UPDATE 1-Genco to scrap deal to buy 6 vessels, take Q4 charge
(Recasts; adds details, share movement)
Nov 4 (Reuters) - Genco Shipping & Trading Ltd (GNK.N) said it agreed to cancel a deal to buy six drybulk vessels, and will take a related charge of $54 million in the fourth quarter.
Genco, which had previously announced it would buy the vessels for an aggregate purchase price of $530 million, said the selling group will retain the deposits totalling $53 million related to the deal.
Genco's decision to forego the purchase has strengthened its liquidity "during a difficult market environment," the company said in a statement.
The company said it repaid the debt related to the deposits related to the deal using cash flow from operations, reducing the debt outstanding under its 2007 revolving credit facility to $1.08 billion.
Genco said it is discussing a potential extension of the $320 million credit facility, put in place to fund the deal, with its lenders.
Under existing terms, the credit facility is to be cancelled upon a cancellation of the acquisition contracts.
A cancellation of the facility will result in a fourth-quarter non-cash charge to interest expense of about $2.3 million related to deferred financing costs, the company said.
Genco shares closed up 4.5 percent at $22.46 Tuesday on the New York Stock Exchange. (Reporting by Adveith Nair in Bangalore; Editing by Pratish Narayanan)
