letter-wcb-forbearance-extension.docx

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PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT NOT FOR DISTRIBUTION WITHOUT PRIOR WRITTEN CONSENT OF CALDERWOOD & HARKNESS LLP

CALDERWOOD & HARKNESS LLP 780 Third Avenue New York, New York 10017 Telephone: (212) 554-7200 Facsimile: (212) 554-7201 www.calderwoodharkness.com

January 3, 2023

VIA EMAIL AND Sundial Data Systems

Graham Whitfield III, Esq. Partner Whitfield, Crane & Burgess LLP 51 West 52nd Street, 38th Floor New York, New York 10019

Re: Thalassa Shipping & Logistics SA / Thalassa Americas Inc. — Proposed First Amendment to Forbearance Agreement

Dear Graham:

I. Introduction

This firm serves as counsel to Thalassa Shipping & Logistics Société Anonyme, a company organized under the laws of the Hellenic Republic ("TSL" or the "Company"), and its wholly-owned subsidiary, Thalassa Americas Inc., a Delaware corporation ("TAI" and, together with TSL, the "Borrowers"), in connection with, among other matters, that certain Senior Secured Credit Facility dated as of June 15, 2019 (as amended, restated, supplemented, or otherwise modified from time to time, the "Credit Agreement"), among TSL (as Borrower), TAI (as Co-Borrower with respect to the U.S. Tranche), Nordbank International AG ("Nordbank"), in its capacity as Administrative Agent and Collateral Agent, and the syndicate of lenders party thereto (the "Lenders").

We understand that Whitfield, Crane & Burgess LLP serves as counsel to an ad hoc group of Senior Secured Lenders (the "Ad Hoc Group") formed under the Credit Agreement, comprising the following institutions and their respective commitments under the facility:

The Ad Hoc Group accordingly holds approximately 54.3% of the $685,000,000 in total facility commitments under the Credit Agreement and constitutes the Required Lenders (as defined in Section 1.01 of the Credit Agreement) for purposes of directing the Administrative Agent.

The purpose of this letter is to propose terms for the First Amendment to the Forbearance Agreement dated as of October 10, 2022 (the "Forbearance Agreement"), by and among the Borrowers and the Lenders (acting through Nordbank as Administrative Agent), in advance of the expiration of the current ninety (90)-day standstill period on January 8, 2023. Enclosed with this letter is a draft of the proposed First Amendment to the Forbearance Agreement (the "First Amendment"), which is transmitted herewith for the Ad Hoc Group's review and comment. We respectfully request that your firm and the Ad Hoc Group's financial advisors review the enclosed draft and revert with any comments or proposed modifications at your earliest convenience, and in no event later than January 6, 2023, given the imminent expiration of the existing standstill.

As set forth in greater detail below, we believe that the additional time afforded by the proposed extension is both reasonable and necessary to permit the parties and their respective advisors to finalize a comprehensive restructuring framework and engage all creditor constituencies in a process designed to maximize recoveries and preserve the going-concern value of TSL's enterprise.

II. Background and Context

A. Events Leading to the Forbearance Agreement

As you are aware, the circumstances leading to the execution of the Forbearance Agreement arose from a series of covenant breaches under the Credit Agreement during the third quarter of 2022, each of which constituted an Event of Default under Article VIII thereof. We briefly recapitulate the relevant defaults for completeness of the record:

1. Minimum Liquidity Covenant Breach. On September 15, 2022, TSL's unrestricted cash and cash equivalents declined to approximately $27.3 million, which was $12.7 million below the $40.0 million Minimum Liquidity threshold set forth in Section 7.11(a) of the Credit Agreement. This shortfall was principally attributable to a combination of (i) a sharp deterioration in dry-bulk charter rates during the second and third quarters of 2022, (ii) accelerated drydocking expenditures for five vessels, and (iii) the Company's continued servicing of scheduled quarterly amortization payments under Term Loan A.

2. Maximum Net Leverage Ratio Breach. As of the fiscal quarter ended September 30, 2022, TSL's Maximum Net Leverage Ratio exceeded the 5.50x maximum permitted under Section 7.11(b) of the Credit Agreement. Specifically, TSL's Net Debt (as defined in the Credit Agreement) stood at approximately $770.9 million, and its Last Twelve Months ("LTM") Consolidated EBITDA (as defined) was approximately $98.6 million, yielding an actual Net Leverage Ratio of approximately 7.82x — a breach of 2.32x above the covenant threshold. The elevated leverage was driven by the decline in EBITDA resulting from reduced charter revenues and increased operating expenses, as well as the Company's total debt load inclusive of the mezzanine notes and unsecured notes discussed in Section III below.

3. Minimum Interest Coverage Ratio Breach. As of the same fiscal quarter, TSL's Interest Coverage Ratio fell below the 2.50x minimum required by Section 7.11(c) of the Credit Agreement. TSL's LTM Consolidated EBITDA of approximately $98.6 million, divided by LTM Consolidated Interest Expense of approximately $56.7 million, produced an actual Interest Coverage Ratio of approximately 1.74x — a shortfall of 0.76x relative to the covenant level. This breach reflected the compounding effect of declining earnings and the substantial fixed-charge burden imposed by the Company's capital structure.

Each of the foregoing constituted an Event of Default under Section 8.01(d) of the Credit Agreement (failure to comply with financial covenants), entitling the Administrative Agent, upon direction of the Required Lenders, to exercise remedies including acceleration of all outstanding obligations, enforcement against the collateral, and other actions as provided in Article VIII.

4. Execution of the Forbearance Agreement. In recognition of the severity of the defaults and the mutual interest of the Borrowers and the Lenders in pursuing a consensual path forward, the parties negotiated and executed the Forbearance Agreement on October 10, 2022. Pursuant to its terms, the Lenders (acting through Nordbank as Administrative Agent) agreed to forbear from exercising any remedies arising from the foregoing Events of Default for a period of ninety (90) days, commencing on October 10, 2022, and expiring on January 8, 2023 (the "Initial Standstill Period"). During the Initial Standstill Period, the Borrowers agreed to, among other things, continue making all scheduled interest payments and Term Loan A quarterly amortization installments, comply with certain enhanced reporting obligations, and engage constructively with the Ad Hoc Group and its advisors regarding restructuring alternatives.

B. Progress During the Initial Standstill Period

Since the execution of the Forbearance Agreement, the parties and their respective financial and legal advisors have been engaged in ongoing and, we believe, constructive dialogue regarding the Company's financial condition, enterprise value, and potential restructuring alternatives. Significant progress has been made on several fronts, including the following:

Financial Advisory Engagement. TSL and TAI engaged Kensington Veltrian Partners LLC ("KHP"), under the direction of James Calloway, Managing Director, as the Borrowers' financial advisor. In parallel, the Ad Hoc Group engaged Draycott Advisory Group LLC ("Draycott"), under the direction of Vanessa Chow, Partner, as the Ad Hoc Group's financial advisor. KHP and Draycott have held multiple working sessions and information exchanges throughout the Initial Standstill Period.

Independent Fleet Appraisal. An independent appraisal of TSL's vessel fleet was completed on November 1, 2022, by Drakos Maritime Valuations Ltd., under the direction of Captain Nikos Drakos, an internationally recognized maritime appraiser. The appraisal valued TSL's fleet of 38 dry-bulk carriers and 12 container vessels at an aggregate charter-free market value of approximately $623 million, representing a decline of approximately $268 million, or 30.1%, from the January 2022 appraisal value of $891 million. This significant deterioration in asset values reflects the broader downturn in global shipping markets, rising fleet age, and declining charter rate expectations for 2023 and 2024. The appraisal has been shared with both the Ad Hoc Group's advisors and the Administrative Agent.

Cash Flow Projections and Enterprise Valuation. KHP has prepared 13-week cash flow projections reflecting TSL's near-term liquidity position and operational needs, as well as an enterprise valuation analysis estimating TSL's total enterprise value within a range of approximately $580 million to $640 million on a going-concern basis. These projections and analyses have been shared with Draycott and are the subject of ongoing diligence and discussion between the advisory teams. KHP is continuing to develop a comprehensive restructuring framework that will form the basis for the restructuring term sheet contemplated by the proposed milestones set forth in Section IV.B below.

Management Engagement. Senior management of TSL and TAI — including Georgios Andreadis (Chief Executive Officer, TSL), Irini Dalakoura (Chief Financial Officer, TSL), and Marcus Hale (President, TAI) — have made themselves available for periodic update calls and diligence sessions with the Ad Hoc Group's advisors. We appreciate the Ad Hoc Group's acknowledgment that management has been cooperative and forthcoming in its disclosures.

Notwithstanding this meaningful progress, additional time is required to finalize and circulate a restructuring term sheet to all creditor constituencies and to convene formal multi-party negotiation sessions with a view to reaching consensus on a Restructuring Support Agreement. We believe the proposed extension of the standstill period, together with the updated milestones described below, will provide a reasonable and structured framework for the completion of these negotiations.

III. Summary of Outstanding Indebtedness Under the Credit Agreement

For ease of reference, we set forth below a summary of the outstanding indebtedness under the Credit Agreement as of September 30, 2022, as well as a brief description of certain other material indebtedness of the Borrowers. This summary is intended for informational purposes only and is qualified in its entirety by reference to the Credit Agreement and the underlying instruments.

A. Senior Secured Credit Facility

The total commitment under the Senior Secured Credit Facility is $685,000,000, extended by a syndicate of nine (9) Lender institutions. As of September 30, 2022, the aggregate outstanding principal balance under the facility was approximately $540,000,000, allocated among the following tranches:

Interest Rate. The applicable interest rate under the Credit Agreement is the Secured Overnight Financing Rate ("SOFR") plus 375 basis points per annum. Since the occurrence of the Events of Default described in Section II.A above, the default rate of SOFR plus 575 basis points per annum has been in effect pursuant to Section 2.08(b) of the Credit Agreement, representing a 200 basis point increase over the non-default rate.

Maturity Date. The Credit Agreement provides for a stated maturity date of June 15, 2024, at which time all outstanding obligations thereunder become due and payable in full.

Collateral. The obligations under the Credit Agreement are secured by first-priority liens and security interests in substantially all of the assets of TSL and TAI, including, without limitation: (i) thirty-eight (38) dry-bulk carriers; (ii) twelve (12) container vessels; (iii) the Houston terminal lease (held by TAI); (iv) all accounts receivable of TSL and TAI; and (v) one hundred percent (100%) of the equity interests in TAI and in each of the fourteen (14) vessel-owning special purpose vehicles ("SPVs") that hold title to certain of the Company's vessels.

B. Other Material Indebtedness

Although the focus of this letter and the proposed First Amendment is on the Senior Secured Credit Facility, we note for completeness that TSL's capital structure includes additional material indebtedness outside the Credit Agreement:

(i) Mezzanine Notes. TSL has outstanding approximately $112.3 million in aggregate principal amount of mezzanine notes (the "Mezzanine Notes") held by Dralvecen Mezzanine Capital LLC ("BMC"). The Mezzanine Notes are secured by a second-priority lien on substantially all of the collateral securing the Senior Secured Credit Facility and bear interest at a rate of 11.5% per annum on a PIK toggle basis. The intercreditor relationship between the Senior Secured Lenders and BMC is governed by that certain Intercreditor Agreement dated as of June 15, 2019. BMC is represented by Kellner & Foss LLP (Theodore Kellner, Partner).

(ii) Senior Unsecured Notes. TSL has outstanding $50,000,000 in aggregate principal amount of 8.25% Senior Unsecured Notes due March 1, 2025 (the "Unsecured Notes"), issued pursuant to an Indenture dated as of March 1, 2020, with Garrison Trust Company serving as Indenture Trustee. An informal group of unsecured noteholders has been formed and is represented by Ashford, Brightmoor Group & McKay PC (Carolyn Brightmoor Group, Partner). As discussed further in Section V below, TSL failed to make the scheduled semi-annual interest payment of $2,062,500 due on December 1, 2022, and the thirty (30)-day cure period under the Indenture expired on January 1, 2023, resulting in an additional event of default under the Unsecured Notes Indenture.

(iii) Trade Payables. TSL and TAI have outstanding trade payables of approximately $38.7 million in the aggregate, which includes amounts owed to fuel suppliers, port authorities, shipyard operators, and other trade creditors in the ordinary course of business.

The foregoing obligations, when combined with the Senior Secured Credit Facility, represent a total debt stack of approximately $740 million (excluding trade payables), against an enterprise valued by KHP in the range of $580 million to $640 million. This underscores the urgent need for a comprehensive restructuring that addresses all layers of the capital structure.

IV. Proposed Terms of the First Amendment to the Forbearance Agreement

We set forth below the principal terms of the proposed First Amendment, each of which is reflected in the enclosed draft. We invite the Ad Hoc Group's comments on each of these provisions and look forward to a constructive discussion aimed at reaching agreement on terms that are acceptable to all parties.

A. Extended Standstill Period

The First Amendment would extend the standstill period under the Forbearance Agreement from its current expiration date of January 8, 2023, to March 8, 2023 — an additional period of fifty-nine (59) days (the "Extended Standstill Period"). During the Extended Standstill Period, the Lenders (acting through Nordbank as Administrative Agent) would continue to forbear from exercising any and all remedies arising from the identified Events of Default, specifically: (i) the breach of the Minimum Liquidity Covenant under Section 7.11(a); (ii) the breach of the Maximum Net Leverage Ratio under Section 7.11(b); and (iii) the breach of the Minimum Interest Coverage Ratio under Section 7.11(c), each as described in Section II.A above.

The Borrowers would continue to satisfy all of their ongoing obligations under the Credit Agreement during the Extended Standstill Period, including without limitation: (a) timely payment of all scheduled interest payments on the outstanding Term Loan A, Revolving Credit Facility, and U.S. Tranche (Term Loan B) balances; and (b) timely payment of the quarterly amortization installments of $10,000,000 due under Term Loan A.

Default Interest. With respect to the default rate increment of 200 basis points currently accruing under Section 2.08(b) of the Credit Agreement, we respectfully propose that the parties discuss one of two alternative treatments during the Extended Standstill Period:

Alternative A — Waiver. A full waiver of default interest accrual during the Extended Standstill Period, with the non-default rate of SOFR plus 375 basis points applying in its place. TSL's current liquidity position remains severely constrained, and the incremental cash burden of the default interest premium is material — estimated at approximately $1.8 million over the proposed fifty-nine (59) day extension period. A waiver would preserve liquidity for operational needs and facilitate the Company's continued compliance with its payment obligations during the restructuring process.

Alternative B — Deferral. If a waiver is not acceptable to the Ad Hoc Group, TSL proposes that default interest continue to accrue during the Extended Standstill Period but that payment thereof be deferred and added to the outstanding principal balance, to be addressed as part of any comprehensive restructuring. Under this alternative, the Borrowers would continue to make current-pay interest at the non-default rate during the extension period.

We recognize that the default interest question is of significant importance to the Ad Hoc Group and its constituents, and we are prepared to discuss this issue in detail at the parties' earliest convenience.

B. Updated Milestones

In order to ensure that the Extended Standstill Period is utilized productively and that the restructuring process continues to advance on a defined timeline, the First Amendment would establish the following revised milestones as conditions to the continued effectiveness of the forbearance:

Milestone 1 — Updated Cash Flow Projections (January 20, 2023). On or before January 20, 2023, TSL shall deliver to the Ad Hoc Group and its advisors (including Draycott Advisory Group LLC) updated 13-week cash flow projections prepared by KHP, reflecting TSL's current liquidity position, projected revenue and expense streams, and anticipated cash needs through April 2023.

Milestone 2 — Preliminary Restructuring Term Sheet (February 1, 2023). On or before February 1, 2023, TSL shall deliver to the Ad Hoc Group a preliminary restructuring term sheet (the "Preliminary Term Sheet") setting forth the proposed framework for an out-of-court restructuring of TSL's indebtedness or, in the alternative, a framework for a pre-negotiated plan of reorganization under Chapter 11 of the Bankruptcy Code. The Preliminary Term Sheet shall address, at a minimum, the proposed treatment of the Senior Secured Credit Facility, the Mezzanine Notes, and the Unsecured Notes, as well as the proposed equity contribution from the existing equity holders and any new-money investment to address the Company's liquidity needs.

Milestone 3 — Comprehensive Term Sheet to All Constituencies (February 15, 2023). On or before February 15, 2023, TSL shall deliver a comprehensive restructuring term sheet (the "Comprehensive Term Sheet") to all creditor constituencies, including: (a) the Ad Hoc Group and its counsel and advisors; (b) Dralvecen Mezzanine Capital LLC and its counsel, Kellner & Foss LLP (Theodore Kellner, Partner); and (c) the informal group of unsecured noteholders and its counsel, Ashford, Brightmoor Group & McKay PC (Carolyn Brightmoor Group, Partner). The Comprehensive Term Sheet shall reflect any feedback received from the Ad Hoc Group on the Preliminary Term Sheet and shall be in sufficient detail to facilitate meaningful negotiation among all constituencies.

Milestone 4 — Commencement of Multi-Party Negotiations (February 28, 2023). On or before February 28, 2023, TSL shall have convened formal multi-party negotiation sessions among TSL, the Ad Hoc Group, BMC, and the unsecured noteholders (and their respective advisors and legal counsel), with the objective of reaching agreement on the material terms of a Restructuring Support Agreement ("RSA"). It is anticipated that these sessions would take place in person in New York, supplemented by video conference as appropriate.

Milestone 5 — RSA or Further Extension Agreement (March 8, 2023). On or before March 8, 2023, either: (a) the Borrowers and the Required Lenders (as defined in Section 1.01 of the Credit Agreement) shall have executed a binding Restructuring Support Agreement on terms acceptable to the Ad Hoc Group, the Borrowers, and — to the extent required — the other creditor constituencies; or (b) if an RSA has not been finalized but negotiations are progressing in good faith and material progress has been achieved (as determined in the reasonable judgment of the Ad Hoc Group), the parties shall have agreed to a further extension of the forbearance on mutually acceptable terms to be negotiated at that time.

Termination Event. The failure of TSL to satisfy any of the foregoing milestones within the time periods specified shall constitute a "Termination Event" under the First Amendment, upon the occurrence of which the Ad Hoc Group (acting through Nordbank as Administrative Agent) may terminate the forbearance upon five (5) business days' prior written notice to the Borrowers, at which point all rights and remedies of the Lenders under the Credit Agreement and applicable law shall be fully restored. We note that the five-day notice period is intended to provide the Borrowers with a brief opportunity to cure any inadvertent delay, and we are open to discussing the appropriate notice mechanism.

C. Information and Reporting Undertakings

In addition to the enhanced reporting obligations already in effect under the Forbearance Agreement, the First Amendment would require TSL and TAI to provide the following to the Ad Hoc Group and Draycott Advisory Group during the Extended Standstill Period:

(i) Bi-Weekly Liquidity Updates. On a bi-weekly basis (every other Tuesday), TSL shall deliver a written report setting forth the Company's current cash position (segregated by unrestricted and restricted cash) and its projected cash needs for the succeeding four (4)-week period, in a form reasonably acceptable to Draycott.

(ii) Monthly Unaudited Financial Statements. TSL shall deliver unaudited consolidated financial statements (including a balance sheet, income statement, and statement of cash flows) for each calendar month during the Extended Standstill Period, within twenty (20) days following the end of the applicable month. Such statements shall be prepared in accordance with International Financial Reporting Standards ("IFRS"), applied on a basis consistent with TSL's audited financial statements, and shall be accompanied by a certificate of TSL's Chief Financial Officer confirming their accuracy and completeness in all material respects.

(iii) Prompt Notice of Material Adverse Changes. TSL shall provide the Ad Hoc Group and Draycott with prompt written notice (and in no event later than two (2) business days) following the occurrence of any event, circumstance, or development that has resulted in, or could reasonably be expected to result in, a material adverse change in the business, operations, assets, liabilities, or financial condition of TSL or TAI.

(iv) Management Access. TSL shall cause its senior management — including Mr. Andreadis (CEO), Ms. Dalakoura (CFO), and Mr. Hale (President, TAI) — to be available for periodic update calls with the Ad Hoc Group's advisors, to be scheduled no less frequently than bi-weekly. The parties shall use reasonable efforts to coordinate the scheduling of such calls in advance.

(v) Auditor Access. TSL shall continue to provide the Ad Hoc Group and its advisors with reasonable access to TSL's independent auditor, Grainger, Holt & Associates LLP (Malcolm Holt, Lead Engagement Partner), for purposes of any diligence inquiries by the Ad Hoc Group's advisors that are relevant to the restructuring process. TSL shall provide any necessary consents or authorizations required to facilitate such access.

D. Acknowledgment of Events of Default

The First Amendment would require TSL and TAI to reaffirm and acknowledge the existence and continuity of each of the Events of Default identified in the original Forbearance Agreement, including the breach of the Minimum Liquidity Covenant, the Maximum Net Leverage Ratio Covenant, and the Minimum Interest Coverage Ratio Covenant. Such reaffirmation would be without prejudice to the Borrowers' rights and defenses, but would serve to confirm that the forbearance is a voluntary accommodation by the Lenders and does not represent a cure, waiver, or modification of the underlying defaults, except as expressly set forth in the First Amendment.

E. Reservation of Rights

Consistent with the original Forbearance Agreement, the First Amendment would include a comprehensive reservation of rights in favor of all parties:

(i) Lender Rights. The Lenders (acting individually or through Nordbank as Administrative Agent) would retain all of their rights and remedies under the Credit Agreement, the Security Documents, and applicable law, including without limitation the right to accelerate the outstanding obligations, enforce the liens against the collateral, and exercise any and all other remedies available at law or in equity, subject only to the forbearance expressly provided during the Extended Standstill Period. Upon termination or expiration of the Extended Standstill Period, all such rights and remedies would be fully restored, without any requirement for further notice, demand, or other action.

(ii) Borrower Rights. TSL and TAI would retain all of their respective rights, claims, and defenses under the Credit Agreement, applicable law, and otherwise, including any rights and defenses arising in connection with any restructuring negotiations or proceedings.

F. Additional Lender Protections

To protect the Lenders' collateral position and the value of the enterprise during the Extended Standstill Period, the First Amendment would include the following additional covenants and restrictions, which are consistent with standard forbearance terms and are designed to prevent any erosion of value pending completion of restructuring negotiations:

(i) Negative Covenant — No New Indebtedness, Liens, or Guarantees. TSL and TAI shall not incur, create, assume, or permit to exist any new indebtedness, liens, or guarantee obligations during the Extended Standstill Period without the prior written consent of the Ad Hoc Group (acting through Nordbank as Administrative Agent). This restriction shall apply to all forms of indebtedness and liens, including secured and unsecured borrowings, capital leases, sale-leaseback transactions, and contingent obligations.

(ii) Negative Covenant — No Asset Dispositions. TSL and TAI shall not sell, transfer, assign, or otherwise dispose of any assets outside the ordinary course of business during the Extended Standstill Period, except for dispositions that do not exceed $5,000,000 individually or $10,000,000 in the aggregate, in each case without the prior written consent of the Ad Hoc Group (acting through Nordbank as Administrative Agent). For the avoidance of doubt, ordinary course chartering, bunkering, and commercial operations shall not be subject to this restriction.

(iii) Negative Covenant — No Intercompany Transfers or Dividends. TSL and TAI shall not make any intercompany transfers, dividends, distributions, or other payments to affiliates or equity holders during the Extended Standstill Period, except for intercompany transfers in the ordinary course of business consistent with historical practice (including routine intercompany operational funding and management fee allocations). No distributions of any kind shall be made to equity holders of TSL, including KFO Holdings SA or any member of the Kostandinos family, during the Extended Standstill Period.

(iv) Minimum Cash Balance. TSL shall maintain a minimum unrestricted cash balance of not less than $20,000,000 at all times during the Extended Standstill Period. We acknowledge that this threshold is below the $40,000,000 Minimum Liquidity Covenant contained in Section 7.11(a) of the Credit Agreement, which remains in breach. The proposed $20,000,000 floor is intended to establish a practical liquidity baseline to prevent further erosion of the Company's cash position during the restructuring process, while recognizing that the existing covenant breach has been identified as one of the Events of Default subject to the forbearance. A breach of the $20,000,000 minimum cash balance shall constitute a Termination Event under the First Amendment.

V. Status of Restructuring Alternatives

We wish to provide the Ad Hoc Group with an update on the current status of the restructuring alternatives being evaluated by TSL, TAI, and their advisors. Calderwood & Harkness and KHP are actively pursuing a dual-track approach to the restructuring, as described below.

A. Out-of-Court Restructuring (Preferred Path)

The strongly preferred path for TSL's board of directors and management is an out-of-court consensual restructuring. KHP is developing a comprehensive restructuring proposal that would address, among other things: (i) the approaching maturity wall under the Credit Agreement (June 15, 2024); (ii) the need for meaningful deleveraging of TSL's balance sheet in light of the significant decline in enterprise and asset values; (iii) TSL's near-term and medium-term liquidity requirements; (iv) proposed amendments to the Credit Agreement, including potential maturity extensions, interest rate adjustments, and covenant modifications; (v) the treatment of the Mezzanine Notes held by BMC, including potential conversion, exchange, or equitization; and (vi) a potential equity contribution from KFO Holdings SA, the Kostandinos family holding company that controls approximately 80% of TSL's equity (Dimitrios Kostandinos holds 62% and Elena Kostandinos-Pavlou holds 18%). We anticipate that the Preliminary Term Sheet and the Comprehensive Term Sheet contemplated by the milestones set forth in Section IV.B above will set forth the detailed terms of the out-of-court proposal for negotiation with all stakeholders.

B. Chapter 11 Contingency Plan

In parallel with the out-of-court track, and as a prudent measure to ensure continuity and optionality, Calderwood & Harkness has been developing a contingency plan for a Chapter 11 filing by TAI (the "Chapter 11 Contingency Plan"). The key elements of this plan are as follows:

(i) Proposed Venue. The contemplated venue for any TAI filing would be the United States Bankruptcy Court for the Southern District of Texas, Houston Division, given TAI's operational nexus to its Houston terminal lease and the court's significant experience with complex maritime and energy restructurings.

(ii) Chief Restructuring Officer. Calderwood & Harkness has engaged in preliminary discussions with Alderney Management Advisors LLC regarding the potential designation of Richard Thornberg as Chief Restructuring Officer ("CRO") for TAI in the event of a Chapter 11 filing. Mr. Thornberg has extensive experience in maritime and logistics restructurings, and we believe his involvement would facilitate an efficient and well-managed case.

(iii) DIP Financing. The Company has received a preliminary term sheet from Nordbank International AG and Triton Credit Partners LP for a proposed $75,000,000 superpriority debtor-in-possession ("DIP") credit facility, with the following indicative terms: interest at SOFR plus 600 basis points, a commitment fee of 0.50%, and a twelve (12)-month maturity. The DIP facility would be subject to customary conditions, including Bankruptcy Court approval, adequate protection to pre-petition secured creditors, and negotiation and execution of definitive documentation. The availability of a DIP facility of this size would provide TAI with sufficient liquidity to fund operations, satisfy administrative expenses, and maintain the going-concern value of the enterprise during a Chapter 11 case.

(iv) Claims and Noticing Agent. Calderwood & Harkness has engaged Pendleton Claim Services Inc. (Laura Pendleton, President) on a standby basis to serve as claims and noticing agent in the event of a Chapter 11 filing. Ms. Pendleton and her team are prepared to mobilize on short notice.

We emphasize that the Chapter 11 Contingency Plan is precisely that — a contingency. The out-of-court path is strongly preferred by TSL's board and management, and we believe it offers the best prospect of maximizing recoveries for all stakeholders while preserving the going-concern value of the enterprise. The Chapter 11 plan serves as a backstop to ensure business continuity and creditor protection in the event that an out-of-court resolution cannot be achieved within a reasonable timeframe. Moreover, we note that the estimated administrative costs associated with a twelve (12)-month Chapter 11 case — including professional fees, DIP financing costs, and operational expenses attributable to the bankruptcy process — are estimated at approximately $18.5 million, representing a significant drag on recoveries that would be avoided through a successful out-of-court restructuring.

C. Unsecured Note Default

We also wish to bring to the Ad Hoc Group's attention that TSL was unable to make the scheduled semi-annual interest payment of $2,062,500 on the $50 million Senior Unsecured Notes on the December 1, 2022 payment date. The thirty (30)-day cure period provided under Section 6.01(a) of the Unsecured Notes Indenture expired on January 1, 2023, resulting in an additional event of default under the Indenture. We anticipate that Garrison Trust Company, as Indenture Trustee, may issue an acceleration notice in due course. Any restructuring proposal developed by TSL and its advisors will need to address the unsecured note default and the treatment of the unsecured noteholders' claims as part of a comprehensive resolution.

VI. Cross-Border Considerations

As you are aware, TSL is a Société Anonyme organized under the laws of Greece, with its principal offices in Piraeus. Accordingly, any restructuring of TSL's indebtedness must be analyzed under both United States and Greek law.

TSL's Greek counsel, Vassiliou & Demetriou Law Offices (Alexandros Vassiliou, Lead Partner), is advising on the Greek law implications of the restructuring alternatives under consideration. In particular, Vassiliou & Demetriou is analyzing whether any proposed restructuring steps — including potential debt-for-equity conversions, material asset dispositions, or intercompany transfers — may trigger obligations under Greek Law 4738/2020 (the "Greek Debt Settlement & Insolvency Code"), including any requirement for TSL to seek a rehabilitation or reorganization proceeding in Greece. Additionally, Vassiliou & Demetriou is advising on potential Chapter 15 recognition considerations in the event that a TAI Chapter 11 filing were to proceed in coordination with any Greek proceedings relating to TSL, including the requirements for recognition of TSL's center of main interests ("COMI") and the establishment of a foreign main or non-main proceeding for purposes of Chapter 15 of the Bankruptcy Code.

Calderwood & Harkness is coordinating closely with Vassiliou & Demetriou to ensure that any proposed restructuring is implementable under both U.S. and Greek law frameworks and that the interests of all parties are appropriately protected across jurisdictions. We would welcome the opportunity to include Vassiliou & Demetriou in any discussion of cross-border structuring issues with your firm and the Ad Hoc Group's advisors.

VII. Request for Engagement

Given the imminent expiration of the Initial Standstill Period on January 8, 2023, time is of the essence. We respectfully request the following:

1. That the Ad Hoc Group and your firm review the enclosed draft First Amendment to the Forbearance Agreement and provide any comments, redlines, or proposed modifications to us no later than January 6, 2023. We have endeavored to prepare a draft that is balanced and reflects the interests of all parties, but we fully expect that the Ad Hoc Group will have comments, and we are committed to engaging constructively to finalize the amendment in advance of the January 8 expiration date.

2. That we schedule a conference call among the following participants to discuss the proposed extension terms at the Ad Hoc Group's earliest convenience:

• Nathaniel Bower, Calderwood & Harkness LLP

• Amy Chesterton, Calderwood & Harkness LLP

• Graham Whitfield III, Whitfield, Crane & Burgess LLP

• Priya Nandakumar, Whitfield, Crane & Burgess LLP

• James Calloway, Kensington Veltrian Partners LLC

• Vanessa Chow, Draycott Advisory Group LLC

We are available at any time on January 4, 5, or 6, and can accommodate evening or weekend schedules as needed given the urgency of the matter.

For purposes of this letter and the proposed First Amendment, our contact information is as follows:

Nathaniel Bower, Partner Calderwood & Harkness LLP 780 Third Avenue New York, New York 10017 Telephone: (212) 554-7218

Email: nbower@calderwoodharkness.com

Amy Chesterton, Lead Associate Calderwood & Harkness LLP 780 Third Avenue New York, New York 10017 Telephone: (212) 554-7342

Email: achesterton@calderwoodharkness.com

VIII. Enclosures

Enclosed with this letter, please find the following:

1. Draft First Amendment to Forbearance Agreement (clean copy), to be executed by Thalassa Shipping & Logistics SA, Thalassa Americas Inc., and Nordbank International AG (in its capacity as Administrative Agent for the Lender syndicate).

A blackline comparison of the draft First Amendment marked against the original Forbearance Agreement dated October 10, 2022, is available upon request. Please let us know if you would find such a comparison helpful and we will arrange for its delivery promptly.

IX. Closing

TSL and TAI remain firmly committed to engaging constructively and in good faith with the Ad Hoc Group and all creditor constituencies to achieve a consensual resolution that preserves the going-concern value of the enterprise and maximizes recoveries for all stakeholders. The Borrowers recognize the significance of the accommodations that have been provided by the Lenders during the Initial Standstill Period, and they are mindful of the Lenders' expectations regarding the pace and direction of the restructuring process. We believe the proposed First Amendment establishes a reasonable and structured framework for the next phase of these negotiations and look forward to your firm's response.

This letter and the enclosed draft First Amendment are transmitted on a confidential and without-prejudice basis, subject to the terms of the Confidentiality Agreement dated September 28, 2022 (as supplemented), among the Borrowers, the Ad Hoc Group, and their respective advisors. Nothing in this letter or the enclosed draft shall be construed as an admission of liability, an offer of settlement, or a waiver of any rights or defenses of any party.

We look forward to hearing from you at your earliest convenience and to continuing our collaborative efforts toward a resolution of this matter.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Nathaniel Bower Partner, Bankruptcy & Restructuring Group 780 Third Avenue New York, New York 10017 Telephone: (212) 554-7218

Email: nbower@calderwoodharkness.com

Enclosure: Draft First Amendment to Forbearance Agreement (clean copy)

cc (via email):

Georgios Andreadis, Chief Executive Officer, Thalassa Shipping & Logistics SA Irini Dalakoura, Chief Financial Officer, Thalassa Shipping & Logistics SA Marcus Hale, President, Thalassa Americas Inc. Stavros Papageorgiou, General Counsel (Greece), Thalassa Shipping & Logistics SA James Calloway, Managing Director, Kensington Veltrian Partners LLC Amy Chesterton, Lead Associate, Calderwood & Harkness LLP Henrik Lüdemann, Managing Director, Nordbank International AG (as Administrative Agent) Priya Nandakumar, Senior Associate, Whitfield, Crane & Burgess LLP

CONFIDENTIAL — SUBJECT TO EXISTING CONFIDENTIALITY AGREEMENTS ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT

Lender	Commitment (USD)
Nordbank International AG	$137,000,000
Harborstone Bank plc	$95,000,000
Triton Credit Partners LP	$68,000,000
Continental Maritime Lending GmbH	$72,000,000
Total (Ad Hoc Group)	$372,000,000
Tranche	Original Amount	Outstanding Balance	Notes
Term Loan A ("TLA")	$400,000,000	$270,000,000	Original $400M less $130M in quarterly amortization payments of $10M per quarter over 13 quarters (Q3 2019 through Q3 2022)
Revolving Credit Facility ("Revolver")	$200,000,000	$185,000,000	$185M drawn; $15M of the commitment remains undrawn
U.S. Tranche — Term Loan B ("TLB")	$85,000,000	$85,000,000	Non-amortizing bullet maturity; TAI as Co-Borrower
Total	$685,000,000	$540,000,000

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT NOT FOR DISTRIBUTION WITHOUT PRIOR WRITTEN CONSENT OF CALDERWOOD & HARKNESS LLP
CALDERWOOD & HARKNESS LLP 780 Third Avenue New York, New York 10017 Telephone: (212) 554-7200 Facsimile: (212) 554-7201 www.calderwoodharkness.com
January 3, 2023
VIA EMAIL AND Sundial Data Systems
Graham Whitfield III, Esq. Partner Whitfield, Crane & Burgess LLP 51 West 52nd Street, 38th Floor New York, New York 10019
Re: Thalassa Shipping & Logistics SA / Thalassa Americas Inc. — Proposed First Amendment to Forbearance Agreement
Dear Graham:
I. Introduction
This firm serves as counsel to Thalassa Shipping & Logistics Société Anonyme, a company organized under the laws of the Hellenic Republic ("TSL" or the "Company"), and its wholly-owned subsidiary, Thalassa Americas Inc., a Delaware corporation ("TAI" and, together with TSL, the "Borrowers"), in connection with, among other matters, that certain Senior Secured Credit Facility dated as of June 15, 2019 (as amended, restated, supplemented, or otherwise modified from time to time, the "Credit Agreement"), among TSL (as Borrower), TAI (as Co-Borrower with respect to the U.S. Tranche), Nordbank International AG ("Nordbank"), in its capacity as Administrative Agent and Collateral Agent, and the syndicate of lenders party thereto (the "Lenders").
We understand that Whitfield, Crane & Burgess LLP serves as counsel to an ad hoc group of Senior Secured Lenders (the "Ad Hoc Group") formed under the Credit Agreement, comprising the following institutions and their respective commitments under the facility:
The Ad Hoc Group accordingly holds approximately 54.3% of the $685,000,000 in total facility commitments under the Credit Agreement and constitutes the Required Lenders (as defined in Section 1.01 of the Credit Agreement) for purposes of directing the Administrative Agent.
The purpose of this letter is to propose terms for the First Amendment to the Forbearance Agreement dated as of October 10, 2022 (the "Forbearance Agreement"), by and among the Borrowers and the Lenders (acting through Nordbank as Administrative Agent), in advance of the expiration of the current ninety (90)-day standstill period on January 8, 2023. Enclosed with this letter is a draft of the proposed First Amendment to the Forbearance Agreement (the "First Amendment"), which is transmitted herewith for the Ad Hoc Group's review and comment. We respectfully request that your firm and the Ad Hoc Group's financial advisors review the enclosed draft and revert with any comments or proposed modifications at your earliest convenience, and in no event later than January 6, 2023, given the imminent expiration of the existing standstill.
As set forth in greater detail below, we believe that the additional time afforded by the proposed extension is both reasonable and necessary to permit the parties and their respective advisors to finalize a comprehensive restructuring framework and engage all creditor constituencies in a process designed to maximize recoveries and preserve the going-concern value of TSL's enterprise.
II. Background and Context
A. Events Leading to the Forbearance Agreement
As you are aware, the circumstances leading to the execution of the Forbearance Agreement arose from a series of covenant breaches under the Credit Agreement during the third quarter of 2022, each of which constituted an Event of Default under Article VIII thereof. We briefly recapitulate the relevant defaults for completeness of the record:
1. Minimum Liquidity Covenant Breach. On September 15, 2022, TSL's unrestricted cash and cash equivalents declined to approximately $27.3 million, which was $12.7 million below the $40.0 million Minimum Liquidity threshold set forth in Section 7.11(a) of the Credit Agreement. This shortfall was principally attributable to a combination of (i) a sharp deterioration in dry-bulk charter rates during the second and third quarters of 2022, (ii) accelerated drydocking expenditures for five vessels, and (iii) the Company's continued servicing of scheduled quarterly amortization payments under Term Loan A.
2. Maximum Net Leverage Ratio Breach. As of the fiscal quarter ended September 30, 2022, TSL's Maximum Net Leverage Ratio exceeded the 5.50x maximum permitted under Section 7.11(b) of the Credit Agreement. Specifically, TSL's Net Debt (as defined in the Credit Agreement) stood at approximately $770.9 million, and its Last Twelve Months ("LTM") Consolidated EBITDA (as defined) was approximately $98.6 million, yielding an actual Net Leverage Ratio of approximately 7.82x — a breach of 2.32x above the covenant threshold. The elevated leverage was driven by the decline in EBITDA resulting from reduced charter revenues and increased operating expenses, as well as the Company's total debt load inclusive of the mezzanine notes and unsecured notes discussed in Section III below.
3. Minimum Interest Coverage Ratio Breach. As of the same fiscal quarter, TSL's Interest Coverage Ratio fell below the 2.50x minimum required by Section 7.11(c) of the Credit Agreement. TSL's LTM Consolidated EBITDA of approximately $98.6 million, divided by LTM Consolidated Interest Expense of approximately $56.7 million, produced an actual Interest Coverage Ratio of approximately 1.74x — a shortfall of 0.76x relative to the covenant level. This breach reflected the compounding effect of declining earnings and the substantial fixed-charge burden imposed by the Company's capital structure.
Each of the foregoing constituted an Event of Default under Section 8.01(d) of the Credit Agreement (failure to comply with financial covenants), entitling the Administrative Agent, upon direction of the Required Lenders, to exercise remedies including acceleration of all outstanding obligations, enforcement against the collateral, and other actions as provided in Article VIII.
4. Execution of the Forbearance Agreement. In recognition of the severity of the defaults and the mutual interest of the Borrowers and the Lenders in pursuing a consensual path forward, the parties negotiated and executed the Forbearance Agreement on October 10, 2022. Pursuant to its terms, the Lenders (acting through Nordbank as Administrative Agent) agreed to forbear from exercising any remedies arising from the foregoing Events of Default for a period of ninety (90) days, commencing on October 10, 2022, and expiring on January 8, 2023 (the "Initial Standstill Period"). During the Initial Standstill Period, the Borrowers agreed to, among other things, continue making all scheduled interest payments and Term Loan A quarterly amortization installments, comply with certain enhanced reporting obligations, and engage constructively with the Ad Hoc Group and its advisors regarding restructuring alternatives.
B. Progress During the Initial Standstill Period
Since the execution of the Forbearance Agreement, the parties and their respective financial and legal advisors have been engaged in ongoing and, we believe, constructive dialogue regarding the Company's financial condition, enterprise value, and potential restructuring alternatives. Significant progress has been made on several fronts, including the following:
Financial Advisory Engagement. TSL and TAI engaged Kensington Veltrian Partners LLC ("KHP"), under the direction of James Calloway, Managing Director, as the Borrowers' financial advisor. In parallel, the Ad Hoc Group engaged Draycott Advisory Group LLC ("Draycott"), under the direction of Vanessa Chow, Partner, as the Ad Hoc Group's financial advisor. KHP and Draycott have held multiple working sessions and information exchanges throughout the Initial Standstill Period.
Independent Fleet Appraisal. An independent appraisal of TSL's vessel fleet was completed on November 1, 2022, by Drakos Maritime Valuations Ltd., under the direction of Captain Nikos Drakos, an internationally recognized maritime appraiser. The appraisal valued TSL's fleet of 38 dry-bulk carriers and 12 container vessels at an aggregate charter-free market value of approximately $623 million, representing a decline of approximately $268 million, or 30.1%, from the January 2022 appraisal value of $891 million. This significant deterioration in asset values reflects the broader downturn in global shipping markets, rising fleet age, and declining charter rate expectations for 2023 and 2024. The appraisal has been shared with both the Ad Hoc Group's advisors and the Administrative Agent.
Cash Flow Projections and Enterprise Valuation. KHP has prepared 13-week cash flow projections reflecting TSL's near-term liquidity position and operational needs, as well as an enterprise valuation analysis estimating TSL's total enterprise value within a range of approximately $580 million to $640 million on a going-concern basis. These projections and analyses have been shared with Draycott and are the subject of ongoing diligence and discussion between the advisory teams. KHP is continuing to develop a comprehensive restructuring framework that will form the basis for the restructuring term sheet contemplated by the proposed milestones set forth in Section IV.B below.
Management Engagement. Senior management of TSL and TAI — including Georgios Andreadis (Chief Executive Officer, TSL), Irini Dalakoura (Chief Financial Officer, TSL), and Marcus Hale (President, TAI) — have made themselves available for periodic update calls and diligence sessions with the Ad Hoc Group's advisors. We appreciate the Ad Hoc Group's acknowledgment that management has been cooperative and forthcoming in its disclosures.
Notwithstanding this meaningful progress, additional time is required to finalize and circulate a restructuring term sheet to all creditor constituencies and to convene formal multi-party negotiation sessions with a view to reaching consensus on a Restructuring Support Agreement. We believe the proposed extension of the standstill period, together with the updated milestones described below, will provide a reasonable and structured framework for the completion of these negotiations.
III. Summary of Outstanding Indebtedness Under the Credit Agreement
For ease of reference, we set forth below a summary of the outstanding indebtedness under the Credit Agreement as of September 30, 2022, as well as a brief description of certain other material indebtedness of the Borrowers. This summary is intended for informational purposes only and is qualified in its entirety by reference to the Credit Agreement and the underlying instruments.
A. Senior Secured Credit Facility
The total commitment under the Senior Secured Credit Facility is $685,000,000, extended by a syndicate of nine (9) Lender institutions. As of September 30, 2022, the aggregate outstanding principal balance under the facility was approximately $540,000,000, allocated among the following tranches:
Interest Rate. The applicable interest rate under the Credit Agreement is the Secured Overnight Financing Rate ("SOFR") plus 375 basis points per annum. Since the occurrence of the Events of Default described in Section II.A above, the default rate of SOFR plus 575 basis points per annum has been in effect pursuant to Section 2.08(b) of the Credit Agreement, representing a 200 basis point increase over the non-default rate.
Maturity Date. The Credit Agreement provides for a stated maturity date of June 15, 2024, at which time all outstanding obligations thereunder become due and payable in full.
Collateral. The obligations under the Credit Agreement are secured by first-priority liens and security interests in substantially all of the assets of TSL and TAI, including, without limitation: (i) thirty-eight (38) dry-bulk carriers; (ii) twelve (12) container vessels; (iii) the Houston terminal lease (held by TAI); (iv) all accounts receivable of TSL and TAI; and (v) one hundred percent (100%) of the equity interests in TAI and in each of the fourteen (14) vessel-owning special purpose vehicles ("SPVs") that hold title to certain of the Company's vessels.
B. Other Material Indebtedness
Although the focus of this letter and the proposed First Amendment is on the Senior Secured Credit Facility, we note for completeness that TSL's capital structure includes additional material indebtedness outside the Credit Agreement:
(i) Mezzanine Notes. TSL has outstanding approximately $112.3 million in aggregate principal amount of mezzanine notes (the "Mezzanine Notes") held by Dralvecen Mezzanine Capital LLC ("BMC"). The Mezzanine Notes are secured by a second-priority lien on substantially all of the collateral securing the Senior Secured Credit Facility and bear interest at a rate of 11.5% per annum on a PIK toggle basis. The intercreditor relationship between the Senior Secured Lenders and BMC is governed by that certain Intercreditor Agreement dated as of June 15, 2019. BMC is represented by Kellner & Foss LLP (Theodore Kellner, Partner).
(ii) Senior Unsecured Notes. TSL has outstanding $50,000,000 in aggregate principal amount of 8.25% Senior Unsecured Notes due March 1, 2025 (the "Unsecured Notes"), issued pursuant to an Indenture dated as of March 1, 2020, with Garrison Trust Company serving as Indenture Trustee. An informal group of unsecured noteholders has been formed and is represented by Ashford, Brightmoor Group & McKay PC (Carolyn Brightmoor Group, Partner). As discussed further in Section V below, TSL failed to make the scheduled semi-annual interest payment of $2,062,500 due on December 1, 2022, and the thirty (30)-day cure period under the Indenture expired on January 1, 2023, resulting in an additional event of default under the Unsecured Notes Indenture.
(iii) Trade Payables. TSL and TAI have outstanding trade payables of approximately $38.7 million in the aggregate, which includes amounts owed to fuel suppliers, port authorities, shipyard operators, and other trade creditors in the ordinary course of business.
The foregoing obligations, when combined with the Senior Secured Credit Facility, represent a total debt stack of approximately $740 million (excluding trade payables), against an enterprise valued by KHP in the range of $580 million to $640 million. This underscores the urgent need for a comprehensive restructuring that addresses all layers of the capital structure.
IV. Proposed Terms of the First Amendment to the Forbearance Agreement
We set forth below the principal terms of the proposed First Amendment, each of which is reflected in the enclosed draft. We invite the Ad Hoc Group's comments on each of these provisions and look forward to a constructive discussion aimed at reaching agreement on terms that are acceptable to all parties.
A. Extended Standstill Period
The First Amendment would extend the standstill period under the Forbearance Agreement from its current expiration date of January 8, 2023, to March 8, 2023 — an additional period of fifty-nine (59) days (the "Extended Standstill Period"). During the Extended Standstill Period, the Lenders (acting through Nordbank as Administrative Agent) would continue to forbear from exercising any and all remedies arising from the identified Events of Default, specifically: (i) the breach of the Minimum Liquidity Covenant under Section 7.11(a); (ii) the breach of the Maximum Net Leverage Ratio under Section 7.11(b); and (iii) the breach of the Minimum Interest Coverage Ratio under Section 7.11(c), each as described in Section II.A above.
The Borrowers would continue to satisfy all of their ongoing obligations under the Credit Agreement during the Extended Standstill Period, including without limitation: (a) timely payment of all scheduled interest payments on the outstanding Term Loan A, Revolving Credit Facility, and U.S. Tranche (Term Loan B) balances; and (b) timely payment of the quarterly amortization installments of $10,000,000 due under Term Loan A.
Default Interest. With respect to the default rate increment of 200 basis points currently accruing under Section 2.08(b) of the Credit Agreement, we respectfully propose that the parties discuss one of two alternative treatments during the Extended Standstill Period:
Alternative A — Waiver. A full waiver of default interest accrual during the Extended Standstill Period, with the non-default rate of SOFR plus 375 basis points applying in its place. TSL's current liquidity position remains severely constrained, and the incremental cash burden of the default interest premium is material — estimated at approximately $1.8 million over the proposed fifty-nine (59) day extension period. A waiver would preserve liquidity for operational needs and facilitate the Company's continued compliance with its payment obligations during the restructuring process.
Alternative B — Deferral. If a waiver is not acceptable to the Ad Hoc Group, TSL proposes that default interest continue to accrue during the Extended Standstill Period but that payment thereof be deferred and added to the outstanding principal balance, to be addressed as part of any comprehensive restructuring. Under this alternative, the Borrowers would continue to make current-pay interest at the non-default rate during the extension period.
We recognize that the default interest question is of significant importance to the Ad Hoc Group and its constituents, and we are prepared to discuss this issue in detail at the parties' earliest convenience.
B. Updated Milestones
In order to ensure that the Extended Standstill Period is utilized productively and that the restructuring process continues to advance on a defined timeline, the First Amendment would establish the following revised milestones as conditions to the continued effectiveness of the forbearance:
Milestone 1 — Updated Cash Flow Projections (January 20, 2023). On or before January 20, 2023, TSL shall deliver to the Ad Hoc Group and its advisors (including Draycott Advisory Group LLC) updated 13-week cash flow projections prepared by KHP, reflecting TSL's current liquidity position, projected revenue and expense streams, and anticipated cash needs through April 2023.
Milestone 2 — Preliminary Restructuring Term Sheet (February 1, 2023). On or before February 1, 2023, TSL shall deliver to the Ad Hoc Group a preliminary restructuring term sheet (the "Preliminary Term Sheet") setting forth the proposed framework for an out-of-court restructuring of TSL's indebtedness or, in the alternative, a framework for a pre-negotiated plan of reorganization under Chapter 11 of the Bankruptcy Code. The Preliminary Term Sheet shall address, at a minimum, the proposed treatment of the Senior Secured Credit Facility, the Mezzanine Notes, and the Unsecured Notes, as well as the proposed equity contribution from the existing equity holders and any new-money investment to address the Company's liquidity needs.
Milestone 3 — Comprehensive Term Sheet to All Constituencies (February 15, 2023). On or before February 15, 2023, TSL shall deliver a comprehensive restructuring term sheet (the "Comprehensive Term Sheet") to all creditor constituencies, including: (a) the Ad Hoc Group and its counsel and advisors; (b) Dralvecen Mezzanine Capital LLC and its counsel, Kellner & Foss LLP (Theodore Kellner, Partner); and (c) the informal group of unsecured noteholders and its counsel, Ashford, Brightmoor Group & McKay PC (Carolyn Brightmoor Group, Partner). The Comprehensive Term Sheet shall reflect any feedback received from the Ad Hoc Group on the Preliminary Term Sheet and shall be in sufficient detail to facilitate meaningful negotiation among all constituencies.
Milestone 4 — Commencement of Multi-Party Negotiations (February 28, 2023). On or before February 28, 2023, TSL shall have convened formal multi-party negotiation sessions among TSL, the Ad Hoc Group, BMC, and the unsecured noteholders (and their respective advisors and legal counsel), with the objective of reaching agreement on the material terms of a Restructuring Support Agreement ("RSA"). It is anticipated that these sessions would take place in person in New York, supplemented by video conference as appropriate.
Milestone 5 — RSA or Further Extension Agreement (March 8, 2023). On or before March 8, 2023, either: (a) the Borrowers and the Required Lenders (as defined in Section 1.01 of the Credit Agreement) shall have executed a binding Restructuring Support Agreement on terms acceptable to the Ad Hoc Group, the Borrowers, and — to the extent required — the other creditor constituencies; or (b) if an RSA has not been finalized but negotiations are progressing in good faith and material progress has been achieved (as determined in the reasonable judgment of the Ad Hoc Group), the parties shall have agreed to a further extension of the forbearance on mutually acceptable terms to be negotiated at that time.
Termination Event. The failure of TSL to satisfy any of the foregoing milestones within the time periods specified shall constitute a "Termination Event" under the First Amendment, upon the occurrence of which the Ad Hoc Group (acting through Nordbank as Administrative Agent) may terminate the forbearance upon five (5) business days' prior written notice to the Borrowers, at which point all rights and remedies of the Lenders under the Credit Agreement and applicable law shall be fully restored. We note that the five-day notice period is intended to provide the Borrowers with a brief opportunity to cure any inadvertent delay, and we are open to discussing the appropriate notice mechanism.
C. Information and Reporting Undertakings
In addition to the enhanced reporting obligations already in effect under the Forbearance Agreement, the First Amendment would require TSL and TAI to provide the following to the Ad Hoc Group and Draycott Advisory Group during the Extended Standstill Period:
(i) Bi-Weekly Liquidity Updates. On a bi-weekly basis (every other Tuesday), TSL shall deliver a written report setting forth the Company's current cash position (segregated by unrestricted and restricted cash) and its projected cash needs for the succeeding four (4)-week period, in a form reasonably acceptable to Draycott.
(ii) Monthly Unaudited Financial Statements. TSL shall deliver unaudited consolidated financial statements (including a balance sheet, income statement, and statement of cash flows) for each calendar month during the Extended Standstill Period, within twenty (20) days following the end of the applicable month. Such statements shall be prepared in accordance with International Financial Reporting Standards ("IFRS"), applied on a basis consistent with TSL's audited financial statements, and shall be accompanied by a certificate of TSL's Chief Financial Officer confirming their accuracy and completeness in all material respects.
(iii) Prompt Notice of Material Adverse Changes. TSL shall provide the Ad Hoc Group and Draycott with prompt written notice (and in no event later than two (2) business days) following the occurrence of any event, circumstance, or development that has resulted in, or could reasonably be expected to result in, a material adverse change in the business, operations, assets, liabilities, or financial condition of TSL or TAI.
(iv) Management Access. TSL shall cause its senior management — including Mr. Andreadis (CEO), Ms. Dalakoura (CFO), and Mr. Hale (President, TAI) — to be available for periodic update calls with the Ad Hoc Group's advisors, to be scheduled no less frequently than bi-weekly. The parties shall use reasonable efforts to coordinate the scheduling of such calls in advance.
(v) Auditor Access. TSL shall continue to provide the Ad Hoc Group and its advisors with reasonable access to TSL's independent auditor, Grainger, Holt & Associates LLP (Malcolm Holt, Lead Engagement Partner), for purposes of any diligence inquiries by the Ad Hoc Group's advisors that are relevant to the restructuring process. TSL shall provide any necessary consents or authorizations required to facilitate such access.
D. Acknowledgment of Events of Default
The First Amendment would require TSL and TAI to reaffirm and acknowledge the existence and continuity of each of the Events of Default identified in the original Forbearance Agreement, including the breach of the Minimum Liquidity Covenant, the Maximum Net Leverage Ratio Covenant, and the Minimum Interest Coverage Ratio Covenant. Such reaffirmation would be without prejudice to the Borrowers' rights and defenses, but would serve to confirm that the forbearance is a voluntary accommodation by the Lenders and does not represent a cure, waiver, or modification of the underlying defaults, except as expressly set forth in the First Amendment.
E. Reservation of Rights
Consistent with the original Forbearance Agreement, the First Amendment would include a comprehensive reservation of rights in favor of all parties:
(i) Lender Rights. The Lenders (acting individually or through Nordbank as Administrative Agent) would retain all of their rights and remedies under the Credit Agreement, the Security Documents, and applicable law, including without limitation the right to accelerate the outstanding obligations, enforce the liens against the collateral, and exercise any and all other remedies available at law or in equity, subject only to the forbearance expressly provided during the Extended Standstill Period. Upon termination or expiration of the Extended Standstill Period, all such rights and remedies would be fully restored, without any requirement for further notice, demand, or other action.
(ii) Borrower Rights. TSL and TAI would retain all of their respective rights, claims, and defenses under the Credit Agreement, applicable law, and otherwise, including any rights and defenses arising in connection with any restructuring negotiations or proceedings.
F. Additional Lender Protections
To protect the Lenders' collateral position and the value of the enterprise during the Extended Standstill Period, the First Amendment would include the following additional covenants and restrictions, which are consistent with standard forbearance terms and are designed to prevent any erosion of value pending completion of restructuring negotiations:
(i) Negative Covenant — No New Indebtedness, Liens, or Guarantees. TSL and TAI shall not incur, create, assume, or permit to exist any new indebtedness, liens, or guarantee obligations during the Extended Standstill Period without the prior written consent of the Ad Hoc Group (acting through Nordbank as Administrative Agent). This restriction shall apply to all forms of indebtedness and liens, including secured and unsecured borrowings, capital leases, sale-leaseback transactions, and contingent obligations.
(ii) Negative Covenant — No Asset Dispositions. TSL and TAI shall not sell, transfer, assign, or otherwise dispose of any assets outside the ordinary course of business during the Extended Standstill Period, except for dispositions that do not exceed $5,000,000 individually or $10,000,000 in the aggregate, in each case without the prior written consent of the Ad Hoc Group (acting through Nordbank as Administrative Agent). For the avoidance of doubt, ordinary course chartering, bunkering, and commercial operations shall not be subject to this restriction.
(iii) Negative Covenant — No Intercompany Transfers or Dividends. TSL and TAI shall not make any intercompany transfers, dividends, distributions, or other payments to affiliates or equity holders during the Extended Standstill Period, except for intercompany transfers in the ordinary course of business consistent with historical practice (including routine intercompany operational funding and management fee allocations). No distributions of any kind shall be made to equity holders of TSL, including KFO Holdings SA or any member of the Kostandinos family, during the Extended Standstill Period.
(iv) Minimum Cash Balance. TSL shall maintain a minimum unrestricted cash balance of not less than $20,000,000 at all times during the Extended Standstill Period. We acknowledge that this threshold is below the $40,000,000 Minimum Liquidity Covenant contained in Section 7.11(a) of the Credit Agreement, which remains in breach. The proposed $20,000,000 floor is intended to establish a practical liquidity baseline to prevent further erosion of the Company's cash position during the restructuring process, while recognizing that the existing covenant breach has been identified as one of the Events of Default subject to the forbearance. A breach of the $20,000,000 minimum cash balance shall constitute a Termination Event under the First Amendment.
V. Status of Restructuring Alternatives
We wish to provide the Ad Hoc Group with an update on the current status of the restructuring alternatives being evaluated by TSL, TAI, and their advisors. Calderwood & Harkness and KHP are actively pursuing a dual-track approach to the restructuring, as described below.
A. Out-of-Court Restructuring (Preferred Path)
The strongly preferred path for TSL's board of directors and management is an out-of-court consensual restructuring. KHP is developing a comprehensive restructuring proposal that would address, among other things: (i) the approaching maturity wall under the Credit Agreement (June 15, 2024); (ii) the need for meaningful deleveraging of TSL's balance sheet in light of the significant decline in enterprise and asset values; (iii) TSL's near-term and medium-term liquidity requirements; (iv) proposed amendments to the Credit Agreement, including potential maturity extensions, interest rate adjustments, and covenant modifications; (v) the treatment of the Mezzanine Notes held by BMC, including potential conversion, exchange, or equitization; and (vi) a potential equity contribution from KFO Holdings SA, the Kostandinos family holding company that controls approximately 80% of TSL's equity (Dimitrios Kostandinos holds 62% and Elena Kostandinos-Pavlou holds 18%). We anticipate that the Preliminary Term Sheet and the Comprehensive Term Sheet contemplated by the milestones set forth in Section IV.B above will set forth the detailed terms of the out-of-court proposal for negotiation with all stakeholders.
B. Chapter 11 Contingency Plan
In parallel with the out-of-court track, and as a prudent measure to ensure continuity and optionality, Calderwood & Harkness has been developing a contingency plan for a Chapter 11 filing by TAI (the "Chapter 11 Contingency Plan"). The key elements of this plan are as follows:
(i) Proposed Venue. The contemplated venue for any TAI filing would be the United States Bankruptcy Court for the Southern District of Texas, Houston Division, given TAI's operational nexus to its Houston terminal lease and the court's significant experience with complex maritime and energy restructurings.
(ii) Chief Restructuring Officer. Calderwood & Harkness has engaged in preliminary discussions with Alderney Management Advisors LLC regarding the potential designation of Richard Thornberg as Chief Restructuring Officer ("CRO") for TAI in the event of a Chapter 11 filing. Mr. Thornberg has extensive experience in maritime and logistics restructurings, and we believe his involvement would facilitate an efficient and well-managed case.
(iii) DIP Financing. The Company has received a preliminary term sheet from Nordbank International AG and Triton Credit Partners LP for a proposed $75,000,000 superpriority debtor-in-possession ("DIP") credit facility, with the following indicative terms: interest at SOFR plus 600 basis points, a commitment fee of 0.50%, and a twelve (12)-month maturity. The DIP facility would be subject to customary conditions, including Bankruptcy Court approval, adequate protection to pre-petition secured creditors, and negotiation and execution of definitive documentation. The availability of a DIP facility of this size would provide TAI with sufficient liquidity to fund operations, satisfy administrative expenses, and maintain the going-concern value of the enterprise during a Chapter 11 case.
(iv) Claims and Noticing Agent. Calderwood & Harkness has engaged Pendleton Claim Services Inc. (Laura Pendleton, President) on a standby basis to serve as claims and noticing agent in the event of a Chapter 11 filing. Ms. Pendleton and her team are prepared to mobilize on short notice.
We emphasize that the Chapter 11 Contingency Plan is precisely that — a contingency. The out-of-court path is strongly preferred by TSL's board and management, and we believe it offers the best prospect of maximizing recoveries for all stakeholders while preserving the going-concern value of the enterprise. The Chapter 11 plan serves as a backstop to ensure business continuity and creditor protection in the event that an out-of-court resolution cannot be achieved within a reasonable timeframe. Moreover, we note that the estimated administrative costs associated with a twelve (12)-month Chapter 11 case — including professional fees, DIP financing costs, and operational expenses attributable to the bankruptcy process — are estimated at approximately $18.5 million, representing a significant drag on recoveries that would be avoided through a successful out-of-court restructuring.
C. Unsecured Note Default
We also wish to bring to the Ad Hoc Group's attention that TSL was unable to make the scheduled semi-annual interest payment of $2,062,500 on the $50 million Senior Unsecured Notes on the December 1, 2022 payment date. The thirty (30)-day cure period provided under Section 6.01(a) of the Unsecured Notes Indenture expired on January 1, 2023, resulting in an additional event of default under the Indenture. We anticipate that Garrison Trust Company, as Indenture Trustee, may issue an acceleration notice in due course. Any restructuring proposal developed by TSL and its advisors will need to address the unsecured note default and the treatment of the unsecured noteholders' claims as part of a comprehensive resolution.
VI. Cross-Border Considerations
As you are aware, TSL is a Société Anonyme organized under the laws of Greece, with its principal offices in Piraeus. Accordingly, any restructuring of TSL's indebtedness must be analyzed under both United States and Greek law.
TSL's Greek counsel, Vassiliou & Demetriou Law Offices (Alexandros Vassiliou, Lead Partner), is advising on the Greek law implications of the restructuring alternatives under consideration. In particular, Vassiliou & Demetriou is analyzing whether any proposed restructuring steps — including potential debt-for-equity conversions, material asset dispositions, or intercompany transfers — may trigger obligations under Greek Law 4738/2020 (the "Greek Debt Settlement & Insolvency Code"), including any requirement for TSL to seek a rehabilitation or reorganization proceeding in Greece. Additionally, Vassiliou & Demetriou is advising on potential Chapter 15 recognition considerations in the event that a TAI Chapter 11 filing were to proceed in coordination with any Greek proceedings relating to TSL, including the requirements for recognition of TSL's center of main interests ("COMI") and the establishment of a foreign main or non-main proceeding for purposes of Chapter 15 of the Bankruptcy Code.
Calderwood & Harkness is coordinating closely with Vassiliou & Demetriou to ensure that any proposed restructuring is implementable under both U.S. and Greek law frameworks and that the interests of all parties are appropriately protected across jurisdictions. We would welcome the opportunity to include Vassiliou & Demetriou in any discussion of cross-border structuring issues with your firm and the Ad Hoc Group's advisors.
VII. Request for Engagement
Given the imminent expiration of the Initial Standstill Period on January 8, 2023, time is of the essence. We respectfully request the following:
1. That the Ad Hoc Group and your firm review the enclosed draft First Amendment to the Forbearance Agreement and provide any comments, redlines, or proposed modifications to us no later than January 6, 2023. We have endeavored to prepare a draft that is balanced and reflects the interests of all parties, but we fully expect that the Ad Hoc Group will have comments, and we are committed to engaging constructively to finalize the amendment in advance of the January 8 expiration date.
2. That we schedule a conference call among the following participants to discuss the proposed extension terms at the Ad Hoc Group's earliest convenience:
• Nathaniel Bower, Calderwood & Harkness LLP
• Amy Chesterton, Calderwood & Harkness LLP
• Graham Whitfield III, Whitfield, Crane & Burgess LLP
• Priya Nandakumar, Whitfield, Crane & Burgess LLP
• James Calloway, Kensington Veltrian Partners LLC
• Vanessa Chow, Draycott Advisory Group LLC
We are available at any time on January 4, 5, or 6, and can accommodate evening or weekend schedules as needed given the urgency of the matter.
For purposes of this letter and the proposed First Amendment, our contact information is as follows:
Nathaniel Bower, Partner Calderwood & Harkness LLP 780 Third Avenue New York, New York 10017 Telephone: (212) 554-7218
Email: nbower@calderwoodharkness.com
Amy Chesterton, Lead Associate Calderwood & Harkness LLP 780 Third Avenue New York, New York 10017 Telephone: (212) 554-7342
Email: achesterton@calderwoodharkness.com
VIII. Enclosures
Enclosed with this letter, please find the following:
1. Draft First Amendment to Forbearance Agreement (clean copy), to be executed by Thalassa Shipping & Logistics SA, Thalassa Americas Inc., and Nordbank International AG (in its capacity as Administrative Agent for the Lender syndicate).
A blackline comparison of the draft First Amendment marked against the original Forbearance Agreement dated October 10, 2022, is available upon request. Please let us know if you would find such a comparison helpful and we will arrange for its delivery promptly.
IX. Closing
TSL and TAI remain firmly committed to engaging constructively and in good faith with the Ad Hoc Group and all creditor constituencies to achieve a consensual resolution that preserves the going-concern value of the enterprise and maximizes recoveries for all stakeholders. The Borrowers recognize the significance of the accommodations that have been provided by the Lenders during the Initial Standstill Period, and they are mindful of the Lenders' expectations regarding the pace and direction of the restructuring process. We believe the proposed First Amendment establishes a reasonable and structured framework for the next phase of these negotiations and look forward to your firm's response.
This letter and the enclosed draft First Amendment are transmitted on a confidential and without-prejudice basis, subject to the terms of the Confidentiality Agreement dated September 28, 2022 (as supplemented), among the Borrowers, the Ad Hoc Group, and their respective advisors. Nothing in this letter or the enclosed draft shall be construed as an admission of liability, an offer of settlement, or a waiver of any rights or defenses of any party.
We look forward to hearing from you at your earliest convenience and to continuing our collaborative efforts toward a resolution of this matter.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Nathaniel Bower Partner, Bankruptcy & Restructuring Group 780 Third Avenue New York, New York 10017 Telephone: (212) 554-7218
Email: nbower@calderwoodharkness.com
Enclosure: Draft First Amendment to Forbearance Agreement (clean copy)
cc (via email):
Georgios Andreadis, Chief Executive Officer, Thalassa Shipping & Logistics SA Irini Dalakoura, Chief Financial Officer, Thalassa Shipping & Logistics SA Marcus Hale, President, Thalassa Americas Inc. Stavros Papageorgiou, General Counsel (Greece), Thalassa Shipping & Logistics SA James Calloway, Managing Director, Kensington Veltrian Partners LLC Amy Chesterton, Lead Associate, Calderwood & Harkness LLP Henrik Lüdemann, Managing Director, Nordbank International AG (as Administrative Agent) Priya Nandakumar, Senior Associate, Whitfield, Crane & Burgess LLP
CONFIDENTIAL — SUBJECT TO EXISTING CONFIDENTIALITY AGREEMENTS ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT
Lender | Commitment (USD)
Nordbank International AG | $137,000,000
Harborstone Bank plc | $95,000,000
Triton Credit Partners LP | $68,000,000
Continental Maritime Lending GmbH | $72,000,000
Total (Ad Hoc Group) | $372,000,000
Tranche | Original Amount | Outstanding Balance | Notes
Term Loan A ("TLA") | $400,000,000 | $270,000,000 | Original $400M less $130M in quarterly amortization payments of $10M per quarter over 13 quarters (Q3 2019 through Q3 2022)
Revolving Credit Facility ("Revolver") | $200,000,000 | $185,000,000 | $185M drawn; $15M of the commitment remains undrawn
U.S. Tranche — Term Loan B ("TLB") | $85,000,000 | $85,000,000 | Non-amortizing bullet maturity; TAI as Co-Borrower
Total | $685,000,000 | $540,000,000

CALDERWOOD & HARKNESS LLP

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