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letter-wcb-restructuring-framework.docx DOCUMENT Finance & Banking

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PRIVILEGED & CONFIDENTIAL

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

Telephone: (212) 554-7000 Facsimile: (212) 554-7001 www.calderwoodharkness.com

January 30, 2023

Via Email and Hand Delivery

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

Re: Thalassa Shipping & Logistics SA / Thalassa Americas Inc. — Proposed Restructuring Framework

C&H Matter No. 1044-00003

Dear Graham:

I. Introduction

I write in my capacity as the responsible partner at Calderwood & Harkness LLP ("C&H"), counsel to Thalassa Shipping & Logistics Société Anonyme, a société anonyme organized under the laws of the Hellenic Republic ("TSL"), and its wholly-owned U.S. subsidiary, Thalassa Americas Inc., a Delaware corporation ("TAI" and, together with TSL, the "Company"). This letter is directed to you in your capacity as lead partner at Whitfield, Crane & Burgess LLP ("WCB"), counsel to the Ad Hoc Group of Senior Secured Lenders (as further described herein, the "Ad Hoc Group").

The purpose of this letter is to present, in detail, TSL's proposed comprehensive restructuring framework (the "Proposed Framework") as a basis for negotiations toward a mutually agreed Restructuring Support Agreement (an "RSA"). This proposal builds upon the constructive dialogue between our respective clients and advisors over the course of the past several months. As you know, the parties are operating under the Forbearance Agreement originally executed on October 10, 2022 (the "Forbearance Agreement"), as extended by the First Amendment thereto dated January 8, 2023 (the "First Amendment"), which currently provides for a forbearance period running through March 8, 2023. We are mindful of the approaching expiration of that forbearance period and believe the framework outlined herein provides a strong foundation for reaching an agreed-upon path forward in advance of that deadline.

TSL's paramount objective is to achieve a consensual, out-of-court resolution of the Company's current financial challenges — one that avoids the cost, disruption, and uncertainty of a Chapter 11 filing and, critically, preserves enterprise value for all stakeholders, including the senior secured lenders, mezzanine lenders, unsecured noteholders, trade creditors, employees, and equity holders alike. We believe the Proposed Framework accomplishes this objective while providing the Ad Hoc Group with meaningful economic protections and enhanced structural safeguards.

This proposal has been developed in close consultation with TSL's financial advisor, Kensington Veltrian Partners LLC ("KHP"), under the direction of James Calloway, Managing Director. KHP's analysis, including a comprehensive 13-week cash flow model, enterprise valuation summary, and Chapter 11 cost-benefit analysis, underpins the economic terms set forth below and is available for review by WCB and Draycott Advisory Group LLC ("Draycott") subject to appropriate confidentiality arrangements.

II. Background and Current Situation

Before setting forth the elements of the Proposed Framework, we believe it is useful to summarize, for the record, the key facts giving rise to the Company's current financial circumstances, the existing capital structure, and the relevant valuation parameters. While these matters are, of course, well known to the Ad Hoc Group and its advisors, a shared factual baseline will facilitate a productive negotiation.

A. The Liquidity Crisis and Covenant Defaults

The Company's financial challenges are principally attributable to a severe and sustained deterioration in the global dry-bulk shipping market. As measured by the Baltic Dry Index ("BDI"), the industry's most widely followed benchmark for freight rates, the dry-bulk market experienced a decline of approximately 58% between January 2022 and September 2022. While the BDI has shown modest signs of stabilization in the fourth quarter of 2022 and early 2023, rates remain well below the levels prevailing during the strong market of 2021.

The BDI decline translated directly into deteriorating charter revenues for TSL's fleet. TSL's average daily time-charter equivalent ("TCE") rate fell from $24,800 per day (reflecting the full-year FY2021 average) to approximately $11,200 per day (based on the Q3 2022 average), representing a decline of approximately 55%. This precipitous reduction in TCE rates has had a cascading effect on the Company's top-line revenue, profitability, and cash flow generation across both the parent entity and its U.S. subsidiary.

At the consolidated group level, TSL revenue declined from €1.42 billion in FY2021 to an estimated €987 million in FY2022, representing a decline of approximately 30.5%. TAI, which is responsible for the Company's U.S. operations, including the Houston terminal and U.S.-originated charter arrangements, experienced a comparable decline, with revenue falling from $312 million in FY2021 to an estimated $198 million in FY2022, a reduction of approximately 36.5%.

These revenue declines precipitated a series of covenant defaults under the Senior Secured Credit Facility (as defined below):

Minimum Liquidity Covenant Breach. On September 15, 2022, TSL's unrestricted cash balance fell to $27.3 million, breaching the $40 million Minimum Liquidity covenant set forth in Section 7.01(a) of the Credit Agreement by a shortfall of $12.7 million. The Company promptly notified the Administrative Agent and the lender group of this breach, as required under the Credit Agreement.

Financial Ratio Covenant Breaches. As of the fiscal quarter ending September 30, 2022, the Company breached two additional financial maintenance covenants. First, the Maximum Net Leverage Ratio stood at 7.82x (calculated as Net Debt of $770.9 million divided by trailing twelve-month EBITDA of $98.6 million), substantially in excess of the 5.50x maximum permitted under Section 7.01(b) of the Credit Agreement. Second, the Minimum Interest Coverage Ratio fell to 1.74x (calculated as trailing twelve-month EBITDA of $98.6 million divided by trailing twelve-month Interest Expense of $56.7 million), well below the 2.50x minimum required under Section 7.01(c) of the Credit Agreement. These breaches constituted Events of Default under Section 8.01 of the Credit Agreement.

Missed Interest Payment on Senior Unsecured Notes. On December 1, 2022, TSL failed to make the scheduled semi-annual interest payment of $2,062,500 on the $50 million 8.25% Senior Unsecured Notes due 2025 (the "Unsecured Notes"), for which Garrison Trust Company serves as indenture trustee. The applicable 30-day cure period under Section 6.01(a) of the Indenture expired on January 1, 2023, and the failure to pay constitutes an Event of Default under the Indenture. As of the date hereof, no acceleration notice has been delivered by the indenture trustee or holders of the required percentage of outstanding Unsecured Notes.

B. Capital Structure Summary

The Company's capital structure as of September 30, 2022, the most recent quarter-end for which complete financial data is available, is summarized below.

1. Senior Secured Credit Facility. The Company is party to that certain Credit Agreement dated as of June 15, 2019 (as amended, the "Credit Agreement"), among TSL, as parent borrower, TAI, as U.S. borrower, the lenders party thereto, and Nordbank International AG, as Administrative Agent and Collateral Agent. The Credit Agreement provides for a total commitment of $685 million across the following tranches:

(a) Term Loan A. A term loan in the original principal amount of $400 million, amortizing in quarterly installments of $10 million. As of September 30, 2022, thirteen quarterly amortization payments have been made (totaling $130 million in aggregate principal reduction), leaving a current outstanding balance of $270 million.

(b) Revolving Credit Facility. A revolving credit facility with a total commitment of $200 million. As of September 30, 2022, $185 million was drawn and outstanding under the Revolver, with $15 million of undrawn availability remaining.

(c) U.S. Tranche (Term Loan B). A non-amortizing bullet term loan in the principal amount of $85 million, borrowed by TAI as U.S. borrower and guaranteed by TSL.

(d) Total Outstanding. As of September 30, 2022, the total outstanding balance under the Senior Secured Credit Facility was $540 million ($270 million Term Loan A + $185 million Revolver + $85 million Term Loan B).

The Senior Secured Credit Facility bears interest at a rate equal to the Secured Overnight Financing Rate ("SOFR") plus 375 basis points per annum. Following the Events of Default described above, default interest of an additional 200 basis points has been accruing pursuant to Section 2.07(b) of the Credit Agreement, resulting in a current effective rate of SOFR plus 575 basis points. The scheduled maturity date of the Senior Secured Credit Facility is June 15, 2024.

The Senior Secured Credit Facility is secured by first-priority liens on substantially all of the Company's assets, including: (i) 38 dry-bulk carriers; (ii) 12 container vessels; (iii) the leasehold interest in the Houston terminal facility; (iv) all accounts receivable of TSL and TAI; (v) 100% of the equity interests in TAI; and (vi) 100% of the equity interests in each of the 14 vessel-owning special purpose vehicles through which a portion of the fleet is held.

2. Mezzanine Notes. TSL is the issuer of those certain Mezzanine Notes dated as of June 15, 2019, in the original principal amount of $100 million, held by Dralvecen Mezzanine Capital LLC ("BMC"). As of September 30, 2022, the outstanding balance of the Mezzanine Notes stood at $112.3 million, reflecting $12.3 million in capitalized payment-in-kind ("PIK") interest that has accrued since the notes' issuance. The Mezzanine Notes bear interest at 11.5% per annum on a PIK toggle basis; the Company elected to pay all interest in kind commencing in Q2 2022. The Mezzanine Notes mature on December 15, 2024 and are secured by a second-priority lien on the collateral securing the Senior Secured Credit Facility, subject to the Intercreditor Agreement dated as of June 15, 2019 (the "Intercreditor Agreement"), between Nordbank International AG, as first-lien agent, and BMC, as second-lien holder.

3. Senior Unsecured Notes. TSL is the issuer of $50 million in aggregate principal amount of 8.25% Senior Unsecured Notes due March 1, 2025, issued pursuant to an Indenture dated as of March 1, 2020, between TSL and Garrison Trust Company, as indenture trustee. Interest is payable semi-annually in cash on June 1 and December 1 of each year. As noted above, the December 1, 2022 interest payment was missed, and an Event of Default exists under the Indenture.

4. Intercompany Note. TAI is the obligor on a subordinated intercompany promissory note payable to TSL in the principal amount of $76.4 million, bearing interest at 5.0% per annum. This note is subordinated to all third-party indebtedness of TAI.

5. Trade Payables. As of September 30, 2022, the Company's consolidated trade payables totaled approximately $38.7 million. The largest individual trade creditor is Olympian Fuel & Supply SA, TSL's principal bunker fuel supplier, which is owed approximately $9.2 million.

6. Total Indebtedness. The Company's total consolidated indebtedness as of September 30, 2022 was approximately $847.3 million, comprised of $540 million under the Senior Secured Credit Facility, $112.3 million of Mezzanine Notes, $50 million of Senior Unsecured Notes, $76.4 million in intercompany obligations, and $38.7 million in trade payables, along with approximately $29.9 million in accrued interest and other liabilities.

C. The Ad Hoc Group

We acknowledge that the Ad Hoc Group is comprised of the following members of the senior secured lender group:

The Ad Hoc Group's collective holdings of $372 million represent approximately 54.3% of the $685 million total commitment under the Senior Secured Credit Facility and approximately 68.9% of the $540 million currently outstanding. The Ad Hoc Group thus constitutes the requisite majority under the Credit Agreement for purposes of directing the Administrative Agent and approving amendments and waivers. We further note that Draycott Advisory Group LLC, under the direction of Vanessa Chow, Partner, serves as financial advisor to the Ad Hoc Group, and we have appreciated Draycott's professional and constructive engagement throughout the forbearance process.

D. Fleet Valuation and Enterprise Value

In order to provide an objective basis for evaluating the economic terms of the Proposed Framework, TSL engaged Drakos Maritime Valuations Ltd. ("Drakos"), under the direction of Captain Nikos Drakos, to conduct an independent appraisal of the Company's fleet. The Drakos appraisal, dated as of November 1, 2022, arrived at a total fleet appraised value of $623 million, as summarized in the following table:

The November 2022 appraised value of $623 million reflects a decline of $268 million, or approximately 30.1%, from the prior Drakos appraisal of $891 million as of January 2022. This decline is consistent with broader market trends and the deterioration in the BDI and secondary vessel sale prices observed during the same period.

KHP has independently estimated the Company's enterprise value as of November 2022 at a range of $580 million to $640 million, with a midpoint of approximately $610 million. KHP's enterprise value analysis incorporated the Drakos fleet appraisal, discounted cash flow analysis under multiple rate scenarios, and comparable company and precedent transaction methodologies.

It is significant that the senior secured debt of $540 million falls well within the enterprise value range under both the fleet appraisal and KHP's enterprise value analysis. This confirms that the senior secured lenders are entitled to, and would receive, a full recovery on their claims in both an in-court and out-of-court scenario. The Proposed Framework is designed to deliver that full recovery while providing additional economic benefits — including an amendment fee, direct prepayment from asset sale proceeds, and the avoidance of administrative costs — that enhance the senior secured lenders' overall return relative to a Chapter 11 alternative.

III. TSL's Proposed Restructuring Framework

The Proposed Framework comprises six integrated components, each designed to work in concert with the others to restore the Company's liquidity, right-size the capital structure to a level sustainable given current and projected market conditions, and position TSL and TAI for long-term operational viability and value creation. The framework is intended to serve as the basis for a comprehensive RSA to be executed by all key stakeholder groups — the Ad Hoc Group (and, ideally, the full senior secured lender group), BMC, the Kostandinos family through KFO Holdings SA, and, to the extent necessary, the indenture trustee for the Unsecured Notes. Each component is described in detail below.

A. Senior Secured Credit Facility Amendment

TSL proposes the following amendments to the Credit Agreement, to be implemented through a comprehensive amendment and waiver agreement (the "Credit Agreement Amendment"):

1. Maturity Extension. The maturity date of the Senior Secured Credit Facility would be extended from June 15, 2024 to June 15, 2027, providing a three-year extension of the current maturity. This extension is a critical element of the restructuring, as it provides the Company with the operational runway necessary to benefit from the anticipated recovery in charter rates, execute an orderly fleet rationalization program, and generate sufficient cash flow to delever organically. Without the extension, the Company would face a near-term refinancing wall at a time when market conditions and the Company's credit profile make a refinancing impractical. The three-year extension period is consistent with KHP's base case projections, which indicate that the Company's leverage ratio would return to approximately 4.5x by mid-2026 under moderate rate recovery assumptions, well within the target range for a sustainable capital structure in the shipping industry.

2. PIK Conversion. $75 million of the outstanding Term Loan A principal would be converted to payment-in-kind, reducing the Company's near-term cash debt service burden while preserving the lenders' economic entitlement. The PIK conversion reflects the reality that, at current TCE rates, the Company's cash flow generation is insufficient to support the existing amortization and interest obligations in full. By converting a portion of the principal to PIK, the Company can allocate available cash flow to maintaining its fleet, meeting operating obligations, and building an appropriate liquidity cushion. The PIK conversion preserves the lenders' economics — the $75 million remains outstanding, accrues interest, and is payable in full at the extended maturity — while providing meaningful near-term cash flow relief.

3. Revolving Credit Facility Reduction. The Revolving Credit Facility commitment would be reduced from $200 million to $150 million, reflecting the Company's reduced operational needs in the current market environment and demonstrating a commitment to deleveraging discipline. We acknowledge that the current drawn balance of $185 million under the Revolver exceeds the proposed reduced commitment of $150 million. The resulting $35 million excess would be repaid through a combination of the KFO Holdings equity contribution described in Section III.C below and operational cash flow, with the objective of reducing the Revolver balance to $150 million or below by the RSA closing date. The commitment reduction is intended to be permanent, signaling to the market and to the lender group that the Company is committed to operating with a leaner capital structure going forward.

4. Financial Covenant Reset. In order to provide the Company with a realistic glide path to financial compliance given current market conditions, the financial maintenance covenants would be amended as follows:

(a) Maximum Net Leverage Ratio. The Maximum Net Leverage Ratio would be reset to 7.00x for the testing periods ending on and after the RSA closing date, stepping down over the following eight fiscal quarters to 5.50x by Q4 2025. The step-down schedule would be calibrated to reflect KHP's base case projections for revenue recovery, cost optimization, and deleveraging from asset sale proceeds, with appropriate cushion to accommodate market volatility.

(b) Minimum Liquidity. The Minimum Liquidity requirement would be reduced from $40 million to $30 million, reflecting the improved liquidity position of the Company following the receipt of the KFO Holdings equity contribution and the right-sizing of the revolving credit facility. The Company believes that a $30 million minimum liquidity level provides an appropriate buffer for operating needs while being achievable and sustainable in the current environment.

(c) Interest Coverage Ratio. The Minimum Interest Coverage Ratio would be waived through the fiscal quarter ending December 31, 2023, to allow the Company a reasonable period of operational recovery before the covenant is reimposed. KHP's projections indicate that the Company's Interest Coverage Ratio would return to compliance with the existing 2.50x minimum during the first half of 2024 under moderate rate recovery assumptions.

5. Amendment Fee. In consideration of the amendments described herein, TSL would pay to the senior secured lenders an amendment fee equal to 1.00% of the $540 million outstanding balance under the Senior Secured Credit Facility, or $5.4 million. To minimize the cash impact of the restructuring transaction and preserve liquidity for operational purposes, the amendment fee would be payable in kind — that is, the $5.4 million would be added to the outstanding principal balance of the Senior Secured Credit Facility at the closing of the Credit Agreement Amendment. The amendment fee is intended to compensate the senior secured lenders for their agreement to the maturity extension, covenant reset, and other accommodations described herein.

6. Default Interest Waiver. TSL requests a retroactive waiver of the default interest that has been accruing on the Senior Secured Credit Facility since the occurrence of the Events of Default in September 2022. As noted above, the default rate provision of the Credit Agreement imposes an additional 200 basis points above the contractual rate, resulting in a total effective rate of SOFR plus 575 basis points. The proposed waiver would be retroactive to the date of the initial Event of Default, and going forward, interest would revert to the contractual rate of SOFR plus 375 basis points. The waiver of default interest is appropriate given the Company's good-faith engagement with the lender group, the execution of the Forbearance Agreement (which contemplated, among other things, a constructive negotiation process), and the fact that the Events of Default are attributable to macroeconomic conditions beyond the Company's control rather than any operational or governance failures.

7. Collateral. The existing first-priority lien package securing the Senior Secured Credit Facility would remain unchanged in all respects. No release of collateral is requested, and the senior secured lenders would continue to benefit from a perfected first-priority security interest in all existing collateral, including the full fleet, the Houston terminal lease, accounts receivable, and equity interests in TAI and the vessel-owning SPVs. Proceeds from the asset dispositions described in Section III.D below would be applied to prepay the Senior Secured Credit Facility and would not be released from the lien.

B. Mezzanine Notes Exchange

TSL proposes the following treatment of the Mezzanine Notes held by BMC (the "Mezzanine Exchange"):

1. Exchange Terms. BMC would exchange the full $112.3 million outstanding balance of the Mezzanine Notes (inclusive of all capitalized PIK interest) for the following consideration:

(a) $60 million in aggregate principal amount of newly issued second-lien secured notes (the "New Second-Lien Notes"), due June 2028, bearing interest at 10.0% per annum, payable entirely in kind, and secured by a second-priority lien on the collateral securing the Senior Secured Credit Facility, junior to the first-priority liens of the senior secured lenders.

(b) A 15% equity interest in TSL, to be issued to BMC in connection with the closing of the Mezzanine Exchange, representing new common equity of TSL.

2. Debt Haircut. The Mezzanine Exchange contemplates a haircut of 46.6% on the debt component of BMC's claim, calculated as follows: ($112.3 million − $60 million) ÷ $112.3 million = 46.6%. While this represents a significant reduction in the face amount of BMC's debt claim, the haircut is substantially offset by the equity component of the exchange consideration, which provides BMC with meaningful upside participation in the post-restructuring enterprise.

3. Equity Dilution Impact. The issuance of a 15% equity interest to BMC would result in the following changes to the Company's equity capitalization:

(a) The Kostandinos family (through KFO Holdings SA) would be diluted from 80% to approximately 68% (80% × 85% = 68%).

(b) Other non-family equity holders would be diluted from 20% to approximately 17% (20% × 85% = 17%).

We note that the dilution to the Kostandinos family is a concession that the family has agreed to make in order to facilitate a consensual resolution. The family's willingness to accept both dilution and a substantial new equity contribution (as described in Section III.C below) underscores their commitment to the long-term viability of the enterprise.

4. Rationale. The proposed exchange terms are designed to provide BMC with a recovery that is comparable to, and in many respects superior to, the recovery BMC would achieve in a Chapter 11 scenario. KHP's waterfall analysis, based on the midpoint enterprise value of $610 million, indicates that in a Chapter 11 liquidation or reorganization, mezzanine recovery would be approximately 62.3%, calculated as follows: ($610 million enterprise value − $540 million senior secured claims) ÷ $112.3 million mezzanine claims = $70 million ÷ $112.3 million = approximately 62.3 cents on the dollar. The proposed exchange offers a debt recovery of approximately 53.4% ($60 million ÷ $112.3 million) on the New Second-Lien Notes alone; when the value of the 15% equity interest is included — which KHP estimates at between $87 million and $96 million based on the enterprise value range (15% × $580 million to $640 million), translating to a value of approximately $13 million to $14.4 million for BMC's share — the total blended recovery exceeds the Chapter 11 alternative. Moreover, the out-of-court exchange avoids the costs, delays, and uncertainties of a contested bankruptcy process, preserves the going-concern value of the enterprise, and provides BMC with equity upside that is not available in a Chapter 11 scenario where value is typically allocated to creditors through fixed-value distributions.

5. Intercreditor Agreement. The existing Intercreditor Agreement dated as of June 15, 2019, between Nordbank International AG and BMC, would be amended and restated in its entirety to reflect the terms of the New Second-Lien Notes and the revised collateral sharing arrangements. The amended and restated Intercreditor Agreement (the "A&R Intercreditor Agreement") would govern the respective rights and priorities of the first-lien lenders and BMC as holder of the New Second-Lien Notes, including standstill provisions, waterfall mechanics, and enforcement rights consistent with market practice for first-lien/second-lien intercreditor arrangements.

6. Status of Discussions with BMC. We wish to note candidly that discussions with Kellner & Foss LLP ("K&F"), counsel to BMC, and specifically with Theodore Kellner, lead partner at K&F, remain at a preliminary stage. TSL has shared the broad contours of the proposed Mezzanine Exchange with BMC and K&F, but the specific terms set forth herein have not yet been agreed upon by BMC. This proposal is therefore subject in all respects to BMC's agreement, and we anticipate that the economic terms of the Mezzanine Exchange may require further negotiation. We intend to engage in substantive discussions with K&F in parallel with our negotiations with WCB and the Ad Hoc Group, and we are committed to keeping all parties informed of material developments.

C. KFO Holdings Equity Contribution

A cornerstone of the Proposed Framework is a new equity contribution by the Kostandinos family, to be made through KFO Holdings SA ("KFO"), the Kostandinos family's holding company and the 80% equity holder of TSL.

1. Amount and Structure. KFO would contribute €35 million in new equity capital to TSL, which at the prevailing EUR/USD exchange rate of approximately 1.091 represents approximately $38.2 million. The contribution would be structured as a subscription for newly issued common equity of TSL and would be fully funded at or prior to the RSA closing date.

2. Use of Proceeds. The proceeds of the KFO equity contribution would be applied as follows:

(a) Funding of working capital and general liquidity needs to ensure the Company maintains adequate cash reserves to support ongoing operations during and following the restructuring process;

(b) Partial repayment of the Revolving Credit Facility to bring the outstanding drawn balance within the reduced $150 million commitment level; and

(c) Payment of transaction costs, including the professional fees and expenses of the Company's legal and financial advisors, as well as the reasonable fees and expenses of the Ad Hoc Group's advisors to the extent payable by the Company under the terms of the Forbearance Agreement.

3. Significance. The KFO equity contribution demonstrates the Kostandinos family's continued commitment to the business and its alignment with creditor interests. The family — comprised of Dimitrios Kostandinos (62% indirect ownership of TSL through KFO) and Elena Kostandinos-Pavlou (18% indirect ownership through KFO) — has operated TSL and its predecessor entities for over three decades, and the family's willingness to invest substantial new capital at this stage of the cycle is a powerful signal of confidence in the long-term prospects of the enterprise. From the creditors' perspective, the equity contribution serves as a meaningful de-risking mechanism: it provides immediate liquidity, reduces revolver exposure, and ensures that the Kostandinos family has significant "skin in the game" in the post-restructuring entity.

4. Distinction from Chapter 11 Alternative. The KFO equity contribution is a critical element that distinguishes the proposed out-of-court path from a Chapter 11 filing. In a Chapter 11 proceeding, the Kostandinos family's existing equity interest would likely be eliminated entirely or significantly diluted under the absolute priority rule. The family has no obligation to contribute new capital in a Chapter 11 context, and absent a negotiated equity investment under a plan, the enterprise would not benefit from this infusion. The $38.2 million contribution therefore represents incremental value that is uniquely available in the out-of-court context and directly benefits the senior secured lenders and other creditors.

D. Asset Dispositions

To accelerate deleveraging and demonstrate the Company's commitment to balance sheet repair, TSL proposes the following asset disposition program:

1. Scope. TSL would sell six older dry-bulk carriers from its fleet within twelve months of the RSA closing date. The vessels to be sold would have an average age of approximately 18 years and would be selected based on a combination of factors, including age, maintenance capital requirements, operating cost profile, and expected net sale proceeds. The disposition of these older, less efficient vessels will improve the overall quality and competitive positioning of the fleet.

2. Estimated Proceeds. Based on current market conditions and recent comparable sales, KHP estimates that the aggregate sale proceeds from the six vessel dispositions would be approximately $72 million. This estimate reflects a range of individual vessel values and accounts for the age and condition of the vessels to be sold.

3. Application of Proceeds. Net sale proceeds, after deduction of customary transaction costs (including brokerage fees, legal fees, and vessel preparation costs), would be applied in their entirety to prepay Term Loan A under the Senior Secured Credit Facility. This direct application of sale proceeds to senior secured debt ensures that the senior secured lenders are the primary beneficiaries of the asset disposition program and provides a concrete, near-term mechanism for meaningful principal reduction.

4. Process and Protections. The specific vessels to be sold would be identified in a side letter to the RSA (the "Vessel Disposition Schedule"), subject to the mutual agreement of TSL and the Required Lenders. All vessel sales would be subject to (i) minimum price floors to be agreed upon in the RSA, below which TSL would not be permitted to consummate a sale without the consent of the Required Lenders; and (ii) an orderly sale process designed to maximize value, including engagement of an internationally recognized shipbroker and a commercially reasonable marketing period.

5. Fleet Rationalization. Upon completion of the asset disposition program, the fleet would be rationalized from 50 vessels to 44 vessels. The remaining fleet would have a lower average age, reduced maintenance capital requirements, and improved operating efficiency, positioning the Company to generate stronger cash flow per vessel as charter rates recover.

E. Treatment of Unsecured Notes

TSL proposes the following treatment of the $50 million Senior Unsecured Notes:

1. Unimpaired. The Senior Unsecured Notes would remain outstanding and unimpaired in all respects. No modification to the principal amount, interest rate, maturity date, or any other term of the Indenture is proposed.

2. Payment of Missed Coupon. The missed December 1, 2022 interest payment of $2,062,500 would be paid in full at or prior to the RSA closing date, curing the existing Event of Default under the Indenture.

3. Indenture Consent. TSL would seek a consent and waiver from Garrison Trust Company, as indenture trustee, to waive the existing Event of Default resulting from the missed interest payment and to confirm that no acceleration or other remedial action will be taken by the trustee in connection therewith.

4. Rationale. TSL's proposal to leave the Unsecured Notes unimpaired reflects several considerations:

(a) Avoiding the cost and complexity of impairing a relatively small tranche of $50 million in unsecured debt, which would require consent solicitation or exchange offer mechanics, potential litigation risk, and significant additional professional fees — all disproportionate to the size of the obligation;

(b) Maintaining TSL's access to the unsecured note market for future financing needs, which is essential for the Company's long-term capital structure flexibility; and

(c) In a Chapter 11 scenario, KHP's waterfall analysis indicates that unsecured note recovery would be estimated at only 8 to 14 cents on the dollar — meaning that full payment in an out-of-court deal represents an enormous improvement in outcome for this constituency and should ensure their support for the transaction.

F. Trade Creditors

1. Payment in Full. All trade creditors (representing approximately $38.7 million in outstanding payables as of September 30, 2022) would be paid in full in the ordinary course of business. No impairment of trade creditor claims is contemplated under the Proposed Framework.

2. Rationale. The preservation of trade creditor relationships is essential to the Company's ongoing operations. In the shipping and logistics industry, the Company is dependent on the continuous availability of bunker fuel, port services, maintenance and repair providers, and other critical vendors. Any interruption or degradation of these relationships could have severe operational consequences and could undermine the going-concern value that the restructuring is designed to preserve. This is particularly true with respect to Olympian Fuel & Supply SA, TSL's principal bunker fuel supplier, which is owed approximately $9.2 million and whose uninterrupted supply is critical to the operation of the fleet.

G. Intercompany Note Restructuring

Finally, the Proposed Framework includes an amendment to the intercompany financing arrangements between TSL and TAI:

1. Terms. The $76.4 million subordinated intercompany promissory note from TAI to TSL would be amended as follows:

(a) The maturity date would be extended from its current maturity to December 2028, aligning the intercompany obligation with the extended maturity of the Company's external debt;

(b) The interest rate would be reduced from 5.0% per annum to 2.0% per annum, reflecting the need to reduce TAI's fixed charges in the current operating environment; and

(c) The subordination of the intercompany note to all senior and second-lien indebtedness of TAI would be confirmed and, if necessary, memorialized in an updated subordination agreement.

2. Impact. The reduction in the intercompany interest rate and the extension of the maturity directly improve TAI's cash flow profile and overall group liquidity, ensuring that TAI has sufficient resources to maintain its U.S. operations, including the Houston terminal, and to meet its obligations under the restructured Senior Secured Credit Facility.

IV. Comparison to Chapter 11 Alternative

While TSL strongly believes that the consensual, out-of-court framework described above represents the optimal path forward for all stakeholders, the Company and its advisors have, as a matter of prudent planning, developed a comprehensive Chapter 11 contingency plan for TAI. The contemplated filing jurisdiction would be the United States Bankruptcy Court for the Southern District of Texas, Houston Division. We provide the following summary of the key Chapter 11 parameters for purposes of comparison and context, as these inform the value proposition of the out-of-court alternative.

Administrative Costs. KHP estimates that the total administrative costs of a Chapter 11 case for TAI would be approximately $18.5 million for the first twelve months, encompassing legal fees for debtor's counsel and any special counsel, financial advisory fees, fees for a Chief Restructuring Officer ("CRO"), U.S. Trustee quarterly fees, claims agent costs, and other professional fees and expenses. These are costs that are entirely avoided in the out-of-court scenario and that would be borne, in substantial part, by the senior secured lenders as superpriority administrative expense claims.

CRO Engagement. In a Chapter 11 filing scenario, TSL has received a preliminary engagement letter from Alderney Management Advisors LLC for the appointment of Richard Thornberg as CRO for TAI. While Mr. Thornberg is a highly experienced restructuring professional, the appointment of a CRO would add additional layers of operational complexity and decision-making authority, potentially disrupting existing management's ability to execute the Company's business plan and fleet rationalization strategy.

DIP Financing. TSL has already received a DIP financing term sheet from Nordbank International AG and Triton Credit Partners LP for a $75 million superpriority debtor-in-possession revolving credit facility, bearing interest at SOFR plus 600 basis points, with a 0.50% commitment fee and a twelve-month maturity. While the availability of DIP financing demonstrates the Company's preparedness and the senior secured lenders' recognition of the enterprise's underlying value, the cost of the DIP facility — at SOFR plus 600 basis points, compared to the proposed post-restructuring rate of SOFR plus 375 basis points — underscores the significant cost differential between the Chapter 11 and out-of-court paths.

Timeline. KHP estimates that a Chapter 11 case for TAI would require a minimum of approximately 270 days to plan confirmation and approximately 300 days to the effective date, assuming a reasonably consensual process without significant litigation. In practice, contested Chapter 11 cases in the shipping sector have taken substantially longer, and the cross-border elements of this case (discussed below) could add further delay.

Cross-Border Complexity. Should TSL, as the Greek parent entity, be required to commence proceedings under Greek Law 4738/2020 (the Greek Insolvency Code) in parallel with or in support of a TAI Chapter 11 filing, the restructuring would involve a potential Chapter 15 recognition proceeding in the United States to obtain recognition of the Greek proceeding as a foreign main proceeding. TSL has engaged Vassiliou & Demetriou Law Offices in Athens as Greek counsel, and preliminary analysis suggests that the coordination of concurrent U.S. and Greek proceedings would be complex, time-consuming, and expensive, with significant uncertainty as to outcomes.

In light of the foregoing, the advantages of the proposed out-of-court framework over a Chapter 11 filing are compelling:

Cost Savings. The out-of-court path avoids approximately $18.5 million in estimated administrative costs, representing value that is preserved for the benefit of all stakeholders, including the senior secured lenders.

Commercial Preservation. In the shipping and logistics industry, a Chapter 11 filing carries significant commercial stigma. Chartering counterparties, port authorities, insurance providers, and trade creditors may reduce or withdraw credit, demand cash-in-advance terms, or decline to enter into new business relationships with a debtor company. The out-of-court path eliminates this risk and preserves the Company's commercial relationships intact.

Speed of Execution. The Proposed Framework targets an RSA closing by approximately June 30, 2023 — approximately five months from today — compared to ten or more months to an effective date in a Chapter 11 case. The faster timeline reduces uncertainty, minimizes operational disruption, and allows the Company to begin executing its post-restructuring business plan sooner.

Senior Secured Lender Economics. The senior secured lenders recover in full in both scenarios, given the cushion between the enterprise value and the senior secured debt. However, the out-of-court deal adds the $5.4 million amendment fee (PIK), the benefit of direct Term Loan A prepayment from approximately $72 million in vessel sale proceeds, and the avoidance of DIP financing costs and administrative expense claims — all of which enhance the senior secured lenders' overall return relative to a Chapter 11.

Employee and Operational Continuity. A Chapter 11 filing would create significant uncertainty for TAI's approximately 680 U.S. employees and TSL's approximately 4,200 employees globally. The out-of-court path avoids this disruption, preserves employee morale and retention, and ensures continuity of the Company's operational capabilities.

V. Process and Timeline Proposal

In order to maintain momentum and achieve a timely resolution, TSL proposes the following process and timeline:

1. Detailed RSA Term Sheet. TSL and its advisors would prepare and circulate a detailed RSA term sheet to all creditor groups, including the Ad Hoc Group, BMC, and Garrison Trust Company, by mid-February 2023, with a target circulation date of February 10, 2023. The term sheet would set forth the definitive economic terms and conditions of each component of the Proposed Framework, including representations and warranties, conditions precedent, milestones, termination events, and fiduciary-out provisions.

2. RSA Execution. TSL targets execution of the RSA by the Ad Hoc Group, BMC, and other key parties by mid-March 2023, in advance of the current forbearance expiration date of March 8, 2023. We recognize that this is an ambitious timeline and that the Ad Hoc Group will require adequate time to evaluate the proposal and provide feedback. To the extent additional time is needed beyond the current forbearance period, TSL is prepared to negotiate in good faith a further extension of the Forbearance Agreement on terms acceptable to both parties.

3. Implementation Documentation. Following execution of the RSA, the parties and their respective counsel would proceed to negotiate and finalize all definitive implementation documentation, including (a) the Credit Agreement Amendment, (b) the A&R Intercreditor Agreement, (c) the New Second-Lien Note Purchase Agreement, (d) the KFO equity subscription agreement, (e) amendments to the Unsecured Notes Indenture or indenture trustee consent and waiver, (f) the intercompany note amendment, and (g) all ancillary documents and instruments. This phase would span Q2 2023, with the objective of having all documentation fully negotiated and in execution form by the RSA closing date.

4. RSA Closing / Effective Date. TSL targets an RSA closing and effective date of June 30, 2023, at which time all restructuring transactions would close simultaneously and the Company would emerge with a restructured balance sheet, a restored liquidity position, and a clear path forward.

We respectfully request that WCB and Draycott Advisory Group review the Proposed Framework in its entirety and revert with the Ad Hoc Group's initial feedback at the earliest opportunity. We recognize that this is a complex, multi-party negotiation and that the Ad Hoc Group will have questions, concerns, and counterproposals. We welcome that engagement and are prepared to work constructively and intensively to bridge any gaps.

To that end, we propose scheduling a call or in-person meeting at the earliest mutually convenient time among the following individuals: Nathaniel Bower and Amy Chesterton of Calderwood & Harkness LLP; James Calloway of KHP; Graham Whitfield III of WCB; and Vanessa Chow of Draycott Advisory Group. We are available any day during the week of February 6, 2023, and would be pleased to host the meeting at our offices if an in-person session is preferred.

VI. Confidentiality

We remind all recipients that this letter and its contents are strictly confidential and are subject to the confidentiality provisions of Section 12 of the Forbearance Agreement, as well as any applicable non-disclosure agreements among the parties and their respective advisors. The distribution of this letter is limited to the individuals and entities identified on the distribution list below, and no portion of this letter or its contents may be disclosed to any third party without the prior written consent of TSL and Calderwood & Harkness LLP.

The proposed terms and framework set forth herein are presented solely for purposes of negotiation and discussion and do not constitute binding commitments, obligations, or agreements of TSL, TAI, KFO Holdings SA, or any other party. No binding obligations shall arise unless and until the parties have negotiated, executed, and delivered a definitive RSA and all related implementation documentation in form and substance satisfactory to all parties and their respective counsel.

VII. Closing

We wish to express our sincere appreciation for the constructive engagement of the Ad Hoc Group, WCB, and Draycott Advisory Group throughout the forbearance period. The professionalism and good faith that have characterized the discussions to date give us confidence that a consensual resolution is achievable. TSL remains firmly committed to achieving an outcome that recognizes and respects the interests of all creditor constituencies while preserving the long-term value and operational integrity of the enterprise.

We are available to discuss any aspect of the Proposed Framework at your convenience. I can be reached directly at (212) 554-7112 or at nbower@calderwoodharkness.com. For day-to-day matters, please do not hesitate to contact Amy Chesterton, lead associate, at (212) 554-7245 or achesterton@calderwoodharkness.com, or Nathan Ikeda, working associate, at (212) 554-7389 or nikeda@calderwoodharkness.com.

We look forward to hearing from you.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Nathaniel Bower Partner Calderwood & Harkness LLP 780 Third Avenue New York, NY 10017 Direct: (212) 554-7112

Email: nbower@calderwoodharkness.com

cc:

Georgios Andreadis, Chief Executive Officer, Thalassa Shipping & Logistics SA Irini Dalakoura, Chief Financial Officer, Thalassa Shipping & Logistics SA Marcus Hale, President, Thalassa Americas Inc. James Calloway, Managing Director, Kensington Veltrian Partners LLC Amy Chesterton, Calderwood & Harkness LLP Colette Whitman, Calderwood & Harkness LLP

Enclosures / Attachments:

A detailed RSA term sheet will follow separately, with a target circulation date of February 10, 2023.

KHP's 13-week cash flow model and enterprise valuation summary are available upon request and can be shared with WCB and Draycott Advisory Group subject to execution of appropriate confidentiality arrangements. Please contact Amy Chesterton to coordinate access.

Lender	Holdings (Face Value)
Nordbank International AG	$137 million
Harborstone Bank plc	$95 million
Triton Credit Partners LP	$68 million
Continental Maritime Lending GmbH	$72 million
Total	$372 million
Vessel Class	Number of Vessels	Appraised Value
Capesize Dry-Bulk Carriers	10	$215 million
Panamax Dry-Bulk Carriers	14	$182 million
Supramax Dry-Bulk Carriers	14	$128 million
Sub-Panamax Container Vessels	12	$98 million
Total Fleet	50	$623 million

PRIVILEGED & CONFIDENTIAL
CALDERWOOD & HARKNESS LLP 780 Third Avenue New York, NY 10017
Telephone: (212) 554-7000 Facsimile: (212) 554-7001 www.calderwoodharkness.com
January 30, 2023
Via Email and Hand Delivery
Graham Whitfield III, Esq. Lead Partner Whitfield, Crane & Burgess LLP 51 West 52nd Street, 38th Floor New York, NY 10019
Re: Thalassa Shipping & Logistics SA / Thalassa Americas Inc. — Proposed Restructuring Framework
C&H Matter No. 1044-00003
Dear Graham:
I. Introduction
I write in my capacity as the responsible partner at Calderwood & Harkness LLP ("C&H"), counsel to Thalassa Shipping & Logistics Société Anonyme, a société anonyme organized under the laws of the Hellenic Republic ("TSL"), and its wholly-owned U.S. subsidiary, Thalassa Americas Inc., a Delaware corporation ("TAI" and, together with TSL, the "Company"). This letter is directed to you in your capacity as lead partner at Whitfield, Crane & Burgess LLP ("WCB"), counsel to the Ad Hoc Group of Senior Secured Lenders (as further described herein, the "Ad Hoc Group").
The purpose of this letter is to present, in detail, TSL's proposed comprehensive restructuring framework (the "Proposed Framework") as a basis for negotiations toward a mutually agreed Restructuring Support Agreement (an "RSA"). This proposal builds upon the constructive dialogue between our respective clients and advisors over the course of the past several months. As you know, the parties are operating under the Forbearance Agreement originally executed on October 10, 2022 (the "Forbearance Agreement"), as extended by the First Amendment thereto dated January 8, 2023 (the "First Amendment"), which currently provides for a forbearance period running through March 8, 2023. We are mindful of the approaching expiration of that forbearance period and believe the framework outlined herein provides a strong foundation for reaching an agreed-upon path forward in advance of that deadline.
TSL's paramount objective is to achieve a consensual, out-of-court resolution of the Company's current financial challenges — one that avoids the cost, disruption, and uncertainty of a Chapter 11 filing and, critically, preserves enterprise value for all stakeholders, including the senior secured lenders, mezzanine lenders, unsecured noteholders, trade creditors, employees, and equity holders alike. We believe the Proposed Framework accomplishes this objective while providing the Ad Hoc Group with meaningful economic protections and enhanced structural safeguards.
This proposal has been developed in close consultation with TSL's financial advisor, Kensington Veltrian Partners LLC ("KHP"), under the direction of James Calloway, Managing Director. KHP's analysis, including a comprehensive 13-week cash flow model, enterprise valuation summary, and Chapter 11 cost-benefit analysis, underpins the economic terms set forth below and is available for review by WCB and Draycott Advisory Group LLC ("Draycott") subject to appropriate confidentiality arrangements.
II. Background and Current Situation
Before setting forth the elements of the Proposed Framework, we believe it is useful to summarize, for the record, the key facts giving rise to the Company's current financial circumstances, the existing capital structure, and the relevant valuation parameters. While these matters are, of course, well known to the Ad Hoc Group and its advisors, a shared factual baseline will facilitate a productive negotiation.
A. The Liquidity Crisis and Covenant Defaults
The Company's financial challenges are principally attributable to a severe and sustained deterioration in the global dry-bulk shipping market. As measured by the Baltic Dry Index ("BDI"), the industry's most widely followed benchmark for freight rates, the dry-bulk market experienced a decline of approximately 58% between January 2022 and September 2022. While the BDI has shown modest signs of stabilization in the fourth quarter of 2022 and early 2023, rates remain well below the levels prevailing during the strong market of 2021.
The BDI decline translated directly into deteriorating charter revenues for TSL's fleet. TSL's average daily time-charter equivalent ("TCE") rate fell from $24,800 per day (reflecting the full-year FY2021 average) to approximately $11,200 per day (based on the Q3 2022 average), representing a decline of approximately 55%. This precipitous reduction in TCE rates has had a cascading effect on the Company's top-line revenue, profitability, and cash flow generation across both the parent entity and its U.S. subsidiary.
At the consolidated group level, TSL revenue declined from €1.42 billion in FY2021 to an estimated €987 million in FY2022, representing a decline of approximately 30.5%. TAI, which is responsible for the Company's U.S. operations, including the Houston terminal and U.S.-originated charter arrangements, experienced a comparable decline, with revenue falling from $312 million in FY2021 to an estimated $198 million in FY2022, a reduction of approximately 36.5%.
These revenue declines precipitated a series of covenant defaults under the Senior Secured Credit Facility (as defined below):
Minimum Liquidity Covenant Breach. On September 15, 2022, TSL's unrestricted cash balance fell to $27.3 million, breaching the $40 million Minimum Liquidity covenant set forth in Section 7.01(a) of the Credit Agreement by a shortfall of $12.7 million. The Company promptly notified the Administrative Agent and the lender group of this breach, as required under the Credit Agreement.
Financial Ratio Covenant Breaches. As of the fiscal quarter ending September 30, 2022, the Company breached two additional financial maintenance covenants. First, the Maximum Net Leverage Ratio stood at 7.82x (calculated as Net Debt of $770.9 million divided by trailing twelve-month EBITDA of $98.6 million), substantially in excess of the 5.50x maximum permitted under Section 7.01(b) of the Credit Agreement. Second, the Minimum Interest Coverage Ratio fell to 1.74x (calculated as trailing twelve-month EBITDA of $98.6 million divided by trailing twelve-month Interest Expense of $56.7 million), well below the 2.50x minimum required under Section 7.01(c) of the Credit Agreement. These breaches constituted Events of Default under Section 8.01 of the Credit Agreement.
Missed Interest Payment on Senior Unsecured Notes. On December 1, 2022, TSL failed to make the scheduled semi-annual interest payment of $2,062,500 on the $50 million 8.25% Senior Unsecured Notes due 2025 (the "Unsecured Notes"), for which Garrison Trust Company serves as indenture trustee. The applicable 30-day cure period under Section 6.01(a) of the Indenture expired on January 1, 2023, and the failure to pay constitutes an Event of Default under the Indenture. As of the date hereof, no acceleration notice has been delivered by the indenture trustee or holders of the required percentage of outstanding Unsecured Notes.
B. Capital Structure Summary
The Company's capital structure as of September 30, 2022, the most recent quarter-end for which complete financial data is available, is summarized below.
1. Senior Secured Credit Facility. The Company is party to that certain Credit Agreement dated as of June 15, 2019 (as amended, the "Credit Agreement"), among TSL, as parent borrower, TAI, as U.S. borrower, the lenders party thereto, and Nordbank International AG, as Administrative Agent and Collateral Agent. The Credit Agreement provides for a total commitment of $685 million across the following tranches:
(a) Term Loan A. A term loan in the original principal amount of $400 million, amortizing in quarterly installments of $10 million. As of September 30, 2022, thirteen quarterly amortization payments have been made (totaling $130 million in aggregate principal reduction), leaving a current outstanding balance of $270 million.
(b) Revolving Credit Facility. A revolving credit facility with a total commitment of $200 million. As of September 30, 2022, $185 million was drawn and outstanding under the Revolver, with $15 million of undrawn availability remaining.
(c) U.S. Tranche (Term Loan B). A non-amortizing bullet term loan in the principal amount of $85 million, borrowed by TAI as U.S. borrower and guaranteed by TSL.
(d) Total Outstanding. As of September 30, 2022, the total outstanding balance under the Senior Secured Credit Facility was $540 million ($270 million Term Loan A + $185 million Revolver + $85 million Term Loan B).
The Senior Secured Credit Facility bears interest at a rate equal to the Secured Overnight Financing Rate ("SOFR") plus 375 basis points per annum. Following the Events of Default described above, default interest of an additional 200 basis points has been accruing pursuant to Section 2.07(b) of the Credit Agreement, resulting in a current effective rate of SOFR plus 575 basis points. The scheduled maturity date of the Senior Secured Credit Facility is June 15, 2024.
The Senior Secured Credit Facility is secured by first-priority liens on substantially all of the Company's assets, including: (i) 38 dry-bulk carriers; (ii) 12 container vessels; (iii) the leasehold interest in the Houston terminal facility; (iv) all accounts receivable of TSL and TAI; (v) 100% of the equity interests in TAI; and (vi) 100% of the equity interests in each of the 14 vessel-owning special purpose vehicles through which a portion of the fleet is held.
2. Mezzanine Notes. TSL is the issuer of those certain Mezzanine Notes dated as of June 15, 2019, in the original principal amount of $100 million, held by Dralvecen Mezzanine Capital LLC ("BMC"). As of September 30, 2022, the outstanding balance of the Mezzanine Notes stood at $112.3 million, reflecting $12.3 million in capitalized payment-in-kind ("PIK") interest that has accrued since the notes' issuance. The Mezzanine Notes bear interest at 11.5% per annum on a PIK toggle basis; the Company elected to pay all interest in kind commencing in Q2 2022. The Mezzanine Notes mature on December 15, 2024 and are secured by a second-priority lien on the collateral securing the Senior Secured Credit Facility, subject to the Intercreditor Agreement dated as of June 15, 2019 (the "Intercreditor Agreement"), between Nordbank International AG, as first-lien agent, and BMC, as second-lien holder.
3. Senior Unsecured Notes. TSL is the issuer of $50 million in aggregate principal amount of 8.25% Senior Unsecured Notes due March 1, 2025, issued pursuant to an Indenture dated as of March 1, 2020, between TSL and Garrison Trust Company, as indenture trustee. Interest is payable semi-annually in cash on June 1 and December 1 of each year. As noted above, the December 1, 2022 interest payment was missed, and an Event of Default exists under the Indenture.
4. Intercompany Note. TAI is the obligor on a subordinated intercompany promissory note payable to TSL in the principal amount of $76.4 million, bearing interest at 5.0% per annum. This note is subordinated to all third-party indebtedness of TAI.
5. Trade Payables. As of September 30, 2022, the Company's consolidated trade payables totaled approximately $38.7 million. The largest individual trade creditor is Olympian Fuel & Supply SA, TSL's principal bunker fuel supplier, which is owed approximately $9.2 million.
6. Total Indebtedness. The Company's total consolidated indebtedness as of September 30, 2022 was approximately $847.3 million, comprised of $540 million under the Senior Secured Credit Facility, $112.3 million of Mezzanine Notes, $50 million of Senior Unsecured Notes, $76.4 million in intercompany obligations, and $38.7 million in trade payables, along with approximately $29.9 million in accrued interest and other liabilities.
C. The Ad Hoc Group
We acknowledge that the Ad Hoc Group is comprised of the following members of the senior secured lender group:
The Ad Hoc Group's collective holdings of $372 million represent approximately 54.3% of the $685 million total commitment under the Senior Secured Credit Facility and approximately 68.9% of the $540 million currently outstanding. The Ad Hoc Group thus constitutes the requisite majority under the Credit Agreement for purposes of directing the Administrative Agent and approving amendments and waivers. We further note that Draycott Advisory Group LLC, under the direction of Vanessa Chow, Partner, serves as financial advisor to the Ad Hoc Group, and we have appreciated Draycott's professional and constructive engagement throughout the forbearance process.
D. Fleet Valuation and Enterprise Value
In order to provide an objective basis for evaluating the economic terms of the Proposed Framework, TSL engaged Drakos Maritime Valuations Ltd. ("Drakos"), under the direction of Captain Nikos Drakos, to conduct an independent appraisal of the Company's fleet. The Drakos appraisal, dated as of November 1, 2022, arrived at a total fleet appraised value of $623 million, as summarized in the following table:
The November 2022 appraised value of $623 million reflects a decline of $268 million, or approximately 30.1%, from the prior Drakos appraisal of $891 million as of January 2022. This decline is consistent with broader market trends and the deterioration in the BDI and secondary vessel sale prices observed during the same period.
KHP has independently estimated the Company's enterprise value as of November 2022 at a range of $580 million to $640 million, with a midpoint of approximately $610 million. KHP's enterprise value analysis incorporated the Drakos fleet appraisal, discounted cash flow analysis under multiple rate scenarios, and comparable company and precedent transaction methodologies.
It is significant that the senior secured debt of $540 million falls well within the enterprise value range under both the fleet appraisal and KHP's enterprise value analysis. This confirms that the senior secured lenders are entitled to, and would receive, a full recovery on their claims in both an in-court and out-of-court scenario. The Proposed Framework is designed to deliver that full recovery while providing additional economic benefits — including an amendment fee, direct prepayment from asset sale proceeds, and the avoidance of administrative costs — that enhance the senior secured lenders' overall return relative to a Chapter 11 alternative.
III. TSL's Proposed Restructuring Framework
The Proposed Framework comprises six integrated components, each designed to work in concert with the others to restore the Company's liquidity, right-size the capital structure to a level sustainable given current and projected market conditions, and position TSL and TAI for long-term operational viability and value creation. The framework is intended to serve as the basis for a comprehensive RSA to be executed by all key stakeholder groups — the Ad Hoc Group (and, ideally, the full senior secured lender group), BMC, the Kostandinos family through KFO Holdings SA, and, to the extent necessary, the indenture trustee for the Unsecured Notes. Each component is described in detail below.
A. Senior Secured Credit Facility Amendment
TSL proposes the following amendments to the Credit Agreement, to be implemented through a comprehensive amendment and waiver agreement (the "Credit Agreement Amendment"):
1. Maturity Extension. The maturity date of the Senior Secured Credit Facility would be extended from June 15, 2024 to June 15, 2027, providing a three-year extension of the current maturity. This extension is a critical element of the restructuring, as it provides the Company with the operational runway necessary to benefit from the anticipated recovery in charter rates, execute an orderly fleet rationalization program, and generate sufficient cash flow to delever organically. Without the extension, the Company would face a near-term refinancing wall at a time when market conditions and the Company's credit profile make a refinancing impractical. The three-year extension period is consistent with KHP's base case projections, which indicate that the Company's leverage ratio would return to approximately 4.5x by mid-2026 under moderate rate recovery assumptions, well within the target range for a sustainable capital structure in the shipping industry.
2. PIK Conversion. $75 million of the outstanding Term Loan A principal would be converted to payment-in-kind, reducing the Company's near-term cash debt service burden while preserving the lenders' economic entitlement. The PIK conversion reflects the reality that, at current TCE rates, the Company's cash flow generation is insufficient to support the existing amortization and interest obligations in full. By converting a portion of the principal to PIK, the Company can allocate available cash flow to maintaining its fleet, meeting operating obligations, and building an appropriate liquidity cushion. The PIK conversion preserves the lenders' economics — the $75 million remains outstanding, accrues interest, and is payable in full at the extended maturity — while providing meaningful near-term cash flow relief.
3. Revolving Credit Facility Reduction. The Revolving Credit Facility commitment would be reduced from $200 million to $150 million, reflecting the Company's reduced operational needs in the current market environment and demonstrating a commitment to deleveraging discipline. We acknowledge that the current drawn balance of $185 million under the Revolver exceeds the proposed reduced commitment of $150 million. The resulting $35 million excess would be repaid through a combination of the KFO Holdings equity contribution described in Section III.C below and operational cash flow, with the objective of reducing the Revolver balance to $150 million or below by the RSA closing date. The commitment reduction is intended to be permanent, signaling to the market and to the lender group that the Company is committed to operating with a leaner capital structure going forward.
4. Financial Covenant Reset. In order to provide the Company with a realistic glide path to financial compliance given current market conditions, the financial maintenance covenants would be amended as follows:
(a) Maximum Net Leverage Ratio. The Maximum Net Leverage Ratio would be reset to 7.00x for the testing periods ending on and after the RSA closing date, stepping down over the following eight fiscal quarters to 5.50x by Q4 2025. The step-down schedule would be calibrated to reflect KHP's base case projections for revenue recovery, cost optimization, and deleveraging from asset sale proceeds, with appropriate cushion to accommodate market volatility.
(b) Minimum Liquidity. The Minimum Liquidity requirement would be reduced from $40 million to $30 million, reflecting the improved liquidity position of the Company following the receipt of the KFO Holdings equity contribution and the right-sizing of the revolving credit facility. The Company believes that a $30 million minimum liquidity level provides an appropriate buffer for operating needs while being achievable and sustainable in the current environment.
(c) Interest Coverage Ratio. The Minimum Interest Coverage Ratio would be waived through the fiscal quarter ending December 31, 2023, to allow the Company a reasonable period of operational recovery before the covenant is reimposed. KHP's projections indicate that the Company's Interest Coverage Ratio would return to compliance with the existing 2.50x minimum during the first half of 2024 under moderate rate recovery assumptions.
5. Amendment Fee. In consideration of the amendments described herein, TSL would pay to the senior secured lenders an amendment fee equal to 1.00% of the $540 million outstanding balance under the Senior Secured Credit Facility, or $5.4 million. To minimize the cash impact of the restructuring transaction and preserve liquidity for operational purposes, the amendment fee would be payable in kind — that is, the $5.4 million would be added to the outstanding principal balance of the Senior Secured Credit Facility at the closing of the Credit Agreement Amendment. The amendment fee is intended to compensate the senior secured lenders for their agreement to the maturity extension, covenant reset, and other accommodations described herein.
6. Default Interest Waiver. TSL requests a retroactive waiver of the default interest that has been accruing on the Senior Secured Credit Facility since the occurrence of the Events of Default in September 2022. As noted above, the default rate provision of the Credit Agreement imposes an additional 200 basis points above the contractual rate, resulting in a total effective rate of SOFR plus 575 basis points. The proposed waiver would be retroactive to the date of the initial Event of Default, and going forward, interest would revert to the contractual rate of SOFR plus 375 basis points. The waiver of default interest is appropriate given the Company's good-faith engagement with the lender group, the execution of the Forbearance Agreement (which contemplated, among other things, a constructive negotiation process), and the fact that the Events of Default are attributable to macroeconomic conditions beyond the Company's control rather than any operational or governance failures.
7. Collateral. The existing first-priority lien package securing the Senior Secured Credit Facility would remain unchanged in all respects. No release of collateral is requested, and the senior secured lenders would continue to benefit from a perfected first-priority security interest in all existing collateral, including the full fleet, the Houston terminal lease, accounts receivable, and equity interests in TAI and the vessel-owning SPVs. Proceeds from the asset dispositions described in Section III.D below would be applied to prepay the Senior Secured Credit Facility and would not be released from the lien.
B. Mezzanine Notes Exchange
TSL proposes the following treatment of the Mezzanine Notes held by BMC (the "Mezzanine Exchange"):
1. Exchange Terms. BMC would exchange the full $112.3 million outstanding balance of the Mezzanine Notes (inclusive of all capitalized PIK interest) for the following consideration:
(a) $60 million in aggregate principal amount of newly issued second-lien secured notes (the "New Second-Lien Notes"), due June 2028, bearing interest at 10.0% per annum, payable entirely in kind, and secured by a second-priority lien on the collateral securing the Senior Secured Credit Facility, junior to the first-priority liens of the senior secured lenders.
(b) A 15% equity interest in TSL, to be issued to BMC in connection with the closing of the Mezzanine Exchange, representing new common equity of TSL.
2. Debt Haircut. The Mezzanine Exchange contemplates a haircut of 46.6% on the debt component of BMC's claim, calculated as follows: ($112.3 million − $60 million) ÷ $112.3 million = 46.6%. While this represents a significant reduction in the face amount of BMC's debt claim, the haircut is substantially offset by the equity component of the exchange consideration, which provides BMC with meaningful upside participation in the post-restructuring enterprise.
3. Equity Dilution Impact. The issuance of a 15% equity interest to BMC would result in the following changes to the Company's equity capitalization:
(a) The Kostandinos family (through KFO Holdings SA) would be diluted from 80% to approximately 68% (80% × 85% = 68%).
(b) Other non-family equity holders would be diluted from 20% to approximately 17% (20% × 85% = 17%).
(c) BMC would hold 15% of TSL's equity.
We note that the dilution to the Kostandinos family is a concession that the family has agreed to make in order to facilitate a consensual resolution. The family's willingness to accept both dilution and a substantial new equity contribution (as described in Section III.C below) underscores their commitment to the long-term viability of the enterprise.
4. Rationale. The proposed exchange terms are designed to provide BMC with a recovery that is comparable to, and in many respects superior to, the recovery BMC would achieve in a Chapter 11 scenario. KHP's waterfall analysis, based on the midpoint enterprise value of $610 million, indicates that in a Chapter 11 liquidation or reorganization, mezzanine recovery would be approximately 62.3%, calculated as follows: ($610 million enterprise value − $540 million senior secured claims) ÷ $112.3 million mezzanine claims = $70 million ÷ $112.3 million = approximately 62.3 cents on the dollar. The proposed exchange offers a debt recovery of approximately 53.4% ($60 million ÷ $112.3 million) on the New Second-Lien Notes alone; when the value of the 15% equity interest is included — which KHP estimates at between $87 million and $96 million based on the enterprise value range (15% × $580 million to $640 million), translating to a value of approximately $13 million to $14.4 million for BMC's share — the total blended recovery exceeds the Chapter 11 alternative. Moreover, the out-of-court exchange avoids the costs, delays, and uncertainties of a contested bankruptcy process, preserves the going-concern value of the enterprise, and provides BMC with equity upside that is not available in a Chapter 11 scenario where value is typically allocated to creditors through fixed-value distributions.
5. Intercreditor Agreement. The existing Intercreditor Agreement dated as of June 15, 2019, between Nordbank International AG and BMC, would be amended and restated in its entirety to reflect the terms of the New Second-Lien Notes and the revised collateral sharing arrangements. The amended and restated Intercreditor Agreement (the "A&R Intercreditor Agreement") would govern the respective rights and priorities of the first-lien lenders and BMC as holder of the New Second-Lien Notes, including standstill provisions, waterfall mechanics, and enforcement rights consistent with market practice for first-lien/second-lien intercreditor arrangements.
6. Status of Discussions with BMC. We wish to note candidly that discussions with Kellner & Foss LLP ("K&F"), counsel to BMC, and specifically with Theodore Kellner, lead partner at K&F, remain at a preliminary stage. TSL has shared the broad contours of the proposed Mezzanine Exchange with BMC and K&F, but the specific terms set forth herein have not yet been agreed upon by BMC. This proposal is therefore subject in all respects to BMC's agreement, and we anticipate that the economic terms of the Mezzanine Exchange may require further negotiation. We intend to engage in substantive discussions with K&F in parallel with our negotiations with WCB and the Ad Hoc Group, and we are committed to keeping all parties informed of material developments.
C. KFO Holdings Equity Contribution
A cornerstone of the Proposed Framework is a new equity contribution by the Kostandinos family, to be made through KFO Holdings SA ("KFO"), the Kostandinos family's holding company and the 80% equity holder of TSL.
1. Amount and Structure. KFO would contribute €35 million in new equity capital to TSL, which at the prevailing EUR/USD exchange rate of approximately 1.091 represents approximately $38.2 million. The contribution would be structured as a subscription for newly issued common equity of TSL and would be fully funded at or prior to the RSA closing date.
2. Use of Proceeds. The proceeds of the KFO equity contribution would be applied as follows:
(a) Funding of working capital and general liquidity needs to ensure the Company maintains adequate cash reserves to support ongoing operations during and following the restructuring process;
(b) Partial repayment of the Revolving Credit Facility to bring the outstanding drawn balance within the reduced $150 million commitment level; and
(c) Payment of transaction costs, including the professional fees and expenses of the Company's legal and financial advisors, as well as the reasonable fees and expenses of the Ad Hoc Group's advisors to the extent payable by the Company under the terms of the Forbearance Agreement.
3. Significance. The KFO equity contribution demonstrates the Kostandinos family's continued commitment to the business and its alignment with creditor interests. The family — comprised of Dimitrios Kostandinos (62% indirect ownership of TSL through KFO) and Elena Kostandinos-Pavlou (18% indirect ownership through KFO) — has operated TSL and its predecessor entities for over three decades, and the family's willingness to invest substantial new capital at this stage of the cycle is a powerful signal of confidence in the long-term prospects of the enterprise. From the creditors' perspective, the equity contribution serves as a meaningful de-risking mechanism: it provides immediate liquidity, reduces revolver exposure, and ensures that the Kostandinos family has significant "skin in the game" in the post-restructuring entity.
4. Distinction from Chapter 11 Alternative. The KFO equity contribution is a critical element that distinguishes the proposed out-of-court path from a Chapter 11 filing. In a Chapter 11 proceeding, the Kostandinos family's existing equity interest would likely be eliminated entirely or significantly diluted under the absolute priority rule. The family has no obligation to contribute new capital in a Chapter 11 context, and absent a negotiated equity investment under a plan, the enterprise would not benefit from this infusion. The $38.2 million contribution therefore represents incremental value that is uniquely available in the out-of-court context and directly benefits the senior secured lenders and other creditors.
D. Asset Dispositions
To accelerate deleveraging and demonstrate the Company's commitment to balance sheet repair, TSL proposes the following asset disposition program:
1. Scope. TSL would sell six older dry-bulk carriers from its fleet within twelve months of the RSA closing date. The vessels to be sold would have an average age of approximately 18 years and would be selected based on a combination of factors, including age, maintenance capital requirements, operating cost profile, and expected net sale proceeds. The disposition of these older, less efficient vessels will improve the overall quality and competitive positioning of the fleet.
2. Estimated Proceeds. Based on current market conditions and recent comparable sales, KHP estimates that the aggregate sale proceeds from the six vessel dispositions would be approximately $72 million. This estimate reflects a range of individual vessel values and accounts for the age and condition of the vessels to be sold.
3. Application of Proceeds. Net sale proceeds, after deduction of customary transaction costs (including brokerage fees, legal fees, and vessel preparation costs), would be applied in their entirety to prepay Term Loan A under the Senior Secured Credit Facility. This direct application of sale proceeds to senior secured debt ensures that the senior secured lenders are the primary beneficiaries of the asset disposition program and provides a concrete, near-term mechanism for meaningful principal reduction.
4. Process and Protections. The specific vessels to be sold would be identified in a side letter to the RSA (the "Vessel Disposition Schedule"), subject to the mutual agreement of TSL and the Required Lenders. All vessel sales would be subject to (i) minimum price floors to be agreed upon in the RSA, below which TSL would not be permitted to consummate a sale without the consent of the Required Lenders; and (ii) an orderly sale process designed to maximize value, including engagement of an internationally recognized shipbroker and a commercially reasonable marketing period.
5. Fleet Rationalization. Upon completion of the asset disposition program, the fleet would be rationalized from 50 vessels to 44 vessels. The remaining fleet would have a lower average age, reduced maintenance capital requirements, and improved operating efficiency, positioning the Company to generate stronger cash flow per vessel as charter rates recover.
E. Treatment of Unsecured Notes
TSL proposes the following treatment of the $50 million Senior Unsecured Notes:
1. Unimpaired. The Senior Unsecured Notes would remain outstanding and unimpaired in all respects. No modification to the principal amount, interest rate, maturity date, or any other term of the Indenture is proposed.
2. Payment of Missed Coupon. The missed December 1, 2022 interest payment of $2,062,500 would be paid in full at or prior to the RSA closing date, curing the existing Event of Default under the Indenture.
3. Indenture Consent. TSL would seek a consent and waiver from Garrison Trust Company, as indenture trustee, to waive the existing Event of Default resulting from the missed interest payment and to confirm that no acceleration or other remedial action will be taken by the trustee in connection therewith.
4. Rationale. TSL's proposal to leave the Unsecured Notes unimpaired reflects several considerations:
(a) Avoiding the cost and complexity of impairing a relatively small tranche of $50 million in unsecured debt, which would require consent solicitation or exchange offer mechanics, potential litigation risk, and significant additional professional fees — all disproportionate to the size of the obligation;
(b) Maintaining TSL's access to the unsecured note market for future financing needs, which is essential for the Company's long-term capital structure flexibility; and
(c) In a Chapter 11 scenario, KHP's waterfall analysis indicates that unsecured note recovery would be estimated at only 8 to 14 cents on the dollar — meaning that full payment in an out-of-court deal represents an enormous improvement in outcome for this constituency and should ensure their support for the transaction.
F. Trade Creditors
1. Payment in Full. All trade creditors (representing approximately $38.7 million in outstanding payables as of September 30, 2022) would be paid in full in the ordinary course of business. No impairment of trade creditor claims is contemplated under the Proposed Framework.
2. Rationale. The preservation of trade creditor relationships is essential to the Company's ongoing operations. In the shipping and logistics industry, the Company is dependent on the continuous availability of bunker fuel, port services, maintenance and repair providers, and other critical vendors. Any interruption or degradation of these relationships could have severe operational consequences and could undermine the going-concern value that the restructuring is designed to preserve. This is particularly true with respect to Olympian Fuel & Supply SA, TSL's principal bunker fuel supplier, which is owed approximately $9.2 million and whose uninterrupted supply is critical to the operation of the fleet.
G. Intercompany Note Restructuring
Finally, the Proposed Framework includes an amendment to the intercompany financing arrangements between TSL and TAI:
1. Terms. The $76.4 million subordinated intercompany promissory note from TAI to TSL would be amended as follows:
(a) The maturity date would be extended from its current maturity to December 2028, aligning the intercompany obligation with the extended maturity of the Company's external debt;
(b) The interest rate would be reduced from 5.0% per annum to 2.0% per annum, reflecting the need to reduce TAI's fixed charges in the current operating environment; and
(c) The subordination of the intercompany note to all senior and second-lien indebtedness of TAI would be confirmed and, if necessary, memorialized in an updated subordination agreement.
2. Impact. The reduction in the intercompany interest rate and the extension of the maturity directly improve TAI's cash flow profile and overall group liquidity, ensuring that TAI has sufficient resources to maintain its U.S. operations, including the Houston terminal, and to meet its obligations under the restructured Senior Secured Credit Facility.
IV. Comparison to Chapter 11 Alternative
While TSL strongly believes that the consensual, out-of-court framework described above represents the optimal path forward for all stakeholders, the Company and its advisors have, as a matter of prudent planning, developed a comprehensive Chapter 11 contingency plan for TAI. The contemplated filing jurisdiction would be the United States Bankruptcy Court for the Southern District of Texas, Houston Division. We provide the following summary of the key Chapter 11 parameters for purposes of comparison and context, as these inform the value proposition of the out-of-court alternative.
Administrative Costs. KHP estimates that the total administrative costs of a Chapter 11 case for TAI would be approximately $18.5 million for the first twelve months, encompassing legal fees for debtor's counsel and any special counsel, financial advisory fees, fees for a Chief Restructuring Officer ("CRO"), U.S. Trustee quarterly fees, claims agent costs, and other professional fees and expenses. These are costs that are entirely avoided in the out-of-court scenario and that would be borne, in substantial part, by the senior secured lenders as superpriority administrative expense claims.
CRO Engagement. In a Chapter 11 filing scenario, TSL has received a preliminary engagement letter from Alderney Management Advisors LLC for the appointment of Richard Thornberg as CRO for TAI. While Mr. Thornberg is a highly experienced restructuring professional, the appointment of a CRO would add additional layers of operational complexity and decision-making authority, potentially disrupting existing management's ability to execute the Company's business plan and fleet rationalization strategy.
DIP Financing. TSL has already received a DIP financing term sheet from Nordbank International AG and Triton Credit Partners LP for a $75 million superpriority debtor-in-possession revolving credit facility, bearing interest at SOFR plus 600 basis points, with a 0.50% commitment fee and a twelve-month maturity. While the availability of DIP financing demonstrates the Company's preparedness and the senior secured lenders' recognition of the enterprise's underlying value, the cost of the DIP facility — at SOFR plus 600 basis points, compared to the proposed post-restructuring rate of SOFR plus 375 basis points — underscores the significant cost differential between the Chapter 11 and out-of-court paths.
Timeline. KHP estimates that a Chapter 11 case for TAI would require a minimum of approximately 270 days to plan confirmation and approximately 300 days to the effective date, assuming a reasonably consensual process without significant litigation. In practice, contested Chapter 11 cases in the shipping sector have taken substantially longer, and the cross-border elements of this case (discussed below) could add further delay.
Cross-Border Complexity. Should TSL, as the Greek parent entity, be required to commence proceedings under Greek Law 4738/2020 (the Greek Insolvency Code) in parallel with or in support of a TAI Chapter 11 filing, the restructuring would involve a potential Chapter 15 recognition proceeding in the United States to obtain recognition of the Greek proceeding as a foreign main proceeding. TSL has engaged Vassiliou & Demetriou Law Offices in Athens as Greek counsel, and preliminary analysis suggests that the coordination of concurrent U.S. and Greek proceedings would be complex, time-consuming, and expensive, with significant uncertainty as to outcomes.
In light of the foregoing, the advantages of the proposed out-of-court framework over a Chapter 11 filing are compelling:
Cost Savings. The out-of-court path avoids approximately $18.5 million in estimated administrative costs, representing value that is preserved for the benefit of all stakeholders, including the senior secured lenders.
Commercial Preservation. In the shipping and logistics industry, a Chapter 11 filing carries significant commercial stigma. Chartering counterparties, port authorities, insurance providers, and trade creditors may reduce or withdraw credit, demand cash-in-advance terms, or decline to enter into new business relationships with a debtor company. The out-of-court path eliminates this risk and preserves the Company's commercial relationships intact.
Speed of Execution. The Proposed Framework targets an RSA closing by approximately June 30, 2023 — approximately five months from today — compared to ten or more months to an effective date in a Chapter 11 case. The faster timeline reduces uncertainty, minimizes operational disruption, and allows the Company to begin executing its post-restructuring business plan sooner.
Senior Secured Lender Economics. The senior secured lenders recover in full in both scenarios, given the cushion between the enterprise value and the senior secured debt. However, the out-of-court deal adds the $5.4 million amendment fee (PIK), the benefit of direct Term Loan A prepayment from approximately $72 million in vessel sale proceeds, and the avoidance of DIP financing costs and administrative expense claims — all of which enhance the senior secured lenders' overall return relative to a Chapter 11.
Employee and Operational Continuity. A Chapter 11 filing would create significant uncertainty for TAI's approximately 680 U.S. employees and TSL's approximately 4,200 employees globally. The out-of-court path avoids this disruption, preserves employee morale and retention, and ensures continuity of the Company's operational capabilities.
V. Process and Timeline Proposal
In order to maintain momentum and achieve a timely resolution, TSL proposes the following process and timeline:
1. Detailed RSA Term Sheet. TSL and its advisors would prepare and circulate a detailed RSA term sheet to all creditor groups, including the Ad Hoc Group, BMC, and Garrison Trust Company, by mid-February 2023, with a target circulation date of February 10, 2023. The term sheet would set forth the definitive economic terms and conditions of each component of the Proposed Framework, including representations and warranties, conditions precedent, milestones, termination events, and fiduciary-out provisions.
2. RSA Execution. TSL targets execution of the RSA by the Ad Hoc Group, BMC, and other key parties by mid-March 2023, in advance of the current forbearance expiration date of March 8, 2023. We recognize that this is an ambitious timeline and that the Ad Hoc Group will require adequate time to evaluate the proposal and provide feedback. To the extent additional time is needed beyond the current forbearance period, TSL is prepared to negotiate in good faith a further extension of the Forbearance Agreement on terms acceptable to both parties.
3. Implementation Documentation. Following execution of the RSA, the parties and their respective counsel would proceed to negotiate and finalize all definitive implementation documentation, including (a) the Credit Agreement Amendment, (b) the A&R Intercreditor Agreement, (c) the New Second-Lien Note Purchase Agreement, (d) the KFO equity subscription agreement, (e) amendments to the Unsecured Notes Indenture or indenture trustee consent and waiver, (f) the intercompany note amendment, and (g) all ancillary documents and instruments. This phase would span Q2 2023, with the objective of having all documentation fully negotiated and in execution form by the RSA closing date.
4. RSA Closing / Effective Date. TSL targets an RSA closing and effective date of June 30, 2023, at which time all restructuring transactions would close simultaneously and the Company would emerge with a restructured balance sheet, a restored liquidity position, and a clear path forward.
We respectfully request that WCB and Draycott Advisory Group review the Proposed Framework in its entirety and revert with the Ad Hoc Group's initial feedback at the earliest opportunity. We recognize that this is a complex, multi-party negotiation and that the Ad Hoc Group will have questions, concerns, and counterproposals. We welcome that engagement and are prepared to work constructively and intensively to bridge any gaps.
To that end, we propose scheduling a call or in-person meeting at the earliest mutually convenient time among the following individuals: Nathaniel Bower and Amy Chesterton of Calderwood & Harkness LLP; James Calloway of KHP; Graham Whitfield III of WCB; and Vanessa Chow of Draycott Advisory Group. We are available any day during the week of February 6, 2023, and would be pleased to host the meeting at our offices if an in-person session is preferred.
VI. Confidentiality
We remind all recipients that this letter and its contents are strictly confidential and are subject to the confidentiality provisions of Section 12 of the Forbearance Agreement, as well as any applicable non-disclosure agreements among the parties and their respective advisors. The distribution of this letter is limited to the individuals and entities identified on the distribution list below, and no portion of this letter or its contents may be disclosed to any third party without the prior written consent of TSL and Calderwood & Harkness LLP.
The proposed terms and framework set forth herein are presented solely for purposes of negotiation and discussion and do not constitute binding commitments, obligations, or agreements of TSL, TAI, KFO Holdings SA, or any other party. No binding obligations shall arise unless and until the parties have negotiated, executed, and delivered a definitive RSA and all related implementation documentation in form and substance satisfactory to all parties and their respective counsel.
VII. Closing
We wish to express our sincere appreciation for the constructive engagement of the Ad Hoc Group, WCB, and Draycott Advisory Group throughout the forbearance period. The professionalism and good faith that have characterized the discussions to date give us confidence that a consensual resolution is achievable. TSL remains firmly committed to achieving an outcome that recognizes and respects the interests of all creditor constituencies while preserving the long-term value and operational integrity of the enterprise.
We are available to discuss any aspect of the Proposed Framework at your convenience. I can be reached directly at (212) 554-7112 or at nbower@calderwoodharkness.com. For day-to-day matters, please do not hesitate to contact Amy Chesterton, lead associate, at (212) 554-7245 or achesterton@calderwoodharkness.com, or Nathan Ikeda, working associate, at (212) 554-7389 or nikeda@calderwoodharkness.com.
We look forward to hearing from you.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Nathaniel Bower Partner Calderwood & Harkness LLP 780 Third Avenue New York, NY 10017 Direct: (212) 554-7112
Email: nbower@calderwoodharkness.com
cc:
Georgios Andreadis, Chief Executive Officer, Thalassa Shipping & Logistics SA Irini Dalakoura, Chief Financial Officer, Thalassa Shipping & Logistics SA Marcus Hale, President, Thalassa Americas Inc. James Calloway, Managing Director, Kensington Veltrian Partners LLC Amy Chesterton, Calderwood & Harkness LLP Colette Whitman, Calderwood & Harkness LLP
Enclosures / Attachments:
A detailed RSA term sheet will follow separately, with a target circulation date of February 10, 2023.
KHP's 13-week cash flow model and enterprise valuation summary are available upon request and can be shared with WCB and Draycott Advisory Group subject to execution of appropriate confidentiality arrangements. Please contact Amy Chesterton to coordinate access.
Lender | Holdings (Face Value)
Nordbank International AG | $137 million
Harborstone Bank plc | $95 million
Triton Credit Partners LP | $68 million
Continental Maritime Lending GmbH | $72 million
Total | $372 million
Vessel Class | Number of Vessels | Appraised Value
Capesize Dry-Bulk Carriers | 10 | $215 million
Panamax Dry-Bulk Carriers | 14 | $182 million
Supramax Dry-Bulk Carriers | 14 | $128 million
Sub-Panamax Container Vessels | 12 | $98 million
Total Fleet | 50 | $623 million

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