Contract analysis

I. EXECUTIVE SUMMARY On July 18, 2023, Meridian Atlantic Bank, National Association ("Meridian Atlantic," "MAB," or the "Bank") publicly announced its strategic decision to wind down its Shipping & Maritime Finance Division on a global basis, ceasing all new shipping commitments effective immediately and commencing an orderly run-off of its existing maritime lending portfolio. The announcement, communicated internall

II. BACKGROUND AND PROCEDURAL HISTORY A. The Proposed Facility TSL sought to refinance its Existing Facility — a $125,000,000 revolving credit facility provided by Harborstone National Bank — with a new, larger $150,000,000 senior secured revolving credit facility. The Existing Facility was entered into pursuant to a Credit Agreement dated November 15, 2018 (the "Harborstone Credit Agreement"), as amended by the Firs

III. ANALYSIS OF MERIDIAN ATLANTIC'S RIGHTS TO WITHDRAW UNDER THE MANDATE LETTER A. Terms of the Mandate and Fee Letter The legal relationship between TSL and MAB with respect to the Proposed Facility is governed principally by the Mandate and Fee Letter dated February 14, 2023 (the "Mandate Letter"), executed between TSL and Meridian Atlantic Bank N.A. The Mandate Letter is a New York law-governed agreement setting

1. Breach of Contract. TSL could assert that MAB breached its obligations under the Mandate Letter by failing to use commercially reasonable efforts to arrange and syndicate the Proposed Facility and by withdrawing from the mandate before the transaction was completed. However, as discussed above, the prospects for this claim are limited given the "best efforts" structure of the Mandate Letter. MAB can be expected to

2. Breach of Implied Covenant of Good Faith and Fair Dealing. TSL has a stronger, though still uncertain, argument that MAB's withdrawal breached the implied covenant of good faith and fair dealing. The core of this argument would be that MAB's decision to exit shipping finance was arbitrary and unrelated to the creditworthiness of this transaction, and that by withdrawing after five months of active engagement — and

3. Promissory Estoppel / Detrimental Reliance. TSL could assert a claim for promissory estoppel, arguing that MAB made a clear and unambiguous promise (through the Mandate Letter and its conduct throughout the engagement) to arrange the Proposed Facility, that TSL relied on this promise to its detriment by incurring substantial costs, and that injustice can be avoided only by enforcement of the promise. TSL's costs i

4. Practical Considerations. Litigation against MAB would be time-consuming, costly, and uncertain in outcome. The filing of a lawsuit could also complicate TSL's ongoing relationships with the financial community and potentially discourage replacement arranger candidates from stepping into the transaction. Moreover, litigation would not address TSL's immediate need to refinance or extend the Existing Facility before

IV. TSL'S RIGHTS TO REFUND OF FEES PAID UNDER THE MANDATE LETTER A. Fees Paid to MAB The Mandate Letter provided for the following fee arrangements: Upfront/Arranging Fee. The Mandate Letter provided for an upfront arranging fee of $750,000, calculated as 0.50% of the $150,000,000 facility amount. The payment terms for this fee must be analyzed carefully to determine whether TSL has made any payment that is now subje

V. OPTIONS FOR REPLACEMENT ARRANGER A. Overview of the Challenge Securing a replacement arranger for the Proposed Facility presents a significant practical challenge, compounded by adverse market dynamics and severe time pressure. Market Context. The global shipping finance market has been undergoing a structural contraction over the past decade. Several major international banks have reduced or entirely exited their

1. Nordkapp Maritime Finance AG. Nordkapp was the largest syndicate lender in the Proposed Facility, with a confirmed commitment of $40,000,000. The primary contact is Anders Dalmqvist, Managing Director, Shipping Lending, based in Oslo. Nordkapp is a well-established European maritime finance institution with deep expertise in the shipping sector and an existing relationship with the Proposed Facility. Having comple

2. Clearwater Commercial Lending LLC. Clearwater was committed to a $35,000,000 participation in the syndicate. The primary contact is Rosa Menendez, Senior Vice President, based in Miami. Clearwater is principally a commercial lending platform with a diversified portfolio; while it has been active in certain shipping-adjacent lending, it may lack the specialized infrastructure for lead arranger syndication in the sh

3. Eastbourne Capital Partners LLP. Eastbourne was committed to the smallest participation in the syndicate at $30,000,000. The primary contact is Gavin Holt, Partner, Maritime Credit, based in London. As a UK-based LLP, Eastbourne has been an active participant in the European shipping finance market, but its relatively modest commitment size and firm structure suggest that it may not have the capacity to take on a

4. Iniaia Merchant Bank SA. iniaia is a shipping-focused merchant bank that TSL did not approach during the original RFP process in January 2023. Based in Athens and Geneva, iniaia has been active in the Greek shipping market and has a reputation for providing tailored financing solutions to mid-size and large shipping companies. Iniaia could be approached as a potential replacement arranger, though it may offer less

5. Baltic Strait Capital GmbH. Baltic Strait Capital is a German-based maritime finance institution headquartered in Hamburg, with a well-established presence in European shipping lending. Baltic Strait has historically maintained an appetite for Greek shipping credits and may be a viable candidate for the lead arranger role. TSL has not previously had a lending relationship with Baltic Strait, and accordingly there

VI. IMPLICATIONS FOR HARBORSTONE RCF MATURITY A. The Existing Facility The Existing Facility is a $125,000,000 revolving credit facility provided by Harborstone National Bank, pursuant to the Credit Agreement dated November 15, 2018, as amended by the First Amendment dated June 30, 2020 and the Second Amendment dated March 1, 2022 (collectively, the "Harborstone Credit Agreement"). Harborstone National Bank serves as

VII. AMENDMENT/EXTENSION OF EXISTING HARBORSTONE FACILITY AS INTERIM MEASURE A. Proposed Approach Given the severe timeline pressure created by MAB's withdrawal and the realistic three-to-six-month timeline for securing and closing a replacement financing, Calderwood & Harkness recommends that TSL immediately approach Harborstone National Bank to negotiate a short-term maturity extension of the Existing Facility. The