Reduces Capex by 33%
Preserves 100% of Deposits
Suspends Dividend
NEW YORK, Dec. 19, 2008 (GLOBE NEWSWIRE) -- Eagle Bulk Shipping Inc. (Nasdaq:EGLE) today announced the completion of two transactions that enhance internally generated growth and increase financial flexibility.
Specific actions include:
* Reached an agreement with Yanghzou Dayang Shipbuilding Co.,
Ltd. in China that reduces current capital expenditure
obligations by approximately $363 million by:
o Converting eight charter-free Supramax newbuilding contracts
totaling approximately $316 million into options on the part
of Eagle Bulk.
o Preserving 100% of Eagle Bulk's deposits for the eight
newbuilding contracts, representing approximately $47
million.
o Applying the $47 million towards progress payments for the
remaining vessels which are being constructed for delivery
in 2009.
* Paid $55,000 for each of the options for the eight vessels
while maintaining the original contract prices on exercise
of the options between approximately $36.7 and $42.3 million.
* Rescheduled delivery of a charter-free Supramax vessel,
Thrush, from September 2009 to November 2010.
* Signed an agreement with its lenders to amend its $1.6
billion revolving credit facility to $1.35 billion and
favorably adjust a number of loan covenants, specifically a
reduction of the asset value clause. Eagle Bulk benefits from
increased liquidity as the reduction in the credit facility
is less than the reduction in the capital commitments
achieved by the agreement with the shipyard.
To further increase cash flow and optimize financial flexibility, the Board of Directors has decided to suspend the Company's dividend to enhance internally generated growth. The Company will continue to utilize the undrawn portion of its credit facility, as well as cash flow from operations, to fund its newbuilding program and to take advantage of other opportunities which may arise in the marketplace.
Sophocles N. Zoullas, Chairman and Chief Executive Officer, commented, "We firmly believe that these agreements, one with our shipyard, and one with our lenders, represent the proactive strategic direction that will deliver long-term value to our shareholders through enhanced internally generated growth.
"The modifications to our newbuilding program will help reduce capital expenditures by 33%, while increasing future contract coverage to 63% and 43% for 2009 and 2010, respectively.
"We also want to acknowledge the spirit of cooperation that has governed our discussions with the Dayang Shipyard and our lenders, which we believe underscores their continued support for Eagle Bulk and has significantly enhanced the Company's future prospects."
Amendment to Revolving Credit Facility
The Company's agreement with its lenders amends its $1.6 billion revolving credit facility to $1.35 billion while favorably adjusting certain loan covenants. The requirement for the Company to maintain a minimum security value of its fleet, which is now an aggregate of the market value of the vessels in its operating fleet and the deposits on its newbuilding contracts that secure its obligations under the revolving credit facility, has been reduced from 130% to 100% of the aggregate principal amount of debt outstanding under the facility. Future dividend payments will be based on the Company maintaining a minimum security value of 130%. The minimum net worth requirement has been reduced from $300 million to $75 million for next year and is subject to annual review thereafter. The amended facility will bear interest at the rate of 1.75% over LIBOR. The amended facility will be available in full until July 2012, following which it will reduce pro rata to a balloon of $717.2 million at maturity in July 2017. The amendment requires the satisfaction of certain post-closing conditions by the Company.
The Company expects to incur certain noncash charges relating to the writedown of deferred costs in connection with the agreements.
Revised Profile of Newbuilding Program
With the agreement with the shipyard, the following table represents the Company's newbuilding program and the vessels' employment upon their delivery:
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Year Daily Time
Vessel Dwt ---- ----------
------ --- Built - Time Charter Charter
------- ------------ -------
Expected Employment Hire Rate Profit
--------- ----------- --------- ------
Delivery(1) Expiration (2) (3)(4) Share
----------- -------------- ------ -----
Wren 53,100 Delivered Feb 2012 $24,750 --
Jun 2008 Feb 2012 to Dec 2018 $18,000 50% over
/Apr 2019 $22,000
Woodstar 53,100 Delivered Jan 2014 $18,300 --
Oct 2008 Jan 2014 to Dec 2018 $18,000 50% over
/Apr 2019 $22,000
Crowned
Eagle 56,000 Delivered
Nov 2008 Nov 2008 to Oct 2009 $16,000 --
Crested
Eagle 56,000 Feb 2009 Charter Free -- --
Stellar
Eagle 56,000 Apr 2009 Charter Free -- --
Bittern 58,000 Sep 2009 Dec 2014 $18,850 --
Dec 2014 to Dec 2018 $18,000 50% over
/Apr 2019 $22,000
Canary 58,000 Oct 2009 Jan 2015 $18,850 --
Jan 2015 to Dec 2018 $18,000 50% over
/Apr 2019 $22,000
Thrasher 53,100 Nov 2009 Feb 2016 $18,400 --
Feb 2016 to Dec 2018 $18,000 50% over
/Apr 2019 $22,000
Crane 58,000 Nov 2009 Feb 2015 $18,850 --
Feb 2015 to Dec 2018 $18,000 50% over
/Apr 2019 $22,000
Avocet 53,100 Dec 2009 Mar 2016 $18,400 --
Mar 2016 to Dec 2018 $18,000 50% over
/Apr 2019 $22,000
Egret(4) 58,000 Dec 2009 Sep 2012 to Jan 2013 $17,650 50% over
$20,000
Golden
Eagle 56,000 Jan 2010 Charter Free -- --
Gannet(4) 58,000 Jan 2010 Oct 2012 to Feb 2013 $17,650 50% over
$20,000
Imperial
Eagle 56,000 Feb 2010 Charter Free -- --
Grebe(4) 58,000 Feb 2010 Nov 2012 to Mar 2013 $17,650 50% over
$20,000
Ibis(4) 58,000 Mar 2010 Dec 2012 to Apr 2013 $17,650 50% over
$20,000
Jay 58,000 Apr 2010 Sep 2015 $18,500 50% over
$21,500
Sep 2015 to Dec 2018 $18,000 50% over
/Apr 2019 $22,000
Kingfisher 58,000 May 2010 Oct 2015 $18,500 50% over
$21,500
Oct 2015 to Dec 2018 $18,000 50% over
/Apr 2019 $22,000
Martin 58,000 Jun 2010 Dec 2016 to Dec 2017 $18,400 --
Thrush 53,100 Rescheduled
from
Sep 2009
to
Nov 2010 Charter Free -- --
Nighthawk 58,000 Mar 2011 Sep 2017 to Sep 2018 $18,400 --
Oriole 58,000 Jul 2011 Jan 2018 to Jan 2019 $18,400 --
Owl 58,000 Aug 2011 Feb 2018 to Feb 2019 $18,400 --
Petrel(5) 58,000 Sep 2011 Jun 2014 to Oct 2014 $17,650 50% over
$20,000
Puffin(5) 58,000 Oct 2011 Jul 2014 to Nov 2014 $17,650 50% over
$20,000
Road-
runner(5) 58,000 Nov 2011 Aug 2014 to Dec 2014 $17,650 50% over
$20,000
Sand-
piper(5) 58,000 Dec 2011 Sep 2014 to Jan 2015 $17,650 50% over
$20,000
CONVERTED INTO OPTIONS
----------------------
Besra 58,000 Oct 2010 Charter Free -- --
Cernicalo 58,000 Jan 2011 Charter Free -- --
Fulmar 58,000 Jul 2011 Charter Free -- --
Goshawk 58,000 Sep 2011 Charter Free -- --
Snipe 58,000 Jan 2012 Charter Free -- --
Swift 58,000 Feb 2012 Charter Free -- --
Raptor 58,000 Mar 2012 Charter Free -- --
Saker 58,000 Apr 2012 Charter Free -- --
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(1) Vessel build and delivery dates are estimates based on
guidance received from shipyard.
(2) The date range represents the earliest and latest date on
which the charterer may redeliver the vessel to the Company
upon the termination of the charter.
(3) The time charter hire rates presented are gross daily charter
rates before brokerage commissions, ranging from 2.25% to
6.25%, to third party ship brokers.
(4) Revenue recognition for the long term charters with base
rates will be based on an average daily base rate over the
life of the charter from commencement of the charter.
(5) The charterer has an option to extend the charter by 2
periods of 11 to 13 months each.
About Eagle Bulk Shipping Inc.
Eagle Bulk Shipping Inc. is a Marshall Islands corporation headquartered in New York. The Company is a leading global owner of Supramax dry bulk vessels that range in size from 50,000 to 60,000 deadweight tons and transport a broad range of major and minor bulk cargoes, including iron ore, coal, grain, cement and fertilizer, along worldwide shipping routes.
Forward-Looking Statements
Matters discussed in this release may constitute forward-looking statements. Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.
The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although Eagle Bulk Shipping Inc. believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, Eagle Bulk Shipping Inc. cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.
Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charter hire rates and vessel values, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled drydocking, changes in our vessel operating expenses, including dry-docking and insurance costs, or actions taken by regulatory authorities, potential liability from future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists.
Risks and uncertainties are further described in reports filed by Eagle Bulk Shipping Inc. with the U.S. Securities and Exchange Commission.
Visit our website at www.eagleships.com