A Greek-Italian joint venture aiming to take over the assets of Giuseppe Bottiglieri Shipping Co (GBSC) is sticking to its offer for the cash-strapped Italian company, despite an initial court ruling in Naples that has blocked it.
“Strongly believing the validity of its proposal, Lighthouse has appealed the [court] decision,” an official with the joint venture, formed by the Zagari and Pappas shipping families through their companies Augustea Holdings and Oceanbulk Maritime, told TradeWinds in a statement.
The Lighthouse statement comes as a deadline for Bottiglieri creditors to decide on a rival restructuring bid, jointly tabled by GSBC and investment firm Bain Capital Credit, expires on Tuesday.
Bottiglieri and Bain have raised their offer after Lighthouse surprisingly submitted their bid in January.
A court in Naples ruled the Lighthouse bid inadmissible earlier this month. Bottiglieri said in a statement this was because it “could not guarantee the recovery of credits nor safeguard the employees (of GSBC)”.
Lighthouse today expressed their surprise at the court ruling, revealing it had been approached by GSBC creditors to submit its bid in the first place and that a vast majority of the banks had backed the offer.
“This was with the support of lenders representing 87% of the total outstanding debt to GBSC,” the joint venture’s official said.
GBSC is understood to be on the hook for nearly $400m to its creditors, mainly Italian banks.
Even after raising its offer, Bottiglieri’s bid promises lenders a recovery rate of just 30% on the amounts owed, Lighthouse said in the statement.
That is mainly because any debt repayments additional to an immediate cash injection of $120m would be made only after GSBC generates an annual return of 15% of that amount from operating the ships, the joint venture claimed.
The bid of Lighthouse, by contrast, would ensure creditors a recovery of at least 60%, the statement said. The Zagari-Pappas bid foresees an injection of working capital in GBSC and the gradual sale of the company’s fleet of 11 post-panamax bulkers, a capesize and four product tankers over a ten-year period.
During that time, the vessels would be managed by entities affiliated to Lighthouse, which “have a historical track record of being best in class operators achieving very low operating costs for their vessels under management”.
Commenting on the Lighthouse plan earlier this month, Bottiglieri said it involved “no upfront cash recovery, but only a 10-year postponement of debt maturities and empty future promises”.
Lighthouse, by contrast, said today its proposal represented “an industrial approach”.
The Naple court’s decision to turn it down “could be a major setback mainly for the lenders of GBSC, who will otherwise be forced to accept a proposal that will probably limit their recovery to half of where the current fair market value of the vessel assets presently stands”.
