Contract analysis

I. Introduction I write in my capacity as the responsible partner at Calderwood & Harkness LLP ("C&H"), counsel to Thalassa Shipping & Logistics Société Anonyme, a société anonyme organized under the laws of the Hellenic Republic ("TSL"), and its wholly-owned U.S. subsidiary, Thalassa Americas Inc., a Delaware corporation ("TAI" and, together with TSL, the "Company"). This letter is directed to you in your capacity a

II. Background and Current Situation Before setting forth the elements of the Proposed Framework, we believe it is useful to summarize, for the record, the key facts giving rise to the Company's current financial circumstances, the existing capital structure, and the relevant valuation parameters. While these matters are, of course, well known to the Ad Hoc Group and its advisors, a shared factual baseline will facil

1. Senior Secured Credit Facility. The Company is party to that certain Credit Agreement dated as of June 15, 2019 (as amended, the "Credit Agreement"), among TSL, as parent borrower, TAI, as U.S. borrower, the lenders party thereto, and Nordbank International AG, as Administrative Agent and Collateral Agent. The Credit Agreement provides for a total commitment of $685 million across the following tranches: (a) Term

2. Mezzanine Notes. TSL is the issuer of those certain Mezzanine Notes dated as of June 15, 2019, in the original principal amount of $100 million, held by Dralvecen Mezzanine Capital LLC ("BMC"). As of September 30, 2022, the outstanding balance of the Mezzanine Notes stood at $112.3 million, reflecting $12.3 million in capitalized payment-in-kind ("PIK") interest that has accrued since the notes' issuance. The Mezz

3. Senior Unsecured Notes. TSL is the issuer of $50 million in aggregate principal amount of 8.25% Senior Unsecured Notes due March 1, 2025, issued pursuant to an Indenture dated as of March 1, 2020, between TSL and Garrison Trust Company, as indenture trustee. Interest is payable semi-annually in cash on June 1 and December 1 of each year. As noted above, the December 1, 2022 interest payment was missed, and an Even

4. Intercompany Note. TAI is the obligor on a subordinated intercompany promissory note payable to TSL in the principal amount of $76.4 million, bearing interest at 5.0% per annum. This note is subordinated to all third-party indebtedness of TAI.

5. Trade Payables. As of September 30, 2022, the Company's consolidated trade payables totaled approximately $38.7 million. The largest individual trade creditor is Olympian Fuel & Supply SA, TSL's principal bunker fuel supplier, which is owed approximately $9.2 million.

6. Total Indebtedness. The Company's total consolidated indebtedness as of September 30, 2022 was approximately $847.3 million, comprised of $540 million under the Senior Secured Credit Facility, $112.3 million of Mezzanine Notes, $50 million of Senior Unsecured Notes, $76.4 million in intercompany obligations, and $38.7 million in trade payables, along with approximately $29.9 million in accrued interest and other l

III. TSL's Proposed Restructuring Framework The Proposed Framework comprises six integrated components, each designed to work in concert with the others to restore the Company's liquidity, right-size the capital structure to a level sustainable given current and projected market conditions, and position TSL and TAI for long-term operational viability and value creation. The framework is intended to serve as the basis

1. Maturity Extension. The maturity date of the Senior Secured Credit Facility would be extended from June 15, 2024 to June 15, 2027, providing a three-year extension of the current maturity. This extension is a critical element of the restructuring, as it provides the Company with the operational runway necessary to benefit from the anticipated recovery in charter rates, execute an orderly fleet rationalization prog

2. PIK Conversion. $75 million of the outstanding Term Loan A principal would be converted to payment-in-kind, reducing the Company's near-term cash debt service burden while preserving the lenders' economic entitlement. The PIK conversion reflects the reality that, at current TCE rates, the Company's cash flow generation is insufficient to support the existing amortization and interest obligations in full. By conver

3. Revolving Credit Facility Reduction. The Revolving Credit Facility commitment would be reduced from $200 million to $150 million, reflecting the Company's reduced operational needs in the current market environment and demonstrating a commitment to deleveraging discipline. We acknowledge that the current drawn balance of $185 million under the Revolver exceeds the proposed reduced commitment of $150 million. The r

4. Financial Covenant Reset. In order to provide the Company with a realistic glide path to financial compliance given current market conditions, the financial maintenance covenants would be amended as follows: (a) Maximum Net Leverage Ratio. The Maximum Net Leverage Ratio would be reset to 7.00x for the testing periods ending on and after the RSA closing date, stepping down over the following eight fiscal quarters t

5. Amendment Fee. In consideration of the amendments described herein, TSL would pay to the senior secured lenders an amendment fee equal to 1.00% of the $540 million outstanding balance under the Senior Secured Credit Facility, or $5.4 million. To minimize the cash impact of the restructuring transaction and preserve liquidity for operational purposes, the amendment fee would be payable in kind — that is, the $5.4 m

6. Default Interest Waiver. TSL requests a retroactive waiver of the default interest that has been accruing on the Senior Secured Credit Facility since the occurrence of the Events of Default in September 2022. As noted above, the default rate provision of the Credit Agreement imposes an additional 200 basis points above the contractual rate, resulting in a total effective rate of SOFR plus 575 basis points. The pro

7. Collateral. The existing first-priority lien package securing the Senior Secured Credit Facility would remain unchanged in all respects. No release of collateral is requested, and the senior secured lenders would continue to benefit from a perfected first-priority security interest in all existing collateral, including the full fleet, the Houston terminal lease, accounts receivable, and equity interests in TAI and

1. Exchange Terms. BMC would exchange the full $112.3 million outstanding balance of the Mezzanine Notes (inclusive of all capitalized PIK interest) for the following consideration: (a) $60 million in aggregate principal amount of newly issued second-lien secured notes (the "New Second-Lien Notes"), due June 2028, bearing interest at 10.0% per annum, payable entirely in kind, and secured by a second-priority lien on

2. Debt Haircut. The Mezzanine Exchange contemplates a haircut of 46.6% on the debt component of BMC's claim, calculated as follows: ($112.3 million − $60 million) ÷ $112.3 million = 46.6%. While this represents a significant reduction in the face amount of BMC's debt claim, the haircut is substantially offset by the equity component of the exchange consideration, which provides BMC with meaningful upside participati

3. Equity Dilution Impact. The issuance of a 15% equity interest to BMC would result in the following changes to the Company's equity capitalization: (a) The Kostandinos family (through KFO Holdings SA) would be diluted from 80% to approximately 68% (80% × 85% = 68%). (b) Other non-family equity holders would be diluted from 20% to approximately 17% (20% × 85% = 17%). (c) BMC would hold 15% of TSL's equity. We note t

4. Rationale. The proposed exchange terms are designed to provide BMC with a recovery that is comparable to, and in many respects superior to, the recovery BMC would achieve in a Chapter 11 scenario. KHP's waterfall analysis, based on the midpoint enterprise value of $610 million, indicates that in a Chapter 11 liquidation or reorganization, mezzanine recovery would be approximately 62.3%, calculated as follows: ($61

5. Intercreditor Agreement. The existing Intercreditor Agreement dated as of June 15, 2019, between Nordbank International AG and BMC, would be amended and restated in its entirety to reflect the terms of the New Second-Lien Notes and the revised collateral sharing arrangements. The amended and restated Intercreditor Agreement (the "A&R Intercreditor Agreement") would govern the respective rights and priorities of th

6. Status of Discussions with BMC. We wish to note candidly that discussions with Kellner & Foss LLP ("K&F"), counsel to BMC, and specifically with Theodore Kellner, lead partner at K&F, remain at a preliminary stage. TSL has shared the broad contours of the proposed Mezzanine Exchange with BMC and K&F, but the specific terms set forth herein have not yet been agreed upon by BMC. This proposal is therefore subject in

1. Amount and Structure. KFO would contribute €35 million in new equity capital to TSL, which at the prevailing EUR/USD exchange rate of approximately 1.091 represents approximately $38.2 million. The contribution would be structured as a subscription for newly issued common equity of TSL and would be fully funded at or prior to the RSA closing date.

2. Use of Proceeds. The proceeds of the KFO equity contribution would be applied as follows: (a) Funding of working capital and general liquidity needs to ensure the Company maintains adequate cash reserves to support ongoing operations during and following the restructuring process; (b) Partial repayment of the Revolving Credit Facility to bring the outstanding drawn balance within the reduced $150 million commitmen

3. Significance. The KFO equity contribution demonstrates the Kostandinos family's continued commitment to the business and its alignment with creditor interests. The family — comprised of Dimitrios Kostandinos (62% indirect ownership of TSL through KFO) and Elena Kostandinos-Pavlou (18% indirect ownership through KFO) — has operated TSL and its predecessor entities for over three decades, and the family's willingnes

4. Distinction from Chapter 11 Alternative. The KFO equity contribution is a critical element that distinguishes the proposed out-of-court path from a Chapter 11 filing. In a Chapter 11 proceeding, the Kostandinos family's existing equity interest would likely be eliminated entirely or significantly diluted under the absolute priority rule. The family has no obligation to contribute new capital in a Chapter 11 contex

1. Scope. TSL would sell six older dry-bulk carriers from its fleet within twelve months of the RSA closing date. The vessels to be sold would have an average age of approximately 18 years and would be selected based on a combination of factors, including age, maintenance capital requirements, operating cost profile, and expected net sale proceeds. The disposition of these older, less efficient vessels will improve t

2. Estimated Proceeds. Based on current market conditions and recent comparable sales, KHP estimates that the aggregate sale proceeds from the six vessel dispositions would be approximately $72 million. This estimate reflects a range of individual vessel values and accounts for the age and condition of the vessels to be sold.

3. Application of Proceeds. Net sale proceeds, after deduction of customary transaction costs (including brokerage fees, legal fees, and vessel preparation costs), would be applied in their entirety to prepay Term Loan A under the Senior Secured Credit Facility. This direct application of sale proceeds to senior secured debt ensures that the senior secured lenders are the primary beneficiaries of the asset dispositio

4. Process and Protections. The specific vessels to be sold would be identified in a side letter to the RSA (the "Vessel Disposition Schedule"), subject to the mutual agreement of TSL and the Required Lenders. All vessel sales would be subject to (i) minimum price floors to be agreed upon in the RSA, below which TSL would not be permitted to consummate a sale without the consent of the Required Lenders; and (ii) an o

5. Fleet Rationalization. Upon completion of the asset disposition program, the fleet would be rationalized from 50 vessels to 44 vessels. The remaining fleet would have a lower average age, reduced maintenance capital requirements, and improved operating efficiency, positioning the Company to generate stronger cash flow per vessel as charter rates recover. E. Treatment of Unsecured Notes TSL proposes the following t

1. Unimpaired. The Senior Unsecured Notes would remain outstanding and unimpaired in all respects. No modification to the principal amount, interest rate, maturity date, or any other term of the Indenture is proposed.

2. Payment of Missed Coupon. The missed December 1, 2022 interest payment of $2,062,500 would be paid in full at or prior to the RSA closing date, curing the existing Event of Default under the Indenture.

3. Indenture Consent. TSL would seek a consent and waiver from Garrison Trust Company, as indenture trustee, to waive the existing Event of Default resulting from the missed interest payment and to confirm that no acceleration or other remedial action will be taken by the trustee in connection therewith.

4. Rationale. TSL's proposal to leave the Unsecured Notes unimpaired reflects several considerations: (a) Avoiding the cost and complexity of impairing a relatively small tranche of $50 million in unsecured debt, which would require consent solicitation or exchange offer mechanics, potential litigation risk, and significant additional professional fees — all disproportionate to the size of the obligation; (b) Maintai

1. Payment in Full. All trade creditors (representing approximately $38.7 million in outstanding payables as of September 30, 2022) would be paid in full in the ordinary course of business. No impairment of trade creditor claims is contemplated under the Proposed Framework.

2. Rationale. The preservation of trade creditor relationships is essential to the Company's ongoing operations. In the shipping and logistics industry, the Company is dependent on the continuous availability of bunker fuel, port services, maintenance and repair providers, and other critical vendors. Any interruption or degradation of these relationships could have severe operational consequences and could undermine

1. Terms. The $76.4 million subordinated intercompany promissory note from TAI to TSL would be amended as follows: (a) The maturity date would be extended from its current maturity to December 2028, aligning the intercompany obligation with the extended maturity of the Company's external debt; (b) The interest rate would be reduced from 5.0% per annum to 2.0% per annum, reflecting the need to reduce TAI's fixed charg

2. Impact. The reduction in the intercompany interest rate and the extension of the maturity directly improve TAI's cash flow profile and overall group liquidity, ensuring that TAI has sufficient resources to maintain its U.S. operations, including the Houston terminal, and to meet its obligations under the restructured Senior Secured Credit Facility.

IV. Comparison to Chapter 11 Alternative While TSL strongly believes that the consensual, out-of-court framework described above represents the optimal path forward for all stakeholders, the Company and its advisors have, as a matter of prudent planning, developed a comprehensive Chapter 11 contingency plan for TAI. The contemplated filing jurisdiction would be the United States Bankruptcy Court for the Southern Dist

V. Process and Timeline Proposal In order to maintain momentum and achieve a timely resolution, TSL proposes the following process and timeline:

1. Detailed RSA Term Sheet. TSL and its advisors would prepare and circulate a detailed RSA term sheet to all creditor groups, including the Ad Hoc Group, BMC, and Garrison Trust Company, by mid-February 2023, with a target circulation date of February 10, 2023. The term sheet would set forth the definitive economic terms and conditions of each component of the Proposed Framework, including representations and warran

2. RSA Execution. TSL targets execution of the RSA by the Ad Hoc Group, BMC, and other key parties by mid-March 2023, in advance of the current forbearance expiration date of March 8, 2023. We recognize that this is an ambitious timeline and that the Ad Hoc Group will require adequate time to evaluate the proposal and provide feedback. To the extent additional time is needed beyond the current forbearance period, TSL

3. Implementation Documentation. Following execution of the RSA, the parties and their respective counsel would proceed to negotiate and finalize all definitive implementation documentation, including (a) the Credit Agreement Amendment, (b) the A&R Intercreditor Agreement, (c) the New Second-Lien Note Purchase Agreement, (d) the KFO equity subscription agreement, (e) amendments to the Unsecured Notes Indenture or ind

4. RSA Closing / Effective Date. TSL targets an RSA closing and effective date of June 30, 2023, at which time all restructuring transactions would close simultaneously and the Company would emerge with a restructured balance sheet, a restored liquidity position, and a clear path forward. We respectfully request that WCB and Draycott Advisory Group review the Proposed Framework in its entirety and revert with the Ad

VI. Confidentiality We remind all recipients that this letter and its contents are strictly confidential and are subject to the confidentiality provisions of Section 12 of the Forbearance Agreement, as well as any applicable non-disclosure agreements among the parties and their respective advisors. The distribution of this letter is limited to the individuals and entities identified on the distribution list below, an

VII. Closing We wish to express our sincere appreciation for the constructive engagement of the Ad Hoc Group, WCB, and Draycott Advisory Group throughout the forbearance period. The professionalism and good faith that have characterized the discussions to date give us confidence that a consensual resolution is achievable. TSL remains firmly committed to achieving an outcome that recognizes and respects the interests