Contract analysis

I. Executive Summary This memorandum provides a comprehensive analysis of the negotiating positions, motivations, and likely demands of each creditor constituency in the Thalassa Shipping & Logistics SA ("TSL") capital structure, and recommends a strategy for achieving an out-of-court restructuring through a Restructuring Support Agreement ("RSA"), thereby averting a Chapter 11 filing by Thalassa Americas Inc. ("TAI"

II. Capital Structure Overview and Recovery Analysis This section provides a detailed overview of each layer of the TSL capital structure as of September 30, 2022, including the identity of holders, key terms, outstanding amounts, collateral, covenant status, and our analysis of estimated recoveries under both the proposed out-of-court RSA and a Chapter 11 liquidation or reorganization scenario. The recovery analysis

III. Stakeholder-by-Stakeholder Negotiating Analysis This section provides a detailed analysis of each creditor constituency's composition, motivations, likely demands, and our recommended negotiating approach. The analysis is intended to guide our engagement strategy and to anticipate the key points of contention that will arise during the RSA negotiation process. A. The Ad Hoc Group of Senior Secured Lenders

1. Composition and Voting Power. The Ad Hoc Group of Senior Secured Lenders was formed in August 2022 in response to TSL's deteriorating financial performance and the emerging covenant breaches. The group comprises four institutional lenders: The Ad Hoc Group is represented by Whitfield, Crane & Burgess LLP ("WCB"), with Graham Whitfield III serving as lead partner and Priya Nandakumar as the senior associate. WCB's

2. Key Interests and Motivations. The senior secured lenders' primary concern is the protection of their collateral value. At the current fleet appraised value of $623 million, the senior secured lenders enjoy comfortable coverage on their $540 million outstanding principal, with a loan-to-value ratio of approximately 86.7%. However, the trajectory of fleet values is concerning: the Drakos appraisal in January 2022 v

3. Likely Demands. Based on our analysis of the senior secured lenders' position, our discussions with WCB and Draycott during the forbearance period, and market precedent for similar shipping restructurings, we anticipate the Ad Hoc Group will make the following principal demands: Maturity Extension: The near-term maturity of June 15, 2024 is the single most critical problem in the capital structure. The Ad Hoc Grou

4. Negotiating Approach. Our recommended approach to the Ad Hoc Group is to engage Graham Whitfield III and Vanessa Chow early and frequently, proposing a framework that directly addresses their core concerns — maturity extension, deleveraging, and covenant reset — while preserving TSL's operational flexibility and the Kostandinos family's majority equity position. The key elements of our engagement strategy are as f

1. Composition. The remaining five senior secured lenders, who are not members of the Ad Hoc Group, hold an aggregate of $313 million, representing 45.7% of the total facility commitment:

2. Key Considerations. These lenders are not represented by WCB or advised by Draycott, and each will need to be individually engaged and brought into the transaction. This presents both a logistical challenge and a potential holdout risk, but several factors work in our favor. Most significantly, the Ad Hoc Group's majority position ($372 million / 68.9% of outstanding) means that the non-Ad-Hoc lenders are likely t

1. Position. BMC's $112.3 million mezzanine position ($100 million original principal plus $12.3 million in capitalized PIK interest through September 30, 2022) is the fulcrum security in TSL's capital structure. As the second-lien holder, BMC sits between the fully-covered senior secured lenders and the deeply out-of-the-money unsecured noteholders. The outcome for BMC depends critically on the enterprise value that

2. Key Interests and Motivations. As the fulcrum security holder, BMC's primary interest is in maximizing its recovery, which at the KHP midpoint enterprise value of $610 million stands at approximately 62.3% of its $112.3 million claim in a Chapter 11 proceeding. However, this headline recovery figure understates the risks that BMC faces in a bankruptcy scenario, including administrative cost priming, DIP facility s

3. Likely Demands. Based on our analysis, we anticipate that BMC will advance the following principal demands in the RSA negotiations: Equity Stake: BMC will demand a meaningful equity stake in TSL as part of the exchange, to participate in any upside recovery if charter rates improve. We expect BMC to open at 20–25% equity and to settle in the range of 12–18%. New Secured Notes: BMC will seek new second-lien notes w

4. Negotiating Approach. Our recommended approach to BMC is to propose an exchange of the $112.3 million mezzanine notes for a combination of new second-lien notes with a substantially reduced face value and equity in TSL. Specifically, we propose: New Second-Lien Notes: $60 million in new second-lien notes, bearing interest at 10.0% PIK, with a maturity of June 2028. The new notes would be secured by second-priority

1. Position. The unsecured noteholders hold $50 million in aggregate principal amount of 8.25% cash-pay notes due March 1, 2025. The notes are currently in default following the failure to pay the December 1, 2022 semi-annual coupon of $2,062,500, with the 30-day cure period having expired on January 1, 2023. An informal group of unsecured noteholders has formed and retained Ashford, Brightmoor Group & McKay PC ("ADM

2. Key Interests and Motivations. The unsecured noteholders occupy a uniquely vulnerable position in the TSL capital structure. In a Chapter 11 proceeding, their recovery would be catastrophic: 8 to 14 cents on the dollar based on KHP's waterfall analysis. This outcome reflects the enormous weight of secured and mezzanine claims that stand ahead of the unsecured notes in the priority waterfall. There is simply insuff

3. Negotiating Approach. We propose to leave the unsecured notes entirely unimpaired under the RSA. Specifically, we would: (a) Pay the missed December 1, 2022 coupon of $2,062,500 in full at or promptly following RSA closing; (b) Maintain the unsecured notes on their existing terms (8.25% cash pay, semi-annual, maturing March 1, 2025) without any modification to principal, interest rate, maturity, or other terms; an

1. Position. TSL has approximately $38.7 million in outstanding trade payables as of September 30, 2022. The largest single trade creditor is Olympian Fuel & Supply SA, a bunker fuel supplier headquartered in Piraeus, which is owed approximately $9.2 million. Other significant trade creditors include port services providers, ship repair and maintenance contractors, classification societies, marine insurers, and vario

2. Negotiating Approach. We propose to pay all trade creditors in full in the ordinary course, without any impairment, deferral, or modification of existing payment terms. Trade creditors are not parties to the RSA negotiations, and the treatment of trade claims should be confirmed in the RSA term sheet but requires no separate negotiation or documentation. This approach is consistent with both operational necessity

1. Position. KFO Holdings SA is the Kostandinos family holding company, headquartered at 42 Akti Miaouli, Piraeus, Greece — the same building as TSL's principal offices. KFO holds 80% of TSL's equity, divided between Dimitrios Kostandinos (62%) and Elena Kostandinos-Pavlou (18%). The remaining 20% is held by non-family investors. In a Chapter 11 scenario, the Kostandinos family's equity position would likely be signi

2. Expected Contribution and Concessions. The Kostandinos family's participation in the RSA is a critical prerequisite for creditor buy-in. The Ad Hoc Group of Senior Secured Lenders has made clear, through informal communications via WCB, that any restructuring must include a meaningful equity contribution from the family. This expectation is reasonable and consistent with market practice: in virtually every out-of-

3. Discussion Points for Chairman Kostandinos. We recommend that Dimitrios Kostandinos and Elena Kostandinos-Pavlou be briefed in detail on the following matters, with the objective of securing their full commitment to the RSA framework before approaching creditors: The equity contribution and dilution are the family's principal concessions; the alternative is far worse. In a Chapter 11 proceeding, the family would a

IV. The Chapter 11 Contingency Plan as Negotiating Leverage A. Overview of Contingency Plan Calderwood & Harkness, in coordination with KHP and the broader advisory team, completed a comprehensive Chapter 11 execution plan on January 10, 2023 (the "Playbook"). The Playbook was developed not only as a genuine contingency for the protection of TSL and its stakeholders in the event that an out-of-court restructuring pro