Updated April 21, 2014 2:34 p.m. ET
New York shipping tycoon Peter Georgiopoulos's Genco Shipping & Trading filed for Chapter 11 bankruptcy protection Monday, with a prepackaged restructuring plan that was hammered out with creditors and unveiled earlier this month.
The deal will slash the dry bulk shipper's debt load by $1.2 billion, according to documents filed with the U.S. Bankruptcy Court in Manhattan. It has already been approved by a majority of the company's debtholders.
Genco claimed assets worth $2.45 billion and debts of $1.48 billion in its bankruptcy filing and said in a statement Monday that it expects to implement the plan and emerge from bankruptcy quickly, although it didn't give a specific time frame.
The company's restructuring plan, which requires court approval, calls for lenders to swap $1.06 billion in principal they are owed for 81.1% equity in the reorganized company. Two other senior credit facilities—worth $253 million and $100 million, respectively--will be amended to extend the maturity dates to August 2019.
Convertible bondholders would receive 8.4% of Genco's new equity. General unsecured claims wouldn't be reduced, and current equity would receive seven-year warrants for 6% of Genco's new equity struck at a $1.295 billion valuation.
Genco is also planning a $100 million rights offering for its new shares. The offering would be backstopped 80% by the credit facility lenders and 20% by bondholders, meaning those groups have agreed to buy any unpurchased shares. The New York Stock Exchange said Monday trading of Genco would be immediately suspended and the company would be delisted.
"We believe the financial restructuring will provide an expedited path to significantly strengthen Genco's balance sheet and improve the Company's financial flexibility," Chief Financial Officer John Wobensmith said in a statement Monday. "Our operations are strong, and once our restructuring is completed, we believe we will be well-positioned for continued growth and success."
Genco said that it has enough cash on hand and generated from operations that it won't need bankruptcy financing. These loans are often lined up before a Chapter 11 filing so that companies low on cash can continue operations during the case.
Mr. Georgiopoulos, who is married to supermodel Kara Young, has faced headwinds with another company where he is chairman: General Maritime Corp., which emerged from bankruptcy in 2012 after lowering its debt and receiving a $175 million investment from Oaktree Capital Management LP.
Genco, which is also based in Manhattan, transports iron ore, coal, grain, steel products and other dry bulk cargo on its fleet of 53 vessels to more than 1,000 ports in 110 countries.
Other shipping companies, including Excel Maritime, Overseas Shipholding GroupOSGIQ -4.98% and TMT Group, have filed for Chapter 11 bankruptcy in recent years amid an industrywide slump. Excel emerged from bankruptcy earlier this year.