Note

Debt

Long-term debt consists of the following:

	December 31, 2016			December 31, 2015
First Lien Facility / Exit Financing Facility*	$	209,099,000		$	245,375,000
Debt issuance costs - First Lien / Exit Financing Facility		(4,746,682	)		(4,172,509	)
First Lien Facility / Exit Financing Facility net of debt issuance costs		204,352,318			241,202,491
Second Lien Facility		67,327,843			-
Debt discount and Debt issuance costs - Second Lien Facility		(15,736,617	)		-
Second Lien Facility, net of Debt issuance costs debt discount		51,591,226			-
Less: Current Portion Exit Financing Facility		-			(15,625,000	)
Total debt	$	255,943,544		$	225,577,491

*Includes loan balances on term loan and revolver loan facility under the First Lien Facility and Exit Financing Facility as of

December

31,

2016

and

2015,

respectively

Refer to “Note

Corporate Reorganization” for discussion of recent debt-related transactions.

For

2016,

interest rates on our outstanding debt ranged from

3.86%

4.99%,

including a margin over LIBOR applicable under the terms of the First Lien Facility. The weighted average effective interest rate for the First Lien Facility including the amortization of debt discount for this period was

6.83%.

The interest rate on payment-in-kind interest on our Second Lien Facility was

15%

including a margin over LIBOR. The weighted average effective interest rate on our Second Lien Facility including the amortization of debt discount for this period was

17.05%.

The payment-in-kind interest is due

January

19,

2020.

For

2015,

interest rates on our outstanding debt ranged from

3.696%

4.08%,

including a margin over LIBOR applicable under the terms of the amended Exit Financing Facility. The weighted average effective interest rate including the amortization of debt discount for this period was

5.06%.

For

2014,

interest rates on our outstanding debt ranged from

3.63%

7.40%,

including a margin over LIBOR applicable under the terms of the amended credit facility for the Predecessor. The weighted average effective interest rate was

2.93%

for the Predecessor. For

2014,

interest rates on our outstanding debt ranged from

4.028%

4.037%,

including a margin over LIBOR applicable under the terms of the amended credit facility for the Successor. The weighted average effective interest rate was

4.13%

for the Successor.

For the years ended

December

31,

2016

and

2015,

a commitment fee of

40%

of the margin was incurred on the undrawn portion of the First Lien Facility. For the period between

October

16,

2014

and

December

31,

2014

(Successor), a commitment fee of

0.7%

was incurred on the undrawn portion of the Exit Financing Facility and for the period between

January

2014

and

October

15,

2014

(Predecessor), a commitment fee of

0.7%

was incurred on the undrawn portion of the facility.

Interest Expense consisted of:

	Successor						Predecessor
	2016		2015		October 16, To December 31, 2014		January 1, To October 15, 2014
First Lien Facility / Exit Financing Facility Interest	$	9,938,822	$	9,781,106	$	2,103,151	$	-
Amortization of Debt issuance costs		4,532,481		2,146,316		256,175		-
Payment in kind interest on Second Lien Facility		7,327,843
Term loan Interest		-		-		-		43,314,831
Amortization of Term Loan Deferred Financing Costs		-		-		-		16,278,544
Debtor-In-Possession Interest		-		-		-		394,096
Amortization of DIP Deferred Financing Costs		-		-		-		750,000

Total Interest Expense	$	21,799,146	$	11,927,422	$	2,359,326	$	60,737,471

Interest paid amounted to

$10,257,766

2016,

$9,911,793

2015,

$10,886,687

from

January

2014

October

15,

2014

and

$1,586,303

from

October

16,

2014

December

31,

2014.

The United States Bankruptcy Code generally provides guidance that specifically limits post-petition interest accruals on secured debt and allows accrual only when the collateral securing the claims exceeds the principal amount of the debt and any accrued interest. As these criteria were not met, the Company ceased to accrue interest on the term and PIK Loans as of

August

2014,

with the exception of the interest on the DIP Loan Facility (described below). As a result, during the bankruptcy proceedings, interest in the amount of

$14,844,413

was not accrued for the period from

August

2014

through

October

15,

2014.

The Company did not make the scheduled

June

30,

2014

interest payment or any other payment subsequent to this date. The Consenting Lenders (as defined herein) agreed to forbear from exercising any rights or remedies with respect to this otherwise due interest payment until the termination of the forbearance period afforded by the waiver. Interest continued to accrue on the unpaid interest payment during the period of forbearance at the penalty rate specified in the Exit Financing Facility. The commencement of the Chapter

cases constituted an event of default that accelerated the Company’s obligations under the Exit Financing Facility, subject to an automatic stay of any action to collect, assert or recover a claim against the Company and the application of the applicable provisions of the Bankruptcy Code.

Senior Secured Debtor-in-Possession Term Loan Agreement

August

2014,

the Company filed the Chapter

cases in the United States Bankruptcy Court for the Southern District of New York (the “Court”). Through the Chapter

cases, the Company sought to implement a balance sheet restructuring pursuant to the terms of its prepackaged plan of reorganization filed with the Court (the “Plan”). The Company continued to operate its business as a “debtor in possession” under the jurisdiction of the Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Court.

Refer to “Note

Corporate Reorganization” and “Note

. Bankruptcy”.

August

2014,

the Court entered an interim order (the “Interim Order”) authorizing the Company’s entry into the DIP Loan Facility. Following the entry of the Interim Order, on

August

2014,

the Company entered into (the “DIP Loan Facility”) among the Company, the subsidiary guarantors from time to time party thereto (the “Guarantors”), the lenders party thereto (the “DIP Lenders”), Wilmington Trust (London) Limited, as DIP Agent and Security Trustee (the “DIP Security Trustee”) and Goldman Sachs Lending Partners LLC, as Sole Book runner and Sole Lead Arranger.

The DIP Loan Facility had a

nine

-month term, subject to a

three

month extension at the option of the Company (the “Extension Option”) provided no default or Event of Default had occurred thereunder and upon payment by the Company of an extension fee to the DIP Lenders equal to

0.75%

of each DIP Lender’s commitment thereunder, unless prior to the end of such

nine

month period, the Plan was confirmed pursuant to an order entered by the Court, in which case, the DIP Loan Facility would terminate on the date of such confirmation. The amount committed and made available under the DIP Loan Facility was

$50

million, of which

$25

million was available following the entry of the Interim Order. On

September

19,

2014,

the Court entered an order approving the DIP Loan Facility on a final basis.

The DIP Loan Facility bore interest at a rate of LIBOR plus an applicable margin of (i)

5.00%

or (ii) upon the exercise of the Extension Option,

7.00%.

The DIP Loan Facility had a minimum liquidity covenant of

$22.5

million and a maximum capital expenditures covenant, each tested as of the end of each fiscal monthly period, and a budget compliance covenant tested on a rolling

four

-week look-back basis, commencing with the

four

-week period ending

August

29,

2014

and on each

four

week anniversary of such date.

Discharge

On the Effective Date, and in accordance with the Plan, the amended credit agreement was terminated and all liens and mortgages related thereto were released as part of the Plan, and the DIP Loan Facility was repaid in full and all liens and mortgages related thereto were released.

Exit Financing Facility

October

2014,

the Company entered into the Exit Financing Facility with the Exit Lenders. The Exit Financing Facility was in the amount of

$275

million, including a

$50

million revolving credit facility out of which

$40

million was drawn as of

December

31,

2015,

and had a maturity date of on

October

15,

2019.

A fee of

$5.5

million was paid to the lenders in connection with the Exit Financing Facility. Amounts drawn under the Exit Financing Facility bore interest at a rate of LIBOR plus margin ranging between

3.50%

and

4.00%

per annum. The revolving credit facility was subject to an annual commitment fee of

40%

of the margin.

The Company’s obligations under the Exit Financing Facility were secured by a

first

priority mortgage on each of the vessels in its fleet and such other vessels that it

may

from time to time include with the approval of the Exit Lenders, a

first

assignment of its earnings account, its liquidity account and its vessel-owning subsidiaries’ earnings accounts, a

first

assignment of all charters (having a term which

may

exceed

months), freights, earnings, insurances, requisition compensation and management agreements with respect to the vessels and a

first

priority pledge of the membership interests of each of its vessel-owning subsidiaries.

The Exit Financing Facility contained certain restrictive financial covenants requiring the Company, among other things to repay the Exit Financing Facility in

equal consecutive quarterly repayment installments each in an amount of

$3,906,250.

The Exit Financing Facility also included customary events of default, including those relating to a failure to pay principal or interest, a breach of covenant, representation or warranty, a cross-default to other indebtedness and non-compliance with security documents.

Forbearance Agreement

January

15,

2016,

the Company entered into a Forbearance and Standstill Agreement (the “Forbearance Agreement”) by and among the Company, certain subsidiaries of the Company party to the Exit Financing Facility as guarantors and each lender under the loan agreement executing the Forbearance Agreement, which constitute the majority lenders (the “Specified Lenders”) where by the Specified Lenders agreed to forbear, during the forbearance period, from exercising certain of their available remedies under the Exit Financing Facility with respect to or arising out of:

●

one

or more events of default that exist as a result of the Company’s voluntary self-disclosure report file with OFAC described above (the “Disclosed Defaults”); and

●

the subsequent event of default that occurred as a result of the Company’s failure to pay when due the quarterly repayment installment due

January

15,

2016,

under the loan agreement (the “Payment Default” and, together with the Disclosed Defaults, the “Specified Defaults”).

The Company, the guarantors, the Specified Lenders and the agent and security trustee under the Exit Financing Facility amended the Forbearance Agreement

seven

times to extend the period of forbearance, the final amendment dated as of

March

22,

2016,

until

March

29,

2016.

In connection with the

second

amendment to the Forbearance Agreement, on

February

2016,

the Company made the quarterly payment installment to the Exit Lenders that was due on

January

15,

2016

in the amount of

$3,906,250,

which payment served to cure the related event of default under the Exit Financing Facility. In addition, in connection with the

second,

fourth

amendment and

sixth

amendment, the Specified Lenders and the agent and security trustee agreed to temporarily waive the Company’s compliance with the minimum liquidity covenant under the Exit Financing Facility, each time reducing the liquidity that was required to be maintained. Under the

fourth

waiver, dated as of

March

18,

2016,

the Company was granted a further temporary waiver of minimum liquidity covenant to temporarily eliminate its application.

Corporate Reorganization and Refinancing

See “Note

Corporate Reorganization.”

First Lien Facility

See “Note

Corporate Reorganization.”

Second Lien Facility

See “Note

Corporate Reorganization.”