NEW YORK, NEW YORK CITY, U.S. — Genco Shipping & Trading Limited and its subsidiary Baltic Trading Limited announced on April 8 that they have entered into a definitive merger agreement under which Genco will acquire Baltic Trading in a stock-for-stock transaction.
Genco transports grain, iron ore, coal, steel products and other drybulk cargoes along worldwide shipping routes. Excluding Baltic Trading Limited's fleet, Genco owns a fleet of 53 drybulk vessels.
Baltic Trading Limited is a drybulk company focused on the spot charter market. Baltic Trading transports grain, iron ore, coal, steel products and other drybulk cargoes along global shipping routes.
Under the terms of the agreement, Baltic Trading will become an indirect wholly-owned subsidiary of Genco, and Baltic Trading shareholders will receive 0.216 shares of Genco common stock for each share of Baltic Trading common stock they own at closing, with fractional shares to be settled in cash. Upon completion of the transaction, Genco shareholders are expected to own approximately 84.5% of the combined company and Baltic Trading shareholders are expected to own approximately 15.5% of the combined company. Genco expects to have its stock listed on the NYSE.
The combined company expects to further extend its leadership position in drybulk shipping and own a combined fleet of 70 drybulk vessels with an average age of 8.8 years and an aggregate carrying capacity of approximately 5,159,000 dwt, consisting of 13 Capesize, eight Panamax, 21 Supramax, four Ultramax, six Handymax and 18 Handysize vessels, after the expected delivery of two Ultramax newbuildings previously contracted by Baltic Trading.
"This transaction is a natural evolution for Genco and Baltic Trading, and we are confident that it will deliver superior value to the shareholders of both companies. The combined company will be poised to capitalize on opportunities in the current market environment, and we believe the combined platform is well positioned for continued growth as a consolidator in our industry,” said Peter C. Georgiopoulos, chairman of the Genco and Baltic Trading boards of directors. “We look forward to completing this transaction, which has been approved by both companies' independent special committees, and building on our position as a leader in international drybulk shipping to create value for our shareholders."
The transaction is expected to close in the third quarter of 2015.
Genco also announced that certain of its wholly-owned subsidiaries have entered into a loan agreement providing for a new $60 million revolving credit facility with ABN AMRO Capital USA LLC and certain other lenders, with an uncommitted accordion feature that, if exercised, will upsize the facility up to $150 million in total.
In addition, Genco announced today that it has entered into an agreement to acquire all of the shares of two single-purpose entities that are wholly owned by Baltic Trading, each of which owns one Capesize drybulk vessel, for an aggregate purchase price of $68.5 million, subject to reduction for approximately $41 million of outstanding first-mortgage debt of such single-purpose entities that is to be guaranteed by Genco and an adjustment for the difference between such single-purpose entities' current assets and total liabilities as of the closing date.
Baltic Trading had previously determined to divest these vessels to increase its liquidity position and strengthen its balance sheet. Through the transactions, Genco is acquiring the vessels known as the Baltic Lion and the Baltic Tiger, which will continue operating under their current time charters. The acquisition of the two vessel-owning entities is subject to the completion of customary documentation and closing conditions. The independent special committees of both companies' Boards of Directors reviewed and approved this transaction, which is expected to close on April 8.