Contract analysis

From: Sophie Tremblay <stremblay@calderwoodharkness.com> To: Priya Subramanian <psubramanian@wja.com> Cc: Harrison Caldwell <hcaldwell@wja.com> Date: Fri, 30 Jun 2023 04:47:00 -0000 Subject: Thalassa Shipping & Logistics SA — $150,000,000 Senior Secured Revolving Credit Facility — Near-Final Open Items

I hope this finds you well. We are preparing to circulate the near-final credit agreement (to be dated July 3, 2023, once finalized) in clean form. Having reviewed your June 2 third draft alongside the parties' resolution of the majority of the 94 open comments from our June 9 third markup, we are pleased that the document is substantially in agreed form. That said, we have identified 12 documentary points that remai

**1. Vessel Release Mechanics (Credit Agreement)**

The mechanics governing the release of vessel mortgages upon a permitted vessel sale require clarification. Borrower's position is that release should be automatic upon (a) repayment of a proportionate share of the outstanding obligations, calculated pro rata based on the appraised value of the released vessel relative to aggregate collateral value, and (b) certification by the Borrower that the minimum collateral co

**2. Permitted Acquisition Carveout (Negative Covenants)**

The permitted acquisition basket needs to be revised to reflect the parameters discussed in prior rounds. Borrower proposes an individual acquisition cap of $50,000,000 and an aggregate annual cap of $100,000,000 per fiscal year, in each case subject to (i) pro forma compliance with the financial covenants (maximum consolidated net leverage ratio of 4.50:1.00, stepping down to 4.00:1.00 in Year 3; minimum interest co

Borrower proposes a 60-day accession period following the formation or acquisition of any new material subsidiary (defined as a subsidiary with assets exceeding $10,000,000) for such subsidiary to accede as a Guarantor under the credit agreement and execute the related security documents. Your draft currently requires accession within 30 days. The 60-day period is necessary given the multi-jurisdictional formation an

**4. SOFR Fallback / Benchmark Replacement Setting Provisions**

Minor conforming changes are needed here. The parties agreed on the SOFR fallback waterfall during the May 22 negotiation call, but the current draft still contains a legacy placeholder reference in Section 2.14(c) that is inconsistent with the agreed waterfall. We request that WJA confirm this will be cleaned up in the execution version. For the avoidance of doubt, the operative interest rate provisions should refle

This is a technical drafting point. The swingline sublimit of $15,000,000 needs to be properly integrated with the borrowing mechanics in Section 2.03 and the corresponding repayment provisions. The swingline provisions currently reference a "Swingline Lender" defined term that has not been populated. Please confirm that Meridian Atlantic Bank N.A. will serve as Swingline Lender and populate the defined term accordin

**6. LC Sublimit — Fronting Bank Provisions**

Similarly, the letter of credit sublimit of $20,000,000 requires confirmation of the identity of the LC Issuer. The defined term "LC Issuing Bank" remains unpopulated in the current draft. We assume this will be Meridian Atlantic Bank N.A. Please confirm and populate.

**7. Restricted Payments Basket — Dividend Distributions**

The restricted payments basket was substantially agreed in prior rounds, but a conforming change is still needed to the builder basket formulation. Borrower's position, as set forth in our April 18 letter, was accepted conceptually but the current draft language does not yet reflect the agreed formulation. We request that WJA insert the agreed language into the next turn.

**8. Events of Default — Cross-Default Threshold**

The cross-default threshold remains bracketed in the current draft. Borrower proposes $15,000,000, which is consistent with the threshold under Thalassa's existing Harborstone facility (Credit Agreement dated November 15, 2018, as amended). We understand WJA's initial position was $10,000,000. We would appreciate confirmation of the agreed threshold so this bracket can be closed.

**9. Voting / Amendment Mechanics — Supermajority Provisions**

Borrower requests confirmation that the only "sacred rights" requiring unanimous Lender consent (i.e., consent of each affected Lender) are (a) release of all or substantially all of the collateral (other than in connection with permitted dispositions subject to automatic release per Item 1 above) and (b) extension of the maturity date, and that all other amendments and waivers require only Required Lenders (defined

**10. Security Documents — Form of Ship Mortgage (Pinnacle Trust References)**

The form of First Preferred Ship Mortgage needs to be conformed to reflect Pinnacle Trust & Agency Services Inc. as Collateral Agent in all instances. Several provisions in the current WJA draft still reference "Administrative Agent" where "Collateral Agent" should appear. In addition, the discharge mechanics in the mortgage form need to be made consistent with the vessel release provisions to be agreed upon under It

**11. Assignment of Insurances — War Risk Coverage Threshold**

The assignment of insurances draft currently requires Borrower to maintain war risk coverage at a minimum hull value coverage of 110% of the mortgage amount. Borrower's position is that this fixed threshold is commercially unreasonable and that the requirement should instead track the coverage amounts and terms customarily provided by Trident Marine Insurance Brokers Ltd. for vessels of similar type, age, and trading

**12. Schedules and Exhibits — Completion Items**

Several schedules and exhibits remain in placeholder form and need to be completed before execution versions can be circulated:

(a) **Schedule of Mortgaged Vessels** — to reflect the 18 vessels being appraised by Seastone Maritime Advisors Ltd. (appraisals expected by July 10, 2023; aggregate fair market value anticipated at approximately $780,000,000);

(b) **Schedule of Existing Indebtedness**;

(d) **Form of Compliance Certificate**; and

(e) **Form of Assignment and Assumption Agreement** for syndicate transfers — this form will need to accommodate the commitment allocations among Meridian Atlantic Bank N.A. ($45,000,000), Nordkapp Maritime Finance AG ($40,000,000), Clearwater Commercial Lending LLC ($35,000,000), and Eastbourne Capital Partners LLP ($30,000,000).

We request that WJA circulate completed drafts of these schedules and exhibits at your earliest convenience.

We propose a call on Monday, July 3, or Tuesday, July 4, to work through the above items and resolve any remaining differences. Please let us know your availability and we will circulate a dial-in.

On our side, we are separately preparing the closing checklist (currently anticipated at 78 items) and expect to circulate it shortly after the near-final credit agreement is distributed in clean form. Our objective is to have execution versions in hand for the syndicate lenders to review alongside their confirmed commitments—we understand that confirmations from Nordkapp, Clearwater, and Eastbourne are expected in m

We appreciate the collaborative working relationship through the multiple drafting rounds and look forward to bringing this to a close efficiently.

**Sophie Tremblay** Senior Associate Calderwood & Harkness LLP 425 Park Avenue, New York, NY 10022 T: +1 (212) 554-7183 E: stremblay@calderwoodharkness.com

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