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Genco and Baltic Trading announced that they have entered into a definitive agreement under which Genco will acquire Baltic Trading in a stock-for-stock transaction.
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Under the terms of the agreement, Baltic Trading will become an indirect wholly-owned subsidiary of Genco. Baltic Trading shareholders will receive 0.216 shares of Genco common stock for each share of Baltic Trading common stock they own at closing, with fractional shares to be settled in cash.
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Upon consummation of the transaction, Genco shareholders are expected to own approximately 84.5% of the combined company and Baltic Trading shareholders (which will not include Genco or its subsidiaries) are expected to own approximately 15.5% of the combined company.
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Shares of Baltic Trading’s Class B Stock (all of which are owned by a subsidiary of Genco) will be canceled in the merger.
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The exchange ratio for Baltic Trading shareholders was established in arm’s length negotiations between the special committees and their financial advisors based upon relative net asset value.
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Genco expects to have its stock listed on the NYSE upon consummation of the transaction.
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We believe that this transaction will deliver value to the shareholders of both companies.
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By combining Genco and Baltic Trading, we are creating an industry leader that we believe is well positioned for future growth and expansion, and we are excited about our future prospects.
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Through this combination, we expect to benefit from having a larger platform and solid financial position for value creation.
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The transaction will simplify our ownership structure, enhance the combined company’s scale and operations and reduce overhead.
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The combined company will be poised to capitalize on opportunities in the current market environment, and we believe the combined platform is well positioned for continued growth as a consolidator in our industry.
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Once the transaction is complete, Genco expects to further extend its leadership position in drybulk shipping and own a fleet of 70 drybulk vessels with an average age of 8.8 years and an aggregate carrying capacity of approximately 5,159,000 dwt, consisting of 13 Capesize, eight Panamax, 21 Supramax, four Ultramax, six Handymax and 18 Handysize vessels, after the expected delivery of the two Ultramax newbuildings previously contracted by Baltic Trading.
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In addition to other customary closing conditions, the closing of the transaction is subject to:
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The listing of Genco common stock on the NYSE;
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The affirmative vote of the holders of a majority of the shares of Genco common stock present and voting at a meeting of Genco shareholders called to consider the transaction;
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The affirmative vote of the holders of a majority of the outstanding shares of Baltic Trading common stock and Class B stock, voting together as a single class, at a meeting of Baltic Trading shareholders called to consider the transaction; and
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The affirmative vote of the holders of a majority of the outstanding shares of Baltic Trading common stock and Class B stock (excluding shares held by Genco, its subsidiaries, and directors and officers of Baltic Trading who are also directors or officers of Genco) at such Baltic Trading shareholders’ meeting.
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Certain affiliates of Centerbridge Partners, L.P., as shareholders of Genco and/or Baltic Trading, as the case may be, have entered into a voting and support agreement, pursuant to which such shareholders have agreed to vote their shares in favor of the transaction.
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The Boards of Directors of both Genco and Baltic Trading established independent special committees to review the transaction and negotiate the terms on behalf of their respective companies. Both special committees unanimously approved the transaction.
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The Boards of Directors of both companies unanimously approved the transaction with Peter C. Georgiopoulos, as Chairman of the Board of each company, abstaining.
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We believe the transaction will position our company for continued future growth and success.
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We look forward to completing this transaction and building on our position as a leader in international drybulk shipping to create value for our investors and charter customers.
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Genco also announced that certain of its wholly-owned subsidiaries have entered into a loan agreement providing for a new $60 million revolving credit facility with ABN AMRO Capital USA LLC and certain other lenders, with an uncommitted accordion feature that, if exercised, will upsize the facility up to $150 million.
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In addition, Genco announced today that it has entered into an agreement to acquire the shares of two single-purpose entities that are wholly-owned by Baltic Trading, each of which owns one Capesize drybulk vessel.
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The aggregate acquisition price is $68.5 million, subject to reduction for approximately $41 million of outstanding first-mortgage debt of the single-purpose entities that is to be guaranteed by Genco. It is also subject to an adjustment for the difference between the single-purpose entities’ current assets and total liabilities as of the closing date.
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Baltic Trading determined to sell these vessels to increase its liquidity position and strengthen its balance sheet, and it was advantageous to keep them in the Genco fleet.
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Through these transactions, Genco is acquiring the vessels known as the Baltic Lion and the Baltic Tiger. The vessels will continue operating under their current time charters.
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The acquisition of the vessel owning entities is subject to the completion of customary documentation and closing conditions. It is expected to close on April 8, 2015.
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The independent special committees of both companies’ Boards of Directors reviewed and approved this transaction.
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Until the transaction closes, Genco and Baltic Trading will continue to operate as separate and independent companies. It is business as usual for all of us.
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We plan to continue to provide our other charterers the same best-in-class international shipping services you expect from us.
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We look forward to completing this transaction and building on our position as a leader in international drybulk shipping to create value for our charter customers.
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If you have additional questions, please do not hesitate to reach out to us.
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Thank you again for your continued support. We look forward to continuing our business relationship with you for many years to come.
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Until the transaction closes, Genco and Baltic Trading will continue to operate as separate and independent companies.
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For us, it’s business as usual. We will continue to manage our fleet as we always do to continue providing our charterers with the best-in-class international shipping services that they expect from us.
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Your hard work will continue to be vital to our success.
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We look forward to completing this transaction and building on our position as a leader in international drybulk shipping to create value for our investors and charter customers.
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Thank you for your dedication.
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