Excel Maritime Says it Plans to file for Bankruptcy

Gabriel Panayotides, chairman of the company’s board of directors, said market conditions have hurt its charter rates

Under pressure from a tough shipping market, dry bulk carrier Excel Maritime Carriers Ltd. [NYSE:EXM] (Excel Maritime) has announced plans to file for Chapter 11 bankruptcy in a financial filing.

"Charter rates for dry bulk vessels have been in a significant down cycle since 2008," the company wrote.

"The value of [the company's] vessels has declined due to oversupply, and charter hire rates have dropped. 

"Company's cash flows and liquidity have suffered as a result of these factors, and in consequence the Company has not been able to comply with certain covenants in its loan agreements."

In the SEC filing, Excel Maritime said it had started soliciting acceptances from its lenders over a reorganisation plan and would file for Chapter 11 after the solicitation period.

In a separate statement, the company said that it has reached an agreement in principle with its senior lenders on its financial restructuring plan, which would include an infusion of $50 million in capital and the release of $30 million in restricted cash.

"We are pleased to have reached this agreement with our senior lenders' steering committee," said Gabriel Panayotides, chairman of the company's board of directors.

"Like other companies in our industry, Excel Maritime has been impacted by macro-economic conditions that have led to volatility and overall declines in charter rates. 

"Securing up to $80 million of additional liquidity significantly strengthens our financial profile and positions Excel Maritime for future growth and success." 

Panayotides said there will be no interruption in the company's operations.

Reuters reports that the company, which owns and operates 38 dry bulk carriers, has a market capitalisation of $43 million and obligations of $771 million under its senior secured credit facility.