7 – DEBT

Long-term debt, net consists of the following:


	March 31,		December 31,
	2020		2019
Principal amount	$	488,834	$	495,824
Less: Unamortized debt financing costs		(12,143)		(13,094)
Less: Current portion		(72,962)		(69,747)

Long-term debt, net	$	403,729	$	412,983


	March 31, 2020				December 31, 2019
			Unamortized				Unamortized
			Debt Issuance				Debt Issuance
	Principal		Cost		Principal		Cost
$495 Million Credit Facility	$	390,314	$	10,791	$	395,724	$	11,642
$108 Million Credit Facility		98,520		1,352		100,100		1,452

Total debt	$	488,834	$	12,143	$	495,824	$	13,094

As of March 31, 2020 and December 31, 2019, $12,143 and $13,094 of deferred financing costs, respectively, were presented as a direct deduction within the outstanding debt balance in the Company’s Condensed Consolidated Balance Sheets. Amortization expense for deferred financing costs was $951 and $915 for the three months ended March 31, 2020 and 2019, respectively. This amortization expense is recorded as a component of Interest expense in the Condensed Consolidated Statements of Operations.

$495 Million Credit Facility

On May 31, 2018, the Company entered into a five-year senior secured credit facility for an aggregate amount of up to $460,000 with Nordea Bank AB (publ), New York Branch (“Nordea”), as Administrative Agent and Security Agenty, the various lenders party thereto, and Nordea, Skandinaviska Enskilda Banken AB (publ), ABN AMRO Capital USA LLC, DVB Bank SE, Crédit Agricole Corporate & Investment Bank, and Danish Ship Finance A/S as Bookrunners and Mandated Lead Arrangers. Deutsche Bank AG Filiale Deutschlandgeschäft, and CTBC Bank Co. Ltd. are Co-Arrangers under this credit facility. On June 5, 2018, proceeds of $460,000 under this facility were used, together with cash on hand, to refinance all of the Company’s existing credit facilities (the $400 Million Credit Facility, $98 Million Credit Facility and 2014 Term Loan Facilities, as defined below) into one facility, and pay down the debt on seven of the Company’s oldest vessels, which have been identified for sale.

On February 28, 2019, the Company entered into an Amendment and Restatement Agreement (the “Amendment”) for this credit facility (the “$495 Million Credit Facility”) with Nordea Bank AB (publ), New York Branch (“Nordea”), as Administrative Agent and Security Agent, the various lenders party thereto, and Nordea, Skandinaviska Enskilda Banken AB (publ), ABN AMRO Capital USA LLC, DVB Bank SE, Crédit Agricole Corporate & Investment Bank, and Danish Ship Finance A/S as Bookrunners and Mandated Lead Arrangers. The Amendment provides for an additional tranche up to $35,000 to finance a portion of the acquisitions, installations, and related costs for scrubbers for 17 of the Company’s Capesize vessels. On August 28, 2019, September 23, 2019 and March 12, 2020, the Company made total drawdowns of $9,300, $12,200 and $11,250, respectively, under the $35 Million tranche of the $495 Million Credit Facility.

On November 15, 2019, the Company utilized $6,880 of the proceeds from the sale of the Genco Challenger and Genco Champion, which were sold during the fourth quarter of 2019, as a loan prepayment under the $495 Million Credit Facility. Additionally, on April 15, 2019, the Company utilized $4,947 of the proceeds from the sale of the Genco Cavalier as a loan prepayment under the $495 Million Credit Facility. Under the terms of the $495 Million Credit Facility, the amount received from the proceeds of the sale of a collateralized vessel can be used towards the financing of a replacement vessel or vessels meeting certain requirements and added as collateral under the facility. However, since a replacement vessel was not added as collateral within the 180 day period stipulated in the $495 Million Credit Facility, the Company was required to utilize the proceeds as a loan prepayment.

As of March 31, 2020, there was no availability under the $495 Million Credit Facility. Total debt repayments of $16,660 and $15,000 were made during the three months ended March 31, 2020 and 2019 under the $495 Million Credit Facility, respectively.

The $495 Million Credit Facility provides for the following key terms in relation to the $460,000 tranche:

The final maturity date is May 31, 2023.

Borrowings bear interest at LIBOR plus 3.25% through December 31, 2018 and LIBOR plus a range of 3.00% and 3.50% thereafter, dependent upon the Company’s ratio of total net indebtedness to the last twelve months EBITDA. Original scheduled amortization payments were $15,000 per quarter commencing on December 31, 2018, with a final payment of $190,000 due on the maturity date. As a result of the loan prepayments for the vessel sales as noted above, scheduled amortization payments were recalculated in accordance with the terms of the facility. Scheduled amortization payments were revised to $14,321 which commenced on December 30, 2019, with a final payment of $188,049 due on the maturity date

Scheduled amortization payments may be recalculated upon the Company’s request based on changes in collateral vessels, prepayments of the loan made as a result of a collateral vessel disposition as part of the Company’s fleet renewal program, or voluntary prepayments, subject in each case to a minimum repayment profile under which the loan will be repaid to nil when the average age of the vessels serving as collateral from time to time reaches 17 years. Mandatory prepayments are applied to remaining amortization payments pro rata, while voluntary prepayments are applied to remaining amortization payments in order of maturity.

Acquisitions and additional indebtedness are allowed subject to compliance with financial covenants, a collateral maintenance test, and other customary conditions.

The $495 Million Credit Facility provides for the following key terms in relation to the $35,000 tranche:

The final maturity date is May 31, 2023.

Borrowings under the tranche may be incurred pursuant to multiple drawings on or prior to March 30, 2020 in minimum amounts of $5,000 and may be used to finance up to 90% of the scrubber costs noted above.

Borrowings under the tranche will bear interest at LIBOR plus 2.50% through September 30, 2019 and LIBOR plus a range of 2.25% to 2.75% thereafter, dependent upon the Company’s ratio of total net indebtedness to the last twelve months’ EBITDA.

The tranche is subject to equal consecutive quarterly repayments commencing on the last day of the fiscal quarter ending March 31, 2020 in an amount reflecting a repayment profile whereby the loans shall have been repaid after four years calculated from March 31, 2020. Assuming that the full $35,000 is borrowed, each quarterly repayment amount was originally scheduled to be equal to $2,500. However, as a result of the loan prepayments for the vessel sales as noted above, the availability under the $35,000 tranche was reduced. As of March 31, 2020, the Company drew down a total of $32,750, and this tranche is considered fully drawn. Scheduled quarterly repayments are $2,339.

The $495 Million Credit Facility provides for the following key terms:

Pursuant to the November 5, 2019 amendment, the Company may pay dividends or repurchase stock to the extent the Company’s total cash and cash equivalents are greater than $100,000 and 18.75% of the Company’s total indebtedness, whichever is higher; if the Company cannot satisfy this condition, the Company is subject to a limitation of 50% of consolidated net income for the quarter preceding such dividend payment or stock repurchase if the collateral maintenance test ratio is 200% or less for such quarter, the full commitment of up to $35,000 for the scrubber tranche is assumed to be drawn.

Collateral vessels can be sold or disposed of without prepayment of the loan if a replacement vessel or vessels meeting certain requirements are included as collateral within 180 days of such sale or disposition. In addition:

we must be in compliance with the collateral maintenance test;

the replacement vessels must become collateral for the loan; and either

the replacement vessels must have an equal or greater appraised value that the collateral vessels for which they are substituted, or

ratio of the aggregate appraised value of the collateral vessels (including replacement vessels) to the outstanding loan amount after the collateral disposition (accounting for any prepayments of the loan by the time the replacement vessels become collateral vessels) must equal or exceed the aggregate appraised value of the collateral vessels to the outstanding loan before the collateral disposition.

Key financial covenants include:

minimum liquidity, with unrestricted cash and cash equivalents to equal or exceed the greater of $30,000 and 7.5% of total indebtedness (no restricted cash is required);

minimum working capital, with consolidated current assets (excluding restricted cash) minus consolidated current liabilities (excluding the current portion of long-term indebtedness) to be not less than zero;

debt to capitalization, with the ratio of total indebtedness to total capitalization to be not more than 70%; and

collateral maintenance, with the aggregate appraised value of collateral vessels to be at least 135% of the principal amount of the loan outstanding under the $495 Million Credit Facility.

Collateral includes the current vessels in the Company’s fleet other than the seven oldest vessels in the fleet which were identified for sale, collateral vessel earnings and insurance, and time charters in excess of 24 months in respect of the collateral vessels.

As of March 31, 2020, the Company was in compliance with all of the financial covenants under the $495 Million Credit Facility.

$108 Million Credit Facility

On August 14, 2018, the Company entered into a five-year senior secured credit facility (the “108 Million Credit Facility”) with Crédit Agricole Corporate & Investment Bank (“CACIB”), as Structurer and Bookrunner, CACIB and Skandinaviska Enskilda Banken AB (Publ) as Mandate Lead Arrangers, CACIB as Administrative Agent and as Security Agent, and the other lenders party thereto from time to time. The Company has used proceeds from the $108 Million Credit Facility to finance a portion of the purchase price for the six vessels, including four Capesize Vessels and two Ultramax vessels, which were delivered to the Company during the three months ended September 30, 2018. These six vessels also serve as collateral under the $108 Million Credit Facility. The Company drew down a total of $108,000 during the three months ended September 30, 2018, which represents 45% of the appraised value of the six vessels.

As of March 31, 2020, there was no availability under the $108 Million Credit Facility. Total debt repayments of $1,580 were made during the three months ended March 31, 2020 and 2019 under the $108 Million Credit Facility.

The $108 Million Credit Facility provides for the following key terms:

The final maturity date of the $108 Million Credit Facility is August 14, 2023.

Borrowings under the $108 Million Credit Facility bear interest at LIBOR plus 2.50% through September 30, 2019 and LIBOR plus a range of 2.25% to 2.75% thereafter, dependent upon the Company’s ratio of total net indebtedness to the last twelve months EBITDA.

Scheduled amortization payments under the $108 Million Credit Facility reflect a repayment profile whereby the facility shall have been repaid to nil when the average vessel aged of the collateral vessels reaches 20 years. Based on this, the required repayments are $1,580 per quarter commencing on December 31, 2018, with a final balloon payment on the maturity date.

Mandatory prepayments are to be applied to remaining amortization payments pro rata, while voluntary prepayments are to be applied to remaining amortization payments in order of maturity.

Pursuant to the November 5, 2019 amendment, the Company may pay dividends or repurchase stock to the extent the Company’s total cash and cash equivalents are greater than $100,000 and 18.75% of its total indebtedness, whichever is higher; if the Company cannot satisfy this condition, the Company is subject to a limitation of 50% of consolidated net income for the quarter preceding such dividend payment or stock repurchase if the collateral maintenance test ratio is 200% or less for such quarter.

Acquisitions and additional indebtedness are allowed subject to compliance with financial covenants (including a collateral maintenance test) and other customary conditions.

Key financial covenants are substantially similar to those under the Company’s $495 Million Credit Facility and include:

minimum liquidity, with unrestricted cash and cash equivalents to equal or exceed the greater of $30,000 and 7.5% of total indebtedness;

debt to capitalization, with the ratio of total indebtedness to total capitalization to be not more than 70%; and

collateral maintenance, with the aggregate appraised value of collateral vessels to be at least 135% of the principal amount of the loan outstanding under the $108 Million Credit Facility.

As of March 31, 2020, the Company was in compliance with all of the financial covenants under the $108 Million Credit Facility.

Interest rates

The following table sets forth the effective interest rate associated with the interest expense for the Company’s debt facilities noted above, including the cost associated with unused commitment fees, if applicable. The following table also includes the range of interest rates on the debt, excluding the impact of unused commitment fees, if applicable:


	For the Three Months Ended March 31,
	2020		2019
Effective Interest Rate	4.76	%	5.56	%
Range of Interest Rates (excluding unused commitment fees)	3.45 % to 5.05	%	4.99 % to 5.76	%