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SUBSEQUENT EVENTS | 6 Months Ended
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Jun. 30, 2018
SUBSEQUENT EVENTS |
SUBSEQUENT EVENTS | 16 – SUBSEQUENT EVENTS On July 26, 2018, the Company took delivery of the Genco Weatherly, a 61,556 dwt 2014-built Ultramax vessel. The Company utilized cash on hand to pay the remaining balance of $22,313 for the Genco Weatherly and expects to utilize proceeds from the anticipated new credit facility as described below to reimburse to the Company a portion of the purchase price. On July 24, 2018, the Company entered into an agreement to sell the Genco Surprise, a 1998-built Panamax vessel, to a third party. On August 7, 2018, the Company completed the sale of the Genco Surprise. This vessel does not serve as collateral under any of the Company’s credit facilities; therefore the Company is not required to pay down any indebtedness with the proceeds from the sale. Refer to Note 2 — Summary of Significant Accounting Policies regarding the impairment recorded for this vessel during the second quarter of 2018. On July 12, 2018, the Company entered into agreements to purchase two modern, high specification 2016-built Capesize drybulk vessels for an aggregate purchase price of $98,000. These vessels are to be renamed the Genco Defender and Genco Liberty. The vessels are expected to be delivered to the Company during the third quarter of 2018. The Company intends to use a combination of cash on hand and proceeds from the anticipated new credit facility as described below. On July 13, 2018, the Company entered into a commitment letter for a new five-year senior secured credit facility (the “New Credit Facility”) to be led by Cr é dit Agricole Corporate & Investment Bank. The Company intends to use proceeds from the New Credit Facility to finance or reimburse to the Company a portion of the purchase price for six vessels, two of which are noted above and four of which are referenced in Note 4 — Vessel Acquisitions and Dispositions, which are to serve as collateral. The aggregate principal amount of the New Credit Facility is estimated to be approximately $107,000, representing 45% of the appraised value of the six vessels. Such amount may be drawn down in up to six borrowings. The commitment letter provides for the following additional key terms:
| · |  | Borrowings under the New Credit Facility will bear interest at LIBOR plus 2.50% through September 30, 2019 and LIBOR plus a range of 2.25% to 2.75% thereafter, dependent upon the Company’s ratio of total net indebtedness to the last twelve months EBITDA.
| · |  | Scheduled amortization payments under the New Credit Facility are to reflect a repayment profile whereby the facility shall have been repaid to nil when the average vessel aged of the collateral vessels reaches 20 years. Assuming borrowing of the full amount estimated above under the New Credit Facility with the third quarter of 2018, such payments are anticipated to be approximately $1,600 per quarter commending on December 31, 2018, with a final balloon payment on the maturity date.
| · |  | Mandatory prepayments are to be applied to remaining amortization payments pro rata, while voluntary prepayments are to be applied to remaining amortization payments in order of maturity.
| · |  | Dividends may be paid subject to customary conditions and a limitation of 50% of consolidated net income for the quarter preceding such dividend payment if the collateral maintenance test ratio is 200% or less for such quarter.
| · |  | Acquisitions and additional indebtedness are allowed subject to compliance with financial covenants, a collateral maintenance test, and other customary conditions.
| · |  | Key financial covenants, which are expected to be based on those in the Company’s $460 Million Credit Facility, include:
| · |  | minimum liquidity, with unrestricted cash and cash equivalents to equal or exceed the greater of $30,000 and 7.5% of total indebtedness;
| · |  | minimum working capital, with consolidated current assets (excluding restricted cash) minus consolidated current liabilities (excluding the current portion of long-term indebtedness) to be not less than zero;
| · |  | debt to capitalization, with the ratio of total indebtedness to total capitalization to be not more than 70%; and
| · |  | collateral maintenance, with the aggregate appraised value of collateral vessels to be at least 135% of the principal amount of the loan outstanding under the New Credit Facility.
Other key provisions are to be based on the $460 Million Credit Facility. Refer to Note 7 — Debt. The New Credit Facility is subject to definitive documentation, and borrowings thereunder are expected to be subject to customary conditions.

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- Definition The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 855 -URI http://asc.fasb.org/topic&trid=2122774 + Details
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