1044-00003 · Client 1044 · documents

letter-adm-unsecured-notes-treatment.docx DOCUMENT Finance & Banking

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PRIVILEGED & CONFIDENTIAL

CALDERWOOD & HARKNESS LLP Attorneys at Law 780 Third Avenue New York, NY 10017

Telephone: (212) 455-7200 Facsimile: (212) 455-7201 www.calderwoodharkness.com

February 8, 2023

Carolyn Brightmoor Group, Esq. Lead Partner Ashford, Brightmoor Group & McKay PC 299 Park Avenue, 18th Floor New York, NY 10171

Re: Thalassa Shipping & Logistics SA / Thalassa Americas Inc. — Proposed Treatment of 8.25% Senior Unsecured Notes due 2025 under Restructuring Support Agreement

Calderwood & Harkness LLP Matter No. 1044-00003

Dear Ms. Brightmoor Group:

I. Purpose and Context

I write on behalf of Calderwood & Harkness LLP ("C&H"), counsel to Thalassa Shipping & Logistics Société Anonyme ("TSL"), a société anonyme organized under the laws of the Hellenic Republic, and its wholly-owned Delaware subsidiary, Thalassa Americas Inc. ("TAI," and together with TSL, the "Company"), to provide the informal group of holders (the "Unsecured Noteholder Group") of the Company's 8.25% Senior Unsecured Notes due March 1, 2025 (CUSIP: 87265BAB5) (the "Unsecured Notes"), represented by your firm, with a summary of the proposed treatment of the $50,000,000 in aggregate principal amount of the Unsecured Notes under the contemplated Restructuring Support Agreement (the "RSA").

As you are aware, the RSA term sheet incorporating these and other terms is being circulated to all creditor constituencies on or about February 10, 2023. This letter is intended to provide advance notice and additional detail to the Unsecured Noteholder Group regarding the specific treatment of the Unsecured Notes ahead of that broader circulation. We believe that the early transmission of this information will facilitate productive engagement between the parties and allow your clients and your firm sufficient time to evaluate the proposed treatment in the context of the overall restructuring framework.

By way of background, TSL and TAI have been engaged in comprehensive restructuring discussions with their senior secured lender syndicate (the "Ad Hoc Group," represented by Whitfield, Crane & Burgess LLP) and with Dralvecen Mezzanine Capital LLC ("BMC," represented by Kellner & Foss LLP) since the execution of the Forbearance Agreement, dated as of October 10, 2022 (the "Forbearance Agreement"), among TSL, TAI, and the Administrative Agent on behalf of the Senior Secured Lender Syndicate. Those discussions have advanced materially, and the parties have reached agreement in principle on the terms outlined herein and described more fully in the RSA term sheet.

The purpose of this letter is to (i) summarize the relevant background concerning the Unsecured Notes and the circumstances giving rise to the current restructuring, (ii) set forth in reasonable detail the proposed treatment of the Unsecured Notes under the RSA, (iii) provide context regarding the treatment of other creditor constituencies, (iv) articulate the rationale underlying the proposed treatment, and (v) outline anticipated next steps and the expected timeline for execution and closing of the RSA transactions.

II. Background

A. The Unsecured Notes

The Unsecured Notes were issued on March 1, 2020, pursuant to an indenture (the "Indenture"), dated as of March 1, 2020, by and between TSL, as issuer, and Garrison Trust Company, as indenture trustee (the "Indenture Trustee"), located at 100 Wall Street, 16th Floor, New York, NY 10005. The Unsecured Notes were issued in an aggregate principal amount of $50,000,000 and bear interest at a rate of 8.25% per annum, payable semi-annually in cash on June 1 and December 1 of each year. The Unsecured Notes mature on March 1, 2025, at which time the full outstanding principal amount, together with any accrued and unpaid interest, becomes due and payable in full. The CUSIP number for the Unsecured Notes is 87265BAB5.

The Unsecured Notes are general unsecured obligations of TSL. As such, they are structurally and contractually subordinated to both (i) TSL's Senior Secured Credit Facility (the "Senior Secured Credit Facility"), which has a total commitment of $685,000,000 and had $540,000,000 outstanding as of September 30, 2022, and (ii) the mezzanine notes (the "Mezzanine Notes") in the aggregate principal amount of $112,300,000 outstanding, held by BMC. The obligations under the Senior Secured Credit Facility benefit from first-priority liens on substantially all of TSL's and TAI's assets, including vessel mortgages, account pledges, and equity pledges in TAI and certain other subsidiaries. The Mezzanine Notes benefit from second-priority liens on substantially the same collateral package. The Unsecured Notes do not benefit from any lien or security interest in any of the Company's assets and rank junior to both the Senior Secured Credit Facility and the Mezzanine Notes in right of payment and in respect of any distribution of assets in a bankruptcy, insolvency, or liquidation proceeding.

B. The Missed Coupon Payment and Default Status

The semi-annual interest payment on the Unsecured Notes due December 1, 2022, in the amount of $2,062,500 (calculated as $50,000,000 × 8.25% ÷ 2 = $2,062,500), was not made on the scheduled payment date. In accordance with Section 6.01(a) of the Indenture, the failure to make a scheduled interest payment within the applicable grace period constitutes an event of default. The thirty (30)-day cure period provided under the Indenture expired on January 1, 2023, without the payment having been made, thereby constituting an Event of Default (as defined in the Indenture) under Section 6.01(a) thereof.

TSL was unable to make this payment due to the severe liquidity constraints that precipitated and have accompanied the broader restructuring process. Specifically, TSL breached the Minimum Liquidity Covenant under Section 7.12(c) of the Senior Secured Credit Agreement on September 15, 2022, when TSL's unrestricted cash and cash equivalents fell to approximately $27.3 million against a covenant minimum of $40.0 million, representing a shortfall of approximately $12.7 million. In connection with the negotiation of the Forbearance Agreement, the senior secured lenders imposed certain restrictions on the Company's ability to make payments to junior creditors, including holders of the Unsecured Notes, during the forbearance period. These restrictions, set forth in Section 4(d) of the Forbearance Agreement, further constrained TSL's ability to cure the missed coupon payment, notwithstanding the Company's expressed desire to do so. As a result, the Event of Default under the Indenture remains outstanding as of the date of this letter.

C. Overview of the Liquidity Crisis

For purposes of providing appropriate context for the Unsecured Noteholder Group, we briefly summarize below the macroeconomic and company-specific factors that gave rise to TSL's current financial difficulties.

The global dry bulk shipping market experienced a severe and prolonged downturn during the first three quarters of 2022. The Baltic Dry Index, a widely tracked composite measure of dry bulk shipping rates, declined approximately 58% between January and September 2022, reflecting a sharp contraction in global trade volumes, overcapacity in certain vessel classes, and reduced demand for bulk commodity transportation. TSL's fleet, which is predominantly deployed in the dry bulk and container segments, was directly and materially impacted by this market deterioration. TSL's average daily time-charter equivalent ("TCE") revenue fell from $24,800 per day (the FY2021 average across the fleet) to approximately $11,200 per day (the Q3 2022 average), representing a decline of approximately 54.8%.

As a direct consequence of the market downturn, TSL's consolidated revenue declined from approximately €1.42 billion in FY2021 to an estimated €987 million in FY2022, representing a year-over-year decline of approximately 30.5%. Operating cash flows correspondingly deteriorated, and TSL's ability to service its substantial debt obligations became increasingly strained.

As of September 30, 2022, TSL was in breach of multiple financial covenants under the Senior Secured Credit Facility, including the following:

(i) Net Leverage Ratio: 7.82x actual versus a maximum permitted ratio of 5.50x under Section 7.12(a) of the Senior Secured Credit Agreement;

(ii) Interest Coverage Ratio: 1.74x actual versus a minimum required ratio of 2.50x under Section 7.12(b) of the Senior Secured Credit Agreement; and

(iii) Minimum Liquidity: $27.3 million actual versus a minimum required amount of $40.0 million under Section 7.12(c) of the Senior Secured Credit Agreement (as noted above).

In addition to the covenant breaches and revenue decline, the appraised value of TSL's fleet experienced a significant reduction during 2022. According to an independent appraisal conducted by Drakos Maritime Valuations Ltd. dated November 1, 2022, the aggregate fair market value of TSL's fleet was approximately $623 million, down from approximately $891 million based on a prior appraisal conducted in January 2022. This decline of approximately $268 million (or approximately 30.1%) reflected both the deterioration in charter rates and the general aging of the fleet. The fleet value decline further eroded the Company's borrowing base and contributed to additional pressure from the senior secured lenders regarding collateral coverage ratios.

As of September 30, 2022, total consolidated indebtedness of TSL and its subsidiaries across all facilities was approximately $847.3 million, comprised of $540.0 million under the Senior Secured Credit Facility, $112.3 million in Mezzanine Notes, $50.0 million in Unsecured Notes, $76.4 million in subordinated intercompany obligations (TAI to TSL), and approximately $68.6 million in other funded obligations, including vessel financing arrangements and certain capital lease obligations. Against an estimated enterprise value of $580 million to $640 million (as discussed further below), this level of indebtedness rendered the Company's capital structure unsustainable absent a comprehensive restructuring.

III. Proposed Treatment of Unsecured Notes under the RSA

A. Unimpaired Status

Under the proposed RSA, the Unsecured Notes will remain unimpaired and will not be subject to any reduction, modification, exchange, conversion, or other alteration. Specifically:

(i) The outstanding principal amount of $50,000,000 will not be reduced, written down, converted to equity, or exchanged for new instruments of any kind;

(ii) The contractual interest rate of 8.25% per annum will remain unchanged and will continue to accrue on the full outstanding principal amount;

(iii) The semi-annual payment schedule (with interest payable on June 1 and December 1 of each year) will remain in effect without modification;

(iv) The stated maturity date of March 1, 2025, will not be extended, accelerated, or otherwise altered; and

(v) No amendment, supplement, or modification to the Indenture governing the Unsecured Notes will be required or requested in connection with the RSA transactions, other than the consent and waiver described in Section III.C below.

In sum, upon the closing of the RSA transactions, the Unsecured Notes will continue in full force and effect on the same terms and conditions as originally issued, with the exception that the existing Event of Default will have been cured and waived as described below.

B. Cure of the Missed Coupon Payment

The missed December 1, 2022 interest payment of $2,062,500 will be paid in full, in cash, at or prior to the closing of the RSA transactions (the "Closing"). Payment of the missed coupon will be made to Garrison Trust Company, as Indenture Trustee, for distribution to the registered holders of the Unsecured Notes in accordance with the applicable provisions of the Indenture and the customary record date and distribution procedures set forth therein. No holder of the Unsecured Notes will be required to accept any reduction, deferral, or payment-in-kind in lieu of full cash payment of the missed coupon amount.

In addition to the missed December 1, 2022 payment, TSL will pay any and all accrued and unpaid interest on the Unsecured Notes that has accumulated in the ordinary course from December 1, 2022, through and including the date of Closing. For purposes of illustration, assuming a Closing date of June 30, 2023, the additional accrued interest from December 1, 2022, through June 30, 2023, would be approximately $2,390,625 (representing approximately 211 days of accrual at $11,301.37 per day, based on a 365-day year and 8.25% per annum on $50,000,000). The actual amount will be calculated as of the applicable Closing date. The aggregate cash payment to the Unsecured Noteholder constituency at Closing is therefore expected to include the missed coupon of $2,062,500 plus any additional accrued and unpaid interest through the Closing date.

The source of funds for these payments will include the €35 million (approximately $38.2 million at the €1 = $1.0914 exchange rate as of the date hereof) equity contribution to be made by KFO Holdings Société Anonyme ("KFO Holdings"), the Kostandinos family holding company, which is being injected into TSL as part of the overall RSA package (the "KFO Equity Contribution"). The KFO Equity Contribution is being made pursuant to an equity subscription agreement to be entered into between KFO Holdings and TSL, the definitive terms of which are being negotiated and are expected to be finalized prior to RSA execution. The KFO Equity Contribution will be funded at or prior to Closing and will be available to satisfy, among other obligations, the cure payments to the holders of the Unsecured Notes, as well as certain other transaction costs and liquidity needs.

C. Waiver of Event of Default

In connection with the Closing, TSL will seek a consent and waiver (the "Consent and Waiver") from Garrison Trust Company, as Indenture Trustee, and, to the extent required under the terms of the Indenture, from the requisite percentage of holders of the Unsecured Notes (which, under Section 6.04 of the Indenture, we understand to be holders representing a majority in aggregate principal amount of the then-outstanding Unsecured Notes), waiving the Event of Default arising from the failure to make the scheduled December 1, 2022 interest payment. The effectiveness of the Consent and Waiver will be conditioned upon the payment in full of the missed coupon amount and all other accrued and unpaid interest at or prior to Closing, such that the waiver and the cure payment will occur simultaneously and the holders of the Unsecured Notes will not be asked to waive any rights without having first received full payment.

C&H anticipates preparing and circulating a form of Consent and Waiver letter to Ashford, Brightmoor Group & McKay PC and to Garrison Trust Company for review and comment in advance of the RSA Closing. We expect to have the initial draft of the Consent and Waiver available for circulation within approximately two weeks following execution of the RSA and would welcome an expeditious review and comment process to ensure that the Consent and Waiver is in agreed form well in advance of the targeted Closing date. We note that the Consent and Waiver is expected to be limited in scope to the specific Event of Default described herein and will not seek any broader waiver of rights, amendment of terms, or modification of protections afforded to the holders of the Unsecured Notes under the Indenture.

D. No Structural Changes

The Unsecured Notes' position in the capital structure of TSL will not be altered as a result of the RSA transactions. The Unsecured Notes will continue to rank as general unsecured obligations of TSL, junior to all secured indebtedness, including:

(i) The Senior Secured Credit Facility, as amended pursuant to Amendment No. 1 to the Senior Secured Credit Agreement (to be entered into in connection with the RSA Closing), with maturity extended from June 15, 2024, to June 15, 2027; and

(ii) The new second-lien notes in the aggregate principal amount of $60,000,000, bearing interest at 10.0% per annum payable in kind, due June 2028, to be issued to BMC in exchange for its existing Mezzanine Notes in the principal amount of $112,300,000.

The existing intercreditor arrangements, insofar as they affect the Unsecured Notes, including the provisions of the Intercreditor Agreement dated as of March 1, 2020, among TSL, TAI, the Administrative Agent under the Senior Secured Credit Facility, BMC, and Garrison Trust Company, will not be modified as part of the RSA transactions. The Unsecured Notes will continue to be subject to the same subordination provisions and standstill restrictions as set forth in the Intercreditor Agreement and the Indenture.

IV. Treatment of Other Creditor Classes (for Reference)

For the benefit of the Unsecured Noteholder Group, and so that the proposed treatment of the Unsecured Notes may be evaluated in the context of the broader restructuring, we provide below a brief summary of the proposed treatment of the other principal creditor constituencies under the RSA. A more detailed description of these terms will be set forth in the RSA term sheet to be circulated on or about February 10, 2023.

(a) Senior Secured Lender Syndicate. The Senior Secured Credit Agreement will be amended pursuant to Amendment No. 1 to the Senior Secured Credit Agreement, which will provide for, among other things: (i) an extension of the maturity date from June 15, 2024, to June 15, 2027; (ii) the conversion of $75 million of Term Loan A principal from cash-pay to payment-in-kind ("PIK") for a period to be agreed; (iii) a reduction of the revolving credit facility commitment from $200 million to $150 million; (iv) a comprehensive reset of the financial covenants, including (A) an increase in the Maximum Net Leverage Ratio to 7.00x, stepping down to 5.50x by Q4 2025, (B) a reduction in the Minimum Liquidity covenant from $40.0 million to $30.0 million, and (C) a waiver of the Interest Coverage Ratio covenant through Q4 2023; (v) an amendment fee of 1.00% of the aggregate outstanding principal amount ($5.4 million), payable in kind by capitalizing such amount into the outstanding principal of the Term Loans; and (vi) a retroactive waiver of any default interest that has accrued since the date of the initial covenant breach. The senior secured lenders are not taking any principal haircut under the RSA and will retain first-priority liens on substantially all of the Company's assets.

(b) Mezzanine Lender (Dralvecen Mezzanine Capital LLC). BMC will exchange its existing Mezzanine Notes in the aggregate principal amount of $112,300,000 for (i) $60,000,000 in new second-lien notes (10.0% PIK interest, maturing June 2028) and (ii) 15% of the pro forma equity in TSL. This represents a 46.6% reduction (or "haircut") on the debt component of BMC's claim (from $112.3 million to $60.0 million). The issuance of the 15% equity stake to BMC will result in the dilution of the existing equity holders: the Kostandinos family's equity stake (held through KFO Holdings and related entities) will be reduced from approximately 80% to approximately 68%, and the remaining non-family equity holders will be reduced from approximately 20% to approximately 17%.

(c) Trade Creditors. Trade creditors will be paid in full in the ordinary course of business and will not be impaired under the RSA. As of the most recent reporting date, TSL and its subsidiaries had approximately $38.7 million in outstanding trade payables, including approximately $9.2 million owed to Olympian Fuel & Supply SA, the Company's largest trade counterparty. Continued payment of trade creditors in the ordinary course is essential to maintaining the Company's ongoing operations and commercial relationships with key vendors and service providers.

(d) Intercompany Note (TAI → TSL). The existing subordinated intercompany note in the principal amount of $76.4 million, pursuant to which TAI is obligated to TSL, will be amended to (i) extend its maturity to December 2028 and (ii) reduce the applicable interest rate from 5.0% per annum to 2.0% per annum. The intercompany note will continue to be fully subordinated to all third-party indebtedness.

(e) Equity. KFO Holdings will contribute €35 million (approximately $38.2 million) in new equity to TSL as part of the KFO Equity Contribution. As noted above, the Kostandinos family's equity ownership will be diluted from approximately 80% to approximately 68% as a result of the issuance of the 15% equity stake to BMC. No cash distribution will be made to any equity holder in connection with the RSA transactions.

V. Rationale for Unimpaired Treatment

The proposed unimpaired treatment of the Unsecured Notes reflects the considered judgment of TSL, its board of directors, and its advisors, after extensive analysis and negotiation, and is supported by the following principal considerations:

(i) Modest Quantum Relative to Overall Restructuring. The Unsecured Notes represent $50 million of the Company's approximately $847.3 million in total consolidated indebtedness, or approximately 5.9% of the total debt stack. The economic concessions necessary to achieve a sustainable capital structure are being borne principally by BMC (which is accepting a 46.6% haircut on its debt claim and converting a portion of its recovery to equity) and by the equity holders (who are contributing $38.2 million in new capital and accepting significant dilution). In this context, impairing the Unsecured Notes would yield relatively modest incremental deleveraging benefit while introducing material additional complexity and delay.

(ii) Avoidance of Delay, Expense, and Complexity. Seeking an amendment to the Indenture or conducting a formal exchange offer in respect of the Unsecured Notes would require the engagement of additional professionals, the preparation and filing of disclosure documents (potentially including an SEC-registered exchange offer), solicitation of consents from a dispersed bondholder base, and compliance with applicable securities laws and Trust Indenture Act requirements. These processes would add significant time and cost to the restructuring, potentially jeopardizing the outside date of the RSA and increasing the risk of a contested Chapter 11 filing. The Company and its advisors have concluded that these costs and risks are not warranted given the relatively modest quantum of the Unsecured Notes.

(iii) Preservation of Capital Market Access. TSL has historically accessed the unsecured capital markets as a component of its funding strategy, and maintaining the Unsecured Notes on an unimpaired basis preserves TSL's track record of honoring its unsecured obligations in full. This is of significant strategic importance to TSL as it looks to re-access the capital markets in the medium term following the completion of the restructuring. The reputational consequences of impairing the Unsecured Notes, even in the context of a broader out-of-court restructuring, could adversely affect TSL's ability to issue unsecured debt at reasonable pricing in the future.

(iv) Comparison to Chapter 11 Recovery Analysis. Kensington Veltrian Partners LLC ("KHP"), TSL's financial advisor, has prepared a waterfall analysis estimating the recoveries that would be available to various creditor classes in a hypothetical Chapter 11 proceeding. Under this analysis, estimated recoveries for holders of the Unsecured Notes in a Chapter 11 scenario would range from approximately 8 to 14 cents on the dollar, depending on the assumptions used regarding enterprise value, administrative costs, and the treatment of intercompany claims. KHP has estimated the enterprise value of TSL at between $580 million and $640 million (midpoint: $610 million). Against approximately $540 million in first-priority senior secured debt and $112.3 million in second-priority mezzanine debt, the aggregate senior and mezzanine claims of approximately $652.3 million exceed even the high end of the enterprise value range, leaving limited (and potentially zero) residual value for distribution to unsecured creditors after satisfaction of secured and priority claims. The proposed unimpaired treatment under the out-of-court RSA is therefore significantly more favorable to the Unsecured Noteholder constituency than the expected alternative in a Chapter 11 proceeding or liquidation scenario.

In light of the foregoing, the Company believes that the proposed treatment reflects an appropriate and equitable outcome for the holders of the Unsecured Notes and is consistent with the Company's fiduciary obligations to all of its stakeholders.

VI. Anticipated Timeline and Next Steps

The Company anticipates the following timeline for the execution and consummation of the RSA transactions:

(i) RSA Term Sheet Circulation: The RSA term sheet incorporating the terms described herein is being circulated to all creditor groups on or about February 10, 2023.

(ii) RSA Execution: TSL anticipates executing the RSA with the requisite creditor support by mid-March 2023. This target date has been established with reference to the current forbearance expiration, which was extended from December 31, 2022, to March 8, 2023, pursuant to the First Amendment to the Forbearance Agreement, dated as of January 8, 2023 (the "First Forbearance Amendment"). The Company intends to seek a further extension of the forbearance period, if necessary, to align with the RSA execution and Closing timeline.

(iii) Definitive Documentation: Following RSA execution, the parties will negotiate and finalize definitive transaction documentation, including (A) Amendment No. 1 to the Senior Secured Credit Agreement, (B) the new second-lien note purchase agreement between TSL and BMC, (C) the equity subscription agreement between TSL and KFO Holdings, (D) the Consent and Waiver from Garrison Trust Company and the requisite holders of the Unsecured Notes, and (E) ancillary documents including amended intercreditor arrangements, updated security documents, and corporate governance documents reflecting the revised equity ownership structure. Definitive documentation is expected to be finalized by May 2023.

(iv) Outside Date / Closing: The RSA has an outside date of June 30, 2023, which is also the targeted Closing date. At Closing, all transactions contemplated by the RSA will become effective, including (A) the effectiveness of Amendment No. 1 to the Senior Secured Credit Agreement, (B) the issuance of the new second-lien notes and equity to BMC, (C) the funding of the KFO Equity Contribution, and (D) the payment in full of the missed coupon of $2,062,500, together with all other accrued and unpaid interest on the Unsecured Notes, and the effectiveness of the Consent and Waiver of the related Event of Default.

We will keep Ashford, Brightmoor Group & McKay PC apprised of material developments with respect to the foregoing timeline and will promptly notify you of any changes or delays that may affect the anticipated schedule.

VII. Request for Engagement and Feedback

C&H respectfully invites Ashford, Brightmoor Group & McKay PC, on behalf of the Unsecured Noteholder Group, to review the proposed treatment set forth in this letter and to provide any comments, questions, or feedback at your earliest convenience. We recognize that your clients will wish to evaluate the proposed treatment in the broader context of the RSA term sheet, and we are fully prepared to engage in substantive discussions regarding the terms described herein and the overall restructuring framework.

In furtherance of these discussions, we request that a call be scheduled at a mutually convenient time between Amy Chesterton and Nathaniel Bower of Calderwood & Harkness LLP and Carolyn Brightmoor Group and Robert Mancini of Ashford, Brightmoor Group & McKay PC to discuss the proposed treatment and address any preliminary questions or concerns. We are available during the week of February 13, 2023, and would suggest scheduling this call promptly following your receipt of the RSA term sheet.

Additionally, C&H will share the RSA term sheet with your firm when it is circulated to the broader creditor constituencies and will provide draft Consent and Waiver documentation for your review and comment as described in Section III.C above. We would welcome a collaborative process in finalizing these documents and are committed to addressing any reasonable concerns raised by the Unsecured Noteholder Group and its counsel.

VIII. Confidentiality

Please note that this letter and its contents are subject to the applicable confidentiality agreements executed in connection with the restructuring discussions, including the Non-Disclosure Agreement dated as of November 1, 2022, by and among TSL, TAI, and the members of the Unsecured Noteholder Group (the "NDA"). We respectfully request that the contents of this letter not be shared beyond the members of the informal Unsecured Noteholder Group and their professional advisors (including legal counsel and financial advisors) without the prior written consent of TSL. Any disclosure of this letter or its contents to persons not authorized to receive confidential information under the NDA may constitute a breach of the NDA and may have adverse consequences for the restructuring process.

IX. Reservation of Rights

Nothing in this letter shall constitute, or be deemed to constitute, a waiver of any rights, remedies, claims, or defenses of TSL, TAI, or any of their affiliates, all of which are expressly reserved in full. Without limiting the generality of the foregoing, (i) the proposed treatment of the Unsecured Notes described herein is subject to the negotiation, execution, and delivery of the RSA by all required parties and the satisfaction of all conditions precedent therein, (ii) TSL and TAI reserve the right to modify, amend, or withdraw the proposed treatment at any time prior to the execution of the RSA, and (iii) no statement in this letter shall be construed as an admission or acknowledgment of any fact, liability, or obligation. This letter does not constitute a commitment, offer, or undertaking by TSL, TAI, or any other party to enter into the RSA or to consummate any of the transactions described herein, and all such transactions remain subject to the execution of definitive documentation on terms and conditions satisfactory to all parties in their respective sole discretion.

In closing, we wish to express our sincere appreciation for the constructive engagement of the Unsecured Noteholder Group and Ashford, Brightmoor Group & McKay PC throughout the restructuring process to date. The willingness of your clients and your firm to engage in good-faith discussions has been an important factor in advancing the restructuring toward a consensual resolution. We remain firmly committed to working collaboratively with all stakeholder groups to achieve an outcome that avoids the need for a Chapter 11 filing and preserves value for all of TSL's creditors and stakeholders.

We look forward to receiving your feedback and to continuing these discussions in the weeks ahead. Please do not hesitate to contact me directly at (212) 455-7234 or achesterton@calderwoodharkness.com, or Nathaniel Bower at (212) 455-7210 or nbower@calderwoodharkness.com, with any questions or to schedule a call at your convenience.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Amy Chesterton Lead Associate, Bankruptcy & Restructuring 780 Third Avenue New York, NY 10017 Tel: (212) 455-7234

Email: achesterton@calderwoodharkness.com

cc: (by email)

Nathaniel Bower, Esq. — Calderwood & Harkness LLP

Colette Whitman, Esq. — Calderwood & Harkness LLP

Georgios Andreadis — Chief Executive Officer, Thalassa Shipping & Logistics SA

Irini Dalakoura — Chief Financial Officer, Thalassa Shipping & Logistics SA

Marcus Hale — President, Thalassa Americas Inc.

Robert Mancini, Esq. — Ashford, Brightmoor Group & McKay PC

PRIVILEGED & CONFIDENTIAL
CALDERWOOD & HARKNESS LLP Attorneys at Law 780 Third Avenue New York, NY 10017
Telephone: (212) 455-7200 Facsimile: (212) 455-7201 www.calderwoodharkness.com
February 8, 2023
Carolyn Brightmoor Group, Esq. Lead Partner Ashford, Brightmoor Group & McKay PC 299 Park Avenue, 18th Floor New York, NY 10171
Re: Thalassa Shipping & Logistics SA / Thalassa Americas Inc. — Proposed Treatment of 8.25% Senior Unsecured Notes due 2025 under Restructuring Support Agreement
Calderwood & Harkness LLP Matter No. 1044-00003
Dear Ms. Brightmoor Group:
I. Purpose and Context
I write on behalf of Calderwood & Harkness LLP ("C&H"), counsel to Thalassa Shipping & Logistics Société Anonyme ("TSL"), a société anonyme organized under the laws of the Hellenic Republic, and its wholly-owned Delaware subsidiary, Thalassa Americas Inc. ("TAI," and together with TSL, the "Company"), to provide the informal group of holders (the "Unsecured Noteholder Group") of the Company's 8.25% Senior Unsecured Notes due March 1, 2025 (CUSIP: 87265BAB5) (the "Unsecured Notes"), represented by your firm, with a summary of the proposed treatment of the $50,000,000 in aggregate principal amount of the Unsecured Notes under the contemplated Restructuring Support Agreement (the "RSA").
As you are aware, the RSA term sheet incorporating these and other terms is being circulated to all creditor constituencies on or about February 10, 2023. This letter is intended to provide advance notice and additional detail to the Unsecured Noteholder Group regarding the specific treatment of the Unsecured Notes ahead of that broader circulation. We believe that the early transmission of this information will facilitate productive engagement between the parties and allow your clients and your firm sufficient time to evaluate the proposed treatment in the context of the overall restructuring framework.
By way of background, TSL and TAI have been engaged in comprehensive restructuring discussions with their senior secured lender syndicate (the "Ad Hoc Group," represented by Whitfield, Crane & Burgess LLP) and with Dralvecen Mezzanine Capital LLC ("BMC," represented by Kellner & Foss LLP) since the execution of the Forbearance Agreement, dated as of October 10, 2022 (the "Forbearance Agreement"), among TSL, TAI, and the Administrative Agent on behalf of the Senior Secured Lender Syndicate. Those discussions have advanced materially, and the parties have reached agreement in principle on the terms outlined herein and described more fully in the RSA term sheet.
The purpose of this letter is to (i) summarize the relevant background concerning the Unsecured Notes and the circumstances giving rise to the current restructuring, (ii) set forth in reasonable detail the proposed treatment of the Unsecured Notes under the RSA, (iii) provide context regarding the treatment of other creditor constituencies, (iv) articulate the rationale underlying the proposed treatment, and (v) outline anticipated next steps and the expected timeline for execution and closing of the RSA transactions.
II. Background
A. The Unsecured Notes
The Unsecured Notes were issued on March 1, 2020, pursuant to an indenture (the "Indenture"), dated as of March 1, 2020, by and between TSL, as issuer, and Garrison Trust Company, as indenture trustee (the "Indenture Trustee"), located at 100 Wall Street, 16th Floor, New York, NY 10005. The Unsecured Notes were issued in an aggregate principal amount of $50,000,000 and bear interest at a rate of 8.25% per annum, payable semi-annually in cash on June 1 and December 1 of each year. The Unsecured Notes mature on March 1, 2025, at which time the full outstanding principal amount, together with any accrued and unpaid interest, becomes due and payable in full. The CUSIP number for the Unsecured Notes is 87265BAB5.
The Unsecured Notes are general unsecured obligations of TSL. As such, they are structurally and contractually subordinated to both (i) TSL's Senior Secured Credit Facility (the "Senior Secured Credit Facility"), which has a total commitment of $685,000,000 and had $540,000,000 outstanding as of September 30, 2022, and (ii) the mezzanine notes (the "Mezzanine Notes") in the aggregate principal amount of $112,300,000 outstanding, held by BMC. The obligations under the Senior Secured Credit Facility benefit from first-priority liens on substantially all of TSL's and TAI's assets, including vessel mortgages, account pledges, and equity pledges in TAI and certain other subsidiaries. The Mezzanine Notes benefit from second-priority liens on substantially the same collateral package. The Unsecured Notes do not benefit from any lien or security interest in any of the Company's assets and rank junior to both the Senior Secured Credit Facility and the Mezzanine Notes in right of payment and in respect of any distribution of assets in a bankruptcy, insolvency, or liquidation proceeding.
B. The Missed Coupon Payment and Default Status
The semi-annual interest payment on the Unsecured Notes due December 1, 2022, in the amount of $2,062,500 (calculated as $50,000,000 × 8.25% ÷ 2 = $2,062,500), was not made on the scheduled payment date. In accordance with Section 6.01(a) of the Indenture, the failure to make a scheduled interest payment within the applicable grace period constitutes an event of default. The thirty (30)-day cure period provided under the Indenture expired on January 1, 2023, without the payment having been made, thereby constituting an Event of Default (as defined in the Indenture) under Section 6.01(a) thereof.
TSL was unable to make this payment due to the severe liquidity constraints that precipitated and have accompanied the broader restructuring process. Specifically, TSL breached the Minimum Liquidity Covenant under Section 7.12(c) of the Senior Secured Credit Agreement on September 15, 2022, when TSL's unrestricted cash and cash equivalents fell to approximately $27.3 million against a covenant minimum of $40.0 million, representing a shortfall of approximately $12.7 million. In connection with the negotiation of the Forbearance Agreement, the senior secured lenders imposed certain restrictions on the Company's ability to make payments to junior creditors, including holders of the Unsecured Notes, during the forbearance period. These restrictions, set forth in Section 4(d) of the Forbearance Agreement, further constrained TSL's ability to cure the missed coupon payment, notwithstanding the Company's expressed desire to do so. As a result, the Event of Default under the Indenture remains outstanding as of the date of this letter.
C. Overview of the Liquidity Crisis
For purposes of providing appropriate context for the Unsecured Noteholder Group, we briefly summarize below the macroeconomic and company-specific factors that gave rise to TSL's current financial difficulties.
The global dry bulk shipping market experienced a severe and prolonged downturn during the first three quarters of 2022. The Baltic Dry Index, a widely tracked composite measure of dry bulk shipping rates, declined approximately 58% between January and September 2022, reflecting a sharp contraction in global trade volumes, overcapacity in certain vessel classes, and reduced demand for bulk commodity transportation. TSL's fleet, which is predominantly deployed in the dry bulk and container segments, was directly and materially impacted by this market deterioration. TSL's average daily time-charter equivalent ("TCE") revenue fell from $24,800 per day (the FY2021 average across the fleet) to approximately $11,200 per day (the Q3 2022 average), representing a decline of approximately 54.8%.
As a direct consequence of the market downturn, TSL's consolidated revenue declined from approximately €1.42 billion in FY2021 to an estimated €987 million in FY2022, representing a year-over-year decline of approximately 30.5%. Operating cash flows correspondingly deteriorated, and TSL's ability to service its substantial debt obligations became increasingly strained.
As of September 30, 2022, TSL was in breach of multiple financial covenants under the Senior Secured Credit Facility, including the following:
(i) Net Leverage Ratio: 7.82x actual versus a maximum permitted ratio of 5.50x under Section 7.12(a) of the Senior Secured Credit Agreement;
(ii) Interest Coverage Ratio: 1.74x actual versus a minimum required ratio of 2.50x under Section 7.12(b) of the Senior Secured Credit Agreement; and
(iii) Minimum Liquidity: $27.3 million actual versus a minimum required amount of $40.0 million under Section 7.12(c) of the Senior Secured Credit Agreement (as noted above).
In addition to the covenant breaches and revenue decline, the appraised value of TSL's fleet experienced a significant reduction during 2022. According to an independent appraisal conducted by Drakos Maritime Valuations Ltd. dated November 1, 2022, the aggregate fair market value of TSL's fleet was approximately $623 million, down from approximately $891 million based on a prior appraisal conducted in January 2022. This decline of approximately $268 million (or approximately 30.1%) reflected both the deterioration in charter rates and the general aging of the fleet. The fleet value decline further eroded the Company's borrowing base and contributed to additional pressure from the senior secured lenders regarding collateral coverage ratios.
As of September 30, 2022, total consolidated indebtedness of TSL and its subsidiaries across all facilities was approximately $847.3 million, comprised of $540.0 million under the Senior Secured Credit Facility, $112.3 million in Mezzanine Notes, $50.0 million in Unsecured Notes, $76.4 million in subordinated intercompany obligations (TAI to TSL), and approximately $68.6 million in other funded obligations, including vessel financing arrangements and certain capital lease obligations. Against an estimated enterprise value of $580 million to $640 million (as discussed further below), this level of indebtedness rendered the Company's capital structure unsustainable absent a comprehensive restructuring.
III. Proposed Treatment of Unsecured Notes under the RSA
A. Unimpaired Status
Under the proposed RSA, the Unsecured Notes will remain unimpaired and will not be subject to any reduction, modification, exchange, conversion, or other alteration. Specifically:
(i) The outstanding principal amount of $50,000,000 will not be reduced, written down, converted to equity, or exchanged for new instruments of any kind;
(ii) The contractual interest rate of 8.25% per annum will remain unchanged and will continue to accrue on the full outstanding principal amount;
(iii) The semi-annual payment schedule (with interest payable on June 1 and December 1 of each year) will remain in effect without modification;
(iv) The stated maturity date of March 1, 2025, will not be extended, accelerated, or otherwise altered; and
(v) No amendment, supplement, or modification to the Indenture governing the Unsecured Notes will be required or requested in connection with the RSA transactions, other than the consent and waiver described in Section III.C below.
In sum, upon the closing of the RSA transactions, the Unsecured Notes will continue in full force and effect on the same terms and conditions as originally issued, with the exception that the existing Event of Default will have been cured and waived as described below.
B. Cure of the Missed Coupon Payment
The missed December 1, 2022 interest payment of $2,062,500 will be paid in full, in cash, at or prior to the closing of the RSA transactions (the "Closing"). Payment of the missed coupon will be made to Garrison Trust Company, as Indenture Trustee, for distribution to the registered holders of the Unsecured Notes in accordance with the applicable provisions of the Indenture and the customary record date and distribution procedures set forth therein. No holder of the Unsecured Notes will be required to accept any reduction, deferral, or payment-in-kind in lieu of full cash payment of the missed coupon amount.
In addition to the missed December 1, 2022 payment, TSL will pay any and all accrued and unpaid interest on the Unsecured Notes that has accumulated in the ordinary course from December 1, 2022, through and including the date of Closing. For purposes of illustration, assuming a Closing date of June 30, 2023, the additional accrued interest from December 1, 2022, through June 30, 2023, would be approximately $2,390,625 (representing approximately 211 days of accrual at $11,301.37 per day, based on a 365-day year and 8.25% per annum on $50,000,000). The actual amount will be calculated as of the applicable Closing date. The aggregate cash payment to the Unsecured Noteholder constituency at Closing is therefore expected to include the missed coupon of $2,062,500 plus any additional accrued and unpaid interest through the Closing date.
The source of funds for these payments will include the €35 million (approximately $38.2 million at the €1 = $1.0914 exchange rate as of the date hereof) equity contribution to be made by KFO Holdings Société Anonyme ("KFO Holdings"), the Kostandinos family holding company, which is being injected into TSL as part of the overall RSA package (the "KFO Equity Contribution"). The KFO Equity Contribution is being made pursuant to an equity subscription agreement to be entered into between KFO Holdings and TSL, the definitive terms of which are being negotiated and are expected to be finalized prior to RSA execution. The KFO Equity Contribution will be funded at or prior to Closing and will be available to satisfy, among other obligations, the cure payments to the holders of the Unsecured Notes, as well as certain other transaction costs and liquidity needs.
C. Waiver of Event of Default
In connection with the Closing, TSL will seek a consent and waiver (the "Consent and Waiver") from Garrison Trust Company, as Indenture Trustee, and, to the extent required under the terms of the Indenture, from the requisite percentage of holders of the Unsecured Notes (which, under Section 6.04 of the Indenture, we understand to be holders representing a majority in aggregate principal amount of the then-outstanding Unsecured Notes), waiving the Event of Default arising from the failure to make the scheduled December 1, 2022 interest payment. The effectiveness of the Consent and Waiver will be conditioned upon the payment in full of the missed coupon amount and all other accrued and unpaid interest at or prior to Closing, such that the waiver and the cure payment will occur simultaneously and the holders of the Unsecured Notes will not be asked to waive any rights without having first received full payment.
C&H anticipates preparing and circulating a form of Consent and Waiver letter to Ashford, Brightmoor Group & McKay PC and to Garrison Trust Company for review and comment in advance of the RSA Closing. We expect to have the initial draft of the Consent and Waiver available for circulation within approximately two weeks following execution of the RSA and would welcome an expeditious review and comment process to ensure that the Consent and Waiver is in agreed form well in advance of the targeted Closing date. We note that the Consent and Waiver is expected to be limited in scope to the specific Event of Default described herein and will not seek any broader waiver of rights, amendment of terms, or modification of protections afforded to the holders of the Unsecured Notes under the Indenture.
D. No Structural Changes
The Unsecured Notes' position in the capital structure of TSL will not be altered as a result of the RSA transactions. The Unsecured Notes will continue to rank as general unsecured obligations of TSL, junior to all secured indebtedness, including:
(i) The Senior Secured Credit Facility, as amended pursuant to Amendment No. 1 to the Senior Secured Credit Agreement (to be entered into in connection with the RSA Closing), with maturity extended from June 15, 2024, to June 15, 2027; and
(ii) The new second-lien notes in the aggregate principal amount of $60,000,000, bearing interest at 10.0% per annum payable in kind, due June 2028, to be issued to BMC in exchange for its existing Mezzanine Notes in the principal amount of $112,300,000.
The existing intercreditor arrangements, insofar as they affect the Unsecured Notes, including the provisions of the Intercreditor Agreement dated as of March 1, 2020, among TSL, TAI, the Administrative Agent under the Senior Secured Credit Facility, BMC, and Garrison Trust Company, will not be modified as part of the RSA transactions. The Unsecured Notes will continue to be subject to the same subordination provisions and standstill restrictions as set forth in the Intercreditor Agreement and the Indenture.
IV. Treatment of Other Creditor Classes (for Reference)
For the benefit of the Unsecured Noteholder Group, and so that the proposed treatment of the Unsecured Notes may be evaluated in the context of the broader restructuring, we provide below a brief summary of the proposed treatment of the other principal creditor constituencies under the RSA. A more detailed description of these terms will be set forth in the RSA term sheet to be circulated on or about February 10, 2023.
(a) Senior Secured Lender Syndicate. The Senior Secured Credit Agreement will be amended pursuant to Amendment No. 1 to the Senior Secured Credit Agreement, which will provide for, among other things: (i) an extension of the maturity date from June 15, 2024, to June 15, 2027; (ii) the conversion of $75 million of Term Loan A principal from cash-pay to payment-in-kind ("PIK") for a period to be agreed; (iii) a reduction of the revolving credit facility commitment from $200 million to $150 million; (iv) a comprehensive reset of the financial covenants, including (A) an increase in the Maximum Net Leverage Ratio to 7.00x, stepping down to 5.50x by Q4 2025, (B) a reduction in the Minimum Liquidity covenant from $40.0 million to $30.0 million, and (C) a waiver of the Interest Coverage Ratio covenant through Q4 2023; (v) an amendment fee of 1.00% of the aggregate outstanding principal amount ($5.4 million), payable in kind by capitalizing such amount into the outstanding principal of the Term Loans; and (vi) a retroactive waiver of any default interest that has accrued since the date of the initial covenant breach. The senior secured lenders are not taking any principal haircut under the RSA and will retain first-priority liens on substantially all of the Company's assets.
(b) Mezzanine Lender (Dralvecen Mezzanine Capital LLC). BMC will exchange its existing Mezzanine Notes in the aggregate principal amount of $112,300,000 for (i) $60,000,000 in new second-lien notes (10.0% PIK interest, maturing June 2028) and (ii) 15% of the pro forma equity in TSL. This represents a 46.6% reduction (or "haircut") on the debt component of BMC's claim (from $112.3 million to $60.0 million). The issuance of the 15% equity stake to BMC will result in the dilution of the existing equity holders: the Kostandinos family's equity stake (held through KFO Holdings and related entities) will be reduced from approximately 80% to approximately 68%, and the remaining non-family equity holders will be reduced from approximately 20% to approximately 17%.
(c) Trade Creditors. Trade creditors will be paid in full in the ordinary course of business and will not be impaired under the RSA. As of the most recent reporting date, TSL and its subsidiaries had approximately $38.7 million in outstanding trade payables, including approximately $9.2 million owed to Olympian Fuel & Supply SA, the Company's largest trade counterparty. Continued payment of trade creditors in the ordinary course is essential to maintaining the Company's ongoing operations and commercial relationships with key vendors and service providers.
(d) Intercompany Note (TAI → TSL). The existing subordinated intercompany note in the principal amount of $76.4 million, pursuant to which TAI is obligated to TSL, will be amended to (i) extend its maturity to December 2028 and (ii) reduce the applicable interest rate from 5.0% per annum to 2.0% per annum. The intercompany note will continue to be fully subordinated to all third-party indebtedness.
(e) Equity. KFO Holdings will contribute €35 million (approximately $38.2 million) in new equity to TSL as part of the KFO Equity Contribution. As noted above, the Kostandinos family's equity ownership will be diluted from approximately 80% to approximately 68% as a result of the issuance of the 15% equity stake to BMC. No cash distribution will be made to any equity holder in connection with the RSA transactions.
V. Rationale for Unimpaired Treatment
The proposed unimpaired treatment of the Unsecured Notes reflects the considered judgment of TSL, its board of directors, and its advisors, after extensive analysis and negotiation, and is supported by the following principal considerations:
(i) Modest Quantum Relative to Overall Restructuring. The Unsecured Notes represent $50 million of the Company's approximately $847.3 million in total consolidated indebtedness, or approximately 5.9% of the total debt stack. The economic concessions necessary to achieve a sustainable capital structure are being borne principally by BMC (which is accepting a 46.6% haircut on its debt claim and converting a portion of its recovery to equity) and by the equity holders (who are contributing $38.2 million in new capital and accepting significant dilution). In this context, impairing the Unsecured Notes would yield relatively modest incremental deleveraging benefit while introducing material additional complexity and delay.
(ii) Avoidance of Delay, Expense, and Complexity. Seeking an amendment to the Indenture or conducting a formal exchange offer in respect of the Unsecured Notes would require the engagement of additional professionals, the preparation and filing of disclosure documents (potentially including an SEC-registered exchange offer), solicitation of consents from a dispersed bondholder base, and compliance with applicable securities laws and Trust Indenture Act requirements. These processes would add significant time and cost to the restructuring, potentially jeopardizing the outside date of the RSA and increasing the risk of a contested Chapter 11 filing. The Company and its advisors have concluded that these costs and risks are not warranted given the relatively modest quantum of the Unsecured Notes.
(iii) Preservation of Capital Market Access. TSL has historically accessed the unsecured capital markets as a component of its funding strategy, and maintaining the Unsecured Notes on an unimpaired basis preserves TSL's track record of honoring its unsecured obligations in full. This is of significant strategic importance to TSL as it looks to re-access the capital markets in the medium term following the completion of the restructuring. The reputational consequences of impairing the Unsecured Notes, even in the context of a broader out-of-court restructuring, could adversely affect TSL's ability to issue unsecured debt at reasonable pricing in the future.
(iv) Comparison to Chapter 11 Recovery Analysis. Kensington Veltrian Partners LLC ("KHP"), TSL's financial advisor, has prepared a waterfall analysis estimating the recoveries that would be available to various creditor classes in a hypothetical Chapter 11 proceeding. Under this analysis, estimated recoveries for holders of the Unsecured Notes in a Chapter 11 scenario would range from approximately 8 to 14 cents on the dollar, depending on the assumptions used regarding enterprise value, administrative costs, and the treatment of intercompany claims. KHP has estimated the enterprise value of TSL at between $580 million and $640 million (midpoint: $610 million). Against approximately $540 million in first-priority senior secured debt and $112.3 million in second-priority mezzanine debt, the aggregate senior and mezzanine claims of approximately $652.3 million exceed even the high end of the enterprise value range, leaving limited (and potentially zero) residual value for distribution to unsecured creditors after satisfaction of secured and priority claims. The proposed unimpaired treatment under the out-of-court RSA is therefore significantly more favorable to the Unsecured Noteholder constituency than the expected alternative in a Chapter 11 proceeding or liquidation scenario.
In light of the foregoing, the Company believes that the proposed treatment reflects an appropriate and equitable outcome for the holders of the Unsecured Notes and is consistent with the Company's fiduciary obligations to all of its stakeholders.
VI. Anticipated Timeline and Next Steps
The Company anticipates the following timeline for the execution and consummation of the RSA transactions:
(i) RSA Term Sheet Circulation: The RSA term sheet incorporating the terms described herein is being circulated to all creditor groups on or about February 10, 2023.
(ii) RSA Execution: TSL anticipates executing the RSA with the requisite creditor support by mid-March 2023. This target date has been established with reference to the current forbearance expiration, which was extended from December 31, 2022, to March 8, 2023, pursuant to the First Amendment to the Forbearance Agreement, dated as of January 8, 2023 (the "First Forbearance Amendment"). The Company intends to seek a further extension of the forbearance period, if necessary, to align with the RSA execution and Closing timeline.
(iii) Definitive Documentation: Following RSA execution, the parties will negotiate and finalize definitive transaction documentation, including (A) Amendment No. 1 to the Senior Secured Credit Agreement, (B) the new second-lien note purchase agreement between TSL and BMC, (C) the equity subscription agreement between TSL and KFO Holdings, (D) the Consent and Waiver from Garrison Trust Company and the requisite holders of the Unsecured Notes, and (E) ancillary documents including amended intercreditor arrangements, updated security documents, and corporate governance documents reflecting the revised equity ownership structure. Definitive documentation is expected to be finalized by May 2023.
(iv) Outside Date / Closing: The RSA has an outside date of June 30, 2023, which is also the targeted Closing date. At Closing, all transactions contemplated by the RSA will become effective, including (A) the effectiveness of Amendment No. 1 to the Senior Secured Credit Agreement, (B) the issuance of the new second-lien notes and equity to BMC, (C) the funding of the KFO Equity Contribution, and (D) the payment in full of the missed coupon of $2,062,500, together with all other accrued and unpaid interest on the Unsecured Notes, and the effectiveness of the Consent and Waiver of the related Event of Default.
We will keep Ashford, Brightmoor Group & McKay PC apprised of material developments with respect to the foregoing timeline and will promptly notify you of any changes or delays that may affect the anticipated schedule.
VII. Request for Engagement and Feedback
C&H respectfully invites Ashford, Brightmoor Group & McKay PC, on behalf of the Unsecured Noteholder Group, to review the proposed treatment set forth in this letter and to provide any comments, questions, or feedback at your earliest convenience. We recognize that your clients will wish to evaluate the proposed treatment in the broader context of the RSA term sheet, and we are fully prepared to engage in substantive discussions regarding the terms described herein and the overall restructuring framework.
In furtherance of these discussions, we request that a call be scheduled at a mutually convenient time between Amy Chesterton and Nathaniel Bower of Calderwood & Harkness LLP and Carolyn Brightmoor Group and Robert Mancini of Ashford, Brightmoor Group & McKay PC to discuss the proposed treatment and address any preliminary questions or concerns. We are available during the week of February 13, 2023, and would suggest scheduling this call promptly following your receipt of the RSA term sheet.
Additionally, C&H will share the RSA term sheet with your firm when it is circulated to the broader creditor constituencies and will provide draft Consent and Waiver documentation for your review and comment as described in Section III.C above. We would welcome a collaborative process in finalizing these documents and are committed to addressing any reasonable concerns raised by the Unsecured Noteholder Group and its counsel.
VIII. Confidentiality
Please note that this letter and its contents are subject to the applicable confidentiality agreements executed in connection with the restructuring discussions, including the Non-Disclosure Agreement dated as of November 1, 2022, by and among TSL, TAI, and the members of the Unsecured Noteholder Group (the "NDA"). We respectfully request that the contents of this letter not be shared beyond the members of the informal Unsecured Noteholder Group and their professional advisors (including legal counsel and financial advisors) without the prior written consent of TSL. Any disclosure of this letter or its contents to persons not authorized to receive confidential information under the NDA may constitute a breach of the NDA and may have adverse consequences for the restructuring process.
IX. Reservation of Rights
Nothing in this letter shall constitute, or be deemed to constitute, a waiver of any rights, remedies, claims, or defenses of TSL, TAI, or any of their affiliates, all of which are expressly reserved in full. Without limiting the generality of the foregoing, (i) the proposed treatment of the Unsecured Notes described herein is subject to the negotiation, execution, and delivery of the RSA by all required parties and the satisfaction of all conditions precedent therein, (ii) TSL and TAI reserve the right to modify, amend, or withdraw the proposed treatment at any time prior to the execution of the RSA, and (iii) no statement in this letter shall be construed as an admission or acknowledgment of any fact, liability, or obligation. This letter does not constitute a commitment, offer, or undertaking by TSL, TAI, or any other party to enter into the RSA or to consummate any of the transactions described herein, and all such transactions remain subject to the execution of definitive documentation on terms and conditions satisfactory to all parties in their respective sole discretion.
In closing, we wish to express our sincere appreciation for the constructive engagement of the Unsecured Noteholder Group and Ashford, Brightmoor Group & McKay PC throughout the restructuring process to date. The willingness of your clients and your firm to engage in good-faith discussions has been an important factor in advancing the restructuring toward a consensual resolution. We remain firmly committed to working collaboratively with all stakeholder groups to achieve an outcome that avoids the need for a Chapter 11 filing and preserves value for all of TSL's creditors and stakeholders.
We look forward to receiving your feedback and to continuing these discussions in the weeks ahead. Please do not hesitate to contact me directly at (212) 455-7234 or achesterton@calderwoodharkness.com, or Nathaniel Bower at (212) 455-7210 or nbower@calderwoodharkness.com, with any questions or to schedule a call at your convenience.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Amy Chesterton Lead Associate, Bankruptcy & Restructuring 780 Third Avenue New York, NY 10017 Tel: (212) 455-7234
Email: achesterton@calderwoodharkness.com
cc: (by email)
Nathaniel Bower, Esq. — Calderwood & Harkness LLP
Colette Whitman, Esq. — Calderwood & Harkness LLP
Georgios Andreadis — Chief Executive Officer, Thalassa Shipping & Logistics SA
Irini Dalakoura — Chief Financial Officer, Thalassa Shipping & Logistics SA
Marcus Hale — President, Thalassa Americas Inc.
Robert Mancini, Esq. — Ashford, Brightmoor Group & McKay PC

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