Eagle Bulk Shipping, through its wholly-owned subsidiaries, Eagle Bulk Shipco and Eagle Shipping, entered into a series of refinancing transactions, including the repayment in full of Eagle Shipping’s outstanding first and second lien credit facilities, each dated as of March 30, 2016.

According to a related 8-K filing, ABN AMRO Capital USA served as security trustee and facility agent for the lender group.

As a result of these transactions, the company has extended the maturities of the outstanding debt of its subsidiaries through 2022 and achieved additional financial flexibility with respect to its free cash flow.

Specific benefits associated with the refinancing transactions include the following:

  • Extension of tenor on all outstanding debt through 2022
  • Payoff of the PIK note bearing a cost of approximately 15%
  • Reduction of annual interest expense by approximately $2.6 million
  • Elimination of exposure to rising interest rates on approximately 60% of company’s debt
  • Facilitation of the potential payment of dividends and alternate uses of cash flow, including fleet expansion.

Gary Vogel, Eagle Bulk’s CEO, commented, “The successful refinancing of our balance sheet on favorable terms is a strong endorsement by our lenders and the capital markets of the company’s business model and validates the actions that we have taken over the last two years to reposition Eagle Bulk as the leading active owner-operator of Supramax/Ultramax vessels. Through this process, we have also created the financial flexibility to pursue accretive opportunities and explore other ways to return value to our shareholders.”

Each of the financial transactions, which are described further below, closed on December 8, 2017.

The net proceeds of $195 million from a previously announced offering by Eagle Shipco of senior secured bonds with a coupon of 8.25% due November 28, 2022 were distributed to the company upon the satisfaction of certain conditions precedent.

Eagle Shipping entered into a $65 million credit agreement consisting of a term loan facility in an aggregate principal amount of up to $60 million and a revolving credit facility in an aggregate principal amount of up to $5 million. Outstanding borrowings under the credit agreement bear an interest of LIBOR + 3.50% per annum. The credit agreement matures on the earlier of five years from the initial borrowing date under the credit agreement and December 8, 2022.

The net proceeds from the bonds, the credit agreement (including the drawdown by Eagle Shipping of the $5 million revolving credit facility), and cash on hand were used to repay in full the amounts outstanding (including accrued interest) under the prior credit facilities.

Eagle Shipco also entered into a revolving credit facility in an aggregate amount of up to $15 million. The super senior facility matures on the earlier of December 8, 2022 and three months prior to the final maturity of the bonds. Outstanding borrowings under the super senior facility will bear an interest of LIBOR + 2.00% per annum. The super senior facility is currently undrawn.