Why Genco Shipping & Trading (GNK) Is Up Today

NEW YORK (TheStreet) -- Genco Shipping & Trading (GNK) is soaring after it paid an interest payment owed on its convertible debt.

By midmorning, shares had spiked 17.7% to $1.46. Trading volume of 2.5 million had exceeded its three-month daily average.

On Thursday, the deep-sea freighter filed an 8-K form with the SEC, informing that it had made its scheduled semi-annual interest payment of around $3.1 million originally due Feb. 18 which was owned on its 5% convertible senior notes due August 15, 2015.

The payment comes as relief after the company disclosed last month that it had entered into a limited waiver of default on that loan agreement but that under the terms of the indenture, a failure to pay interest did not constitute a default until a grace period of 30 days expires (March 21).

The New York-based business suffered a sell-off on Thursday after The New York Post reported that the shipping company would soon file for Chapter 11 bankruptcy protection. The newspaper cited an unnamed person familiar with the situation but has not disclosed its source. A spokesperson for Genco Shipping & Trading has yet to respond to a request for comment.

However, the interest payment has restored confidence in a turnaround. In its filing, the company added that it "continues to be in discussions with representatives of its secured lenders and certain holders of the Notes concerning a potential restructuring of its indebtedness. The company does not intend to provide updates or details of the restructuring discussions."

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