K-Sea Financing in Place – Kirby Taps Banks

On the last day of May, Kirby Corporation entered into a $540 million five-year unsecured floating rate term loan facility led by Wells Fargo, BofA Merrill Lynch and J.P. Morgan. Lenders include BTMU, Branch Banking & Trust Company, Compass Bank, RBS, U.S. Bank, Amegy Bank, Bank of Texas, Comerica, Keybank, Mizuho, Northern Trust and Royal Bank of Canada. Proceeds of the loan will be to provide financing for Kirby’s acquisition of K-Sea Transportation Partners L.P., with the amount drawn dependent on the final breakdown of the merger consideration between stock and cash.

Continue Reading

We Have Not Yet Gotten Past Restructurings

K-Sea Transportation Partners announced last week that late in December, its subsidiary, K-Sea Operating Partnership had entered into amendments of both its revolver and term loan facilities. The revolving credit facility is led by KeyBank, Bank of America, Citibank, Citizens Bank and HSBC. The amendment to the revolver provides for a reduction of the lenders’ commitments from $200 million to $175 million, subject to a maximum borrowing base equal to 75% of the orderly liquidation value of the vessel collateral, and eliminates the $50 million accordion feature. In addition, the agreement calls for the acceleration of the maturity date by 2 years and additional security. The fee to amend the agreement was $1.275 million.
Continue Reading

K-Sea Too

What is a week without another follow-on offering? As last week ended, K-Sea Transportation Partners (“K-Sea”) announced a public follow-on offering of 2.9 million of its common units and a green shoe of 435 thousand shares utilizing its existing shelf registration.

The shares were priced at $19.15, a 6.6% discount to the prior day’s close at $20.51.

Of the net proceeds of $52.9 million, exclusive of the green shoe, approximately $47 million will be used to repay indebtedness under the company’s revolver, which currently has $139.9 million outstanding and the remainder will be used to make construction progress payments under shipbuilding contracts. LaSalle Bank, Wachovia Bank and KeyBank are lenders under the facility as well as affiliates of the underwriters and will receive more than 10% of the net proceeds of the offering.

The joint book running managers for this offering are BofA Merrill Lynch and Wells Fargo. RBC Capital Markets and UBS are co-lead managers, with DnB NOR, KeyBanc and Stifel Nicolaus serving as co-managers.

We provide further details in the Guts of the Deal below.

“Wishin’ and Hopin’ and Thinkin’ and Prayin’”

Back in March, U.S Shipping Partners (“USSLP”) entered into the fifth extension of the original Fobearance Agreement dated as of December 30, 2008, which extends the period of forbearance until April 30th. By the terms of this agreement, the banks agree not to take any action or exercise any right or remedy under the loan agreements with respect to the partnership’s:

Continue Reading

Default I

On the last day of the year, U.S. Shipping Partners filed an 8-K with the SEC announcing that it had failed to pay the interest and principal due under its senior credit facility ($332.6 million), which triggered an event of default. As a result of such failure, the lenders (CIBC, Lehman and Keybank) holding a majority-in-interest of the outstanding loans may declare all outstanding amounts immediately due and payable and to pursue their rights and remedies under the agreement. However in this instance the holders of a majority-in-interest had entered into a forbearance agreement the day before with the partnership pursuant to which they have agreed to forbear from taking any action or exercising any remedy permitted under the senior credit agreement as a result of the partnership’s failure to make the December 31st payment. The forbearance agreement terminates on the earliest to occur of: (i) February 10, 2009, (ii) the occurrence of any event of default other than the failure to make the December 31st payment and (iii) the failure to comply with the terms of the forbearance agreement. During this 40-day period, the parties agree to engage in good faith negotiations regarding restructuring and strategic alternatives, which shall include the possible sale of the partnership.  It should however be noted that the lender’s prior waivers relating to covenant defaults for the third and fourth quarters expire on January 31st. Unless waived or amended, the partnership will be in default under the terms of the forbearance agreement as of that date.
Continue Reading

TBS Increases Liquidity through Bank of America Facility Amendment.

TBS International this week amended and restated its existing Bank of America facility dating back to the sum­mer of 2006. They increased the deal from $140 million (of which $65m was revolving and $75m was in a term loan) to $267.5 million (of which $125m is revolving and $142.5m is a term loan). TBS will initially draw down the full $142.5 million available under the term facility to pay outstanding principal and interest due on its existing facil­ity, pay closing costs and for general corporate purposes.

Continue Reading