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Why Genco Shipping (GNK) Is Tanking on Wednesday

NEW YORK (TheStreet) -- Genco Shipping & Trading (GNK) shares are tanking on Wednesday after the deep-sea freighter disclosed that it had entered into a limited waiver of default on its loan agreement.

By early afternoon, shares had slipped 20.6% to $1.43. Trading volume of 4.1 million was nearly three times its three-month daily average.

In the SEC filing, the New York-based business said it had failed to make a scheduled semi-annual interest payment of around $3.1 million on Feb. 17. Under the terms of the indenture, a failure to pay interest does not constitute a default until a grace period of 30 days expires (March 21).

"As a result of the continued weakness in charter rates and required payment of debt obligations of, and expenditures by, the Company, the Company is using the Grace Period to review its financing options and is currently considering various alternatives with respect to the restructuring of its capital structure," the company said in the filing.

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"The Company is in discussions with representatives of its secured lenders and certain holders of the Notes concerning a potential restructuring of its indebtedness."

Genco Shipping has retained Blackstone Advisory Partners as financial advisor to give guidance on any potential restructuring.

"There can be no assurance that the Company will be able to successfully resolve its current liquidity situation, that the Company will receive any additional funding from any party, or that the Company will be able to reach agreement with its various secured lenders and other creditors on a consensual restructuring of its capital structure," Genco added in the filing.

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