Exhibit 10.14
[FORTIS BANK LOGO]
Solid partners, flexible solutions
Capital Maritime & Trading Corp.
Attn. Mr. Evangelos Marinakis/Mr. Yiannis Lazarides
3, lassonos Street
Piraeus 185 37
GREECE
Fax: +30 210 428 4286
Date 25 May 2005
Our Ref Offer 250505
Subject Financing post IPO
Dear Sirs,
We write further to the above and with regard to our recent discussions, and are
pleased to confirm that Fortis Bank (Nederland) N.V. is prepared to arrange and
underwrite a secured term loan for the financing of two newbuilding product
tankers for Capital Maritime & Trading Corp., subject to the following terms and
conditions.
TOTAL FACILITY OF MAXIMUM USD 53,900,000
(UNITED STATES DOLLARS FIFTY THREE MILLION NINE HUNDRED THOUSAND)
Facility Purpose : To provide pre- and post-delivery financing for the
acquisition of two (2) product tankers:
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Name Dwt Delivery Yard
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1 Aeolos 37,500 March '07 Hyundai Mipo, S. Korea
2 Avax 47,000 Jan '07 Hyundai Mipo, S. Korea
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Each a "Vessel" and collectively the "Vessels".
Facility Type : Secured Term Loan (the "Facility") evidenced by a loan
agreement and other legal and commercial documents (the
"Facility Agreement").
Facility Amount : Maximum USD 53,900,000 (say United States Dollars Fifty
Three Million Nine Hundred Thousand), to be split in the
following Tranches:
Tranche 1
Maximum USD 25,600,000 (say United States Dollars Twenty
Five Million and Six Hundred Thousand), but in any event
not more than 80% of the acquisition price or 75% of the
Fair Market Value ("FMV") of Vessel number 1.
Fortis Bank (Nederland) N.V.
Commercial Register Rotterdam number 30064791
Tranche 2
Maximum USD 28,300,000 (say United States Dollars Twenty
Eight Million and Three Hundred Thousand), but in any
event not more than 80% of the acquisition price or 75%
of the FMV of Vessel number 2.
The contract price of vessel 1 shall not exceed USD
32,100,000 per Vessel and the contract price of Vessel 2
shall not exceed USD 35,433,000. The aggregate of the two
Tranches to be in any event not more than 80% of the
contract prices or 75% of the fair market values ("FMV")
of the Vessels, whichever is lower.
Pre-delivery:
Up to maximum of 75% of the pre-delivery yard
instalments, including the signing instalment, as per the
shipbuilding Contract.
Borrower : Capital Maritime & Trading Corp., established in March
2005, under the Laws of Marshall Islands.
Corporate Guarantee: The 2 subsidiaries of the Borrower which hold at any time
the full ownership interest in the Vessels who will
unconditionally and irrevocably guarantee the obligations
of the Borrower under the Facility Agreement (each a
"Guarantor" and collectively the "Guarantors").
Arranger : Fortis Bank (Nederland) N.V. or any entity within our
group ("Fortis Bank" and/or the "Arranger").
Agent : Fortis Bank
Drawdown : Pre-delivery
In several tranches, according to the Shipbuilding
Contracts of the Vessels on or prior to March 2007.
Post-Delivery
Tranche 1 In one advance on or prior to 31 March 2007.
Tranche 2 In one advance on or prior to 31 January 2007.
Cancellation : The facility will not be available for further drawings
after March 2007. The Borrower may request an extension
of this date, which extension will not be unreasonably
withheld. Furthermore, the Facility is cancelled in case
no Initial Public Offering of the Company has taken place
before 30 September 2005.
Final Maturity : 10 years from Delivery of each Vessel but in any event no
later than March 2017, or earlier in accordance with the
Facility Agreement.
Repayment : Tranche 1
In 40 equal consecutive quarterly instalments of USD
427,500, commencing 3 months from Delivery. In addition,
a final balloon payment of USD 8,500,000 will be payable
together with the 40th and final instalment.
Tranche 2
In 40 equal consecutive quarterly instalments of USD
482,500, commencing 3 months from Delivery. In addition,
a final balloon payment of USD 9,000,000 will be payable
together with the 40th and final instalment.
Voluntary : Prepayable in whole or in part without penalty on any
Prepayment interest payment date, subject to 15 days written notice
to the Agent, in minimum amounts of USD 500,000 or
integral multiples thereof.
Prepayments will be applied to the repayment schedule pro
rata.
Any break funding costs associated with prepayment(s)
shall be for account of the Borrower.
Involuntary : The net proceeds from the sale or total loss of the
Prepayment Vessels shall be applied in such a way that after the
prepayment effected (1) Leverage remains at the same
level as before the prepayment, (2) all financial
covenants are met.
Arrangement Fee : 0.30% flat of the Facility Amount, payable to the
Arranger. 0.20% to be paid on signing of the Facility,
and the remaining 0.10% at the delivery of each Vessel.
Cancellation Fee : USD 10,000, payable to the Lender in case no IPO is
finalised on or before 30 September 2005.
Commitment Fee : 0.10% per annum during the first year from July 31st 2005
and 0.25% per annum thereafter, payable quarterly in
arrears over the committed but undrawn portion of the
Facility.
Interest : Interest will be charged over the outstanding portion of
the Facility, at the rate of the Margin over:-
1, 3, 6, 9 or 12 month USD Libor, or such longer periods
as the Agent may agree.
A maximum of three 1-month interest periods in any
calendar year will be permitted.
Interest will be calculated on the basis of the actual
number of days elapsed in a year of 360 days, and shall
be payable at the earlier of the end of an interest
period and semi-annually.
Margin : o If leverage < 65%: 0.95% per annum.
o If Leverage >= 65%: 1.05%.
Leverage is defined as total outstanding debt under this
Facility divided by the FMV of the Vessels.
Hedging : Any interest rate hedge instrument to be effectuated by
the Agent after fulfillment of the conditions precedent
and will be secured pari passu with the other securities
under this Facility Agreement.
Security : Usual and customary for a transaction of this type,
including but not limited to:-
Pre-delivery
o First priority assignment of the refund guarantees
for the pre-delivery instalments, issued by a bank
acceptable to the Agent. The wording of the refund
guarantees to be acceptable to the Agent.
o First priority assignment of the Guarantors' rights
under the Shipbuilding Contracts.
o Corporate Guarantee from the Guarantors.
Post-delivery
o First priority mortgages over the Vessels in a
jurisdiction acceptable to the Agent.
o Unconditional and irrevocable Corporate Guarantees
from the Guarantors for the obligations of the
Borrower under the Facility Agreement.
o First priority assignment of the Vessels'
insurances, including but not limited to Hull &
Machinery, Protection & Indemnity, War Risks, MII
and MII Additional Perils Pollution.
Marine and War Risks shall be for a minimum of 125%
of the outstanding Facility Amount.
The cost of MII and MII Additional Perils Pollution
taken out by the Agent shall be for the account of
the Borrowers.
o First priority assignment of all earnings of the
Vessels.
o First priority assignment of any time charters or
voyage charters entered into by the Guarantors.
o First priority pledges over the Operating accounts
held with the Agent.
Application of : All earnings of the Vessels shall be paid to the Agent
Earnings for credit to an individual Vessel Operating Accounts of
the Guarantors held with the Agent.
Said earnings to be applied as follows:-
o First, toward payment of all sums other than
principal or interest due under the Facility
Agreement which may be owing to the Banks.
Surplus earnings to be released to the Borrower.
Covenants : Usual and customary for a transaction of this type,
including but not limited to:-
o The Vessels to be in class, free of any overdue
recommendations.
o Commercial, technical and/or operational management
of the Vessels to be executed by Capital
Shipmanagement Corp. or any other company acceptable
to the Agent ("the Manager").
o No change of flag, classification society,
intermediate or ultimate ownership and management of
the Vessels without the prior written consent of the
Agent, not to be unreasonably withheld.
o The Manager and the Guarantors will from the
required date at all times during the security
period comply with the International Management Code
for the Safe Operation of Ships and for Pollution
Prevention adopted by the International Maritime
Organisation.
o The Vessels' Operating Accounts to be held with the
Agent.
o Restriction on asset acquisitions and disposals with
respect to the Guarantors.
o Restriction on additional indebtedness with respect
to the Guarantors.
o Cross default with respect to the other obligations
of the Borrower and the Guarantors.
o The Borrower and the Guarantors shall provide the
Agent with audited annual accounts within 180 days
of the year end and semi-annual management accounts
within 90 days of the half-year end. Further
relevant financial information shall be provided on
demand.
o Material Adverse Change.
o Satisfactory technical survey of the Vessels by surveyors
appointed by the Agent at the expense of the Borrower.
This survey to take place after the Vessels' fifth
anniversary.
Financial Covenants: The following financial covenants shall apply to the
Borrower and its subsidiaries on a consolidated basis and
be measured at the end of each fiscal quarter:
1. Leverage Ratio: The Borrower's Net Debt (Total Debt
less Cash) to Market Adjusted Assets shall at all
times be no more than 70%.
2. Minimum Net Worth: The Borrower's Net Worth to be
minimum USD 200 mln.
3. Minimum Liquidity: The Borrower and its subsidiaries
shall maintain at all times minimum cash and cash
equivalents equal to USD 25,000,000.
4. Working Capital: The Borrower and its subsidiaries
shall always maintain a positive working capital.
5. Interest Coverage: The ratio of EBITDA to Interest
Expense shall be no less than 3.00 to 1.00.
6. Collateral Maintenance: The Aggregate Average Fair
Market Value of the Fleet shall be no less than 135%
of the aggregate outstanding loans under all credit
facilities.
7. Dividends: The Borrower may pay dividends provided
that no event of default has occurred.
The following financial covenant shall apply to the
Guarantors and be measured at the end of each fiscal
quarter:
o The aggregate market value of the Vessels should at
all times be at least 120% of the amount outstanding
under the Facility for the first three years of the
Facility period and 130% for the period thereafter.
The aggregate market value shall be determined as
the arithmetic average of the valuations of SSY and
Fearnleys ("Acceptable Brokers").
Valuations obtained at the expense of the Borrower
shall be limited to one per year.
Conditions : Usual and customary for a transaction of this type,
Precedent including but not limited to:-
o The Borrower shall have consummated the initial
public offering on the NYSE of its common stock,
pursuant to documentation in form and substance
satisfactory to the Arranger.
o The Borrower shall have received net cash proceeds
of at least USD 200,000,000 from the IPO.
o The Arranger shall be satisfied with the corporate
and capital structure of the Borrower and its
subsidiaries after giving effect to the IPO and the
Credit Facilities (the Credit Facilities and the IPO
collectively referred to as the "Transaction").
o All necessary governmental approvals (domestic and
foreign) and third party approvals and/or consents
in connection with the Transaction, the transactions
contemplated by the Credit Facilities and otherwise
referred to herein shall have been obtained and
remain in effect, and all applicable waiting periods
shall have expired without any action being taken by
any competent authority which, in the judgement of
the Arranger, restrains, prevents, or imposes
materially adverse conditions upon, the consummation
of the Transaction or the transactions contemplated
by the Credit Facilities or otherwise referred to
herein. Additionally, there shall not exist any
judgement, order, injunction or other restraint
prohibiting or imposing materially adverse
conditions upon the Transaction or the transactions
contemplated by the Credit Facilities.
o Satisfactory valuations of the Vessels by Acceptable
Brokers appointed by the Agent at the expense of the
Borrower.
o A favourable opinion from the Agent's insurance
consultants at the expense of the Borrower
confirming that
the required insurances have been placed and are
acceptable to the Agent, and that the underwriters
are acceptable to the Agent.
o Letters of undertaking from the insurance brokers,
inclusive confirmation notices of assignment, notices
of cancellation and loss payable clause acceptable to
the Agent.
Events of Default : Usual and customary for a transaction of this type,
including but not limited to:-
o Failure to pay any amounts due when required under
the Facility Agreement.
o Failure to comply with the Financial Covenants.
o Cross default with respect to the other obligations
of the Borrower and Guarantors.
General Conditions : In addition to the terms and conditions set out in this
letter, the General Terms and Conditions of Fortis Bank
(Nederland) N.V. will apply.
Documentation : Usual and customary for a transaction for this type.
Increased Costs : The documentation will include a provision requiring the
Borrower to reimburse the Banks for any increased costs,
which are incurred as a result of regulatory changes.
Representations / : Usual and customary for a transaction for this type.
Warranties
Taxation : Any payments under the Facility Agreement are to be made
free and clear of all present and future taxes, levies,
duties or deductions of any nature whatsoever, levied
either now or at any future time.
Expenses : All costs incurred in connection with the establishment
and maintenance of the Facility, the Facility Agreement
and security documents, including legal fees and out of
pocket expenses, will be for the account of the Borrower
Governing Law : The laws of England and the non-exclusive jurisdiction of
the English courts.
This offer letter will remain valid until the close of business, Rotterdam time
on 31 July 2005. Please note that this offer letter, supersedes the ones sent to
you before.
If you agree with contents of this offer letter, we kindly request you return to
us the copy, dated and duly signed "for approval".
Yours Sincerely,
For and on behalf of
Fortis Bank (Nederland) N.V.
/s/ A.C.A.J. Biesbroeck /s/ J.D. Kalverkamp /s/ Ioannis Lazaridis
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A.C.A.J. Biesbroeck J.D. Kalverkamp IOANNIS LAZARIDIS
For approval
21/5/05
