SUPPLEMENTAL LETTER TO THE LOAN AGREEMENT
TBS INTERNATIONAL LIMITED
& SUBSIDIARIES EXHIBIT
10.4
SUPPLEMENTAL
LETTER TO THE LOAN AGREEMENT
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To:
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Claremont Shipping
Corp., Yorkshire
Shipping Corp.
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and TBS International
Limited
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Commerce
Building
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Xxx
Xxxxxxxx Xxxx
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Xxxxxxxx
XX00
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Xxxxxxx
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Attn:
Xxxxxxx X. Xxxx
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Copy:
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TBS
Shipping Services Inc.
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000
Xxxx Xxxxxx Xxxxxx Xxxx
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Xxxxxxx,
XX 00000
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U.S.A.
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Attn: Xxxxxxxxx
X. Xxxxxx
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24 March
2009
Dear
Sirs
Loan
Agreement dated 7 December 2007 made between (i) Claremont Shipping Corp. and
Yorkshire Shipping Corp. as joint and several Borrowers and (ii) Credit Suisse
as Lender and Swap Bank relating to a term loan facility of US$40,000,000 as
supplemented by an amendment letter dated 19 March 2008 (together the “Loan
Agreement”)
We refer
to the Loan Agreement. Words and expressions defined therein shall
have the same meaning when used herein except as expressly provided in this
supplemental letter.
We refer
to your request to make a voluntary prepayment under the Loan Agreement in an
amount of US$3,000,000 (plus any breakage accrued interest and breakage costs
applicable thereto). Notwithstanding the terms of Clause 7.9 of the
Loan Agreement, we agree that such prepayment shall be applied in order of
maturity and pro rata against each Advance as follows:
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1.
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in
respect of the Ship A Advance such prepayment shall be applied against the
two instalments each of US$750,000 due on 12 September 2009 and 12
December 2009; for the avoidance of doubt the repayment of instalments for
this Advance shall continue thereafter in the manner described in the Loan
Agreement and the next repayment of US$437,000 shall be paid on 12 March
2010; and
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2.
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in
respect of Ship B Advance such prepayment shall applied against the two
instalments each of US$750,000 due on 19 August 2009 and 19 November 2009;
for the avoidance of doubt the repayment of instalments for this Advance
shall continue thereafter in the manner described in the Loan Agreement
and the next repayment of US$750,000 shall be paid on 19 February
2010.
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In
addition we refer to your request that we agree to waive your compliance with
certain financial covenants under the Loan Agreement for the period commencing
from the date of signing of this letter up to 1 January 2010 at 12:00a.m.
Eastern time (the “Waiver
Period”). We hereby give our consent to such request subject
to the following conditions:
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1.
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receipt
by us from the Borrowers of a (non-refundable) fee in an amount of
US$143,750 no later than 12 March
2009;
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2.
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receipt
by us of satisfactory evidence in such form as we may in our sole
discretion require that the lenders under the Bank of America Facilities
and the RBS Facilities have agreed to similar waivers;
and
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3.
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no
Event of Default or Potential Event of Default has occurred or is
continuing or would result from the waivers being
made.
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Upon
satisfaction of such conditions, the following amendments to the Loan Agreement
temporarily apply for the duration of the Waiver Period:
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1.
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Notwithstanding
the provisions of Clause 4.12 of the Loan Agreement, the applicable rate
of Margin shall be 2.75%.
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2.
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Any
breach by the Borrowers of the requirement set out at Clause 14.1 of the
Loan Agreement shall not be an Event of Default pursuant to Clause 18.1(b)
of the Loan Agreement.
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3.
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Any
breach of the requirements of the financial covenants set out at
paragraphs (a) and (c) of Schedule 3 of the Loan Agreement shall not be an
Event of Default pursuant to Clause 18.1(c) of the Loan
Agreement.
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4.
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The
following amendments shall apply to the financial covenants set out at
Schedule 3 of the Loan Agreement:
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a.
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the
Minimum Cash Liquidity requirement for each calendar month shall be
increased from US$15,000,000 to US$40,000,000;
and
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b.
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paragraph
(d) (Minimum Consolidated Fixed Charge Coverage Ratio) shall be amended to
read:
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“Minimum Consolidated Interest Charge
Coverage Ratio Permit the Consolidated Interest Charge
Coverage Rate as of the end of any fiscal quarter and for the period
of:
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(i)
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the
two fiscal quarters of Holdings ending 30 June 2009 to be less than
1.10:1.00;
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(ii)
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the
three fiscal quarters of Holdings ending 30 September 2009 to be less than
1.35:1.00; and
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(iii)
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the
four fiscal quarters of Holdings ending 31 December 2009 to be less than
1.75:1.00.”.
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With
effect from 1 January 2010 the temporary amendments to the Loan Agreement
described above shall cease to apply and the terms of the Loan Agreement which
applied prior to the Waiver Period shall be reinstated. For the
avoidance of doubt we confirm that with effect from 1 January 2010 the Borrowers
shall undertake not to permit the minimum “Consolidated Interest Charge Coverage
Ratio” (originally defined as the “Consolidated Fixed Charge Coverage Ratio” in
the Loan Agreement and as such defined term is amended below) for the four
fiscal quarters of Holdings ending 31 March 2009 and for the most recently
completed four fiscal quarters as at each quarter date falling thereafter to be
less than 1.50:1.00.
We also
agree that with effect from the date of this letter the following amendments
shall be made to the Loan Agreement:
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1.
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The
defined term “Consolidated Fixed Charge Coverage Ratio” shall amended to
be the term “Consolidated Interest Charge Coverage Ratio” (but otherwise
having the same meaning) and thereafter all references in the Loan
Agreement and any of the Schedules thereto to “Consolidated Fixed Charge
Coverage Ratio” shall be amended to refer to “Consolidated Interest Charge
Coverage Ratio”.
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2.
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The
definition of “Consolidated EBITDA” shall be amended to
read:
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““Consolidated EBITDA” means, at
any date of determination, an amount equal to Consolidated Net Income of
Holdings and its Subsidiaries on a consolidated basis for the most recently
completed Measurement Period, plus:
(a) the
following to the extent deducted in calculating such Consolidated Net Income
(and without duplication): (i) Consolidated Interest Charges, (ii)
the provision for Federal, state, local and foreign income taxes payable, (iii)
depreciation and amortization expense, (iv) net losses from the sales of vessels
as permitted under this Agreement and (v) any noncash impairment charges
incurred during each fiscal year of Holdings and its Subsidiaries ending
December 31, 2008 and December 31, 2009 in respect of any of Holdings’ or its
Subsidiaries’ goodwill and Vessels, (in each case of or by Holdings and its
Subsidiaries for such Measurement Period); and minus
(b) the
following to the extent included in calculating such Consolidated Net Income,
all net gains from the sales of vessels as permitted under this Agreement (in
each case of or by Holdings and its Subsidiaries for such Measurement Period);
provided that, to the extent characterized as interest on the income statements
of Holdings and its Subsidiaries for such Measurement Period pursuant to FASB
Interpretation No. 133 – Accounting for Derivative Instruments and Hedging
Activities (June 0000), xxxxxxx adjustments in connection with any interest rate
Swap Contract entered into by Holdings or any of its Subsidiaries, shall be
excluded;”.
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3.
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The
definition of “Consolidated Interest Charges” shall be amended to
read:
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““Consolidated Interest Charges”
means, for any Measurement Period, the sum of:
(a) all
interest, premium payments, debt discount, fees, charges and related expenses in
connection with borrowed money (including capitalized interest but excluding
capitalized interest on Permitted New Vessel Construction Indebtedness) or in
connection with the deferred purchase price of assets, in each case to the
extent treated as interest in accordance with GAAP;
(b) all
interest paid or payable with respect to discontinued operations;
and
(c) the
portion of rent expense under Capitalized Leases that is treated as interest in
accordance with GAAP, in each case, of or by Holdings and its Subsidiaries on a
consolidated basis for the most recently completed Measurement
Period,
provided
that, to the extent characterized as interest on the income statements of
Holdings and its Subsidiaries for such Measurement Period pursuant to FASB
Interpretation No. 133 – Accounting for Derivative Instruments and Hedging
Activities (June 0000), xxxxxxx adjustments in connection with any interest rate
Swap Contract entered into by Holdings or any of its Subsidiaries, shall be
excluded;”.
TBS
International Limited, by signature of this letter, confirms its approval to the
amendments to the Loan Agreement set out herein and confirms that the Guarantee
shall remain in full force and effect.
The
provisions of clause 30 (Law and Jurisdiction) of the Loan Agreement shall apply
to this Letter. For the avoidance of doubt all terms of the Loan
Agreement and the Finance Documents shall remain in full force and effect and,
save as provided herein, unchanged.
Yours
faithfully
/s/
Meike Macttig /s/
Xxxxx Xxxxxxxx
duly
authorised for
CREDIT
SUISSE
(as
Lender and Swap Bank)
Accepted
and agreed this 24 day of March 2009 by:
/s/
Xxxxxxxxx X. Xxxxxx /s/
Xxxxxxxxx X. Xxxxxx
duly
authorised
for duly authorised
for
Claremont
Shipping
Corp. Yorkshire
Shipping Corp.
We hereby
confirm and acknowledge that we have read and understood the terms and
conditions of the above letter and agree in all respects to the same and confirm
that the Corporate Guarantee to which we are a party shall remain in full force
and effect and shall continue to stand as security for the obligations of the
Borrowers under the Loan Agreement.
/s/
Xxxxxxxxx X. Xxxxxx
TBS
INTERNATIONAL LIMITED
(as
Guarantor)
