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Genco Shipping (GNK): Near-Term Restructuring/Chapter 11 is Highly Likely, Says Wells Fargo

April 2, 2014 2:48 PM EDT
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Price: $20.26 -0.78%

Rating Summary:
    13 Buy, 3 Hold, 4 Sell

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    Up: 8 | Down: 4 | New: 35
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Wells Fargo reiterated an Underperform rating on Genco Shipping (NYSE: GNK). Analyst Michael Webber thinks a near-term restructuring/chapter 11 is highly likely

"On 3/31 GNK announced waiver agreements with lenders under its $1.1B credit facility, $100MM term loan and $253MM term loan which waived several covenant compliance requirements through 4/1. These waivers were granted as GNK continues to discuss a consensual restructuring of its outstanding debt with lenders and temporarily extended the timeline for the ongoing negotiations to progress. On 4/1 GNK reached revised agreements with lenders which further extended the expiring waivers out to 4/21 on similar terms, although we note that one major change allows for the termination of the waivers if GNK is unable to reach a definitive restructuring agreement with lenders by 4/4," said Webber.

"Following the most recent update on the ongoing restructuring negotiations we continue to believe a near-term restructuring/chapter 11 is highly likely. We believe the biggest question is what kind of deal can be structured with convert holders the
converts are currently trading at ~$0.85/dollar with questions around any minimal
residual value for common holders still there. Ultimately, we believe convert holders are likely given equity (in addition to cash), with zero or a token amount of equity left for current common holders, and we reiterate our Underperform rating," he added.

For an analyst ratings summary and ratings history on Genco Shipping click here. For more ratings news on Genco Shipping click here.

Shares of Genco Shipping closed at $1.61 yesterday.


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