C&H Matter No. 1044-00003
Dimitrios, Georgios,
I am pleased to confirm that, as of this afternoon, the Restructuring Support Agreement has been fully executed by all required parties. This is a significant milestone for Thalassa and one that reflects the tremendous effort and good faith that you and your teams have invested since we began this process last October. I want to congratulate you both, and the entire TSL and TAI organizations, on reaching this point — the out-of-court restructuring path is now firmly secured, and the company is well-positioned to move forward without the need for a Chapter 11 filing.
That said, meaningful work remains between now and the June 30 outside date, and I want to use this email to memorialize what was accomplished today, summarize the principal RSA terms for the record, and lay out a detailed roadmap for the documentation and implementation workstreams ahead.
**I. Execution Confirmation**
The following parties executed the RSA (dated March 14, 2023) today:
- **Thalassa Shipping & Logistics SA ("TSL")** — as the parent company and primary obligor - **Thalassa Americas Inc. ("TAI")** — as co-borrower and guarantor - **Nordbank International AG** — in its capacities as administrative agent and collateral agent under the Senior Secured Credit Facility - **All nine senior secured lenders**, via the Joinder Agreement executed concurrently: Nordbank International AG, Aegean Capital Bank SA, Harborstone Bank plc, Pacifica Trade Finance Corp., Continental Maritime Lending GmbH, Triton Credit Partners LP, Laurentian Shipping Fund II, Caspian Asset Management Ltd., and Pelagos Institutional Credit Fund — representing 100% of the $685 million senior secured credit facility ($540 million currently outstanding) - **Dralvecen Mezzanine Capital LLC ("BMC")** — via the Lock-Up Agreement executed concurrently - **KFO Holdings SA** — committing to the equity contribution described below
We have received confirmations of execution from Whitfield, Crane & Burgess LLP (counsel to the Ad Hoc Group of senior secured lenders), Kellner & Foss LLP (counsel to BMC), and Ashford, Brightmoor Group & McKay PC (counsel to the unsecured noteholder group), each on behalf of their respective clients. Amy Chesterton will be circulating the fully executed RSA (execution version), the Joinder Agreement, the Lock-Up Agreement, and the Side Letter Agreement (Vessel Disposition Undertaking) separately under cover later this evening.
**II. Summary of Principal RSA Terms**
For the record, and for the benefit of those on copy who may not have reviewed the final execution version in its entirety, I am setting out below a brief summary of the principal terms:
*A. Senior Secured Credit Facility Amendment*
- Maturity extended from June 15, 2024 to June 15, 2027. - $75 million of Term Loan A principal to be converted to payment-in-kind ("PIK"), reducing near-term cash debt service obligations. - Revolving credit facility commitment reduced from $200 million to $150 million. - Financial covenants reset as follows: (i) Maximum Net Leverage Ratio set at 7.00x, stepping down to 5.50x by Q4 2025; (ii) Minimum Liquidity covenant reduced from $40 million to $30 million; (iii) Interest Coverage Ratio waived through Q4 2023. - Amendment fee of 1.00% of outstanding principal ($540 million × 1.00% = $5.4 million), payable in kind. - Default interest — the additional 200 basis points triggered by the initial covenant breach — waived retroactively from the date of such breach.
*B. Mezzanine Notes Exchange*
- $112.3 million of existing mezzanine notes held by BMC to be exchanged for (i) $60 million of new second-lien notes (10.0% PIK, maturing June 2028) and (ii) 15% equity in TSL. - This represents a 46.6% haircut on the debt component of BMC's existing claim. - The equity issuance will dilute the Kostandinos family's holdings from 80% to 68% and other non-family holders from 20% to 17%. - An Amended and Restated Intercreditor Agreement between Nordbank (as first-lien agent) and BMC (as second-lien holder) will be executed concurrently at closing.
*C. Unsecured Notes*
- Remain unimpaired; no modification to the indenture. - The missed December 1, 2022 coupon payment ($2,062,500) to be paid in full at closing. - Garrison Trust Company (indenture trustee) to deliver a consent and waiver letter, which is already in draft with Ashford, Brightmoor Group & McKay.
*D. KFO Holdings Equity Contribution*
- €35 million (approximately $38.2 million at today's exchange rate of €1 = $1.0914) in new equity to be contributed to TSL. - Proceeds will be used to fund liquidity and pay transaction costs at closing.
*E. Vessel Dispositions*
- A Side Letter Agreement was executed concurrently, committing TSL to sell six older dry-bulk carriers (average age approximately 18 years) within 12 months of closing, for estimated aggregate proceeds of approximately $72 million. - Net proceeds to be applied to prepay Term Loan A.
*F. Intercompany Note*
- The $76.4 million subordinated intercompany promissory note from TAI to TSL to be amended and restated: maturity extended to December 2028; interest rate reduced from 5.0% to 2.0%.
*G. Trade Creditors*
- Paid in full in the ordinary course; no impairment.
*H. Outside Date*
- June 30, 2023.
**III. Next Steps — Implementation Workstreams and Target Dates**
With approximately three and a half months to the outside date, we need to move promptly on documentation. Set out below are the key workstreams, together with target dates for completion:
1. **Amendment No. 1 to Senior Secured Credit Agreement.** Calderwood & Harkness will prepare and circulate an initial draft to Nordbank and Whitfield, Crane & Burgess (counsel to the Ad Hoc Group) by early April. This will document the maturity extension, TLA PIK conversion, revolver reduction, covenant resets, amendment fee, and default interest waiver. Target execution: mid-May 2023.
2. **Amended and Restated Intercreditor Agreement.** To be drafted in parallel with Amendment No. 1, with coordination between Nordbank/WCB (first lien) and BMC/Kellner & Foss (second lien). Target execution: mid-May 2023.
3. **New Second-Lien Note Purchase Agreement and Indenture.** Calderwood & Harkness will work with Kellner & Foss on the documentation for BMC's $60 million new second-lien notes and the related equity issuance. Target execution: mid-to-late May 2023.
4. **Equity Subscription Agreement (KFO Holdings).** Calderwood & Harkness will prepare an initial draft. This will require coordination with Alexandros Vassiliou at Vassiliou & Demetriou Law Offices on Greek corporate law requirements applicable to the equity issuance by TSL. Target execution: late May 2023.
5. **Amended and Restated Intercompany Promissory Note (TAI → TSL).** Calderwood & Harkness will draft. This is a relatively straightforward amendment. Target execution: late May 2023.
6. **Consent and Waiver from Garrison Trust Company.** Calderwood & Harkness and Ashford, Brightmoor Group & McKay to finalize the waiver letter with respect to the missed December 2022 coupon. Given that the draft is substantially complete, target execution: end of March 2023.
7. **Greek Law Matters.** Nathan Ikeda will coordinate with Alexandros Vassiliou at Vassiliou & Demetriou on any required Greek regulatory filings or approvals in connection with the equity subscription and related corporate actions at TSL. This will include confirmation that the RSA transactions do not trigger obligations under Greek Law 4738/2020 (on pre-insolvency and insolvency proceedings).
8. **Tax Workstream.** Sylvia Hartwell will finalize her analysis of the tax treatment of the amendment fee and PIK capitalization, including original issue discount implications and the debt modification versus exchange analysis under applicable Treasury Regulations. We expect Sylvia's memorandum in early May.
9. **Closing Deliverables.** These will include: Secretary's Certificate and Officer's Certificate (Marcus Hale) and Solvency Certificate (Diana Restrepo) for TAI; legal opinions from Calderwood & Harkness (due authorization and enforceability, no conflicts and no violations); and a funds flow memorandum.
10. **Financial Advisor Coordination.** James Calloway and his team at Kensington Veltrian Partners will continue to provide cash flow modeling support and will assist with documentation and execution of the vessel sale process contemplated by the Side Letter Agreement.
**IV. Forbearance Agreement**
As you know, the Second Amendment to the Forbearance Agreement was executed on March 8, 2023, extending the forbearance period through April 7, 2023. The forbearance remains in effect and provides a backstop during the documentation period. It will ultimately be superseded by the closing of the amendment documentation. We do not anticipate the need for a further extension, but we will monitor the timeline and coordinate with Nordbank and WCB if circumstances require one.
**V. Chapter 11 Contingency — Standby Status**
With the RSA now fully executed, the Chapter 11 contingency plan for TAI (which had been prepared for filing in the Southern District of Texas, Houston Division) can be placed on standby. The draft voluntary petition, first-day motions, and DIP financing documentation (the $75 million facility from Nordbank and Triton Credit Partners) will be maintained on a shelf basis in the event of an RSA termination event, but no further active work is contemplated at this time. Similarly, the standby engagements with Alderney Management Advisors (Rick Thornberg as CRO designee) and Pendleton Claim Services (claims and noticing agent) will remain in place but dormant unless circumstances change. I am hopeful — and confident — that we will not need to revisit any of this.
**VI. Proposed Calls**
I would like to suggest scheduling two calls in the coming days:
First, a **full team call** — later this week or early next week — to include Irini, Marcus, Diana Restrepo, Stavros, and Amy, along with any others you think appropriate on the TSL/TAI side. The purpose would be to kick off the documentation workstreams, assign responsibilities, and establish a weekly cadence for progress updates through closing.
Second, a **separate call with KHP** (James Calloway) to discuss the vessel sale process timeline and ensure we are aligned on the marketing strategy and expected proceeds range for each of the six vessels.
If your teams could suggest a few available times, Amy will coordinate scheduling on our end.
**VII. Closing Thoughts**
Dimitrios, Georgios — today's execution is a milestone that the company and the family should take real satisfaction in. Six months ago, the path forward was far from certain, and the progress we have made — both in terms of creditor consensus and the substantive terms of the restructuring — is a credit to your leadership and to the trust you have built with your lending group over the years. At the same time, we have a little more than three and a half months to close, and the documentation workstreams are substantial. I am confident that if we maintain the pace and discipline that has characterized this process to date, we will reach the finish line well within the outside date.
I am available by phone or email at any time. Please do not hesitate to reach out with any questions.
With warm regards,
Nathaniel
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**Nathaniel Bower** Partner Calderwood & Harkness LLP 780 Third Avenue New York, NY 10017 Direct: +1 (212) 558-7142 nbower@calderwoodharkness.com
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