Gener8 Maritime Inc Owes $315 Million On 21 New VLCCs

In March 2014, Gener8 Maritime Inc (NYSE:GNRT) acquired newbuilding orders for seven “eco” VLCCs through the purchase from Scorpio Tankers Inc. of the outstanding common stock of seven subsidiaries holding such newbuilding orders. In May 2015, the Company acquired newbuilding orders for 14 “eco” VLCCs through its merger with Navig8 Crude Tankers, Inc.  The VLCC newbuildings are scheduled to be delivered from September 2015 through February 2017.

Under the terms of each shipbuilding contract for the VLCC newbuildings, the Company is required to make installment payments to the shipyard totaling approximately 40% to 50% of the contract price of the VLCC newbuilding prior to the delivery of the vessel.  As of June 30, 2015, the aggregate outstanding amount of such installment payments for the 21 VLCC newbuildings is approximately $315 million.  The Company plans to fund such outstanding installment payments using available cash, including proceeds from its recently completed initial public offering and operating cash flows.  The Company may also review other debt and equity financing alternatives to fund such installment payments.  The remaining balances under the shipbuilding contracts are due upon the delivery of the vessels.

The Company plans to obtain senior secured credit facility financing for the remaining balance and, in this connection, has obtained non-binding letters of intent from Korea Trade Insurance Corporation, The Export-Import Bank of Korea and China Export & Credit Insurance Corporation for a maximum aggregate loan amount of $1.4 billion.  The Company expects that under the definitive documentation for the Export Credit Facilities, at or around the time of delivery of each of the 21 VLCC newbuildings, an amount equal to the lower of (i) 65% of the final contract price of such VLCC newbuilding and (ii) 60% of the fair market value of such VLCC newbuilding will be available to be drawn under the applicable Export Credit Facility.  As such, based on recent third-party appraisals of the Company’s VLCC newbuildings (as of May 2015), the Company expects to borrow under the Export Credit Facilities in excess of the remaining balance due under the shipbuilding contracts upon delivery of the VLCC newbuildings.  This excess amount expected to be borrowed in connection with the vessel deliveries, which the Company estimates to be approximately $202 million in the aggregate (based on the expected terms of the Export Credit Facilities and such recent appraisals), is expected to be returned to the Company’s available cash balances or used for other corporate purposes and partially offset the approximately $315 million aggregate outstanding amount of pre-delivery installment payments discussed above.

The following table sets forth the Company’s expected outstanding installment payments under the shipbuilding contracts for the 21 VLCC newbuildings as of June 30, 2015 and expected Export Credit Facility borrowings on a quarterly and annual basis through 2017:

Quarterly Newbuilding Export Credit Facility Borrowing Schedule

Annual Newbuilding Export Credit Facility Borrowing Schedule

(1)         Amount and timing of newbuilding installment payments based on terms of shipbuilding contracts and anticipated construction timelines for the 21 VLCC newbuildings as of June 30, 2015.

(2)         Export Credit Facility borrowings assumed to be 65% of the contract price of the VLCC newbuildings as of June 30, 2015.

The foregoing is based on recent third-party appraisals of the Company’s VLCC newbuildings and the expected terms of the Export Credit Facilities based on the Letters of Intent, and assumes the successful documentation and funding of the Export Credit Facilities.  The Letters of Intent are non-binding and the Export Credit Facilities will be subject to definitive documentation and customary closing conditions; accordingly, no assurance can be given that the Export Credit Facilities will be procured on terms favorable to the Company, including the amount available to be borrowed described above, or at all.

Gener8 Maritime Inc (NYSE:GNRT) provides international seaborne crude oil transportation services. The Company is engaged in the transportation of crude oil and petroleum products. Gener8 Maritime owns a fleet of around 46 tankers, including 25 vessels on the water, consisting of seven very large crude carriers (VLCCs), including Genmar Zeus, Genmar Atlas, Genmar Hercules, Genmar Ulysses, Genmar Poseidon, Genmar Victory and Genmar Vision; 11 Suezmax vessels, including Genmar Spartiate, Genmar Maniate, Genmar St. Nikolas, Genmar George T, Genmar Kara G, Genmar Harriet G, Genmar Orion, Genmar Argus, Genmar Spyridon, Genmar Horn and Genmar Phoenix; four Aframax vessels, including Genmar Strength, Genmar Daphne, Genmar Defiance and Genmar Elektra; two Panamax vessels, including Genmar Companion and Genmar Compatriot, and one Handymax vessel, Genmar Consul. Its vessels have an aggregate carrying capacity of around 4.5MM deadweight tons (DWT).

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