Eagle Bulk, the parent company of Eagle Bulk Shipping Inc, has commenced a voluntary “prepackaged” Chapter 11 case in the United States Bankruptcy Court for the Southern District of New York.
Eagle Bulk Shipping Inc. has entered into a Restructuring Support Agreement (RSA) with lenders holding more than 85% of the loans outstanding under its Fourth Amended and Restated Credit Agreement, dated June 20, 2012, regarding the terms of a balance sheet restructuring that will reduce its debt obligations by approximately USD 975 million.
In conjunction with the prepackaged case, Eagle Bulk also filed its proposed plan of reorganization and related disclosure statement.
Eagle Bulk has also obtained a commitment for up to USD 50 million of debtor-in-possession (DIP) financing from certain of its lenders which, subject to Court approval, will significantly enhance liquidity.
During the process, Eagle Bulk intends to continue normal day-to-day operations.
Under the terms of the plan, the lenders will convert their debt into 99.5% of the new equity in the reorganized Eagle Bulk, subject to dilution, and receive a cash distribution from the proceeds of an exit financing facility.
All existing equity interests in Eagle Bulk will be cancelled, with such equity interests receiving, subject to dilution, 0.5% of the new equity in the reorganized Eagle Bulk and seven-year warrants to acquire an additional 7.5% of the new equity in the reorganized Eagle Bulk.
Press Release; August 6, 2014