Paragon Shipping Sells its Fleet to Settle Debt
On Wednesday, dry bulk operator Paragon Shipping announced that it had reached an agreement with its creditors to liquidate its remaining fleet in order to settle one of its debt obligations.
The fleet, consisting of the handysize and panamax bulkers Coral Seas, Golden Seas, Prosperous Seas, Precious Seas, Priceless Seas and Proud Seas, is to be sold to unnamed, unaffiliated third parties, Paragon said. In exchange, it will receive “full and final settlement of the outstanding amount of the respective facility,” referring to a syndicated loan facility dated May 6, 2014.
Paragon did not specify the dollar value of the sale nor the amount of the debt to be retired.
In January, Paragon announced the sale of the 1998-built Panamax Kind Seas to a third party – reportedly Samios Shipping – in order to partially settle a loan with Bank of Ireland. The vessel had been detailed by the U.S. Coast Guard in April of last year for SOLAS deficiencies; she was released the same month, after repairs were made.
Paragon Shipping also had two bulkers under construction at Dayang Shipbuilding and three at Yangzijiang Shipbuilding. It announced today that it had not taken planned delivery of the first at Dayang and had canceled the second. At Yangzijiang, Paragon said that it had negotiated deferred delivery for all three orders until the end of the year, at no added cost, noting that the current market value of the newbuilds is less than the balance due on delivery.
The firm recently skipped an interest payment on unsecured notes due to lack of liquidity, and it is looking to exchange the notes for common stock. Paragon has extended the deadline for the exchange offer until the middle of March, and says that it is “currently evaluating a number of strategic alternatives.”
In related news, Dayang Shipbuilding was the scene of mass protests today, as nearly one thousand shipyard workers marched to demand payment of salary arrears, the third such demonstration at the yard so far this year. Dayang reportedly plans another 600 layoffs in the near future.