Pegasus Shipping Mulls Restructuring

Friday, November 19, 1999

Panamax tanker specialist Pegasus Shipping is discussing the restructuring of its $150 million 1997 junk bond issue with noteholders. "Pegasus Shipping...is holding discussions with its noteholders towards implementation of a new business plan aimed at strengthening the company's balance sheet and business," a company spokesman said. The spokesman said the company was using a 30 day grace period in relation to its coupon payment which fell due on November 15. Discussions also included proposals to capitalize on current market sector weakness and the introduction of new capital, he said. Last week ratings agency Moody's downgraded Pegasus' senior secured debt rating on the company's 11.875 percent first preferred ship mortgage notes due 2004 to Ca from B3 on fears of a payment default. Pegasus officials said extremely competitive conditions in the Panamax tanker markets had exerted significant downward pressure on rates and it had been hit by the default of a major charterer representing more than 20 percent of its income. Moody's said charterer Arne Blystad S/A had been unable to meet time charter obligations and had made a one-off settlement payment in return for Pegasus foregoing a considerable amount of open receivables. Pegasus currently owns and operates a fleet of 14 vessels.