* Oaktree Capital to pump in $175 mln in equity
* Receives up to $100 mln DIP financing commitment
* Debtors expect emergence from bankruptcy in spring of 2012
By Vaishnavi Bala and Krishna N Das
Nov 17 General Maritime Corp, a
crude oil and refined petroleum products shipper, filed for
Chapter 11 bankruptcy protection on Thursday, becoming the
latest victim of a downturn triggered by an oversupply of
vessels amid weak demand.
Bankers expect more bankruptcies and restructuring in the
sector as daily rates for vessels fall below their operating
costs, hurting companies' cash flows and ability to comply with
General Maritime, which listed total assets of $1.72 billion
and liabilities of $1.41 billion as of September end, said
private equity firm Oaktree Capital Management will
provide it with $175 million in equity.
The company's lenders have also agreed to defer cash
payments of about $140 million to June 2014.
"(Oaktree investment) is good in this situation as tanker
markets will stay soft for at least 2-3 years," First Securities
ASA analyst Erik Folkeson said.
"However, they will still have a negative operating cash
flow. The question is, when will the markets turn and will they
have sufficient cash to live through a long period of tough
The company has a commitment for up to $100 million in new
debtor-in-possession financing from a group of lenders, led by
Nordea as the administrative agent. The debtors are expecting
the company to emerge from bankruptcy in the spring of 2012.
"The situation (bankruptcy/current agreement) is the best
for all partners," Nordea spokesman Erik Durhan said. "We don't
expect there to be any large negative effect on Nordea."
New York-based General Maritime, whose shares have lost
about 95 percent of their value this year as of Wednesday, has
posted losses for the last eight quarters.
The company, which was founded in 1991 by chairmen Peter
Georgiopoulos in its first avatar as Maritime Equity Management,
owns a fleet of 30 tankers with a total carrying capacity of
about 5.1 million deadweight tonnage.
It operates mainly in the Atlantic Ocean, including ports in
the Caribbean, South and Central America, the United States,
West Africa, the Mediterranean, Europe and the North Sea.
General Maritime said all its units, except those in
Portugal, Russia, Singapore and certain inactive ones, have also
started Chapter 11 cases.
"If the market stays at this level for a long time, many
companies will go the same way. They will have a need to
deleverage and increase their liquidity," analyst Folkeson said.
"We will see a lot of restructuring."
Danish firm Torm, which has a dry shipping and oil
tanker division, said on Thursday it was talking to lenders
about rescheduling its $1.84 billion debt and tripled to $300
million the amount it is seeking in a rights issue.
On Wednesday, trucking and marine freight service provider
Trailer Bridge Inc filed for Chapter 11 bankruptcy
protection and drybulk shipper Paragon Shipping Inc
said it was in violation of a loan agreement.
The case is in Re: General Maritime Corp-Southern District
of New York, No. 11-15285.