Eagle Bulk Shipping has been given another week to resolve a dispute over restrictive covenants linked to credit facilities backed by the Royal Bank of Scotland.
The development may not come as a surprise as it follows two extensions of waivers originally due to expire on 30 April.
While the new 20 June deadline suggests the US-quoted bulker owner is working towards a resolution with lenders under a broader attempt to restructure debt analysts note the five-day reprieve is shorter than one secured at the start of the month.
“While we believe the extension itself is technically a positive, we view the implications of a shorter extension as a negative,” wrote Michael Webber of Wells Fargo Securities in an alert tied to the previous 15-day extension.
“Eagle has a $32m scheduled debt repayment in July, which would put it below its currently waived minimum liquidity covenant of $36m, and potentially at a near-zero cash balance, depending on rates and timing.
“While the extension does imply that Eagle and its lenders are still working towards an agreement, we find any feasible resolution materially detrimental to current equity holders. We reiterate our ‘underperform rating’ as we expect the lack of progress toward a restructuring, as well as the weak dry bulk market, to continue to weigh on shares.”
When the previous waiver extension came to light in early June Eagle’s shares slipped 8.89% to $2.74 on the heels of the filing but today’s update appeared to have only a modest impact as its stock slipped 3.82% to $2.77 in early trading.
