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TBS International secures breathing space from creditors

December 5 - TBS International, the global heavylift multipurpose tweendeckers and handysize/handymax bulk carrier operator, has been handed a two-month breathing space by its creditors into the New Year.

In September, 2011 the line announced that it had reached agreementwith lenders that it would not make certain principal payments due on its financing facilities for the period to December 15, 2011. The line has now reached agreements in principle with its lenders to restructure the company's debt, with lenders agreeing to an extension of the forbearance period to February 15, 2012.

The agreements in principle, subject to final documentation and approvals, provide for the continued operation of the company's business under current management, continued timely payment in full of all trade creditors, satisfaction of the claims of certain lenders, restructuring of the terms of debt held by the company's key lenders and no residual value for the existing common and preferred stock.

During the extended forbearance period, the lenders will not exercise their rights and remedies which arise from the company's failure to make interest and principal payments when due and any failure to comply with certain of its financial covenants. The company and its lenders expect to finalise agreements with respect to the company's financial obligations and defaultsunder its various financing facilities.

Joseph Royce, chairman, CEO and president, commented: "We are pleased to have reached these agreements in principle because we believe itwill ensure continued, uninterrupted operation of the company's fleet and the company's continued ability to meet its customers' needs on a timely and efficient basis."

In August, HLPFI (August 9) reported that TBS faced uncertain business conditions in 2011 created by three major macroeconomic factors had negatively affected TBS' financial results for Q2 and H1 2011. Continued deliveries of new build vessels in all drybulk categories, which is increasing capacity as itoutpaces scrapping of tonnage; secondly, downward pressure on dry cargo freight rates; and, lastly, the high cost of transportation fuel, which the line has not been able to pass on to customers because of the downward pressure on freight rates.

In November, (November 10) HLPFI also reported that TBS International had conceded its equity in the eyes of its lenders has 'no value' leaving uncertainty over the company's future in light of its ongoing difficulties in complying with all financial covenants.

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