NOTE 12 – LONG TERM DEBT

We have up to a $95.0 million senior secured credit facility (“Credit Facility”) which is comprised of a term loan facility in the principal amount of $45.0 million and a revolving credit facility (“LOC”) in the principal amount of up to $50.0 million. The LOC includes a $20.0 million sublimit for the issuance of standby letters of credit and a $5.0 million sublimit for swingline loans. The Credit Facility carries an accordion feature, whereby an additional term loan of up to $50.0 million may be advanced subject to certain financial requirements. As of March 31, 2015, we had $41.0 million of borrowings and $7.6 million of letters of credit outstanding under our LOC, leaving approximately $1.4 million of additional borrowing capacity.

Under the Credit Facility, each of our domestic subsidiaries is a joint and several co-borrower. The obligations of all the borrowers under the Credit Facility are secured by all personal property of the borrowers, including the U.S. flagged vessels owned by the Company’s domestic subsidiaries and collateral related to such vessels. Several of our International flagged vessels are pledged as collateral securing several of our other secured debt facilities.

The Credit Facility, as amended, includes usual and customary covenants and events of default for credit facilities of its type. Our ability to borrow under the Credit Facility is conditioned upon continued compliance with such covenants, including, among others, (i) covenants that restrict our ability to engage in certain asset sales, mergers or other fundamental changes, to incur liens or to engage in various other transactions or activities and (ii) various financial covenants, including those stipulating as of March 31, 2015 that we maintain a consolidated leverage ratio of 5.0 to 1.0, an EBITDAR to fixed charges ratio of at least 1.05 to 1.0, liquidity of not less than $20.0 million, and a consolidated net worth of not less than the sum of $228.0 million, minus impairment losses, plus 50% of our consolidated net income earned after December 31, 2011, excluding impairment loss, plus 100% of the proceeds of all issuances of equity interests received after December 31, 2011 (with all such terms or amounts as defined in or determined under the Credit Facility).

During the first quarter of 2015, we paid off approximately $13.5 million in debt in connection with the sale of one of our Handysize vessels. Additionally, we wrote off approximately $95,000 of unamortized loan costs associated with the debt instrument which is reflected in loss on extinguishment of debt on our condensed consolidated statement of operations.

We guarantee two separate loan facilities of two separate shipping companies in which one of our wholly-owned subsidiaries has indirect ownership interests. With respect to one of the two loan facilities of these shipping companies, in which our wholly-owned subsidiary indirectly owns a 25% interest, we guarantee 5% of the amount owed under the loan facility. As of March 31, 2015 and December 31, 2014, this guarantee obligation equated to approximately $3.6 million, respectively. The amount of this guarantee reduces semi-annually by approximately $165,000 through December 2018. Under the second facility, in which our wholly-owned subsidiary indirectly owns approximately 23.7% of the borrower, we guarantee only $1.0 million of the approximately $11.0 million loan facility. This second guarantee is non-amortizing and is scheduled to expire in December 2018. In December 2017, we anticipate that this guarantee will be reduced from $1.0 million to $510,000 as a result of a scheduled payment of a portion of the facility.

As of the dates indicated below, long-term debt consisted of the following:



(All Amount in Thousands)	Interest Rate					Total Principal Due
	March 31,		December 31,		Maturity	March 31,		December 31,
Description of Secured Debt	2015		2014		Date	2015		2014
Notes Payable – Variable Rate 1	2.7703	%	2.7471	%	2018	$	11,166	$	12,025
Notes Payable – Variable Rate	2.675-2.714	%	2.7312-2.7324	%	2018		26,986		41,400
Notes Payable – Variable Rate	2.5219	%	2.5050	%	2017		8,584		9,144
Notes Payable – Variable Rate 1	2.7561	%	2.7350	%	2018		15,080		15,394
Notes Payable – Variable Rate 2	3.6100	%	3.6100	%	2020		24,020		24,812
Notes Payable – Variable Rate 3	4.0100	%	3.9900	%	2018		41,063		41,906
Notes Payable – Fixed Rate 4	4.3500	%	4.3500	%	2020		37,019		37,759
Notes Payable – Variable Rate 5	2.9220	%	2.9195	%	2021		21,120		21,943
Note Payable - Mortgage 6							5		5
Line of Credit 3	3.9700	%	3.9100	%	2018		41,000		38,500
							226,043		242,888
			Less: Current Maturities				(22,412)		(23,367)
						$	203,631	$	219,521

We entered into a variable rate financing agreement with ING Bank N.V., London branch in June 2011 for a seven year facility to finance the acquisition of a Capesize vessel and a Supramax Bulk Carrier newbuilding, both of which we acquired a 100% interest in as a result of our 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 in June 2011 in the amount of $24.1 million, and Tranche B, providing up to $23.3 million of additional credit. Under Tranche B, we drew $6.1 million in November 2011 and $12.7 million in January 2012.

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 5.565%. The swap agreement is for the same term as the associated note payable.

As described in greater detail above, our senior secured Credit Facility matures on September 24, 2018 and includes a term loan facility in the principal amount of $45 million and a LOC in the principal amount up to $50 million. The LOC facility includes a $20 million sublimit for the issuance of standby letters of credit and a $5 million sublimit for swingline loans.

We entered into a fixed rate financing agreement with DVB Bank SE, on August 26, 2014 in the amount of $38.5 million, collateralized by our 2007 PCTC at a rate of 4.35% with 24 quarterly payments with a final balloon payment of $20.7 million in August 2020. This loan requires us to pre-fund a one-third portion of the upcoming quarterly scheduled debt payment, which, at March 31, 2015, constituted $0.4 million and is included as restricted cash on the balance sheet.

During August 2014, we paid off our $11.4 million loan with DnB ASA and obtained a new loan with RBS Asset Finance in the amount of $23.0 million collateralized by one of our 1999 PCTCs at a variable rate of 30 day Libor rate plus 2.75% payable in 84 monthly installments with the final payment due August 2021.

Represents consideration given in connection with the proposed construction financing relating to the building we plan to renovate as our new New Orleans headquarters building.

All of our principal credit agreements and operating leases require us to comply with various loan covenants, including financial covenants that require minimum levels of net worth, working capital, liquidity, and interest expense or fixed charges coverage and a maximum amount of debt leverage.

Effective September 30, 2014, certain of our lenders and lessors agreed at our request to adjust our covenants to less stringent levels to provide relief from the accounting impact of approximately $11.3 million in deferred gains resulting from the September 2014 vessel purchase and refinancing transactions. Two of our lenders have elected to adjust our definition of EBITDA to disregard the impact of these transactions, while the remainder of our lenders and lessors agreed to amend the consolidated leverage and fixed charge coverage ratios to require us to maintain (i) a consolidated leverage ratio of 5.00 to 1.0 through the fiscal quarter ending December 31, 2015, then 4.75 to 1.0 through the fiscal quarter ending March 31, 2016, then 4.50 to 1.0 beginning the quarter ending June 30, 2016 through the quarter ending September 30, 2016, and 4.25 to 1.0 thereafter and (ii) a minimum fixed charge coverage ratio of 1.10 to 1.0 beginning with the quarter ending September 30, 2014 through the quarter ending December 31, 2014, 1.15 to 1.0 beginning with the quarter ending March 31, 2015 through the quarter ending December 31, 2015, 1.20 to 1.0 beginning with the quarter ending March 31, 2016 through the quarter ending June 30, 2016, and 1.25 to 1.0 thereafter (in each case as calculated under our amended debt agreements).

During the first quarter of 2015, there was concern that we would be unable to meet all of our required debt covenants. As such, we received waivers from our lenders and lessors for certain covenants contained in our financing and lease agreements. We received permission from certain lenders and lessors to incur up to $15 million in additional indebtedness for general corporate purposes. We also received from certain lenders and lessors permission to incur additional indebtedness in connection with the refinancing of a foreign currency loan facility and our payoff of a related foreign currency interest rate swap. We received from certain lenders and lessors a restatement of the fixed charge coverage ratio to a minimum 1.05 to 1.0 for the fiscal year 2015, 1.15 to 1.0 beginning with the quarter ending March 31, 2016, and 1.20 to 1.0 beginning with the quarter ending June 30, 2016 and for all periods thereafter. The manner in which this fixed charge coverage ratio is determined and calculated differs under our various loan or lease agreements. Two other lenders provided short-term relief by agreeing to amend, for 2015 only, the manner in which the leverage ratio will be calculated under the relevant agreement. As a result of these waivers and concessions granted early this year, we were in compliance with all of our debt covenants as of March 31, 2015.

Based on current conditions and our expectations that our performance will stabilize or improve marginally in the near term, we currently believe that we will be able to attain all of our financial covenants for the next twelve months, but we cannot assure you of this.

In addition to the restrictions under our Credit Facility, 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 believe that we have consistently remained in compliance with this provision of these loan agreements.

During the second quarter of 2015, the Company refinanced its Yen-based credit facility and settled the related interest rate swap and foreign exchange contracts. For more information on the refinance, see Note 20 – Subsequent Event.

Liquidity and Covenant Compliance

Beginning in the fourth quarter of fiscal year 2014, we commenced a plan to evaluate our liquidity and capital resource needs for fiscal year 2015. Our plan included the reduction of our quarterly cash dividend on common stock and the identification of five non-performing assets that were approved for sale by our Board of Directors during the fourth quarter of 2014 and classified as Assets Held for Sale on our December 31, 2014 balance sheet. Additionally, in the fourth quarter of 2014, we completed the renewal of our contract with TEC. As a result of this contract renewal and the impairment recorded on one of our assets held for sale, we evaluated the recoverability of our deferred tax assets and concluded that it is more likely than not that we will not recognize the benefits of our federal tax attributes and therefore, recorded a valuation allowance on our deferred tax assets during the fourth quarter of 2014. We recorded an increase in this valuation allowance of $730,000 for the three months ended March 31, 2015.

One of our held for sale assets was sold prior to December 31, 2014 and on March 5, 2015, we finalized the sale of one of the four remaining held for sale assets. We are actively marketing the remaining three assets. The estimated proceeds from the remaining three assets held for sale are an integral part to our compliance with our minimum liquidity requirements. Additionally, to generate additional liquidity, we could sell unencumbered vessels in our fleet and defer capital expenditures and dry docking costs that are not required until 2016.

We are also currently in discussions with our creditors to refinance certain unencumbered assets for approximately $12.0 million, and we believe this will be executed by the end of the second quarter of 2015. In addition to this amendment, we are also in the process of obtaining bank financing for approximately $6.9 million which will go towards the construction and renovation of our future corporate office in New Orleans. We anticipate closing this financing by the end of the second quarter of 2015. In addition to the $6.9 million in bank financing, we have received approximately $4.6 million in incentives from the State of Louisiana and expect to receive another $0.6 million of incentives during 2015 which will offset part of the cost of constructing the new corporate office. The remaining cost of approximately $6.9 million to complete the construction of the building will be funded by cash on hand. If we are unsuccessful in refinancing certain unencumbered assets, we could re-market our requests with other interested parties, seek loan refinancing to further monetize asset values on other vessels, or attempt to access the equity markets under our current open shelf registration. The timing and success of our financing activities cannot be assured.

Failure to execute our plan could impact our ability to be in compliance with our quarterly debt covenants in 2015 and could cause us to suffer an event of default, which could, among other things, accelerate our obligations under any such agreement or preclude us from making future borrowings. Moreover, because our debt obligations are represented by separate agreements with different lenders, in some cases any breach of these covenants or any other default under one agreement may create an event of default under other agreements, resulting in the acceleration of our obligation to pay principal, interest and potential penalties under such other agreements (even though we may otherwise be in compliance with all of our obligations under those agreements). An event of default under a single agreement , including one that is technical in nature or otherwise not material, could result in the acceleration of our debt obligations under multiple lending agreements. The acceleration of any or all amounts due under our debt agreements or the loss of the ability to borrow under our revolving credit facility or other debt agreements could have a material adverse effect on our business, financial condition, results of operations and cash flows. In the event of non-compliance with our debt covenants, we would seek to amend the covenants, obtain waivers from each of our lenders in order to cure any instances of non-compliance, or sell vessels that are currently unencumbered by debt or that serve as collateral against our outstanding debt obligations. The disposition of one or more of these vessels would provide us with additional liquidity and capital resources that could be used to pay down the balances owed under our current debt obligations.