NEW YORK (TheStreet) -- Shares of Eagle Bulk Shipping Inc. (EGLE) - Get Report are climbing higher by 14.96% to $1.46 on very heavy volume in mid-morning trading on Wednesday.

The bulk cargo shipping company announced today that it has reached a restructuring agreement with lenders holding over 85% of the loans under its 2012 credit agreement to reduce its total debt by $975 million and provide payment in full for trade creditors.

In order to execute its restructuring plan, Eagle Bulk began a voluntary Chapter 11 bankruptcy case in the U.S. Bankruptcy Court for the Southern District of New York, in order to "facilitate a prompt exit from the financial restructuring process without disruption to Eagle Bulk's business," the company said.

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Eagle Bulk received a $50 million debtor-in-possession financing from some of its lenders, which if approved by the court will enhance the company's liquidity.

Separately, TheStreet Ratings team rates EAGLE BULK SHIPPING INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate EAGLE BULK SHIPPING INC (EGLE) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Marine industry. The net income has significantly decreased by 1744.1% when compared to the same quarter one year ago, falling from $1.37 million to -$22.59 million.
  • The debt-to-equity ratio is very high at 2.33 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.04, which clearly demonstrates the inability to cover short-term cash needs.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Marine industry and the overall market, EAGLE BULK SHIPPING INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $0.17 million or 86.70% when compared to the same quarter last year. Despite a decrease in cash flow of 86.70%, EAGLE BULK SHIPPING INC is in line with the industry average cash flow growth rate of -91.77%.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 54.95%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1750.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • You can view the full analysis from the report here: EGLE Ratings Report

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