Eagle Bulk Eyes Bond Amendment to Finance Scrubber Retrofits

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Connecticut-based Eagle Bulk Shipping is looking to secure an amendment to the Eagle Bulk ShipCo bond terms in an effort to finance more exhaust gas cleaning system retrofits.

Namely, the company has mandated DNB Markets, Fearnley Securities and SEB to arrange a series of meetings from October 5, 2018 with existing holders of the USD 200 million in aggregate principal amount of 8.250% senior secured bonds due in November 2022 issued by the company’s subsidiary Eagle Bulk ShipCo.

Through the meetings, the company would seek approval for an amendment to the bond terms to allow for the use of proceeds from the sale of security vessels, up to a proposed USD 25 million for the partial financing of scrubbers. This would finance four exhaust gas cleaning systems to be retrofitted to the company’s fleet of vessels and options to purchase 18 additional scrubbers.

According to the bond terms, proceeds from sale of a security vessel can only be used towards either vessel acquisitions and/or tendering for outstanding bonds.

The development comes less than a month after Eagle Bulk Shipping unveiled a series of agreements for the order of 19 scrubbers. The company intends to complete the installation of scrubbers on the 19 vessels prior to January 1, 2020, which is the implementation date of the sulphur emission cap regulation set forth by the International Maritime Organisation (IMO).

As part of the deals, ShipCo intends to install scrubbers on four of the security vessels. In addition to these installations, scrubbers may be installed on up to an additional 18 of the security vessels under the options agreements. The cost, including installation, is expected to be approximately USD 2 million per scrubber, the company informed.

ShipCo seeks to finance the installation of the scrubbers through sources of funds which may include available cash, cash flow from operations and proceeds from the sale of security vessels.

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