Contract analysis

I. Executive Summary Calderwood & Harkness LLP ("C&H") was engaged on October 25, 2022, by Thalassa Shipping & Logistics Société Anonyme ("TSL") and its U.S. subsidiary, Thalassa Americas Inc. ("TAI"), to advise on Chapter 11 contingency planning and out-of-court restructuring alternatives in connection with TSL's deteriorating financial condition and multiple covenant defaults under its senior secured credit facilit

II. Background and Context A. The Parties to the Forbearance Agreement The Forbearance Agreement was entered into by and among the following parties, whose roles and positions in the capital structure are described below. Borrower and Co-Borrower. TSL serves as the borrower under the Senior Secured Credit Agreement. TSL is a Société Anonyme organized under the laws of the Hellenic Republic, with its principal offices

1. Minimum Liquidity Covenant Breach (September 15, 2022). Section 7.12(a) of the Credit Agreement requires TSL to maintain unrestricted cash and cash equivalents (measured at the consolidated level) of not less than $40 million at all times. This is a "springing" covenant tested on a continuous basis rather than at quarter-end. As of September 15, 2022, TSL's actual unrestricted liquidity had fallen to $27.3 million

2. Maximum Net Leverage Ratio Breach (September 30, 2022). Section 7.13(a) of the Credit Agreement requires that the Net Leverage Ratio (defined as Net Debt divided by LTM Consolidated EBITDA) shall not exceed 5.50x, tested quarterly at each fiscal quarter-end. As of September 30, 2022, the actual Net Leverage Ratio was 7.82x, calculated as follows: • Net Debt: $770.9 million (total indebtedness of $847.3 million les

3. Minimum Interest Coverage Ratio Breach (September 30, 2022). Section 7.13(b) of the Credit Agreement requires that the Interest Coverage Ratio (defined as LTM Consolidated EBITDA divided by LTM Interest Expense) shall not be less than 2.50x, tested quarterly. As of September 30, 2022, the actual Interest Coverage Ratio was 1.74x, calculated as follows: • LTM Consolidated EBITDA: $98.6 million • LTM Interest Expens

III. Detailed Analysis of Forbearance Agreement Terms This Section provides a detailed analysis of each material provision of the Forbearance Agreement, together with our assessment of the associated risks and our recommendations for remedial action in the context of extension negotiations or other restructuring discussions. A. Scope of Forbearance The scope of the forbearance is defined in Section 2 of the Forbearan

Section 4(a) of the Forbearance Agreement addresses the treatment of default interest during the standstill period. This is one of the most consequential economic provisions of the agreement and, in our assessment, one of the most lender-favorable. The Forbearance Agreement expressly provides that default interest shall continue to accrue throughout the standstill period at the default rate specified in the Credit Ag

Section 5 of the Forbearance Agreement enumerates the events that permit the lender syndicate (acting through Nordbank as Administrative Agent) to terminate the standstill prior to the January 8, 2023 Termination Date. The termination events are numerous and, in several cases, afford the lenders broad discretion to end the standstill. Each is described and analyzed below.

1. Material Breach by TSL or TAI (Section 5(a)). The standstill terminates immediately if TSL or TAI materially breaches any representation, warranty, or covenant contained in the Forbearance Agreement itself. No cure period is provided. This termination trigger is distinct from breaches of the underlying Credit Agreement; it relates specifically to TSL's and TAI's obligations under the Forbearance Agreement, includi

2. New Defaults Under the Credit Agreement (Section 5(b)). The standstill terminates immediately upon the occurrence of any Default or Event of Default under the Credit Agreement beyond the three Specified Defaults. As discussed in Section III.A, this creates a direct and immediate risk in connection with any new covenant breach, payment default, or cross-default that may arise during the standstill period. The Q4 20

3. Cross-Default Events (Section 5(c)). The standstill terminates immediately upon the occurrence of any default under the mezzanine notes, the unsecured notes, or any other material indebtedness of TSL or TAI that constitutes a cross-default event under Section 8.01(e) of the Credit Agreement. This trigger creates a direct linkage between the Forbearance Agreement and events occurring in TSL's other debt instruments

4. Failure to Deliver Information (Section 5(d)). The standstill terminates immediately if TSL or TAI fails to deliver any information, report, or financial statement required under the enhanced information covenants of the Forbearance Agreement (Section III.E below) within the specified deadlines. Notably, no cure period is provided. This means that even a minor, inadvertent delay in the delivery of a weekly 13-week

5. Commencement of Insolvency Proceedings (Section 5(e)). The standstill terminates immediately upon the commencement by TSL, TAI, or any material subsidiary of any voluntary insolvency proceeding, including a Chapter 11 filing, a Chapter 15 filing, or Greek insolvency proceedings under Law 4738/2020. This termination trigger is standard in forbearance agreements and serves to ensure that the lender group retains the

6. Material Adverse Change (Section 5(f)). The standstill terminates immediately upon the occurrence of any "Material Adverse Change" in the financial condition, business, operations, assets, or prospects of TSL, TAI, or any material subsidiary. The MAC definition in the Forbearance Agreement is broadly drafted and does not contain exclusions for industry-wide downturns, macroeconomic conditions, or market-wide fluct

7. Failure to Engage a Financial Advisor (Section 5(g)). The standstill terminates if TSL fails to engage a financial advisor acceptable to the Ad Hoc Group within 15 days of the execution date (i.e., by October 25, 2022). This condition has been satisfied by the engagement of KHP on October 15, 2022. James Calloway, Managing Director at KHP, has been confirmed as the engagement lead, and the Ad Hoc Group (through WC

8. Liens or Judgments (Section 5(h)). The standstill terminates immediately upon the entry of any judgment or the attachment of any lien against TSL, TAI, or any material subsidiary in excess of a $5 million threshold (whether individually or in the aggregate). This trigger is designed to prevent the erosion of collateral value during the standstill through litigation or enforcement actions by third parties.

9. Asset Dispositions Outside the Ordinary Course (Section 5(i)). The standstill terminates immediately if TSL or TAI disposes of any asset outside the ordinary course of business without the prior written consent of Nordbank (as Administrative Agent). This is consistent with the negative covenant on asset sales (Section III.F below) but operates as an independent termination trigger. Risk Assessment. Taken as a whol

Section 6 of the Forbearance Agreement imposes a significantly enhanced set of information delivery and reporting obligations on TSL and TAI during the standstill period. These obligations go well beyond the financial reporting requirements of the underlying Credit Agreement and are designed to provide the lender group and its advisors with real-time visibility into TSL's operations, financial condition, and restruct

2. Monthly Financial Statements (Section 6(b)). TSL is required to deliver unaudited consolidated monthly financial statements, together with fleet operating reports and vessel-level profit and loss statements, within 20 calendar days following the end of each calendar month. The monthly financial package must include a consolidated balance sheet, income statement, and cash flow statement for the month, together with

3. Fleet Status Reports (Section 6(c)). TSL is required to deliver biweekly fleet status reports (on the 1st and 15th of each month, or the next business day) providing vessel-by-vessel detail on: (a) current employment status (time charter, voyage charter, spot market, idle); (b) current and contracted charter rates; (c) off-hire days and reasons therefor; (d) any vessel casualties, detentions, port state control de

4. Material Event Notifications (Section 6(d)). TSL and TAI are required to provide prompt written notice to Nordbank and the Ad Hoc Group (within two (2) business days of occurrence or of TSL/TAI becoming aware) of any material event, including without limitation: (a) any regulatory action, investigation, or inquiry by any governmental or maritime authority; (b) the commencement of any litigation or arbitration invo

5. Access to Management (Section 6(e)). The Ad Hoc Group, acting through WCB and Draycott, has the right to schedule calls and meetings with TSL management (Georgios Andreadis, CEO; Irini Dalakoura, CFO) and TAI management (Marcus Hale, President; Diana Restrepo, VP Finance) on not less than 48 hours' prior written notice. TSL and TAI have agreed to make their senior management "reasonably available" for such calls a

6. Access to Books and Records (Section 6(f)). The lender syndicate and its advisors (including WCB and Draycott) have the right, during normal business hours and upon reasonable prior notice, to inspect the books, records, accounts, and financial records of TSL at its headquarters at 42 Akti Miaouli, Piraeus 18538, Greece, and of TAI at its principal office at 1400 McKinney Street, Suite 2200, Houston, TX 77010. Thi

1. No New Indebtedness (Section 7(a)). TSL and TAI shall not incur, assume, or permit to exist any indebtedness (as defined in the Credit Agreement) beyond that existing as of the execution date, except for ordinary-course trade credit and payables incurred in the ordinary course of business consistent with past practice.

2. No New Liens (Section 7(b)). TSL and TAI shall not create, incur, assume, or permit to exist any lien on any property or asset, except for permitted liens as defined in the Credit Agreement and liens existing as of the execution date.

3. No Asset Sales Outside the Ordinary Course (Section 7(c)). TSL and TAI shall not sell, transfer, lease, or otherwise dispose of any property or assets outside the ordinary course of business if such disposition would result in proceeds exceeding $1 million individually or $5 million in the aggregate, without the prior written consent of Nordbank (as Administrative Agent). This restriction is significant because as

4. No Dividends or Distributions (Section 7(d)). TSL shall not declare or pay any dividend or make any distribution to its equity holders, including KFO Holdings SA and the Kostandinos family. This covenant is unsurprising given the financial distress and is consistent with the existing restricted payment covenants in the Credit Agreement, which are independently triggered during a period of default.

5. No Intercompany Transfers (Section 7(e)). Neither TSL nor TAI shall make any intercompany transfer, loan, advance, or payment exceeding $500,000 in any single transaction, or $2 million in the aggregate during the standstill period, without the prior written consent of Nordbank (as Administrative Agent). This restriction is relevant given the $76.4 million intercompany note from TAI to TSL and the ongoing operatio

6. No Capital Expenditures Beyond Agreed Budget (Section 7(f)). TSL and TAI shall not make capital expenditures in excess of the amounts set forth in an agreed capital expenditure budget attached as an exhibit to the Forbearance Agreement. The agreed budget was developed in consultation with KHP and reflects essential maintenance capital expenditures (including scheduled drydockings and classification society require

7. No Changes to Senior Management (Section 7(g)). TSL and TAI shall not terminate, replace, or make any material change to the roles or responsibilities of senior management — defined to include Georgios Andreadis (CEO of TSL), Irini Dalakoura (CFO of TSL), Marcus Hale (President of TAI), and Diana Restrepo (VP Finance of TAI) — without prior written notice to and consultation with the Ad Hoc Group. Risk Analysis. T

Section 10 of the Forbearance Agreement requires TSL and TAI to pay the reasonable and documented professional fees and expenses of the following parties: (a) Nordbank International AG, in its capacity as Administrative Agent and Collateral Agent, including reasonable internal costs and out-of-pocket expenses; (b) Whitfield, Crane & Burgess LLP, as counsel to the Ad Hoc Group; and (c) Draycott Advisory Group LLC, as