Financially distressed dry bulk shipper Eagle Bulk has gained another two weeks to come to an agreement with their lenders to agree on a restructuring agreement after their May 15 deadline passed yesterday without an agreement.
Their waiver to execute a new agreement has been extended to 31 May 2014.
At the end of 2013, Eagle Bulk was $1,129,478,741 in debt and were in violation of their maximum leverage ratio as set in their credit facility. In the company’s 10-Q filing for 2013, they note:
“Without the negotiation of further waivers or modifications to our Fourth Amended and Restated Credit Agreement or completion of a restructuring of the Company’s outstanding indebtedness, it is likely that we will not be in compliance with the maximum leverage ratio and the minimum interest coverage ratio for periods on or after June 30, 2014. As a result, we have concluded that there is substantial doubt about the Company’s ability to continue as a going concern and we have classified our debt as current as of December 31, 2013.”
Should an agreement not be reached, Eagle Bulk notes their majority lenders will foreclose on the liens held on their ships, leading to a cascading effect of foreclosures by other lenders ultimately leading to bankruptcy or liquidation of the company.
Eagle Bulk warns shareholders in an SEC filing yesterday:
“Although there can be no assurance that the Company will be able to reach an agreement with the Lenders regarding the terms of a Restructuring, it is expected that any Restructuring transaction would be substantially dilutive to the Company’s current shareholders.”
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