Genmar set to emerge from bankruptcy

Tanker operator General Maritime Corporation (GMRRQ.OB) says that the U.S. Bankruptcy Court for the Southern District of New York has confirmed the second amended joint plan of reorganization of the company and its direct and indirect subsidiaries that are debtors under Chapter 11 of the Bankruptcy Code.  General Maritime currently expects to emerge from Chapter 11 in May 2012 after the conditions to effectiveness of the plan are satisfied.

General Maritime says that the plan reflects the terms of a global settlement among its main creditor constituencies that, among other things, provides for a meaningful recovery to the unsecured creditors of the debtors and resolves all disputes on plan-related issues between and among the debtors, funds managed by Oaktree Capital Management, L.P. and their investment entities, the Official Committee of Unsecured Creditors, the company’s senior secured lenders, and holders of more than 57% of the company’s senior notes.  All voting classes of creditors voted in favor of the plan, with the senior secured lenders voting unanimously in favor of the plan and approximately 97 perecnt in amount and 69 percent in number of general unsecured creditors voting in favorn.

General Maritime says the plan will substantially deleverage its balance sheet and position it to be a “financially stronger global enterprise” after it gets out of bankruptcy. The company’s financial debt will be reduced by approximately $600 million, its cash interest expense will be reduced by approximately $42 million annually, and it will get a new equity capital infusion of approximately $175 million from the Oaktree Funds.   

Jeffrey D. Pribor, General Maritime’s Chief Financial Officer, said, “The confirmation of our plan represents a major milestone and is one of the last remaining steps in our restructuring.  We are proud of what we have accomplished and believe that, through this process, we will establish a foundation to emerge as a stronger and more competitive company. I would like to thank our customers and vendors for their support throughout this process as well as our employees for their ongoing to commitment to General Maritime.”

Under the plan, holders of unsecured claims against the company and its debtor subsidiaries that guarantee the company’s obligations under its secured credit facilities (the “guarantor debtors”) will share in $6 million in cash, warrants exercisable for up to three percent of the equity in the reorganized company, and two percent of the equity in the reorganized company. The plan provides that the debtors’ prepetition senior lenders will receive a $75 million paydown of their existing prepetition obligations and provide exit financing to the debtors.  Funds managed by Oaktree Capital Management will receive 98 percent of the equity in the reorganized company for the $175 million equity capital infusion and the conversion of $175 million of secured claims against the company.  The common stock of the company will be extinguished under the plan and holders of the company’s common stock will not receive a distribution under the plan.

May 3, 2012