General Maritime Corp. (GMR) voluntarily filed for Chapter 11 bankruptcy and reached agreements with key senior lenders for a financial restructuring that will allow the oil-tanker company’s operations to continue.
“Our operations are strong, but continued macroeconomic weakness and reduced tanker rates have diminished our cash flow and our ability to comply with certain covenants under our debt instruments,” said Chief Financial Officer Jeffrey D. Pribor.
Along with the filing, General Maritime has received a commitment for up to $100 million in new debtor-in-possession financing from a group of lenders led by Nordea Bank Finland PLC. The company said the new financing and cash generated from its ongoing operations will fund the business during the restructuring process and prevent customer interruption.
The restructuring agreement and related equity commitment letter are supported by more than two-thirds of its obligations from banks and Oaktree Capital Management LP.
Oaktree also agreed to provide a $175 million new equity investment in General Maritime and convert its prepetition secured debt to equity.
With the exception of those in Portugal, Russia and Singapore, all of General Maritime’s subsidiaries have filed for Chapter 11.
Last month, Standard & Poor’s Ratings Services cut its rating on General Maritime to selective default, citing the company’s failure to make a scheduled principal payment.
In its latest quarterly results, General Maritime reported a wider loss as revenue dropped 12% on lower rates.
Shares closed Wednesday at 16 cents and were inactive premarket. The stock has fallen 95% so far this year.
-By Melodie Warner, Dow Jones Newswires