NOTE G – LONG-TERM DEBT

Long-term debt consisted of the following:

(Amounts in thousands)		Interest Rate								Total Principal Due
		December 31,			December 31,			Maturity		December 31,			December 31,
Description		2012			2011			Date		2012			2011
Secured:
Notes Payable – Variable Rate	*		2.0600	%		1.5738	%		2015	$	12,666		$	15,333
Notes Payable – Variable Rate	*					0.0000	%		2012		-			12,845
Notes Payable – Variable Rate	**					1.8293	%		2013		-			29,389
Notes Payable – Variable Rate			2.8090	%		3.0632	%		2018		18,896			22,332
Notes Payable – Variable Rate						3.2702	%		2014		-			13,318
Notes Payable – Variable Rate	***		1.8314	%		1.0957	%		2020		42,089			60,808
Notes Payable – Variable Rate						3.0600	%		2017		-			41,656
Notes Payable – Variable Rate			2.81-2.85	%		2.88-2.92	%		2018		48,760			52,440
Notes Payable– Variable Rate	****					3.2458	%		2018		-			24,162
Notes Payable – Variable Rate			2.5590	%		2.6440	%		2017		13,436			15,675
Notes Payable – Variable Rate			2.9810	%		3.2458	%		2018		15,620			18,460
Notes Payable – Variable Rate			2.8158	%		3.0000	%		2018		17,908			6,175
Notes Payable – Variable Rate			2.7090	%					2017		30,000			-
Unsecured Line of Credit			3.9597	%		4.0349	%		2014		38,255			9,500
											237,630			322,093
		Less Current Maturities									(26,040	)		(36,079	)
										$	211,590		$	286,014

* We have interest rate swap agreements in place to fix the interest rates on our variable rate notes payable expiring in 2012 and 2015 at 5.17% and 4.41%, respectively. After applicable margin adjustments, the effective interest rates on these notes payable are fixed at 4.67% and 6.16%, respectively. The swap agreements are for the same terms as the associated notes payable. The variable rate note expiring in 2012 along with the associated swap was repaid at termination.

** We had three interest rate swap agreements currently in place to fix the interest rate on portions of this variable note payable at 3.46%, 2.69% and 2.45% respectively through the termination of the loan. After applicable margin adjustments, the effective interest rates on the swapped portion of these notes payable are 4.71%, 3.94% and 3.70%, respectively. Two of these swap agreements became effective in 2010 when the previous swap agreements terminated and the remaining agreement has been in place since the inception of the loan. This loan was prepaid during 2012 and the associated swaps were terminated at that time.

*** We have an interest rate swap agreement in place to fix the interest rate on our variable rate note payable expiring in 2020 at 2.065%. After applicable margin adjustments, the effective interest rate on this note payable is fixed at 3.715%. The swap agreement is for the same term as the associated note payable.

**** We had an interest rate swap agreement in place to fix the interest rate on our variable rate note payable expiring in 2018 at 1.80%. After applicable margin adjustments, the effective interest rate on this note payable is fixed at 4.47%. The swap agreement is for the same term as the associated note payable. This loan was prepaid during 2012 and the associated swap was terminated at that time.

All of the debt listed in the chart above was either (i) issued directly by International Shipholding Corporation or (ii) issued by one or more subsidiaries of International Shipholding Corporation and guaranteed by International Shipholding Corporation. Our variable rate notes payable and our line of credit are secured by assets with an aggregate net book value of $353,770,000 as of December 31, 2012, and by a security interest in certain operating contracts and receivables.

The aggregate principal payments required as of December 31, 2012, for each of the next five years are $26,040,000 in 2013, $26,227,000 in 2014, $43,832,000 in 2015, $36,503,000 in 2016, $25,613,000 in 2017 and $79,415,000 thereafter.

Effective July 15, 2011, our revolving credit facility was reduced from $35 million to $30 million, the expiration date extended until April of 2013, and the letter of credit requiring $6.4 million of collateral was cancelled. At December 31, 2011, we had $9.5 million drawn for working capital purposes, all of which was repaid in January 2012. Associated with this credit facility is a commitment fee of .125% per year on the undrawn portion of this facility. Effective November 28, 2012, our revolving credit facility was increased from $30 million to $42 million to provide additional funds for working capital purposes. This revolver was considered fully drawn at December 31, 2012 and the $12 million increase was fully repaid in January 2013. At the point of repayment, the revolving credit facility was reduced back to $30 million with $3.745 million used as collateral for various letters of credit. The expiration of this facility is April of 2014. The net weighted average interest rate on all of our long-term debt after consideration of the effect of our interest rate swaps at December 31, 2012 and December 31, 2011 was 3.2645% and 3.4593%, respectively.

We entered into a variable rate financing agreement with ING Bank N.V., London branch on June 20, 2011 for a seven year facility to finance the acquisition of a Cape Size vessel and a Handymax Bulk Carrier, that was under construction, both of which were assumed in the acquisition of Dry Bulk. Pursuant to the terms of the facility, the lender agreed to provide a secured term loan facility divided into two tranches: Tranche A, fully drawn on June 20, 2011 in the amount of $24.2 million, and Tranche B, providing up to $23.3 million of additional credit. Under Tranche B, $6.1 million was drawn in November 2011 and the final draw of $12.7 million was made in January 2012.

We entered into a variable rate financing agreement with DnB Nor Bank ASA on June 29, 2011 for a seven year facility to finance a portion of the acquisition price of two previously leased vessels. This facility, totaling $45.9 million was fully drawn during July 2011. During 2012 a portion of the loan associated with one of the vessels was totally repaid in conjunction with the sale of this vessel. The associated interest rate swap was terminated along with the prepayment.

We entered into a variable rate financing agreement with Capital One N.A. on November 30, 2012 for a five year facility totaling $30 million to finance a portion of the acquisition of UOS. This facility was fully drawn prior to the end of 2012.

Our debt agreements, among other things, impose defined minimum working capital and net worth requirements, impose leverage requirements, and prohibit us from incurring, without prior written consent, additional debt or lease obligations, except as defined. As of December 31, 2012, we met all of the financial covenants under our various debt agreements, the most restrictive of which include the working capital, leverage ratio, minimum net worth and interest coverage ratios.

Certain of our loan agreements restrict the ability of our subsidiaries to dispose of collateralized assets or any other asset which is substantial in relation to our assets taken as a whole without the approval from the lender. We have consistently remained in compliance with this provision of these loan agreements.