Re: | Genco Shipping & Trading Limited |
1. | We note your response to our prior comment 1 and the revised table of selected consolidated financial data included in Annex A. Please revise to clearly indicate at the top of the columns that the period from July 9 to December 31, 2014 is the Successor period and all other periods are Predecessor periods. Also, please include a vertical black line separating the Successor and Predecessor columns. |
2. | We note that the consolidated statements of equity include a line item for net gain from fresh-start adjustments, which refers to Note 21. In light of the restatement amount related to the net loss on reorganization items, please provide us with your revised consolidated statements of equity which reflect this revision. |
3. | We note your response to our prior comment 10 which indicates that the components of the total reorganization value of the Company are included in Annex E in the “Successor July 9, 2014” column. However, we continue to believe that it would benefit investors to include separate footnote disclosure reflecting the allocation of reorganization value which clearly shows how the amount of goodwill was calculated or determined. Specifically, please explain how the total assets of the successor entity at July 9, 2014 of $1,986,822, reconciles to the reorganization value of $1,233,000. Please revise accordingly. |
4. | We note that the amount of the adjustment relating to the discharge of predecessor equity as reflected in footnote (a) of Annex D is $829,974. Please explain to us why this amount differs from the adjustments in column (a) of Annex E which total $849,575 for predecessor common stock and additional paid-in capital. Also, please tell us why the adjustment for issuance of successor equity of $1,133,900 in footnote (a) of Annex D differs from the successor common stock and additional paid-in capital in column (a) of Annex E of $1,233,000. |
Elimination of Predecessor common stock and additional paid-in capital
|
$
|
849,575
|
||
Elimination of Predecessor retained deficit
|
(57,463
|
)
|
||
Elimination of Predecessor accumulated other comprehensive income
|
34,931
|
|||
Elimination of Predecessor noncontrolling interests
|
2,931
|
|||
Previously reported discharge of Predecessor equity as a component of “Reorganization items, net”
|
$
|
829,974
|
· | The adjustment for issuance of Successor equity of $1,133,900 represents the Successor equity value confirmed in the Plan in the amount of $1,233,900 offset by $100,000 of the Successor equity value confirmed in the Plan that was distributed in the rights offering included in the Plan. Pursuant to the terms of the Plan, the Company issued 5.4 million shares of Successor common stock in exchange for cash proceeds of $100,000. This amount was deducted from the Successor equity value confirmed in the Plan for purposes of determining the Successor equity available for distribution to creditors in exchange for the discharge of debts owed to them as follows: |
Successor equity value confirmed in the Plan
|
$
|
1,233,900
|
||
Less rights offering
|
(100,000
|
)
|
||
Value used for net gain on debt discharge calculation
|
$
|
1,133,900
|
· | The Successor common stock and additional paid-in capital in column (a) of Annex E of $1,233,000 represents the Successor equity value confirmed in the reorganization plan adjusted by $900 of Predecessor noteholder claims associated with non-accredited investors. Pursuant to terms of the Plan, the settlement of non-accredited Predecessor noteholder claims in exchange for discharge of their debt was to be settled in cash rather than the common stock of the Successor Company. It was estimated that the Company would settle $900 of such claims associated with non-accredited investors in cash rather than the common stock of the Successor. Accordingly, the Company recorded a liability for this estimate with an offsetting debit to Successor Additional paid-in capital, which is summarized as follows: |
Reconciliation:
|
||||
Successor equity value confirmed in the Plan
|
$
|
1,233,900
|
||
Other
|
(900
|
)
|
||
Amount reflected as Successor common stock and additional paid-in capital
|
$
|
1,233,000
|
Reconciliation:
|
||||
Successor equity value confirmed in the Plan
|
$
|
1,233,900
|
||
Less rights offering
|
(100,000
|
)
|
||
Value used for net gain on debt discharge calculation
|
$
|
1,133,900
|
||
Add back rights offering
|
100,000
|
|||
Other
|
(900
|
)
|
||
Amount reflected as Successor common stock and additional paid-in capital
|
$
|
1,233,000
|
5. | Please explain to us why the issuance of successor common stock used in the calculation of the net gain on discharge of liabilities is $1,133,900, rather than the amount reflected in the table as Successor common stock and additional paid-in capital of $1,233,000. |
· | The Company is responsible for the adequacy and accuracy of the disclosure in the filing; |
· | Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and |
· | The Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. |
ITEM 6. | SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA |
Successor
|
Predecessor
|
|||||||||||||||||||||||
For the Years Ended December 31,
|
||||||||||||||||||||||||
Period from July 9 to December 31, 2014 (2)
|
Period from January 1 to July 9, 2014 (2) (restated)
|
2013
|
2012
|
2011
|
2010
|
|||||||||||||||||||
Income Statement Data:
|
||||||||||||||||||||||||
(U.S. dollars in thousands except for share and per share amounts)
|
||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||
Voyage revenues
|
$
|
98,817
|
$
|
118,759
|
$
|
224,179
|
$
|
223,159
|
$
|
388,929
|
$
|
447,438
|
||||||||||||
Service revenues
|
1,584
|
1,701
|
3,285
|
3,294
|
3,285
|
1,249
|
||||||||||||||||||
Total revenues
|
$
|
100,401
|
$
|
120,460
|
$
|
227,464
|
$
|
226,453
|
$
|
392,214
|
$
|
448,687
|
||||||||||||
Operating Expenses:
|
||||||||||||||||||||||||
Voyage expenses
|
7,525
|
4,140
|
8,046
|
7,009
|
4,457
|
4,467
|
||||||||||||||||||
Vessel operating expenses
|
56,943
|
64,670
|
111,671
|
114,318
|
105,514
|
78,976
|
||||||||||||||||||
General, administrative and management fees
|
36,915
|
31,371
|
34,031
|
35,673
|
33,928
|
29,081
|
||||||||||||||||||
Depreciation and amortization
|
36,714
|
75,952
|
140,743
|
139,063
|
136,203
|
115,663
|
||||||||||||||||||
Other operating income
|
(530
|
)
|
—
|
(121
|
)
|
(265
|
)
|
(527
|
)
|
(791
|
)
|
|||||||||||||
Goodwill impairment
|
166,067
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Total operating expenses
|
303,634
|
176,133
|
294,370
|
295,798
|
279,575
|
227,396
|
||||||||||||||||||
Operating (loss) income
|
(203,233
|
)
|
(55,673
|
)
|
(66,906
|
)
|
(69,345
|
)
|
112,639
|
221,291
|
||||||||||||||
Other expense
|
(7,538
|
)
|
(41,122
|
)
|
(88,217
|
)
|
(87,209
|
)
|
(86,186
|
)
|
(72,042
|
)
|
||||||||||||
(Loss) income before reorganization items, net
|
(210,771
|
)
|
(96,795
|
)
|
(155,123
|
)
|
(156,554
|
)
|
26,453
|
149,249
|
||||||||||||||
Reorganization items, net
|
(1,591
|
)
|
(915,640
|
)
|
—
|
—
|
—
|
—
|
||||||||||||||||
Net (loss) income before income taxes
|
(212,362
|
)
|
(1,012,435
|
)
|
(155,123
|
)
|
(156,554
|
)
|
26,453
|
149,249
|
||||||||||||||
Income tax expense
|
(996
|
)
|
(815
|
)
|
(1,898
|
)
|
(1,222
|
)
|
(1,385
|
)
|
(1,840
|
)
|
||||||||||||
Net (loss) income
|
(213,358
|
)
|
(1,013,250
|
)
|
(157,021
|
)
|
(157,776
|
)
|
25,068
|
147,409
|
||||||||||||||
Less: Net (loss) income attributable to noncontrolling interest
|
(31,064
|
)
|
(62,101
|
)
|
(9,280
|
)
|
(12,848
|
)
|
(318
|
)
|
6,166
|
|||||||||||||
Net (loss) income attributable to Genco Shipping & Trading Limited
|
$
|
(182,294
|
)
|
$
|
(951,149
|
)
|
$
|
(147,741
|
)
|
$
|
(144,928
|
)
|
$
|
25,386
|
$
|
141,243
|
||||||||
Net (loss) earnings per share - basic
|
$
|
(3.02
|
)
|
$
|
(21.83
|
)
|
$
|
(3.42
|
)
|
$
|
(3.47
|
)
|
$
|
0.72
|
$
|
4.28
|
||||||||
Net (loss) earnings per share - diluted
|
$
|
(3.02
|
)
|
$
|
(21.83
|
)
|
$
|
(3.42
|
)
|
$
|
(3.47
|
)
|
$
|
0.72
|
$
|
4.07
|
||||||||
Dividends declared per share
|
—
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||||||||
Weighted average common shares outstanding - Basic
|
60,360,515
|
43,568,942
|
43,249,070
|
41,727,075
|
35,179,244
|
32,987,449
|
||||||||||||||||||
Weighted average common shares outstanding - Diluted
|
60,360,515
|
43,568,942
|
43,249,070
|
41,727,075
|
35,258,205
|
35,891,373
|
||||||||||||||||||
Balance Sheet Data:
|
||||||||||||||||||||||||
(U.S. dollars in thousands, at end of period)
|
||||||||||||||||||||||||
Cash and cash equivalents
|
$
|
83,414
|
$
|
N/A
|
|
$
|
122,722
|
$
|
72,600
|
$
|
227,968
|
$
|
270,877
|
|||||||||||
Total assets
|
1,752,913
|
N/A
|
|
2,957,254
|
2,843,371
|
3,119,277
|
3,182,708
|
|||||||||||||||||
Total debt (current and long-term, including notes payable)
|
430,135
|
N/A
|
|
1,595,945
|
1,524,357
|
1,694,393
|
1,746,248
|
Total equity
|
1,292,774
|
N/A
|
|
1,308,805
|
1,261,207
|
1,361,618
|
1,348,153
|
|||||||||||||||||
Other Data:
|
||||||||||||||||||||||||
(U.S. dollars in thousands)
|
||||||||||||||||||||||||
Net cash (used in) provided by operating activities
|
$
|
(26,835
|
)
|
$
|
(33,317
|
)
|
$
|
(3,144
|
)
|
$
|
(18,834
|
)
|
$
|
158,183
|
$
|
262,680
|
||||||||
Net cash used in investing activities
|
(44,101
|
)
|
(30,535
|
)
|
(146,555
|
)
|
(3,669
|
)
|
(133,367
|
)
|
(870,230
|
)
|
||||||||||||
Net cash provided by (used in) financing activities
|
18,273
|
77,207
|
199,821
|
(132,865
|
)
|
(67,725
|
)
|
690,160
|
||||||||||||||||
EBITDA (1)
|
$
|
(137,010
|
)
|
$
|
(833,366
|
)
|
$
|
83,041
|
$
|
82,537
|
$
|
249,080
|
$
|
330,711
|
(1) | EBITDA represents net (loss) income attributable to Genco Shipping & Trading Limited plus net interest expense, taxes and depreciation and amortization. EBITDA is included because it is used by management and certain investors as a measure of operating performance. EBITDA is used by analysts in the shipping industry as a common performance measure to compare results across peers. Our management uses EBITDA as a performance measure in our consolidated internal financial statements, and it is presented for review at our board meetings. We believe that EBITDA is useful to investors as the shipping industry is capital intensive which often results in significant depreciation and cost of financing. EBITDA presents investors with a measure in addition to net income to evaluate our performance prior to these costs. EBITDA is not an item recognized by U.S. GAAP and should not be considered as an alternative to net income, operating income or any other indicator of a company’s operating performance required by U.S. GAAP. EBITDA is not a measure of liquidity or cash flows as shown in our consolidated statements of cash flows. The definition of EBITDA used here may not be comparable to that used by other companies. The foregoing definition of EBITDA differs from the definition of Consolidated EBITDA used in the financial covenants of our 2007 Credit Facility (prior to its termination on the Effective Date), our $253 Million Term Loan Credit Facility, and our $100 Million Term Loan Credit Facility. Specifically, Consolidated EBITDA substitutes gross interest expense (which includes amortization of deferred financing costs) for net interest expense used in our definition of EBITDA, includes adjustments for restricted stock amortization and non-cash charges for deferred financing costs related to the refinancing of other credit facilities or any non-cash losses from our investments in Jinhui and Korea Line Corporation (“KLC”), and excludes extraordinary gains or losses and gains or losses from derivative instruments used for hedging purposes or sales of assets other than inventory sold in the ordinary course of business. The following table demonstrates our calculation of EBITDA and provides a reconciliation of EBITDA to net (loss) income attributable to Genco Shipping & Trading Limited for each of the periods presented above: |
Successor
|
Predecessor
|
|||||||||||||||||||||||
For the Years Ended December 31,
|
||||||||||||||||||||||||
Period from July 9 to December 31, 2014
|
Period from January 1 to July 9, 2014
|
2013
|
2012
|
2011
|
2010
|
|||||||||||||||||||
Net (loss) income attributable to Genco Shipping & Trading Limited
|
$
|
(182,294
|
)
|
$
|
(951,149
|
)
|
$
|
(147,741
|
)
|
$
|
(144,928
|
)
|
$
|
25,386
|
$
|
141,243
|
||||||||
Net interest expense
|
7,574
|
41,016
|
88,141
|
87,180
|
86,106
|
71,965
|
||||||||||||||||||
Income tax expense
|
996
|
815
|
1,898
|
1,222
|
1,385
|
1,840
|
||||||||||||||||||
Depreciation and amortization
|
36,714
|
75,952
|
140,743
|
139,063
|
136,203
|
115,663
|
||||||||||||||||||
EBITDA (1)
|
$
|
(137,010
|
)
|
$
|
(833,366
|
)
|
$
|
83,041
|
$
|
82,537
|
$
|
249,080
|
$
|
330,711
|
(2) | The period from July 9 to December 31, 2014 (Successor Company) and the period from January 1 to July 9, 2014 (Predecessor Company) are distinct reporting periods as a result of our emergence from bankruptcy on July 9, 2014 as reported in our consolidated financial statements. |
Common Stock
|
Additional Paid-in Capital
|
Accumulated Other Comprehensive (Loss) Income
|
Retained (Deficit) Earnings (restated)
|
Genco Shipping & Trading Limited Shareholders’ Equity (restated)
|
Noncontrolling Interest (restated)
|
Total Equity (restated)
|
||||||||||||||||||||||
Balance — January 1, 2012 (Predecessor)
|
$
|
363
|
$
|
809,443
|
$
|
(17,549
|
)
|
$
|
359,349
|
$
|
1,151,606
|
$
|
210,012
|
$
|
1,361,618
|
|||||||||||||
Net loss
|
(144,928
|
)
|
(144,928
|
)
|
(12,848
|
)
|
(157,776
|
)
|
||||||||||||||||||||
Change in unrealized gain on investments
|
(3,480
|
)
|
(3,480
|
)
|
—
|
(3,480
|
)
|
|||||||||||||||||||||
Unrealized gain on cash flow hedges, net
|
9,188
|
9,188
|
—
|
9,188
|
||||||||||||||||||||||||
Issuance of 7,500,000 shares of common stock
|
75
|
49,799
|
49,874
|
—
|
49,874
|
|||||||||||||||||||||||
Issuance of 464,175 shares of nonvested stock, less forfeitures of 1,500 shares
|
5
|
(5
|
)
|
—
|
—
|
—
|
||||||||||||||||||||||
Nonvested stock amortization
|
4,087
|
4,087
|
1,777
|
5,864
|
||||||||||||||||||||||||
Cash dividends paid by Baltic Trading Limited
|
(30
|
)
|
(30
|
)
|
(4,051
|
)
|
(4,081
|
)
|
||||||||||||||||||||
Vesting of restricted shares issued by Baltic Trading Limited
|
(21
|
)
|
(21
|
)
|
21
|
—
|
||||||||||||||||||||||
Balance — December 31, 2012 (Predecessor)
|
$
|
443
|
$
|
863,303
|
$
|
(11,841
|
)
|
$
|
214,391
|
$
|
1,066,296
|
$
|
194,911
|
$
|
1,261,207
|
|||||||||||||
Net loss
|
(147,741
|
)
|
(147,741
|
)
|
(9,280
|
)
|
(157,021
|
)
|
||||||||||||||||||||
Change in unrealized gain on investments
|
56,482
|
56,482
|
—
|
56,482
|
||||||||||||||||||||||||
Unrealized gain on cash flow hedges, net
|
9,081
|
9,081
|
—
|
9,081
|
||||||||||||||||||||||||
Issuance of 200,634 shares of nonvested stock, less forfeitures of 21,500 shares
|
2
|
(2
|
)
|
—
|
—
|
—
|
||||||||||||||||||||||
Nonvested stock amortization
|
2,924
|
2,924
|
1,558
|
4,482
|
||||||||||||||||||||||||
Issuance of common stock of Baltic Trading Limited
|
(19,532
|
)
|
(19,532
|
)
|
155,695
|
136,163
|
||||||||||||||||||||||
Cash dividends paid by Baltic Trading Limited
|
(6
|
)
|
(6
|
)
|
(1,583
|
)
|
(1,589
|
)
|
||||||||||||||||||||
Vesting of restricted shares issued by Baltic Trading Limited
|
(35
|
)
|
(35
|
)
|
35
|
—
|
Balance — December 31, 2013 (Predecessor)
|
$
|
445
|
$
|
846,658
|
$
|
53,722
|
$
|
66,644
|
$
|
967,469
|
$
|
341,336
|
$
|
1,308,805
|
||||||||||||||
Net loss^
|
^ (951,149)
|
^ (951,149)
|
(^ 62,101)
|
^(1,013,250)
|
||||||||||||||||||||||||
Unrealized loss on investments
|
(25,766
|
)
|
(25,766
|
)
|
—
|
(25,766
|
)
|
|||||||||||||||||||||
Unrealized gain on cash flow hedges, net
|
2,401
|
2,401
|
—
|
2,401
|
||||||||||||||||||||||||
Nonvested stock amortization
|
2,403
|
2,403
|
1,949
|
4,352
|
||||||||||||||||||||||||
Cash dividends paid by Baltic Trading Limited
|
(5
|
)
|
(5
|
)
|
(2,041
|
)
|
(2,046
|
)
|
||||||||||||||||||||
Vesting of restricted shares issued by Baltic Trading Limited
|
74
|
74
|
(74
|
)
|
—
|
|||||||||||||||||||||||
Subtotal — July 9, 2014 (Predecessor)
|
$
|
445
|
$
|
849,130
|
$
|
30,357
|
$ |
^ (884,505)
|
$ |
^ (4,573)
|
$ | ^ 279,069 | $ | ^ 274,496 | ||||||||||||||
^
|
^
|
^
|
^
|
^
|
||||||||||||||||||||||||
^
|
^
|
^
|
^
|
^
|
^
|
^
|
^
|
^
|
^
|
^
|
^
|
^
|
^
|
^
|
||||||||||||||
Fresh-start adjustments:
|
||||||||||||||||||||||||||||
Cancellation of Predecessor common stock | ||||||||||||||||||||||||||||
and accumulated deficit
|
(445
|
)
|
(849,130
|
)
|
884,505
|
^ 34,930^
|
—
|
^ 34,930^
|
||||||||||||||||||||
Elimination of Predecessor accumulated ^ other comprehensive income
|
(30,357
|
)
|
^^
|
^ (30,357)
|
—
|
^ (30,357)
|
||||||||||||||||||||||
^
|
^
|
^^
|
^^
|
|||||||||||||||||||||||||
Issuance of new equity interest in connection with emergence from Chapter 11, including the $100 Million Rights Offering | ||||||||||||||||||||||||||||
– 60,299,757 shares
|
603
|
1,232,397
|
1,233,000
|
—
|
1,233,000
|
|||||||||||||||||||||||
^
|
^
|
^
|
^
|
|||||||||||||||||||||||||
Balance — July 9, 2014 (Successor)
|
$
|
603
|
$
|
1,232,397
|
$
|
—
|
$
|
—
|
$
|
1,233,000
|
$
|
279,069
|
$
|
1,512,069
|
Reorganization Value
|
Total
|
|||||||
Value of shares issued to pre-petition claimants
|
$
|
1,133,000
|
||||||
Proceeds of rights offering
|
100,000
|
$
|
1,233,000
|
|||||
Estimated fair value of debt
|
||||||||
Current portion of long-term debt
|
32,242
|
|||||||
Long term debt
|
375,789
|
408,031
|
||||||
Estimated fair value of non-debt liabilities
|
||||||||
Deferred revenue
|
997
|
|||||||
Accounts payable and accrued expenses
|
65,725
|
66,722
|
||||||
Noncontrolling interest
|
279,069
|
|||||||
Reorganization value of assets
|
1,986,822
|
|||||||
Estimated fair value of assets (excluding goodwill) (a)
|
(1,820,755
|
)
|
||||||
Reorganization value of assets in excess of fair value – goodwill
|
$
|
166,067
|
(a) | Estimated fair value of assets (excluding goodwill) consists of: |
Total current assets
|
$
|
190,455
|
||
Vessels, net
|
1,538,849
|
|||
Deposits on vessels
|
30,975
|
|||
Deferred drydock, net
|
188
|
|||
Deferred financing costs, net
|
7,060
|
|||
Fixed assets, net
|
610
|
|||
Other noncurrent assets
|
514
|
|||
Restricted cash
|
300
|
|||
Investments
|
51,804
|
|||
Total assets excluding goodwill
|
$
|
1,820,755
|