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MEMORANDUM — PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT

FROM: Daniel Obi, Associate, Banking & Finance, Calderwood & Harkness LLP

TO: Sophie Tremblay, Senior Associate, Banking & Finance, Calderwood & Harkness LLP

DATE: July 11, 2023

RE: Collateral Coverage Analysis — Proposed $150,000,000 Senior Secured Revolving Credit Facility for Thalassa Shipping & Logistics SA

MATTER NO.: 1044-00002

COPIES: Ian Blackwood (Responsible Partner); Stephanie Okafor (Billing Partner)

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I. Executive Summary

This memorandum analyzes whether the eighteen (18) Mortgaged Vessels identified in the near-final credit agreement dated July 3, 2023 (the "Credit Agreement") satisfy the minimum collateral coverage ratio required thereunder in connection with the proposed $150,000,000 senior secured revolving credit facility (the "Facility") for Thalassa Shipping & Logistics SA ("TSL" or the "Borrower"). The analysis is based on independent vessel appraisals delivered by Seastone Maritime Advisors Ltd. ("Seastone"), a London-based independent maritime valuation firm, on July 10, 2023. The appraisals were prepared under the direction of Duncan Fairweather, Managing Director of Seastone, and reflect charter-free fair market values as of June 30, 2023.

The key conclusions of this analysis are as follows:

• Aggregate Fair Market Value. The aggregate charter-free fair market value of the 18 Mortgaged Vessels, as determined by Seastone, is $780,000,000.

• Minimum Required Collateral Value. Under Section 7.15 of the Credit Agreement, TSL is required to maintain a minimum collateral coverage ratio of 140% of outstanding facility obligations at all times. At a full draw of $150,000,000, the minimum required collateral value is 140% × $150,000,000 = $210,000,000.

• Actual Coverage Ratio. The actual collateral coverage ratio at full draw is approximately 520% ($780,000,000 ÷ $150,000,000), providing substantial headroom of approximately $570,000,000 above the minimum threshold.

• Utilization-Based Testing. It bears noting that the coverage ratio under the Credit Agreement is tested against outstanding facility obligations (i.e., drawn revolving loans, LC exposure, and swingline loans), not against total commitments. As a result, at lower utilization levels — which are expected to be the norm given TSL's indicated borrowing needs — the actual coverage ratio will be even more favorable than the 520% figure calculated at full draw.

This memorandum provides a vessel-by-vessel breakdown of the Seastone appraisals, a detailed sensitivity analysis under various fleet value decline and utilization scenarios, a review of the vessel release and substitution mechanics under the Credit Agreement, and recommendations for further negotiation of the collateral coverage provisions.

II. Background

A. Transaction Overview

Thalassa Shipping & Logistics SA ("TSL") is a Société Anonyme organized under the laws of the Hellenic Republic (Greece), with its registered offices and principal place of business located at 14 Akti Miaouli, Piraeus 185 35, Greece. TSL is a diversified maritime shipping company engaged in the ownership, operation, and commercial management of dry bulk carriers and tankers.

TSL is seeking to enter into the proposed $150,000,000 senior secured revolving credit facility for two principal purposes:

(a) Refinancing. To refinance in full the existing $125,000,000 senior secured revolving credit facility with Harborstone National Bank (the "Existing Facility"), originally documented pursuant to a Credit Agreement dated November 15, 2018, as amended by the First Amendment dated June 30, 2020 and the Second Amendment dated March 1, 2022. The Existing Facility has a stated maturity date of November 15, 2023, and TSL has determined to refinance prior to maturity rather than seek a further extension.

(b) Incremental Liquidity. To provide $25,000,000 of incremental borrowing capacity over and above the Existing Facility commitment amount, to be used for general corporate and working capital purposes, including vessel drydocking costs, bunker fuel procurement, and ordinary course operating expenses.

The key parties to the proposed Facility are as follows:

• Borrower: Thalassa Shipping & Logistics SA

• Sole Lead Arranger, Sole Bookrunner, and Administrative Agent: Meridian Atlantic Bank, National Association ("Meridian Atlantic")

• Syndicate Lenders:

• Nordkapp Maritime Finance AG — $40,000,000 commitment

• Clearwater Commercial Lending LLC — $35,000,000 commitment

• Eastbourne Capital Partners LLP — $30,000,000 commitment

• Meridian Atlantic Bank, N.A. (retained commitment) — $45,000,000

• Collateral Agent and Security Trustee: Pinnacle Trust & Agency Services Inc.

• Governing Law: State of New York

The Facility includes a $20,000,000 sublimit for the issuance of standby and commercial letters of credit (with Meridian Atlantic serving as the initial Issuing Bank) and a $15,000,000 sublimit for swingline loans (with Meridian Atlantic serving as the Swingline Lender). The proposed maturity date is five years from closing.

TSL is represented in this transaction by Calderwood & Harkness LLP. Meridian Atlantic and the Lenders are represented by Whitfield, Jensen & Adler LLP ("WJA"). The near-final Credit Agreement dated July 3, 2023 reflects the second markup by WJA following our initial draft circulated on May 15, 2023 and our third markup circulated on June 9, 2023. As of the date of this memorandum, 94 open comments remain across the transaction documents.

B. TSL Fleet Overview

TSL operates a fleet of 40 vessels, consisting of 28 dry bulk carriers and 12 tankers. The total fleet was appraised in the first quarter of 2023 at an aggregate fair market value of approximately $1,200,000,000 (the "Total Fleet Value"). TSL's fleet operates integrated maritime logistics services across a range of trade routes, with a primary focus on the Mediterranean Sea, the Black Sea region, and transatlantic routes serving ports in Northern Europe, West Africa, the U.S. Gulf Coast, and the East Coast of South America.

For the fiscal year ended December 31, 2022, TSL reported the following financial highlights:

• Revenue: approximately $620,000,000

• EBITDA: approximately $145,000,000

These financial metrics indicate a healthy operating profile, with an EBITDA margin of approximately 23.4%. The proposed Facility, at full draw, would represent a leverage ratio of approximately 1.03x against FY2022 EBITDA, which is conservative by industry standards.

C. Collateral Package Summary

The collateral package securing the Facility is comprehensive and structured in a manner consistent with standard practice in ship financing transactions. The principal elements of the collateral package are as follows:

1. First-Priority Ship Mortgages. First-priority ship mortgages (in the form of first preferred or statutory mortgages, as applicable, depending on the flag state of each vessel) on each of the 18 designated Mortgaged Vessels. The mortgages will be recorded in the applicable ship registries in each flag state jurisdiction (Republic of the marshall Islands, Republic of Liberia, and Republic of Panama).

2. Assignment of Earnings. Assignment of all earnings accounts and receivables attributable to the Mortgaged Vessels, including freight, hire, and demurrage receivables, to the Collateral Agent for the benefit of the Secured Parties.

3. Assignment of Insurances. Assignment of all hull & machinery ("H&M") and protection & indemnity ("P&I") insurance coverages for the Mortgaged Vessels. TSL's insurance program is brokered through Trident Marine Insurance Brokers Ltd. The Collateral Agent will be named as loss payee and additional assured under the relevant policies.

4. Share Pledges. Pledge of 100% of the equity interests in each vessel-owning subsidiary that holds title to one or more Mortgaged Vessels. The relevant vessel-owning subsidiaries are:

• Thalassa Dry Bulk Holdings Ltd., a company organized under the laws of the Republic of Cyprus;

• Thalassa Tanker Operations Ltd., a company organized under the laws of the Republic of the marshall Islands; and

• Thalassa Logistics International Ltd., a company organized under the laws of the Republic of Cyprus.

5. Assignment of Time Charters. Assignment of all time charter agreements with remaining terms of twelve (12) months or more to which any Mortgaged Vessel is subject, together with all earnings, proceeds, and claims arising thereunder.

The collateral package is designed to provide the Lenders with comprehensive security over the Mortgaged Vessels and their associated revenue streams. This memorandum focuses specifically on the vessel mortgage component and the associated collateral coverage ratio analysis.

III. Minimum Collateral Coverage Ratio — Contractual Requirement

The near-final Credit Agreement dated July 3, 2023 establishes a minimum collateral coverage ratio that TSL must maintain at all times during the term of the Facility. The relevant provisions are summarized below.

Minimum Ratio. Section 7.15 (Collateral Coverage) of the Credit Agreement requires TSL to maintain a minimum collateral coverage ratio of 140% of outstanding facility obligations at all times. This ratio is consistent with prevailing market practice in senior secured shipping finance transactions, where minimum coverage ratios typically range from 125% to 150% depending on the credit profile of the borrower, fleet age and composition, and prevailing market conditions.

Definition of Outstanding Facility Obligations. For purposes of the collateral coverage ratio, "Outstanding Facility Obligations" is defined in Section 1.01 of the Credit Agreement to include:

(a) the aggregate outstanding principal amount of all Revolving Loans;

(b) the aggregate amount of all LC Exposure (defined as the sum of the aggregate undrawn stated amount of all outstanding Letters of Credit plus the aggregate principal amount of all unreimbursed LC Disbursements); and

Accordingly, at a full draw of $150,000,000 (inclusive of the maximum letter of credit and swingline sublimits), the minimum required aggregate fair market value of the Mortgaged Vessels would be:

140% × $150,000,000 = $210,000,000

Testing Frequency. The collateral coverage ratio is tested on the following occasions:

(a) Quarterly. In connection with the delivery of each quarterly compliance certificate required under Section 6.02(a) of the Credit Agreement, based on the most recent vessel appraisals then available;

(b) Upon Vessel Disposition. Promptly upon (and giving pro forma effect to) any sale, transfer, total loss, or other disposition of a Mortgaged Vessel; and

(c) Upon Administrative Agent Request. At such other times as the Administrative Agent may reasonably request, if the Administrative Agent has reasonable grounds to believe that the aggregate fair market value of the Mortgaged Vessels may have declined materially since the most recent appraisal date.

Consequence of Breach. If the collateral coverage ratio falls below 140% at any testing date, TSL must, within thirty (30) days following the date on which such deficiency is identified (or, in the case of a vessel sale or total loss, within thirty (30) days following the consummation of such sale or the occurrence of such total loss):

(a) prepay outstanding facility obligations in an amount sufficient to restore the collateral coverage ratio to at least 140%; or

(b) provide additional Mortgaged Vessels as collateral (including delivery of duly executed and recorded first-priority ship mortgages, insurance assignments, earnings assignments, and related security documents), such that the aggregate fair market value of all Mortgaged Vessels (including such additional vessels) is sufficient to restore the collateral coverage ratio to at least 140%.

Failure to cure the deficiency within the 30-day cure period constitutes an Event of Default under Section 8.01(d) of the Credit Agreement.

Appraisal Methodology. The fair market value of the Mortgaged Vessels is determined on a charter-free basis by an independent appraiser acceptable to the Administrative Agent. For purposes of the initial funding and ongoing compliance, the parties have agreed upon Seastone Maritime Advisors Ltd. as the approved independent appraiser. Section 7.15(c) of the Credit Agreement provides that the Administrative Agent may designate one or more additional approved appraisers from time to time, and that TSL may propose alternative appraisers for the Administrative Agent's approval (not to be unreasonably withheld). Appraisals are conducted at TSL's cost.

IV. Vessel-by-Vessel Valuation Analysis

A. Seastone Appraisal Summary

On July 10, 2023, Seastone Maritime Advisors Ltd. ("Seastone") delivered independent appraisal reports covering each of the 18 Mortgaged Vessels to be encumbered under the proposed Facility. Seastone is a London-based independent maritime valuation firm with offices at 55 Gracechurch Street, London EC3V 0EE, United Kingdom. The appraisals were prepared by Duncan Fairweather, Managing Director, and his team, and are addressed to Meridian Atlantic Bank, N.A. in its capacity as Administrative Agent, and to Pinnacle Trust & Agency Services Inc. in its capacity as Collateral Agent.

The key parameters of the Seastone appraisals are as follows:

• Valuation Standard: Charter-free fair market value on an "as-is, where-is" basis

• Valuation Date: June 30, 2023

• Methodology: Seastone's valuations are based on a combination of (i) comparable market transaction data for similar vessel types, ages, and specifications; (ii) discounted cash flow analysis using forward freight rate assumptions; and (iii) replacement cost analysis adjusted for depreciation. This methodology is consistent with standard shipping finance appraisal practice and the requirements of Section 7.15 of the Credit Agreement.

• Currency: All values expressed in United States dollars

Seastone has confirmed in its engagement letter and in the body of each appraisal report that it has no material business relationship with TSL, Meridian Atlantic, or any of the Syndicate Lenders that would impair its independence, and that it has performed its valuations in accordance with the standards of the International Valuation Standards Council (IVSC) and the Maritime Valuers' Accreditation Scheme.

B. Vessel-by-Vessel FMV Table (18 Mortgaged Vessels)

Set forth below is the vessel-by-vessel summary of the Seastone appraisals for the 18 Mortgaged Vessels, organized by vessel type. All fair market values are as of June 30, 2023.

Dry Bulk Carriers (12 Vessels)

Subtotal — Dry Bulk Carriers: $571,000,000

Tankers (6 Vessels)

Subtotal — Tankers: $209,000,000

Aggregate Fair Market Value of 18 Mortgaged Vessels: $780,000,000

All individual vessel values set forth above are derived from the Seastone appraisal reports dated July 10, 2023 and reflect the allocations made by Seastone among the individual vessels within the Mortgaged Vessel pool. Copies of the Seastone reports are maintained in the deal file and are available for review upon request.

C. Fleet Composition Notes

The composition of the Mortgaged Vessel pool warrants several observations relevant to the coverage analysis:

Vessel Type Mix. The 18 Mortgaged Vessels consist of 12 dry bulk carriers and 6 tankers. The dry bulk carriers are further diversified across three sub-segments: three Capesize vessels (aggregate FMV of $204,000,000), five Panamax vessels (aggregate FMV of $222,000,000), and four Supramax vessels (aggregate FMV of $145,000,000). The tanker fleet includes two Aframax vessels (aggregate FMV of $87,000,000), two Suezmax vessels (aggregate FMV of $76,000,000), and two MR (medium range) product tankers (aggregate FMV of $46,000,000). This diversification across vessel types and sub-segments provides a degree of insulation against downturns in any single sector of the shipping market.

Proportion of Total Fleet. The 18 Mortgaged Vessels represent 45% of TSL's total fleet of 40 vessels by count. By value, the Mortgaged Vessel aggregate FMV of $780,000,000 represents approximately 65% of the total fleet value of approximately $1.2 billion (based on Q1 2023 fleet-wide appraisals). This means that TSL retains 22 unencumbered vessels with an estimated aggregate value of approximately $420,000,000, which are available as potential additional collateral should the need arise.

Fleet Age. The 18 Mortgaged Vessels were built between 2012 and 2020. The average age of the Mortgaged Vessels, as of the June 30, 2023 valuation date, is approximately 6 years, indicating a relatively modern fleet. Younger vessels tend to maintain higher resale values and are less susceptible to accelerated depreciation due to regulatory obsolescence (including with respect to environmental regulations such as the IMO 2020 sulfur cap and the forthcoming Carbon Intensity Indicator requirements). The oldest vessel in the pool, M/V Attica Fortune, was built in 2012 and is approximately 11 years old; notwithstanding its age, Seastone has appraised it at $58,000,000, reflecting the strong current market for Capesize tonnage.

Vessel-Owning Subsidiaries. The Mortgaged Vessels are held by three vessel-owning subsidiaries: (i) Thalassa Dry Bulk Holdings Ltd. (Cyprus), which holds the majority of the dry bulk carriers; (ii) Thalassa Tanker Operations Ltd. (Republic of the marshall Islands), which holds all six tankers; and (iii) Thalassa Logistics International Ltd. (Cyprus), which holds certain dry bulk carriers flagged in Panama. The pledge of 100% of the equity interests in each of these subsidiaries provides the Secured Parties with both in rem security (through the ship mortgages) and equity-level security (through the share pledges), ensuring multiple enforcement pathways in the event of a default.

V. Coverage Ratio Analysis

A. At Full Draw ($150,000,000)

The following summarizes the collateral coverage ratio analysis assuming a full draw of the Facility:

As illustrated above, the actual coverage ratio of 520% at full draw exceeds the 140% minimum by 380 percentage points, representing dollar headroom of $570,000,000. This is an exceptionally robust coverage position.

B. Sensitivity Analysis — FMV Decline Scenarios

A critical question for the Lenders is the extent to which the aggregate fair market value of the Mortgaged Vessels could decline before the 140% minimum coverage ratio would be breached. The following analysis examines this question at various utilization levels:

At full draw of $150,000,000, the aggregate FMV of the Mortgaged Vessels would need to decline by approximately 73.1% — from $780,000,000 to $210,000,000 — before the 140% minimum would be breached. To put this in historical context, the most severe decline in dry bulk vessel values in recent memory occurred during the global financial crisis of 2008-2009, when Capesize values declined by approximately 60-65% from peak to trough. Even that historically unprecedented decline would not have triggered a coverage breach under the current collateral structure at full draw.

At lower utilization levels, the decline tolerance is even more favorable: at 75% draw ($112.5 million outstanding), FMV could decline by approximately 79.8%, and at 50% draw ($75 million outstanding), FMV could decline by approximately 86.5%, before the minimum ratio would be breached.

C. Sensitivity Analysis — Utilization Scenarios

The following table illustrates the coverage ratio at various utilization levels, holding the aggregate Mortgaged Vessel FMV constant at $780,000,000:

All utilization scenarios produce coverage ratios that far exceed the 140% minimum. Even at the maximum draw of $150,000,000, the coverage ratio of 520% is nearly four times the required minimum. This analysis confirms that the proposed collateral package provides more than adequate coverage at any reasonably foreseeable utilization level.

D. Comparison to Existing Harborstone Facility

A comparison to the Existing Facility with Harborstone National Bank is instructive. The Existing Facility (as amended) also requires a minimum collateral coverage ratio of 140%, and the collateral pool under the Existing Facility includes the same 18 vessels (subject to differences in the underlying security documentation, which is not analyzed in this memorandum).

As of the most recent reporting date, the aggregate outstanding principal balance under the Existing Facility is approximately $124,375,000. Applying the current Seastone FMV of $780,000,000 to the Existing Facility:

Coverage Ratio (Existing Facility) = $780,000,000 ÷ $124,375,000 ≈ 627%

The proposed Facility's larger commitment size ($150,000,000 vs. $125,000,000) results in a slightly lower coverage ratio at full draw (520% vs. 627% under the Existing Facility at its current outstanding balance), but this difference is immaterial in the context of the substantial headroom above the 140% minimum under either facility. Moreover, the proposed Facility provides TSL with an additional $25,000,000 of borrowing capacity — a meaningful incremental liquidity benefit — while still maintaining a coverage ratio that is nearly four times the required minimum.

VI. Vessel Release Mechanics

A. Overview of Release Provisions

The near-final Credit Agreement includes provisions permitting the release of individual Mortgaged Vessels from the collateral pool under specified conditions. These release mechanics are set forth in Section 10.04 (Release of Collateral) and Section 7.16 (Vessel Dispositions) of the Credit Agreement and are critical to TSL's operational flexibility, as TSL actively manages its fleet and may from time to time sell, replace, or otherwise dispose of individual vessels.

Under the Credit Agreement, TSL may request the release of a Mortgaged Vessel from the collateral pool in connection with any of the following events:

(a) a permitted vessel sale or other disposition in the ordinary course of TSL's fleet management activities;

(b) a total loss event (whether actual or constructive) with respect to a Mortgaged Vessel; or

(c) a substitution of the Mortgaged Vessel with a replacement vessel that is acceptable to the Administrative Agent and that meets the criteria set forth in the Credit Agreement.

B. Conditions to Release

The release of any Mortgaged Vessel from the collateral pool is subject to the satisfaction of each of the following conditions:

Coverage Ratio Maintenance. After giving pro forma effect to the release (i.e., removing the subject vessel's FMV from the numerator of the collateral coverage ratio calculation), the aggregate FMV of the remaining Mortgaged Vessels must be sufficient to maintain a minimum coverage ratio of 140% of then-outstanding facility obligations. This is the critical gatekeeping condition and ensures that the Lenders' collateral position is not materially impaired by any individual vessel release.

Mandatory Prepayment. If the coverage ratio would fall below 140% after giving pro forma effect to the proposed release, TSL must, contemporaneously with the release, prepay outstanding facility obligations in an amount sufficient to restore the coverage ratio to at least 140%. The mandatory prepayment must be accompanied by a corresponding reduction in commitments, unless the Credit Agreement otherwise provides.

No Event of Default. No Event of Default or Default (as each is defined in the Credit Agreement) shall have occurred and be continuing at the time of the requested release, or would result from the consummation of the release.

Administrative Agent Consent. Written consent of the Administrative Agent, acting at the direction of the Required Lenders (defined as Lenders holding more than 50% of the aggregate commitments), is required prior to the release of any Mortgaged Vessel. The Credit Agreement does not specify a reasonableness standard for such consent, which is a point we may wish to revisit in final negotiations (see Section VII.C below).

C. Illustrative Release Scenario

To illustrate the operation of the vessel release mechanics, consider the following hypothetical scenario:

Scenario: TSL wishes to sell and release M/V Aegean Valor (Seastone FMV: $72,000,000), the highest-value dry bulk carrier in the Mortgaged Vessel pool.

• Remaining Collateral FMV After Release: $780,000,000 – $72,000,000 = $708,000,000

• At Full Draw ($150,000,000): Revised coverage ratio = $708,000,000 ÷ $150,000,000 = 472%

• Minimum Required: 140%

• Conclusion: The release would be permitted without any mandatory prepayment, as the revised coverage ratio of 472% remains well above the 140% minimum.

This analysis demonstrates that TSL could release a significant number of Mortgaged Vessels before approaching the 140% coverage floor. At full draw, the maximum aggregate FMV that could be released from the collateral pool without triggering a mandatory prepayment obligation is:

$780,000,000 – $210,000,000 = $570,000,000

This figure is equivalent to the dollar headroom calculated in Section V.A above. In practical terms, this means that TSL could release a substantial majority of the Mortgaged Vessels (by value) while remaining in compliance with the coverage ratio — a reflection of the significant overcollateralization of the proposed Facility.

D. Substitution of Collateral Vessels

In addition to outright release, the Credit Agreement permits TSL to substitute a Mortgaged Vessel with a replacement vessel. The substitution mechanics, set forth in Section 10.04(c) of the Credit Agreement, require the satisfaction of the following conditions:

(a) Administrative Agent Approval. The replacement vessel must be acceptable to the Administrative Agent in its reasonable discretion, taking into account the type, age, condition, and earning capacity of the replacement vessel.

(b) Ship Mortgage. TSL must grant (or cause the applicable vessel-owning subsidiary to grant) a new first-priority ship mortgage on the replacement vessel in form and substance satisfactory to the Collateral Agent, and such mortgage must be duly recorded in the applicable ship registry.

(c) Appraisal. The replacement vessel must be appraised by an approved independent appraiser (Seastone or an equivalent appraiser acceptable to the Administrative Agent) at the time of substitution.

(d) Insurance and Earnings Assignments. TSL must deliver duly executed assignments of insurances and earnings with respect to the replacement vessel, consistent with the requirements of the security documents.

(e) Coverage Ratio Compliance. After giving effect to the substitution (i.e., removing the released vessel's FMV and adding the replacement vessel's FMV), the collateral coverage ratio must remain at or above 140% of outstanding facility obligations.

(f) No Event of Default. No Event of Default or Default shall be continuing or would result from the substitution.

The substitution mechanism provides TSL with important operational flexibility to renew and upgrade its fleet during the term of the Facility without reducing the Lenders' collateral coverage.

VII. Observations and Recommendations

A. Substantial Headroom

The collateral coverage analysis set forth in this memorandum demonstrates that the proposed collateral package provides extraordinary headroom above the 140% minimum coverage ratio required under the Credit Agreement. The key findings are as follows:

• The actual coverage ratio at full draw is 520%, which is 380 percentage points above the 140% minimum.

• In dollar terms, TSL has $570,000,000 of headroom above the minimum required FMV of $210,000,000 at full draw.

• Even in a severe shipping market downturn, the aggregate FMV of the Mortgaged Vessels would need to decline by approximately 73.1% from current levels before a coverage breach would occur at full draw — a decline that would exceed the most severe historical precedents, including the 2008-2009 global financial crisis.

• The diversified composition of the Mortgaged Vessels — encompassing a mix of Capesize, Panamax, and Supramax dry bulk carriers as well as Aframax, Suezmax, and MR tankers — provides structural protection against sector-specific downturns. A decline in dry bulk values may be partially offset by stable or increasing tanker values, and vice versa, reducing the probability of a simultaneous across-the-board decline of the magnitude that would be required to trigger a breach.

B. Monitoring Considerations

Notwithstanding the substantial headroom identified above, we note the following monitoring considerations for TSL's attention:

Quarterly Compliance Certificates. TSL should ensure that it has internal processes in place to deliver quarterly compliance certificates to the Administrative Agent in a timely manner, reflecting the most recent vessel appraisals. Failure to deliver compliance certificates within the required timeframe may itself constitute an Event of Default, independent of the underlying coverage ratio.

Proactive Interim Appraisals. In the event of significant volatility in dry bulk or tanker freight rates — such as a sustained decline in the Baltic Dry Index or a sharp correction in tanker rates — TSL may wish to proactively commission interim appraisals from Seastone (or another approved appraiser) to confirm continued compliance with the coverage ratio. While the Credit Agreement requires appraisals only on a quarterly basis (absent a specific request from the Administrative Agent), proactive appraisals would allow TSL to anticipate any potential issues and take remedial action before a formal deficiency arises.

Administrative Agent's Right to Request Appraisals. The Credit Agreement reserves to the Administrative Agent the right to require additional appraisals at TSL's cost if the Administrative Agent has reasonable grounds to believe that the aggregate FMV of the Mortgaged Vessels may have materially declined since the most recent appraisal date. TSL should be aware of this right and be prepared to respond promptly to any such request.

C. Potential Negotiation Points

The substantial overcollateralization of the proposed Facility raises an important negotiation consideration that we have previously identified in our third markup of the Credit Agreement dated June 9, 2023, which was circulated to WJA (counsel to the Lenders) as part of the ongoing negotiations.

Specifically, in our third markup, we proposed the inclusion of a mechanism for the automatic release of Mortgaged Vessels when the collateral coverage ratio exceeds a specified threshold — for example, 200%. Under such a mechanism, TSL would be entitled to request the release of one or more Mortgaged Vessels without the consent of the Administrative Agent or the Required Lenders, provided that (a) the coverage ratio would remain above 200% after giving pro forma effect to the release, and (b) no Event of Default or Default is continuing. This would be in addition to (and not in replacement of) the existing release mechanics requiring Administrative Agent consent at the 140% threshold.

We also proposed, in the alternative, a reduction in the number of Mortgaged Vessels from 18 to a smaller number sufficient to provide comfortable coverage at the 140% minimum. Given that only $210,000,000 of collateral value is required to satisfy the 140% minimum at full draw, TSL could theoretically satisfy the coverage requirement with as few as three or four of the most valuable Mortgaged Vessels.

Both of these proposals remain among the 94 open comments in the current negotiation. WJA has not yet responded substantively to either proposal.

Recommendation: I recommend that we press this point in the final round of negotiations. The data presented in this memorandum strongly supports TSL's position that the current collateral package is significantly over-secured relative to the Facility size, and that TSL should be entitled to greater flexibility in managing its collateral pool. An automatic release mechanism at the 200% threshold would provide meaningful operational flexibility to TSL without materially increasing the Lenders' credit risk, given that a 200% coverage ratio still represents $90,000,000 of excess coverage at full draw. This point should be raised with Sophie for discussion with Ian Blackwood prior to the next negotiation call with WJA, which I understand is tentatively scheduled for the week of July 17.

D. Interaction with Other Collateral

It is important to note that the analysis set forth in this memorandum focuses exclusively on the vessel mortgage component of the collateral package — specifically, the aggregate fair market value of the 18 Mortgaged Vessels as measured against the 140% minimum coverage ratio. However, the overall collateral package securing the Facility is substantially broader than the vessel mortgages alone.

As described in Section II.C above, the collateral package also includes:

(a) assignments of earnings accounts and receivables attributable to the Mortgaged Vessels;

(b) assignments of H&M and P&I insurance coverages;

(d) assignments of all time charters with remaining terms of 12 months or more.

These additional collateral elements provide significant supplemental credit support to the Lenders that is not captured in the collateral coverage ratio calculation. The coverage ratio, as defined in the Credit Agreement, is calculated solely by reference to vessel fair market values. The earnings assignments, insurance assignments, share pledges, and charter assignments represent additional layers of security that further reduce downside risk for the Lenders in the event of a borrower default.

In particular, the assignment of time charters with remaining terms of 12 months or more provides the Lenders with direct access to contracted revenue streams, which may retain substantial value even in a market downturn (since time charter rates are fixed for the duration of the charter). Similarly, the share pledges provide an equity-level enforcement pathway that may be more efficient in certain jurisdictions than in rem foreclosure on the vessels themselves.

The existence of these additional collateral elements further supports our position (discussed in Section VII.C above) that the current collateral package is substantially over-secured and that TSL should be afforded greater flexibility in managing its Mortgaged Vessel pool.

VIII. Appendices

Appendix A: Summary Table of Seastone Appraisals

The following consolidated table reproduces the vessel-by-vessel fair market values from Section IV.B of this memorandum, organized by vessel type with aggregate and subtotals.

Dry Bulk Carriers

Tankers.

AGGREGATE FAIR MARKET VALUE — 18 MORTGAGED VESSELS: $780,000,000

Appendix B: Coverage Ratio Sensitivity Matrix

The following matrix illustrates the collateral coverage ratio at various combinations of aggregate FMV decline percentages and Facility utilization levels. Cells in which the coverage ratio falls below the 140% minimum are marked with an asterisk (*).

Notes:

• The asterisk (*) denotes scenarios in which the collateral coverage ratio falls below the 140% minimum, triggering a mandatory prepayment obligation or a requirement to pledge additional collateral.

• At full draw ($150M), the coverage ratio reaches the 140% minimum at a decline of approximately 73.1% and breaches the minimum at declines in excess of that threshold.

• At $125M drawn, the minimum is breached at a decline of approximately 80%. At $100M drawn or less, no decline scenario tested in this matrix results in a breach.

• These scenarios do not account for the passage of time or age-related depreciation, which would reduce FMV gradually even absent a market-wide downturn. However, annual depreciation for vessels of this type and age is typically in the range of 3-5% per annum, well within the tolerance levels identified above.

Appendix C: Relevant Credit Agreement Provisions (Cross-References)

The following table identifies the key provisions of the near-final Credit Agreement dated July 3, 2023 that are relevant to the collateral coverage analysis set forth in this memorandum:

This memorandum has been prepared for internal use by the Banking & Finance practice group of Calderwood & Harkness LLP in connection with our representation of Thalassa Shipping & Logistics SA. It is protected by the attorney-client privilege and the work product doctrine. This memorandum should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP.

END OF MEMORANDUM

No.	Vessel Name	Vessel Type	Year Built	DWT	Flag State	Vessel-Owning Subsidiary	Seastone FMV (US$)
1	M/V Aegean Valor	Capesize	2015	180,000	Marshall Islands	Thalassa Dry Bulk Holdings Ltd.	$72,000,000
2	M/V Cretan Wind	Capesize	2016	182,000	Marshall Islands	Thalassa Dry Bulk Holdings Ltd.	$74,000,000
3	M/V Poseidon Star	Panamax	2017	82,000	Liberia	Thalassa Dry Bulk Holdings Ltd.	$48,000,000
4	M/V Olympia Tide	Panamax	2014	78,000	Marshall Islands	Thalassa Dry Bulk Holdings Ltd.	$42,000,000
5	M/V Thessaly Dawn	Supramax	2018	58,000	Panama	Thalassa Logistics International Ltd.	$38,000,000
6	M/V Ionian Crest	Supramax	2016	56,000	Marshall Islands	Thalassa Dry Bulk Holdings Ltd.	$34,000,000
7	M/V Rhodesia Sun	Panamax	2013	76,000	Liberia	Thalassa Dry Bulk Holdings Ltd.	$36,000,000
8	M/V Macedon Spirit	Supramax	2019	60,000	Marshall Islands	Thalassa Dry Bulk Holdings Ltd.	$41,000,000
9	M/V Attica Fortune	Capesize	2012	176,000	Panama	Thalassa Logistics International Ltd.	$58,000,000
10	M/V Meltemi Breeze	Panamax	2018	81,000	Marshall Islands	Thalassa Dry Bulk Holdings Ltd.	$46,000,000
11	M/V Spartan Wave	Supramax	2015	55,000	Liberia	Thalassa Dry Bulk Holdings Ltd.	$32,000,000
12	M/V Delphi Horizon	Panamax	2020	83,000	Marshall Islands	Thalassa Dry Bulk Holdings Ltd.	$50,000,000
No.	Vessel Name	Vessel Type	Year Built	DWT	Flag State	Vessel-Owning Subsidiary	Seastone FMV (US$)
13	M/T Helios Flame	Aframax	2017	115,000	Marshall Islands	Thalassa Tanker Operations Ltd.	$52,000,000
14	M/T Nereid Glory	Suezmax	2016	158,000	Liberia	Thalassa Tanker Operations Ltd.	$62,000,000
15	M/T Phaethon Rise	MR	2019	50,000	Panama	Thalassa Tanker Operations Ltd.	$28,000,000
16	M/T Ariadne Grace	Aframax	2018	113,000	Marshall Islands	Thalassa Tanker Operations Ltd.	$35,000,000
17	M/T Cyclades Star	MR	2020	51,000	Marshall Islands	Thalassa Tanker Operations Ltd.	$18,000,000
18	M/T Prometheus Venture	Suezmax	2015	156,000	Liberia	Thalassa Tanker Operations Ltd.	$14,000,000
Metric	Amount
Aggregate Mortgaged Vessel FMV	$780,000,000
Outstanding Facility Obligations (Maximum)	$150,000,000
Actual Coverage Ratio	520.0%
Minimum Required Ratio	140.0%

Excess Coverage (Percentage Points)	380.0 pp
Minimum Required FMV at Full Draw	$210,000,000
Dollar Headroom Above Minimum	$570,000,000
Utilization Level	Outstanding Obligations	Min. Required FMV (140%)	Current FMV	Maximum Permissible Decline	Decline Tolerance (%)
Full Draw (100%)	$150,000,000	$210,000,000	$780,000,000	$570,000,000	73.1%
75% Draw	$112,500,000	$157,500,000	$780,000,000	$622,500,000	79.8%
50% Draw	$75,000,000	$105,000,000	$780,000,000	$675,000,000	86.5%
Utilization	Outstanding Obligations	Coverage Ratio	Excess Over 140% Minimum
$50,000,000	$50,000,000	1,560.0%	1,420.0 pp
$75,000,000	$75,000,000	1,040.0%	900.0 pp
$100,000,000	$100,000,000	780.0%	640.0 pp
$125,000,000	$125,000,000	624.0%	484.0 pp
$150,000,000	$150,000,000	520.0%	380.0 pp
No.	Vessel Name	Type	Year Built	DWT	Flag	FMV (US$)
1	M/V Aegean Valor	Capesize	2015	180,000	Marshall Islands	$72,000,000
2	M/V Cretan Wind	Capesize	2016	182,000	Marshall Islands	$74,000,000
3	M/V Attica Fortune	Capesize	2012	176,000	Panama	$58,000,000
Capesize Subtotal (3 vessels)	$204,000,000
4	M/V Poseidon Star	Panamax	2017	82,000	Liberia	$48,000,000
5	M/V Olympia Tide	Panamax	2014	78,000	Marshall Islands	$42,000,000
6	M/V Rhodesia Sun	Panamax	2013	76,000	Liberia	$36,000,000
7	M/V Meltemi Breeze	Panamax	2018	81,000	Marshall Islands	$46,000,000
8	M/V Delphi Horizon	Panamax	2020	83,000	Marshall Islands	$50,000,000
Panamax Subtotal (5 vessels)	$222,000,000
9	M/V Thessaly Dawn	Supramax	2018	58,000	Panama	$38,000,000

10	M/V Ionian Crest	Supramax	2016	56,000	Marshall Islands	$34,000,000
11	M/V Macedon Spirit	Supramax	2019	60,000	Marshall Islands	$41,000,000
12	M/V Spartan Wave	Supramax	2015	55,000	Liberia	$32,000,000
Supramax Subtotal (4 vessels)	$145,000,000
DRY BULK TOTAL (12 vessels)	$571,000,000
No.	Vessel Name	Type	Year Built	DWT	Flag	FMV (US$)
13	M/T Helios Flame	Aframax	2017	115,000	Marshall Islands	$52,000,000
14	M/T Ariadne Grace	Aframax	2018	113,000	Marshall Islands	$35,000,000
Aframax Subtotal (2 vessels)	$87,000,000
15	M/T Nereid Glory	Suezmax	2016	158,000	Liberia	$62,000,000
16	M/T Prometheus Venture	Suezmax	2015	156,000	Liberia	$14,000,000
Suezmax Subtotal (2 vessels)	$76,000,000
17	M/T Phaethon Rise	MR	2019	50,000	Panama	$28,000,000
18	M/T Cyclades Star	MR	2020	51,000	Marshall Islands	$18,000,000
MR Subtotal (2 vessels)	$46,000,000
TANKER TOTAL (6 vessels)	$209,000,000
FMV Decline	Resulting Agg. FMV	$50M Drawn	$75M Drawn	$100M Drawn	$125M Drawn	$150M Drawn
0%	$780,000,000	1,560%	1,040%	780%	624%	520%
10%	$702,000,000	1,404%	936%	702%	562%	468%
20%	$624,000,000	1,248%	832%	624%	499%	416%
30%	$546,000,000	1,092%	728%	546%	437%	364%
40%	$468,000,000	936%	624%	468%	374%	312%
50%	$390,000,000	780%	520%	390%	312%	260%
60%	$312,000,000	624%	416%	312%	250%	208%
70%	$234,000,000	468%	312%	234%	187%	156%

73.1%	$210,000,000	420%	280%	210%	168%	140%
75%	$195,000,000	390%	260%	195%	156%	130%*
80%	$156,000,000	312%	208%	156%	125%*	104%*
Provision	Section Reference	Description
"Collateral Coverage Ratio" (Definition)	Section 1.01	Defines the Collateral Coverage Ratio as the ratio of the aggregate Fair Market Value of all Mortgaged Vessels to the aggregate Outstanding Facility Obligations, expressed as a percentage.
"Mortgaged Vessels" (Definition)	Section 1.01	Defines "Mortgaged Vessels" as each vessel listed on Schedule 4 to the Credit Agreement that is subject to a first-priority ship mortgage in favor of the Collateral Agent for the benefit of the Secured Parties.
"Fair Market Value" (Definition)	Section 1.01	Defines "Fair Market Value" as the charter-free fair market value of a vessel on an "as-is, where-is" basis as determined by an Approved Appraiser in accordance with standard industry practice.
Minimum Collateral Coverage Covenant	Section 7.15	Requires TSL to maintain a minimum Collateral Coverage Ratio of 140% of Outstanding Facility Obligations at all times, with quarterly testing in connection with compliance certificate delivery.
Vessel Release and Substitution	Section 10.04	Sets forth the conditions and procedures for the release of Mortgaged Vessels from the collateral pool, including the pro forma coverage ratio test, mandatory prepayment obligation, and substitution mechanics.
Vessel Dispositions	Section 7.16	Establishes the conditions under which TSL may sell, transfer, or otherwise dispose of Mortgaged Vessels, including coverage ratio compliance and Administrative Agent consent requirements.
Mandatory Prepayment Upon Coverage Deficiency	Section 2.05(b)(iii)	Requires TSL to make mandatory prepayments of outstanding facility obligations if the Collateral Coverage Ratio falls below 140%, in an amount sufficient to restore compliance within 30 days.
Approved Appraiser Requirements	Section 7.15(c)	Specifies that Fair Market Value determinations must be made by an independent appraiser acceptable to the Administrative Agent; identifies Seastone Maritime Advisors Ltd. as an initially approved appraiser.
Compliance Certificate	Section 6.02(a)	Requires quarterly delivery of a compliance certificate signed by a Financial Officer of TSL, including a calculation of the Collateral Coverage Ratio as of the most recent fiscal quarter end.
Events of Default — Covenant Breach	Section 8.01(d)	Provides that failure to comply with Section 7.15 (after expiration of the 30-day cure period for coverage deficiencies) constitutes an Event of Default.

MEMORANDUM — PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT
FROM: Daniel Obi, Associate, Banking & Finance, Calderwood & Harkness LLP
TO: Sophie Tremblay, Senior Associate, Banking & Finance, Calderwood & Harkness LLP
DATE: July 11, 2023
RE: Collateral Coverage Analysis — Proposed $150,000,000 Senior Secured Revolving Credit Facility for Thalassa Shipping & Logistics SA
MATTER NO.: 1044-00002
COPIES: Ian Blackwood (Responsible Partner); Stephanie Okafor (Billing Partner)
Right-click to update Table of Contents
I. Executive Summary
This memorandum analyzes whether the eighteen (18) Mortgaged Vessels identified in the near-final credit agreement dated July 3, 2023 (the "Credit Agreement") satisfy the minimum collateral coverage ratio required thereunder in connection with the proposed $150,000,000 senior secured revolving credit facility (the "Facility") for Thalassa Shipping & Logistics SA ("TSL" or the "Borrower"). The analysis is based on independent vessel appraisals delivered by Seastone Maritime Advisors Ltd. ("Seastone"), a London-based independent maritime valuation firm, on July 10, 2023. The appraisals were prepared under the direction of Duncan Fairweather, Managing Director of Seastone, and reflect charter-free fair market values as of June 30, 2023.
The key conclusions of this analysis are as follows:
•  Aggregate Fair Market Value. The aggregate charter-free fair market value of the 18 Mortgaged Vessels, as determined by Seastone, is $780,000,000.
•  Minimum Required Collateral Value. Under Section 7.15 of the Credit Agreement, TSL is required to maintain a minimum collateral coverage ratio of 140% of outstanding facility obligations at all times. At a full draw of $150,000,000, the minimum required collateral value is 140% × $150,000,000 = $210,000,000.
•  Actual Coverage Ratio. The actual collateral coverage ratio at full draw is approximately 520% ($780,000,000 ÷ $150,000,000), providing substantial headroom of approximately $570,000,000 above the minimum threshold.
•  Utilization-Based Testing. It bears noting that the coverage ratio under the Credit Agreement is tested against outstanding facility obligations (i.e., drawn revolving loans, LC exposure, and swingline loans), not against total commitments. As a result, at lower utilization levels — which are expected to be the norm given TSL's indicated borrowing needs — the actual coverage ratio will be even more favorable than the 520% figure calculated at full draw.
This memorandum provides a vessel-by-vessel breakdown of the Seastone appraisals, a detailed sensitivity analysis under various fleet value decline and utilization scenarios, a review of the vessel release and substitution mechanics under the Credit Agreement, and recommendations for further negotiation of the collateral coverage provisions.
II. Background
A. Transaction Overview
Thalassa Shipping & Logistics SA ("TSL") is a Société Anonyme organized under the laws of the Hellenic Republic (Greece), with its registered offices and principal place of business located at 14 Akti Miaouli, Piraeus 185 35, Greece. TSL is a diversified maritime shipping company engaged in the ownership, operation, and commercial management of dry bulk carriers and tankers.
TSL is seeking to enter into the proposed $150,000,000 senior secured revolving credit facility for two principal purposes:
(a) Refinancing. To refinance in full the existing $125,000,000 senior secured revolving credit facility with Harborstone National Bank (the "Existing Facility"), originally documented pursuant to a Credit Agreement dated November 15, 2018, as amended by the First Amendment dated June 30, 2020 and the Second Amendment dated March 1, 2022. The Existing Facility has a stated maturity date of November 15, 2023, and TSL has determined to refinance prior to maturity rather than seek a further extension.
(b) Incremental Liquidity. To provide $25,000,000 of incremental borrowing capacity over and above the Existing Facility commitment amount, to be used for general corporate and working capital purposes, including vessel drydocking costs, bunker fuel procurement, and ordinary course operating expenses.
The key parties to the proposed Facility are as follows:
•  Borrower: Thalassa Shipping & Logistics SA
•  Sole Lead Arranger, Sole Bookrunner, and Administrative Agent: Meridian Atlantic Bank, National Association ("Meridian Atlantic")
•  Syndicate Lenders:
•  Nordkapp Maritime Finance AG — $40,000,000 commitment
•  Clearwater Commercial Lending LLC — $35,000,000 commitment
•  Eastbourne Capital Partners LLP — $30,000,000 commitment
•  Meridian Atlantic Bank, N.A. (retained commitment) — $45,000,000
•  Collateral Agent and Security Trustee: Pinnacle Trust & Agency Services Inc.
•  Governing Law: State of New York
The Facility includes a $20,000,000 sublimit for the issuance of standby and commercial letters of credit (with Meridian Atlantic serving as the initial Issuing Bank) and a $15,000,000 sublimit for swingline loans (with Meridian Atlantic serving as the Swingline Lender). The proposed maturity date is five years from closing.
TSL is represented in this transaction by Calderwood & Harkness LLP. Meridian Atlantic and the Lenders are represented by Whitfield, Jensen & Adler LLP ("WJA"). The near-final Credit Agreement dated July 3, 2023 reflects the second markup by WJA following our initial draft circulated on May 15, 2023 and our third markup circulated on June 9, 2023. As of the date of this memorandum, 94 open comments remain across the transaction documents.
B. TSL Fleet Overview
TSL operates a fleet of 40 vessels, consisting of 28 dry bulk carriers and 12 tankers. The total fleet was appraised in the first quarter of 2023 at an aggregate fair market value of approximately $1,200,000,000 (the "Total Fleet Value"). TSL's fleet operates integrated maritime logistics services across a range of trade routes, with a primary focus on the Mediterranean Sea, the Black Sea region, and transatlantic routes serving ports in Northern Europe, West Africa, the U.S. Gulf Coast, and the East Coast of South America.
For the fiscal year ended December 31, 2022, TSL reported the following financial highlights:
•  Revenue: approximately $620,000,000
•  EBITDA: approximately $145,000,000
These financial metrics indicate a healthy operating profile, with an EBITDA margin of approximately 23.4%. The proposed Facility, at full draw, would represent a leverage ratio of approximately 1.03x against FY2022 EBITDA, which is conservative by industry standards.
C. Collateral Package Summary
The collateral package securing the Facility is comprehensive and structured in a manner consistent with standard practice in ship financing transactions. The principal elements of the collateral package are as follows:
1.  First-Priority Ship Mortgages. First-priority ship mortgages (in the form of first preferred or statutory mortgages, as applicable, depending on the flag state of each vessel) on each of the 18 designated Mortgaged Vessels. The mortgages will be recorded in the applicable ship registries in each flag state jurisdiction (Republic of the marshall Islands, Republic of Liberia, and Republic of Panama).
2.  Assignment of Earnings. Assignment of all earnings accounts and receivables attributable to the Mortgaged Vessels, including freight, hire, and demurrage receivables, to the Collateral Agent for the benefit of the Secured Parties.
3.  Assignment of Insurances. Assignment of all hull & machinery ("H&M") and protection & indemnity ("P&I") insurance coverages for the Mortgaged Vessels. TSL's insurance program is brokered through Trident Marine Insurance Brokers Ltd. The Collateral Agent will be named as loss payee and additional assured under the relevant policies.
4.  Share Pledges. Pledge of 100% of the equity interests in each vessel-owning subsidiary that holds title to one or more Mortgaged Vessels. The relevant vessel-owning subsidiaries are:
•  Thalassa Dry Bulk Holdings Ltd., a company organized under the laws of the Republic of Cyprus;
•  Thalassa Tanker Operations Ltd., a company organized under the laws of the Republic of the marshall Islands; and
•  Thalassa Logistics International Ltd., a company organized under the laws of the Republic of Cyprus.
5.  Assignment of Time Charters. Assignment of all time charter agreements with remaining terms of twelve (12) months or more to which any Mortgaged Vessel is subject, together with all earnings, proceeds, and claims arising thereunder.
The collateral package is designed to provide the Lenders with comprehensive security over the Mortgaged Vessels and their associated revenue streams. This memorandum focuses specifically on the vessel mortgage component and the associated collateral coverage ratio analysis.
III. Minimum Collateral Coverage Ratio — Contractual Requirement
The near-final Credit Agreement dated July 3, 2023 establishes a minimum collateral coverage ratio that TSL must maintain at all times during the term of the Facility. The relevant provisions are summarized below.
Minimum Ratio. Section 7.15 (Collateral Coverage) of the Credit Agreement requires TSL to maintain a minimum collateral coverage ratio of 140% of outstanding facility obligations at all times. This ratio is consistent with prevailing market practice in senior secured shipping finance transactions, where minimum coverage ratios typically range from 125% to 150% depending on the credit profile of the borrower, fleet age and composition, and prevailing market conditions.
Definition of Outstanding Facility Obligations. For purposes of the collateral coverage ratio, "Outstanding Facility Obligations" is defined in Section 1.01 of the Credit Agreement to include:
(a) the aggregate outstanding principal amount of all Revolving Loans;
(b) the aggregate amount of all LC Exposure (defined as the sum of the aggregate undrawn stated amount of all outstanding Letters of Credit plus the aggregate principal amount of all unreimbursed LC Disbursements); and
(c) the aggregate outstanding principal amount of all Swingline Loans.
Accordingly, at a full draw of $150,000,000 (inclusive of the maximum letter of credit and swingline sublimits), the minimum required aggregate fair market value of the Mortgaged Vessels would be:
140% × $150,000,000 = $210,000,000
Testing Frequency. The collateral coverage ratio is tested on the following occasions:
(a) Quarterly. In connection with the delivery of each quarterly compliance certificate required under Section 6.02(a) of the Credit Agreement, based on the most recent vessel appraisals then available;
(b) Upon Vessel Disposition. Promptly upon (and giving pro forma effect to) any sale, transfer, total loss, or other disposition of a Mortgaged Vessel; and
(c) Upon Administrative Agent Request. At such other times as the Administrative Agent may reasonably request, if the Administrative Agent has reasonable grounds to believe that the aggregate fair market value of the Mortgaged Vessels may have declined materially since the most recent appraisal date.
Consequence of Breach. If the collateral coverage ratio falls below 140% at any testing date, TSL must, within thirty (30) days following the date on which such deficiency is identified (or, in the case of a vessel sale or total loss, within thirty (30) days following the consummation of such sale or the occurrence of such total loss):
(a) prepay outstanding facility obligations in an amount sufficient to restore the collateral coverage ratio to at least 140%; or
(b) provide additional Mortgaged Vessels as collateral (including delivery of duly executed and recorded first-priority ship mortgages, insurance assignments, earnings assignments, and related security documents), such that the aggregate fair market value of all Mortgaged Vessels (including such additional vessels) is sufficient to restore the collateral coverage ratio to at least 140%.
Failure to cure the deficiency within the 30-day cure period constitutes an Event of Default under Section 8.01(d) of the Credit Agreement.
Appraisal Methodology. The fair market value of the Mortgaged Vessels is determined on a charter-free basis by an independent appraiser acceptable to the Administrative Agent. For purposes of the initial funding and ongoing compliance, the parties have agreed upon Seastone Maritime Advisors Ltd. as the approved independent appraiser. Section 7.15(c) of the Credit Agreement provides that the Administrative Agent may designate one or more additional approved appraisers from time to time, and that TSL may propose alternative appraisers for the Administrative Agent's approval (not to be unreasonably withheld). Appraisals are conducted at TSL's cost.
IV. Vessel-by-Vessel Valuation Analysis
A. Seastone Appraisal Summary
On July 10, 2023, Seastone Maritime Advisors Ltd. ("Seastone") delivered independent appraisal reports covering each of the 18 Mortgaged Vessels to be encumbered under the proposed Facility. Seastone is a London-based independent maritime valuation firm with offices at 55 Gracechurch Street, London EC3V 0EE, United Kingdom. The appraisals were prepared by Duncan Fairweather, Managing Director, and his team, and are addressed to Meridian Atlantic Bank, N.A. in its capacity as Administrative Agent, and to Pinnacle Trust & Agency Services Inc. in its capacity as Collateral Agent.
The key parameters of the Seastone appraisals are as follows:
•  Valuation Standard: Charter-free fair market value on an "as-is, where-is" basis
•  Valuation Date: June 30, 2023
•  Methodology: Seastone's valuations are based on a combination of (i) comparable market transaction data for similar vessel types, ages, and specifications; (ii) discounted cash flow analysis using forward freight rate assumptions; and (iii) replacement cost analysis adjusted for depreciation. This methodology is consistent with standard shipping finance appraisal practice and the requirements of Section 7.15 of the Credit Agreement.
•  Currency: All values expressed in United States dollars
Seastone has confirmed in its engagement letter and in the body of each appraisal report that it has no material business relationship with TSL, Meridian Atlantic, or any of the Syndicate Lenders that would impair its independence, and that it has performed its valuations in accordance with the standards of the International Valuation Standards Council (IVSC) and the Maritime Valuers' Accreditation Scheme.
B. Vessel-by-Vessel FMV Table (18 Mortgaged Vessels)
Set forth below is the vessel-by-vessel summary of the Seastone appraisals for the 18 Mortgaged Vessels, organized by vessel type. All fair market values are as of June 30, 2023.
Dry Bulk Carriers (12 Vessels)
Subtotal — Dry Bulk Carriers: $571,000,000
Tankers (6 Vessels)
Subtotal — Tankers: $209,000,000
Aggregate Fair Market Value of 18 Mortgaged Vessels: $780,000,000
All individual vessel values set forth above are derived from the Seastone appraisal reports dated July 10, 2023 and reflect the allocations made by Seastone among the individual vessels within the Mortgaged Vessel pool. Copies of the Seastone reports are maintained in the deal file and are available for review upon request.
C. Fleet Composition Notes
The composition of the Mortgaged Vessel pool warrants several observations relevant to the coverage analysis:
Vessel Type Mix. The 18 Mortgaged Vessels consist of 12 dry bulk carriers and 6 tankers. The dry bulk carriers are further diversified across three sub-segments: three Capesize vessels (aggregate FMV of $204,000,000), five Panamax vessels (aggregate FMV of $222,000,000), and four Supramax vessels (aggregate FMV of $145,000,000). The tanker fleet includes two Aframax vessels (aggregate FMV of $87,000,000), two Suezmax vessels (aggregate FMV of $76,000,000), and two MR (medium range) product tankers (aggregate FMV of $46,000,000). This diversification across vessel types and sub-segments provides a degree of insulation against downturns in any single sector of the shipping market.
Proportion of Total Fleet. The 18 Mortgaged Vessels represent 45% of TSL's total fleet of 40 vessels by count. By value, the Mortgaged Vessel aggregate FMV of $780,000,000 represents approximately 65% of the total fleet value of approximately $1.2 billion (based on Q1 2023 fleet-wide appraisals). This means that TSL retains 22 unencumbered vessels with an estimated aggregate value of approximately $420,000,000, which are available as potential additional collateral should the need arise.
Fleet Age. The 18 Mortgaged Vessels were built between 2012 and 2020. The average age of the Mortgaged Vessels, as of the June 30, 2023 valuation date, is approximately 6 years, indicating a relatively modern fleet. Younger vessels tend to maintain higher resale values and are less susceptible to accelerated depreciation due to regulatory obsolescence (including with respect to environmental regulations such as the IMO 2020 sulfur cap and the forthcoming Carbon Intensity Indicator requirements). The oldest vessel in the pool, M/V Attica Fortune, was built in 2012 and is approximately 11 years old; notwithstanding its age, Seastone has appraised it at $58,000,000, reflecting the strong current market for Capesize tonnage.
Vessel-Owning Subsidiaries. The Mortgaged Vessels are held by three vessel-owning subsidiaries: (i) Thalassa Dry Bulk Holdings Ltd. (Cyprus), which holds the majority of the dry bulk carriers; (ii) Thalassa Tanker Operations Ltd. (Republic of the marshall Islands), which holds all six tankers; and (iii) Thalassa Logistics International Ltd. (Cyprus), which holds certain dry bulk carriers flagged in Panama. The pledge of 100% of the equity interests in each of these subsidiaries provides the Secured Parties with both in rem security (through the ship mortgages) and equity-level security (through the share pledges), ensuring multiple enforcement pathways in the event of a default.
V. Coverage Ratio Analysis
A. At Full Draw ($150,000,000)
The following summarizes the collateral coverage ratio analysis assuming a full draw of the Facility:
As illustrated above, the actual coverage ratio of 520% at full draw exceeds the 140% minimum by 380 percentage points, representing dollar headroom of $570,000,000. This is an exceptionally robust coverage position.
B. Sensitivity Analysis — FMV Decline Scenarios
A critical question for the Lenders is the extent to which the aggregate fair market value of the Mortgaged Vessels could decline before the 140% minimum coverage ratio would be breached. The following analysis examines this question at various utilization levels:
At full draw of $150,000,000, the aggregate FMV of the Mortgaged Vessels would need to decline by approximately 73.1% — from $780,000,000 to $210,000,000 — before the 140% minimum would be breached. To put this in historical context, the most severe decline in dry bulk vessel values in recent memory occurred during the global financial crisis of 2008-2009, when Capesize values declined by approximately 60-65% from peak to trough. Even that historically unprecedented decline would not have triggered a coverage breach under the current collateral structure at full draw.
At lower utilization levels, the decline tolerance is even more favorable: at 75% draw ($112.5 million outstanding), FMV could decline by approximately 79.8%, and at 50% draw ($75 million outstanding), FMV could decline by approximately 86.5%, before the minimum ratio would be breached.
C. Sensitivity Analysis — Utilization Scenarios
The following table illustrates the coverage ratio at various utilization levels, holding the aggregate Mortgaged Vessel FMV constant at $780,000,000:
All utilization scenarios produce coverage ratios that far exceed the 140% minimum. Even at the maximum draw of $150,000,000, the coverage ratio of 520% is nearly four times the required minimum. This analysis confirms that the proposed collateral package provides more than adequate coverage at any reasonably foreseeable utilization level.
D. Comparison to Existing Harborstone Facility
A comparison to the Existing Facility with Harborstone National Bank is instructive. The Existing Facility (as amended) also requires a minimum collateral coverage ratio of 140%, and the collateral pool under the Existing Facility includes the same 18 vessels (subject to differences in the underlying security documentation, which is not analyzed in this memorandum).
As of the most recent reporting date, the aggregate outstanding principal balance under the Existing Facility is approximately $124,375,000. Applying the current Seastone FMV of $780,000,000 to the Existing Facility:
Coverage Ratio (Existing Facility) = $780,000,000 ÷ $124,375,000 ≈ 627%
The proposed Facility's larger commitment size ($150,000,000 vs. $125,000,000) results in a slightly lower coverage ratio at full draw (520% vs. 627% under the Existing Facility at its current outstanding balance), but this difference is immaterial in the context of the substantial headroom above the 140% minimum under either facility. Moreover, the proposed Facility provides TSL with an additional $25,000,000 of borrowing capacity — a meaningful incremental liquidity benefit — while still maintaining a coverage ratio that is nearly four times the required minimum.
VI. Vessel Release Mechanics
A. Overview of Release Provisions
The near-final Credit Agreement includes provisions permitting the release of individual Mortgaged Vessels from the collateral pool under specified conditions. These release mechanics are set forth in Section 10.04 (Release of Collateral) and Section 7.16 (Vessel Dispositions) of the Credit Agreement and are critical to TSL's operational flexibility, as TSL actively manages its fleet and may from time to time sell, replace, or otherwise dispose of individual vessels.
Under the Credit Agreement, TSL may request the release of a Mortgaged Vessel from the collateral pool in connection with any of the following events:
(a) a permitted vessel sale or other disposition in the ordinary course of TSL's fleet management activities;
(b) a total loss event (whether actual or constructive) with respect to a Mortgaged Vessel; or
(c) a substitution of the Mortgaged Vessel with a replacement vessel that is acceptable to the Administrative Agent and that meets the criteria set forth in the Credit Agreement.
B. Conditions to Release
The release of any Mortgaged Vessel from the collateral pool is subject to the satisfaction of each of the following conditions:
Coverage Ratio Maintenance. After giving pro forma effect to the release (i.e., removing the subject vessel's FMV from the numerator of the collateral coverage ratio calculation), the aggregate FMV of the remaining Mortgaged Vessels must be sufficient to maintain a minimum coverage ratio of 140% of then-outstanding facility obligations. This is the critical gatekeeping condition and ensures that the Lenders' collateral position is not materially impaired by any individual vessel release.
Mandatory Prepayment. If the coverage ratio would fall below 140% after giving pro forma effect to the proposed release, TSL must, contemporaneously with the release, prepay outstanding facility obligations in an amount sufficient to restore the coverage ratio to at least 140%. The mandatory prepayment must be accompanied by a corresponding reduction in commitments, unless the Credit Agreement otherwise provides.
No Event of Default. No Event of Default or Default (as each is defined in the Credit Agreement) shall have occurred and be continuing at the time of the requested release, or would result from the consummation of the release.
Administrative Agent Consent. Written consent of the Administrative Agent, acting at the direction of the Required Lenders (defined as Lenders holding more than 50% of the aggregate commitments), is required prior to the release of any Mortgaged Vessel. The Credit Agreement does not specify a reasonableness standard for such consent, which is a point we may wish to revisit in final negotiations (see Section VII.C below).
C. Illustrative Release Scenario
To illustrate the operation of the vessel release mechanics, consider the following hypothetical scenario:
Scenario: TSL wishes to sell and release M/V Aegean Valor (Seastone FMV: $72,000,000), the highest-value dry bulk carrier in the Mortgaged Vessel pool.
•  Remaining Collateral FMV After Release: $780,000,000 – $72,000,000 = $708,000,000
•  At Full Draw ($150,000,000): Revised coverage ratio = $708,000,000 ÷ $150,000,000 = 472%
•  Minimum Required: 140%
•  Conclusion: The release would be permitted without any mandatory prepayment, as the revised coverage ratio of 472% remains well above the 140% minimum.
This analysis demonstrates that TSL could release a significant number of Mortgaged Vessels before approaching the 140% coverage floor. At full draw, the maximum aggregate FMV that could be released from the collateral pool without triggering a mandatory prepayment obligation is:
$780,000,000 – $210,000,000 = $570,000,000
This figure is equivalent to the dollar headroom calculated in Section V.A above. In practical terms, this means that TSL could release a substantial majority of the Mortgaged Vessels (by value) while remaining in compliance with the coverage ratio — a reflection of the significant overcollateralization of the proposed Facility.
D. Substitution of Collateral Vessels
In addition to outright release, the Credit Agreement permits TSL to substitute a Mortgaged Vessel with a replacement vessel. The substitution mechanics, set forth in Section 10.04(c) of the Credit Agreement, require the satisfaction of the following conditions:
(a) Administrative Agent Approval. The replacement vessel must be acceptable to the Administrative Agent in its reasonable discretion, taking into account the type, age, condition, and earning capacity of the replacement vessel.
(b) Ship Mortgage. TSL must grant (or cause the applicable vessel-owning subsidiary to grant) a new first-priority ship mortgage on the replacement vessel in form and substance satisfactory to the Collateral Agent, and such mortgage must be duly recorded in the applicable ship registry.
(c) Appraisal. The replacement vessel must be appraised by an approved independent appraiser (Seastone or an equivalent appraiser acceptable to the Administrative Agent) at the time of substitution.
(d) Insurance and Earnings Assignments. TSL must deliver duly executed assignments of insurances and earnings with respect to the replacement vessel, consistent with the requirements of the security documents.
(e) Coverage Ratio Compliance. After giving effect to the substitution (i.e., removing the released vessel's FMV and adding the replacement vessel's FMV), the collateral coverage ratio must remain at or above 140% of outstanding facility obligations.
(f) No Event of Default. No Event of Default or Default shall be continuing or would result from the substitution.
The substitution mechanism provides TSL with important operational flexibility to renew and upgrade its fleet during the term of the Facility without reducing the Lenders' collateral coverage.
VII. Observations and Recommendations
A. Substantial Headroom
The collateral coverage analysis set forth in this memorandum demonstrates that the proposed collateral package provides extraordinary headroom above the 140% minimum coverage ratio required under the Credit Agreement. The key findings are as follows:
•  The actual coverage ratio at full draw is 520%, which is 380 percentage points above the 140% minimum.
•  In dollar terms, TSL has $570,000,000 of headroom above the minimum required FMV of $210,000,000 at full draw.
•  Even in a severe shipping market downturn, the aggregate FMV of the Mortgaged Vessels would need to decline by approximately 73.1% from current levels before a coverage breach would occur at full draw — a decline that would exceed the most severe historical precedents, including the 2008-2009 global financial crisis.
•  The diversified composition of the Mortgaged Vessels — encompassing a mix of Capesize, Panamax, and Supramax dry bulk carriers as well as Aframax, Suezmax, and MR tankers — provides structural protection against sector-specific downturns. A decline in dry bulk values may be partially offset by stable or increasing tanker values, and vice versa, reducing the probability of a simultaneous across-the-board decline of the magnitude that would be required to trigger a breach.
B. Monitoring Considerations
Notwithstanding the substantial headroom identified above, we note the following monitoring considerations for TSL's attention:
Quarterly Compliance Certificates. TSL should ensure that it has internal processes in place to deliver quarterly compliance certificates to the Administrative Agent in a timely manner, reflecting the most recent vessel appraisals. Failure to deliver compliance certificates within the required timeframe may itself constitute an Event of Default, independent of the underlying coverage ratio.
Proactive Interim Appraisals. In the event of significant volatility in dry bulk or tanker freight rates — such as a sustained decline in the Baltic Dry Index or a sharp correction in tanker rates — TSL may wish to proactively commission interim appraisals from Seastone (or another approved appraiser) to confirm continued compliance with the coverage ratio. While the Credit Agreement requires appraisals only on a quarterly basis (absent a specific request from the Administrative Agent), proactive appraisals would allow TSL to anticipate any potential issues and take remedial action before a formal deficiency arises.
Administrative Agent's Right to Request Appraisals. The Credit Agreement reserves to the Administrative Agent the right to require additional appraisals at TSL's cost if the Administrative Agent has reasonable grounds to believe that the aggregate FMV of the Mortgaged Vessels may have materially declined since the most recent appraisal date. TSL should be aware of this right and be prepared to respond promptly to any such request.
C. Potential Negotiation Points
The substantial overcollateralization of the proposed Facility raises an important negotiation consideration that we have previously identified in our third markup of the Credit Agreement dated June 9, 2023, which was circulated to WJA (counsel to the Lenders) as part of the ongoing negotiations.
Specifically, in our third markup, we proposed the inclusion of a mechanism for the automatic release of Mortgaged Vessels when the collateral coverage ratio exceeds a specified threshold — for example, 200%. Under such a mechanism, TSL would be entitled to request the release of one or more Mortgaged Vessels without the consent of the Administrative Agent or the Required Lenders, provided that (a) the coverage ratio would remain above 200% after giving pro forma effect to the release, and (b) no Event of Default or Default is continuing. This would be in addition to (and not in replacement of) the existing release mechanics requiring Administrative Agent consent at the 140% threshold.
We also proposed, in the alternative, a reduction in the number of Mortgaged Vessels from 18 to a smaller number sufficient to provide comfortable coverage at the 140% minimum. Given that only $210,000,000 of collateral value is required to satisfy the 140% minimum at full draw, TSL could theoretically satisfy the coverage requirement with as few as three or four of the most valuable Mortgaged Vessels.
Both of these proposals remain among the 94 open comments in the current negotiation. WJA has not yet responded substantively to either proposal.
Recommendation: I recommend that we press this point in the final round of negotiations. The data presented in this memorandum strongly supports TSL's position that the current collateral package is significantly over-secured relative to the Facility size, and that TSL should be entitled to greater flexibility in managing its collateral pool. An automatic release mechanism at the 200% threshold would provide meaningful operational flexibility to TSL without materially increasing the Lenders' credit risk, given that a 200% coverage ratio still represents $90,000,000 of excess coverage at full draw. This point should be raised with Sophie for discussion with Ian Blackwood prior to the next negotiation call with WJA, which I understand is tentatively scheduled for the week of July 17.
D. Interaction with Other Collateral
It is important to note that the analysis set forth in this memorandum focuses exclusively on the vessel mortgage component of the collateral package — specifically, the aggregate fair market value of the 18 Mortgaged Vessels as measured against the 140% minimum coverage ratio. However, the overall collateral package securing the Facility is substantially broader than the vessel mortgages alone.
As described in Section II.C above, the collateral package also includes:
(a) assignments of earnings accounts and receivables attributable to the Mortgaged Vessels;
(b) assignments of H&M and P&I insurance coverages;
(c) pledges of 100% of the equity interests in each vessel-owning subsidiary; and
(d) assignments of all time charters with remaining terms of 12 months or more.
These additional collateral elements provide significant supplemental credit support to the Lenders that is not captured in the collateral coverage ratio calculation. The coverage ratio, as defined in the Credit Agreement, is calculated solely by reference to vessel fair market values. The earnings assignments, insurance assignments, share pledges, and charter assignments represent additional layers of security that further reduce downside risk for the Lenders in the event of a borrower default.
In particular, the assignment of time charters with remaining terms of 12 months or more provides the Lenders with direct access to contracted revenue streams, which may retain substantial value even in a market downturn (since time charter rates are fixed for the duration of the charter). Similarly, the share pledges provide an equity-level enforcement pathway that may be more efficient in certain jurisdictions than in rem foreclosure on the vessels themselves.
The existence of these additional collateral elements further supports our position (discussed in Section VII.C above) that the current collateral package is substantially over-secured and that TSL should be afforded greater flexibility in managing its Mortgaged Vessel pool.
VIII. Appendices
Appendix A: Summary Table of Seastone Appraisals
The following consolidated table reproduces the vessel-by-vessel fair market values from Section IV.B of this memorandum, organized by vessel type with aggregate and subtotals.
Dry Bulk Carriers
Tankers.  
AGGREGATE FAIR MARKET VALUE — 18 MORTGAGED VESSELS: $780,000,000
Appendix B: Coverage Ratio Sensitivity Matrix
The following matrix illustrates the collateral coverage ratio at various combinations of aggregate FMV decline percentages and Facility utilization levels. Cells in which the coverage ratio falls below the 140% minimum are marked with an asterisk (*).
Notes:
•  The asterisk (*) denotes scenarios in which the collateral coverage ratio falls below the 140% minimum, triggering a mandatory prepayment obligation or a requirement to pledge additional collateral.
•  At full draw ($150M), the coverage ratio reaches the 140% minimum at a decline of approximately 73.1% and breaches the minimum at declines in excess of that threshold.
•  At $125M drawn, the minimum is breached at a decline of approximately 80%. At $100M drawn or less, no decline scenario tested in this matrix results in a breach.
•  These scenarios do not account for the passage of time or age-related depreciation, which would reduce FMV gradually even absent a market-wide downturn. However, annual depreciation for vessels of this type and age is typically in the range of 3-5% per annum, well within the tolerance levels identified above.
Appendix C: Relevant Credit Agreement Provisions (Cross-References)
The following table identifies the key provisions of the near-final Credit Agreement dated July 3, 2023 that are relevant to the collateral coverage analysis set forth in this memorandum:
This memorandum has been prepared for internal use by the Banking & Finance practice group of Calderwood & Harkness LLP in connection with our representation of Thalassa Shipping & Logistics SA. It is protected by the attorney-client privilege and the work product doctrine. This memorandum should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP.
END OF MEMORANDUM
No. | Vessel Name | Vessel Type | Year Built | DWT | Flag State | Vessel-Owning Subsidiary | Seastone FMV (US$)
1 | M/V Aegean Valor | Capesize | 2015 | 180,000 | Marshall Islands | Thalassa Dry Bulk Holdings Ltd. | $72,000,000
2 | M/V Cretan Wind | Capesize | 2016 | 182,000 | Marshall Islands | Thalassa Dry Bulk Holdings Ltd. | $74,000,000
3 | M/V Poseidon Star | Panamax | 2017 | 82,000 | Liberia | Thalassa Dry Bulk Holdings Ltd. | $48,000,000
4 | M/V Olympia Tide | Panamax | 2014 | 78,000 | Marshall Islands | Thalassa Dry Bulk Holdings Ltd. | $42,000,000
5 | M/V Thessaly Dawn | Supramax | 2018 | 58,000 | Panama | Thalassa Logistics International Ltd. | $38,000,000
6 | M/V Ionian Crest | Supramax | 2016 | 56,000 | Marshall Islands | Thalassa Dry Bulk Holdings Ltd. | $34,000,000
7 | M/V Rhodesia Sun | Panamax | 2013 | 76,000 | Liberia | Thalassa Dry Bulk Holdings Ltd. | $36,000,000
8 | M/V Macedon Spirit | Supramax | 2019 | 60,000 | Marshall Islands | Thalassa Dry Bulk Holdings Ltd. | $41,000,000
9 | M/V Attica Fortune | Capesize | 2012 | 176,000 | Panama | Thalassa Logistics International Ltd. | $58,000,000
10 | M/V Meltemi Breeze | Panamax | 2018 | 81,000 | Marshall Islands | Thalassa Dry Bulk Holdings Ltd. | $46,000,000
11 | M/V Spartan Wave | Supramax | 2015 | 55,000 | Liberia | Thalassa Dry Bulk Holdings Ltd. | $32,000,000
12 | M/V Delphi Horizon | Panamax | 2020 | 83,000 | Marshall Islands | Thalassa Dry Bulk Holdings Ltd. | $50,000,000
No. | Vessel Name | Vessel Type | Year Built | DWT | Flag State | Vessel-Owning Subsidiary | Seastone FMV (US$)
13 | M/T Helios Flame | Aframax | 2017 | 115,000 | Marshall Islands | Thalassa Tanker Operations Ltd. | $52,000,000
14 | M/T Nereid Glory | Suezmax | 2016 | 158,000 | Liberia | Thalassa Tanker Operations Ltd. | $62,000,000
15 | M/T Phaethon Rise | MR | 2019 | 50,000 | Panama | Thalassa Tanker Operations Ltd. | $28,000,000
16 | M/T Ariadne Grace | Aframax | 2018 | 113,000 | Marshall Islands | Thalassa Tanker Operations Ltd. | $35,000,000
17 | M/T Cyclades Star | MR | 2020 | 51,000 | Marshall Islands | Thalassa Tanker Operations Ltd. | $18,000,000
18 | M/T Prometheus Venture | Suezmax | 2015 | 156,000 | Liberia | Thalassa Tanker Operations Ltd. | $14,000,000
Metric | Amount
Aggregate Mortgaged Vessel FMV | $780,000,000
Outstanding Facility Obligations (Maximum) | $150,000,000
Actual Coverage Ratio | 520.0%
Minimum Required Ratio | 140.0%
Excess Coverage (Percentage Points) | 380.0 pp
Minimum Required FMV at Full Draw | $210,000,000
Dollar Headroom Above Minimum | $570,000,000
Utilization Level | Outstanding Obligations | Min. Required FMV (140%) | Current FMV | Maximum Permissible Decline | Decline Tolerance (%)
Full Draw (100%) | $150,000,000 | $210,000,000 | $780,000,000 | $570,000,000 | 73.1%
75% Draw | $112,500,000 | $157,500,000 | $780,000,000 | $622,500,000 | 79.8%
50% Draw | $75,000,000 | $105,000,000 | $780,000,000 | $675,000,000 | 86.5%
Utilization | Outstanding Obligations | Coverage Ratio | Excess Over 140% Minimum
$50,000,000 | $50,000,000 | 1,560.0% | 1,420.0 pp
$75,000,000 | $75,000,000 | 1,040.0% | 900.0 pp
$100,000,000 | $100,000,000 | 780.0% | 640.0 pp
$125,000,000 | $125,000,000 | 624.0% | 484.0 pp
$150,000,000 | $150,000,000 | 520.0% | 380.0 pp
No. | Vessel Name | Type | Year Built | DWT | Flag | FMV (US$)
1 | M/V Aegean Valor | Capesize | 2015 | 180,000 | Marshall Islands | $72,000,000
2 | M/V Cretan Wind | Capesize | 2016 | 182,000 | Marshall Islands | $74,000,000
3 | M/V Attica Fortune | Capesize | 2012 | 176,000 | Panama | $58,000,000
Capesize Subtotal (3 vessels) | $204,000,000
4 | M/V Poseidon Star | Panamax | 2017 | 82,000 | Liberia | $48,000,000
5 | M/V Olympia Tide | Panamax | 2014 | 78,000 | Marshall Islands | $42,000,000
6 | M/V Rhodesia Sun | Panamax | 2013 | 76,000 | Liberia | $36,000,000
7 | M/V Meltemi Breeze | Panamax | 2018 | 81,000 | Marshall Islands | $46,000,000
8 | M/V Delphi Horizon | Panamax | 2020 | 83,000 | Marshall Islands | $50,000,000
Panamax Subtotal (5 vessels) | $222,000,000
9 | M/V Thessaly Dawn | Supramax | 2018 | 58,000 | Panama | $38,000,000
10 | M/V Ionian Crest | Supramax | 2016 | 56,000 | Marshall Islands | $34,000,000
11 | M/V Macedon Spirit | Supramax | 2019 | 60,000 | Marshall Islands | $41,000,000
12 | M/V Spartan Wave | Supramax | 2015 | 55,000 | Liberia | $32,000,000
Supramax Subtotal (4 vessels) | $145,000,000
DRY BULK TOTAL (12 vessels) | $571,000,000
No. | Vessel Name | Type | Year Built | DWT | Flag | FMV (US$)
13 | M/T Helios Flame | Aframax | 2017 | 115,000 | Marshall Islands | $52,000,000
14 | M/T Ariadne Grace | Aframax | 2018 | 113,000 | Marshall Islands | $35,000,000
Aframax Subtotal (2 vessels) | $87,000,000
15 | M/T Nereid Glory | Suezmax | 2016 | 158,000 | Liberia | $62,000,000
16 | M/T Prometheus Venture | Suezmax | 2015 | 156,000 | Liberia | $14,000,000
Suezmax Subtotal (2 vessels) | $76,000,000
17 | M/T Phaethon Rise | MR | 2019 | 50,000 | Panama | $28,000,000
18 | M/T Cyclades Star | MR | 2020 | 51,000 | Marshall Islands | $18,000,000
MR Subtotal (2 vessels) | $46,000,000
TANKER TOTAL (6 vessels) | $209,000,000
FMV Decline | Resulting Agg. FMV | $50M Drawn | $75M Drawn | $100M Drawn | $125M Drawn | $150M Drawn
0% | $780,000,000 | 1,560% | 1,040% | 780% | 624% | 520%
10% | $702,000,000 | 1,404% | 936% | 702% | 562% | 468%
20% | $624,000,000 | 1,248% | 832% | 624% | 499% | 416%
30% | $546,000,000 | 1,092% | 728% | 546% | 437% | 364%
40% | $468,000,000 | 936% | 624% | 468% | 374% | 312%
50% | $390,000,000 | 780% | 520% | 390% | 312% | 260%
60% | $312,000,000 | 624% | 416% | 312% | 250% | 208%
70% | $234,000,000 | 468% | 312% | 234% | 187% | 156%
73.1% | $210,000,000 | 420% | 280% | 210% | 168% | 140%
75% | $195,000,000 | 390% | 260% | 195% | 156% | 130%*
80% | $156,000,000 | 312% | 208% | 156% | 125%* | 104%*
Provision | Section Reference | Description
"Collateral Coverage Ratio" (Definition) | Section 1.01 | Defines the Collateral Coverage Ratio as the ratio of the aggregate Fair Market Value of all Mortgaged Vessels to the aggregate Outstanding Facility Obligations, expressed as a percentage.
"Mortgaged Vessels" (Definition) | Section 1.01 | Defines "Mortgaged Vessels" as each vessel listed on Schedule 4 to the Credit Agreement that is subject to a first-priority ship mortgage in favor of the Collateral Agent for the benefit of the Secured Parties.
"Fair Market Value" (Definition) | Section 1.01 | Defines "Fair Market Value" as the charter-free fair market value of a vessel on an "as-is, where-is" basis as determined by an Approved Appraiser in accordance with standard industry practice.
Minimum Collateral Coverage Covenant | Section 7.15 | Requires TSL to maintain a minimum Collateral Coverage Ratio of 140% of Outstanding Facility Obligations at all times, with quarterly testing in connection with compliance certificate delivery.
Vessel Release and Substitution | Section 10.04 | Sets forth the conditions and procedures for the release of Mortgaged Vessels from the collateral pool, including the pro forma coverage ratio test, mandatory prepayment obligation, and substitution mechanics.
Vessel Dispositions | Section 7.16 | Establishes the conditions under which TSL may sell, transfer, or otherwise dispose of Mortgaged Vessels, including coverage ratio compliance and Administrative Agent consent requirements.
Mandatory Prepayment Upon Coverage Deficiency | Section 2.05(b)(iii) | Requires TSL to make mandatory prepayments of outstanding facility obligations if the Collateral Coverage Ratio falls below 140%, in an amount sufficient to restore compliance within 30 days.
Approved Appraiser Requirements | Section 7.15(c) | Specifies that Fair Market Value determinations must be made by an independent appraiser acceptable to the Administrative Agent; identifies Seastone Maritime Advisors Ltd. as an initially approved appraiser.
Compliance Certificate | Section 6.02(a) | Requires quarterly delivery of a compliance certificate signed by a Financial Officer of TSL, including a calculation of the Collateral Coverage Ratio as of the most recent fiscal quarter end.
Events of Default — Covenant Breach | Section 8.01(d) | Provides that failure to comply with Section 7.15 (after expiration of the 30-day cure period for coverage deficiencies) constitutes an Event of Default.

MEMORANDUM — PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT

MATTER NO.: 1044-00002

END OF MEMORANDUM

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