC Subtopic 220-10, “Comprehensive Income” (“ASC 220-10”), which establishes standards for reporting and displaying comprehensive income and its components in financial statements. Comprehensive income is comprised of net income and amounts related to the Company’s interest rate swaps accounted for as hedges, as well as unrealized gains or losses associated with the Company’s AFS investments.
Nonvested stock awards
The Company follows ASC Subtopic 718-10, “Compensation — Stock Compensation” (“ASC 718-10”), for nonvested stock issued under its equity incentive plans. Stock-based compensation costs from nonvested stock have been classified as a component of additional paid-in capital.
Accounting estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include vessel valuations, the valuation of amounts due from charterers, performance claims, residual value of vessels, useful life of vessels and the fair value of derivative instruments. Actual results could differ from those estimates.
Concentration of credit risk
Financial instruments that potentially subject the Company to concentrations of credit risk are amounts due from charterers, cash and cash equivalents, deposits on vessels and interest rate swap agreements. With respect to amounts due from charterers, the Company attempts to limit its credit risk by performing ongoing credit evaluations and, when deemed necessary, requires letters of credit, guarantees or collateral. The Successor Company earned 100% of revenues from 44 customers during the period from July 9 to December 31, 2014. The Predecessor Company earned 100% of revenues from 33 customers during the period from January 1 to July 9, 2014, 48 customers during the year ended December 31, 2013 and 43 customers during the year ended December 31, 2012. Management does not believe significant risk exists in connection with the Company’s concentrations of credit at December 31, 2014 and 2013.
For the period from July 9 to December 31, 2014 for the Successor Company, there were two customers that individually accounted for more than 10% of voyage revenues; Cargill International S.A., including its subsidiaries (“Cargill”) and Swissmarine Services S.A., including its subsidiaries (“Swissmarine”), which represented 17.06% and 22.52% of voyage revenues, respectively. For the period from January 1 to July 9, 2014 for the Predecessor Company, there were two customers that individually accounted for more than 10% of voyage revenues; Cargill and Swissmarine, which represented 19.37% and 20.67% of voyage revenues, respectively. For the year ended December 31, 2013 for the Predecessor Company, there were three customers that individually accounted for more than 10% of voyage revenues; Cargill, Swissmarine and Pacific Basin Chartering Ltd., which represented 21.45%, 18.73% and 10.30% of voyage revenues, respectively. For the year ended December 31, 2012 for the Predecessor Company, there was one customer that individually accounted for more than 10% of voyage revenues, Cargill, which represented 31.27% of voyage revenues.
At December 31, 2014 and 2013, deposits on vessels consist primarily of progress payments due by Baltic Trading to the shipyard as per the newbuilding contracts with Yangfan Group Co., Ltd. These payments are not held in an escrow account; however, Baltic Trading has a refund guarantee with the Bank of China in the case that Yangfan Group Co., Ltd. does not perform as required by the newbuilding contracts. Refer to Note 6 — Vessel Acquisitions for further information.
At December 31, 2014 and 2013, the Company maintains all of its cash and cash equivalents with three and four financial institutions, respectively. None of the Company’s cash and cash equivalent balances is covered by insurance in the event of default by these financial institutions.
At December 31, 2013, the Company had four interest rate swap agreements with DnB Bank ASA to manage interest costs and the risk associated with changing interest rates related to the 2007 Credit Facility. None of the interest rate swap agreements were covered by insurance in the event of default by this financial institution. On April 30, 2014, the remaining interest rate swap agreement was terminated by DNB Bank ASA and a secure claim was filed with the Bankruptcy Court. Refer to Note 1 — General Information for additional information regarding defaults related to the interest rate swap. There were no interest rate swaps held by the Company at December 31, 2014.
Fair value of financial instruments
The estimated fair values of the Company’s financial instruments, such as amounts due to / due from charterers, accounts payable and long-term debt, approximate their individual carrying amounts as of December 31, 2014 and 2013 due to their short-term maturity or the variable-rate nature of the respective borrowings under the credit facilities.
The fair value of the interest rate swaps is the estimated amount the Company would receive or have to pay in order to terminate these agreements at the reporting date, taking into account current interest rates and the creditworthiness of the counterparty for assets and creditworthiness of the Company for liabilities. See Note 14 - Fair Value of Financial Instruments for additional disclosure on the fair values of long term debt, convertible senior notes, derivative instruments, and AFS securities.
Derivative financial instruments
Interest rate risk management
The Company is exposed to the impact of interest rate changes. The Company’s objective is to manage the impact of interest rate changes on its earnings and cash flow in relation to borrowings primarily for the purpose of acquiring drybulk vessels. These borrowings are subject to a variable borrowing rate. Up until the Effective Date, the Company used pay-fixed receive-variable interest rate swaps to manage future interest costs and the risk associated with changing interest rate obligations. These swaps were designated as cash flow hedges of future variable rate interest payments and were tested for effectiveness on a quarterly basis. Refer to Note 12 — Interest Rate Swap Agreements for further information regarding the interest rate swaps that were held by the Company prior to the Effective Date.
The differential to be paid or received for the effectively hedged portion of any swap agreement was recognized as an adjustment to interest expense as incurred. Additionally, the changes in value for the portion of the swaps that were effectively hedging future interest payments were reflected as a component of AOCI.
For the interest rate swaps that are not designated as an effective hedge, the change in the value and the rate differential to be paid or received was recognized as other expense and is listed as a component of other (expense) income in the Consolidated Statements of Operations.
Recent accounting pronouncements
In May 2014, the FASB issued Accounting Standards Update 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. The Company is evaluating the potential impact of this adoption on its consolidated financial statements.
In February 2013, the FASB issued Accounting Standards Update No. 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” (“ASU 2013-02”), to improve the transparency of changes in other comprehensive income (loss) (“OCI”) and items reclassified out of accumulated other income (loss) (“AOCI”). The amendments in ASU 2013-02 are required to be applied prospectively and are effective for reporting periods beginning after December 15, 2012. The adoption of ASU 2013-02 did not have any impact on the Company’s consolidated financial statements other than separately disclosing in the footnotes to the consolidated financial statements amounts reclassified out of AOCI and the individual line items in the Consolidated Statement of Operations that are affected. The Company adopted ASU 2013-02 during the year ended December 31, 2013 and the impact of adoption was not material to the Company’s consolidated financial statements. Refer to Note 13 — Accumulated Other Comprehensive Income (Loss) for additional disclosure.
|
|||
3 - SEGMENT INFORMATION
The Company determines its reportable segments based on the information utilized by the chief operating decision maker to assess performance and make decisions about allocating the Company’s resources. Based on this information, the Company has two reportable operating segments, GS&T and Baltic Trading. Both GS&T and Baltic Trading are engaged in the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk carrier vessels. GS&T and Baltic Trading seek to deploy their vessels on time charters, spot market-related time charters or in vessel pools trading in the spot market. Segment results are evaluated based on net (loss) income. Additionally, the debt covenants for the credit facilities are measured separately for GS&T and Baltic Trading. The accounting policies applied to the reportable segments are the same as those used in the preparation of the Company’s consolidated financial statements. As a result of the adoption of fresh-start reporting on the Effective Date, the cost basis for certain of Baltic Trading’s assets were revalued and are reflected in the Baltic Trading balances in the segment information reported below.
The following table presents a reconciliation of total voyage revenue from external (third party) customers for the Company’s two operating segments to total consolidated voyage revenue from external customers for the Successor Company for the period from July 9 to December 31, 2014 and for the Predecessor Company for the period from January 1 to July 9, 2014 and for the years ended December 31, 2013 and 2012.
|
|
|
Successor |
|
Predecessor |
|
||||||||||
|
|
|
Period from |
|
Period from |
|
For the Years Ended December 31, |
|
||||||||
|
|
|
2014 |
|
2014 |
|
2013 |
|
2012 |
|
||||||
|
Voyage revenue from external customers |
|
|
|
|
|
|
|
|
|
||||||
|
GS&T |
|
$ |
|
77,885 |
|
$ |
|
94,171 |
|
$ |
188,206 |
|
$ |
195,855 |
|
|
Baltic Trading |
|
20,932 |
|
24,588 |
|
35,973 |
|
27,304 |
|
||||||
|
Total operating segments |
|
98,817 |
|
118,759 |
|
224,179 |
|
223,159 |
|
||||||
|
Eliminating revenue |
|
— |
|
— |
|
— |
|
— |
|
||||||
|
Total consolidated voyage revenue from external customers |
|
$ |
|
98,817 |
|
$ |
|
118,759 |
|
$ |
224,179 |
|
$ |
223,159 |
|
The following table presents a reconciliation of total intersegment revenue, which eliminates upon consolidation, for the Company’s two operating segments for the Successor Company for the period from July 9 to December 31, 2014 and for the Predecessor Company for the period from January 1 to July 9, 2014 and for the years ended December 31, 2013 and 2012. The intersegment revenue noted in the following table represents revenue earned by GS&T pursuant to the management agreement entered into with Baltic Trading, which includes commercial service fees, technical service fees and sale and purchase fees, if any.
|
|
|
Successor |
|
Predecessor |
|
||||||||
|
|
|
Period from |
|
Period from |
|
For the Years Ended December 31, |
|
||||||
|
|
|
2014 |
|
2014 |
|
2013 |
|
2012 |
|
||||
|
Intersegment Revenue |
|
|
|
|
|
|
|
|
|
||||
|
GS&T |
|
$ |
2,309 |
|
$ |
2,156 |
|
$ |
4,571 |
|
$ |
2,816 |
|
|
Baltic Trading |
|
— |
|
— |
|
— |
|
— |
|
||||
|
Total operating segments |
|
2,309 |
|
2,156 |
|
4,571 |
|
2,816 |
|
||||
|
Eliminating revenue |
|
(2,309 |
) |
(2,156 |
) |
(4,571 |
) |
(2,816 |
) |
||||
|
Total consolidated intersegment revenue |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
The following table presents a reconciliation of total depreciation and amortization expense for the Company’s two operating segments to total consolidated depreciation and amortization expense for the Successor Company for the period from July 9 to December 31, 2014 and for the Predecessor Company for the period from January 1 to July 9, 2014 and for the years ended December 31, 2013 and 2012. The eliminating depreciation and amortization expense noted in the following table consists of the elimination of intercompany transactions resulting from the depreciation expense associated with the 1% purchase fee due to GS&T from Baltic Trading pursuant to the Management Agreement. The 1% purchase fee is capitalized as part of vessel assets by Baltic Trading and is depreciated over the remaining life of the vessel and therefore, the associated depreciation expense is eliminated upon consolidation.
|
|
|
Successor |
|
Predecessor |
|
||||||||
|
|
|
Period from |
|
Period from |
|
For the Years Ended December 31, |
|
||||||
|
|
|
2014 |
|
2014 |
|
2013 |
|
2012 |
|
||||
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
||||
|
GS&T |
|
$ |
28,922 |
|
$ |
65,237 |
|
$ |
125,344 |
|
$ |
124,405 |
|
|
Baltic Trading |
|
7,794 |
|
10,829 |
|
15,564 |
|
14,814 |
|
||||
|
Total operating segments |
|
36,716 |
|
76,066 |
|
140,908 |
|
139,219 |
|
||||
|
Eliminating depreciation and amortization |
|
(2 |
) |
(114 |
) |
(165 |
) |
(156 |
) |
||||
|
Total consolidated depreciation and amortization |
|
$ |
36,714 |
|
$ |
75,952 |
|
$ |
140,743 |
|
$ |
139,063 |
|
The following table presents a reconciliation of total interest expense for the Company’s two operating segments to total consolidated interest expense for the Successor Company for the period from July 9 to December 31, 2014 and for the Predecessor Company for the period from January 1 to July 9, 2014 and for the years ended December 31, 2013 and 2012. There is no eliminating interest expense as the interest incurred by each operating segment is related to each operating segment’s own debt facilities.
|
|
|
Successor |
|
Predecessor |
|
||||||||
|
|
|
Period from |
|
Period from |
|
For the Years Ended December 31, |
|
||||||
|
|
|
2014 |
|
2014 |
|
2013 |
|
2012 |
|
||||
|
Interest expense |
|
|
|
|
|
|
|
|
|
||||
|
GS&T |
|
$ |
4,791 |
|
$ |
37,998 |
|
$ |
83,761 |
|
$ |
83,306 |
|
|
Baltic Trading |
|
2,829 |
|
3,063 |
|
4,455 |
|
4,252 |
|
||||
|
Total operating segments |
|
7,620 |
|
41,061 |
|
88,216 |
|
87,558 |
|
||||
|
Eliminating interest expense |
|
— |
|
— |
|
— |
|
— |
|
||||
|
Total consolidated interest expense |
|
$ |
7,620 |
|
$ |
41,061 |
|
$ |
88,216 |
|
$ |
87,558 |
|
The following table presents a reconciliation of total net (loss) income for the Company’s two operating segments to total consolidated net (loss) income for the Successor Company for the period from July 9 to December 31, 2014 and for the Predecessor Company for the period from January 1 to July 9, 2014 and for the years ended December 31, 2013 and 2012. The eliminating net (loss) income noted in the following table consists of the elimination of intercompany transactions between GS&T and Baltic Trading as well as dividends received by GS&T from Baltic Trading for its Class B shares of Baltic Trading.
|
|
|
Successor |
|
Predecessor |
|
||||||||
|
|
|
Period from |
|
Period from |
|
For the Years Ended December 31, |
|
||||||
|
|
|
2014 |
|
2014 |
|
2013 |
|
2012 |
|
||||
|
Net (loss) income |
|
|
|
|
|
|
|
|
|
||||
|
GS&T |
|
$ |
(177,921 |
) |
$ |
878,127 |
|
$ |
(144,054 |
) |
$ |
(139,295 |
) |
|
Baltic Trading |
|
(35,032 |
) |
(93,430 |
) |
(11,392 |
) |
(17,270 |
) |
||||
|
Total operating segments |
|
(212,953 |
) |
784,697 |
|
(155,446 |
) |
(156,565 |
) |
||||
|
Eliminating net loss (income) |
|
405 |
|
140 |
|
1,575 |
|
1,211 |
|
||||
|
Total consolidated net (loss) income |
|
$ |
(213,358 |
) |
$ |
784,557 |
|
$ |
(157,021 |
) |
$ |
(157,776 |
) |
The following table presents a reconciliation of total assets for the Company’s two operating segments to total consolidated net assets as of December 31, 2014 and December 31, 2013. The eliminating assets noted in the following table consist of the elimination of intercompany transactions resulting from the capitalization of fees paid to GS&T by Baltic Trading as vessel assets, including related accumulated depreciation, as well as the outstanding receivable balance due to GS&T from Baltic Trading as of December 31, 2014 and 2013.
|
|
|
Successor |
|
Predecessor |
|
||
|
|
|
December 31, |
|
December 31, |
|
||
|
Total assets |
|
|
|
|
|
||
|
GS&T |
|
$ |
1,270,923 |
|
$ |
2,404,811 |
|
|
Baltic Trading |
|
482,415 |
|
557,367 |
|
||
|
Total operating segments |
|
1,753,338 |
|
2,962,178 |
|
||
|
Eliminating assets |
|
(425 |
) |
(4,924 |
) |
||
|
Total consolidated assets |
|
$ |
1,752,913 |
|
$ |
2,957,254 |
|
The following table presents a reconciliation of total expenditures for vessel purchases, including vessel deposits, for the Company’s two operating segments to total consolidated expenditures for vessel purchases, including vessel deposits, for the Successor Company for the period from July 9 to December 31, 2014 and for the Predecessor Company for the period from January 1 to July 9, 2014 and for the years ended December 31, 2013 and 2012. The eliminating expenditures for vessels noted in the following table consists primarily of the elimination of the 1% purchase fees due to GS&T from Baltic Trading pursuant to the Management Agreement which were paid by Baltic Trading to GS&T during the period from July 9 to December 31, 2014 and during the year ended December 31, 2013.
|
|
|
Successor |
|
Predecessor |
|
||||||||
|
|
|
Period from |
|
Period from |
|
For the Years Ended December 31, |
|
||||||
|
|
|
2014 |
|
2014 |
|
2013 |
|
2012 |
|
||||
|
Expenditures for vessels |
|
|
|
|
|
|
|
|
|
||||
|
GS&T |
|
$ |
831 |
|
$ |
1,043 |
|
$ |
192 |
|
$ |
1,155 |
|
|
Baltic Trading |
|
23,922 |
|
28,952 |
|
146,598 |
|
— |
|
||||
|
Total operating segments |
|
24,753 |
|
29,995 |
|
146,790 |
|
1,155 |
|
||||
|
Eliminating expenditures for vessels |
|
(280 |
) |
— |
|
(1,440 |
) |
— |
|
||||
|
Total consolidated expenditures for vessels |
|
$ |
24,473 |
|
$ |
29,995 |
|
$ |
145,350 |
|
$ |
1,155 |
|
|
|||
4 - CASH FLOW INFORMATION
As of December 31, 2013, the Company had four interest rate swaps which are described and discussed in Note 12 — Interest Rate Swap Agreements. At December 31, 2013, the fair value of the four interest rate swaps were in a liability position of $6,975, all of which was classified within current liabilities.
For the period from July 9 to December 31, 2014, the Successor Company had non-cash investing activities not included in the Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $464 for the Purchase of vessels, including deposits and $22 for the Purchase of other fixed assets. Additionally, for the period from July 9 to December 31, 2014, the Successor Company had non-cash financing activities not included in the Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $2,190 associated with the Payment of deferred financing fees. Lastly, for the period from July 9 to December 31, 2014, the Successor Company had non-cash investing activities not included in the Consolidated Statement of Cash Flows for items included in Prepaid expenses and other current assets consisting of $7 associated with the Purchase of vessels, including deposits.
Professional fees and trustee fees in the amount of $1,591 were recognized in Reorganization items, net for the period from July 9 to December 31, 2014 by the Successor Company (refer to Note 21). During this period, $32,794 of professional fees and trustee fees were paid through December 31, 2014 and $313 is included in Accounts payable and accrued expenses as of December 31, 2014.
For the period from January 1 to July 9, 2014, the Predecessor Company had non-cash investing activities not included in the Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $53 for the Purchase of vessels, including deposits and $20 for the Purchase of other fixed assets. Additionally, for the period from January 1 to July 9, 2014, the Predecessor Company had non-cash financing activities not included in the Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $456 associated with the Payment of deferred financing fees.
Of the $35,232 of professional fees and trustee fees recognized in Reorganization items, net for the period from January 1 to July 9, 2014 by the Predecessor Company (refer to Note 21), $2,703 was paid through July 9, 2014 and $32,529 is included in Accounts payable and accrued expenses as of July 9, 2014.
For the year ended December 31, 2013, the Predecessor Company had non-cash investing activities not included in the Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $618 for the Purchase of vessels, including deposits and $122 for the Purchase of other fixed assets. For the year ended December 31, 2013, the Predecessor Company had non-cash financing activities not included in the Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $78 associated with the Payment of deferred financing fees and $111 for the Payment of common stock issuance costs by its subsidiary. Additionally, for the year ended December 31, 2013, the Predecessor Company had non-cash financing activities not included in the Consolidated Statement of Cash Flows for items included in Current interest payable consisting of $13,199 associated with the Payment of deferred financing fees.
For the year ended December 31, 2012, the Predecessor Company had non-cash financing activities not included in the Consolidated Statement of Cash Flows for items included in Long-term interest payable consisting of $13,199 associated with the Payment of deferred financing fees.
During the period from July 9 to December 31, 2014, the Successor Company made a reclassification of $9,140 from deposits on vessels to vessels, net of accumulated depreciation, due to the completion of the purchase of Baltic Hornet. No such reclassifications were made by the Predecessor Company during the period from January 1 to July 9, 2014 and during the years ended December 31, 2013 and 2012.
During the period from January 1 to July 9, 2014, the Predecessor Company made a reclassification of $984 from fixed assets to vessel assets for items that should be capitalized and depreciated over the remaining life of the respective vessels.
During the period from July 9 to December 31, 2014, cash paid by the Successor Company for interest, net of amounts capitalized, was $5,483. During the period from January 1 to July 9, 2014 and the years ended December 31, 2013 and 2012, cash paid for interest, net of amounts capitalized and including bond coupon interest paid, was $40,209, $75,133 and $79,373 respectively.
During the period from July 9 to December 31, 2014, cash paid by the Successor Company for estimated income taxes was $750. During the period from January 1 to July 9, 2014 and during the years ended December 31, 2013 and 2012, cash paid for estimated income taxes was $1,495, $1,275 and $1,216, respectively.
On August 7, 2014, the Company made grants of nonvested common stock pursuant to the MIP as approved by the Plan in the amount of 1,110,600 shares to the participating officers, directors and other management of the Successor Company. The aggregate fair value of such nonvested stock was $22,212. Additionally, on August 7, 2014, the Company issued 8,557,461 MIP Warrants to the participating officers, directors and other management of the Successor Company. The aggregate fair value of these awards upon emergence from bankruptcy was $54,436.
On May 16, 2013, the Company made grants of nonvested common stock in the amount of 200,634 shares in the aggregate to directors of the Company. The grant date fair value of such nonvested stock was $315. On May 17, 2012, November 7, 2012 and December 13, 2012, the Company made grants of nonvested common stock in the amount of 15,000, 2,500 and 52,500 shares, respectively, to directors of the Company. The grant date fair value of such nonvested stock was $53, $7 and $141, respectively. These shares vested on May 16, 2013. On December 13, 2012, the Board of Directors approved a grant of 100,000 shares of nonvested common stock to Peter C. Georgiopoulos, Chairman of the Board, which had a grant date fair value of $268. Lastly, on December 13, 2012, the Company granted 294,175 shares of nonvested stock to certain employees. The grant date fair value of such nonvested stock was $788. These nonvested shares were cancelled on the Effective Date and the holder received warrants to acquire shares of New Genco Common Stock. Refer to Note 1 - General Information for information regarding the Chapter 11 Cases.
On April 9, 2014, Baltic Trading made grants of nonvested common stock in the amount of 36,345 shares to directors of Baltic Trading. The aggregate fair value of such nonvested stock was $225. Additionally, on December 18, 2014, 700,000 and 350,000 shares of Baltic Trading’s nonvested common stock were granted to Peter C. Georgiopoulos, Chairman of the Board of Baltic Trading, and John Wobensmith, Baltic Trading’s President and Chief Financial Officer, respectively. The grant date fair value of such nonvested stock was $2,615.
On May 16, 2013, Baltic Trading made grants of nonvested common stock in the amount of 59,680 shares to directors of Baltic Trading. The grant date fair value of such nonvested stock was $225. These shares vested on April 9, 2014. Additionally, on December 19, 2013, 539,000 and 400,000 shares of Baltic Trading’s nonvested common stock were granted to Peter C. Georgiopoulos and John Wobensmith, respectively. The grant date fair value of such nonvested stock was $5,371.
On May 17, 2012 and December 13, 2012, Baltic Trading made grants of nonvested common stock in the amount of 12,500 and 37,500 shares, respectively, to directors of Baltic Trading. The grant date fair value of such nonvested stock was $48 and $113, respectively. These shares vested on May 16, 2013. Additionally, on December 13, 2012, 166,666 and 83,333 shares of Baltic Trading’s nonvested common stock were granted to Peter C. Georgiopoulos and John Wobensmith, respectively. The grant date fair value of such nonvested stock was $750. All of the aforementioned grants of Baltic Trading’s nonvested common stock were made under Baltic Trading’s Equity Incentive Plan.
|
|||
5 — GOODWILL IMPAIRMENT
ASC 350-20 bases the accounting for goodwill on the reporting units of the combined entity. The Company has two reporting units as defined by criteria in ASC 350-20, GS&T and Baltic Trading.
The Company recorded Goodwill of $166,067 in adopting fresh-start reporting in accordance with provisions of ASC 852 as of the Effective Date, which was allocated to its two reporting units based on their relative fair values as of that date.
ASC 350-20 provides guidance for impairment testing of goodwill, which is not amortized. Goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that its carrying amount may not be recoverable, using a two-step process that begins with an estimation of the fair value of the Company’s reporting units. The first step is a screen for potential impairment and the second step measures the amount of impairment, if any. The first step involves a comparison of the estimated fair value of a reporting unit with its carrying amount. If the estimated fair value of the reporting unit exceeds its carrying value, goodwill of the reporting unit is considered unimpaired. Conversely, if the carrying amount of the reporting unit exceeds its estimated fair value, the second step is performed to measure the amount of impairment, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined by allocating the estimated fair value of the reporting unit to the estimated fair value of its existing assets and liabilities in a manner similar to a purchase price allocation. The unallocated portion of the estimated fair value of the reporting unit is the implied fair value of goodwill. If the implied fair value of goodwill is less than the carrying amount, an impairment loss, equivalent to the difference, is recorded as a reduction of goodwill and a charge to operating expense.
In the Company’s annual test of goodwill for impairment on December 31, 2014, the Company estimated the fair value of the reporting units to which its goodwill had been allocated. For this purpose the Company used the trailing 10-year industry average rates for each vessel class, over the remaining useful life of each vessel, recognizing that the transportation drybulk products is cyclical in nature and is subject to wide fluctuation in rates, and management believes the use of a 10-year average is the best measure of future rates over the remaining useful life of the Company’s fleet. Also for this purpose, the Company uses a utilization rate based on the Company’s historic average. In addition, the Company expects to incur the following costs over the remaining useful lives of the vessels in the Company’s fleet:
|
· |
Vessel operating costs based on historic and budgeted costs adjusted for inflation, |
|
· |
Drydocking costs based on historic costs adjusted for inflation, and |
|
· |
General and administrative costs adjusted for inflation. |
The more significant factors which could impact management’s assumptions regarding voyage revenues, drydocking costs and general and administrative expenses include, without limitation: (a) loss or reduction in business from the Company’s significant customers; (b) changes in demand; (c) material declines in rates in the tanker market; (d) changes in production of or demand for drybulk products, generally or in particular regions; (e) greater than anticipated levels of new building orders or lower than anticipated rates of scrapping; (f) changes in rules and regulations applicable to the drybulk industry, including, without limitation, legislation adopted by international organizations such as the International Maritime Organization and the European Union or by individual countries; (g) actions taken by regulatory authorities; and (h) increases in costs including without limitation: crew wages, insurance, provisions, repairs and maintenance.
Step 1 of impairment testing as of December 31, 2014 consisted of determining and comparing the fair value of a reporting unit, calculated by weighting discounted expected future cash flows, the fair value of the vessels and other assets owned by the reporting unit and the fair value of the reporting units based on the public trading price of each reporting unit, to the carrying value of each reporting unit. Based on performance of this test, it was determined that the goodwill allocated to each reporting unit may be impaired.
The Company then undertook the second step of the goodwill impairment test which involves the procedures discussed above. For purposes of determining the fair value of each reporting unit, the Company ascribed a weight of 75% to a valuation method based on the fair value of the reporting unit’s net assets; and 25% to the valuation method that utilized the public trading price of each reporting unit. There was no weight ascribed to a third valuation methodology considered by management, which was the discounted cash flow (“DCF”) valuation method due to the significant volatility in the drybulk rate market and the values derived by applying the DCF valuation method were not consistent with the other values derived in applying the other two valuation methodologies considered.
As a result of this testing, management determined that all of the goodwill allocated to the two reporting units was impaired, which resulted in a write-off at December 31, 2014 of $166,067. This impairment is attributable to the progressive decline in vessel charter rates that occurred from the Effective Date to the Company’s annual goodwill impairment test date of December 31, 2014, which included significant declines during the fourth quarter of 2014, which affected both the reporting units vessel values and their publicly traded stock prices.
Other than goodwill, the Company does not have any other intangible assets that are not amortized.
|
|||
6 - VESSEL ACQUISITIONS
On July 2, 2013, Baltic Trading entered into agreements to purchase two Handysize drybulk vessels from subsidiaries of Clipper Group for an aggregate purchase price of $41,000. The Baltic Hare, a 2009-built Handysize vessel, was delivered on September 5, 2013 and the Baltic Fox, a 2010-built Handysize vessel, was delivered on September 6, 2013. Baltic Trading financed the vessel purchases with proceeds from its May 28, 2013 common stock offering and borrowings under its $22 Million Term Loan Facility entered into on August 30, 2013. Refer to Note 10 — Debt below for further information regarding the Baltic Trading $22 Million Term Loan Facility.
On October 31, 2013, Baltic Trading entered into agreements to purchase two Capesize drybulk vessels from affiliates of SK Shipping Co. Ltd. for an aggregate purchase price of $103,000. The Baltic Lion, a 2012-built Capesize vessel, was delivered on December 27, 2013, and the Baltic Tiger, a 2011-built Capesize vessel, was delivered on November 26, 2013. Baltic Trading financed the vessel purchases with cash on hand and borrowings under its $44 Million Term Loan Facility entered into on December 3, 2013. Refer to Note 10 — Debt below for further information regarding the Baltic Trading $44 Million Term Loan Facility.
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, to be 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 are to be renamed the Baltic Mantis and the Baltic Scorpion. The purchases are subject to completion of customary additional documentation and closing conditions. 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 are expected to be delivered to Baltic Trading during the second and third quarters of 2015, respectively. As of December 31, 2014 and December 31, 2013, deposits on vessels were $25,593 and $1,013, respectively. Baltic Trading intends to use a combination of cash on hand, future cash flow from operations as well as debt or equity financing, including the 2014 Baltic Trading Term Loan Facilities and the Baltic Trading $148 Million Credit Facility as described in Note 10 — Debt, to fully finance the acquisition of these four Ultramax newbuilding drybulk vessels. On December 30, 2014, Baltic Trading paid $19,645 for the final payment due for the Baltic Wasp, which has been classified as noncurrent Restricted Cash in the Consolidated Balance Sheets as of December 31, 2014 as the payment was held in an escrow account and not released to the seller until the vessel was delivered to Baltic Trading on January 2, 2015.
Refer to Note 1 — General Information for a listing of the vessel delivery dates for the vessels in the Company’s fleet and the estimated delivery dates for vessels that Baltic Trading has entered into agreements to purchase.
Below market time charters, including those acquired during previous periods, were amortized as an increase to voyage revenue by the Predecessor Company in the amount of $68, $334 and $746 during the period from January 1 to July 9, 2014 and during the years ended December 31, 2013 and 2012, respectively. The remaining unamortized fair market value of Time charters acquired at December 31, 2013 was $84. As part of fresh-start reporting, the remaining liability for below market time charters was written-off during the re-valuation of our liabilities, refer to “Financial Statement Presentation” section in Note 1 — General Information.
Additionally, as part of fresh-start reporting, an asset for above market time charters was recorded in Time charters acquired in the amount of $450 for the Genco Bourgogne, Genco Muse and Genco Spirit. These above market time charters were amortized as a decrease to voyage revenue by the Successor Company in the amount of $450 during the period from July 9 to December 31, 2014. The remaining unamortized fair market value of Time charters acquired at December 31, 2014 is $0.
Capitalized interest expense associated with the newbuilding contracts entered into by Baltic Trading as recorded by the Successor Company for the period from July 9 to December 31, 2014 was $400. Capitalized interest expense associated with the newbuilding contracts entered into by Baltic Trading as recorded by the Predecessor Company for the period from January 1 to July 9, 2014 and during the years ended December 31, 2013 and 2012 was $295, $0 and $0, respectively.
|
|||
7 —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 December 31, 2014 and 2013, the Company held 16,335,100 shares of Jinhui capital stock which is recorded at its fair value of $26,414 and $77,488, respectively, based on the closing price on December 30, 2014 and 2013, respectively. At December 31, 2014 and 2013, the Company held 3,355 shares of KLC stock which is recorded at its fair value of $72 and $82, respectively, based on the closing price on December 30, 2014 and 2013, respectively.
The Company reviews the investment in Jinhui and KLC for impairment on a quarterly basis. There were no impairment charges recognized during the period from July 9 to December 31, 2014, January 1 to July 9, 2014 or during the years ended December 31, 2013 and 2012.
The unrealized gains (losses) for 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.
Refer to Note 13 — Accumulated Other Comprehensive Income (Loss) for a breakdown of the components of AOCI.
|
|||
8 - NET (LOSS) INCOME PER SHARE
The computation of basic net (loss) income per share is based on the weighted-average number of common shares outstanding during the year. The computation of diluted net (loss) income per share assumes the vesting of nonvested stock awards (refer to Note 24 — 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 1,110,600 and 0 nonvested shares outstanding at December 31, 2014 and July 9, 2014 for the Successor Company and Predecessor Company, respectively (refer to Note 24 — Stock-Based Compensation), all are anti-dilutive. The Successor Company’s diluted net (loss) income per share will also reflect the assumed conversion of the Equity Warrants and MIP Warrants issued by the Successor Company if the impact is dilutive under the treasury stock method. The Predecessor Company’s diluted net (loss) income per share will also reflect the assumed conversion under the Predecessor Company’s convertible debt if the impact is dilutive under the “if converted” method. The impact of the shares convertible under the Predecessor Company’s convertible notes is excluded from the computation of diluted income per share when interest expense per common share obtainable upon conversion is greater than basic earnings per share.
The components of the denominator for the calculation of basic net (loss) income per share and diluted net (loss) income per share are as follows:
|
|
|
Successor |
|
Predecessor |
|
||||
|
|
|
Period from |
|
Period from |
|
|
|
|
|
|
|
|
July 9 to |
|
January 1 to |
|
|
|
|
|
|
|
|
December 31, |
|
July 9, |
|
Year Ended December 31, |
|
||
|
|
|
2014 |
|
2014 |
|
2013 |
|
2012 |
|
|
Common shares outstanding, basic: |
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding, basic |
|
60,360,515 |
|
43,568,942 |
|
43,249,070 |
|
41,727,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding, diluted: |
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding, basic |
|
60,360,515 |
|
43,568,942 |
|
43,249,070 |
|
41,727,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of warrants |
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of convertible notes |
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of restricted stock awards |
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding, diluted |
|
60,360,515 |
|
43,568,942 |
|
43,249,070 |
|
41,727,075 |
|
The following table sets forth a reconciliation of the net (loss) income attributable to GS&T and the net (loss) income attributable to GS&T for diluted net (loss) income per share under the “if-converted” method:
|
|
|
Successor |
|
Predecessor |
|
||||||||
|
|
|
Period from |
|
Period from |
|
|
|
|
|
||||
|
|
|
July 9 to |
|
January 1 to |
|
|
|
|
|
||||
|
|
|
December 31, |
|
July 9, |
|
Year Ended December 31, |
|
||||||
|
|
|
2014 |
|
2014 |
|
2013 |
|
2012 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net (loss) income attributable to GS&T |
|
$ |
(182,294 |
) |
$ |
793,291 |
|
$ |
(147,741 |
) |
$ |
(144,928 |
) |
|
|
|
|
|
|
|
|
|
|
|
||||
|
Interest expense related to convertible notes, if dilutive |
|
— |
|
— |
|
— |
|
— |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net (loss) income attributable to GS&T for the computation of diluted net (loss) income per share |
|
$ |
(182,294 |
) |
$ |
793,291 |
|
$ |
(147,741 |
) |
$ |
(144,928 |
) |
|
|||
9 - RELATED PARTY TRANSACTIONS
The following represent related party transactions reflected in these consolidated financial statements:
The Company makes available employees performing internal audit services to General Maritime Corporation (“GMC”), where the Company’s Chairman, Peter C. Georgiopoulos, also serves as Chairman of the Board. For the period from July 9 to December 31, 2014, the Successor Company invoiced $12 to GMC and for the period from January 1 to July 9, 2014 and for the years ended December 31, 2013 and 2012, the Predecessor Company invoiced $72, $145 and $175, respectively, to GMC. The amounts billed to GMC include time associated with such internal audit services and other expenditures. Additionally, during the period from July 9 to December 31, 2014, the Successor Company incurred travel and other office related expenditures totaling $53. For the period from January 1 to July 9, 2014 and during the years ended December 31, 2013 and 2012, the Predecessor Company incurred travel and other office related expenditures totaling $49, $133 and $87, respectively. These amounts are reimbursable to GMC or its service provider. At December 31, 2014 and 2013, the amount due to GMC from the Company was $41 and $16, respectively.
During the period from July 9 to December 31, 2014, the Successor Company incurred legal services (primarily in connection with vessel acquisitions) aggregating $11 from Constantine Georgiopoulos, the father of Peter C. Georgiopoulos, Chairman of the Board. Additionally, during the period from January 1 to July 9, 2014 and during the years ended December 31, 2013 and 2012, the Predecessor Company incurred legal services aggregating $3, $48 and $11, respectively, from Constantine Georgiopoulos. At December 31, 2014 and 2013, the amount due to Constantine Georgiopoulos was $9 and $25, respectively.
GS&T and Baltic Trading have entered into agreements with Aegean Marine Petroleum Network, Inc. (“Aegean”) to purchase lubricating oils for certain vessels in the their fleets. Peter C. Georgiopoulos, Chairman of the Board of the Company, is Chairman of the Board of Aegean. During the period from July 9 to December 31, 2014, Aegean supplied lubricating oils to the Successor Company’s vessels aggregating $790. Additionally, during the period from January 1 to July 9, 2014 and during the years ended December 31, 2013 and 2012, Aegean supplied lubricating oils to the Predecessor Company’s vessels aggregating $1,087, $1,521 and $1,517, respectively. At December 31, 2014 and 2013, $267 and $263 remained outstanding, respectively.
During the period from July 9 to December 31, 2014, the Successor Company invoiced MEP for technical services provided and expenses paid on MEP’s behalf aggregating $1,618. During the period from January 1 to July 9, 2014 and during the years ended December 31, 2013 and 2012, the Predecessor Company invoiced MEP for technical services provided and expenses paid on MEP’s behalf aggregating $1,743, $3,430 and $3,396, respectively. Peter C. Georgiopoulos, Chairman of the Board, controls and has a minority interest in MEP. At December 31, 2014 and 2013, $10 and $7, respectively, was due to the Company from MEP. Total service revenue earned by the Successor Company for the technical service provided to MEP for the period from July 9 to December 31, 2014 was $1,584. Total service revenue earned by the Predecessor Company for technical services provided to MEP for the period from January 1 to July 9, 2014 and for the years ended December 31, 2013 and 2012 was $1,701, $3,285 and $3,294, respectively.
|
|||
10 - DEBT
Long-term debt consists of the following:
|
|
|
Successor |
|
Predecessor |
|
||
|
|
|
December 31, |
|
December 31, |
|
||
|
|
|
|
|
|
|
||
|
2007 Credit Facility |
|
$ |
— |
|
$ |
1,055,912 |
|
|
$100 Million Term Loan Facility |
|
67,792 |
|
75,484 |
|
||
|
$253 Million Term Loan Facility |
|
165,568 |
|
180,793 |
|
||
|
2010 Baltic Trading Credit Facility |
|
102,250 |
|
102,250 |
|
||
|
Baltic Trading $22 Million Term Loan Facility |
|
20,125 |
|
21,625 |
|
||
|
Baltic Trading $44 Million Term Loan Facility |
|
41,250 |
|
44,000 |
|
||
|
2014 Baltic Trading Term Loan Facilities |
|
33,150 |
|
— |
|
||
|
Less: Current portion |
|
(34,324 |
) |
(1,316,439 |
) |
||
|
|
|
|
|
|
|
||
|
Long-term debt |
|
$ |
395,811 |
|
$ |
163,625 |
|
Bankruptcy Proceedings
To allow discussions with the Company’s creditors concerning the Company’s restructuring to continue into April 2014 without the need to file for immediate bankruptcy relief, on March 31, 2014, the Company entered into agreements with certain of the lenders under our 2007 Credit Facility, our $100 Million Term Loan Facility, and our $253 Million Term Loan Facility (our “Credit Facilities”) to obtain waivers or forbearances with respect to certain potential or actual events of default as of March 31, 2014 as follows (the “Relief Agreements”):
|
· |
not making the scheduled amortization payment on March 31, 2014 under our 2007 Credit Facility; |
|
· |
not meeting the consolidated interest ratio covenant for the period ended March 31, 2014; |
|
· |
not meeting the maximum leverage ratio covenant for the period ending March 31, 2014; |
|
· |
not meeting the collateral maintenance test under the 2007 Credit Facility; |
|
· |
not meeting the minimum cash balance covenant under the 2007 Credit Facility; |
|
· |
not furnishing audited financial statements to the lenders within 90 days after year end for the year ended December 31, 2013; |
|
· |
a cross-default with respect to our outstanding interest rate swap with respect to the foregoing; |
|
· |
cross-defaults among our credit facilities with respect to the foregoing; and |
|
· |
any related defaults or events of default resulting from the failure to give notice with respect to any of the foregoing. |
The Relief Agreement for our 2007 Credit Facility provided that the agent and consenting lenders would forbear to exercise their rights and remedies through 11:59 p.m. on April 1, 2014 with respect to the foregoing potential or actual events of default, subject to earlier termination if a subsequent event of default occurs under our credit agreements other than those described above or if we breach the terms of the Relief Agreement. The Relief Agreements for our other two Credit Facilities provided that the agent and lenders waived through 11:59 p.m. on April 1, 2014 the foregoing potential or actual events of default, subject to earlier termination if a subsequent event of default occurs under our credit agreements or if we breach the terms of the Relief Agreements. Notwithstanding such waivers and forbearances, the fact that we did not make the scheduled amortization payment on March 31, 2014 constituted an event of default under our currently outstanding interest rate swap. In addition, under the indenture and supplemental indenture (the “Indenture”) governing our 5.0% Convertible Senior Notes issued on July 27, 2010 (the “2010 Notes”), the Company’s failure to make such payment would constitute an event of default under the Indenture if the Company failed to cure such default within 30 days after notice from the trustee under the Indenture.
On April 1, 2014, the Company entered into new agreements with the other parties to the Relief Agreements that extended the expiration of the forbearances and waivers under the Relief Agreements from 11:59 p.m. on April 1, 2014 to 11:59 p.m. on April 21, 2014. Also, the forbearances and waivers would have terminated if a definitive agreement for the Company’s restructuring was not effective by 11:59 p.m. on April 4, 2014. The Company avoided this termination through our entry into the Support Agreement. Such new agreements are otherwise on substantially the same terms and conditions as the Relief Agreements.
As of July 9, 2014, the Effective Date, the 2007 Credit Facility was terminated and the liens and mortgages related thereto were released as part of the Plan. Refer to the “Bankruptcy Filing” section of Note 1 — General Information for further information regarding the Chapter 11 Cases.
August 2012 Credit Facility Agreements
On August 1, 2012, the Company entered into agreements (the “August 2012 Agreements”) to amend or waive certain provisions of the agreements for the 2007 Credit Facility, $100 Million Term Loan Facility and the $253 Million Term Loan Facility (as defined below). The agreements implemented, among other things, the following:
|
· |
The waiver of the Company’s compliance with its existing maximum leverage ratio covenant and minimum permitted consolidated interest ratio covenant that commenced on October 1, 2011 and ends on and includes March 31, 2013 was extended to end on and include December 31, 2013 (which we refer to as the extended waiver period). |
|
· |
The gross interest-bearing debt to total capital covenant which originally ended on and included March 31, 2013 was extended to end on and include December 31, 2013. This covenant limits the ratio of the Company’s interest-bearing indebtedness to the sum of its interest-bearing indebtedness and its consolidated net worth in accordance with GAAP to 62.5% on the last day of any fiscal quarter during the waiver period. |
|
· |
Scheduled amortization payments through and including the quarter ending December 31, 2013 were deferred until the final payment at maturity under the 2007 Credit Facility and prepaid under the other two credit facilities. The next scheduled amortization payments under these facilities will be due in the first quarter of 2014 in the aggregate principal amount of $55,193. |
|
· |
Commencing September 30, 2012, the Company was to repay the 2007 Credit Facility on a quarterly basis using excess cash, defined as the balance over $100,000 in the Company’s and certain of its subsidiaries’ accounts pledged under the 2007 Credit Facility. Of such repayments, 25% would be allocated to the final payment at maturity, and 75% will be applied entirely against each successive scheduled mandatory principal repayment beginning with the payment due March 31, 2014. Certain other mandatory repayments under the existing terms of this facility as well as voluntary prepayments will be applied in the same manner. These obligations continued until the later of December 31, 2013 and the date on which the appraised value of certain mortgaged vessels is equal to at least 100% of the aggregate principal amount of the Company’s loans, letters of credit and certain hedge obligations under the 2007 Credit Facility. |
|
· |
The Company and its subsidiaries (other than Baltic Trading and its subsidiaries) would not increase the amount of principal indebtedness currently outstanding under each of its three credit agreements or change their maturity dates. |
|
· |
Indebtedness that the Company and its subsidiaries (other than Baltic Trading and its subsidiaries) may incur in connection with vessel acquisitions will be limited to 60% of the lesser of the vessel’s acquisition cost and fair market value. Any newly acquired vessel will subject to a security interest under the 2007 Credit Facility. |
|
· |
The Applicable Margin over LIBOR payable on the principal amount outstanding under the 2007 Credit Facility increased from 2.0% to 3.0% per annum. |
|
· |
The minimum cash balance required under the 2007 Credit Facility increased from $500 to $750 per vessel mortgaged under the 2007 Credit Facility. |
|
· |
The Company agreed to grant additional security for its obligations under the 2007 Credit Facility, consisting of a pledge of the Class B Stock of Baltic Trading held by Genco Investments LLC and a second priority security interest in vessels pledged under its other two credit facilities or in connection with any new indebtedness (excluding in each case vessels owned by Baltic Trading and its subsidiaries). |
|
· |
Consenting lenders under each of the three credit facilities received an upfront fee of 0.25% on the amount of outstanding loans. |
As required under the August 2012 Agreements, the Company prepaid $57,893 under its 2007 Credit Facility, $30,450 under its $253 Million Term Loan Facility, and $11,538 under its $100 Million Term Loan Facility on August 1, 2012. The prepayment under the 2007 Credit Facility was applied to the final payment due under the facility. The prepayments under the other two facilities were applied in order of maturity and fulfilled all scheduled amortization payments through December 31, 2013 under these facilities. In addition, lenders under the 2007 Credit Facility will receive a fee equal to 1.25% of the principal amount outstanding following such prepayment, or $13,199, on the earlier date of the maturity date of this facility or the date on which all obligations under this facility have been paid in full. The $13,199 has been recorded as current interest payable in current liabilities in the consolidated balance sheet at December 31, 2013 which is consistent with the classification of the principal amount of the 2007 Credit Facility, see “2007 Credit Facility” section below for further information.
December 2011 Credit Facility Agreements
On December 21, 2011, the Company entered into agreements (the “December 2011 Agreements”) to amend or waive provisions of the 2007 Credit Facility, the $100 Million Term Loan Facility and the $253 Million Term Loan Facility. The aforementioned credit facilities are explained in further detail below. The agreements implemented, among other things, the following:
|
· |
The Company’s compliance with its existing maximum leverage ratio covenant was waived for a period starting on October 1, 2011 and ending on (and including) March 31, 2013, or the waiver period. This covenant governs the ratio of the Company’s net debt to EBITDA (as such term is defined in the credit agreements). |
|
· |
The Company’s compliance with its existing minimum permitted consolidated interest ratio covenant is also waived for the waiver period. This covenant governs the ratio of the Company’s EBITDA to consolidated interest expense. |
|
· |
A new gross interest-bearing debt to total capital covenant applies to the Company for the duration of the waiver period. This covenant limits the ratio of the Company’s interest-bearing indebtedness to the sum of its interest-bearing indebtedness and its consolidated net worth in accordance with GAAP to 62.5% on the last day of any fiscal quarter during the waiver period. |
|
· |
Consenting lenders under the facilities received an upfront fee of 0.25% of the amount of outstanding loans. |
As contemplated under these agreements, the Company prepaid $52,500 under its 2007 Credit Facility, $7,000 under its $253 Million Term Loan Facility, and $3,000 under its $100 Million Term Loan Facility. All such prepayments were applied in inverse order of maturity under each credit facility. In addition, the 2007 Credit Facility is subject to a facility fee of 2.0% per annum on the average daily outstanding principal amount of the loans thereunder, payable quarterly in arrears, which was reduced to 1.0% on February 28, 2012 when the Company completed an equity offering of 7,500,000 shares of common stock, refer to Note 1 — General Information. The other two credit facilities were not subject to a facility fee.
2007 Credit Facility
On July 20, 2007, the Company entered into the 2007 Credit Facility with DnB Nor Bank ASA for the purpose of acquiring nine Capesize vessels and refinancing the Company’s existing 2005 Credit Facility and Short-Term Line. DnB Nor Bank ASA is also Mandated Lead Arranger, Bookrunner, and Administrative Agent. The Company has used borrowings under the 2007 Credit Facility to repay amounts outstanding under the 2005 Credit Facility and the Short-Term Line, and these two facilities have accordingly been terminated. During the years ended December 31, 2012 and 2011, total repayments of $118,588 and $102,500 were made, respectively. The $118,588 of repayments made during 2012 includes the $57,893 of repayments made during 2012 pursuant to the August 2012 Agreements, as noted in the “August 2012 Credit Facility Agreements” section hereof. The $102,500 of repayments made during 2011 includes the $52,500 prepayment of debt made during 2011 pursuant to the December 2011 Agreements, as noted in the “December 2011 Credit Facility Amendments” section herein. As of December 31, 2013, $1,055,912 was outstanding under the 2007 Credit Facility. As of December 31, 2013, the Company had utilized its maximum borrowing capacity under the 2007 Credit Facility. As noted in the “Bankruptcy Proceedings” section above, the 2007 Credit Facility was terminated on the Effective Date.
On January 26, 2009, the Company entered into an amendment to the 2007 Credit Facility (the “2009 Amendment”) which implemented the following modifications to the terms of the 2007 Credit Facility:
|
· |
Compliance with the existing collateral maintenance financial covenant was waived effective for the year ended December 31, 2008 and until the Company can represent that it is in compliance with all of its financial covenants and is otherwise able to pay a dividend and purchase or redeem shares of common stock under the terms of the Credit Facility in effect before the 2009 Amendment. The Company’s cash dividends and share repurchases were suspended until the Company can represent that it is in a position to again satisfy the collateral maintenance covenant. |
|
· |
The total amount of the 2007 Credit Facility is subject to quarterly reductions of $12,500 beginning March 31, 2009 through March 31, 2012 and quarterly reductions of $48,195 beginning June 30, 2012 and thereafter until the maturity date. After the prepayment of $52,500 and $57,893 made during December 2011 and August 2012 pursuant to the December 2011 Agreements and August 2012 Agreements, respectively, a final payment of $381,182 will be due on the maturity date. |
|
· |
The Applicable Margin to be added to the London Interbank Offered Rate to calculate the rate at which the Company’s borrowings bear interest is 2.00% per annum. This was increased to 3.00% per annum pursuant to the August 2012 Agreements as noted above. |
|
· |
The commitment commission paid to each lender is 0.70% per annum of the daily average unutilized commitment of such lender. |
Amounts repaid under the 2007 Credit Facility may not be reborrowed. The 2007 Credit Facility had a maturity date of July 20, 2017.
Loans made under the 2007 Credit Facility may be and have been used for the following:
|
· |
up to 100% of the en bloc purchase price of $1,111,000 for nine modern drybulk Capesize vessels, which the Company has agreed to purchase from Metrostar; |
|
· |
repayment of amounts previously outstanding under the Company’s 2005 Credit Facility, or $206,233; |
|
· |
the repayment of amounts previously outstanding under the Company’s Short-Term Line, or $77,000; |
|
· |
possible acquisitions of additional drybulk carriers between 25,000 and 180,000 dwt that are up to ten years of age at the time of delivery and not more than 18 years of age at the time of maturity of the credit facility; |
|
· |
up to $50,000 of working capital, if available; and |
|
· |
the issuance of up to $50,000 of standby letters of credit. At December 31, 2014 and 2013, there were no letters of credit issued under the 2007 Credit Facility. |
All amounts owing under the 2007 Credit Facility are secured by the following:
|
· |
cross-collateralized first priority mortgages on 35 of the Company’s existing vessels and any new vessels financed with the 2007 Credit Facility; |
|
· |
an assignment of any and all earnings of the mortgaged vessels; |
|
· |
an assignment of all insurances on the mortgaged vessels; |
|
· |
a first priority perfected security interest in all of the shares of Jinhui owned by the Company; |
|
· |
an assignment of the shipbuilding contracts and an assignment of the shipbuilder’s refund guarantees meeting the Administrative Agent’s criteria for any additional newbuildings financed under the 2007 Credit Facility; and |
|
· |
a first priority pledge of the Company’s ownership interests in each subsidiary guarantor. |
The Company completed a pledge of its ownership interests in the subsidiary guarantors that own the nine Capesize vessels acquired. The other collateral described above was pledged, as required, within 30 days of the effective date of the 2007 Credit Facility.
The Company’s borrowings under the 2007 Credit Facility bore interest at the London Interbank Offered Rate (“LIBOR”) for an interest period elected by the Company of one, three, or six months, or longer if available, plus the Applicable Margin which was 0.85% per annum. Effective January 26, 2009, due to the 2009 Amendment, the Applicable Margin increased to 2.00%. Additionally, effective August 1, 2012, due to the August 2012 Agreements, the Applicable Margin increased to 3.00%. In addition to other fees payable by the Company in connection with the 2007 Credit Facility, the Company paid a commitment fee at a rate of 0.20% per annum of the daily average unutilized commitment of each lender under the facility until September 30, 2007, and 0.25% thereafter. Effective January 26, 2009, due to the 2009 Amendment, the rate increased to 0.70% per annum of the daily average unutilized commitment of such lender. Refer to “December 2011 Credit Facility Agreements” above for the facility fee that the Company is subject to pursuant to the December 2011 Agreements.
The 2007 Credit Facility includes the following financial covenants which apply to the Company and its subsidiaries on a consolidated basis and are measured at the end of each fiscal quarter beginning with June 30, 2007:
|
· |
The leverage covenant requires the maximum average net debt to EBITDA ratio to be no greater than 5.5:1.0. As per the December 2011 Agreements and the August 2012 Agreements, this covenant has been waived for a period beginning on October 1, 2011 and ending on (and including) December 31, 2013. |
|
· |
Cash and cash equivalents must not be less than $750 per mortgaged vessel. This was increased from $500 per mortgaged vessel effective August 1, 2012 pursuant to the August 2012 Agreements. |
|
· |
The ratio of EBITDA to interest expense, on a rolling last four-quarter basis, must be no less than 2.0:1.0. As per the December 2011 Agreements and the August 2012 Agreements, this covenant has been waived for a period beginning on October 1, 2011 and ending on (and including) December 31, 2013. |
|
· |
After July 20, 2007, consolidated net worth, as defined in the 2007 Credit Facility, must be no less than $263,300 plus 80% of the value of the any new equity issuances of the Company from June 30, 2007. Based on the equity offerings completed in October 2007, May 2008, July 2010 and February 2012, consolidated net worth must be no less than $674,555. |
|
· |
The aggregate fair market value of the mortgaged vessels must at all times be at least 130% of the aggregate outstanding principal amount under the credit facility plus all letters of credit outstanding; the Company has a 30 day remedy period to post additional collateral or reduce the amount of the revolving loans and/or letters of credit outstanding. This covenant was waived effective for the year ended December 31, 2008 and indefinitely until the Company can represent that it is in compliance with all of its financial covenants as per the 2009 Amendment as described above. |
As of December 31, 2013, 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. As such, the debt outstanding under this facility of $1,055,912 was classified as a current liability in the consolidated balance sheets as of December 31, 2013.
Refer to “Bankruptcy Proceedings” section above for further information about the Chapter 11 Cases and the termination of the 2007 Credit Facility on the Effective Date.
$100 Million Term Loan Facility
On August 12, 2010, the Company entered into the $100 Million Term Loan Facility with Crédit Agricole Corporate and Investment Bank, which is also acting as Agent and Security Trustee; and Crédit Industriel et Commercial; and Skandinaviska Enskilda Banken AB (publ) are the lenders under the facility. The Company has used the $100 Million Term Loan Facility to fund or refund to the Company a portion of the purchase price of the acquisition of five vessels from Metrostar (Refer to Note 6 — Vessel Acquisitions). Under the terms of the facility, the $100 Million Term Loan Facility was drawn down in five equal tranches of $20,000 each, with one tranche per vessel. The $100 Million Term Loan Facility has a final maturity date of seven years from the date of the first drawdown, or August 17, 2017, and borrowings under the facility bear interest at LIBOR for an interest period of one, three or six months (as elected by the Company), plus 3.00% per annum. A commitment fee of 1.35% is payable on the undrawn committed amount of the $100 Million Term Loan Facility, which began accruing on August 12, 2010. Borrowings are to be repaid quarterly, with the outstanding principal amortized on a 13-year profile, with any outstanding amount under the $100 Million Term Loan Facility to be paid in full on the final maturity date. Repaid amounts are no longer available and cannot be reborrowed. Borrowings under the $100 Million Term Loan Facility are secured by liens on the five Metrostar vessels purchased by GS&T and other related assets. Certain of the Company’s wholly-owned ship-owning subsidiaries, each of which own one of the five Metrostar vessels, will act as guarantors under the $100 Million Term Loan Facility.
As of December 31, 2014, the Company has utilized its maximum borrowing capacity under the $100 Million Term Loan Facility.
The $100 Million Term Loan Facility requires the Company to comply with a number of covenants, including financial covenants related to leverage, consolidated net worth, interest coverage and dividends; minimum working capital requirements; collateral maintenance requirements; and other covenants, most of which are in principle and calculation similar to the Company’s covenants under the existing 2007 Credit Facility. The $100 Million Term Loan Facility includes usual and customary events of default and remedies for facilities of this nature. Refer to the “August 2012 Credit Facility Agreements” and “December 2011 Credit Facility Agreements” sections above for waivers obtained for specific covenants under this credit facility.
See above in this note under the heading “Bankruptcy Proceedings” for a description of the agreement the Company entered into to obtain waivers with respect to certain events of default relating to the $100 Million Term Loan Facility. See the “Bankruptcy Filing” section under Note 1 — General Information for the Company’s restructuring plans, including the filing of its Chapter 11 Cases and the Company’s subsequent emergence from Chapter 11.
On the Effective Date, Genco 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:
|
· |
A paydown 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 ($1,923 for the $100 Million Term Loan Facility and $5,075 for the $253 Million Term Loan Facility). |
|
· |
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. |
|
· |
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 March 31, 2015 (with quarterly testing commencing June 30, 2015). |
|
· |
A fleetwide minimum liquidity covenant requiring maintenance of cash of $750 per vessel for all vessels owned by Genco (excluding those owned by Baltic Trading). |
|
· |
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.
As of December 31, 2014, the Company believed it was in compliance with all of the financial covenants under the Amended and Restated $100 Million Term Loan Facility. However, as of December 31, 2013, the Company believed it was probable that the Company would not be in compliance with certain covenants at measurement dates within the following twelve months. As such, the debt outstanding under this facility of $75,484 was classified as a current liability in the consolidated balance sheet as of December 31, 2013.
Following the procurement of updated valuations in February 2015, the Company was not in compliance with the collateral maintenance test of a ratio of 130%. The collateral measurement was 122.4%, representing an approximate shortfall of $5,150. Under the terms of the credit facility the Company would need to cover such shortfall within 30 days from the time it is notified by the security agent. The Company has not been notified by the security agent to take any remedial actions. The Company has been in communication with the facility’s security agent and plans to add one of its unencumbered Handysize vessels as additional collateral to cover the shortfall and satisfy the collateral maintenance test.
The following table sets forth the repayment of the outstanding debt of $67,792 at December 31, 2014 under the Amended and Restated $100 Million Term Loan Facility:
|
Year Ending December 31, |
|
Total |
|
|
|
|
|
|
|
|
|
2015 |
|
$ |
7,692 |
|
|
2016 |
|
7,692 |
|
|
|
2017 |
|
7,692 |
|
|
|
2018 |
|
7,692 |
|
|
|
2019 |
|
37,024 |
|
|
|
Total debt |
|
$ |
67,792 |
|
$253 Million Term Loan Facility
On August 20, 2010, the Company entered into the $253 Million Term Loan Facility. BNP Paribas; Crédit Agricole Corporate and Investment Bank; DVB Bank SE; Deutsche Bank AG Filiale Deutschlandgeschäft, which is also acting as Security Agent and Bookrunner; and Skandinaviska Enskilda Banken AB (publ) are Lenders and Mandated Lead Arrangers under the facility. Deutsche Bank Luxembourg S.A. is acting as Agent under the facility, and Deutsche Bank AG and all of the Lenders other than Deutsche Bank AG Filiale Deutschlandgeschäft are acting as Swap Providers under the facility. The Company has used the $253 Million Term Loan Facility to fund a portion of the purchase price of the acquisition of 13 vessels from affiliates of Bourbon. Under the terms of the facility, the $253 Million Term Loan Facility was drawn down in 13 tranches in amounts based on the particular vessel being acquired, with one tranche per vessel. The $253 Million Term Loan Facility has a maturity date of August 15, 2015 and borrowings under the $253 Million Term Loan Facility bear interest, as elected by the Company, at LIBOR for an interest period of three or six months, plus 3.00% per annum. A commitment fee of 1.25% is payable on the undrawn committed amount of the $253 Million Term Loan Facility, which began accruing on August 20, 2010. Borrowings are to be repaid quarterly with outstanding principal amortized on a per vessel basis and any outstanding amount under the $253 Million Term Loan Facility to be paid in full on the maturity date. Repaid amounts are no longer available and cannot be reborrowed. Borrowings under the $253 Million Term Loan Facility are secured by liens on the Bourbon vessels and other related assets. Certain of the Company’s wholly-owned ship-owning subsidiaries, each of which owns one of the Bourbon vessels, will act as guarantors under the credit facility.
As of December 31, 2014, total drawdowns of $253,000 have been made under the $253 Million Term Loan Facility to fund or refund to the Company a portion of the purchase price of the 12 Bourbon vessels delivered during the third quarter of 2010 and the Bourbon vessel delivered during the first quarter of 2011. Refer to Note 1 — General Information for a listing of the vessels delivered. As of December 31, 2014, the Company has utilized its maximum borrowing capacity under the $253 Million Term Loan Facility.
The $253 Million Term Loan Facility requires the Company to comply with a number of covenants, including financial covenants related to leverage, consolidated net worth, liquidity and interest coverage; dividends; collateral maintenance requirements; and other covenants, most of which are in principle and calculation similar to our covenants under the existing 2007 Credit Facility. As of December 31, 2014 and 2013, 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. The $253 Million Term Loan Facility includes usual and customary events of default and remedies for facilities of this nature. Refer to the “December 2011 Credit Facility Agreements” section herein for waivers obtained for specific covenants under this credit facility.
See above in this note under the heading “2007 Credit Facility” for a description of the agreement the Company entered into to obtain waivers with respect to certain events of default relating to the $253 Million Term Loan Facility. See the “Bankruptcy Filing” section under Note 1 — General Information for the Company’s restructuring plans, including the filing of its Chapter 11 Cases and the Company’s subsequent emergence from Chapter 11.
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. 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.
As of December 31, 2014, the Company believed it was in compliance with all of the financial covenants under the Amended and Restated $253 Million Term Loan Facility, except for the 135% collateral maintenance test. The actual percentage measured by the Company was 130.7% at December 31, 2014 and 134.8% on January 9, 2015 following the Company’s scheduled amortization payment of $5,075. Under the terms of the credit facility the company would need to cover such shortfall within 30 days from the time it was notified by the security agent. The Company has not been notified by the security agent to take any actions to remedy this slight shortfall. The Company has been in communication with the facility’s agent and prepaid $216 of the outstanding indebtedness on March 2, 2015, which will reduce the next scheduled amortization payment of $5,075 due in early April 2015. The next date that valuations under this credit facility will be required is June 30, 2015.
As of December 31, 2013, 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. As such, the debt outstanding under this facility of $180,793 was classified as a current liability and the restricted cash related to this facility was classified as a current asset as of December 31, 2013 in the consolidated balance sheets.
The following table sets forth the repayment of the outstanding debt of $165,568 at December 31, 2014 under the Amended and Restated $253 Million Term Loan Facility:
|
Year Ending December 31, |
|
Total |
|
|
|
|
|
|
|
|
|
2015 |
|
$ |
20,300 |
|
|
2016 |
|
20,300 |
|
|
|
2017 |
|
20,300 |
|
|
|
2018 |
|
20,300 |
|
|
|
2019 |
|
84,368 |
|
|
|
Total debt |
|
$ |
165,568 |
|
2010 Baltic Trading 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 Baltic Trading Credit Facility”). An amendment to the 2010 Baltic Trading Credit Facility was entered into by Baltic Trading effective November 30, 2010. Among other things, this amendment increased the commitment amount of the 2010 Baltic Trading Credit Facility from $100,000 to $150,000. An additional amendment to the 2010 Baltic Trading Credit Facility was entered into by Baltic Trading effective August 29, 2013 (the “August 2013 Amendment”). The August 2013 Amendment implemented the following modifications to the 2010 Baltic Trading Credit Facility:
|
· |
The requirement that certain additional vessels acquired by Baltic Trading be mortgaged as collateral under the 2010 Baltic Trading Credit Facility was eliminated. |
|
· |
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 Baltic Trading Credit Facility. |
|
· |
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. On the maturity date, November 30, 2016, the total commitment will reduce to zero and all borrowings must be paid in full. |
|
· |
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 Baltic Trading $22 Million Term Loan Facility (as defined below) have been incorporated into the 2010 Baltic Trading Credit Facility. |
A commitment fee of 1.25% per annum is payable on the unused daily portion of the 2010 Baltic Trading Credit Facility, which began accruing on March 18, 2010 under the terms of the commitment letter entered into on February 25, 2010. In connection with the August 2013 Amendment, Baltic Trading paid an upfront fee of $275. Of the total original facility amount of $150,000, $25,000 is available for working capital purposes. On May 9, 2013, the Company drew down $1,000 for working capital purposes.
Borrowings under the 2010 Baltic Trading Credit Facility are secured by liens on Baltic Trading’s initial vessels and other related assets. Borrowings under the facility are subject to the delivery of security documents with respect to Baltic Trading’s initial vessels. Baltic Trading’s subsidiaries owning the initial vessels act as guarantors under the 2010 Baltic Trading Credit Facility.
All amounts owing under the 2010 Baltic Trading Credit Facility are also secured by the following:
|
· |
cross-collateralized first priority mortgages of each of Baltic Trading’s initial vessels; |
|
· |
an assignment of any and all earnings of Baltic Trading’s initial vessels; and |
|
· |
an assignment of all insurance on the mortgaged vessels. |
The 2010 Baltic Trading Credit Facility requires Baltic Trading to comply with a number of covenants, including financial covenants related to liquidity, consolidated net worth, and collateral maintenance; delivery of quarterly and annual financial statements and annual projections; maintaining adequate insurances; compliance with laws (including environmental); compliance with ERISA; maintenance of flag and class of Baltic Trading’s initial vessels; restrictions on consolidations, mergers or sales of assets; restrictions on changes in the Manager of Baltic Trading’s initial vessels (or acceptable replacement vessels); limitations on changes to the Management Agreement; limitations on liens; limitations on additional indebtedness; restrictions on paying dividends; restrictions on transactions with affiliates; and other customary covenants.
The amended 2010 Baltic Trading Credit Facility includes the following financial covenants which apply to Baltic Trading and its subsidiaries on a consolidated basis and are measured at the end of each fiscal quarter:
|
· |
Cash and cash equivalents plus the undrawn amount available for working capital under the facility must not be less than $5,000 during the first year following the amendment, or until November 30, 2011. Beginning December 1, 2010, cash and cash equivalents plus the undrawn amount available for working capital under the facility must not be less than $750 per vessel for all vessels in Baltic Trading’s fleet. |
|
· |
Consolidated net worth must not be less than (i) $232,796 plus (ii) 50% of the value of any subsequent primary equity offerings of Baltic Trading. |
|
· |
The aggregate fair market value of the mortgaged vessels must at all times be at least 140% of the aggregate outstanding principal amount under the 2010 Baltic Trading Credit Facility. |
As of December 31, 2014, $7,750 remained available under the 2010 Baltic Trading Credit Facility as the total commitment was reduced to $110,000 pursuant to the August 2013 Amendment. The total available working capital borrowings of $25,000 are subject to the total remaining availability under the 2010 Baltic Trading Credit Facility; therefore, only $7,750 is available for working capital purposes as of December 31, 2014.
Under the 2010 Baltic Trading Credit Facility, Baltic Trading is not permitted to make loans to GS&T or Genco Investments LLC if an event of default existed at the time of the loan or could be reasonably expected to result there from. In addition, Baltic Trading would not be permitted under the facility to declare or pay dividends to its shareholders (including Genco Investments LLC) if an event of default existed at the time of payment or would be caused thereby. As of December 31, 2012, to remain in compliance with a net worth covenant in the facility, Baltic Trading needs to maintain a net worth of $232,796 after the payment of any dividends.
As of December 31, 2014, the Company believes Baltic Trading is in compliance with all of the financial covenants under the 2010 Baltic Trading Credit Facility.
On December 31, 2014, Baltic Trading entered into the Baltic Trading $148 Million Credit Facility, refer to “Baltic Trading $148 Million Credit Facility” section below. Borrowings under the Baltic Trading $148 Million Credit Facility will be used to refinance Baltic Trading’s indebtedness under the 2010 Baltic Trading Credit Facility. On January 7, 2015, Baltic Trading repaid the $102,250 outstanding under the 2010 Baltic Trading Credit Facility with borrowings from the $148 Million Credit Facility. Baltic Trading utilized the repayment terms under the Baltic Trading $148 Million Credit Facility in order to determine the repayment dates of the outstanding debt as of December 31, 2014.
The following table sets forth the repayment of the outstanding debt of $102,250 at December 31, 2014 under the 2010 Baltic Trading Credit Facility utilizing the payment terms under the Baltic Trading $148 Million Credit Facility:
|
Year Ending December 31, |
|
Total |
|
|
|
|
|
|
|
|
|
2015 |
|
$ |
— |
|
|
2016 |
|
4,378 |
|
|
|
2017 |
|
9,787 |
|
|
|
2018 |
|
9,787 |
|
|
|
2019 |
|
78,298 |
|
|
|
Total debt |
|
$ |
102,250 |
|
Baltic Trading $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 “Baltic Trading $22 Million Term Loan Facility”). Amounts borrowed and repaid under the Baltic Trading $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 Baltic Trading $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 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 Baltic Trading $22 Million Term Loan Facility are secured by liens on Baltic Trading’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 Baltic Trading $22 Million Term Loan Facility, Baltic Trading agreed to guarantee the obligations of its subsidiaries under the Baltic Trading $22 Million Term Loan Facility.
The Baltic Trading $22 Million Term Loan Facility also requires Baltic Trading, Baltic Hare Limited and Baltic Fox Limited to comply with a number of covenants, including financial covenants related to liquidity, leverage, consolidated net worth, and collateral maintenance; delivery of quarterly and annual financial statements and annual projections; maintaining adequate insurances; compliance with laws (including environmental); maintenance of flag and class of the initial vessels; restrictions on consolidations, mergers or sales of assets; limitations on changes in the manager of the Baltic Trading’s vessels; limitations on changes to the Management Agreement; limitations on liens and additional indebtedness; prohibitions on paying dividends if an event of default has occurred or would occur as a result of payment of a dividend; restrictions on transactions with affiliates; and other customary covenants. The liquidity covenants under the facility require Baltic Hare Limited and Baltic Fox Limited to maintain $500 each in their cash accounts and Baltic Trading to maintain $750 for each vessel in its fleet in cash or cash equivalents plus undrawn working capital lines of credit. The facility’s leverage covenant requires that the ratio of Baltic Trading’s total financial indebtedness to the value of its total assets as adjusted based on vessel appraisals not exceed 70%. The facility also requires that Baltic Trading maintain a minimum consolidated net worth of $232,796 plus fifty percent of the value of Baltic Trading’s equity offerings completed on or after May 28, 2013. The facility’s collateral maintenance covenant requires that the minimum fair market value of vessels mortgaged under the facility be 130% of the amount outstanding under the facility through August 30, 2016 and 135% of such amount thereafter.
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 December 31, 2014, Baltic Trading has utilized its maximum borrowing capacity of $22,000 and there was no further availability. At December 31, 2014 and 2013, the total outstanding debt balance was $20,125 and $21,625, respectively, as required repayments began on December 4, 2013.
As of December 31, 2014, the Company believes Baltic Trading is in compliance with all of the financial covenants under the Baltic Trading $22 Million Term Loan Facility.
The following table sets forth the repayment of the outstanding debt of $20,125 at December 31, 2014 under the Baltic Trading $22 Million Term Loan Facility:
|
Year Ending December 31, |
|
Total |
|
|
|
|
|
|
|
|
|
2015 |
|
$ |
1,500 |
|
|
2016 |
|
1,500 |
|
|
|
2017 |
|
1,500 |
|
|
|
2018 |
|
1,500 |
|
|
|
2019 |
|
14,125 |
|
|
|
|
|
|
|
|
|
Total debt |
|
$ |
20,125 |
|
Baltic Trading $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 “Baltic Trading $44 Million Term Loan Facility”). Amounts borrowed and repaid under the Baltic Trading $44 Million Term Loan Facility may not be reborrowed. The Baltic Trading $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 Baltic Trading $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 was 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 on 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 Baltic Trading $44 Million Term Loan Facility are secured by liens on Baltic Trading’s vessels to be financed or refinanced with borrowings under the facility, namely the Baltic 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 Baltic Tiger released. Under a Guarantee and Indemnity entered into concurrently with the Baltic Trading $44 Million Term Loan Facility, Baltic Trading agreed to guarantee the obligations of its subsidiaries under the Baltic Trading $44 Million Term Loan Facility.
The Baltic Trading $44 Million Term Loan Facility also requires Baltic Trading, Baltic Tiger Limited and Baltic Lion Limited to comply with a number of covenants, including financial covenants related to liquidity, leverage, consolidated net worth, and collateral maintenance; delivery of quarterly and annual financial statements and annual projections; maintaining adequate insurances; compliance with laws (including environmental); maintenance of flag and class of the initial vessels; restrictions on consolidations, mergers or sales of assets; limitations on changes in the manager of the Baltic Trading’s vessels; limitations on changes to the Management Agreement; limitations on liens and additional indebtedness; prohibitions on paying dividends if an event of default has occurred or would occur as a result of payment of a dividend; restrictions on transactions with affiliates; and other customary covenants. The liquidity covenants under the facility require Baltic Tiger Limited and Baltic Lion Limited to maintain $1,000 each in their cash accounts and Baltic Trading to maintain $750 for each vessel in its fleet in cash or cash equivalents plus undrawn working capital lines of credit. The facility’s leverage covenant requires that the ratio of Baltic Trading’s total financial indebtedness to the value of its total assets as adjusted based on vessel appraisals not exceed 70%. The facility also requires that Baltic Trading maintain a minimum consolidated net worth of $232,796 plus fifty percent of the value of any primary equity offerings of Baltic Trading after April 30, 2013. The facility’s collateral maintenance covenant requires that the minimum fair market value of vessels mortgaged under the facility be 125% of the amount outstanding under the facility.
On December 23, 2013, Baltic Tiger Limited and Baltic Lion Limited made drawdowns of $21,400 and $22,600 for the Baltic Tiger and Baltic Lion, respectively. As of December 31, 2014, Baltic Trading has utilized its maximum borrowing capacity of $44,000 and there was no further availability. At December 31, 2014 and 2013, the total outstanding debt balance was $41,250 and $44,000, respectively, as required repayments began on March 24, 2014.
As of December 31, 2014, the Company believes Baltic Trading is in compliance with all of the financial covenants under the Baltic Trading $44 Million Term Loan Facility.
The following table sets forth the repayment of the outstanding debt of $41,250 at December 31, 2014 under the Baltic Trading $44 Million Term Loan Facility:
|
Year Ending December 31, |
|
Total |
|
|
|
|
|
|
|
|
|
2015 |
|
$ |
2,750 |
|
|
2016 |
|
2,750 |
|
|
|
2017 |
|
2,750 |
|
|
|
2018 |
|
2,750 |
|
|
|
2019 |
|
30,250 |
|
|
|
|
|
|
|
|
|
Total debt |
|
$ |
41,250 |
|
2014 Baltic Trading 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 Baltic Trading Term Loan Facilities”) to partially finance the newbuilding Ultramax vessel that each subsidiary is to acquire, namely the Baltic Hornet and Baltic Wasp, respectively. Amounts borrowed under the 2014 Baltic Trading Term Loan Facilities may not be reborrowed. The 2014 Baltic Trading 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 Baltic Trading 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 will be recorded in deferred financing fees. Borrowings under the 2014 Baltic Trading 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 will commence six months after the actual delivery date for a vessel.
Borrowings under the 2014 Baltic Trading Term Loan Facilities are to be secured by liens on the Baltic Trading’s vessels acquired with borrowings under these facilities, namely the Baltic Hornet and Baltic Wasp, and other related assets. Baltic Trading guarantees the obligations of the Baltic Hornet and Baltic Wasp under the 2014 Baltic Trading Term Loan Facilities.
The 2014 Baltic Trading Term Loan Facilities require Baltic Trading, Baltic Hornet Limited and Baltic Wasp Limited to comply with covenants comparable to those of the Baltic Trading $44 Million Term Loan Facility, with the exception of the collateral maintenance covenant and minimum cash requirement for the encumbered vessels. For the 2014 Baltic Trading Term Loan Facilities, the collateral maintenance covenant requiring that the minimum fair market value of the vessels acquired be 135% of the amount outstanding under the 2014 Baltic Trading Term Loan Facilities. Additionally, for the 2014 Baltic Trading Term Loan Facilities, the Baltic Hornet Limited and Baltic Wasp Limit are required to maintain $750 each in their cash accounts. Refer to “Baltic Trading $44 Million Term Loan Facility” section above.
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 December 31, 2014, Baltic Trading has utilized its maximum borrowing capacity and there was no further availability. At December 31, 2014, the total outstanding debt balance was $33,150.
As of December 31, 2014, the Company believes Baltic Trading is in compliance with all of the financial covenants under the 2014 Baltic Trading Term Loan Facilities.
The following table sets forth the repayment of the outstanding debt of $33,150 at December 31, 2014 under the 2014 Baltic Trading Term Loan Facilities:
|
Year Ending December 31, |
|
Total |
|
|
|
|
|
|
|
|
|
2015 |
|
$ |
2,081 |
|
|
2016 |
|
2,763 |
|
|
|
2017 |
|
2,763 |
|
|
|
2018 |
|
2,763 |
|
|
|
2019 |
|
2,763 |
|
|
|
Thereafter |
|
20,017 |
|
|
|
|
|
|
|
|
|
Total debt |
|
$ |
33,150 |
|
Baltic Trading $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 “Baltic Trading $148 Million Credit Facility”). The Baltic Trading $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 will be used to refinance Baltic Trading’s outstanding indebtedness under the 2010 Baltic Trading Credit Facility. Amounts borrowed under the revolving credit facility of the Baltic Trading $148 Million Credit Facility may be re-borrowed. Borrowings under the term loan facility of the Baltic Trading $148 Million Credit Facility may be incurred pursuant to two single term loans in an amount of $16,500 each that will be used to finance, in part, the purchase of two newbuilding Ultramax vessels that Baltic Trading has agreed to acquire, namely the Baltic Scorpion and Baltic Mantis. Amounts borrowed under the term loan facility of the Baltic Trading $148 Million Credit Facility may not be re-borrowed.
The Baltic Trading $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 Baltic Trading $148 Million Credit Facility, which began accruing on December 31, 2014. The commitment under the revolving credit facility of the Baltic Trading $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 Baltic Trading $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 Baltic Trading $148 Million Credit Facility must be repaid in full on the maturity date, December 31, 2019.
Borrowings under the Baltic Trading $148 Million Credit Facility are secured by liens on nine of Baltic Trading’s existing vessels that have served as collateral under the 2010 Baltic Trading 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 Baltic Trading $148 Million Credit Facility requires Baltic Trading to comply with a number of customary covenants substantially similar to those in the 2010 Baltic Trading Credit Facility, including financial covenants related to liquidity, leverage, consolidated net worth and collateral maintenance. Refer to the “2010 Baltic Trading Credit Facility” section above for further information.
As of December 31, 2014, $148,000 remained available under the Baltic Trading $148 Million Credit Facility as there were no drawdowns during the year ended December 31, 2014.
On January 7, 2015, Baltic Trading drew down $104,500 from the revolving credit facility of the Baltic Trading $148 Million Credit Facility. Using these borrowings, Baltic Trading repaid the $102,250 outstanding under the 2010 Baltic Trading Facility.
As of December 31, 2014, the Company had not drawn down on the Baltic Trading $148 Million Credit Facility, and therefore no measurement of financial covenants was required for this facility.
Refer to “2010 Baltic Trading Credit Facility” section above for the repayment schedule of the outstanding debt of $102,250 as of December 31, 2014 which was refinanced with the Baltic Trading $148 Million Credit Facility.
Change of Control
If the Company’s ownership in Baltic Trading were to decrease to less than 10% of the aggregate number of shares of common stock and Class B Stock of Baltic Trading, the outstanding Baltic Trading Class B Stock held by the Company would automatically convert into common stock, and the voting power held by the Company in Baltic Trading would likewise decrease to less than 30%. This would result in a change of control as defined under the Baltic Trading 2010 Credit Facility, the Baltic Trading $22 Million Term Loan Facility, the Baltic Trading $44 Million Term Loan Facility and the 2014 Baltic Trading Term Loan Facilities, and would therefore constitute an event of default. Additionally, a change of control constituting an event of default under Baltic Trading’s credit facilities would also occur if any party other than the Company or certain other permitted holders beneficially owns more than 30% of the Company’s outstanding voting or economic equity interests, which may occur if a party were deemed to control Genco. Refer to Note 1 — General Information for discussion of the Company’s current economic status. The Prepack Plan did not result, and the Company does not expect the Prepack Plan to result, in a reduction of the Company’s ownership in Baltic Trading. As of the date of this report, no change of control under either of the foregoing tests has occurred. In addition, Baltic Trading has the right to terminate the Management Agreement upon the occurrence of certain events, including a Manager Change of Control (as defined in the Management Agreement), without making a termination payment. Some of these have occurred as a result of the transactions contemplated by the Prepack Plan, including the consummation of any transaction that results in (i) any “person” (as such term is used in Section 13(d)(3) of the Securities Exchange Act of 1934), other than Peter Georgiopoulos or any of his affiliates, becoming the beneficial owner of 25% of the Company’s voting securities or (ii) the Company’s stock ceasing to be traded on the New York Stock Exchange or any other internationally recognized stock exchange. Therefore, Baltic Trading may have the right to terminate the Management Agreement, although Baltic Trading may be prevented or delayed from doing so because of the effect of applicable bankruptcy law, including the automatic stay provisions of the United States Bankruptcy Code and the provisions of the Prepack Plan and the Confirmation Order. The Prepack Plan did not result in any changes to the Management Agreement. In its Annual Report on Form 10-K for the year ended December 31, 2014 filed on March 2, 2015, Baltic Trading stated that its Board of Directors had not made any determination as of the date of such report regarding any action in connection with the Management Agreement in light of the foregoing events.
Interest payable
As required under the August 2012 Agreements, lenders under the 2007 Credit Facility will receive a fee equal to 1.25% of the principal amount outstanding following such prepayment, or $13,199, on the earlier date of the maturity date of this facility or the date on which all obligations under this facility have been paid in full. On the Effective Date, the 2007 Credit Facility was terminated, therefore this liability was discharged. Refer to Note 1 — General Information for further information regarding the Chapter 11 Cases.
Interest rates
The following tables set forth the effective interest rate associated with the interest expense for the Company’s debt facilities noted above included the costs associated with unused commitment fees. For the Predecessor Company for the period from January 1 to July 9, 2014 and for the years ended December 31, 2013 and 2012, the effective interest rate also included the rate differential between the pay fixed, receive variable rate on the interest rate swap agreements that were in effect (refer to Note 12 — Interest Rate Swap Agreements), combined, as well as the 1.0% facility fee for the 2007 Credit Facility as noted above. The following tables also include the range of interest rates on the debt, excluding the impact of swaps and unused commitment fees, if applicable:
|
|
|
Successor |
|
Predecessor |
|
||||
|
|
|
Period from |
|
Period from |
|
|
|
|
|
|
|
|
July 9 to |
|
January 1 to |
|
|
|
|
|
|
|
|
December 31, |
|
July 9, |
|
Year Ended December 31, |
|
||
|
|
|
2014 |
|
2014 |
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Interest Rate |
|
3.60% |
|
4.19% |
|
4.70% |
|
4.68% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Range of Interest Rates (excluding impact of swaps and unused commitment fees) |
|
2.73% to 3.76% |
|
3.15% to 5.15% |
|
3.16% to 4.38% |
|
3.21% to 4.63% |
|
Letter of credit
In conjunction with the Company entering into a long-term office space lease (See Note 22 - Commitments and Contingencies), the Company was required to provide a letter of credit to the landlord in lieu of a security deposit. As of September 21, 2005, the Company obtained an annually renewable unsecured letter of credit with DnB NOR Bank. The letter of credit outstanding was $300 as of December 31, 2014 and 2013 at a fee of 1% per annum. The letter of credit is cancelable on each renewal date provided the landlord is given 150 days minimum notice. This letter of credit has been securitized by $300 that was paid by the Company to DnB NOR Bank during the year ended December 31, 2012. This has been recorded as restricted cash included in total noncurrent assets in the consolidated balance sheet as of December 31, 2014 and 2013.
|
|||
11 — CONVERTIBLE SENIOR NOTES
The Company issued $125,000 of the 2010 Notes on July 27, 2010. The 2010 Notes mature on August 15, 2015 and are convertible into shares of the Company’s common stock at a conversion rate of approximately 51.0204 shares of common stock per (in whole dollars) $1,000 principal amount of the 2010 Notes (equivalent to an initial conversion price of $19.60 per share, representing a 22.5% conversion premium over the concurrent offering price of $16.00 per share of the Company’s common stock on July 21, 2010), subject to adjustment, based on the occurrence of certain events, including, but not limited to, (i) the issuance of certain dividends on our common stock, (ii) the issuance of certain rights, options or warrants, (iii) the effectuation of share splits or combinations, (iv) certain distributions of property and (v) certain issuer tender or exchange offers as described in the Indenture, with the amount due on conversion payable in shares, cash, or a combination thereof at the Company’s discretion. The total underlying shares of the 2010 Notes are 6,377,551 shares of common stock. Since the Company can settle a conversion of the 2010 Notes with shares, cash, or a combination thereof at its discretion, the Company allocated the convertible debt proceeds between the liability component and the embedded conversion option (i.e., the equity component). The liability component of the debt instrument is being accreted to par value using the effective interest method over the remaining life of the debt. This accretion is reported as a component of interest expense. The equity component is not subsequently revalued as long as it continues to qualify for equity treatment.
Upon issuance, the Company estimated the fair value of the liability component of the 2010 Notes, assuming a 10% non-convertible borrowing rate, to be $100,625 and the fair value of the conversion option to be $24,375. This amount was recorded as a debt discount and as an increase to additional paid-in capital as of the issuance date and the Company proportionately allocated approximately $918 of issuance costs against this equity component. The issuance costs allocated to the liability component of $3,637 along with the debt discount is being amortized to interest expense over the approximate 5-year period to the maturity of the 2010 Notes on August 15, 2015 resulting in additional interest expense in future periods. The issuance cost allocated to the liability component has been recorded as deferred financing costs; refer to Note 16 — Deferred Financing Costs.
The 2010 Notes were issued pursuant to an indenture, dated as of July 27, 2010 (the “Base Indenture”), by and between the Company and The Bank of New York Mellon, as trustee (the “Trustee”), supplemented by the First Supplemental Indenture dated as of June 27, 2010, by and between the Company and the Trustee (the “Supplemental Indenture,” and together with the Base Indenture, the “Indenture”). The 2010 Notes were represented by a global security, executed by the Company, in the form attached to the Supplemental Indenture. Interest was payable semi-annually in arrears on February 15 and August 15 of each year, which began on February 15, 2011. The 2010 Notes were to mature on August 15, 2015, subject to earlier repurchase or conversion upon the occurrence of certain events. Holders could have converted their 2010 Notes before February 15, 2015, only in certain circumstances determined by (i) the market price of the Company’s common stock, (ii) the trading price of the 2010 Notes, or (iii) the occurrence of specified corporate events. The 2010 Notes were subject to repurchase by the Company at the option of the holders following a fundamental change, as defined in the Indenture, including, but not limited to, (i) certain ownership changes, (ii) certain recapitalizations, mergers and dispositions, (iii) approval of any plan or proposal for the liquidation, or dissolution of the Company, and (iv) the Company’s common stock ceasing to be listed on any of the New York Stock Exchange or the Nasdaq Global Select Market, any of their respective successors or any other U.S. national securities exchange, at a price equal to 100% of the principal amount of the 2010 Notes plus accrued and unpaid interest up to the fundamental change repurchase date. After February 15, 2015, holders could convert their 2010 Notes at any time thereafter until the second scheduled trading day preceding maturity.
The Indenture included customary agreements and covenants by the Company, including with respect to events of default.
As noted in Note 1 — General Information, the filing of the Chapter 11 Cases by the Company on April 21, 2014 constituted an event of default with respect to the 2010 Notes. On that date, the Company ceased recording interest expense related to the 2010 Notes. During the period from January 1 to July 9, 2014, interest expense of $2,522, including the amortization of the discount of the liability components and the bond coupon interest expense, was not recorded by the Predecessor Company, which would have been incurred had the indebtedness not been reclassified as a Liability subject to compromise. On the Effective Date, when the Company emerged from Chapter 11, the 2010 Notes and the Indenture were fully satisfied and discharged.
The following tables provide additional information about the Company’s 2010 Notes.
|
|
|
Predecessor |
|
|
|
|
|
December 31, |
|
|
|
Carrying amount of the equity component (additional paid-in capital) |
|
$ |
24,375 |
|
|
Principal amount of the 2010 Notes |
|
125,000 |
|
|
|
Unamortized discount of the liability component |
|
9,119 |
|
|
|
Net carrying amount of the liability component |
|
115,881 |
|
|
|
|
|
Predecessor |
|
|||||||
|
|
|
Period from |
|
|
|
|||||
|
|
|
January 1 to |
|
|
|
|||||
|
|
|
July 9, |
|
Year Ended December 31, |
|
|||||
|
|
|
2014 (a) |
|
2013 |
|
2012 |
|
|||
|
Effective interest rate on liability component |
|
10.0 |
% |
10.0 |
% |
10.0 |
% |
|||
|
Cash interest expense recognized |
|
$ |
1,886 |
|
$ |
6,250 |
|
$ |
6,263 |
|
|
Non-cash interest expense recognized |
|
1,592 |
|
4,963 |
|
4,537 |
|
|||
|
Non-cash deferred financing amortization costs included in interest expense |
|
216 |
|
720 |
|
722 |
|
|||
(a)The amounts and percentage reflect amounts through April 21, 2014 since the Company ceased recording interest expense due to the Chapter 11 Cases.
Refer to Note 1 — General Information for additional information regarding defaults relating to the 2010 Notes
|
|||
12 - INTEREST RATE SWAP AGREEMENTS
As of March 31, 2014, the Company was in default under covenants of its 2007 Credit Facility due to the default on the scheduled debt amortization payment due on March 31, 2014. Refer to Note 1 — General Information for additional information regarding defaults relating to the swap. The default under the 2007 Credit Facility required the Company to elect interest periods of only one-month, therefore the Company no longer qualified for hedge accounting under the original designation and hedge accounting was terminated effective March 31, 2014. Additionally, the filing of the Chapter 11 Cases by the Company on the Petition Date constituted an event of default with respect to the outstanding interest rate swap with DNB Bank ASA. As a result, DNB Bank ASA terminated all transactions under the remaining swap agreement effective April 30, 2014 and filed a secured claim with the Bankruptcy Court of $5,622. The claim was paid to DNB Bank ASA by the Successor Company during the period from July 9 to December 31, 2014.
As of December 31, 2013, the Company had four interest rate swap agreements outstanding with DnB Bank ASA to manage interest costs and the risk associated with changing interest rates related to the Company’s 2007 Credit Facility. The total notional principal amount of the swaps at December 31, 2013 is $306,233 and the swaps had specified rates and durations. Three of the swaps that were outstanding as of December 31, 2013 expired during 2014 prior to the Petition Date.
The swap agreements held by the Predecessor Company synthetically converted variable rate debt to fixed rate debt at the fixed interest rate of the swap plus the Applicable Margin, as defined in the “2007 Credit Facility” section above in Note 10 — Debt.
The following table summarizes the interest rate swaps designated as cash flow hedges that were in place as of December 31, 2013 for the Predecessor Company:
|
|
|
Predecessor |
|
|||||||
|
|
|
December 31, |
|
|||||||
|
Interest Rate Swap Detail |
|
Notional |
|
|||||||
|
Trade |
|
Fixed |
|
Start Date |
|
End date |
|
Amount |
|
|
|
Date |
|
Rate |
|
of Swap |
|
of Swap |
|
Outstanding |
|
|
|
9/6/05 |
|
4.485 |
% |
9/14/05 |
|
7/29/15 |
|
$ |
106,233 |
|
|
3/29/06 |
|
5.25 |
% |
1/2/07 |
|
1/1/14 |
|
50,000 |
|
|
|
1/9/09 |
|
2.05 |
% |
1/22/09 |
|
1/22/14 |
|
100,000 |
|
|
|
2/11/09 |
|
2.45 |
% |
2/23/09 |
|
2/23/14 |
|
50,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
306,233 |
|
The following table summarizes the derivative asset and liability balances at December 31, 2013 for the Predecessor Company:
|
|
|
Liability Derivatives |
|
||||||||
|
|
|
Balance |
|
Fair Value |
|
Balance |
|
Fair Value |
|
||
|
|
|
Sheet |
|
December |
|
Sheet |
|
December 31, |
|
||
|
Derivatives designated as hedging instruments |
|
|
|
|
|
|
|
|
|
||
|
Interest rate contracts |
|
Fair value of derivative instruments (Current Assets) |
|
$ |
— |
|
Fair value of derivative instruments (Current Liabilities) |
|
$ |
6,975 |
|
|
Interest rate contracts |
|
Fair value of derivative instruments (Noncurrent Assets) |
|
— |
|
Fair value of derivative instruments (Noncurrent Liabilities) |
|
— |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Total derivatives designated as hedging instruments |
|
|
|
— |
|
|
|
6,975 |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Total Derivatives |
|
|
|
$ |
— |
|
|
|
$ |
6,975 |
|
The differentials to be paid or received for these swap agreements were recognized as an adjustment to Interest expense as incurred. The Company utilized cash flow hedge accounting for these swaps through March 31, 2014, whereby the effective portion of the change in value of the swaps was reflected as a component of AOCI. The ineffective portion is recognized as Other expense, which is a component of Other (expense) income. On March 31, 2014, the cash flow hedge accounting on the remaining swap agreement was discontinued. Once cash flow hedge accounting was discontinued, the changes in the fair value of the interest rate swaps were recorded in the Consolidated Statement of Operations in Interest expense and the remaining amounts included in AOCI were amortized to interest expense over the original term of the hedging relationship for the Predecessor Company.
The interest expense pertaining to the interest rate swaps for the Predecessor Company for the period from January 1 to July 9, 2014 and the years ended December 31, 2013 and 2012 was $2,580, $9,963 and $13,440, respectively.
The following tables present the impact of derivative instruments and their location within the Consolidated Statement of Operations for the Predecessor Company:
The Effect of Derivative Instruments on the Consolidated Statement of Operations
For the Period from January 1 to July 9, 2014
|
Derivatives in Cash |
|
Amount of |
|
Location of |
|
Amount of |
|
Location of |
|
Amount of |
|
|||
|
Relationships |
|
2014 |
|
Portion) |
|
2014 |
|
Portion) |
|
2014 |
|
|||
|
Interest rate contracts |
|
$ |
(179 |
) |
Interest Expense |
|
$ |
(2,580 |
) |
Other Income (Expense) |
|
$ |
— |
|
The Effect of Derivative Instruments on the Consolidated Statement of Operations
For the Year Ended December 31, 2013
|
Derivatives in Cash |
|
Amount of |
|
Location of |
|
Amount of |
|
Location of |
|
Amount of |
|
|||
|
Relationships |
|
2013 |
|
Portion) |
|
2013 |
|
Portion) |
|
2013 |
|
|||
|
Interest rate contracts |
|
$ |
(882 |
) |
Interest Expense |
|
$ |
(9,963 |
) |
Other Income (Expense) |
|
$ |
(4 |
) |
The Effect of Derivative Instruments on the Consolidated Statement of Operations
For the Year Ended December 31, 2012
|
Derivatives in Cash |
|
Amount of |
|
Location of |
|
Amount of |
|
Location of |
|
Amount of |
|
|||
|
Relationships |
|
2012 |
|
Portion) |
|
2012 |
|
Portion) |
|
2012 |
|
|||
|
Interest rate contracts |
|
$ |
(4,252 |
) |
Interest Expense |
|
$ |
(13,440 |
) |
Other Income (Expense) |
|
$ |
100 |
|
The Effect of Derivative Instruments on the Consolidated Statement of Operations
For the Period from January 1 to July 9, 2014 and for the Years Ended December 31, 2013 and 2012
|
|
|
|
|
Amount of |
|
|||||||
|
|
|
Location of |
|
For the Period |
|
|
|
|
|
|||
|
|
|
Gain (Loss) |
|
from January 1 to |
|
|
|
|||||
|
Derivatives not designated |
|
Recognized in Income |
|
July 9, |
|
For the Year Ended December 31, |
|
|||||
|
as Hedging Instruments |
|
on Derivative |
|
2014 |
|
2013 |
|
2012 |
|
|||
|
Interest rate contracts |
|
Interest Expense |
|
$ |
(225 |
) |
$ |
— |
|
$ |
— |
|
The Company was required to provide collateral in the form of vessel assets to support the interest rate swap agreements, excluding vessel assets of Baltic Trading. Prior to the termination of the 2007 Credit Facility on the Effective Date, the Company’s 35 vessels mortgaged under the 2007 Credit Facility served as collateral in the aggregate amount of $100,000.
|
|||
13 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The components of AOCI included in the accompanying consolidated balance sheets consist of net unrealized gain (loss) on cash flow hedges and net unrealized gains (losses) from investments in Jinhui stock and KLC stock for the Predecessor Company. For the Successor Company, the components of AOCI included in the accompanying consolidated balance sheets consists only of net unrealized gains (losses) from investments in Jinhui stock and KLC stock based on the revised cost basis recorded as part of fresh-start reporting.
Changes in AOCI by Component
For the Period from July 9 to December 31, 2014
Successor Company
|
|
|
Net Unrealized |
|
|
|
AOCI — July 9, 2014 |
|
$ |
— |
|
|
|
|
|
|
|
|
OCI before reclassifications |
|
(25,317 |
) |
|
|
Amounts reclassified from AOCI |
|
— |
|
|
|
Net current-period OCI |
|
(25,317 |
) |
|
|
|
|
|
|
|
|
AOCI — December 31, 2014 |
|
$ |
(25,317 |
) |
Changes in AOCI by Component
For the Period from January 1, 2012 to July 9, 2014
Predecessor Company
|
|
|
Net Unrealized |
|
Net Unrealized |
|
Total |
|
|||
|
AOCI — January 1, 2012 |
|
$ |
(25,245 |
) |
$ |
7,696 |
|
$ |
(17,549 |
) |
|
|
|
|
|
|
|
|
|
|||
|
OCI before reclassifications |
|
22,628 |
|
(3,480 |
) |
19,148 |
|
|||
|
Amounts reclassified from AOCI |
|
(13,440 |
) |
— |
|
(13,440 |
) |
|||
|
Net current-period OCI |
|
9,188 |
|
(3,480 |
) |
5,708 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
AOCI — December 31, 2012 |
|
$ |
(16,057 |
) |
$ |
4,216 |
|
$ |
(11,841 |
) |
|
|
|
|
|
|
|
|
|
|||
|
OCI before reclassifications |
|
19,044 |
|
56,482 |
|
75,526 |
|
|||
|
Amounts reclassified from AOCI |
|
(9,963 |
) |
— |
|
(9,963 |
) |
|||
|
Net current-period OCI |
|
9,081 |
|
56,482 |
|
65,563 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
AOCI — December 31, 2013 |
|
$ |
(6,976 |
) |
$ |
60,698 |
|
$ |
53,722 |
|
|
|
|
|
|
|
|
|
|
|||
|
OCI before reclassifications |
|
(179 |
) |
(25,766 |
) |
(25,945 |
) |
|||
|
Amounts reclassified from AOCI |
|
2,580 |
|
— |
|
2,580 |
|
|||
|
Net current-period OCI |
|
2,401 |
|
(25,766 |
) |
(23,365 |
) |
|||
|
|
|
|
|
|
|
|
|
|||
|
AOCI — July 9, 2014 |
|
$ |
(4,575 |
) |
$ |
34,932 |
|
$ |
30,357 |
|
Reclassifications Out of AOCI
Predecessor Company
|
|
|
Amount Reclassified from AOCI |
|
|
|
|||||||
|
|
|
Predecessor |
|
|
|
|||||||
|
|
|
For the Period |
|
|
|
|
|
|
|
|||
|
|
|
from January 1 to |
|
|
|
|
|
Affected Line Item in |
|
|||
|
|
|
July 9, |
|
For the Year Ended December 31, |
|
the Statement Where |
|
|||||
|
Details about AOCI Components |
|
2014 |
|
2013 |
|
2012 |
|
Net Loss is Presented |
|
|||
|
Gains and losses on cash flow hedges Interest rate contracts |
|
$ |
2,580 |
|
$ |
9,963 |
|
$ |
13,440 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total reclassifications for the period |
|
$ |
2,580 |
|
$ |
9,963 |
|
$ |
13,440 |
|
|
|
|
|||
14 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values and carrying values of the Company’s financial instruments at December 31, 2014 and 2013 which are required to be disclosed at fair value, but not recorded at fair value, are noted below.
|
|
|
Successor |
|
Predecessor |
|
||||||||
|
|
|
December 31, 2014 |
|
December 31, 2013 |
|
||||||||
|
|
|
Carrying |
|
Fair Value |
|
Carrying |
|
Fair Value |
|
||||
|
Cash and cash equivalents |
|
$ |
83,414 |
|
$ |
83,414 |
|
$ |
122,722 |
|
$ |
122,722 |
|
|
Restricted cash |
|
29,695 |
|
29,695 |
|
10,150 |
|
10,150 |
|
||||
|
Floating rate debt |
|
430,135 |
|
430,135 |
|
1,480,064 |
|
See Below |
|
||||
|
2010 Notes |
|
— |
|
— |
|
115,881 |
|
63,438 |
|
||||
The fair value of the floating rate debt under the Amended and Restated $100 Million Term Loan Facility and the Amended and Restated $253 Million Term Loan Facility are based on rates obtained upon our emergence from Chapter 11 on the Effective Date. The 2007 Credit Facility was terminated on the Effective Date; however, a portion of the floating rate debt of the 2007 Credit Facility which was outstanding as of December 31, 2013 was traded in a private transaction for an amount that is not determinable by the Company, which Management believed was lower than the debt’s current carrying value as of December 31, 2013. The 2010 Baltic Trading Credit Facility was refinanced by the Baltic Trading $148 Million Credit Facility which was entered into December 31, 2014. On January 7, 2015, Baltic Trading settled the outstanding debt under the 2010 Baltic Trading Credit Facility with proceeds from the Baltic Trading $148 Million Credit Facility, therefore Management believes the floating debt outstanding under the 2010 Baltic Trading Credit Facility approximates its fair value as of December 31, 2014. The fair value of the Baltic Trading $22 Million Term Loan Facility and the Baltic Trading $44 Million Term Loan Facility is based on rates that Baltic Trading recently obtained upon the effective dates of these facilities on August 30, 2013 and December 3, 2013, respectively. Lastly, the fair value of the floating rate debt outstanding under the 2014 Baltic Trading Term Loan Facilities is based on rates that Baltic Trading recently obtained upon the effective date of these facilities on October 8, 2014. Refer to Note 10 — Debt for further information. Additionally, the Company considers its creditworthiness in determining the fair value of the floating rate debt under the credit facilities. The carrying value approximates the fair market value for these floating rate loans, except for the 2007 Credit Facility as of December 31, 2013. The fair value of the convertible senior notes payable represents the market value based on recent transactions of the 2010 Notes at December 31, 2013 without bifurcating the value of the conversion option. The fair value of the interest rate swaps as of December 31, 2013 is the estimated amount the Company would pay to terminate the swap agreements at the reporting date, taking into account current interest rates and the creditworthiness of both the swap counterparty and the Company. Refer to Note 11 — Convertible Senior Notes and Note 12 — Interest Rate Swap Agreements for further information regarding the effect of the Chapter 11 Cases. The carrying amounts of the Company’s other financial instruments at December 31, 2014 and 2013 (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 assumptions (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 December 31, 2014 and 2013, the fair values of the Company’s financial assets and liabilities are categorized as follows:
|
|
|
Successor |
|
|||||||
|
|
|
December 31, 2014 |
|
|||||||
|
|
|
Total |
|
Quoted |
|
Significant |
|
|||
|
Investments |
|
$ |
26,486 |
|
$ |
26,486 |
|
$ |
— |
|
|
|
|
Predecessor |
|
|||||||
|
|
|
December 31, 2013 |
|
|||||||
|
|
|
Total |
|
Quoted |
|
Significant |
|
|||
|
Investments |
|
$ |
77,570 |
|
$ |
77,570 |
|
$ |
— |
|
|
Derivative instruments — liability position |
|
6,975 |
|
— |
|
6,975 |
|
|||
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. The Company’s only interest rate derivative instruments is a pay-fixed, receive-variable interest rate swaps based on LIBOR which was outstanding as of December 31, 2013. The Company has elected to use the income approach to value the derivatives, using observable Level 2 market inputs at measurement date and standard valuation techniques to convert future amounts to a single present amount assuming that participants are motivated, but not compelled to transact. Level 2 inputs for the valuations are limited to quoted prices for similar assets or liabilities in active markets (specifically futures contracts on LIBOR for the first two years) and inputs other than quoted prices that are observable for the asset or liability (specifically LIBOR cash and swap rates and credit spreads at commonly quoted intervals). Mid-market pricing is used as a practical expedient for fair value measurements. Refer to Note 12 — Interest Rate Swap Agreements for further information regarding the Company’s interest rate swap agreements. ASC 820-10 states that the fair value measurement of an asset or liability must reflect the nonperformance risk of the entity and the counterparty. Therefore, the impact of the counterparty’s creditworthiness when in an asset position and the Company’s creditworthiness when in a liability position have also been factored into the fair value measurement of the derivative instruments. This credit valuation adjustment did not have a material impact on the fair value of these derivative instruments as of December 31, 2013. Refer to Note 1 — General Information for additional information regarding defaults relating to the swap. 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 2010 Notes are publicly traded in the over-the-counter market; however, they are not considered to be actively traded. As such, the 2010 Notes are considered to be a Level 2 item as of December 31, 2013. The interest rate swap agreement and 2010 Notes were not outstanding as of December 31, 2014. The Company did not have any Level 3 financial assets or liabilities during the years ended December 31, 2014 and 2013.
|
|||
15 - PREPAID EXPENSES AND OTHER CURRENT AND NONCURRENT ASSETS
Prepaid expenses and other current assets consist of the following:
|
|
|
Successor |
|
Predecessor |
|
||
|
|
|
December 31, |
|
December |
|
||
|
Lubricant inventory, fuel oil and diesel oil inventory and other stores |
|
$ |
11,018 |
|
$ |
11,342 |
|
|
Prepaid items |
|
4,638 |
|
5,000 |
|
||
|
Insurance receivable |
|
1,951 |
|
1,096 |
|
||
|
Other |
|
4,816 |
|
1,627 |
|
||
|
Total prepaid expenses and other current assets |
|
$ |
22,423 |
|
$ |
19,065 |
|
Other noncurrent assets in the amount of $514 at December 31, 2014 and 2013 represent the security deposit related to the operating lease entered into effective April 4, 2011. Refer to Note 22 — Commitments and Contingencies for further information related to the lease agreement.
|
|||
16 — DEFERRED FINANCING COSTS
Deferred financing costs includes fees, commissions and legal expenses associated with securing loan facilities and other debt offerings and amending existing loan facilities. These costs are amortized over the life of the related debt and are included in interest expense. Refer to Note 10 — Debt for further information regarding the existing loan facilities.
Total net deferred financing costs consist of the following as of December 31, 2014 and 2013:
|
|
|
Successor |
|
Predecessor |
|
||
|
|
|
December 31, |
|
December 31, |
|
||
|
|
|
|
|
|
|
||
|
2007 Credit Facility |
|
$ |
— |
|
$ |
29,568 |
|
|
$ 100 Million Term Loan Facility |
|
1,492 |
|
1,783 |
|
||
|
$ 253 Million Term Loan Facility |
|
3,135 |
|
4,708 |
|
||
|
2010 Notes |
|
— |
|
3,637 |
|
||
|
2010 Baltic Trading Credit Facility |
|
— |
|
3,339 |
|
||
|
Baltic Trading $148 Million Credit Facility |
|
3,233 |
|
— |
|
||
|
Baltic Trading $22 Million Term Loan Facility |
|
529 |
|
518 |
|
||
|
Baltic Trading $44 Million Term Loan Facility |
|
758 |
|
737 |
|
||
|
2014 Baltic Trading Term Loan Facilities |
|
1,853 |
|
— |
|
||
|
Total deferred financing costs |
|
11,000 |
|
44,290 |
|
||
|
Less: accumulated amortization |
|
729 |
|
22,279 |
|
||
|
Total |
|
$ |
10,271 |
|
$ |
22,011 |
|
Amortization expense of deferred financing costs for the Successor Company for the period from July 9 to December 31, 2014 was $845. Amortization expense of deferred financing costs for the Predecessor Company for the period from January 1 to July 9, 2014 and for the years ended December 31, 2013 and 2012 was $4,461, $9,116 and $5,413, respectively. This amortization expense is recorded as a component of interest expense in the Consolidated Statements of Operations.
On the Effective Date, the Company eliminated the net unamortized deferred financing costs for the 2007 Credit Facility and the 2010 Notes and classified the changes as Restructuring items, net in the Consolidated Statements of Operation for the Predecessor Company as both the 2007 Credit Facility and 2010 Notes were terminated as part of the Plan. Additionally, the unamortized deferred financing costs for the $100 Million Term Loan Facility and the $253 Million Term Loan Facility prior to their Restatements and Amendment pursuant to the Plan were eliminated and the Company classified the changes to Restructuring items, net in the Consolidated Statements of Operation for the Predecessor Company. Fees and legal expenses for securing the Amended and Restated $100 Million and $253 Million Term Loan Facilities have been capitalized as deferred financing costs and will be amortized over the extended term of the respective loans.
Baltic Trading entered into the Baltic Trading $148 Million Credit Facility on December 31, 2014, which was used to refinance the outstanding indebtedness under the 2010 Baltic Trading Credit Facility. As such, on December 31, 2014, the net unamortized deferred financing costs associated with the 2010 Baltic Trading Credit Facility are going to be amortized over the life of the Baltic Trading $148 Million Credit Facility. (Refer to Note 10 — Debt)
|
|||
17 - FIXED ASSETS
Fixed assets consist of the following:
|
|
|
Successor |
|
Predecessor |
|
||
|
|
|
December 31, |
|
December |
|
||
|
Fixed assets, at cost: |
|
|
|
|
|
||
|
Vessel equipment |
|
$ |
229 |
|
$ |
4,323 |
|
|
Leasehold improvements |
|
— |
|
2,679 |
|
||
|
Furniture and fixtures |
|
462 |
|
786 |
|
||
|
Computer equipment |
|
129 |
|
754 |
|
||
|
Total costs |
|
820 |
|
8,542 |
|
||
|
Less: accumulated depreciation and amortization |
|
119 |
|
3,438 |
|
||
|
Total |
|
$ |
701 |
|
$ |
5,104 |
|
Refer to Note 4 — Cash Flow Information for information regarding the reclassification from fixed assets to vessels assets by the Predecessor Company during the period from January 1 to July 9, 2014.
|
|||
18 — ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
|
|
|
Successor |
|
Predecessor |
|
||
|
|
|
December 31, |
|
December 31, |
|
||
|
Accounts payable |
|
$ |
9,921 |
|
$ |
5,643 |
|
|
Accrued general and administrative expenses |
|
5,894 |
|
8,960 |
|
||
|
Accrued vessel operating expenses |
|
12,402 |
|
12,756 |
|
||
|
Total |
|
$ |
28,217 |
|
$ |
27,359 |
|
|
|||
19 — LIABILITIES SUBJECT TO COMPROMISE
As a result of the filing of the Chapter 11 Cases on April 21, 2014, the payment of pre-petition indebtedness is subject to compromise or other treatment under a plan of reorganization. Generally, actions to enforce or otherwise effect payment of pre-bankruptcy filing liabilities are stayed. Refer to the Financial Statement Presentation section of Note 1 — General Information for the allocation of the reinstatement of the Liabilities subject to compromise on the Effective Date.
As of July 9, 2014, Liabilities subject to compromise for the Predecessor Company consist of the following:
|
|
|
Predecessor |
|
|
|
|
|
July 9, 2014 |
|
|
|
2007 Credit Facility |
|
$ |
1,055,912 |
|
|
$ 100 Million Term Loan Facility |
|
73,561 |
|
|
|
$ 253 Million Term Loan Facility |
|
175,718 |
|
|
|
Interest payable |
|
13,199 |
|
|
|
Terminated interest rate swap liability |
|
5,622 |
|
|
|
Convertible senior note payable |
|
117,473 |
|
|
|
Bond coupon interest payable |
|
1,105 |
|
|
|
Lease obligation |
|
815 |
|
|
|
Pre-petition accounts payable |
|
41 |
|
|
|
Total |
|
$ |
1,443,446 |
|
|
|||
20 — 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 period from July 9 to December 31, 2014, the Successor Company earned $98,817 of voyage revenue. For the period from January 1 to July 9, 2014 and for the years ended December 31, 2013 and 2012, the Predecessor Company earned $118,759, $224,179 and $223,159, respectively. There was no profit sharing revenue earned during the years ended December 31, 2014, 2013 and 2012. Future minimum time charter revenue, based on vessels committed to noncancelable time charter contracts as of February 11, 2015, is expected to be $6,024 during 2015, 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.
|
|||
21 — REORGANIZATION ITEMS, NET
Reorganization items, net represent 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:
|
|
|
Successor |
|
Predecessor |
|
||
|
|
|
Period from |
|
Period from |
|
||
|
Professional fees incurred |
|
$ |
968 |
|
$ |
34,981 |
|
|
Trustee fees incurred |
|
623 |
|
251 |
|
||
|
Total reorganization fees |
|
$ |
1,591 |
|
$ |
35,232 |
|
|
|
|
|
|
|
|
||
|
Gain on settlement of liabilities subject to compromise |
|
$ |
— |
|
$ |
(1,187,689 |
) |
|
Net gain on debt and equity discharge and issuance |
|
— |
|
(775,086 |
) |
||
|
Fresh-start reporting adjustments |
|
— |
|
1,045,376 |
|
||
|
Total fresh-start adjustment |
|
$ |
— |
|
$ |
(917,399 |
) |
|
|
|
|
|
|
|
||
|
Total reorganization items, net |
|
$ |
1,591 |
|
$ |
(882,167 |
) |
|
|||
22 — COMMITMENTS AND CONTINGENCIES
In September 2005, the Company entered into a 15-year lease for office space in New York, New York for which there was a free rental period from September 1, 2005 to July 31, 2006. On January 6, 2012, the Company ceased the use of this space. During the period from January 1 to July 9, 2014 and during the years ended December 31, 2013 and 2012, the Predecessor Company recorded net rent expense of ($41), $1,264 and $92, respectively, representing the adjustment to and the present value of the Company’s estimated remaining rent expense for the duration of the lease after taking into account estimated future sublease income based on the sublease agreement entered into effective November 1, 2013 and deferred rent on the facility. The current and long-term lease obligations related to this lease agreement as of December 31, 2013 of $176 and $744, respectively, are recorded in the consolidated balance sheets in Current portion of lease obligations and Long-term lease obligations, respectively, for the Predecessor Company. Pursuant to the Plan that was approved by the Bankruptcy Court, the Debtors rejected the lease agreement on the Effective Date and the Company believes that it will owe the lessor the remaining liability.
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 are $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 commences immediately upon the expiration of such sub-sublease agreements, 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 for the Predecessor Company. 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 December 31, 2014 and 2013 of $390 and $2,370, respectively. Rent expense pertaining to this lease recorded by the Successor Company for the period from July 9 to December 31, 2014 was $865. Rent expense pertaining to this lease recorded by the Predecessor Company for the period from January 1 to July 9, 2014 and for the years ended December 31, 2013 and 2012 was $813 $1,558 and $1,558, respectively.
Future minimum rental payments on the above lease for the next five years and thereafter are as follows: $1,037 for 2015, $1,076 annually for 2016 and 2017, $916 for 2018, $2,230 for 2019 and a total of $13,360 for the remaining term of the lease.
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 February 5, 2010, the rehabilitation plan submitted by Samsun was approved by the South Korean courts. As part of the rehabilitation process, the Company’s claim of $17,212 will be settled in the following manner; 34.0%, or $5,852, will be paid in cash in annual installments on December 30th of each year from 2010 through 2019 ranging from 8.0% to 17.0%; the remaining 66.0%, or $11,360, was converted to Samsun shares at a specified value per share. During the year ended December 31, 2014, the Company received $296 and $234 from Samsun for the remainder of the payment that was due on December 30, 2012, including interest, and 50% of the payment that was due on December 30, 2013, respectively. During the year ended December 31, 2013, there were no payments remitted by Samsun. Lastly, during the year ended December 31, 2012, the Company received $263 from Samsun which represented 50% of the payment due on December 30, 2012. As such, during the years ended December 31, 2014, 2013 and 2012, $530, $0 and $263, respectively, have been recorded as other operating income.
During January 2011, the Genco Success, a 1997-built Handymax vessel, was on charter to KLC when KLC filed for a rehabilitation application with South Korean courts. The original rehabilitation plan submitted by KLC was approved by the South Korean courts on July 3, 2012. However, on October 4, 2013, a final revised rehabilitation plan was approved by the South Korean courts which resulted in a settlement payment to be paid to the Company of $21 in addition to 3,355 shares of stock of KLC. The Company valued the shares of KLC stock using the fair value on the date that the shares were received which resulted in other operating income of $100. These shares of KLC stock have been classified as AFS, refer to Note 7 — Investments for further information. As per the original rehabilitation plan, the Company received a payment of $2 from KLC on December 30, 2012. As such, during the years ended December 31, 2014, 2013 and 2012, $0, $121 and $2, respectively, have been recorded as other operating income.
|
|||
23 — SAVINGS PLAN
In August 2005, the Company established a 401(k) plan that is available to full-time employees who meet the plan’s eligibility requirements. This 401(k) plan is a defined contribution plan, which permits employees to make contributions up to maximum percentage and dollar limits allowable by IRS Code Sections 401(k), 402(g), 404 and 415 with the Company matching up to the first six percent of each employee’s salary on a dollar-for-dollar basis. The matching contribution vests immediately. For the period from July 9 to December 31, 2014, the Successor Company’s matching contributions to this plan were $181. For the period from January 1 to July 9, 2014 and the years ended December 31, 2013 and 2012, the Predecessor Company’s matching contributions to this plan were $131, $301 and $296, respectively.
|
|||
24 — STOCK-BASED COMPENSATION
Genco Shipping & Trading — Predecessor Company
On July 12, 2005, the Company’s Board of Directors approved the Genco Shipping and Trading Limited 2005 Equity Incentive Plan (the “2005 GS&T Plan”). The aggregate number of shares of common stock available for award under the 2005 GS&T Plan is 2,000,000 shares. Additionally, on May 17, 2012, at the Company’s 2012 Annual Meeting of Shareholders, the Company’s shareholders approved the Genco Shipping and Trading Limited 2012 Equity Incentive Plan (the “2012 GS&T Plan”). The aggregate number of shares of common stock available for award under the 2012 GS&T Plan is 3,000,000 shares. Under these plans, 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 employees, directors and consultants who the compensation committee (or other committee or the Board of Directors) believes are key to the Company’s success. Awards may consist of incentive stock options, nonqualified stock options, stock appreciation rights, dividend equivalent rights, nonvested stock, unrestricted stock and performance shares. Under the Plan, on the Effective Date, any unvested shares under the 2005 and 2012 GS&T Plans were deemed vested automatically and Equity Warrants were issued. Refer to “Successor Company Equity Warrant Agreement” section in Note 1 — General Information for further information. The vesting of these shares is included in the $2,403 of nonvested stock amortization expense recorded by the Predecessor Company during the period from January 1 to July 9, 2014 and is included in the table below.
Under the 2005 and 2012 GS&T Plans, grants of nonvested common stock to executives and employees vested ratably on each of the four anniversaries of the determined vesting date. Grants of nonvested common stock issued under the 2005 and 2012 GS&T Plans to directors vested the earlier of the first anniversary of the grant date or the date of the next annual shareholders’ meeting, which are typically held during May. Grants of nonvested common stock issued under the 2005 and 2012 GS&T Plans to the Company’s Chairman, Peter C. Georgiopoulos, that were not granted as part of grants made to all directors, excluding the grants made on December 13, 2012, December 28, 2011 and December 21, 2010, vested ratably on each of the ten anniversaries of the vesting date.
The table below summarizes the Predecessor Company’s nonvested stock awards for the period from January 1, 2012 to July 9, 2014 under the 2005 and 2012 GS&T Plans:
|
|
|
Number of |
|
Weighted |
|
|
|
Outstanding at January 1, 2014 - Predecessor |
|
880,465 |
|
$ |
7.77 |
|
|
Granted |
|
— |
|
— |
|
|
|
Vested |
|
(880,465 |
) |
7.77 |
|
|
|
Forfeited |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
Outstanding at July 9, 2014 - Predecessor |
|
— |
|
$ |
— |
|
|
|
|
Year Ended December 31, |
|
||||||||
|
|
|
2013 |
|
2012 |
|
||||||
|
|
|
Number |
|
Weighted |
|
Number of |
|
Weighted |
|
||
|
Outstanding at January 1 - Predecessor |
|
1,108,762 |
|
$ |
9.47 |
|
936,787 |
|
$ |
14.06 |
|
|
Granted |
|
200,634 |
|
1.57 |
|
464,175 |
|
2.71 |
|
||
|
Vested |
|
(407,431 |
) |
9.46 |
|
(290,700 |
) |
13.49 |
|
||
|
Forfeited |
|
(21,500 |
) |
5.53 |
|
(1,500 |
) |
6.39 |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Outstanding at December 31 - Predecessor |
|
880,465 |
|
$ |
7.77 |
|
1,108,762 |
|
$ |
9.47 |
|
The total fair value of shares that vested under the 2005 and 2012 GS&T Plans during the period from January 1 to July 9, 2014 and during the years ended December 31, 2013 and 2012 was $691, $943 and $733, 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 period from January 1 to July 9, 2014 and for the years ended December 31, 2013 and 2012, the Predecessor Company recognized nonvested stock amortization expense for the 2005 and 2012 GS&T Plans, which is included in general, administrative and management fees, as follows:
|
|
|
Predecessor |
|
|||||||
|
|
|
Period from |
|
Year Ended December 31, |
|
|||||
|
|
|
2014 |
|
2013 |
|
2012 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
General, administrative and management fees |
|
$ |
2,403 |
|
$ |
2,924 |
|
$ |
4,087 |
|
Genco Shipping & Trading — Successor Company
2014 Management Incentive Plan
On the Effective Date, pursuant to the Chapter 11 Plan, the Company adopted the MIP (as defined in Note 1 — General Information). An aggregate of 9,668,061 shares of Common Stock were available for award under the MIP, which were awarded in the form of restricted stock grants and awards of 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, which are exercisable for 2,380,664, 2,467,009, and 3,709,788 shares and have exercise prices of $25.91 (the “$25.91 Warrants”), $28.73 (the “$28.73 Warrants”) and $34.19 (the “$34.19 Warrants”), respectively. The fair value of each warrant upon emergence from bankruptcy was $7.22 for the $25.91 Warrants, $6.63 for the $28.73 Warrants and $5.63 for the $34.19 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 period from August 7, 2014 to December 31, 2014, the Successor Company recognized amortization expense of the fair value of these warrants of $13,390 which is included in the Company’s Consolidated Statements of Operations as a component of General, administrative and management fees. Amortization of the unamortized stock-based compensation balance of $41,046 as of December 31, 2014 is expected to be expensed $25,941, $11,496, and $3,609 during the years ending December 31, 2015, 2016 and 2017, respectively. The following table summarizes all the warrant activity for the period July 9, 2014 to December 31, 2014:
|
|
|
Number of |
|
Weighted |
|
Weighted |
|
||
|
Outstanding at July 9, 2014 - Successor |
|
— |
|
$ |
— |
|
$ |
— |
|
|
Granted |
|
8,557,461 |
|
30.31 |
|
6.36 |
|
||
|
Exercised |
|
— |
|
— |
|
— |
|
||
|
Forfeited |
|
— |
|
— |
|
— |
|
||
|
|
|
|
|
|
|
|
|
||
|
Outstanding at December 31, 2014 - Successor |
|
8,557,461 |
|
$ |
30.31 |
|
$ |
6.36 |
|
The following table summarizes certain information about the warrants outstanding as of December 31, 2014:
|
|
|
Warrants Outstanding, |
|
Warrants Exercisable, |
|
||||||||
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
||
|
|
|
|
|
Weighted |
|
Average |
|
|
|
Weighted |
|
||
|
Weighted |
|
Number of |
|
Average |
|
Remaining |
|
Number of |
|
Average |
|
||
|
$ |
30.31 |
|
8,557,461 |
|
$ |
30.31 |
|
5.60 |
|
— |
|
— |
|
On August 6, 2014, the Successor Company’s Board of Directors approved the 2014 Equity Incentive Plan for an aggregate of 250,000,000, which included the shares issued for the Successor Company pursuant to the Plan. The nonvested stock awards granted under the 2014 MIP Plan will vest ratably on each of the three anniversaries of the determined vesting date of August 7, 2014. The table below summarizes the Successor Company’s nonvested stock awards for the period from July 9 to December 31, 2014 that were issued under the 2014 MIP Plan:
|
|
|
Number of |
|
Weighted |
|
|
|
Outstanding at July 9, 2014 - Successor |
|
— |
|
$ |
— |
|
|
Granted |
|
1,110,600 |
|
20.00 |
|
|
|
Vested |
|
— |
|
— |
|
|
|
Forfeited |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2014 - Successor |
|
1,110,600 |
|
$ |
20.00 |
|
The total fair value of restricted shares that vested under the 2014 MIP Plan during the period from July 9 to December 31, 2014 for the Successor Company was $0. 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 period from July 9 to December 31, 2014, the Successor Company recognized nonvested stock amortization expense for the 2014 MIP Plan restricted shares, which is included in General, administrative and management fees, as follows:
|
|
|
Successor |
|
|
|
|
|
Period from |
|
|
|
General, administrative and management fees |
|
$ |
5,464 |
|
The Company is amortizing these grants over the applicable vesting periods, net of anticipated forfeitures. As of December 31, 2014, unrecognized compensation cost of $16,748 related to nonvested stock will be recognized over a weighted-average period of 2.6 years.
Baltic Trading Limited
On March 3, 2010, Baltic Trading’s Board of Directors approved the Baltic Trading Limited 2010 Equity Incentive Plan (the “Baltic Trading Plan”). On March 13, 2014, Baltic Trading’s Board of Directors approved an amendment to 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. Under the Baltic Trading Plan, Baltic Trading’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 officers, directors, and executive, managerial, administrative and professional employees of and consultants to Baltic Trading or the Company whom the compensation committee (or other committee of the Board of Directors) believes are key to Baltic Trading’s success. Awards may consist of restricted stock, restricted stock units, stock options, stock appreciation rights and other stock or cash-based awards.
Grants of restricted stock to Peter C. Georgiopoulos, Chairman of the Board of Baltic Trading, and John Wobensmith, President and Chief Financial Officer of Baltic Trading, made in connection with Baltic Trading’s IPO vest ratably on each of the first four anniversaries of March 15, 2010. Grants of restricted common stock to Baltic Trading’s directors made following Baltic Trading’s IPO (which exclude the foregoing grant to Mr. Georgiopoulos) vest the earlier of the first anniversary of the grant date or the date of Baltic Trading’s next annual shareholders’ meeting. Grants of restricted stock made to executives and the Chairman of the Board not in connection with the Company’s IPO vest ratably on each of the first four anniversaries of the determined vesting date.
The following table presents a summary of Baltic Trading’s nonvested stock awards for the three years ended December 31, 2014 under the Baltic Trading Plan:
|
|
|
Year Ended December 31, |
|
|||||||||||||
|
|
|
2014 |
|
2013 |
|
2012 |
|
|||||||||
|
|
|
Number |
|
Weighted |
|
Number |
|
Weighted |
|
Number |
|
Weighted |
|
|||
|
Outstanding at January 1 |
|
1,381,429 |
|
$ |
6.03 |
|
664,249 |
|
$ |
7.70 |
|
545,750 |
|
$ |
11.60 |
|
|
Granted |
|
1,086,345 |
|
2.61 |
|
998,680 |
|
5.60 |
|
299,999 |
|
3.04 |
|
|||
|
Vested |
|
(525,930 |
) |
7.21 |
|
(281,500 |
) |
8.48 |
|
(181,500 |
) |
11.71 |
|
|||
|
Forfeited |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Outstanding at December 31 |
|
1,941,844 |
|
$ |
3.80 |
|
1,381,429 |
|
$ |
6.03 |
|
664,249 |
|
$ |
7.70 |
|
The total fair value of shares that vested under the Baltic Trading Plan during the period from July 9 to December 31, 2014, the period from January 1 to July 9, 2014 and during the years ended December 31, 2013 and 2012 was $1,168, $1,143, $1,194 and $663. The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date.
The Successor Company and the Predecessor Company recognized nonvested stock amortization expense for the Baltic Trading Plan, which is included in General, administrative and management fees, as follows:
|
|
|
Successor |
|
Predecessor |
|
||||||||
|
|
|
Period from |
|
Period from |
|
Year Ended December 31, |
|
||||||
|
|
|
2014 |
|
2014 |
|
2013 |
|
2012 |
|
||||
|
General, administrative and management fees |
|
$ |
1,551 |
|
$ |
1,949 |
|
$ |
1,558 |
|
$ |
1,777 |
|
The Company is amortizing Baltic Trading’s grants over the applicable vesting periods, net of anticipated forfeitures. As of December 31, 2014, unrecognized compensation cost of $5,273 related to nonvested stock will be recognized over a weighted-average period of 3.28 years.
|
|||
25 — SHARE REPURCHASE PROGRAM
On February 13, 2008, the Company’s Board of Directors approved a share repurchase program for up to a total of $50,000 of the Company’s common stock. Share repurchases were to be made from time to time for cash in open market transactions at prevailing market prices or in privately negotiated transactions. The timing and amount of purchases under the program will be determined by management based upon market conditions and other factors. Purchases may be made pursuant to a program adopted under Rule 10b5-1 under the Securities Exchange Act. The program does not require the Company to purchase any specific number or amount of shares and may be suspended or reinstated at any time in the Company’s discretion and without notice. Prior to the termination of the 2007 Credit Facility pursuant to the Plan, repurchases were subject to restrictions under the 2007 Credit Facility. The 2007 Credit Facility was amended as of February 13, 2008 to permit the share repurchase program and provide that the dollar amount of shares repurchased is counted toward the maximum dollar amount of dividends that may be paid in any fiscal quarter. Subsequently, on January 26, 2009, the Company entered into the 2009 Amendment which amended the 2007 Credit Facility to require the Company to suspend all share repurchases until the Company can represent that it is in a position to again satisfy the collateral maintenance covenant. Refer to Note 10 —Debt.
Since the inception of its share repurchase program through July 9, 2014, the Predecessor Company repurchased and retired 278,300 shares of its common stock for $11,500. No share repurchases were made by the Predecessor Company during the period from January 1 to July 9, 2014 and during the years ended December 31, 2013 and 2012.
|
|||
26 - LEGAL PROCEEDINGS
Refer to Note 1 — General Information for information concerning the Chapter 11 Cases.
On March 28, 2014, the Genco Auvergne was arrested due to a disputed claim with the charterer of one of the Company’s other vessels, namely the Genco Ardennes. In order for the Company to release the Genco Auvergne from its arrest, the Company entered into a cash collateralized $900 bank guarantee with Skandinaviska Enskilda Banken AB (the “SEB Bank Guarantee”) on April 3, 2014. The vessel has since been released from its arrest and the bank guarantee will remain in an escrow account until the arbitration related to this case is completed. The SEB Bank Guarantee resulted in additional indebtedness by the Company. As the Company was in default under the covenants of its 2007 Credit Facility due to the default on a scheduled debt amortization payment due on March 31, 2014, on April 3, 2014 the Company received a consent from the lenders under the 2007 Credit Facility to incur this additional indebtedness. Also, under the $253 Million Term Loan Facility for which the Genco Auvergne is collateralized, the Company may not incur additional indebtedness related to its collateralized vessels under this facility. The Company also received a consent from the lenders under the $253 Million Term Loan Facility on April 3, 2014 in order to enter the SEB Bank Guarantee. The $900 to collateralize the bank guarantee has been recorded as Prepaid expenses and other current assets in the Consolidated Balance Sheets as of December 31, 2014.
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.
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27 — RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS
Subsequent to the issuance of the Company’s 2014 consolidated financial statements, the Company became aware of an error in its allocation of goodwill impairment to noncontrolling interest recognized in December 2014 by the Company associated with its consolidated subsidiary Baltic Trading (refer to Note 5 — Goodwill Impairment). As a result of this error, amounts allocated to the Company’s noncontrolling interest in the Company’s previously reported Consolidated Statement of Operations of the Successor Company for the period from July 9, 2014 to December 31, 2014 and the Company’s previously reported Consolidated Balance Sheet of the Successor Company as of December 31, 2014 were incorrect.
The error affected the Company’s previously reported Net loss allocable to GS&T and the noncontrolling interest and Net loss per share allocable to GS&T on the face of the Company’s Consolidated Statement of Operations of the Successor Company for the period from July 9, 2014 to December 31, 2014; and the Company’s previously reported allocation of shareholders’ equity to the shareholders of the Company and the noncontrolling interest in the face of the Company’s Consolidated Balance Sheet of the Successor Company as of December 31, 2014. The error did not impact the Company’s previously reported consolidated revenues, operating expenses, net loss or cash flows for the Successor Company for the period from July 9, 2014 to December 31, 2014; or the Company’s previously reported consolidated assets, liabilities or total equity of the Successor Company as of December 31, 2014.
The Company determined its previously issued consolidated financial statements for the year ended December 31, 2014 should be restated to correct for this error. The effect of correcting for this error resulted in; 1) a decrease in previously reported net loss attributable to GS&T and an increase in previously reported Net loss attributable to noncontrolling interest for the period from July 9, 2014 to December 31, 2014 by the same amount; and 2) an increase in GS&T’s equity attributable to its shareholders and a decrease in the Noncontrolling interest in the Consolidated Balance Sheet as of December 31, 2014 by the same amount. The effect of correcting these errors is summarized as follows:
|
· |
For the period from July 9, 2014 to December 31, 2014, the previously reported Net loss attributable to GS&T decreased by $21,823 to $182,294 from $204,117 as a result of the restatement. This resulted in a change in Net loss per share from $3.38 to $3.02 as a result of the restatement. After the restatement, the Net loss attributable to noncontrolling interest for the period from July 9, 2014 to December 31, 2014 increased by $21,823 to $31,064 from $9,241. The Company’s consolidated Net loss for the period from July 9, 2014 to December 31, 2014 was unchanged at $213,358. |
|
· |
As of December 31, 2014, the previously reported equity recorded by GS&T attributable to its shareholders increased by $21,823 to $1,044,201 from $1,022,378 as a result of the restatement. After restatement, as of December 31, 2014, the noncontrolling interest’s equity decreased by $21,823 to $248,573 from $270,396. The Company’s consolidated total equity in its Consolidated Balance Sheet as of December 31, 2014 was unchanged at $1,292,774. |
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28 — UNAUDITED QUARTERLY RESULTS OF OPERATIONS
In the opinion of the Company’s management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation have been included on a quarterly basis. We have presented the unaudited quarterly results of operations separately for the Successor Company and the Predecessor Company.
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2014 |
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|||||||||||||
|
|
|
Predecessor |
|
Successor |
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|||||||||||
|
|
|
|
|
Period from |
|
Period from |
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|
|
|||||||
|
|
|
Quarter Ended |
|
July 1 to |
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July 9 to |
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Quarter Ended |
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|||||||
|
|
|
March 31 |
|
June 30 |
|
July 9 |
|
September 30 |
|
December 31 |
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|||||
|
|
|
(In thousands, except share and per share amounts) |
|
|||||||||||||
|
Revenues |
|
$ |
63,180 |
|
$ |
51,545 |
|
$ |
4,034 |
|
$ |
43,943 |
|
$ |
54,874 |
|
|
Operating (loss) income |
|
(20,766 |
) |
(26,552 |
) |
(8,356 |
) |
(17,436 |
) |
(185,796 |
) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Net (loss) income |
|
(42,238 |
) |
(65,557 |
) |
892,351 |
|
(22,562 |
) |
(190,795 |
) |
|||||
|
Net (loss) income attributable to noncontrolling interest |
|
(3,133 |
) |
(5,033 |
) |
(568 |
) |
(4,272 |
) |
(26,792 |
) |
|||||
|
Net (loss) income attributable to Genco Shipping & Trading Limited |
|
(39,105 |
) |
(60,524 |
) |
892,919 |
|
(18,290 |
) |
(164,003 |
) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Net (loss) earnings per share - basic (2) |
|
$ |
(0.90 |
) |
$ |
(1.39 |
) |
$ |
20.49 |
|
$ |
(0.30 |
) |
$ |
(2.72 |
) |
|
Net (loss) earnings per share - diluted (2) |
|
$ |
(0.90 |
) |
$ |
(1.39 |
) |
$ |
20.49 |
|
$ |
(0.30 |
) |
$ |
(2.72 |
) |
|
Dividends declares and paid per share (1) |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
Weighted average common shares outstanding - basic |
|
43,568,942 |
|
43,568,942 |
|
43,568,942 |
|
60,299,766 |
|
60,415,981 |
|
|||||
|
Weighted average common shares outstanding - diluted |
|
43,568,942 |
|
43,568,942 |
|
43,568,942 |
|
60,299,766 |
|
60,415,981 |
|
|||||
|
|
|
2013 |
|
||||||||||
|
|
|
Predecessor |
|
||||||||||
|
|
|
Quarter Ended |
|
||||||||||
|
|
|
March 31 |
|
June 30 |
|
September 30 |
|
December 31 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Revenues |
|
$ |
40,486 |
|
$ |
45,760 |
|
$ |
59,433 |
|
$ |
81,785 |
|
|
Operating (loss) income |
|
(30,474 |
) |
(27,075 |
) |
(13,387 |
) |
4,030 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net (loss) income |
|
(51,950 |
) |
(48,940 |
) |
(36,976 |
) |
(19,155 |
) |
||||
|
Net (loss) income attributable to noncontrolling interest |
|
(3,787 |
) |
(3,571 |
) |
(1,942 |
) |
20 |
|
||||
|
Net (loss) income attributable to Genco Shipping & Trading Limited |
|
(48,163 |
) |
(45,369 |
) |
(35,034 |
) |
(19,175 |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net (loss) earnings per share - basic (2) |
|
$ |
(1.12 |
) |
$ |
(1.05 |
) |
$ |
(0.81 |
) |
$ |
(0.43 |
) |
|
Net (loss) earnings per share - diluted (2) |
|
$ |
(1.12 |
) |
$ |
(1.05 |
) |
$ |
(0.81 |
) |
$ |
(0.43 |
) |
|
Dividends declares and paid per share (1) |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
Weighted average common shares outstanding - basic |
|
43,161,510 |
|
43,196,895 |
|
43,231,510 |
|
43,403,894 |
|
||||
|
Weighted average common shares outstanding - diluted |
|
43,161,510 |
|
43,196,895 |
|
43,231,510 |
|
43,403,894 |
|
||||
|
(1) |
Does not include cash dividends paid by Baltic Trading. |
|
(2) |
Amounts may not total to annual earnings (loss) because each quarter and year are calculated separately based on basic and diluted weighted-average common shares outstanding during that period. |
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29 - SUBSEQUENT EVENTS
On January 2, 2015, Baltic Trading took delivery of the Baltic Wasp, a 63,389 dwt Ultramax newbuilding from Yangfan Group Co., Ltd. Baltic Trading utilized cash on hand and $16,350 of proceeds from the 2014 Baltic Trading Term Loan Facilities to pay the remaining balance of $19,400 for the Baltic Wasp.
On February 27, 2015, Baltic Trading drew down $10,500 under the working capital line of the Baltic Trading $148 Million Credit Facility. This amount represents the remaining availability under the $115,000 revolving credit facility.
Refer to Note 10 — Debt for discussion on collateral short-fall for the $100 Million Term Loan Facility and the $253 Million Term Facility.
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|||
Principles of consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which include the accounts of GS&T, its wholly-owned subsidiaries and Baltic Trading, a subsidiary in which the Company owns a majority of the voting interests and exercises control. All intercompany accounts and transactions have been eliminated in consolidation.
Basis of reporting
The consolidated financial statements have been prepared on a going concern basis as the Company believes that internally generated cash flow and cash on hand will be sufficient to fund the operations of the Company’s fleet, including its working capital requirements, for the next twelve months, subject to the resolution of the foregoing issue related to the Company’s credit facilities, refer to Note 10 — Debt. The Company’s current and future liquidity will greatly depend upon the Company’s operating results. The Company’s ability to continue to meet its liquidity needs is subject to, and will be affected by; cash utilized in operations; the economic or business environment in which the Company operates; weakness in shipping industry conditions; the financial condition of the Company’s customers, vendors and service providers; the Company’s ability to comply with the financial and other covenants of its post-restructuring indebtedness; and other factors. Additionally, the Chapter 11 Cases, including the fact that the Company has been subject to bankruptcy proceedings, and related matters could negatively impact the Company’s financial condition.
Business geographics
The Company’s vessels regularly move between countries in international waters, over hundreds of trade routes and, as a result, the disclosure of geographic information is impracticable.
Vessel acquisitions
When the Company enters into an acquisition transaction, it determines whether the acquisition transaction was the purchase of an asset or a business based on the facts and circumstances of the transaction. As is customary in the shipping industry, the purchase of a vessel is normally treated as a purchase of an asset as the historical operating data for the vessel is not reviewed nor is it material to the Company’s decision to make such acquisition.
When a vessel is acquired with an existing time charter, the Company allocates the purchase price to the vessel and the time charter based on, among other things, vessel market valuations and the present value (using an interest rate which reflects the risks associated with the acquired charters) of the difference between (i) the contractual amounts to be paid pursuant to the charter terms and (ii) management’s estimate of the fair market charter rate, measured over a period equal to the remaining term of the charter. The capitalized above-market (assets) and below-market (liabilities) charters are amortized as a reduction or increase, respectively, to revenues over the remaining term of the charter.
Segment reporting
The Company has two reportable segments, GS&T and Baltic Trading, which are both engaged in the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk carrier vessels. Refer to Note 3 — Segment Information for further information.
Revenue and voyage expense recognition
Since the Company’s inception, revenues have been generated from time charter agreements, pool agreements and spot market-related time charters. A time charter involves placing a vessel at the charterer’s disposal for a set period of time during which the charterer may use the vessel in return for the payment by the charterer of a specified daily hire rate, including any ballast bonus payments received pursuant to the time charter agreement. Spot market-related time charters are the same as other time charter agreements, except the time charter rates are variable and are based on a percentage of the average daily rates as published by the Baltic Dry Index (“BDI”). Voyage revenues also include the sale of bunkers consumed during short-term time charters pursuant to the terms of the time charter agreement.
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. These differences in bunkers resulted in a net (gain) loss of $852 during the period from July 9 to December 31, 2014 for the Successor Company. During the period from January 1 to July 9, 2014 and during the years ended December 31, 2013 and 2012, the Predecessor Company recorded net (gains) losses of ($252), ($567) and ($1,714), respectively. Additionally, voyage expenses include the cost of bunkers consumed during short-term time charters pursuant to the terms of the time charter agreement.
The Company records time charter revenues over the term of the charter as service is provided. Revenues are recognized on a straight-line basis as the average revenue over the term of the respective time charter agreement. The Company records spot market-related time charter revenues over the term of the charter as service is provided based on the rate determined based on the BDI for each respective billing period. As such, the revenue earned by the Company’s vessels that are on spot market-related time charters is subject to fluctuations of the spot market. The Company recognizes voyage expenses when incurred.
Four of the Company’s vessels, the Genco Ocean, Genco Bay, Genco Avra and Genco Spirit, were chartered under spot market-related time charters which include a profit-sharing element. The time charters for the Genco Ocean and Genco Bay ended during August 2013 and March 2013, respectively. The time charters for the Genco Avra and Genco Spirit ended during March 2014 and November 2014, respectively. Under these charter agreements, the rate for the spot market-related time charter was linked with a floor of $9 and a ceiling of $14 daily with a 50% profit sharing arrangement to apply to any amount above the ceiling. The rate was based on 115% of the average of the daily rates reflected in the daily reports of the Baltic Handysize Index.
At December 31, 2014 and 2013, eight and five of GS&T’s vessels were in vessel pools, respectively. Additionally, at December 31, 2014 and 2013, five and four of Baltic Trading’s vessels were in vessel pools, respectively. At December 31, 2014, GS&T and Baltic Trading had five and two vessels, respectively, operating in the Clipper Logger Pool, a vessel pool trading in the spot market for which Clipper Group acts as the pool manager. Additionally, at December 31, 2014, GS&T and Baltic Trading had two and three vessels, respectively, operating in the Bulkhandling Handymax A/S Pool, a vessel pool trading in the spot market for which Torvald Klaveness acts as pool manager. Lastly, as of December 31, 2014, GS&T had one vessel operating in the Navig8 Bulk Pool, a vessel pool trading in the spot market for which Navig8 Inc. acts as the pool manager. At December 31, 2013, GS&T and Baltic Trading had two and two vessels, respectively, operating in the Clipper Logger Pool. Additionally, at December 31, 2013, Baltic Trading had two vessels operating in the Bulkhandling Handymax A/S Pool. Lastly, at December 31, 2013, GS&T had three vessels operating in the LB/IVS Pool, a vessel pool trading in the spot market for which Lauritzen Bulkers A/S acts as the pool manager. Under pool arrangements, the vessels operate under a time charter agreement whereby the cost of bunkers and port expenses are borne by the pool and operating costs including crews, maintenance and insurance are typically paid by the owner of the vessel. Since the members of the pool share in the revenue less voyage expenses generated by the entire group of vessels in the pool, and the pool operates in the spot market, the revenue earned by these vessels is subject to the fluctuations of the spot market. The Company recognizes revenue from these pool arrangements based on its portion of the net distributions reported by the relevant pool, which represents the net voyage revenue of the pool after voyage expenses and pool manager fees.
Other operating income
During the period from July 9 to December 31, 2014, the Successor Company recorded other operating income of $530. During the period from January 1 to July 9, 2014 and during the years ended December 31, 2013 and 2012, the Predecessor Company recorded other operating income of $0, $121 and $265 respectively. Other operating income recorded by the Successor Company during the period from July 9 to December 31, 2014 and by the Predecessor Company during the year ended December 31, 2012 consists of $530 and $263, respectively, related to installments due from Samsun Logix Corporation (“Samsun”) pursuant to the rehabilitation plan which was approved by the South Korean courts. Other operating income recorded by the Predecessor Company during the years ended December 31, 2013 and 2012 also included $21 and $2, respectively, related to the settlement due from Korea Line Corporation (“KLC”) pursuant to the rehabilitation plan which was approved by the South Korean courts. Lastly, other operating income during the year ended December 31, 2013 included $100 related to the receipt of 3,355 shares of stock of KLC as part of the aforementioned rehabilitation plan. This investment has been designated as Available for Sale (“AFS”). Refer to Note 22 — Commitments and Contingencies for further information regarding the bankruptcy settlements with Samsun and KLC and Note 7 — Investments for further information regarding the investment in KLC shares.
Due from charterers, net
Due from charterers, net includes accounts receivable from charters, net of the provision for doubtful accounts. At each balance sheet date, the Company records the provision based on a review of all outstanding charter receivables. Included in the standard time charter contracts with the Company’s customers are certain performance parameters which, if not met, can result in customer claims. As of December 31, 2014 and 2013, the Company had a reserve of $1,588 and $632, respectively, against the due from charterers balance and an additional accrual of $662 and $536, respectively, in deferred revenue, each of which is primarily associated with estimated customer claims against the Company including vessel performance issues under time charter agreements.
Revenue is based on contracted charterparties. However, there is always the possibility of dispute over terms and payment of hires and freights. In particular, disagreements may arise concerning the responsibility of lost time and revenue. Accordingly, the Company periodically assesses the recoverability of amounts outstanding and estimates a provision if there is a possibility of non-recoverability. The Company believes its provisions to be reasonable based on information available.
Inventories
Inventories consist of consumable bunkers, lubricants and victualling stores, which are stated at the lower of cost or market value and are recorded in Prepaid expenses and other current assets. Cost is determined by the first in, first out method.
Vessel operating expenses
Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance, the cost of spares and consumable stores, and other miscellaneous expenses. Vessel operating expenses are recognized when incurred.
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 that 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 period from July 9 to December 31, 2014 for the Successor Company was $36,265. Depreciation expense for vessels for the period from January 1 to July 9, 2014 and for the years ended December 31, 2013 and 2012 for the Predecessor Company was $71,756, $133,562, and $133,111, 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 cost of steel times the weight of the ship noted in lightweight tons (lwt). Effective July 9, 2014, on the Effective Date, the Company increased the estimated scrap value of the vessels from $245 per lwt to $310 per lwt prospectively based on the 15-year average scrap value of steel. The change in the estimated scrap value will result in a decrease in depreciation expense over the remaining life of the vessel assets. During the period from July 9 to December 31, 2014, the increase in the estimated scrap value resulted in a decrease in depreciation expense of $1,540 for the Successor Company. The decrease in depreciation expense resulted in a $0.03 change to the basic and diluted net loss per share during the period from July 9 to December 31, 2014. The basic and diluted net loss per share would have been ($3.05) per share if there was no change in the estimated scrap value.
Fixed assets, net
Fixed assets, net are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are based on a straight line basis over the estimated useful life of the specific asset placed in service. The following table is used in determining the typical estimated useful lives:
|
Description |
|
Useful lives |
|
|
|
|
|
|
|
Leasehold improvements |
|
Lesser of the estimated useful life of the asset or life of the lease |
|
|
Furniture, fixtures & other equipment |
|
5 years |
|
|
Vessel equipment |
|
2-15 years |
|
|
Computer equipment |
|
3 years |
|
Depreciation and amortization expense for fixed assets for the period from July 9 to December 31, 2014 for the Successor Company was $119. Depreciation and amortization expense for fixed assets for the period from January 1 to July 9, 2014 and for the years ended December 31, 2013 and 2012 for the Predecessor Company was $458, $1,481 and $888, respectively.
Deferred drydocking costs
The Company’s vessels are required to be drydocked approximately every 30 to 60 months for major repairs and maintenance that cannot be performed while the vessels are operating. The Company defers the costs associated with the drydockings as they occur and amortizes these costs on a straight-line basis over the period between drydockings. Costs deferred as part of a vessel’s drydocking include actual costs incurred at the drydocking yard; cost of travel, lodging and subsistence of personnel sent to the drydocking site to supervise; and the cost of hiring a third party to oversee the drydocking. If the vessel is drydocked earlier than originally anticipated, any remaining deferred drydock costs that have not been amortized are expensed at the end of the next drydock.
Amortization expense for drydocking for the period from July 9 to December 31, 2014 for the Successor Company was $330. Amortization expense for drydocking for the period from January 1 to July 9, 2014 and for the years ended December 31, 2013 and 2012 for the Predecessor Company was $3,738, $5,700, and $5,064, respectively. All other costs incurred during drydocking are expensed as incurred.
Goodwill
The Company follows the provisions of ASC Subtopic 350-20, “Intangibles - Goodwill and Other” (“ASC 350-20”). This statement requires that goodwill and intangible assets with indefinite lives be tested for impairment at least annually or when there is a triggering event and written down with a charge to operations when the carrying amount of the reporting unit that includes goodwill exceeds the estimated fair value of the reporting unit. If the carrying value of the goodwill exceeds the reporting unit’s implied goodwill, such excess must be written off.
The Company recorded Goodwill of $166,067 upon adoption of fresh-start reporting in accordance with provisions of ASC 852 as of the Effective Date. Pursuant to the Company’s annual goodwill impairment testing performed as of December 31, 2014, it was determined that the entire amount of this goodwill was impaired. Refer to Note 5 — Goodwill Impairment.
Impairment of long-lived assets
The Company follows ASC Subtopic 360-10, “Property, Plant and Equipment” (“ASC 360-10”), which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. If indicators of impairment are present, the Company performs an analysis of the anticipated undiscounted future net cash flows of the related long-lived assets. If the carrying value of the related asset exceeds the undiscounted cash flows, the carrying value is reduced to its fair value. Various factors including anticipated future charter rates, estimated scrap values, future drydocking costs and estimated vessel operating costs are included in this analysis.
For the periods from July 9 to December 31, 2014 and from January 1 to July 9, 2014 and during the years ended December 31, 2013 and 2012, no impairment charges were recorded on the Company’s long-lived assets.
As part of fresh-start reporting, the Company revalued its vessel assets at their fair values as of the Effective Date and the losses were recorded in Reorganization items, net in the Consolidated Statements of Operation.
Deferred financing costs
Deferred financing costs, included in other assets, consist of fees, commissions and legal expenses associated with securing loan facilities and other debt offerings and amending existing loan facilities. These costs are amortized over the life of the related debt and are included in interest expense.
Cash and cash equivalents
The Company considers highly liquid investments such as money market funds and certificates of deposit with an original maturity of three months or less to be cash equivalents.
Investments
The Company holds an investment in the capital stock of Jinhui Shipping and Transportation Limited (“Jinhui”) and in 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 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 issuers 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 7 — Investments.
Income taxes
Pursuant to Section 883 of the U.S. Internal Revenue Code of 1986 (as amended) (the “Code”), qualified income derived from the international operations of ships is excluded from gross income and exempt from U.S. federal income tax if a company engaged in the international operation of ships meets certain requirements (the “Section 883 exemption”). Among other things, in order to qualify, the Company must be incorporated in a country that grants an equivalent exemption to U.S. corporations and must satisfy certain qualified ownership requirements.
GS&T is incorporated in the Marshall Islands. Pursuant to the income tax laws of the Marshall Islands, GS&T is not subject to Marshall Islands income tax. The Marshall Islands has been officially recognized by the Internal Revenue Service as a qualified foreign country that currently grants the requisite equivalent exemption from tax. GS&T is not taxable in any other jurisdiction, with the exception of Genco Management (USA) Limited as noted below.
GS&T will qualify for the Section 883 exemption if, among other things, (i) GS&T stock is treated as primarily and regularly traded on an established securities market in the United States (the publicly traded test”), or (ii) GS&T satisfies one of two other ownership tests. Under applicable Treasury Regulations, the publicly-traded test cannot be satisfied in any taxable year in which persons who actually or constructively own 5% or more of our stock (“5% shareholders”), together own 50% or more of GS&T’s stock for more than half the days in such year (the “five percent override rule”), unless an exception applies.
Based on the ownership and trading of GS&T stock in 2014, management believes that GS&T satisfied the publicly traded test and qualified for the Section 883 exemption in 2014. However, as a result of the restructuring of GS&T’s indebtedness pursuant to the Plan, 5% shareholders may beneficially own more than 50% of GS&T stock for more than half of 2015. As a result, the five percent override rule may apply, and management believes that GS&T would have significant difficulty in satisfying an exception thereto. It is also not clear whether GS&T will satisfy one of the other two ownership tests. Thus, GS&T may not qualify for the Section 883 exemption in 2015. Even if GS&T does qualify for the Section 883 exemption in 2015, there can be no assurance that changes and shifts in the ownership of GS&T stock by 5% shareholders will not preclude GS&T from qualifying for the Section 883 exemption in future taxable years.
If GS&T does not qualify for the Section 883 exemption, GS&T’s U.S. source shipping income, i.e., 50% of its gross shipping income attributable to transportation beginning or ending in the U.S. (but not both beginning and ending in the U.S.) would be subject to a 4% tax without allowance for deductions (the “U.S. gross transportation tax”).
Baltic Trading is also incorporated in the Marshall Islands and its stock is primarily traded on an established securities market in the U.S. However, GS&T has indirectly owned shares of Baltic Trading’s Class B Stock which has provided GS&T with over 50% of the combined voting power of all classes of Baltic Trading’s voting stock since Baltic Trading’s IPO was completed on March 15, 2010. As a result, Baltic Trading’s Class B Stock will not be treated as regularly traded and Baltic Trading will not satisfy the publicly traded test (and cannot satisfy one of the other two ownership tests). Thus, Baltic Trading does not qualify for a Section 883 exemption. As such, Baltic Trading is subject to U.S. gross transportation income tax on its U.S. source shipping income.
During the period from July 9 to December 31, 2014, Baltic Trading had U.S. source shipping income of $450. Baltic Trading’s estimated U.S. gross transportation income tax expense for the period from July 9 to December 31, 2014 was $18. During the period from January 1 to July 9, 2014 and during the years ended December 31, 2013 and 2012, Baltic Trading had U.S. source shipping income of $965, $832 and $690, respectively. Baltic Trading’s U.S. gross transportation income tax expense for the period from January 1 to July 9, 2014 and for the years ended December 31, 2013 and 2012 was $39, $34 and $28, respectively.
In addition to GS&T’s shipping income and pursuant to certain agreements, GS&T technically and commercially manages vessels for Baltic Trading, and provides technical management of vessels for MEP in exchange for fees. These management services are performed by Genco Management (USA) Limited (“Genco (USA)”), which has elected to be classified (and taxed) as a corporation for U.S. federal income tax purposes. As such, Genco (USA) is subject to U.S. federal net income tax (currently imposed at graduated rates of up to 35%) on its worldwide net income, including the net income derived from providing these management 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 management services for both Baltic Trading and MEP’s vessels.
Total revenue earned by the Successor Company for management services during the period from July 9 to December 31, 2014 was $3,893, of which $2,309 was eliminated upon consolidation. After allocation of certain expenses, there was taxable net income of $2,178 associated with these activities for the period from July 9 to December 31, 2014. This resulted in estimated U.S. federal net income tax expense of $978 for the period from July 9 to December 31, 2014.
Total revenue earned by the Predecessor Company for management services during the period from January 1 to July 9, 2014 and during the years ended December 31, 2013 and 2012 was $3,857, $7,856 and $6,110, respectively, of which $2,156, $4,571 and $2,816, respectively, was eliminated upon consolidation. After allocation of certain expenses, there was taxable net income of $1,723 associated with these activities for the period from January 1 to July 9, 2014. This resulted in estimated U.S. federal net income tax expense of $776 for the period from January 1 to July 9, 2014. After allocation of certain expenses, there was taxable net income of $4,235 associated with these activities for the year ended December 31, 2013. This resulted in estimated U.S. federal net income tax expense of $1,864 for the year ended December 31, 2013. After allocation of certain expenses, there was taxable net income of $2,655 associated with these activities for the year ended December 31, 2012. This resulted in estimated U.S. federal net income tax expense of $1,194 for the year ended December 31, 2012.
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. Refer to “Revenue and voyage expense recognition” above for description of the Company’s revenue recognition policy.
Comprehensive income
The Company follows ASC Subtopic 220-10, “Comprehensive Income” (“ASC 220-10”), which establishes standards for reporting and displaying comprehensive income and its components in financial statements. Comprehensive income is comprised of net income and amounts related to the Company’s interest rate swaps accounted for as hedges, as well as unrealized gains or losses associated with the Company’s AFS investments.
Nonvested stock awards
The Company follows ASC Subtopic 718-10, “Compensation — Stock Compensation” (“ASC 718-10”), for nonvested stock issued under its equity incentive plans. Stock-based compensation costs from nonvested stock have been classified as a component of additional paid-in capital.
Accounting estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include vessel valuations, the valuation of amounts due from charterers, performance claims, residual value of vessels, useful life of vessels and the fair value of derivative instruments. Actual results could differ from those estimates.
Concentration of credit risk
Financial instruments that potentially subject the Company to concentrations of credit risk are amounts due from charterers, cash and cash equivalents, deposits on vessels and interest rate swap agreements. With respect to amounts due from charterers, the Company attempts to limit its credit risk by performing ongoing credit evaluations and, when deemed necessary, requires letters of credit, guarantees or collateral. The Successor Company earned 100% of revenues from 44 customers during the period from July 9 to December 31, 2014. The Predecessor Company earned 100% of revenues from 33 customers during the period from January 1 to July 9, 2014, 48 customers during the year ended December 31, 2013 and 43 customers during the year ended December 31, 2012. Management does not believe significant risk exists in connection with the Company’s concentrations of credit at December 31, 2014 and 2013.
For the period from July 9 to December 31, 2014 for the Successor Company, there were two customers that individually accounted for more than 10% of voyage revenues; Cargill International S.A., including its subsidiaries (“Cargill”) and Swissmarine Services S.A., including its subsidiaries (“Swissmarine”), which represented 17.06% and 22.52% of voyage revenues, respectively. For the period from January 1 to July 9, 2014 for the Predecessor Company, there were two customers that individually accounted for more than 10% of voyage revenues; Cargill and Swissmarine, which represented 19.37% and 20.67% of voyage revenues, respectively. For the year ended December 31, 2013 for the Predecessor Company, there were three customers that individually accounted for more than 10% of voyage revenues; Cargill, Swissmarine and Pacific Basin Chartering Ltd., which represented 21.45%, 18.73% and 10.30% of voyage revenues, respectively. For the year ended December 31, 2012 for the Predecessor Company, there was one customer that individually accounted for more than 10% of voyage revenues, Cargill, which represented 31.27% of voyage revenues.
At December 31, 2014 and 2013, deposits on vessels consist primarily of progress payments due by Baltic Trading to the shipyard as per the newbuilding contracts with Yangfan Group Co., Ltd. These payments are not held in an escrow account; however, Baltic Trading has a refund guarantee with the Bank of China in the case that Yangfan Group Co., Ltd. does not perform as required by the newbuilding contracts. Refer to Note 6 — Vessel Acquisitions for further information.
At December 31, 2014 and 2013, the Company maintains all of its cash and cash equivalents with three and four financial institutions, respectively. None of the Company’s cash and cash equivalent balances is covered by insurance in the event of default by these financial institutions.
At December 31, 2013, the Company had four interest rate swap agreements with DnB Bank ASA to manage interest costs and the risk associated with changing interest rates related to the 2007 Credit Facility. None of the interest rate swap agreements were covered by insurance in the event of default by this financial institution. On April 30, 2014, the remaining interest rate swap agreement was terminated by DNB Bank ASA and a secure claim was filed with the Bankruptcy Court. Refer to Note 1 — General Information for additional information regarding defaults related to the interest rate swap. There were no interest rate swaps held by the Company at December 31, 2014.
Fair value of financial instruments
The estimated fair values of the Company’s financial instruments, such as amounts due to / due from charterers, accounts payable and long-term debt, approximate their individual carrying amounts as of December 31, 2014 and 2013 due to their short-term maturity or the variable-rate nature of the respective borrowings under the credit facilities.
The fair value of the interest rate swaps is the estimated amount the Company would receive or have to pay in order to terminate these agreements at the reporting date, taking into account current interest rates and the creditworthiness of the counterparty for assets and creditworthiness of the Company for liabilities. See Note 14 - Fair Value of Financial Instruments for additional disclosure on the fair values of long term debt, convertible senior notes, derivative instruments, and AFS securities.
Derivative financial instruments
Interest rate risk management
The Company is exposed to the impact of interest rate changes. The Company’s objective is to manage the impact of interest rate changes on its earnings and cash flow in relation to borrowings primarily for the purpose of acquiring drybulk vessels. These borrowings are subject to a variable borrowing rate. Up until the Effective Date, the Company used pay-fixed receive-variable interest rate swaps to manage future interest costs and the risk associated with changing interest rate obligations. These swaps were designated as cash flow hedges of future variable rate interest payments and were tested for effectiveness on a quarterly basis. Refer to Note 12 — Interest Rate Swap Agreements for further information regarding the interest rate swaps that were held by the Company prior to the Effective Date.
The differential to be paid or received for the effectively hedged portion of any swap agreement was recognized as an adjustment to interest expense as incurred. Additionally, the changes in value for the portion of the swaps that were effectively hedging future interest payments were reflected as a component of AOCI.
For the interest rate swaps that are not designated as an effective hedge, the change in the value and the rate differential to be paid or received was recognized as other expense and is listed as a component of other (expense) income in the Consolidated Statements of Operations.
Recent accounting pronouncements
In May 2014, the FASB issued Accounting Standards Update 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. The Company is evaluating the potential impact of this adoption on its consolidated financial statements.
In February 2013, the FASB issued Accounting Standards Update No. 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” (“ASU 2013-02”), to improve the transparency of changes in other comprehensive income (loss) (“OCI”) and items reclassified out of accumulated other income (loss) (“AOCI”). The amendments in ASU 2013-02 are required to be applied prospectively and are effective for reporting periods beginning after December 15, 2012. The adoption of ASU 2013-02 did not have any impact on the Company’s consolidated financial statements other than separately disclosing in the footnotes to the consolidated financial statements amounts reclassified out of AOCI and the individual line items in the Consolidated Statement of Operations that are affected. The Company adopted ASU 2013-02 during the year ended December 31, 2013 and the impact of adoption was not material to the Company’s consolidated financial statements. Refer to Note 13 — Accumulated Other Comprehensive Income (Loss) for additional disclosure.
|
|||
|
|
|
Fresh-Start Adjustments |
|
|||||||||||||
|
|
|
Predecessor |
|
Debt Discharge |
|
Reinstatement of |
|
Revaluation of |
|
Successor |
|
|||||
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Cash and cash equivalents |
|
$ |
48,551 |
|
$ |
87,526 |
|
$ |
— |
|
$ |
— |
|
$ |
136,077 |
|
|
Restricted cash |
|
9,975 |
|
— |
|
— |
|
— |
|
9,975 |
|
|||||
|
Due from charterers, net |
|
13,194 |
|
— |
|
— |
|
— |
|
13,194 |
|
|||||
|
Prepaid expenses and other current assets |
|
30,800 |
|
— |
|
— |
|
(41 |
) |
30,759 |
|
|||||
|
Time charters acquired |
|
— |
|
— |
|
— |
|
450 |
|
450 |
|
|||||
|
Total current assets |
|
102,520 |
|
87,526 |
|
— |
|
409 |
|
190,455 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Noncurrent assets: |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Vessels, net |
|
2,604,731 |
|
— |
|
— |
|
(1,065,882 |
) |
1,538,849 |
|
|||||
|
Deposits on vessels |
|
28,658 |
|
— |
|
— |
|
2,317 |
|
30,975 |
|
|||||
|
Deferred drydock, net |
|
16,584 |
|
— |
|
— |
|
(16,396 |
) |
188 |
|
|||||
|
Deferred financing costs, net |
|
18,953 |
|
(11,893 |
) |
— |
|
— |
|
7,060 |
|
|||||
|
Fixed assets, net |
|
4,053 |
|
— |
|
— |
|
(3,443 |
) |
610 |
|
|||||
|
Other noncurrent assets |
|
514 |
|
— |
|
— |
|
— |
|
514 |
|
|||||
|
Restricted cash |
|
300 |
|
— |
|
— |
|
— |
|
300 |
|
|||||
|
Investments |
|
51,804 |
|
— |
|
— |
|
— |
|
51,804 |
|
|||||
|
Goodwill |
|
— |
|
— |
|
— |
|
166,067 |
|
166,067 |
|
|||||
|
Total noncurrent assets |
|
2,725,597 |
|
(11,893 |
) |
— |
|
(917,337 |
) |
1,796,367 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Total assets |
|
$ |
2,828,117 |
|
$ |
75,633 |
|
$ |
— |
|
$ |
(916,928 |
) |
$ |
1,986,822 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Current liabilities not subject to compromise: |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Accounts payable and accrued expenses |
|
$ |
60,333 |
|
$ |
(1,086 |
) |
$ |
6,478 |
|
$ |
— |
|
$ |
65,725 |
|
|
Current portion of long-term debt |
|
4,250 |
|
— |
|
27,992 |
|
— |
|
32,242 |
|
|||||
|
Deferred revenue |
|
997 |
|
— |
|
— |
|
— |
|
997 |
|
|||||
|
Time charters acquired |
|
16 |
|
— |
|
— |
|
(16 |
) |
— |
|
|||||
|
Total current liabilities not subject to compromise |
|
65,596 |
|
(1,086 |
) |
34,470 |
|
(16 |
) |
98,964 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Noncurrent liabilities not subject to compromise: |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Long-term lease obligations |
|
2,670 |
|
— |
|
— |
|
(2,670 |
) |
— |
|
|||||
|
Long-term debt |
|
161,500 |
|
— |
|
214,289 |
|
— |
|
375,789 |
|
|||||
|
Total noncurrent liabilities not subject to compromises |
|
164,170 |
|
— |
|
214,289 |
|
(2,670 |
) |
375,789 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Total liabilities subject to compromise |
|
1,443,446 |
|
(1,194,687 |
) |
(248,759 |
) |
— |
|
— |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Total liabilities |
|
1,673,212 |
|
(1,195,773 |
) |
— |
|
(2,686 |
) |
474,753 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Genco Shipping & Trading Limited shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Predecessor Common stock |
|
445 |
|
(445 |
) |
— |
|
— |
|
— |
|
|||||
|
Predecessor Additional paid-in capital |
|
849,130 |
|
(849,130 |
) |
— |
|
— |
|
— |
|
|||||
|
Successor Common stock |
|
— |
|
603 |
|
— |
|
— |
|
603 |
|
|||||
|
Successor Additional paid-in capital |
|
— |
|
1,232,397 |
|
— |
|
— |
|
1,232,397 |
|
|||||
|
Accumulated other comprehensive income |
|
30,357 |
|
4,574 |
|
— |
|
(34,931 |
) |
— |
|
|||||
|
Retained (deficit) earnings |
|
(57,463 |
) |
936,774 |
|
— |
|
(879,311 |
) |
— |
|
|||||
|
Total Genco Shipping & Trading Limited shareholders’ equity |
|
822,469 |
|
1,324,773 |
|
— |
|
(914,242 |
) |
1,233,000 |
|
|||||
|
Noncontrolling interest |
|
332,436 |
|
(53,367 |
) |
— |
|
— |
|
279,069 |
|
|||||
|
Total equity |
|
1,154,905 |
|
1,271,406 |
|
— |
|
(914,242 |
) |
1,512,069 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Total liabilities and equity |
|
$ |
2,828,117 |
|
$ |
75,633 |
|
$ |
— |
|
$ |
(916,928 |
) |
$ |
1,986,822 |
|
(a)Debt Discharge and Equity Issuance — This column reflects the following adjustments pursuant to the Plan:
|
· |
The discharge of the outstanding debt under the 2007 Credit Facility of $1,055,912. |
|
· |
The discharge of the long-term interest payable due pursuant to the 2007 Credit Facility of $13,199. |
|
· |
The discharge of the 2010 Notes liability of $117,473 and the bond coupon interest of $1,105. |
|
· |
Receipt of the $100,000 rights offering pursuant to the Plan. |
|
· |
The payment of interest expense accrued up until the Effective Date of $1,772, $59 and $156 for the 2007 Credit Facility, the $100 Million Term Loan Facility and the $253 Million Term Loan Facility, respectively. |
|
· |
The paydown on the Effective Date of $1,923 and $5,075 for the $100 Million Term Loan Facility and $253 Million Term Loan Facility, respectively, which were due on the Effective Date as they were not paid during the pendency of the Chapter 11 Cases. |
|
· |
The adjustment of net unamortized deferred financing fees of $15,383 for the 2007 Credit Facility, the 2010 Notes as well as the $100 Million and $253 Million Term Loan Facilities prior to the amendments and restatements as per the Plan. |
|
· |
The payment of deferred financing fees of $3,490 for the Amended and Restated $100 Million and $253 Million Term Loan Facilities. |
|
· |
Adjustment of equity of $1,271,406 to adjust for the cancellation of the old equity of the Predecessor Company and the issuance of the new equity for the Successor Company. |
(b)Reinstatement of Liabilities — This column reflects the reinstatement of the remaining Liabilities subject to compromise for the Predecessor Company which were not already adjusted in the Debt Discharge and Equity Issuance column. It includes the following adjustments:
|
· |
The reclassification of the debt outstanding under the Amended and Restated $100 Million Term Loan Facility. This includes $7,692 of current long-term debt and $63,946 of long-term debt. |
|
· |
The reclassification of the debt outstanding under the Amended and Restated $253 Million Term Loan Facility. This includes $20,300 of current long-term debt and $150,343 of long-term debt. |
|
· |
The reinstatement of $5,622 related to the termination of the interest rate swap agreement with DNB Bank ASA. |
|
· |
The reinstatement of the $815 lease obligation. |
|
· |
The reinstatement of $41 of pre-petition accounts payable due to vendors in the United States. |
(c)Revaluation of Assets and Liabilities — Fresh-start reporting adjustments are made to reflect asset values at their estimated fair value, including:
|
· |
Adjustment of $179 to prepaid amounts for the Predecessor Company. |
|
· |
Adjustment to reflect the fair value of time charters acquired of $434. |
|
· |
Adjustment of $1,083,404 to reflect the fair value of vessel assets, vessel deposits, drydocking assets and other fixed assets as of the Effective Date. |
|
· |
Adjustment of $2,670 to reflect the fair value of the Company’s current lease agreement which was previously recorded as long-term lease obligations. As of the Effective Date, the lease agreement has been valued at below market, therefore we have recorded in Prepaid expenses and other current assets an asset of $138 which will be amortized over the remaining life of the lease agreement. |
|
· |
An adjustment of $166,067 to reflect the reorganization value of the Successor Company in excess of the fair value of assets, net of liabilities. |
|
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 |
|
1998 |
|
Genco Pioneer Limited |
|
Genco Pioneer |
|
29,952 |
|
1/4/05 |
|
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 |
|
1999 |
|
Genco Marine Limited |
|
Genco Marine |
|
45,222 |
|
3/29/05 |
|
1996 |
|
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 |
|
5/12/2011 |
|
2011 |
|
Genco Mare Limited |
|
Genco Mare |
|
34,428 |
|
7/20/2011 |
|
2011 |
|
Genco Spirit Limited |
|
Genco Spirit |
|
34,432 |
|
11/10/2011 |
|
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 |
|
3/29/2011 |
|
2011 |
|
Baltic Trading’s Wholly Owned |
|
Vessel Acquired |
|
Dwt |
|
Delivery Date |
|
Year |
|
|
|
|
|
|
|
|
|
|
|
Baltic Leopard Limited |
|
Baltic Leopard |
|
53,447 |
|
4/8/10 |
|
2009 |
|
Baltic Panther Limited |
|
Baltic Panther |
|
53,351 |
|
4/29/10 |
|
2009 |
|
Baltic Cougar Limited |
|
Baltic Cougar |
|
53,432 |
|
5/28/10 |
|
2009 |
|
Baltic Jaguar Limited |
|
Baltic Jaguar |
|
53,474 |
|
5/14/10 |
|
2009 |
|
Baltic Bear Limited |
|
Baltic Bear |
|
177,717 |
|
5/14/10 |
|
2010 |
|
Baltic Wolf Limited |
|
Baltic Wolf |
|
177,752 |
|
10/14/10 |
|
2010 |
|
Baltic Wind Limited |
|
Baltic Wind |
|
34,409 |
|
8/4/10 |
|
2009 |
|
Baltic Cove Limited |
|
Baltic Cove |
|
34,403 |
|
8/23/10 |
|
2010 |
|
Baltic Breeze Limited |
|
Baltic Breeze |
|
34,386 |
|
10/12/10 |
|
2010 |
|
Baltic Fox Limited |
|
Baltic Fox |
|
31,883 |
|
9/6/13 |
|
2010 |
|
Baltic Hare Limited |
|
Baltic Hare |
|
31,887 |
|
9/5/13 |
|
2009 |
|
Baltic Lion Limited |
|
Baltic Lion |
|
179,185 |
|
12/27/13 |
|
2012 |
|
Baltic Tiger Limited |
|
Baltic Tiger |
|
179,185 |
|
11/26/13 |
|
2011 |
|
Baltic Hornet Limited |
|
Baltic Hornet |
|
63,574 |
|
10/29/14 |
|
2014 |
|
Baltic Wasp Limited |
|
Baltic Wasp |
|
63,389 |
|
1/2/15 |
|
2015 |
|
Baltic Scorpion Limited |
|
Baltic Scorpion |
|
64,000 |
|
Q2 2015 (1) |
|
2015 (1) |
|
Baltic Mantis Limited |
|
Baltic Mantis |
|
64,000 |
|
Q3 2015 (1) |
|
2015 (1) |
(1)Built dates and delivery dates for vessels being delivered in the future are estimates based on guidance received from the sellers and the respective shipyards.
|
|||
|
Description |
|
Useful lives |
|
|
|
|
|
|
|
Leasehold improvements |
|
Lesser of the estimated useful life of the asset or life of the lease |
|
|
Furniture, fixtures & other equipment |
|
5 years |
|
|
Vessel equipment |
|
2-15 years |
|
|
Computer equipment |
|
3 years |
|
|
|||
|
|
|
Successor |
|
Predecessor |
|
||||||||||
|
|
|
Period from |
|
Period from |
|
For the Years Ended December 31, |
|
||||||||
|
|
|
2014 |
|
2014 |
|
2013 |
|
2012 |
|
||||||
|
Voyage revenue from external customers |
|
|
|
|
|
|
|
|
|
||||||
|
GS&T |
|
$ |
|
77,885 |
|
$ |
|
94,171 |
|
$ |
188,206 |
|
$ |
195,855 |
|
|
Baltic Trading |
|
20,932 |
|
24,588 |
|
35,973 |
|
27,304 |
|
||||||
|
Total operating segments |
|
98,817 |
|
118,759 |
|
224,179 |
|
223,159 |
|
||||||
|
Eliminating revenue |
|
— |
|
— |
|
— |
|
— |
|
||||||
|
Total consolidated voyage revenue from external customers |
|
$ |
|
98,817 |
|
$ |
|
118,759 |
|
$ |
224,179 |
|
$ |
223,159 |
|
|
|
|
Successor |
|
Predecessor |
|
||||||||
|
|
|
Period from |
|
Period from |
|
For the Years Ended December 31, |
|
||||||
|
|
|
2014 |
|
2014 |
|
2013 |
|
2012 |
|
||||
|
Intersegment Revenue |
|
|
|
|
|
|
|
|
|
||||
|
GS&T |
|
$ |
2,309 |
|
$ |
2,156 |
|
$ |
4,571 |
|
$ |
2,816 |
|
|
Baltic Trading |
|
— |
|
— |
|
— |
|
— |
|
||||
|
Total operating segments |
|
2,309 |
|
2,156 |
|
4,571 |
|
2,816 |
|
||||
|
Eliminating revenue |
|
(2,309 |
) |
(2,156 |
) |
(4,571 |
) |
(2,816 |
) |
||||
|
Total consolidated intersegment revenue |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
|
|
Successor |
|
Predecessor |
|
||||||||
|
|
|
Period from |
|
Period from |
|
For the Years Ended December 31, |
|
||||||
|
|
|
2014 |
|
2014 |
|
2013 |
|
2012 |
|
||||
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
||||
|
GS&T |
|
$ |
28,922 |
|
$ |
65,237 |
|
$ |
125,344 |
|
$ |
124,405 |
|
|
Baltic Trading |
|
7,794 |
|
10,829 |
|
15,564 |
|
14,814 |
|
||||
|
Total operating segments |
|
36,716 |
|
76,066 |
|
140,908 |
|
139,219 |
|
||||
|
Eliminating depreciation and amortization |
|
(2 |
) |
(114 |
) |
(165 |
) |
(156 |
) |
||||
|
Total consolidated depreciation and amortization |
|
$ |
36,714 |
|
$ |
75,952 |
|
$ |
140,743 |
|
$ |
139,063 |
|
|
|
|
Successor |
|
Predecessor |
|
||||||||
|
|
|
Period from |
|
Period from |
|
For the Years Ended December 31, |
|
||||||
|
|
|
2014 |
|
2014 |
|
2013 |
|
2012 |
|
||||
|
Interest expense |
|
|
|
|
|
|
|
|
|
||||
|
GS&T |
|
$ |
4,791 |
|
$ |
37,998 |
|
$ |
83,761 |
|
$ |
83,306 |
|
|
Baltic Trading |
|
2,829 |
|
3,063 |
|
4,455 |
|
4,252 |
|
||||
|
Total operating segments |
|
7,620 |
|
41,061 |
|
88,216 |
|
87,558 |
|
||||
|
Eliminating interest expense |
|
— |
|
— |
|
— |
|
— |
|
||||
|
Total consolidated interest expense |
|
$ |
7,620 |
|
$ |
41,061 |
|
$ |
88,216 |
|
$ |
87,558 |
|
|
|
|
Successor |
|
Predecessor |
|
||||||||
|
|
|
Period from |
|
Period from |
|
For the Years Ended December 31, |
|
||||||
|
|
|
2014 |
|
2014 |
|
2013 |
|
2012 |
|
||||
|
Net (loss) income |
|
|
|
|
|
|
|
|
|
||||
|
GS&T |
|
$ |
(177,921 |
) |
$ |
878,127 |
|
$ |
(144,054 |
) |
$ |
(139,295 |
) |
|
Baltic Trading |
|
(35,032 |
) |
(93,430 |
) |
(11,392 |
) |
(17,270 |
) |
||||
|
Total operating segments |
|
(212,953 |
) |
784,697 |
|
(155,446 |
) |
(156,565 |
) |
||||
|
Eliminating net loss (income) |
|
405 |
|
140 |
|
1,575 |
|
1,211 |
|
||||
|
Total consolidated net (loss) income |
|
$ |
(213,358 |
) |
$ |
784,557 |
|
$ |
(157,021 |
) |
$ |
(157,776 |
) |
|
|
|
Successor |
|
Predecessor |
|
||
|
|
|
December 31, |
|
December 31, |
|
||
|
Total assets |
|
|
|
|
|
||
|
GS&T |
|
$ |
1,270,923 |
|
$ |
2,404,811 |
|
|
Baltic Trading |
|
482,415 |
|
557,367 |
|
||
|
Total operating segments |
|
1,753,338 |
|
2,962,178 |
|
||
|
Eliminating assets |
|
(425 |
) |
(4,924 |
) |
||
|
Total consolidated assets |
|
$ |
1,752,913 |
|
$ |
2,957,254 |
|
|
|
|
Successor |
|
Predecessor |
|
||||||||
|
|
|
Period from |
|
Period from |
|
For the Years Ended December 31, |
|
||||||
|
|
|
2014 |
|
2014 |
|
2013 |
|
2012 |
|
||||
|
Expenditures for vessels |
|
|
|
|
|
|
|
|
|
||||
|
GS&T |
|
$ |
831 |
|
$ |
1,043 |
|
$ |
192 |
|
$ |
1,155 |
|
|
Baltic Trading |
|
23,922 |
|
28,952 |
|
146,598 |
|
— |
|
||||
|
Total operating segments |
|
24,753 |
|
29,995 |
|
146,790 |
|
1,155 |
|
||||
|
Eliminating expenditures for vessels |
|
(280 |
) |
— |
|
(1,440 |
) |
— |
|
||||
|
Total consolidated expenditures for vessels |
|
$ |
24,473 |
|
$ |
29,995 |
|
$ |
145,350 |
|
$ |
1,155 |
|
|
|||
|
|
|
Successor |
|
Predecessor |
|
||||
|
|
|
Period from |
|
Period from |
|
|
|
|
|
|
|
|
July 9 to |
|
January 1 to |
|
|
|
|
|
|
|
|
December 31, |
|
July 9, |
|
Year Ended December 31, |
|
||
|
|
|
2014 |
|
2014 |
|
2013 |
|
2012 |
|
|
Common shares outstanding, basic: |
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding, basic |
|
60,360,515 |
|
43,568,942 |
|
43,249,070 |
|
41,727,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding, diluted: |
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding, basic |
|
60,360,515 |
|
43,568,942 |
|
43,249,070 |
|
41,727,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of warrants |
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of convertible notes |
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of restricted stock awards |
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding, diluted |
|
60,360,515 |
|
43,568,942 |
|
43,249,070 |
|
41,727,075 |
|
|
|
|
Successor |
|
Predecessor |
|
||||||||
|
|
|
Period from |
|
Period from |
|
|
|
|
|
||||
|
|
|
July 9 to |
|
January 1 to |
|
|
|
|
|
||||
|
|
|
December 31, |
|
July 9, |
|
Year Ended December 31, |
|
||||||
|
|
|
2014 |
|
2014 |
|
2013 |
|
2012 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net (loss) income attributable to GS&T |
|
$ |
(182,294 |
) |
$ |
793,291 |
|
$ |
(147,741 |
) |
$ |
(144,928 |
) |
|
|
|
|
|
|
|
|
|
|
|
||||
|
Interest expense related to convertible notes, if dilutive |
|
— |
|
— |
|
— |
|
— |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net (loss) income attributable to GS&T for the computation of diluted net (loss) income per share |
|
$ |
(182,294 |
) |
$ |
793,291 |
|
$ |
(147,741 |
) |
$ |
(144,928 |
) |
|
|||
|
|
|
Successor |
|
Predecessor |
|
||
|
|
|
December 31, |
|
December 31, |
|
||
|
|
|
|
|
|
|
||
|
2007 Credit Facility |
|
$ |
— |
|
$ |
1,055,912 |
|
|
$100 Million Term Loan Facility |
|
67,792 |
|
75,484 |
|
||
|
$253 Million Term Loan Facility |
|
165,568 |
|
180,793 |
|
||
|
2010 Baltic Trading Credit Facility |
|
102,250 |
|
102,250 |
|
||
|
Baltic Trading $22 Million Term Loan Facility |
|
20,125 |
|
21,625 |
|
||
|
Baltic Trading $44 Million Term Loan Facility |
|
41,250 |
|
44,000 |
|
||
|
2014 Baltic Trading Term Loan Facilities |
|
33,150 |
|
— |
|
||
|
Less: Current portion |
|
(34,324 |
) |
(1,316,439 |
) |
||
|
|
|
|
|
|
|
||
|
Long-term debt |
|
$ |
395,811 |
|
$ |
163,625 |
|
|
|
|
Successor |
|
Predecessor |
|
||||
|
|
|
Period from |
|
Period from |
|
|
|
|
|
|
|
|
July 9 to |
|
January 1 to |
|
|
|
|
|
|
|
|
December 31, |
|
July 9, |
|
Year Ended December 31, |
|
||
|
|
|
2014 |
|
2014 |
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Interest Rate |
|
3.60% |
|
4.19% |
|
4.70% |
|
4.68% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Range of Interest Rates (excluding impact of swaps and unused commitment fees) |
|
2.73% to 3.76% |
|
3.15% to 5.15% |
|
3.16% to 4.38% |
|
3.21% to 4.63% |
|
|
Year Ending December 31, |
|
Total |
|
|
|
|
|
|
|
|
|
2015 |
|
$ |
7,692 |
|
|
2016 |
|
7,692 |
|
|
|
2017 |
|
7,692 |
|
|
|
2018 |
|
7,692 |
|
|
|
2019 |
|
37,024 |
|
|
|
Total debt |
|
$ |
67,792 |
|
|
Year Ending December 31, |
|
Total |
|
|
|
|
|
|
|
|
|
2015 |
|
$ |
20,300 |
|
|
2016 |
|
20,300 |
|
|
|
2017 |
|
20,300 |
|
|
|
2018 |
|
20,300 |
|
|
|
2019 |
|
84,368 |
|
|
|
Total debt |
|
$ |
165,568 |
|
|
Year Ending December 31, |
|
Total |
|
|
|
|
|
|
|
|
|
2015 |
|
$ |
— |
|
|
2016 |
|
4,378 |
|
|
|
2017 |
|
9,787 |
|
|
|
2018 |
|
9,787 |
|
|
|
2019 |
|
78,298 |
|
|
|
Total debt |
|
$ |
102,250 |
|
|
Year Ending December 31, |
|
Total |
|
|
|
|
|
|
|
|
|
2015 |
|
$ |
1,500 |
|
|
2016 |
|
1,500 |
|
|
|
2017 |
|
1,500 |
|
|
|
2018 |
|
1,500 |
|
|
|
2019 |
|
14,125 |
|
|
|
|
|
|
|
|
|
Total debt |
|
$ |
20,125 |
|
|
Year Ending December 31, |
|
Total |
|
|
|
|
|
|
|
|
|
2015 |
|
$ |
2,750 |
|
|
2016 |
|
2,750 |
|
|
|
2017 |
|
2,750 |
|
|
|
2018 |
|
2,750 |
|
|
|
2019 |
|
30,250 |
|
|
|
|
|
|
|
|
|
Total debt |
|
$ |
41,250 |
|
|
Year Ending December 31, |
|
Total |
|
|
|
|
|
|
|
|
|
2015 |
|
$ |
2,081 |
|
|
2016 |
|
2,763 |
|
|
|
2017 |
|
2,763 |
|
|
|
2018 |
|
2,763 |
|
|
|
2019 |
|
2,763 |
|
|
|
Thereafter |
|
20,017 |
|
|
|
|
|
|
|
|
|
Total debt |
|
$ |
33,150 |
|
|
|||
|
|
|
Predecessor |
|
|
|
|
|
December 31, |
|
|
|
Carrying amount of the equity component (additional paid-in capital) |
|
$ |
24,375 |
|
|
Principal amount of the 2010 Notes |
|
125,000 |
|
|
|
Unamortized discount of the liability component |
|
9,119 |
|
|
|
Net carrying amount of the liability component |
|
115,881 |
|
|
|
|
|
Predecessor |
|
|||||||
|
|
|
Period from |
|
|
|
|||||
|
|
|
January 1 to |
|
|
|
|||||
|
|
|
July 9, |
|
Year Ended December 31, |
|
|||||
|
|
|
2014 (a) |
|
2013 |
|
2012 |
|
|||
|
Effective interest rate on liability component |
|
10.0 |
% |
10.0 |
% |
10.0 |
% |
|||
|
Cash interest expense recognized |
|
$ |
1,886 |
|
$ |
6,250 |
|
$ |
6,263 |
|
|
Non-cash interest expense recognized |
|
1,592 |
|
4,963 |
|
4,537 |
|
|||
|
Non-cash deferred financing amortization costs included in interest expense |
|
216 |
|
720 |
|
722 |
|
|||
(a)The amounts and percentage reflect amounts through April 21, 2014 since the Company ceased recording interest expense due to the Chapter 11 Cases.
|
|||
|
|
|
Predecessor |
|
|||||||
|
|
|
December 31, |
|
|||||||
|
Interest Rate Swap Detail |
|
Notional |
|
|||||||
|
Trade |
|
Fixed |
|
Start Date |
|
End date |
|
Amount |
|
|
|
Date |
|
Rate |
|
of Swap |
|
of Swap |
|
Outstanding |
|
|
|
9/6/05 |
|
4.485 |
% |
9/14/05 |
|
7/29/15 |
|
$ |
106,233 |
|
|
3/29/06 |
|
5.25 |
% |
1/2/07 |
|
1/1/14 |
|
50,000 |
|
|
|
1/9/09 |
|
2.05 |
% |
1/22/09 |
|
1/22/14 |
|
100,000 |
|
|
|
2/11/09 |
|
2.45 |
% |
2/23/09 |
|
2/23/14 |
|
50,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
306,233 |
|
|
|
|
Liability Derivatives |
|
||||||||
|
|
|
Balance |
|
Fair Value |
|
Balance |
|
Fair Value |
|
||
|
|
|
Sheet |
|
December |
|
Sheet |
|
December 31, |
|
||
|
Derivatives designated as hedging instruments |
|
|
|
|
|
|
|
|
|
||
|
Interest rate contracts |
|
Fair value of derivative instruments (Current Assets) |
|
$ |
— |
|
Fair value of derivative instruments (Current Liabilities) |
|
$ |
6,975 |
|
|
Interest rate contracts |
|
Fair value of derivative instruments (Noncurrent Assets) |
|
— |
|
Fair value of derivative instruments (Noncurrent Liabilities) |
|
— |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Total derivatives designated as hedging instruments |
|
|
|
— |
|
|
|
6,975 |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Total Derivatives |
|
|
|
$ |
— |
|
|
|
$ |
6,975 |
|
The following tables present the impact of derivative instruments and their location within the Consolidated Statement of Operations for the Predecessor Company:
The Effect of Derivative Instruments on the Consolidated Statement of Operations
For the Period from January 1 to July 9, 2014
|
Derivatives in Cash |
|
Amount of |
|
Location of |
|
Amount of |
|
Location of |
|
Amount of |
|
|||
|
Relationships |
|
2014 |
|
Portion) |
|
2014 |
|
Portion) |
|
2014 |
|
|||
|
Interest rate contracts |
|
$ |
(179 |
) |
Interest Expense |
|
$ |
(2,580 |
) |
Other Income (Expense) |
|
$ |
— |
|
The Effect of Derivative Instruments on the Consolidated Statement of Operations
For the Year Ended December 31, 2013
|
Derivatives in Cash |
|
Amount of |
|
Location of |
|
Amount of |
|
Location of |
|
Amount of |
|
|||
|
Relationships |
|
2013 |
|
Portion) |
|
2013 |
|
Portion) |
|
2013 |
|
|||
|
Interest rate contracts |
|
$ |
(882 |
) |
Interest Expense |
|
$ |
(9,963 |
) |
Other Income (Expense) |
|
$ |
(4 |
) |
The Effect of Derivative Instruments on the Consolidated Statement of Operations
For the Year Ended December 31, 2012
|
Derivatives in Cash |
|
Amount of |
|
Location of |
|
Amount of |
|
Location of |
|
Amount of |
|
|||
|
Relationships |
|
2012 |
|
Portion) |
|
2012 |
|
Portion) |
|
2012 |
|
|||
|
Interest rate contracts |
|
$ |
(4,252 |
) |
Interest Expense |
|
$ |
(13,440 |
) |
Other Income (Expense) |
|
$ |
100 |
|
The Effect of Derivative Instruments on the Consolidated Statement of Operations
For the Period from January 1 to July 9, 2014 and for the Years Ended December 31, 2013 and 2012
|
|
|
|
|
Amount of |
|
|||||||
|
|
|
Location of |
|
For the Period |
|
|
|
|
|
|||
|
|
|
Gain (Loss) |
|
from January 1 to |
|
|
|
|||||
|
Derivatives not designated |
|
Recognized in Income |
|
July 9, |
|
For the Year Ended December 31, |
|
|||||
|
as Hedging Instruments |
|
on Derivative |
|
2014 |
|
2013 |
|
2012 |
|
|||
|
Interest rate contracts |
|
Interest Expense |
|
$ |
(225 |
) |
$ |
— |
|
$ |
— |
|
|
|||
Changes in AOCI by Component
For the Period from July 9 to December 31, 2014
Successor Company
|
|
|
Net Unrealized |
|
|
|
AOCI — July 9, 2014 |
|
$ |
— |
|
|
|
|
|
|
|
|
OCI before reclassifications |
|
(25,317 |
) |
|
|
Amounts reclassified from AOCI |
|
— |
|
|
|
Net current-period OCI |
|
(25,317 |
) |
|
|
|
|
|
|
|
|
AOCI — December 31, 2014 |
|
$ |
(25,317 |
) |
Changes in AOCI by Component
For the Period from January 1, 2012 to July 9, 2014
Predecessor Company
|
|
|
Net Unrealized |
|
Net Unrealized |
|
Total |
|
|||
|
AOCI — January 1, 2012 |
|
$ |
(25,245 |
) |
$ |
7,696 |
|
$ |
(17,549 |
) |
|
|
|
|
|
|
|
|
|
|||
|
OCI before reclassifications |
|
22,628 |
|
(3,480 |
) |
19,148 |
|
|||
|
Amounts reclassified from AOCI |
|
(13,440 |
) |
— |
|
(13,440 |
) |
|||
|
Net current-period OCI |
|
9,188 |
|
(3,480 |
) |
5,708 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
AOCI — December 31, 2012 |
|
$ |
(16,057 |
) |
$ |
4,216 |
|
$ |
(11,841 |
) |
|
|
|
|
|
|
|
|
|
|||
|
OCI before reclassifications |
|
19,044 |
|
56,482 |
|
75,526 |
|
|||
|
Amounts reclassified from AOCI |
|
(9,963 |
) |
— |
|
(9,963 |
) |
|||
|
Net current-period OCI |
|
9,081 |
|
56,482 |
|
65,563 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
AOCI — December 31, 2013 |
|
$ |
(6,976 |
) |
$ |
60,698 |
|
$ |
53,722 |
|
|
|
|
|
|
|
|
|
|
|||
|
OCI before reclassifications |
|
(179 |
) |
(25,766 |
) |
(25,945 |
) |
|||
|
Amounts reclassified from AOCI |
|
2,580 |
|
— |
|
2,580 |
|
|||
|
Net current-period OCI |
|
2,401 |
|
(25,766 |
) |
(23,365 |
) |
|||
|
|
|
|
|
|
|
|
|
|||
|
AOCI — July 9, 2014 |
|
$ |
(4,575 |
) |
$ |
34,932 |
|
$ |
30,357 |
|
Reclassifications Out of AOCI
Predecessor Company
|
|
|
Amount Reclassified from AOCI |
|
|
|
|||||||
|
|
|
Predecessor |
|
|
|
|||||||
|
|
|
For the Period |
|
|
|
|
|
|
|
|||
|
|
|
from January 1 to |
|
|
|
|
|
Affected Line Item in |
|
|||
|
|
|
July 9, |
|
For the Year Ended December 31, |
|
the Statement Where |
|
|||||
|
Details about AOCI Components |
|
2014 |
|
2013 |
|
2012 |
|
Net Loss is Presented |
|
|||
|
Gains and losses on cash flow hedges Interest rate contracts |
|
$ |
2,580 |
|
$ |
9,963 |
|
$ |
13,440 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total reclassifications for the period |
|
$ |
2,580 |
|
$ |
9,963 |
|
$ |
13,440 |
|
|
|
|
|||
|
|
|
Successor |
|
Predecessor |
|
||||||||
|
|
|
December 31, 2014 |
|
December 31, 2013 |
|
||||||||
|
|
|
Carrying |
|
Fair Value |
|
Carrying |
|
Fair Value |
|
||||
|
Cash and cash equivalents |
|
$ |
83,414 |
|
$ |
83,414 |
|
$ |
122,722 |
|
$ |
122,722 |
|
|
Restricted cash |
|
29,695 |
|
29,695 |
|
10,150 |
|
10,150 |
|
||||
|
Floating rate debt |
|
430,135 |
|
430,135 |
|
1,480,064 |
|
See Below |
|
||||
|
2010 Notes |
|
— |
|
— |
|
115,881 |
|
63,438 |
|
||||
As of December 31, 2014 and 2013, the fair values of the Company’s financial assets and liabilities are categorized as follows:
|
|
|
Successor |
|
|||||||
|
|
|
December 31, 2014 |
|
|||||||
|
|
|
Total |
|
Quoted |
|
Significant |
|
|||
|
Investments |
|
$ |
26,486 |
|
$ |
26,486 |
|
$ |
— |
|
|
|
|
Predecessor |
|
|||||||
|
|
|
December 31, 2013 |
|
|||||||
|
|
|
Total |
|
Quoted |
|
Significant |
|
|||
|
Investments |
|
$ |
77,570 |
|
$ |
77,570 |
|
$ |
— |
|
|
Derivative instruments — liability position |
|
6,975 |
|
— |
|
6,975 |
|
|||
|
|||
|
|
|
Successor |
|
Predecessor |
|
||
|
|
|
December 31, |
|
December |
|
||
|
Lubricant inventory, fuel oil and diesel oil inventory and other stores |
|
$ |
11,018 |
|
$ |
11,342 |
|
|
Prepaid items |
|
4,638 |
|
5,000 |
|
||
|
Insurance receivable |
|
1,951 |
|
1,096 |
|
||
|
Other |
|
4,816 |
|
1,627 |
|
||
|
Total prepaid expenses and other current assets |
|
$ |
22,423 |
|
$ |
19,065 |
|
|
|||
|
|
|
Successor |
|
Predecessor |
|
||
|
|
|
December 31, |
|
December 31, |
|
||
|
|
|
|
|
|
|
||
|
2007 Credit Facility |
|
$ |
— |
|
$ |
29,568 |
|
|
$ 100 Million Term Loan Facility |
|
1,492 |
|
1,783 |
|
||
|
$ 253 Million Term Loan Facility |
|
3,135 |
|
4,708 |
|
||
|
2010 Notes |
|
— |
|
3,637 |
|
||
|
2010 Baltic Trading Credit Facility |
|
— |
|
3,339 |
|
||
|
Baltic Trading $148 Million Credit Facility |
|
3,233 |
|
— |
|
||
|
Baltic Trading $22 Million Term Loan Facility |
|
529 |
|
518 |
|
||
|
Baltic Trading $44 Million Term Loan Facility |
|
758 |
|
737 |
|
||
|
2014 Baltic Trading Term Loan Facilities |
|
1,853 |
|
— |
|
||
|
Total deferred financing costs |
|
11,000 |
|
44,290 |
|
||
|
Less: accumulated amortization |
|
729 |
|
22,279 |
|
||
|
Total |
|
$ |
10,271 |
|
$ |
22,011 |
|
|
|||
|
|
|
Successor |
|
Predecessor |
|
||
|
|
|
December 31, |
|
December |
|
||
|
Fixed assets, at cost: |
|
|
|
|
|
||
|
Vessel equipment |
|
$ |
229 |
|
$ |
4,323 |
|
|
Leasehold improvements |
|
— |
|
2,679 |
|
||
|
Furniture and fixtures |
|
462 |
|
786 |
|
||
|
Computer equipment |
|
129 |
|
754 |
|
||
|
Total costs |
|
820 |
|
8,542 |
|
||
|
Less: accumulated depreciation and amortization |
|
119 |
|
3,438 |
|
||
|
Total |
|
$ |
701 |
|
$ |
5,104 |
|
|
|||
|
|
|
Successor |
|
Predecessor |
|
||
|
|
|
December 31, |
|
December 31, |
|
||
|
Accounts payable |
|
$ |
9,921 |
|
$ |
5,643 |
|
|
Accrued general and administrative expenses |
|
5,894 |
|
8,960 |
|
||
|
Accrued vessel operating expenses |
|
12,402 |
|
12,756 |
|
||
|
Total |
|
$ |
28,217 |
|
$ |
27,359 |
|
|
|||
|
|
|
Predecessor |
|
|
|
|
|
July 9, 2014 |
|
|
|
2007 Credit Facility |
|
$ |
1,055,912 |
|
|
$ 100 Million Term Loan Facility |
|
73,561 |
|
|
|
$ 253 Million Term Loan Facility |
|
175,718 |
|
|
|
Interest payable |
|
13,199 |
|
|
|
Terminated interest rate swap liability |
|
5,622 |
|
|
|
Convertible senior note payable |
|
117,473 |
|
|
|
Bond coupon interest payable |
|
1,105 |
|
|
|
Lease obligation |
|
815 |
|
|
|
Pre-petition accounts payable |
|
41 |
|
|
|
Total |
|
$ |
1,443,446 |
|
|
|||
|
|
|
Successor |
|
Predecessor |
|
||
|
|
|
Period from |
|
Period from |
|
||
|
Professional fees incurred |
|
$ |
968 |
|
$ |
34,981 |
|
|
Trustee fees incurred |
|
623 |
|
251 |
|
||
|
Total reorganization fees |
|
$ |
1,591 |
|
$ |
35,232 |
|
|
|
|
|
|
|
|
||
|
Gain on settlement of liabilities subject to compromise |
|
$ |
— |
|
$ |
(1,187,689 |
) |
|
Net gain on debt and equity discharge and issuance |
|
— |
|
(775,086 |
) |
||
|
Fresh-start reporting adjustments |
|
— |
|
1,045,376 |
|
||
|
Total fresh-start adjustment |
|
$ |
— |
|
$ |
(917,399 |
) |
|
|
|
|
|
|
|
||
|
Total reorganization items, net |
|
$ |
1,591 |
|
$ |
(882,167 |
) |
|
|
|
|
Number of |
|
Weighted |
|
|
|
Outstanding at July 9, 2014 - Successor |
|
— |
|
$ |
— |
|
|
Granted |
|
1,110,600 |
|
20.00 |
|
|
|
Vested |
|
— |
|
— |
|
|
|
Forfeited |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2014 - Successor |
|
1,110,600 |
|
$ |
20.00 |
|
|
|
|
Year Ended December 31, |
|
|||||||||||||
|
|
|
2014 |
|
2013 |
|
2012 |
|
|||||||||
|
|
|
Number |
|
Weighted |
|
Number |
|
Weighted |
|
Number |
|
Weighted |
|
|||
|
Outstanding at January 1 |
|
1,381,429 |
|
$ |
6.03 |
|
664,249 |
|
$ |
7.70 |
|
545,750 |
|
$ |
11.60 |
|
|
Granted |
|
1,086,345 |
|
2.61 |
|
998,680 |
|
5.60 |
|
299,999 |
|
3.04 |
|
|||
|
Vested |
|
(525,930 |
) |
7.21 |
|
(281,500 |
) |
8.48 |
|
(181,500 |
) |
11.71 |
|
|||
|
Forfeited |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Outstanding at December 31 |
|
1,941,844 |
|
$ |
3.80 |
|
1,381,429 |
|
$ |
6.03 |
|
664,249 |
|
$ |
7.70 |
|
The table below summarizes the Predecessor Company’s nonvested stock awards for the period from January 1, 2012 to July 9, 2014 under the 2005 and 2012 GS&T Plans:
|
|
|
Number of |
|
Weighted |
|
|
|
Outstanding at January 1, 2014 - Predecessor |
|
880,465 |
|
$ |
7.77 |
|
|
Granted |
|
— |
|
— |
|
|
|
Vested |
|
(880,465 |
) |
7.77 |
|
|
|
Forfeited |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
Outstanding at July 9, 2014 - Predecessor |
|
— |
|
$ |
— |
|
|
|
|
Year Ended December 31, |
|
||||||||
|
|
|
2013 |
|
2012 |
|
||||||
|
|
|
Number |
|
Weighted |
|
Number of |
|
Weighted |
|
||
|
Outstanding at January 1 - Predecessor |
|
1,108,762 |
|
$ |
9.47 |
|
936,787 |
|
$ |
14.06 |
|
|
Granted |
|
200,634 |
|
1.57 |
|
464,175 |
|
2.71 |
|
||
|
Vested |
|
(407,431 |
) |
9.46 |
|
(290,700 |
) |
13.49 |
|
||
|
Forfeited |
|
(21,500 |
) |
5.53 |
|
(1,500 |
) |
6.39 |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Outstanding at December 31 - Predecessor |
|
880,465 |
|
$ |
7.77 |
|
1,108,762 |
|
$ |
9.47 |
|
|
|
|
Number of |
|
Weighted |
|
Weighted |
|
||
|
Outstanding at July 9, 2014 - Successor |
|
— |
|
$ |
— |
|
$ |
— |
|
|
Granted |
|
8,557,461 |
|
30.31 |
|
6.36 |
|
||
|
Exercised |
|
— |
|
— |
|
— |
|
||
|
Forfeited |
|
— |
|
— |
|
— |
|
||
|
|
|
|
|
|
|
|
|
||
|
Outstanding at December 31, 2014 - Successor |
|
8,557,461 |
|
$ |
30.31 |
|
$ |
6.36 |
|
|
|
|
Warrants Outstanding, |
|
Warrants Exercisable, |
|
||||||||
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
||
|
|
|
|
|
Weighted |
|
Average |
|
|
|
Weighted |
|
||
|
Weighted |
|
Number of |
|
Average |
|
Remaining |
|
Number of |
|
Average |
|
||
|
$ |
30.31 |
|
8,557,461 |
|
$ |
30.31 |
|
5.60 |
|
— |
|
— |
|
|
|
|
Successor |
|
|
|
|
|
Period from |
|
|
|
General, administrative and management fees |
|
$ |
5,464 |
|
|
|
|
Successor |
|
Predecessor |
|
||||||||
|
|
|
Period from |
|
Period from |
|
Year Ended December 31, |
|
||||||
|
|
|
2014 |
|
2014 |
|
2013 |
|
2012 |
|
||||
|
General, administrative and management fees |
|
$ |
1,551 |
|
$ |
1,949 |
|
$ |
1,558 |
|
$ |
1,777 |
|
|
|
|
Predecessor |
|
|||||||
|
|
|
Period from |
|
Year Ended December 31, |
|
|||||
|
|
|
2014 |
|
2013 |
|
2012 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
General, administrative and management fees |
|
$ |
2,403 |
|
$ |
2,924 |
|
$ |
4,087 |
|
|
|||
|
|
|
2014 |
|
|||||||||||||
|
|
|
Predecessor |
|
Successor |
|
|||||||||||
|
|
|
|
|
Period from |
|
Period from |
|
|
|
|||||||
|
|
|
Quarter Ended |
|
July 1 to |
|
July 9 to |
|
Quarter Ended |
|
|||||||
|
|
|
March 31 |
|
June 30 |
|
July 9 |
|
September 30 |
|
December 31 |
|
|||||
|
|
|
(In thousands, except share and per share amounts) |
|
|||||||||||||
|
Revenues |
|
$ |
63,180 |
|
$ |
51,545 |
|
$ |
4,034 |
|
$ |
43,943 |
|
$ |
54,874 |
|
|
Operating (loss) income |
|
(20,766 |
) |
(26,552 |
) |
(8,356 |
) |
(17,436 |
) |
(185,796 |
) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Net (loss) income |
|
(42,238 |
) |
(65,557 |
) |
892,351 |
|
(22,562 |
) |
(190,795 |
) |
|||||
|
Net (loss) income attributable to noncontrolling interest |
|
(3,133 |
) |
(5,033 |
) |
(568 |
) |
(4,272 |
) |
(26,792 |
) |
|||||
|
Net (loss) income attributable to Genco Shipping & Trading Limited |
|
(39,105 |
) |
(60,524 |
) |
892,919 |
|
(18,290 |
) |
(164,003 |
) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Net (loss) earnings per share - basic (2) |
|
$ |
(0.90 |
) |
$ |
(1.39 |
) |
$ |
20.49 |
|
$ |
(0.30 |
) |
$ |
(2.72 |
) |
|
Net (loss) earnings per share - diluted (2) |
|
$ |
(0.90 |
) |
$ |
(1.39 |
) |
$ |
20.49 |
|
$ |
(0.30 |
) |
$ |
(2.72 |
) |
|
Dividends declares and paid per share (1) |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
Weighted average common shares outstanding - basic |
|
43,568,942 |
|
43,568,942 |
|
43,568,942 |
|
60,299,766 |
|
60,415,981 |
|
|||||
|
Weighted average common shares outstanding - diluted |
|
43,568,942 |
|
43,568,942 |
|
43,568,942 |
|
60,299,766 |
|
60,415,981 |
|
|||||
|
|
|
2013 |
|
||||||||||
|
|
|
Predecessor |
|
||||||||||
|
|
|
Quarter Ended |
|
||||||||||
|
|
|
March 31 |
|
June 30 |
|
September 30 |
|
December 31 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Revenues |
|
$ |
40,486 |
|
$ |
45,760 |
|
$ |
59,433 |
|
$ |
81,785 |
|
|
Operating (loss) income |
|
(30,474 |
) |
(27,075 |
) |
(13,387 |
) |
4,030 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net (loss) income |
|
(51,950 |
) |
(48,940 |
) |
(36,976 |
) |
(19,155 |
) |
||||
|
Net (loss) income attributable to noncontrolling interest |
|
(3,787 |
) |
(3,571 |
) |
(1,942 |
) |
20 |
|
||||
|
Net (loss) income attributable to Genco Shipping & Trading Limited |
|
(48,163 |
) |
(45,369 |
) |
(35,034 |
) |
(19,175 |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net (loss) earnings per share - basic (2) |
|
$ |
(1.12 |
) |
$ |
(1.05 |
) |
$ |
(0.81 |
) |
$ |
(0.43 |
) |
|
Net (loss) earnings per share - diluted (2) |
|
$ |
(1.12 |
) |
$ |
(1.05 |
) |
$ |
(0.81 |
) |
$ |
(0.43 |
) |
|
Dividends declares and paid per share (1) |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
Weighted average common shares outstanding - basic |
|
43,161,510 |
|
43,196,895 |
|
43,231,510 |
|
43,403,894 |
|
||||
|
Weighted average common shares outstanding - diluted |
|
43,161,510 |
|
43,196,895 |
|
43,231,510 |
|
43,403,894 |
|
||||
|
(1) |
Does not include cash dividends paid by Baltic Trading. |
|
(2) |
Amounts may not total to annual earnings (loss) because each quarter and year are calculated separately based on basic and diluted weighted-average common shares outstanding during that period. |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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