Excel Maritime to File for Chapter 11 Bankruptcy Protection

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June 11, 2013

Excel Maritime’s capesize bulker, Lowlands Beilun. Image courtesy Excel Maritime.

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June 11 (Reuters) – Drybulk shipper Excel Maritime Carriers Ltd intends to file for Chapter 11 bankruptcy, a regulatory filing showed on Tuesday, making it the latest victim of a downturn in the shipping industry.

Charter rates for dry bulk vessels, which transport cargoes such as coal, grain and iron ore, have steadily declined since 2008 as dozens of new vessels ordered before the global financial crisis came into service after demand had fallen.

The slump, one of the worst ever faced by the industry, has caused a number of bankruptcies including that of Britain’s oldest shipping firm, Stephenson Clarke Shipping Ltd, and Italian dry freight group Deiulemar Shipping.

Excel said it had started soliciting acceptances from its lenders for a prepackaged reorganization plan, supported by a committee of its secured lenders.

Excel would file a petition under Chapter 11 after the solicitation period, the filing showed.

The company, which owns and operates a fleet of 38 dry bulk cargo vessels, said it was no longer able to sustain its debt service obligations.

Excel, whose market capitalization was $43 million as of Monday’s close, has $150 million of unsecured bonds due in 2027. Obligations under its senior secured credit facility are about $771 million.

“We have been expecting a restructuring or Chapter 11 event at Excel Maritime for some time, given ongoing weakness in the dry bulk market and its significant debt obligations,” Wells Fargo Securities analyst Michael Webber said.

A restructuring agreement between its senior lenders and an entity affiliated with the family of Excel’s Chairman, Gabriel Panayotides, gives Excel up to $50 million of new capital.

The company will also get access to $30 million of currently restricted cash.

Panayotides will receive a 60 percent equity stake in the company for $30 million. The stake could potentially increase to 75 percent with an additional $20 million contribution.

The lenders will own the remaining 40 percent stake, and in exchange will postpone the maturity of Excel’s $771 million senior secured facility to 2018.

“We believe that there is substantial long-term Chapter 11 or refinancing risk amid other distressed dry bulk stocks including Genco Shipping and Trading Ltd, Dryships Inc and Eagle Bulk Shipping Inc,” Webber said.

Clarkson Capital Markets analyst Urs Dur noted that while some drybulk shippers remain stressed, companies such as Navios Maritime Holdings Inc and Navios Maritime Partners LP had solid balance sheets.

Excel had $27.2 million in cash and more than $1 billion in debt as of June 2012, according to Thomson Reuters data.

The New York Stock Exchange said it would immediately suspend trading in Excel shares and start delisting proceedings. The stock closed at 47 cents on Monday.

(c) 2013 Thomson Reuters, Click For Restrictions

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