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Rating Action:

Moody's downgrades General Maritime; PDR to Caa1, outlook negative

20 Dec 2010

$300 million unsecured notes downgraded to Caa2

New York, December 20, 2010 -- Moody's Investors Service lowered its ratings of General Maritime Corporation ("GenMar"): Corporate Family ("CFR") to B3 from B1, Probability of Default ("PDR") to Caa1 from B2 and senior unsecured to Caa2 from Caa1. Moody's also downgraded the Speculative Grade Liquidity rating to SGL-4 from SGL-3. The outlook is negative.

Downgrades:

..Issuer: General Maritime Corporation

.... Probability of Default Rating, Downgraded to Caa1 from B2

.... Speculative Grade Liquidity Rating, Downgraded to SGL-4 from SGL-3

.... Corporate Family Rating, Downgraded to B3 from B1

.... Senior Unsecured Regular Bond/Debenture, Downgraded to Caa2 from Caa1

RATINGS RATIONALE

The downgrade of the ratings reflects GenMar's tightening liquidity position as a result of ongoing weak tanker freight rates and upcoming debt maturities. These maturities include the recently arranged $22.8 million bridge loan due October 21, 2011 ("Bridge Loan"), and two $50 million repayments (one each on April 26, 2011 and October 26, 2011) that are due on the company's $750 million revolving credit facility that was almost fully drawn at September 30, 2010. In April, 2011, GenMar also needs to fund the delivery of the seventh and final vessel it had agreed to purchase from Metrostar Management Corporation ("Metrostar") in June 2010. This delivery of a Suezmax newbuilding will need to be funded with equity because of the 60% debt to capital requirement of the $372 million amortizing credit facility that the company arranged in June 2010 in connection with the Metrostar transaction. These commitments aggregate almost $190 million and Moody's believes they will likely need to be funded with proceeds from the sales of vessels, particularly if the company is not able to issue additional equity, as the financial profile cannot accommodate additional debt. The ratings downgrade also considers the effect of weak tanker rates on tanker values and on the company's share price.

The Caa1 PDR reflects the company's weak liquidity, high leverage and overall weak credit metrics profile. Anticipation of ongoing weak freight rates and the large increase in debt that accompanied the Metrostar vessel acquisition are likely to prevent a near-term recovery of credit metrics to levels that would support a higher rating. However, with five unencumbered double-hulled vessels including two Very Large Crude Carriers and three modern product tankers, the company retains the ability to sell ships to raise money to meet some or all of its upcoming debt maturities. Although cash stood at $59 million at September 30, 2010, only the excess above $50 million was effectively available because of the credit facilities' minimum liquidity covenant.

The negative outlook considers that GenMar is required to repay the Bridge Loan by January 15, 2011, although the credit agreement provides the banks the option to extend this date up to the stated maturity date of October 21, 2011. Additionally, compliance with one or more financial covenants is not likely at December 31, 2010, absent a waiver or amendment from the bank group. The ratings could be downgraded further if GenMar is not able to raise sufficient proceeds through sales of vessels or from a secondary equity offering in order to meet its obligations as they come due, starting with the Bridge Loan due on January 15, 2011. The inability to obtain a waiver or amendment of the leverage covenant for the December 31, 2010 measurement period could also result in a downgrade of the ratings. The outlook could be changed to stable if the company repays the bridge loan by January 15 and raises additional proceeds that assures the timely reduction of the $750 million revolving credit by April 26, 2011 and the payment for the Metrostar newbuilding due to be delivered in April 2011.

The principal methodologies used in this rating were Global Shipping Industry published in December 2009, and Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009.

The last rating action on GenMar was the July 15, 2010 downgrade of the PDR to B2 from B1 and of the senior unsecured rating to Caa1 from B3.

General Maritime Corporation, a Marshall Islands Corporation headquartered in New York, N.Y., is the holding company parent of three intermediate holding companies of GenMar's vessel-owning subsidiaries.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, parties not involved in the ratings, public information, confidential and proprietary Moody's Investors Service information, and confidential and proprietary Moody's Analytics information.

Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating.

Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

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New York
Jonathan Root
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Michael J. Mulvaney
MD - Corporate Finance
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's downgrades General Maritime; PDR to Caa1, outlook negative
No Related Data.
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