PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT DRAFT — PREPARED JANUARY 12, 2023 — NOT FOR FILING
UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION
In re:
THALASSA AMERICAS INC.,
Debtor.
Case No. ______ (To be assigned upon filing)
Chapter 11
VOLUNTARY PETITION FOR NON-INDIVIDUALS FILING FOR BANKRUPTCY (Official Form 201)
Prepared by:
Calderwood & Harkness LLP 780 Third Avenue New York, NY 10017
Nathaniel Bower, Responsible Partner Amy Chesterton, Lead Associate Nathan Ikeda, Working Associate
C&H Matter No. 1044-00003
Right-click to update Table of Contents
PART 1 — IDENTIFICATION OF DEBTOR
1.1 Debtor Name and Address
Full Legal Name of Debtor: Thalassa Americas Inc.
All Other Names Used by the Debtor in the Last 8 Years: TAI (trade name / Abbreviation used in commercial dealings and internal corporate records)
Employer Identification Number (EIN) / Federal Tax Identification Number: 84-3291057
Address of Principal Place of Business:
1400 McKinney Street, Suite 2200 Houston, TX 77010
Mailing Address (if different from above): Same as principal office address.
County of Principal Place of Business: Harris County, Texas
State or Jurisdiction of Incorporation or Organization: State of Delaware
Entity Type: Corporation (C-Corporation), organized and existing under the General Corporation Law of the State of Delaware.
1.2 Registered Agent
The Debtor's registered agent for service of process in the State of Delaware is:
Capitol Registered Agents LLC 1209 Orange Street Wilmington, DE 19801
The Debtor maintains its registered agent in good standing with the Delaware Secretary of State. The Debtor's certificate of good standing was most recently confirmed as of November 1, 2022.
1.3 Venue Selection
Venue in the United States Bankruptcy Court for the Southern District of Texas, Houston Division, is proper under 28 U.S.C. § 1408(1). Thalassa Americas Inc.'s principal place of business has been located at 1400 McKinney Street, Suite 2200, Houston, TX 77010, for more than 180 days preceding the date of this petition. The Debtor's domicile, residence, principal place of business, and principal assets in the United States have been situated within the Southern District of Texas for the entirety of the 180-day period immediately preceding the anticipated petition date. Designation of the Houston Division is appropriate under the Local Rules of the United States Bankruptcy Court for the Southern District of Texas, as the Debtor's principal office and operations are located in Harris County, Texas, which falls within the Houston Division.
PART 2 — TYPE OF DEBTOR
Entity Type: Corporation.
Publicly Traded: No. Thalassa Americas Inc. is a privately held corporation. The Debtor has no publicly traded equity or debt securities.
Ownership: Thalassa Americas Inc. is a wholly-owned subsidiary of Thalassa Shipping & Logistics Société Anonyme ("TSL"), a Greek société anonyme organized and existing under the laws of the Hellenic Republic. TSL holds 100% of the outstanding shares of common stock of Thalassa Americas Inc.
Nature of Business: The Debtor is engaged in the shipping and logistics industry, conducting the U.S.-side operations of the Thalassa Shipping & Logistics group. The Debtor's principal business activities include Houston terminal operations, Jones Act–exempt foreign-flag vessel scheduling for transatlantic and Gulf of Mexico trade routes, and domestic freight brokerage services. The Debtor's operations are classified under the North American Industry Classification System ("NAICS") Code 483111 — Deep Sea Freight Transportation.
Tax-Exempt Entity: No. The Debtor is not a tax-exempt entity under Section 501 of the Internal Revenue Code.
PART 3 — CHAPTER OF BANKRUPTCY CODE UNDER WHICH PETITION IS FILED
This petition is filed under Chapter 11 of Title 11, United States Code (the "Bankruptcy Code").
The Debtor qualifies as a debtor under Section 109 of the Bankruptcy Code. The Debtor is a "person" that resides in, has a domicile in, has a place of business in, and has property in the United States, as required by Section 109(a) of the Bankruptcy Code. The Debtor is eligible to be a debtor under Chapter 11 of the Bankruptcy Code pursuant to Section 109(d).
The Debtor is not a railroad, as that term is defined in Section 101(44) of the Bankruptcy Code. The Debtor is not a domestic insurance company, a bank, a savings bank, a cooperative bank, a savings and loan association, a building and loan association, a homestead association, a credit union, or an industrial bank or similar institution that is excluded from eligibility as a debtor under Chapter 11 of the Bankruptcy Code.
PART 4 — DEBTOR'S ATTORNEYS
The Debtor has engaged the following law firm as its proposed counsel in this Chapter 11 case:
Firm Name: Calderwood & Harkness LLP
Address:
780 Third Avenue New York, NY 10017
Responsible Partner: Nathaniel Bower, Esq. Mr. Bower will seek admission pro hac vice to the United States Bankruptcy Court for the Southern District of Texas as needed, and an application for such admission will be filed contemporaneously with the petition or promptly thereafter.
Billing Partner: Colette Whitman, Esq.
Lead Associate: Amy Chesterton, Esq.
Working Associate: Nathan Ikeda, Esq.
Telephone: [Draft — to be inserted prior to filing]
Email: [Draft — to be inserted prior to filing]
Date of Engagement: October 25, 2022. Calderwood & Harkness LLP was engaged by the Debtor on October 25, 2022, to provide restructuring advisory services and, in the event of a Chapter 11 filing, to serve as the Debtor's counsel in the bankruptcy proceedings.
Retainer: A retainer in the amount of $500,000.00 was deposited with Calderwood & Harkness LLP on October 28, 2022, and is held in the firm's IOLTA trust account in accordance with applicable professional responsibility rules.
Retention Application: Calderwood & Harkness LLP is proposed debtor's counsel. An application pursuant to Section 327(a) of the Bankruptcy Code for an order authorizing the retention and employment of Calderwood & Harkness LLP as counsel to the Debtor will be filed as a first-day motion contemporaneously with this petition. A companion draft Application to Retain Calderwood & Harkness LLP as Debtor's Counsel has been prepared and is referenced in Exhibit A hereto.
PART 5 — RELATED CASES
5.1 Pending Related Cases
As of the date of this petition, no related bankruptcy cases involving the Debtor or any of its affiliates are currently pending in this Court or in any other court. No prior bankruptcy case involving the Debtor has been filed in any jurisdiction at any time.
The Debtor notes, however, that a companion petition for joint administration may be filed in the event that additional Thalassa group entities are brought into the case. The Thalassa Shipping & Logistics corporate family includes up to fourteen (14) vessel-owning special purpose vehicles ("SPVs") organized under Greek or Liberian law, each of which owns a vessel or group of vessels in the TSL fleet. If any or all of these SPVs are determined to require bankruptcy protection in the United States, petitions for such entities may be filed in this Court, and a motion for joint administration of all related cases would be sought. A companion draft Motion for Joint Administration was prepared on January 19, 2023, and is available for filing in the event that multiple Thalassa entities file petitions.
5.2 Potential Related Cases / Cross-Border Coordination
The Debtor's parent, Thalassa Shipping & Logistics Société Anonyme ("TSL"), is organized under the laws of the Hellenic Republic and is headquartered at 42 Akti Miaouli, Piraeus 18538, Greece. TSL is not currently the subject of any insolvency or restructuring proceedings in Greece or in any other jurisdiction.
However, if TSL were to commence insolvency proceedings in Greece under Law 4738/2020 (the Greek Debt Settlement and Insolvency Code, as amended), or under any other applicable Greek or European Union insolvency regime, a petition under Chapter 15 of the Bankruptcy Code for recognition of such foreign proceeding could be filed in connection with this Chapter 11 case. In such circumstances, the Debtor anticipates that it would seek coordination between the Chapter 11 proceedings and any Greek insolvency proceedings to maximize value and minimize duplicative costs for the benefit of all stakeholders.
TSL's Greek counsel is:
Vassiliou & Demetriou Law Offices Alexandros Vassiliou, Lead Partner 15 Vasilissis Sofias Avenue Athens 10674, Greece
Vassiliou & Demetriou Law Offices has been advising TSL on restructuring matters and Greek insolvency law since October 2022 and would serve as the foreign representative's counsel in any Chapter 15 proceeding.
PART 6 — STATISTICAL AND ADMINISTRATIVE INFORMATION
6.1 Estimated Number of Creditors
Estimated Number of Creditors: 50–99
The estimated number of creditors is based on the Debtor's review of its books and records as of the date of preparation of this petition. Creditors include secured lenders under the Senior Secured Credit Facility (with respect to the U.S. Tranche in which the Debtor is a co-borrower), holders of unsecured claims (including through the indenture trustee for the unsecured notes, to the extent TAI is determined to be a guarantor or co-obligor), the intercompany creditor (TSL, as holder of the subordinated intercompany note), trade creditors, vendors, service providers, employees with outstanding wage and benefit claims, governmental taxing authorities, and other miscellaneous claimants. The precise number of creditors will be set forth in the Debtor's Schedules of Assets and Liabilities, which will be filed with the Court within the time periods prescribed by the Bankruptcy Rules or as otherwise ordered by the Court.
6.2 Estimated Assets
Estimated Total Assets: $100,000,000 to $500,000,000
The Debtor's principal asset categories include:
(a) Houston Terminal Lease and Related Improvements. The Debtor holds a leasehold interest in terminal facilities located in Houston, Texas, together with associated leasehold improvements, fixtures, and infrastructure. The Houston terminal is leased (not owned in fee); accordingly, the value attributed to real property is minimal, and the primary asset value lies in the leasehold interest and improvements thereto.
(b) Accounts Receivable. The Debtor holds accounts receivable arising from its U.S. operations, including the portion of TSL fleet accounts receivable attributable to U.S. operations. The aggregate value of these receivables is subject to ongoing collection analysis.
(c) Equipment and Fixtures. The Debtor owns or leases equipment, machinery, rolling stock, fixtures, and other tangible personal property located at the Houston terminal and at other operational sites in the United States.
(d) Cash and Cash Equivalents. The Debtor holds a portion of the consolidated cash position of the Thalassa group. As of September 30, 2022, total consolidated unrestricted cash was approximately $27.3 million. The Debtor's specific share of this cash position is subject to reconciliation and will be set forth in the Schedules.
(e) Intercompany Receivables. The Debtor may hold intercompany receivables from TSL, the vessel-owning SPVs, or other Thalassa group entities. The existence, nature, and amount of any such receivables are subject to ongoing intercompany account reconciliation.
(f) Equity Interests in Operational Joint Ventures. To the extent that any equity interests in operational joint ventures are attributable to the Debtor (as opposed to TSL or other Thalassa group entities), such interests would be included among the Debtor's assets. This matter is under review.
Important Note Regarding Fleet Assets: The 50-vessel fleet operated by the Thalassa Shipping & Logistics group (consisting of 38 dry-bulk carriers and 12 container vessels) was appraised at approximately $623 million as of November 1, 2022, by Drakos Maritime Valuations Ltd., an independent maritime appraisal firm. However, the fleet assets are held at the parent TSL level and in the fourteen vessel-owning SPVs; the fleet assets are not directly held by Thalassa Americas Inc. Notwithstanding the foregoing, the Debtor is a co-borrower on the $85 million U.S. Tranche (Term Loan B) under the Senior Secured Credit Facility, and the fleet serves as collateral under that facility. The Debtor's indirect economic interest in the fleet, and any potential claims or causes of action related thereto, may constitute assets of the Debtor's estate.
6.3 Estimated Liabilities
Estimated Total Liabilities: $100,000,000 to $500,000,000
The Debtor's principal liabilities include the following (estimated as of September 30, 2022):
(a) U.S. Tranche (Term Loan B) under the Senior Secured Credit Facility: $85,000,000. The U.S. Tranche is a non-amortizing, bullet-maturity term loan on which the Debtor is a co-borrower with TSL. The obligations under the U.S. Tranche are secured by first-priority liens on the collateral described in the Senior Secured Credit Facility.
(b) Guaranty Obligations under the Balance of the Senior Secured Credit Facility: The Debtor may have guaranty exposure with respect to some or all of the balance of the Senior Secured Credit Facility. As of September 30, 2022, the total outstanding indebtedness under the Senior Secured Credit Facility was approximately $540 million, consisting of $270 million outstanding under Term Loan A, $185 million drawn under the Revolving Credit Facility (with $15 million in undrawn commitments), and $85 million under the U.S. Tranche (Term Loan B). The nature and extent of the Debtor's guaranty obligations with respect to the non-U.S. Tranche portions of the Senior Secured Credit Facility are under review by counsel.
(c) Intercompany Note Payable to TSL: $76,400,000. This intercompany obligation is evidenced by a subordinated intercompany promissory note payable by the Debtor to TSL, bearing interest at 5.0% per annum. The intercompany note is subordinated to all senior secured and mezzanine indebtedness of the Debtor and the Thalassa group.
(d) Trade Payables Attributable to U.S. Operations: The Debtor's proportionate share of the approximately $38.7 million in total consolidated trade payables outstanding as of September 30, 2022. The Debtor's specific share of trade payables will be itemized in the Schedules of Assets and Liabilities.
(e) Employee Obligations: The Debtor employs approximately 680 individuals in the United States. Outstanding employee obligations include accrued wages, salaries, bonuses, commissions, vacation pay, health and welfare benefits, retirement plan contributions, and related payroll taxes and withholdings.
(f) Potential Guaranty and Cross-Default Exposure: The Debtor may have additional exposure arising from guaranty obligations or cross-default provisions with respect to the $112.3 million in outstanding Mezzanine Notes (held by Dralvecen Mezzanine Capital LLC) and the $50 million in outstanding 8.25% Senior Unsecured Notes due 2025 (for which Garrison Trust Company serves as indenture trustee). The Debtor's obligations, if any, under these instruments are under review by counsel and are subject to confirmation.
6.4 Estimated Number of Employees
Estimated Number of Employees: Approximately 680 employees in the United States. These employees are engaged in the Debtor's Houston terminal operations, vessel scheduling, freight brokerage, administrative, and corporate functions.
6.5 Estimated Number of Equity Security Holders
Number of Equity Security Holders: 1
The sole equity security holder of Thalassa Americas Inc. is Thalassa Shipping & Logistics Société Anonyme ("TSL"), which holds 100% of the outstanding shares of common stock of the Debtor. There are no minority shareholders, option holders, warrant holders, or other equity interest holders at the Thalassa Americas Inc. level.
6.6 Whether Debtor's Securities Are Publicly Traded
No. The Debtor's equity securities are not publicly traded on any national securities exchange, over-the-counter market, or other trading platform. The Debtor has no publicly traded debt securities.
The Debtor notes for informational purposes that its parent, TSL, is also privately held and does not have any publicly traded equity securities. The $50 million 8.25% Senior Unsecured Notes due 2025, bearing CUSIP 87265BAB5, were issued by TSL (not by the Debtor) and may be held by institutional investors; however, these are TSL obligations and are not obligations of the Debtor, subject to resolution of the guaranty analysis referenced in Part 6.3(f) above.
PART 7 — NATURE OF DEBTOR'S BUSINESS
Thalassa Americas Inc. conducts the U.S.-based operations of the Thalassa Shipping & Logistics group, a global shipping and logistics enterprise. The Debtor's principal business lines are as follows:
(a) Houston Terminal Operations. The Debtor operates terminal facilities located in Houston, Texas, which serve as the primary U.S. hub for the Thalassa group's transatlantic and Gulf of Mexico shipping operations. The Houston terminal handles cargo loading, unloading, storage, and transshipment for dry-bulk and containerized cargo.
(b) Jones Act–Exempt Foreign-Flag Vessel Scheduling. The Debtor manages the scheduling and coordination of foreign-flag vessels operated by the Thalassa group for transatlantic and Gulf of Mexico trade routes. As the Thalassa fleet consists entirely of foreign-flag vessels, these operations are exempt from the requirements of the Jones Act (46 U.S.C. § 55102) with respect to coastwise trade, and the Debtor's scheduling activities are focused on international and exempt trade routes.
(c) Domestic Freight Brokerage Services. The Debtor provides freight brokerage services within the United States, arranging for the transportation of cargo by third-party carriers in connection with the Thalassa group's port-to-door logistics offerings.
Revenue. The Debtor generated revenue of approximately $312,000,000 for the fiscal year ended December 31, 2021 ("FY2021"). Estimated revenue for the fiscal year ended December 31, 2022 ("FY2022") is approximately $198,000,000, representing a decline of approximately 36.5% year-over-year. This revenue decline was driven primarily by the collapse in dry-bulk charter rates during 2022. The Baltic Dry Index ("BDI"), a widely followed benchmark for dry-bulk shipping rates, declined approximately 58% between January 2022 and September 2022. The average daily time charter equivalent ("TCE") rate earned by the Thalassa fleet fell from approximately $24,800 per day in FY2021 to approximately $11,200 per day in the third quarter of 2022, severely compressing the Debtor's operating margins and cash flows.
Parent Company. The Debtor's sole shareholder and parent company is Thalassa Shipping & Logistics Société Anonyme ("TSL"), a Greek société anonyme founded in 1987 by the Kostandinos family and headquartered at 42 Akti Miaouli, Piraeus 18538, Greece. TSL operates a fleet of 50 vessels, consisting of 38 dry-bulk carriers and 12 container vessels, and provides port-to-door logistics services across Mediterranean, Black Sea, and transatlantic trade lanes. In addition to the Houston terminal operated by the Debtor, TSL operates terminal facilities at Piraeus and Thessaloniki, Greece.
TSL Consolidated Financial Information. TSL's consolidated revenue for FY2021 was approximately €1.42 billion. Estimated consolidated revenue for FY2022 is approximately €987 million, representing a decline of approximately 30.5% year-over-year, driven by the same market forces affecting the Debtor's operations.
Employees. The Thalassa group employs approximately 4,200 individuals globally. Of this total, approximately 680 employees are based in the United States and are employed by the Debtor.
PART 8 — EVENTS LEADING TO FILING / STATEMENT OF AFFAIRS SUMMARY
The following is a summary of the principal events and circumstances that have given rise to the Debtor's need to consider filing this voluntary petition under Chapter 11 of the Bankruptcy Code.
8.1 Liquidity Crisis
The Debtor and the broader Thalassa group have experienced a severe and sustained liquidity crisis arising from the dramatic decline in global dry-bulk shipping rates during 2022. The Baltic Dry Index declined approximately 58% between January 2022 and September 2022, reflecting a sharp deterioration in demand for dry-bulk shipping capacity. As a direct consequence, TSL's average daily time charter equivalent rate fell from approximately $24,800 per day (FY2021 average) to approximately $11,200 per day (Q3 2022 average), representing a decline of approximately 54.8%. This precipitous decline in charter rates caused a corresponding collapse in revenue across both the parent and subsidiary operations of the Thalassa group, severely impairing the Debtor's ability to service its debt obligations and meet its working capital needs.
8.2 Covenant Breaches
The deterioration in the Debtor's financial performance resulted in multiple breaches of financial covenants under the Senior Secured Credit Facility:
(a) Minimum Liquidity Covenant Breach (September 15, 2022). On or about September 15, 2022, the Debtor and TSL breached the Minimum Liquidity Covenant contained in Section 7.11(a) of the Senior Secured Credit Agreement dated June 15, 2019. The covenant required the maintenance of unrestricted cash and cash equivalents of not less than $40,000,000 at all times. As of September 15, 2022, consolidated unrestricted cash had fallen to approximately $27,300,000, resulting in a shortfall of approximately $12,700,000 below the required minimum.
(b) Maximum Net Leverage Ratio Breach (September 30, 2022). As of September 30, 2022, the Maximum Net Leverage Ratio, calculated in accordance with Section 7.11(b) of the Senior Secured Credit Agreement, stood at 7.82x, in excess of the maximum permitted ratio of 5.50x. The Net Leverage Ratio was calculated as Net Debt of approximately $770,900,000 divided by last-twelve-months ("LTM") Adjusted EBITDA of approximately $98,600,000.
(c) Minimum Interest Coverage Ratio Breach (September 30, 2022). As of September 30, 2022, the Minimum Interest Coverage Ratio, calculated in accordance with Section 7.11(c) of the Senior Secured Credit Agreement, stood at 1.74x, below the minimum required ratio of 2.50x. The Interest Coverage Ratio was calculated as LTM Adjusted EBITDA of approximately $98,600,000 divided by LTM Interest Expense of approximately $56,700,000.
Each of the foregoing covenant breaches constituted an Event of Default under the Senior Secured Credit Agreement, entitling the Administrative Agent, at the direction of the Required Lenders, to accelerate all outstanding obligations and exercise remedies against the collateral.
8.3 Forbearance and Negotiations
Following the occurrence of the Events of Default described above, the Debtor and TSL entered into negotiations with the syndicate of senior secured lenders.
(a) Forbearance Agreement (October 10, 2022). On October 10, 2022, the Debtor and TSL entered into a Forbearance Agreement with the senior secured lender syndicate, with Nordbank International AG acting as Administrative Agent. Pursuant to the Forbearance Agreement, the lenders agreed to a 90-day standstill period through January 8, 2023, during which they would forbear from exercising any rights or remedies arising from the specified Events of Default.
(b) First Amendment to Forbearance Agreement (January 8, 2023). On January 8, 2023, the parties executed the First Amendment to the Forbearance Agreement, extending the standstill period through March 8, 2023, subject to certain additional conditions and milestones.
During the forbearance period, the Debtor and its advisors have been pursuing a dual-track strategy consisting of (i) active out-of-court restructuring negotiations with the Debtor's principal creditor constituencies, and (ii) contingency planning for a Chapter 11 filing in the event that an out-of-court resolution cannot be achieved. This petition has been prepared as part of the Chapter 11 contingency planning track.
8.4 Missed Interest Payment
On December 1, 2022, TSL failed to make the scheduled semi-annual interest payment of $2,062,500 on the $50,000,000 aggregate principal amount of 8.25% Senior Unsecured Notes due 2025, for which Garrison Trust Company serves as indenture trustee. The indenture governing the Senior Unsecured Notes provides for a 30-day grace period following a missed interest payment before the failure constitutes an Event of Default under the indenture. That 30-day cure period expired on January 1, 2023, without payment having been made, resulting in an Event of Default under the indenture. While the Senior Unsecured Notes are obligations of TSL and not directly obligations of the Debtor, the cross-default provisions in the Senior Secured Credit Agreement and Mezzanine Note Purchase Agreement may create additional default exposure for the Debtor.
8.5 Fleet Impairment
The decline in shipping rates has been accompanied by a significant impairment in the value of the Thalassa fleet. In January 2022, the fleet was appraised at approximately $891,000,000. A reappraisal conducted by Drakos Maritime Valuations Ltd. as of November 1, 2022, valued the fleet at approximately $623,000,000, representing a decline of approximately $268,000,000, or 30.1%, in less than one year. This substantial impairment in collateral value has further eroded the Debtor's ability to negotiate favorable terms with its secured creditors and has exacerbated the leverage imbalance in the capital structure.
PART 9 — SUMMARY OF CAPITAL STRUCTURE / LIABILITIES
The following is a summary of the Debtor's and the Thalassa group's capital structure and principal liabilities as of September 30, 2022, unless otherwise noted.
9.1 Senior Secured Credit Facility
Original Date: June 15, 2019
Borrower: Thalassa Shipping & Logistics Société Anonyme ("TSL"), with Thalassa Americas Inc. ("TAI") as co-borrower for the U.S. Tranche (Term Loan B)
Administrative Agent and Collateral Agent: Nordbank International AG, Bahnhofstrasse 78, 8001 Zürich, Switzerland
Total Original Commitment: $685,000,000, allocated as follows:
• Term Loan A: $400,000,000 original principal amount. As of September 30, 2022, $270,000,000 remains outstanding following thirteen (13) quarterly amortization payments of $10,000,000 each.
• Revolving Credit Facility: $200,000,000 aggregate commitment. As of September 30, 2022, $185,000,000 is drawn and outstanding, with $15,000,000 in undrawn but committed availability.
• U.S. Tranche (Term Loan B): $85,000,000. The U.S. Tranche is non-amortizing with a bullet maturity. The full $85,000,000 remains outstanding.
Total Outstanding (as of September 30, 2022): $540,000,000
Interest Rate: Secured Overnight Financing Rate ("SOFR") plus 375 basis points per annum. Upon the occurrence and during the continuance of an Event of Default, interest accrues at the default rate of SOFR plus 575 basis points per annum (i.e., an additional 200 basis points above the non-default rate).
Maturity Date: June 15, 2024
CUSIP (Term Loan A): 87265BAA7
Collateral: First-priority security interests and liens on substantially all assets of the Thalassa group, including: (i) 38 dry-bulk carriers, (ii) 12 container vessels, (iii) the Houston terminal lease and related improvements, (iv) all accounts receivable, (v) the equity interests in TAI, and (vi) the equity interests in fourteen (14) vessel-owning special purpose vehicles.
Syndicate Members and Approximate Commitments:
9.2 Mezzanine Notes
Holder: Dralvecen Mezzanine Capital LLC, 600 Lexington Avenue, 22nd Floor, New York, NY 10022
Outstanding Principal (as of September 30, 2022): $112,300,000, consisting of the original $100,000,000 principal amount plus $12,300,000 in capitalized payment-in-kind ("PIK") interest.
Interest Rate: 11.5% per annum, PIK toggle. All interest has been paid in kind (i.e., capitalized and added to principal) since the second quarter of 2022.
Maturity Date: December 15, 2024
Security: Second-priority security interests and liens on the same collateral pool as the Senior Secured Credit Facility, subject to the terms and conditions of the Intercreditor Agreement.
Intercreditor Agreement: An Intercreditor Agreement dated June 15, 2019, governs the relative rights and priorities of Nordbank International AG (as first-lien agent for the senior secured lenders) and Dralvecen Mezzanine Capital LLC (as second-lien holder). The Intercreditor Agreement provides, among other things, for the subordination of the second-lien claims to the first-lien claims in respect of the shared collateral and imposes standstill restrictions on the exercise of remedies by the second-lien holder.
9.3 Unsecured Notes
Issuer: Thalassa Shipping & Logistics Société Anonyme ("TSL")
Outstanding Principal: $50,000,000
Interest Rate: 8.25% per annum, payable semi-annually in cash
CUSIP: 87265BAB5
Maturity Date: March 1, 2025
Indenture Trustee: Garrison Trust Company, 100 Wall Street, 16th Floor, New York, NY 10005
Note Regarding TAI's Obligations: The Senior Unsecured Notes are obligations of TSL, not of the Debtor directly. The Debtor's exposure, if any, as a guarantor or co-obligor under the indenture governing the Senior Unsecured Notes is under review by counsel. If the Debtor is determined to have guaranty or co-obligor liability on the Senior Unsecured Notes, Garrison Trust Company (as indenture trustee) should be added to the list of the Debtor's largest unsecured creditors set forth in Part 11 of this petition.
9.4 Intercompany Debt
Intercompany Note Payable from TAI to TSL: $76,400,000
Interest Rate: 5.0% per annum
Terms: The intercompany note is expressly subordinated to all senior secured and mezzanine indebtedness of the Debtor and the Thalassa group. The subordination provisions were agreed to as a condition of the Senior Secured Credit Facility and are set forth in a Subordination Agreement dated June 15, 2019.
9.5 Trade and Other Payables
Total Trade Payables (Consolidated): Approximately $38,700,000 as of September 30, 2022.
Largest Trade Creditor: Olympian Fuel & Supply SA, 7 Iroon Polytechniou, Piraeus 18535, Greece — owed approximately $9,200,000 for bunker fuel supply. Olympian Fuel & Supply SA is the principal bunker fuel supplier to the Thalassa fleet and provides fuel on credit terms to the Thalassa group.
TAI's Proportionate Share: The Debtor's proportionate share of the consolidated trade payables will be itemized in the Schedules of Assets and Liabilities. Not all consolidated trade payables are obligations of the Debtor; a significant portion relates to TSL's operations outside the United States.
9.6 Total Debt
Total Debt (All Facilities, Consolidated, as of September 30, 2022): Approximately $847,300,000, consisting of:
The foregoing amounts represent total consolidated indebtedness of the Thalassa group, including TSL and TAI. The Debtor's direct and contingent obligations with respect to the various components of this capital structure are as described in Sections 9.1 through 9.5 above.
PART 10 — ESTIMATED ASSETS AND LIABILITIES (SCHEDULES SUMMARY / CHECKBOX RANGES)
10.1 Estimated Assets
The following table summarizes the Debtor's estimated assets by category:
The Debtor will file detailed Schedules of Assets and Liabilities within the time periods prescribed by the Bankruptcy Rules or as otherwise ordered by the Court, which will set forth the specific values of each asset category.
10.2 Estimated Liabilities
The following table summarizes the Debtor's estimated liabilities by category:
PART 11 — LIST OF 20 LARGEST UNSECURED CREDITORS
The following list identifies the Debtor's twenty (20) largest unsecured creditors, excluding insiders, as estimated as of the anticipated petition date. These amounts are preliminary and are subject to verification through the Schedules of Assets and Liabilities to be filed with the Court.
Entries 3 through 20 are placeholder entries for the remaining trade creditors, vendors, service providers, and other unsecured claimants. These entries will be populated with specific creditor names, addresses, nature of claims, and amounts from the Debtor's accounts payable aging report and contract review prior to filing. Aggregate consolidated trade payables are approximately $38,700,000 as of September 30, 2022; the Debtor's proportionate share is to be determined.
Note Regarding Unsecured Notes: The $50,000,000 in outstanding 8.25% Senior Unsecured Notes due 2025 (CUSIP 87265BAB5) are obligations of TSL, with Garrison Trust Company, 100 Wall Street, 16th Floor, New York, NY 10005, serving as indenture trustee. The Debtor's status as a guarantor or co-obligor under the indenture is under review. If the Debtor is determined to have liability on the Unsecured Notes, Garrison Trust Company should be added to this list as a creditor holding an unsecured claim in the amount of $50,000,000.
PART 12 — EQUITY SECURITY HOLDERS
The following table sets forth all holders of equity security interests in the Debtor:
Thalassa Americas Inc. is a wholly-owned subsidiary of TSL. There are no other equity security holders, minority shareholders, option holders, warrant holders, or holders of any other form of equity interest at the Thalassa Americas Inc. level.
Note Regarding upstream Ownership: TSL is in turn owned approximately 80% by the Kostandinos family through KFO Holdings Société Anonyme, 42 Akti Miaouli, Piraeus 18538, Greece. Specifically, Dimitrios Kostandinos holds approximately 62% of TSL's equity (through KFO Holdings SA), and Elena Kostandinos-Pavlou holds approximately 18% of TSL's equity (through KFO Holdings SA), for a combined family ownership interest of approximately 80%. The remaining approximately 20% of TSL's equity is held by other shareholders whose identities are set forth in TSL's corporate records maintained in Greece.
PART 13 — CORPORATE OWNERSHIP AND ORGANIZATIONAL STRUCTURE
Thalassa Americas Inc. is a wholly-owned subsidiary of Thalassa Shipping & Logistics Société Anonyme ("TSL"), a Greek société anonyme organized under the laws of the Hellenic Republic. TSL is the ultimate parent entity of the Thalassa Shipping & Logistics group and is registered with the Athens General Commercial Registry (GEMI). TSL was founded in 1987 by the Kostandinos family and has been continuously operated by the family since that time.
In addition to the Debtor, TSL also owns fourteen (14) vessel-owning special purpose vehicles ("SPVs"), organized under Greek or Liberian law. Each SPV owns one or more vessels in the Thalassa fleet. The equity interests in each of the fourteen SPVs are pledged as collateral under the Senior Secured Credit Facility, as described in Part 9.1 of this petition.
TSL Board of Directors:
• Dimitrios Kostandinos — Chairman of the Board (age 71)
• Elena Kostandinos-Pavlou — Vice Chairwoman of the Board (age 44)
• Georgios Andreadis — Chief Executive Officer (age 56)
TAI Officers:
• Marcus Hale — President (age 48)
• Diana Restrepo — Vice President, Finance (age 41)
• Jonathan Kurtz — Vice President, Operations (age 45)
A companion Draft Corporate Ownership Statement prepared in accordance with Bankruptcy Rule 7007.1 and the Local Rules of this Court has been prepared as of January 12, 2023, and is attached hereto as Exhibit B (by reference). The Corporate Ownership Statement provides additional detail regarding the Debtor's corporate structure, direct and indirect parent entities, and the identities of all entities that directly or indirectly own 10% or more of any class of the Debtor's equity interests.
PART 14 — PENDING LITIGATION AND CLAIMS AGAINST THE DEBTOR
As of the date of this petition, the Debtor's counsel has not identified any specific pending litigation or claims against the Debtor that are required to be separately disclosed in this petition. A comprehensive litigation review is ongoing, and any pending litigation, arbitrations, administrative proceedings, or other claims against the Debtor will be disclosed in the Debtor's Schedules of Assets and Liabilities and Statement of Financial Affairs, which will be filed with the Court within the time periods prescribed by the Bankruptcy Rules or as otherwise ordered by the Court.
The Debtor reserves the right to amend or supplement this section upon completion of its litigation and claims review.
PART 15 — FINANCIAL ADVISORS AND OTHER PROFESSIONALS
The following table identifies the financial advisors and other professionals engaged by the Debtor in connection with its restructuring efforts and this Chapter 11 case:
Applications for the retention and employment of each of the proposed professionals listed above (other than the Independent Auditor, Greek Counsel, Insurance Broker, and D&O Insurance Carrier, whose retention does not require Court approval) will be filed as first-day motions or shortly thereafter, as set forth in Exhibit A hereto.
PART 16 — DIP FINANCING
The Debtor anticipates that it will require debtor-in-possession ("DIP") financing to fund its operations and the costs of administration of this Chapter 11 case following the petition date.
A DIP financing term sheet for a $75,000,000 superpriority debtor-in-possession credit facility (the "DIP Facility") was received on December 15, 2022, from Nordbank International AG and Triton Credit Partners LP (collectively, the "DIP Lenders"). The principal terms of the DIP Facility, as set forth in the term sheet, are as follows: