GNK Genco Shipping and Trading Limited

Item 3.02               Unregistered Sales of Equity Securities

On October 6, 2016, as previously disclosed in the Company’s Current Report on Form 8-K filed on such date, the Company entered into stock purchase agreements effective as of October 4, 2016 (the “Initial Purchase Agreements”) with funds or related entities managed by Centerbridge Partners, L.P. or its affiliates (“Centerbridge”), funds or related entities managed by Strategic Value Partners, LLC or its affiliates (“SVP”), and funds managed by affiliates of Apollo Global Management, LLC (“Apollo” and, collectively with Centerbridge and SVP, the “Initial Investors”), representing the Company’s three largest shareholders, for the purchase of the Company’s Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”) for an aggregate of up to $125 million in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). On October 27, 2016, as previously disclosed in the Company’s Current Report on Form 8-K filed on such date, the Company entered into a stock purchase agreement (the “Additional Purchase Agreement” and, together with the Initial Purchase Agreements, the “Purchase Agreements”) with certain Additional Purchase Investors (the “Additional Purchase Investors” and, together with the Initial Investors, the “Investors”) for the purchase of Series A Preferred Stock for an aggregate of $38.6 million in a private placement exempt from the registration requirements of the Securities Act. The Additional Purchase Investors include certain of the Initial Investors and John C. Wobensmith, the Company’s President.

On November 15, 2016, pursuant to the Purchase Agreements, the Company completed the private placement of 27,061,856 shares of Series A Preferred Stock - 25,773,196 shares at a price per share of $4.85, and an additional 1,288,660 shares of Series A Preferred Stock issued on a pro rata basis to the Initial Investors pursuant to the Initial Purchase Agreement as a commitment fee in respect of the Initial Investors’ commitment to purchase additional shares if they were not sold pursuant to the Additional Purchase Agreement (the “Commitment Fee”). The aggregate purchase price for the Series A Preferred Stock sold pursuant to the Purchase Agreements was $125 million.

The Series A Preferred Stock sold pursuant to the Purchase Agreements will be automatically and mandatorily convertible into the Company’s common stock, par value $0.01 per share, upon approval by the Company’s shareholders such conversion. The Series A Preferred Stock may not be converted without such shareholder approval. The purchase price and the other terms and conditions of the transaction were established in arm’s length negotiations between a special committee of the board of directors of the Company (the “Special Committee”) and the Investors. The Special Committee unanimously approved the transaction.

Pursuant to the terms of the Purchase Agreements, the Company has entered into Registration Rights Agreements with the Investors (the “Registration Rights Agreements”). The Registration Rights Agreements require, among other things, that we file one or more “resale” registration statements, registering under the Securities Act the offer and sale of all of the common stock issued or to be issued to the Investors upon conversion of the Series A Preferred Stock.

 

The offering, issuance, and distribution of the Series A Preferred Stock, and the common stock of the Company issuable upon the conversion of the Series A Preferred Stock, were and are exempt from the registration requirements of section 5 of the Securities Act, and such shares of Series A Preferred Stock and common stock (if issued) will be issued to the Investors, each of whom has represented that it is an accredited investor, as defined in Regulation D under the Securities Act, pursuant to Section 4(a)(2) of the Securities Act.