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o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
OR | ||
x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, 2010 | ||
OR | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to | ||
OR | ||
o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class | Name of each exchange on which registered | |
Common shares, $0.01 par value | NASDAQ Global Market |
Securities registered or to be registered pursuant to Section 12(g) of the Act: | None |
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: | None |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer x |
U.S. GAAP þ | International Financial Reporting Standards as issued | Othero |
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Item 2. | Offer Statistics and Expected Timetable |
Item 3. | Key Information |
A. | Selected Financial Data |
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Successor | Predecessor | ||||||||||||||||||||||||
October 14 | January 1 | ||||||||||||||||||||||||
Year Ended | to | to | Year Ended | Year Ended | Year Ended | ||||||||||||||||||||
December 31, | December 31, | October 13, | December 31, | December 31, | December 31, | ||||||||||||||||||||
2010 | 2009 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||
Statement of Operations Data | |||||||||||||||||||||||||
Operating revenues | 102,733 | 14,096 | 33,564 | 56,519 | 55,774 | 45,973 | |||||||||||||||||||
Vessel operating expenses | (39,219 | ) | (6,530 | ) | (22,681 | ) | (19,798 | ) | (17,489 | ) | (12,780 | ) | |||||||||||||
Management fees | (1,007 | ) | (315 | ) | (900 | ) | (1,404 | ) | (1,243 | ) | (1,110 | ) | |||||||||||||
General & administrative expenses | (15,592 | ) | (12,025 | ) | (8,366 | ) | (7,816 | ) | (5,278 | ) | (4,029 | ) | |||||||||||||
Depreciation and amortization expenses | (39,558 | ) | (4,844 | ) | (11,813 | ) | (15,040 | ) | (14,029 | ) | (9,318 | ) | |||||||||||||
Impairment losses | (39,515 | ) | — | (68,042 | ) | — | — | — | |||||||||||||||||
Operating (loss)/income from continuing operations | (54,856 | ) | (14,659 | ) | (87,581 | ) | 5,449 | 14,471 | 16,157 | ||||||||||||||||
Interest and finance expense, net | (44,899 | ) | (23,996 | ) | (10,928 | ) | (15,741 | ) | (16,966 | ) | (13,463 | ) | |||||||||||||
Other income/(expenses), net | (5 | ) | — | 40 | 2 | (11 | ) | (72 | ) | ||||||||||||||||
(Loss)/income from continuing operations | (97,618 | ) | (35,865 | ) | (95,448 | ) | (16,573 | ) | (5,936 | ) | 1,644 | ||||||||||||||
Net (loss)/income | (94,849 | ) | (37,872 | ) | (125,764 | ) | (39,828 | ) | (8,733 | ) | 2,199 | ||||||||||||||
(Loss)/earnings per share (basic and diluted) continuing operations | (14.03 | ) | (6.42 | ) | (39.84 | ) | (6.94 | ) | (2.50 | ) | 0.72 | ||||||||||||||
(Loss)/earnings per share (basic and diluted) | (13.63 | ) | (6.78 | ) | (52.49 | ) | (16.69 | ) | (3.68 | ) | 0.96 | ||||||||||||||
Cash dividends declared per share | — | — | — | 1.20 | 7.56 | 10.68 | |||||||||||||||||||
Weighted average number of shares (basic and diluted) | 6,958,903 | 5,588,937 | 2,395,858 | 2,386,182 | 2,373,238 | 2,368,073 | |||||||||||||||||||
Balance Sheet Data (at period end) | |||||||||||||||||||||||||
Cash and cash equivalents | 67,531 | 106,255 | — | 4,009 | 12,444 | 11,612 | |||||||||||||||||||
Restricted cash (current) | 12,606 | 403 | 1,898 | 8,510 | 39 | 3,242 | |||||||||||||||||||
Total current assets | 102,569 | 121,421 | 10,018 | 19,741 | 20,199 | 22,430 | |||||||||||||||||||
Restricted cash (non-current) | 30,700 | 9,668 | — | — | 1,548 | — | |||||||||||||||||||
Total assets | 761,733 | 485,369 | 196,849 | 317,777 | 425,491 | 458,040 | |||||||||||||||||||
Current portion of long-term debt | 26,773 | 14,240 | 221,430 | 223,710 | 284,800 | — | |||||||||||||||||||
Total current liabilities | 94,739 | 54,260 | 256,303 | 251,489 | 311,997 | 29,622 | |||||||||||||||||||
Long-term debt | 554,238 | 264,460 | — | — | — | 284,800 | |||||||||||||||||||
Total liabilities | 686,099 | 326,857 | 256,303 | 252,261 | 318,372 | 325,452 | |||||||||||||||||||
Total shareholders’ equity/(deficit) | 75,634 | 158,512 | (59,454 | ) | 65,516 | 107,119 | 132,588 | ||||||||||||||||||
Other Financial Data (for period ending) | |||||||||||||||||||||||||
Net cash (used in)/provided by operating activities | (9,685 | ) | (5,869 | ) | (10,557 | ) | 2,901 | 17,581 | 24,215 | ||||||||||||||||
Net cash provided by/(used in) investing activities | (22,189 | ) | — | 2,216 | 61,083 | (2,008 | ) | (101,815 | ) | ||||||||||||||||
Net cash provided by/(used in) financing activities | (6,850 | ) | 112,124 | 4,332 | (72,419 | ) | (14,741 | ) | 69,964 | ||||||||||||||||
Net increase (decrease) in cash and cash equivalents | (38,724 | ) | 106,255 | (4,009 | ) | (8,435 | ) | 832 | (7,636 | ) | |||||||||||||||
Cash dividends paid | — | — | — | (2,862 | ) | (17,970 | ) | (25,292 | ) | ||||||||||||||||
Fleet Data (at period end) | |||||||||||||||||||||||||
Number of product tankers owned | 6 | 9 | 9 | 9 | 10 | 10 | |||||||||||||||||||
Number of container vessels owned(1) | — | 2 | 2 | 3 | 5 | 5 | |||||||||||||||||||
Number of dry bulk vessels owned | 12 | 3 | — | — | — | — |
(1) | Considered discontinued operations for all periods presented. |
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B. | Capitalization and Indebtedness |
C. | Reasons for the Offer and Use of Proceeds |
D. | Risk Factors |
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• | demand for cargoes (e.g., oil and oil products for tankers, coal, raw materials, agricultural products and steel products for bulkers); | |
• | supply of cargoes; | |
• | oil prices; | |
• | demand of energy in developing countries; | |
• | continuing growth of industrialization in the emerging countries; | |
• | regional availability of refining capacity; | |
• | the globalization of manufacturing; | |
• | global and regional economic and political conditions; | |
• | armed conflicts, acts of piracy and terrorism; | |
• | developments in international trade; | |
• | changes in seaborne and other transportation patterns, including changes in the distances over which cargoes are transported; | |
• | environmental and other regulatory developments; | |
• | currency exchange rates; and | |
• | weather. |
• | the number of newbuilding deliveries; | |
• | the scrapping activity and age of vessels in the existing world fleet; | |
• | the price of steel; | |
• | changes in environmental and other regulations that may limit the useful lives of vessels; | |
• | the conversion of vessels from one type to another; | |
• | the loss of vessels; | |
• | the number of vessels (tankers mainly) that are used for storage; | |
• | the number of vessels that are in or out of service; and | |
• | port or canal congestion and increased waiting days at port. |
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• | general economic and market conditions affecting the shipping industry; | |
• | increase/decrease in demand for vessels’ acquisitions; | |
• | the types and sizes of available vessels; | |
• | increase/decrease in the supply of tonnage capacity; | |
• | expected newbuilding deliveries and future market expectations; | |
• | the cost of newbuildings; | |
• | availability of acquisition finance; | |
• | prevailing charter rates; and | |
• | technological advances in vessel design or equipment, changes in applicable environmental or other regulations or standards, or otherwise. |
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• | quality or engineering problems; | |
• | changes in governmental regulations or maritime self-regulatory organization standards; | |
• | work stoppages or other labor disturbances at the shipyard; | |
• | bankruptcy or other financial crisis of the shipbuilder; | |
• | a backlog of orders at the shipyard; | |
• | political or economic disturbances; | |
• | weather interference or catastrophic event, such as a major earthquake or fire; | |
• | requests for changes to the original vessel specifications; | |
• | shortages of or delays in the receipt of necessary construction materials, such as steel; | |
• | inability to finance the construction or conversion of the vessels; or | |
• | inability to obtain requisite permits or approvals. |
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• | on-board installation of automatic information systems, or AIS, to enhancevessel-to-vessel andvessel-to-shore communications; | |
• | on-board installation of ship security alert systems; | |
• | the development of vessel security plans; and | |
• | compliance with flag state security certification requirements. |
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• | incur or guarantee additional indebtedness; | |
• | create liens on our assets; | |
• | make investments; | |
• | engage in recapitalizations and acquisitions; | |
• | redeem capital stock; | |
• | make capital expenditures; | |
• | change the management of our vessels or terminate the management agreements we have relating to our vessels; | |
• | enter into long-term charter arrangements without the consent of the lender; and | |
• | sell any of our vessels. |
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• | specific ratios of shareholders’ equity as a percentage of our total assets, adjusting the book value of our fleet to its market value; | |
• | working capital of not less than zero dollars; | |
• | maintenance of minimum liquidity requirements at five per cent of the outstanding loans; | |
• | maintenance of ratio of EBITDA to interest payable to specific levels; | |
• | maintenance of specific value to loan ratios; | |
• | cash sweep on the earnings of the vessels; | |
• | minimum interest coverage ratios; and | |
• | minimum market adjusted equity ratios. |
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• | our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, vessel or other acquisitions or general corporate purposes may be impaired in the future; | |
• | if new debt is added to our debt levels, the related risks that we now face would increase and we may not be able to meet all of our debt obligations; | |
• | a substantial portion of our cash flow from operations must be dedicated to the payment of principal and interest on our indebtedness, thereby reducing the funds available to us for other purposes, and there can be no assurance that our operations will generate sufficient cash flow to service this indebtedness; | |
• | we will be exposed to the risk of increased interest rates because our borrowings under facility agreements will be at variable rates of interest; | |
• | it may be more difficult for us to satisfy our obligations to our lenders, resulting in possible defaults on and acceleration of such indebtedness and the cross-acceleration or cross-default of our other indebtedness; | |
• | we may be more vulnerable to general adverse economic and industry conditions; | |
• | we may be at a competitive disadvantage compared to our competitors with less debt or comparable debt at more favorable interest rates; | |
• | our ability to refinance indebtedness may be limited or the associated costs may increase; and | |
• | our flexibility to adjust to changing market conditions and ability to withstand competitive pressures could be limited, or we may be prevented from carrying out capital spending that is necessary or important to our growth strategy and efforts to improve operating margins or our business. |
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• | operational deficiencies; | |
• | the removal of a vessel from the water for repairs, maintenance or inspection, which is referred to as drydocking; | |
• | equipment breakdowns; | |
• | delays due to accidents or deviations from course; | |
• | occurrence of hostilities in the vessel’s flag state; | |
• | crewing strikes, labor boycotts, certain vessel detentions or similar problems; or | |
• | our failure to maintain the vessel in compliance with its specifications, contractual standards and applicable country of registry and international regulations or to provide the required crew. |
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• | identify vessels for acquisition; | |
• | consummate acquisitions; | |
• | integrate acquired vessels successfully with our existing operations; | |
• | identify businesses engaged in managing, operating or owning vessels for acquisitions or joint ventures; | |
• | hire, train and retain qualified personnel and crew to manage and operate our growing business and fleet; | |
• | identify additional new markets; | |
• | improve our operating, financial and accounting systems and controls; and | |
• | obtain required financing for our existing and new operations. |
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• | the cost of our labor and materials; | |
• | the cost of suitable replacement vessels; | |
• | customer/market requirements; | |
• | increases in the size of our fleet; and | |
• | governmental regulations and maritime self-regulatory organization standards relating to safety, security or the environment. |
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• | authorizing our board of directors to issue “blank check” preference shares without shareholder approval; | |
• | establishing a classified board of directors with staggered, three-year terms; | |
• | prohibiting us from engaging in a “business combination” with an “interested shareholder” for a period of three years after the date of the transaction in which the person becomes an interested shareholder unless certain conditions are met; | |
• | not permitting cumulative voting in the election of directors; | |
• | authorizing the removal of directors only for cause and only upon the affirmative vote of the holders of at least 80% of our outstanding common shares; |
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• | limiting the persons who may call special meetings of shareholders to our board of directors, subject to certain rights guaranteed to shareholders under the BCA; | |
• | requiring Grandunion, or Nicholas Fistes and Michail Zolotas, directly or indirectly, to maintain legal and beneficial ownership of not less than 10% of the issued and outstanding share capital of the Company (whereas in two loan agreements the requirement is for Michail Zolotas and Nicholas Fistes to maintain, directly or indirectly, legal and beneficial ownership of not less than 33.3% of the issued and outstanding share capital of the Company); | |
• | requiring Nicholas Fistes and Michail Zolotas to be at any given time the beneficial owners of at least 50.1% of the voting share capital of Grandunion; | |
• | requiring Nicholas Fistes and Michail Zolotas to remain at any given time the Chairman, and the President and Chief Executive Officer of the Company, respectively; and | |
• | establishing advance notice requirements for nominations for election to our board of directors and for proposing matters that can be acted on by shareholders at our shareholder meetings. |
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Item 4. | Information on the Company |
A. | History and Development of the Company |
• | Brought in-house commercial, operational and technical management with highly qualified and experienced personnel; | |
• | Exited the container sector; | |
• | Completed the divestiture of all of the underperforming and unprofitable tanker vessels that existed prior to the recapitalization; | |
• | Implemented a newbuilding program; | |
• | Doubled our fleet size from 11 to 22 vessels; | |
• | Diversified both our vessel and charter mix to limit our exposure to market cycles, while positioning ourselves to take advantage of market upswings; | |
• | Focused on creating an advantageous blend of product tanker and dry bulk vessels; and | |
• | Created a scalable platform to support future growth. |
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• | ISO 9001 from American Bureau of Shipping Quality Evaluations for a quality management system, by consistently providing a service that meets customer and applicable statutory and regulatory requirements, and by enhancing customer satisfaction through, among other things, processes for continual improvement; | |
• | ISO 14001 from American Bureau of Shipping for environmental management, including policies and objectives targeting legal and other requirements; and | |
• | Certificate of Company Compliance by the American Bureau of Shipping for safety, quality and environmental requirements of the ABS HSQE guide. |
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B. | Business Overview |
Net Daily | ||||||||||||||
Size | Vessel | Charter | ||||||||||||
Vessel Name | (Dwt) | Type | Year Built | Charter Expiration | Hire Rate | |||||||||
Product Tanker Vessels | ||||||||||||||
Newlead Compass | 72,934 | Panamax | 2006 | Q3 2016(1) | $11,700 plus 50% profit sharing up to $26,000 and 30% above such amount | |||||||||
Newlead Compassion | 72,782 | Panamax | 2006 | min: April 2016 max: June 2016(1) | $11,700 plus 50% profit sharing up to $26,000 and 30% above such amount | |||||||||
Newlead Avra | 73,495 | Panamax | 2004 | min: February 2012 max: March 2012 | $13,825 plus 50% profit sharing above $14,000 |
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Net Daily | ||||||||||||||
Size | Vessel | Charter | ||||||||||||
Vessel Name | (Dwt) | Type | Year Built | Charter Expiration | Hire Rate | |||||||||
Newlead Fortune | 73,495 | Panamax | 2004 | min: November 2011 max: December 2011 | $13,825 plus 50% profit sharing above $14,000 | |||||||||
Hiotissa | 37,329 | Handymax | 2004 | —(2) | Scorpio Handymax Tanker Pool Earnings | |||||||||
Hiona | 37,337 | Handymax | 2003 | —(2) | Scorpio Handymax Tanker Pool Earnings | |||||||||
Dry bulk Vessels | ||||||||||||||
Newlead Endurance | 92,000 | Post-Panamax | 2011 | min: March 2018 max: May 2018 | $14,438 plus 50% profit sharing(3) | |||||||||
Newlead Tomi | 79,224 | Kamsarmax | 2010 | min: September 2015 max: March 2016 | $28,710(4) | |||||||||
Newlead Prosperity | 34,682 | Handysize | 2003 | August 2011 | $12,188(5) | |||||||||
Newlead Victoria | 75,966 | Panamax | 2002 | min: July 2012 max: October 2012 | Floating rate time charter(6) | |||||||||
Brazil(7) | 151,738 | Capesize | 1995 | min: December 2013 max: February 2014 | $28,985(8) | |||||||||
Australia(7) | 172,972 | Capesize | 1993 | min: November 2011 max: January 2012 | $20,391 | |||||||||
China(7) | 135,364 | Capesize | 1992 | min: November 2015 max: October 2016 | $12,753 | |||||||||
Grand Ocean | 149,498 | Capesize | 1990 | min: January 2012 max: May 2012(9) | $19,680 | |||||||||
Newlead Venetico | 134,982 | Capesize | 1990 | min: June 2012 max: October 2012(10) | $17,760 | |||||||||
Grand Rodosi(6) | 68,788 | Panamax | 1990 | August 2011 | $22,325 | |||||||||
Newlead Markela | 71,733 | Panamax | 1990 | min: February 2013 max: June 2013 | $21,972 | |||||||||
Newlead Esmeralda | 69,458 | Panamax | 1990 | min: August 2011 max: November 2011 | $17,953 | |||||||||
Newlead Spartounta | 135,070 | Capesize | 1989 | Spot | — |
Size | Vessel | Expected | Charter Rate | |||||||||
Newbuildings | (Dwt) | Type | Delivery Date | Charter Term | (Daily, Net) | |||||||
Newlead TBN | 35,000 | Handysize | 2nd Half 2011 | Twelve years +/- 4 months | $12,000 plus 40% profit sharing(11) | |||||||
Newlead TBN | 80,000 | Kamsarmax | Q4 2011 | Seven year time charter | $27,300 | |||||||
Newlead TBN | 35,000 | Handysize | Q3 2012 | Twelve years +/- 4 months | $12,000 plus 40% profit sharing(11) |
(1) | The time charter of the Newlead Compassion commenced in May 2011, while the Newlead Compass is expected to commence during Q3 2011. The net daily charter-out rate is $11,700 for the first year, $13,650 for the second, third and fourth year and $15,600 for the fifth year plus 50.0% profit-sharing on the actual earnings of the charterer up to $26,000 per day and 30% above such amount. | |
(2) | The Hiotissa entered the Handymax Tanker Pool of Scorpio Management in April 2011, while the Hiona is expected to enter the same pool in Q3 2011. | |
(3) | At the end of the seven year time charter, the charterer also has an option to extend the charter period for one year and one additional year. Charter-out rate for first optional year is $15,400 (net) per day plus 50/50 profit sharing. Charter-out rate for second optional year is $16,844 per day (net) plus 50/50 profit sharing. | |
(4) | Five year time charter at net charter rate of $28,710 per day, plus charterer’s option for one year plus one additional year. The vessel owners have a put option for a second two-year charter at a net charter rate between $19,800 and $28,710 per day. The second charter is subject to the first charterer not exercising the optional years. The first and second charters secure a total charter duration of seven years for the vessel. | |
(5) | The vessel was chartered-in during the fourth quarter 2010 initially until March 15, 2011, with an obligation to conclude the purchase by the end of the charter period at the latest. By an addendum signed on March 11, 2011, the parties agreed initially to extend the charter period until April 8, 2011, while by a second addendum signed on |
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April 7, 2011, the charter period was extended until May 6, 2011. On May 10, 2011, we completed the acquisition of the vessel. Subject to the charterer’s option to redeliver the vessel in the Mediterranean Sea,which, if exercised, would result in a net daily charter-out rate of $14,063. | ||
(6) | The vessel owner shall have the right to an earlier redelivery of the vessel, at any time within the charter duration, subject to vessel owner’s tendering to charterers three months’ advance notice. | |
(7) | This vessel was sold and leased back to the Company on a bareboat charter for a period of eight years. | |
(8) | Net charter rate of $28,985 per day for the first three years and $26,180 per day thereafter, plus 50/50 profit sharing of the daily earnings of the charterer above $26,600. | |
(9) | The charterer also has an option to extend the charter period for one additional year. | |
(10) | The charterer also has an option to extend the charter period for six additional months. | |
(11) | Base rate is $12,000 per day. Above a rate of $14,000 per day, profit sharing is 40% based on open book accounting on actual earnings. Charterers have a 50% purchase option. |
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• | 25-year-old tankers must be of double-hull construction or of a mid-deck design with double-sided construction, unless: |
• | 30-year-old tankers must be of double-hull construction or mid-deck design with double-sided construction; and | |
• | all tankers will be subject to enhanced inspections. |
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• | is the subject of a contract for a major conversion or original construction on or after July 6, 1993; | |
• | commences a major conversion or has its keel laid on or after January 6, 1994; or | |
• | completes a major conversion or is a newbuilding delivered on or after July 6, 1996. |
• | the oil tanker conversion was completed before July 6, 1996; | |
• | the conversion included the replacement of the entire cargo section and fore-body and the tanker complies with all the relevant provisions of the MARPOL Convention applicable at the date of completion of the major conversion; and | |
• | the original delivery date of the oil tanker will apply when considering the 15 years of age threshold relating to the first technical specifications survey to be completed in accordance with the MARPOL Convention. |
• | crude oils having a density at 15°C higher than 900 kg/m3; | |
• | fuel oils having either a density at 15°C higher than 900 kg/m3 or a kinematic viscosity at 50°C higher than 180 mm2/s; or | |
• | bitumen, tar and their emulsions. |
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• | natural resource damages and related assessment costs; | |
• | real and personal property damages; | |
• | net loss of taxes, royalties, rents, profits or earnings capacity; | |
• | net cost of public services necessitated by a spill response, such as protection from fire, safety or health hazards; | |
• | loss of profits or impairment of earning capacity due to injury, destruction or loss of real property, personal property and natural resources; and | |
• | loss of subsistence use of natural resources. |
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• | address a “worst case” scenario and identify and ensure, through contract or other approved means, the availability of necessary private response resources to respond to a “worst case discharge”; | |
• | describe crew training and drills; and | |
• | identify a qualified individual with full authority to implement removal actions. |
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• | on-board installation of automatic identification systems to provide a means for the automatic transmission of safety-related information from among similarly equipped ships and shore stations, including information on a ship’s identity, position, course, speed and navigational status; | |
• | on-board installation of ship security alert systems, which do not sound on the vessel and instead only alert the authorities on shore; | |
• | the development of vessel security plans; | |
• | a ship identification number to be permanently marked on a vessel’s hull; | |
• | a continuous synopsis record kept onboard showing a vessel’s history, including the name of the ship and of the state whose flag the ship is entitled to fly, the date on which the ship was registered with that state, the ship’s identification number, the port at which the ship is registered and the name of the registered owner(s) and their registered address; and | |
• | compliance with flag state security certification requirements. |
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Trade — Million Tons | CAGR(1) % | % Total Trade | ||||||||||||||||||
2000 | 2010 | 2000-10 | 2000 | 2010 | ||||||||||||||||
Liquid Cargo | ||||||||||||||||||||
Crude Oil | 2,079 | 2,276 | 0.91 | 32.1 | 25.9 | |||||||||||||||
Refined Petroleum Products | 602 | 875 | 3.81 | 9.3 | 10.0 | |||||||||||||||
Liquid Chemicals | 128 | 214 | 5.28 | 2.0 | 2.4 | |||||||||||||||
Liquefied Gases | 168 | 261 | 4.54 | 2.6 | 3.0 | |||||||||||||||
Total Liquid Cargo | 2,977 | 3,627 | 1.99 | 46.0 | 41.3 | |||||||||||||||
Total Dry Cargo | 3,491 | 5,155 | 3.98 | 54.0 | 58.7 | |||||||||||||||
Dry Bulk | ||||||||||||||||||||
Coal | 539 | 915 | 5.43 | 8.3 | 10.4 | |||||||||||||||
Iron Ore | 489 | 1,004 | 7.46 | 7.6 | 11.4 | |||||||||||||||
Grain | 221 | 242 | 0.9 | 3.4 | 2.8 | |||||||||||||||
Total Major Bulks | 1,249 | 2,161 | 5.63 | 19.3 | 24.6 | |||||||||||||||
Minor Bulks | 901 | 1.018 | 1.23 | 13.9 | 11.6 | |||||||||||||||
Other | ||||||||||||||||||||
Container Cargo | 620 | 1,366 | 8.21 | 9.6 | 15.6 | |||||||||||||||
General Cargo | 720 | 610 | (16.4 | ) | 11.1 | 6.9 | ||||||||||||||
Total Seaborne Trade | 6,468 | 8,782 | 3.11 | 100.0 | 100.0 |
(1) | Compound annual growth rate. |
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(Percent change from previous period)
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(Million Barrels Per Day)
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(Million Barrels Per Day)
2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | ||||||||||||||||||||||||||||||||||
North America | 24.0 | 24.0 | 24.1 | 24.5 | 25.3 | 25.5 | 25.4 | 25.5 | 24.2 | 23.3 | 23.8 | |||||||||||||||||||||||||||||||||
Europe | 15.1 | 15.3 | 15.3 | 15.4 | 15.6 | 15.5 | 15.5 | 15.3 | 15.4 | 14.5 | 14.3 | |||||||||||||||||||||||||||||||||
Pacific | 8.6 | 8.7 | 8.6 | 8.7 | 8.5 | 8.6 | 8.5 | 8.4 | 8.1 | 7.7 | 7.7 | |||||||||||||||||||||||||||||||||
Total OECD(1) | 47.7 | 48.0 | 48.0 | 48.6 | 49.4 | 49.6 | 49.4 | 49.2 | 47.7 | 45.5 | 45.7 | |||||||||||||||||||||||||||||||||
China | 4.8 | 4.7 | 5.0 | 5.6 | 6.4 | 6.6 | 7.0 | 7.6 | 7.9 | 8.4 | 9.2 | |||||||||||||||||||||||||||||||||
Middle East | 4.7 | 5.2 | 5.4 | 5.4 | 5.8 | 6.1 | 6.5 | 6.5 | 7.1 | 7.0 | 7.3 | |||||||||||||||||||||||||||||||||
Asia (excluding China) | 7.3 | 7.6 | 7.9 | 8.1 | 8.6 | 8.8 | 8.9 | 9.5 | 9.7 | 10.0 | 10.3 | |||||||||||||||||||||||||||||||||
Africa | 2.4 | 2.6 | 2.7 | 2.7 | 2.8 | 2.9 | 3.0 | 3.1 | 3.2 | 3.2 | 3.2 | |||||||||||||||||||||||||||||||||
Latin America | 4.9 | 4.9 | 4.8 | 4.7 | 4.9 | 5.0 | 5.2 | 5.7 | 5.9 | 6.0 | 6.3 | |||||||||||||||||||||||||||||||||
FSU(2) | 3.6 | 3.7 | 3.5 | 3.6 | 3.7 | 3.8 | 3.9 | 4.2 | 4.2 | 4.0 | 4.2 | |||||||||||||||||||||||||||||||||
Europe | 0.7 | 0.8 | 0.7 | 0.7 | 0.7 | 0.7 | 0.7 | 0.8 | 0.7 | 0.7 | 0.7 | |||||||||||||||||||||||||||||||||
Total Non-OECD | 28.4 | 29.5 | 30.0 | 30.8 | 32.9 | 33.9 | 35.2 | 37.4 | 38.7 | 39.3 | 41.2 | |||||||||||||||||||||||||||||||||
World Total | 76.1 | 77.5 | 78.0 | 79.4 | 82.3 | 83.5 | 84.6 | 86.6 | 86.4 | 84.8 | 86.9 |
(1) | Organisation for Economic Co-operation & Development; (2) Former Soviet Union |
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(CAGR — Percent)
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(Tons per Capita)
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(Million Barrels Per Day)
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(Million Barrels Per Day)
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(CAGR — Percent)
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(CAGR — Percent)
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(Million Tons)
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(Million Tons/Billion Ton Miles)
2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | ||||||||||||||||||||||||||||||||||
Seaborne Trade — Million Tons | ||||||||||||||||||||||||||||||||||||||||||||
Refined Products | 602 | 608 | 618 | 623 | 686 | 745 | 779 | 823 | 854 | 847 | 875 | |||||||||||||||||||||||||||||||||
Crude Oil | 2,079 | 2,017 | 1,997 | 2,111 | 2,241 | 2,253 | 2,289 | 2,262 | 2,232 | 2,210 | 2,276 | |||||||||||||||||||||||||||||||||
Total Seaborne Trade | 2,681 | 2,625 | 2,615 | 2,734 | 2,927 | 2,998 | 3,068 | 3,085 | 3,086 | 3,057 | 3,151 | |||||||||||||||||||||||||||||||||
Demand — Billion Ton Miles | ||||||||||||||||||||||||||||||||||||||||||||
Refined Products | 1,583 | 1,733 | 1,572 | 1,853 | 2,226 | 2,886 | 2,332 | 2,506 | 2,686 | 2,788 | 2,905 | |||||||||||||||||||||||||||||||||
Crude Oil | 7,220 | 7,528 | 7,140 | 7,814 | 8,504 | 9,299 | 8,715 | 8,751 | 8,911 | 8,681 | 9,104 | |||||||||||||||||||||||||||||||||
Total Ton Mile Demand | 8,803 | 9,261 | 8,712 | 9,667 | 10,730 | 12,185 | 11,047 | 11,257 | 11,597 | 11,469 | 12,009 |
(Nautical Miles)
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Category | Size Range — Dwt | |||
Handy | 10-49,999 | |||
Panamax | 50-79,999 | |||
Aframax | 80-119,999 | |||
Suezmax | 120-199,999 | |||
VLCC | 200,000 + |
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• | LR2(long range 2 tankers, with a product cargo carrying capacity in excess of 80,000 dwt. LR2 tankers typically operate on long-haul voyages, although port constraints limit their trading routes. LR2s generally trade on long-haul routes from the Middle East to Asia, Europe and the Gulf of Mexico or the Caribbean. | |
• | LR1(long range 1 tankers), with an oil cargo carrying capacity of approximately 50,000 to 79,999 dwt. LR1 tankers are engaged in a range of product trades, generally from Europe to the United States, the Gulf of Mexico, or back. They also trade within the Mediterranean, or within Asia as well as between the Middle East and Asia. | |
• | MR2(medium range 2 tankers), with an oil cargo carrying capacity of approximately 30,000 to 49,999 dwt. MR2 tankers are employed in shorter regional trades, mainly in North West Europe, the Caribbean, the Mediterranean and Asia. A typical cargo size would be between45-50,000 tons. | |
• | Handysize/MR1(medium range 1 tankers), with an oil-carrying capacity of 10,000 to 29,999 dwt. MR1 tankers trade on a variety of regional trade routes carrying refined petroleum products on trade routes not suitable for larger vessels. |
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Total | ||||||||||||||||||
Deadweight | Number of | % of Fleet | Capacity | % of Fleet | ||||||||||||||
Size Category | Tons | Vessels | (Number) | (Million Dwt) | (Dwt) | |||||||||||||
VLCC | >200,000 | 548 | 18.0 | 166.1 | 43.6 | |||||||||||||
Suezmax | 120,000-199,000 | 418 | 13.7 | 64.2 | 16.9 | |||||||||||||
Aframax | 80,000-119,000 | 874 | 28.7 | 92.6 | 24.3 | |||||||||||||
Panamax | 50,000-79,999 | 443 | 14.6 | 30.8 | 8.1 | |||||||||||||
Handymax/size | 10,000-49,999 | 758 | 24.9 | 27.3 | 7.2 | |||||||||||||
Total | 3,041 | 100.0 | % | 381.0 | 100.0 | % |
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(Million Dwt)
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Total | % of | |||||||||||||||||
Deadweight | Number of | % of | Capacity | Orderbook | ||||||||||||||
Size Category | Tons | Vessels | Orderbook | (Million Dwt) | (Dwt) | |||||||||||||
LR2 | >80,000 | 40 | 18.9 | % | 4.5 | 33.4 | % | |||||||||||
LR1 | 50,000-79,999 | 90 | 42.5 | % | 5.8 | 43.4 | % | |||||||||||
MR2 | 25,000-49,999 | 66 | 31.1 | % | 2.9 | 21.5 | % | |||||||||||
MR1 | 10,000-24,999 | 16 | 7.5 | % | 0.2 | 1.7 | % | |||||||||||
Total | 212 | 100.0 | % | 13.4 | 100.0 | % |
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Total | ||||||||
End Period | No. | Size (‘000 Dwt) | ||||||
2000 | 878 | 30,712 | ||||||
2001 | 866 | 30,587 | ||||||
2002 | 829 | 29,694 | ||||||
2003 | 785 | 28,803 | ||||||
2004 | 833 | 31,952 | ||||||
2005 | 882 | 35,260 | ||||||
2006 | 926 | 38,555 | ||||||
2007 | 976 | 42,429 | ||||||
2008 | 1,038 | 46,348 | ||||||
2009 | 1,115 | 51,765 | ||||||
2010 | 1,207 | 65,417 | ||||||
March 2011(1) | 1,193 | 65,700 |
(1) | Through March 31, 2011 |
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(‘000 Dwt)
![(GRAPH)](https://capedge.com/proxy/20-F/0000950123-11-063380/y04983y0498313.gif)
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World Product Tanker Fleet: Average | ||||||
Average | ||||||
Deadweight | Age | |||||
Size Category | Tons | (Years) | ||||
LR2 | >80,000 | 7.3 | ||||
LR1 | 50,000-79,999 | 5.5 | ||||
M R2 | 25,000-49,999 | 11.1 | ||||
M R1 | 10,000-24,999 | 16.4 | ||||
Fleet Average | 9.8 |
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Total | ||||||||||||||||||
Deadweight | Number of | % of Fleet | Capacity | % of Fleet | ||||||||||||||
Size Category | Tons | Vessels | (Number) | (Million Dwt) | (Dwt) | |||||||||||||
VLCC | >200,000 | 179 | 32.7 | 56.3 | 33.9 | |||||||||||||
Suezmax | 120,000-199,999 | 150 | 35.9 | 23.2 | 36.2 | |||||||||||||
Aframax | 80,000-119,999 | 135 | 15.4 | 14.8 | 16.0 | |||||||||||||
Panamax | 50,000-79,999 | 104 | 23.5 | 6.8 | 22.1 | |||||||||||||
Handy | 10,000-49,9999 | 88 | 11.6 | 3.3 | 12.0 | |||||||||||||
Total | 656 | 21.6 | % | 104.4 | 27.4 | % |
Deadweight | Number of | % of | Total Capacity | % of | ||||||||||||||
Size Category | Tons | Vessels | Orderbook | (Million Dwt) | Orderbook (Dwt) | |||||||||||||
LR2 | >80,000 | 40 | 18.9 | % | 4.5 | 33.4 | % | |||||||||||
LR1 | 50,000-79,999 | 90 | 42.5 | % | 5.8 | 43.4 | % | |||||||||||
MR2 | 25,000-49,999 | 66 | 31.1 | % | 2.9 | 21.5 | % | |||||||||||
MR1 | 10,000-24,999 | 16 | 7.5 | % | 0.2 | 1.7 | % | |||||||||||
Total | 212 | 100.0 | % | 13.4 | 100.0 | % |
2011 | 2012 | 2013 | 2014 | Total | ||||||||||||||||||||||||||||||||||||
Size | No. | M Dwt | No. | M Dwt | No. | M Dwt | No. | M Dwt | No. | M Dwt | ||||||||||||||||||||||||||||||
10,000-24,999 | 14 | 0.2 | 2 | 0.0 | 0 | 0.0 | 0 | 0.0 | 16 | 0.2 | ||||||||||||||||||||||||||||||
25,000-49,999 | 41 | 1.8 | 22 | 1.0 | 3 | 0.1 | 0 | 0.0 | 66 | 2.9 | ||||||||||||||||||||||||||||||
50,000-79,999 | 49 | 3.4 | 25 | 1.4 | 16 | 1.0 | 0 | 0.0 | 90 | 5.8 | ||||||||||||||||||||||||||||||
80,000+ | 19 | 2.1 | 16 | 1.8 | 2 | 0.2 | 3 | 0.4 | 40 | 4.5 | ||||||||||||||||||||||||||||||
Total | 123 | 7.5 | 65 | 4.2 | 21 | 1.3 | 3 | 0.4 | 212 | 13.4 |
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• | In the most recent new ordering spree, which peaked in early 2008, shipowners were often quoted unrealistic delivery times by some of the less experienced and newly emerging shipyards. Delays in deliveries from these shipyards have been varied, but the evidence available suggests that slippage rates have been considerable, with some shipyards only delivering two-thirds of what they were due to deliver in 2009/2010. | |
• | Financing is not in place for all of the tankers on order and in the current climate some owners will find it difficult to secure adequate funding. | |
• | Orders have been placed at “greenfield” shipyards, some of which are also finding it difficult to secure funding for yard development. A greenfield yard is a shipyard with no prior experience in building vessels for international account. | |
• | The current economic and financial crisis and the steep decline in shipping markets since 2009 may lead to further orderbook cancellations. |
Products | ||||||||||||||||||||||||||||||||||||||||||
10-25k | 25-50k | 50-80k | 80k+ | Total | ||||||||||||||||||||||||||||||||||||||
No. | Dwt | No. | Dwt | No. | Dwt | No. | Dwt | No | Dwt | |||||||||||||||||||||||||||||||||
Actual Deliveries | 9 | 131,334 | 49 | 2,312,512 | 37 | 2,692,001 | 24 | 2,675,138 | 119 | 7,810,985 | ||||||||||||||||||||||||||||||||
2009 | Scheduled OB Deliveries(1) | 13 | 156,786 | 63 | 2,785,009 | 53 | 3,707,883 | 36 | 4,036,625 | 165 | 10,686,303 | |||||||||||||||||||||||||||||||
Slippage (% of O B) | 31 | % | 16 | % | 22 | % | 17 | % | 30 | % | 27 | % | 33 | % | 34 | % | 28 | % | 27 | % | ||||||||||||||||||||||
Actual Deliveries | 12 | 172,695 | 31 | 1,449,508 | 32 | 2,148,660 | 15 | 1,708,882 | 90 | 5,479,745 | ||||||||||||||||||||||||||||||||
2010 | Scheduled OB Deliveries(2) | 13 | 173,857 | 55 | 2,389,278 | 40 | 2,633,562 | 26 | 2,826,084 | 134 | 8,022,781 | |||||||||||||||||||||||||||||||
Slippage (%of OB) | 8 | % | 1 | % | 44 | % | 39 | % | 20 | % | 18 | % | 42 | % | 40 | % | 33 | % | 32 | % |
(1) | Based on Orderbook as of January 2009; (2) Based on Orderbook as of January 2010 |
• | Abareboat charterinvolves the use of a vessel usually over longer periods of time ranging up to several years. In this case, all voyage related costs, including vessel fuel, or bunker, and port dues as well as all vessel operating expenses, such asday-to-day operations, maintenance, crewing and insurance, transfer to the charterer’s account. The owner of the vessel receives monthly charter hire payments on a per day basis and is responsible only for the payment of capital costs related to the vessel. | |
• | Atime charterinvolves the use of the vessel, either for a number of months or years or for a trip between specific delivery and redelivery positions, known as a trip charter. The charterer pays all voyage related costs. The owner of the vessel receives semi-monthly charter hire payments on a per day basis and is responsible for the payment of all vessel operating expenses and capital costs of the vessel. | |
• | Asingleorspot voyage charterinvolves the carriage of a specific amount and type of cargo on a load-port to discharge-port basis, subject to various cargo handling terms. Most of these charters are of a single or spot voyage nature, as trading patterns do not encourage round voyage trading. The owner |
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of the vessel receives one payment derived by multiplying the tons of cargo loaded on board by the agreed upon freight rate expressed on a per cargo ton basis. The owner is responsible for the payment of all expenses including voyage, operating and capital costs of the vessel. |
• | Acontract of affreightment, orCOA, relates to the carriage of multiple cargoes over the same route and enables the COA holder to nominate different ships to perform individual voyages. Essentially, it constitutes a number of voyage charters to carry a specified amount of cargo during the term of the COA, which usually spans a number of years. All of the ship’s operating, voyage and capital costs are borne by the ship owner. The freight rate normally is agreed on a per cargo ton basis. |
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(US$/Day Period Averages)
Size Category | Handysize | Handymax | Aframax | Suezmax | VLCC | |||||||||||||||
DWT | 30,000 | 45,000 | 90-95,000 | 150,000 | 280,000 | |||||||||||||||
2000 | 12,454 | 13,958 | 18,854 | 27,042 | 35,250 | |||||||||||||||
2001 | 15,583 | 17,563 | 23,125 | 30,500 | 37,958 | |||||||||||||||
2002 | 11,417 | 13,288 | 16,896 | 17,750 | 23,458 | |||||||||||||||
2003 | 13,267 | 14,846 | 19,146 | 26,104 | 33,604 | |||||||||||||||
2004 | 15,629 | 19,029 | 29,500 | 37,875 | 53,900 | |||||||||||||||
2005 | 18,854 | 25,271 | 35,021 | 42,292 | 60,125 | |||||||||||||||
2006 | 21,417 | 26,792 | 35,233 | 42,667 | 55,992 | |||||||||||||||
2007 | 22,000 | 24,500 | 33,143 | 43,042 | 53,333 | |||||||||||||||
2008 | 21,438 | 23,092 | 34,708 | 46,917 | 74,662 | |||||||||||||||
2009 | 13,675 | 14,850 | 19,663 | 27,825 | 38,533 | |||||||||||||||
2010 | 11,000 | 12,388 | 18,571 | 25,967 | 36,083 | |||||||||||||||
March 2011 | 12,000 | 13,000 | 16,000 | 21,000 | 29,000 |
(US$/Day — Period Averages)
Arabian Gulf — Japan | Caribbean — USES(1),(2) | Mediterranean-NW Europe | ||||||||||||||||||||||
(50,000-60,000 Dwct*) | (35,000-40,000 Dwct*) | (25,000-35,000 Dwct*) | ||||||||||||||||||||||
Routes | WS(3) | ($/day)TCE(4) | WS | ($/day)TCE | WS | ($/day)TCE | ||||||||||||||||||
2000 | 237 | 24,390 | 276 | 14,415 | 234 | 10,750 | ||||||||||||||||||
2001 | 249 | 32,835 | 267 | 18,040 | 260 | 14,625 | ||||||||||||||||||
2002 | 152 | 16,515 | 182 | 10,100 | 185 | 8,610 | ||||||||||||||||||
2003 | 218 | 25,390 | 270 | 17,240 | 238 | 14,975 | ||||||||||||||||||
2004 | 251 | 31,800 | 337 | 24,000 | 304 | 14,800 | ||||||||||||||||||
2005 | 276 | 37,675 | 272 | 23,925 | 297 | 11,925 | ||||||||||||||||||
2006 | 214 | 26,525 | 233 | 21,575 | 259 | 7,600 | ||||||||||||||||||
2007 | 181 | 24,150 | 203 | 22,000 | 242 | 17,775 | ||||||||||||||||||
2008 | 250 | 34,600 | 234 | 23,400 | 287 | 21,325 | ||||||||||||||||||
2009 | 93 | 14,050 | 93 | 9,450 | 114 | 6,275 | ||||||||||||||||||
2010 | 133 | 12,658 | 141 | 10,958 | ||||||||||||||||||||
March 2011 | 122 | 4,200 | 190 | 14,900 |
* | dwct refers to the cargo parcel size and in the case of a fully loaded ship is normally equivalent to approximately 97% of the vessel’s deadweight. |
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(US$/Day — Period Averages)
MR1 | MR2 | LR1 | ||||||||||
30,000 | 45,000 | 75,000(1) | ||||||||||
Size Category Dwt | (5-Years Old) | (5-Years Old) | (5-Years Old) | |||||||||
2000 | 12,454 | 13,958 | 17,284 | |||||||||
2001 | 15,583 | 17,563 | 22,064 | |||||||||
2002 | 11,417 | 13,288 | 16,677 | |||||||||
2003 | 13,267 | 14,846 | 15,891 | |||||||||
2004 | 15,629 | 19,029 | 24,485 | |||||||||
2005 | 18,854 | 25,271 | 28,933 | |||||||||
2006 | 21,417 | 26,792 | 29,100 | |||||||||
2007 | 22,200 | 24,500 | 30,408 | |||||||||
2008 | 21,438 | 23,092 | 28,525 | |||||||||
2009 | 13,675 | 14,850 | 18,617 | |||||||||
2010 | 11,000 | 12,388 | 16,333 | |||||||||
March 2011 | 12,000 | 13,000 | 14,500 |
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![(GRAPH)](https://capedge.com/proxy/20-F/0000950123-11-063380/y04983y0498315.gif)
(US$ Million — Period Averages)
Size | ||||||||||||||||
Category | MR1 | MR2 | LR1 | |||||||||||||
Year | Dwt | 30,000 | 50,000(2) | 75,000(2) | ||||||||||||
2000 | n/a | 28.4 | 33.2 | |||||||||||||
2001 | n/a | 29.8 | 35.8 | |||||||||||||
2002 | n/a | 26.3 | 31.1 | |||||||||||||
2003 | 26.3 | 28.3 | 32.3 | |||||||||||||
2004 | 32.5 | 35.4 | 38.9 | |||||||||||||
2005 | 36.9 | 41.8 | 43.6 | |||||||||||||
2006 | 40.0 | 46.8 | 48.0 | |||||||||||||
2007 | 41.9 | 49.5 | 56.0 | |||||||||||||
2008 | 44.8 | 52.1 | 63.6 | |||||||||||||
2009 | 34.8 | 40.3 | 47.5 | |||||||||||||
2010 | 31.6 | 36.0 | 44.7 | |||||||||||||
March 2011 | 31.5 | 36.3 | 44.7 |
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(US$ Million)
![(GRAPH)](https://capedge.com/proxy/20-F/0000950123-11-063380/y04983y0498316.gif)
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(US$ Million —Five-Year-Old Tankers — Period Averages)
MR1(2) | MR2* | LR1* | ||||||||||
Size Category Dwt | 30,000(1) | 45,000(3) | 70,000(4) | |||||||||
2000 | 16.9 | 22.0 | 30.1 | |||||||||
2001 | 17.0 | 25.6 | 33.2 | |||||||||
2002 | 15.5 | 21.8 | 26.5 | |||||||||
2003 | 21.8 | 25.4 | 27.7 | |||||||||
2004 | 29.9 | 34.8 | 36.3 | |||||||||
2005 | 36.6 | 44.3 | 45.9 | |||||||||
2006 | 37.6 | 47.1 | 47.9 | |||||||||
2007 | 40.4 | 50.0 | 54.8 | |||||||||
2008 | 42.5 | 51.0 | 58.0 | |||||||||
2009 | 26.2 | 30.2 | 35.8 | |||||||||
2010 | 23.0 | 26.4 | 37.2 | |||||||||
March 2011 | 22.5 | 28.0 | 37.0 |
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Regulation | Introduced | Features | ||
OPA | 1990 | Single-hull ships banned by 2010 in the U.S. | ||
Double-sided and double-bottom ships banned by 2015. | ||||
IMO MARPOL Regulations 13G & 13H | Latest amendment in 2003 | Newbuildings must be double-hull. | ||
Phase out of pre-MARPOL tankers as of 2005. Remaining single-hull tankers phased out by 2010 or 2015, depending on port and flag states. | ||||
Single-hull ships over 15 years subject to Conditional Assessment Scheme. | ||||
Single-hull tankers banned from carrying heavy oil grades as of 2005, or as of 2008 for tankers between 600-5,000 dwt. | ||||
EU 417/2002 | 1999 | 25-year-old single-hull ships to cease trading as of 2007 unless they apply hydrostatic balance methods or segregated ballast tanks. | ||
Single-hull tankers fitted with segregated ballast tanks phased out by 2015. | ||||
EU 1723/2003 | 2003 | Pre-MARPOL single-hull tankers banned after 2005. Remaining single-hull vessels banned as of 2010. | ||
Single-hull tankers banned from carrying heavy oil grades by 2003. | ||||
MARPOL Annex II, International Bulk Chemical Code (IBC) | 2004 | Beginning January 1, 2007, vegetable oils which were previously categorized as being unrestricted will now be required to be carried in IMO II chemical tankers or certain IMO III tankers that meet the environmental protection requirements of an IMO II tanker with regard to hull type (double hull) and cargo tank location. | ||
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(8.78 Billion Tons)
![(PIE CHART)](https://capedge.com/proxy/20-F/0000950123-11-063380/y04983y0498317.gif)
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(3.18 Billion Tons)
![(PIE CHART)](https://capedge.com/proxy/20-F/0000950123-11-063380/y04983y0498318.gif)
![(MAP)](https://capedge.com/proxy/20-F/0000950123-11-063380/y04983y0498319.gif)
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(Million Tons)
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(% change previous period)
GDP | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010(1) | |||||||||||||||||||||||||||||||||
Global Economy | 4.8 | 2.4 | 3.0 | 4.1 | 5.3 | 4.4 | 4.9 | 5.0 | 2.8 | (0.9 | ) | 4.9 | ||||||||||||||||||||||||||||||||
USA | 3.8 | 0.3 | 1.6 | 2.7 | 3.9 | 3.1 | 2.7 | 2.1 | 0.4 | (2.6 | ) | 2.9 | ||||||||||||||||||||||||||||||||
Europe | 3.4 | 1.7 | 1.1 | 1.1 | 2.1 | 1.8 | 3.1 | 2.7 | 0.5 | (4.0 | ) | 1.7 | ||||||||||||||||||||||||||||||||
Japan | 2.8 | 0.4 | (0.3 | ) | 1.8 | 2.7 | 1.9 | 2.0 | 2.4 | (1.2 | ) | (6.3 | ) | 4.4 | ||||||||||||||||||||||||||||||
China | 8.0 | 7.5 | 8.3 | 10.0 | 10.1 | 10.4 | 11.6 | 13.0 | 9.6 | 9.1 | 10.2 | |||||||||||||||||||||||||||||||||
India | 5.1 | 4.4 | 4.7 | 7.4 | 7.0 | 9.1 | 9.9 | 9.3 | 7.5 | 6.7 | 8.6 |
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(CAGR — Percent)
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(Million Tons)
2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | ||||||||||||||||||||||||||||||||||
Coal | 539 | 587 | 590 | 619 | 650 | 675 | 769 | 833 | 830 | 784 | 915 | |||||||||||||||||||||||||||||||||
Iron Ore | 489 | 503 | 544 | 580 | 644 | 715 | 759 | 823 | 886 | 959 | 1,004 | |||||||||||||||||||||||||||||||||
Grain | 221 | 213 | 210 | 211 | 208 | 212 | 221 | 228 | 235 | 209 | 242 | |||||||||||||||||||||||||||||||||
Minor Bulks | 901 | 890 | 900 | 957 | 918 | 895 | 927 | 960 | 975 | 969 | 1,015 | |||||||||||||||||||||||||||||||||
Total | 2,150 | 2,193 | 2,244 | 2,367 | 2,420 | 2,497 | 2,676 | 2,844 | 2,929 | 2,921 | 3,179 |
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(Thousand Tons)
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(Thousand Tons)
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(BillionTon-Miles)
2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | ||||||||||||||||||||||||||||||||||
Coal | 2,831 | 3,082 | 3,115 | 3,250 | 3,412 | 3,544 | 4,073 | 4,500 | 4,566 | 4,101 | 4,854 | |||||||||||||||||||||||||||||||||
Iron Ore | 2,690 | 2,766 | 2,990 | 3,193 | 3,525 | 3,899 | 4,098 | 4,936 | 5,438 | 6,231 | 6,731 | |||||||||||||||||||||||||||||||||
Grain | 1,161 | 1,118 | 1,103 | 1,108 | 1,089 | 1,113 | 1,161 | 1,196 | 1,243 | 1,109 | 1,310 | |||||||||||||||||||||||||||||||||
Minor Bulks | 4,469 | 4,411 | 4,481 | 4,714 | 5,036 | 4,924 | 5,097 | 5,327 | 5,411 | 5,296 | 5,529 | |||||||||||||||||||||||||||||||||
Total | 11,150 | 11,378 | 11,688 | 12,264 | 13,063 | 13,480 | 14,429 | 15,959 | 16,658 | 16,735 | 18,424 |
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Category | Size Range — Dwt | |||
Handysize | 10-39,999 | |||
Handymax/Supramax | 40-59,999 | |||
Panamax | 60-79,999 | |||
Post Panamax | 80-109,999 | |||
Capesize | 110-199,999 | |||
VLOC | 200,000 + |
• | Handysize. Handysize vessels have a carrying capacity of up to 39,999 dwt. These vessels are primarily involved in carrying minor bulk cargoes. Increasingly, vessels of this type operate on regional trading routes, and may serve as trans-shipment feeders for larger vessels. Handysize vessels are well suited for small ports with length and draft restrictions. Their cargo gear enables them to service ports lacking the infrastructure for cargo loading and unloading. | |
• | Handymax/Supramax. Handymax vessels have a carrying capacity of between 40,000 and 59,999 dwt. These vessels operate on a large number of geographically dispersed global trade routes, carrying primarily iron ore, coal, grains and minor bulks. Within the Handymax category there is also asub-sector known asSupramax.Supramax bulk vessels are vessels between 50,000 to 59,999 dwt, normally offering cargo loading and unloading flexibility with on-board cranes, while at the same time possessing the cargo carrying capability approaching conventional Panamax bulk vessels. Hence, the earnings potential of a Supramax dry bulk vessel, when compared to a conventional Handymax vessel of 45,000 dwt, is greater. | |
• | Panamax. Panamax vessels have a carrying capacity of between 60,000 and 79,999 dwt. These vessels carry coal, grains, and, to a lesser extent, minor bulks, including steel products, forest products and fertilizers. Panamax vessels are able to pass through the Panama Canal, making them more versatile than larger vessels. | |
• | Post Panamax. (sometimes known as Kamsarmax). Post Panamax vessels typically have a carrying capacity of between 80,000 and 109,999 dwt. These vessels tend to be shallower and have a larger beam than a standard Panamax vessel with a higher cubic capacity. They have been designed specifically for loading high cubic cargoes from draught restricted ports. This type of vessel cannot transit the Panama Canal. The term Kamsarmax stems from Port Kamsar in Guinea, where large quantities of bauxite are exported from a port with only 13.5 meter draught and a 229 meter length overall restriction, but no beam restriction. | |
• | Capesize. Capesize vessels have carrying capacities of between 110,000 and 199,999 dwt. Only the largest ports around the world possess the infrastructure to accommodate vessels of this size. Capesize vessels are mainly used to transport iron ore or coal and, to a lesser extent, grains, primarily on long-haul routes. | |
• | VLOC. Very large ore carriers are in excess of 200,000 dwt and are a comparatively new sector of the dry bulk vessel fleet. VLOCs are built to exploit economies of scale on long-haul iron ore routes. |
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Post | ||||||||||||||||||||||||||||
Panamax/ | ||||||||||||||||||||||||||||
Cargo Type | Handysize | Handymax | Supramax | Panamax | Kamsarmax | Capesize | VLOC | |||||||||||||||||||||
Iron Ore | X | X | X | |||||||||||||||||||||||||
Coal | X | X | X | X | X | X | ||||||||||||||||||||||
Grains | X | X | X | X | X | |||||||||||||||||||||||
Alumina, Bauxite | X | X | X | X | X | |||||||||||||||||||||||
Steel Products | X | X | X | �� | X | X | ||||||||||||||||||||||
Forest Products | X | X | X | |||||||||||||||||||||||||
Fertilizers | X | X | X | |||||||||||||||||||||||||
Minerals | X | X | X | |||||||||||||||||||||||||
Minor Bulks-Other | X | X |
Deadweight | Number of | % of Total Fleet | Total Capacity | % of Total Fleet | ||||||||||||||||
Size Category | (Tons) | Vessels | (No) | (Million Dwt) | (Dwt) | |||||||||||||||
Handysize | 10-39,999 | 3,020 | 36.6 | 82.2 | 15.1 | |||||||||||||||
Handymax | 40-59,999 | 2,207 | 26.8 | 114.4 | 20.4 | |||||||||||||||
Panamax | 60-79,999 | 1,432 | 17.3 | 102.5 | 18.8 | |||||||||||||||
Post Panamax | 80-109,999 | 430 | 5.2 | 37.8 | 6.9 | |||||||||||||||
Capesize | 110-199,999 | 965 | 11.7 | 162.6 | 29.8 | |||||||||||||||
VLOC | 200,000+ | 202 | 2.4 | 49.0 | 9.0 | |||||||||||||||
Total | 8,248 | 100.0 | 545.5 | 100.0 |
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(Millions of Dwt & No. of Vessels)
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2011 | 2012 | 2013 | 2014 | 2015+ | Total | % of | ||||||||||||||||||||||||||||||||||||||||||||||
Size | No. | Dwt | No. | Dwt | No. | Dwt | No. | Dwt | No. | Dwt | No. | Dwt | fleet | |||||||||||||||||||||||||||||||||||||||
10-40,000 | 456 | 14,326 | 265 | 8,829 | 62 | 2,127 | 9 | 303 | 0 | 0 | 792 | 25,585 | 31.1 | % | ||||||||||||||||||||||||||||||||||||||
40-60,000 | 384 | 21,448 | 287 | 15,766 | 117 | 6,263 | 20 | 1,091 | 0 | 0 | 808 | 44,568 | 40.0 | % | ||||||||||||||||||||||||||||||||||||||
60-80,000 | 116 | 8,446 | 121 | 8,761 | 68 | 4,865 | 4 | 299 | 0 | 0 | 309 | 22,370 | 21.8 | % | ||||||||||||||||||||||||||||||||||||||
80-110,000 | 261 | 22,654 | 291 | 24,466 | 74 | 6,352 | 23 | 2,143 | 3 | 301 | 652 | 55,917 | 147.8 | % | ||||||||||||||||||||||||||||||||||||||
110-200,000 | 236 | 39,575 | 147 | 24,305 | 41 | 6,893 | 0 | 0 | 0 | 0 | 424 | 70,773 | 43.5 | % | ||||||||||||||||||||||||||||||||||||||
200,000+ | 57 | 16,517 | 84 | 21,839 | 35 | 8,606 | 13 | 3,520 | 0 | 0 | 189 | 50,482 | 103.0 | |||||||||||||||||||||||||||||||||||||||
Total | 1,510 | 122,966 | 1,195 | 103,966 | 397 | 35,106 | 69 | 7,356 | 3 | 301 | 3,174 | 269,695 | 49.4 | % |
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• | In the most recent new ordering spree, which peaked in early 2008, shipowners were quoted unrealistic delivery times by some of the less experienced and new emerging shipyards. | |
• | The current economic and financial crisis and the steep depression in shipping markets generally may lead to further orderbook cancellations. A significant number of dry bulk vessel orders have been cancelled since the crisis began in the second half of 2008. | |
• | Financing is not in place for all of the vessels on order and in the current climate some owners will find it difficult to secure adequate funding. | |
• | Orders have been placed at “greenfield” shipyards, some of which are also finding it difficult to secure funding for yard development. | |
• | Even before the crisis, the less experienced shipyards were experiencing delays in deliveries. |
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(‘000 Dwt)
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• | Time Charter. A charter under which the vessel owner is paid charterhire on aper-day basis for a specified period of time. Typically, the shipowner receives semi-monthly charterhire payments on aU.S. dollar-per-day basis and is responsible for providing the crew and paying vessel operating expenses while the charterer is responsible for paying the voyage expenses and additional voyage insurance. Under time charters, including trip time charters, the charterer pays voyage expenses such as port, canal and fuel costs and bunkers. | |
• | Trip Charter. A time charter for a trip to carry a specific cargo from a load port to a discharge port at a set daily rate. | |
• | Voyage Charter. A voyage charter involves the carriage of a specific amount and type of cargo on a loadport-to-discharge port basis, subject to various cargo handling terms. Most of these charters are of a single voyage nature, as trading patterns do not encourage round voyage trading. The owner of the vessel receives one payment derived by multiplying the tonnage of cargo loaded on board by the agreed upon freight rate expressed on aU.S. dollar-per-ton basis. The owner is responsible for the payment of all voyage and operating expenses, as well as the capital costs of the vessel. | |
• | Spot Charter. A spot charter generally refers to a voyage charter or a trip charter, which generally last from 10 days to three months. Under both types of spot charters, the shipowner would pay for |
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vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs and for commissions on gross revenues. The shipowner would also be responsible for each vessel’s intermediate and special survey costs. |
• | Contract of Affreightment. A contract of affreightment, or CoA, relates to the carriage of multiple cargoes over the same route and enables the CoA holder to nominate different vessels to perform the individual voyages. Essentially, it constitutes a series of voyage charters to carry a specified amount of cargo during the term of the CoA, which usually spans a number of years. The entire vessel’s operating expenses, voyage expenses and capital costs are borne by the shipowner. Freight normally is agreed on aU.S. dollar-per-ton basis. | |
• | Bareboat Charter. A bareboat charter involves the use of a vessel usually over longer periods of time ranging over several years. In this case, all voyage related costs, mainly vessel fuel and port dues, as well as all vessel operating expenses, such asday-to-day operations, maintenance, crewing and insurance, are for the charterer’s account. The owner of the vessel receives monthly charter hire payments on a U.S. dollar per day basis and is responsible only for the payment of capital costs related to the vessel. A bareboat charter is also known as a “demise charter” or a “time charter by demise.” |
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(Index Points)
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(U.S. Dollars per Day)
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(U.S. Dollars per Day)
Handysize | Supramax | Panamax | Capesize | VLOC | ||||||||||||||||
28,000 Dwt | 55,000 Dwt | 75,000 Dwt | 170,000 Dwt | 200,000 Dwt+ | ||||||||||||||||
10 Years Old | 5 Years Old | 5 Years Old | 5 Years Old | 5 Years Old | ||||||||||||||||
2000 | 7,371 | 9,433 | 11,063 | 18,021 | n/a | |||||||||||||||
2001 | 5,629 | 8,472 | 9,543 | 14,431 | n/a | |||||||||||||||
2002 | 4,829 | 7,442 | 9,102 | 13,608 | n/a | |||||||||||||||
2003 | 8,289 | 13,736 | 17,781 | 30,021 | n/a | |||||||||||||||
2004 | 14,413 | 31,313 | 36,708 | 55,917 | n/a | |||||||||||||||
2005 | 12,021 | 23,038 | 27,854 | 49,333 | 54,330 | |||||||||||||||
2006 | 12,558 | 21,800 | 22,475 | 45,646 | 50,650 | |||||||||||||||
2007 | 23,021 | 43,946 | 52,229 | 102,875 | 107,920 | |||||||||||||||
2008 | 24,110 | 48,310 | 56,480 | 116,180 | 119,240 | |||||||||||||||
2009 | 9,425 | 15,179 | 19,650 | 35,285 | 30,950 | |||||||||||||||
2010 | 14,025 | 20,779 | 25,317 | 40,308 | 38,955 | |||||||||||||||
March 2011 | 13,000 | 15,500 | 16,750 | 18,000 | 18,500 |
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(Million U.S. Dollars)
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C. | Organizational Structure |
D. | Properties, Plants and Equipment |
Item 4A. | Unresolved Staff Comments |
Item 5. | Operating and Financial Review and Prospects |
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• | Brought in-house commercial, operational and technical management with highly qualified and experienced personnel; | |
• | Exited the container sector; | |
• | Completed the divestiture of all of the underperforming and unprofitable tanker vessels that existed prior to the recapitalization; | |
• | Implemented a newbuilding program; | |
• | Doubled our fleet size from 11 to 22 vessels; | |
• | Diversified both our vessel and charter mix to limit our exposure to market cycles, while positioning ourselves to take advantage of market upswings; | |
• | Focused on creating an advantageous blend of product tanker and dry bulk vessels; and | |
• | Created a scalable platform to support future growth. |
A. | Operating results |
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• | Market exposure: We manage the size and composition of our fleet by chartering our owned vessels to international charterers. In order to diversify our market risk, we attempt to achieve an appropriate balance of the composition of our vessels between wet and dry vessels. | |
• | Available days: Available days are the total number of days a vessel is controlled by a company less the aggregate number of days that the vessel is off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys. The shipping industry uses available days to measure the number of days in a period during which vessels should be capable of generating revenues. | |
• | Operating days: Operating days are the number of available days in a period less the aggregate number of days that the vessels are off-hire due to any reason, including lack of demand or unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues. | |
• | Fleet utilization: Fleet utilization is obtained by dividing the number of operating days during a period by the number of available days during the period for the core vessels. The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys or vessel positioning. | |
• | Equivalent vessels: Equivalent vessels is equal to the available days of the fleet divided by the number of the calendar days in the respective period. | |
• | TCE rates: Time Charter Equivalent, or TCE, rates are defined as voyage, time charter and bareboat revenues, less voyage expenses and commissions during a period, divided by the number of available days during the period. The TCE rate is a standard shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters are generally not expressed in per day amounts, while charter rates for vessels on time charters generally are expressed in such amounts. The Newlead Compass was employed on bareboat charter during 2010 until December 20, 2010 and during the years ended December 31, 2009 and 2008. The Newlead Compassion was employed on bareboat charter up to June 10, 2010, and during the years ended December 31, 2009 and 2008. Accordingly, the Newlead Compass’ and the Newlead Compassion’s charter rates have been grossed up to reflect a TCE rate of approximately $24,933 per day, assuming operating costs of $6,700 per day, for fiscal year ended December 31, 2010, and for the periods from January 1, 2009 to October 13, 2009 and October 14, 2009 to December 31, 2009, and for the year ended December 31, 2008, as applicable. |
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Successor | Predecessor | ||||||||||||||||
January 1 to | October 14 to | January 1 to | Year Ended | ||||||||||||||
December 31, | December 31, | October 13, | December 31, | ||||||||||||||
2010 | 2009 | 2009 | 2008 | ||||||||||||||
Available Days | 5,722 | 824 | 2,285 | 3,294 | |||||||||||||
Operating Days | 4,963 | 682 | 1,874 | 3,029 | |||||||||||||
Fleet utilization excluding non-core vessels | 92.9 | % | 90.6 | % | 97.1 | % | 99.2 | % | |||||||||
Fleet utilization dry sector | 96.7 | % | 97.5 | % | — | — | |||||||||||
Fleet utilization wet sector | 87.5 | % | 76.8 | % | 82.0 | % | 92.0 | % | |||||||||
Equivalent vessels | 15.7 | 10.4 | 8.0 | 9.0 | |||||||||||||
Time Charter Equivalent Rate | $ | 14,942 | $ | 12,466 | $ | 12,277 | $ | 16,518 | |||||||||
Direct daily vessel operating expenses(1) | $ | 7,091 | $ | 8,665 | $ | 9,916 | $ | 8,276 |
(1) | Direct daily vessel operating expenses are defined as the sum of the vessel operating expenses, excluding provision for claims, and management fees, divided by the vessels calendar days. This has been adjusted to exclude the calendar days with respect to the Newlead Compass and the Newlead Compassion, during their employment on bareboat charters. |
• | charter rates and periods of charter hire; | |
• | vessel operating expenses and voyage costs, which are incurred in both U.S. dollars and other currencies, primarily Etururos; | |
• | depreciation expenses, which are a function of the cost of our vessels, significant vessel improvement costs and our vessels’ estimated useful lives; and | |
• | financing costs related to our indebtedness. |
• | the duration of the charters; | |
• | the level of spot market rates at the time of charter; | |
• | decisions relating to vessel acquisitions and disposals; | |
• | the amount of time spent positioning vessels; |
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• | the amount of time that vessels spend in dry-dock undergoing repairs and upgrades; | |
• | the age, condition and specifications of the vessels; and | |
• | the aggregate level of supply and demand in the dry bulk shipping industry. |
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Successor | Predecessor | ||||||||||||
Year Ended | October 14, to | January 1, to | |||||||||||
December 31, | December 31, | October 13, | |||||||||||
2010 | 2009 | 2009 | |||||||||||
OPERATING REVENUES | $ | 102,733 | $ | 14,096 | $ | 33,564 | |||||||
EXPENSES: | |||||||||||||
Commissions | (2,345 | ) | (407 | ) | (769 | ) | |||||||
Voyage expenses | (18,793 | ) | (4,634 | ) | (8,574 | ) | |||||||
Vessel operating expenses | (39,219 | ) | (6,530 | ) | (22,681 | ) | |||||||
General and administrative expenses | (15,592 | ) | (12,025 | ) | (8,366 | ) | |||||||
Depreciation and amortization expenses | (39,558 | ) | (4,844 | ) | (11,813 | ) | |||||||
Impairment losses | (39,515 | ) | — | (68,042 | ) | ||||||||
Loss on sale from vessels, net | (1,560 | ) | — | — | |||||||||
Management fees | (1,007 | ) | (315 | ) | (900 | ) | |||||||
(157,589 | ) | (28,755 | ) | (121,145 | ) | ||||||||
Operating loss from continuing operations | (54,856 | ) | (14,659 | ) | (87,581 | ) | |||||||
OTHER (EXPENSES)/INCOME, NET: | |||||||||||||
Interest and finance expense | (44,899 | ) | (23,996 | ) | (10,928 | ) | |||||||
Interest income | 550 | 236 | 9 | ||||||||||
Other (expense)/income, net | (5 | ) | — | 40 | |||||||||
Change in fair value of derivatives | 1,592 | 2,554 | 3,012 | ||||||||||
Total other expenses, net | (42,762 | ) | (21,206 | ) | (7,867 | ) | |||||||
Loss from continuing operations | (97,618 | ) | (35,865 | ) | (95,448 | ) | |||||||
Gain/(loss) from discontinued operations | 2,769 | (2,007 | ) | (30,316 | ) | ||||||||
Net loss | $ | (94,849 | ) | $ | (37,872 | ) | (125,764 | ) | |||||
(Loss)/income per share: | |||||||||||||
Basic and diluted | |||||||||||||
Continuing operations | $ | (14.03 | ) | $ | (6.42 | ) | $ | (39.84 | ) | ||||
Discontinued operations | $ | 0.40 | $ | (0.36 | ) | $ | (12.65 | ) | |||||
Total | $ | (13.63 | ) | $ | (6.78 | ) | $ | (52.49 | ) | ||||
Weighted average number of shares: | |||||||||||||
Basic and diluted | 6,958,903 | 5,588,937 | 2,395,858 | ||||||||||
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Successor | Predecessor | ||||||||||||
October 14, | January 1, | ||||||||||||
2009 to | 2009 to | Year Ended | |||||||||||
December 31, | October 31, | December 31, | |||||||||||
2009 | 2009 | 2008 | |||||||||||
(Audited) | (Audited) | (Audited) | |||||||||||
(Expressed in thousands of U.S. dollars) | |||||||||||||
Operating revenues | $ | 14,096 | $ | 33,564 | $ | 56,519 | |||||||
Commissions | (407 | ) | (769 | ) | (689 | ) | |||||||
Voyage expenses | (4,634 | ) | (8,574 | ) | (6,323 | ) | |||||||
Vessel operating expenses | (6,530 | ) | (22,681 | ) | (19,798 | ) | |||||||
General and administrative expenses | (12,025 | ) | (8,366 | ) | (7,816 | ) | |||||||
Depreciation and amortization expenses | (4,844 | ) | (11,813 | ) | (15,040 | ) | |||||||
Impairment loss | — | (68,042 | ) | — | |||||||||
Management fees | (315 | ) | (900 | ) | (1,404 | ) | |||||||
(28,755 | ) | (121,145 | ) | (51,070 | ) | ||||||||
Operating (loss)/income | (14,659 | ) | (87,581 | ) | 5,449 | ||||||||
Interest and finance expenses, net | (23,996 | ) | (10,928 | ) | (15,741 | ) | |||||||
Interest income | 236 | 9 | 232 | ||||||||||
Other income, net | — | 40 | 2 | ||||||||||
Change in fair value of derivatives | 2,554 | 3,012 | (6,515 | ) | |||||||||
Loss from continuing operations | (35,865 | ) | (95,448 | ) | (16,573 | ) | |||||||
Loss from discontinued operations | (2,007 | ) | (30,316 | ) | (23,255 | ) | |||||||
Net loss | $ | (37,872 | ) | $ | (125,764 | ) | $ | (39,828 | ) | ||||
(Loss)/income per share | |||||||||||||
Basic and diluted | |||||||||||||
Continuing operations | $ | (6.42 | ) | $ | (39.84 | ) | $ | (6.94 | ) | ||||
Discontinued operations | $ | (0.36 | ) | $ | (12.65 | ) | $ | (9.75 | ) | ||||
Total | $ | (6.78 | ) | $ | (52.49 | ) | $ | (16.69 | ) | ||||
Weighted average number of shares | |||||||||||||
Basic and diluted | 5,588,937 | 2,395,858 | 2,386,182 | ||||||||||
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Successor | Predecessor | ||||||||||||||||
Year Ended | October 14, to | January 1, to | Year Ended | ||||||||||||||
December 31, | December 31, | October 13, | December 31, | ||||||||||||||
2010 | 2009 | 2009 | 2008 | ||||||||||||||
Net cash (used in)/provided by operating activities | $ | (9,685 | ) | $ | (5,869 | ) | $ | (10,557 | ) | $ | 2,901 | ||||||
Net cash (used in)/provided by investing activities | (22,189 | ) | — | 2,216 | 61,083 | ||||||||||||
Net cash (used in)/provided by financing activities | (6,850 | ) | 112,124 | 4,332 | (72,419 | ) | |||||||||||
Net (decrease)/increase in cash and cash equivalents | (38,724 | ) | 106,255 | (4,009 | ) | (8,435 | ) | ||||||||||
Cash and cash equivalents, beginning of year/period | 106,255 | — | 4,009 | 12,444 | |||||||||||||
Cash and cash equivalents, end of year/period | $ | 67,531 | $ | 106,255 | $ | — | $ | 4,009 | |||||||||
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• | 1.75% if our total shareholders’ equity divided by our total assets, adjusting the book value of our fleet to its market value, is equal to or greater than 50%; | |
• | 2.75% if our total shareholders’ equity divided by our total assets, adjusting the book value of our fleet to its market value, is equal to or greater than 27.5% but less than 50%; and | |
• | 3.25% if our total shareholders’ equity divided by our total assets, adjusting the book value of our fleet to its market value, is less than 27.5%. |
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• | our shareholders’ equity as a percentage of our total assets, adjusting the book value of our fleet to its market value, must be no less than: |
• | we must maintain, on a consolidated basis on each financial quarter, working capital (as defined in the loan facility) of not less than zero dollars ($0); | |
• | we must maintain a minimum liquidity equal to at least 5% of the outstanding loan; | |
• | the ratio of EBITDA (earnings before interest, taxes, depreciation and amortization) to interest payable must be no less than; |
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• | The BCF was valued at $100.5 million and is amortized over the life of the 7% Notes as interest expense. The BCF represents the difference between the conversion price of the 7% Notes ($9.00) and the market price of our common shares at the date of issuance ($15.24), multiplied by 16.1 million shares, assuming full conversion of the initial $145.0 million of 7% Notes. Assuming no further conversions of the remaining $125.0 million of 7% Notes, the annual BCF amortization will be $14.4 million annually; and | |
• | The Make Whole Fundamental Change was valued at $31,301 relating to an additional benefit of 10% of additional shares that the holders can potentially acquire when converting the 7% Notes under certain circumstances. This is also amortized over the life of the 7% Notes as an interest expense. |
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Successor | Predecessor | ||||||||||||||||
Year Ended | October 14, to | January 1, to | Year Ended | ||||||||||||||
December 31, | December 31, | October 13, | December 31, | ||||||||||||||
2010 | 2009 | 2009 | 2008 | ||||||||||||||
ADJUSTED EBITDA RECONCILIATION | |||||||||||||||||
Net loss | $ | (94,849 | ) | $ | (37,872 | ) | $ | (125,764 | ) | $ | (39,828 | ) | |||||
Plus: (Income) / loss from discontinued operations | (2,769 | ) | 2,007 | 30,316 | 23,255 | ||||||||||||
Loss from continuing operations | (97,618 | ) | (35,865 | ) | (95,448 | ) | (16,573 | ) | |||||||||
PLUS: | |||||||||||||||||
Net interest expense | 44,349 | 23,760 | 10,919 | 15,509 | |||||||||||||
Depreciation and amortization | 39,558 | 4,844 | 11,813 | 15,040 | |||||||||||||
EBITDA | $ | (13,711 | ) | $ | (7,261 | ) | $ | (72,716 | ) | $ | 13,976 | ||||||
Straight line revenue | 467 | 158 | — | — | |||||||||||||
Provision for doubtful receivables | 391 | — | 217 | 160 | |||||||||||||
Provision for claims | 1,674 | — | 3,730 | — | |||||||||||||
Change in fair value of derivatives | (1,592 | ) | (2,554 | ) | (3,012 | ) | 6,515 | ||||||||||
Impairment losses | 39,515 | — | 68,042 | — | |||||||||||||
Loss on sale from vessels, net | 1,560 | — | — | — | |||||||||||||
Share based compensation | 2,680 | 7,898 | 793 | 1,083 | |||||||||||||
Operating loss / (income) for non-core vessels | 6,564 | 4,594 | 11,498 | (4,298 | ) | ||||||||||||
ADJUSTED EBITDA | $ | 37,548 | $ | 2,835 | $ | 8,552 | $ | 17,436 | |||||||||
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C. | Research and Development, Patents and Licenses |
D. | Trend information |
E. | Off-Balance Sheet Arrangements |
F. | Tabular Disclosure of Contractual Obligations |
Payment Due by Period | ||||||||||||||||||||
More than | ||||||||||||||||||||
Contractual obligations | Total | Less than a year | 1-3 years | 3-5 years | 5 years | |||||||||||||||
(in 000’s USD) | ||||||||||||||||||||
Long-term debt obligation(1) | $ | 657,782 | $ | 34,421 | $ | 136,263 | 369,655 | 117,443 | ||||||||||||
Interest payments(2) | 181,011 | 40,963 | 69,704 | 49,309 | 21,035 | |||||||||||||||
Rental agreements(3) | 5,001 | 423 | 864 | 891 | 2,823 | |||||||||||||||
Newbuildings and vessel future commitments | 133,700 | 112,850 | 19,850 | 1,000 | — | |||||||||||||||
Total | $ | 977,494 | $ | 188,657 | $ | 226,681 | $ | 420,855 | $ | 141,301 | ||||||||||
(1) | Refers to our obligations to repay the indebtedness outstanding as of December 31, 2010, (including long-term debts, capital lease obligations and convertible notes) assuming that we meet the covenants of our credit facilities. The amount does not reflect a debt discount (BCF) of $69.1 million. | |
(2) | Refers to our expected interest payments over the term of the indebtedness outstanding as of December 31, 2010, assuming an effective interest rate of 6.37% per annum. | |
(3) | Refers to our obligations under the rental agreements for office space. |
(i) | Rental agreements |
(ii) | Commercial and Technical Ship Management Agreements |
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(iii) | Commitment exit |
(iv) | Newbuildings |
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G. | Safe Harbor |
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Item 6. | Directors, Senior Management and Employees |
Name | Age | Position | ||||
Nicholas G. Fistes | 52 | Class I Director and Chairman since October 13, 2009 | ||||
Michail S. Zolotas | 37 | Class I Director and Deputy Chairman, President and CEO since October 13, 2009 | ||||
Allan L. Shaw | 47 | Class II Director, and Chief Financial Officer since October 13, 2009 | ||||
Masaaki Kohsaka | 77 | Class II Director since October 13, 2009 | ||||
Dr. John Tzoannos | 67 | Class II Director since April 1, 2010 | ||||
Spyros Gianniotis | 51 | Class III Director since October 13, 2009 | ||||
Apostolos I. Tsitsirakis | 42 | Class III Director since October 13, 2009 | ||||
Panagiotis Skiadas | 40 | Class III Director since June 2005 | ||||
Panagiotis Peter Kallifidas | 41 | Corporate Secretary since January 1, 2010 | ||||
George Fragos | 46 | Chief Operating Officer since October 13, 2009 | ||||
Sozon Alifragkis | 42 | Senior Vice President and Chief Commercial Office since October 13, 2009 |
Director, Executive Chairman
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Director, President and Chief Executive Officer
Director, Chief Financial Officer
Director
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Director
Director
Director
Director
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General Counsel and Corporate Secretary
Senior Vice President and Chief Commercial Officer
Chief Operating Officer
B. | Compensation |
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C. | Board Practices |
D. | Employees |
E. | Share ownership |
• | each person known by us to own beneficially more than 5% of our shares; | |
• | each of our directors and executive officers who beneficially own our shares; and | |
• | all directors and executive officers as a group. |
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Shares Beneficially Owned | ||||||||
Identity of Person or Group | Number | Percentage | ||||||
Executive Officers and Directors | ||||||||
Michail S. Zolotas(1)(2)(3)(4) | 19,623,106 | 90.8 | % | |||||
Nicholas G. Fistes(2)(3)(4) | 3,523,105 | 45.5 | % | |||||
Allan L. Shaw(5) | 166,667 | 2.2 | % | |||||
Masaaki Kohsaka | 7,084 | * | ||||||
Spyros Gianniotis | 7,084 | * | ||||||
Apostolos I. Tsitsirakis | 7,084 | * | ||||||
Dr. John Tzoannos | 7,084 | * | ||||||
Panagiotis Skiadas | 17,084 | * | ||||||
Panagiotis Peter Kallifidas | * | * | ||||||
George Fragos | * | * | ||||||
Sozon Alifragkis | * | * | ||||||
Directors and Executive Officers as a Group(1)(2)(3)(4)(5) | 19,835,192 | 91.8 | % |
* | Less than one percent | |
(1) | Includes 13,877,778 common shares underlying the 7% Notes beneficially owned by Focus Maritime Corp., a Marshall Islands corporation. Focus Maritime Corp. is wholly-owned by Michail S. Zolotas. Focus Maritime’s business address is 83 Akti Miaouli & Flessa Street, Piraeus Greece 185 38. The foregoing information was derived from a Schedule 13G/A filed by Grandunion with the SEC on September 16, 2010. | |
(2) | Grandunion is a Marshall Islands corporation, which is wholly owned by Nicholas G. Fistes and Michail S. Zolotas, who each own 50% of the issued and outstanding capital stock of Grandunion. Grandunion’s business address is 83 Akti Miaouli & Flessa Street, Piraeus Greece 185 38. The foregoing information was derived from a Schedule 13D/A filed with the SEC on September 16, 2010. | |
(3) | Includes 1,463,631 common shares beneficially owned by Rocket Marine Inc. that are subject to a voting agreement with Grandunion, over which Grandunion has voting power. | |
(4) | Includes 3,523,105 common shares beneficially owned by Grandunion. | |
(5) | Does not include 250,000 restricted common shares underlying options issued pursuant to the Company’s Equity Incentive Plan. |
Item 7. | Major Shareholders and Related Party Transactions |
A. | Major Shareholders |
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Shares Beneficially Owned | ||||||||
Identity of Person or Group | Number | Percentage | ||||||
Principal Shareholders | ||||||||
Focus Maritime Corp.(1) | 16,100,001 | 74.5 | % | |||||
Grandunion Inc.(2)(3) | 3,523,105 | 45.5 | % | |||||
Rocket Marine Inc.(4) | 1,463,631 | 18.9 | % | |||||
S. Goldman Advisors, LLC(5) | 656,233 | 8.5 | % | |||||
Investment Bank of Greece, S.A.(6) | 427,778 | 5.5 | % |
(1) | Includes 13,877,778 common shares underlying the 7% Notes. Focus Maritime Corp., a Marshall Islands corporation, is wholly owned by Michail S. Zolotas. Focus Maritime’s business address is 83 Akti Miaouli & Flessa Street, Piraeus Greece 185 38. The foregoing information was derived from a Schedule 13G/A filed by Grandunion with the SEC on September 16, 2010. | |
(2) | Grandunion is a Marshall Islands corporation, which is wholly owned by Nicholas G. Fistes and Michail S. Zolotas, who each own 50% of the issued and outstanding capital stock of Grandunion. Grandunion’s business address is 83 Akti Miaouli & Flessa Street, Piraeus Greece 185 38. The foregoing information was derived from a Schedule 13D/A filed with the SEC on September 16, 2010. | |
(3) | Includes 1,463,631 common shares beneficially owned by Rocket Marine Inc. that are subject to a voting agreement with Grandunion, over which Grandunion has voting power. | |
(4) | Rocket Marine Inc., a Marshall Islands corporation, is a wholly owned subsidiary of Aries Energy Corporation, which is also a Marshall Islands corporation. Mons Bolin, the Company’s former Chief Executive Officer, President and former member of the board of directors, and Captain Gabriel Petridis, the Company’s former Chairman, each own 50% of the issued and outstanding capital stock of Aries Energy Corporation. Each of Aries Energy Corporation, Mons Bolin and Captain Gabriel Petridis disclaims beneficial ownership of such shares, except to the extent of their pecuniary interest therein. The principal business address for each of Aries Energy Corporation, Mr. Bolin and Cpt. Petridis is 18 Zerva Nap. Street, Glyfada, Athens Greece 166 75. The foregoing information was derived from a Schedule 13G/A filed with the SEC on October 16, 2009. | |
(5) | Includes 529,167 common shares underlying warrants, the beneficial ownership of which is shared by Mr. Sheldon Goldman and S. Goldman Advisors, LLC, or Goldman Advisors. Mr. Goldman is the sole member and senior managing director of Goldman Advisors and he has sole power to vote or to direct the vote and to dispose or to direct the disposition of 127,066 common shares. Goldman Advisors and Mr. Goldman may be deemed to share the power to vote or to direct the vote and to dispose or to direct the disposition of the 529,167 common shares beneficially owned by Goldman Advisors. The principal business address of S. Goldman Advisors, LLC and Mr. Goldman is 825 Third Avenue, 34th Floor, New York, NY, 10022. The foregoing information was derived from a Schedule 13D filed with the SEC on December 23, 2010. | |
(6) | Includes 416,667 common shares underlying warrants and 11,111 common shares underlying the 7% Notes. Represents shares owned by Investment Bank of Greece, S.A., or IBG, and Marfin Popular Bank Public Co., Ltd., or Marfin Popular. Marfin Popular is deemed to beneficially own such shares as a result of its approximately 96% ownership of IBG. The principal business address of IBG is 24B Kifissias Avenue, Maroussi, Athens Greece 151 25. The principal business address of Marfin Popular is 154 Limassol Avenue, Nicosia, 2025, Cyprus. The foregoing information was derived from a Schedule 13G/A filed with the SEC on April 13, 2011. |
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B. | Related Party Transactions |
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Item 8. | Financial Information |
A. | Consolidated Statements and Other Financial Information |
• | The charterers of the vessel Newlead Avra notified the Company in October 2008 of their intention to pursue the following claims and notified the appointment of an arbitrator in relation to them: |
a) | Damages suffered bysub-charterers of the vessel in respect of remaining on board cargo at New York in September 2007; | |
b) | Damages suffered bysub-charterers of the vessel as a result of a change in management and the consequent dispute regarding oil major approval from October 2007; and | |
c) | Damages suffered bysub-charterers of the vessel resulting from a grounding at Houston in October 2007. |
• | The charterers of the Newlead Fortune notified the Company in October 2008 of their intention to pursue the following claims, and notified the appointment of an arbitrator in relation to them: |
a) | Damages as a result of a change in management and the consequent dispute regarding oil major approval from October 2007; and | |
b) | Damages resulting from the creation of Hydrogen Sulphide in the vessel’s tanks at two ports in the United States. |
• | The vessel Grand Rodosi was involved in a collision in October 2010 with the fishing vessel “Apollo S”. As of December 31, 2010, the Company is not able to reliably measure the expected possible losses. However, any amounts to be claimed are 100% covered by the P&I Club: |
a) | Value of “Apollo S” plus expenses — the Company has a provided guarantee for A$19,321,242; | |
b) | Damage to wharf — the Company has a provided guarantee for A$3,387,500; and | |
c) | Pollution cleanup costs — the Company has a provided guarantee for A$500,000. |
• | The charterers of the Newlead Esmeralda notified the Company in November 2010 of their intention to pursue the following claim. After discussions with charterers, in March 2011, and following discussions, an agreement was reached that neither party would seek security in the future for the claims relating to the grounding that occurred in March 2010. Based on advice of counsel, we believe the charterer’s chances of success are remote. Below is a list of the claims: |
a) | Damages for lost income as a result of cargo that was not able to be loaded, subsequent to vessel’s grounding in March 2010; | |
b) | Damages resulting from the prolonged storage costs due to the inability to place cargo on board the vessel; and | |
c) | Anticipated costs. |
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B. | Significant Changes |
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Item 9. | The Offer and Listing |
A. | Offer and Listing Details |
High | Low | |||||||
For the Fiscal Year Ended December 31, 2006 | $ | 177.60 | $ | 108.84 | ||||
For the Fiscal Year Ended December 31, 2007 | $ | 125.40 | $ | 70.92 | ||||
For the Fiscal Year Ended December 31, 2008 | $ | 93.24 | $ | 3.72 | ||||
For the Fiscal Year Ended December 31, 2009 | $ | 19.68 | $ | 3.84 | ||||
For the Fiscal Year Ended December 31, 2010 | $ | 12.60 | $ | 2.26 | ||||
For the Quarter Ended | ||||||||
March 31, 2009 | $ | 19.68 | $ | 3.84 | ||||
June 30, 2009 | $ | 13.20 | $ | 4.32 | ||||
September 30, 2009 | $ | 10.44 | $ | 6.72 | ||||
December 31, 2009 | $ | 16.56 | $ | 8.76 | ||||
March 31, 2010 | $ | 11.76 | $ | 7.80 | ||||
June 30, 2010 | $ | 12.60 | $ | 7.56 | ||||
September 30, 2010 | $ | 9.37 | $ | 4.24 | ||||
December 31, 2010 | $ | 4.99 | $ | 2.26 | ||||
March 31, 2011 | $ | 2.88 | $ | 2.05 | ||||
For the Month Ended | ||||||||
January 31, 2011 | $ | 2.88 | $ | 2.35 | ||||
February 28, 2011 | $ | 2.75 | $ | 2.35 | ||||
March 31, 2011 | $ | 2.58 | $ | 2.05 | ||||
April 30, 2011 | $ | 2.30 | $ | 1.99 | ||||
May 31, 2011 | $ | 2.26 | $ | 2.01 | ||||
June 30, 2011 (through June 29, 2011) | $ | 2.30 | $ | 1.69 |
B. | Plan of Distribution |
C. | Markets |
D. | Selling Shareholders |
E. | Dilution |
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F. | Expenses of the issue |
Item 10. | Additional Information |
A. | Share Capital |
B. | Memorandum and Articles of Association |
• | restrict dividends on our common shares; | |
• | dilute the voting power of our common shares; | |
• | impair the liquidation rights of our common shares; and | |
• | discourage, delay or prevent a change of control of our Company. |
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• | prior to the date of the transaction that resulted in the shareholder becoming an interested shareholder, our board of directors approved either the business combination or the transaction that resulted in the shareholder becoming an interested shareholder; | |
• | upon consummation of the transaction that resulted in the shareholder becoming an interested shareholder, the interested shareholder owned at least 85% of our voting shares outstanding at the time the transaction commenced; or | |
• | after the date of the transaction that resulted in the shareholder becoming an interested shareholder, the business combination is approved by the board of directors and authorized at an annual or special meeting of shareholders by the affirmative vote of at least 80% of our outstanding voting shares that are not owned by the interested shareholder. |
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• | the classified board and director election and removal provisions; | |
• | the percentage of approval required for our shareholders to amend our bye-laws; | |
• | the limitations on business combinations between us and interested shareholders; | |
• | the provisions requiring the affirmative vote of the holders of not less than 80% of our outstanding voting shares to amend the foregoing provisions; and | |
• | the limitations on shareholders’ ability to call special meetings, subject to certain rights guaranteed to shareholders under the BCA. |
C. | Material contracts |
D. | Exchange controls |
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E. | Taxation |
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(1) | it is organized in a qualified foreign country, which is one that grants an “equivalent exemption” to corporations organized in the United States in respect of such category of the shipping income for which exemption is being claimed under Section 883 and which we refer to as the “Country of Organization Test”; and |
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(2) | Either |
(A) | more than 50% of the value of its stock is beneficially owned, directly or indirectly, by individuals who are “residents” of a qualified foreign country, which we refer to as the “50% Ownership Test,” or |
(B) | its stock is “primarily and regularly traded on an established securities market” in its country of organization, in another qualified foreign country or in the United States, which we refer to as the “Publicly Traded Test.” |
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• | we have, or are considered to have, a fixed place of business in the United States involved in the earning of shipping income; and | |
• | substantially all of our U.S. source shipping income is attributable to regularly scheduled transportation, such as the operation of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the United States. |
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• | at least 75% of our gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of a rental business), or | |
• | at least 50% of the average value of the assets held by the corporation during such taxable year produce, or are held for the production of, passive income. |
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• | the gain is effectively connected with theNon-U.S. Holder’s conduct of a trade or business in the United States. If theNon-U.S. Holder is entitled to the benefits of an income tax treaty with respect to that gain, that gain is taxable only if it is attributable to a permanent establishment maintained by theNon-U.S. Holder in the United States; or | |
• | theNon-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met. |
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• | fail to provide an accurate taxpayer identification number; | |
• | are notified by the Internal Revenue Service that you have failed to report all interest or dividends required to be shown on your federal income tax returns; or | |
• | in certain circumstances, fail to comply with applicable certification requirements. |
F. | Dividends and paying agents |
G. | Statement by experts |
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H. | Documents on display |
I. | Subsidiary information |
Item 11. | Quantitative and Qualitative Disclosures About Market Risk |
• | On July 5, 2006, we entered into interest rate swaps with five banks on identical terms. These five swaps had an effective date of July 3, 2006 and a maturity date of April 4, 2011. Under the terms of the swap agreements, we paid a fixed interest rate of 5.63% per annum on a total of $100.0 million of our long-term debt. These swap agreements matured and fully settled. | |
• | On April 3, 2008, we entered into a floored swap transaction with one bank and a simultaneous swap and cap transaction with another bank. These two synthetic swaps had an effective date of April 3, 2008 and maturity dates of April 3, 2011 and April 4, 2011, respectively. Under the terms of the floored swap agreement, we paid a fixed interest rate of 4.285% per annum on a total of $23.3 million of our long term debt. Under the terms of the swap and cap transactions, we paid a fixed interest rate of 4.14% on a total of $23.3 million of our long-term debt and we have limited our interest rate exposure to 4.14% on an additional amount of $23.3 million. These swap agreements matured and fully settled. |
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• | In connection with the recapitalization, we entered into a credit facility and an interest rate swap with Marfin Egnatia Bank. On May 6, 2010, we refinanced this credit facility (see Note 12 of our consolidated financial statements). The aforementioned swap was re-attached to the new credit facility and has a termination date of September 2, 2014. Under the terms of the swap agreement, we pay a fixed interest rate of 4.08% per annum on the notional amount of the swap. | |
• | In connection with the acquisition of the two Kamsarmaxes, we assumed two interest rate swaps with the Bank of Scotland both of which had maturity dates of April 4, 2013. Under the terms of the swap agreements, we paid a fixed interest rate of 3.973% per annum. These swaps were amended and extended to conform to the notional amounts, anticipated drawings and repayment schedule as per the loan facilities. The amended and extended swap agreements began on July 6, 2010 and have maturity dates on October 15, 2015 and a fixed interest rate of 4.01% per annum on the notional amount of the swaps. |
Item 12. | Description of Securities Other than Equity Securities |
Item 13. | Defaults, Dividend Arrearages and Delinquencies |
Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds |
Item 15. | Controls and Procedures |
(a) | Disclosure Controls and Procedures |
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(b) | Management’s Annual Report on Internal Control Over Financial Reporting |
(c) | Attestation report of the independent registered public accounting firm |
(d) | Changes in internal control over financial reporting |
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Item 16A. | Audit Committee Financial Expert |
Item 16B. | Code of Ethics |
Item 16C. | Principal Accountant Fees and Services |
Item 16D. | Exemptions from the Listing Standards for Audit Committees |
Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchases |
Item 16F. | Changes in Registrant’s Certifying Accountant |
Item 16G. | Corporate Governance |
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• | We have a board of directors with a majority of independent directors which holds at least one annual meeting at which only independent directors are present, consistent with NASDAQ corporate governance requirements. We are not required under Bermuda law to maintain a board of directors with a majority of independent directors, and we cannot guarantee that we will always in the future maintain a board of directors with a majority of independent directors. | |
• | We have a Governance and Nominating committee comprised of independent directors that is responsible for identifying and recommending potential candidates to become board members and recommending directors for appointment to the board and board committees. Shareholders may also identify and recommend potential candidates to become board members in writing. No formal written charter has been prepared or adopted because this process is outlined in our bye-laws. | |
• | In lieu of obtaining an independent review of related party transactions for conflicts of interests, consistent with Bermuda law requirements, our bye-laws require any director who has a potential conflict of interest to identify and declare the nature of the conflict to our board of directors at the first meeting of the board of directors. Our bye-laws additionally provide that related party transactions must be approved by independent and disinterested directors. | |
• | In lieu of obtaining shareholder approval prior to the issuance of securities, we were required to obtain the consent of the Bermuda Monetary Authority as required by Bermuda law before we issued securities. We have obtained a blanket consent from the Bermuda Monetary Authority. If we choose to issue additional securities, we will not be required to obtain any further consent so long as our common shares are listed. | |
• | As a foreign private issuer, we are not required to solicit proxies or provide proxy statements to NASDAQ pursuant to NASDAQ corporate governance rules or Bermuda law. Consistent with Bermuda law, we will notify our shareholders of meetings between 15 and 60 days before the meeting. This notification will contain, among other things, information regarding business to be transacted at the meeting. In addition, our bye-laws provide that shareholders must give us advance notice to properly introduce any business at a meeting of the shareholders. Our bye-laws also provide that shareholders may designate a proxy to act on their behalf (in writing or by telephonic or electronic means as approved by our board from time to time). |
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Item 17. | Financial Statements |
Item 18. | Financial Statements |
Item 19. | Exhibits |
1 | .1 | Amended and Restated Memorandum of Association of NewLead Holdings Ltd. (Previously filed as Exhibit 99.1 to the Company’s Report onForm 6-K, filed on September 30, 2009, and hereby incorporated by reference.) | ||
1 | .2 | Certificate of Incorporation on Change of Name (Previously filed as Exhibit 1.1 to the Company’s Report onForm 6-K, filed on January 8, 2010, and hereby incorporated by reference.) | ||
1 | .3 | Amended and Restated Bye-laws of the Company (Previously filed as Exhibit 3.1 to the Company’s Report onForm 6-K, filed on January 27, 2010, and hereby incorporated by reference.) | ||
2 | .1 | Indenture, dated as of October 13, 2009, between the Company and Marfin Egnatia Bank S.A. (Previously filed as Exhibit 99.1 to the Company’s Report onForm 6-K, filed on October 22, 2009, and hereby incorporated by reference.) | ||
2 | .2 | Form of Note Purchase Agreement, dated October 13, 2009, among the Company, each of the purchasers listed on the signature thereto, and Marfin Egnatia Bank S.A. (Previously filed as Exhibit 99.2 to the Company’s Report onForm 6-K, filed on October 22, 2009, and hereby incorporated by reference.) | ||
2 | .3 | Form of 7% Convertible Senior Note Due 2015, dated as of October 13, 2009, made by the Company (Previously filed as Exhibit 99.3 to the Company’s Report onForm 6-K, filed on October 22, 2009, and hereby incorporated by reference.) | ||
2 | .4 | Warrant Certificate, dated October 13, 2009 from the Company to Investment Bank of Greece (Previously filed as Exhibit 99.8 to the Company’s Report onForm 6-K, filed on October 22, 2009, and hereby incorporated by reference.) | ||
4 | .1 | Form of Equity Incentive Plan (Previously filed as Exhibit 10.6 to the Company’s 10.6 to the Company’s registration statement onForm F-1/A (RegistrationNo. 333-124952) and hereby incorporated by reference.) | ||
4 | .2 | Amendment to Equity Incentive Plan (Previously filed as Exhibit 4.9 to the Company’s Annual Report onForm 20-F, filed on June 26, 2009 and hereby incorporated by reference.) | ||
4 | .3 | Amendment to Equity Incentive Plan, dated October 14, 2010. | ||
4 | .4 | Fifth Supplemental Agreement, dated June 11, 2008, between the Company and The Bank of Scotland relating to the Credit Agreement, dated April 3, 2006 among the Company and The Bank of Scotland and Nordea Bank Finland as joint lead arrangers (Previously filed as Exhibit 4.7 to the Company’s Annual Report onForm 20-F, filed on June 30, 2008, and hereby incorporated by reference.) | ||
4 | .5 | Sixth Supplemental Agreement, dated June 24, 2009, between the Company and The Bank of Scotland relating to a Credit Agreement, dated April 3, 2006, among the Company and The Bank of Scotland and Nordea Bank Finland as joint lead arrangers (Previously filed as Exhibit 4.8 to the Company’s Annual Report onForm 20-F, filed on June 26, 2009, and hereby incorporated by reference.) | ||
4 | .6 | $145 Million Convertible Bond Commitment Letter, dated July 15, 2009, between Investment Bank of Greece and the Company (Previously filed as Exhibit 99.F to the Schedule 13D of Grandunion Inc., filed on September 28, 2009, and hereby incorporated by reference.) | ||
4 | .7 | Financial Agreement, dated August 18, 2009, among Marfin Bank, Australia Holdings Ltd., China Holdings Ltd. and Brazil Holdings Ltd. (Previously filed as Exhibit 10.1 to the Company’s Report onForm 6-K, filed on January 27, 2010, and hereby incorporated by reference.) |
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4 | .8 | Registration Rights Agreement, dated September 16, 2009 among Grandunion Inc., Rocket Marine Inc. and the Company (Previously filed as Exhibit 99.D to the Schedule 13D (Amendment No. 1) of Grandunion Inc. and Focus Maritime Corp., filed on October 22, 2009, and hereby incorporated by reference.) | ||
4 | .9 | Voting Agreement, dated September 16, 2009 among Grandunion Inc., Rocket Marine Inc. Gabriel Petrides, Mons S. Bolin and Aries Energy Corporation and acknowledged by the Company (Previously filed as Exhibit 99.B to the Schedule 13D of Grandunion Inc., filed on September 28, 2009, and hereby incorporated by reference.) | ||
4 | .10 | Lock-Up Agreement, dated September 16, 2009, among Grandunion Inc., Rocket Marine Inc., Gabriel Petrides, Mons S. Bolin and Aries Energy Corporation and acknowledged by the Company (Previously filed as Exhibit 99.C to the Schedule 13D of Grandunion Inc., filed on September 28, 2009 and hereby incorporated by reference.) | ||
4 | .10 | Lock-Up Agreement, dated September 16, 2009, among Grandunion Inc., Rocket Marine Inc., Gabriel Petrides, Mons S. Bolin and Aries Energy Corporation and acknowledged by the Company (Previously filed as Exhibit 99.D to the Schedule 13D of Grandunion Inc., filed on September 28, 2009 and hereby incorporated by reference.) | ||
4 | .11 | Lock-Up Agreement, dated September 16, 2009, between Grandunion Inc. and the Company (Previously filed as Exhibit 99.E to the Schedule 13D of Grandunion Inc., filed on September 28, 2009 and hereby incorporated by reference.) | ||
4 | .12 | Facility Agreement, dated October 13, 2009, among the Company, Bank of Scotland plc, Nordea Bank Finland plc, London Branch, HSH Nordbank AG, The Governor and the Company of the Bank of Ireland, Sumitomo Mitsui Banking Corporation, Brussels Branch, Bayerische Hypo-und Vereinsbank AG, Commerzbank Aktiengesellschaft, General Electric Capital Corporation, Natixis and Swedbank AB (publ) (Previously filed as Exhibit 99.5 to the Company’s Report onForm 6-K, filed on October 22, 2009, and hereby incorporated by reference.) | ||
4 | .13 | Warrant Purchase Agreement, dated October 13, 2009, between the Company and Investment Bank of Greece (Previously filed as Exhibit 99.6 to the Company’s Report onForm 6-K, filed on October 22, 2009 and hereby incorporated by reference.) | ||
4 | .14 | Warrant Agreement, dated October 13, 2009, between the Company and Investment Bank of Greece (Previously filed as Exhibit 99.7 to the Company’s Report onForm 6-K, filed on October 22, 2009 and hereby incorporated by reference.) | ||
4 | .15 | Registration Rights Agreement, dated October 13, 2009, among Investment Bank of Greece, Focus Maritime Corp. and the Company (Previously filed as Exhibit 99.4 to the Company’s Report onForm 6-K, filed on October 22, 2009 and hereby incorporated by reference.) | ||
4 | .16 | $80 Million Secured Senior and Junior Term Loan Facility Commitment Letter, dated February 19, 2009 between Bank of Scotland and the Company, as guarantor (Previously filed as Exhibit 4.16 to the Company’s Annual Report onForm 20-F, filed on March 18, 2010, and hereby incorporated by reference.) | ||
4 | .17 | Escrow Agreement, dated April 1, 2010, between the Company and Grandunion Inc. and Computershare Trust Company N.A. (Previously filed as Exhibit 10.1 to the Company’s Report onForm 6-K, filed on April 26, 2010, and hereby incorporated by reference.) | ||
4 | .18 | Registration Rights Agreement, dated April 1, 2010, between the Company and Grandunion Inc. (Previously filed as Exhibit 10.2 to the Company’s Report onForm 6-K, filed on April 26, 2010 and hereby incorporated by reference.) | ||
4 | .19 | Second Supplemental Agreement, dated April 1, 2010, in relation to the Loan Agreement, dated November 10, 2006, between the Company and Commerzbank, for a loan facility of up to $18.0 million. (Previously filed as Exhibit 10.4 to the Company’s Report onForm 6-K, filed on April 26, 2010, and hereby incorporated by reference.) | ||
4 | .20 | Loan Agreement, dated March 19, 2008, between the Company and Piraeus Bank, for a loan of up to $76.0 million. (Previously filed as Exhibit 10.6 to the Company’s Report onForm 6-K, filed on April 26, 2010 and hereby incorporated by reference.) |
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4 | .21 | Second Supplemental Agreement, dated March 31, 2010, relating to the Loan Agreement dated March 19, 2008, between the Company and Piraeus Bank, for a loan of up to $76.0 million. (Previously filed as Exhibit 10.7 to the Company’s Report onForm 6-K, filed on April 26, 2010, and hereby incorporated by reference.) | ||
4 | .22 | Loan Agreement, dated March 31, 2010, between the Company and Piraeus Bank, for a loan of up to $21.0 million. (Previously filed as Exhibit 10.8 to the Company’s Report onForm 6-K, filed on April 26, 2010, and hereby incorporated by reference.) | ||
4 | .23 | Financial Agreement dated March 31, 2010, between the Company and Marfin Egnatia Bank S.A, for a credit facility up to $35.0 million. (Previously filed as Exhibit 10.9 to the Company’s Report onForm 6-K, filed on April 26, 2010, and hereby incorporated by reference.) | ||
4 | .24 | Senior Facility Agreement dated April 15, 2010, among the Company, Bank of Scotland, BTMU Capital Corporation and Bank of Ireland, for a loan up to $66.7 million. (Previously filed as Exhibit 10.1 to the Company’s Report onForm 6-K, filed on July 19, 2010, and hereby incorporated by reference.) | ||
4 | .25 | Junior Facility Agreement dated April 15, 2010, among the Company, Bank of Scotland and BTMU Capital Corporation for a loan up to $13.3 million. (Previously filed as Exhibit 10.2 to the Company’s Report onForm 6-K, filed on July 19, 2010, and hereby incorporated by reference.) | ||
4 | .26 | Supplemental Deed dated April 26, 2010, among the Company, Bank of Scotland plc and Nordea Bank Finland plc, relating to a $221.4 million term loan facility. (Previously filed as Exhibit 10.3 to the Company’s Report onForm 6-K, filed on July 19, 2010, and hereby incorporated by reference.) | ||
4 | .27 | Financial Agreement dated May 6, 2010, between the Company and Marfin Egnatia Bank S.A, for a credit facility up to $65.28 million. (Previously filed as Exhibit 10.4 to the Company’s Report onForm 6-K, filed on July 19, 2010, and hereby incorporated by reference.) | ||
4 | .28 | Loan Agreement, dated October 16, 2007, as novated, amended and restated March 31, 2010, between the Company and West LB, and as further novated, amended and restated on June 4, 2010, relating to a term loan facility of up to $27.5 million. (Previously filed as Exhibit 10.5 to the Company’s Report onForm 6-K, filed on July 19, 2010 and hereby incorporated by reference.) | ||
4 | .29 | Loan Agreement dated July 2, 2010, with First Business Bank for a loan facility of up to $24.15 million. (Previously filed as Exhibit 10.1 to the Company’s Report onForm 6-K, filed on September 21, 2010, and hereby incorporated by reference.) | ||
4 | .30 | Third Supplemental Agreement dated July 2, 2010, relating to the $14.75 million loan facility with Emporiki Bank. (Previously filed as Exhibit 10.3 to the Company’s Report onForm 6-K, filed on September 21, 2010 and hereby incorporated by reference.) | ||
4 | .31 | Fourth Supplemental Agreement dated September 8, 2010, relating to the $14.75 million loan facility with Emporiki Bank. (Previously filed as Exhibit 10.4 to the Company’s Report onForm 6-K, filed on September 21, 2010 and hereby incorporated by reference.) | ||
4 | .32 | Loan Agreement dated October 22, 2007, with EFG Eurobank for a loan facility of up to $32.0 million. (Previously filed as Exhibit 10.5 to the Company’s Report onForm 6-K, filed on September 21, 2010 and hereby incorporated by reference.) | ||
4 | .33 | Third Supplemental Agreement dated July 9, 2010, relating to the $32.0 million loan facility with EFG Eurobank. (Previously filed as Exhibit 10.6 to the Company’s Report onForm 6-K, filed on September 21, 2010, and hereby incorporated by reference.) | ||
4 | .34 | Fourth Supplemental Agreement dated August 13, 2010 relating to the $32.0 million loan facility with EFG Eurobank. (Previously filed as Exhibit 10.7 to the Company’s Report onForm 6-K, filed on September 21, 2010, and hereby incorporated by reference.) | ||
4 | .35 | Loan Agreement dated July 9, 2010, with DVB Bank, Nord LB and Emporiki Bank for a loan facility of up to $48.0 million. (Previously filed as Exhibit 10.8 to the Company’s Report onForm 6-K, filed on September 21, 2010 and hereby incorporated by reference.) | ||
4 | .36 | First Supplemental Agreement dated July 14, 2010, relating to the $48.0 million loan facility with DVB Bank, Nord LB and Emporiki Bank. (Previously filed as Exhibit 10.9 to the Company’s Report onForm 6-K, filed on September 21, 2010, and hereby incorporated by reference.) |
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4 | .37 | Loan Agreement dated December 10, 2010, with Marfin Egnatia Bank for a reducing revolving credit facility of up to $62.0 million. (Previously filed as Exhibit 10.1 to the Company’s Report onForm 6-K, filed on January 11, 2011 and hereby incorporated by reference.) | ||
4 | .38 | Second Supplemental Agreement dated November 9, 2010, relating to the $48.0 million loan facility with DVB Bank, Nord LB and Emporiki Bank. (Previously filed as Exhibit 10.2 to the Company’s Report onForm 6-K, filed on January 11, 2011 and hereby incorporated by reference.) | ||
4 | .39 | Third Supplemental Agreement dated December 15, 2010, relating to the $48.0 million loan facility with DVB Bank, Nord LB and Emporiki Bank. (Previously filed as Exhibit 10.3 to the Company’s Report onForm 6-K, filed on January 11, 2011, and hereby incorporated by reference.) | ||
4 | .40 | Third Supplemental Agreement, dated November 5, 2010, in relation to the Loan Agreement, dated November 10, 2006, between the Company and Commerzbank, for a loan facility of up to $18.0 million. | ||
4 | .41 | First Supplemental Agreement, dated October 15, 2010, in relation to Loan Agreement with First Business Bank dated July 2, 2010, for a loan facility of up to $24.15 million. | ||
4 | .42 | Loan Agreement dated May 9, 2011, with First Business Bank for a loan facility of up to $12.0 million. | ||
4 | .43 | Second Supplemental Agreement, dated May 9, 2011, in relation to the Loan Agreement dated July 2, 2010, with First Business Bank, for a loan facility of up to $24.15 million. | ||
4 | .44 | Fifth Supplemental Agreement dated November 8, 2010, relating to the $14.75 million loan facility with Emporiki Bank. | ||
4 | .45 | Fifth Supplemental Agreement dated October 15, 2010, relating to the $32.0 million loan facility with EFG Eurobank. | ||
4 | .46 | Amendment to Escrow Agreement, dated July 2, 2010, between the Company and Grandunion Inc. and Computershare Trust Company N.A. | ||
4 | .47 | Bareboat Agreement, dated November 23, 2010, between the Grand Rodosi Inc. and Prime Hill Maritime Ltd. | ||
4 | .48 | Bareboat Agreement, dated November 23, 2010, between Australia Holdings Ltd. and Prime Mountain Maritime Ltd. | ||
4 | .49 | Bareboat Agreement, dated November 23, 2010, between Brazil Holdings Ltd. and Prime Lake Maritime Ltd. | ||
4 | .50 | Bareboat Agreement, dated November 23, 2010, between China Holdings Ltd. and Prime Time Maritime Ltd. | ||
4 | .51 | Shares Issuance Agreement, dated January 20, 2011, between the Company and Lemissoler Corporate Management Ltd. | ||
4 | .52 | Bareboat Agreement, dated June 8, 2011, between Curby Navigation Ltd. and Endurance Shipping LLC. | ||
8 | .1 | List of Subsidiaries | ||
12 | .1 | Rule 13a-14(a)/15d-14(a) Certification of the Company’s Chief Executive Officer. | ||
12 | .2 | Rule 13a-14(a)/15d-14(a) Certification of the Company’s Chief Financial Officer. | ||
13 | .1 | Certification of the Company’s Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
13 | .2 | Certification of the Company’s Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
15 | .1 | Consent of PricewaterhouseCoopers S.A. |
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F-3
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CONSOLIDATED BALANCE SHEETS
(All amounts expressed in thousands of U.S. dollars except share amounts)
As of | As of | ||||||||||||||
December 31, | December 31, | ||||||||||||||
Note | 2010 | 2009 | |||||||||||||
ASSETS | |||||||||||||||
Current assets | |||||||||||||||
Cash and cash equivalents | $ | 67,531 | $ | 106,255 | |||||||||||
Restricted cash | 7 | 12,606 | 403 | ||||||||||||
Trade receivables, net | 6,025 | 4,572 | |||||||||||||
Other receivables | 2,333 | 496 | |||||||||||||
Due from related parties | 100 | 40 | |||||||||||||
Inventories | 8 | 2,986 | 3,085 | ||||||||||||
Prepaid expenses | 1,909 | 1,082 | |||||||||||||
Due from managing agents | 587 | 8 | |||||||||||||
Backlog asset | 9 | 8,492 | 5,528 | ||||||||||||
Total current assets | 102,569 | 121,469 | |||||||||||||
Restricted cash | 7 | 30,700 | 9,668 | ||||||||||||
Vessels under construction | 10 | 32,253 | — | ||||||||||||
Assets held for sale | — | 8,250 | |||||||||||||
Vessels and other fixed assets, net | 11 | 455,416 | 253,115 | ||||||||||||
Goodwill | 6 | 81,590 | 86,036 | ||||||||||||
Backlog asset | 9 | 46,165 | — | ||||||||||||
Deferred charges, net | 12 | 13,040 | 6,831 | ||||||||||||
Total non-current assets | 659,164 | 363,900 | |||||||||||||
Total assets | $ | 761,733 | $ | 485,369 | |||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||
Current liabilities | |||||||||||||||
Current portion of long-term debt | 15 | $ | 26,773 | $ | 14,240 | ||||||||||
Accounts payable, trade | 13 | 35,876 | 11,048 | ||||||||||||
Accrued liabilities | 14 | 17,370 | 16,957 | ||||||||||||
Capital lease obligations | 17 | 7,648 | — | ||||||||||||
Deferred charter revenue | 9 | 476 | — | ||||||||||||
Deferred income | 880 | 226 | |||||||||||||
Derivative financial instruments | 21 | 5,319 | 9,687 | ||||||||||||
Due to related parties | 115 | 234 | |||||||||||||
Due to managing agent | 282 | 1,868 | |||||||||||||
Total current liabilities | 94,739 | 54,260 | |||||||||||||
Non-current liabilities | |||||||||||||||
Derivative financial instruments | 21 | 4,642 | 7,407 | ||||||||||||
Senior convertible 7% notes, net | 16 | 55,877 | 41,430 | ||||||||||||
Capital lease obligations | 17 | 77,319 | — | ||||||||||||
Unearned profit | 17 | 10,399 | — | ||||||||||||
Deferred charter revenue | 9 | 91 | — | ||||||||||||
Deferred income | 1,325 | 730 | |||||||||||||
Other non-current liabilities | 20,665 | — | |||||||||||||
Long-term debt | 15 | 421,042 | 223,030 | ||||||||||||
Total non-current liabilities | 591,360 | 272,597 | |||||||||||||
Total liabilities | 686,099 | 326,857 | |||||||||||||
Commitments and contingencies | 22 | ||||||||||||||
Shareholders’ equity | |||||||||||||||
Preference Shares, $0.01 par value, 500 million shares authorized, none issued | — | — | |||||||||||||
Common Shares, $0.01 par value, 1 billion shares authorized, 7.3 million and 6.6 million shares issued and outstanding as of December 31, 2010 and December 31, 2009, respectively | 74 | 67 | |||||||||||||
Additional paid-in capital | 208,281 | 196,317 | |||||||||||||
Accumulated deficit | (132,721 | ) | (37,872 | ) | |||||||||||
Total shareholders’ equity | 75,634 | 158,512 | |||||||||||||
Total liabilities and shareholders’ equity | $ | 761,733 | $ | 485,369 | |||||||||||
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CONSOLIDATED STATEMENTS OF OPERATIONS
(All amounts expressed in thousands of U.S. dollars except share and per share amounts)
Successor | Predecessor | ||||||||||||||||||||
Year Ended | October 14, to | January 1, to | Year Ended | ||||||||||||||||||
December 31, | December 31, | October 13, | December 31, | ||||||||||||||||||
Note | 2010 | 2009 | 2009 | 2008 | |||||||||||||||||
OPERATING REVENUES | $ | 102,733 | $ | 14,096 | $ | 33,564 | $ | 56,519 | |||||||||||||
EXPENSES: | |||||||||||||||||||||
Commissions | (2,345 | ) | (407 | ) | (769 | ) | (689 | ) | |||||||||||||
Voyage expenses | (18,793 | ) | (4,634 | ) | (8,574 | ) | (6,323 | ) | |||||||||||||
Vessel operating expenses | (39,219 | ) | (6,530 | ) | (22,681 | ) | (19,798 | ) | |||||||||||||
General and administrative expenses | (15,592 | ) | (12,025 | ) | (8,366 | ) | (7,816 | ) | |||||||||||||
Depreciation and amortization expenses | (39,558 | ) | (4,844 | ) | (11,813 | ) | (15,040 | ) | |||||||||||||
Impairment losses | 3, 6, 22 | (39,515 | ) | — | (68,042 | ) | — | ||||||||||||||
Loss on sale from vessels, net | (1,560 | ) | — | — | — | ||||||||||||||||
Management fees | (1,007 | ) | (315 | ) | (900 | ) | (1,404 | ) | |||||||||||||
(157,589 | ) | (28,755 | ) | (121,145 | ) | (51,070 | ) | ||||||||||||||
Operating (loss) / income from continuing operations | (54,856 | ) | (14,659 | ) | (87,581 | ) | 5,449 | ||||||||||||||
OTHER (EXPENSES) / INCOME, NET: | |||||||||||||||||||||
Interest and finance expense | 15 | (44,899 | ) | (23,996 | ) | (10,928 | ) | (15,741 | ) | ||||||||||||
Interest income | 550 | 236 | 9 | 232 | |||||||||||||||||
Other (expense) / income, net | (5 | ) | — | 40 | 2 | ||||||||||||||||
Change in fair value of derivatives | 21 | 1,592 | 2,554 | 3,012 | (6,515 | ) | |||||||||||||||
Total other expenses, net | (42,762 | ) | (21,206 | ) | (7,867 | ) | (22,022 | ) | |||||||||||||
Loss from continuing operations | (97,618 | ) | (35,865 | ) | (95,448 | ) | (16,573 | ) | |||||||||||||
Income/(loss) from discontinued operations | 25 | 2,769 | (2,007 | ) | (30,316 | ) | (23,255 | ) | |||||||||||||
Net loss | $ | (94,849 | ) | $ | (37,872 | ) | $ | (125,764 | ) | $ | (39,828 | ) | |||||||||
(Loss) / income per share: | |||||||||||||||||||||
Basic and diluted | |||||||||||||||||||||
Continuing operations | $ | (14.03 | ) | $ | (6.42 | ) | $ | (39.84 | ) | $ | (6.94 | ) | |||||||||
Discontinued operations | $ | 0.40 | $ | (0.36 | ) | $ | (12.65 | ) | $ | (9.75 | ) | ||||||||||
Total | $ | (13.63 | ) | $ | (6.78 | ) | $ | (52.49 | ) | $ | (16.69 | ) | |||||||||
Weighted average number of shares: | |||||||||||||||||||||
Basic and diluted | 6,958,903 | 5,588,937 | 2,395,858 | 2,386,182 | |||||||||||||||||
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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(All amounts expressed in thousands of U.S. dollars except share amounts)
Additional | Total | |||||||||||||||||||||||
Common | Share | Paid-in | Accumulated | Shareholders’ | ||||||||||||||||||||
Note | Shares | Capital | Capital | Deficit | Equity | |||||||||||||||||||
Balance at January 1, 2008 (Predecessor) | 2,385 | $ | 24 | $ | 115,828 | $ | (8,733 | ) | $ | 107,119 | ||||||||||||||
Net loss | — | — | — | (39,828 | ) | (39,828 | ) | |||||||||||||||||
Issuance of common shares | 18, 19 | 29 | 0 | 4 | — | 4 | ||||||||||||||||||
Share-based compensation | 18 | — | — | 1,083 | — | 1,083 | ||||||||||||||||||
Dividends paid | — | — | (2,862 | ) | — | (2,862 | ) | |||||||||||||||||
Balance at December 31, 2008 (Predecessor) | 2,414 | 24 | 114,053 | (48,561 | ) | 65,516 | ||||||||||||||||||
Net loss | — | — | — | (125,764 | ) | (125,764 | ) | |||||||||||||||||
Issuance of common shares | 18, 19 | 7 | 1 | — | — | 1 | ||||||||||||||||||
Share-based compensation | 18 | — | — | 793 | — | 793 | ||||||||||||||||||
Balance at October 13, 2009 (Predecessor) | 2,421 | $ | 25 | $ | 114,846 | $ | (174,325 | ) | $ | (59,454 | ) | |||||||||||||
(Successor) | ||||||||||||||||||||||||
Change in control — basis adjustment | — | $ | — | $ | (77,978 | ) | $ | 174,325 | $ | 96,347 | ||||||||||||||
Contribution of vessels | 19 | 1,582 | 16 | 34,981 | — | 34,997 | ||||||||||||||||||
Beneficial conversion feature on the convertible senior 7% notes | 16 | — | — | 100,536 | — | 100,536 | ||||||||||||||||||
Conversion of the convertible senior 7% notes ($20m) | 16, 19 | 2,222 | 22 | 19,978 | — | 20,000 | ||||||||||||||||||
Net loss | — | — | — | (37,872 | ) | (37,872 | ) | |||||||||||||||||
Share-based compensation | 18, 19 | 390 | 4 | 3,954 | — | 3,958 | ||||||||||||||||||
Balance at December 31, 2009 (Successor) | 6,615 | 67 | 196,317 | (37,872 | ) | 158,512 | ||||||||||||||||||
Net loss | — | — | — | (94,849 | ) | (94,849 | ) | |||||||||||||||||
Issuance of common shares | 18, 19 | 13 | 0 | — | — | 0 | ||||||||||||||||||
Shares issued for business acquisition | 5, 19 | 700 | 7 | 5,203 | — | 5,210 | ||||||||||||||||||
Warrants | 12, 21 | — | — | 4,081 | — | 4,081 | ||||||||||||||||||
Share-based compensation | 18 | — | — | 2,680 | — | 2,680 | ||||||||||||||||||
Balance at December 31, 2010 (Successor) | 7,328 | $ | 74 | $ | 208,281 | $ | (132,721 | ) | $ | 75,634 | ||||||||||||||
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts expressed in thousands of U.S. dollars)
Successor | Predecessor | ||||||||||||||||
Year Ended | October 14, to | January 1, to | Year Ended | ||||||||||||||
December 31, | December 31, | October 13, | December 31, | ||||||||||||||
2010 | 2009 | 2009 | 2008 | ||||||||||||||
OPERATING ACTIVITIES: | |||||||||||||||||
Net loss | $ | (94,849 | ) | $ | (37,872 | ) | $ | (125,764 | ) | $ | (39,828 | ) | |||||
Adjustments to reconcile net loss to net cash (used in) / provided by operating activities: | |||||||||||||||||
Depreciation and amortization | 30,028 | 3,656 | 17,368 | 30,493 | |||||||||||||
Impairment losses | 39,515 | — | 91,601 | 30,075 | |||||||||||||
Provision for doubtful receivables | 316 | — | 292 | 1,018 | |||||||||||||
Amortization and write-off of deferred financing costs | 3,728 | 1,391 | 555 | 1,333 | |||||||||||||
Amortization of deferred charter revenue | (3,194 | ) | — | (1,694 | ) | (8,115 | ) | ||||||||||
Amortization of backlog asset | 13,890 | 1,992 | — | — | |||||||||||||
Amortization of the beneficial conversion feature | 14,442 | 17,000 | — | — | |||||||||||||
Change in fair value of derivative financial instruments | (8,449 | ) | (2,554 | ) | (3,012 | ) | 6,515 | ||||||||||
Payments for dry-docking / special survey costs | (3,548 | ) | (1,040 | ) | (4,306 | ) | (2,159 | ) | |||||||||
Share-based compensation | 2,680 | 3,958 | 793 | 1,083 | |||||||||||||
Warrants compensation expense | — | 3,940 | — | — | |||||||||||||
Loss / (gain) on sale from vessels | (938 | ) | — | 5,584 | (13,569 | ) | |||||||||||
(Increase) decrease in: | |||||||||||||||||
Trade receivables | (927 | ) | (783 | ) | (1,480 | ) | (1,332 | ) | |||||||||
Other receivables | 676 | 89 | 1,704 | (1,256 | ) | ||||||||||||
Inventories | 617 | (110 | ) | (1,489 | ) | 745 | |||||||||||
Prepaid expenses | 700 | 20 | (135 | ) | 714 | ||||||||||||
Due from/to managing agent | (2,712 | ) | 455 | 1,759 | 654 | ||||||||||||
Due from/to related parties | (668 | ) | — | 49 | (643 | ) | |||||||||||
Increase (decrease) in: | |||||||||||||||||
Accounts payable, trade | (823 | ) | 991 | 6,546 | (4,822 | ) | |||||||||||
Accrued liabilities | (938 | ) | 4,571 | 2,206 | 2,479 | ||||||||||||
Deferred income | 769 | (1,573 | ) | (1,134 | ) | (484 | ) | ||||||||||
Net cash (used in) / provided by operating activities | (9,685 | ) | (5,869 | ) | (10,557 | ) | 2,901 | ||||||||||
INVESTING ACTIVITIES: | |||||||||||||||||
Vessel acquisitions | (1,601 | ) | — | — | — | ||||||||||||
Vessels under construction | (45,126 | ) | — | — | — | ||||||||||||
Advances for vessel acquisitions | (3,177 | ) | — | — | — | ||||||||||||
Restricted cash | (11,033 | ) | — | — | 1,548 | ||||||||||||
Cash acquired through business acquisition, net of cash paid | 1,561 | — | — | — | |||||||||||||
Other fixed asset acquisitions | (76 | ) | — | (63 | ) | (27 | ) | ||||||||||
Proceeds from the sale of vessels | 37,263 | — | 2,279 | 59,562 | |||||||||||||
Net cash (used in) / provided by investing activities | (22,189 | ) | — | 2,216 | 61,083 | ||||||||||||
FINANCING ACTIVITIES: | |||||||||||||||||
Principal repayments of long-term debt | (482,243 | ) | (57,400 | ) | (2,280 | ) | (61,090 | ) | |||||||||
Proceeds from long-term debt | 419,445 | 35,840 | — | — | |||||||||||||
Proceeds from senior convertible 7% notes, net | — | 140,718 | — | — | |||||||||||||
Restricted cash for debt repayment | (21,038 | ) | (8,173 | ) | 6,612 | (8,471 | ) | ||||||||||
Proceeds from the sale and leaseback of vessels | 86,800 | — | — | — | |||||||||||||
Capital lease payments | (1,833 | ) | — | — | — | ||||||||||||
Payments for deferred charges | (7,982 | ) | — | — | — | ||||||||||||
Shareholders contribution | — | 1,139 | — | — | |||||||||||||
Proceeds from issuance of common shares | 1 | — | — | 4 | |||||||||||||
Dividends paid | — | — | — | (2,862 | ) | ||||||||||||
Net cash (used in) / provided by financing activities | (6,850 | ) | 112,124 | 4,332 | (72,419 | ) | |||||||||||
Net (decrease) / increase in cash and cash equivalents | (38,724 | ) | 106,255 | (4,009 | ) | (8,435 | ) | ||||||||||
Cash and cash equivalents | |||||||||||||||||
Beginning of year / period | 106,255 | — | 4,009 | 12,444 | |||||||||||||
End of year / period | $ | 67,531 | $ | 106,255 | $ | — | $ | 4,009 | |||||||||
Supplemental Cash Flow information: | |||||||||||||||||
Interest paid | $ | 23,684 | $ | 663 | $ | 13,140 | $ | 13,453 | |||||||||
Issuance of common shares for business combination | $ | 5,210 | — | — | — | ||||||||||||
Issuance of warrants for deferred charges | $ | 957 | — | — | — | ||||||||||||
Assets disposed in connection with assumed acquisitions | $ | 8,501 | — | — | — | ||||||||||||
Assets acquired and liabilities assumed under asset acquisitions: | |||||||||||||||||
- Acquired advances for vessels under construction | $ | 29,315 | — | — | — | ||||||||||||
- Vessels and other fixed assets, net acquired | $ | 81,110 | — | — | — | ||||||||||||
- Long-term debt assumed | $ | 118,868 | — | — | — | ||||||||||||
Acquired other assets / liabilities, net | $ | 40,098 | — | — | — | ||||||||||||
Assets acquired and liabilities assumed under business acquisitions: | |||||||||||||||||
- Vessels and other fixed assets, net acquired | $ | 143,808 | — | — | — | ||||||||||||
- Long-term debt assumed | $ | 154,475 | — | — | — | ||||||||||||
- Other assets and liabilities, net acquired | $ | 36 | — | — | — |
F-7
Table of Contents
Notes to the Consolidated Financial Statements
(All amounts expressed in thousands of U.S. dollars except share and per share data and where otherwise specified)
1. | DESCRIPTION OF BUSINESS |
F-8
Table of Contents
• | ISO 9001 from American Bureau of Shipping Quality Evaluations for a quality management system, by consistently providing service that meets customer and applicable statutory and regulatory requirements, and by enhancing customer satisfaction through, among other things, processes for continual improvement; | |
• | ISO 14001 from American Bureau of Shipping for environmental management, including policies and objectives targeting legal and other requirements; and | |
• | Certificate of Company Compliance by the American Bureau of Shipping for safety, quality and environmental requirements of the ABS HSQE guide. |
F-9
Table of Contents
F-10
Table of Contents
2. | SUBSIDIARIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS |
Successor | Predecessor | ||||||||||
Country of | Periods that | Periods that | |||||||||
Company Name | Incorporation | Nature / Vessel Name | vessel operated | vessel operated | |||||||
1. | Land Marine S.A. | Marshall Islands | Vessel owning company(1) | 10/14/2009 – 9/15/2010 | 3/07/2003 – 10/13/2009 | ||||||
2. | Rider Marine S.A. | Marshall Islands | Vessel owning company(2) | 10/14/2009 – 4/22/2010 | 3/18/2003 – 10/13/2009 | ||||||
3. | Ostria Waves Ltd. | Marshall Islands | Vessel owning company(3) | 10/14/2009 – 9/07/2010 | 5/25/2004 – 10/13/2009 | ||||||
4. | Altius Marine S.A. | Marshall Islands | Newlead Avra(4) | 10/14/2009 – 12/31/2010 | 6/24/2004 – 10/13/2009 | ||||||
5. | Fortius Marine S.A. | Marshall Islands | Newlead Fortune(5) | 10/14/2009 – 12/31/2010 | 8/02/2004 – 10/13/2009 | ||||||
6. | Ermina Marine Ltd. | Marshall Islands | Vessel owning company(6) | 10/14/2009 – 9/07/2010 | 12/09/2004 – 10/13/2009 | ||||||
7. | Chinook Waves Corporation | Marshall Islands | Vessel owning company(7) | 10/14/2009 – 4/15/2010 | 11/30/2005 – 10/13/2009 | ||||||
8. | Compass Overseas Ltd. | Bermuda | M/T Newlead Compass(8) | 10/14/2009 – 12/31/2010 | 2/14/2006 – 10/13/2009 | ||||||
9. | Compassion Overseas Ltd. | Bermuda | M/T Newlead Compassion | 10/14/2009 – 12/31/2010 | 6/16/2006 – 10/13/2009 | ||||||
10. | Australia Holdings Ltd. | Liberia | M/V Australia | 10/14/2009 – 12/31/2010 | — | ||||||
11. | Brazil Holdings Ltd. | Liberia | M/V Brazil | 10/14/2009 – 12/31/2010 | — | ||||||
12. | China Holdings Ltd. | Liberia | M/V China | 10/14/2009 – 12/31/2010 | — | ||||||
13. | Curby Navigation Ltd. | Liberia | Hull S-1125(9) | — | — | ||||||
14. | Newlead Victoria Ltd. | Liberia | M/V Newlead Victoria(10) | 4/01/2010 – 12/31/2010 | — | ||||||
15. | Grand Venetico Inc. | Marshall Islands | M/V Grand Venetico | 4/01/2010 – 12/31/2010 | — | ||||||
16. | Grand Oceanos Inc. | Liberia | M/V Grand Oceanos | 4/01/2010 – 12/31/2010 | — | ||||||
17. | Grand Rodosi Inc. | Liberia | M/V Grand Rodosi | 4/01/2010 – 12/31/2010 | — | ||||||
18. | Challenger Enterprises Ltd. | Liberia | M/V Hiona | 4/01/2010 – 12/31/2010 | — | ||||||
19. | Crusader Enterprises Ltd. | Liberia | M/V Hiotissa | 4/01/2010 – 12/31/2010 | — | ||||||
20. | Newlead Shipping S.A. | Panama | Management company | — | — | ||||||
21. | Newlead Bulkers S.A. | Liberia | Management company | — | — | ||||||
22. | Santa Ana Waves Corporation | Marshall Islands | Vessel owning company(11) | — | — | ||||||
23. | Makassar Marine Ltd. | Marshall Islands | Vessel owning company(12) | 10/14/2009 – 1/07/2010 | 7/15/2005 – 10/13/2009 | ||||||
24. | Seine Marine Ltd. | Marshall Islands | Vessel owning company(13) | 10/14/2009 – 1/20/2010 | 4/26/2005 – 10/13/2009 | ||||||
25. | Vintage Marine S.A. | Marshall Islands | Vessel owning company(14) | — | 8/05/2004 – 6/11/2008 | ||||||
26. | Jubilee Shipholding S.A. | Marshall Islands | Vessel owning company(15) | — | 7/26/2004 – 6/29/2009 | ||||||
27. | Olympic Galaxy Shipping Ltd. | Marshall Islands | Vessel owning company(16) | — | 4/28/2004 – 6/02/2008 | ||||||
28. | Dynamic Maritime Co. | Marshall Islands | Vessel owning company(17) | — | 6/01/2004 – 4/30/2008 | ||||||
29. | AMT Management Ltd. | Marshall Islands | Management company | — | — | ||||||
30. | Newlead Holdings (ex Aries Maritime) (US) LLC | United States of America | Operating company(18) | — | — | ||||||
31 | Abroad Consulting Ltd. | Marshall Islands | Operating company(19) | — | — | ||||||
32. | Leading Marine Consultants Inc. | Marshall Islands | Operating company | — | — | ||||||
33. | Ayasha Trading Corporation | Liberia | M/V Newlead Tomi | 12/03/2010 – 12/31/2010 | — | ||||||
34. | Bethune Properties S.A. | Liberia | Hull N216 | — | — | ||||||
35. | Grand Esmeralda Inc. | Liberia | M/V Newlead Esmeralda | 7/09/2010 – 12/31/2010 | — | ||||||
36. | Grand Markela Inc. | Liberia | M/V Newlead Markela | 7/02/2010 – 12/31/2010 | — | ||||||
37. | Grand Spartounta Inc. | Marshall Islands | M/V Grand Spartounta | 7/02/2010 – 12/31/2010 | — | ||||||
38. | Newlead Progress Inc. | Marshall Islands | Vessel owning company | — | — | ||||||
39. | Newlead Prosperity Inc. | Marshall Islands | M/V Newlead Prosperity | 10/01/2010 – 12/31/2010 | — | ||||||
40. | Grand Affection S.A. | Marshall Islands | Hull 4023 | — | — | ||||||
41. | Grand Affinity S.A. | Marshall Islands | Hull 4029 | — | — | ||||||
42. | Newlead Stride Inc. | Marshall Islands | Vessel owning company | — | — | ||||||
43. | Grand Victoria Pte Ltd. | Singapore | Vessel owning company(20) | — | — | ||||||
44. | Newlead Bulker Holdings Inc. | Marshall Islands | Sub-holding company(21) | — | — | ||||||
45. | Newlead Tanker Holdings Inc. | Marshall Islands | Sub-holding company(21) | — | — | ||||||
46. | Mote Shipping Ltd. | Malta | Vessel owning company(22) | — | — | ||||||
47. | Statesman Shipping Ltd. | Malta | Vessel owning company(22) | — | — | ||||||
48. | Trans Continent Navigation Ltd. | Malta | Vessel owning company(22) | — | — | ||||||
49. | Trans State Navigation Ltd. | Malta | Vessel owning company(22) | — | — | ||||||
50. | Bora Limited | British Virgin Islands | Vessel owning company(22) | — | — |
1) | M/T High Land was sold on September 15, 2010. | |
2) | M/T High Rider was sold and delivered to its new owners on April 22, 2010. | |
3) | M/T Ostria was sold on September 7, 2010. |
F-11
Table of Contents
4) | M/T Altius was renamed to M/T Newlead Avra on February 14, 2010. | |
5) | M/T Fortius was renamed to M/T Newlead Fortune on March 11, 2010. | |
6) | M/T Nordanvind was sold on September 7, 2010. | |
7) | M/T Chinook was sold and delivered to its new owners on April 15, 2010. | |
8) | M/T Stena Compass was renamed M/T Newlead Compass on December 22, 2010. | |
9) | On March 30, 2010, NewLead acquired Curby Navigation Ltd., a company which was incorporated on December 30, 2009. | |
10) | M/V Grand Victoria was renamed M/V Newlead Victoria on June 4, 2010. | |
11) | The Company was dissolved on November 9, 2010. | |
12) | M/V Saronikos Bridge was sold on January 7, 2010. | |
13) | M/V MSC Seine was sold on January 20, 2010. | |
14) | M/T Arius was sold on June 11, 2008. | |
15) | M/V Ocean Hope was sold on June 29, 2009. | |
16) | M/V Energy 1 was sold was June 2, 2008. | |
17) | M/V MSC Oslo was sold on April 30, 2008. | |
18) | Aries Maritime (US) LLC was incorporated on October 23, 2008, as a representative office in the United States. The company changed its name to Newlead Holdings (US) LLC on January 19, 2010. | |
19) | The Company was dissolved on June 15, 2010. | |
20) | Previous owner of M/V Grand Victoria which was renamed Newlead Victoria (see item 10 above). | |
21) | Wholly owned entities of Newlead Holdings Ltd. both incorporated on October 21, 2010. | |
22) | Vessels M/T High Land, M/T High Rider, M/T Altius. M/T Fortius and M/T Ostria were transferred from Trans Continent Navigation Ltd, Mote Shipping Ltd, Statesman Shipping Ltd, Trans State Navigation Ltd and Bora Limited to Altius Marine S.A., Land Marine S.A., Rider Marine S.A., Fortius Marine S.A. and Ostria Waves Ltd in November, July, August, November 2005 and January 2007, respectively. The original acquisitions for these vessels were made on June 24, 2004, on March 7, 2003, on March 18, 2003, on August 2, 2004 and on May 25, 2004, respectively. |
3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
F-12
Table of Contents
F-13
Table of Contents
F-14
Table of Contents
Furniture, fixtures and equipment: | 5 years | |
Computer equipment and software: | 5 years |
F-15
Table of Contents
F-16
Table of Contents
F-17
Table of Contents
F-18
Table of Contents
F-19
Table of Contents
4. | RECENT ACCOUNTING PRONOUNCEMENTS |
F-20
Table of Contents
5. | BUSINESS COMBINATION |
F-21
Table of Contents
Fair value on | ||||
acquisition date | ||||
Cash and cash equivalents | $ | 1,661 | ||
Trade and other receivables, net | 1,342 | |||
Inventories | 349 | |||
Prepaid expenses | 950 | |||
Backlog asset | 9,833 | |||
Vessels | 143,808 | |||
Restricted cash | 34 | |||
Total assets | 157,977 | |||
Accounts payable | 7,417 | |||
Accrued liabilities | 1,105 | |||
Deferred income | 352 | |||
Due to related parties, net | 547 | |||
Deferred charter revenue | 3,051 | |||
Bank debt | 154,475 | |||
Total liabilities | 166,947 | |||
Fair value of net liabilities | 8,970 | |||
Fair value of additional consideration | 5,310 | |||
Goodwill | $ | 14,280 |
F-22
Table of Contents
6. | GOODWILL |
F-23
Table of Contents
October 13, 2009 | October 13, 2009 | ||||||||||||||||||||||||
Predecessor | Successor | ||||||||||||||||||||||||
Contributions | |||||||||||||||||||||||||
from | |||||||||||||||||||||||||
Value of | Grandunion | Post | |||||||||||||||||||||||
Assets | (at historical | Financing | Recapitalized | ||||||||||||||||||||||
Carrying | Basis | and Liabilities | basis) | Activities | Carrying | ||||||||||||||||||||
Value | Adjustments | Acquired | (5) | (7) | Values | ||||||||||||||||||||
A | B | C=A+B | D | E | F=C+D+E | ||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | — | $ | 1,139 | $ | 131,544 | (8) | $ | 132,683 | ||||||||||||
Restricted cash | 1,898 | — | 1,898 | — | (1,498 | )(7) | 400 | ||||||||||||||||||
Trade receivables, net | 3,721 | — | 3,721 | — | — | 3,721 | |||||||||||||||||||
Other receivables | 584 | — | 584 | — | — | 584 | |||||||||||||||||||
Inventories | 2,713 | — | 2,713 | 262 | — | 2,975 | |||||||||||||||||||
Prepaid expenses | 1,102 | — | 1,102 | — | — | 1,102 | |||||||||||||||||||
Backlog asset | — | 7,520 | (2) | 7,520 | — | — | 7,520 | ||||||||||||||||||
Total current assets | 10,018 | 7,520 | 17,538 | 1,401 | 130,046 | 148,985 | |||||||||||||||||||
Vessels and other fixed assets, net | 185,813 | 2,587 | (1) | 188,400 | 75,289 | — | 263,689 | ||||||||||||||||||
Restricted cash | — | — | — | — | 10,672 | (7) | 10,672 | ||||||||||||||||||
Deferred charges, net | 1,018 | (1,018 | )(3) | — | — | 8,222 | (8) | 8,222 | |||||||||||||||||
Goodwill | — | 86,036 | 86,036 | — | — | 86,036 | |||||||||||||||||||
Total non-current assets | 186,831 | 87,605 | 274,436 | 75,289 | 18,894 | 368,619 | |||||||||||||||||||
Total assets | $ | 196,849 | $ | 95,125 | $ | 291,974 | $ | 76,690 | $ | 148,940 | $ | 517,604 | |||||||||||||
Current portion of long-term debt | $ | (221,430 | ) | $ | — | $ | (221,430 | ) | $ | (6,240 | ) | $ | 193,430 | (7) | $ | (34,240 | ) | ||||||||
Accounts payable, trade | (10,146 | ) | — | (10,146 | ) | — | — | (10,146 | ) | ||||||||||||||||
Accrued liabilities | (11,794 | ) | — | (11,794 | ) | (298 | ) | — | (12,092 | ) | |||||||||||||||
Deferred income | (673 | ) | — | (673 | ) | (887 | ) | — | (1,560 | ) | |||||||||||||||
Derivative financial instruments | (9,439 | ) | — | (9,439 | ) | (2,295 | ) | — | (11,734 | ) | |||||||||||||||
Deferred charter revenue | (1,222 | ) | 1,222 | (4) | — | — | — | — | |||||||||||||||||
Due to managing agent | (1,599 | ) | — | (1,599 | ) | — | — | (1,599 | ) | ||||||||||||||||
Total current liabilities | (256,303 | ) | 1,222 | (255,081 | ) | (9,720 | ) | 193,430 | (71,371 | ) | |||||||||||||||
Deferred income | — | — | — | (813 | ) | — | (813 | ) | |||||||||||||||||
Derivative financial instruments | — | — | — | — | (3,971 | )(8) | (3,971 | ) | |||||||||||||||||
7% Convertible senior notes, net | — | — | — | — | (44,433 | )(8) | (44,433 | ) | |||||||||||||||||
Long-term debt | — | — | — | (31,160 | ) | (193,430 | )(7) | (224,590 | ) | ||||||||||||||||
Total non-current liabilities | — | — | — | (31,973 | ) | (241,834 | ) | (273,807 | ) | ||||||||||||||||
Total liabilities | (256,303 | ) | 1,222 | (255,081 | ) | (41,693 | ) | (48,404 | ) | (345,178 | ) | ||||||||||||||
Share capital | (24 | ) | — | (24 | ) | (16 | ) | — | (40 | ) | |||||||||||||||
Additional paid-in capital | (114,847 | ) | (96,347 | ) | (36,869 | ) | (34,981 | ) | (100,536 | ) | (172,386 | ) | |||||||||||||
Accumulated deficit | 174,325 | (6) | — | — | — | — | — | ||||||||||||||||||
Total shareholders’ equity | 59,454 | (96,347 | ) | (36,893 | ) | (34,997 | ) | (100,536 | ) | (172,426 | ) | ||||||||||||||
Total liabilities and shareholders’ equity | $ | (196,849 | ) | $ | (95,125 | ) | $ | (291,974 | ) | $ | (76,690 | ) | $ | (148,940 | ) | $ | (517,604 | ) | |||||||
(1) | Vessels and other fixed assets, net were adjusted to fair value. | |
(2) | Backlog asset which relates to charter-out contracts were determined to have a fair value. |
F-24
Table of Contents
(3) | Deferred charges were valued at $0. | |
(4) | Deferred charter revenue was valued at $0. | |
(5) | The assets and liabilities of the three vessel owning companies brought into the Company from Grandunion were recorded at their historical cost. | |
(6) | Accumulated deficit was transferred to additional paid-in capital. | |
(7) | The Company’s existing syndicate of lenders entered into the new Facility Agreement, dated October 13, 2009, which resulted in the classification of the debt according to the contractual terms. As a result of the new Facility Agreement, the Company complied with its covenants, described in Note 15, and on the recapitalization date the Company’s debt was reclassified between its long and short term components based on its contractual terms, while the agreement requires restricted cash of 5%. | |
(8) | Represents the issuance of the 7% Notes, described in Note 1, net of discounts. For the detailed components of the 7% Notes see discussion in Note 16. |
2010 | 2009 | |||||||
SUCCESSOR | ||||||||
Balance at January 1, | $ | 86,036 | $ | — | ||||
Goodwill acquired during the year (Note 5) | 14,280 | 86,036 | ||||||
Impairment losses | (18,726 | ) | — | |||||
Balance at December 31, | $ | 81,590 | $ | 86,036 | ||||
F-25
Table of Contents
7. | RESTRICTED CASH |
As of December 31, | As of December 31, | |||||||
2010 | 2009 | |||||||
Minimum Liquidity | $ | 250 | $ | 403 | ||||
Retention of proceeds from sale of vessels | 1,323 | — | ||||||
Letters of guarantee for hull and vessels | 11,033 | — | ||||||
Short term restricted cash accounts | 12,606 | 403 | ||||||
Minimum Liquidity | — | 9,668 | ||||||
Retention of proceeds from sale of vessels | 30,669 | — | ||||||
Letters of guarantee | 31 | — | ||||||
Long term restricted cash accounts | 30,700 | 9,668 | ||||||
$ | 43,306 | $ | 10,071 | |||||
8. | INVENTORIES |
As of December 31, | As of December 31, | |||||||
2010 | 2009 | |||||||
Bunkers | $ | 1,656 | $ | 2,075 | ||||
Lubricants | 1,330 | 953 | ||||||
Other | — | 57 | ||||||
$ | 2,986 | $ | 3,085 | |||||
F-26
Table of Contents
9. | BACKLOG ASSET/DEFERRED CHARTER REVENUE |
Deferred | ||||||||
Backlog Asset | Charter Revenue | |||||||
PREDECESSOR | ||||||||
Balance at January 1, 2008 | $ | — | $ | 11,031 | ||||
Amortization | — | (8,115 | ) | |||||
Balance at December 31, 2008 | — | 2,916 | ||||||
Additions | — | — | ||||||
Amortization | — | (1,694 | ) | |||||
Balance at October 13, 2009 | — | 1,222 | ||||||
SUCCESSOR | ||||||||
Additions | — | — | ||||||
Change in control — basis adjustment | 7,520 | (1,222 | ) | |||||
Amortization | (1,992 | ) | — | |||||
Balance at December 31, 2009 | 5,528 | — | ||||||
Business combination (Note 5) | 9,833 | 3,051 | ||||||
Additions | 53,186 | 710 | ||||||
Amortization | (13,890 | ) | (3,194 | ) | ||||
Balance at December 31, 2010 | $ | 54,657 | $ | 567 | ||||
Current | $ | 8,492 | $ | 476 | ||||
Non-current | $ | 46,165 | $ | 91 | ||||
F-27
Table of Contents
10. | VESSELS UNDER CONSTRUCTION |
Post- | ||||||||||||||||
Kamsarmax | Panamax | Handysize | ||||||||||||||
Vessels | Vessel | Vessels | Total | |||||||||||||
Balance January 1, 2010 | $ | — | $ | — | $ | — | $ | — | ||||||||
Advance payments in cash | 27,500 | 7,400 | 7,900 | 42,800 | ||||||||||||
Acquired advances for vessels under construction | 19,727 | — | 9,588 | 29,315 | ||||||||||||
Capitalized expenses | 3,027 | 398 | 738 | 4,163 | ||||||||||||
Transfer to vessels’ cost | (44,025 | ) | — | — | (44,025 | ) | ||||||||||
Balance December 31, 2010 | $ | 6,229 | $ | 7,798 | $ | 18,226 | $ | 32,253 | ||||||||
F-28
Table of Contents
11. | VESSELS AND OTHER FIXED ASSETS, NET |
F-29
Table of Contents
Leased | Special | Other Fixed | ||||||||||||||||||||||
Cost | Vessels | Vessels | Dry Docking | Survey | Assets | Total | ||||||||||||||||||
PREDECESSOR | ||||||||||||||||||||||||
Balance at January 1, 2008 | $ | 479,172 | $ | — | $ | 17,321 | $ | 7,856 | $ | 183 | $ | 504,532 | ||||||||||||
Additions | — | — | 1,140 | 1,019 | 27 | 2,186 | ||||||||||||||||||
Disposals — Discontinued operations | (69,003 | ) | — | (6,450 | ) | (822 | ) | — | (76,275 | ) | ||||||||||||||
Balance at December 31, 2008 | 410,169 | — | 12,011 | 8,053 | 210 | 430,443 | ||||||||||||||||||
Additions | — | — | 4,761 | 1,358 | 63 | 6,182 | ||||||||||||||||||
Disposals — Discontinued operations | (17,224 | ) | — | (484 | ) | (421 | ) | — | (18,129 | ) | ||||||||||||||
Balance at October 13, 2009 | 392,945 | — | 16,288 | 8,990 | 273 | 418,496 | ||||||||||||||||||
SUCCESSOR | ||||||||||||||||||||||||
Additions | — | — | 1,333 | — | — | 1,333 | ||||||||||||||||||
Additions — Contribution from Grandunion | 98,985 | — | 5,767 | — | — | 104,752 | ||||||||||||||||||
Change in control — basis adjustment | (82,870 | ) | — | (16,288 | ) | (8,990 | ) | (273 | ) | (108,421 | ) | |||||||||||||
Transfer to assets held for sale | (8,400 | ) | — | — | — | — | (8,400 | ) | ||||||||||||||||
Balance at December 31, 2009 | 400,660 | — | 7,100 | — | — | 407,760 | ||||||||||||||||||
Business combination | 143,050 | — | — | — | 758 | 143,808 | ||||||||||||||||||
Additions | 82,711 | — | 3,548 | — | 76 | 86,335 | ||||||||||||||||||
Transfer from Vessels Under Construction | 44,025 | — | — | — | — | 44,025 | ||||||||||||||||||
Disposals | (34,338 | ) | — | (1,332 | ) | — | — | (35,670 | ) | |||||||||||||||
Transfers from Vessels to Leased Vessels | (87,291 | ) | 87,000 | — | — | — | (291 | ) | ||||||||||||||||
Balance at December 31, 2010 | $ | 548,817 | $ | 87,000 | $ | 9,316 | $ | — | $ | 834 | $ | 645,967 | ||||||||||||
Accumulated Depreciation and Amortization | ||||||||||||||||||||||||
PREDECESSOR | ||||||||||||||||||||||||
Balance at January 1, 2008 | $ | (89,788 | ) | $ | — | (9,597 | ) | $ | (4,249 | ) | $ | (60 | ) | $ | (103,694 | ) | ||||||||
Depreciation and Amortization for the year | (25,437 | ) | — | (3,775 | ) | (1,242 | ) | (39 | ) | (30,493 | ) | |||||||||||||
Disposals | 25,753 | — | 3,959 | 570 | — | 30,282 | ||||||||||||||||||
Impairment Loss | (30,075 | ) | — | — | — | — | (30,075 | ) | ||||||||||||||||
Balance at December 31, 2008 | (119,547 | ) | — | (9,413 | ) | (4,921 | ) | (99 | ) | (133,980 | ) | |||||||||||||
Depreciation and Amortization for the period | (14,073 | ) | — | (2,050 | ) | (1,071 | ) | (174 | ) | (17,368 | ) | |||||||||||||
Impairment loss | (91,601 | ) | — | — | — | — | (91,601 | ) | ||||||||||||||||
Disposals | 9,361 | — | 484 | 421 | — | 10,266 | ||||||||||||||||||
Balance at October 13, 2009 | (215,860 | ) | — | (10,979 | ) | (5,571 | ) | (273 | ) | (232,683 | ) | |||||||||||||
SUCCESSOR | ||||||||||||||||||||||||
Additions — Contribution from Grandunion | (27,894 | ) | — | (1,569 | ) | — | — | (29,463 | ) | |||||||||||||||
Change in control — basis adjustment | 94,184 | — | 10,979 | 5,571 | 273 | 111,007 | ||||||||||||||||||
Depreciation and Amortization for the period | (3,187 | ) | — | (469 | ) | — | — | (3,656 | ) | |||||||||||||||
Transfer to assets held for sale | 150 | — | — | — | — | 150 | ||||||||||||||||||
Balance at December 31, 2009 | (152,607 | ) | — | (2,038 | ) | — | — | (154,645 | ) | |||||||||||||||
Depreciation and Amortization for the year | (26,139 | ) | (841 | ) | (2,781 | ) | — | (408 | ) | (30,169 | ) | |||||||||||||
Impairment loss (note 3) | (15,662 | ) | — | — | — | — | (15,662 | ) | ||||||||||||||||
Accumulated Depreciation of Leasedback Vessels | 8,104 | — | — | — | — | 8,104 | ||||||||||||||||||
Disposals | 1,664 | — | 157 | — | — | 1,821 | ||||||||||||||||||
Balance at December 31, 2010 | $ | (184,640 | ) | $ | (841 | ) | $ | (4,662 | ) | $ | — | $ | (408 | ) | $ | (190,551 | ) | |||||||
PREDECESSOR | ||||||||||||||||||||||||
Net book value — January 1, 2008 | $ | 389,384 | $ | — | $ | 7,724 | $ | 3,607 | $ | 123 | $ | 400,838 | ||||||||||||
Net book value — December 31, 2008 | $ | 290,622 | $ | — | $ | 2,598 | $ | 3,132 | $ | 111 | $ | 296,463 | ||||||||||||
Net book value — October 13, 2009 | $ | 177,085 | $ | — | $ | 5,309 | $ | 3,419 | $ | — | $ | 185,813 | ||||||||||||
SUCCESSOR | ||||||||||||||||||||||||
Net book value — December 31, 2009 | $ | 248,053 | $ | — | $ | 5,062 | $ | — | $ | — | $ | 253,115 | ||||||||||||
Net book value — December 31, 2010 | $ | 364,177 | $ | 86,159 | $ | 4,654 | $ | — | $ | 426 | $ | 455,416 | ||||||||||||
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12. | DEFERRED CHARGES, NET |
Financing | ||||||||||||
Costs | Other Costs | Total | ||||||||||
PREDECESSOR | ||||||||||||
Net Book Value at January 1, 2008 | $ | 2,906 | $ | — | $ | 2,906 | ||||||
Amortization | (850 | ) | — | (850 | ) | |||||||
Write-offs | (483 | ) | — | (483 | ) | |||||||
Net Book Value at December 31, 2008 | 1,573 | — | 1,573 | |||||||||
Amortization | (555 | ) | — | (555 | ) | |||||||
Net Book Value at October 13, 2009 | $ | 1,018 | $ | — | $ | 1,018 | ||||||
SUCCESSOR | ||||||||||||
Change in control — basis adjustment | $ | (1,018 | ) | $ | — | $ | (1,018 | ) | ||||
Additions (Note 6) | 8,222 | — | 8,222 | |||||||||
Amortization | (1,391 | ) | — | (1,391 | ) | |||||||
Net Book Value at December 31, 2009 | 6,831 | — | 6,831 | |||||||||
Additions | 9,778 | 255 | 10,033 | |||||||||
Amortization | (2,368 | ) | — | (2,368 | ) | |||||||
Write-offs | (1,360 | ) | — | (1,360 | ) | |||||||
Transfer to Vessels Under Construction | (96 | ) | — | (96 | ) | |||||||
Net Book Value at December 31, 2010 | $ | 12,785 | $ | 255 | $ | 13,040 | ||||||
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13. | ACCOUNTS PAYABLE, TRADE |
As of December 31, | As of December 31, | |||||||
2010 | 2009 | |||||||
Suppliers | $ | 14,420 | $ | 6,316 | ||||
Vessel purchase obligation | 11,079 | — | ||||||
Agents | 803 | 261 | ||||||
Other creditors | 9,574 | 4,471 | ||||||
$ | 35,876 | $ | 11,048 | |||||
14. | ACCRUED LIABILITIES |
As of December 31, | As of December 31, | |||||||
2010 | 2009 | |||||||
Accrued interest | $ | 7,977 | $ | 5,267 | ||||
Accrued claims | 1,521 | 4,152 | ||||||
Other accrued expenses | 7,872 | 7,538 | ||||||
$ | 17,370 | $ | 16,957 | |||||
15. | LONG-TERM DEBT |
2009 | ||||||||||||||||||||||||
2010 | Current Portion | |||||||||||||||||||||||
Description | Long-term | Current Portion | Total | Long-term | of Long-term | Total | ||||||||||||||||||
Syndicate Facility Agreement | $ | 177,062 | $ | 7,639 | $ | 184,701 | $ | 193,430 | $ | 8,000 | $ | 201,430 | ||||||||||||
Marfin Credit Facilities | 48,970 | — | 48,970 | 29,600 | 6,240 | 35,840 | ||||||||||||||||||
West LB Bank Credit Facility | 24,875 | 1,500 | 26,375 | — | — | — | ||||||||||||||||||
Piraeus Bank Credit Facilities | 71,700 | 7,950 | 79,650 | — | — | — | ||||||||||||||||||
Kamsarmax syndicate facilities agreements | 49,203 | 3,297 | 52,500 | — | — | — | ||||||||||||||||||
FBB Credit Facility | 20,150 | 3,200 | 23,350 | — | — | — | ||||||||||||||||||
EFG Eurobank Credit Facility | 11,035 | 2,100 | 13,135 | — | — | — | ||||||||||||||||||
Handysize Syndicate Facility Agreement | 18,047 | 1,087 | 19,134 | — | — | — | ||||||||||||||||||
Balance December 31, 2010 | $ | 421,042 | $ | 26,773 | $ | 447,815 | $ | 223,030 | $ | 14,240 | $ | 237,270 | ||||||||||||
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(a) | Syndicate Facility Agreement |
• | 1.75% if the Company’s total shareholders’ equity divided by the Company’s total assets, adjusting the book value of the Company’s fleet to its market value, is equal to or greater than 50%; | |
• | 2.75% if the Company’s total shareholders’ equity divided by the Company’s total assets, adjusting the book value of the Company’s fleet to its market value, is equal to or greater than 27.5% but less than 50%; and | |
• | 3.25% if the Company’s total shareholders’ equity divided by the Company’s total assets, adjusting the book value of the Company’s fleet to its market value, is less than 27.5%. |
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• | the Company’s shareholders’ equity as a percentage of the Company’s total assets, adjusting the book value of the Company’s fleet to its market value, must be no less than: |
• | the Company must maintain, on a consolidated basis on each financial quarter, working capital (as defined in the loan facility) of not less than zero dollars ($0); | |
• | the Company must maintain a minimum requirement equal to at least 5% of the outstanding loan; and | |
• | the Company’s ratio of EBITDA (earnings before interest, taxes, depreciation and amortization) to interest payable must be no less than; |
(b) | Marfin Credit Facilities |
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(c) | Commerzbank Credit Facility |
(d) | West LB Bank Credit Facility |
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(e) | Piraeus Bank Credit Facilities |
(f) | Kamsarmax Syndicate Facility Agreements |
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(g) | First Business Bank (FBB) Credit Facility |
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(h) | Emporiki Bank Credit Facility |
(i) | EFG Eurobank Credit Facility |
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(j) | Handysize Syndicate Facility Agreement |
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Successor | Predecessor | ||||||||||||||||
October 14, | January 1, | ||||||||||||||||
Year Ended | 2009 to | 2009 to | Year Ended | ||||||||||||||
December 31, | December 31, | October 13, | December 31, | ||||||||||||||
2010 | 2009 | 2009 | 2008 | ||||||||||||||
Interest expense | $ | 25,492 | $ | 5,416 | $ | 9,711 | $ | 13,413 | |||||||||
Amortization of deferred charges | 3,728 | 1,391 | 555 | 850 | |||||||||||||
Amortization of the beneficial conversion feature (Note 16) | 14,442 | 17,000 | — | — | |||||||||||||
Other expenses | 1,237 | 189 | 662 | 1,478 | |||||||||||||
$ | 44,899 | $ | 23,996 | $ | 10,928 | $ | 15,741 | ||||||||||
December 31, 2011 | $ | 26,773 | ||
December 31, 2012 | 30,345 | |||
December 31, 2013 | 89,526 | |||
December 31, 2014 | 184,358 | |||
December 31, 2015 | 52,554 | |||
Thereafter | 64,259 | |||
$ | 447,815 | |||
16. | SENIOR CONVERTIBLE 7% NOTES |
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7% Notes | ||||
7% Notes — initially issued | $ | (145,000 | ) | |
Partial conversion of the convertible senior notes | 20,000 | |||
7% Notes — outstanding | (125,000 | ) | ||
Beneficial Conversion Feature | 100,536 | |||
Amortization of the Beneficial Conversion Feature | (17,000 | ) | ||
Make whole fundamental change | 34 | |||
Balance at December 31, 2009 | (41,430 | ) | ||
Amortization of the Beneficial Conversion Feature | (14,442 | ) | ||
Make whole fundamental change | (5 | ) | ||
Balance at December 31, 2010 | $ | (55,877 | ) | |
17. | CAPITAL LEASE OBLIGATIONS |
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Description | Amount | |||
December 31, 2011 | $ | 14,592 | ||
December 31, 2012 | 14,592 | |||
December 31, 2013 | 13,619 | |||
December 31, 2014 | 8,755 | |||
December 31, 2015 | 8,755 | |||
Thereafter | 64,807 | |||
Total minimum lease payments | 125,120 | |||
Less: imputed interest | (40,153 | ) | ||
Present value of minimum lease payments | 84,967 | |||
Current portion of capitalized lease obligations | 7,648 | |||
Long term capitalized lease obligations | $ | 77,319 | ||
18. | SHARE BASED COMPENSATION |
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Weighted | ||||||||||||
Weighted | Average | |||||||||||
Number of | Average Fair | Vesting Period | ||||||||||
Shares | Values | (Years) | ||||||||||
Outstanding and non-vested shares, as of January 1, 2008 (Predecessor) | 8,334 | $ | 103.68 | 0.8 | ||||||||
Granted(1) | 28,750 | 38.88 | 1.2 | |||||||||
Vested | (17,084 | ) | 70.08 | — | ||||||||
Outstanding and non-vested shares, as of December 31, 2008 (Predecessor) | 20,000 | 39.36 | 1.6 | |||||||||
Granted(2) | 7,293 | 15.24 | 0.0 | |||||||||
Vested | (27,293 | ) | 32.87 | — | ||||||||
Outstanding and non-vested shares, as of October 13, 2009 (Predecessor) | — | — | 0.0 | |||||||||
Granted(3) | 390,001 | 15.13 | 0.8 | |||||||||
Vested | (208,334 | ) | 15.24 | — | ||||||||
Outstanding and non-vested shares, as of December 31, 2009 (Successor) | 181,667 | 15.01 | 1.8 | |||||||||
Granted(4) | 12,085 | 11.04 | 1.2 | |||||||||
Outstanding and non-vested shares, as of December 31, 2010 (Successor) | 193,752 | $ | 14.76 | 1.7 | ||||||||
(1) | 18,750 shares vest over a three-year period, 8,334 shares had immediate vesting and 1,666 shares vests over a two-year period. Vesting for these shares was accelerated on the date of recapitalization. | |
(2) | Vested on the date of the recapitalization. | |
(3) | 208,334 shares had immediate vesting, 166,667 have a two-year vesting schedule (at January 1, 2011, and 2012), while 15,000 vests in three years (at January 1, 2011, 2012, and 2013). | |
(4) | 6,668 shares were granted on January 1, 2010 and vest over a one year period (January 1, 2011). 5,417 shares were granted on April 15, 2010 out of which 3,750 vest in three years (at January 1, 2011, 2012 and 2013) and 1,667 vest over a one year period (January 1, 2011). |
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Weighted | ||||||||||||||||
Weighted | Weighted | Average | ||||||||||||||
Number of | Average | Average Fair | Vesting Period | |||||||||||||
Options | Exercise Price | Value | (Years) | |||||||||||||
Outstanding, as of January 1, 2008 (Predecessor) | — | $ | — | $ | — | — | ||||||||||
Granted(1) | 25,000 | 104.00 | 6.20 | 3.0 | ||||||||||||
Outstanding, as of December 31, 2008 (Predecessor) | 25,000 | 104.00 | 6.20 | 3.0 | ||||||||||||
Outstanding, as of October 13, 2009 (Predecessor) | 25,000 | 104.00 | 6.20 | 3.0 | ||||||||||||
Granted(2) | 250,000 | 19.80 | 6.25 | 3.0 | ||||||||||||
Outstanding, as of December 31, 2009 (Successor) | 275,000 | 27.45 | 6.24 | 3.0 | ||||||||||||
Outstanding, as of December 31, 2010 (Successor) | 275,000 | 27.45 | 6.99 | 3.0 | ||||||||||||
Exercisable at December 31, 2010 | 129,167 | $ | 36.10 | $ | 6.90 | — |
(1) | In 2008, the Company granted 25,000 share options to purchase common shares subject to a vesting period of three annual equal installments. The fair value of these share option awards has been calculated based on the Binomial lattice model method. The Company used this model given that the options granted are exercisable at a specified time after vesting period (up to 10 years). The assumptions utilized in the Binomial lattice valuation model for the share option included a dividend yield of 5% and an expected volatility of 43%. For the first two vesting dates, the risk-free interest rate was 3.8% and the fair value per share option amounted to $6.60 with an expected life of 6 years. For the third vesting date, the risk-free interest rate was 4.6% with an expected life of 10 years, while the fair value per share option amounted to $5.40. On October 13, 2009, all these shares were vested due to the recapitalization. | |
(2) | In 2009, the Company granted 250,000 share options to purchase common shares, which vest equally over 36 months and are subject to accelerated vesting upon certain circumstances. The fair value of these share option awards has been calculated based on the Binomial lattice model method. The Company used this model given that the options granted are exercisable at a specified time after vesting period (through five years from October 13, 2009). Pursuant to the Board of Directors resolution dated October 14, 2010, the exercisable period of these share options extended for additional five years, i.e. until October 13, 2019. The additional cost of $59 will be expensed in the statement of operations according to the vesting schedule of the options. The assumptions utilized in the Binomial lattice valuation model for the share option included a dividend yield of 0% and an expected volatility of 90%. The risk-free interest rate was 2.3% and the weighted average fair value per share option amounted to $6.25. |
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19. | COMMON SHARES AND DIVIDENDS |
20. | SEGMENT INFORMATION |
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Wet | Dry | Total | |||||||||||||||||||||||||||||||||||||
Successor | Predecessor | Successor | Predecessor | Successor | Predecessor | ||||||||||||||||||||||||||||||||||
Year Ended | October 14, to | January 1, to | Year Ended | October 14, to | January 1, to | Year Ended | October 14, to | January 1, to | |||||||||||||||||||||||||||||||
December 31, | December 31, | October 13, | December 31, | December 31, | October 13, | December 31, | December 31, | October 13, | |||||||||||||||||||||||||||||||
2010 | 2009 | 2009 | 2010 | 2009 | 2009 | 2010 | 2009 | 2009 | |||||||||||||||||||||||||||||||
Operating revenue | $ | 45,601 | $ | 9,201 | $ | 33,564 | $ | 57,599 | $ | 4,895 | $ | — | $ | 103,200 | $ | 14,096 | $ | 33,564 | |||||||||||||||||||||
Commissions | (1,268 | ) | (292 | ) | (769 | ) | (1,077 | ) | (115 | ) | — | (2,345 | ) | (407 | ) | (769 | ) | ||||||||||||||||||||||
Voyage expenses | (17,495 | ) | (4,548 | ) | (8,574 | ) | (1,298 | ) | (86 | ) | — | (18,793 | ) | (4,634 | ) | (8,574 | ) | ||||||||||||||||||||||
Vessel operating expenses | (18,046 | ) | (4,694 | ) | (22,681 | ) | (21,173 | ) | (1,836 | ) | — | (39,219 | ) | (6,530 | ) | (22,681 | ) | ||||||||||||||||||||||
General and administrative expenses | (6,045 | ) | (1,766 | ) | (4,553 | ) | (5,136 | ) | (540 | ) | — | (11,181 | ) | (2,306 | ) | (4,553 | ) | ||||||||||||||||||||||
Management fees | (829 | ) | (194 | ) | (900 | ) | (178 | ) | (121 | ) | — | (1,007 | ) | (315 | ) | (900 | ) | ||||||||||||||||||||||
Other income/(expense), net | 2 | — | 40 | (7 | ) | — | — | (5 | ) | — | 40 | ||||||||||||||||||||||||||||
Operating (loss) / income before depreciation and amortization | 1,920 | (2,293 | ) | (3,873 | ) | 28,730 | 2,197 | — | 30,650 | (96 | ) | (3,873 | ) | ||||||||||||||||||||||||||
Depreciation and amortization expense | (18,992 | ) | (2,989 | ) | (11,813 | ) | (20,566 | ) | (1,855 | ) | — | (39,558 | ) | (4,844 | ) | (11,813 | ) | ||||||||||||||||||||||
Impairment losses | (39,515 | ) | — | (68,042 | ) | — | — | — | (39,515 | ) | — | (68,042 | ) | ||||||||||||||||||||||||||
Segment operating (loss) / income | (56,587 | ) | (5,282 | ) | (83,728 | ) | 8,164 | 342 | — | (48,423 | ) | (4,940 | ) | (83,728 | ) | ||||||||||||||||||||||||
Transaction costs | (931 | ) | (6,702 | ) | (3,442 | ) | (409 | ) | (2,234 | ) | — | (1,340 | ) | (8,936 | ) | (3,442 | ) | ||||||||||||||||||||||
Straight line revenue | — | — | — | (467 | ) | — | — | (467 | ) | — | — | ||||||||||||||||||||||||||||
Compensation costs | (1,444 | ) | (587 | ) | (371 | ) | (1,236 | ) | (196 | ) | — | (2,680 | ) | (783 | ) | (371 | ) | ||||||||||||||||||||||
Provision for doubtful receivables | (204 | ) | — | — | (187 | ) | — | — | (391 | ) | — | — | |||||||||||||||||||||||||||
Gain / (loss) on sale from vessels | 1,168 | — | — | (2,728 | ) | — | — | (1,560 | ) | — | — | ||||||||||||||||||||||||||||
Interest and finance expense, net | (22,939 | ) | (18,372 | ) | (10,928 | ) | (21,960 | ) | (5,624 | ) | — | (44,899 | ) | (23,996 | ) | (10,928 | ) | ||||||||||||||||||||||
Interest income | 336 | 177 | 9 | �� | 214 | 59 | — | 550 | 236 | 9 | |||||||||||||||||||||||||||||
Change in fair value of derivatives | 1,179 | 1,537 | 3,012 | 413 | 1,017 | — | 1,592 | 2,554 | 3,012 | ||||||||||||||||||||||||||||||
Loss from continuing operations | $ | (79,422 | ) | $ | (29,229 | ) | $ | (95,448 | ) | $ | (18,196 | ) | $ | (6,636 | ) | $ | — | $ | (97,618 | ) | $ | (35,865 | ) | $ | (95,448 | ) | |||||||||||||
Total assets | $ | 262,967 | $ | 388,832 | — | $ | 498,766 | $ | 96,537 | — | $ | 761,733 | $ | 485,369 | — | ||||||||||||||||||||||||
Goodwill | $ | 53,966 | $ | 65,768 | — | $ | 27,624 | $ | 20,268 | — | $ | 81,590 | $ | 86,036 | — | ||||||||||||||||||||||||
Long lived assets | $ | 171,948 | $ | 179,516 | — | $ | 315,721 | $ | 73,599 | — | $ | 487,669 | $ | 253,115 | — |
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Wet | Dry | Total | ||||||||||
Predecessor | ||||||||||||
Year Ended | Year Ended | Year Ended | ||||||||||
December 31, | December 31, | December 31, | ||||||||||
2008 | 2008 | 2008 | ||||||||||
Operating revenue | $ | 56,519 | $ | — | $ | 56,519 | ||||||
Commissions | (689 | ) | — | (689 | ) | |||||||
Voyage expenses | (6,323 | ) | — | (6,323 | ) | |||||||
Vessel operating expenses | (19,798 | ) | — | (19,798 | ) | |||||||
General and administrative expenses | (6,733 | ) | — | (6,733 | ) | |||||||
Management fees | (1,404 | ) | — | (1,404 | ) | |||||||
Other expense, net | 2 | — | 2 | |||||||||
Operating (loss) / income before depreciation and amortization | 21,574 | — | 21,574 | |||||||||
Depreciation and amortization expense | (15,040 | ) | — | (15,040 | ) | |||||||
Impairment losses | — | — | — | |||||||||
Segment operating (loss) / income | 6,534 | — | 6,534 | |||||||||
Transaction costs | — | — | — | |||||||||
Straight line revenue | — | — | — | |||||||||
Compensation costs | (1,083 | ) | — | (1,083 | ) | |||||||
Provision for doubtful receivables | — | — | — | |||||||||
Gain on sale from vessels | — | — | — | |||||||||
Interest and finance expense, net | (15,741 | ) | — | (15,741 | ) | |||||||
Interest income | 232 | — | 232 | |||||||||
Change in fair value of derivatives | (6,515 | ) | — | (6,515 | ) | |||||||
Loss from continuing operations | $ | (16,573 | ) | $ | — | $ | (16,573 | ) | ||||
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21. | FINANCIAL INSTRUMENTS |
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Fair Value | |||||||||||||||||||||||||||||
Contract | As of | As of | |||||||||||||||||||||||||||
Value | Termination | Notional | Fixed | Floating | December 31, | December 31, | |||||||||||||||||||||||
Interest rate swaps | Date | Date | Amount | Rate | Rate | 2010 | 2009 | ||||||||||||||||||||||
SMBC Bank | 7/3/2006 | 4/4/2011 | $ | 20,000 | 5.63 | % | 3-month LIBOR | $ | (277 | ) | $ | (1,475 | ) | ||||||||||||||||
Bank of Ireland | 7/3/2006 | 4/4/2011 | $ | 20,000 | 5.63 | % | 3-month LIBOR | (277 | ) | (1,484 | ) | ||||||||||||||||||
HSH Nordbank | 7/3/2006 | 4/4/2011 | $ | 20,000 | 5.63 | % | 3-month LIBOR | (277 | ) | (1,483 | ) | ||||||||||||||||||
Nordea Bank | 7/3/2006 | 4/4/2011 | $ | 20,000 | 5.63 | % | 3-month LIBOR | (277 | ) | (1,481 | ) | ||||||||||||||||||
Bank of Scotland | 7/3/2006 | 4/4/2011 | $ | 20,000 | 5.63 | % | 3-month LIBOR | (277 | ) | (1,481 | ) | ||||||||||||||||||
Nordea Bank* | 4/3/2008 | 4/4/2011 | $ | 23,333 | 4.14 | % | 3-month LIBOR | (233 | ) | (1,195 | ) | ||||||||||||||||||
Bank of Scotland** | 4/3/2008 | 4/3/2011 | $ | 46,667 | 4.28 | % | 3-month LIBOR | (242 | ) | (1,249 | ) | ||||||||||||||||||
Marfin Egnatia Bank*** | 9/2/2009 | 9/2/2014 | $ | 37,400 | 4.08 | % | 3-month LIBOR | (1,931 | ) | (1,926 | ) | ||||||||||||||||||
Bank of Scotland | 7/6/2010 | 10/15/15 | $ | 63,636 | 4.01 | % | 3-month LIBOR | (5,027 | ) | — | |||||||||||||||||||
Bank of Scotland | 7/6/2010 | 10/15/15 | $ | 13,333 | 4.01 | % | 3-month LIBOR | (1,143 | ) | — | |||||||||||||||||||
$ | (9,961 | ) | $ | (11,774 | ) | ||||||||||||||||||||||||
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Fair Value | |||||||||
As of | As of | ||||||||
December 31, | December 31, | ||||||||
2010 | 2009 | ||||||||
Short-term | $ | (5,319 | ) | $ | (9,687 | ) | |||
Long-term | (4,642 | ) | (2,087 | ) | |||||
$ | (9,961 | ) | $ | (11,774 | ) | ||||
* | Synthetic swap including interest rate cap detailed as follows: |
Counter-party | Value Date | Termination Date | Notional Amount | Cap | ||||||||||||
Nordea | 4/3/08 | 4/4/11 | $ | 23,333 | 4.14 | % |
** | Synthetic swap including interest rate floor detailed as follows: |
Counter-party | Value Date | Termination Date | Notional Amount | Floor | ||||||||||||
Bank of Scotland | 4/3/08 | 4/3/11 | $ | 23,333 | 4.285 | % |
*** | As part of the contribution from Grandunion on October 13, 2009, the Company assumed a $37,400 interest rate swap by Marfin Egnatia Bank. |
Quoted Prices | Significant | |||||||||||||||
in Active | Other | Significant | ||||||||||||||
Markets for | Observable | Unobservable | ||||||||||||||
Identical Assets | Inputs | Inputs | ||||||||||||||
Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
December 31, 2009 | ||||||||||||||||
Liabilities | ||||||||||||||||
Interest rate swaps | $ | 11,774 | $ | — | $ | 11,774 | $ | — | ||||||||
Warrants | $ | 5,273 | $ | — | $ | 5,273 | $ | — | ||||||||
Make Whole Fundamental Change | $ | 42 | $ | — | $ | 42 | $ | — | ||||||||
December 31, 2010 | ||||||||||||||||
Liabilities | ||||||||||||||||
Interest rate swaps | $ | 9,961 | $ | — | $ | 9,961 | $ | — | ||||||||
Make Whole Fundamental Change | $ | 0 | $ | — | $ | 0 | $ | — |
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(1) | Commitments |
December 31, 2011 | $ | 423 | ||
December 31, 2012 | 429 | |||
December 31, 2013 | 435 | |||
December 31, 2014 | 442 | |||
December 31, 2015 | 449 | |||
Thereafter | 2,823 | |||
$ | 5,001 | |||
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(2) | Contingencies |
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• | The charterers of the Newlead Avra notified the Company in October 2008 of their intention to pursue the following claims and notified the appointment of an arbitrator in relation to them: |
a) | Damages suffered bysub-charterers of the vessel relating to remaining on board cargo in New York in September 2007; | |
b) | Damages suffered bysub-charterers of the vessel as a result of a change in management and the consequent dispute regarding oil major approval from October 2007; and | |
c) | Damages suffered bysub-charterers of the vessel resulting from grounding in Houston in October 2007. |
• | The charterers of the Newlead Fortune notified the Company in October 2008 of their intention to pursue the following claims, and notified the appointment of an arbitrator in relation to them: |
a) | Damages as a result of a change in management and the consequent dispute regarding oil major approval from October 2007; and | |
b) | Damages resulting from the creation of hydrogen sulphide in the vessel’s tanks at two ports in the United States. |
• | The vessel Grand Rodosi was involved in a collision in October 2010 with the fishing vessel “Apollo S”. As of December 31, 2010, the Company is not able to reliably measure the expected possible losses. However, any amounts to be claimed are 100% covered by the P&I Club: |
a) | Value of “Apollo S” plus expenses — the Company has a provided guarantee for A$19,321,242; | |
b) | Damage to wharf — the Company has a provided guarantee for A$3,387,500; and | |
c) | Pollution cleanup costs — the Company has a provided guarantee for A$500,000. |
• | The charterers of the Newlead Esmeralda notified the Company in November 2010 of their intention to pursue the following claim. After discussions with the charterers in March 2011, an agreement was reached that neither party would seek security in the future for the claims relating to the grounding that occurred in March 2010. Based on advice of counsel, the Company believes the charterer’s chances of success are remote. Below is a list of the claims: |
a) | Damages for lost income as a result of cargo that was not able to be loaded, subsequent to vessel’s grounding in March 2010; | |
b) | Damages resulting from the prolonged storage costs due to the inability to place cargo on board the vessel; and | |
c) | Anticipated costs. |
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23. | TAXATION |
24. | TRANSACTIONS INVOLVING RELATED PARTIES |
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25. | DISCONTINUED OPERATIONS |
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Successor | Predecessor | |||||||||||||||
October 14, | January 1, | |||||||||||||||
Year Ended | 2009 to | 2009 to | Year Ended | |||||||||||||
December 31, | December 31, | October 13, | December 31, | |||||||||||||
2010 | 2009 | 2009 | 2008 | |||||||||||||
Operating Revenues | $ | 1,207 | $ | 1,591 | $ | 11,679 | $ | 22,777 | ||||||||
Net income / (loss) | $ | 2,769 | $ | (2,007 | ) | $ | (30,316 | ) | $ | (23,255 | ) |
26. | SUBSEQUENT EVENTS |
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By: | /s/ Michail Zolotas |