6-K 1 form6k.htm FORM 6-K form6k.htm
FORM 6-K


SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934


Commission File Number: 001-10137

EXCEL MARITIME CARRIERS LTD.
(Translation of registrant's name into English)

Excel Maritime Carriers Ltd.
Par La Ville Place
14 Par-La-Ville Road
Hamilton, HM JX, Bermuda
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F [ X ] Form 40-F [ ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ___

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)7: ___

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 
 

 

INFORMATION CONTAINED IN THIS FORM 6-K REPORT
 
 
On June 10, 2013, Excel Maritime Carriers Ltd. (the “Company”) commenced soliciting acceptances of the Joint Prepackaged Chapter 11 Plan of Reorganization of Excel Maritime Carriers Ltd. and Certain of its Affiliates (the “Plan of Reorganization”).  The Plan is supported by a steering committee of the Company's secured lenders and, upon the conclusion of the solicitation period and the satisfaction of certain other conditions, the Company intends to file a voluntary petition for relief under chapter 11 of the United States Bankruptcy Code. A copy of the disclosure statement of the Company relating to the Plan of Reorganization is attached to this report on Form 6-K as Exhibit 1.
 

 
 
 
 

 

Exhibit 1

 
 

 

 
THIS SOLICITATION IS BEING CONDUCTED TO OBTAIN SUFFICIENT ACCEPTANCES OF THE JOINT PREPACKAGED CHAPTER 11 PLAN OF REORGANIZATION OF EXCEL MARITIME CARRIERS LTD. AND CERTAIN OF ITS AFFILIATES (THE "PLAN") PRIOR TO THE FILING OF VOLUNTARY CASES UNDER CHAPTER 11 OF TITLE 11 OF THE UNITED STATES CODE (THE "BANKRUPTCY CODE").  IF SUFFICIENT VOTES TO OBTAIN CONFIRMATION OF THE PLAN ARE RECEIVED AND CERTAIN OTHER CONDITIONS ARE MET, EXCEL MARITIME CARRIERS LTD. AND CERTAIN OF ITS AFFILIATES (COLLECTIVELY, THE "DEBTORS") INTEND TO FILE VOLUNTARY CHAPTER 11 CASES TO IMPLEMENT THE PLAN.  BECAUSE THE CHAPTER 11 CASES HAVE NOT YET BEEN COMMENCED, THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED BY ANY BANKRUPTCY COURT AS CONTAINING ADEQUATE INFORMATION WITHIN THE MEANING OF SECTION 1125(a) OF THE BANKRUPTCY CODE.  FOLLOWING THE COMMENCEMENT OF THEIR CHAPTER 11 CASES, IF ANY, THE DEBTORS EXPECT TO SEEK PROMPTLY AN ORDER OF THE BANKRUPTCY COURT (1) APPROVING (A) THIS DISCLOSURE STATEMENT AS HAVING CONTAINED ADEQUATE INFORMATION AND (B) THE SOLICITATION AS HAVING BEEN IN COMPLIANCE WITH SECTION 1125(b) OF THE BANKRUPTCY CODE, AND (2) CONFIRMING THE PLAN DESCRIBED HEREIN.
 
DISCLOSURE STATEMENT
 
DATED JUNE 10, 2013
 
PREPETITION SOLICITATION OF VOTES
WITH RESPECT TO JOINT PREPACKAGED CHAPTER 11 PLAN OF REORGANIZATION
 
OF
 
EXCEL MARITIME CARRIERS LTD. AND CERTAIN OF ITS AFFILIATES
 
SPECIAL NOTICE REGARDING FEDERAL AND STATE SECURITIES LAWS
 
Neither this Disclosure Statement nor the Plan has been filed with or reviewed by the Bankruptcy Court, and the securities to be issued on or after the Effective Date (as defined in the Plan), are not and will not be the subject of a registration statement filed with the United States Securities and Exchange Commission (the "SEC") under the United States Securities Act of 1933, as amended (the "Securities Act"), or any securities regulatory authority of any state under any state securities law ("Blue Sky Law").  The Debtors are relying on section 4(2) of the Securities Act and similar provisions of state securities law, and expect, to the extent applicable, the exemption from the Securities Act, or other applicable exemptions, and equivalent state law registration requirements provided by section 1145(a)(1) of the Bankruptcy Code, to exempt from registration under the Securities Act and Blue Sky Law the offer and sale of new securities in connection with the solicitation and the Plan.
 
Each holder of a Syndicate Credit Facility Claim or General Unsecured Claim against Excel Maritime Carriers Ltd. (in each case, as defined in the Plan) or authorized signatory for the beneficial owner of a Syndicate Credit Facility Claim or General Unsecured Claim against Excel will be required to certify on its ballot whether such holder or beneficial owner is an "Accredited Investor," as that term is defined by Rule 501 of Regulation D of the Securities Act.
 
The Plan has not been approved or disapproved by the SEC or any state securities commission and neither the SEC nor any state securities commission has approved the securities to be issued to eligible holders of impaired classes or passed upon the accuracy or adequacy of the information contained herein.  Any

 
 

 
 
representation to the contrary is a criminal offense.  Neither the solicitation nor this Disclosure Statement constitutes an offer to sell, or the solicitation of an offer to buy securities in any state or jurisdiction in which such offer or solicitation is not authorized.

THE VOTING DEADLINE TO ACCEPT OR REJECT THE PLAN IS 5:00 P.M. PREVAILING EASTERN TIME ON JUNE 28, 2013, UNLESS EXTENDED BY THE DEBTORS (THE "VOTING DEADLINE").   THE RECORD DATE FOR DETERMINING WHETHER A HOLDER OF AN IMPAIRED CLAIM IS ENTITLED TO VOTE ON THE PLAN IS MAY 31, 2013 (THE "VOTING RECORD DATE").

THE DEBTORS ARE FURNISHING THIS DISCLOSURE STATEMENT TO EACH MEMBER OF AN IMPAIRED CLASS UNDER THE PLAN. THIS DISCLOSURE STATEMENT IS TO BE USED BY EACH RECIPIENT SOLELY IN CONNECTION WITH HIS, HER, OR ITS EVALUATION OF THE PLAN AND USE OF THIS DISCLOSURE STATEMENT FOR ANY OTHER PURPOSE IS NOT AUTHORIZED.  THIS DISCLOSURE STATEMENT MAY NOT BE REPRODUCED OR PROVIDED TO OTHERS (OTHER THAN THOSE ADVISORS OF ANY RECIPIENT OF THIS DISCLOSURE STATEMENT WHO MAY REVIEW THE INFORMATION CONTAINED HEREIN TO ASSIST SUCH RECIPIENT IN HIS, HER, OR ITS EVALUATION OF THE PLAN), WITHOUT THE PRIOR WRITTEN CONSENT OF THE DEBTORS.

Prepared by:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
(212) 735-3000
Jay M. Goffman
Mark A. McDermott
Suzanne D.T. Lovett




 
 

 
 
INTRODUCTION AND DISCLAIMER
 
A.
Overview of Excel's Restructuring
 
Excel Maritime Carriers Ltd. ("Excel"), a company incorporated under the laws of Liberia, and its affiliated Debtors (collectively with their non-Debtor affiliates, the "Company") submit this Disclosure Statement to certain holders of claims against the Debtors in connection with the solicitation of acceptances of the proposed Joint Prepackaged Chapter 11 Plan of Reorganization of Excel Maritime Carriers Ltd. and Certain of its Affiliates, dated as of June 10, 2013, a copy of which is annexed hereto as Appendix A.  The Debtors are soliciting acceptances from holders of three classes of claims:  (1) holders of secured obligations under Excel's senior secured syndicate credit facility, dated April 14, 2008 (as amended); (2) holders of certain general unsecured claims against Excel, described below, including holders of unsecured convertible notes, swap claims and claims arising under a settlement with certain bareboat charter parties; and (3) the holder of a guaranty claim under a secured loan facility entered into by Debtors Odell International Ltd.  ("Odell") and Minta Holdings S.A. ("Minta"), dated as of November 27, 2007 (as amended).
 
As described further below, the Company owns and operates a fleet of thirty-eight "dry bulk" cargo vessels.  The dry bulk shipping industry is cyclical, with attendant volatility in charter hire rates and profitability.  Charter rates for dry bulk vessels have been in a significant down cycle since 2008, with key industry performance metrics at significantly lower levels than the historical averages.  Accordingly, the Company's revenues, profitability and value have been very negatively affected.  Its value is significantly below the face amount of its debt, and it is no longer able to sustain its debt service obligations.
 
The Company, with the assistance of its investment banker, estimates its total enterprise value to be between $575 million and $625 million, with a mid-point of $600 million.  However, the Company's obligations under its senior secured credit facility are approximately $771 million.  Most of the Debtors are obligated on this facility, and the facility is secured by liens on substantially all the Debtors' assets.  In addition, the Company is obligated on $150 million principal amount of unsecured convertible notes due October 15, 2027 and the Company also is obligated on several other obligations described below.
 
Because the Company's senior secured lenders' claims are vastly under water, the lenders are entitled to receive almost all of the value of the reorganized Company.  Indeed, the lenders have advised the Debtors that, pursuant to section 1111(b)(2) of the Bankruptcy Code, the lenders are electing to treat their claims as fully secured.  Accordingly, under the Plan, the lenders will receive a restructured obligation in the amount of approximately $771 million plus 100% of the stock in the reorganized company.  However, the terms of the restructured facility are below market, and the stock in the reorganized Company has option value only.  The Debtors therefore estimate that the value of the consideration being afforded to the secured lenders under the Plan will afford the lenders an estimated recovery of only 77% of the face amount of their claims, which is based on the mid-point of the estimated enterprise value of the reorganized Company.  The terms of the restructured facility are contained in Appendix B hereto.
 
The only value available for distribution to Excel's general unsecured creditors lies at non-Debtor Christine Shipco LLC ("Christine Shipco"), a joint venture in which Excel holds a 71.4% interest.  In order to ensure that holders of general unsecured claims receive the value to which they are entitled, holders of general unsecured claims against Excel, including the unsecured convertible notes, will receive their pro rata share of an unsecured cash flow note (the "New Cash Flow Note") issued by Excel or a new wholly-owned subsidiary of Excel to which Excel shall contribute its interests in Christine Shipco.  The Cash Flow Note shall have a face value of $5 million and shall entitle the holders to receive principal and interest payments from future cash dividends distributed to Excel by Christine Shipco and from cash proceeds accruing to Excel, or the new subsidiary, as applicable, upon the sale of all or a part of its interests in Christine Shipco or Christine Shipco's assets.  A summary of the principal terms of the New Cash Flow Note is attached to the Plan as Exhibit A.
 
Credit Suisse, as lender, is a creditor under a secured loan facility with Debtors Odell and Minta, as borrowers, and Excel, as guarantor.  Excel entered into negotiations with Credit Suisse prepetition regarding the obligations under this facility, and Credit Suisse has agreed that all of its claims will be discharged through a sale of

 
i

 
 
Odell and Minta's assets pursuant to section 363 of the Bankruptcy Code, as described more fully below and in the Odell/Minta Term Sheet attached to the Plan as Exhibit B.
 
Trade claims will be honored in the course of business without interruption, subject to the Company's right to contest any claims that it believes are invalid.  It is crucial that the Plan leave trade claims unimpaired, as any disruption in the provision of trade or services could devastate the Debtors' business and frustrate the reorganization contemplated herein.  Litigation claims are also unimpaired by the Plan.  The Debtors are engaged in a limited number of actions, almost all of which involve foreign law, in multiple foreign jurisdictions with foreign litigants.  It would be difficult, if not impossible, and inefficient to bring such claims into the bankruptcy court for resolution.  Further, many of these actions, if successful, will be covered by the Debtors' existing insurance coverage.  Finally, existing equity in Excel is not entitled to receive any value and will be canceled under the Plan.
 
The Company has negotiated the terms of a restructuring support agreement with a steering committee appointed by the senior secured lenders for the purpose of representing the interests of those lenders.  The terms of the restructuring reached in the negotiations between the Company and the steering committee have been set forth in a term sheet, a copy of which is attached as Appendix B.  The steering committee has recommended that the lenders execute a restructuring support agreement indicating their agreement with the terms set forth in the term sheet and that they further vote to accept the Plan.  The restructuring support agreement will only become effective upon execution by the Company, Ivory Shipping as identified and indicated below, and lenders holding 66 2/3% in dollar amount and a majority in number of the senior secured claims.  Certain provisions of the restructuring support agreement, including various milestones, are summarized below in Section II.E.2(d) – "Negotiations with the Steering Committee and Development of Restructuring Support Agreement."  See also the first risk factor in  Section V.A. – "Risks Related to Failure to Consummate the Plan of Reorganization."
 
B.
Lenders' Separate Transaction With Ivory
 
While the senior secured lenders are entitled, by virtue of their secured claims, to substantially all the value in the reorganized Company and, accordingly, to manage and operate the Company as its new owners as the lenders see fit, the lenders wish to maintain continuity in the Company's leadership and related operations.
 
The Company's Chairman of the Board of Directors is Mr. Gabriel Panayotides, who has significant experience in the shipping industry since 1978.  Mr. Panayotides and/or members of his family currently maintain total voting power of approximately 55.8% of the capital stock in Excel.  While all such equity will be cancelled under the Plan, the lenders and Ivory Shipping Inc. ("Ivory"), an entity affiliated with the family of Mr. Panayotides, have entered into an agreement, outside the Plan, under which Ivory will (i) acquire from the lenders 60% of the equity in reorganized Excel which the lenders are receiving under the Plan and (ii) have the right to appoint a majority of the Board of Directors of reorganized Excel for an initial two year period.
 
In order to effectuate this transaction and to provide for the future governance of reorganized Excel, the lenders and Ivory will create a Marshall Islands limited liability company ("Holdco") for the purpose of holding 100% of the new common stock in reorganized Excel issued under the Plan.  The lenders will own 40% of Holdco, and Ivory will own 60% of Holdco.  Ivory will acquire its 60% in exchange for (i) a $10 million unsecured note issued to Holdco, payable in cash upon the Plan Effective Date and (ii) Ivory's agreement to consent to, and waive any rights in connection with, the release to reorganized Excel of $20 million in cash currently held in escrow, which Ivory previously deposited to backstop an equity offering of Excel many months ago and which, as described further below, did not succeed in raising any material new equity for the Company.
 
Under the parties' agreement, Ivory will be entitled to contribute another $20 million to Holdco under certain circumstances on or before March 31, 2015.  If this contribution is made, Holdco will immediately invest the contribution in reorganized Excel, and Ivory's ownership in Holdco will increase to 75% and the lenders' ownership will be reduced to an aggregate of 25%.  Under certain circumstances, including if Ivory elects not to make the contribution by March 31, 2015, then Ivory's ownership percentage in Holdco will automatically be reduced to 25%, and the lenders' aggregate ownership percentage will increase to 75%.  In this scenario, the lenders will be entitled to appoint five of the seven members of reorganized Excel's Board of Directors and Ivory will be

 
ii

 
 
limited to two appointees.  The agreement between the lenders and Ivory is summarized in the Restructuring Term Sheet attached hereto as Appendix B.
 
C.
Summary of Treatment of Creditors and Stockholders
 
The Debtors are furnishing this Disclosure Statement to all members of impaired classes entitled to vote on the Plan to enable such persons to make an informed decision whether to vote to accept or reject the Plan.  The Disclosure Statement is to be used by each such person solely in connection with its evaluation of the Plan.  Use of this Disclosure Statement for any other purpose is not authorized.
 
Description and Amount of Claims and Interests
Summary of Treatment
Unclassified Claims
Administrative Claims (Unimpaired)
An Administrative Claim is a claim for costs and expenses of administration of the chapter 11 cases.  All Allowed Administrative Claims will be paid in full in cash on the Effective Date of the Plan, or as soon thereafter as such claim is allowed, unless the holder and the Debtors agree to different treatment.  Any Allowed Administrative Claim based on a liability incurred by a Debtor in the ordinary course of business during the chapter 11 cases, including goods and services provided to a Debtor after the Petition Date, may be paid in the ordinary course of business, in accordance with the terms and conditions of any agreement or customary payment terms.
Estimated Amount:     $45 million
Estimated Recovery:   100%
Priority Tax Claims (Unimpaired)
A Priority Tax Claim is any claim owed by the Debtors to governmental units for taxes that are entitled to priority under the Bankruptcy Code.  On the Petition Date, the Debtors will seek, and anticipate receiving, authority to pay all such claims in the ordinary course.  To the extent any such claim is not so paid, then on the Effective Date, or as soon as reasonably practicable thereafter, each holder of an Allowed Priority Tax Claim shall have its claim reinstated, which means that such holder's legal, equitable and contractual rights with respect to its Priority Tax Claim will be left unaltered and paid in the ordinary course, unless such holder and the Debtors agree to different treatment.
Estimated Amount:    $0.00
Estimated Recovery:  100%
Intercompany Claims
(Unimpaired or Impaired at the election of the Debtors)
An Intercompany Claim is a claim of a Debtor against another Debtor.  On or prior to the Effective Date, all Intercompany Claims shall either be reinstated, in full or in part, or cancelled and discharged, in full or in part.
 
Estimated Recovery:  100%
Classified Claims
Class 1 – Non-Tax Priority Claims
(Unimpaired)
A Non-Tax Priority Claim is a pre-petition claim entitled to priority under the Bankruptcy Code other than an Administrative Claim or a Priority Tax Claim. Such claims include claims by employees for unpaid wages, salaries or commissions earned within 180 days before the Petition Date.  The Debtors do not believe they have any Non-Tax Priority Claims.  To the extent any such claim is not so paid, on the Effective Date, or as soon as reasonably practicable after, each holder of an Allowed Class 1 – Non-Tax Priority Claim will have such claim reinstated and paid in full.
Estimated Amount:     $0.00
Estimated Recovery:   100%
 
 
iii

 
 
Description and Amount of Claims and Interests
Summary of Treatment
Class 2 – Syndicate Credit Facility Claims (Impaired)
A Syndicate Credit Facility Claim is a claim outstanding under Excel's senior secured credit facility, dated April 14, 2008 (as amended).  Holders of Syndicate Credit Facility Claims have made the election pursuant to section 1111(b) of the Bankruptcy Code to have their entire claims treated as secured. On the Effective Date, each holder of an Allowed Syndicate Credit Facility Claim shall receive its pro rata share of a restructured loan, the terms of which are described in Appendix B hereto, plus 100% of the common stock of Reorganized Excel.
Estimated Amount:     $771 million
Estimated Recovery:   77%
Class 3 – Christine Shipco Facility Secured Guaranty Claim (Unimpaired)
 
A Christine Shipco Facility Secured Guaranty Claim is a claim arising under Excel's guaranty of a secured loan agreement, dated as of April 26, 2010 (as amended), between Excel's partially-owned, non-Debtor subsidiary Christine Shipco LLC, as borrower, and DVB Bank SE, as lender. On the Effective Date, each Allowed Class 3 – Christine Shipco Guaranty Claim shall be reinstated, which means that such holder's legal, equitable and contractual rights with respect to its Christine Shipco Guaranty Claim will be left unaltered and paid in the ordinary course.
Estimated Amount:     $21 million
Estimated Recovery:    100%
Class 4 – Other Secured Claims
(Unimpaired)
An Other Secured Claim is any claim that is secured by a lien on collateral, or subject to setoff, other than a Syndicate Credit Facility Claim or Christine Shipco Guaranty Claim.  The Debtors do not believe they have any such claims. On the Effective Date, each Allowed Class 4 – Other Secured Claim shall be reinstated, which means that such holder's legal, equitable and contractual rights with respect to its Other Secured Claim will be left unaltered.
Estimated Amount:     $0.00
Estimated Recovery:   100%
Class 5 – General Unsecured Claims
(Impaired)
A General Unsecured Claim is a pre-petition claim against Excel that is not entitled to priority under the Bankruptcy Code, is not secured by a lien on collateral, and is not a Class 7 – Trade Claim or a Class 8 – Litigation Claim (each described below).  Class 5 includes (i) Noteholder Claims arising under the 1.875% unsecured convertible senior notes issued by Excel pursuant to an indenture dated October 10, 2007 and due October 15, 2027; (ii) claims arising under certain swap agreements, described below; and (iii) claims arising under a settlement with certain bareboat charter parties, described below. On the Effective Date, each holder of a General Unsecured Claim shall receive in full and final satisfaction, release and discharge of, and in exchange for such General Unsecured Claim, its pro rata share of the New Cash Flow Note issued by Excel, or a wholly-owned subsidiary of Excel, which shall entitle the holders to receive principal and interest payments from future cash dividends distributed to Excel, or such subsidiary, as applicable, by Christine Shipco and from cash proceeds accruing to Excel, or such subsidiary, as applicable, upon the sale of its interests in Christine Shipco or Christine Shipco's assets.
Estimated Amount:    $163 million
Estimated Recovery:  3%
 
 
iv

 
 
Description and Amount of Claims and Interests
Summary of Treatment
Class 6 – Odell/Minta Facility Guaranty Claims (Impaired)
An Odell/Minta Facility Guaranty Claim is a claim arising under the secured credit facility between Credit Suisse, as lender, Odell and Minta, as borrowers, and Excel, as guarantor, dated November 27, 2007 (as amended).  Credit Suisse, as the holder of all Class 6 Claims, has agreed that its Class 6 Claims shall receive the treatment provided for in the Odell/Minta term sheet, attached to the Plan as Exhibit B, which contemplates a sale of Odell's and Minta's assets pursuant to section 363 of the Bankruptcy Code.  Upon closing of such transaction, Credit Suisse shall agree to receive no additional distribution under the Plan on account of its Class 6 Claims.
Estimated Amount:    $42.9 million
Estimated Recovery:  0%
Class 7 – Trade Claims (Unimpaired)
A Trade Claim is any unsecured claim that is not a General Unsecured Claim nor a Litigation Claim, and includes (i) all unsecured claims asserted against subsidiary Debtors, including claims arising from the provision of goods, materials or services by trade vendors and service providers, including commissions related thereto, incurred by the subsidiary Debtors in the ordinary course of the subsidiary Debtors' business and (ii) those unsecured claims asserted against Excel arising from the provision of goods, materials or services by trade vendors and service providers, including commissions related thereto, incurred to Excel in the ordinary course of Excel's business. The Debtors anticipate filing a motion on the petition date requesting authority to pay in the ordinary course all non-U.S. vendors and vendors who may be able to assert maritime liens absent payment.  The Debtors believe that these vendors should account for all or substantially all their Trade Claims.  On the Effective Date, any unpaid Class 7 – Trade Claim shall be reinstated, which means that such holder's legal, equitable and contractual rights with respect to its Trade Claim will be left unaltered and paid in the ordinary course.
Estimated Amount:  $16.5 million
Estimated Recovery:  100%
Class 8 – Litigation Claims (Unimpaired)
A Litigation Claim is a claim for damages pursuant to a threatened, or pending action, claim, cause of action or other proceeding against a Debtor.  A number of relatively small actions are pending against the Debtors, almost exclusively in non-U.S. jurisdictions.  On the Effective Date, each Class 8 – Litigation Claim shall be reinstated, which means that such holder's legal, equitable and contractual rights with respect to its Litigation Claim will be left unaltered and paid in the ordinary course.  The Debtors will continue to contest such claims in the appropriate forum.
Estimated Amount:  $796,000
Estimated Recovery:  100%
Class 9 – Section 510(b) Claims
(Impaired)
A Section 510(b) Claim is a claim arising from the purchase or sale, or the rescission of the purchase or sale, of equity securities or debt securities of Excel.  Holders of Class 9 – Section 510(b) Claims will receive no recovery under the Plan.
Estimated Amount:  $0.00
Estimated Recovery:  0%
Class 10 – Interests  in Excel
(Impaired)
An Interest in Excel is any equity security in Excel, including but not limited to stock, warrants and options.  On the Effective Date, all Interests in Excel will be cancelled without further action by the Debtors or
 
 
v

 
 
Description and Amount of Claims and Interests
Summary of Treatment
  Reorganized Debtors.  Holders of Class 10 – Interests in Excel will not retain any property or receive any recovery under the Plan.
Estimated Amount:  N/A
Estimated Recovery:  0%
Class 11 – Interests in Debtors Other than Excel (Unimpaired)
This class is comprised of Excel's ownership in its subsidiaries.  On the Effective Date, these interests will be reinstated.
Estimated Amount:  N/A
Estimated Recovery:  100%
 
D.
Disclaimer
 
This Disclosure Statement describes certain aspects of the Plan, the Company's operations, the Company's indebtedness, restructuring of the Company's financial affairs, the Company's post-restructuring management and other related matters.  FOR A COMPLETE UNDERSTANDING OF THE PLAN, YOU SHOULD READ THIS DISCLOSURE STATEMENT, INCLUDING SECTION V "RISK FACTORS TO BE CONSIDERED," THE PLAN, AND THE APPENDICES AND EXHIBITS HERETO AND THERETO IN THEIR ENTIRETY.  IN THE EVENT OF ANY INCONSISTENCY BETWEEN THE PLAN AND THIS DISCLOSURE STATEMENT, THE TERMS OF THE PLAN ARE CONTROLLING.
 
THE DEBTORS HAVE NOT COMMENCED CASES UNDER CHAPTER 11 OF THE BANKRUPTCY CODE AT THIS TIME.  BECAUSE NO BANKRUPTCY CASES HAVE BEEN COMMENCED, THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED BY ANY BANKRUPTCY COURT AS CONTAINING "ADEQUATE INFORMATION" WITHIN THE MEANING OF SECTION 1125(a) OF THE BANKRUPTCY CODE.  NONETHELESS, WHEN CHAPTER 11 CASES ARE SUBSEQUENTLY COMMENCED, THE DEBTORS INTEND TO SEEK PROMPTLY AN ORDER OF THE BANKRUPTCY COURT APPROVING THIS DISCLOSURE STATEMENT PURSUANT TO SECTION 1125 OF THE BANKRUPTCY CODE AND DETERMINING THAT THE SOLICITATION OF VOTES ON THE PLAN BY MEANS OF THIS DISCLOSURE STATEMENT COMPLIED WITH SECTION 1126(b) OF THE BANKRUPTCY CODE.
 
THE DEBTORS INTEND TO CONTINUE OPERATING THEIR BUSINESS IN CHAPTER 11 IN THE ORDINARY COURSE AND TO SEEK THE NECESSARY RELIEF FROM THE BANKRUPTCY COURT TO PAY THEIR TRADE VENDORS, AND CERTAIN OTHER CREDITORS IN FULL AND ON TIME.  THE CLAIMS OF THE DEBTORS' TRADE CREDITORS ARE NOT IMPAIRED UNDER THE PLAN.
 
THE CONFIRMATION AND EFFECTIVENESS OF THE PLAN ARE SUBJECT TO THE SATISFACTION OR WAIVER OF CONDITIONS PRECEDENT, AND THERE CAN BE NO ASSURANCE THAT THOSE CONDITIONS PRECEDENT WILL BE SATISFIED.  THE DEBTORS CURRENTLY INTEND TO SEEK TO EFFECTUATE THE PLAN PROMPTLY AFTER CONFIRMATION OF THE PLAN.  THERE CAN BE NO ASSURANCE, HOWEVER, AS TO WHEN AND WHETHER CONFIRMATION OF THE PLAN AND THE EFFECTIVE DATE ACTUALLY WILL OCCUR.  PROCEDURES FOR DISTRIBUTIONS UNDER THE PLAN, INCLUDING MATTERS THAT ARE EXPECTED TO AFFECT (A) THE TIMING OF THE RECEIPT OF DISTRIBUTIONS BY HOLDERS OF CLAIMS IN CERTAIN CLASSES AND (B) THE AMOUNT OF DISTRIBUTIONS ULTIMATELY RECEIVED BY SUCH HOLDERS ARE DESCRIBED IN SECTION IV — "SUMMARY OF THE PLAN OF REORGANIZATION."  IF THE PLAN IS NOT CONFIRMED AND/OR EFFECTUATED, THEN THE DEBTORS WILL HAVE TO CONSIDER ALL OF THEIR OPTIONS AS DEBTORS IN BANKRUPTCY.  SEE SECTION X — "ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN."
 
NO PERSON IS AUTHORIZED BY THE DEBTORS IN CONNECTION WITH THE PLAN OR THE SOLICITATION TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION REGARDING THIS DISCLOSURE STATEMENT OR THE PLAN OTHER THAN AS CONTAINED IN THIS

 
vi

 
 
DISCLOSURE STATEMENT AND THE APPENDICES ATTACHED HERETO OR INCORPORATED HEREIN BY REFERENCE OR REFERRED TO HEREIN.  IF SUCH INFORMATION OR REPRESENTATION IS GIVEN OR MADE, IT MAY NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE DEBTORS.  THIS DISCLOSURE STATEMENT DOES NOT CONSTITUTE LEGAL, BUSINESS, FINANCIAL, OR TAX ADVICE.  ANY CREDITOR OR INTEREST HOLDER DESIRING ANY SUCH ADVICE OR ANY OTHER ADVICE SHOULD CONSULT WITH ITS OWN ADVISORS.
 
THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT, INCLUDING THE INFORMATION REGARDING THE COMPANY'S HISTORY, BUSINESS, AND OPERATIONS, IS INCLUDED FOR PURPOSES OF SOLICITING ACCEPTANCES OF THE PLAN BUT, AS TO CONTESTED MATTERS AND ADVERSARY PROCEEDINGS THAT MAY BE PENDING AS OF THE FILING OF THE DEBTORS' CHAPTER 11 CASES OR COMMENCED AFTER THE FILING OF THE DEBTORS' CHAPTER 11 CASES, IS NOT TO BE CONSTRUED AS AN ADMISSION OR A STIPULATION BUT RATHER AS A STATEMENT MADE IN SETTLEMENT NEGOTIATIONS.
 
THIS DISCLOSURE STATEMENT MAY NOT BE RELIED ON FOR ANY PURPOSE OTHER THAN TO DETERMINE WHETHER TO VOTE TO ACCEPT OR TO REJECT THE PLAN, AND NOTHING STATED HEREIN CONSTITUTES AN ADMISSION OF ANY FACT OR LIABILITY BY ANY PARTY, OR BE ADMISSIBLE IN ANY PROCEEDING INVOLVING THE COMPANY OR ANY OTHER PARTY, OR BE DEEMED A REPRESENTATION OF THE TAX OR OTHER LEGAL EFFECTS OF THE PLAN ON THE COMPANY OR HOLDERS OF CLAIMS OR INTERESTS.  CERTAIN OF THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT, BY THEIR NATURE, ARE FORWARD-LOOKING AND CONTAIN ESTIMATES AND ASSUMPTIONS.  THERE CAN BE NO ASSURANCE THAT SUCH STATEMENTS WILL BE REFLECTIVE OF ACTUAL OUTCOMES. ALL HOLDERS OF IMPAIRED CLAIMS SHOULD CAREFULLY READ AND CONSIDER THIS DISCLOSURE STATEMENT AND THE PLAN IN THEIR ENTIRETY, INCLUDING SECTION V — "RISK FACTORS TO BE CONSIDERED," BEFORE VOTING TO ACCEPT OR REJECT THE PLAN.
 
Except with respect to the "Financial Projections" attached hereto as Appendix F and except as otherwise specifically and expressly stated herein (including with respect to the pleadings the Debtors expect to file in the chapter 11 cases), this Disclosure Statement does not reflect any events that may occur subsequent to the date hereof and that may have a material impact on the information contained in this Disclosure Statement.  Accordingly, the delivery of this Disclosure Statement will not, under any circumstance, imply that the information herein is correct or complete as of any time subsequent to the date hereof.
 
EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, ALL INFORMATION CONTAINED HEREIN HAS BEEN PROVIDED BY THE DEBTORS.  UNLESS SPECIFICALLY NOTED, THE FINANCIAL INFORMATION CONTAINED HEREIN HAS NOT BEEN AUDITED BY A CERTIFIED PUBLIC ACCOUNTING FIRM.
 
INCORPORATION BY REFERENCE; WHERE YOU CAN FIND ADDITIONAL INFORMATION
 
The Debtors incorporate by reference information indicated below that Excel files, and has filed, with the SEC, which means that the Debtors are disclosing important information to the holders of claims against and interests in the Debtor in connection with this solicitation by referring to those documents. Information that is incorporated by reference is an important part of this Disclosure Statement.  The Debtors incorporate by reference the documents listed below and any future filings made by Excel with the SEC under sections 13(a), 13(c), 14 or 15(d) of the United States Securities Exchange Act of 1934, as amended,  between the date of this Disclosure Statement and the termination of the solicitation.  Such documents form an integral part of this Disclosure Statement:
 
 
·
Annual Report on Form 20-F filed with the SEC on March 30, 2012, including the financial statements and related notes contained therein.

 
vii

 
 
 
·
Reports of Foreign Issuer on Form 6-K dated April 3, 2012; May 3, 2012; May 7, 2012; May 18, 2012; May 21, 2012; June 22, 2012; June 29, 2012; July 9, 2012; August 8, 2012; September 7, 2012; October 1, 2012; September 17, 2012 (on Form 6-K/A); January 11, 2013; March 8, 2013; March 28, 2013; May 1, 2013; and May 23, 2013.
 
 
·
Report of Foreign Issuer on Form NT 20-F dated May 1, 2013.
 
You may obtain copies of documents incorporated by reference into this Disclosure Statement at no cost by writing or telephoning:
 
Donlin, Recano & Company, Inc.
Ballot Processing Center
P.O. Box 2034 Murray Hill Station
New York, NY 10156-0701
Tel: (212) 771-1128
 
None of the information on Excel's website is deemed to be a part of this Disclosure Statement. Any reference to Excel's website and the information contained therein is for informational purposes only.
 
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS:  This Disclosure Statement contains certain forward-looking statements, all of which are based on various estimates and assumptions.  Such forward-looking statements are subject to inherent uncertainties and to a wide variety of significant business, economic, and competitive risks, including, among others, those summarized herein.  See Section V — "Risk Factors To Be Considered."  When used in this Disclosure Statement, the words "anticipate," "believe," "estimate," "will," "may," "intend," and "expect" and similar expressions generally identify forward-looking statements.  Although the Debtors believe that their plans, intentions, and expectations reflected in the forward-looking statements are reasonable, they cannot be sure that they will be achieved.  These statements are only predictions and are not guarantees of future performance or results.  Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated by a forward-looking statement.  All forward-looking statements attributable to the Debtors or persons acting on their behalf are expressly qualified in their entirety by the cautionary statements set forth in this Disclosure Statement.  Forward-looking statements speak only as of the date on which they are made.  Except as required by law, the Debtors expressly disclaim any obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.

 
viii

 
 
TABLE OF CONTENTS

INTRODUCTION AND DISCLAIMER
i
 
A.
Overview of Excel's Restructuring
i
 
B.
Lenders' Separate Transaction With Ivory
ii
 
C.
Summary of Treatment of Creditors and Stockholders
iii
 
D.
Disclaimer
vi
INCORPORATION BY REFERENCE; WHERE YOU CAN FIND ADDITIONAL INFORMATION
vii
I.
PLAN VOTING INSTRUCTIONS AND PROCEDURES
1
 
A.
Notice To Holders Of Claims
1
 
B.
Voting Procedures and Ballots
1
   
1.
Voting procedures for holders of Syndicate Credit Facility Claims, Guaranty Claims relating to the Odell/Minta Facility, and General Unsecured Claims against Excel other than Noteholder Claims
1
   
2.
Voting Procedures for Beneficial Holders of Noteholder Claims
2
 
C.
Confirmation; Acknowledgements
2
 
D.
Further Information; Additional Copies
3
 
E.
Revocation; Waivers of Defects; Irregularities
3
 
F.
Confirmation Hearing And Deadline For Objections To Confirmation
3
II.
OVERVIEW OF THE COMPANY
4
 
A.
Corporate Structure of the Company
4
 
B.
Overview Of Business
4
 
C.
Capital Structure
5
   
1.
Common Stock
5
   
2.
Secured Debt
5
   
3.
Convertible Notes
6
   
4.
Interest Rate Swaps
6
 
D.
Pending Litigation
7
 
E.
Events Leading to Chapter 11 Cases
7
   
1.
The International Dry Bulk Shipping Market
7
   
2.
Evaluation of Restructuring Alternatives
7
III.
THE ANTICIPATED CHAPTER 11 CASES
12
 
A.
Motions To Be Filed On The Petition Date
12
   
1.
Motion To Schedule Combined Hearing
12
   
2.
Motion To Use Cash Collateral
12
   
3.
Motion To Continue Using Existing Cash Management Systems
12
   
4.
Motion To Pay Maritime Lien Claimants and Foreign Vendors
12
   
5.
Motion To Maintain Insurance Policies and Pay Insurance Premiums
13
   
6.
Motion To Pay Taxes
13
   
7.
Motion to Sell Odell and Minta
13
   
8.  
Other "First Day" Motions
13
 
B.  
Anticipated Timetable For The Chapter 11 Cases
13
IV.  
SUMMARY OF THE PLAN OF REORGANIZATION
13
 
 
ix

 
 
 
A.
Overview Of Chapter 11
14
 
B.
Classification And Treatment Of Claims And Interests
14
   
1.
Treatment Of Unclassified Claims
14
   
2.
Treatment of Classes
15
   
3.
Intercompany Claims
18
   
4.
Special Provision Regarding Unimpaired Classes of Claims
18
 
C.
Acceptance Of The Plan
18
   
1.
Classes Entitled to Vote
18
   
2.
Elimination of Classes
18
   
3.
Cramdown
18
 
D.  
Means For Implementation Of The Plan
18
   
1.
Continued Legal Existence
18
   
2.
Post-Confirmation Funding
18
   
3.
Disposition of Odell International Ltd. and Minta Holdings S.A.
18
   
4.
Section 1145 Exemption
19
   
5.
Corporate Action
19
   
6.
Effectuating Documents; Further Transactions
19
   
7.
Preservation of Causes of Action
19
   
8.
Exemption From Certain Transfer Taxes and Recording Fees
19
   
9.
Dissolution of Creditors' Committee
19
   
10. 
Cancellation of Existing Securities and Agreements
19
   
11.
Officers and Directors of Reorganized Excel
20
   
12.
Officers and Directors of Reorganized Debtors other than Excel
20
 
E.
Provisions Governing Distributions
20
   
1.
Allowed Claims and Interests
20
   
2.
Fractional Shares
20
   
3.
Withholding and Reporting Requirements
20
   
4.
Setoffs
20
 
F.
Treatment Of Executory Contracts And Unexpired Leases
20
   
1.
Assumption of Executory Contracts and Unexpired Leases
20
   
2.
D&O Liability Insurance Policies and Indemnification Provisions
21
   
3.
Adequate Assurance
21
 
G.
Confirmation And Consummation Of The Plan
21
   
1.
Condition To Entry of the Confirmation Order
21
   
2.
Conditions To Effective Date
21
   
3.
Waiver Of Conditions
22
 
H.
Effect Of Plan Confirmation
22
   
1.
Binding Effect
22
   
2.
Revesting of Assets
22
   
3.
Compromise and Settlement of Claims and Interests
22
   
4.
Discharge of the Debtors
22
   
5.
Releases and Related Matters
23
   
6.
Exculpation and Limitation of Liability
24
   
7.
Injunction
24
   
8.
Term of Bankruptcy Injunction or Stays
24
 
I.
Retention Of Jurisdiction
25
   
1.
Retention of Jurisdiction
25
   
2.
Failure of Bankruptcy Court to Exercise Jurisdiction
26
 
J.
Miscellaneous Provisions
26
   
1.
Payment Of Statutory Fees
26
   
2.
Amendment Or Modification Of The Plan
26
 
 
x

 
 
   
3.
Revocation, Withdrawal, or Non-Consummation
26
   
4.  
Governing Law
26
V.
RISK FACTORS TO BE CONSIDERED
27
 
A.
Risks Related to Failure to Consummate the Plan of Reorganization
27
 
B.
Risks Related to Confirmation
28
 
C.
Potential Adverse Effects of Chapter 11
29
 
D.
Risks Related to Becoming Holders of Reorganized Excel's Common Stock
29
 
E.
Risks Related to Becoming a Holder of the New Cash Flow Note
30
 
F.
Dependence on Key Management Personnel and Other Employees
32
 
G.
No Assurance of Ultimate Recoveries; Uncertainty of Financial Projections
32
 
H.  
Other Risks Relating to the Company's Business and the Company's Ability to Satisfy its Debt Obligations after the Effective Date
33
 
I.
Operational Risks
43
 
J.
Financial and Taxation Risks
47
 
K.
Legal and Regulatory Risks
48
VI.
APPLICABILITY OF FEDERAL AND OTHER SECURITIES LAWS
50
 
A.
Issuance and Resale of Plan Securities Under the Plan
50
   
1.
Exemption from Registration
50
   
2.
Resales of Plan Securities; Definition of Underwriter
51
VII. 
CERTAIN TAX CONSEQUENCES OF THE PLAN
51
 
A.
Certain U.S. Federal Income Tax Consequences to U.S. Holders
52
   
1.
U.S. Holders of Syndicate Credit Facility Claims
53
   
2.
U.S. Holders of Convertible Notes
55
 
B.
Other Tax Issues
56
 
C.
Importance of Obtaining Professional Tax Assistance
57
VIII. 
FEASIBILITY OF THE PLAN AND BEST INTERESTS OF CREDITORS
57
 
A.
Feasibility of the Plan
57
 
B.
Valuation Analysis
57
   
1.
Introduction
57
   
2.
Valuation
58
 
C.
Best Interests Test
59
IX.
Confirmation Without Acceptance Of All Impaired Classes: The 'Cramdown' Alternative
60
X.
ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN
61
XI.
CONCLUSION AND RECOMMENDATION
62

 
xi

 
 
APPENDICES
 
APPENDIX A
 
Joint Prepackaged Chapter 11 Plan of Reorganization of Excel Maritime Carriers Ltd. and Certain of its Affiliates
 
Exhibit A to the Plan – New Cash Flow Note
 
v Exhibit B to the Plan – Odell/Minta Term Sheet
 
APPENDIX B
 
Term Sheet in Support of Restructuring
 
APPENDIX C
 
List of Debtors
 
APPENDIX D
 
Corporate Organization Chart
 
APPENDIX E
 
Liquidation Analysis
 
APPENDIX F
 
Financial Projections
 
APPENDIX G
 
Audited Financial Statements for Fiscal Year 2011
 
APPENDIX H
 
Unaudited Financial Statements for Fiscal Year 2012
 
APPENDIX I
 
Pending Litigation as of June 10, 2013


 
xii

 
 
I.          PLAN VOTING INSTRUCTIONS AND PROCEDURES
 
 
A.
Notice To Holders Of Claims
 
This Disclosure Statement is being transmitted to holders of claims that are entitled under the Bankruptcy Code to vote on the Plan.  Only three classes are entitled to vote on the Plan:  (1) holders of secured obligations under Excel's senior secured syndicate credit facility, dated April 14, 2008 (as amended); (2) holders of certain general unsecured claims against Excel, including "Noteholder Claims" with respect to the 1.875% unsecured convertible senior notes issued by Excel pursuant to an indenture dated October 10, 2007 and due October 15, 2027 (the "Convertible Notes"), swap claims and claims arising under a settlement with certain bareboat charter parties; and (3) the holder of a guaranty claim under a secured loan facility entered into by Debtors Odell and Minta.
 
The purpose of this Disclosure Statement is to provide adequate information to enable such holders to make a reasonably informed decision with respect to the Plan prior to exercising their right to vote to accept or reject the Plan.  All other classes are either unimpaired under the Plan, in which case the holders of claims in such classes are deemed to have accepted the Plan, or are receiving no distribution under the Plan, in which case the holders of claims in such classes are deemed to have rejected the Plan.
 
ALL HOLDERS OF IMPAIRED CLAIMS ENTITLED TO VOTE ON THE PLAN ARE ENCOURAGED TO READ THIS DISCLOSURE STATEMENT AND ITS APPENDICES CAREFULLY AND IN THEIR ENTIRETY BEFORE DECIDING TO VOTE TO ACCEPT OR REJECT THE PLAN.  THIS DISCLOSURE STATEMENT CONTAINS IMPORTANT INFORMATION ABOUT THE PLAN AND IMPORTANT CONSIDERATIONS PERTINENT TO ACCEPTANCE OR REJECTION OF THE PLAN.  THIS DISCLOSURE STATEMENT, THE PLAN, AND BALLOTS ARE THE ONLY DOCUMENTS TO BE USED IN CONNECTION WITH THE SOLICITATION OF VOTES ON THE PLAN.  NO PERSON HAS BEEN AUTHORIZED TO DISTRIBUTE ANY INFORMATION CONCERNING THE COMPANY RELATING TO THE SOLICITATION OTHER THAN THE INFORMATION CONTAINED HEREIN.
 
 
B.
Voting Procedures and Ballots
 
 
1.
Voting procedures for holders of Syndicate Credit Facility Claims, Guaranty Claims relating to the Odell/Minta Facility, and General Unsecured Claims against Excel other than Noteholder Claims
 
Holders of Syndicate Credit Facility Claims, the Guaranty Claim relating to the Odell/Minta Facility, and General Unsecured Claims against Excel other than Noteholder Claims will receive a ballot to be used in voting on the Plan.  After carefully reviewing the Plan, this Disclosure Statement, and the detailed instructions accompanying your ballot, indicate your acceptance or rejection of the Plan by voting in favor of or against the Plan on the enclosed ballot.  Complete and sign your ballot and return your ballot to Donlin, Recano & Company, Inc.  (the "Voting Agent") either by first class mail, or by hand delivery, or overnight courier to the address set forth below, so that it is received by the Voting Deadline.
 
THE VOTING DEADLINE IS 5:00 P.M. PREVAILING EASTERN TIME ON JUNE 28, 2013, UNLESS EXTENDED BY THE DEBTORS. THE VOTING RECORD DATE FOR DETERMINING WHETHER A HOLDER OF AN IMPAIRED CLAIM IS ENTITLED TO VOTE ON THE PLAN IS MAY 31, 2013.  FOR YOUR VOTE TO BE COUNTED, YOUR BALLOT MUST BE PROPERLY COMPLETED AS SET FORTH ABOVE AND IN ACCORDANCE WITH THE VOTING INSTRUCTIONS ON THE BALLOT AND RECEIVED NO LATER THAN THE VOTING DEADLINE BY THE VOTING AGENT BY FIRST CLASS MAIL, HAND DELIVERY, OR OVERNIGHT COURIER AT THE ADDRESS SET FORTH BELOW.

 
1

 
 
Regular Mail
 
Donlin, Recano & Company, Inc.
Ballot Processing Center
P.O. Box 2034 Murray Hill Station
New York, NY 10156-0701
 
If by hand delivery or overnight courier
 
Donlin, Recano & Company, Inc.
Ballot Processing Center
419 Park Avenue South, Suite 1206
New York, NY 10016
 
Except as provided below, unless the ballot is actually received by the Voting Agent before the Voting Deadline or the Bankruptcy Court orders otherwise, the Debtors may, in their sole discretion, reject such ballot as invalid, and therefore decline to utilize it in connection with seeking confirmation of the Plan. In the event of a dispute with respect to any claim, any vote to accept or reject the Plan cast with respect to such claim will not be counted for purposes of determining whether the Plan has been accepted or rejected, unless the Bankruptcy Court orders otherwise.
 
 
2.
Voting Procedures for Beneficial Holders of Noteholder Claims
 
Each beneficial holder of Convertible Notes as of the Record Date will receive a beneficial ballot.  Beneficial holders who wish to vote to accept or reject the Plan must complete the beneficial ballot in accordance with the instructions contained therein and return it to their respective bank, broker, dealer, trust company or other agent or nominee (each, a "Nominee").  Upon receipt of such beneficial ballot, Nominees will execute a master ballot to reflect the votes of their beneficial holders.  Nominees must tender master ballots to the Voting Agent at the address listed above by the Voting Deadline.  In order to ensure that their vote is counted, beneficial holders must provide their beneficial ballot to their respective Nominees in time to allow such nominees to execute and deliver master ballots to the Voting Agent by the Voting Deadline, which is 5:00 p.m. prevailing eastern time on June 28, 2013.
 
By properly completing and executing beneficial ballots and returning them to their Nominees, beneficial holders of Noteholder Claims are directing their respective Nominees to execute a master ballot on the beneficial holders' behalf that reflects their vote with respect to the Plan.  Holders of impaired claims voting to accept the Plan shall, by so voting, indicate their consent to the relief sought by Excel and its affiliated Debtors pursuant to various "First Day" motions (see Section III.A. – "The Anticipated Chapter 11 Cases – Motions to be Filed on the Petition Date" below).
 
 
C.
Confirmation; Acknowledgements
 
By submitting a ballot to the Voting Agent or submitting a beneficial ballot to a Nominee, as applicable, each holder of an impaired claim entitled to vote will be confirming that (i) such holder or legal and financial advisors acting on its behalf has had the opportunity to ask questions of, and receive answers from, Excel concerning the terms of the Plan, the business of Excel and other related matters, (ii) Excel has made available to such holder or its agents all documents and information relating to the Plan and related matters reasonably requested by or on behalf of such holder, and (iii) except for information provided by Excel in writing, and by its own agents, such holder has not relied on any statements made or other information received from any person with respect to the Plan.
 
By submitting a ballot to the Voting Agent or submitting a beneficial ballot to a Nominee, as applicable, each holder of an impaired claim entitled to vote also acknowledges that the interests in Excel and the New Cash Flow Note being offered pursuant to the Plan are not being offered pursuant to a registration statement filed with the SEC and represents that any such security will be acquired for its own account and not with a view to

 
2

 
 
any distribution of such in violation of the Securities Act.  It is expected that if issued pursuant to the Plan the interests in Excel and New Cash Flow Note will be exempt from the registration requirements of the Securities Act by virtue of 1145 of the Bankruptcy Code and may be resold by the holders thereof subject to the provisions of 1145.
 
 
D.
Further Information; Additional Copies
 
If you have any questions about the procedure for voting your claim, the packet of materials that you have received or the amount of your claim; or if you wish to obtain an additional copy of the Plan, this Disclosure Statement, or any appendices or exhibits to such documents, please contact the Voting Agent at:
 
Donlin, Recano & Company, Inc.
Ballot Processing Center
P.O. Box 2034 Murray Hill Station
New York, NY 10156
Telephone: (212) 771-1128
 
 
E.
Revocation; Waivers of Defects; Irregularities
 
You may modify your vote on the Plan at any time prior to the Voting Deadline.  Unless otherwise directed by the Bankruptcy Court, all questions as to the validity, form, eligibility (including time of receipt), acceptance, revocation, or withdrawal of ballots will be determined by the Voting Agent and the Debtors in their sole discretion, which determination will be final and binding.  The Debtors also reserve the right to reject any and all ballots not in proper form, the acceptance of which would, in the opinion of the Debtors or their counsel, be unlawful.
 
The Debtors further reserve the right to waive any defects or irregularities or conditions of delivery as to any particular ballot. The interpretation (including the ballot and the respective instructions therein) by the Debtors, unless otherwise directed by the Bankruptcy Court, will be final and binding on all parties. Unless waived, any defects or irregularities in connection with deliveries of ballots must be cured within such time as the Debtors (or the Bankruptcy Court) determine. Neither the Debtors nor any other person will be under any duty to provide notification of defects or irregularities with respect to deliveries of ballots nor will any of them incur any liabilities for failure to provide such notification. Unless otherwise directed by the Bankruptcy Court, delivery of such ballots will not be deemed to have been made until such irregularities have been cured or waived. Ballots previously furnished (and as to which any irregularities have not theretofore been cured or waived) will be invalidated.
 
 
F.
Confirmation Hearing And Deadline For Objections To Confirmation
 
WHEN THE DEBTORS FILE PETITIONS FOR RELIEF UNDER CHAPTER 11 OF THE BANKRUPTCY CODE, THEY WILL REQUEST THAT THE BANKRUPTCY COURT SCHEDULE A CONFIRMATION HEARING TO CONSIDER THE ADEQUACY OF THIS DISCLOSURE STATEMENT AND TO CONFIRM THE PLAN.  NOTICE OF THE CONFIRMATION HEARING WILL BE PROVIDED TO HOLDERS OF CLAIMS AND INTERESTS OR THEIR REPRESENTATIVES (THE "CONFIRMATION HEARING NOTICE") PURSUANT TO AN ORDER OF THE BANKRUPTCY COURT.  OBJECTIONS TO CONFIRMATION MUST BE FILED WITH THE BANKRUPTCY COURT BY THE DATE DESIGNATED IN THE CONFIRMATION HEARING NOTICE AND ARE GOVERNED BY BANKRUPTCY RULES 3020(B) AND 9014 AND LOCAL RULES OF THE BANKRUPTCY COURT.  UNLESS AN OBJECTION TO CONFIRMATION IS TIMELY SERVED AND FILED, SUCH OBJECTION TO CONFIRMATION MAY NOT BE CONSIDERED BY THE BANKRUPTCY COURT AT THE CONFIRMATION HEARING.

 
3

 

II.          OVERVIEW OF THE COMPANY
 
 
A.
Corporate Structure of the Company
 
Excel is a holding company and the ultimate parent of each of the Debtors in these chapter 11 cases, in addition to various non-Debtor entities.  A list of the Debtors is attached as Appendix C hereto.  A corporate organization chart is attached as Appendix D hereto.  The Company's executive offices are located in Nea Kifisia, Greece, and it maintains registered addresses in Monrovia, Liberia and Hamilton, Bermuda.  Excel is the sole member of Excel Maritime LLC, a New York limited liability company with an office in White Plains, New York.
 
 
B.
Overview Of Business
 
The Company is a shipping company founded in 1988 and incorporated under the laws of the Republic of Liberia.  The Company is a provider of worldwide sea borne transportation for "dry bulk" cargo including, among others, iron ore, coal and grain, collectively referred to as "major bulks" and steel products, fertilizers, cement, bauxite, sugar and scrap metal, collectively referred to as "minor bulks."  The dry bulk market is the primary provider of global commodities transportation. Approximately one third of all seaborne trade is dry bulk related.
 
The Company currently owns a fleet of thirty-eight vessels.  Thirty-seven of these vessels are wholly-owned by thirty-seven direct subsidiaries of Excel (each subsidiary, a "Vessel Owner"), each of which is a Debtor in these chapter 11 cases.  One vessel is owned by non-Debtor Christine Shipco, a joint venture in which Excel holds a 71.4% interest.  The Company's fleet consists of 6 Capesize, 14 Kamsarmax, 14 Panamax, 2 Supramax and 2 Handymax vessels (together, the "Vessels") with a total carrying capacity of approximately 3.4  million deadweight tons (dwt), making the Company one of the world's largest independent dry bulk operators.  The terms "Handymax", Supramax" et cetera refer to size categories of bulk carriers, some of which reference regional ports.  For example, the term "Kamsarmax" refers to the maximum length of a vessel that can load in the port of Kamsar, and the term "Panamax" refers to the vessel size that can fit in the Panama Canal's lock chambers.
 
Maryville Maritime Inc. ("Maryville"), a wholly-owned non-Debtor subsidiary of Excel, provides in-house technical management for all of the Vessels pursuant to discrete management agreements entered into between each of the Vessel Owners and Maryville. Maryville provides technical supervision such as repairs, maintenance and inspections, safety and quality control, crewing and training, as well as provisioning. Maryville's in-house technical management of the Vessels provides the Company with a competitive advantage in controlling both the cost and quality of its Vessels' operations. Maryville also provides commercial management for negotiating charters, managing relationships, and providing seafaring crew to all the Vessels through a third party manning agent. Maryville is also party to a management agreement with Excel, pursuant to which it provides administrative services to Excel and its direct and indirect, Debtor and non-Debtor subsidiaries. Maryville employs management and administrative employees who oversee and run the Company's operations pursuant to the management agreements.
 
The Debtors generate revenues by deploying their fleet on a mix of "Period Time Charters" and "Spot Charters."  Period Time Charters are charters with a term of at least four months on average.  Spot Charters are comprised of both voyage charters (charters for one specific voyage) and short-term charters, which are charters with a term of less than four months on average.  The Company deploys its Vessels according to its assessment of market conditions, adjusting the mix of both types of charters to take advantage of the relatively stable cash flow and high utilization rates associated with Period Time Charters and to profit from attractive Spot Charter rates during periods of strong charter market conditions.  As of May 31, 2013, 23 of the Vessels in the Company's fleet were employed under Period Time Charters and 15 were operating in the Spot Charter market.  In 2010, 2011 and 2012, the Company maintained vessel utilization rates (defined as number of available days divided by fleet calendar dates) of 96.2%, 98% and 95.6%, respectively.  As of May 15, 2013, the Company had entered into charters that secured a 61% vessel utilization rate for 2013.  The Company expects this number will continue to rise as it secures additional 2013 charters.

 
4

 

 
C.
Capital Structure
 
 
1.
Common Stock
 
Excel's Class A common stock has traded on the NYSE under the symbol "EXM" since September 15, 2005.  Prior to that date, Excel's Class A common stock traded on the American Stock Exchange under the same symbol.  As of May 15, 2013, 103,153,299 shares of Excel's Class A common stock and 295,746 shares of its Class B common stock were issued and outstanding.  Mr. Panayotides and entities associated with him hold 36,625,355 of Excel's Class A common stock and 150,875 of its Class B common stock.  These amounts represent approximately 47% of the total voting power of Excel's capital stock.  Additionally, Ms. Ismini Panayotides, the Company's Business Development Officer and Board Secretary and the daughter of Mr. Panayotides, and entities associated with her hold 4,949,837 of Excel's Class A common stock and 30,000 of its Class B common stock, representing approximately 8.8% of the total voting power of Excel's capital stock.
 
 
2.
Secured Debt
 
 
(a)
Syndicate Credit Facility
 
Excel is a borrower pursuant to that certain senior secured credit facility, dated April 14, 2008 (as amended, modified and supplemented), whereby Nordea Bank Finland PLC, London Branch ("Nordea") was appointed administrative agent (the "Syndicate Credit Facility"). Approximately $771 million is currently outstanding under the Syndicate Credit Facility.  The Syndicate Credit Facility is secured by, among other things, guarantees by each Vessel Owner other than non-Debtor Christine Shipco and Debtors Odell and Minta (each of which is party to a separate credit facility) and first priority mortgages and first priority assignments of insurances for each of the Vessels owned by the guarantors ("Collateral Vessels"). The Syndicate Credit Facility is further secured by (i) assignments of earnings, (ii) assignments of charter for the Collateral Vessels in excess of 11 months, (iii) manager's undertakings and an assignment of management agreement for each Collateral Vessel, (iv) account pledge agreements for each Collateral Vessel, and (v) a pledge over, among others, the shares of entities owning the Collateral Vessels.
 
 
(b)
Odell/Minta Facility
 
Minta and Odell are borrowers pursuant to that certain secured loan facility agreement for a loan of up to $75.6 million dated November 27, 2007 (as amended, modified and supplemented), pursuant to which Credit Suisse is the lender (the "Odell/Minta Facility"). Approximately $42.9 million is currently outstanding under the Odell/Minta Facility.  The Odell/Minta Facility is guaranteed by Excel and secured by, among other things, (i) a first priority mortgage over, and assignments of insurances and earnings with respect to, each of the Vessels M/V Mairouli and M/V July M, (ii) manager's undertakings for each of the two Vessels, and (iii) account pledge agreements for each of the two Vessels.  The Debtors do not believe there is any equity in the two Vessels.
 
 
(c)
The Christine Shipco Facility
 
The Company owns a 71.4% interest in non-Debtor Christine Shipco, a joint venture limited liability company.  The owner of the minority interest is a third party unaffiliated with the Company called Robertson Maritime Investors LLC.  On April 30, 2010, Christine Shipco took delivery of the M/V Christine from Imabari Shipyard in Japan at a total cost of approximately $72.5 million.  Non-Debtor Christine Shipco is a borrower pursuant to that certain secured loan facility agreement for a loan of up to $42.0 million dated April 26, 2010 (as amended, modified and supplemented), pursuant to which DVB Bank SE is the lender (the "Christine Shipco Facility"). The loan amount under the Christine Shipco Facility represented 65% of the vessel's fair market value at the time of the vessel's delivery and was drawn in order to finance the delivery of the M/V Christine.  The loan bears interest at LIBOR plus a margin of 3% and is repayable in 26 quarterly installments of $0.8 million through December 2015 and thereafter at $0.6 million through September 2016 with a balloon payment of approximately $20.0 million at October 2016.  Approximately $29.5 million is currently outstanding under the Christine Shipco Facility.  The Christine Shipco Facility is guaranteed by Excel (up to an amount not to exceed 71.4% of any indebtedness under the Christine Shipco Facility) and secured by, among other things, (i) a first priority pledge of the membership interests in Christine Shipco, (ii) a first priority mortgage over, and an assignment

 
5

 
 
of insurances and earnings with respect to, the vessel M/V Christine, and (iii) an account pledge agreement.  Christine Shipco is not a Debtor.  The Christine Shipco Facility is not being restructured.  However, as set forth below in Section II.E.2(f) – "The New Cash Flow Note," the Debtors will issue the New Cash Flow Note to holders of General Unsecured Claims, which will entitle the holders thereof to receive repayment from future cash dividends distributed to Excel, or a wholly-owned subsidiary of Excel, as applicable, by Christine Shipco or from the net proceeds of the sale of all or part of its 71.4% interest in Christine Shipco or from the net proceeds to Excel, or other subsidiary, as a result of the sale of all or parts of the assets of Christine Shipco.
 
 
3.
Convertible Notes
 
Excel issued $150.0 million principal amount of 1.875% unsecured convertible senior notes due October 15, 2027 pursuant to that certain indenture dated October 10, 2007 (the "Indenture") with Deutsche Bank Trust Company Americas as indenture trustee (the "Indenture Trustee").  Pursuant to the Indenture, the Convertible Notes are convertible into Class A common stock of Excel under certain circumstances.  The holders of the Convertible Notes may, at their option, require the Company to purchase the principal amount of the notes for cash before the Convertible Notes' maturity date on certain specified dates, the earliest of which is October 15, 2014.
 
 
4.
Interest Rate Swaps
 
 
(a)
The Nomura Swap
 
On September 2, 2010, Excel entered into a partially-secured interest rate swap with Nomura International plc ("Nomura") for a notional amount of $50 million decreasing by $0.8 million quarterly and  maturing in September 2015 (the "Nomura Swap").  The Company makes quarterly payments to Nomura at a fixed rate of 1.79% and Nomura makes quarterly floating rate payments at 3-month $LIBOR to the Company based on the same notional amount.  As of May 31, 2013, the estimated mark-to-market liability of the Company in connection with the Nomura Swap was approximately $1.3 million, secured by cash collateral of $1.3 million located in an account held in Nomura's favor.  The Nomura Swap was scheduled to roll over on June 10, 2013, and the Company made a business decision to unwind the swap.  On June 7, 2013, Excel and Nomura agreed to unwind the Nomura Swap, which resulted in a net payment by Nomura to Excel of $30,000.  The cash collateral in the pledged account was used to settle and unwind the swap.  As a result, Nomura has no claims outstanding against Excel arising under the Nomura Swap and Nomura will not receive any distribution under the Plan.
 
 
(b)
The Eurobank Swap
 
Excel entered into an unsecured interest rate swap on March 29, 2011 with Eurobank EFG Private Bank Luxembourg S.A. ("Eurobank") for a non-amortizing notional amount of $50 million (the "Eurobank Swap").  The Eurobank Swap is effective from April 1, 2012 to April 1, 2015.  The Company makes quarterly payments to Eurobank at a fixed rate of 1.80%, 2.25% and 2.75% for the first, second and third year, respectively, while Eurobank makes quarterly floating-rate payments of 3-month LIBOR on the same notional amount.  As of May 31, 2013, the estimated mark-to-market liability of the Company in connection with the Eurobank Swap was approximately $2.1 million.
 
 
(c)
The Marfin Swap
 
On July 11, 2011 Excel entered into an unsecured interest rate swap with Marfin Popular Bank Public Co. Ltd., Greek Branch ("Marfin") for a non-amortizing notional amount of $50 million (the "Marfin Swap").  The Marfin Swap is effective from January 3, 2013 to January 3, 2017.  The Company makes quarterly payments to Marfin at a fixed rate of 1.5% for the first year, and 2.98% for the remaining years, while Marfin makes quarterly floating-rate payments of 3-month LIBOR to the Company based on the same notional amount.  As of May 31, 2013, the estimated mark-to-market liability of the Company in connection with the Marfin Swap was approximately $3.8 million.

 
6

 

 
D.
Pending Litigation
 
The Debtors are, from time to time, subject to various asserted or unasserted legal proceedings and claims. As of the date hereof, the Debtors have taken a litigation reserve of approximately $225,000. The Debtors believe that the majority of claims outside of the litigation reserve would be covered by their insurance policies, should any claims proceed to final judgment or be settled by the parties. 
 
Although the Debtors cannot predict what types of claims may be asserted against them in the future, the current claims asserted against the Debtors can be characterized as either breach of contract claims, vessel or port facilities damage claims, claims in respect of cargo, or claims of seafaring employees of Maryville. The Debtors are currently actively defending approximately six lawsuits in court or arbitration proceedings.  Of the claims asserted, no single claim amount alleged exceeds $500,000.  Set forth on Appendix I hereto is a schedule of the pending claims against the Debtors, identified with reference to the jurisdiction in which such claim is pending, the nature of the pending claim, and the claim amount alleged, if any. As set forth in the Plan, nothing will affect the Debtors' or the Reorganized Debtors' rights and defenses, both legal and equitable, with respect to such claims. 
 
 
E.
Events Leading to Chapter 11 Cases
 
 
1.
The International Dry Bulk Shipping Market
 
The dry bulk shipping industry is cyclical with attendant volatility in charter hire rates and profitability.   Charter rates for dry bulk vessels have been in a significant down cycle since 2008.  The Baltic Dry Index ("BDI") is an assessment of the price of moving major bulks by vessels. The BDI measures 23 shipping routes on a timecharter basis, and covers numerous types of vessels, including Handymax, Panamax, Capesize, and Supramax.  The dry bulk market deteriorated significantly in 2012.  On February 3, 2012, the BDI dropped to a 26-year low of 647, owing to a combination of both weak vessel demand and increases in supply.  The average BDI for 2012 was 920, approximately 41% lower than the average index of 1,549 in 2011.  As of May 31, 2013 the BDI closed at 809.
 
The Company's results of operations depend primarily on the charter hire rates that it is able to realize.  Fluctuations in charter rates result from changes in the supply and demand for vessel capacity and changes in the supply and demand for the major commodities carried by sea internationally.  The recent decline and volatility in charter rates is, in significant measure, the result of vessel oversupply, including numerous deliveries of new ships (described in the industry as "newbuilding").  As the global economic downturn continues, lagging demand for dry bulk commodities has been unable to fully absorb the approximately 98.5 and 98.7 million new deadweight tonnage that entered the market in 2011 and 2012, respectively, despite almost record high scrapping levels. The result is decreased demand and increased supply.
 
The decline and volatility in charter rates have negatively impacted the Company.  The value of its vessels has declined due to oversupply, and charter hire rates have dropped.  The Company's cash flows and liquidity have suffered as a result of these factors, and in consequence the Company has not been able to comply with certain covenants in its loan agreements.  Further, as a result of the volatility and rate decline witnessed in the charter markets and continued oversupply of new vessels, vessel values are expected to remain under severe pressure.
 
 
2.
Evaluation of Restructuring Alternatives
 
 
(a)
Syndicate Credit Facility Amendments and Failed Equity Offering
 
Since early 2012 the Company has worked to address its cash flow issues and debt maturities, including retaining financial advisors and engaging in ongoing negotiations with its lenders under its secured debt facilities.  In particular, in order to address its financial situation, the Company entered into a series of amendments to the Syndicate Credit Facility.  Significantly, as of March 30, 2012, the Company negotiated a fifth amendment (the "Fifth Amendment") to the Syndicate Credit Facility.  Under the Fifth Amendment, the Syndicate Credit Facility's amortization schedule, collateral value clause and certain of its financial covenants were modified in order

 
7

 
 
to permit the Company to improve its debt maturity profile and respond to the weak charter conditions and volatility in vessels' market values.  The Fifth Amendment also modified the loan repayment schedule to allow the Company, at its option, to defer the repayment of principal amount of up to $100 million, originally scheduled for 2012 and 2013, to the balloon payment due at the end of the Syndicate Credit Facility's term in April 2016.  Following the amendment to the Syndicate Credit Facility, the Company reached agreements with each of Credit Suisse and DVB Bank SE to similarly amend a number of financial covenants under the respective credit facilities with those institutions.
 
Under the Fifth Amendment, the Company was required to raise at least $30 million in equity (the "Additional Equity") through an offer and sale of newly issued capital stock of Excel (the "Offering") by December 31, 2012.  In connection with the Fifth Amendment and the Offering, on March 29, 2012, Excel entered into a backstop agreement with Ivory, pursuant to which Ivory deposited $20 million (the "Escrow Funds") into an escrow account (the "Escrow Account") set up for that purpose and committed to purchase capital stock of Excel up to the total amount deposited in the escrow account, in the event that Excel failed to raise the Additional Equity.
 
To launch the Offering, on May 7, 2012, the Company entered  into separate sales agreements with each of Deutsche Bank Securities Inc. and Knight Capital Americas, L.P., as sales agents, under which it sought to sell an aggregate of up to $35.0 million in gross proceeds of its  Class A common stock par value $0.01.  The common stock was to be sold in privately negotiated transactions or transactions deemed to be "at-the-market offerings," including sales made directly on the NYSE, on any other existing trading market for the Class A common stock or to or through a market maker.  Unfortunately, the Company was able to raise only $4.1 million of Additional Equity given the severe continuing decline in the international dry bulk shipping market and the Company's over-leveraged capital structure.
 
 
(b)
Redelivery of the Bareboat Charters
 
Bird Acquisition Corp., a non-Debtor indirect subsidiary of Excel ("Bird"), and seven Marshall Islands LLCs wholly owned by Bird (collectively with Bird the "Bareboat Charterers") previously operated seven vessels under bareboat charters pursuant to respective bareboat charterparties ("Bareboat Charters") entered into in July 2007 with third party vessel owners ("Bareboat Owners").  Due to the dramatic drop in charter rates, after accounting for daily operating costs, in 2012 the Debtors were losing approximately $10,000 per day per bareboat chartered vessel.  Therefore, the Bareboat Charterers took steps to reduce these losses which led to the redelivery of each of the seven vessels back to their respective owners during the course of the fourth quarter of 2012.  The owners of the bareboat charter vessels asserted claims against the Bareboat Charterers for damages arising from the early termination of the Bareboat Charters. The Bareboat Charterers denied any liability to the owners of the bareboat charter vessels.
 
Three of the Bareboat Charterers (the "Settling Bareboat Charterers"), together with Excel, signed a settlement agreement with the respective owners of three of the Bareboat Charter vessels ("Settling Bareboat Owners"), pursuant to which the chartered vessels were redelivered to their respective owners in exchange for the agreement of Excel, Bird and the Settling Bareboat Charterers to pay $5 million in cash or in stock, in the latter case at the market price on the date of the stock's issuance, by December 2015 (with Excel's option to extend such deadline to December 2017 pursuant to the terms of the settlement agreement, which extension would require interest payments on any remaining balance of 10% per year, payable quarterly).  The Settling Bareboat Charterers are not Debtors in these chapter 11 cases.  However, the Settling Bareboat Owners have claims against Excel arising out of the settlement agreement.  The claims of the Settling Bareboat Owners against Excel arising under the settlement agreement are classed as General Unsecured Claims under the Plan and will share in the recovery proposed for Class 5 --  General Unsecured Claims.
 
The remaining four bareboat charter vessels were also redelivered to their respective owners (the "German Owners"). The German Owners and the relevant Bareboat Charterers are currently engaged in arbitration regarding their respective claims and counterclaims under the relevant Bareboat Charters. 

 
8

 

 
(c)
Divestiture of Hope Shipco
 
In May 2013, Excel transferred ownership of one of its Vessel-owning subsidiaries, Hope Shipco LLC ("Hope Shipco") (the owner of the Vessel M/V Mairaki), to ABN Amro Bank N.V ("ABN Amro") in full and final satisfaction of the Company's obligations under two secured debt instruments.
 
Hope Shipco was a borrower pursuant to that certain secured loan agreement for a loan of up to $42 million, dated February 11, 2010 (as amended, modified and supplemented), whereby ABN Amro was the lender (the "ABN Facility").  The ABN Facility was guaranteed by Excel and secured by, among other things, (i) a first priority mortgage over, and an assignment of insurances and earnings with respect to, the M/V Mairaki, (ii) a manager's undertakings for the M/V Mairaki, (iii) an account pledge agreement for the M/V Mairaki, and (iv) a pledge over the membership interest in Hope Shipco.  As of April 30, 2013, $35 million was outstanding under the ABN Facility. Certain subsidiaries of Excel were also counterparties to an interest rate swap (the "ABN Swap") with ABN Amro, which was guaranteed by Excel. As of April 29, 2013, the ABN Swap represented an estimated mark-to-market liability for Excel of $29 million.  The ABN Swap was secured by the same collateral as the Syndicate Credit Facility on a last-out basis.
 
Excel entered into negotiations with ABN Amro in March 2013.  Between May 2, 2013 and May 28, 2013, the Company received various reservations of rights and notices of default pursuant to which ABN Amro gave notice to the Company of its intent to exercise its rights and remedies as a secured lender. Given that the obligations of the Company under the ABN Facility and the ABN Swap significantly exceeded the equity value of the membership interests in Hope Shipco, the parties ultimately entered into a settlement agreement to avoid the unnecessary expenses associated with the exercise of such remedies. As part of that settlement, the parties agreed voluntarily to transfer the ownership of Hope Shipco to ABN Amro's designee in full and final satisfaction of the Company's obligations under both the ABN Facility and ABN Swap.  As part of this consensual settlement, ABN Amro agreed to waive its deficiency claims against the Company with respect to the undersecured portions of the ABN Facility and the ABN Swap.  Hope Shipco's shares were transferred to a subsidiary of ABN Amro on May 31, 2013.  ABN Amro does not have a claim against Excel or any of the Debtors in these chapter 11 cases.
 
 
(d)
Negotiations with the Steering Committee and Development of a Restructuring Support Agreement
 
As of August 2012, the Company had only raised approximately $4.1 million of Additional Equity through the Offering. By that point, the Company had recognized that it would need to pursue a comprehensive restructuring. To that end, in July and September 2012, the Company retained Global Maritime Partners Inc. and Miller Buckfire & Co., LLC ("Miller Buckfire"), respectively, as financial advisors to assist it in evaluating and implementing its restructuring strategies. Shortly thereafter, a steering committee ("Steering Committee") of certain Syndicate Credit Facility Lenders was formed in connection with a potential restructuring of the Debtors' obligations under the Syndicate Credit Facility. In connection with negotiations on a potential restructuring with the Steering Committee, the Company entered into additional amendments to the Syndicate Credit Facility subsequent to the Fifth Amendment and amended the Escrow Agreement governing the release of the Escrow Funds. Under the Sixth Amendment dated September 30, 2012, the Company agreed to repay Syndicate Credit Facility loan principal in the amount of $9.0 million (comprised of $3.0 million per month in October, November and December 2012), in return for agreement by the Syndicate Credit Facility Lender to forbear from exercising their rights in connection with noncompliance of certain loan agreement provisions through December 31, 2012. In addition to the repayments under the Sixth Amendment, in December 2012, the Company sold M/V Attractive, a Handymax vessel, for net proceeds of approximately $2.7 million, which were used to repay indebtedness under the Syndicate Credit Facility.
 
Following the expiration of the forbearance period in the Sixth Amendment, the Syndicate Credit Facility Lenders agreed to forbear from exercising their rights, through subsequent amendments, in connection with certain overdue principal and interest payments through May 15, 2013. In particular, the Company obtained forbearance from the Syndicate Credit Facility Lenders with respect to, among other things, the non-payment of a principal installment of approximately $25 million due January 2, 2013. Concurrent with its negotiations with the Steering Committee, the Company also engaged in similar discussions with its lenders under its other credit facilities. The Company is currently in breach of certain financial covenants relating to outstanding indebtedness for fiscal quarter ended December 31, 2012 and certain other covenants.

 
9

 
 
After several months of negotiation, in May 2013 the Debtors and Steering Committee agreed in principle on the terms of a restructuring, as reflected in the Plan annexed hereto as Appendix A and described in this Disclosure Statement.  The Steering Committee has recommended that the lenders execute a restructuring support agreement indicating agreement with the terms set forth on a restructuring term sheet, annexed hereto as Appendix B, and that they vote to accept the Plan.  The restructuring support agreement provides, among other things and subject to certain conditions, that the lenders party thereto will waive certain defaults under the Syndicate Credit Facility until the Plan is consummated or the restructuring support agreement terminates according to its terms, and will negotiate certain transaction documents relating to the Debtor's restructuring.  In particular, pursuant to the restructuring support agreement, on the Effective Date and as part of the consideration received in exchange for their claims under the Plan, the Syndicate Credit Facility Lenders will receive a restructured loan (the "Amended and Restated Senior Secured Credit Facility") the terms of which are described in Appendix B.
 
 
(e)
Negotiations with Credit Suisse and Proposed 363 Sale
 
Prior to the commencement of this solicitation, Excel began negotiating with Credit Suisse, the lender under the Odell/Minta Facility, to restructure and settle the obligations under that facility.  Excel and Credit Suisse ultimately reached an agreement whereby, post-petition, Excel will sell the assets of Odell and Minta pursuant to a sale under section 363 of the Bankruptcy Code.  Credit Suisse (or its nominee(s)) have agreed to credit bid, pursuant to section 363(k) of the Bankruptcy Code, up to the maximum amount of its secured claim against the collateral securing the Odell/Minta Facility as consideration for the purchase of those assets.  In order to ensure that Excel receives the highest and best price possible in the 363 sale, Excel engaged a third party broker to market the two Vessels owned by Odell and Minta.  Following the filing of a motion under section 363 of the Bankruptcy Code on the Petition Date and in the event that no higher or better offers are received by Excel for Odell's and Minta's assets, Excel, following Bankruptcy Court approval and on Credit Suisse's instructions and consent, will complete the sale of the assets by effecting a change in control of the shares of Odell and Minta to companies affiliated with Ms. Ismini Panayotides, pursuant to the Odell/Minta Term Sheet, attached to the Plan as Exhibit B. Credit Suisse shall never have actual ownership of the assets of Odell and Minta.
 
In connection with the foregoing, the Debtors will increase the balance of their existing loan under the Odell/Minta Facility in the form of a debtor-in-possession loan (the increase to be secured by Credit Suisse's existing liens under the Odell/Minta Facility) by an amount equal to the lesser of (i) $500,000 or (ii) the post-petition restructuring costs of Odell and Minta (including, without limitation, Credit Suisse's restructuring costs) and operating expenses of Odell and Minta, to the extent that such restructuring costs and operating expenses are in excess of Odell's and Minta's operating revenue for the period from the Petition Date to the closing date of the 363 sale.  The balance of the debtor-in-possession loan shall be added to the amount paid to Credit Suisse from the proceeds on any sale by Odell and Minta if Credit Suisse or its nominee(s) are not the ultimate purchaser of Odell's and Minta's assets and shall be included for the purposes of calculating the value of the Credit Suisse's credit bid in the 363 sale.  Credit Suisse has agreed that its Class 6 Claims under the Plan will be discharged pursuant this process, and that Credit Suisse will receive no distribution under the Plan on account of its Class 6 Claims upon closing of this transaction.  To the extent that the Bankruptcy Court does not approve the transaction or the transaction does not close, Credit Suisse reserves all rights and remedies as to the Class 6 Claims and all other matters related thereto.
 
 
(f)
The New Cash Flow Note
 
As the Debtors considered their restructuring alternatives, it became clear that the Debtors' enterprise value would permit only minimal economic recovery to holders of general unsecured claims against Excel, including holders of Convertible Notes issued by Excel (the "Noteholders"). This conclusion is based on the fact that the estimated value of the Company is approximately $600 million, whereas the Syndicate Credit Facility Lenders collectively are owed approximately $771 million, which is secured by liens on substantially all the Debtors' assets. The only value available for distribution to Excel's general unsecured creditors arises in connection with Excel's 71.4% interest in non-Debtor Christine Shipco. However, transferring any of Excel's joint venture interest in Christine Shipco to third parties would be subject to risks that could significantly impact the value of the joint venture, as the Christine Shipco Facility contains a provision that would allow the lender, DVB Bank SE, to foreclose on its collateral upon a change of control. To mitigate this risk, Excel determined that the best way to provide value to its general unsecured creditors was for it, or a new wholly-owned subsidiary to which Excel would

 
10

 
 
transfer its interest in Christine Shipco, to issue the New Cash Flow Note to such creditors. Under the Plan, each holder of a general unsecured claim against Excel will receive a pro rata share of the New Cash Flow Note, which shall have a face value of $5 million and entitle the holders to receive principal and interest payments from future cash dividends distributed to Excel, or such subsidiary, as applicable, by Christine Shipco and from cash proceeds accruing to Excel, or such subsidiary, as applicable, upon the sale of all or part of its interests in Christine Shipco or Christine Shipco's assets.  The principal terms of the New Cash Flow Note are summarized in Exhibit A to the Plan.
 
Based on recently received appraisals from two independent shipping advisory firms, who conducted asset-level valuations of the M/V Christine, and the evaluation of current data from VesselsValue, an internationally-recognized provider of vessel sale and valuation information, the estimated market value of the M/V Christine on a charter-free basis based on the average of these indications of value is $34 million. The value of Christine Shipco's above-market charter, described immediately below, is estimated at approximately $9 million as of May 31, 2013. Under a time charter agreement dated December 28, 2006, as amended October 6, 2009, among Christine Shipco and an unaffiliated third-party charterer, the charterer agreed to pay Christine Shipco a gross charter rate floor of $25,000 per day, subject to a charter hire adjustment based on a Capesize vessel spot index, through an expiration date of November 1, 2015 at the earliest. Subsequent to November 1, 2015 Christine Shipco will attempt to re-charter M/V Christine. If M/V Christine cannot be re-chartered it will be operated at gross spot voyage rates which are projected to be $20,000 per day in 2016 and $21,000 per day in 2017. Based on the charter rate payments through an assumed expiration date of November 1, 2015 and projected spot voyage rates thereafter, Christine Shipco is projected to earn average annual time charter equivalent revenue of $7.7 million from 2014 to 2017. The Christine Shipco Facility and New Cash Flow Note will mature on October 27, 2016 and June 30, 2017, respectively. The Christine Shipco Facility has a balloon payment of approximately $20.0 million due on the maturity date of October 27, 2016, and based on the expected age of the M/V Christine of approximately 6.75 years, the Company expects that the loan will be refinanced in full, although the Company can give no assurances it will be able to refinance the Christine Shipco Facility on favorable terms or at all.
 
The vessel operating expenses of the M/V Christine consist of a mix of fixed and variable costs including crew costs, provisions, deck and engine stores, lubricating oil, insurance and maintenance and repairs. M/V Christine’s vessel operating expenses were approximately $4,800 per day during 2012, and the Company expects these expenses to increase to $5,000 per day in 2013 and by 2% per year thereafter. In addition, a fixed fee is incurred by Christine Shipco for technical management services provided for the M/V Christine by Maryville. Maryville provides technical supervision such as repairs, maintenance and inspections, safety and quality control, crewing and training, as well as provisioning for the M/V Christine. In 2012, the Christine Shipco’s total fee for technical management services was equal to $575 per day. Drydock expense is a fixed cost based on expected maintenance requirements corresponding to the age of the M/V Christine and is estimated to be $900,000 in 2015. According to industry regulations, vessels are placed into drydock approximately every 24-30 months. Any unexpected increase in these costs will affect the value of Christine Shipco. Christine Shipco's loan under the Christine Shipco Facility bears interest at LIBOR plus a margin of 3% and is repayable in quarterly installments of $0.8 million through December 2015 and thereafter at $0.6 million through September 2016. Christine Shipco is projected to generate average annual free cash flow of $1.8 million from 2014 to 2017, net of quarterly interest and loan installments but excluding the assumed refinanced balloon payment at maturity under the Christine Shipco Facility, in which Excel, or a wholly-owned subsidiary of Excel formed to hold Excel's interests in Christine Shipco, would have a 71.4% interest. As a result, the cash balance in Christine Shipco, prior to the distribution of any cash dividends to joint venture partners and assuming no cash utilized in the refinancing of the Christine Shipco Facility balloon payment, is projected to grow from $8.1 million at the beginning of 2014 to $14.5 million at June 30, 2017.
                                                       
1
The projections regarding the future cash flows of Christine Shipco are subject to the same inherent limitations and are based on the same assumptions set forth in the Debtors' consolidated Financial Projections, attached hereto as Appendix F.  You should read such assumptions in connection with any discussion of Christine Shipco's future projections, along with the risk factors set forth below in Section V.E. – "Risks Related to Becoming a Holder of the New Cash Flow Note," and contained in Section V.G. – "Inherent uncertainty of Company's Financial Projections" which may also affect the future value of Christine Shipco and the recoveries of holders of the New Cash Flow Note.  The Debtors assume no duty to update such projections, whether as a result of new information, future events, or otherwise.

 
11

 
 
Excel's, or its wholly owned subsidiary's, 71.4% interest in the cash balance would be $5.8 million in 2014 and $10.4 million in June 30, 2017.
 
III.          THE ANTICIPATED CHAPTER 11 CASES
 
The Debtors intend to commence the chapter 11 cases as soon as practicable after the Voting Deadline.  From and after the Petition Date, the Debtors intend to continue operating their businesses and managing their properties as debtors in possession pursuant to sections 1107 and 1108 of the Bankruptcy Code.
 
The Debtors do not expect the chapter 11 cases to be protracted.  To ease their transition into chapter 11 and to expedite their emergence from chapter 11, the Debtors intend to seek from the Bankruptcy Court, among other things, the relief detailed below on the filing date of the chapter 11 cases the "Petition Date").  If granted, this relief will facilitate the administration of the chapter 11 cases.  There can be no assurance, however, that the Bankruptcy Court will grant the requested relief.  The Debtors may also seek various other forms of administrative and other relief in the early stages of the chapter 11 cases.
 
 
A.
Motions To Be Filed On The Petition Date
 
 
1.
Motion To Schedule Combined Hearing
 
The Debtors expect to seek an order (i) scheduling a combined Confirmation Hearing and hearing on the adequacy of this Disclosure Statement on the earliest date which is convenient for the Bankruptcy Court (the "Combined Hearing"); (ii) approving the objection deadline and procedures with respect to the Combined Hearing; and (iii) approving the proposed notice of the Combined Hearing.  At the Combined Hearing, the Debtors will seek approval of this Disclosure Statement and confirmation of the Plan pursuant to sections 1125, 1128, and 1129 of the Bankruptcy Code.  At that time, the Debtors also expect to request the Bankruptcy Court to approve the prepetition solicitation of votes on the Plan.
 
 
2.
Motion To Use Cash Collateral
 
The Debtors expect to seek authority to use their cash collateral and, if necessary, to obtain debtor in possession financing in order to continue their business operations.  The Debtors expect to seek authorization to use only such amounts of cash collateral necessary to continue to operate their businesses in the ordinary course.
 
 
3.
Motion To Continue Using Existing Cash Management Systems
 
Because the Debtors expect the chapter 11 cases to be pending for a short time, and because of the administrative hardship that any operating changes would impose, the Debtors expect to seek authority to continue using their existing cash management system, bank accounts, and business forms and to follow their internal investment and deposit guidelines.  Absent the Bankruptcy Court's authorization of the continued use of the cash management system, the Debtors' cash flow could be impeded to the detriment of the Debtors' estates and their creditors.  Further, the Debtors expect to seek authority to continue undertaking ordinary course intercompany transactions by and among themselves and their non-Debtor affiliates consistent with past practices of the Debtors and such non-Debtor affiliates.
 
 
4.
Motion To Pay Maritime Lien Claimants and Foreign Vendors
 
The Debtors plan to continue to operate their businesses in the ordinary course after the filing of the chapter 11 cases.  In order to avoid any disruption to their businesses and consistent with their past practices, the Debtors expect to seek authority to pay the trade claims of their maritime lien claimants and foreign vendors as they become due in the ordinary course of business.

 
12

 
 
 
5.
Motion To Maintain Insurance Policies and Pay Insurance Premiums
 
The Debtors expect to seek authority to maintain their insurance policies and pay insurance premiums in the ordinary course of the Debtors' businesses and consistent with their past practices.
 
 
6.
Motion To Pay Taxes
 
The Debtors expect to seek authority to pay prepetition sales taxes, use taxes, and foreign taxes, regardless of when incurred, to the appropriate taxing, licensing and other governmental authorities in the ordinary course of the Debtors' businesses and consistent with their past practices.
 
 
7.
Motion to Sell Odell and Minta
 
The Debtors will seek authority to sell the shares in Debtors Odell and Minta to a nominee (or nominees) of Credit Suisse, pursuant to the transaction described above.  See Section II.E.2(e) – "Negotiations with Credit Suisse and Proposed 363 Sale" for more details.
 
 
8.
Other "First Day" Motions
 
Upon the commencement of the chapter 11 cases, the Debtors also intend to seek court approval to provide for, among other things:
 
 
·
the filing of a consolidated list of creditors;
 
 
·
the extension of the deadlines to (a) file schedules and statements, and (b) to file financial reports pursuant to Bankruptcy Rule 2015.3; and ultimate waiver if the Plan is effectuated;
 
 
·
joint administration of the Debtors' chapter 11 cases;
 
 
·
retention of restructuring professionals and ordinary course professionals; and
 
 
·
confirmation of the protections of sections 362 and 365 of the Bankruptcy Code.
 
 
B.
Anticipated Timetable For The Chapter 11 Cases
 
Following the Petition Date, the Debtors expect the chapter 11 cases to proceed on the following estimated timetable.  There can be no assurance, however, that the Bankruptcy Court will permit the chapter 11 cases to proceed as expeditiously as anticipated.
 
The Debtors anticipate that the hearing to consider the adequacy of the Disclosure Statement and confirmation of the Plan will occur within 30 to 45 days after the Petition Date.  Assuming that the Plan is confirmed at that hearing, the Plan provides that the Effective Date (as defined in the Plan) will be the first business day on which all conditions to the Plan's effectiveness (as set forth in Article VIII of the Plan) have been satisfied or waived.  See Section IV.G.1 — "Summary Of The Plan Of Reorganization – Confirmation And Consummation Of The Plan – Condition To Entry of the Confirmation Order."  Based upon information currently available, the Debtors believe that the Effective Date could occur shortly after the Confirmation Date.  There can be no assurance, however, that this projected timetable can be achieved.
 
IV.          SUMMARY OF THE PLAN OF REORGANIZATION
 
The primary objectives of the Plan are to (i) restructure the Company's obligations under the Syndicate Credit Facility and provide value to holders of General Unsecured Claims and, (ii) settle, compromise, or otherwise dispose of certain Claims on terms that the Debtors believe to be fair and reasonable and in the best interests of their respective estates and stakeholders.  The statements contained in this Disclosure Statement include summaries of the provisions contained in the Plan and in the documents referred to therein.  The statements contained in this Disclosure Statement do not purport to be precise or complete statements of all the terms and

 
13

 

 
provisions of the Plan or the documents referred to therein, and reference is made to the Plan and to such documents for the full and complete statements of such terms and provisions.  Capitalized terms not defined herein have the meaning ascribed to them in the Plan.
 
The Plan itself and the documents referred to therein control the actual treatment of Claims against and Interests in the Debtors under the Plan and will, upon the Effective Date, be binding upon all Holders of Claims against and Interests in the Debtors and their Estates, the Reorganized Debtors, and other parties in interest.  In the event of any conflict between this Disclosure Statement, on the one hand, and the Plan or any other operative document, on the other hand, the terms of the Plan and such other operative document are controlling.
 
 
A.
Overview Of Chapter 11
 
Chapter 11 is the principal business reorganization chapter of the Bankruptcy Code.  Under chapter 11 of the Bankruptcy Code, a debtor is authorized to reorganize or liquidate its business for the benefit of itself, its creditors, and its interest holders.  Another goal of chapter 11 is to promote equality of treatment for similarly situated creditors and similarly situated interest holders with respect to the distribution of a debtor's assets.  The consummation of a plan of reorganization or liquidation is the principal objective of a chapter 11 case.  The plan sets forth the means for satisfying claims against and interests in a debtor.  Confirmation of a plan by the Bankruptcy Court makes that plan binding upon the debtor and any creditor of or equity security holder in the debtor, whether or not such creditor or equity security holder (i) holds a claim or interest that is impaired under the plan; (ii) has voted to accept or reject the plan; or (iii) receives or retains any property under the plan.
 
 
B.
Classification And Treatment Of Claims And Interests
 
The Plan, though proposed jointly, constitutes separate plans proposed by each of the Debtors. Therefore, except as expressly in the Plan, the classifications set forth below will be deemed to apply separately with respect to each Plan proposed by the Debtors.  In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Claims and Priority Tax Claims have not been classified, and the respective treatment of such Claims is set forth in Article II of the Plan.  A Claim or Interest is placed in a particular Class only to the extent that the Claim or Interest falls within the description of that Class and is classified in other Classes to the extent that any portion of the Claim or Interest falls within the description of such other Classes.  A Claim is also placed in a particular Class for the purpose of receiving distributions pursuant to the Plan only to the extent that such Claim is an Allowed Claim in that Class and such Claim has not been paid, released, or otherwise settled prior to the Effective Date.
 
 
1.
Treatment Of Unclassified Claims
 
 
(a)
Administrative Claims
 
An Administrative Claim means a claim arising under Bankruptcy Code section 507(a)(2) for costs and expenses of administration of the chapter 11 cases under Bankruptcy Code sections 503(b), 507(b), or 1114(e)(2), including: (a) any actual and necessary costs and expenses, incurred after the Petition Date, of preserving the estates and operating the businesses of the Debtors (such as wages, salaries and commissions for services and payments for inventory, leased equipment and premises) and claims of governmental units for taxes (including tax audit claims related to tax years commencing after the Petition Date, but excluding claims relating to tax periods, or portions thereof, ending on or before the Petition Date); and (b) all other claims entitled to administrative claim status pursuant to a final order of the Bankruptcy Court, but excluding Priority Tax Claims, Non-Tax Priority Claims and Professional Fee Claims.
 
On, or as soon as reasonably practicable after, the latest of (a) the Effective Date, (b) the date on which an Administrative Claim becomes an Allowed Administrative Claim, or (c) the date on which an Allowed Administrative Claim becomes payable under any agreement relating thereto, each Holder of such Allowed Administrative Claim will receive, in full and final satisfaction, settlement, release, and discharge of, and in exchange for, such Allowed Administrative Claim, Cash equal to the unpaid portion of such Allowed Administrative Claim.  Notwithstanding the foregoing, (y) any Allowed Administrative Claim based on a liability incurred by a Debtor in the ordinary course of business during the chapter 11 cases may be paid in the ordinary course of business

 
14

 
 
in accordance with the terms and conditions of any agreement relating thereto and (z) any Allowed Administrative Claim may be paid on such other terms as may be agreed to between the Holder of such Claim and the Debtors or the Reorganized Debtors.
 
 
(b)
Priority Tax Claims
 
A Priority Tax Claim means a claim of a governmental unit of the kind specified in Bankruptcy Code sections 502(i) or 507(a)(8).
 
On, or as soon as reasonably practicable after, the later of (a) the Effective Date or (b) the date on which a Priority Tax Claim becomes an Allowed Priority Tax Claim, each Holder of an Allowed Priority Tax Claim will receive, in full and final satisfaction, settlement, release, and discharge of, and in exchange for, such Allowed Priority Tax Claim, in the sole discretion of the Debtors, (i) Cash equal to the unpaid portion of such Holder's Allowed Priority Tax Claim, (ii) treatment in any other manner such that such Holder's Allowed Priority Tax Claim will be paid in accordance with the provisions of section 1129(a)(9)(C) of the Bankruptcy Code, or (iii) such other treatment as to which the Debtors or the Reorganized Debtors and such Holder will have agreed upon in writing.
 
 
(c)
Professional Fee Claims
 
A Professional Fee Claim means an Administrative Claim of a Professional for compensation for services rendered or reimbursement of costs, expenses, or other charges incurred on or after the Petition Date and prior to and including the Effective Date.
 
Each Professional requesting compensation pursuant to sections 330, 331 or 503(b) of the Bankruptcy Code for services rendered in connection with the chapter 11 cases prior to the Effective Date will file with the Bankruptcy Court an application for allowance of final compensation and reimbursement of expenses in the chapter 11 cases on or before the 30th day following the Effective Date.  Without limiting the foregoing, the Reorganized Debtors may pay the charges incurred by the Reorganized Debtors on and after the Effective Date for any Professional's fees, disbursements, expenses or related support services, without application to or approval by the Bankruptcy Court.
 
In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Claims, Priority Tax Claims and Professional Fees are not classified and are not entitled to vote on the Plan.
 
 
2.
Treatment of Classes
 
 
(a)
Class 1 - Non-Tax Priority Claims
 
 
(i)
Impairment and Voting.  Class 1 Claims in respect of all Debtors are Unimpaired.  Each Holder of an Allowed Non-Tax Priority Claim is not entitled to vote to accept or reject the Plan and will be conclusively deemed to have accepted the Plan.
 
 
(ii)
Distribution.  Unless the Holder of any such Claim and the Debtors agree to a different treatment, on the Effective Date, each Holder of an Allowed Non-Tax Priority Claim will have its Claim paid in full in cash.
 
 
(b)
Class 2 – Syndicate Credit Facility Claims
 
 
(i)
Impairment and Voting.  Class 2 Claims in respect of all Debtors are Impaired.  Pursuant to section 1126 of the Bankruptcy Code, each Holder of an Allowed Class 2 Syndicate Credit Facility Claim is entitled to vote to accept or reject the Plan.

 
15

 
 
 
(ii)
Distribution.  The Holders of the Syndicate Credit Facility Claims have made the election pursuant to section 1111(b) of the Bankruptcy Code. On the Effective Date, each Holder of an Allowed Syndicate Credit Facility Claim will receive, in full and final satisfaction, release, and discharge of, and in exchange for, such Syndicate Credit Facility Claim, its pro rata share of (a) the Amended and Restated Senior Secured Credit Facility; and (b) the right to receive 100% of the New Common Stock of Reorganized Excel, which Holders of the Syndicate Credit Facility Claims have agreed will be held by an entity designated by such Holders to hold such stock on their behalf.
 
 
(c)
Class 3 – Christine Shipco Facility Secured Guaranty Claim
 
 
(i)
Impairment and Voting. The Class 3 Claim is Unimpaired, and the Holder of the Allowed Class 3 Claim is conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.  Therefore, the Holder of the Class 3 Claim is not entitled to vote to accept or reject the Plan.
 
 
(ii)
Distribution. The Holder of the Class 3 Claim will have such Claim Reinstated on the Effective Date.
 
 
(d)
Class 4 – Other Secured Claims
 
 
(i)
Impairment and Voting. Class 4 Claims in respect of all Debtors are Unimpaired, and the Holders of Allowed Class 4 Claims are conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.  Therefore, the Holders of Class 4 Claims are not entitled to vote to accept or reject the Plan.
 
 
(ii)
Distribution. Holders of Class 4 Claims will have such Claims Reinstated on the Effective Date.
 
 
(e)
Class 5 – General Unsecured Claims
 
 
(i)
Impairment and Voting. Class 5 Claims in respect of Excel are Impaired. Pursuant to section 1126 of the Bankruptcy Code, each Holder of an Allowed Class 5 Claim is entitled to vote to accept or reject the Plan.
 
 
(ii)
Distribution. On the Effective Date, or as soon thereafter as is reasonably practicable, each Holder of an Allowed General Unsecured Claim will receive its pro rata share of the New Cash Flow Note to be issued by Excel, the principal terms of which are summarized in Exhibit A hereto.
 
 
(f)
Class 6 – Odell/Minta Facility Guaranty Claims
 
 
(i)
Impairment and Voting.  Class 6 Claims in respect of Excel are Impaired.  Pursuant to section 1126 of the Bankruptcy Code, each Holder of an Allowed Class 6 Claim is entitled to vote to accept or reject the Plan.
 
 
(ii)
Distribution. Holders of Class 6 Claims will be treated as provided for in Section 5.3 of the Plan.

 
16

 

 
(g)
Class 7 – Trade Claims
 
 
(i)
Impairment and Voting. Class 7 Claims in respect of all Debtors are Unimpaired, and the Holders of Allowed Class 7 Claims are conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.  Therefore, the Holders of Class 7 Claims are not entitled to vote to accept or reject the Plan.
 
 
(ii)
Distribution. Holders of Class 7 Claims will have such Claims Reinstated on the Effective Date.
 
 
(h)
Class 8 – Litigation Claims
 
 
(i)
Impairment and Voting. Class 8 Claims in respect of all Debtors are Unimpaired, and the Holders of Allowed Class 8 Claims are conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.  Therefore, the Holders of Class 8 Claims are not entitled to vote to accept or reject the Plan.
 
 
(ii)
Distribution. Holders of Class 8 Claims will have such Claims Reinstated on the Effective Date.
 
 
(i)
Class 9 – Section 510(b) Claims
 
 
(i)
Impairment and Voting. Class 9 Claims against Excel are Impaired, and the Holders of Allowed Class 9 Claims are conclusively deemed to have rejected the Plan pursuant to section 1126(g) of the Bankruptcy Code.  Therefore, the Holders of Class 9 Claims against Excel are not entitled to vote to accept or reject the Plan.
 
 
(ii)
Distribution. The Holders of Section 510(b) Claims will not receive nor retain any property under the Plan on account of such Section 510(b) Claims and the obligations of the Debtors and Reorganized Debtors on account of Section 510(b) Claims will be discharged.
 
 
(j)
Class 10 – Interests in Excel
 
 
(i)
Impairment and Voting. Class 10 Interests in Excel are Impaired, and the Holders of Allowed Class 10 Interests are conclusively deemed to have rejected the Plan pursuant to section 1126(g) of the Bankruptcy Code.  Therefore, the Holders of Class 10 Interests in Excel are not entitled to vote to accept or reject the Plan.
 
 
(ii)
Distribution. On the Effective Date, all Interests in Excel will be deemed to be automatically cancelled without further action by the Debtors or Reorganized Debtors and the obligations of the Debtors and Reorganized Debtors thereunder will be discharged. Holders of Interests in Excel will receive no property under the Plan on account of such Interests.
 
 
(k)
Class 11 – Interests in Debtors Other than Excel
 
 
(i)
Impairment and Voting. Class 11 Interests in respect of all Debtors other than Excel are Unimpaired, and the Holders of Allowed Class 11 Interests are conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.  Therefore, the Holders of Class 11 Interests in Debtors Other than Excel are not entitled to vote to accept or reject the Plan.
 
 
17

 
 
 
(ii)
Distribution. Holders of Class 11 Claims will have such Claims Reinstated on the Effective Date.
 
3.     Intercompany Claims. On the Effective Date, all Intercompany Claims will, at the election of Excel, be either (a) Reinstated, (b) released, waived, and discharged, or (c) contributed to, or dividended to, the capital of the obligor.
 
4.           Special Provision Regarding Unimpaired Classes of Claims. Except as otherwise provided in the Plan, nothing will affect the Debtors' or the Reorganized Debtors' rights and defenses, both legal and equitable, with respect to any Claims in Unimpaired Classes, including, but not limited to, all rights with respect to legal and equitable defenses to setoffs against or recoupments of Claims in Unimpaired Classes.
 
 
C.
Acceptance Of The Plan
 
1.           Classes Entitled to Vote.  Classes 2, 5, and 6 are Impaired and entitled to vote to accept or reject the Plan.  Classes 1, 3, 4, 7, 8, and 11 are Unimpaired and, therefore, are not entitled to vote.  Classes 9 and 10 are deemed to have rejected the Plan and are not entitled to vote.
 
2.           Elimination of Classes.  To the extent applicable, any Class that does not contain any Allowed Claims or any Claims temporarily allowed for voting purposes under Bankruptcy Rule 3018, as of the date of the commencement of the Confirmation Hearing, will be deemed to have been deleted from the Plan for purposes of (a) voting to accept or reject the Plan and (b) determining whether it has accepted or rejected the Plan under section 1129(a)(8) of the Bankruptcy Code.
 
3.           Cramdown.  The Debtors request confirmation of the Plan, as it may be modified from time to time, under section 1129(b) of the Bankruptcy Code.
 
 
D.
Means For Implementation Of The Plan
 
1.           Continued Legal Existence.  Except as otherwise provided for in the Plan, each of the Debtors will continue to exist after the Effective Date as a separate legal entity, with all the powers of such an entity under applicable law in the jurisdiction in which each applicable Debtor is organized, incorporated or otherwise formed and pursuant to such Debtor's articles of organization or formation, operating agreement and other organizational documents in effect as of the Effective Date (provided that such organizational documents will be amended to prohibit the Reorganized Debtors from issuing non-voting equity securities to the extent necessary to comply with section 1123(a) of the Bankruptcy Code).
 
2.           Post-Confirmation Funding.  On the Effective Date Excel will receive: (i) $10 million which will be contributed to Excel by the Lenders' designee as holder of the New Common Stock, and (ii) the release to Excel of the Escrow Funds which has been placed in escrow by Ivory Shipping Inc. pursuant to the terms of the Escrow Agreement. On the Effective Date Ivory Shipping Inc. will release all of its claims to and waive all of its rights in respect of the Escrow Funds.
 
3.           Disposition of Odell International Ltd. and Minta Holdings S.A.  The assets securing the Odell/Minta Facility will be disposed of pursuant to the 363 Sale Motion.  Credit Suisse, as the holder of the Odell/Minta Facility Guarantee Claims, has agreed that its Claims under the Plan in Class 6 will be discharged pursuant to this process, and that Credit Suisse will receive no distribution under the Plan on account of its Class 6 Claims upon closing of this transaction.  To the extent that the Bankruptcy Court does not approve the transaction or the transaction does not close, Credit Suisse reserves all rights and remedies as to Class 6 Claims and all other matters related thereto.

 
18

 

4.           Section 1145 Exemption.  Pursuant to section 1145 of the Bankruptcy Code, the issuance and allocation of shares of the New Common Stock and the New Cash Flow Note pursuant to the Plan will be exempt from registration under the Securities Act, and any state or local law requiring registration for offer or sale of a security.
 
5.           Corporate Action.  Each of the matters provided for under the Plan involving the corporate structure of any Debtor or Reorganized Debtor or any corporate action to be taken by, or required of, any Debtor or Reorganized Debtor will be deemed to have occurred and be effective as provided in the Plan, and will be authorized, approved and, to the extent taken prior to the Effective Date, ratified in all respects without any requirement of further action by stockholders, members, creditors, directors, or managers of the Debtors or the Reorganized Debtors.
 
6.           Effectuating Documents; Further Transactions.   Each of the Debtors and Reorganized Debtors, and their respective officers and designees, is authorized to execute, deliver, file, or record such contracts, instruments, releases, indentures, and other agreements or documents, and take such actions, as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan, or to otherwise comply with applicable law.
 
7.           Preservation of Causes of Action.  In accordance with section 1123(b)(3) of the Bankruptcy Code, the Reorganized Debtors will retain and may (but are not required to) enforce all Retained Actions.  After the Effective Date, the Reorganized Debtors, in their sole and absolute discretion, will have the right to bring, settle, release, compromise, or enforce such Retained Actions (or decline to do any of the foregoing), without further approval of the Bankruptcy Court.  The failure of the Debtors to specifically list any claim, right of action, suit, proceeding, or other Retained Action in the Plan or the Disclosure Statement does not, and will not be deemed to, constitute a waiver or release by the Debtors or the Reorganized Debtors of such claim, right of action, suit, proceeding or other Retained Action, and, therefore, no preclusion doctrine, collateral estoppel, issue preclusion, claim preclusion, estoppel (judicial, equitable, or otherwise), or laches will apply to such claim, right of action, suit, proceeding, or other Retained Action upon or after the confirmation or consummation of the Plan.
 
8.           Exemption From Certain Transfer Taxes and Recording Fees.  Pursuant to section 1146(a) of the Bankruptcy Code, any transfers from a Debtor to a Reorganized Debtor or to any other Person or entity pursuant to the Plan, or any agreement regarding the transfer of title to or ownership of any of the Debtors' real or personal property, will not be subject to any document recording tax, stamp tax, conveyance fee, sales tax, intangibles or similar tax, mortgage tax, stamp act, real estate transfer tax, mortgage recording tax, Uniform Commercial Code filing or recording fee, or other similar tax or governmental assessment, and the Confirmation Order will direct the appropriate state or local governmental officials or agents to forego the collection of any such tax or governmental assessment and to accept for filing and recordation any of the foregoing instruments or other documents without the payment of any such tax or governmental assessment.
 
9.           Dissolution of Creditors' Committee .  If a Creditors' Committee is appointed, it will continue in existence until the Effective Date to exercise those powers and perform those duties specified in section 1103 of the Bankruptcy Code.  On the Effective Date, the Creditors' Committee, if appointed, will be dissolved and the Creditors' Committee's members will be deemed released of all their duties, responsibilities, and obligations in connection with the Chapter 11 Cases or the Plan and its implementation, and the retention or employment of the Creditors' Committee's attorneys, accountants, professionals, and other agents will terminate, except with respect to (i) all Professional Fee Claims and (ii) any appeals of the Confirmation Order.
 
10.         Cancellation of Existing Securities and Agreements.  Except as provided in the Plan or in the Confirmation Order, or for the purpose of evidencing a right to distribution hereunder or a contractual right to indemnification or reimbursement of the Administrative Agent, on the Effective Date, (i) all indentures, notes, stock, bonds, purchase rights, instruments, guarantees, certificates, warrants, options, puts, agreements (including registration rights agreements), and other documents evidencing or giving rise to Claims and Interests against and in the Debtors will be canceled, and the obligations of the Debtors thereunder or in any way related thereto will be fully released, terminated, extinguished and discharged, in each case without further notice to or order of the Bankruptcy Court, act or action under applicable law, regulation, order, or rule or any requirement of further action, vote, or other approval or authorization by any Person; provided, however, notwithstanding Confirmation or the

 
19

 

occurrence of the Effective Date, any such indenture, guarantee or agreement that governs the rights of the Holder of a Claim will continue in effect solely for purposes of (a) allowing Holders of Syndicate Credit Facility Claims and General Unsecured Claims and Class 6 Claims (as applicable) to receive distributions under the Plan as provided in the Plan; provided further, however, that the preceding proviso will not affect the discharge of Claims or Interests pursuant to the Bankruptcy Code, the Confirmation Order or the Plan, or result in any expense or liability to the Reorganized Debtors, except to the extent set forth in or provided for under the Plan;  provided further, however, that the cancellation of indentures, notes, stock, bonds, purchase rights, instruments, guarantees, certificates, warrants, options, puts, agreements and other documents hereunder will not itself alter the obligations or rights among third parties (apart from the Debtors, the Reorganized Debtors, and the non-Debtor affiliates).
 
11.         Officers and Directors of Reorganized Excel.   On the Effective Date, each of the members of the existing board of directors of Excel will be deemed to have resigned in such capacity.  The Debtors' businesses will continue to be managed, as of the Effective Date, by existing management.  At least five business days prior to the deadline that the Bankruptcy Court sets for parties in interest to file objections to Confirmation, Excel will file a notice with the Court designating the new officers and members of the board of directors of Reorganized Excel who will be appointed automatically without any requirement of further action by stockholders, members, creditors, directors, or managers of the Debtors or Reorganized Excel.
 
12.         Officers and Directors of Reorganized Debtors other than Excel. All officers and directors of Subsidiary Debtors in office as of the Effective Date will continue in office after the Effective Date in accordance with the governing documents of the Subsidiary Debtors.
 
 
E.
Provisions Governing Distributions
 
1.           Allowed Claims and Interests.  Notwithstanding any provision in the Plan to the contrary, the Debtors or the Reorganized Debtors will make distributions only to Holders of Allowed Claims.  A Holder of a Disputed Claim will receive only a distribution on account thereof when and to the extent that such Holder's Disputed Claim becomes an Allowed Claim.
 
2.           Fractional Shares.  No fractional shares of New Common Stock will be issued or distributed under the Plan.  The actual distribution of shares of New Common Stock will be rounded to the next higher or lower whole number as follows:  (a) fractions less than one-half (½) will be rounded to the next lower whole number and (b) fractions equal to or greater than one-half (½) will be rounded to the next higher whole number.  No consideration will be provided in lieu of fractional shares that are rounded down.
 
3.           Withholding and Reporting Requirements.  In connection with the Plan and all distributions hereunder, the Reorganized Debtors will comply with all withholding and reporting requirements imposed by any federal, state, local, or foreign taxing authority, and all distributions hereunder will be subject to any such withholding and reporting requirements.  The Reorganized Debtors will be authorized to take any and all actions that may be necessary or appropriate to comply with such withholding and reporting requirements.
 
4.           Setoffs.  The Reorganized Debtors may, pursuant to applicable law, but will not be required to, set off against any Claim the payments or other distributions to be made pursuant to the Plan in respect of such Claim, claims of any nature whatsoever that the Debtors or the Reorganized Debtors may have against the Holder of such Claim; provided, however, that neither the failure to do so nor the allowance of any Claim hereunder will constitute a waiver or release by the Reorganized Debtors of any such Claim that the Debtors or the Reorganized Debtors may have against such Holder.
 
 
F.
Treatment Of Executory Contracts And Unexpired Leases
 
1.           Assumption of Executory Contracts and Unexpired Leases. On the Effective Date, all executory contracts and unexpired leases of the Debtors will be deemed assumed in accordance with the provisions and requirements of sections 365 and 1123 of the Bankruptcy Code, except those executory contracts or unexpired leases that have previously expired or terminated pursuant to their own terms.

 
20

 

2.            D&O Liability Insurance Policies and Indemnification Provisions.  Notwithstanding anything in the Plan to the contrary, as of the Effective Date, the D&O Liability Insurance Policies and Indemnification Provisions belonging or owed to directors, officers, and employees of the Debtors (or the Estates) who served or were employed at any time by the Debtors will be deemed to be, and will be treated as though they are, executory contracts and the Debtors will assume (and assign to the Reorganized Debtors if necessary to continue the D&O Liability Insurance Policies in full force) all of the D&O Liability Insurance Policies and Indemnification Provisions pursuant to section 365(a) of the Bankruptcy Code. Entry of the Confirmation Order will constitute the Bankruptcy Court's approval of the Debtors' foregoing assumption of each of the D&O Liability Insurance Policies and Indemnification Provisions. On or before the Effective Date, the Reorganized Debtors will obtain reasonably sufficient tail coverage (i.e., D&O insurance coverage that extends beyond the end of the policy period) under a directors and officers' liability insurance policy for the current and former directors, officers and managers for a period of six (6) years after the Effective Date.
 
3.            Adequate Assurance.  Entry of the Confirmation Order by the Bankruptcy Court will constitute findings by the Bankruptcy Court that (a) the Reorganized Debtors have properly provided for the cure of any defaults that might have existed, (b) each assumption is in the best interest of the Reorganized Debtors, their Estate, and all parties in interest in these Chapter 11 Cases and (c) the requirements for assumption of any executory contract or unexpired lease to be assumed had been satisfied.  Except as otherwise provided in the following sentence, all cure payments under any assumed contract will be made by the Reorganized Debtors on the Effective Date or as soon as practicable thereafter.
 
 
G.
Confirmation And Consummation Of The Plan
 
1.           Condition To Entry of the Confirmation Order.  The following are conditions precedent to Confirmation, each of which must be satisfied or waived by the Debtors and the Requisite Consenting Lenders in accordance with the terms hereof:
 
(a)           The Plan and all schedules, documents, supplements and exhibits relating to the Plan will have been filed in form and substance acceptable to the Debtors and each of the Requisite Consenting Lenders.
 
(b)           The proposed Confirmation Order will be in form and substance acceptable to the Debtors and each of the Requisite Consenting Lenders.
 
2.            Conditions To Effective Date. The following are conditions precedent to the occurrence of the Effective Date, each of which must be satisfied or waived by the Debtors and each of the Requisite Consenting Lenders in accordance with the terms hereof:
 
(a)           The Confirmation Order will be in full force and effect and not subject to any stay, and will provide, among other things, that the Reorganized Debtors' offer of the New Common Stock and New Cash Flow Note issued under the Plan is exempt from the registration requirements of the Securities Act pursuant to applicable securities law and the Reorganized Debtors' issuance of such New Common Stock and New Cash Flow Note under the Plan is exempt from the registration requirements of the Securities Act and similar state statutes pursuant to section 1145 of the Bankruptcy Code.
 
(b)           The Amended and Restated Senior Secured Credit Facility will have been executed and delivered, and all conditions precedent thereto will have been satisfied.
 
(c)           All authorizations, consents, and regulatory approvals required, if any, in connection with the consummation of the Plan will have been obtained.
 
(d)           The Secured Lenders, or their designee, will have received no less than $10 million from Ivory Shipping Inc. for contribution to Excel and such funds will be available for contribution.

 
21

 

(e)           Ivory Shipping Inc. and Excel will have delivered instructions to Seward & Kissel to release the Escrow Funds to Excel on the Effective Date, and such funds will be available for release by Seward & Kissel to Excel.
 
(f)           All other actions, documents, and agreements necessary to implement the Plan will have been effected or executed.
 
3.            Waiver Of Conditions. The Debtors and the Requisite Consenting Lenders may jointly waive, in whole or in part, the conditions to the occurrence of the Effective Date, without any notice to parties in interest or the Bankruptcy Court and without a hearing.  The waiver of a condition to the occurrence of the Effective Date will not be deemed a waiver of any other rights, and each such right will be deemed an ongoing right that may be asserted at any time.
 
 
H.
Effect Of Plan Confirmation
 
1.            Binding Effect.  The Plan will be binding upon and inure to the benefit of the Debtors, their Estates, all current and former Holders of Claims and Interests, and their respective successors and assigns, including, but not limited to, the Reorganized Debtors.
 
2.            Revesting of Assets.  Except as otherwise explicitly provided in the Plan, on the Effective Date, all property comprising the Estates will revest in the Reorganized Debtors, free and clear of all Claims, Liens, charges, encumbrances, rights, and Interests of creditors and equity security holders.  As of the Effective Date, the Reorganized Debtors may operate their businesses and use, acquire, and dispose of property and settle and compromise Claims or Interests without supervision of the Bankruptcy Court, free of any restrictions of the Bankruptcy Code or Bankruptcy Rules, other than those restrictions expressly imposed by the Plan or the Confirmation Order.
 
3.            Compromise and Settlement of Claims and Interests Pursuant to section 363 of the Bankruptcy Code and Bankruptcy Rule 9019 and in consideration for the distributions and other benefits provided pursuant to the Plan, the provisions of the Plan will constitute a good faith compromise of all Claims, Interests and controversies relating to the contractual, legal and subordination rights that a Holder of a Claim may have with respect to any Allowed Claim or Interest, or any distribution to be made on account of such Allowed Claim or Interest. The entry of the Confirmation Order will constitute the Bankruptcy Court's approval of the compromise or settlement of all such Claims, Interests and controversies, as well as a finding by the Bankruptcy Court that such compromise or settlement is in the best interests of the Debtors, their Estates and Holders of Claims and Interests and is fair, equitable and reasonable. In accordance with the provisions of the Plan, pursuant to section 363 of the Bankruptcy Code and Bankruptcy Rule 9019(a), without any further notice to or action, order or approval of the Bankruptcy Court, after the Effective Date, the Reorganized Debtors may compromise and settle Claims against them and Causes of Action against other Persons.
 
4.            Discharge of the Debtors.  Pursuant to section 1141(d) of the Bankruptcy Code, and except as otherwise specifically provided in the Plan, the distributions, rights and treatment that are provided in the Plan will be in full and final satisfaction, settlement, release and discharge, effective as of the Effective Date, of all Claims, Interests and Causes of Action of any nature whatsoever, including any interest accrued on Claims or Interests from and after the Petition Date, whether known or unknown, against, liabilities of, Liens on, obligations of, rights against and Interests in, the Debtors or any of their assets or properties, regardless of whether any property will have been distributed or retained pursuant to the Plan on account of such Claims and Interests, including demands, liabilities and Causes of Action that arose before the Effective Date, any contingent or non-contingent liability on account of representations or warranties issued on or before the Effective Date, and all debts of the kind specified in sections 502(g), 502(h) or 502(i) of the Bankruptcy Code, in each case whether or not: (i) a proof of Claim or Interest based upon such Claim, debt, right or Interest is filed or deemed filed pursuant to section 501 of the Bankruptcy Code; (ii) a Claim or Interest based upon such Claim, debt, right or Interest is Allowed or disallowed pursuant to section 502 of the Bankruptcy Code; or (iii) the Holder of such a Claim or Interest has accepted the Plan. Except as otherwise provided in the Plan, any default by the Debtors or their affiliates with respect to any Claim or Interest that existed before or on account of the filing of the Chapter 11 Cases will be deemed cured on the Effective

 
22

 

Date. The Confirmation Order will be a judicial determination of the discharge of all Claims and Interests subject to the Effective Date occurring, except as otherwise expressly provided in the Plan.
 
 
5.
Releases and Related Matters.
 
 
(a)
Releases by the Debtors.
 
Pursuant to section 1123(b) of the Bankruptcy Code and to the extent allowed by applicable law, and except as otherwise specifically provided in the Plan or the Plan Supplement, for good and valuable consideration, including the service of the Released Parties to facilitate the expeditious reorganization of the Debtors and the implementation of the restructuring contemplated by the Plan, on and after the Effective Date, the Released Parties are deemed released and discharged by the Debtors, the Reorganized Debtors, the Estates and non-Debtor affiliates from any and all Claims, Interests, obligations, rights, suits, damages, Causes of Action, remedies and liabilities whatsoever, including any derivative claims, asserted or assertable on behalf of the Debtors, whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity or otherwise, that the Debtors, the Reorganized Debtors, the Estates or the non-Debtor affiliates would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the Holder of any Claim or Interest or other Person, based on or relating to, or in any manner arising from, in whole or in part, the Debtors, the Debtors' restructuring, the Chapter 11 Cases, the purchase, sale or rescission of the purchase or sale of any security of the Debtors or the Reorganized Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan, the Plan Supplement, the business or contractual arrangements between any Debtor, Reorganized Debtor, Estate or non-Debtor affiliate and any Released Party, the restructuring of Claims and Interests before or during the Chapter 11 Cases, the negotiation, formulation or preparation of the Plan, the Disclosure Statement, the Plan Supplement, or related agreements, instruments or other documents, upon any other act or omission, transaction, agreement, event or other occurrence taking place on or before the Effective Date; provided, however that nothing in Section 9.5 of the Plan will be construed to release any party or entity from intentional fraud, willful misconduct, or criminal conduct, as determined by a Final Order.
 
 
(b)
Releases by the Holders of Claims and Interests.
 
Except as otherwise provided in the Plan or the Plan Supplement, as of the Effective Date, each Holder of a Claim or Interest will be deemed to have conclusively, absolutely, unconditionally, irrevocably and forever, released and discharged the Debtors, the Reorganized Debtors, the Estates, non-Debtor affiliates and the Released Parties from any and all Claims, Interests, obligations, rights, suits, damages, Causes of Action, remedies and liabilities whatsoever, including any derivative Claims, assertable on behalf of a Debtor, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity or otherwise, that such Person would have been legally entitled to assert (whether individually or collectively), based on or relating to, or in any manner arising from, in whole or in part, the Debtors, the Debtors' restructuring, the Chapter 11 Cases, the purchase, sale or rescission of the purchase or sale of any security of the Debtors or the Reorganized Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan or the Plan Supplement, the business or contractual arrangements between any Debtor, Reorganized Debtor, Estate or non-Debtor affiliate and any Released Party, the restructuring of Claims and Interests before or during the Chapter 11 Cases, the negotiation, formulation or preparation of the Plan, the Disclosure Statement, the Plan Supplement, or related agreements, instruments or other documents, upon any other act or omission, transaction, agreement, event or other occurrence including or pertaining to the Debtors and taking place on or before the Effective Date, provided, however that nothing in Section 9.5 of the Plan will be construed to release any party or entity from intentional fraud, willful misconduct, or criminal conduct, as determined by a Final Order; provided further, however that Section 9.5 of the Plan will not release the Debtors, the Reorganized Debtors, the Estates, non-Debtor affiliates or the Released Parties from any Cause of Action held by a governmental entity existing as of the Effective Date based on (i) the Internal Revenue Code or other domestic state, city, or municipal tax code, (ii) the environmental laws of the United States or any domestic state, city, or municipality, (iii) any criminal laws of the United States or any domestic state, city, or municipality, (iv) the Securities and Exchange Act of 1934 (as now in effect or hereafter amended), the Securities Act, or other securities laws of the United States or any domestic state, city or municipality, (v) the Employee Retirement Income Security

 
23

 
 
Act of 1974, as amended, or (vi) the laws and regulations of the Bureau of Customs and Border Protection of the United States Department of Homeland Security.
 
6.           Exculpation and Limitation of Liability. Except as otherwise specifically provided in the Plan or Plan Supplement, no Exculpated Party will have or incur, and each Exculpated Party is hereby released and exculpated from, any Exculpated Claim, and in all respects such Persons will be entitled to reasonably rely upon the advice of counsel with respect to their duties and responsibilities pursuant to the Plan. The Debtors, the Reorganized Debtors, and the Released Parties have, and upon Confirmation of the Plan will be deemed to have, participated in good faith and in compliance with the applicable provisions of the Bankruptcy Code with regard to the solicitation and distribution of the Plan securities pursuant to the Plan, therefore, are not, and on account of such distributions will not be, liable at any time for the violation of any applicable law, rule or regulation governing the solicitation of acceptances or rejections of the Plan or such distributions made pursuant to the Plan.
 
7.           Injunction.
 
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THE PLAN, THE PLAN SUPPLEMENT OR RELATED DOCUMENTS, OR FOR OBLIGATIONS ISSUED PURSUANT TO THE PLAN, ALL PERSONS WHO HAVE HELD, HOLD OR MAY HOLD CLAIMS OR INTERESTS THAT HAVE BEEN RELEASED, DISCHARGED OR EXCULPATED PURSUANT TO THIS ARTICLE IX ARE PERMANENTLY ENJOINED, FROM AND AFTER THE EFFECTIVE DATE, FROM TAKING ANY OF THE FOLLOWING ACTIONS: (1) COMMENCING OR CONTINUING IN ANY MANNER ANY ACTION OR OTHER PROCEEDING OF ANY KIND ON ACCOUNT OF OR IN CONNECTION WITH OR WITH RESPECT TO ANY SUCH CLAIMS OR INTERESTS; (2) ENFORCING, ATTACHING, COLLECTING OR RECOVERING BY ANY MANNER OR MEANS ANY JUDGMENT, AWARD, DECREE OR ORDER AGAINST SUCH PERSONS ON ACCOUNT OF OR IN CONNECTION WITH OR WITH RESPECT TO ANY SUCH CLAIMS OR INTERESTS; (3) CREATING, PERFECTING OR ENFORCING ANY ENCUMBRANCE OF ANY KIND AGAINST SUCH PERSONS OR THE PROPERTY OR ESTATES OF SUCH PERSONS ON ACCOUNT OF OR IN CONNECTION WITH OR WITH RESPECT TO ANY SUCH CLAIMS OR INTERESTS; AND (4) COMMENCING OR CONTINUING IN ANY MANNER ANY ACTION OR OTHER PROCEEDING OF ANY KIND ON ACCOUNT OF OR IN CONNECTION WITH OR WITH RESPECT TO ANY SUCH CLAIMS OR INTERESTS RELEASED, SETTLED OR DISCHARGED PURSUANT TO THE PLAN.
 
THE RIGHTS AFFORDED IN THE PLAN AND THE TREATMENT OF ALL CLAIMS AND INTERESTS IN THE PLAN WILL BE IN EXCHANGE FOR AND IN COMPLETE SATISFACTION OF ALL CLAIMS AND INTERESTS OF ANY NATURE WHATSOEVER, INCLUDING ANY INTEREST ACCRUED ON CLAIMS FROM AND AFTER THE PETITION DATE, AGAINST THE DEBTORS OR ANY OF THEIR ASSETS, PROPERTY OR ESTATES. ON THE EFFECTIVE DATE, ALL SUCH CLAIMS AGAINST THE DEBTORS WILL BE FULLY RELEASED AND DISCHARGED, AND THE INTERESTS WILL BE CANCELLED.
 
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED FOR IN THE PLAN OR IN OBLIGATIONS ISSUED PURSUANT HERETO FROM AND AFTER THE EFFECTIVE DATE, ALL CLAIMS AGAINST THE DEBTORS WILL BE FULLY RELEASED AND DISCHARGED, AND ALL INTERESTS WILL BE CANCELLED, AND THE DEBTORS' LIABILITY WITH RESPECT THERETO WILL BE EXTINGUISHED COMPLETELY, INCLUDING ANY LIABILITY OF THE KIND SPECIFIED UNDER SECTION 502(G) OF THE BANKRUPTCY CODE. ALL PERSONS WILL BE PRECLUDED FROM ASSERTING AGAINST THE DEBTORS, THE DEBTORS' ESTATES, THE REORGANIZED DEBTORS, EACH OF THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, AND EACH OF THEIR ASSETS AND PROPERTIES, ANY OTHER CLAIMS OR INTERESTS BASED UPON ANY DOCUMENTS, INSTRUMENTS OR ANY ACT OR OMISSION, TRANSACTION OR OTHER ACTIVITY OF ANY KIND OR NATURE THAT OCCURRED BEFORE THE EFFECTIVE DATE.
 
8.           Term of Bankruptcy Injunction or Stays.  Unless otherwise provided in the Plan or in the Confirmation Order, all injunctions or stays provided for in the Chapter 11 Cases under sections 105 or 362 of the

 
24

 

Bankruptcy Code or otherwise, and extant on the Confirmation Date (excluding any injunctions or stays contained in the Plan or the Confirmation Order), will remain in full force and effect until the Effective Date.
 
 
I.
Retention Of Jurisdiction
 
1.            Retention of Jurisdiction. Pursuant to sections 105(c) and 1142 of the Bankruptcy Code and notwithstanding entry of the Confirmation Order and the occurrence of the Effective Date, the Bankruptcy Court will retain exclusive jurisdiction over all matters arising out of, and related to, the Chapter 11 Cases and the Plan to the fullest extent permitted by law, including, among other things, jurisdiction to:
 
(a)           resolve any matters related to the assumption, assumption and assignment, or rejection of any executory contract or unexpired lease with respect to which any Debtor or Reorganized Debtor may be liable, and to hear, determine, and, if necessary, liquidate any Claims arising therefrom;
 
(b)           decide or resolve any motions, adversary proceedings, contested or litigated matters, and any other matters, and grant or deny any applications, involving the Debtors that may be pending on the Effective Date;
 
(c)           enter such orders as may be necessary or appropriate to implement or consummate the provisions of the Plan and all contracts, instruments, releases, and other agreements or documents created in connection with the Plan, the Disclosure Statement, or the Confirmation Order;
 
(d)           resolve any cases, controversies, suits, or disputes that may arise in connection with the consummation, interpretation, or enforcement of the Plan or any contract, instrument, release, or other agreement or document that is executed or created pursuant to the Plan, or any entity's rights arising from, or obligations incurred in connection with, the Plan or such documents;
 
(e)           modify the Plan before or after the Effective Date pursuant to section 1127 of the Bankruptcy Code or modify the Confirmation Order, or any contract, instrument, release, or other agreement or document created in connection with the Plan or the Confirmation Order, or remedy any defect or omission, or reconcile any inconsistency, in any Bankruptcy Court order, the Plan, the Confirmation Order, or any contract, instrument, release, or other agreement or document created in connection with the Plan, or the Confirmation Order, in such manner as may be necessary or appropriate to consummate the Plan;
 
(f)           hear and determine all applications for compensation and reimbursement of expenses of Professionals under the Plan or under sections 330, 331, 503(b) and 1129(a)(4) of the Bankruptcy Code; provided, however, that from and after the Effective Date the payment of fees and expenses of the Reorganized Debtors, including professional fees, will be made in the ordinary course of business and will not be subject to the approval of the Bankruptcy Court;
 
(g)           issue injunctions, enter and implement other orders, or take such other actions as may be necessary or appropriate to restrain interference by any entity with consummation, implementation, or enforcement of the Plan or the Confirmation Order;
 
(h)          adjudicate controversies arising out of the administration of the Estates or the implementation of the Plan;
 
(i)           recover all assets of the Debtors and property of the Estates, wherever located;
 
(j)           enter and implement such orders as are necessary or appropriate if the Confirmation Order is for any reason, or in any respect, modified, stayed, reversed, revoked, or vacated, or distributions pursuant to the Plan are enjoined or stayed;
 
(k)           hear and resolve all matters concerning state, local, and federal taxes in accordance with sections 346, 505 and 1146 of the Bankruptcy Code;

 
25

 

(l)           determine any other matters that may arise in connection with, or relate to, the Plan, the Confirmation Order, or any contract, instrument, release, or other agreement or document created in connection with the Plan, or the Confirmation Order;
 
(m)          enforce all orders, judgments, injunctions, releases, exculpations, indemnifications, and rulings entered in connection with the Chapter 11 Cases;
 
(n)           hear and determine such other matters related hereto that are not inconsistent with the Bankruptcy Code or title 28 of the United States Code; and
 
(o)           enter an order closing the Chapter 11 Cases.
 
2.            Failure of Bankruptcy Court to Exercise Jurisdiction.  If the Bankruptcy Court abstains from exercising, or declines to exercise, jurisdiction or is otherwise without jurisdiction over any matter, including the matters set forth in Section 10.1 of the Plan, the provisions of Article X of the Plan will have no effect upon and will not control, prohibit, or limit the exercise of jurisdiction by any other court having jurisdiction with respect to such matter.
 
 
J.
Miscellaneous Provisions
 
1.            Payment Of Statutory Fees.  All fees payable pursuant to section 1930 of title 28 of the United States Code, as determined by the Bankruptcy Court at the Confirmation Hearing, will be paid on the Effective Date.
 
2.            Amendment Or Modification Of The Plan.  Subject to section 1127 of the Bankruptcy Code and, to the extent applicable, sections 1122, 1123, and 1125 of the Bankruptcy Code and subject further to the consent of the Requisite Consenting Lenders, the Debtors reserve the right to alter, amend, or modify the Plan at any time prior to or after the Confirmation Date, including, without limitation the right to withdraw the Plan as to any particular Debtor and seek to confirm and consummate the Plan with respect to the other Debtors.  A Holder of a Claim that has accepted the Plan will be deemed to have accepted the Plan, as altered, amended or modified, if the proposed alteration, amendment or modification does not materially and adversely change the treatment of the Claim of such Holder.
 
3.            Revocation, Withdrawal, or Non-Consummation.  The Debtors reserve the right to revoke or withdraw the Plan at any time prior to the Confirmation Date and to file other plans of reorganization.  If the Debtors revoke or withdraw the Plan, or if Confirmation or consummation of the Plan does not occur, then (i) the Plan will be null and void in all respects, (ii) any settlement or compromise embodied in the Plan (including the fixing or limiting to an amount any Claim or Class of Claims or any release contemplated hereby), assumption of executory contracts or leases effected by the Plan, and any document or agreement executed pursuant to the Plan will be deemed null and void, and (iii) nothing contained in the Plan, and no acts taken in preparation for consummation of the Plan, will (A) constitute or be deemed to constitute a waiver or release of any Claims by or against, or any Interests in, the Debtors or any other Person, (B) prejudice in any manner the rights of the Debtors or any Person in any further proceedings involving the Debtors, or (C) constitute an admission of any sort by the Debtors or any other Person.
 
4.            Governing Law.  Except to the extent that the Bankruptcy Code, the Bankruptcy Rules or other federal law is applicable, or to the extent that an exhibit or schedule to the Plan provides otherwise, the rights and obligations arising under the Plan will be governed by, and construed and enforced in accordance with, the laws of the State of New York without giving effect to the principles of conflicts of law of such jurisdiction; provided, however that corporate governance matters relating to the Debtors or the Reorganized Debtors, as applicable, not incorporated in New York will be governed by the laws of the jurisdiction in which the applicable Debtor or Reorganized Debtor is incorporated.

 
26

 

V.          RISK FACTORS TO BE CONSIDERED
 
The Plan involves a degree of risk and uncertainty.  You should carefully consider the risks and uncertainties described below as well as the other information set forth in this Disclosure Statement (and the documents delivered together herewith and incorporated by reference) before deciding whether to vote to accept or reject the Plan.  The Company has described the risks and uncertainties that it believes are material, but these risks and uncertainties may not be the only ones faced by the Company.  Additional risks and uncertainties that are not currently known to the Company, or that the Company currently deems immaterial,  may also have an adverse effect on the Company's business, financial condition, results of operations or future prospects.  If this occurs, the value of Reorganized Excel or the New Cash Flow Note may decline.
 
The order in which the risks are presented does not necessarily reflect the likelihood of their occurrence or the magnitude of their potential impact on the Company's business, financial condition, results of operations, or the value of Reorganized Excel or the New Cash Flow Note.
 
 
A.
Risks Related to Failure to Consummate the Plan of Reorganization
 
The Company believes that restructuring through the Plan is critical to its continuing viability.  If the Plan is not confirmed, the Company's creditors may seek to exercise certain remedies against it, or the Company may need to seek relief under the Bankruptcy Code without the benefit of a plan supported by its secured creditors.
 
The Company is in default under the Syndicate Credit Facility, and the secured lenders thereunder have the right to enforce share pledges against almost all of the Company and thereby take ownership of substantially all of the Company's assets.  The secured lenders under the Company's other secured facilities may also enforce their rights against the collateral securing those facilities.  The Company has also defaulted under the terms of the Convertible Notes and holders thereof may attempt to pursue the Company for payment.  Certain unsecured creditors with maritime claims or liens may attempt to enforce such claims by arrest of the Company's vessels in various jurisdictions, or may commence foreign insolvency proceedings against the Company.  Although the Company has negotiated the terms of a restructuring support agreement with the Steering Committee, such agreement will not be effective until such time as sufficient number and amount of senior secured lenders execute the agreement.  In addition, there can be no assurance that a sufficient number or amount of senior secured lenders or other creditors of the Company will agree and vote in favor of the Plan to comply with the Bankruptcy Code's requirements for confirmation of the Plan.
 
These factors may require the Company to seek relief under a traditional "free fall" chapter 11 filing.  The Company believes that doing so would be detrimental to its business and would adversely affect its relationships with customers, employees, lenders and other stakeholders.  For example,
 
 
·
customers may lose confidence in the Company and choose not to do business with the Company, leading to a decline in revenues and cash flow;
 
 
·
suppliers, including in particular bunker suppliers and other maritime service suppliers, may refuse to provide bunkers or services to the Company, rendering the Company unable to operate its fleet, or may require that bunkers or services be provided on less favorable credit terms, reducing the liquidity available to the Company;
 
 
·
employees of Maryville, who run the day-to-day operations of the Company's business, could be distracted from performance of their duties, or more easily attracted to other career opportunities, and it may be more difficult to replace key employees;
 
 
·
lenders may seek to terminate relationships with the Company, require financial assurances or enhanced returns, or refuse to provide credit on the terms contemplated by the Plan;
 
 
·
the Company could be forced to operate in bankruptcy for an extended period of time while it develops and seeks approval for a reorganization plan.

 
27

 

Failure to Consummate the Plan.
 
Section 1129 of the Bankruptcy Code sets forth the requirements for confirmation of a plan and requires, among other things, that the value of distributions to dissenting creditors and shareholders not be less than the value of distributions such creditors and shareholders would receive if the Company were liquidated under chapter 7 of the Bankruptcy Code.  Although the Company believes that the Plan will meet such tests, there can be no assurance that the Bankruptcy Court will reach the same conclusion. If the Plan is not confirmed and consummated, there can be no assurance that the chapter 11 cases will continue rather than be converted to chapter 7 liquidations.  The Bankruptcy Court, which sits as a court of equity, may exercise substantial discretion with respect to the affairs of the Company during the chapter 11 cases. Furthermore, although the Company believes that the Effective Date will occur shortly after the Confirmation Date, there can be no assurance as to such timing or that the Effective Date will occur.  The Company could experience material adverse changes in its liquidity as a result of any such delay.
 
 
B.
Risks Related to Confirmation
 
If the Bankruptcy Court determines that solicitation or the votes on the Plan did not comply with the requirements of the Bankruptcy Code, the Company may need to resolicit acceptances which would delay confirmation of the Plan.
 
Section 1126(b) of the Bankruptcy Code provides that the holder of a claim against, or interest in, a debtor who accepts or rejects a plan before the commencement of a chapter 11 case is deemed to have accepted or rejected such plan under the Bankruptcy Code so long as the solicitation of such acceptance was made in accordance with applicable nonbankruptcy law governing the adequacy of disclosure in connection with such solicitations, or, if such laws do not exist, such acceptance was solicited after disclosure of "adequate information", as defined in section 1125 of the Bankruptcy Code. In addition, Bankruptcy Rule 3018(b) provides that a holder of a claim or interest who has accepted or rejected a plan before the commencement of the case under the Bankruptcy Code will not be deemed to have accepted or rejected the plan if the court finds after notice and a hearing that the plan was not transmitted in accordance with reasonable solicitation procedures.
 
While the Company believes that the solicitation of votes to accept or reject the Plan of Reorganization is proper under applicable non-bankruptcy law, rules, and regulations, and contains adequate information as defined by section 1125(a) of the Bankruptcy Code, the Company cannot be certain that the solicitation of acceptances or rejections will be approved by the Bankruptcy Court. The Bankruptcy Court may decide that the solicitation failed to meet the requirements of section 1126(b) of the Bankruptcy Code. If the Bankruptcy Court determines that the solicitation did not comply with the requirements of section 1126(b) of the Bankruptcy Code,  the Company may seek to resolicit acceptances, and, in that event, confirmation of the Plan of Reorganization could be delayed and possibly jeopardized.
 
A Confirmation Order entered by the Bankruptcy Court may not be recognized as effective by a Liberian court.
 
Excel is incorporated pursuant to the laws of Liberia. Although the Company will make every effort to ensure that any Confirmation Order entered by the Bankruptcy Court and the steps taken pursuant to the Confirmation Order to implement the restructuring are recognized and are effective as a matter of Liberian law, it is possible that if a creditor or stakeholder were to challenge the restructuring and a Liberian court were required to adjudicate on the effectiveness of the restructuring, a Liberian court may refuse to recognize the effect of the Confirmation Order.
 
The cancellation of Interests in Debtor Excel and issuance of new stock pursuant to the Plan may not be recognized as effective by a Liberian court.
 
Excel is incorporated pursuant to and the rights attaching to its shares are governed by the laws of Liberia. While the Company considers that the cancellation and issuance of shares in Debtor Excel pursuant to the Confirmation order will be recognized as effective, it is possible that a Liberian court could refuse to recognize or enforce the rights of the holders of common stock in Reorganized Excel issued pursuant to the Plan.

 
28

 

 
C.
Potential Adverse Effects of Chapter 11
 
Although the Company will seek to make its stay in chapter 11 as brief as possible and to obtain relief from the Bankruptcy Court so as to minimize any potential disruption to its business operations, it is possible that the commencement of the chapter 11 cases could materially adversely affect the relationship among the Company and its customers, employees, contractors and vendors.
 
Moreover, because the Debtors' business operations implicate maritime law, various foreign creditors could assert maritime liens against the Debtors' assets.  The determination of what claim constitutes a maritime lien is determined by local law on a case by case basis.  Thus, various interested parties may attempt to seize assets located outside of the United States to the detriment of the Debtors, their estates and creditors, or take other actions in contravention of the automatic stay of section 362 of the Bankruptcy Code.  In addition, upon learning of the Debtors' bankruptcy, counterparties to leases and executory contracts, including charterparties,  may attempt to terminate those leases or contracts pursuant to ipso facto provisions in contravention of section 365 of the Bankruptcy Code.
 
 
D.
Risks Related to Becoming Holders of Reorganized Excel's Common Stock
 
The market price of Excel's Class A common stock historically has been volatile and the value of Reorganized Excel is likely to continue to be volatile.
 
The market price of Excel's Class A common stock has fluctuated widely since it began trading on the NYSE in September 2005.  The new common stock of Reorganized Excel will not be listed on the NYSE and is expected to be held through ownership interests in a Marshall Island limited liability company and therefore no trading market for its common stock is expected to develop.  The value of Reorganized Excel is likely to continue to be volatile as a result of many factors, including those discussed in "Other Risks Relating to The Company's Business and the Company's Ability to Satisfy its Debt Obligations after the Effective Date" below, as well as the Company's actual results of operations and perceived prospects, the prospects of its competition and of the shipping industry in general and in particular the dry bulk sector, differences between its actual financial and operating results and those expected by investors and analysts, changes in analysts' recommendations or projections, changes in general valuations for companies in the shipping industry (particularly the dry bulk sector), changes in general economic or market conditions, and broad market fluctuations.  
 
U.S. securities laws may impose certain restrictions on the resale of Reorganized Excel's common stock.
 
Reorganized Excel's common stock is being distributed in reliance upon an exemption from registration under the Securities Act and applicable state securities laws. Thus, the common stock has not been registered under the Securities Act or any state securities laws.  The Company makes no representation regarding the right of any holder of Reorganized Excel's common stock to freely resell the common stock.  See Article VI – "Applicability of Federal and Other Securities Laws."
 
The Company does not intend to pay dividends on Reorganized Excel's common stock.
 
The Company does not intend to pay dividends on Reorganized Excel's common stock in the foreseeable future and the Company cannot assure holders of Reorganized Excel's common stock that it will ever pay dividends.  This may adversely affect the value of Reorganized Excel's common stock.
 
Because the Company is a foreign corporation, its shareholders may not have the same rights that shareholders in a U.S. corporation may have. 
 
The Company is a Liberian corporation. The Company's articles of incorporation and bylaws and the Business Corporation Act of Liberia 1976, as amended (the "Liberian BCA"), govern its affairs. While the Liberian BCA resembles provisions of the corporation laws of a number of states in the United States, Liberian law does not as clearly establish shareholders' rights and the fiduciary responsibilities of its directors as do statutes and judicial precedent in some U.S. jurisdictions. However, while the Liberian courts generally follow U.S. court precedent, there have been few judicial cases in Liberia interpreting the Liberian BCA. Investors may have more

 
29

 

difficulty in protecting their interests in the face of actions by the management, directors or controlling shareholders than would shareholders of a corporation incorporated in a U.S. jurisdiction that has developed a substantial body of case law.
 
It may be difficult to serve process on or enforce a U.S. judgment against the Company, its officers and the majority of its directors. 
 
The Company is a Liberian corporation and nearly all of its executive officers and directors are located outside of the United States.  In addition, a substantial portion of the Company's assets and the assets of its directors and officers are located outside of the United States.  As a result, it may be difficult to serve legal process within the United States upon the Company or any of these persons.  It may also be difficult to enforce, both in and outside the United States, judgments obtained in U.S. courts against the Company or any of these persons in any action, including actions based upon the civil liability provisions of U.S. federal or state securities laws. Furthermore, there is substantial doubt that the courts of the Republic of Liberia or of the non-U.S. jurisdictions in which the Company's offices are located would enter judgments in original actions brought in those courts predicated on U.S. federal or state securities laws.
 
 
E.
Risks Related to Becoming a Holder of the New Cash Flow Note
 
Christine Shipco is subject to the same or substantially similar business, operational, legal and regulatory risks faced by the Company on account of its participation in the dry bulk shipping industry.
 
Christine Shipco is included in the definition of "the Company."  All risk factors below that describe the business, operational, taxation, legal and regulatory risks to which the Company is subject as a result of its participation in the dry bulk shipping industry apply equally to Christine Shipco.  These risk factors may affect Christine Shipco's business, results of operations and financial condition, and its ability to generate cash flow and distribute dividends to Excel or a new subsidiary created to hold Excel's interest in Christine and therefore the ability of the holders of the New Cash Flow Note to receive any recovery on account of such note.
 
While Excel or its wholly-owned subsidiary is the issuer of the New Cash Flow Note, the obligations to make principal and interest payments thereon will be limited to the proceeds received by the issuer on account of its interest in Christine Shipco or the sale of M/V Christine or the issuer's interest in Christine Shipco, in whole or in part.  Therefore, the issuer's obligation to make payments on the New Cash Flow Note is contingent on the issuer's receipt of cash dividends from Christine Shipco  based on free cash flow generated by Christine Shipco, in respect of its 71.4% interest in Christine Shipco, or proceeds from a sale of M/V Christine in the future or proceeds from the sale of all or part of such joint venture interest.  If the issuer does not receive cash dividends from Christine Shipco or proceeds from the sale of all or part of its interest in Christine Shipco, the issuer will have no obligation to make payments under the New Cash Flow Note.  The issuer's right to receive cash dividends or sale proceeds in connection with its 71.4% ownership in Christine Shipco is contingent on many different factors, including but not limited to the following:
 
 
·
Any cash dividends available for distribution will be net of Christine's fixed costs, which include its quarterly debt service obligations under the Christine Shipco Facility, a fee associated with the technical manager of the M/V Christine and dry dock costs, and operating costs, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, and maintenance and repairs.  Certain operating expenses are variable and subject to change and any unexpected increase will affect Christine Shipco's cash flow.  All fixed and variable costs must be paid before any dividends can be distributed to the issuer, and hence, before any cash quarterly interest payments or prepayments of principal may be made on the New Cash Flow Note.  Christine Shipco is also required under the terms of the Christine Shipco Facility to meet certain financial covenants, including minimum liquidity covenants, that restrict its ability to pay dividends. There can be no guarantee that Christine Shipco will generate sufficient free cash flow to pay dividends after satisfying its quarterly debt service obligations and other financial covenants in the Christine Shipco Facility.

 
30

 

 
·
Payment of the principal amount of the New Cash Flow Note at maturity is subject to the issuer's ability to generate sufficient proceeds from its interest in Christine Shipco, either from receipt of its pro rata portion of the net cash proceeds upon the sale of M/V Christine, or the sale of all or part of its joint venture interest.  There can be no guarantee that the sale of M/V Christine or the issuer's interest in Christine Shipco will generate sufficient cash proceeds to repay the New Cash Flow Note in full or at all.
 
 
·
Under the terms of the Limited Liability Company Agreement of Christine Shipco, dated as of March 30, 2007, the unanimous consent of Christine Shipco's board of directors is required to authorize the distribution of dividends or to sell M/V Christine.  The issuer will not control the board of directors, and hence, the power to authorize distribution of cash dividends or to generate cash proceeds through the sale of M/V Christine lies with third parties whose interests may be contrary to those of Holders of General Unsecured Claims, and who may refuse to authorize distribution of dividends or the sale of M/V Christine.
 
 
·
The terms of the Christine Shipco Facility restrict Christine Shipco's and issuer's ability to sell any of the assets pledged as collateral for the facility, including M/V Christine and the membership shares in Christine Shipco owned by the issuer. There can be no guarantee that the issuer will be permitted under the terms of the Christine Shipco Facility to sell its membership interest in Christine Shipco, or that Christine Shipco will be permitted to sell M/V Christine, and thereby generate funds to repay the New Cash Flow Note.
 
 
·
The Limited Liability Company Agreement of Christine Shipco contains "right of first offer" provisions, which places certain restrictions upon the issuer ability to sell all or part of its joint venture interest in Christine Shipco, and which may reduce the price at which the issuer is able to sell all or part of that interest.
 
 
·
Dry bulk vessel values are at near-historic lows, due to a combination of factors described more fully below.  See V.H. – "Other Risks Relating to the Company's Business and the Company's Ability to Satisfy its Debt Obligations after the Effective Date." Even if M/V Christine is sold, the market value of MV/Christine may be insufficient upon such sale to permit for recovery to the holders of the New Cash Flow Note.
 
 
·
Christine Shipco is party to an above-market time charter agreement.  As described more fully below, charterhire rates are at near-historic lows, and a drop in spot charter rates may incentivize the charterer of M/V Christine to default under the time charter agreement.   See V.H. – "Other Risks Relating to the Company's Business and the Company's Ability to Satisfy its Debt Obligations after the Effective Date." If Christine Shipco's charterer defaults or the charter reaches its contractual end, Christine Shipco may have to re-charter M/V Christine at a lower rate, may be forced to re-charter in the spot market, which is currently depressed, or may not be able to re-charter the vessel at all, which would affect Christine Shipco's results of operations and ability to pay dividends, and may cause it to default under the Christine Shipco Facility.
 
 
·
In the event of a default under the Christine Shipco Facility, DVB Bank SE, as lender under the facility, may exercise its right to seize its collateral, which includes a first priority pledge of the membership interests in Christine Shipco and a first priority mortgage over, and an assignment of insurances and earnings with respect to, M/V Christine.  If DVB Bank SE forecloses upon its collateral, there will be no proceeds with which to repay the New Cash Flow Note.
 
Therefore, the Company cannot assure Holders of General Unsecured Claims that any payments will be made in connection with the New Cash Flow Note, and cannot assure such Holders of any recovery on account of any interests in the New Cash Flow Note.  Holders of General Unsecured Claims should read Exhibit A to the Plan, which summarizes the principal terms of the New Cash Flow Note, for a more fulsome description of the note and their rights thereunder.

 
31

 

Inherent uncertainty of Company's Financial Projections with respect to Christine Shipco.
 
The forward looking information regarding the projected future cash flows of Christine Shipco and Excel's interest therein were prepared on the same basis as the projections attached hereto as Appendix F.  Please refer to the risk factor in Section V.G – "Inherent uncertainty of Company's Financial Projections" for a description of the inherent limitations of such projections.
 
The ability of Holders of General Unsecured Claims to transfer their interests in the New Cash Flow Note may be limited by the absence of an active trading market, and it may not be possible to sell interests in the New Cash Flow Note.
 
The New Cash Flow Note is a new issue of securities for which there is no established public market.  If an active trading market for the New Cash Flow Note does not develop, Holders of the New Cash Flow Note may have difficulty selling their interest therein at an attractive price, or at all. The value of the New Cash Flow Note may be adversely affected by changes in the overall market for this types of securities and by changes in Christine Shipco's financial performance or prospects or the financial performance or prospects of the Company and companies in the shipping industry generally.
 
U.S. securities laws may impose certain restrictions on the resale of  the New Cash Flow Note.
 
 The New Cash Flow Note is being distributed in reliance upon an exemption from registration under the Securities Act and applicable state securities laws. Thus, the New Cash Flow Note has not been registered under the Securities Act or any state securities laws.  The Company makes no representation regarding the right of any holder of interests in the New Cash Flow Note to freely resell such interest.  See Article VI – "Applicability of Federal and Other Securities Laws."
 
 
F.
Dependence on Key Management Personnel and Other Employees
 
The Company's success depends to a significant extent upon the abilities and efforts of its management team. The Company's ability to retain key members of its management team and to hire new members as may be necessary will contribute to that success. The loss of the services of any of these individuals for any significant period of time due to death, disability or termination of employment could adversely affect the Company's business prospects and financial condition. The Company is also dependent on qualified personnel in order to execute its day-to-day operations. The loss of the services of any of these individuals for any significant period of time or the Company's inability to attract and retain qualified personnel could have a material adverse effect on its capacity to manage its business. Difficulty in hiring and retaining replacement personnel could have a similar effect. The Company does not maintain "key man" life insurance on any of its officers.
 
 
G.
No Assurance of Ultimate Recoveries; Uncertainty of Financial Projections
 
No assurance of ultimate recoveries.
 
The value of the common stock in Reorganized Excel and the New Cash Flow Note cannot be determined with precision, and there can be no assurances of the actual recoveries to holders of Class 2 or Class 5 Claims. The Company cannot assure its claimholders that they will be able to resell any consideration received in respect of their claims at current values or at all.
 
Inherent uncertainty of Company's Financial Projections.
 
In connection with this Disclosure Statement and the Confirmation Hearing, the Company prepared Financial Projections, attached hereto as Appendix F, to demonstrate to the Bankruptcy Court the feasibility of the Plan and its ability to continue operations upon its emergence from the chapter 11 cases.  This information was prepared for the limited purpose of furnishing recipients of this Disclosure Statement with adequate information to make an informed judgment regarding acceptance of the Plan, and was not prepared for the purpose of providing the basis for an investment decision relating to the issuance of common stock in Reorganized Excel.  This information was not audited or reviewed by the Company's independent public accountants.  The Company

 
32

 
 
does not intend to update or otherwise revise the Financial Projections, including any revisions to reflect events or circumstances existing or arising after the date of this Disclosure Statement or to reflect the occurrence of unanticipated events, even if any or all of the underlying assumptions do not come to fruition.  Furthermore, the Company does not intend to update or revise the Financial Projections to reflect changes in general economic or industry conditions.
 
At the time they were prepared, the projections reflected numerous assumptions concerning the Company's anticipated future performance and with respect to prevailing and anticipated market and economic conditions that were and remain beyond its control and that may not materialize.  Projections are inherently subject to substantial and numerous uncertainties and to a wide variety of significant business, economic and competitive risks, and the assumptions underlying the projections and/or valuation estimates may prove to be wrong in material respects.  Actual results may vary significantly from those contemplated by the projections that were prepared in connection with this Disclosure Statement and the Confirmation Hearing.  As a result, such projections are only an estimate and should not be relied upon as necessarily indicative of future, actual recoveries.
 
The business plan was developed by the Company with the help of its advisors.  There can be no assurances that the Company's business plan will not change, perhaps materially, as a result of decisions management and Reorganized Excel's Board of Directors make after fully evaluating the strategic direction of the Company and its business plan.  Any deviations from the Company's business plan would necessarily cause a deviation from the attached projections, and could result in materially different outcomes from those projected.
 
Lack of recent audited financial statements.
 
Attached to this Disclosure Statement as Appendix G are the Company's audited financial statements for the fiscal year ended December 31, 2011.  This is the last period for which audited financial information is available.  While attached to this Disclosure Statement as Appendix H are the Company's unaudited financial statements, as of and for the year ended December 31, 2012 as of the date hereof, the Company has not prepared audited financial statements for any fiscal year subsequent to December 31, 2011.  The Company believes the unaudited financial statements prepared for fiscal year 2012 are consistent with its audited financials and all adjustments that would be made were such financial statements subjected to an audit in accordance with the standards of the Public Company Accounting Oversight Board.  However, the Company cannot assure you that any changes made to the financial statements for fiscal year 2012 pursuant to an audit would not have been material to you in your decision whether to vote to accept or reject the Plan.
 
 
H.
Other Risks Relating to the Company's Business and the Company's Ability to Satisfy its Debt Obligations after the Effective Date
 
After the Effective Date, the Company will require a significant amount of cash to service its indebtedness.  The Company's ability to generate cash depends on many factors beyond its control, and the Company may default on its obligations to pay any of its indebtedness, violate financial covenants in its loan agreements, and may be subject to restrictions on the payment of its other debt obligations or cause a cross-default or cross-acceleration.
 
The Company's ability to make scheduled payments on, and to refinance, its indebtedness, will depend on its ability to generate cash from operations in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond the Company's control.  Low dry bulk charter rates and dry bulk vessels have negatively impacted the Company's cash flow in the past, and the Company cannot provide assurance that its business will generate sufficient cash flow from operations in an amount sufficient to enable the Company to pay its indebtedness, fund its other liquidity needs and comply with financial covenant. In the event of such default:
 
 
·
lenders could require the Company to restructure its debt, post additional collateral, enhance its equity and liquidity, increase its interest payments or pay down its indebtedness to a level where it is in compliance with its loan covenants or sell vessels from its fleet;

 
33

 

 
·
the lenders or holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable and, if not paid on demand, institute foreclosure proceedings against the Company's assets securing such indebtedness; and
 
 
·
even if those lenders or holders do not declare a default, they may be able to cause all of the Company's available cash to be used to repay the indebtedness owed to them or restrict the Company's access to its cash.
 
Subject to limited exceptions, the Amended and Restated Senior Secured Credit Agreement will generally restrict the Company's ability to incur additional indebtedness or undertake financing activities or other similar actions that would generate cash, absent prior consent from the requisite lenders, and will require that the proceeds thereof be applied to prepay outstanding obligations under the Amended and Restated Senior Secured Credit Agreement.  The Company's other debt agreements impose similar restrictions.  The Company cannot offer assurances that requisite consents to undertake such actions could, if necessary, be effected on commercially reasonable terms, or at all.  The Company's cash flow and capital resources may be insufficient for payment of interest on and principal of its debt in the future, and any such alternative measures may be unsuccessful or may not permit it to meet scheduled debt service obligations, which could cause the Company to default on obligations and could impair its liquidity and its ability to continue to operate its business as described herein and in the documents incorporated by reference.
 
Further, as a result of cross-default provisions contained in the Company's loan agreements, any default could lead to additional defaults under its other loan agreements and the consequent acceleration of the indebtedness thereunder, the commencement of foreclosure proceedings by other lenders and/or exercise of other remedies by such lenders. This could adversely affect the Company's ability to continue its business and force it into bankruptcy or liquidation.
 
The Company may also be required to reclassify all of its indebtedness as current liabilities, which would be significantly in excess of its cash and other current assets, and accordingly would adversely affect the Company's ability to continue as a going concern by limiting the Company's ability to continue to conduct its operations, finance its future operations, pursue business opportunities, or make payments on its debt obligations.
 
The agreements and instruments governing the Company's debt contain, and the Amended and Restated Senior Secured Credit Agreement will contain, restrictive covenants which may limit the Company's liquidity and corporate activities.
 
The Company's loan agreements impose, and the Amended and Restated Senior Secured Credit Agreement will impose, significant operating and financial restrictions on it. These restrictions may limit the Company's ability to:
 
 
·
incur additional indebtedness or provide guaranties;
 
 
·
create liens on its assets;
 
 
·
enter into time charters for more than 12 months (including optional renewals) or enter into bareboat charters;
 
 
·
sell capital stock of its subsidiaries;
 
 
·
make investments;
 
 
·
undergo a change in ownership or control, or permit a change in ownership and control of Maryville (in its capacity as the Company's manager);
 
 
·
engage in mergers or acquisitions;
 
 
·
pay dividends or redeem capital stock;
 
 
34

 

 
·
make capital expenditures;
 
 
·
enter into transactions with affiliates;
 
 
·
change the flag, class or the management of its vessels or terminate or materially amend the management agreement relating to each vessel; and
 
 
·
sell its vessels or other assets.
 
The Company may need to seek permission from its lenders in order to engage in certain corporate actions.  The interests of the Company's lenders may be different from its own and the Company cannot guarantee that it will be able to obtain the permission of the Company's lenders when needed.  Subject to limited exceptions, the Amended and Restated Senior Secured Credit Agreement restricts the ability of the Company and its subsidiaries to raise new funds or financing for future operations or business opportunities without the consent of the requisite lenders.  Such restrictions may have an adverse effect on its liquidity, operations and financial performance.

The market fundamentals of the dry bulk market historically have been volatile and have deteriorated significantly since the market high in May 2008, which has adversely affected and may continue to adversely affect the Company's results of operations and financial condition.
 
The Company is an independent shipping company that operates in the dry bulk shipping markets.  One of the factors that impacts the Company's profitability is the freight rates it is able to charge.  The dry bulk shipping industry is cyclical with attendant volatility in charter hire rates and profitability.  The degree of charter hire rate volatility among different types of dry bulk vessels has varied widely, and charter hire rates for dry bulk vessels are at near historically low levels.  Because the Company charters some of its vessels pursuant to voyage charters or short-term time charters, it is exposed to changes in spot market and short-term charter rates for dry bulk carriers and such changes may affect the Company's earnings and the value of its dry bulk carriers at any given time.
 
This volatility is reflected by the movement of the BDI from May 2008 to the present day.  The BDI declined from a high of 11,793 in May 2008 to a low of 663 in December 2008, which represents a decline of approximately 94%. Over the comparable period of May through December 2008, the high and low of the Baltic Panamax Index and the Baltic Capesize Index (which measure the price of moving materials by Panamax and Capesize vessels, respectively)  represent a decline of approximately 96% and 99%, respectively. During 2009, the BDI increased from a low of 772 in January to a high of 4,661 in November of 2009. In 2010, the BDI increased from a low of 2,848 in January 2010 to a high of 4,209 in May 2010 and subsequently decreased to a low of 1,700 in July 2010. During 2011, the BDI remained volatile, ranging from a low of 1,043 on February 4, 2011 to a high of 2,173 on October 14, 2011. As of December 23, 2011, the BDI was 1,738. On February 3, 2012, the BDI dropped to a 26-year low of 647, owing to a combination of both weak vessel demand and further increases in supply, and the average BDI for 2012 was 920 – 41% lower than the average index of 1,549 in 2011.
 
The market fundamentals of the dry bulk market deteriorated significantly in 2012, as the average BDI of 920 for the year was about 41% lower than the average index of 1,549 in 2011.  On May 31, 2013 the BDI closed at 809. Despite a relatively healthy demand growth, primarily due to increased imports in China, the record high deliveries of newly built dry bulk vessels have pushed the charter rates substantially lower. More specifically, while the seaborne trade for dry bulk commodities grew by approximately 7% in 2012, with large part of this growth being attributed to iron ore and coal trade which increased by 5% and 12%, respectively, the growth of the dry bulk fleet in 2012 was about 10% or approximately 64 million deadweight tons, as the large number of new deliveries of approximately 99 million deadweight tons was only partly counterbalanced by the demolition of approximately 34 million deadweight tons. The decline and volatility in charter rates in the dry bulk market and increased supply affected the value of dry bulk vessels and negatively affected the Company's cash flows and liquidity. The Company can offer no assurance that the dry bulk market will improve, and if the weak dry bulk market persists, it will continue to negatively affect the Company's results of operations and financial condition.

 
35

 

Charter hire rates for dry bulk vessels are volatile and are driven by a number of factors which are outside the control of the Company.
 
Fluctuations in charter rates result from changes in the supply and demand for vessel capacity and changes in the supply and demand for the major commodities carried by sea internationally. Because the factors affecting the supply and demand for vessels are outside of the Company's control and are unpredictable, the nature, timing, direction and degree of changes in industry conditions are also unpredictable.
 
Factors that influence demand for vessel capacity include:
 
·
supply and demand for energy resources, commodities, semi-finished and finished consumer and industrial products;
 
 
·
changes in the exploration or production of energy resources, commodities, semi-finished and finished consumer and industrial products;
 
 
·
the location of regional and global exploration, production and manufacturing facilities;
 
 
·
the location of consuming regions for energy resources, commodities, semi-finished and finished consumer and industrial products;
 
 
·
the globalization of production and manufacturing;
 
 
·
global and regional economic and political conditions, including armed conflicts and terrorist activities; embargoes and strikes;
 
 
·
natural disasters and other disruptions in international trade;
 
 
·
developments in international trade;
 
 
·
changes in seaborne and other transportation patterns, including the distance cargo is transported by sea;
 
 
·
environmental and other regulatory developments;
 
 
·
currency exchange rates; and
 
 
·
weather.
 
Factors that influence the supply of vessel capacity include:
 
 
·
the number of newbuilding deliveries;
 
 
·
the scrapping rate of older vessels;
 
 
·
vessel casualties;
 
 
·
the level of port congestion;
 
 
·
changes in environmental and other regulations that may limit the useful life of vessels;
 
 
·
the number of vessels that are out of service, namely those that are laid-up, drydocked, awaiting repairs or otherwise not available for hire; and
 
 
·
changes in global dry bulk commodity production.

 
36

 
 
Other factors that affect the rate of newbuilding, scrapping and laying-up include newbuilding prices, secondhand vessel values in relation to scrap prices, cost of bunkers and other operating costs, costs associated with classification society surveys, normal maintenance and insurance coverage, the efficiency and age profile of the existing dry bulk fleet in the market, and government and industry regulation of maritime transportation practices, particularly environmental protection laws and regulations. The Company may not be able to correctly assess the nature, timing and degree of changes in industry conditions which may have an adverse effect on its results of operations and financial condition.
 
An oversupply of dry bulk carrier capacity may lead to further reductions in charterhire rates and profitability. 
 
The market supply of dry bulk carriers has been increasing. The number of dry bulk vessels on order as of January 2012 was approximately 36% for Panamax class vessels and 29% for Capesize class vessels of the then-existing global dry bulk fleet in terms of deadweight tons, with the majority of new deliveries expected mainly during 2012. In 2012, dry bulk carriers of a cumulative 99 million deadweight tons entered service, representing a year-on-year increase in deadweight of approximately 10%.  Recent estimates indicate that new deliveries in 2013 will add at least 10% of additional capacity to each ship class, and 22% of additional capacity to the Panamax vessel class.
 
An oversupply of dry bulk carrier capacity could exacerbate the recent decrease in charter rates or prolong the current period of low charter rates.  A material increase in the net supply of dry bulk vessel capacity without corresponding growth in dry bulk vessel demand could have a material adverse effect on the Company's fleet utilization and its charter rates generally, and could materially adversely affect the Company's business, financial condition and results of operations.
 
When the Company's charters end, it may not be able to replace them promptly or with profitable ones and, in addition, any such new charters are potentially subject to further decline in charter rates and other market deterioration, which could adversely affect the Company's results of operations.
 
When the Company's time charters expire, the Company will generally attempt to re-charter its vessels at favorable rates with reputable charterers, but there can be no guarantee that it will succeed. The charterers under these charters have no obligation to renew or extend the charters. If the Company cannot enter into time period charters on acceptable terms, it may have to secure charters in the spot market, where charters rates are more volatile and revenues are, therefore, less predictable.  If the current low charter rate environment persists, or a further reduction occurs, upon the expiration or termination of the Company's vessels' current charters, the Company may only be able to re-charter its vessels at reduced or unprofitable rates or it may not be able to charter these vessels at all.
 
Failure to obtain replacement charters will reduce or eliminate the Company's revenue and its ability to service its debt. In addition, the Company may have to reposition its vessels without cargo or compensation to deliver them to future charterers or to move vessels to areas where it believes that future employment may be more likely or advantageous. Repositioning the Company's vessels would increase its vessel operating costs which could have an adverse effect on the Company's results of operations and financial condition.
 
A drop in spot charter rates may provide an incentive for some charterers to renegotiate or default on their time charters, which could reduce the Company's revenues and have a material adverse effect on its business, financial condition and results of operations. 
 
When the Company enters into a time charter, charter rates under that time charter are fixed for the term of the charter. The ability of each of the Company's charterers to perform its obligations under the charter depends on a number of factors that are beyond its control and may include, among other things, general economic conditions, the condition of the maritime and offshore industries, the overall financial condition of the charterer, charter rates received for specific types of vessels and various expenses. In addition, if the spot charter rates in the dry bulk shipping industry become significantly lower than the time charter rates that some of the Company's charterers are obligated to pay the Company under its existing time charters, the charterers may have incentives to default under that time charter or attempt to renegotiate the time charter. If the Company's charterers default on their charters, the Company will seek the remedies available to it, which may include arbitration or litigation to enforce

 
37

 
 
the contracts, although such efforts may not be successful. If its charterers fail to pay their obligations, the Company would have to attempt to re-charter its vessels at lower charter rates, which would affect the Company's results of operations.
 
The Company's operating results are subject to seasonal fluctuations, which could affect its operating results and ability to service its debt.
 
The Company operates its vessels in markets that have historically exhibited seasonal variations in demand and, as a result, in charterhire rates. To the extent the Company operates vessels in the spot market this seasonality may result in quarter-to-quarter volatility in its operating results. The dry bulk sector is typically stronger in the fall and winter months in anticipation of increased consumption of coal and other raw materials in the northern hemisphere. In addition, unpredictable weather patterns in these months tend to disrupt vessel scheduling and supplies of certain commodities. As a result, the Company's revenues from its dry bulk carriers may be weaker during the fiscal quarters ending June 30 and September 30, and, conversely, the Company's revenues from its dry bulk carriers may be stronger in fiscal quarters ending December 31 and March 31. While this seasonality will not affect the Company's operating results as long as its fleet is employed on period time charters, to the extent its vessels are employed in the spot market, it could materially affect the Company's operating results.
 
The market values of the Company's vessels have declined and may further decrease. This could lead the Company to incur losses when it sells vessels or it may be required to write down their carrying value, which may adversely affect the Company's earnings, or cause it to default under its loan agreements.  
 
The fair market values of the Company's vessels have generally experienced high volatility and have declined to near-historic lows in recent years. The market values of the Company's vessels may continue to  fluctuate depending on a number of factors, including:
 
 
·
general economic and market conditions affecting the shipping industry;
 
 
·
the prevailing rate of charter hire;
 
 
·
competition from other shipping companies and other modes of transportation;
 
 
·
the types, sizes and ages of its vessels;
 
 
·
the supply and demand for vessels;
 
 
·
applicable governmental regulations;
 
 
·
technological advances; and
 
 
·
the cost of newbuildings.
 
The Company evaluates the carrying amounts of its vessels to determine if events have occurred that would require an impairment of their carrying amounts. The recoverable amount of vessels is reviewed based on events and changes in circumstances that would indicate that the carrying amount of the assets might not be recovered. The review for potential impairment indicators and projection of future cash flows related to the vessels is complex and requires the Company to make various estimates on the basis of various assumptions, including future freight rates and earnings from the vessels which have been historically volatile.
 
When the Company's estimate of undiscounted future cash flows for any vessel is lower than the vessel's carrying value, the carrying value is written down, by recording a charge to operations, to the vessel's fair market value if the fair market value is lower than the vessel's carrying value. The carrying values of the Company's vessels may not represent their fair market value in the future because the new market prices of secondhand vessels tend to fluctuate with changes in charter rates and the cost of newbuildings.  Any impairment charges incurred as a result of declines in charter rates could have a material adverse effect on the Company's business, results of operations, cash flows and financial condition.  If for any reason the Company sells its vessels at a time when prices

 
38

 
 
have fallen, the sale price may be less than the vessels' carrying amount on its financial statements, and the Company would incur a loss and a reduction in earnings.
 
Further, when the market value of a vessel declines, it reduces the Company's ability to comply with its outstanding debt or obtain future financing. The Company's lending facilities, including the Amended and Restated Senior Secured Credit Agreement, are secured by mortgages on its vessels and require it to comply with minimum security vessel values and satisfy certain financial and other covenants, including those that are affected by the market value of the Company's vessels.   Further declines in the market and vessel values could cause the Company to breach financial covenants relating to the maintenance of minimum security vessel values contained in its lending facilities.
 
Continued disruption in world financial markets and the resulting governmental action in Europe, the United States and in other parts of the world could have a material adverse impact on the Company's ability to obtain financing, its results of operations, financial condition and cash flows and could cause the market price of its common stock to decline.
 
In the current global economy, operating businesses have faced and continue to face tightening credit, weakening demand for goods and services, and weak international liquidity conditions. Lower demand for dry bulk cargoes, as well as diminished trade credit available for the delivery of such cargoes, have led to decreased demand for dry bulk carriers, creating downward pressure on charter rates and vessel values.  Negative economic conditions have had a number of adverse consequences for dry bulk and other shipping sectors, including, among other things:
 
 
·
an absence of available financing for vessels;
 
 
·
a further decrease in the market value of vessels and no active secondhand market for the sale of vessels;
 
 
·
low charter rates; and
 
 
·
declaration of bankruptcy by some charterers, operators and ship owners.
 
The occurrence of one or more of these events could have a material adverse effect on the Company's business, results of operations, cash flows and financial condition.
 
The Company faces liquidity risks which may be exacerbated by changing market conditions.
 
The Company's activities are subject to liquidity risk, that is, the risk that it will be unable to meet its payment obligations, including loan commitments, when due. In light of this, the availability of the liquidity needed to carry out the various activities in which the Company is engaged and the ability to access long-term financing are essential for the Company to be able to meet its anticipated and unforeseen cash payment obligations, so as not to impair its day-to-day operations or financial position. Instability in global financial markets, the after-effect in part of the global financial market crisis, may impact liquidity.     
 
A number of financial institutions experienced serious financial difficulties in recent years, and an increasing number of financial institutions will likely continue to experience serious financial difficulties as a result of a deterioration in the stability, or perceived stability, of the respective countries in which these institutions are based or operate.  This instability is due to the European sovereign debt crisis, which began in May 2010 in the wake of Greece's public finance problems and spread rapidly to the countries of the Euro area exhibiting greatest weakness.
 
Although the Company has no exposure to sovereign debt of governments and other public bodies of countries in or outside the Eurozone, it faces risks attendant to changes in economic environments, changes in interest rates and instability in certain securities markets, among other factors.  Major market disruptions and adverse changes in market conditions and the regulatory climate in Europe, the United States and worldwide may adversely affect the Company's business or impair its ability to borrow amounts under any future financial

 
39

 

 
arrangements. There is a possibility that the Company's ability to access the liquidity it needs may be affected by further increases in the cost of borrowing, a reduction in the availability of financing, an increase in the cost of other forms of fundraising and/or an inability to sell its assets or to liquidate its investments, which would, in turn, have an impact on the Company's activities, with major negative effects on its operating results and capital and financial position.
 
An economic slowdown in the Asia Pacific region could exacerbate the effect of recent slowdowns in the economies of the United States and Europe and may have a material adverse effect on the Company's business, financial condition and results of operations.
 
Negative changes in economic conditions in any Asia Pacific country, particularly in China, may exacerbate the effect of the significant recent slowdowns in the economies of the United States and Europe and may have a material adverse effect on the Company's business, financial condition and results of operations, as well as its future prospects. Before the global economic financial crisis began in 2008, China had one of the world's fastest growing economies in terms of gross domestic product, or GDP, which had a significant impact on shipping demand. In 2012, the growth rate of China's GDP decreased to approximately 7.4%, as compared to approximately 9.2% for the year ended December 31, 2011 and 10.4% for the year ended December 31, 2010. China has recently imposed measures to restrain lending, which may further contribute to a slowdown in its economic growth. It is possible that China and other countries in the Asia Pacific region will continue to experience slowed or even negative economic growth in the near future. Moreover, the limited recovery of the economies of the United States, Europe and other Asian countries may further adversely affect economic growth in China and elsewhere.  The Company's business, financial condition and results of operations as well as its future prospects, will likely be materially and adversely affected by an economic downturn in any of these countries.
 
Changes in the economic and political environment in China and policies adopted by the Chinese government to regulate its economy may have a material adverse effect on the Company's business, financial condition and results of operations. 
 
The Chinese economy differs from the economies of most countries belonging to the Organization for Economic Cooperation and Development, in such respects as structure, government involvement, level of development, growth rate, capital reinvestment, allocation of resources, rate of inflation and balance of payments position. Prior to 1978, the Chinese economy was a planned economy. Since 1978, increasing emphasis has been placed on the utilization of market forces in the development of the Chinese economy. Annual and five-year State Plans are adopted by the Chinese government in connection with the development of the economy. Although state-owned enterprises still account for a substantial portion of the Chinese industrial output, in general, the Chinese government is reducing the level of direct control that it exercises over the economy through State Plans and other measures. There is an increasing level of freedom and autonomy in areas such as allocation of resources, production, pricing and management and a gradual shift in emphasis to a "market economy" and enterprise reform. Limited price reforms were undertaken, with the result that prices for certain commodities are principally determined by market forces. Many of the reforms are unprecedented or experimental and may be subject to revision, change or abolition based upon the outcome of such experiments. If the Chinese government does not continue to pursue a policy of economic reform, the level of imports to and exports from China could be adversely affected by the Chinese government's changes to these economic reforms, as well as by changes in political, economic and social conditions or other relevant policies of the Chinese government, such as changes in laws, regulations or export and import restrictions, all of which could adversely affect the Company's business, operating results and financial condition.
 
The Company's vessels may call on ports located in countries that are subject to restrictions imposed by the United States government, which could negatively affect the value of Reorganized Excel.
 
The Company currently employs all of its vessels under time charter contracts with unaffiliated parties. Under the terms of these time charters, and consistent with shipping industry practice, the charterer of each vessel pays the Company a daily time charter rate and directs the vessel's route, loading and discharge ports and cargoes carried. While the Company does not control the routes or ports of call made by its vessels, all of the time charter contracts under which its vessels operate contain express prohibitions proscribing trades of its vessels in Sudan and Cuba, as well as countries that are prohibited in trading by the United Nations or the United States. In

 
40

 
 
addition, the Company has not had, and does not intend to have in the future, directly or indirectly, any agreements, commercial arrangements or other contacts with the governments of, or entities controlled by the governments of Iran, Sudan, Syria or Cuba, and has not provided, and does not intend to provide any goods or services, directly or indirectly, to the governments of, or entities controlled by the governments of, such countries.  The value of Reorganized Excel may be adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in these and surrounding countries.
 
Occasionally, however, upon charterers' instructions, the Company's vessels have called, and may again call, on ports located in countries subject to sanctions and embargoes imposed by the United States government and countries identified by the United States government as state sponsors of terrorism, including Iran, Sudan and Syria. In 2012, the Company's vessels made ten calls on Iranian ports (nine calls on the port of Bandar Imam Khomeini and one call on the port of Bandar Abbas) out of a total of 569 calls on worldwide ports. In 2011, the Company's vessels made seven calls on the Iranian port of Bandar Imam Khomeini and one call on the Syrian port of Tartous.  In each of these voyages the cargo consisted solely of agricultural products.  Although the Company believes that it is in compliance with all applicable sanctions and embargo laws and regulations, and intends to maintain such compliance, there can be no assurance that it will be in compliance in the future, particularly as the scope of certain laws may be unclear and may be subject to changing interpretations. Any such violation could result in fines or other penalties. Moreover, the Company's charterers may violate applicable sanctions and embargo laws and regulations as a result of actions that do not involve the Company or its vessels, and those violations could in turn negatively affect the Company's reputation.
 
World events outside the Company's control may negatively affect the shipping industry, which could adversely affect the Company's operations and financial condition.
 
Terrorist attacks like those in New York in 2001, London in 2005, Mumbai in 2008 and other countries and the continuing response of the world community to these attacks, as well as the threat of future terrorist attacks around the world, continue to cause uncertainty in the world financial markets and may affect the Company's business, results of operations and financial condition. Continuing conflicts in North Africa and the Middle East and the presence of U.S. and other armed forces in various regions around the world may lead to additional acts of terrorism and armed conflict, which may contribute to further economic instability in the global financial markets. In the past, political conflicts resulted in attacks on vessels, mining of waterways and other efforts to disrupt international shipping. For example, in October 2002, the VLCC Limburg was attacked by terrorists in Yemen. Acts of terrorism and piracy have also affected vessels trading in regions such as the South China Sea. Such events could also cause partial or complete closure of ports and sea passages such as the Suez and Panama Canals, potentially resulting in higher costs, vessel delays or cancelations on some of the Company's lines. Future terrorist attacks could also result in increased volatility of the financial markets in the United States and globally and could result in an economic recession in the United States or the world. Any of these occurrences could have a material adverse impact on the Company's operating results, revenue, and costs.
 
In addition, because the Company's operations are primarily conducted outside of the United States, they may be affected by economic, political and governmental conditions in the countries where the Company is engaged in business or where its vessels are registered. Future hostilities or political instability in regions where the Company operates or may operate could have a material adverse effect on the Company's business, results of operations and ability to service its debt. In addition, tariffs, trade embargoes and other economic sanctions by the United States or other countries against countries where its vessels trade may limit trading activities with those countries, which could also harm the Company's business, financial condition and results of operations.
 
The smuggling of drugs, weapons or other contraband onto the Company's vessels may lead to governmental claims against the Company.
 
The Company expects that its vessels will call in areas where smugglers attempt to hide drugs, weapons and other contraband on vessels, with or without the knowledge of crew members. To the extent its vessels are found with contraband, whether with or without the knowledge of any crew member, the Company may face governmental or other regulatory claims which could have an adverse effect on the Company's business, results of operations, cash flows and financial condition.

 
41

 

Governments could requisition the Company's vessels during a period of war or emergency, resulting in loss of earnings. 
 
A government could requisition one or more of the Company's vessels for title or hire, or seize one or more of its vessels. Requisition for title occurs when a government takes control of a vessel and becomes her owner. Requisition for hire occurs when a government takes control of a vessel and effectively becomes her charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency, although governments may elect to requisition vessels in other circumstances. Government requisition of one or more of the Company's vessels would negatively impact its revenues.
 
Maritime claimants could arrest the Company's vessels, which could interrupt its cash flow.
 
Crew members, suppliers of goods and services to a vessel, shippers of cargo, vessel financing participants, charterparties, and other parties may be entitled to a maritime lien against a vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lien holder may enforce its lien by arresting a vessel through foreclosure proceedings. The arrest or attachment of one or more of the Company's vessels could interrupt its cash flow and require it to make significant payments to have the arrest lifted. 
 
In addition, in some jurisdictions, such as South Africa, under the "sister ship" theory of liability, a claimant may arrest both the vessel which is subject to the claimant's maritime lien and any "associated" vessel, which is any vessel owned or controlled by the same owner. Claimants could try to assert "sister ship" liability against one vessel in the Company's fleet for claims relating to another of its ships.  In particular, as described in Section II.E.2(b)  – "Redelivery of the Bareboat Charters" above, owners of bareboat charter vessels previously chartered by certain of Excel's non-Debtor subsidiaries have alleged an entitlement to enforce their alleged claims against the assets of Excel pursuant to South Africa's "sister ship" theory of liability.
 
The Company depends upon a few significant customers for a large part of its revenues. The loss of one or more of these customers could adversely affect the Company's financial performance. 
 
The Company has historically derived a significant part of its revenue from a small number of charterers. In 2012, the Company derived approximately 16%, 14% and 10% of its gross revenues from EDF Trading Limited, Global Maritime Investments Ltd., and Glencore Grain B.V., respectively.
 
If one or more of the Company's customers is unable to perform under one or more charters with it and the Company is not able to find a replacement charter, or if a customer exercises certain rights to terminate the charter, the Company could suffer a loss of revenues that could materially adversely affect its business, financial condition and results of operations. 
 
The Company could lose a customer or the benefits of a time charter if, among other things:
 
 
·
the customer fails to make charter payments because of its financial inability, disagreements with the Company or otherwise;
 
 
·
the customer terminates the charter because the Company fails to deliver the vessel within a fixed period of time, the vessel is lost or damaged beyond repair, there are serious deficiencies in the vessel or prolonged periods of off-hire, or there are other defaults by the Company under the charter;
 
 
·
the customer terminates the charter because the vessel has been subject to seizure for more than a specified number of days; or
 
 
·
there is a prolonged force majeure event affecting the customer, including damage to, or destruction of relevant production facilities, war or political unrest, which prevents the Company from performing services for that customer.

 
42

 

 
If the Company loses a key customer, it may be unable to obtain period time charters on comparable terms with charterers of comparable standing or may have increased exposure to the volatile spot market.
 
The Company faces strong competition.
 
The Company obtains charters for its vessels in a highly competitive market that is capital intensive and highly fragmented. The Company's market share is insufficient to enforce any degree of pricing discipline. Competition for the transportation of dry bulk cargo by sea is intense and depends on price, location, size, age, condition and the acceptability of the vessel and its operators to the charterers. Although the Company believes that no single competitor has a dominant position in the markets in which it competes, the Company is aware that certain competitors may be able to devote greater financial and other resources to their activities than it can, resulting in a significant competitive threat to the Company. In addition, due in part to the highly fragmented market, competitors with greater resources than the Company could enter the dry bulk shipping industry and operate larger fleets through consolidations or acquisitions and may be able to offer lower charter rates and higher quality vessels than the Company is able to offer. The Company cannot give assurances that it will continue to compete successfully with its competitors or that these factors will not erode its competitive position in the future.
 
 
I.
Operational Risks
 
The operation of the Company's ocean-going vessels entails the possibility of marine disasters including damage or destruction of the vessel due to accident, the loss of a vessel due to piracy or terrorism, loss of life, damage or destruction of cargo and similar events that may cause a loss of revenue from affected vessels and could damage the Company's business reputation, which may in turn lead to loss of business.
 
The operation of the Company's ocean-going vessels entails certain inherent risks that may adversely affect its business and reputation, and which may substantially increase the Company's costs, including:
 
 
·
damage or destruction of a vessel due to marine disaster such as a collision;
 
 
·
the loss of a vessel due to piracy and terrorism;
 
 
·
cargo and property losses or damage as a result of the foregoing or less drastic causes such as human error, mechanical failure and bad weather;
 
 
·
environmental accidents as a result of the foregoing; and
 
 
·
business interruptions and delivery delays caused by mechanical failure, human error, war, terrorism, political action in various countries, labor strikes or adverse weather conditions.
 
If the Company's vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of drydock repairs are unpredictable and can be substantial.  In addition, space at drydocking facilities is sometimes limited and not all drydocking facilities are conveniently located. The Company may be unable to find space at a suitable drydocking facility or it may be forced to travel to a drydocking facility that is distant from the relevant vessel's position. The loss of earnings while its vessels are being repaired and repositioned, as well as the actual cost of these repairs, would decrease the Company's earnings. The Company may not have insurance that is sufficient to cover all or any of these costs or losses and may have to pay drydocking costs not covered by its insurance.  Further, the involvement of the Company's vessels in a disaster or delays in delivery or loss of cargo may harm its reputation as a safe and reliable vessel operator and could cause it to lose business.

 
43

 

The operation of dry bulk vessels has certain unique operational risks; failure to adequately maintain the Company's vessels could have a material adverse effect on the Company's business, financial condition and results of operations.
 
With a dry bulk vessel, the cargo itself and its interaction with the vessel may create operational risks. By their nature, dry bulk cargoes are often heavy, dense and easily shifted, and they may react badly to water exposure. In addition, dry bulk vessels are often subjected to battering treatment during unloading operations with grabs, jackhammers (to pry encrusted cargoes out of the hold) and small bulldozers. This treatment may cause damage to the vessel. Vessels damaged due to treatment during unloading procedures may be more susceptible to breach while at sea. Breaches of a dry bulk vessel's hull may lead to the flooding of the vessel's holds. If a dry bulk vessel suffers flooding in its forward holds, the bulk cargo may become so dense and waterlogged that its pressure may buckle the vessel's bulkheads, leading to the loss of a vessel. If the Company does not adequately maintain its vessels, it may be unable to prevent these events. The occurrence of any of these events could have a material adverse effect on the Company's business, financial condition and results of operations.
 
Risk of loss and lack of adequate insurance may affect the Company's results.
 
In addition to risks relating to the operation of ocean-going vessels, described above, the Company's business may be affected by political circumstances in foreign countries, hostilities, labor strikes, and boycotts. Any such event may result in loss of revenues or increased costs. The United States Oil Pollution Act of 1990 ("OPA"), by imposing potentially unlimited liability upon owners, operators and bareboat charterers for certain oil pollution accidents in the U.S., has made liability insurance more expensive for shipowners and operators and has also caused insurers to consider reducing available liability coverage.
 
The Company carries insurance to protect against most of the accident-related risks involved in the conduct of its business and maintains environmental damage and pollution insurance coverage. The Company does not carry insurance covering the loss of revenue resulting from vessel off-hire time. The Company believes that its insurance coverage is adequate to protect it against most accident-related risks involved in the conduct of its business and that it maintains appropriate levels of environmental damage and pollution insurance coverage. Currently, the available amount of coverage for pollution is $1.0 billion for dry bulk carriers per vessel per incident. However, there can be no assurance that all risks are adequately insured against, that any particular claim will be paid or that the Company will be able to procure adequate insurance coverage at commercially reasonable rates in the future. More stringent environmental regulations in the past have resulted in increased costs for insurance against the risk of environmental damage or pollution. In the future, the Company may be unable to procure adequate insurance coverage to protect it against environmental damage or pollution.
 
Outside of the United States, other national laws generally provide for the owner to bear strict liability for pollution, subject to a right to limit liability under applicable national or international regimes for limitation of liability. The most widely applicable international regime limiting maritime pollution liability is the Convention on Limitation of Liability for Maritime Claims (London 1976), or 1976 Convention. Rights to limit liability under the 1976 Convention are forfeited where a spill is caused by a shipowner's intentional or reckless conduct. Certain states have ratified the IMO's 1996 Protocol to the 1976 Convention. The Protocol provides for substantially higher liability limits to apply in those jurisdictions than the limits set forth in the 1976 Convention. Finally, some jurisdictions are not a party to either the 1976 Convention or the Protocol of 1996, and, therefore, a shipowner's rights to limit liability for maritime pollution in such jurisdictions may be uncertain.
 
In some areas of regulation, the European Union has introduced new laws without attempting to procure a corresponding amendment of international law. In October 2009, the European Union amended a directive to impose criminal sanctions for illicit ship-source discharges of polluting substances, including minor discharges, if committed with intent, recklessly or with serious negligence and the discharges individually or in the aggregate result in deterioration of the quality of water. Criminal liability for pollution may result in substantial penalties or fines and increased civil liability claims. The directive could therefore result in criminal liability being incurred in circumstances where it would not be otherwise incurred under international law. Experience has shown that in the emotive atmosphere often associated with pollution incidents, the negligence alleged by prosecutors has often been found by courts on grounds which the international maritime community has found hard to understand. Moreover, there is skepticism in the international maritime community that "serious negligence" will prove to be any narrower

 
44

 
 
in practice than ordinary negligence. Criminal liability for a pollution incident could not only result in the Company incurring substantial penalties or fines, but may also, in some jurisdictions, facilitate civil liability claims for greater compensation than would otherwise have been payable.
 
The Company is subject to funding calls by its protection and indemnity associations, and its associations may not have enough resources to cover claims made against them.
 
The Company is indemnified for legal liabilities incurred while operating its vessels through membership in P&I associations. P&I associations are mutual insurance associations whose members must contribute to cover losses sustained by other association members. The objective of a P&I association is to provide mutual insurance based on the aggregate tonnage of a member's vessels entered into the association. Claims are paid through the aggregate premia of all members of the association, although members remain subject to calls for additional funds if the aggregate premia are insufficient to cover claims submitted to the association. Claims submitted to the association may include those incurred by members of the association, as well as claims submitted to the association from other P&I associations with which the Company's P&I association has entered into inter-association agreements. The Company cannot guarantee that the P&I associations to which it belongs will remain viable or that it will not become subject to additional funding calls which could adversely affect it.
 
Acts of piracy on ocean-going vessels could adversely affect the Company's business.
 
Acts of piracy have historically affected ocean-going vessels, including the Company's own, trading in regions of the world such as the South China Sea, the Indian Ocean, and the Arabian Sea, and in the Gulf of Aden off the coast of Somalia. On December 11, 2010, the Company's vessel Renuar was hijacked in waters east of Somalia and was released on April 23, 2011. Although the frequency of sea piracy worldwide decreased during 2012 to its lowest level since 2009, sea piracy incidents continue to occur, particularly in the Gulf of Aden off the coast of Somalia and increasingly in the Gulf of Guinea, with dry bulk vessels and tankers particularly vulnerable to such attacks.
 
If piracy attacks result in regions in which  the Company's vessels are deployed being characterized as "war risk" zones by insurers, as the Gulf of Aden temporarily was in May 2008, or as "war and strikes" listed areas by the Joint War Committee, premia payable for such coverage could increase significantly and such insurance coverage may be more difficult to obtain. Accordingly, the Company may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on it. Although the Company usually obtains war risk insurance for certain of its vessels making port calls in designated war zone areas, it cannot provide assurance that such insurance will be obtained prior to one of the Company's vessels entering into an actual war zone, which could result in that vessel not being insured. Even if its insurance coverage is adequate to cover its losses,  the Company may not be able to timely obtain a replacement vessel in the event of a loss. In addition, detention of any of the Company's vessels, hijacking as a result of an act of piracy against its vessels, or an increase in cost, or unavailability, or insufficiency of insurance for its vessels, could have a material adverse impact on the Company's business, financial condition, results of operations and ability to service its debt.
 
Rising fuel prices may affect the Company's profitability.
 
The price of bunker fuel is correlated with crude oil prices, which in turn have historically exhibited significant volatility in short periods of time and have recently been at, or close to, historic highs. Furthermore, crude oil prices are influenced by a host of economic and geopolitical factors, such as global terrorism, political instability, tensions in the Middle East, insurrections in the Niger Delta, a long-term increase in global demand for oil and the economic development of emerging markets, China and India in particular.
 
While the Company generally will not bear the cost of fuel, or bunkers for vessels operating on time charters, fuel is a significant factor in negotiating charter rates. As a result, an increase in the price of fuel beyond the Company's expectations may adversely affect its profitability at the time of charter negotiation. In addition, upon redelivery of vessels at the end of a period time or trip time charter, the Company may be obligated to repurchase bunkers on board at prevailing market prices, which could be materially higher than fuel prices at the inception of the charter period. Fuel is also a significant, if not the largest, expense in the Company's shipping operations when vessels are not under period charters. Changes in the price of fuel may adversely affect the

 
45

 

Company's profitability. The price and supply of fuel is unpredictable and fluctuates based on events outside the Company's control, including geopolitical developments, supply and demand for oil and gas, actions by the Organization of Petroleum Exporting Countries, and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns and environmental concerns. Further, fuel may become much more expensive in the future, which may reduce the profitability and competitiveness of the Company's business versus other forms of transportation.
 
Rising crew costs may adversely affect the Company's profits. 
 
Crew costs are a significant expense for the Company under its charters. Recently, the limited supply of, and increased demand for, well-qualified crew, due to the increase in the size of the global shipping fleet, has created upward pressure on crewing costs, which the Company bears under its Period Time Charters and Spot Charters. Increases in crew costs may adversely affect the Company's profitability.
 
Because many of the Company's employees are covered by industry-wide collective bargaining agreements, failure of industry groups to renew those agreements may disrupt the Company's operations and adversely affect its earnings. 
 
The Company currently employs approximately 851 seafarers on-board its vessels and 121 land-based employees in its Athens office. The 121 employees in Greece are covered by industry-wide collective bargaining agreements that set basic standards. The Company cannot guarantee that these agreements will prevent labor interruptions. If not resolved in a timely and cost-effective manner, industrial action or other labor unrest could prevent or hinder the Company's operations from being carried out normally and could have a material adverse effect on the Company's business, results of operations, cash flows, and financial condition.
 
The aging of the Company's fleet may result in increased operating costs in the future, which could adversely affect the Company's earnings. 
 
The majority of the Company's vessels were acquired secondhand, and the Company's estimates their useful lives to be 28 years from their date of delivery from the yard, depending on various market factors and management's ability to comply with government and industry regulatory requirements.  The Company's current operating fleet has an average age of approximately 11 years (10.2 years on a deadweight weighted average basis).
 
In general, expenditures necessary for maintaining a vessel in good operating condition increase as a vessel ages.  Older vessels are typically less fuel efficient and more costly to maintain than more recently constructed vessels due to improvements in engine technology. Cargo insurance rates also increase with the age of a vessel, making older vessels less desirable to charterers.  Older vessels also tend to be less fuel-efficient than newer vessels. While the difference in fuel consumption is factored into the freight rates that the Company's older vessels earn, if the cost of bunker fuels were to increase significantly, it could disproportionately affect the Company's vessels and significantly lower its profits.  Further, secondhand vessels may also develop unexpected mechanical and operational problems despite adherence to regular survey schedules and proper maintenance.
 
In addition, governmental regulations, including environmental regulations, safety or other equipment standards related to the age of vessels may require expenditures for alterations to existing equipment or the addition of new equipment to the Company's vessels and may restrict the type of activities in which its vessels may engage. The Company cannot give assurances that, as its vessels age, market conditions will justify those expenditures or enable the Company to operate its vessels profitably during the remainder of their useful lives.
 
The Company does not expect to set aside reserves for vessel replacement, and at the end of a vessel's useful life its revenue will decline if the Company is also unable to borrow funds for vessel replacement. 
 
As of May 31, 2013, the vessels in the Company's current fleet had an average age of 11 years.  The Company does not expect setting aside any reserves for vessel replacement.  Therefore, it may be unable to replace the vessels in its fleet upon the expiration of their useful lives in the event it has insufficient credit at the time of such expiration to borrow funds for vessel replacement. The Company estimates the useful life of its vessels

 
46

 
 
to be 28 years from the date of initial delivery from the shipyard. If the Company is unable to replace the vessels in its fleet upon the expiration of their useful lives, its business, results of operations, financial condition and ability to service its debt will be adversely affected.
 
Technological innovation could reduce the Company's charterhire income and the value of its vessels. 
 
The charterhire rates and the value and operational life of a vessel are determined by a number of factors including the vessel's efficiency, operational flexibility and physical life. Efficiency includes speed, fuel economy and the ability to load and discharge cargo quickly. Flexibility includes the ability to enter harbors, utilize related docking facilities and pass through canals and straits. The length of a vessel's physical life is related to its original design and construction, its maintenance and the impact of the stress of operations. If new dry bulk carriers are built that are more efficient or more flexible or have longer physical lives than the Company's vessels, competition from these more technologically advanced vessels could adversely affect the amount of charterhire payments the Company receives for its vessels once their initial charters expire, and the resale value of its vessels could significantly decrease. As a result, the Company's business, results of operations, cash flows and financial condition could be adversely affected.
 
Certain of the Company's directors, officers, and principal stockholders are affiliated with entities engaged in business activities similar to those conducted by the Company which may compete directly with it, causing such persons or entities with which they are affiliated to have conflicts of interest.
 
Some of the Company's directors, officers and principal stockholders have affiliations with entities that have similar business activities to those conducted by the Company or that are parties to agreements with it. Certain of the Company's directors are also directors of other shipping companies and they may enter similar businesses in the future. These other affiliations and business activities may give rise to certain conflicts of interest in the course of such individuals' affiliation with the Company.
 
 
J.
Financial and Taxation Risks
 
The Company currently maintains all of its cash and cash equivalents with a limited number of financial institutions which subjects it to credit risk.
 
The Company currently maintains all of its cash and cash equivalents with a limited number of financial institutions located in the United Kingdom, Switzerland, Greece, The Netherlands, Luxembourg and Germany. The Company does not expect any of its balances to be covered by insurance in the event of default by any of these financial institutions. The occurrence of such a default could therefore have a material adverse effect on the Company's business, financial condition, results of operations and cash flows, and it may lose part or all of its cash that it has deposited with such financial institutions.
 
Because the Company generates all of its revenues in U.S. dollars but incurs approximately one-fifth of its expenses in other currencies, exchange rate fluctuations could hurt its results of operations. 
 
The Company generates all of its revenues in U.S. dollars but has historically incurred approximately 20% to 25% of its vessel operating expenses in currencies other than U.S. dollars. This variation in operating revenues and expenses could lead to fluctuations in net income due to changes in the value of the U.S. dollar relative to the other currencies, in particular the Japanese yen, the Euro, the Singapore dollar and the British pound sterling. Expenses incurred in foreign currencies against which the U.S. dollar falls in value may increase as a result of these fluctuations, therefore decreasing the Company's net income. The Company currently does not hedge its currency exposure and, as a result, its results of operations and financial condition could suffer.
 
The Company is subject to the U.S. Federal Income Tax on U.S. source income, which could reduce its earnings.
 
Under the Internal Revenue Code, 50% of the gross shipping income of a vessel owning or chartering corporation, such as the Company and its subsidiaries, that is attributable to transportation that begins or ends, but that does not both begin and end, in the U.S. may be subject to a 4% U.S. federal income tax without

 
47

 

 
allowance for deduction, unless that corporation qualifies for exemption from tax under Section 883 of the Internal Revenue Code and the applicable Treasury Regulations promulgated thereunder. 
 
The Company does not believe that it is currently entitled to exemption under Section 883 of the Internal Revenue Code for any taxable year. Therefore, the Company is subject to an effective 2% U.S. federal income tax on the gross shipping income that it derives during the year that is attributable to the transport or cargoes to or from the U.S.
 
 
K.
Legal and Regulatory Risks
 
The Company's operations are subject to the risks of litigation.
 
The Company is involved on an ongoing basis in litigation arising in the ordinary course of business or otherwise. Litigation may include claims related to commercial, labor, employment, antitrust, securities, tax or environmental matters.  Moreover, the process of litigating cases, even if the Company is successful, may be costly, and may approximate the cost of damages sought.  These actions could also expose the Company to adverse publicity, which might adversely affect the Company's brand and reputation.  Litigation trends and expenses and the outcome of litigation cannot be predicted with certainty, and adverse litigation trends, expenses and outcomes could adversely affect the Company's financial results, to the extent not adequately covered by insurance.
 
As described in more detail in Section II.E.2(b) – "Redelivery of the Bareboat Charters," certain of the Company's non-Debtor subsidiaries, including Bird, are currently engaged in arbitration with respect to the return of certain bareboat charter vessels to their owners.  Excel may be obligated under any judgment against Bird or its other subsidiaries or any settlement entered into by those parties.
 
The Company's business may be adversely affected by protectionist policies and regulatory regimes adopted by countries globally.
 
There is a risk that countries could, in the wake of the global financial and economic crisis or in response to real or perceived currency manipulations or trade imbalances, resort to protectionist measures or make changes to the regulatory regimes in which the Company operates in order to protect and preserve domestic industries. Such measures could include raising import tariffs, providing subsidies to domestic industries, restrictions on currency repatriation and the creation of other trade barriers.  A global trend towards protectionism would be harmful to the global economy in general, as protectionist measures could cause world trade to shrink and counter-measures taken by protectionist policies' target countries would increase the chance for all-out trade wars.  As the Company's business success hinges, among other things, on global trade volumes, the stated protectionist policies and regulatory regimes would have a material adverse effect on the Company's business, financial condition and results of operations.
 
The Company is subject to complex laws and regulations, including environmental, safety and security regulations that could adversely affect the cost, manner or feasibility of doing business.
 
The Company's operations are subject to numerous laws and regulations in the form of international conventions and treaties, national, state and local laws and national and international regulations in force in the jurisdictions in which the Company's vessels will operate or will be registered, which could significantly affect the ownership and operation of its vessels.  These requirements include, but are not limited to, conventions of the International Maritime Organization, or IMO, such as the International Convention for the Prevention of Marine Pollution from Ships, 1973, as modified by the Protocols of 1978, the International Convention for the Safety of Life at Sea of 1974, the International Convention on Load Lines of 1966, the Convention on Limitation of Liability for Maritime Claims (as amended), or 1976 Convention, the International Convention on Civil Liability for Oil Pollution Damage of 1969, as amended by different Protocol in 1976, 1984, and 1992, and amended in 2000, the OPA, the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980, the U.S. Clean Air Act, U.S. Clean Water Act and the U.S. Marine Transportation Security Act of 2002.
 
Compliance with such laws, regulations and standards, where applicable, may require installation of costly equipment or operational changes and may affect the resale value or useful lives of the Company's vessels.

 
48

 
 
The Company may also incur additional costs in order to comply with other existing and future regulatory obligations, including, but not limited to, costs relating to air emissions, including greenhouse gases, the management of ballast waters, maintenance and inspection, development and implementation of emergency procedures and insurance coverage or other financial assurance of its ability to address pollution incidents. These costs could have a material adverse effect on the Company's business, results of operations, cash flows and financial condition. Failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of the Company's operations. 
 
Environmental laws often impose strict liability for remediation of spills and releases of oil and hazardous substances, which could subject the Company to liability without regard to whether it was negligent or at fault. Under OPA, for example, owners, operators and bareboat charterers are jointly and severally strictly liable for the discharge of oil within the 200-mile exclusive economic zone around the United States. An oil spill could result in significant liability, including fines, penalties and criminal liability and remediation costs for natural resources damages under other federal, state and local laws, as well as third-party damages. Under OPA, the Company will be required to satisfy insurance and financial responsibility requirements for potential marine fuel spills and other pollution incidents. Furthermore, the 2010 explosion of the Deepwater Horizon and the subsequent release of oil into the Gulf of Mexico, or other events, may result in further regulation of the shipping industry, and modifications to statutory liability schemes, which could have a material adverse effect on the Company's business, financial condition, results of operations and cash flows. Although the Company arranges for insurance to cover certain environmental risks, there can be no assurance that such insurance will be sufficient to cover all such risks or that any claims will not have a material adverse effect on the Company's business, results of operations, cash flows and financial condition. 
 
Further legislation, or amendments to existing legislation, applicable to international and national maritime trade are expected over the coming years in areas such as ship recycling, sewage systems, emission control (including emissions of greenhouse gases), ballast treatment and handling. The United States has recently enacted legislation and regulations that require more stringent controls of air and water emissions from ocean-going vessels. Such legislation or regulations may require additional capital expenditures or operating expenses (such as increased costs for low-sulfur fuel) in order for the Company to maintain its vessels in compliance with international and/or national regulations. 
 
The operation of the Company's vessels is affected by the requirements set forth in the United Nations' International Maritime Organization's International Management Code for the Safe Operation of Ships and Pollution Prevention ("ISM Code").  The ISM Code requires ship owners, ship managers and bareboat charterers to develop and maintain an extensive "Safety Management System" that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. If the Company fails to comply with the ISM Code, it may be subject to increased liability, its insurance coverage may be invalidated or decreased, or its vessels may be detained in, or denied access to, certain ports. Currently, each of the Company's vessels is ISM Code-certified by Bureau Veritas or American Bureau of Shipping and the Company expects that any vessel that it agrees to purchase will be ISM Code-certified upon delivery to it. Bureau Veritas and American Bureau of Shipping have awarded ISM certification to Maryville, the Company's vessel management company and a wholly-owned subsidiary of Excel. However, there can be no assurance that such certification will be maintained indefinitely.
 
Increased inspection procedures and tighter import and export controls could increase costs and disrupt the Company's business. 
 
International shipping is subject to various security and customs inspection and related procedures in countries of origin and destination and transshipment points. Inspection procedures may result in the seizure of contents of the Company's vessels, delays in the loading, offloading or delivery and the levying of customs duties, fines or other penalties against the Company. 
 
It is possible that changes to inspection procedures could impose additional financial and legal obligations on the Company or require significant capital expenditures. Changes to inspection procedures could also impose additional costs and obligations on the Company's customers and may, in certain cases, render the shipment

 
49

 
 
of certain types of cargo uneconomical or impractical. Any such changes or developments may have a material adverse effect on the Company's business, financial condition and results of operations.
 
The Company's commercial vessels are subject to inspection by a classification society.
 
The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. Classification societies are non-governmental, self-regulating organizations and certify that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and the Safety of Life at Sea Convention. The Company's vessels are currently enrolled with Bureau Veritas, American Bureau of Shipping, Nippon Kaiji Kyokai, Det Norske Veritas and Lloyd's Register of Shipping.
 
A vessel must undergo Annual Surveys, Intermediate Surveys and Special Surveys. In lieu of a Special Survey, a vessel's machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. The Company's vessels are on Special Survey cycles for hull inspection and continuous survey cycles for machinery inspection. Every vessel is also required to be drydocked every two to three years for inspection of the underwater parts of such vessel. Generally, the Company will make a decision to scrap a vessel or reassess its useful life at the time of a vessel's fifth Special Survey.
 
If any vessel fails any Annual Survey, Intermediate Survey, or Special Survey, the vessel may be unable to trade between ports and, therefore, would be unemployable, potentially causing a negative impact on the Company's revenues due to the loss of revenues from such vessel until it is able to trade again.
 
VI.          APPLICABILITY OF FEDERAL AND OTHER SECURITIES LAWS
 
 
A.
Issuance and Resale of Plan Securities Under the Plan
 
 
1.
Exemption from Registration
 
The Plan provides for Reorganized Excel to issue New Common Stock to holders of claims under the Syndicate Credit Facility and to issue the New Cash Flow Note to holders of Allowed General Unsecured Claims (together, the "Plan Securities"). The Debtors believe that the Plan Securities constitute "securities," as defined in section 2(a)(1) of the Securities Act, section 101 of the Bankruptcy Code, and applicable Blue Sky Law. Section 4(2) of the Securities Act provides that the registration requirements of section 5 of the Securities Act shall not apply to the offer and sale of a security in connection with transactions not involving any public offering. By virtue of section 18 of the Securities Act, section 4(2) also provides that any state Blue Sky Law requirements shall not apply to such offer or sale.
 
Section 1145 of the Bankruptcy Code provides that the registration requirements of section 5 of the Securities Act (and any state Blue Sky Law requirements) shall not apply to the offer or sale of stock, options, warrants, or other securities by a debtor if (a) the offer or sale occurs under a plan of reorganization; (b) the recipients of the securities hold a claim against, an interest in, or claim for administrative expense against, the debtor; and (c) the securities are issued in exchange for a claim against or interest in a debtor or are issued principally in such exchange and partly for cash and property.
 
In reliance upon these exemptions, the offer and sale of the Plan Securities will not be registered under the Securities Act or any state Blue Sky Law. Accordingly, the Plan Securities may be resold without registration under the Securities Act or other federal securities laws, unless the holder is an "underwriter" (as discussed below) with respect to such securities, as that term is defined in section 2(a)(11) of the Securities Act and in the Bankruptcy Code. In addition, the Plan Securities generally may be able to be resold without registration under state securities laws pursuant to various exemptions provided by the respective Blue Sky Law of those states; however, the availability of such exemptions cannot be known unless individual state Blue Sky Laws are examined.  Therefore, recipients of the Plan Securities are advised to consult with their own legal advisors as to the availability of any such exemption from registration under state Blue Sky Law in any given instance and as to any applicable requirements or conditions to such availability.

 
50

 
 
2.           Resales of Plan Securities; Definition of Underwriter
 
If the holder of the Plan Securities is an underwriter, the Plan Securities will be "restricted securities" and may not be resold under the Securities Act and applicable state Blue Sky Law absent an effective registration statement under the Securities Act or pursuant to an applicable exemption from registration, including Rule 144 promulgated under the Securities Act. Section 1145(b)(1) of the Bankruptcy Code defines an "underwriter" as one who, except with respect to "ordinary trading transactions" of an entity that is not an "issuer," (a) purchases a claim against, interest in, or claim for an administrative expense in the case concerning the debtor, if such purchase is with a view to distribution of any security received or to be received in exchange for such claim or interest; or (b) offers to sell securities offered or sold under a plan for the holders of such securities; or (c) offers to buy securities offered or sold under a plan from the holders of such securities, if such offer to buy is (i) with a view to distribution of such securities and (ii) under an agreement made in connection with the plan, with the consummation of the plan, or with the offer or sale of securities under the plan; or (d) is an issuer of the securities within the meaning of section 2(a)(11) of the Securities Act. In addition, a person who receives a fee in exchange for purchasing an issuer's securities could also be considered an underwriter within the meaning of section 2(a)(11) of the Securities Act.
 
The definition of an "issuer" for purposes of whether a person is an underwriter under section 1145(b)(1)(D) of the Bankruptcy Code, by reference to section 2(a)(11) of the Securities Act, includes as "statutory underwriters" all persons who, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with, an issuer of securities. The reference to "issuer," as used in the definition of "underwriter" contained in section 2(a)(11), is intended to cover "controlling persons" of the issuer of the securities.
 
"Control," as defined in Rule 405 of the Securities Act, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise. Accordingly, an officer or director of a reorganized debtor or its successor under a plan of reorganization may be deemed to be a "controlling person" of such debtor or successor, particularly if the management position or directorship is coupled with ownership of a significant percentage of the reorganized debtor's or its successor's voting securities. Moreover, the legislative history of section 1145 of the Bankruptcy Code suggests that a creditor who owns ten percent (10%) or more of a class of securities of a reorganized debtor may be presumed to be a "controlling person" and, therefore, an underwriter.
 
Resales of the Plan Securities by persons deemed to be "underwriters" (which definition includes "controlling persons") are not exempted by section 1145 of the Bankruptcy Code from registration under the Securities Act or other applicable law. Under certain circumstances, holders of Plan Securities who are deemed to be "underwriters" may be entitled to resell their Plan Securities pursuant to the limited safe harbor resale provisions of Rule 144. Generally, Rule 144 would permit the public sale of securities received by such person if current information regarding the issuer is publicly available and if volume limitations, manner of sale requirements and certain other conditions are met. However, the Company does not presently intend to make publicly available the requisite current information regarding the Company, and as a result, Rule 144 will not be available for resales of Plan Securities by persons deemed to be underwriters.
 
Whether any particular person would be deemed to be an "underwriter" (including whether such person is a "controlling person") with respect to the Plan Securities would depend upon various facts and circumstances applicable to that person. Accordingly, the Debtors express no view whether any person would be deemed an "underwriter" with respect to the Plan Securities. In view of the complex nature of the question of whether a particular person may be an "underwriter," the Debtors make no representations concerning the right of any person to freely resell Plan Securities. Accordingly, the Debtors recommend that potential recipients of Plan Securities consult their own counsel concerning their ability to freely trade such securities without compliance with the federal and state securities laws.
 
VII.          CERTAIN TAX CONSEQUENCES OF THE PLAN
 
The following is a summary of certain U.S. federal income tax consequences of the Plan to U.S. Holders (as defined below) of Allowed Syndicate Credit Facility Claims and holders of Convertible Notes that are entitled to vote to accept or reject the Plan. This summary is for informational purposes only and is based on the

 
51

 
 
Internal Revenue Code of 1986, as amended (the "Tax Code"), Treasury regulations promulgated thereunder, and administrative and judicial interpretations and practice, all as in effect on the date of this Disclosure Statement and all of which are subject to change or differing interpretations, with possible retroactive effect. Due to the lack of definitive judicial and administrative authority in a number of areas, substantial uncertainty may exist with respect to some of the tax consequences described herein. No opinion of counsel has been obtained as to any of the tax consequences of the Plan and no ruling will be sought from the Internal Revenue Service ("IRS") with respect to any statement or conclusion in this summary. No representations are being made regarding the particular tax consequences of the confirmation or implementation of the Plan as to any creditor or equity interest-holder and there can be no assurance that the IRS would not assert, or that a court would not sustain, positions different from those discussed herein.
 
The following discussion does not address foreign, state, or local tax consequences of the Plan, nor does it purport to address all aspects of U.S. federal income taxation applicable to special classes of taxpayers (including, without limitation, banks and certain other financial institutions, insurance companies, tax-exempt organizations, governmental entities, partnerships or other pass-through entities, real estate investment trusts (REITs), regulated investment companies (RICs), persons whose functional currency is not the U.S. dollar, dealers subject to the mark-to-market rules of Section 475 of the Tax Code, employees of the Debtors, and persons who received their Syndicate Credit Facility Claims or Convertible Notes, as the case may be, pursuant to the exercise of an employee stock option or otherwise as compensation). The following discussion also does not address any persons receiving an interest in the New Cash Flow Note other than with respect to their status as a holder of Convertible Notes. This summary assumes that the Syndicate Credit Facility Claims and Convertible Notes are held as capital assets for U.S. federal income tax purposes and that the membership interests in Holdco, the interests in the Amended and Restated Senior Secured Credit Facility, and Reorganized Excel's common stock will each be held as a capital asset for U.S. federal income tax purposes. Furthermore, the following discussion does not address U.S. federal taxes other than income taxes (including, without limitation, estate and gift taxes).  Holders (as defined below) should consult their tax advisors regarding the tax consequences to them of the transactions contemplated by the Plan, including U.S. federal, state, local and foreign tax consequences.
 
For purposes of this discussion, a "U.S. Holder" is a beneficial holder of Allowed Syndicate Credit Facility Claims or Convertible Notes that is, for U.S. federal income tax purposes (1) an individual that is a citizen or resident of the United States, (2) a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof or the District of Columbia, (3) an estate, the income of which is subject to U.S. federal income taxation regardless of its source, or (4) a trust if (i) a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of the substantial decisions of such trust or (ii) such trust has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person.
 
If a partnership (including any entity treated as a partnership for U.S. federal income tax purposes) holds Allowed Syndicate Credit Facility Claims or Convertible Notes, as the case may be, the U.S. federal income tax consequences to the partners of such partnership will depend on the activities of the partnership and the status of the partners. A partnership considering participating in the Plan should consult its tax advisor regarding the consequences to the partnership and its partners of the Plan.
 
TO ENSURE COMPLIANCE WITH IRS CIRCULAR 230, HOLDERS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF FEDERAL TAX ISSUES CONTAINED OR REFERRED TO IN THIS DISCLOSURE STATEMENT IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY HOLDERS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THEM UNDER THE TAX CODE, (B) SUCH DISCUSSION IS WRITTEN IN CONNECTION WITH THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS DISCUSSED HEREIN, AND (C) HOLDERS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
 
 
A.
Certain U.S. Federal Income Tax Consequences to U.S. Holders
 
The discussion below describes possible U.S. federal income tax consequences of the transactions contemplated by the Plan to U.S. Holders; however, no assurance can be given as to the treatment of such

 
52

 
 
transactions by the IRS or as to whether such treatment will be sustained by a court. Each U.S. Holder should consult its tax advisor regarding the tax consequences to it of the transactions contemplated by the Plan and information that may be relevant to its particular situation and circumstances.
 
 
1.
U.S. Holders of Syndicate Credit Facility Claims
 
(a)         General
 
Pursuant to the Plan, in full satisfaction and discharge of its Claim, each Holder of an Allowed Syndicate Credit Facility Claim will receive (i) its pro rata share of all of the stock of Reorganized Excel on the Effective Date and (ii) an interest in the Amended and Restated Senior Secured Credit Facility having the same principal amount as the principal amount of the Allowed Syndicate Credit Facility Claim surrendered by such Holder, which shall be divided between Senior Secured Term Loan A and a new Senior Secured Term Loan B  (collectively, the "Excel Exchange").  In addition, on the Effective Date and concurrently with the receipt of the stock of Reorganized Excel, each Holder of an Allowed Syndicate Credit Facility Claim shall automatically (and shall automatically be deemed to) contribute such Reorganized Excel stock to Holdco in exchange for such Holder's pro rata share of 40% of the membership interests in Holdco (the "Holdco Contribution"). Excel intends to follow, for U.S. federal income tax purposes, the treatment of the Excel Exchange and the Holdco Contribution as described in the Plan. The IRS could take the position, however, that the Excel Exchange, the Holders, Excel, and/or the Holdco Contribution should be treated for U.S. federal income tax purposes in some manner other than that set forth in the Plan.
 
(b)         The Excel Exchange
 
The U.S. federal income tax consequences of the Excel Exchange will depend, in part, on whether the Holders' Allowed Syndicate Credit Facility Claims constitute "securities" for U.S. federal income tax purposes. Whether a debt instrument constitutes a "security" is determined based on all the facts and circumstances. Most authorities have held that the length of the term of a debt instrument at initial issuance is an important factor in determining whether such instrument is a security for U.S. federal income tax purposes. These authorities have indicated that a term of less than five years is evidence that the instrument is not a security, whereas a term of ten years or more is evidence that it is a security. The Allowed Syndicate Credit Facility Claims have a term of more than five years but less than ten years. There are other factors that may be relevant to the determination, including the security for payment, the creditworthiness of the obligor, the subordination or lack thereof with respect to other creditors, the right to vote or otherwise participate in the management of the obligor, convertibility of the instrument into equity of the obligor, whether payments of interest are fixed, variable or contingent and whether such payments are made on a current basis or accrued. It is unclear whether Holders' Allowed Syndicate Credit Facility Claims constitute "securities" for U.S. federal income tax purposes and each Holder should consult its tax advisor regarding the treatment of such obligations as "securities."
 
The Company intends to take the position that each of the Allowed Syndicate Credit Facility Claims and Senior Secured Term Loan A and Senior Secured Term Loan B of the Amended and Restated Senior Secured Credit Facility are "securities" for U.S. federal income tax purposes.
 
(i)      Treatment as a Recapitalization
 
Subject to the discussion below regarding accrued interest, to the extent that a Holder's Allowed Syndicate Credit Facility Claim is characterized as a "security" for U.S. federal income tax purposes, the Excel Exchange should be treated as a "recapitalization" for U.S. federal income tax purposes and the Amended and Restated Senior Secured Credit Facility should also be characterized as a "security" for U.S. federal income tax purposes. If the Excel Exchange is treated as a recapitalization, a U.S. Holder of an Allowed Syndicate Credit Facility Claim generally should not recognize capital gain or loss pursuant to the Excel Exchange. A U.S. Holder's aggregate tax basis in the Reorganized Excel stock and its interests in Senior Secured Term Loan A and Senior Secured Term Loan B of the Amended and Restated Senior Secured Credit Facility it receives in the Excel Exchange should be equal to the tax basis of such U.S. Holder's Allowed Syndicate Credit Facility Claim surrendered in exchange therefor. This aggregate tax basis should be allocated among such Reorganized Excel stock and the interests in Senior Secured Term Loan A and Senior Secured Term Loan B of the Amended and Restated

 
53

 
 
Senior Secured Credit Facility in proportion to their respective fair market values as of the Effective Date. Such U.S. Holder's holding period for such Reorganized Excel stock and the interests in Senior Secured Term Loan A and Senior Secured Term Loan B of the Amended and Restated Senior Secured Credit Facility generally should include its holding period for the Allowed Syndicate Credit Facility Claim surrendered in exchange therefor.
 
(ii)      Treatment as a Taxable Exchange
 
Generally.  Subject to the discussion below regarding accrued interest, if the Allowed Syndicate Credit Facility Claims are not characterized as "securities," and as a result the Excel Exchange is not treated as a "recapitalization," and the transactions contemplated by the Plan are otherwise taxable to a U.S. Holder, such U.S. Holder should recognize gain or loss equal to the difference between (a) the sum of the fair market value as of the Effective Date of such U.S. Holder's pro rata share of the Reorganized Excel stock and the issue price of the interests in Senior Secured Term Loan A and Senior Secured Term Loan B of the Amended and Restated Senior Secured Credit Facility received pursuant to the Plan (which generally should be deemed to equal the stated principal amount if neither the Amended and Restated Senior Secured Credit Facility nor the Syndicate Credit Facility Claim surrendered in exchange therefor is considered "publicly traded" under applicable Treasury regulations) over (b) such U.S. Holder's tax basis in its Allowed Syndicate Credit Facility Claim surrendered pursuant to the Plan.  Such gain or loss should be capital gain or loss (subject to the "market discount" rules described below) and should be long-term capital gain or loss if the U.S. Holder's holding period for its surrendered Allowed Syndicate Credit Facility Claim exceeded one year. A U.S. Holder's tax basis in its pro rata share of each of the shares of Reorganized Excel stock and the interests in Senior Secured Term Loan A and Senior Secured Term Loan B of the Amended and Restated Senior Secured Credit Facility received pursuant to the Plan should equal the fair market value of such interests on the Effective Date. A U.S. Holder's holding period for its pro rata share of each of the Reorganized Excel stock and the interests in Senior Secured Term Loan A and Senior Secured Term Loan B of the Amended and Restated Senior Secured Credit Facility received pursuant to the Plan should begin on the day following the Effective Date.
 
(c)         The Holdco Contribution
 
Subject to the market discount rules described below, the Holdco Contribution generally should be treated as a tax-free transaction in which no gain or loss is recognized for U.S. federal income tax purposes. A U.S. Holder's basis in its Holdco membership interest generally should be equal to the tax basis of such U.S. Holder's Reorganized Excel stock exchanged therefor. A U.S. Holder's holding period in its Holdco membership interest generally should include its holding period for such Reorganized Excel stock.
 
(d)         Accrued Interest
 
To the extent that any consideration is allocated to accrued but unpaid interest, a U.S. Holder of Allowed Syndicate Credit Facility Claims that has not previously included such accrued interest in taxable income for U.S. federal income tax purposes should recognize ordinary income equal to the fair market value of any property received (including the U.S. Holder's pro rata share of the Reorganized Excel stock and the Amended and Restated Senior Secured Credit Facility) with respect to such Claims for accrued interest. U.S. Holders should consult their tax advisors regarding the particular U.S. federal income tax consequences applicable to them under the Plan in respect of Allowed Syndicate Credit Facility Claims for accrued interest.
 
(e)         Market Discount
 
A U.S. Holder that purchased its Allowed Syndicate Credit Facility Claim from a prior holder at a discount to the then-adjusted issue price of such Allowed Syndicate Credit Facility Claim may be subject to the market discount rules of the Tax Code. Under those rules, assuming such U.S. Holder has not made an election to amortize the market discount into income on a current basis, any gain recognized on the exchange of such Allowed Syndicate Credit Facility Claim (subject to a de minimis rule and exceptions for certain nonrecognition transactions) generally would be characterized as ordinary income to the extent of the accrued market discount on such Allowed Syndicate Credit Facility Claim as of the Effective Date. U.S. Holders of Allowed Syndicate Credit Facility Claims should consult their tax advisors as to the tax consequences of the market discount rules, including, without limitation, the possible application of such rules on the Excel Exchange and Holdco Contribution.

 
54

 
 
 
2.
U.S. Holders of Convertible Notes
 
(a)         General
 
Pursuant to the Plan, in full satisfaction and discharge of its Convertible Notes, each Holder of a Convertible Note will receive an interest in the New Cash Flow Note on the Effective Date (the "Convertible Notes Exchange"). Excel intends to follow, for U.S. federal income tax purposes, the treatment of the Convertible Notes Exchange as described in the Plan. The IRS could take the position, however, that the Holders or Excel should be treated for U.S. federal income tax purposes in some manner other than that set forth in the Plan.
 
(b)         The Convertible Notes Exchange
 
The U.S. federal income tax consequences of the Convertible Notes Exchange will depend, in part, on whether the Convertible Notes constitute "securities" for U.S. federal income tax purposes and whether the New Cash Flow Note constitutes equity of Excel or a "security" of Excel.
 
Whether a debt instrument constitutes a "security" is determined based on all the facts and circumstances. Most authorities have held that the length of the term of a debt instrument at initial issuance is an important factor in determining whether such instrument is a security for U.S. federal income tax purposes. These authorities have indicated that a term of less than five years is evidence that the instrument is not a security, whereas a term of ten years or more is evidence that it is a security. There are other factors that may be relevant to the determination, including the security for payment, the creditworthiness of the obligor, the subordination or lack thereof with respect to other creditors, the right to vote or otherwise participate in the management of the obligor, convertibility of the instrument into equity of the obligor, whether payments of interest are fixed, variable or contingent and whether such payments are made on a current basis or accrued.  The Company intends to take the position that the Convertible Notes are "securities" for U.S. federal income tax purposes.
 
The appropriate characterization of the New Cash Flow Note for U.S federal income tax purposes is unclear.  The Company intends to take the position that the New Cash Flow Note is equity of Excel for U.S. federal income tax purposes.  It is possible, however, that the IRS could take the position that the New Cash Flow Note is, instead, equity of Christine Holdco or debt of Excel.  If the New Cash Flow Note is properly characterized as debt of Excel, it could be subject to special rules that relate to contingent payment debt instruments.  The application of these rules may require a U.S. holder of the New Cash Flow Note to recognize income prior to the receipt of cash. Each Holder should consult its tax advisor regarding the treatment of such obligations as equity.
 
(i)      Treatment as a Recapitalization
 
Subject to the discussion below regarding accrued interest, to the extent that the Convertible Notes are characterized as "securities" for U.S. federal income tax purposes and the New Cash Flow Note is characterized as equity of Excel or as a "security" for U.S. federal income tax purposes, the Convertible Notes Exchange should be treated as a "recapitalization" for U.S. federal income tax purposes. If the Convertible Notes Exchange is treated as a recapitalization, a U.S. Holder of Convertible Notes generally should not recognize capital gain or loss pursuant to the Convertible Notes Exchange. A U.S. Holder's aggregate tax basis in its interest in the New Cash Flow Note received in the Convertible Notes Exchange should be equal to the tax basis of such U.S. Holder's Convertible Notes surrendered in exchange therefor. A U.S. Holder's holding period for such interest in the New Cash Flow Note generally should include such U.S. Holder's holding period for the Convertible Notes surrendered in exchange therefor.
 
(ii)      Treatment as a Taxable Exchange
 
Subject to the discussions below regarding accrued interest, to the extent that the Convertible Notes are not properly characterized as "securities" or the New Cash Flow Note is not properly characterized as equity of Excel or as a "security" for U.S. federal income tax purposes so that the transactions contemplated by the Plan are otherwise taxable to a U.S. Holder, a U.S. Holder of Convertible Notes should generally recognize gain or loss equal to the difference between (a) the sum of the fair market value as of the Effective Date of such U.S.

 
55

 
 
Holder's interest in the New Cash Flow Note received pursuant to the Plan over (b) such U.S. Holder's tax basis in the Convertible Notes surrendered pursuant to the Plan.  Such gain or loss should be capital gain or loss (subject to the "market discount" rules described below) and should be long-term capital gain or loss if the U.S Holder's holding period for the surrendered Convertible Notes exceeded one year. A U.S Holder's tax basis in its interest in the New Cash Flow Note received pursuant to the Plan should equal the fair market value of such interest on the Effective Date. A U.S Holder's holding period for its interest in the New Cash Flow Note received pursuant to the Plan should begin on the day following the Effective Date.
 
(c)         Accrued Interest
 
To the extent that any consideration is allocated to accrued but unpaid interest, a U.S. Holder of Convertible Notes on which there is accrued interest that such U.S. Holder previously has not included in taxable income for U.S. federal income tax purposes should recognize ordinary income equal to the fair market value of any property received (including the U.S. Holder's interest in the New Cash Flow Note) with respect to such Claims for accrued interest. U.S. Holders should consult their tax advisors regarding the particular U.S. federal income tax consequences applicable to them under the Plan in respect of any Claims for accrued interest.
 
(d)         Market Discount
 
A U.S. Holder that purchased its Convertible Notes from a prior holder at a discount to the then-adjusted issue price of such Convertible Notes may be subject to the market discount rules of the Tax Code. Under those rules, assuming such U.S. Holder has not made an election to amortize the market discount into income on a current basis, any gain recognized on the exchange of such Convertible Notes (subject to a de minimis rule and exceptions for certain nonrecognition transactions) generally would be characterized as ordinary income to the extent of the accrued market discount on such Convertible Notes as of the Effective Date. U.S. Holders of Convertible Notes should consult their tax advisors as to the tax consequences of the market discount rules, including, without limitation, the possible application of such rules on the Convertible Notes Exchange.
 
 
B.
Other Tax Issues
 
Excel and certain of its subsidiaries are incorporated in the Republic of Liberia. Under the Consolidated Tax Amendments Act of 2010, Excel and its Liberian subsidiaries will be deemed non-resident Liberian corporations wholly exempted from Liberian taxation, effective as of 1977, and distributions to its shareholders (if any) will be made free of any Liberian withholding tax.
 
All vessels owned by Excel through its respective Debtor Vessel-owning subsidiaries, as previously stated, are managed by Maryville which is a Liberian corporation, having established a branch office in Greece, pursuant to the provisions of art. 25 of law 27/1975 (often referred to as a "Law 89 Company"). In January 2013, law 4110/2013 amended the long-standing provisions of art. 26 of law 27/1975 by imposing a fixed annual tonnage tax on vessels flying a foreign (i.e. non-Greek) flag which are managed by a Law 89 Company, establishing an identical tonnage tax regime as the one already in force for vessels flying the Greek flag. This tax varies depending on the size of the vessel, calculated in gross registered tonnage ("GRT"), as well as on the age of each vessel. As explicitly stated in the new law, payment of this tonnage tax completely satisfies ("exhausts") all income tax obligations of both the shipowning company and of all its shareholders up to the ultimate beneficial owners (no matter how many holding companies are in-between the shipowning company and the ultimate beneficial owners). Any tax payable to the state of the flag of each vessel as a result of its registration with a foreign flag registry (e.g. Liberia or the Marshall Islands) is subtracted from the amount of tonnage tax due to the Greek tax authorities. In the case of Excel, each Vessel-owning Debtor and Maryville are jointly and severally liable vis-à-vis the Greek state for payment of this tax with respect to each vessel. This means that all the Debtor Vessel-owning companies (wholly owned by Excel) as of 2013 have this added tax obligation. In addition, under the same law (4110/2013) any transfer (for whatever reason, including as a result of inheritance) of shares in a shipowning company that pays the aforementioned tonnage tax (or of a company holding shares in such shipowning company) is exempt from any tax.

 
56

 

 
C.
Importance of Obtaining Professional Tax Assistance
 
THE FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN INCOME TAX CONSEQUENCES OF THE PLAN AND IS NOT A SUBSTITUTE FOR CAREFUL TAX PLANNING WITH A TAX PROFESSIONAL. THE ABOVE DISCUSSION IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT TAX ADVICE. THE TAX CONSEQUENCES ARE IN MANY CASES UNCERTAIN AND MAY VARY DEPENDING ON A CLAIM OR HOLDER'S PARTICULAR CIRCUMSTANCES. ACCORDINGLY, HOLDERS OF CLAIMS SHOULD CONSULT THEIR TAX ADVISORS ABOUT THE UNITED STATES FEDERAL, STATE, AND LOCAL, AND APPLICABLE FOREIGN INCOME AND OTHER TAX CONSEQUENCES OF THE PLAN.
 
VIII.          FEASIBILITY OF THE PLAN AND BEST INTERESTS OF CREDITORS
 
 
A.
Feasibility of the Plan
 
The Bankruptcy Code requires that the Bankruptcy Court determine that confirmation of the Plan is not likely to be followed by liquidation or the need for further financial reorganization of the Debtors.  For purposes of showing that the Plan meets this "feasibility" standard, the Debtors have analyzed the ability of the Reorganized Debtors to meet their obligations under the Plan and retain sufficient liquidity and capital resources to conduct their business. To support their belief in the feasibility of the Plan, the Debtors have relied upon the Financial Projections set forth as Appendix F of this Disclosure Statement.  The Financial Projections show that the Reorganized Debtors should have sufficient cash to make payments required under the Plan.  Accordingly, the Debtors believe the Plan is feasible and meets the requirements of section 1129(a)(11) of the Bankruptcy Code.
 
THE FINANCIAL PROJECTIONS ARE BY THEIR NATURE FORWARD LOOKING, AND ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THE INFORMATION SET FORTH THEREIN.  Readers of this Disclosure Statement are cautioned not to place undue reliance on the Financial Projections, and should carefully review Section V - "Risk Factors To Be Considered" herein.  The Financial Projections should not be relied upon as necessarily indicative of future, actual recoveries.
 
Holders of Claims against the Debtors are advised that the Financial Projections were not prepared with a view toward compliance with the published guidelines of the American Institute of Certified Public Accountants or any other regulatory or professional agency or body or generally accepted accounting principles.  Furthermore, the Debtors' independent certified public accountants have not compiled or examined the Financial Projections and accordingly do not express any opinion or any other form of assurance with respect thereto and assume no responsibility for the Financial Projections.
 
In addition to the assumptions footnoted in the Financial Projections themselves, the Financial Projections also assume that (i) the Plan will be confirmed and consummated in accordance with its terms, (ii) there will be no material change in legislation or regulations, or the administration thereof, that will have an unexpected effect on the operations of the Reorganized Debtors, and (iii) there will be no material contingent or unliquidated litigation or indemnity claims applicable to the Reorganized Debtors.  Although considered reasonable by the Debtors as of the date hereof, unanticipated events and circumstances occurring after the preparation of the Financial Projections may affect actual recoveries under the Plan.
 
The Debtors do not intend to update or otherwise revise the Financial Projections, including any revisions to reflect events or circumstances existing or arising after the date of this Disclosure Statement or to reflect the occurrence of unanticipated events, even if any or all of the underlying assumptions do not come to fruition. Furthermore, the Debtors do not intend to update or revise the Financial Projections to reflect changes in general economic or industry conditions.
 
 
B.
Valuation Analysis
 
 
1.
Introduction

 
57

 
 
In conjunction with formulating the Plan, the Debtors have determined that it is appropriate to estimate the post-confirmation enterprise value. Accordingly, the Debtors, have directed Miller Buckfire to prepare such a valuation. In preparing the estimated total enterprise value range, Miller Buckfire has, among other things: i) conducted meetings and discussions with members of the Debtors’ management team ii) reviewed the Debtors’ business plan, including the underlying assumptions upon which it was based iii) considered certain economic and industry information relevant to the Debtors’ operating businesses iv) reviewed certain analyses prepared by other firms retained by the Debtors; and v) reviewed relevant publicly available information concerning the Debtors, the dry bulk shipping industry in which it the Debtors operates, their markets and competitors.
 
 
2.
Valuation
 
Four commonly accepted valuation methodologies were utilized to evaluate the post-confirmation total enterprise value of the Debtors: i) the fleet valuation methodology, ii) the comparable public companies trading multiples methodology, iii) the comparable acquisition multiples methodology and iv) the discounted cash flow methodology.
 
The fleet valuation methodology derives an estimated enterprise value of the Debtors based upon third-party fleet valuations. It is a common practice in the shipping industry to attain third-party fleet valuations and appraisals which are provided by shipbroking and shipping advisory firms with extensive experience in understanding the global ship purchase and sale markets.  These firms review and evaluate a substantial portion of these transactions on an ongoing basis, in addition to formulating informed views on underlying shipping markets and their influence on these transactions, giving them a current view of the market value of vessels based on a going-concern non-distressed asset sale transaction between a willing buyer and seller. These market values are based upon various factors including vessel type, vessel age, market charter rates and the market’s view of the vessel’s ability to generate a certain stream of future earnings. In performing its analysis, Miller Buckfire reviewed appraisals of the Debtors’ fleet from two independent shipping advisory firms, who conducted asset-level valuations of the Debtors’ fleet. In addition to these two independent appraisals, Miller Buckfire also evaluated current data from VesselsValue, an internationally recognized provider of vessel sale and valuation information. The average of these indications of value was used to determine an aggregate market value of the 35 vessels owned and operated by the Debtors upon emergence. The market value of the vessels was then adjusted to include the value of any above or below market charter agreements.
 
The comparable public companies trading multiples methodology involved identifying a reference group of publicly-traded marine transportation companies which were selected based on fleet profile, cargo and exposure to the dry bulk shipping market. Miller Buckfire subsequently evaluated each company’s enterprise value as a multiple of historical and projected EBITDA and gross asset value. Miller Buckfire used these reference group benchmarks to develop multiple ranges for the Debtors which account for differences in i) profitability profiles and ii) fleet characteristics between the reference group and the Debtors’ business.
 
The comparable acquisition multiples methodology involved reviewing previously announced and completed acquisitions of dry bulk vessels or fleet of vessels that are most comparable to Debtors’ fleet of dry bulk vessels. The transactions reviewed cover approximately 6 years from July 2007 to present and range in value from $100 million to $2 billion. Miller Buckfire relied on information available in public documents, company press releases and publicly-available third-party research to calculate the enterprise value multiple to gross asset value implied by the purchase price and transaction value, and applied these multiples to the gross asset value of the 35 vessels owned and operated by the Debtors upon emergence.
 
The discounted cash flow methodology involved deriving the unlevered free cash flows that the Debtors would generate assuming the Financial Projections (as defined herein) were realized following emergence from Chapter 11. To determine the Debtors’ enterprise value range, these cash flows and an estimated enterprise value at the end of the projection period were discounted to an assumed date of emergence from Chapter 11 of September 30, 2013, using the Debtors’ estimated weighted average cost of capital.
 
The total enterprise value incorporates the value attributable to Excel’s ownership in non-Debtor subsidiaries. In specific, the equity value of Excel’s 71.4% joint venture stake in Christine Shipco was estimated separately based on estimating the enterprise value of Christine Shipco LLC, utilizing the fleet valuation and

 
58

 
 
discounted cash flow methodologies, and adjusting the resultant value of the equity stake for certain items related to corporate governance and ability to monetize the investment at fair value, including existing dividend distribution rights and restrictions on transferability of interest.
 
Utilizing the aforementioned valuation methodologies and including the value of Excel’s non-Debtor subsidiaries, Miller Buckfire estimates the total enterprise value of the Debtors to be between approximately $575 million and $625 million with a mid-point of approximately $600 million.
 
This valuation is based upon information available to, and analyses undertaken by, Miller Buckfire and assumes a Plan effective date of September 30, 2013. The valuation analysis reflects other factors and assumptions including a successful reorganization of the Debtors’ business and finances in a timely manner, achieving forecasts reflected in the financial projections, the amount of cash available to the Debtor upon emergence and the Plan becoming effective in accordance with its terms on a basis consistent with the estimates and other assumptions discussed herein.
 
Additionally, an estimate of total enterprise value is not entirely mathematical but rather, involves complex considerations and judgments concerning various factors that could affect the value of an operating business. Moreover, the value of an operating business is subject to uncertainties and contingencies that are difficult to predict and will fluctuate with changes affecting the financial conditions and prospects of such a business.
 
The estimate of total enterprise value set forth herein is not necessarily indicative of actual outcomes, which may be significantly more or less favorable than those set forth herein depending on the results of the Debtors’ operations or changes in industry conditions. Additionally, these estimates of value represent hypothetical values of the Debtors as the continuing operator of their businesses and assets, and do not purport to reflect or constitute estimates of the actual market value that may be realized through the sale of any securities to be issued pursuant to the Plan, which may be significantly different than the amounts set forth herein. Such estimates were developed solely for purposes of formulation and negotiation of the Plan and analysis of implied relative recoveries to creditors thereunder. The value of an operating business such as the Debtors’ businesses is subject to uncertainties and contingencies that are difficult to predict and will fluctuate with changes in factors affecting the financial condition and prospects of such businesses.
 
Because valuation estimates are inherently subject to uncertainties, neither the Debtors, Miller Buckfire, nor any other person assumes responsibility for their accuracy, but the Debtors believe the estimates have been prepared in good faith based on reasonable assumptions.
 
 
C.
Best Interests Test
 
Section 1129(a)(7) of the Bankruptcy Code requires that the Bankruptcy Court find that each entity who rejects (or is deemed to reject) the Plan will receive property with a value, as of the Effective Date, that is not less than the amount that it would receive if the Debtors were liquidated under chapter 7 of the Bankruptcy Code on that date.  This requirement is known as the "best interests of creditors" test.
 
In a chapter 7 case, one or more bankruptcy trustees would sell the Debtors' assets to generate cash.  In general, the net proceeds of assets encumbered by valid and perfected security interests would be paid to the creditors holding those security interests.  The remaining proceeds would be applied to the administrative expenses of the liquidation, including the trustees' fees, the fees of their professionals, and wind-down expenses.  If funds were remaining, priority claims, including certain employee and tax claims, would be paid prior to any distributions to non-priority unsecured creditors.  A chapter 7 liquidation analysis of the Debtors' assets is attached hereto as Appendix E (the "Liquidation Analysis").
 
The Debtors believe that the Plan meets the best interests test.  After analyzing the effect that a chapter 7 liquidation would have on the ultimate proceeds available for distribution, the Debtors, in consultation with their advisors, believe that the distributions under the Plan will be at least as much as under a chapter 7 liquidation.  The Debtors believe that any liquidation analysis in these cases is highly speculative given the nature of

 
59

 
 
the Debtors' assets. However, based on the Liquidation Analysis, the Debtors believe that in a chapter 7 liquidation the net proceeds of any sale would be far less than the value provided under the Plan.
 
The fact that the going concern value would be higher than a liquidation value can be attributed to the following:  (i) the increased costs and expenses of liquidation under chapter 7, including the fees payable to the chapter 7 trustee and the attorneys and advisors to such trustee, (ii) additional expenses and claims, some of which would have to be paid in order to liquidate the Debtors' assets, which would be generated during the liquidation, (iii) the erosion of the value of the Debtors' assets during the liquidation process, (iv) the likelihood that vessel sale prices achieved in the "forced sale" atmosphere of a chapter 7 liquidation, particularly given current market constraints, would be significantly lower than the value which may be realized through the operation or sale of the vessels as going concerns, (v) the potential loss of any "fleet" or "pool" value, being the value derived from coordinated operation of a fleet of vessels so as to minimize ballast voyages, through the separate  sale of individual vessels,  and (vi)  the likelihood of increased opportunistic litigation and claims by counterparties to the Debtors' various agreements.
 
IX.          CONFIRMATION WITHOUT ACCEPTANCE OF ALL IMPAIRED CLASSES: THE 'CRAMDOWN' ALTERNATIVE
 
Under section 1129(b) of the Bankruptcy Code, the Bankruptcy Court may confirm a plan over the objection of an impaired rejecting class, if, among other things, at least one impaired class of claims has accepted the plan (not counting the votes of any "insiders" as defined in the Bankruptcy Code) and if the plan "does not discriminate unfairly" against and is "fair and equitable" to each impaired, rejecting class.
 
 Class 5 – General Unsecured Claims is Impaired and entitled to vote on the Plan. Class 9 – Section 510(b) Claims and Class 10 – Interests in Excel will receive no recovery under the Plan and are deemed to reject it.  In view of the deemed rejection of the Plan by Classes 9 and 10, and, if applicable, the rejection of the Plan by Class 5, the Debtors will seek confirmation of the Plan pursuant to the "cramdown" provisions of section 1129(b) of the Bankruptcy Code.
 
A plan does not discriminate unfairly within the meaning of the Bankruptcy Code if a dissenting class is treated substantially equivalent with respect to other classes of equal rank. Courts will take into account a number of factors in determining whether a plan discriminates unfairly, including whether the discrimination has a reasonable basis, whether the debtor can carry out a plan without such discrimination, whether such discrimination is proposed in good faith, and the treatment of the class that alleges discrimation. Courts have also held that it is appropriate to classify unsecured creditors separately if the differences in classification are in the best interest of the creditors, foster reorganization efforts, do not violate the absolute priority rule, and do not needlessly increase the number of classes.
 
Class 5 – General Unsecured Claims will receive a 3% recovery under the Plan.  Class 9 – Section 510(b) Claims, and Class 10 – Interests in Excel will both receive zero recovery under the Plan. The Claims and Interests in these Classes are likewise properly subordinated to all other Claims of any nature, and/or are legally distinct. Accordingly, the Plan does not discriminate unfairly against holders of Claims and Interests in Classes 5, 9 and 10.
 
A plan is fair and equitable as to a class of unsecured claims that rejects a plan if the plan provides (a) for each holder of a claim included in the rejecting class to receive or retain on account of that claim property that has a value, as of the effective date of the plan, equal to the allowed amount of such claim; or (b) that the holder of any claim or interest that is junior to the claims of such class will not receive or retain on account of such junior claim or interest any property at all. A plan is fair and equitable as to a class of equity interests that rejects a plan if the plan provides (a) that each holder of an interest included in the rejecting class receive or retain on account of that interest property that has a value, as of the effective date of the plan, equal to the greatest of the allowed amount of any fixed liquidation preference to which such holder is entitled, any fixed redemption price to which such holder is entitled, or the value of such interest; or (b) that the holder of any interest that is junior to the interests of such class will not receive or retain any property at all on account of such junior interest under the plan.

 
60

 
 
The Plan is fair and equitable with respect to Classes 5, 9 and 10.  First, there are no holders of any Claims against or Interests in the Debtors junior to the Claims and Interests in Classes 5, 9 and 10, respectively, who will receive or retain any property under the Plan on account of such junior claim or interest. Second, pursuant to the Plan, no holders of Claims against or Interests in the Debtors senior to Classes 5, 9 and 10 are receiving more than full payment on account of such Claims against or Interests in the Debtors.  Thus, the Debtors submit that the Plan is structured such that it does not "discriminate unfairly" and is "fair and equitable" to each impaired rejecting class.
 
X.          ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN
 
If the requisite acceptances are not received or if the Plan is not confirmed, the Debtors could attempt to formulate and propose a different plan or plans of reorganization.  Such a plan or plan(s) might involve either a reorganization and continuation of the Debtors' businesses or an orderly liquidation of assets.
 

 
61

 
 
CONCLUSION AND RECOMMENDATION
 
The Debtors believe that confirmation and implementation of the Plan is preferable to any other alternative under the circumstances.  Other alternatives would involve significant delay, uncertainty, substantial additional adminis­trative costs, and/or a lower recovery to the holders of impaired claims.
 
Consequently, the Debtors urge all holders of impaired claims to vote to accept the Plan and to evidence their acceptance by duly completing and returning their ballots so that they will be received on or before 5:00 p.m., prevailing eastern time, on June 28, 2013 by the Voting Agent.
Dated:            June 10, 2013


 
EXCEL MARITIME CARRIERS LTD.
 
    (for itself and on behalf of the other Debtors)
   
   
 
By:  
/s/ Pavlos Kanellopoulos
   
Name:  
 Pavlos Kanellopoulos
   
Title:
Chief Financial Officer
       
       
 
Jay M. Goffman
 
Mark A. McDermott
 
Suzanne D.T. Lovett
 
SKADDEN, ARPS, SLATE, MEAGHER
 
  & FLOM LLP
 
Four Times Square
 
New York, New York 10036-6522
 
(212) 735-3000
 
Email: Jay.Goffman@skadden.com
 
Email: Mark.McDermott@skadden.com
 
Email: Suzanne.Lovett@skadden.com

 
 
 
62

 
 

APPENDIX A

TO

DISCLOSURE STATEMENT
OF EXCEL MARITIME CARRIERS LTD. AND CERTAIN OF ITS AFFILIATES

JOINT PREPACKAGED CHAPTER 11 PLAN OF REORGANIZATION
OF EXCEL MARITIME CARRIERS LTD. AND CERTAIN OF ITS AFFILIATES




 
 

 


 
SKADDEN, ARPS, SLATE, MEAGHER
  & FLOM LLP
Jay M. Goffman
Mark A. McDermott
Suzanne D.T. Lovett
Four Times Square
New York, New York 10036
(212) 735-3000
 
 
Proposed Counsel for Debtors and
  Debtors in Possession
 

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
   
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
x
 
 
In re:
 
EXCEL MARITIME CARRIERS LTD., et al.,
 
Debtors.
:
 
Chapter 11
 
Case No. [       ]
 
 
:
:
:
:
:
:
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
x
 

 
JOINT PREPACKAGED CHAPTER 11 PLAN OF REORGANIZATION OF EXCEL MARITIME CARRIERS LTD. AND CERTAIN OF ITS AFFILIATES
 
 
Dated: June 10, 2013
 



 
A-1

 


 
TABLE OF CONTENTS
 
 
Page
ARTICLE I
DEFINED TERMS AND RULES OF INTERPRETATION
 
1.1
363 Sale Motion
1
 
1.2
Administrative Agent
1
 
1.3
Administrative Claim
1
 
1.4
Allowed
1
 
1.5
Amended and Restated Senior Secured Credit Facility
1
 
1.6
Avoidance Action
2
 
1.7
Bankruptcy Code
2
 
1.8
Bankruptcy Court
2
 
1.9
Bankruptcy Rules
2
 
1.10
Bareboat Charter Settlement Claims
2
 
1.11
Business Day
2
 
1.12
Cash
2
 
1.13
Causes of Action
2
 
1.14
Chapter 11 Case(s)
2
 
1.15
Christine Shipco Facility
3
 
1.16
Christine Shipco Facility Guaranty
3
 
1.17
Christine Shipco Facility Secured Guaranty Claim
3
 
1.18
Christine Shipco Guaranty Security
3
 
1.19
Claim
3
 
1.20
Class
3
 
1.21
Confirmation
3
 
1.22
Confirmation Date
3
 
1.23
Confirmation Hearing
3
 
1.24
Confirmation Order
3
 
1.25
Creditors' Committee
3
 
1.26
D&O Liability Insurance Policies
3
 
1.27
Debtors
3
 
1.28
Disclosure Statement
4
 
1.29
Disputed Claim
4
 
1.30
Effective Date
4
 
1.31
Escrow Agreement
4
 
1.32
Escrow Funds
4

 
A-2

 


 
1.33
Estate(s)
4
 
1.34
Excel
4
 
1.35
Exculpated Claim
4
 
1.36
Exculpated Parties
5
 
1.37
Exhibit
5
 
1.38
Final Order
5
 
1.39
General Unsecured Claim
5
 
1.40
Holder
5
 
1.41
Impaired
5
 
1.42
Indemnification Provisions
5
 
1.43
Intercompany Claim
5
 
1.44
Interest
5
 
1.45
Lien
5
 
1.46
Litigation Claim
5
 
1.47
Loan Documents
6
 
1.48
New Cash Flow Note
6
 
1.49
New Common Stock
6
 
1.50
Non-Tax Priority Claim
6
 
1.51
Noteholder Claims
6
 
1.52
Odell/Minta Facility
6
 
1.53
Odell/Minta Facility Guaranty
6
 
1.54
Odell/Minta Term Sheet
6
 
1.55
Other Secured Claims
6
 
1.56
Person
6
 
1.57
Petition Date
6
 
1.58
Plan
6
 
1.59
Plan Supplement
7
 
1.60
Priority Tax Claim
7
 
1.61
Professional
7
 
1.62
Professional Fee Claim
7
 
1.63
Reinstated
7
 
1.64
Released Parties
7
 
1.65
Reorganized
7
 
1.66
Reorganized Excel
7
 
1.67
Requisite Consenting Lenders
8
 
1.68
Retained Actions
8
 
1.69
Section 510(b) Claim
8

 
A-3

 


 
1.70
Secured
8
 
1.71
Secured Lenders
8
 
1.72
Securities Act
8
 
1.73
Steering Committee
8
 
1.74
Subsidiary Debtors
8
 
1.75
Swap Claims
8
 
1.76
Syndicate Credit Facility
8
 
1.77
Syndicate Credit Facility Claim
9
 
1.78
Trade Claims
9
 
1.79
Unimpaired
9
 
1.80
Unsecured Swaps
9
ARTICLE II
TREATMENT OF UNCLASSIFIED CLAIMS
 
2.1
Administrative Claims
10
 
2.2
Priority Tax Claim
10
 
2.3
Professional Fees
11
ARTICLE III
CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS
 
3.1
Introduction
11
 
3.2
Summary of Classes
11
 
3.3
Treatment of Classes
12
 
3.4
Intercompany Claims
14
 
3.5
Special Provision Regarding Unimpaired Classes of Claims
14
ARTICLE IV
ACCEPTANCE OF THIS PLAN
 
4.1
Classes Entitled to Vote
15
 
4.2
Elimination of Classes
15
 
4.3
Cramdown
15
ARTICLE V
MEANS FOR IMPLEMENTATION OF THIS PLAN
 
5.1
Continued Legal Existence
15
 
5.2
Post-Confirmation Funding
15
 
5.3
Disposition of Odell International Ltd. and Minta Holdings S.A.
15
 
5.4
Section 1145 Exemption
15
 
5.5
Corporate Action
16
 
5.6
Effectuating Documents; Further Transactions
16

 
A-4

 


 
5.7
Preservation of Causes of Action
16
 
5.8
Exemption From Certain Transfer Taxes and Recording Fees
16
 
5.9
Dissolution of Creditors' Committee
16
 
5.10
Cancellation of Existing Securities and Agreements
17
 
5.11
Officers and Directors of Reorganized Excel
17
 
5.12
Officers and Directors of Reorganized Debtors other than Excel.
17
ARTICLE VI
PROVISIONS GOVERNING DISTRIBUTIONS
 
6.1
Allowed Claims and Interests
18
 
6.2
Fractional Shares
18
 
6.3
Withholding and Reporting Requirements
18
 
6.4
Setoffs
18
ARTICLE VII
TREATMENT OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES
 
7.1
Assumption of Executory Contracts and Unexpired Leases
18
 
7.2
D&O Liability Insurance Policies and Indemnification Provisions
18
 
7.3
Adequate Assurance.
19
ARTICLE VIII
CONFIRMATION AND CONSUMMATION OF THIS PLAN
 
8.1
Condition To Entry of the Confirmation Order
19
 
8.2
Conditions To Effective Date
19
 
8.3
Waiver Of Conditions
20
ARTICLE IX
EFFECT OF PLAN CONFIRMATION
 
9.1
Binding Effect
20
 
9.2
Revesting of Assets
20
 
9.3
Compromise and Settlement of Claims and Interests
20
 
9.4
Discharge of the Debtors
21
 
9.5
Releases and Related Matters
21
 
9.6
Exculpation and Limitation of Liability
23
 
9.7
Injunction
23
 
9.8
Term of Bankruptcy Injunction or Stays
24
ARTICLE X
RETENTION OF JURISDICTION
 
10.1
Retention of Jurisdiction
24
 
10.2
Failure of Bankruptcy Court to Exercise Jurisdiction
25

 
A-5

 


ARTICLE XI
MISCELLANEOUS PROVISIONS
 
11.1
Payment Of Statutory Fees
26
 
11.2
Amendment Or Modification Of This Plan
26
 
11.3
Revocation, Withdrawal, or Non-Consummation
26
 
11.4
Notice
26
 
11.5
Governing Law
27
 



 
A-6

 

 
EXHIBITS
 
 
EXHIBIT A  -  Summary of Principal Terms of the New Cash Flow Note
 
 
EXHIBIT B  -  Odell/Minta Term Sheet
 




 
A-7

 


 
INTRODUCTION
 
Excel Maritime Carriers Ltd. and its affiliated debtors and debtors-in-possession in the above-captioned cases (collectively, the "Debtors") propose the following joint prepackaged chapter 11 plan of reorganization for the resolution of the outstanding Claims against and Interests in the Debtors.  Reference is made to the Disclosure Statement, filed contemporaneously herewith, for a discussion of (i) certain information relating to the Debtors, (ii) a summary and analysis of this Plan, and (iii) certain matters related to the confirmation and the consummation of this Plan.  Subject to certain restrictions and requirements set forth in section 1127 of title 11 of the United States Code and Rule 3019 of the Federal Rules of Bankruptcy Procedure, and, subject to Section 11.3 herein, the Debtors reserve the right to alter, amend, modify, revoke, or withdraw this Plan.
 
 
ARTICLE I
 
DEFINED TERMS AND RULES OF INTERPRETATION
 
 
Defined Terms.  As used herein, capitalized terms shall have the meanings set forth below.  Any term that is not otherwise defined herein, but that is used in the Bankruptcy Code or the Bankruptcy Rules, shall have the meaning given to that term in the Bankruptcy Code or the Bankruptcy Rules, as applicable.
 
1.1           363 Sale Motion means the motion filed by the Debtors on the Petition Date seeking approval, pursuant to section 363 of the Bankruptcy Code, to sell the assets of Debtors Odell International Ltd. and Minta Holdings S.A.
 
1.2           Administrative Agent means Nordea Bank Finland PLC, London Branch, in its capacity as administrative agent under the Syndicate Credit Facility, or its successor in such capacity.
 
1.3           Administrative Claim means a Claim for costs and expenses of administration of the Chapter 11 Cases under sections 503(b) or 507(b) of the Bankruptcy Code, including, but not limited to:  (a) any actual and necessary costs and expenses, incurred on or after the Petition Date, of preserving the Estates and operating the businesses of the Debtors; (b)  Professional Fee Claims; (c) all fees and charges assessed against the Estates under section 1930 of title 28 of the United States Code, and (d) claims under section 503(b)(9) of the Bankruptcy Code.
 
1.4           Allowed means, with respect to any Claim, such Claim or any portion thereof that has been allowed (a) by a Final Order of the Bankruptcy Court, (b) pursuant to the terms of this Plan, (c) by agreement between the Holder of such Claim and the Debtors or Reorganized Debtors, or (d) by an order of a court in which such Claim could have been determined, resolved or adjudicated if the Chapter 11 Cases had not been commenced.
 
1.5           Amended and Restated Senior Secured Credit Facility means that certain amended and restated financing facility to be entered into between Reorganized Excel