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Eagle Bulk seeks bondholder approval to finance scrubber retrofits

Wants to change bond terms so it can use proceeds from certain ship sales to finance scrubber programme.



Eagle Bulk Shipping's dry bulk vessel, the Osprey I. Image credit: Eagle Bulk Shipping


Updated on 03 Oct 2018 00:13 GMT

Eagle Bulk Shipping Inc has announced that it is seeking to arrange a series of meetings with bondholders to seek their approval to amend existing bond terms in order to use the proceeds from the sale of certain bond-securing vessels to finance the retrofitting of four scrubbers, with the option to purchase an additional 18.

DNB Markets, Fearnley Securities and SEB have been mandated to arrange the meetings, from October 5, with existing holders of the $200m in senior secured bonds with a coupon of 8.25% due in November 2022, issued by Eagle Bulk's subsidiary Eagle Bulk Shipco LLC (ShipCo).

According to the existing bond terms, the use of proceeds from the sale of vessels that secure the bonds can only be used towards either vessel acquisitions and/or tendering for outstanding bonds.

But the proposed amendment to the terms is intended to allow for the use of proceeds from the sale of these vessels (up to a proposed $25m) for the partial financing of the scrubbers.

Additionally, ShipCo seeks to finance the installation of the scrubbers through available cash and cash flow from operations.

Scrubber agreements

Eagle Bulk previously announced a month ago that it had entered into a series of agreements for the purchase of 19 scrubbers, with the option to buy an additional 18 units.

The US owner and operator of dry bulk vessels said it aims to complete the retrofit of all 19 vessels prior to the January 1, 2020 implementation date of the new 0.5 percent global cap on fuel sulphur content.

As part of the agreements, Shipco intends to install scrubbers on four of the vessels that secure the bonds, with the option for an additional 18 bond-securing ships.

The cost, including installation, is estimated at approximately $2m per scrubber system.






Related Links:

Eagle Bulk to retrofit up to 37 scrubbers in new initiative
Eagle Bulk swings into profit despite higher bunker prices driving up voyage costs
Higher bunker prices drive up voyage costs as Eagle Bulk posts 2017 loss
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