Genco Shipping & Trading to Acquire Baltic Trading

Maritime Activity Reports, Inc.

April 9, 2015

Genco Shipping & Trading Limited and its subsidiary Baltic Trading Limited has announced that they have entered into a definitive merger agreement under which Genco will acquire Baltic Trading in a stock-for-stock transaction. 

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 consummation of the transaction, Genco shareholders are expected to own approximately 84.5 percent of the combined company and Baltic Trading shareholders are expected to own approximately 15.5 percent of the combined company.  Genco expects to have its stock listed on the NYSE upon consummation of the transaction.

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.

Peter C. Georgiopoulos, Chairman of the Genco and Baltic Trading Boards of Directors said, "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. 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."

John C. Wobensmith, President of Genco and President and Chief Financial Officer of Baltic Trading, said, "By combining Genco and Baltic Trading we are creating an industry leader that is well positioned for future growth and expansion, and we are excited about our future prospects.  Through this combination, we expect to benefit from having a larger platform and solid financial position for value creation.  The transaction will simplify our ownership structure, enhance the combined company's scale and operations and reduce overhead.  We appreciate the continued support of our commercial banks and look forward to continuing to provide our charterers around the world with best-in-class shipping services."

In addition to other customary closing conditions, the closing of the transaction is subject to the listing of Genco common stock on the NYSE, the affirmative vote of the holders of a majority of the shares of Genco common stock present and voting at a meeting of Genco shareholders called to consider the transaction, the affirmative vote of the holders of a majority of the outstanding shares of Baltic Trading common stock and Class B stock, voting together as a single class, at a meeting of Baltic Trading shareholders called to consider the transaction and the affirmative vote of the holders of a majority of the outstanding shares of Baltic Trading common stock and Class B stock (excluding shares held by Genco, its subsidiaries, and directors and officers of Baltic Trading who are also directors or officers of Genco) at such Baltic Trading shareholders' meeting.  Certain affiliates of Centerbridge Partners, L.P., as shareholders of Genco and/or Baltic Trading, as the case may be, have entered into a voting and support agreement, pursuant to which such shareholders have agreed to vote their shares in favor of the transaction.
The transaction is expected to close in the third quarter of 2015.

The Boards of Directors of both Genco and Baltic Trading established independent special committees to review the transaction and negotiate the terms on behalf of their respective companies.  Both independent special committees unanimously approved the transaction.  The Boards of Directors of both companies approved the merger by unanimous vote of directors present and voting, with Peter C. Georgiopoulos, Chairman of the Board of each company, recused for the vote.

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  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, 2015.

Houlihan Lokey Capital, Inc. acted as financial advisor to Genco and Genco's independent special committee, and Milbank, Tweed, Hadley & McCloy LLP acted as legal advisor to Genco's independent special committee. Blackstone Advisory Partners LP served as financial advisor and Kaye Scholer LLP served as legal advisor to Baltic Trading's independent special committee.  Evercore Partners Inc. is serving as an advisor to Baltic Trading.  Kramer Levin Naftalis & Frankel LLP serves as regular corporate counsel to Genco and Baltic Trading.


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