Banks Take a Somewhat Harder Line

Up to now negotiations between the banks and the borrowers have been reasonably friendly with few demands made by the former other than with respect to pricing and some adjustments to amortization as the quid pro quo for the waivers required. Star Bulk Carriers was not as fortunate.

Last week, the company reached agreements in principle with its lenders to obtain waivers for certain covenants, including minimum asset coverage covenants, contained in its loan agreements. The related terms are described below:

With respect to the $120 million facility, the lender will waive the loan-to-value ratio covenant through January 31, 2010. The company will provide a first preferred mortgage on the currently debt-free vessel Star Alpha and pledge an account containing $6 million as further security for this facility

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