UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
(Mark One)
[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12 (b) OR (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, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-17326
ANANGEL-AMERICAN SHIPHOLDINGS LIMITED
(Exact name of Registrant as specified in its charter)
Not applicable
(Translation of Registrant's name into English)
CAYMAN ISLANDS
(Jurisdiction of incorporation or organization)
P. O. Box 75247, Kallithea,
GR 176-10, Greece
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
None
Securities registered or to be registered pursuant to Section 12(g) of the Act.
American Depositary Shares
(Title of class)
Class A Ordinary Shares of $ 1.00 each
(Title of class)
------------------------------------------------------------
Securities for which there is a reporting obligation
pursuant to Section 15(d) of the Act
None
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Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report.
11,745,854 Class A Ordinary Shares of $ 1.00 each*
12,228,000 Class B Ordinary Shares of $ 1.00 each**
-------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No _______
------
Indicate by check mark which financial statement item the registrant has elected
to follow.
Item 17 ______ Item 18 X
-------
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes __________ No __________
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* 11,745,854 Class A Shares were outstanding as of May 18, 2001
** 12,228,000 Class B Shares were outstanding as of May 18, 2001
TABLE OF CONTENTS
ITEM PAGE
PART I....................................................................1
ITEM 1. Identity of Directors, Senior Management and Advisors...........1
ITEM 2. Offer Statistics and Expected Timetable.........................1
ITEM 3. Key Information ................................................1
ITEM 4. Information on the Company ....................................14
ITEM 5. Operating and Financial Review and Prospects ..................24
ITEM 6. Directors, Senior Management and Employees ....................35
ITEM 7. Major Shareholders and Related Party Transactions .............37
ITEM 8. Financial Information .........................................40
ITEM 9. The Offer and Listing .........................................40
ITEM 10. Additional Information........................................43
ITEM 11. Quantitative and Qualitative Disclosures About Market Risk ...46
ITEM 12. Description of Securities Other than Equity Securities........49
PART II..................................................................50
ITEM 13. Defaults, Dividend Arrearages and Delinquencies...............50
ITEM 14. Material Modifications to the Rights of Security Holders
and Use of Proceeds.........................................50
ITEM 15. [Reserved]....................................................50
ITEM 16. [Reserved]....................................................50
PART III.................................................................50
ITEM 17. Financial Statements..........................................50
ITEM 18. Financial Statements ........................................50
ITEM 19. Exhibits .....................................................51
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS...............................F-1
SIGNATURES...............................................................C-1
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SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This Annual Report on Form 20-F contains forward-looking statements within
the meaning of the Securities Exchange Act of 1934. Such statements relate to,
among other things, industries in which the Company operates, the world economy,
earnings and cash flows and may be indicated by words or phrases such as
"anticipates", "supports", "plans", "projects", "expects", "should", "hope",
"forecast", "the Company believes", "management is of the opinion" and similar
words or phrases. Such statements may also be made by management orally.
Forward-looking statements are subject to inherent uncertainties and risks,
including among others: increasing price and product/service competition,
including new entrants; technological developments and changes; the achievement
of lower costs and expenses; and governmental and public policy changes
including maritime and environmental regulations. In addition, such statements
could be affected by general industry and market conditions and growth rates,
and general economic conditions including interest rate and currency exchange
rate fluctuations. In light of these risks and uncertainties, actual events and
results may vary significantly from those included in or contemplated or implied
by such statements. Readers are cautioned not to place undue reliance on such
forward-looking statements. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
Not applicable
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable
ITEM 3. KEY INFORMATION
A. SELECTED FINANCIAL DATA
The following selected financial data for the year ended June 30, 1996, the
six months ended December 31, 1996 and the years ended December 31, 1997,
December 31, 1998, December 31, 1999 and December 31, 2000 are derived from the
consolidated financial statements of Anangel-American Shipholdings Limited (the
"Company"). This information should be read in conjunction with the audited
consolidated financial statements of the Company and Management's Discussion and
Analysis of Financial Condition and Results of Operations. The Company's
financial statements are prepared in accordance with US GAAP.
-1-
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED SIX MONTHS YEAR ENDED
DEC. 31, 2000 DEC. 31, 1999 DEC. 31, 1998 DEC. 31, 1997 ENDED JUNE 30,
DEC. 31, 1996 1996
(IN THOUSANDS OF US DOLLARS, EXCEPT PER SHARE DATA)
KEY FIGURES FROM CONSOLIDATED
STATEMENTS OF INCOME:
Revenue from voyages 97,514 63,660 61,521 74,593 39,515 100,144
Operating Profit/(Loss) 30,569 (1,672) (3,108) 9,833 6,473 26,463
Realization of shipping investments 1,455 -- -- -- -- 4,453
Net Income/(Loss) 28,409 (17,324) (5,666) 4,442 2,961 21,024
AMOUNTS PER ORDINARY SHARE:
Earnings (basic and diluted) $1.18 ($1.07) ($0.35) $0.28 $0.19 $1.32
Dividends Ordinary -- -- -- 0.10 0.50 1.00
KEY FIGURES FROM CONSOLIDATED CASH FLOW:
Net cash provided by operating
activities 87,418 13,289 7,191 31,578 14,598 29,073
Vessel acquisitions (68,622) (53,006) (9,215) (4,373) -- (24,484)
Proceeds from realization of shipping 1,455 -- -- -- -- 16,137
investments
Proceeds of issue of ordinary shares -- 45,406 -- -- -- --
Issue/(repayment) of long term debt (12,803) 15,378 (7,963) (17,414) (3,496) 31,104
/capital lease creditor
Repurchase agreements (27,644) 3,264 15,047 1,149 2,958 6,669
Funds provided by bank overdrafts (193) 12 759 -- -- --
Dividends paid -- -- -- (1,598) (7,991) (15,982)
Increase/(Decrease) in cash and cash (21,242) 24,470 7,119 1,042 6,069 42,517
equivalents (*)
Increase/(Decrease) in
Restricted cash (*) (5,058) 127 1,300 8,300
KEY FIGURES FROM CONSOLIDATED BALANCE
SHEETS:
Vessels at cost 600,208 525,719 481,525 481,525 481,525 481,525
Depreciation (196,151) (173,606) (152,453) (131,631) (109,939) (99,093)
Total assets 514,824 517,991 462,035 449,662 456,169 460,500
Long term debt 208,048 208,318 185,557 183,823 182,368 186,132
Total Shareholders' Equity 271,680 243,271 215,189 220,855 218,011 223,041
Ordinary Shares Outstanding 23,973,854 23,973,854 15,982,569 15,982,569 15,982,569 15,982,569
(*) Reclassifications have been made in the above Table in order to conform the
1999, 1998 and 1997 figures to the treatment of these items in the 2000
financial statements.
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B. CAPITALIZATION AND INDEBTEDNESS
Not applicable
C. REASONS FOR THE OFFER AND USE OF PROCEEDS
Not applicable
D. RISK FACTORS
BUSINESS RISKS
Cyclical nature of industry, freight rates and vessel values
The Company is an independent shipping company, which has historically
operated in the dry cargo market. This market has been cyclical in varying
degrees, experiencing fluctuations in freight rates, profitability and, as a
result of these, vessel values. These fluctuations have been primarily due to
changes in the level and pattern of global economic growth, the highly
competitive nature of the world shipping industry and changes in the supply of
and demand for seaborne shipping capacity.
Freight rates are strongly influenced by the supply of and demand for
shipping capacity. The demand for shipping capacity is primarily determined by
demand for the commodities carried and by the distance that those commodities
are to be moved by sea. Demand for commodities is affected by, among other
things, world and regional economic and political conditions (including
developments in international trade, fluctuations in industrial and agricultural
production, armed conflicts, embargoes and strikes), environmental concerns,
weather patterns, canal closures and changes in seaborne and other
transportation patterns and crop yields. The supply of shipping capacity,
measured by the amount of suitable tonnage available to carry cargo, is
determined by the size of the existing fleet in a particular market, the number
of newbuilding deliveries, the scrapping of older vessels and the number of
vessels out of active service (i.e. laid-up, dry-docked, awaiting repairs or
otherwise not available for hire). In addition to prevailing and anticipated
freight rates, factors that affect the rate of newbuilding, scrapping and
laying-up include:
o newbuilding prices,
o secondhand vessel values in relation to scrap prices,
o costs of bunkers and other operating costs,
o normal maintenance and insurance coverage,
o the efficiency and age profile of the existing fleet in the market; and
o government and industry regulation of maritime transportation
practices, particularly environmental protection laws and regulations.
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The factors that influence the supply of and demand for shipping capacity are
outside the Company's control, and the nature, timing and degree of changes in
industry conditions are unpredictable. In 1998, due to a decline in freight
markets that started in 1995, the Company suffered its first loss, a net loss of
$5,666,000 or $0.35 per outstanding share. The Company suffered a further and
increased loss in 1999, a net loss of $17,324,000 or $1.07 per outstanding
share. Although freight markets improved strongly from late 1999 through 2000
and the Company again recorded profits in the 2000 year of $28,409,000 or $1.18
per outstanding share, there can be no assurance that demand will increase in
the future or that freight rates will not again decline to the point that the
Company's operations become unprofitable.
Liquidity, leverage and ability to service debt
As of December 31, 2000, the Company had $211,472,000 of long term debt
outstanding (primarily comprised of obligations under capital leases), of which
$3,424,000 fell due within the subsequent twelve-month period. At that date the
Company had $61,983,000 in cash. As of May 18, 2001 long-term debt was
approximately $209,521,000, of which $2,089,000 fell due before December 31,
2001, whilst the Company had approximately $99,237,000 in cash, of which
$26,572,000 was restricted. As of May 18, 2001, the Company had two newbuildings
under construction for which it had so far paid $2,199,000 per vessel of the
total purchase price for each vessel of $21,990,000 each[1]. Under the Company's
financing arrangements, the Company is permitted to incur additional
indebtedness from time to time, and the Company may borrow funds to finance a
portion of the purchase price of the above vessels, or other vessels the Company
may acquire in the second-hand or newbuilding markets. The level of the
Company's debt obligations will have several effects on the Company's future
operations, including the following:
o the Company's leveraged position may hinder the Company's ability to
obtain financing in the future for working capital, capital expenditures
and general corporate purposes, including acquisitions of additional
vessels,
o a substantial portion of the Company's cash flow from operations will be
required to be dedicated to the payment of the Company's debt
obligations, and will not be available for other purposes,
o the Company may be hindered in its ability to withstand competitive
pressures and respond to changing business conditions,
o the Company may be more vulnerable to any downturn in its business, which
historically has been cyclical and subject to general and industry-
specific economic conditions, and
o the Company may be more leveraged than others with whom the Company
competes, which may put us at a competitive disadvantage.
The Company's long-term debt is presently comprised of long term capital
lease arrangements with third parties covering six of the Company's vessels and
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[1] One of these two newbuilding contracts has subsequently been cancelled
pursuant to arrangements described in Item 4.A. "History and Development
of the Company - Recent Events", as a result of which the Company has
received a sum of $4,200,000, which will be accounted for in the Company's
second quarter 2001 results.
-4-
a bank loan covering a further one of its vessels. The lease arrangements
require compliance with certain financial ratios, including, prior to September
1999, that the value-adjusted equity of the Company exceed total debt. As a
result of a cyclical fall in the market value of the Company's fleet in 1998,
the Company was, as of year-end 1998, technically in breach of that requirement.
Since that time, the market value of the Company's vessels has increased. In
addition, effective September 1999, the requirement was revised to be that the
Company's value-adjusted equity should exceed 50% of total debt. Under letter of
credit facilities that support these arrangements, and due to the same cyclical
fall in market value of the Company's fleet, additional collateral was provided
to the banks providing the letter of credit facilities and the required ratio of
collateral to debt was reduced.
Any inability to service the Company's debt obligations or obtain additional
financing, as needed, would have a material adverse effect on the Company.
The Company's ability to meet its debt obligations will depend upon the
Company's operating performance, which will be affected by economic conditions
and by financial, business and other factors affecting the Company's operations,
many of which are beyond the Company's control. There can be no assurance that
the Company's business will continue to generate cash flow at levels sufficient
to satisfy the Company's debt service requirements. If the Company is unable to
generate sufficient cash from operations to make scheduled interest payments on
the Company's leases, or to meet other obligations and commitments, the Company
will be required to adopt one or more alternatives, such as refinancing or
restructuring the Company's debt obligations, selling vessels or raising
additional debt or equity capital. There can be no assurance that any of these
alternatives could be effected on a timely basis, on satisfactory terms or at
all.
International risks
The market value of the Company's vessels fluctuate largely in relation to
existing and anticipated freight rates as well as with changes in general
economic and market conditions. For example, the economic crisis in Southeast
Asia, and to a lesser extent, in Latin America and Russia that developed in 1997
and 1998 had an adverse effect on vessel values and freight rates. A substantial
portion of the Company's shipping operations is conducted with charterers from
Southeast Asia, although some portion of the charters concluded with such
charterers are for voyages in other parts of the world. While vessel values and
freight rates recovered from the latter part of 1999 and through 2000, there can
be no assurance that they will not decline in the future.
In addition, since the Company's operations are conducted worldwide,
primarily outside of the United States, they may be affected by currency
fluctuations and by changing economic, political and social conditions in the
countries where the Company's business is conducted or where the Company's
vessels are registered or flagged. In particular, the Company's operations may
be affected by war, expropriation of vessels, imposition of taxes, increased
regulation or other circumstances, and as a consequence, the Company may incur
higher costs, the Company's assets may be impaired, and the Company's operations
may be adversely effected.
Risks involved in the purchase and operation of secondhand vessels
-5-
As of May 18, 2001 the average age of the Company's existing vessels (by
deadweight) was approximately 10.2 years and their useful lives were estimated
to be up to 25 years, depending on their condition. The Company's current
business strategy includes the possibility of purchasing additional vessels.
There can be no assurance that additional vessels of the quality the Company
desires will be available for purchase at prices the Company is willing to pay.
In general, expenditures necessary for maintaining a vessel in good operating
condition increase as the age of the vessel increases, and older vessels may
develop unexpected mechanical and operational problems despite adherence to
regular survey schedules and proper maintenance. Furthermore, as vessels grow
older they can generally be expected to decline in value. As the values of the
Company's vessels decline, refinancing debt relating to these vesselscould have
a material adverse effect on the Company's liquidity. In addition, secondhand
vessels typically carry very limited warranties with respect to their condition
as compared to warranties available for newbuilding vessels. Cargo insurance
rates also tend to increase with the age of a vessel, and secondhand vessels
tend to be less fuel-efficient than newer vessels. While differences in fuel
consumption and anticipated freight insurance costs tend to be factored into the
freight rates earned by older vessels, if these costs were to increase
significantly, the Company's older vessels could be affected.
In addition, changes in governmental regulations, safety or other equipment
standards may require expenditures for alterations to existing equipment, the
addition of new equipment to the fleet or restrictions on the cargoes that the
fleet may transport. There can be no assurance that market conditions will
justify such expenditures or enable the Company to operate its vessels
profitably during the remainder of the economic lives of such vessels.
Potential unavailability of charters at attractive rates
The Company currently charters a substantial portion of its vessels on a
relatively short-term basis. The majority of these charters will expire in 2001
unless extended. There can be no assurance that, if these charters are extended,
the charter hire rates will be at or greater than the current charter hire rates
or that, if such charters are not extended, profitable replacement charters will
be available.
Competition
The Company obtains charters for vessels in highly competitive markets in
which the Company's market share is insufficient to enforce any degree of
pricing discipline. Although the Company believes that no single competitor has
a dominant position in the markets in which the Company operates, the Company is
aware that certain competitors may be able to devote greater financial and other
resources to their activities, which may result in a greater competitive threat
to the Company's operations. There can be no assurance that the Company will
continue to compete successfully with its competitors or that the Company's
competitive position will not be eroded in the future. The Company's vessels
compete primarily on the basis of price, the condition of the vessels and the
reputation of the manager of the Company's vessels, Anangel Shipping Enterprises
S.A. (the "Manager").
Transactions with affiliates; potential conflicts of interest
-6-
John Angelicoussis, Demetrios Stylianou, and Constantinos Panagopoulos who
are directors and officers of the Company and Christos Kanellakis, a director of
the Company until May 14, 2001, are also officers and/or directors of
Angelicoussis Shipholding Group Limited ("ASGL") and its subsidiaries. ASGL and
its subsidiaries operate in the shipping business. As of May 18, 2001
subsidiaries of ASGL owned six dry cargo vessels, though these are not of a size
or type likely to compete for cargoes with any of the Company's vessels. As a
result of their involvement in ASGL, however, the above persons may have had in
the past and may in the future experience conflicts of interest in connection
with the selection, purchase, operation and sale of the Company's vessels.
Generally, as far as the sale and purchase of vessels is concerned, the Company
relies on valuations given by independent shipbrokers in determining whether the
price the Company either offers or is offered is appropriate. In addition, John
Angelicoussis has given the Company an undertaking that he will not for his own
account purchase any dry cargo vessels without first offering the Company the
opportunity to acquire such vessels.
The Manager, which charters and operates the Company's vessels, is ultimately
owned or controlled by members of the Angelicoussis and Kanellakis families. The
Manager charters and operates, among other vessels, ASGL's and the Company's
vessels. The Manager's services are performed under a contract under which the
Company pays a monthly fee for operating the Company's vessels and commissions
for chartering the Company's vessels. The Manager subcontracts the chartering of
the Company's vessels to its London agent, Agelef Shipping Co. (London) Limited
("Agelef"). Agelef is a UK limited company controlled by Angelicoussis and
Kanellakis family interests. Under these arrangements in the twelve months to
December 31, 2000 the Company paid the Manager $2,874,000 for operating and
$2,316,000 for chartering the Company's vessels. The Company believes these fees
are either at or below industry standard rates for the services rendered.
The Company currently places between 70 and 80% of its hull and machinery
insurance and all of the Company's loss-of-hire insurance with Aegian Insurance
Company Limited ("Aegian"), which is a subsidiary of ASGL. Aegian fully
reinsures the hull and machinery and loss of hire insurance. This practice
results in cost savings to the Company not available if the Company went
directly into the market. In the twelve months to December 31, 2000, the Company
paid Aegian $1,164,000 in premiums.
Companies which the Company understands may be indirectly owned or controlled
by the sister of Mr John Angelicoussis, Anna Kanellakis, whose husband, Christos
Kanellakis, was one of the Company's directors until May 14, 2001, as of May 18,
2001 operated three Capesizes and six Panamax vessels and have a further three
Panamax vessels of approximately 75,000 DWT each on order from Daewoo
Shipbuilding & Marine Engineering Co. Ltd. ("DSME" or "Daewoo"). The vessels
these companies operate are managed by an independent third party, Alpha Tankers
and Freighters International Ltd. ("Alpha"). Alpha subcontracts to the Manager
certain services, such as the recruiting of officers and the purchase of
supplies, and subcontracts to the Manager's London agent, Agelef, the chartering
of its vessels. It is therefore conceivable that the personnel of Agelef may
experience conflicts in determining whether certain employment opportunities
should be offered first to the vessels managed by the Manager on behalf of
either the Company or ASGL, or the vessels managed by Alpha on behalf of the
Kanellakis family interests. Although such possibility of conflict in the
chartering of vessels does exist, particularly in the case of the vessels
managed by Alpha, the Company believes that, as a practical matter, neither the
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Manager, nor Agelef, nor Aegian is conflicted in carrying out its duties to the
Company, ASGL or Alpha either in chartering or, where applicable, in operating
vessels. The vessels chartered by the Manager and Alpha through Agelef are
seldom available for the same charter and the operations work is performed at
standard rates and is readily available from third parties worldwide. The
Company therefore believes that the services are provided in accordance with
industry practice and at standard prices.
Possible catastrophic loss and liability insurance
The ownership and operation of any ocean-going vessel in international trade
is affected by a number of risks, including mechanical failure, personal injury,
vessel and cargo loss or damage, business interruption due to political
conditions in foreign countries, hostilities, labor strikes, adverse weather
conditions and catastrophic marine disaster, including environmental accidents
and collisions. All these risks could result in liability to the Company and
could cause loss of revenue, increased costs or loss of reputation.
The Company maintains insurance consistent with industry standards against
these risks. There can be no assurance, however, that the Company will
adequately insure against all risks, that any particular claim will be paid out
of these insurances, or that the Company will be able to procure adequate
insurance coverage at commercially reasonable rates in the future. More
stringent environmental and other regulations may result in increased costs for,
or the lack of availability of, insurance against the risks of environmental
damage, pollution and other claims for damages that may be asserted against the
Company. In addition, even if insurance proceeds are paid to the Company to
cover the financial losses incurred following the occurrence of one of these
events, there can be no assurance that the Company's business reputation, and
therefore the Company's ability to obtain future charters, will not be adversely
affected by such an event. Such an impact on the Company's business reputation
could have a material adverse effect on the Company's business and results of
operations. The Company has taken and continues to take steps in order to enable
it to meet U.S. requirements for vessels calling on U.S. ports.
Environmental and other regulations
The Company's operations are materially affected by extensive and changing
environmental protection and other laws, rules, regulations and conventions.
Compliance with these laws, rules, regulations and conventions may entail
significant expense, including expenses for ship modifications and changes in
operating procedures. Although the Company believes that it is in substantial
compliance with such laws, rules, regulations and conventions, there can be no
assurance that the costs of compliance, or the failure to comply, would not have
a material adverse effect on the Company's business, results of operations,
financial condition and liquidity.
The United States Oil Pollution Act of 1990, as amended ("OPA 90"), imposes
strict, joint and several liability on owners, operators and charterers by
demise (i.e. bareboat charterers) of vessels (the "Responsible Parties") for
actual or threatened discharges of oil into the navigable waters of the United
States or adjoining shorelines, including the 200-nautical mile exclusive
-8-
economic zone of the United States ("U.S. Waters"), with certain limited
exceptions. OPA 90 limits the strict liability of Responsible Parties to the
greater of $600 per gross ton or $500,000 for non-tanker vessels (subject to
possible adjustment for inflation) for removal costs and damages that result
from an actual or threatened discharge of oil. This limit does not apply,
however, if the incident is caused by gross negligence, willful misconduct, or
the violation by a Responsible Party or its agent of any applicable United
States federal safety, construction or operating regulation, or if the
Responsible Party fails to report the incident or cooperate in connection with
related removal activities. In addition, OPA 90 specifically permits individual
states to impose their own liability regimes with regard to hazardous materials
and oil pollution incidents occurring within their boundaries, and most states
bordering on a navigable waterway have enacted legislation providing for strict
unlimited liability for discharges of pollutants within state waters. In some
cases, states that have enacted such legislation have not yet issued
implementing regulations defining owners' or operators' responsibilities under
these laws.
The Comprehensive Environmental Response, Compensation, and Liability Act, as
amended ("CERCLA," or "Superfund Act") imposes strict, joint and several
liability on Responsible Parties for vessels that release or threaten to release
hazardous substances into the environment, including waters under the
jurisdiction of the United States, or that transport hazardous substances to
disposal or treatment facilities from which there are releases or threatened
releases. CERCLA limits the strict liability of non-tanker vessels carrying
hazardous substances as cargo or residue to $300 per gross ton, or $5,000,000,
whichever is greater, for response costs and damages to natural resources. These
limits do not apply, however, if the release or threat of release is the result
of willful misconduct or willful negligence within the privity or knowledge of
the Responsible Party, or is the result of violation of safety, construction or
operating standards or regulations, or the Responsible Party fails or refuses to
cooperate with and assist public officials responding to the release.
Pursuant to regulations promulgated by the United States Coast Guard ("USCG")
under OPA 90, Responsible Parties must meet financial responsibility
requirements under OPA 90 and the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended ("CERCLA"). The protection
and indemnity clubs ("P&I Clubs"), which have historically provided ship owners
and operators with financial assurance, have refused to furnish evidence of
insurance to Responsible Parties and, therefore, Responsible Parties have
obtained financial assurance from other sources at additional cost. Although the
Company currently satisfies all of the financial responsibility requirements for
each of the Company's vessels that call in U.S. Waters, failure to maintain
compliance with these USCG regulations could have a material adverse effect on
the Company's business, results of operations, financial condition and
liquidity.
According to the International Maritime Organisation ("IMO"), an agency of
the United Nations, 99 bulk carriers sank between 1990 and 1997, an increase in
the historical rate of bulk carrier accidents. In response the IMO adopted
regulations in 1997 to reduce the risk of dry bulk carriers sinking. These
regulations generally require new and existing dry bulk carriers to be capable
of withstanding the flooding of any one cargo hold at a particular time. The
Company's vessels currently satisfy the requirement of these regulations.
Failure to comply with these IMO regulations could have a material adverse
effect on the Company's business, financial condition, results of operations and
liquidity.
-9-
The Company's operations are also affected by the recently adopted
requirements set forth in the International Safety Management ("ISM") Code. The
ISM Code and implementing regulations now require ship owners and bareboat
charterers who have assumed responsibility for the operation of bulk carriers,
to have developed an extensive "Safety Management System" that includes, among
other things, the adoption of a safety and environmental protection policy
setting forth instructions and procedures for operating their vessels safely and
procedures for dealing with emergencies. Noncompliance with the ISM Code may
lead to decreases in available insurance coverage for affected vessels and may
result in the denial of access to, or detention in, certain ports. Although the
Company has obtained ISM certification for its existing vessels by successfully
completing audits conducted by the American Bureau of Shipping and Det Norske
Veritas, leading classification societies, and the Hellenic Republic Ministry of
Mercantile Marine, failure to maintain such certification would have a material
adverse effect on the Company's business, results of operations, financial
condition and liquidity. The Company will be required to obtain ISM
Certification for the vessels the Company is committed to buy and any additional
vessels that the Company purchases within six months of acquiring them. Failure
to obtain and maintain such certifications would have a material adverse effect
on the Company's business, results of operations, financial condition and
liquidity.
In complying with OPA 90, the IMO regulations, the ISM Code and with other
laws and regulations that may be adopted, ship owners and operators may incur
significant additional costs in meeting new maintenance and inspection
requirements, in developing contingency arrangements for potential spills and in
obtaining insurance coverage. These laws and regulations also may restrict the
economic life of vessels, require a reduction in cargo carrying capacity and
make such vessels less desirable to potential charterers. Additional laws and
regulations may be adopted which impose strict liability similar to that imposed
by OPA 90 or which limit the Company's ability to do business and which could
have a material adverse effect on the Company's business, financial conditions,
results of operations and liquidity.
Risk of arrest; loss of hire
Currently, all of the Company's existing vessels are chartered to third
parties. Under the terms of the Company's charters, the vessels are placed
off-hire (i.e. the charterer ceases to pay charter hire) for any period during
which such vessel is "arrested" for a reason not arising from the fault of the
charterer. Under the general maritime law in many jurisdictions, and under the
newly adopted but not yet effective International Convention on Arrest of Ships,
1999, crew members, tort claimants, claimants for breach of certain maritime
contracts, vessel mortgagees, suppliers of goods and services to a vessel and
shippers and consignees of cargo and others entitled to a maritime lien against
that vessel may enforce their lien by "arresting" a vessel through court
processes.
In addition, in certain jurisdictions, such as South Africa, and those
countries adopting the new International Convention on Arrest of Ships, 1999,
under the "sister ship" theory of liability, a claimant may arrest not only the
vessel with respect to which the claimant's maritime lien has arisen, but also
any "associated" vessel owned or controlled by the legal or beneficial owner of
that vessel. While in some of the jurisdictions which have adopted this
doctrine, liability for damages is limited in scope and would only extend to a
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company and its ship owning subsidiaries, there can be no assurance that
liability for damages caused by a vessel managed by the Manager would not be
asserted against the Company, any of the Company's ship owning subsidiaries or
their respective vessels. The arrest of one or more vessels could result in a
material loss of cash flow for the Company or require the Company to pay
substantial sums to have the arrest lifted. According to Article 6 of the newly
adopted but not yet effective International Convention of Arrest of Ships, 1999,
depending on the circumstances, recovery may be sought for damages arising from
"wrongful arrest" and the courts may as a condition of the arrest of a ship or
of permitting an arrest already effected to be maintained, impose upon the
claimant who seeks to arrest or who has procured the arrest of the ship, the
obligation to provide security of a kind and for an amount and upon such terms
as may be determined by that court for any loss which may be incurred by the
defendant as a result of the arrest and for which the claimant may be found
liable, including but not restricted to such loss or damage as may be incurred
by that defendant in consequence of (i) the arrest having been wrongful or
unjustified or (ii) excessive security having been demanded and provided. This
is subject to the exception that a judgment obtained against a parent holding
company may be satisfied out of the assets of the holding company including its
ownership in its subsidiaries. Although the Company currently maintains
insurance coverage for liability for each of the Company's vessels, there can be
no assurance that such insurance will continue to be available on terms
favorable to us or at all.
Group liability
Although each of the Company's vessels is or will be separately owned by one
of the Company's subsidiaries, under certain circumstances, a parent company and
all the ship owning affiliates in a group under common control or engaged in a
joint venture could be held liable under corporate veil piercing principles for
damages or debts owed by one of the other affiliates or by the parent.
Therefore, it is possible that all of the Company's assets and the Company's
subsidiaries could be subject to execution upon a judgment against the Company
or any of its subsidiaries. Absent a situation in which claimants are able to
"pierce the corporate veil", generally speaking, the assets of the parent will
not be reachable for the acts of the subsidiary while the assets of the
subsidiary might be indirectly answerable for the acts of the parent. Although
the Company currently maintains insurance coverage for liability for each of the
Company's vessels, there can be no assurance that such insurance will continue
to be available on favourable terms, or at all.
Dependence on key personnel
The Company is dependent upon a limited number of senior executives for the
principal decisions with respect to the Company's activities, including John
Angelicoussis and Demetrios Stylianou, who have over 55 years of combined
experience in the shipping business. The loss or unavailability of the services
of either or both these persons for any significant period of time could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Reliance on the Manager
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The Company is dependent on its Manager in connection with the conduct of the
Company's activities. The loss of the Manager's services could have a material
adverse effect on the Company's business, financial condition and results of
operations.
Currency risks
All of the Company's revenue is received and most of the Company's expenses
are incurred in United States dollars. However, the Company has incurred and
will continue to incur expenses in other currencies, particularly Greek
drachmae. For the year ended December 31, 2000, total expenses incurred in Greek
drachmae accounted for approximately 42% of the total operating expenses
incurred, total expenses incurred in United States dollars accounted for less
than 28% of the total operating expenses incurred and the remaining 30% of the
total operating expenses were incurred in various other currencies. While the
United States dollar has generally appreciated against the Greek drachma in
recent years, it has also depreciated from time to time. Depreciation in the
value of the United States dollar relative to the Greek drachma would increase
the United States dollar cost to the Company of paying such expenses and thus
could have a material adverse effect on the Company's results of operations.
There can be no assurance that the portion of the Company's business conducted
in other currencies will not increase in the future, which could expand the
Company's exposure to losses arising from currency fluctuations. The Company has
not historically hedged its exposure to foreign currency fluctuations and has no
current intention to do so.
Market risks, financial instruments and hedging
In accordance with the Company's investment guidelines, the Company invests
its surplus cash in U.S. Treasury Bonds. In recent years, the Company has
entered into agreements for the sale of these U.S. Treasury Bonds and the
subsequent repurchase of such securities as a means of financing working
capital. As of December 31, 2000, the Company had invested approximately $20
million in U.S. Treasury Bonds. All of these securities had been sold to a
financial institution subject to an agreement for the Company to repurchase
them. Since such securities bear fixed rates of interest, the Company is subject
to market risks associated with the impact of changes in interest rates on the
market value of these securities.
In addition, the Company has reduced its borrowing costs under its capital
lease agreements by entering into financial instruments to convert a substantial
portion of the Company's interest rate exposure under such agreements from fixed
rates to floating rates. However, at the same time, the Company's exposure to
the impact of changes in interest rates on the Company's borrowing costs under
such agreements has increased. The notional principal amount of these
instruments was approximately $117.6 million as of December 31, 2000. There can
be no assurance that interest rates will not rise in the future, which could
have an adverse impact on the costs of the Company's financing arrangements.
Possible taxation of the Company's United States source income
Unless an exemption applies under section 883 of the Internal Revenue Code of
1986, as amended (the "Code"), the gross amount of any U.S. source shipping
income derived by the Company's subsidiaries that is not effectively connected
with the conduct of a trade or business in the United States will be subject to
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a 4% tax. For these purposes, 50% of the subsidiaries shipping income that is
attributable to transportation that begins or ends (but that does not both begin
and end) in the United States is considered derived from sources within the
United States. The 4% tax on gross U.S. source shipping income would not apply
to any U.S. source shipping income that is considered effectively connected with
the conduct of a U.S. trade or business. Instead, if not exempt under section
883 of the Code, such income would be subject to U.S. federal income tax on a
net basis at corporate tax rates graduating to 35%. Under those circumstances,
the subsidiaries would also be subject to a 30% branch profits tax on earnings
effectively connected with the conduct of such U.S. trade or business, as
determined after allowance for certain adjustments, and on certain interest paid
or deemed paid by the subsidiaries' U.S. trade or business.
Based on the manner in which the Company conducts its operations, the Company
does not expect its subsidiaries to derive U.S. source shipping income that is
effectively connected with the conduct of a U.S. trade or business. The Company
anticipates that approximately 10% of its gross revenues constitutes U.S. source
shipping income. Thus, absent an exemption, the maximum effective rate of U.S.
federal income tax should not exceed 0.40%.
In general terms, the exemption under section 883 of the Code applies in the
case of a foreign corporation organized in a country which grants an equivalent
exemption to U.S. corporations, provided that more than 50 percent of the value
of the foreign corporation's stock is owned directly or indirectly by
individuals who are resident in foreign countries that grant reciprocal
exemptions of sufficiently broad scope to U.S. corporations. The Company's
subsidiaries are organized in Panama and Liberia, the Company's ships operate
under the Greek flag and more than 50 percent of the value of the Company's
stock is owned either directly or indirectly by individuals who are resident in
or nationals of Greece. Greece, Liberia and Panama are countries that grant
equivalent exemptions of sufficiently broad scope to U.S. corporations. Thus,
the Company believes that its subsidiaries qualify for exemption under section
883 of the Code.
Euro conversion
The Company's revenues are received in dollars. The Company's expenses are
incurred in drachmae, US dollars and other currencies. The Greek drachma is, as
of December 29, 2000, one of the twelve European currencies that have converted
to the Euro. Other than its exposure to the drachma, however, the Company is not
otherwise a party to any material contracts in which payment is expected to be
made in a currency that is to be converted to the Euro. The Company's
information systems are capable of handling conversion to the Euro.
Limited public market for the Class A shares and ADSs
The Company's ADSs trade on the NASDAQ National Market System. However, the
market for sale of these shares has been limited. At May 18, 2001, there were
11,113,711 ADSs outstanding and held of record by 79 persons, including
1,392,300 ADSs held in treasury by the Company. Such a limited market could make
it difficult for holders to sell ADSs in the future.
The Company's Class A shares are listed on the Luxembourg Stock Exchange. At
May 18, 2001, there were 2,069,628 Class A shares outstanding (excluding Class A
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shares underlying the ADSs) and held of record by 23 persons, including 45,185
Class A shares held in treasury by the Company. No trades in such Class A shares
took place on the Luxembourg Stock Exchange in the year to December 31, 2000.
Such a limited and inactive market could make it difficult for holders to sell
Class A shares in the future.
Concentration of share ownership
The Company's Articles of Association provide that the holders of Class A
shares (which include holders of ADSs) and Class B shares are entitled to equal
representation on the Board of Directors. As a result, the directors who are
representatives of either class can block any proposal requiring approval of the
Board of Directors. Anangel Integrity, which owns all of the outstanding Class B
shares, also currently owns 60.25% of the outstanding Class A shares and is not
restricted from acquiring additional Class A shares (including ADSs). Other
entities ultimately controlled by Angelicoussis family interests own a further
1.1% of the outstanding Class A shares. Anangel Integrity and other entities
controlled by Angelicoussis family interests therefore have the capability to
name the representatives on the board of directors of both classes of the
Company's shares should a competed election for representation on the board of
directors take place.
Enforceability of Judgments Against the Company
The Company is a Cayman Islands corporation with limited liability. Under Cayman
Islands law, there is doubt as to whether the courts of the Cayman Islands would
enforce (i) judgments of United States courts obtained in actions against
Directors of the Company predicated upon the civil liability provisions of the
United States federal securities laws and (ii) original actions brought in the
Cayman Islands against such persons or the Company predicated solely upon United
States federal securities laws. There is no treaty in effect between the United
States and the Cayman Islands providing for such enforcement, and there are no
grounds upon which Cayman Islands courts may choose to enforce judgments of
United States courts. Certain remedies available under the United states federal
securities laws would not be allowed in Cayman Islands courts as contrary to
that nation's public policy.
Limitations on ability of the Company's shareholders to protect their interests
The Company's corporate affairs are governed by its Memorandum and Articles of
Association and by the Cayman Islands Companies Law. The provisions of the
Cayman Islands Companies Law resemble provisions of the corporation laws of
England, but there have been relatively few judiciary cases interpreting the
Companies Law and it does not incorporate the non-statutory law or judicial case
law of any state of the United States. As a result the Company's minority
shareholders may have more difficulty in protecting their interests in the face
of actions by management, directors or controlling shareholders than would be
the case were the corporation incorporated in a U.S. jurisdiction.
ITEM 4. INFORMATION ON THE COMPANY
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A. HISTORY AND DEVELOPMENT OF THE COMPANY
ANANGEL-AMERICAN SHIPHOLDINGS LIMITED (the "Company") was incorporated in the
Cayman Islands on April 14, 1987 under the Companies Law of 1960 of the Cayman
Islands (as amended) as the holding company of subsidiaries engaged in the
business of acquiring and operating ocean-going cargo vessels. The Company's
principal objectives are to achieve (i) operating profits from the charter of
ocean-going cargo vessels and (ii) capital gains through market value
appreciation from the selective and timely acquisition and disposal of such
vessels. The Company has recently announced that it will in future focus the
Company's dry cargo operations in such a manner as to service the demands of
energy related transportation.
As of May 18, 2001 the Company owned and operated twenty-one vessels: two
multipurpose, seven handysize, seven Panamax and five Capesize, with a further
two Panamax vessels on order. The current fleet totals 1,616,519 deadweight
tonnes which have an average age of 10.2 years, compared with approximately 14.5
years for the world dry bulk feet in excess of 10,000 deadweight tonnes at that
date.
The Company's dry cargo fleet is managed by Anangel Shipping Enterprises S.A.
(the "Manager"). See "Operations - The Manager" below. The Company's principal
office is that of the Manager, which is located at Sygrou Avenue 354, Kallithea,
Athens, GR 176-74, Greece, and its telephone number is +30 1 946 7200.
Angelicoussis Shipholding Group Limited ("ASGL") is a private Bermuda holding
corporation, which together with its subsidiaries and its affiliates is
collectively referred to herein as the "Angelicoussis Group". The Angelicoussis
Group, which has been one of the largest Greek shipping operators of dry cargo
tonnage since the 1980s, was founded by the late Mr. Antonis Angelicoussis who
had owned and operated dry cargo and tanker vessels since 1947. The decision to
found the Company was taken under his leadership in 1986 by the Angelicoussis
family in partnership with American Express Bank Ltd., Shearson Lehman Hutton
Inc. (collectively the "the Amex Group") and other entities connected with the
then Amex Group.
The Company was established with two classes of Ordinary Shares, nominal
value $1.00 each ("Shares"), outstanding, consisting of Class A and Class B
Shares. All of the B Ordinary Shares, which from inception have accounted for
approximately 51% of the total ordinary share capital in issue were acquired by
Anangel Integrity Compania Naviera SA ("Anangel Integrity"), a Panamanian
corporation which until May, 1 2001 was a wholly owned subsidiary of ASGL. At
December 31, 2000, the Angelicoussis Group owned a total of 18,664,676 Class A
and Class B Shares representing approximately 77.854% of the Company's issued
and outstanding Shares. The Company's Class A Shares were first listed on the
Luxembourg Stock Exchange in June 1987, and the Company instituted an American
Depositary Receipt ("ADR") program for the Class A Shares on February 22, 1989.
The ADRs have traded on the National Market System of the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") since March
26, 1989 under the symbol ASIPY. The Bank of New York is the Depositary for the
ADRs; each ADR represents one American Depositary Share ("ADS"), which in turn
represents one Class A Share. On July 19, 1989, the Company completed a public
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offering in the United States and a concurrent international public offering of
3,450,000 ADSs. At the same time as the public offering Anangel Integrity
subscribed for a further 3,450,000 Class B Ordinary Shares, thus maintaining the
proportion of B Ordinary Shares issued and outstanding at more than 50% of the
total ordinary share capital in issue.
On October 22, 1999, the Company offered its shareholders the right to
purchase one additional Class A Share or Class B Share for every two shares held
at the closing bid price of $5.75 on the NASDAQ National Market System as at
November 15, 1999. Prior to the commencement of the offering ("Rights
Offering"), ASGL agreed to purchase all of the Shares it would be offered in the
Rights Offering directly or indirectly through Anangel Integrity. In addition,
ASGL agreed to purchase, directly or indirectly through Anangel Integrity, any
Class A Shares offered to, but not purchased by, the Company's other
shareholders at the same price per share. ASGL and Anangel Integrity effected
the purchases referred to in the previous sentence in order to assure that the
Rights Offering would be fully subscribed and that the Company would receive
funding for the purposes of the offering; namely, expansion of the Company's
fleet. The Rights Offering expired on December 20, 1999. As a result of the
Rights Offering, the Company issued a total of 7,991,285 additional Shares
including 7,167,148 additional shares in the aggregate to ASGL and Anangel
Integrity, and raised gross proceeds of $45.9 million, of which expenses related
to the offering of $0.5 million have been incurred and charged against surplus
paid-in capital. The Company's books and accounts are recorded in US dollars.
The Company's financial statements are prepared in accordance with generally
accepted accounting principles in the United States ("US GAAP").
RECENT EVENTS. At December 31, 2000, Anangel Integrity and ASGL owned 77.854% of
the Shares of the Company. At that date ASGL was equally controlled by interests
represented by John Angelicoussis and interests represented by his sister, Anna
Kanellakis, and both Mr. John Angelicoussis and Mr. Christos Kanellakis, the
husband of Anna Kanellakis, were directors of the Company. Over the last several
years, the Kanellakis family interests have developed a growing direct
involvement in shipping and intend to continue to develop this involvement in
the future. In order to avoid any possible future conflicts of interest with the
Company, the Kanellakis and Angelicoussis family interests agreed, subsequent to
December 31, 2000, that their interests in the Company should be re-organised so
that the Angelicoussis family interests would become the sole beneficial owners
of the shares in the Company owned by Anangel Integrity and ASGL. In order to
facilitate this reorganization, the Company declared and paid a cash dividend of
$3.00 per share, totaling $71,921,562, to all shareholders of record date April
30, 2001 on May 4, 2001. Anangel Integrity then acquired all the share capital
of the Company previously owned by ASGL, and ownership of Anangel Integrity was
then transferred to Angelicoussis family interests represented by Mr. John
Angelicoussis. Anangel Integrity also acquired any shares in the Company owned
directly by Kanellakis family interests as of that date.
In connection with the above arrangements, the Company also granted the
Kanellakis family interests a thirty day oral option commencing on April 1, 2001
to purchase one or more of the following four vessels/newbuilding contracts: the
Capesizes "Anangel Millennium" and "Anangel Century", both built in 2000, the
Panamax "Anangel Afovos", which had been delivered to the Company in March 2001,
and Hull No. 1144. The option was exercised and the three vessels and one
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newbuilding contract, which had an aggregate carrying value of approximately
$91.9 million at the time of sale were purchased by the Kanellakis family
interests effective May 1, 2001, at a price of $97.5 million representing their
fair market value as determined by independent shipbrokers as of March 31, 2001.
As of May 18, 2001 the Company therefore owned twenty one dry cargo vessels
totaling 1,616,519 deadweight, with a further two Panamax newbuildings on order
each of around 75,000 deadweight.
Subsequent to May 18, 2001 the Company has made a further announcement, as set
out below, dated May 30, 2001, simultaneously with the release of its first
quarter earnings for 2001, that:
"The Company previously announced the intention to broaden the scope of its
activities in the shipping industry. In this respect the Directors are
pleased to announce that they have finalised negotiations for the acquisition
of a 25% stake in ACOL Tankers Limited and an option to acquire an additional
26% of that company prior to December 31, 2001. ACOL is a privately owned
owner/ operator of modern crude oil tankers (currently 5 VLCCs and 3
Aframaxes) which interests of John Angelicoussis (our Chairman and President
whose interests control 80% of our Company) currently control 78%. Our
Company has agreed to pay US$47,404,000 for the 25% ACOL stake, which is
based on net asset value as of May 1, 2001. The strike price for the 26%
under the option is to be based on ACOL's net asset value at the time of
exercise of the option. Net asset value is per books adjusted by the market
value of ships owned, as established by five independent ship valuers.
ACOL's earnings will be accounted for by Anangel-American Shipholdings
Limited on an equity basis and are expected to increase the Company's
earnings. ACOL's revenues were US$48,490,000, ebitda US$35,651,000 and net
income US$28,580,000 for the quarter ending March 31, 2001.
ACOL was formed in September 1999 with a group of founders of ICB Shipping
AB, a Swedish tanker company, to acquire 4 VLCCs from ICB with the balance of
ICB's vessels going to Frontline Ltd.
Anangel-American also announces that it has cancelled its last Panamax order
with Daewoo Shipping and Marine Engineering and ordered a 300,000 DWT VLCC
for delivery in the second quarter 2003, which order we have assigned to
interests of John Angelicoussis for US$4,200,000.
Following the sale of the four vessels to the Kanellakis family earlier this
month, the Directors have decided to focus the Company's dry cargo operations
to service the growing demands of energy related transportation. We therefore
intend to gradually increase the number of Panamax and Capesize vessels at
the appropriate time and dispose of the Handysize and multipurpose vessels."
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B. BUSINESS OVERVIEW
OPERATIONS. Mr. Antonis Angelicoussis, the late President of both ASGL and
the Company, founded the Angelicoussis shipping business in 1947. Mr.
Angelicoussis acquired his first ocean-going dry cargo vessel in 1953, and his
fleet had grown to 18 vessels by 1972, at which time ASGL was incorporated in
Bermuda and all the shipowning companies became its wholly owned subsidiaries.
Under the new structure, ASGL embarked upon a fleet expansion and renewal
program and at December 31, 2000 the Angelicoussis Group's fleet (including the
vessels owned by the Company) numbered 30 dry cargo vessels totaling in excess
of 2.2 million DWT, including the Company's vessels, and is one of the largest
Greek shipping groups operating dry cargo vessels. The Manager presently engages
around 507 sea-going officers and crew of whom, as of May 18, 2001,
approximately 378 will be employed in servicing the vessels of the Company at
any one time.
PLAN OF OPERATION. The Company's vessels are owned or leased by separate
Panamanian or Liberian corporations, all of which are wholly owned by the
Company. Ownership of the Company's vessels through individual,
single-vessel-owning companies may provide a measure of protection for the
Company and the subsidiaries of the Company from damages resulting from, and
asserted against, any one vessel. For a list of the Company's subsidiaries that
own the Company's vessels, see Item 4.D., "Property, plant and equipment - Fleet
Profile."
The Company is committed to acquiring soundly constructed; well-kept vessels
and maintaining them at high levels of upkeep, in the belief that
well-maintained vessels ultimately help reduce operating costs. The Company's
fleet presently consists of five Capesize dry cargo vessels, seven Panamax bulk
carriers, seven large Handysize bulk carriers and two smaller Multipurpose
vessels.
The Company's operating strategy is to seek to charter its vessels as much as
possible on a time charter basis rather than on a voyage charter basis. A time
charter involves the hiring of a ship from a shipowner for a period of time
pursuant to a contract under which the shipowner places his ship, with crew and
equipment, at the disposal of the charterer, for which the charterer
periodically pays hire money. Subject to any restrictions in the contract, the
charterer decides the type and quantity of cargo to be carried and the ports of
loading and discharging, supplies the ship with bunkers and pays for the cargo
handling operations, canal and port charges, pilotage, towage and ship's agency.
The technical operation and navigation of the ship remain the responsibility of
the shipowner. Time charters vary depending upon the anticipated time of the
charter: "trip" time charters or short-term time charters (e.g., two months), a
number of voyages in succession or medium-term time charters (e.g., six to nine
months), or long-term time charters (e.g., a number of years). A voyage charter
involves a contract under which the charterer pays for the use of a ship's cargo
space for one, or sometimes more than one, voyage. Under this type of charter,
the shipowner pays all the operating costs of the ship (including bunkers, canal
and port charges, pilotage, towage and ship's agency), while payment for cargo
handling charges is the subject of agreement between the parties. Freight is
generally paid per unit of cargo, such as per ton, based on an agreed quantity,
or as a lump sum irrespective of the quantity loaded or the time taken to
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perform the voyage, though extra compensation or rebates may be payable under
the contract if the charterer varies anticipated loading or discharging times.
The Company does not share cargo space between charterers on a voyage.
The Company favours time charters over voyage charters since, with time
charters, the Company's costs are largely forecastable in advance and the
charterer, not the Company, is liable for any increase in fuel costs, port
charges and the financial effects of any extra time expended in completing a
"voyage", as long as this additional time is not the fault of the vessel.
Obviously, the longer the period of the time charter, the more the Company's
revenues can be foreseen in advance although less advantage can be derived from
any continued appreciation of market freight-rates. The Company's policy is to
maintain a mix of period employment and to charter its vessels out to first
class charterers for up to twelve months or longer, whenever it believes that
freight-rates may have reached a temporary peak.
The assessment of a charterer's financial condition and reliability is an
important factor in negotiating employment for the vessels, and the Company
prefers to deal with major trading houses, major producers and government-owned
entities rather than with more speculative or undercapitalized entities.
Many shipping companies historically have been exposed to very depressed
charter rates in what has been an extremely cyclical industry, and thus a key to
survival in this market has been to contain costs and minimize fixed charges.
The Company and the Manager have consequently pursued a vigorous policy of
controlling costs, recognizing that, during a poor market, low operating costs
assume paramount importance. Thus, one of the Company's objectives is to enable
the Company to compete successfully under market conditions in which shipowners
with high costs could not survive. The Company believes that it can best do so
by operating a young and well-maintained fleet in order to achieve higher
efficiency and relatively low operating costs. In addition, it is the Company's
policy to limit leverage to conservative levels and thus keep fixed charges
within margins it believes to be prudent.
The nature of the Company's business is worldwide and its business will
fluctuate in line with the main patterns of trade of the major dry bulk cargoes
and vary according to changes in the supply and demand for these items, and
particularly henceforth to changes in the supply and demand for energy related
commodities. Reference is made to "Year End Review" contained at pages 8 through
15 of the Company's Report and Accounts for the year ended December 31, 2000
(the "2000 Report"), which information is incorporated herein by reference in
Item 8.
THE MANAGER. The Company's vessels are each operated pursuant to a contract
with the Manager, a Panamanian corporation, which is ultimately owned or
controlled by members of the Angelicoussis and Kanellakis families. The Manager
has been operating ships, with particular expertise in dry cargo vessels, since
1971.
ASGL and the Company conduct their land-based operations through the Manager
based in Kallithea, Athens, Greece, which engages a total of 98 employees. The
Manager employs another 27 employees at its London agency, Agelef Shipping Co.
(London) Ltd. ("Agelef"), a United Kingdom company. Agelef acts as shipbroking
agent for the Manager and other similar entities including Alpha Tankers and
Freighters International Ltd. ("Alpha") and is responsible to the Manager for
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chartering, bunkering and insurance functions. The Manager, through Agelef,
charters the Company's vessels in the open market where charter rates are
determined by market factors. See Item 7. "Major Shareholders and Related Party
Transactions" for information regarding the fees paid to the Manager.
At any time, vessels owned by the Company and those owned by others who
utilize the services of the Manager and Agelef will be operating worldwide and,
as chartering opportunities arise, it is the responsibility of Agelef to decide
which of the vessels is, under the circumstances, most suitable for the carriage
of the prospective cargo or for a particular charter. This could potentially
give rise to a conflict of interest in securing the best employment for an
individual vessel. With regard to the acquisition or disposal of tonnage, the
Manager advises the Board of Directors on opportunities to purchase and sell
vessels.
CREWING AND TECHNICAL MANAGEMENT. The Company maintains its fleet under the
Greek flag. Each dry cargo vessel is the subject of a separate management
contract between the subsidiary that owns or leases the vessel and the Manager,
all such contracts being identical in their terms. A copy of the standard form
of management contract has previously been filed with the Securities and
Exchange Commission (the "Commission") as an exhibit to its Form 20-F
Registration Statement for the year ended June 30, 1988. Each contract is for a
period of three years from the date of signature and thereafter for additional
one-year terms unless either party gives 60 days' written notice of termination
to the other. See Item 7. "Major Shareholders and Related Party Transactions"
for information regarding the fees paid to the Manager. The Company's vessels
are not operated as a pool in that there is no form of income apportionment
between the Company's vessels and other vessels, including other vessels owned
or operated by the Angelicoussis Group.
INSURANCE. The business of the Company is affected by a number of risks,
including the risk of mechanical failure of the vessels, collision, property
losses to the vessels, the risk of cargo loss or damage and the risk of business
interruption due to political circumstances in foreign countries, hostilities
and labor strikes.
In addition, the operation of any ocean-going vessel is subject to the
inherent possibility of catastrophic marine disaster, including oil spills and
other environmental mishaps and the liabilities arising from owning and
operating vessels in international trade.
The Company has arranged for the insurance of the vessels in line with
standard industry practice, and the Manager has personnel dedicated to attempt
to settle any claims as efficiently as possible. The Company maintains hull and
machinery insurance, both marine and war risks, which includes the risk of Total
or Constructive Total Loss; Protection and Indemnity insurance and legal cost by
way of Freight Demurrage and Defense Cover with Mutual Assurance Associations.
The Company's cover is consistent with industry practice.
The Company has arranged loss-of-hire insurance, which provides insurance
against loss of freight revenue due to accidents or breakdowns. The Manager has
a good insurance record and the Company's insurance costs are consequently
competitive. As of the date of this report, the Company has taken and is
continuing to take steps in order to enable it to meet the United States
-20-
Certificate of Financial Responsibility ("COFR") requirements for vessels
calling on United States ports.
EMPLOYEES. The Company's vessels are manned by seamen who are employed by the
Company's subsidiaries that are the record owners or lessors of the vessels.
When the Company's vessels are fully utilized, approximately 378 seamen,
officers and crew are employed.
THE INDUSTRY AND COMPETITION. The shipping industry is international in
scope, and highly cyclical freight markets characterize most of its sectors. Due
to intense competition and a widely dispersed ownership structure, no one
shipowner maintains a dominant market share in any sector in which the Company
operates its vessels. The Company's vessels compete primarily on the basis of
rate, the condition of the vessels and the reputation of the Manager.
Reference is made to "Year End Review", contained at pages 8 through 15 of
the 2000 Report, which information is incorporated herein by reference in Item
18, for a discussion of the current shipping market generally and its
relationship to the Company's operations.
CAPITAL STRUCTURE OF THE COMPANY. The capital stock of the Company is divided
into 15,000,000 authorized Class A Shares and 15,000,000 authorized Class B
Shares. The Class A and B Shares are entitled to notice of, and to attend, any
general meeting of the Shareholders of the Company and have the right to vote on
any resolution. The Company also has 1,500,000 Senior Preference Shares and
5,000,000 Junior Preference Shares authorized, none of which are currently
issued and outstanding. The Class A and Class B Shares rank pari-passu with each
other and therefore have the same dividend, liquidation and voting rights.
In February 1990, the Shareholders of the Company adopted a Resolution to
amend the Articles of Association of the Company permitting the Company to
purchase from time to time any or all of the Class A or Class B Shares then
issued and outstanding (the "Treasury Stock Program"). Subsequent to the
adoption of the Resolution, the Board of Directors authorized the repurchase of
up to two million Shares of the Company and, at October 9, 1995, a total of
1,437,485 Class A Shares had been repurchased at an average price of $12.59 per
share, which shares are held in the Company's treasury. Subsequent to the end of
1995 the Company has not repurchased any Shares.
At the Extraordinary General Meetings of the Class A and Class B Shareholders
of the Company held on February 28, 1992 (the "1992 EGMs"), the Shareholders
voted upon and approved an amendment to the Articles of Association which
allowed for the convertibility, subject to certain conditions, of Class B Shares
into Class A Shares. The amendment provides that each holder of Class B Shares
is entitled, upon 30 days' prior written notice, to convert, on a
share-for-share basis, up to such proportion of the holder's Class B Shares as
is equal to the proportion which the number of Class B Shares held by the holder
bears to the total number of Class B Shares outstanding, provided that, after
giving effect to such conversion, the number of remaining Class B Shares
outstanding will not constitute less than fifty-one per cent of the aggregate
number of all Class A and Class B Shares outstanding, net of the Class A shares
held in the Company's treasury.
-21-
On December 20, 1999, the Company raised gross proceeds of US$45.9 million in
the Rights Offering described in Item 4.A. "History and development of the
Company" above.
At an Extraordinary General Meetings of the Class A and Class B Shareholders
of the Company held on March 30, 2001 (the "2001 EGMs"), the Shareholders voted
upon and approved an amendment to the Articles of Association which allowed for
the distribution of dividends out of surplus paid in capital. Passage of this
resolution allowed the Company to declare and pay the special dividend of $3.0
per share referred to above, $1.23 of which, or $29,508,000, was paid out of
retained earnings and $1.77 of which, or $42,414,000, was paid out of surplus
paid in capital.
C. ORGANIZATIONAL STRUCTURE
The Company is the 100% owner of all the shares in each of its individual
shipowning subsidiaries. For a list of the Company's subsidiaries that own the
Company's vessels, see Item 4.D., " Property, plant and equipment - Fleet
profile". The Company has no other subsidiaries other than vessel owning
subsidiaries.
D. PROPERTY, PLANT AND EQUIPMENT
FLEET PROFILE. The Company currently operates the following twenty-one
vessels. For information concerning the results of the operations of the fleet,
see Item 18, "Financial Statements".
VESSEL ACQUISITION TYPE DWT YEAR WHERE
- ------ COST ---- TONNAGE BUILT BUILT
($000) ------- ----- -----
----------
ALPHA JUPITER
Purchased: October 12, 1987 11,488 Friendship 23,278 1985 Japan
Owned by: Polynesian Sea H. T.
Enterprises SA (Panama) (Multipurpose)
ALPHA BRAVERY 15,492 Friendship 23,278 1985 Japan
Purchased: January 10,1990 H. T.
Owned by: Alpha Venus (Multipurpose)
Enterprises SA (Panama)
ANANGEL EAGLE 15,040 Handysize Dry Bulk 34,070 1983 Japan
Purchased: July 10, 1989 Carrier
Owned by: Alpha Providence
Compania Naviera SA (Panama)
ANANGEL POWER 14,340 Handysize Dry Bulk 34,111 1982 Japan
Purchased: August 28, 1989 Carrier
Owned by: Kara Sea
Enterprises SA (Panama)
FRANGISKOS C.K. 17,743 Future 32 Dry Bulk 37,611 1984 Japan
Purchased: January 31, 1990 Carrier (Handysize)
Owned by: Solomon Sea
Enterprises SA (Panama)
-22-
VESSEL ACQUISITION TYPE DWT YEAR WHERE
- ------ COST ---- TONNAGE BUILT BUILT
($000) ------- ----- -----
----------
MARIA I.A. 16,728 Future 32 Dry Bulk 37,593 1984 Japan
Purchased: July 17, 1989 Carrier (Handysize)
Owned by: Dickson Navigation
Ltd (Liberia)
ALPHA FAITH 10,085 Future 32 Dry Bulk 37,611 1984 Japan
Purchased: October 14, 1987 Carrier (Handysize)
Owned by: Cretan Mare
Enterprises SA (Panama)
ANANGEL DIGNITY 8,064 Handysize Dry Bulk 44,125 1984 Japan
Purchased: November 6, 1986 Carrier
Owned by: Pechora Sea
Enterprises SA (Panama)
ANANGEL SUCCESS 10,791 Handysize Dry Bulk 44,146 1984 Japan
Purchased: October 27, 1987 Carrier
Owned by: Ionian Mare
Enterprises SA (Panama)
ANANGEL EXPRESS*
Purchased: August 7, 1987 10,810 Panamax Dry Bulk 61,537 1982 Japan
Owned by: Adriatic Mare Enterprises SA Carrier
(Panama)
ANTONIS I. ANGELICOUSSIS 26,457 Panamax Dry Bulk 69,349 1989 Japan
Purchased: September 20, 1989 Carrier
Owned by: North Sea
Enterprises SA (Panama)
ANANGEL PROGRESS 23,249 Panamax Dry Bulk 69,406 1989 Japan
Purchased: January 30, 1989 Carrier
Owned by: Alpha Pioneer
Compania Naviera SA (Panama)
ANANGEL VENTURE 24,154 Panamax Dry Bulk 69,406 1989 Japan
Purchased: March 29, 1989 Carrier
Owned by: Anangel Purity
Compania Naviera SA (Panama)
ANANGEL PRIDE** 52,478 Capesize Dry Bulk 161,600 1993 Korea
Delivered: April 15, 1993 Carrier
Owned by: Lockheart Shipping
Inc. (Liberia)
ANANGEL SOLIDARITY** 52,828 Capesize Dry Bulk 161,545 1993 Korea
Delivered: June 24, 1993 Carrier
Owned by: Nashwood Maritime
Inc. (Liberia)
ANANGEL SPLENDOUR** 53,632 Capesize Dry Bulk 161,587 1993 Korea
Delivered: October 18,1993 Carrier
Owned by: Greywing Shipping
Inc. (Liberia)
ANANGEL AMBITION** 53,397 Capesize Dry Bulk 161,526 1994 Korea
Delivered: November 11, 1994 Carrier
Owned by: Marpet Shipping Corp.
(Liberia)
-23-
VESSEL ACQUISITION TYPE DWT YEAR WHERE
- ------ COST ---- TONNAGE BUILT BUILT
($000) ------- ----- -----
----------
ANANGEL ENOSIS** 30,576 Panamax Dry Bulk 73,556 1995 Korea
Delivered: July 27, 1995 Carrier
Owned by: Caspian Sea
Maritime Inc. (Liberia)
ANANGEL OMONIA ** 32,107 Panamax Dry Bulk 73,519 1996 Korea
Delivered: 5 January 1996 Carrier
Owned by: Baffin Sea
Maritime Inc. (Liberia)
ANANGEL ARGONAUT 12,875 Panamax Dry Bulk 65,668 1981 Japan
Purchased: January 1996 Carrier
Owned by: Anangel Argonaut Shipping Inc.
(Liberia)
ANANGEL DESTINY ** 44,195 Capesize Dry Bulk 171,997 1999 Korea
Delivered: May 5, 1999 Carrier
Owned by: Montebello Maritime Co. Ltd.
(Liberia)
* This vessel was originally purchased by Adriatic Mare Enterprises, S.A., a
subsidiary of the Company, but was sold by the Company in January 1994 and
leased back from the purchasers on a bareboat charter. On March 10, 2000
the Company exercised an option to re-purchase the vessel.
** The Company considers it more appropriate to provide the delivery date,
rather than the contract date, for vessels that it ordered as
newbuildings.
At December 31, 2000 the Company had an additional two vessel owning
subsidiaries, Longview Shipholding Inc. and Front Shipholding Inc. of Liberia,
which owned the vessels "Anangel Millennium" and "Anangel Century", both 170,415
deadweight Capesizes delivered to the Company during 2000. As of March 2001 the
Company also owned the "Anangel Afovos", a 74,374 deadweight Panamax through its
subsidiary, Anangel Star Compania Naviera S.A.. All three of the above vessels,
along with the newbuilding contract for Panamax Hull 1144 were sold to the
Kanellakis family pursuant to the transaction described above at Item 4. A.
"History and development of the Company", effective May 1, 2001.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion is based on the Company's financial statements
included in Item 18 hereto.
A. RESULTS OF OPERATIONS
THE DRY CARGO MARKET
-24-
The Company is an international transportation group that currently owns and
operates dry cargo vessels ranging in size from multipurpose vessels of 23,278
DWT up to Capesize vessels of up to 171,997 DWT. The vessels operate worldwide
as can be seen from the following table, which gives a breakdown of revenue by
geographic region for the years ended December 31, 2000, 1999 and 1998.
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
2000 1999 1998
EUROPE 47,989 25,187 23,431
ASIA 27,868 20,388 23,594
NORTH AMERICA 0 5,614 2,111
SOUTH AMERICA 8,380 517 318
AFRICA 3,656 1,378 1,898
AUSTRALIA 9,621 10,576 10,169
===================================================================
TOTAL 97,514 63,660 61,521
During the year ending December 31, 2000, the global dry bulk markets
consolidated the recovery begun in the late summer of 1999. Demand for freight
continued to outpace supply and the dry cargo market, as reflected by the
opening and closing values of the Baltic Dry Index (a composite of the Baltic
Capesize, Panamax and Handy Indices that succeeded the Baltic Freight Index on
November 1, 1999), rose approximately 20% from year-end 1999 to year-end 2000.
During the year ending December 31, 1999, the global dry bulk markets
gradually stabilized and gained momentum towards the end of the year. At the
beginning of the year the Baltic Freight Index sunk to its lowest level of the
year at 776, a little below the 1998 low of 780. The market did not improve
significantly until September when the Index reached 1,243, after averaging just
974 for the first nine months of the year.
During the year ending December 31, 1998, the global dry bulk markets fell as
demand for freight was reduced due to the economic crisis experienced in the Far
East. This was reflected by the Baltic Freight Index, which opened the year at
its high at 1,232 and fell sharply to 932 by the beginning of February. The
index recovered slightly to 1,105 in March but fell consistently to the year's
low of 780 in August. There was a minor rally in October when the Index rose to
1,008 but it fell again to close the year at 794, a loss of 36% for the year.
In 2000 the total dry cargo fleet grew some 3% to a total of 274.8 million
DWT compared to a growth of some 1% in 1999 and a decrease of 0.2% in 1998. The
increase was most marked in the Capesize and Panamax sectors and at year-end
2000 the total fleet of vessels above 60,000 DWT stood at 153.7 million DWT
versus 145.9 million DWT at year-end 1999. The strongest growth was in the
Panamax sector at 6.6%, followed by the Capesizes with 5.7%, whilst the Handymax
sector registered a 1.7% increase and the Handysize a 1.8% decrease.
-25-
As of December 31, 2000, the dry bulk carrier order-book stood at 35.7
million DWT. This compares to an order-book of 36.2 million DWT at year-end
1999. The year-end 2000 order-book for Capesize, Panamax and Handy bulkers stood
at 10.1, 12.8 and 12.8 million DWT, or 11.7%, 19.7% and 10.4% of their
respective fleets. During 2000 demolition levels fell sharply and bulk carrier
scrapping totaled only 4.4 million DWT, just 48.4% of the 9.1 million DWT that
was retired in 1999.
GENERAL
The Company's gross revenues are affected by the spot and term structure of
the freight-rate markets and by the capacity utilization of its fleet. Gross
revenues include revenues from time charter as well as from voyage charter
contracts, although the Company's fleet is normally chartered on a time charter
basis. Revenues of vessels chartered on a voyage basis include voyage expenses
such as bunkers, port expenses and canal tolls and, in order to arrive at Time
Charter Equivalent ("TCE") rates, all voyage expenses are first deducted from
revenues.
The fleet's capacity utilization (measured by the proportion of the year for
which the Company's vessels were on hire) was as follows for the periods
specified:
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER DECEMBER DECEMBER
31, 2000 31, 1999 31, 1998
% % %
MULTIPURPOSE 90.3 90.9 90.1
HANDYMAX 96.1 96.2 94.4
PANAMAX 96.9 97.7 96.9
CAPESIZE 97.8 99.7 97.5
============================================================
TOTAL (FLEET) 96.3 97.0 96.2
Capacity utilization varies from year to year depending upon time lost due to
dry-docking, repairs and maintenance and time lost awaiting employment.
The Company's business is not seasonal and the comparative discussions below,
based on a daily TCE basis where appropriate, provide the most appropriate basis
for comparison of its results.
The Company's depreciation policy is intended to write down the cost of the
vessels to their scrap value, as estimated at the time of acquisition, over
their useful lives, estimated at 20 years from the date of building, except for
newly-built vessels ordered by the Company since 1992 whose useful lives are
estimated at 25 years. After a vessel's third special survey its expected useful
life is reassessed and, if justified by the condition of the vessel, extended up
to a maximum of 25 years.
-26-
The Company exercises close control of its daily operating costs, and the
impact of inflation on net income is not expected to be significant. General and
administrative costs are not expected to vary materially irrespective of the
number of vessels acquired by the Company. The ratio of costs to revenue is
likely to be affected far more by changes in the level of freight rates
available in the market than by changes in cost levels themselves.
The relationship of the US Dollar (in which all revenues are received) to the
Greek Drachma (in which crew wages are paid) and other currencies (in which many
of the other operating expenses are incurred) is relevant to the overall level
of the Company's costs. However, it is not anticipated that this will of itself
have any material effect on the Company's profitability, and the Company does
not take any steps to hedge against any currency exchange risk.
Drachma movements relative to US Dollar:
2000 1999 1998
OPEN 322 280 285
CLOSE 362 328 282
AVERAGE 366 306 295
HIGH 410 328 323
====================================================================
LOW 320 276 276
Until December 31, 2000 another cost has been a monthly administration charge
of approximately $18-20,000 payable to the Manager, which included a
contribution for office space and all the wages and employee benefits of two
members of staff engaged in the administration of the Company. At present there
are no members of the Manager's staff specifically dedicated to the business of
the Company and the monthly charge was cancelled with effect from January 1,
2001. The Company is also charged for such direct expenses as legal fees and
printing costs and will continue to be charged specific costs related to the
administration of its affairs. In addition, each Director of the Company is paid
$4,000 per meeting for attendance plus an annual fee of $5,000 and is also
reimbursed for travel expenses. Total general and administrative costs amounted
to $848,000, $735,000 and $925,000 for the years ended December 31, 2000,
December 31, 1999 and December 31, 1998, respectively.
FIRST QUARTER ENDED MARCH 31, 2001 COMPARED TO FIRST QUARTER ENDED MARCH 31,
2000
There were 2,079 operating days in the first quarter 2001, 1.2% more than
the 2,054 recorded for the first quarter 2000. This reflects the net increase in
the size of the Company's fleet caused by the addition of two Capesize
newbuildings, the MV "Anangel Millennium" and the MV "Anangel Century", in
February and August 2000 respectively, less the services of the Handysize bulker
MV "Anangel Honesty" which was sold in July 2000.
The Company reported revenue from voyages of $26,258,000 for the first
quarter 2001, a 27.5% increase over the $20,593,000 reported for the
corresponding period the previous year. Daily TCE revenue per operating day
increased 8.3% to $274,860 for the first quarter 2001 from $253,878 for the
-27-
first quarter the pervious year or an average of $11,437 per vessel in 2001
compared with an average of $10,899 per vessel in 2000. Despite the increase in
the size of the fleet, however, operating expenses actually declined to
$10,664,000 for the first quarter 2001 from $10,756,000 for the first quarter
2000.
As a consequence of the Company's increased investment in vessels, the
depreciation charge increased to $5,760,000 for the first quarter 2001 compared
with $5,474,000 for the first quarter 2000. Investment and other income
decreased to $1,261,000 in 2001 versus $3,904,000 in 2000, whilst general and
administrative expenses increased to $208,000 in 2001 from $196,000 in 2000.
Interest expense decreased to $3,241,000 for the first quarter of 2001 compared
with $3,362,000 for the first quarter of 2000. The net effect of these changes
was an increase in net income for the first quarter 2001 to $7,646,000 from
$4,709,000 for the first quarter 2000.
YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999
There were 8,347 operating days during the year to December 31, 2000 - 442
days or 5.6% more than the 7,905 days recorded during the year to December 31,
1999. The increase was due to the addition to the fleet of two Capesize
newbuildings, the MV "Anangel Millennium" and the MV "Anangel Century", in
February and August respectively, less the services of the Handysize bulker MV
"Anangel Honesty", which was sold in July 2000.
Overall the Company's revenue from voyages increased 53.2% to $97,514,000 in
2000 from $63,660,000 in 1999, whilst operating expenses remained relatively
unchanged at $44,243,000 in 2000 versus $44,179,000 in 1999. The principal
reason for the increase in revenue was the improvement in the freight market as
well as net increase in tonnage operated by the Company.
Daily TCE revenue per operating day increased 68.6% to $251,004 in 2000 from
$148,867 in 1999. Operating expenses on a TCE basis increased 6.9% to $94,259 in
2000 from $88,206 in 1999. This increase was wholly due to the increase in the
size of the fleet, as the Company's average operating cost per day per vessel
fell 2.8% or $113 to $3,898 in 2000 from $4,011 in 1999.
The following table analyses the Company's average daily operating costs on a
TCE vessel day basis for the twelve months ended December 31, 2000 compared with
the twelve months ended December 31, 1999, per expense category.
-28
YEAR ENDED YEAR ENDED PERCENTAGE
DECEMBER 31, DECEMBER 31, CHANGE
2000 1999
($ per day, except vessel days)
VESSEL DAYS 8,347 7,905 +5.6
CREW PAYROLL 1,405 1,664 -15.6
INSURANCE 447 464 -3.7
REPAIRS & MAINTENANCE 966 911 +6.0
OTHER, INCL. MANAGEMENT 1,080 972 +11.1
TOTAL OPERATING COST 3,989 4,011 -2.8
Crew payroll decreased by 15.6% in US Dollar terms. This was principally due
to the depreciation of the Greek Drachma against the US Dollar over the course
of the year. Insurance premia decreased by 3.7% due to continuing favorable
insurance market conditions, but also reflecting the Company's good insurance
record. Repairs and maintenance increased by 6.0%, whilst other operating costs,
including management fees, increased by 11.1%.
Fleet depreciation was $22,702,000 in 2000 compared to $21,153,000 in 1999.
This primarily reflects the Company's increased investment in operating assets
over the course of the year, though the Company also revised the useful life of
two of its vessels from 20 to 25 years, compared to a revision of five vessels
the previous year.
The net effect of the above was that the Company recorded an operating profit
of $30,569,000 in 2000 compared to an operating loss of $1,672,000 in 1999.
The Company recorded a gain on disposal of vessels of $1,455,000 in 2000
compared to zero in 1999; investment and other income was $12,498,000 in 2000
compared to negative $2,957,000 in 1999; general and administrative expenses
were $848,000 in 2000 compared to $735,000 in 1999; and interest and finance
charges were $15,265,000 in 2000 compared to $11,960,000 in 1999. These
additions/deductions meant that the Company recorded a net income for the year
of $28,409,000 for 2000 compared to a net loss for the year of $17,324,000 in
1999.
YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998
There were 7,905 operating days during the year to December 31, 1999 - 240
days or 3.1% more than the 7,665 days recorded during the year to December 31,
1998. The increase was due to the addition to the fleet of the Capesize
newbuilding, the MV "Anangel Destiny", in May 1999.
Overall the Company's revenue from voyages increased 3.5% to $63,660,000 in
1999 from $61,521,000 in 1998, whilst operating expenses remained relatively
unchanged at $44,149,000 in 1999 versus $43,807,000 in 1998.
-29-
Daily TCE revenue per operating day increased 2.6% to $148,867 in 1999 from
$145,028 in 1998. Operating expenses on a TCE basis decreased 2.7% to $88,206 in
1999 from $90,676 in 1998. The Company's average operating cost per day per
vessel fell 7.1% or $308 to $4,011 in 1999 from $4,319 in 1998.
The following table analyses the Company's average daily operating costs on a
TCE vessel day basis for the twelve months ended December 31, 1999 compared with
the twelve months ended December 31, 1998, per expense category.
YEAR ENDED YEAR ENDED PERCENTAGE
DECEMBER 31, DECEMBER 31, CHANGE
1999 1998
($ per day, except vessel days)
VESSEL DAYS 7,905 7,665
CREW PAYROLL 1,664 1,604 +3.7
INSURANCE 464 563 -17.6
REPAIRS & MAINTENANCE 911 1,148 -20.6
OTHER, INCL. MANAGEMENT 972 1,004 -3.2
TOTAL OPERATING COST 4,011 4,319 -7.1
Crew payroll increased by 6% in Greek Drachma terms and by 3.7% in US Dollar
terms. This was principally due to the depreciation of the Greek Drachma against
the US Dollar due to the favorable dollar/drachma exchange rate. Insurance
premia decreased by 17.6% due to continuing favorable insurance market
conditions, but also reflecting the Company's good insurance record. Repairs and
maintenance decreased by 20.6% principally due to favorable prices for supplies
and repairs during the period, which were further enhanced by the strength of
the dollar. Other costs, including management costs, decreased by 3.2%.
Fleet depreciation was $21,153,000 in 1999 compared to $20,822,000 in 1998.
This reflects the Company's increased investment in operating assets over the
course of the year. Furthermore, the Company revised the useful life of five of
its vessels from 20 to 25 years, compared to a revision of two vessels the
previous year.
The net effect of the above was that the Company recorded an operating loss
of $1,672,000 in 1999 compared to an operating loss of $3,108,000 in 1998.
Investment and other income was negative $2,957,000 in 1999 compared to
positive $9,574,000 in 1998; general and administrative expenses were $735,000
in 1999 compared to $925,000 in 1998; and interest and finance charges were
$11,960,000 in 1999 compared to $11,207,000 in 1998. These additions/deductions
meant that the Company recorded a net loss for the year of $17,324,000 in 1999
compared to a net loss for the year of $5,666,000 for 1998.
-30-
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
There were 7,665 operating days during the year to December 31, 1998 - the
same number of operating days as the year to December 31, 1997. The Company's
fleet remained unchanged during the year with no acquisitions or disposals
having taken place.
Overall the Company's revenue from voyages decreased 17.5% to $61,521,000 in
1998 from $74,593,000 in 1997, whilst operating expenses remained relatively
unchanged at $43,807,000 in 1998 versus $43,069,000 in 1997.
Daily TCE revenue per operating day decreased 23.3% to $145,028 in 1998 from
$189,180 in 1997. Operating expenses on a TCE basis decreased 6.5% to $90,676 in
1998 from $96,989 in 1997. The Company's average operating cost per day per
vessel fell 6.6% or $305 to $4,319 in 1998 from $4,624 in 1997.
The following table analyses the Company's average daily operating costs on a
TCE vessel day basis for the twelve months ended December 31, 1998 compared with
the twelve months ended December 31, 1997, per expense category.
YEAR ENDED YEAR ENDED PERCENTAGE
DECEMBER 31, DECEMBER 31, CHANGE
1998 1997
($ per day, except vessel days)
VESSEL DAYS 7,665 7,665
CREW PAYROLL 1,604 1,759 - 8.8
INSURANCE 563 690 -18.4
REPAIRS & MAINTENANCE 1,148 1,211 - 5.2
OTHER, INCL. MANAGEMENT 1,004 964 + 4.1
TOTAL OPERATING COST 4,319 4,624 - 6.6
Crew payroll decreased by 8.8% in US Dollar terms. This was principally due
to the depreciation of the Greek Drachma against the US Dollar over the course
of the year. Insurance premia decreased by 18.4% due to continuing favorable
insurance market conditions, but also reflecting the Company's insurance record.
Repairs and maintenance decreased by 5.2% due to favorable price changes in
supplies and repairs during the period. Other, including management, increased
by 4.1% due to minor increases in tonnage tax and in lubricants and crew travel
costs.
-31-
Fleet depreciation was $20,822,000 in 1998 compared to $21,691,000 in 1997.
This reflects the fact that the Company revised the useful life of two of its
vessels from 20 to 25 years during the 1997 year.
The net effect of the above was that the Company recorded an operating loss
of $3,108,000 in 1998 compared to an operating profit of $9,833,000 in 1997.
The Company recorded investment and other income of $9,574,000 in 1998
compared to $6,879,000 in 1997; general and administrative expenses were
$925,000 in 1998 compared to $930,000 in 1997; and interest and finance charges
were $11,207,000 in 1998 compared to $11,340,000 in 1997. These
additions/deductions meant that the Company recorded a net loss for the year of
$5,666,000 for 1998 compared to a net profit for the year of $4,442,000 in 1997.
B. LIQUIDITY AND CAPITAL RESOURCES
The Company's cash balances and marketable securities stood at $95,981,000,
$138,294,000 and $111,764,000 at December 31, 2000, December 31, 1999 and
December 31, 1998 respectively, which amounts included restricted cash of
$11,931,000, $6,873,000 and $7,000,000. Obligations under repurchase agreements
amounted to $22,047,000, $49,691,000 and $46,427,000, at December 31, 2000,
December 31, 1999 and December 31, 1998 respectively.
Net cash provided by Operating Activities was $87,418,000, $13,289,000 and
$7,191,000 for the years ended December 31, 2000, December 31, 1999 and December
31, 1998 respectively.
Since February 1992, when the Shareholders first authorized the Company to
incur debt and to acquire newbuildings, the Company has borrowed money to fund
its newbuilding program. Total borrowings excluding obligations under repurchase
agreements were $212,050,000, $213,281,000 and $187,976,000 at December 31,
2000, December 31, 1999 and December 31, 1998 respectively, representing 41.2%,
41.2% and 40.7% of total assets in each year.
During the year ended June 30, 1996, the Company entered into a number of
long term agreements to finance six of its vessels through lease-leaseback
arrangements. The vessels have been leased to independent third parties for 27
years and are to be leased back to the Company under bareboat charters for
approximately 14 years. The rentals due to the Company have been prepaid by the
third party, net of a loan by the Company to the third party, which is to be
repaid out of future bareboat charter rentals. The net effect of these
transactions is to provide financing to the Company of $193,000,000 at an
effective fixed interest rate of 6.2% per annum, assuming exercise of the
Company's purchase options after 14 years, as described below.
Under the bareboat charters, the Company had the option to acquire the third
parties' remaining interests in the leased vessels in the years 2001 and 2004
and at the end of the 14-year charter term. Purchase option prices in 2001 and
2004 are based on the greater of open market values and predetermined amounts.
At this time the Company does not intend to exercise the purchase option falling
due in 2001. The option price at the conclusion of the 14-year bareboat charter
term is specified in the agreement. In the event that the Company does not
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exercise its option to purchase the interests at that time, the Company has an
obligation to make alternative arrangements so that the benefit to the third
parties is equal to, or greater than, the option price.
The Company's obligations under the bareboat charters are collateralized by
mortgages over the leased vessels and assignment of their earnings and
insurance. In addition, mortgages have been granted over a further thirteen
vessels as collateral for letters of credit issued to third parties by banks and
cash collateral of $7.1 million has been given to the banks involved in the
leasing transaction.
The lease-leaseback agreements contain various covenants, which, inter alia,
require the maintenance of a minimum $25,000,000 in liquid funds or committed
unused borrowing facilities and compliance with certain financial ratios. In
addition to the payments due under the bareboat charters, the agreements require
the Company to deposit additional collateral, up to stipulated amounts over the
period of the bareboat charter which currently comprises a cash collateral of
$4.8 million.
Financial instruments, which are used by the Company for purposes other than
trading, have been entered into to effectively convert a substantial portion of
its interest rate exposure under its capital leases from fixed rates of 7.5% per
annum and 8.15% per annum to floating rates of 0.875% and 0.85% over LIBOR,
respectively. The notional principal of such agreements as of December 31, 2000
amounted to $117,600,000 with aggregate maturities as follows: year ending
December 31, 2001 - $1,100,000; year ending December 31, 2002 - $600,000; years
ending December 31, 2003 to 2010 - $115,900,000.
In the years 1992-1994, the Company entered into a number of interest rate
swap agreements to reduce the impact of changes in interest rates on its loan
facilities. In fiscal year 1995, the Company decided to close all of these
interest rate swap agreements totaling $150,000,000. The total profit realized
on the termination of these agreements amounted to $5,700,000, which was
deferred and has been credited to income according to the contract maturities.
The final deferred portion was released to the income statement in 1998.
Shareholders' equity was $271,680,000, $243,271,000 and $215,189,000 at
December 31, 2000, December 31, 1999 and December 31, 1998 respectively,
representing 52.8%, 47.0% and 46.6% of total assets at the corresponding times.
Since year end 2000, the Company arranged an additional $50,000,000 of
borrowing facilities in order to assist the Company in the payment of the
special dividend of $3.00 per share, totaling $71,922,000, paid to shareholders
of record date April 30, 2001 on May 4, 2001. This facility was secured by
negative pledges on the Company's vessels "Anangel Millennium" and "Anangel
Century", which have subsequently been sold to the Kanellakis family interests
and the credit facility repaid.
The Company believes its existing resources; cash flows from operations and
borrowing capacity under its existing credit facilities will be adequate to meet
its liquidity needs for the foreseeable future. As at May 18, 2001 the Company's
total borrowings were $209,521,000 whilst cash balances totaled $99,237,000 of
which $26,572,000 were pledged to banks.
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On January 1, 2001, the Company adopted Statement of Financial Accounting
Standard (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging
Activities", as amended by SFAS No. 138 "Accounting for Certain Derivative
Instruments and Certain Hedging Activities". SFAS 133 as amended, establishes
accounting and reporting standards for derivative instruments. Specifically,
SFAS No. 133 requires an entity to recognize all derivatives as either assets or
liabilities in the statement of financial position and to measure these
instruments at fair value. Additionally, the fair value adjustment will affect
stockholder' equity or net income depending on whether the derivative instrument
qualifies as a hedge for accounting purposes and, if so, the nature of the
activity. As of January 1, 2001, the implementation of the new standard did not
materially affect the Company's financial condition, as there were no
instruments that qualified as derivative instruments under FAS 133 and due to
the Company's restricted use of such instruments.
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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. DIRECTORS AND SENIOR MANAGEMENT
The Company's Board of Directors currently consists of six members. The
Company's Articles of Association specify that the Board of Directors shall
consist of an equal number of Directors representing the Class A Shareholders as
represent the Class B Shareholders.
Of the Directors listed below, Messrs. J. A. Angelicoussis, C. Th.
Panagopoulos and D. A. Stylianou represent the Class B Shareholders, and Messrs.
D. J. Butters, S. S. Gordon and R. A. Savage represent the Class A Shareholders.
The Directors and Officers of the Company are as follows:
NAME AGE POSITION
---- --- --------
DIRECTORS
John A. Angelicoussis 53 Director, Chairman of the Board
and President
Constantinos Th. Panagopoulos 50 Director, Assistant Secretary
Demetrios A. Stylianou 56 Director, Treasurer
David J. Butters 59 Director
Sheldon S. Gordon 65 Director
Robert A. Savage 67 Director
OFFICERS
Kenneth H. N. Sparkes 69 Secretary
All of the above Directors have served in such capacity since the Company's
inception, with the exception of Mr. Robert A. Savage who was elected to the
Board on October 4, 1991 and Mr. Constantinos Th. Panagopoulos who was elected
to the Board in June 2001.
During the year to December 31, 2000 the Company's then Vice President, Mr.
Paris Xanalatos, resigned in order to take up a position within his own family's
shipping business in Piraeus, Greece.
Mr. Christos Kanellakis, director of the Company since its inception and
President from September 1989 to October 1997, resigned from the Board on May
14, 2001 following the purchase of the Kanellakis family interests in Anangel
American, the majority shareholder in the Company by Angelicoussis family
interests as discussed in Section 4. A. "History and Development of the Company
- - Recent Events".
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DIRECTORS
JOHN A. ANGELICOUSSIS has been Chairman of the Company from September 21,
1989, Chairman and President of the Company from October 1997, and has been
Chief Executive Officer of Agelef since 1974. He is a Director and Chairman of
ASGL, Director and President of Acol Tankers Limited, Director of the United
Kingdom Freight, Demurrage and Defence Association and a Director of the
Hellenic Mutual War Risk Association (Bermuda) Ltd. He is a member of the Board
of Managers of the American Bureau of Shipping, the British Committee of the
American Bureau of Shipping, the Hellenic Committee of Bureau Veritas and the
Board of Directors of Det Norske Veritas, and the Greek Shipping Co-operation
Committee.
CONSTANTINOS TH. PANAGOPOULOS has been Assistant Secretary of the Company
since June 1993. He is a member of the Greek Bar and has been practicing
maritime law in Greece since 1977. Mr. Panagopoulos is also a Director and
Secretary of ASGL.
DEMETRIOS A. STYLIANOU, FCA, is Treasurer of the Company and Director and
Treasurer of ASGL. Prior to joining ASGL in 1979, he headed the Piraeus office
of the accounting firm of Coopers & Lybrand. He is also a Director of ICB
Shipping AB and Director and Treasurer of Acol Tankers Limited.
DAVID J. BUTTERS is a Managing Director of Lehman Brothers. He is Chairman of
the Board of Gulf mark Offshore Inc., Director of Acol Tankers Limited and a
Director of Weatherford Int'l Inc. He is a member of the Board of Advisors of
Energy International N. V.
SHELDON S. GORDON is Chairman of Union Bonaire Privet International Holdings
Inc., and various affiliated companies. He is also a Director of Ametek Inc.,
Ermis Maritime Holdings Ltd., Gulfmark Offshore Inc., Holland Balanced Fund and
Union Bancaire Privee in Geneva. He was formerly a Partner of The Blackstone
Group, L.P.
ROBERT A. SAVAGE, is a member of the Advisory Board of Rhone Partners L.P. He
was formerly Chairman of American Express Bank and Advisor to Chairman, Union
Bancaire Privee.
B. COMPENSATION
The aggregate amount of compensation payable to all Directors and Officers of
the Company as a group (currently 7 persons) by the Company and its subsidiaries
and affiliates for services in all capacities in respect of the year ended
December 31, 2000 was $117,250. This amount relates solely to Directors' fees,
as all other personnel costs, including those of the Company's Officers, were
included in the fees paid to the Manager.
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C. BOARD PRACTICES
The Company's Board of Directors are not subject to annual election by the
Shareholders. Each director serves until he dies, becomes disabled or bankrupt,
resigns or is removed. In any such event, his replacement is named by the
remaining directors representing the same class of shareholders, and that
appointee serves until the next Annual General Meeting of Shareholders whereat
the directorship is to be filled by the shareholders represented by such
Director. There are no arrangements or understandings between any of the
Directors or Officers and any other person or persons pursuant to which they
were selected as Director or Officer.
The Company has not executed any specific service contracts with its
Directors, but each Director of the Company is paid $4,000 per Board meeting for
attendance plus an annual fee of $5,000 and is also reimbursed for travel
expenses.
Since inception the Company has had an Audit Committee consisting of all the
Directors representing the Class A shares and the Company's Treasurer, which
meets at least once a year. The present members of the Audit Committee are,
accordingly, Messrs. D.J. Butters, S.S. Gordon, R.A. Savage and D.A. Stylianou.
The Audit Committee's primary duties and responsibilities are to:
o Oversee that management has maintained the reliability and integrity of
the accounting policies and financial reporting and disclosure practices
of the Company.
o Oversee that management has established and maintained processes to assure
that an adequate system of internal control is functioning within the
Company.
o Oversee that management has established and maintained processes to assure
compliance by the Company with all applicable laws, regulations and
corporate policy.
D. EMPLOYEES
The Company has no direct employees, but relies on members of the Managers
staff to fulfill the needs of the Company.
SHARE OWNERSHIP
With the exception of Mr. John Angelicoussis, whose family interests are
disclosed in Item 7. below all of the remaining directors and officers of the
Company taken together own less than 1.0% of the outstanding share capital of
the Company. There are no options to purchase the shares of the Company, nor are
there any arrangements for involving the personnel of the Manager in the
ownership of the Company's shares.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
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A. MAJOR SHAREHOLDERS
The following table sets forth certain information as of May 18, 2001 with
respect to each person known to the Company to own more than 5% of the Company's
Class A Shares or Class B Shares.
TITLE OF CLASS IDENTITY OF PERSON AMOUNT OWNED % OF CLASS
-------------- OR GROUP AT MAY 18, 2001 (ISSUED AND
-------- --------------- OUTSTANDING)
------------
CLASS A SHARES ANANGEL INTEGRITY 7,077,207 60.25%
DEVEREUX 131,250 1.1%
INVESTMENTS
CORPORATION
CLASS B SHARES ANANGEL INTEGRITY 12,228,000 100.0%
Both Anangel Integrity and Devereux Investments Corporation of Liberia are
privately owned investment companies controlled by Angelicoussis family
interests.
The registrar of the Company's Class A Shares is Banque Internationale a
Luxembourg S.A. The Register of the Company's Class A Shares does not permit
full disclosure of the beneficial ownership of the Company as, of the 13,183,339
issued Class A Shares (including Treasury Shares) on the register as of May 18,
2001, the majority are registered to the Luxembourg agents of the Euroclear and
Cedel clearing-house systems. By virtue of domestic legislation in their
countries of incorporation, these entities are not permitted to make disclosure
of the identities of their principals. The Directors of the Company further
believe that many of the Class A Shares are, in turn, held in nominee accounts
for which disclosure of the beneficial owners' identity may not be permitted
under Luxembourg law. However, the ownership table above embodies, in addition
to information contained on the Register of the Company's Class A Shares, the
best information in the possession of the Directors of the Company and is
believed to be accurate.
The Bank of New York, as the Depositary for the ADRs, is, as of May 18, 2001,
the registered holder of 11,113,711 ADSs, each ADS representing one Class A
Share. The Class A Shares represented by the ADSs held by The Bank of New York
are held within the total of Class A Shares registered to Caisse d'Epargne de
l'Etat, The Bank of New York's Luxembourg custodian. As of May 18, 2001, there
were 79 registered holders of the 11,113,711 ADRs, represented by the ADSs.
B. RELATED PARTY TRANSACTIONS
(i) INTERESTS AS REPRESENTATIVES OF SHAREHOLDERS
Messrs. J. A. Angelicoussis, D.A. Stylianou and C. Th. Panagopoulos,
Directors of the Company, are also Directors and Officers of Anangel
Integrity, which is the holder of a majority of the outstanding Shares of
the Company, including all of the Class B Shares. For information
concerning the positions of Mr. J. A. Angelicoussis, Mr. D. A. Stylianou
and C.Th. Panagopoulos in Aegian Insurance Company Limited (see item (iii)
below).
(ii) INTERESTS IN THE MANAGER
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Each of the Company's dry cargo vessels (including the newbuildings) is
operated under a management contract with the Manager. The terms of the
management contracts are standard to the industry and the Managers'
monthly remuneration is set at a competitive level compared with industry
norms. The Manager is ultimately owned or controlled by members of the
Angelicoussis and Kanellakis families. The Manager received from the
Company, under the arrangements described in (a), (b), (c) and (d) below,
$5,464,000 in the year ended December 31, 2000.
The present compensation paid to the Manager is as follows:
(a) Management fees of $12,500 per vessel per month effective January 1,
2001. The management fees are subject to annual renegotiation, but
may not be increased by more than 20% per annum.
(b) Actual expenses related to administrative services.
(c) Chartering commissions for shipbroking services:
(i) 2.5% of gross value of time charters and
(ii) 2.0% of gross value of voyage charters.
(d) Out of pocket newbuilding supervision expenses.
In addition to the foregoing, the Manager is paid a fee of $50,000 plus
out-of-pocket expenses for each vessel acquired by the Company from
sellers other than the Angelicoussis Group and its affiliates.
(iii) INTERESTS IN AEGIAN INSURANCE
The vessels of the Company and ASGL and certain of the other vessels
managed by the Manager or for which Agelef performs chartering services,
place between 72% to 80% of their hull and machinery insurance through
Aegian Insurance Company Limited ("Aegian"), a Bermuda insurance company
that is wholly owned by ASGL. These insurance policies are placed at
London market rates. Aegian may make a profit on these activities, as
would a third party insurer. Mr. J. A. Angelicoussis is Director and
President, Mr. D. A. Stylianou is Director and Vice President and Mr. C.
Th. Panagopoulos is Director and Assistant Secretary of Aegian. The
Company paid insurance premiums to Aegian in the amount of $1,164,000
during the year ended December 31, 2000.
C. INTERESTS OF EXPERTS AND COUNSEL
Not applicable.
-39-
ITEM 8. FINANCIAL INFORMATION
A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
See Item 18. "Financial Statements"
Dividend policy
The Company has no fixed dividend policy at present. The directors will
review the profitability and prospects of the Company from time to time and
assess whether or not such a payment is appropriate.
Legal proceedings.
There are no material pending legal proceedings other than ordinary routine
litigation incidental to the business of the Company.
B. SIGNIFICANT CHANGES
As discussed in Item 4. A. "History and development of the Company - Recent
events" above, on May 4, 2001 the company paid a special dividend of $71,921,562
to its shareholders. $29,508,000 of this dividend was debited to Retained
Earnings, with the balance of $42,414,000 debited to Surplus Paid-in Capital.
The Company funded the dividend payment out of its cash reserves and the balance
through a finance facility made available by the Company's bankers.
Effective May 1, 2001 the Kanellakis family interests exercised an option
granted to them by the Company to purchase four vessels/newbuilding contracts as
also described above in Item 4. A. "History and development of the Company -
Recent events". As consideration for the transfer of ownership of these
vessels/newbuilding contracts the Kanellakis family paid the Company $97,500,000
in cash. The Company used the proceeds of this sale to fully repay the finance
facility described above and the net effect was therefore to increase the
Company's cash balances to approximately $99,237,000 ($26,572,000 of which was
pledged to banks) as of May 18, 2001, whilst reducing the Company's net
investment in vessels from approximately $416,128,000 (including vessels under
construction) at December 31, 2000 to approximately $327,253,000.
As further set out in Item 4. A. "History and development of the Company -
Recent events" above, subsequent to May 18, 2001 the Company agreed to purchase
25% of ACOL for $47,404,000. This purchase resulted in a reduction of the
Company's cash balances of $47,404,000 and a corresponding investment in
associated entities of the same amount. At the same time the transactions
whereby the Company cancelled the second of its remaining newbuilding contracts
at Daewoo and sold the replacement newbuilding contract for a VLCC to interests
represented by Mr. John Angelicoussis, resulted in an increase of cash of
$4,200,000 and a reduction in investment in vessels of $2,335,000.
ITEM 9. THE OFFER AND LISTING
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A. LISTING DETAILS
Class A shares.
The Company's Class A Shares are listed on the Luxembourg Stock Exchange. No
trades in such shares took place in 2000.
American depositary receipts.
The Company instituted the ADR program on February 22, 1989, and its ADRs
have traded on the NASDAQ National Market System since March 26, 1989, under the
symbol ASIPY. The Bank of New York is the Depositary for the ADRs; each ADR
represents one ADS, which in turn represents one Class A Share. The following
table sets forth, for the quarters indicated, the high and low closing sales
prices for the ADRs as traded on the NASDAQ National Market System.
-41-
PRICE PER ADR
HIGH LOW
---- ---
$ $
YEAR ENDED DECEMBER 31, 1996 15.25 9.125
----------------------------
YEAR ENDED DECEMBER 31, 1997 12.625 7.625
----------------------------
YEAR ENDED DECEMBER 31, 1998 4.00 9.0625
----------------------------
YEAR ENDED DECEMBER 31, 1999
----------------------------
First Quarter 5.625 3.5625
Second Quarter 6.50 3.8125
Third Quarter 6.00 4.375
Fourth Quarter 6.00 4.6875
YEAR ENDED DECEMBER 31, 2000
----------------------------
First Quarter 5.4375 4.875
Second Quarter 6.25 4.375
Third Quarter 7.25 4.625
Fourth Quarter 7.125 5.00
November, 2000 6.5 5.625
December, 2000 5.875 5.25
YEAR ENDING DECEMBER 31, 2001
-----------------------------
January 5.5 5.12
February 7.75 5.125
March 7.00 6.5313
April 8.00 4.50
May 4.75 3.57
Class B shares. The Company's Class B Shares are not listed or traded on any
securities exchange, and no trading market exists for the Class B Shares. The
convertibility of Class B Shares into Class A Shares is further described in
Item 4.A., "History and development of the Company" above.
B. PLAN OF DISTRIBUTION
Not applicable
C. MARKETS
See "Listing details" above.
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D. SELLING SHAREHOLDERS
Not applicable
ITEM 10. ADDITIONAL INFORMATION
A. SHARE CAPITAL
Not applicable
B. MEMORANDUM AND ARTICLES OF ASSOCIATION
On March 30, 2001 an extraordinary meeting of the shareholders of the Company
approved as a Special Resolution that Article 95 of the Articles of Association
of the Company be amended to read that no dividend shall be paid otherwise than
out of profits or out of monies otherwise available for dividends in accordance
with Cayman Islands Companies Law.
The Articles of Association of the Company as amended on March 30, 2001 are
attached hereto as Exhibit 1.1.
C. MATERIAL CONTRACTS
As described in Item 4.a. "History and Development of the Company - Recent
events" on February 23, 2001 the Company granted an oral option to Anna
Kanellakis to purchase the shares of Longview Shipholding Inc., Front
Shipholding Inc., Anangel Star Compania Naviera S.A. and Reiner Trading &
Investment S.A., the owning companies respectively of the M.V. Anangel
Millenium, the M.V. Anangel Century, the M.V. Anangel Afovos and newbuilding
hull no. 1144.. The agreement provided for such option to be exercised between
April 1, 2001 and April 30, 2001 and the purchase price for the shares to be
equivalent to the market value of the four companies vessels as of March 31,
2001 as determined by a panel of independent shipbrokers. The option was
exercised and the transaction consummated by means of stock transfer agreements
each dated May 14, 2001, pursuant to which the Company received $37,000,000 in
respect of the shares of the owning company of M.V. Anangel Millennium,
$37,000,000 in respect of the shares of the owning company of M.V. Anangel
Century, $21,750,000 in respect of the shares of the owning company of M.V.
Anangel Afovos and $1,709,000 in respect of the shares of the owning company of
newbuilding hull no. 1144.
-43-
As also described in Item 4.a "History and Development ofthe Company - Recent
events" on May 29, 2001 the Company entered into a stock transfer agreement with
Maran Holdings Limited, a company controlled by Angelicoussis family interests
represented by Mr. John Angelicoussis, to transfer to Maran the shares of Alpha
Bay & Investment Inc. (the owning company for the cancelled Panamax newbuilding
order no. 1150) and Titan Maritime Ltd. (the owning company for the VLCC
newbuilding contract, hull no.5205). The price paid for the shares was
$4,200,000 representing the value of the two company's assets as adjusted for
the market value of the newbuilding contract held by Titan as determined by
independent valuation. As a further element of this agreement Maran granted to
the Company an option on 26% of the shares of ACOL exercisable prior to December
31, 2001 under which the Company would purchase such shares at the proportionate
net asset value of ACOL as adjusted for the market value of its assets as
determined a panel of independent shipbrokers.
D. EXCHANGE CONTROLS
The Company does not believe there are any laws, decrees or regulations of
the Cayman Islands applicable to it restricting the import or export of capital
or affecting the remittance of dividends, interest or other payments to holders
of the Company's Shares.
There are no restrictions under the Company's Articles or Memorandum of
Association or under Cayman Islands law as currently in effect that limit the
right of non-residents or foreign owners, as such, freely to hold or vote in
respect of the Company's Class A or Class B Shares or to receive dividends
thereon.
The Company is a Cayman Islands corporation with limited liability. Under
Cayman Islands law, there is doubt as to whether the courts of the Cayman
Islands would enforce (i) judgments of United States courts obtained in actions
against Directors of the Company predicated upon the civil liability provisions
of the United States federal securities laws and (ii) original actions brought
in the Cayman Islands against such persons or the Company predicated solely upon
United States federal securities laws. There is no treaty in effect between the
United States and the Cayman Islands providing for such enforcement, and there
are no grounds upon which Cayman Islands courts may choose to enforce judgments
of United States courts. Certain remedies available under the United States
federal securities laws would not be allowed in Cayman Islands courts as
contrary to that nation's public policy.
E. TAXATION
The Cayman Islands at present imposes no taxes on profit, income, capital
gains or appreciations of the Company. There are also currently no taxes imposed
in the Cayman Islands on profit, income, capital gains or appreciations of the
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holders of the Shares nor any taxes on the holders of the Shares in the nature
of estate duty, inheritance or capital transfer tax. Further, the Company has
obtained an undertaking from the Cayman Islands Government authorities that, for
a period of twenty years from the date of incorporation of the Company, no law
which is enacted in the Cayman Islands imposing any tax on profit, income,
capital gains or appreciations shall apply to the Company and that, for the same
period of 20 years, no taxes on profit, income, capital gains or appreciations
nor any tax in the nature of estate duty or inheritance tax shall be payable on
the shares, debentures or other obligations of the Company. There is at present
no reciprocal tax treaty between the Cayman Islands and the US regarding tax
withholding.
Since the enactment of the Tax Reform Act of 1986, US shareholders of certain
foreign corporations (so-called passive foreign investment companies or "PFICs")
have been subject to a special US taxing regime. A PFIC is any foreign
corporation if, for any taxable year, either (i) 75% or more of its gross income
consists of "passive" income or (ii) at least 50% of the average value of its
assets produce, or are held to produce, passive income.
Generally, the US tax consequences to a US shareholder of owning stock in a
PFIC are that (i) such shareholder is not entitled to capital gain treatment
upon the disposition of such stock, (ii) a non-deductible interest charge is
imposed to reflect the shareholder's deferral of tax and (iii) in the case of an
individual shareholder, the stock does not receive a tax-free step-up in basis
upon the shareholder's death.
The Company is of the view that neither the Company nor any of its operating
subsidiaries constitutes a PFIC. For PFIC purposes, the income of the Company
(and of its operating subsidiaries) will be considered to be derived principally
from the time and voyage chartering of its vessels, which income should not be
considered passive in nature because the Company and its operating subsidiaries
actively participate in the leasing business.
F. DIVIDENDS AND PAYING AGENTS
Not applicable
G. STATEMENTS BY EXPERTS
Not applicable
H. DOCUMENTS ON DISPLAY
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended. In accordance with these requirements the
Company files reports and other information with the Securities and Exchange
Commission. These materials, including this annual report and the accompanying
exhibits, may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549 and at the Commission's Regional Offices at 7 World Trade Center,
Suite 1300, New York, New York 10048 and 500 West Madison Street, Suite 1400,
Northwestern Atrium Center, Chicago, Illinois 60661. You may obtain information
on the operation of the public reference room by calling 1 (800) SEC-0330, and
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you may obtain copies at prescribed rates from the Public Reference Section of
the Commission at its principal office in Washington, D.C. 20549. The SEC
maintains a website (http://www.sec.gov.) that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC. In addition, documents referred to in this annual
report may be inspected at the Company's principal office at Sygrou Avenue 354,
Kallithea, Athens, GR 176-74, Greece.
I. SUBSIDIARY INFORMATION
Not applicable
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The following discussion about the Company's market sensitive instruments and
risk management activities includes "forward-looking statements" that involve
risks and uncertainties. Actual results could differ materially from those
projected in the "forward-looking statements". See "Special Note Regarding
Forward-Looking Statements" preceding Item 1.
The following descriptions summarize the financial instruments and financial
instruments held by the Company at December 31, 2000 that are sensitive to
changes in interest rates, foreign exchange rates and commodity prices.
The Company is exposed to market risks associated with the impact of changes
in interest rates on its marketable securities and associated repurchase, "repo"
activities (discussed further below) as well as on its borrowing costs. The cash
management activities of the Company are undertaken in accordance with the
investment guidelines of the Company, which have been determined by the Board of
Directors. In accordance with these guidelines, surplus cash is invested only in
time deposits or US Treasury Bonds. The Company has in recent years been
utilizing its investment in US Treasury Bonds as a means of raising working
capital finance at extremely competitive rates by entering into agreements for
the sale and subsequent repurchase of the securities. The sale and repurchase
agreements are of very limited duration (usually 1-2 weeks) to enable the
Company to monitor market rates and dispose of the securities should it be
considered appropriate.
As discussed in more detail below, a number of vessels in the fleet have been
financed through lease and leaseback agreements, the effect of which has been to
provide finance at fixed rates of interest. Financial instruments have been
entered into to effectively convert a substantial portion of the Company's
interest rate exposure under these capital leases from fixed rates of 7.5% per
annum and 8.15% per annum to floating rates of 0.875% and 0.85% over US$ LIBOR
respectively and, as a result, the Company is exposed to the impact of changes
in interest rates on its capital lease borrowing costs. Furthermore, two of the
-46-
vessels operated by the Company were subject to operating leases until March 10,
2000 that, with effect from January 1999, were bearing interest at a variable
rate of interest (90 day US$ LIBOR + 2.25%).
The Company is also exposed to market risks associated with the impact of
foreign exchange fluctuations on its operations due to the fact that revenue is
generated in US dollars whereas certain expenses are borne in a variety of other
currencies, primarily the Greek drachma. Until now the Group has taken no steps
to hedge its foreign currency exposure.
The Company has no significant direct exposure to the impact of changes in
commodity prices, other than fuel costs, the impact of which is mitigated by the
fact that the Group's policy is to charter vessels on a time charter basis
wherever possible, which means that the cost of bunkers is borne by the
charterer. The Company is also affected by the change in commodity prices to the
extent that these impact generally on supply and demand factors for
transportation by sea.
TRADING
US TREASURY BONDS/REPURCHASE AGREEMENTS
As at December 31, 2000, the Company had invested in US Treasury Bonds of
US$22,067,000, all of which had been sold to a financial institution but were
subject to repurchase agreements by the Company. The Treasury Bonds are fixed
interest securities, the market values of which are sensitive to changes in
interest rates. Details of securities held and the related repurchase
obligations are shown in the tables below.
MARKETABLE SECURITIES
MARKETABLE NOMINAL FAIR VALUE AT COUPON RATE MATURITY
SECURITY (US$000) 31/12/2000
(US$000)
US Treasury 5,000 5,391 * 6.000% 15 Aug 2009
US Treasury 15,000 16,676 * 6.125% 15 Aug 2029
------ ------
Total 20,000 22,067
------ ------
REPURCHASE AGREEMENTS
MARKETABLE NOMINAL FAIR VALUE AT EFFECTIVE MATURITY
SECURITY (US$000) 31/12/2000 INTEREST RATE
(US$000)
US Treasury Bonds 5,000 5,390 * 6.450% 5 Jan 2001
------ -----
US Treasury Bonds 15,000 16,657 * 6.400% 5 Jan 2001
------ ------
20,000 22,047
* Includes accrued interest.
-47-
As at December 31, 1999, the total fair values of marketable securities and
repurchase agreements amounted to US$48.2 million and US$49.7 million,
respectively.
NON-TRADING
The tables below provide information about the Company's non-trading
financial instruments (including capital lease obligations) and derivative
financial instruments that are sensitive to changes in interest rates. For debt
obligations, the table presents principal cash flows and related weighted
average interest rates by expected maturity dates. For interest rate swaps, the
table presents notional amounts and interest rates by contractual maturity
dates.
EXPECTED MATURITY
(all numbers in US $000's except for percentages)
2001 2002 2003 2004 THEREAFTER TOTAL
LIABILITIES
Lease and Leaseback 10,281 9,741 9,521 11,370 268,597 309,510
arrangements[2]
Average interest rate 6.2 6.3 6.3 6.4 6.7
(%)
Long term bank 1,460 1,460 1,525 1,590 18,275 24,310(*)
borrowings[3]
Short term bank 578 578
borrowings
(*) excluding accrued interest
EXPECTED MATURITY
(all numbers in US $000's except for percentages)
2001 2002 2003 2004 THEREAFTER TOTAL FAIR
VALUE[4]
INTEREST RATE
DERIVATIVES[5]
Fixed to variable 1,087 627 456 2,340 113,100 117,610
(US$)
Weighted average pay
rate (fixed) 7.59 7.50 7.50 7.63 7.83
Average receive rate 0.85-0.875% above LIBOR
(variable)
- ----------------------------------------
[2] Obligations arising under lease and leaseback arrangements were entered
into in 1996 to finance the cost of six of the vessels in the fleet. These
leases provided finance to the Company at fixed rates of interest.
[3] A 10 year loan was taken out in May 1999 to finance the cost of the
"Anangel Destiny". The loan is repayable in 20 consecutive semi-annual
progressively increasing installments together with a final balloon
payment of US$11.4 million and bears interest at 0.875% over LIBOR.
[4] Due to the specialized nature of these instruments, it is not considered
practicable to determine their fair value.
[5] Financial instruments have been entered into to convert a substantial
portion of the interest rate exposure under the capital leases from fixed
rates of 7.5% per annum and 8.15% per annum to floating rates of 0.875%
and 0.85% over LIBOR, respectively.
-48-
OPERATING LEASES
The Company previously had obligations under operating lease agreements,
which, with effect from January 15, 1999, bore interest at a variable interest
rate based on 90 days LIBOR plus 2.25%. The Company exercised its option to buy
back the vessels subject to the operating leases on March 10, 2000.
FOREIGN CURRENCY/INFLATION
FOREIGN CURRENCY MANAGEMENT
The shipping industry's principal currency is the US dollar and, as a result,
the Group's revenues are in dollars. The Company does, however, incur expenses
in other currencies, primarily the Greek drachma, the currency in which crew
payroll costs are denominated. Another significant expense which is not
necessarily dollar denominated is the cost of vessel repairs. Accordingly, the
Company's operating results, which are reported in US dollars, may be affected
by fluctuations in the exchange rate between the US dollar and the currencies in
which it incurs expenses. Until now the Company has not used any derivatives to
mitigate such risks.
It is estimated that the hypothetical impact resulting from a hypothetical
appreciation of 5% in the US dollar against the Greek drachma would be to
increase net income and cash flows for 2001 by US dollar $701,000. Similar
sensitivity measured for 2000 showed a comparable US dollar increase in income
and cash flows of around $470,000.
INFLATION
The Company does not believe that inflation has had a material impact on the
Company's operations, although certain of the Company's operating expenses
(e.g., crewing insurance and dry-docking costs) are subject to fluctuations due
to market forces. Inflationary pressures on bunker costs are not expected to
have any material impact on the Company's future operations since, as previously
discussed, the Company aims to charter on a time charter basis, in which case
such costs are paid for by the charterers.
OTHER
In the normal course of business, the Company also faces risks that are
either non-financial or non-quantifiable. Such risks principally include country
risk, credit risk and legal risk. Such risks are not represented in the above
analysis. For a description of such risks, see Item 3.D., "Risk Factors".
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
-49-
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS
ITEM 15. [RESERVED]
ITEM 16. [RESERVED]
PART III
ITEM 17. FINANCIAL STATEMENTS
The Company has responded to Item 18 in lieu of responding to this Item.
ITEM 18. FINANCIAL STATEMENTS
Financial Statements:
Consolidated Balance Sheets as at December 31, 2000 and December 31, 1999.
Consolidated Statements of Income for the years ended December 31, 2000,
December 31, 1999 and December 31, 1998.
Consolidated Statements of Cash Flows for the years ended December 31,
2000, December 31, 1999 and December 31, 1998.
Consolidated Statements of Shareholders' Equity for the years ended
December 31, 2000, December 31, 1999 and December 31, 1998.
Notes to the Consolidated Financial Statements.
The foregoing consolidated financial statements are contained in the
Company's Report and Accounts for the year ended December 31, 2000, which
immediately follows, and are incorporated herein by reference.
-50-
ITEM 19. EXHIBITS
(a) Incorporated portions of the Company's Report and Accounts for the
year to December 31, 2000.
1.1 Memorandum and Articles of Association of the Company as amended on
30 March 2001 (Filed herewith)
2.1 Deposit Agreement between the Company and The Bank of New York dated
as of December 1, 1988 (incorporated by reference to Exhibit 1.1 of
the Company's Form 20-F for the fiscal year ended June 30, 1992.)
4.1. (a)* Participation Agreement dated as of January 26, 1996, by and
among Anangel-American Shipholdings Limited and Marpet
Shipping Corp., Bossier Maritime S. A., Banc One Arizona
Leasing Corporation, and others, covering the vessel Anangel
Ambition.
(b)* Trust Agreement dated as of January 26, 1996, between Banc One
Arizona Leasing Corporation and Fleet National Bank of
Connecticut, regarding the vessel Anangel Ambition.
(c)* Head Charter Agreement dated as of January 26, 1996, between
Fleet National Bank of Connecticut and Marpet Shipping Corp.,
regarding the vessel Anangel Ambition.
(d)* Bareboat Charter dated as of January 26, 1996, between Fleet
National Bank of Connecticut and Bossier Maritime S.A.,
regarding the vessel Anangel Ambition.
(e)* Loan Agreement dated as of January 26, 1996, by and among
Fleet National Bank of Connecticut, Deutsche Schiffsbank
Aktiengesellschaft and others, Lakeland Investment Trust Inc
and Deutsche Schiffsbank Aktiengesellschaft (as Administrative
and Security Agent), regarding the vessel Anangel Ambition.
(f)* Letter of Credit from Citibank N.A. to Banc One Arizona
Leasing Corporation dated as of January 26, 1996, regarding
the vessel Anangel Ambition.
4.2 (a)* Participation Agreement dated as of January 26, 1996, by and
among Anangel-American Shipholdings Limited, Caspian Sea
Maritime Inc., Quincy Maritime Inc., Bank One Arizona Leasing
Corporation, Watertown Investment Co. Ltd., Deutsche
Schiffsbank Aktiengesellschaft, Fleet National Bank of
Connecticut and Target Enterprises Limited, covering the
vessel Anangel Enosis.
-51-
(b)* Trust Agreement dated as of January 26, 1996, between Bank One
Arizona Leasing Corporation and Fleet National Bank of
Connecticut, regarding the vessel Anangel Enosis.
(c)* Head Charter Agreement dated as of January 26, 1996, between
Fleet National Bank of Connecticut and Caspian Sea Maritime
Inc., regarding the vessel Anangel Enosis.
(d)* Bareboat Charter dated as of January 26, 1996, between Fleet
National Bank of Connecticut and Quincy Maritime Inc.,
regarding the vessel Anangel Enosis.
(e)* Loan Agreement dated as of January 26, 1996, by and among
Fleet National Bank of Connecticut, Deutsche Schiffsbank
Aktiengesellschaft and others, Watertown Investment Co. Ltd.
and Deutsche Schiffsbank Aktiengesellschaft (as Administrative
and Security Agent), regarding the vessel Anangel Enosis.
(f)* Letter of Credit dated as of January 26, 1996, from Citibank
N.A. to Banc One Arizona Leasing Corporation, regarding the
vessel Anangel Enosis.
4.3 (a)* Participation Agreement dated as of April 21, 1996, by and
among Anangel-American Shipholdings Limited, Baffin Sea
Maritime Inc., Erie Navigation Co. Ltd., Bank One Arizona
Leasing Corporation, Sea Flight Enterprises Inc., Credit
Suisse, Fleet National Bank, Omonia Trust Inc. and others,
covering the vessel Anangel Omonia.
(b)* Trust Agreement dated as of April 21, 1996, between Bank One
Arizona Leasing Corporation and Fleet National Bank, regarding
the vessel Anangel Omonia.
(c)* Head Charter Agreement dated as of April 21, 1996, between
Fleet National Bank and Baffin Sea Maritime Inc., regarding
the vessel Anangel Omonia.
(d)* Bareboat Charter dated as of April 21, 1996, between Fleet
National Bank and Erie Navigation Co. Ltd., regarding the
vessel Anangel Omonia.
(e)* Loan Agreement dated as of April 21, 1996, by and among Fleet
National Bank, Credit Suisse (Luxembourg) S.A., Sea Flight
Enterprises Inc. and Credit Suisse (as Administrative and
Security Agent), regarding the vessel Anangel Omonia.
-52-
(f)* Letter of Credit dated as of April 21, 1996, from Credit
Suisse (Basel) to Banc One Arizona Leasing Corporation,
regarding the vessel Anangel Omonia.
4.4 (a)* Participation Agreement dated as of April 21, 1996, by and
among Anangel-American Shipholdings Limited, Lockheart
Shipping Inc., Medford Marine Co. Ltd., State Street Bank and
Trust Company, Seacross International Inc., Credit Suisse,
Fleet National Bank, Pride Trust Inc. and others, covering the
vessel Anangel Pride.
(b)* Trust Agreement dated as of April 21, 1996, between State
Street Bank and Trust Company and Fleet National Bank,
regarding the vessel Anangel Pride.
(c)* Head Charter Agreement dated as of April 21, 1996, between
Fleet National Bank and Lockheart Shipping Inc., regarding the
vessel Anangel Pride.
(d)* Bareboat Charter dated as of April 21, 1996, between Fleet
National Bank and Medford Marine Co. Ltd., regarding the
vessel Anangel Pride.
(e)* Loan Agreement dated as of April 21, 1996, by and among Fleet
National Bank, Credit Suisse (Luxembourg) S.A., Sea Cross
International Inc. and Credit Suisse (as Administrative and
Security Agent), regarding the vessel Anangel Pride.
(f)* Letter of Credit dated as of April 21, 1996, from Credit
Suisse (Basel) to Credit Suisse (New York), regarding the
vessel Anangel Pride.
4.5 (a)* Participation Agreement dated as of April 21, 1996, by and
among Anangel-American Shipholdings Limited, Nashwood
Maritime Inc., Goldensound Shipping & Investment Inc., State
Street Bank and Trust Company, Ashley Co. Ltd., Credit Suisse,
Fleet National Bank, Solidarity Trust, Inc. and others,
covering the vessel Anangel Solidarity.
(b)* Trust Agreement dated as of April 21, 1996, between State
Street Bank and Trust Company and Fleet National Bank,
regarding the vessel Anangel Solidarity.
(c)* Head Charter Agreement dated as of April 21, 1996, between
Fleet National Bank and Nashwood Maritime Inc., regarding the
vessel Anangel Solidarity.
(d)* Bareboat Charter dated as of April 21, 1996, between Fleet
National Bank and Goldensound Shipping & Investment Inc.,
regarding the vessel Anangel Solidarity.
-53-
(e)* Loan Agreement dated as of April 21, 1996, by and among Fleet
National Bank, Credit Suisse (Luxembourg) S.A., Ashley Co.
Ltd., and Credit Suisse (as Administrative and Security
Agent), regarding the vessel Anangel Solidarity.
(f)* Letter of Credit dated as of April 21, 1996, from Credit
Suisse (Basel) to Credit Suisse (New York), regarding the
vessel Anangel Solidarity.
4.6 (a)* Participation Agreement dated as of January 26, 1996, by and
among Anangel American Shipholdings Limited, Greywing Shipping
Inc., Fair Lawn Shipping Corp, Banc One Arizona Leasing
Corporation, Montclair Investment Trust Inc., Deutsche
Schiffsbank Aktiengesellschaft, Fleet National Bank of
Connecticut, Solar Services Inc. and others, covering the
vessel Anangel Splendour.
(b)* Trust Agreement dated as of January 26, 1996, between Banc One
Arizona Leasing Corporation and Fleet National Bank of
Connecticut, regarding the vessel Anangel Splendour.
(c)* Head Charter Agreement dated as of January 26, 1996, between
Fleet National Bank of Connecticut and Greywing Shipping Inc.,
regarding the vessel Anangel Splendour.
(d)* Bareboat Charter dated as of January 26, 1996, between Fleet
National Bank of Connecticut and Fair Lawn Shipping Corp.,
regarding the vessel Anangel Splendour.
(e)* Loan Agreement dated as of January 26, 1996, by and among
Fleet National Bank of Connecticut, Deutsche Schiffsbank
Aktiengesellschaft and others, Montclair Investment Trust
Inc., and Deutsche Schiffsbank Aktiengesellschaft (as
Administrative and Security Agent), regarding the vessel
Anangel Splendour.
(f)* Letter of Credit dated as of January 26, 1996, from Citibank
N.A. to Banc One Arizona Leasing, regarding the vessel Anangel
Splendour.
4.7.**Shipbuilding Contract made April 19, 1999 for a 169,770 DWMT Single
Screw Diesel Driven Bulkcarrier (Hull No. S-462), between Longview
Shipholding Inc. as buyer and Sasebo Heavy Industries Co., Ltd. as
builder.
4.8.**Supplemental Agreement dated April 1, 1999 between Anangel-American
Shipholdings Limited, Alpha Pioneer Compania Naviera S.A.,
Polynesian Sea Enterprises S.A., Alpha Venus Enterprises S.A.,
Dickson Navigation Ltd and Credit Suisse.
-54-
4.9** Second Deed of Amendment dated December 22, 1998 between
Anangel-American Shipholdings Limited, Anangel Argonaut Shipping
Inc, Kara Sea Enterprises S.A., Alpha Providence Compania Naviera
S.A., North Sea Enterprises S.A., Commerzbank Aktiengesellschaft
London Branch and Deutsche Schiffsbank Aktiengesellschaft.
4.10** Letter of Credit Facility Agreement dated April 22, 1996 between
Anangel-American Shipholdings Limited as requestor and indemnifier,
and Credit Suisse as letter of credit issuer.
4.11** Letter of Credit Facility Agreement dated August 2, 1996 by and
among Anangel-American Shipholdings Limited as requestor and
indemnifier, Bremer Bank Niederlassung der Dresdner Bank
Aktiengesellschaft as bank, and Deutsche Schiffsbank
Aktiengesellschaft as administrative and security agent.
4.12** First Deed of Amendment dated January 3, 1997 by and between
Anangel-American Shipholdings Limited, Alpha Providence Compania
Naviera S.A., Anangel Purity Compania Naviera S.A., Bremer Bank
Niederlassung der Dresdner Bank Aktiengesellschaft, and Deutsche
Schiffsbank Aktiengesellschaft.
4.13***Loan Agreement dated May 20, 1999 between Montebello Maritime Co
Ltd, Anangel-American Shipholdings Limited and Deutsche Schiffsbank
Aktiengesellschaft, regarding the vessel Anangel Destiny.
4.14***Shipbuilding Contract dated August 11, 1999 for a 169,770 DWMT
Single Screw Diesel Driven Bulkcarrier (Hull No. S-465) between
Sasebo Heavy Industries Co., Ltd. And Front Shipholding Inc.
4.15***Shipbuilding Contract dated October 15, 1999 for the Construction
and Sale of 75,000 TDW Bulk Carrier (Hull No. 1139) between Anangel
Star Compania Naviera S.A. and Daewoo Heavy Industries Ltd.
4.16.***Shipbuilding Contract dated October 15, 1999 for the Construction
and Sale of 75,000 TDW Bulk Carrier (Hull No. 1141) between Anangel
Light Compania Naviera S.A. and Daewoo Heavy Industries Ltd.
4.17***Form of Subscription Agreement offered to holders of record of
Anangel-American Shipholdings Limited's outstanding ADSs at the
close of business on November 19, 1999 in connection with the Rights
Offering.
4.18***Form of Subscription Agreement offered to holders of record of
Anangel-American Shipholdings Limited's outstanding Class A Shares
at the close of business on November 19, 1999 in connection with the
Rights Offering.
4.19 Facility Agreement dated April 30, 2001 between Anangel-American
Shipholdings Limited and the Royal Bank of Scotland Plc. (Filed
herewith)
-55-
4.20 Stock Transfer Agreement dated May 29, 2001 between Anangel-American
Shipholdings Limited and Maran Holdings Limited concerning the
transfer of the shares of Titan Maritime Ltd. and Alpha Bay &
Investment Inc. (Filed herewith)
8.1 List of Subsidiaries. (Filed herewith)
* Incorporated by reference to the exhibits filed with the Company's Form
20-F for the fiscal year ended June 30, 1996, File No. 0-17326.
** Incorporated by reference to the exhibits filed with the amendment on
Form 20-F/A to the Company's Form 20-F for the fiscal year ended December 31,
1998, File No. 0-17326.
*** Incorporated by reference to the exhibits filed with the amendment on
Form 20-F/A to the Company's Form 20-F for the fiscal year ended December 31,
1999, File No. 0-17326.
-56-
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF ANANGEL-AMERICAN
SHIPHOLINGS LIMITED
Report of Independent Accountants F-2
Consolidated Balance Sheets as at December 31, 2000 and
December 31, 1999. F-3
Consolidated Statements of Income for the years ended
December 31, 2000, December 31, 1999 and December 13, 1998. F-4
Consolidated Statements of Cash Flows for the years ended
December 31, 2000, December 31, 1999 and December 31, 1998. F-5
Consolidated Statements of Shareholders Equity for the
years ended December 31, 2000, December 31, 1999 and December 31, 1998. F-6
Notes to the Consolidated Financial Statements. F-7
F-1
[PRICEWATERHOUSECOOPERS PWC LOGO]
- --------------------------------------------------------------------------------
|
| PricewaterhouseCoopers SA
| 268 Kifisias Avenue
| 152 32 Halandri
| Greece
| Telephone +30 (1) 6874 400
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REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
ANANGEL-AMERICAN SHIPHOLDINGS LIMITED
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, cash flows and shareholders' equity present
fairly, in all material respects, the financial position of Anangel-American
Shipholdings Limited and its subsidiaries at December 31, 2000 and 1999, and the
results of their operations and their cash flows for the three years ended
December 31, 2000 in conformity with accounting principles generally accepted in
the United States of America. These financial statements are the responsibility
of the Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers
Athens, April 24, 2001 (except for the matters disclosed in Note 17, for which
the date is June 22, 2001)
Athens : 24 Xenias Street, 115 28 Athens, telephones: 30-1-7486 661-7,
fax: 30-1-7777 390
Piraeus : 3 Aghiou Nikolaou Street, 185 37 Piraeus,
telephones: 30-1-4515 841, 4531 093, fax: 30-1-4183 760
Thessaloniki : 1 Leontos Sofou Street, 546 26 Thessaloniki,
telephones: 30-31-521 219, 521 234, fax: 30-31-511 643
F-2
ANANGEL-AMERICAN SHIPHOLDINGS LIMITED
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
As at December 31, 2000 and 1999
DEC 31 DEC 31
2000 1999
NOTES $000'S $000'S
--------------- ----------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents 2 61,983 83,225
Marketable securities 3 22,067 48,196
--------------- ----------------
84,050 131,421
Other current assets 4 2,715 5,184
--------------- ----------------
TOTAL CURRENT ASSETS 86,765 136,605
--------------- ----------------
Vessels at cost 5 600,208 525,719
Less: Accumulated depreciation 5 (196,151) (173,606)
--------------- ----------------
404,057 352,113
Vessels under construction 5 12,071 22,400
Restricted cash 5 11,931 6,873
--------------- ----------------
Total non-current assets 428,059 381,386
--------------- ----------------
TOTAL ASSETS 514,824 517,991
=============== ================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Creditors and accruals 6 7,292 8,597
Obligations under repurchase agreements 3 22,047 49,691
Current portion of long term debt and lease obligations 7 3,424 4,192
Short term borrowings 7 578 771
--------------- ----------------
TOTAL CURRENT LIABILITIES 33,341 63,251
--------------- ----------------
Long term debt and lease obligations 7 208,048 208,318
Deferred income 8 1,755 3,151
--------------- ----------------
TOTAL LIABILITIES 243,144 274,720
=============== ================
COMMITMENTS AND CONTINGENCIES 14
SHAREHOLDERS' EQUITY
Ordinary shares 9
A shares of $1 par value each (15,000,000 authorised)
13,183,339 (1999 - 13,183,339) issued and outstanding 13,183 13,183
(1,437,485) (1999 - 1,437,485) held in treasury (1,437) (1,437)
----------- --------------- ----------------
11,745,854 11,746 11,746
----------
B shares of $1 par value each (15,000,000 authorised)
12,228,000 (1999 - 12,228,000) issued and outstanding 12,228 12,228
---------- --------------- ----------------
23,973,854 (1999 - 23,973,854) 23,974 23,974
---------- --------------- ----------------
Surplus paid in capital 234,829 234,829
Less: Excess of cost of treasury shares over nominal value (16,631) (16,631)
--------------- ----------------
218,198 218,198
Retained earnings 29,508 1,099
--------------- ----------------
TOTAL SHAREHOLDERS' EQUITY 271,680 243,271
--------------- ----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 514,824 517,991
=============== ================
The notes on pages F-5 to F-17 form part of these financial statements. A
summary of the Group's significant accounting policies is set out in note 1
F-3
ANANGEL-AMERICAN SHIPHOLDINGS LIMITED
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31, 2000, 1999 and 1998
DEC 31 DEC 31 DEC 31
2000 1999 1998
Notes $000'S $000'S $000'S
------------- -------------- -------------
REVENUE FROM VOYAGES 10 97,514 63,660 61,521
Operating expenses (44,243) (44,179) (43,807)
Depreciation 5 (22,702) (21,153) (20,822)
------------- -------------- -------------
OPERATING PROFIT/(LOSS) 30,569 (1,672) (3,108)
EXPENSES
Add/(deduct):
Gain on disposal of vessel 5 1,455 - -
Investment and other income/ (loss) (net) 3 12,498 (2,957) 9,574
General and administrative expenses (848) (735) (925)
Interest and finance charges 3,7 (15,265) (11,960) (11,207)
------------- -------------- -------------
NET INCOME/(LOSS) FOR THE YEAR 11 28,409 (17,324) (5,666)
============= ============== =============
COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR 28,409 (17,324) (5,666)
============= ============== =============
EARNINGS PER SHARE FOR THE YEAR:
Basic and diluted 12 $1.18 ($1.07) ($0.35)
============= ============== =============
DIVIDENDS PER SHARE FOR THE YEAR:
Ordinary $0.00 $0.00 $0.00
============= ============== =============
Special 16 $0.00 $0.00 $0.00
============= ============== =============
The notes on pages F-5 to F-17 form part of these financial statements. A
summary of the Group's significant accounting policies is set out in note 1
F-4
ANANGEL-AMERICAN SHIPHOLDINGS LIMITED
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOW
For the years ended December 31, 2000, 1999 and 1998
DEC 31 DEC 31 DEC 31
2000 1999 1998
$000'S $000'S $000'S
--------------- --------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income/(loss) for the year 28,409 (17,324) (5,666)
Adjustments to reconcile net income to net cash provided by
operating activities:
Gain on disposal of vessel (1,455) - -
Depreciation 22,702 21,153 20,822
Amortisation of gain on sale and leaseback of vessels (198) (1,065) (893)
Accrued interest included in debt and capital lease obligations 12,287 12,028 11,369
Unrealised gain on interest rate swaps (capital leases) (522) (2,114) (1,503)
Amortisation of gain on disposal of interest swap agreements - - (392)
(Profit)/loss on sale of marketable securities (3,736) 6,510 (2,974)
Unrealised holding (gain)/loss on marketable securities (1,624) 1,919 (855)
(Decrease)/increase in revenue received in advance 579 (123) (309)
(Decrease)/increase in provision for bad debts (131) 33 124
CHANGE IN ASSETS AND LIABILITIES:
(Increase) / Decrease in inventories (89) 200 (222)
Decrease / (Increase) in receivables 828 1,060 (1,122)
Decrease / (Increase) in prepayments 186 1,134 (2,311)
Decrease / (Increase) in accrued interest receivable 663 (840) 256
(Decrease) / Increase in creditors and accruals (1,305) 493 1,924
Acquisition of trading securities - (52,861) (97,951)
Funds received from disposal of trading securities 30,824 43,086 86,894
--------------- --------------- ----------------
Net cash provided by operating activities 87,418 13,289 7,191
--------------- --------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposal of vessel 5,660 - -
Purchase of vessels / new-buildings (68,622) (53,006) (9,215)
--------------- --------------- ----------------
Net cash used in investing activities (62,962) (53,006) (9,215)
--------------- --------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issue of ordinary shares (net of expenses) - 45,406 -
Funds provided by new bank debt - 26,500 -
Decrease / (Increase) in restricted cash (5,058) 127 1,300
(Repayments) / funds provided by bank overdrafts (net) (193) 12 759
Repayment of loans/capital lease creditor (12,803) (11,122) (7,963)
Repurchase agreements (net) (27,644) 3,264 15,047
--------------- --------------- ----------------
Net cash (required) / provided by financing activities (45,698) 64,187 9,143
--------------- --------------- ----------------
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (21,242) 24,470 7,119
Cash and cash equivalents beginning of year 83,225 58,755 51,636
--------------- --------------- ----------------
Cash and cash equivalents end of year 61,983 83,225 58,755
=============== =============== ================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest (net of amount capitalised) 17,338 11,446 12,203
=============== =============== ================
The notes on pages 5 to 17 form part of these financial statements. A summary of
the Group's significant accounting policies is set out in note 1
F-5
ANANGEL-AMERICAN SHIPHOLDINGS LIMITED
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the years ended December 31, 2000, 1999 and 1998
NOMINAL
VALUE OF SURPLUS TOTAL
NO OF A LESS SHARES NO OF B SHARES IN PAID-IN RETAINED SHAREHOLDERS'
ORDINARY HELD IN ORDINARY ISSUE CAPITAL EARNINGS EQUITY
SHARES TREASURY SHARES $000'S $000'S $000'S $000'S
------------ ------------ ------------ ------------ ------------ ------------ ------------
Balance December 31, 1997 9,268,054 (1,437,485) 8,152,000 15,983 180,783 24,089 220,855
Net loss (5,666) (5,666)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Balance December 31, 1998 9,268,054 (1,437,485) 8,152,000 15,983 180,783 18,423 215,189
------------ ------------ ------------ ------------ ------------ ------------ ------------
Balance December 31, 1998 9,268,054 (1,437,485) 8,152,000 15,983 180,783 18,423 215,189
Issue of ordinary shares
(net of expenses) 3,915,285 4,076,000 7,991 37,415 45,406
Net loss (17,324) (17,324)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Balance December 31, 1999 13,183,339 (1,437,485) 12,228,000 23,974 218,198 1,099 243,271
------------ ------------ ------------ ------------ ------------ ------------ ------------
Balance December 31, 1999 13,183,339 (1,437,485) 12,228,000 23,974 218,198 1,099 243,271
Net income 28,409 28,409
------------ ------------ ------------ ------------ ------------ ------------ ------------
Balance December 31, 2000 13,183,339 (1,437,485) 12,228,000 23,974 218,198 29,508 271,680
------------ ------------ ------------ ------------ ------------ ------------ ------------
The notes on pages F-5 to F-17 form part of these financial statements. A
summary of the Group's significant accounting policies is set out in note 1
F-6
ANANGEL-AMERICAN SHIPHOLDINGS LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
Anangel-American Shipholdings Limited (the "Company") was incorporated in
the Cayman Islands on April 14, 1987 under the Companies Law of 1960 of the
Cayman Islands (as amended).
The consolidated financial statements include the accounts of the Company
and its majority-owned subsidiaries (together called the "Group"). All
material intercompany transactions and accounts have been eliminated.
The Company's principal objectives are to achieve operating profits from the
chartering of ocean-going vessels and capital gains from market value
appreciation from the selective and timely acquisition and disposal of such
vessels. The nature of the Company's business is world-wide and therefore
fluctuates in line with trade patterns for dry bulk cargoes (see Note 10).
The preparation of financial statements in conformity with generally
accepted accounting principles in the United States requires management to
make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
dates of the financial statements and reported amounts of operating revenues
and expenses during the reported periods. Actual results could differ from
those estimates.
A summary of the most important accounting policies is set out below.
VESSELS
- COST
Vessels are shown at cost. Cost includes the vessel's contract price,
delivery and acquisition expenses and, where applicable, major initial
repairs and improvements. In addition, finance charges specifically incurred
during the construction period of a vessel are capitalised and included in
its cost.
- DEPRECIATION
The depreciation policy is intended to write down the cost of the vessels to
their scrap value, as estimated at the time of acquisition, using the
straight line method over their useful lives which are initially estimated
at 20 years from the date of building except for newly built vessels
acquired by the Company since 1992 whose useful lives are estimated at 25
years. After a vessel's third special survey its expected useful life is
reassessed and, if justified by its condition, extended up to a maximum 25
years.
As a result of two vessels (1999 - five vessels) having completed their
third special survey during the current year , the Company extended the
useful lives of these vessels from 20 years to 25 years in accordance with
the above accounting policy. The effect of the revision for the vessels'
useful lives was a reduction in depreciation charge and an increase in net
income for the year of $540,000 and earnings per share of $0.02 (1999 -
reduction in net loss of $861,000 and net loss per share of $0.05). There
are no vessels scheduled to undergo their third special survey within 2001.
LONG LIVED ASSETS
The Company accounts for its fleet in accordance with the requirements of
Statement of Financial Accounting Standard 121 "Accounting for Impairment of
Long-lived Assets and Assets to be Disposed Of". The statement requires that
long-lived assets used or disposed of by an entity be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recovered. An impairment loss for an
asset held for use should be recognized when the estimate of undiscounted
future net cash flows, excluding interest charges, expected to be generated
by the use of the asset is less than its carrying amount. Measurement of
impairment loss is based on the fair value of the asset. The Company has
determined that no impairment loss needs to be recognized for applicable
assets.
F-7
ANANGEL-AMERICAN SHIPHOLDINGS LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
INVENTORIES ON BOARD
Inventories on board the vessels are valued at the lower of cost, using the
first-in-first-out method, and net realisable value.
MARKETABLE SECURITIES
Marketable securities, all of which are held for trading purposes, are
carried at market value and unrealised holding gains or losses are reflected
in the income statement. Realised gains or losses on disposal of securities
are computed by reference to initial cost, as modified by any subsequent
market value adjustments.
All marketable securities are subject to repurchase agreements. Marketable
securities and the corresponding obligation to repurchase these securities
have been recorded as assets and liabilities respectively.
CASH AND CASH EQUIVALENTS
For the purposes of the statements of cash flows all highly liquid
investments with maturities of three months or less when purchased are
considered to be cash equivalents. Cash and cash equivalents that are
legally restricted as to use by the Company are classified as restricted
cash and are shown separately as such in the balance sheet.
REVENUE RECOGNITION
Revenues from time and voyage charters are recognised in proportion to the
charter time elapsed during the reporting period which represents the period
during services are rendered. Charter revenue received in advance is
recorded as a liability until charter services are rendered.
TRANSLATION OF FOREIGN CURRENCIES
The Company's functional currency is the U.S. dollar. Assets and liabilities
denominated in foreign currencies are translated into U.S. dollars at
exchange rates prevailing at the balance sheet date. Income and expenses
denominated in foreign currencies are translated into U.S. dollars at
exchange rates prevailing at the date of transaction. Resulting exchange
gains and/or losses on settlement or translation are included in the
accompanying consolidated statements of income.
REPAIRS AND MAINTENANCE
Expenditure for repairs, maintenance and special survey of vessels is
normally charged against income in the year incurred. Provision is made for
future drydockings and related repairs if such activity falls into arrears
compared to the company's three yearly program.
EARNINGS PER SHARE
Basic EPS is computed based on the income (loss) available to common
stockholders and weighted average number of shares outstanding for basic
EPS. Diluted EPS includes the effect of the assumed conversion of
potentially dilutive instruments issued by the Company (see Note 12).
RECLASSIFICATION
A reclassification between restricted cash balances and cash and cash
equivalents has been made to conform the 1999 and 1998 financial statements
and notes to the 2000 presentation.
F-8
ANANGEL-AMERICAN SHIPHOLDINGS LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NEW STANDARD TO BE IMPLEMENTED
On January 1, 2001, the Company adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities", as amended by SFAS No. 138,
"Accounting for Certain Derivative Instruments and Certain Hedging
Activities". SFAS 133, as amended, establishes accounting and reporting
standards for derivative instruments. Specifically, SFAS No. 133 requires an
entity to recognise all derivatives as either assets or liabilities in the
statement of financial position and to measure these instruments at fair
value. Additionally, the fair value adjustment will affect either
stockholders' equity or net income depending on whether the derivative
instrument qualifies as a hedge for accounting purposes and, if so, the
nature of the activity. As of January 1, 2001, the implementation of the new
standard did not materially effect the Company's financial condition, as
there were no instruments that qualify as derivative instruments under FAS
133 and due to the Company's restricted use of such instruments.
2. CASH AND CERTIFICATES OF DEPOSITS
DEC 31 DEC 31
2000 1999
$000'S $000'S
--------- ---------
Cash balances 3,263 3,130
Certificates of deposit 58,720 80,095
--------- ---------
61,983 83,225
========= =========
3. MARKETABLE SECURITIES
Marketable securities as at December 31, 2000 comprise US Treasury Bonds
(6.00% - $5 million, 6.125% - $15 million and maturing August 15, 2009 and
August 15, 2029 respectively), all of which are held for trading purposes.
These securities are carried at market value, resulting in an unrealised
holding gain of $ 1,624,000 as at December 31, 2000 (1999 - $1,919,000 loss
and 1998 - $855,000 gain) which is included in investment and other income
(net) (see Note 11).
All marketable securities have been sold to Salomon Smith Barney and are
subject to repurchase agreements with maturities up to 30 days. Interest on
repurchase obligations is payable at 6.45% per annum (6.00% USTB August 15,
2009) and 6.4% per annum (6.125% USTB August 15, 2029) respectively.
4. OTHER CURRENT ASSETS
DEC 31 DEC 31
2000 1999
$000'S $000'S
--------- ---------
Inventories 1,204 1,115
Voyage receivables 1,205 1,637
Less: provision for doubtful debts (26) (157)
Prepaid lease payments (see Note 5 ) - 1,861
Insurance claims 173 600
Other receivables 159 128
--------- ---------
2,715 5,184
========= =========
F-9
ANANGEL-AMERICAN SHIPHOLDINGS LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DEC 31 DEC 31
2000 1999
INVENTORIES ARE ANALYZED AS FOLLOWS : $000'S $000'S
--------- ---------
Bunkers 131 229
Lubricants 868 682
Stores 205 204
--------- ---------
1,204 1,115
========= =========
5. VESSELS
NEW BUILDINGS
"ANANGEL MILLENNIUM" AND "ANANGEL CENTURY"
The Company took delivery of its two Capesize new-building vessels, the MV
"Anangel Millennium" and the MV "Anangel Centrury" each of 170,415 DWT, on
order from Sasebo Heavy Industries Co of Japan in February 2000 and August
2000 respectively. The total construction costs of these two vessels
amounted to $69.3 million and were financed from the Company's own cash
reserves.
Management of these vessels' operations has been undertaken by Anangel
Shipping Enterprises SA, a related company, at a monthly fee of $10,500 per
vessel.
"ANANGEL DESTINY"
In May 1999, the Company took delivery of the "Anangel Destiny" a 171,997
DWT Capesize vessel. The construction of the vessel was supervised by
Anangel Shipping Enterprises SA, a related company, at a monthly fee of
$10,500. The final instalment payable to the shipyard was financed by a bank
loan of $26.5 million from Deutsche Schiffsbank.
The loan is repayable in 20 consecutive semi-annual progressively increasing
installments, commencing after the drawdown date, together with a balloon
payment of $11.4 million in May 2009. The loan bears interest at 0.875% over
LIBOR and is secured by a first preferred mortgage on the vessel as well as
assignment of all insurances and earnings.
The loan agreement inter alia, contains minimum asset value covenants and
minimum liquidity requirements of $25 million.
The outstanding principal portion of the loan as of December 31,2000 is
repayable as follows (see Note 7):
$000'S
---------
2001 1,460
2002 1,460
2003 1,525
2004 1,590
2005 1,590
Thereafter 16,685
---------
24,310
=========
F-10
ANANGEL-AMERICAN SHIPHOLDINGS LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5. VESSELS - CONTINUED
DAEWOO SHIPBUILDING & MARINE ENGINEERING CO. ("DSME")
In October 1999, the Company entered into a newbuilding contract with DSME
of Korea, the successor company to Daewoo Heavy Industries, for the
construction of two Panamax bulk carriers of approximately 75,000 DWT each
("Hull No. 1139" and "Hull No.1141"), at contract prices of $22 million each
with an option to order two additional similar vessels at predetermined
prices of $22 million each. In March 2001, the Company received delivery of
the Anangel Afovos the first of its two newbuildings on order with the
second vessel currently scheduled for delivery in February 2002.
The first three installments due under each contract totalling $6.6 million
are subject to letters of guarantee issued by the Bank of Korea in favour of
the Company. The letters of guarantee expire upon delivery of the
newbuildings at which time the final installments of $15.4 million for each
vessel fall due.
In December 2000 the Company cancelled the two additional newbuilding orders
placed in April 2000, as the shipyard did not obtain the necessary letters
of guarantee for these specific orders. Consequently, the Company replaced
the cancelled orders by acquiring two Panamax newbuilding contracts ("Hull
No. 1144" and "Hull No.1150") of about 75,000 DWT each through the
acquisition of the entire share capital in Alpha Bay & Investment Inc and
Reiner Trading & Investment S.A. from a related party (see note 16). The two
replacement newbuildings are to be constructed at a contract price of $22
million each for delivery in June 2002 and August 2002 respectively.
The first three installments due under each contract totalling $6.6 million
are subject to letters of guarantee issued by the Bank of Korea in favour of
the subsidiary companies. The letters of guarantee expire upon delivery of
the newbuildings at which time the final installments of $15.4 million for
each vessel fall due. The Company has guaranteed the amounts due to the
shipyard under the contracts on behalf of the two subsidiary companies (see
note 16). The newbuildings are expected to be primarily financed through the
Company's own cash reserves.
Management of the vessels' construction will be undertaken by Anangel
Shipping Enterprises SA, a related company, at a fee of $10,500 per month.
Future installments payable under newbuilding contracts with DSME as at
December 31, 2000 fall due as follows:
HULL NO
-------------------------------------------
1139 1141 1144 1150 TOTAL
-------------------------------------------
Year ending $000'S $000'S $000'S $000'S $000'S
December 31
2001 17,592 17,592 2,199 2,199 39,582
2002 - - 17,592 17,592 35,184
-------------------------------------------
17,592 17,592 19,791 19,791 74,766
===========================================
F-11
ANANGEL-AMERICAN SHIPHOLDINGS LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
VESSELS SUBJECT TO OPERATING LEASES
In January 1994 the Company sold two of its vessels, the "Anangel Express"
and the "Anangel Honesty", for an aggregate net price of $25.6 million, at
the same time taking them back on five year bareboat charters with purchase
options at estimated future market values starting towards the end of the
third year. In February 1997 the original lease term was extended by a
further three years and the implicit interest rate in the lease for the
extension period commencing January 15, 1999 was converted from a fixed to a
variable interest rate based on 90 days LIBOR plus 2.25%. The original
transactions resulted in a surplus of $12.2 million representing the excess
of net sale proceeds over book value, which has been recognised in the
income statement over the charter period. The unamortised balance at the
date of the extension of the lease has been recognised in the income
statement over the new lease term (see Note 8).
The lease agreements required the maintenance of specified liquidity levels
and compliance with certain financial ratios.
In March 2000 the Company exercised its option to purchase these vessels
from the lessor for $9.5 million representing their stipulated purchase
values at the exercise date. The total capitalised costs for the two vessels
amounted to $9.4 million comprising the vessels' stipulated purchase values
adjusted for the unamortised balance of the deferred gain arising from the
sale and leaseback (see Note 8) and non-refundable prepaid lease payments
(see Note 4) at the date of purchase. Subsequently, in July 2000, the
Company sold the "Anangel Honesty" for $5,660,000, which resulted in a gain
on disposal of $1,455,000.
The rental expense under these agreements for the year amounted to $742,000
(1999 - $3,133,000 and 1998 - $3,103,000) and is included as part of vessel
operating expenses. Prepaid lease rentals at December 31, 2000 amounted to
$Nil (1999 - $1,861,000) which is included in "Other current assets". (see
Note 4).
VESSELS SUBJECT TO CAPITAL LEASES
In 1996 the Company entered into a number of long term agreements to finance
six of its vessels through lease-leaseback arrangements. The vessels have
been leased to an independent third party for 27 years and are to be leased
back to the Company under bareboat charters for approximately 14 years. The
rentals due to the Company have been prepaid by the third party, net of a
loan by the Company to the third party which is to be repaid out of future
bareboat charter rentals. The net effect of these transactions has been to
provide finance to the Company of $193 million at an effective fixed
interest rate of 6.2% per annum.
Under the bareboat charters the Company has the option to acquire the third
party's remaining interests in the leased vessels in the years 2001 and 2004
and at the end of the 14 year charter term. Purchase option prices in 2001
and 2004 are based on the greater of open market values and predetermined
amounts. The option price at the conclusion of the 14 year bareboat charter
term is specified in the agreement. In the event that the Company does not
exercise its option to purchase the interests at that time, the Company has
an obligation to make alternative arrangements so that the benefit to the
third party is equal to, or greater than, the option price.
The Company's obligations under the bareboat charters are collateralised by
mortgages over the leased vessels and the assignment of earnings and
insurances. In addition, mortgages have been granted over a further thirteen
vessels as collateral for letters of credit issued to third parties by banks
and a cash collateral of $7.1 million (1999 - $2.1 million) has been given
to the banks involved in the leasing transaction.
The lease-leaseback agreements contain various covenants, which, inter alia,
require the maintenance of a minimum $25 million in liquid funds or
committed unused borrowing facilities, and compliance with certain financial
ratios.
In addition to the payments due under the bareboat charters, the agreements
require the Company to deposit additional collateral, up to stipulated
amounts over the period of the bareboat charter as disclosed in the table
that follows, and which currently comprises a cash collateral of $4.8
million (1999 - $4.8 million).
F-12
ANANGEL-AMERICAN SHIPHOLDINGS LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
VESSELS SUBJECT TO CAPITAL LEASES - CONTINUED
Future minimum payments by year under the capital leases, and additional
collateral, are as follows:
CAPITAL ADDITIONAL
LEASES COLLATERAL
YEAR ENDING DECEMBER 31 $000'S $000'S
---------- ----------
2001 10,281 7,905
2002 9,741 9,666
2003 9,521 10,522
2004 11,370 9,438
2005 13,752 7,348
Thereafter 254,845 29,790
---------- ----------
309,510 74,669
----------
Less: amount representing interest (114,080)
----------
Present value of future minimum lease payments 195,430
Less: payments under interest rate SWAPS (8,469)
----------
186,961
==========
The gross book value, accumulated depreciation and net book value of vessels
subject to capital leases are $275 million, $68 million and $207 million
respectively. In total, vessels with a net book value of $293 million (1999:
$310 million) have been mortgaged and cash totaling $11.9 million (1999:
$6.9 million) has been pledged as collateral for financing provided under
the capital leases referred to in Note 7.
In July and September, 1999, the Company obtained waivers from the
respective issuers of the letters of credit supporting the lease-leaseback
arrangements for the technical breach of the requirement that the value
adjusted equity of the Group should equal total debt. Effective September
1999, the ratio of debt to the value-adjusted equity was revised by the
issuing banks and shall not exceed 2:1.
FUTURE DISPOSAL OF VESSELS
Refer to Note 16 (c).
6. CREDITORS AND ACCRUALS
DEC 31 DEC 31
2000 1999
$000'S $000'S
------------ -----------
Trade creditors 4,153 4,124
Amounts due to related parties (Note 16) 21 9
Other accruals 3,118 4,464
------------ -----------
7,292 8,597
============ ===========
F-13
ANANGEL-AMERICAN SHIPHOLDINGS LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
7. LOANS AND OTHER BORROWINGS
DEC 31 DEC 31
2000 1999
SHORT TERM BORROWINGS : $000'S $000'S
--------- ---------
Bank overdrafts 578 771
Current portion of long term borrowings 3,424 4,192
--------- ---------
4,002 4,963
--------- ---------
LONG TERM BORROWINGS :
Bank debt (including accrued interest) (see Note 5) 24,511 25,812
Capital lease creditor (see Note 5) 186,961 186,698
Less: Current portion (3,424) (4,192)
--------- ---------
208,048 208,318
--------- ---------
TOTAL BORROWINGS 212,050 213,281
========= =========
Details on the fair value of the company's borrowings are presented in
Note 13.
The weighted average interest rate on short-term borrowings outstanding as
at December 31, 2000 was 8.18% p.a. (1999 - 6.96% p.a)
Financial instruments, which are used by the Company for purposes other than
trading, have been entered into to effectively convert a substantial portion
of its interest rate exposure under the capital leases from fixed rates of
7.5% per annum and 8.15% per annum to floating rates of 0.875% and 0.85%
over LIBOR respectively. As at December 31, 2000 the notional principal of
such agreements amount to $117.6 million (1999 - $119.7 million and 1998 -
$121.4 million) with aggregate maturities as follows :
YEAR ENDING DECEMBER 31 $ MILLION
2001 1.1
2002 0.6
2003 0.5
2004 2.3
2005 4.9
Thereafter 108.2
---------
117.6
=========
Due to the specialised nature of these instruments, it is not practicable to
estimate their market value or the amount of the accounting loss to be
incurred in the event of non-performance by the counterparty, which would be
equivalent to the differential between the fixed and floating interest rates
for the duration of the agreements. The Company is exposed to credit risk in
the event of non-performance by other parties to the agreements. However,
the Company does not anticipate non-performance due to the high credit
status of the counter-parties.
During the year ended June 30, 1995 the Company disposed of all of its
interest rate swap agreements, which had originally been entered into, to
hedge existing borrowings, resulting in a total gain on disposal of $5.7
million. This gain has been amortised as an adjustment to interest cost over
the life of the original swap agreements, which expired in 1998. The total
interest cost incurred for the year ended December 31, 2000, adjusted for
amortisation of gains on disposal of interest rate swap agreements, amounted
to $16,149,000 (1999 - $12,328,000 and 1998 - $11,655,000) of which $884,000
(1999 - $368,000 and 1998 - $448,000) was capitalised as part of the
vessels' construction costs.
F-14
ANANGEL-AMERICAN SHIPHOLDINGS LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
8. DEFERRED INCOME DEC 31 DEC 31
2000 1999
$000'S $000'S
--------- ---------
Deferred profit on sale and leaseback of
vessels (see note 5) - 1,975
Revenue received in advance 1,755 1,176
--------- ---------
1,755 3,151
========= =========
9. ORDINARY SHARES
All of the B Ordinary shares, which currently account for approximately 51%
of the total ordinary share capital in issue and outstanding, are held by
Anangel Integrity Compania Naviera SA ("Integrity"), a wholly owned
subsidiary of Angelicoussis Shipholding Company Limited, the shareholders of
which are Greek nationals. Previously, the majority ownership in vessels
registered under the Greek flag had to rest with Greek nationals and the
Articles of Association therefore permit the Directors to refuse to register
a transfer of the B Ordinary shares unless the Directors are satisfied that
the shares will continue to be beneficially held by Greek nationals.
Following a change in the legislation, and provided the vessels continue to
be managed by a Greek company, the requirement for majority control by Greek
nationals in order to sail under the Greek flag is no longer applicable to
the Company.
Under the Company's Articles of Association (as amended in 1992) holders of
the Class B Ordinary shares may at any time give 30 days written notice to
the Company to tender their shares for conversion into A Ordinary shares
provided that, as a result of the conversion, the number of B Ordinary
shares in issue and outstanding does not constitute less than 51% of the
aggregate number of Class A and Class B Ordinary shares in issue and
outstanding. Allotment of Class A Ordinary shares is on the basis of one
Class A Ordinary share for each Class B Ordinary share tendered.
The Class A and Class B shares rank pari-passu with each other and therefore
have the same dividend, liquidation and voting rights, except that
shareholders of the latter class of shares may not vote on any resolution to
place the company into voluntary liquidation.
STOCK REPURCHASES
From time to time, the Board of Directors authorises the Company to
repurchase its own common stock. The Company repurchased an aggregate of
1,437,485 Class A ordinary shares at a cost of $17.4 million for the period
to June 30, 1993. The stock repurchases have not been retired and are held
in safe custody. This has resulted in a reduction of $1.4 million in the
stated capital (par value) and the balance of $16 million as a reduction in
the surplus paid in capital account, respectively. The Company did not
repurchase any of its common stock subsequent to June 30, 1993. The Company
plans to repurchase its own stock on the open market from time to time
depending on market conditions.
ISSUE OF SHARE CAPITAL
On October 22, 1999, the Company offered its shareholders the right to
purchase one additional Class A share or Class B share for every two shares
held at the closing bid price of $5.75 on the Nasdaq National Market System
as at November 15, 1999. The purpose of the offering was to raise capital to
finance expansion of the Company's fleet. As a result of the offering the
Company raised gross proceeds of $45.9 million, of which expenses related to
the offering of $0.5 million have been incurred and charged against surplus
paid in capital.
F-15
ANANGEL-AMERICAN SHIPHOLDINGS LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10. REVENUE FROM VOYAGES
DEC 31 DEC 31 DEC 31
2000 1999 1998
$000'S $000'S $000'S
--------- --------- ---------
Europe 47,989 25,187 23,431
Asia 27,868 20,388 23,594
North America - 5,614 2,111
South America 8,380 517 318
Africa 3,656 1,378 1,898
Australia 9,621 10,576 10,169
--------- --------- ---------
97,514 63,660 61,521
========= ========= =========
In the year ended December 31, 2000 one charterer based in Europe accounted
for revenues totalling $11,681,000.
In the year ended December 31, 1999 no charterer accounted for more than 10%
of total revenues.
In the year ended December 31, 1998 one charterer based in Australia and one
charterer based in Asia accounted for revenues totalling $7,806,000 and
$6,757,000 respectively.
11. ADDITIONAL INCOME STATEMENT INFORMATION
DEC 31 DEC 31 DEC 31
2000 1999 1998
$000'S $000'S $000'S
-------- --------- ---------
Net income / (loss) is stated after
crediting/(charging):
Interest on marketable securities &
certificates of deposit 7,149 5,521 5,753
Profit/(losses) on sale of
securities (net) 3,735 (6,510) 2,974
Unrealised holding gains/(losses) on
marketable securities 1,624 (1,919) 855
Gains and losses on transactions denominated in foreign currencies and bad
debts written-off were not material.
12. EARNINGS PER SHARE
The calculation of basic and diluted earnings per ordinary share are based
on income of $28,409,000 (1999 - loss of $17,324,000 and 1998- loss of
$5,666,000) and on 23,973,854 shares (1999 - 16,157,720 shares and 1998 -
15,982,569 shares), being the weighted average number of shares in issue
during the year.
The company has no outstanding dilutive instruments for each of the three
years presented.
13. FINANCIAL INSTRUMENTS
FAIR VALUES
The carrying amounts of the following financial instruments approximate
their fair values: cash and certificates of deposits, marketable securities
all of which are subject to repurchase agreements, trade receivables and
payables, short term borrowings and floating rate long term borrowings.
Information on the fair value of the Company's interest rate swaps is
disclosed in Note 7.
F-16
ANANGEL-AMERICAN SHIPHOLDINGS LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CREDIT RISK
There is a concentration of credit risk with various banks with respect to
cash and cash equivalents, marketable securities and short term and long
term borrowings. However, the Company believes that no significant credit
risk exists due to the high credit status of the counterparties.
The Company also manages its credit risk with respect to trade receivables
as its preference is to deal with major trading houses, major producers and
government owned entities rather than with more speculative or
undercapitalised entities. The assessment of a charterer's financial
condition and reliability is an important factor in negotiating employment
of the Company's vessels. Concentration of credit risk associated with trade
receivables is shown in Note 10.
14. COMMITMENTS AND CONTINGENT LIABILITIES
The Company has commitments under new building contracts and capital leases
as described in notes 5 and 7. There are no material legal proceedings to
which the Company is a party or to which any of its properties are subject.
15. TAXES
The Company is not subject to taxation in the Cayman Islands on its income,
or on capital gains, nor are its shareholders subject to any dividend tax,
estate duty, inheritance or capital transfer tax in the Cayman Islands. A
tonnage tax on the vessels, all of which are registered under the Greek
flag, is payable to the Greek State and is included within operating
expenses. The Directors have been advised that, apart from dividends, the
taxation of which depends on the tax and residence status of individual
shareholders, the Company's profits will not be taxed in any other
jurisdiction.
16. TRANSACTIONS INVOLVING RELATED PARTIES
(A) INCOME/(EXPENSES) RECOGNISED IN THE CONSOLIDATED
STATEMENTS OF INCOME:
DEC 31 DEC 31 DEC 31
2000 1999 1998
$000'S $000'S $000'S
--------- --------- ---------
Vessel management fees
- Anangel Shipping Enterprises SA (2,874) (2,730) (2,646)
Brokerage commissions
- Anangel Shipping Enterprises SA (2,316) (1,478) (1,475)
Administration charges
- Anangel Shipping Enterprises SA (274) (326) (310)
Agents expenses
- Ago Shipping Inc (11) (26) -
Insurance premiums
- Aegian Insurance Company Ltd (1,164) (1,456) (1,678)
(B) ASSETS/(LIABILITIES) RECOGNISED IN
THE CONSOLIDATED BALANCE SHEETS:
Cash held by:
- Anangel Shipping Enterprises SA 2,711 2,932
Supervision fees included in vessels
under construction
- Anangel Shipping Enterprises SA 306 173
Other creditors and accruals
- Angelicoussis Shipholding Group Ltd (3) (3)
- Argo Shipping Inc (18) (6)
Short term borrowings
- Anangel Shipping Enterprises SA (130) (47)
F-17
ANANGEL-AMERICAN SHIPHOLDINGS LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(C) OTHER TRANSACTIONS
Rights offering
Prior to the rights offering during 1999 (refer to Note 9) Angelicoussis
Shipholding Group Limited ("ASGL") owned all of the Class B shares and 43%
of the Class A Shares, effectively representing 72% of the Company's total
issued ordinary shares. ASGL had agreed to purchase all of the shares that
were offered under the basic subscription right and to purchase any
remaining shares offered to, but not purchased by, other shareholders, at
the same price per share. As a result of the offering ASGL purchased a total
of 1,378,884 amounting to $7,928,583 not taken up by the other shareholders.
This has effectively increased ASGL shareholding to approximately 78% of the
Company's total issued ordinary shares.
Purchase of newbuilding contracts
As more fully explained in Note 5, the Company acquired two newbuilding
contracts through the purchase of the entire share capital of Alpha Bay &
Investment Inc and Reiner Trading & Investment SA from the Kanellakis family
interests. The purchase price for the transfer of the shares to the Company
was based on fair values of $4.7 million determined by reference to the
initial installments already paid under the shipyard contracts plus accrued
interest to December 27, 2000. At the date of transfer of the shares to the
Company, Alpha Bay & Investment Inc and Reiner Trading & Investment SA did
not have any assets or liabilities other than their interests in the
newbuilding contracts under which instalments totaling $4.4 million were
paid to the shipyard.
Special dividend and option to purchase vessels
Approximately 78% of the Company's shares are owned by Anangel Integrity and
ASGL, equally controlled by interests represented by John Angelicoussis and
interests represented by his sister, Anna Kanellakis. Over the last several
years, the Kanellakis family interests have developed a growing direct
involvement in shipping and intend to continue to develop this involvement
in the future. In order to avoid any possible future conflicts of interest
with the Company, the Kanellakis and Angelicoussis family interests in the
Company are to be reorganised so that John Angelicoussis will be the sole
beneficial owner of the shares in the Company owned by Anangel Integrity and
ASGL. To facilitate this transaction the Company will declare and pay a cash
dividend of $3.00 per share to all shareholders of record date April 30,
2001 and payable on May 4, 2001.
As the Company does not have sufficient retained earnings to cover the cash
dividend, its shareholders approved a resolution to amend its Articles of
Association to permit the distribution of dividends out of surplus paid in
capital at an extraordinary general meeting held in Athens, Greece on March
30, 2001. The Company intends to finance the dividend through a new credit
facility of up to $50 million, which is currently being negotiated with its
bankers. It is anticipated that the new credit facility will be subject to
collateral in the form of negative pledges on the Company's two newly built
Capesize vessels, the Anangel Millennium and Anangel Century which have an
aggregate net book value of $67.6 million.
In order to broaden the scope of its existing activities in the shipping
industry the Company is considering the disposal of certain vessels. As a
result, the Company has granted the Kanellakis family interests a thirty
(30) day option beginning April 1, 2001 to purchase shortly thereafter at
fair market value, to be determined by independent shipbrokers as of March
31, 2001, one or more of the following vessels / newbuildings having an
aggregate net carrying amount of $72.7 million : "Anangel Millennium",
"Anangel Century", Hull No. 1139 and Hull No. 1144. In the event that the
Kanellakis family interests do not exercise this option, the Company will
consider the sale of these vessels to other parties (see Note 5).
F-18
ANANGEL-AMERICAN SHIPHOLDINGS LIMITED
- --------------------------------------------------------------------------------
17. SUBSEQUENT EVENTS
DISPOSAL OF VESSELS
Effective May 1, 2001 the Kanellakis family interests exercised the option
granted to them by the Company to purchase four vessels/newbuilding
contracts as described above in Note 16 c. As consideration for the transfer
of ownership of these vessels/newbuilding contracts the Kanellakis family
paid the Company $97,500,000 in cash which resulted in a gain of
approximately US$ 5,545,000. The Company used the proceeds from this sale to
fully repay the facility obtained to partially finance the payment of the
special dividend described above in Note 16 c.
ACQUISITION OF EQUITY INTEREST IN ACOL TANKERS LIMITED
Pursuant to the Company's declared intention to broaden the scope of its
activities in the shipping industry, the Company finalised negotiations on
May 29, 2001 for the acquisition, at a cost of $47,404,000, of a 25% stake
in ACOL Tankers Limited ("ACOL"), a privately owned/operator of modern crude
oil tankers. ACOL Tankers currently owns 5 Very Large Crude Carriers
("VLCCs") of between 243,870 and 300,000 deadweight and 3 Aframaxes of
98,800 to 105,000 deadweight, and is owned, as to 78.0% of the outstanding
shares by interests represented by Mr. John Angelicoussis, the Chairman and
President of the Company. The price for the acquisition of 25.0% of ACOL is
based on ACOL's net asset value as of May 1, 2001 where the accounting net
asset value of the company has been adjusted by the market value of the
vessels owned by ACOL as established by five independent ship valuers.
The Company has also acquired an option to acquire a further 26% of ACOL
prior to December 31, 2001, the price for which would be at net asset value,
determined as stated above, at the time of the exercise of the option.
NEWBUILDING ORDERS
In May 2001 the Company decided to cancel its second Panamax order at DSME
for Hull No. 1150, and had instead ordered a 300,000 deadweight VLCC in its
place for delivery in the second quarter of 2003. This order has
subsequently been assigned to entities ultimately controlled by interests
represented by Mr. John Angelicoussis in exchange for a cash payment to the
Company of $4,200,000.
FUTURE FOCUS OF DRY-CARGO BUSINESS
Following the sale of four vessels to the Kanellakis family on May 1, 2001,
the Company has decided to focus its dry-cargo operations to service the
growing demands of energy related transportation. The Company therefore
intends to gradually increase the number of Panamax and Capesize vessels at
the appropriate time and dispose of the Handysize and Multi-purpose vessels.
F-19
ANANGEL-AMERICAN SHIPHOLDINGS LIMITED
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
DEC 31
2000
(12 MONTHS)
$000'S
-----------
INCOME DATA
Revenue from voyages 97,514
Net income 28,409
Earnings per share $1.18
FINANCIAL DATA
Total Assets 514,824
Liabilities 243,144
Shareholders' Equity 271,680
SHARE DATA
Shareholders' Equity per share of common stock $11.33
Share Price $5.25
Dividends - Ordinary -
- Special -
OTHER DATA
Net Income Before Depreciation $51,111
Earnings per Share Before depreciation $2.13
FLEET DATA (AS OF YEAR END)
(a) No. operating Vessels
Owned 23
Total DWT IN 000's 1,957
(b) No. Under Construction 4
Total DWT IN 000's 300.0
F-20
ANANGEL-AMERICAN SHIPHOLDINGS LIMITED
- --------------------------------------------------------------------------------
THE FLEET
Vessels - 100% owned
TYPE NAME YEAR BUILT DWT
---------------------- ------------------------------- ----------------------------------- ------------------
MULTIPURPOSE ALPHA JUPITER 1985 23,278
ALPHA BRAVERY 1985 23,278
------------------
46,556
------------------
HANDYSIZE ANANGEL EAGLE 1983 34,070
ANANGEL POWER 1982 34,111
FRANGISKOS C.K. 1984 37,611
MARIA IA 1984 37,593
ALPHA FAITH 1984 37,611
ANANGEL DIGNITY 1984 44,125
ANANGEL SUCCESS 1984 44,146
------------------
269,267
------------------
PANAMAX ANANGEL EXPRESS 1982 61,537
ANANGEL ARGONAUT 1981 65,668
ANTONIS I ANGELICOUSSIS 1989 69,349
ANANGEL PROGRESS 1989 69,406
ANANGEL VENTURE 1989 69,406
ANANGEL ENOSIS 1995 73,556
ANANGEL OMONIA 1996 73,519
------------------
482,441
------------------
CAPESIZES ANANGEL PRIDE 1993 161,600
ANANGEL SOLIDARITY 1993 161,545
ANANGEL SPLENDOUR 1993 161,587
ANANGEL AMBITION 1994 161,526
ANANGEL DESTINY 1999 171,997
ANANGEL MILLENNIUM 2000 170,415
ANANGEL CENTURY 2000 169,770
------------------
1,158,440
------------------
1,956,704
==================
NEWBUILDINGS
PANAMAX DAEWOO HULL NO 1139 Delivered in 1st Quarter, 2001 75,000
DAEWOO HULL NO 1141 Delivery due 1st Quarter, 2002 75,000
DAEWOO HULL NO 1144 Delivery due 2nd Quarter, 2002 75,000
DAEWOO HULL NO 1150 Delivery due 3rd Quarter, 2002 75,000
------------------
300,000
------------------
TOTAL GROUP DWT 2,256,704
==================
F-21
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this annual report on its behalf.
By: /s/ D.A. Stylianou
--------------------------------------
Name: D.A. Stylianou
Title: Director
Date: June 28, 2001
C-1
APPENDIX A
DEFINITION OF SHIPPING TERMS
The following is a set of definitions for shipping terms which are used
throughout this Form 20-F.
Baltic Freight
Index (BFI)/Baltic
Dry Index (BDI) The Baltic Freight Index ("BFI") is calculated
and published daily by a panel of experts and is
intended to provide a measure of the level of spot
rates in the dry bulk freight-rate market. The BFI
reflects the daily chartering activity in eleven
weighted trade routes served by Panamax and
Capesize vessels worldwide. The BFI ceased on
November 1, 1999. The closest equivalent is the
Baltic Dry Index ("BDI").
Bulk cargo Homogeneous unpacked dry cargo such as grain, iron
ore or coal. Any commodity shipped in this way is
said to be in bulk.
Bunker Space in which fuel for the ship is stored on
board. The expression bunkers denotes the fuel
itself.
Capesize The largest size of bulk carrier, generally dry
cargo vessels in excess of 100,000 DWT.
Deadweight Tonnage (DWT) The capacity of a ship consisting of the total
weight of cargo, bunkers, fresh water, stores and
crew, expressed in long tons of 2,240 lbs., which
the ship can carry when loaded to a particular
load line, normally her summer load line. Also
referred to as total deadweight.
Dry bulk carrier Single-deck ship designed to carry dry bulk
cargoes. Such ships have large hatchways to
facilitate cargo handling. Often referred to as a
bulker.
Dry cargo Any cargo, packed or unpacked, carried in
non-liquid bulk form.
Friendship H.T. Standard design, Multipurpose dry cargo vessel of
23,000 DWT having very large hatches with bulk
carrier capacity but also fitted with retractable
tweendecks suitable for the carriage of
containers.
Future 32 Standard design bulk cargo vessel of 37,500 DWT
fitted with 25-ton cranes.
Geared/Gearless Vessel with/without sufficient on board equipment
(cranes, derricks, etc.) to permit the discharge
of its cargo without the assistance of shore
facilities.
Handysize Bulk carrier of 30,000-45,000 DWT.
M. V. (Motor Vessel) A vessel powered by a diesel engine and generally
a dry cargo vessel.
Multipurpose Vessel designed with retractable tweendecks and
loose container fittings enabling it to trade as a
bulk carrier or tweendecker, or to carry
containers.
Panamax Largest size of ship capable of navigating the
Panama Canal, generally of 60,000-75,000 DWT.
Time charter The hiring of a ship from a shipowner for a period
of time. Under this type of contract, the
shipowner places his ship, with crew and
equipment, at the disposal of the charterer, for
which the charterer periodically pays hire money.
Subject to any restrictions in the contract, the
charterer decides the type and quantity of cargo
to be carried and the ports of loading and
discharging. He is responsible for supplying the
ship with bunkers and for the payment of cargo
handling operations, canal and port charges,
pilotage, towage and ship's agency. The technical
operation and navigation of the ship remain the
responsibility of the shipowner. A ship hired in
this way is said to be on time charter. Such
periods can vary from the anticipated time
necessary to perform a specific voyage (e.g. two
months) - "trip" time charters or short-term time
charters; a number of voyages in succession (e.g.
six to nine months) - medium term time charters;
or a number of years - long-term time charters.
The terms and conditions of the contract are set
down in a document known as a time charter-party.
Time Charter Equivalent Time Charter Equivalent is that daily rate which
would result in the same profit had a vessel been
chartered under a time charter contract rather
than on a voyage contract.
Tweendeck/Tweendecker A vessel with one (usually) or more decks in
between the bottom and the weather decks.
Voyage charter Contract of carriage in which the charterer pays
for the use of a ship's cargo space for one, or
sometimes more than one, voyage. Under this type
of charter, the shipowner pays all the operating
costs of the ship (including bunkers, canal and
port charges, pilotage, towage and ship's agency)
while payment for port and cargo handling charges
are the subject of agreement between the parties.
Freight is generally paid per unit of cargo, such
as ton, based on an agreed quantity, or as a lump
sum irrespective of the quantity loaded or the
time taken to perform the voyage, though extra
compensation or rebates may be payable under the
contract if the charterer varies anticipated
loading or discharging times. The terms and
conditions of the contract are set down in a
document known as a voyage charter-party.
Shipping terms supplied by Dictionary of Shipping Terms and other sources.