Indicate by check mark whether the registrant files or will file annual reports under cover of Form
20-F
or Form
40-F.
Form 20-F ☒ Form
40-F ☐
Attached hereto as Exhibit I is a press release dated November 2, 2017 of Global Ship Lease, Inc. (the Company) reporting the Companys
financial results for the three and nine months ended September 30, 2017. Attached hereto as Exhibit II are the Companys interim unaudited consolidated financial statements for the three and nine months ended September 30, 2017.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
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GLOBAL SHIP LEASE, INC.
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Date: November 2, 2017
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By:
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/s/ Ian J. Webber
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Ian J. Webber
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Chief Executive Officer
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Page 2
EXHIBIT I
Investor and Media Contacts:
The
IGB Group
Bryan Degnan
646-673-9701
or
Leon Berman
212-477-8438
Global Ship Lease Reports Results for the Third
Quarter of 2017
LONDON, ENGLAND November
2, 2017
- Global Ship Lease, Inc. (NYSE:GSL) (the Company), a
containership charter owner, announced today its unaudited results for the three months and nine months ended September 30, 2017.
Third Quarter
and Year To Date Highlights
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Reported operating revenue of $41.2 million for the third quarter 2017. Revenue for the nine months ended September 30, 2017 was $121.1 million
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Reported net income available to common shareholders of $8.9 million for the third quarter 2017. For the nine months ended September 30, 2017, net income was $22.5 million
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Normalized net income
(1)
was $8.9 million for the third quarter 2017, the same as reported net income. Normalized net income was $23.0 million for the
nine months ended September 30, 2017
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Generated $29.3 million of Adjusted EBITDA
(1)
for the third quarter 2017. Adjusted EBITDA for the nine months ended September 30, 2017 was
$85.4 million
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Agreed on September 11, 2017 with CMA CGM to extend the charters on two of our 2,207 TEU containerships, the 2002-built
Julie Delmas
and the 2003-built
Delmas Keta
, by 12 months (plus or minus 45 days
at the charterers option) at a fixed rate of $7,800 per vessel per day, commencing September 11, 2017 and September 20, 2017, respectively
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Agreed on October 19, 2017 a new time charter with CMA CGM for the 2005-built
OOCL Tianjin
, which will be renamed
GSL Tianjin,
an 8,063 TEU containership. The charter is for a period of three to eight
months (at the charterers option) at a fixed rate of $13,000 per day, which commenced on October 25, 2017, immediately upon
re-delivery
from its previous charter
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On October 31, 2017, closed the previously announced offering of $360 million aggregate principal amount of 9.875% first priority secured notes due 2022. The net proceeds, together with borrowings under a new
$54.8 million super senior secured term loan facility and cash on hand, are to be used to refinance our existing 10.000% notes due 2019. In addition, all outstanding borrowings under both the existing revolving credit facility and the existing
secured term loan have been repaid and terminated.
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Ian Webber, Chief Executive Officer of Global Ship Lease, stated, Throughout the
third quarter of 2017, we continued to operate our fleet of 18
mid-sized
and smaller containerships on stable, fixed rate time-charter contracts with
top-tier
liner
companies, delivering highly consistent cash flows, as we have throughout our history. With an excellent record of operational performance and against a background of
Page 1
improving fundamentals for
mid-sized
and smaller containerships, we are pleased to have successfully extended or renewed charters on three vessels with no
down-time, thereby securing continued employment for our entire fleet on profitable terms throughout the quieter winter period.
Mr. Webber
continued, We remain optimistic that a recovery in fundamentals, albeit subject to some seasonality, will continue to support a firming of the charter market for
mid-sized
and smaller vessels. Vessel
ordering in these size segments remains very limited, scrapping activity is positive, and demand growth in the trade lanes dependent on this tonnage is robust. With strong indications of a cyclical recovery, we successfully refinanced all of our
existing debt on a long-term basis and on improved terms. Our enhanced balance sheet, a high-quality fleet, multiple years of contracted revenue, and an increasingly attractive market environment provide us with an opportunity to create substantial
shareholder value by pursuing attractive acquisitions of vessels, always with a charter, whilst continuing to
de-lever.
SELECTED FINANCIAL DATA UNAUDITED
(thousands of U.S. dollars)
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Three
months
ended
September 30,
2017
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Three
months
ended
September 30,
2016
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Nine
months
ended
September 30,
2017
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Nine
months
ended
September 30,
2016
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Operating Revenue
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41,216
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41,154
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121,117
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125,097
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Operating Income (Loss)
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19,894
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(11,884
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)
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56,859
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24,422
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Net Income (Loss) for Common Shareholders
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8,878
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(23,685
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)
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22,496
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(13,085
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)
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Adjusted EBITDA (1)
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29,340
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28,051
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85,446
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86,169
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Normalised Net Income (1)
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8,878
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5,240
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23,016
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16,301
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(1)
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Adjusted EBITDA and Normalized net income (loss) are
non-US
Generally Accepted Accounting Principles (US GAAP) measures, as explained further in this press release, and are
considered by Global Ship Lease to be useful measures of its performance. Reconciliations of such
non-GAAP
measures to the interim unaudited financial information are provided in this Earnings Release.
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Revenue and Utilization
The fleet
generated revenue from fixed rate, mainly long-term time charters of $41.2 million in the three months ended September 30, 2017, the same as in the comparative period in 2016, with a small reduction in revenue as a consequence of the
amendments to the charters of
Marie Delmas
and
Kumasi
whereby the day rate stepped down on August 1, 2016 and again in
mid-September
2017, offset by reduced levels of offhire. There were
1,656 ownership days in the quarter, the same as in the comparable period in 2016. In the third quarter 2017, there was no offhire, giving an overall utilization of 100.0%. In the comparable 2016 period, there was no unplanned offhire and 38 days of
planned offhire from regulatory drydockings, giving an overall utilization of 97.7%.
For the nine months ended September 30, 2017, revenue was
$121.1 million, down $4.0 million from revenue of $125.1 million in the comparative period of 2016, mainly due to the amendments to the charters of
Marie Delmas
and
Kumasi
.
Page 2
The table below shows fleet utilization for the three and nine months ended September 30, 2017 and 2016, and
for the years ended December 31, 2016, 2015, 2014 and 2013.
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Three months ended
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Nine months ended
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Days
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Sept 30,
2017
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Sept 30,
2016
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Sept 30,
2017
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Sept 30,
2016
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Dec 31,
2016
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Dec 31,
2015
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Dec 31,
2014
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Dec 31,
2013
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Ownership days
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1,656
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1,656
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4,914
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4,932
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6,588
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6,893
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6,270
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6,205
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Planned offhirescheduled drydock
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0
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(38
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)
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(62
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)
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(89
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)
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(100
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)
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(9
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)
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(48
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(21
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Unplanned offhire
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0
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0
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(30
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(2
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(3
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)
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(7
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)
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(12
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)
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(7
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)
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Idle time
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0
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0
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0
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0
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0
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(13
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)
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(64
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0
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Operating days
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1,656
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1,618
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4,822
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4,841
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6,485
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6,864
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6,146
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6,177
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Utilization
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100.0
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%
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97.7
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%
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98.1
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%
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98.2
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%
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98.4
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%
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99.6
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%
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98.0
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%
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99.5
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%
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In the three months ended September 30, 2017, there were no regulatory
dry-dockings.
There have been a total of four such
dry-dockings
year to date. One further regulatory
dry-docking,
previously
scheduled for late 2017, has been deferred to early 2018. Three
dry-dockings
were completed in the three months ended September 30, 2016. There were a total of six
dry-dockings
in 2016.
Vessel Operating Expenses
Vessel operating expenses, which include costs of crew, lubricating oil, spares and insurance, were $10.6 million for the three months ended
September 30, 2017, compared to $11.8 million in the comparative period. The average cost per ownership day in the quarter was $6,401, compared to $7,103 for the comparative period, down $702 per day or 9.9%. The reduction is primarily
attributable to reduced cost of lubricating oil, the timing of spend on repairs and maintenance, lower insurance costs on renewal and lower costs incurred in
dry-dockings
that are expensed rather than
capitalized.
For the nine months ended September 30, 2017, vessel operating expenses were $31.9 million or an average of $6,487 per day,
compared to $34.5 million in the comparative period or $6,991 per day. The $504, or 7.2%, reduction in vessel operating expenses per day is due mainly to reasons noted above.
Depreciation
Depreciation for the three months ended
September 30, 2017 was $9.4 million, compared to $10.6 million in the third quarter 2016, with the reduction being due to the effect of lower book values for a number of vessels following impairment write downs taken in the third and
fourth quarters 2016.
Depreciation for the nine months ended September 30, 2017 was $28.6 million, compared to $32.4 million in the
comparative period of 2016, with the reduction being due to the reason noted above.
Impairment
The Companys accounting policies require that tangible fixed assets such as vessels are reviewed individually for impairment in case of trigger events or
changes in circumstances to assess whether their carrying amounts are recoverable.
In September 2017, the Company agreed with CMA CGM to extend the
charters on
Julie Delmas
and
Delmas Keta
, by 12 months (plus or minus 45 days at the charterers option) at a fixed rate of $7,800 per vessel per day, commencing September 11, 2017 and September 20, 2017 respectively.
These extensions triggered the performance of an impairment test on the two vessels. No impairment was identified.
Page 3
In third quarter 2016, the Company agreed with CMA CGM to amend and extend the charters of the
Marie
Delmas
and
Kumasi
. These amendments triggered the performance of an impairment test on the two vessels as at August 1, 2016 resulting in a
non-cash
impairment charge of $29.4 million being
recognized in the quarter ended September 30, 2016 as the sum of the expected undiscounted future cash flows from these assets over their estimated remaining useful lives was less than the carrying amounts. The impairment charge is equal to the
amount by which the assets carrying amounts exceed their fair values. Fair value is the net present value of estimated future cash flows discounted by an appropriate discount rate.
General and Administrative Costs
General and
administrative costs were $1.3 million in the three months ended September 30, 2017, compared to $1.4 million in the third quarter of 2016.
For the nine months ended September 30, 2017, general and administrative costs were $3.8 million, compared to $4.6 million for the comparative
period in 2016. The reduction is due to lower staff costs and professional fees.
Other Operating Income
Other operating income in the three months ended September 30, 2017 was $2,000, compared to $32,000 in the third quarter of 2016.
For the nine months ended September 30, 2017, other operating income was $50,000, compared to $175,000 in the comparative period.
Adjusted EBITDA
As a result of the above, Adjusted
EBITDA was $29.3 million for the three months ended September 30, 2017, up from $28.1 million for the three months ended September 30, 2016 as lower vessel operating costs and general and administrative costs offset lower
revenue, mainly from the amendments to the charters of
Marie Delmas
and
Kumasi
.
Adjusted EBITDA for the nine months ended
September 30, 2017 was $85.4 million, compared to $86.2 million for the comparative period.
Interest Expense
Debt at September 30, 2017 comprised amounts outstanding on our 2019 notes, our revolving credit facility and our secured term loan.
Interest expense for the three months ended September 30, 2017, was $10.4 million, down $0.7 million on the interest expense for the three
months ended September 30, 2016 of $11.1 million. The reduction is mainly due to reduced interest on our notes on lower amounts outstanding.
For the nine months ended September 30, 2017, interest expense was $32.4 million. For the nine months ended September 30, 2016, interest
expense was $35.3 million. The decrease is mainly due to lower amounts outstanding on our notes.
Interest income for the three months ended
September 30, 2017 was $152,000, up from $57,000 in the comparative period of 2016 due to higher cash balances. Interest income for the nine months ended September 30, 2017 was $335,000 compared to $139,000 in the comparative period.
Page 4
Re-financing
On October 31, 2017, we closed the previously announced offering of $360.0 million aggregate principal amount of 9.875% first priority secured notes
due 2022. The net proceeds, together with cash on hand, are to be used to refinance the existing 10.000% notes due 2019. In addition, we have agreed a new super senior secured term loan facility of $54.8 million with a maximum term of three
years and bearing interest at LIBOR plus 3.25%, which was drawn on October 31, 2017, the net proceeds of which, together with cash on hand, have been used to repay outstanding borrowings under both the existing revolving credit facility and the
existing secured term loan, which have now been terminated.
Taxation
Taxation for the three months ended September 30, 2017 was $15,000, compared to $17,000 in the third quarter of 2016.
Taxation for the nine months ended September 30, 2017 was $31,000, compared to $32,000 for the comparative period in 2016.
Earnings Allocated to Preferred Shares
The Series B
Preferred Shares carry a coupon of 8.75%, the cost of which for the three months ended September 30, 2017 was $0.8 million, the same as in the comparative period.
The cost in the nine months ended September 30, 2017 was $2.3 million, the same as in the comparative period.
Net Income (Loss) Available to Common Shareholders
Net
income available to common shareholders for the three months ended September 30, 2017 was $8.9 million. Net loss for the three months ended September 30, 2016 was $23.7 million, after the
non-cash
impairment charge of $29.4 million related to the
Marie Delmas
and
Kumasi.
Normalized
net income, which excludes, where relevant, the effect of any
non-cash
impairment charges, gains and losses on the purchase of notes and accelerated amortization of deferred financing charges and original
issue discount consequent upon the retirement of Notes, was $8.9 million for the three months ended September 30, 2017 (the same as reported), compared to $5.2 million for the three months ended September 30, 2016.
Net income was $22.5 million for the nine months ended September 30, 2017. Net loss was $13.1 million for the nine months ended
September 30, 2016 after the $29.4 million
non-cash
impairment charge associated with
Marie Delmas
and
Kumasi
.
Normalized net income was $23.0 million for the nine months ended September 30, 2017 and was $16.3 million for the nine months ended
September 30, 2016.
Fleet
The following table
provides information about the
on-the-water
fleet of 18 vessels. 16 vessels are chartered to CMA CGM, and two to OOCL.
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Vessel
Name
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Capacity
in TEUs
(1)
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Year
Built
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Purchase
by GSL
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Remaining
Charter
Term
(2)
(years)
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Earliest
Charter Expiry
Date
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|
|
Daily
Charter
Rate
$
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|
CMA CGM Matisse
|
|
|
2,262
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1999
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|
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Dec 2007
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2.2
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|
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|
Sept 21, 2019
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15,300
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|
CMA CGM Utrillo
|
|
|
2,262
|
|
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|
1999
|
|
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Dec 2007
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|
|
|
2.2
|
|
|
|
Sept 11, 2019
|
|
|
|
15,300
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|
Delmas Keta
|
|
|
2,207
|
|
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|
2003
|
|
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Dec 2007
|
|
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1.0
|
(3)
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|
Aug 6, 2018
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7,800
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|
Julie Delmas
|
|
|
2,207
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|
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2002
|
|
|
|
Dec 2007
|
|
|
|
0.9
|
(3)
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|
|
Jul 28, 2018
|
|
|
|
7,800
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|
Kumasi
|
|
|
2,207
|
|
|
|
2002
|
|
|
|
Dec 2007
|
|
|
|
1.3 - 3.3
|
(4)
|
|
|
Nov 16, 2018
|
|
|
|
9,800
|
|
Page 5
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|
|
|
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|
|
|
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Marie Delmas
|
|
|
2,207
|
|
|
|
2002
|
|
|
|
Dec 2007
|
|
|
|
1.3 - 3.3
|
(4)
|
|
|
Nov 16, 2018
|
|
|
|
9,800
|
|
CMA CGM La Tour
|
|
|
2,272
|
|
|
|
2001
|
|
|
|
Dec 2007
|
|
|
|
2.2
|
|
|
|
Sept 20, 2019
|
|
|
|
15,300
|
|
CMA CGM Manet
|
|
|
2,272
|
|
|
|
2001
|
|
|
|
Dec 2007
|
|
|
|
2.2
|
|
|
|
Sept 7, 2019
|
|
|
|
15,300
|
|
CMA CGM Alcazar
|
|
|
5,089
|
|
|
|
2007
|
|
|
|
Jan 2008
|
|
|
|
3.3
|
|
|
|
Oct 18, 2020
|
|
|
|
33,750
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|
CMA CGM Château dIf
|
|
|
5,089
|
|
|
|
2007
|
|
|
|
Jan 2008
|
|
|
|
3.3
|
|
|
|
Oct 11, 2020
|
|
|
|
33,750
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|
CMA CGM Thalassa
|
|
|
11,040
|
|
|
|
2008
|
|
|
|
Dec 2008
|
|
|
|
8.3
|
|
|
|
Oct 1, 2025
|
|
|
|
47,200
|
|
CMA CGM Jamaica
|
|
|
4,298
|
|
|
|
2006
|
|
|
|
Dec 2008
|
|
|
|
5.2
|
|
|
|
Sept 17, 2022
|
|
|
|
25,350
|
|
CMA CGM Sambhar
|
|
|
4,045
|
|
|
|
2006
|
|
|
|
Dec 2008
|
|
|
|
5.2
|
|
|
|
Sept 16, 2022
|
|
|
|
25,350
|
|
CMA CGM America
|
|
|
4,045
|
|
|
|
2006
|
|
|
|
Dec 2008
|
|
|
|
5.2
|
|
|
|
Sept 19, 2022
|
|
|
|
25,350
|
|
CMA CGM Berlioz
|
|
|
6,621
|
|
|
|
2001
|
|
|
|
Aug 2009
|
|
|
|
3.9
|
|
|
|
May 28, 2021
|
|
|
|
34,000
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|
OOCL Tianjin
|
|
|
8,063
|
|
|
|
2005
|
|
|
|
Oct 2014
|
|
|
|
0.5
|
(5)
|
|
|
Jan 25, 2018
|
(5)
|
|
|
13,000
|
(5)
|
OOCL Qingdao
|
|
|
8,063
|
|
|
|
2004
|
|
|
|
Mar 2015
|
|
|
|
0.6
|
|
|
|
Mar 11, 2018
|
|
|
|
34,500
|
|
OOCL Ningbo
|
|
|
8,063
|
|
|
|
2004
|
|
|
|
Sep 2015
|
|
|
|
1.1
|
|
|
|
Sep 17, 2018
|
|
|
|
34,500
|
|
(1)
|
Twenty-foot Equivalent Units.
|
(2)
|
As at September 30, 2017 to
mid-point
of
re-delivery
period and adjusted for OOCL Tianjin as per footnote (5) below. Plus or
minus 90 days, other than (i) OOCL Tianjin (to be renamed GSL Tianjin) which is between January 25, 2018 and June 25, 2018, (ii) OOCL Qingdao which is between March 11, 2018 and June 11, 2018, and (iii) OOCL Ningbo
which is between September 17, 2018 and December 17, 2018, all at charterers option and (iv) Julie Delmas and Delmas Keta (see note 3 below).
|
(3)
|
The charters for Julie Delmas and Delmas Keta were extended in September 2017 by 12 months (plus or minus 45 days at the charterers option) at a fixed rate of $7,800 per vessel per day, commencing on
September 11, 2017 and September 20, 2017, respectively.
|
(4)
|
The charters for Kumasi and Marie Delmas were amended in July 2016 to, inter alia, provide us with three consecutive options to extend the charters at $9,800 per day. The first of these options was exercised in July
2017, extending the charters to end 2018. The two remaining options allow us to extend the charters to December 31, 2020 plus or minus 90 days at charterers option. The earliest possible
re-delivery
date, not taking into account our remaining options, is shown in the table.
|
(5)
|
A new time charter for OOCL Tianjin, to be renamed GSL Tianjin, with CMA CGM commenced October 25, 2017, immediately upon
re-delivery
from its previous charter to OOCL, at
a fixed rate of $13,000 per day. The vessel is chartered for a period of three to eight months at the charterers option.
|
Conference Call and Webcast
Global Ship Lease will hold
a conference call to discuss the Companys results for the three months ended September 30, 2017 today, Thursday November 2, 2017 at 10:30 a.m. Eastern Time. There are two ways to access the conference call:
|
(1)
|
Dial-in:
(877)
445-2556
or (908)
982-4670;
Passcode: 6299768 Please dial in at least 10 minutes
prior to 10:30 a.m. Eastern Time to ensure a prompt start to the call.
|
|
(2)
|
Live Internet webcast and slide presentation:
http://www.globalshiplease.com
|
If you are
unable to participate at this time, a replay of the call will be available through Saturday, November 18, 2017 at (855)
859-2056
or (404)
537-3406.
Enter the code
6299768 to access the audio replay. The webcast will also be archived on the Companys website:
http://www.globalshiplease.com
.
Page 6
Annual Report on Form 20F
The Companys Annual Report for 2016 is on file with the Securities and Exchange Commission. A copy of the report can be found under the Investor
Relations section (Annual Reports) of the Companys website at
http://www.globalshiplease.com
Shareholders may request a hard copy of the audited financial statements free of charge by contacting the Company at
info@globalshiplease.com
or by writing to Global Ship Lease, Inc, care of Global Ship Lease Services Limited, Portland House, Stag Place, London SW1E 5RS or by telephoning +44 (0) 207 869 8806.
About Global Ship Lease
Global Ship Lease is a
containership charter owner. Incorporated in the Marshall Islands, Global Ship Lease commenced operations in December 2007 with a business of owning and chartering out containerships under long-term, fixed rate charters to top tier container liner
companies.
Global Ship Lease owns 18 vessels with a total capacity of 82,312 TEU and an average age, weighted by TEU capacity, at September 30, 2017
of 12.8 years. All 18 vessels are currently fixed on time charters, 16 of which are with CMA CGM. The average remaining term of the charters at September 30, 2017 is 3.0 years or 3.3 years on a weighted basis, taking into account the new
charter agreed for
OOCL Tianjin
.
Reconciliation of
Non-U.S.
GAAP Financial Measures
A. Adjusted EBITDA
Adjusted EBITDA represents net income before
interest income and expense including amortization of deferred finance costs, earnings allocated to preferred shares, income taxes, depreciation, amortization and impairment. Adjusted EBITDA is a
non-US
GAAP
quantitative measure used to assist in the assessment of the Companys ability to generate cash from its operations. We believe that the presentation of Adjusted EBITDA is useful to investors because it is frequently used by securities
analysts, investors and other interested parties in the evaluation of companies in our industry. Adjusted EBITDA is not defined in US GAAP and should not be considered to be an alternate to Net income or any other financial metric required by
such accounting principles.
ADJUSTED EBITDAUNAUDITED
(thousands of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months
ended
Sept 30,
2017
|
|
|
Three
months
ended
Sept 30,
2016
|
|
|
Nine
months
ended
Sept 30,
2017
|
|
|
Nine
months
ended
Sept 30,
2016
|
|
Net income (loss) available to common shareholders
|
|
|
8,878
|
|
|
|
(23,685
|
)
|
|
|
22,496
|
|
|
|
(13,085
|
)
|
Adjust: Depreciation
|
|
|
9,446
|
|
|
|
10,578
|
|
|
|
28,587
|
|
|
|
32,390
|
|
Impairment
|
|
|
|
|
|
|
29,357
|
|
|
|
|
|
|
|
29,357
|
|
Interest
income
|
|
|
(152
|
)
|
|
|
(57
|
)
|
|
|
(335
|
)
|
|
|
(139
|
)
|
Interest
expense
|
|
|
10,387
|
|
|
|
11,075
|
|
|
|
32,370
|
|
|
|
35,317
|
|
Income tax
|
|
|
15
|
|
|
|
17
|
|
|
|
31
|
|
|
|
32
|
|
Earnings allocated
to preferred shares
|
|
|
766
|
|
|
|
766
|
|
|
|
2,297
|
|
|
|
2,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
29,340
|
|
|
|
28,051
|
|
|
|
85,446
|
|
|
|
86,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 7
B. Normalized net income
Normalized net income represents net income adjusted for the premium paid on the tender offer together with the related accelerated amortization of deferred
financing costs and original issue discount. Normalized net income is a
non-GAAP
quantitative measure which we believe will assist investors and analysts who often adjust reported net income for
non-operating
items that do not affect operating performance or operating cash generated. Normalized net income is not defined in US GAAP and should not be considered to be an alternate to net income or any
other financial metric required by such accounting principles.
Normalized net income represents Net income (loss) adjusted for the unrealized gain (loss)
on derivatives, the accelerated write off of a portion of deferred financing costs, impairment charges and gain of redemption of preferred shares. Normalized net income is a
non-GAAP
quantitative measure which
we believe will assist investors and analysts who often adjust reported net income for
non-operating
items such as change in fair value of derivatives to eliminate the effect of
non-cash
non-operating
items that do not affect operating performance or cash generated. Normalized net income is not defined in US GAAP and should not be
considered to be an alternate to Net income (loss) or any other financial metric required by such accounting principles.
NORMALIZED NET
INCOMEUNAUDITED
(thousands of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months
ended
Sept 30,
2017
|
|
|
Three
months
ended
Sept 30,
2016
|
|
|
Nine
months
ended
Sept 30,
2017
|
|
|
Nine
months
ended
Sept 30,
2016
|
|
Net income (loss) available to common shareholders
|
|
|
8,878
|
|
|
|
(23,685
|
)
|
|
|
22,496
|
|
|
|
(13,085
|
)
|
Adjust: Gain on purchase of notes
|
|
|
|
|
|
|
(475
|
)
|
|
|
|
|
|
|
(927
|
)
|
Premium paid on tender offer for notes
|
|
|
|
|
|
|
|
|
|
|
390
|
|
|
|
533
|
|
Accelerated write off of deferred financing charges related to notes purchase and tender offer
|
|
|
|
|
|
|
10
|
|
|
|
61
|
|
|
|
100
|
|
Accelerated write off of original issue discount related to notes purchase and tender offer
|
|
|
|
|
|
|
33
|
|
|
|
69
|
|
|
|
323
|
|
Impairment charge
|
|
|
|
|
|
|
29,357
|
|
|
|
|
|
|
|
29,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized net income
|
|
|
8,878
|
|
|
|
5,240
|
|
|
|
23,016
|
|
|
|
16,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Safe Harbor Statement
This communication contains forward-looking statements. Forward-looking statements provide Global Ship Leases current expectations or forecasts of future
events. Forward-looking statements include statements about Global Ship Leases expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as
anticipate, believe, continue, estimate, expect, intend, may, ongoing, plan, potential, predict, project,
will or
Page 8
similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not
forward-looking. These forward-looking statements are based on assumptions that may be incorrect, and Global Ship Lease cannot assure you that these projections included in these forward-looking statements will come to pass. Actual results could
differ materially from those expressed or implied by the forward-looking statements as a result of various factors.
The risks and uncertainties include,
but are not limited to:
|
|
|
future operating or financial results;
|
|
|
|
expectations regarding the future growth of the container shipping industry, including the rates of annual demand and supply growth;
|
|
|
|
the financial condition of our charterers, particularly CMA CGM, our principal charterer and main source of operating revenue, and their ability to pay charterhire in accordance with the charters;
|
|
|
|
Global Ship Leases financial condition and liquidity, including its ability to obtain additional waivers which might be necessary under the existing credit facility or obtain additional financing to fund capital
expenditures, vessel acquisitions and other general corporate purposes;
|
|
|
|
Global Ship Leases ability to meet its financial covenants and repay its credit facilities;
|
|
|
|
Global Ship Leases expectations relating to dividend payments and forecasts of its ability to make such payments including the availability of cash and the impact of constraints under its credit facility;
|
|
|
|
future acquisitions, business strategy and expected capital spending;
|
|
|
|
operating expenses, availability of crew, number of
off-hire
days, drydocking and survey requirements and insurance costs;
|
|
|
|
general market conditions and shipping industry trends, including charter rates and factors affecting supply and demand;
|
|
|
|
assumptions regarding interest rates and inflation;
|
|
|
|
changes in the rate of growth of global and various regional economies;
|
|
|
|
risks incidental to vessel operation, including piracy, discharge of pollutants and vessel accidents and damage including total or constructive total loss;
|
|
|
|
estimated future capital expenditures needed to preserve its capital base;
|
|
|
|
Global Ship Leases expectations about the availability of ships to purchase, the time that it may take to construct new ships, or the useful lives of its ships;
|
|
|
|
Global Ship Leases continued ability to enter into or renew long-term, fixed-rate charters;
|
|
|
|
the continued performance of existing long-term, fixed-rate time charters;
|
|
|
|
Global Ship Leases ability to capitalize on its managements and board of directors relationships and reputations in the containership industry to its advantage;
|
|
|
|
changes in governmental and classification societies rules and regulations or actions taken by regulatory authorities;
|
|
|
|
expectations about the availability of insurance on commercially reasonable terms;
|
|
|
|
unanticipated changes in laws and regulations including taxation;
|
|
|
|
potential liability from future litigation.
|
Forward-looking statements are subject to known and unknown risks
and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Global Ship Leases actual results could differ
materially from those anticipated in forward-looking statements for many reasons specifically as described in
Page 9
Global Ship Leases filings with the SEC. Accordingly, you should not unduly rely on these forward-looking statements, which speak only as of the date of this communication. Global Ship
Lease undertakes no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this communication or to reflect the occurrence of unanticipated events. You should, however, review the factors and
risks Global Ship Lease describes in the reports it will file from time to time with the SEC after the date of this communication.
Page 10
Global Ship Lease, Inc.
Interim Unaudited Consolidated Statements of Income
(Expressed in thousands of U.S. dollars except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
|
Nine months ended
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Operating Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time charter revenue
|
|
$
|
9,444
|
|
|
$
|
9,444
|
|
|
$
|
28,022
|
|
|
$
|
28,123
|
|
Time charter revenue related party
|
|
|
31,772
|
|
|
|
31,710
|
|
|
|
93,095
|
|
|
|
96,974
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,216
|
|
|
|
41,154
|
|
|
|
121,117
|
|
|
|
125,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessel operating expenses
|
|
|
10,200
|
|
|
|
11,362
|
|
|
|
30,678
|
|
|
|
33,282
|
|
Vessel operating expenses related party
|
|
|
400
|
|
|
|
400
|
|
|
|
1,200
|
|
|
|
1,199
|
|
Depreciation
|
|
|
9,446
|
|
|
|
10,578
|
|
|
|
28,587
|
|
|
|
32,390
|
|
Impairment of vessels
|
|
|
|
|
|
|
29,357
|
|
|
|
|
|
|
|
29,357
|
|
General and administrative
|
|
|
1,278
|
|
|
|
1,373
|
|
|
|
3,843
|
|
|
|
4,622
|
|
Other operating income
|
|
|
(2
|
)
|
|
|
(32
|
)
|
|
|
(50
|
)
|
|
|
(175
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
21,322
|
|
|
|
53,038
|
|
|
|
64,258
|
|
|
|
100,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
19,894
|
|
|
|
(11,884
|
)
|
|
|
56,859
|
|
|
|
24,422
|
|
Non Operating Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
152
|
|
|
|
57
|
|
|
|
335
|
|
|
|
139
|
|
Interest expense
|
|
|
(10,387
|
)
|
|
|
(11,075
|
)
|
|
|
(32,370
|
)
|
|
|
(35,317
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income / (Loss) before Income Taxes
|
|
|
9,659
|
|
|
|
(22,902
|
)
|
|
|
24,824
|
|
|
|
(10,756
|
)
|
Income taxes
|
|
|
(15
|
)
|
|
|
(17
|
)
|
|
|
(31
|
)
|
|
|
(32
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
9,644
|
|
|
$
|
(22,919
|
)
|
|
$
|
24,793
|
|
|
$
|
(10,788
|
)
|
Earnings allocated to Series B Preferred Shares
|
|
|
(766
|
)
|
|
|
(766
|
)
|
|
|
(2,297
|
)
|
|
|
(2,297
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income available to Common Shareholders
|
|
$
|
8,878
|
|
|
$
|
(23,685
|
)
|
|
$
|
22,496
|
|
|
$
|
(13,085
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of Class A common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (including RSUs without service conditions)
|
|
|
47,975,609
|
|
|
|
47,858,640
|
|
|
|
47,975,609
|
|
|
|
47,850,139
|
|
Diluted
|
|
|
47,975,609
|
|
|
|
47,858,640
|
|
|
|
47,975,609
|
|
|
|
47,850,139
|
|
Net income per Class A common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (including RSUs without service conditions)
|
|
$
|
0.19
|
|
|
$
|
(0.49
|
)
|
|
$
|
0.47
|
|
|
$
|
(0.27
|
)
|
Diluted
|
|
$
|
0.19
|
|
|
$
|
(0.49
|
)
|
|
$
|
0.47
|
|
|
$
|
(0.27
|
)
|
Weighted average number of Class B common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
7,405,956
|
|
|
|
7,405,956
|
|
|
|
7,405,956
|
|
|
|
7,405,956
|
|
Net income per Class B common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
Page 11
Global Ship Lease, Inc.
Interim Unaudited Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
September 30,
2017
|
|
|
December 31,
2016
|
|
Assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
65,562
|
|
|
$
|
54,243
|
|
Accounts receivable
|
|
|
166
|
|
|
|
29
|
|
Due from related party
|
|
|
1,065
|
|
|
|
906
|
|
Prepaid expenses
|
|
|
2,614
|
|
|
|
1,146
|
|
Other receivables
|
|
|
191
|
|
|
|
52
|
|
Inventory
|
|
|
629
|
|
|
|
553
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
70,227
|
|
|
|
56,929
|
|
|
|
|
|
|
|
|
|
|
Vessels in operation
|
|
|
694,638
|
|
|
|
719,110
|
|
Other fixed assets
|
|
|
12
|
|
|
|
7
|
|
Intangible assets
|
|
|
9
|
|
|
|
16
|
|
Other long term assets
|
|
|
112
|
|
|
|
195
|
|
|
|
|
|
|
|
|
|
|
Total
non-current
assets
|
|
|
694,771
|
|
|
|
719,328
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
764,998
|
|
|
$
|
776,257
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders Equity
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Current portion of long term debt
|
|
|
25,755
|
|
|
|
31,026
|
|
Intangible liability charter agreements
|
|
|
1,779
|
|
|
|
1,807
|
|
Deferred revenue
|
|
|
2,848
|
|
|
|
1,940
|
|
Accounts payable
|
|
|
452
|
|
|
|
963
|
|
Due to related party
|
|
|
1,555
|
|
|
|
1,315
|
|
Accrued expenses
|
|
|
3,491
|
|
|
|
11,664
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
35,880
|
|
|
|
48,715
|
|
|
|
|
|
|
|
|
|
|
Long term debt
|
|
|
369,255
|
|
|
|
388,847
|
|
Intangible liability charter agreements
|
|
|
8,454
|
|
|
|
9,782
|
|
Deferred tax liability
|
|
|
20
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
Total long term liabilities
|
|
|
377,729
|
|
|
|
398,649
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
$
|
413,609
|
|
|
$
|
447,364
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
Stockholders Equity
|
|
|
|
|
|
|
|
|
Class A Common stock authorized 214,000,000 shares with a $0.01 par value; 47,575,609
shares issued and outstanding (2016 47,575,609)
|
|
$
|
476
|
|
|
$
|
476
|
|
Class B Common stock authorized 20,000,000 shares with a $0.01 par value; 7,405,956
shares issued and outstanding (2016 7,405,956)
|
|
|
74
|
|
|
|
74
|
|
Series B Preferred shares authorized 16,100 shares with $0.01 par value; 14,000 shares
issued and outstanding (2016 14,000)
|
|
|
|
|
|
|
|
|
Additional paid in capital
|
|
|
386,708
|
|
|
|
386,708
|
|
(Accumulated deficit)
|
|
|
(35,869
|
)
|
|
|
(58,365
|
)
|
|
|
|
|
|
|
|
|
|
Total Stockholders Equity
|
|
|
351,389
|
|
|
|
328,893
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders Equity
|
|
$
|
764,998
|
|
|
$
|
776,257
|
|
|
|
|
|
|
|
|
|
|
Page 12
Global Ship Lease, Inc.
Interim Unaudited Consolidated Statements of Cash Flows
(Expressed in thousands of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
|
Nine months ended
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Cash Flows from Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income / (Loss)
|
|
$
|
9,644
|
|
|
$
|
(22,919
|
)
|
|
$
|
24,793
|
|
|
$
|
(10,788
|
)
|
Adjustments to Reconcile Net income to Net Cash Provided by Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
9,446
|
|
|
|
10,578
|
|
|
|
28,587
|
|
|
|
32,390
|
|
Vessel impairment
|
|
|
|
|
|
|
29,357
|
|
|
|
|
|
|
|
29,357
|
|
Amortization of deferred financing costs
|
|
|
838
|
|
|
|
909
|
|
|
|
2,613
|
|
|
|
2,681
|
|
Amortization of original issue discount
|
|
|
258
|
|
|
|
333
|
|
|
|
883
|
|
|
|
1,249
|
|
Amortization of intangible liability
|
|
|
(452
|
)
|
|
|
(530
|
)
|
|
|
(1,356
|
)
|
|
|
(1,589
|
)
|
Share based compensation
|
|
|
|
|
|
|
85
|
|
|
|
|
|
|
|
200
|
|
Gain on repurchase of secured notes
|
|
|
|
|
|
|
(475
|
)
|
|
|
|
|
|
|
(927
|
)
|
Decrease (increase) in accounts receivable and other assets
|
|
|
(1,706
|
)
|
|
|
(64
|
)
|
|
|
(1,905
|
)
|
|
|
(462
|
)
|
Decrease (increase) in inventory
|
|
|
46
|
|
|
|
(54
|
)
|
|
|
(75
|
)
|
|
|
20
|
|
Increase (decrease) in accounts payable and other liabilities
|
|
|
(7,747
|
)
|
|
|
(9,796
|
)
|
|
|
(8,495
|
)
|
|
|
(11,081
|
)
|
(Decrease) increase in unearned revenue
|
|
|
150
|
|
|
|
1,119
|
|
|
|
908
|
|
|
|
911
|
|
Increase in related party balances
|
|
|
45
|
|
|
|
374
|
|
|
|
673
|
|
|
|
1,437
|
|
Unrealized foreign exchange (gain) loss
|
|
|
|
|
|
|
21
|
|
|
|
6
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities
|
|
|
10,522
|
|
|
|
8,938
|
|
|
|
46,632
|
|
|
|
43,391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for vessel improvements
|
|
|
|
|
|
|
|
|
|
|
(100
|
)
|
|
|
|
|
Cash paid in respect of sale of vessels
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(254
|
)
|
Cash paid for other assets
|
|
|
|
|
|
|
(5
|
)
|
|
|
(8
|
)
|
|
|
(6
|
)
|
Cash paid for drydockings
|
|
|
(701
|
)
|
|
|
(3,220
|
)
|
|
|
(4,632
|
)
|
|
|
(4,168
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Investing Activities
|
|
|
(701
|
)
|
|
|
(3,225
|
)
|
|
|
(4,740
|
)
|
|
|
(4,428
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of secured notes
|
|
|
|
|
|
|
(4,526
|
)
|
|
|
(19,501
|
)
|
|
|
(34,936
|
)
|
Proceeds from drawdown of revolving credit facility
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred financing costs incurred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of credit facilities
|
|
|
(2,925
|
)
|
|
|
(1,925
|
)
|
|
|
(8,775
|
)
|
|
|
(6,575
|
)
|
Series B Preferred Shares dividends paid
|
|
|
(766
|
)
|
|
|
(766
|
)
|
|
|
(2,297
|
)
|
|
|
(2,297
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Financing Activities
|
|
|
(3,691
|
)
|
|
|
(7,217
|
)
|
|
|
(30,573
|
)
|
|
|
(43,808
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase (decrease) in Cash and Cash Equivalents
|
|
|
6,130
|
|
|
|
(1,504
|
)
|
|
|
11,319
|
|
|
|
(4,845
|
)
|
Cash and Cash Equivalents at Start of Period
|
|
|
59,432
|
|
|
|
50,250
|
|
|
|
54,243
|
|
|
|
53,591
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents at End of Period
|
|
$
|
65,562
|
|
|
$
|
48,746
|
|
|
$
|
65,562
|
|
|
$
|
48,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest paid
|
|
$
|
18,313
|
|
|
$
|
20,021
|
|
|
$
|
37,991
|
|
|
$
|
42,253
|
|
Income tax paid
|
|
$
|
12
|
|
|
$
|
11
|
|
|
$
|
36
|
|
|
$
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 13
EXHIBIT II
GLOBAL SHIP LEASE, INC.
INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2017
Global Ship Lease, Inc.
Interim Unaudited Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2017
|
|
|
December 31,
2016
|
|
|
|
Note
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
$
|
65,562
|
|
|
$
|
54,243
|
|
Accounts receivable
|
|
|
|
|
|
|
166
|
|
|
|
29
|
|
Due from related party
|
|
|
6
|
|
|
|
1,065
|
|
|
|
906
|
|
Prepaid expenses
|
|
|
|
|
|
|
2,614
|
|
|
|
1,146
|
|
Other receivables
|
|
|
|
|
|
|
191
|
|
|
|
52
|
|
Inventory
|
|
|
|
|
|
|
629
|
|
|
|
553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
|
|
|
|
70,227
|
|
|
|
56,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessels in operation
|
|
|
4
|
|
|
|
694,638
|
|
|
|
719,110
|
|
Other fixed assets
|
|
|
|
|
|
|
12
|
|
|
|
7
|
|
Intangible assets
|
|
|
|
|
|
|
9
|
|
|
|
16
|
|
Other long term assets
|
|
|
5
|
|
|
|
112
|
|
|
|
195
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
non-current
assets
|
|
|
|
|
|
|
694,771
|
|
|
|
719,328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
|
|
|
$
|
764,998
|
|
|
$
|
776,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long term debt
|
|
|
5
|
|
|
|
25,755
|
|
|
|
31,026
|
|
Intangible liability charter agreements
|
|
|
|
|
|
|
1,779
|
|
|
|
1,807
|
|
Deferred revenue
|
|
|
|
|
|
|
2,848
|
|
|
|
1,940
|
|
Accounts payable
|
|
|
|
|
|
|
452
|
|
|
|
963
|
|
Due to related party
|
|
|
6
|
|
|
|
1,555
|
|
|
|
1,315
|
|
Accrued expenses
|
|
|
|
|
|
|
3,491
|
|
|
|
11,664
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
|
|
|
|
35,880
|
|
|
|
48,715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long term debt
|
|
|
5
|
|
|
|
369,255
|
|
|
|
388,847
|
|
Intangible liability charter agreements
|
|
|
|
|
|
|
8,454
|
|
|
|
9,782
|
|
Deferred tax liability
|
|
|
|
|
|
|
20
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long term liabilities
|
|
|
|
|
|
|
377,729
|
|
|
|
398,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
|
|
|
$
|
413,609
|
|
|
$
|
447,364
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
7
|
|
|
|
|
|
|
|
|
|
Stockholders Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A Common stock authorized 214,000,000 shares with a $0.01 par value; 47,575,609
shares issued and outstanding (2016 47,575,609)
|
|
|
8
|
|
|
$
|
476
|
|
|
$
|
476
|
|
Class B Common stock authorized 20,000,000 shares with a $0.01 par value; 7,405,956
shares issued and outstanding (2016 7,405,956)
|
|
|
8
|
|
|
|
74
|
|
|
|
74
|
|
Series B Preferred shares authorized 16,100 shares with $0.01 par value; 14,000 shares
issued and outstanding (2016 14,000)
|
|
|
8
|
|
|
|
|
|
|
|
|
|
Additional paid in capital
|
|
|
|
|
|
|
386,708
|
|
|
|
386,708
|
|
(Accumulated deficit)
|
|
|
|
|
|
|
(35,869
|
)
|
|
|
(58,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders Equity
|
|
|
|
|
|
|
351,389
|
|
|
|
328,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders Equity
|
|
|
|
|
|
$
|
764,998
|
|
|
$
|
776,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to interim unaudited consolidated financial statements
Page 1
Global Ship Lease, Inc.
Interim Unaudited Consolidated Statements of Income
(Expressed in thousands of U.S. dollars except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
|
Nine months ended
September 30,
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
Note
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time charter revenue
|
|
|
|
|
|
$
|
9,444
|
|
|
$
|
9,444
|
|
|
$
|
28,022
|
|
|
$
|
28,123
|
|
Time charter revenue related party
|
|
|
6
|
|
|
|
31,772
|
|
|
|
31,710
|
|
|
|
93,095
|
|
|
|
96,974
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,216
|
|
|
|
41,154
|
|
|
|
121,117
|
|
|
|
125,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessel operating expenses
|
|
|
|
|
|
|
10,200
|
|
|
|
11,362
|
|
|
|
30,678
|
|
|
|
33,282
|
|
Vessel operating expenses related party
|
|
|
6
|
|
|
|
400
|
|
|
|
400
|
|
|
|
1,200
|
|
|
|
1,199
|
|
Depreciation
|
|
|
4
|
|
|
|
9,446
|
|
|
|
10,578
|
|
|
|
28,587
|
|
|
|
32,390
|
|
Impairment of vessels
|
|
|
4
|
|
|
|
|
|
|
|
29,357
|
|
|
|
|
|
|
|
29,357
|
|
General and administrative
|
|
|
|
|
|
|
1,278
|
|
|
|
1,373
|
|
|
|
3,843
|
|
|
|
4,622
|
|
Other operating income
|
|
|
|
|
|
|
(2
|
)
|
|
|
(32
|
)
|
|
|
(50
|
)
|
|
|
(175
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
|
|
|
|
21,322
|
|
|
|
53,038
|
|
|
|
64,258
|
|
|
|
100,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
|
|
|
|
|
19,894
|
|
|
|
(11,884
|
)
|
|
|
56,859
|
|
|
|
24,422
|
|
Non Operating Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
|
|
|
|
152
|
|
|
|
57
|
|
|
|
335
|
|
|
|
139
|
|
Interest expense
|
|
|
|
|
|
|
(10,387
|
)
|
|
|
(11,075
|
)
|
|
|
(32,370
|
)
|
|
|
(35,317
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) before Income Taxes
|
|
|
|
|
|
|
9,659
|
|
|
|
(22,902
|
)
|
|
|
24,824
|
|
|
|
(10,756
|
)
|
Income taxes
|
|
|
|
|
|
|
(15
|
)
|
|
|
(17
|
)
|
|
|
(31
|
)
|
|
|
(32
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
|
|
|
|
$
|
9,644
|
|
|
$
|
(22,919
|
)
|
|
$
|
24,793
|
|
|
$
|
(10,788
|
)
|
Earnings allocated to Series B Preferred Shares
|
|
|
8
|
|
|
|
(766
|
)
|
|
|
(766
|
)
|
|
|
(2,297
|
)
|
|
|
(2,297
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) available to Common Shareholders
|
|
|
|
|
|
$
|
8,878
|
|
|
$
|
(23,685
|
)
|
|
$
|
22,496
|
|
|
$
|
(13,085
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of Class A common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (including RSUs without service conditions)
|
|
|
10
|
|
|
|
47,975,609
|
|
|
|
47,858,640
|
|
|
|
47,975,609
|
|
|
|
47,850,139
|
|
Diluted
|
|
|
10
|
|
|
|
47,975,609
|
|
|
|
47,858,640
|
|
|
|
47,975,609
|
|
|
|
47,850,139
|
|
Net income (loss) per Class A common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (including RSUs without service conditions)
|
|
|
10
|
|
|
$
|
0.19
|
|
|
$
|
(0.49
|
)
|
|
$
|
0.47
|
|
|
$
|
(0.27
|
)
|
Diluted
|
|
|
10
|
|
|
$
|
0.19
|
|
|
$
|
(0.49
|
)
|
|
$
|
0.47
|
|
|
$
|
(0.27
|
)
|
Weighted average number of Class B common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
10
|
|
|
|
7,405,956
|
|
|
|
7,405,956
|
|
|
|
7,405,956
|
|
|
|
7,405,956
|
|
Net income per Class B common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
10
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
See accompanying notes to interim unaudited consolidated financial statements
Page 2
Global Ship Lease, Inc.
Interim Unaudited Consolidated Statements of Cash Flows
(Expressed in thousands of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
|
Nine months ended
September 30,
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
Note
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (Loss)
|
|
|
|
|
|
$
|
9,644
|
|
|
$
|
(22,919
|
)
|
|
$
|
24,793
|
|
|
$
|
(10,788
|
)
|
Adjustments to Reconcile Net income to Net Cash Provided by Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
4
|
|
|
|
9,446
|
|
|
|
10,578
|
|
|
|
28,587
|
|
|
|
32,390
|
|
Vessel impairment
|
|
|
4
|
|
|
|
|
|
|
|
29,357
|
|
|
|
|
|
|
|
29,357
|
|
Amortization of deferred financing costs
|
|
|
5
|
|
|
|
838
|
|
|
|
909
|
|
|
|
2,613
|
|
|
|
2,681
|
|
Amortization of original issue discount
|
|
|
5
|
|
|
|
258
|
|
|
|
333
|
|
|
|
883
|
|
|
|
1,249
|
|
Amortization of intangible liability
|
|
|
|
|
|
|
(452
|
)
|
|
|
(530
|
)
|
|
|
(1,356
|
)
|
|
|
(1,589
|
)
|
Share based compensation
|
|
|
9
|
|
|
|
|
|
|
|
85
|
|
|
|
|
|
|
|
200
|
|
Gain on repurchase of secured notes
|
|
|
5
|
|
|
|
|
|
|
|
(475
|
)
|
|
|
|
|
|
|
(927
|
)
|
Increase in accounts receivable and other assets
|
|
|
|
|
|
|
(1,706
|
)
|
|
|
(64
|
)
|
|
|
(1,905
|
)
|
|
|
(462
|
)
|
Decrease (increase) in inventory
|
|
|
|
|
|
|
46
|
|
|
|
(54
|
)
|
|
|
(75
|
)
|
|
|
20
|
|
Decrease in accounts payable and other liabilities
|
|
|
|
|
|
|
(7,747
|
)
|
|
|
(9,796
|
)
|
|
|
(8,495
|
)
|
|
|
(11,081
|
)
|
Increase in unearned revenue
|
|
|
|
|
|
|
150
|
|
|
|
1,119
|
|
|
|
908
|
|
|
|
911
|
|
Increase in related party balances
|
|
|
6
|
|
|
|
45
|
|
|
|
374
|
|
|
|
673
|
|
|
|
1,437
|
|
Unrealized foreign exchange (gain) loss
|
|
|
|
|
|
|
|
|
|
|
21
|
|
|
|
6
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities
|
|
|
|
|
|
|
10,522
|
|
|
|
8,938
|
|
|
|
46,632
|
|
|
|
43,391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for vessel improvements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(100
|
)
|
|
|
|
|
Cash paid in respect of sale of vessels
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(254
|
)
|
Cash paid for other assets
|
|
|
|
|
|
|
|
|
|
|
(5
|
)
|
|
|
(8
|
)
|
|
|
(6
|
)
|
Cash paid for drydockings
|
|
|
|
|
|
|
(701
|
)
|
|
|
(3,220
|
)
|
|
|
(4,632
|
)
|
|
|
(4,168
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Investing Activities
|
|
|
|
|
|
|
(701
|
)
|
|
|
(3,225
|
)
|
|
|
(4,740
|
)
|
|
|
(4,428
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of secured notes
|
|
|
5
|
|
|
|
|
|
|
|
(4,526
|
)
|
|
|
(19,501
|
)
|
|
|
(34,936
|
)
|
Repayment of credit facilities
|
|
|
5
|
|
|
|
(2,925
|
)
|
|
|
(1,925
|
)
|
|
|
(8,775
|
)
|
|
|
(6,575
|
)
|
Series B Preferred Shares dividends paid
|
|
|
8
|
|
|
|
(766
|
)
|
|
|
(766
|
)
|
|
|
(2,297
|
)
|
|
|
(2,297
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Financing Activities
|
|
|
|
|
|
|
(3,691
|
)
|
|
|
(7,217
|
)
|
|
|
(30,573
|
)
|
|
|
(43,808
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase (decrease) in Cash and Cash Equivalents
|
|
|
|
|
|
|
6,130
|
|
|
|
(1,504
|
)
|
|
|
11,319
|
|
|
|
(4,845
|
)
|
Cash and Cash Equivalents at Start of Period
|
|
|
|
|
|
|
59,432
|
|
|
|
50,250
|
|
|
|
54,243
|
|
|
|
53,591
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents at End of Period
|
|
|
|
|
|
$
|
65,562
|
|
|
$
|
48,746
|
|
|
$
|
65,562
|
|
|
$
|
48,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest paid
|
|
|
|
|
|
$
|
18,313
|
|
|
$
|
20,021
|
|
|
$
|
37,991
|
|
|
$
|
42,253
|
|
Income tax paid
|
|
|
|
|
|
$
|
12
|
|
|
$
|
11
|
|
|
$
|
36
|
|
|
$
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to interim unaudited consolidated financial statements
Page 3
Global Ship Lease, Inc.
Interim Unaudited Consolidated Statements of Changes in Stockholders Equity
(Expressed in thousands of U.S. dollars except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Common
Stock at
$0.01
Par value
|
|
|
Number of
Series B
Preferred
Shares at
$0.01
Par value
|
|
|
Common
Stock
|
|
|
Series B
Preferred
Shares
|
|
|
Additional
Paid in
Capital
|
|
|
Accumulated
Deficit
|
|
|
Stockholders
Equity
|
|
Balance at January 1, 2016
|
|
|
54,947,440
|
|
|
|
14,000
|
|
|
$
|
549
|
|
|
$
|
|
|
|
$
|
386,425
|
|
|
$
|
9,792
|
|
|
$
|
396,766
|
|
Restricted Stock Units (note 9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
283
|
|
|
|
|
|
|
|
283
|
|
Class A common shares issued (note 8)
|
|
|
34,125
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Net loss for the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(65,095
|
)
|
|
|
(65,095
|
)
|
Series B Preferred Shares dividend (note 8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,062
|
)
|
|
|
(3,062
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2016
|
|
|
54,981,565
|
|
|
|
14,000
|
|
|
$
|
550
|
|
|
$
|
|
|
|
$
|
386,708
|
|
|
$
|
(58,365
|
)
|
|
$
|
328,893
|
|
Net income for the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,793
|
|
|
|
24,793
|
|
Series B Preferred Shares dividend (note 8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,297
|
)
|
|
|
(2,297
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2017
|
|
|
54,981,565
|
|
|
|
14,000
|
|
|
$
|
550
|
|
|
$
|
|
|
|
$
|
386,708
|
|
|
$
|
(35,869
|
)
|
|
$
|
351,389
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to interim unaudited consolidated financial statements
Page 4
Global Ship Lease, Inc.
Notes to the Interim Unaudited Consolidated Financial Statements
(Expressed in thousands of U.S. dollars)
On August 14, 2008, Global Ship Lease, Inc. (the Company or
GSL) merged indirectly with Marathon Acquisition Corp. (Marathon), a company then listed on The American Stock Exchange. Following the merger, the Company became listed on the New York Stock Exchange on August 15, 2008.
2.
|
Nature of Operations and Basis of Preparation
|
The Global Ship Lease group owns and charters out containerships.
As of September 30, 2017, the group owned 18 vessels; 15 were time chartered to CMA CGM and three to Orient Overseas Container Lines with remaining charter periods ranging from 0.25 to 8.25 years.
The following table provides information about the 18 vessels owned as at September 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessel Name
|
|
Capacity
in TEUs
(1)
|
|
|
Year
Built
|
|
|
Purchase Date
by GSL
|
|
Charterer
|
|
Charter
Remaining
Duration
(years)
(2)
|
|
|
Daily
Charter
Rate
|
|
CMA CGM Matisse
|
|
|
2,262
|
|
|
|
1999
|
|
|
December 2007
|
|
CMA CGM
|
|
|
2.2
|
|
|
$
|
15.300
|
|
CMA CGM Utrillo
|
|
|
2,262
|
|
|
|
1999
|
|
|
December 2007
|
|
CMA CGM
|
|
|
2.2
|
|
|
$
|
15.300
|
|
Delmas Keta
(4)
|
|
|
2,207
|
|
|
|
2003
|
|
|
December 2007
|
|
CMA CGM
|
|
|
1.0
|
|
|
$
|
7.800
|
|
Julie Delmas
(4)
|
|
|
2,207
|
|
|
|
2002
|
|
|
December 2007
|
|
CMA CGM
|
|
|
0.9
|
|
|
$
|
7.800
|
|
Kumasi
(3)
|
|
|
2,207
|
|
|
|
2002
|
|
|
December 2007
|
|
CMA CGM
|
|
|
3.3
|
|
|
$
|
9.800
|
|
Marie Delmas
(3)
|
|
|
2,207
|
|
|
|
2002
|
|
|
December 2007
|
|
CMA CGM
|
|
|
3.3
|
|
|
$
|
9.800
|
|
CMA CGM La Tour
|
|
|
2,272
|
|
|
|
2001
|
|
|
December 2007
|
|
CMA CGM
|
|
|
2.2
|
|
|
$
|
15.300
|
|
CMA CGM Manet
|
|
|
2,272
|
|
|
|
2001
|
|
|
December 2007
|
|
CMA CGM
|
|
|
2.2
|
|
|
$
|
15.300
|
|
CMA CGM Alcazar
|
|
|
5,089
|
|
|
|
2007
|
|
|
January 2008
|
|
CMA CGM
|
|
|
3.3
|
|
|
$
|
33.750
|
|
CMA CGM Château dlf
|
|
|
5,089
|
|
|
|
2007
|
|
|
January 2008
|
|
CMA CGM
|
|
|
3.3
|
|
|
$
|
33.750
|
|
CMA CGM Thalassa
|
|
|
11,040
|
|
|
|
2008
|
|
|
December 2008
|
|
CMA CGM
|
|
|
8.3
|
|
|
$
|
47.200
|
|
CMA CGM Jamaica
|
|
|
4,298
|
|
|
|
2006
|
|
|
December 2008
|
|
CMA CGM
|
|
|
5.2
|
|
|
$
|
25.350
|
|
CMA CGM Sambhar
|
|
|
4,045
|
|
|
|
2006
|
|
|
December 2008
|
|
CMA CGM
|
|
|
5.2
|
|
|
$
|
25.350
|
|
CMA CGM America
|
|
|
4,045
|
|
|
|
2006
|
|
|
December 2008
|
|
CMA CGM
|
|
|
5.2
|
|
|
$
|
25.350
|
|
CMA CGM Berlioz
|
|
|
6,621
|
|
|
|
2001
|
|
|
August 2009
|
|
CMA CGM
|
|
|
3.9
|
|
|
$
|
34.000
|
|
OOCL Tianjin
(5)
|
|
|
8,063
|
|
|
|
2005
|
|
|
October 2014
|
|
OOCL
|
|
|
0.1
|
|
|
$
|
34.500
|
|
OOCL Qingdao
|
|
|
8,063
|
|
|
|
2004
|
|
|
March 2015
|
|
OOCL
|
|
|
0.6
|
|
|
$
|
34.500
|
|
OOCL Ningbo
|
|
|
8,063
|
|
|
|
2004
|
|
|
September 2015
|
|
OOCL
|
|
|
1.1
|
|
|
$
|
34.500
|
|
(1)
|
Twenty-foot Equivalent Units.
|
(2)
|
Plus or minus 90 days, other than (i) OOCL Tianjin which is between October 28, 2017 and January 28, 2018, (ii) OOCL Qingdao which is between March 11, 2018 and June 11, 2018, and
(iii) OOCL Ningbo which is between September 17, 2018 and December 17, 2018, all at charterers option.
|
(3)
|
The charters on these two vessels were amended in July 2016 to provide for a revised charter rate of $13,000 per day with effect from August 1, 2016 until September 14, 2017 for Marie Delmas and
September 21, 2017 for Kumasi, and to provide for three option periods, all at the Companys option, at a charter rate of $9,800 per day. The option periods are (i) September 15 or 22, 2017 for Marie Delmas and Kumasi
respectively to December 31, 2018, plus or minus 45 days (ii) January 1, 2019 to December 31, 2019 plus or minus 45 days and (iii) January 1, 2020 to December 31, 2020 plus or minus 90 days. The first such option
has been exercised.
|
(4)
|
The charters for Julie Delmas and Delmas Keta have been extended in September 2017 by 12 months, plus or minus 45 days at the charterers option at a fixed rate of $7,800 per vessel per day, commencing on
September 11, 2017 and September 20, 2017, respectively.
|
(5)
|
A new time charter for OOCL Tianjin, to be renamed GSL Tianjin, with CMA CGM commenced October 25, 2017, immediately upon
re-delivery
from its previous charter to OOCL.
The vessel is chartered for a period of three to eight months (at the charterers option) at a fixed rate of $13,000 per day.
|
Page 5
Global Ship Lease, Inc.
Notes to the Interim Unaudited Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
2.
|
Nature of Operations and Basis of Preparation (continued)
|
Counterparty risk
The majority of the Companys revenues are derived from charters of vessels to CMA CGM. The Company is consequently highly dependent on
the performance by CMA CGM of its obligations under these charters. The container shipping industry is volatile and has been experiencing a sustained cyclical downturn. Many container shipping companies have reported financial losses.
If CMA CGM ceases doing business or fails to perform its obligations under the charters, the Companys business, financial position and
results of operations would be materially adversely affected as it is probable that, even if the Company was able to find replacement charters, such replacement charters would be at significantly lower daily rates and for shorter durations. If such
events occur, there would be significant uncertainty about the Companys ability to continue as a going concern.
These consolidated
financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments
relating to the recoverability and classification of recorded assets, nor to the amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern.
3.
|
Accounting Policies and Disclosure
|
The accompanying financial information is unaudited
and reflects all adjustments, consisting solely of normal recurring adjustments, which, in the opinion of management, are necessary for a fair statement of financial position and results of operations for the interim periods presented. The financial
information does not include all disclosures required under United States Generally Accepted Accounting Principles (US GAAP) for annual financial statements. These interim unaudited consolidated financial statements should be read in
conjunction with the Companys financial statements as of December 31, 2016 filed with the Securities and Exchange Commission on April 12, 2017 in the Companys Annual Report on Form
20-F.
Impairment Testing
The agreement to amend the charters on two of the Companys vessels in September 2017 and the impending redelivery of another of the
Companys vessels (see note 2(a)) were seen as indicators of potential impairment of their carrying value. Accordingly, an impairment test was performed for these three vessels as at September 30, 2017, which resulted in no impairment
charge being recognised.
The assumptions used involve a considerable degree of estimation. Actual conditions may differ significantly from
the assumptions and thus actual cash flows may be significantly different to those expected with a material effect on the recoverability of each vessels carrying amount. The most significant assumptions made for the determination of expected
cash flows are (i) charter rates on expiry of existing charters, which are based on forecast charter rates, where relevant, for the four years from the date of the impairment test and a reversion to the historical mean for each vessel
thereafter
(ii) off-hire
days, which are based on actual
off-hire
statistics for the Companys fleet (iii) operating costs, based on current levels
escalated over time based on long term trends (iv) dry docking frequency, duration and cost, (v) estimated useful life which is assessed as a total of 30 years and (vi) the residual value. In the case of an indication of impairment,
the results of a recoverability test would also be sensitive to the discount rate applied.
Recently issued accounting standards
In May 2017, FASB issued an accounting standards update in respect of Compensation Stock Compensation (Topic 718)
Scope of Modification Accounting. The amendments are intended to clarify the accounting treatment as well as reduce the cost and complexity when applying the guidance to the modification of the terms and conditions of share-based payments. The
amendments are effective for annual periods beginning after December 15, 2017, although early application is permitted. The Company is currently assessing the impact of adopting this update on its financial statements.
Page 6
Global Ship Lease, Inc.
Notes to the Interim Unaudited Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
3.
|
Accounting Policies and Disclosure (continued)
|
In May 2014, the FASB issued ASU
No. 2014-09,
Revenue from Contracts with Customers (Topic 606), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. This update was originally to be effective January 1, 2017. However, the FASB issued ASU
2015-14
in August 2015, which deferred the effective date by one year to January 1, 2018. The adoption of this standard is not expected to have a material impact on the revenue recognized for our vessels, as
our charters qualify as operating leases and therefore are not within the scope of Topic 606. Currently we have no material contracts which fall within the scope of Topic 606.
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material
impact on the interim unaudited consolidated financial statements of the Company.
4.
|
Vessels in Operation, less Accumulated Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2017
|
|
|
December 31,
2016
|
|
Cost less impairment brought forward
|
|
$
|
1,003,285
|
|
|
$
|
1,095,275
|
|
Accumulated Depreciation
|
|
|
(308,647
|
)
|
|
|
(283,743
|
)
|
Vessel impairment during period
|
|
|
|
|
|
|
(92,422
|
)
|
|
|
|
|
|
|
|
|
|
Net book value
|
|
$
|
694,638
|
|
|
$
|
719,110
|
|
|
|
|
|
|
|
|
|
|
Due to continuing poor industry conditions, impairment tests were performed on a vessel by vessel basis as at
December 31, 2016, which resulted in an impairment charge on four vessels, totalling $63,065, being recognised in the three months ended December 31, 2016.
Impairment tests were performed on two of the groups vessels as at July 31, 2016, following amendments to the terms of their
charters, which resulted in an impairment charge of $29,357 being recognised in the three months ended September 30, 2016.
|
|
|
|
|
|
|
|
|
|
|
September 30,
2017
|
|
|
December 31,
2016
|
|
2019 Notes
|
|
$
|
420,000
|
|
|
$
|
420,000
|
|
Less repurchase of Notes (note 5(a))
|
|
|
(73,713
|
)
|
|
|
(54,212
|
)
|
Less original issue discount
|
|
|
(6,300
|
)
|
|
|
(6,300
|
)
|
Amortization of original issue discount
|
|
|
4,793
|
|
|
|
3,910
|
|
|
|
|
|
|
|
|
|
|
2019 Notes (note 5(a))
|
|
|
344,780
|
|
|
|
363,398
|
|
Revolving Credit Facility (note 5(b))
|
|
|
39,200
|
|
|
|
39,200
|
|
Secured Term Loan (note 5(c))
|
|
|
15,600
|
|
|
|
24,375
|
|
Less: Deferred financing costs (note 5(e))
|
|
|
(4,570
|
)
|
|
|
(7,100
|
)
|
|
|
|
|
|
|
|
|
|
Balance
|
|
|
395,010
|
|
|
|
419,873
|
|
Less: Current portion of 2019 Notes (note 5(a))
|
|
|
(19,501
|
)
|
|
|
(19,501
|
)
|
Less: Current portion of Secured Term Loan (note 5(c))
|
|
|
(6,254
|
)
|
|
|
(11,525
|
)
|
|
|
|
|
|
|
|
|
|
Non-current
portion of Long-Term Debt
|
|
$
|
369,255
|
|
|
$
|
388,847
|
|
|
|
|
|
|
|
|
|
|
Page 7
Global Ship Lease, Inc.
Notes to the Interim Unaudited Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
5.
|
Long-Term Debt (continued)
|
|
a)
|
10.0% First Priority Secured Notes Due 2019
|
On March 19, 2014 the Company
completed the sale of $420,000 of 10.0% First Priority Secured Notes which mature on April 1, 2019 (the 2019 Notes). Proceeds after the deduction of the original issue discount, but before expenses, amounted to $413,700.
Interest on the 2019 Notes is payable semi-annually on April 1 and October 1 of each year. As at September 30, 2017, the 2019
Notes were secured by first priority ship mortgages on 16 of the Companys 18 vessels (the Mortgaged Vessels) and by assignments of earnings and insurances, a pledge over certain bank accounts, as well as share pledges over each
subsidiary owning a Mortgaged Vessel. In addition, the 2019 Notes are fully and unconditionally guaranteed, jointly and severally, by the Companys 18 vessel owning subsidiaries and Global Ship Lease Services Limited.
The original issue discount is being amortised on an effective interest rate basis over the life of the 2019 Notes.
Under the terms of the 2019 Notes the Company is required within 120 days following the end of each financial year, in which the Company has at
least $1,000 of Excess Cash Flow, as defined, to offer to purchase up to a maximum offer amount of $20,000, such amount being the aggregate of 102% of the principal amount plus any accrued and unpaid interest thereon, up to, but not including, the
purchase date. The first such offer, for 2014, in the maximum amount of $20,000, was launched on April 21, 2015. At the close of this offer, $350 nominal amount of 2019 Notes was tendered and accepted.
Following the sale of two vessels secured to the 2019 Notes in November and December 2015, the Company was required to offer the net sale
proceeds, less a proportion used to repay part of the Revolving Credit Facility (see note 5(b)), to Noteholders (Collateral Sale Offer) within 90 days of receipt of the sale proceeds. The terms of the Collateral Sale Offer are the same
as those of the annual Excess Cash Flow Offer. Consequently, on February 2, 2016, the Company launched a combined Excess Cash Flow Offer for 2015 and the Collateral Sale Offer in an aggregate amount of $28,417 (Maximum Offer
Amount), at a purchase price of 102% of the aggregate principal amount plus any accrued and unpaid interest thereon, up to, but not including, the purchase date. At the close of this offer, the nominal amount of 2019 Notes tendered exceeded
the Maximum Offer Amount and $26,662 nominal amount of the 2019 Notes was accepted on a pro rata basis.
The third Excess Cash Flow offer,
for 2016, in the maximum amount of $20,000, was launched on March 22, 2017. At the close of this offer on April 19,2017, the 2019 Notes tendered exceeded the Maximum Offer Amount and $19,501 nominal amount of the 2019 Notes was accepted on
a pro rata basis.
In May, August and November, 2016, the Company purchased $4,200, $5,000 and $18,000 nominal amount of the 2019 Notes
respectively, in the open market. This gave rise to gains of $452, $475 and $1,938, which were included within Interest Expense in the Consolidated Statements of Income. These 2019 Notes were subsequently cancelled.
|
b)
|
Revolving Credit Facility
|
On March 19, 2014, and in connection with the 2019
Notes, the Company entered into a $40,000 senior secured revolving credit facility with Citibank N.A. (the Revolving Credit Facility). This facility matures on October 1, 2018. The interest rate under the facility is USD LIBOR plus
a margin of 3.25% and is payable at least quarterly. A commitment fee of 1.30% per annum is due quarterly on undrawn amounts.
The
collateral provided to the 2019 Notes also secures, on a super senior first priority basis, the Revolving Credit Facility. Up to and including December 31, 2015, the Company was required to have had a minimum cash balance of $15,000 on each
test date, being June 30 and December 31 in each year. After this date, the minimum cash balance on each test date increased to $20,000.
Amounts outstanding under this facility can be prepaid without penalty, other than breakage costs in certain circumstances. During the quarter
ended March 31, 2015, $40,000 was drawn down under the Revolving Credit Facility to assist with the purchase of OOCL Qingdao on March 11, 2015. Following the sale of two secured vessels in November and December 2015, $800 of the net sale
proceeds was applied to reduce amounts outstanding under the facility.
Page 8
Global Ship Lease, Inc.
Notes to the Interim Unaudited Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
5.
|
Long-Term Debt (continued)
|
On July 29, 2015, the Company entered into a $35,000 secured
term loan with DVB Bank SE (the Secured Term Loan). This facility matures five years after drawdown, with early repayment, inter alia, if the 2019 Notes are not refinanced by November 30, 2018, or if the secured vessel ceases to be
employed on a charter for a period in excess of 90 days. The interest rate under the loan is USD LIBOR plus a margin of 2.75%, until November 30, 2018 and 3.25% thereafter, and is payable at least quarterly.
The Secured Term Loan is secured by a first priority ship mortgage on OOCL Tianjin and by assignment of earnings and insurances for the same
vessel.
The Secured Term Loan is repayable in 20 equal quarterly instalments, commencing three months after drawdown. $35,000 was drawn
down under the Secured Term Loan on September 10, 2015. The loan agreement requires an additional $1,400 to be repaid over eight equal quarterly instalments, the last of which was paid during Q3 2017, to provide a reserve for potential
enhancement expenditure on the secured vessel ahead of the expiry of the initial charter to OOCL. These additional instalments reduce the debt balance and can be redrawn to fund the enhancement work, or utilized to permanently reduce the quarterly
instalments for the remainder of the term of the loan if no such work is required.
The Secured Term Loan has the same Cash Balance
financial covenant as that in the Revolving Credit Facility. In addition, there is a minimum Shareholders Equity covenant of $200,000, also to be tested semi-annually on June 30 and December 31. The Secured Term Loan was amended on
November 30, 2016 to exclude from the definition of Shareholders Equity the effect of any impairment charges recognised after July 1, 2016. The amendment also provided for accelerated amortization totalling $5.0 million to be paid
equally in five quarterly instalments, commencing fourth quarter 2016. Repayments otherwise payable from March 2018 are reduced pro rata for the accelerated amortization.
Based on scheduled and estimated repayments from October 1,
2017 the long term debt will be reduced in each of the relevant periods as follows:
|
|
|
|
|
Year ending September 30,
|
|
|
|
|
2018
|
|
$
|
25,755
|
|
2019
|
|
|
370,659
|
|
2020
|
|
|
4,673
|
|
Less: amortization of original issue discount
|
|
|
(1,507
|
)
|
Less: amortization of deferred financing costs
|
|
|
(4,570
|
)
|
|
|
|
|
|
|
|
$
|
395,010
|
|
|
|
|
|
|
|
e)
|
Deferred financing costs
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2017
|
|
|
December 31,
2016
|
|
Opening balance
|
|
$
|
7,100
|
|
|
$
|
10,611
|
|
Amortization included within interest expense
|
|
|
(2,530
|
)
|
|
|
(3,511
|
)
|
|
|
|
|
|
|
|
|
|
Closing balance
|
|
$
|
4,570
|
|
|
$
|
7,100
|
|
|
|
|
|
|
|
|
|
|
Deferred financing costs are amortized on an effective interest rate basis over the life of the financings for
which they were incurred.
Page 9
Global Ship Lease, Inc.
Notes to the Interim Unaudited Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
6.
|
Related Party Transactions
|
CMA CGM is presented as a related party as it was, until the
merger referred to in note 1, the parent company of Global Ship Lease, Inc. and at September 30, 2017, is a significant shareholder of the Company, owning Class A and Class B common shares representing a 44.4% voting interest in the
Company.
Amounts due to and from CMA CGM companies are shown in the Consolidated Balance Sheets. The current account balances at
September 30, 2017 and December 31, 2016 relate to amounts payable to or recoverable from CMA CGM group companies. The majority of the Companys charter arrangements are with CMA CGM and one of its subsidiaries provides the Company
with ship management services on the majority of its vessels.
Time Charter Agreements
The majority of the Companys time charter arrangements are with CMA CGM. Under these time charters, hire is payable in advance and the
daily rate is fixed for the duration of the charter. The charters are for remaining periods as at September 30, 2017 of between 0.10 and 8.25 years (see note 2(a)). Of the $516,205 maximum contracted future charter hire receivable (including
all periods at the Companys option) for the fleet set out in note 7, $494,367 relates to the 15 vessels that were chartered to CMA CGM as at September 30, 2017. Revenues generated from charters to CMA CGM are shown separately in the
Consolidated Statements of Income.
Ship Management Agreements
At September 30, 2017, the Company outsourced day to day technical management of 13 of its vessels to CMA Ships Limited (CMA
Ships), a wholly owned subsidiary of CMA CGM. The Company pays CMA Ships an annual management fee of $123 per vessel (2016: $123) and reimburses costs incurred by CMA Ships on its behalf, mainly being for the provision of crew, lubricating
oils and routine maintenance. Such reimbursement is subject to a cap per day per vessel, depending on the vessel. The impact of the cap is determined annually on a vessel by vessel basis for so long as the initial charter remains in place; no claims
have been made under the cap agreement. Ship management fees related to CMA Ships are shown separately in the Consolidated Statements of Income.
Except for transactions with CMA CGM companies, the Company did not enter into any other related party transactions.
7.
|
Commitments and Contingencies
|
Charter Hire Receivable
The Company has entered into time charters for its vessels. The charter hire is fixed for the duration of the charter. The maximum contracted
annual future charter hire receivable (not allowing for any offhire and assuming expiry at the
mid-point
between the earliest and latest possible end dates) for the 18 vessels subject to charters as at
September 30, 2017 is as follows:
|
|
|
|
|
Year ending September 30,
|
|
|
|
|
2018
|
|
|
137,678
|
|
2019
|
|
|
112,664
|
|
2020
|
|
|
93,976
|
|
2021
|
|
|
65,058
|
|
2022
|
|
|
44,986
|
|
Thereafter
|
|
|
61,843
|
|
|
|
|
|
|
|
|
$
|
516,205
|
|
|
|
|
|
|
Page 10
Global Ship Lease, Inc.
Notes to the Interim Unaudited Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars except share data)
At September 30, 2017 the Company had two classes of common shares.
The rights of holders of Class B common shares are identical to those of holders of Class A common shares, except that the dividend rights of holders of Class B common shares are subordinated to those of holders of Class A common
shares. Dividends, when declared, must be paid as follows:
|
|
|
firstly, to all Class A common shares at the applicable rate for the quarter;
|
|
|
|
secondly, to all Class A common shares until they have received payment for all preceding quarters at the rate of $0.23 per share per quarter;
|
|
|
|
thirdly, to all Class B common shares at the applicable rate for the quarter;
|
|
|
|
then, to all Class A and B common shares as if they were a single class.
|
The Class B
common shares remain subordinated until the Company has paid a dividend at least equal to $0.23 per quarter per share on both the Class A and Class B common shares for the immediately preceding four-quarter period. Due to the requirements
described above, Class B common shares cannot receive any dividend until all Class A common shares have received dividends representing $0.23 per share per quarter for all preceding quarters. Should the notional arrearages of dividend on
the Class A common shares be made up and a dividend at the rate of $0.23 per share be paid for four consecutive quarters, the Class B common shares convert to Class A common shares on a
one-for-one
basis. Also, each Class B common share will convert into a Class A common share on a change of control of the Company.
A dividend of $0.10 per Class A common share was paid on August 24, 2015 and on November 24, 2015. Prior to these, the last
quarter for which a dividend was paid was the fourth quarter 2008 at $0.23 per Class A common share.
Restricted stock units have been
granted from time to time to the Directors and management, under the Companys Equity Incentive Plans, as part of their compensation arrangements (see note 9). On March 31, June 30, September 30 and December 30, 2016, 8,529,
8,534, 8,534 and 8,528 shares respectively, were issued under Equity Incentive Plan, representing 20% of directors base fee for the quarters ended March 31, June 30, September 30, and December 31, 2016. The number of shares
issued was determined on the basis of a notional value per share of $4.00 rather than market values.
On August 20, 2014, the Company
issued 1,400,000 depositary shares, each of which represents 1/100
th
of one share of the Companys 8.75% Series B Cumulative Redeemable Perpetual Preferred Shares (the Series B
Preferred Shares). Dividends are payable at 8.75% per annum in arrears on a quarterly basis. At any time after August 20, 2019 (or within 180 days after the occurrence of a fundamental change), the Series B Preferred Shares may be
redeemed, at the discretion of the Company, in whole or in part, at a redemption price of $2,500.00 per share (equivalent to $25.00 per depositary share). The net proceeds from the offering were $33,497. These shares are classified as Equity in the
Consolidated Balance Sheets. The dividends payable on the Series B Preferred Shares are presented as a reduction of Retained Earnings in the Consolidated Statements of Equity, when and if declared by the Board of Directors. An initial dividend was
declared on September 22, 2014 for the third quarter 2014. Subsequent quarterly dividends have been declared, the last of which was on September 11, 2017 for the third quarter 2017.
Page 11
Global Ship Lease, Inc.
Notes to the Interim Unaudited Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars except share data)
9.
|
Share-Based Compensation
|
Share based awards since January 1, 2016, are summarized
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Units
|
|
|
|
Number of
Units
|
|
|
Weighted
Average
Fair Value
on Grant
Date
|
|
|
Actual Fair
Value on
Vesting
Date
|
|
Unvested as at January 1, 2016
|
|
|
300,000
|
|
|
$
|
3.25
|
|
|
|
n/a
|
|
Granted March 3, 2016
|
|
|
200,000
|
|
|
$
|
1.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested as at December 31, 2016
|
|
|
500,000
|
|
|
$
|
2.42
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested as at September 30, 2017
|
|
|
500,000
|
|
|
$
|
2.42
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Using the graded vesting method of expensing the restricted stock unit grants, the calculated weighted average
fair value of the stock units is recognized as compensation cost in the Consolidated Statements of Income over the vesting period. During the three and nine months ended September 30, 2017, the Company recognized no (2016: $85 and $200) share
based compensation cost. As at September 30, 2017, there was no unrecognized compensation cost relating to the above share based awards (December 31, 2016: $ nil).
Restricted stock units granted to four members of management on September 2, 2011 were to vest over two years; half during September and
October 2012 and the remaining half during September and October 2013. In March 2012, these grants were amended and restated to provide that vesting would occur only when the individual leaves employment, for whatever reason, provided that this was
after September 30, 2012 in respect of half of the grant and after September 30, 2013 for the other half of the grant. Restricted stock units granted to management on March 13, 2012 are expected to vest when the individual leaves
employment, provided that this is after September 30, 2014 and is not as a result of resignation or termination for cause. Restricted stock units granted to management on March 7, 2013 are expected to vest when the individual leaves
employment, provided that this is after September 30, 2015 and is not as a result of resignation or termination for cause.
On
August 28, 2015, the Company adopted the 2015 Equity Incentive Plan which allows the Board of Directors to grant employees, consultants and directors of the Company and its subsidiaries, options, stock appreciation rights, stock grants, stock
units and dividend equivalents on substantially the same terms as the 2008 Plan, which was closed for further awards. The 2015 Plan permits a maximum issuance of 1,500,000 shares.
Under the 2015 Plan, restricted stock units granted to four members of management on March 3, 2016 were divided into two tranches. The
first tranche (100,000 restricted stock units)) will vest when the individual leaves employment, provided that this is after December 31, 2016 and is not for cause. The second tranche (100,000 restricted stock units) also vests after
December 31, 2016 on the same terms, but, in addition, only if and when the stock price has been at or above $5.00 for 20 consecutive trading days and provided that this has occurred before December 31, 2019.
During the year ended December 31, 2016, 34,125 shares were issued under the 2015 Plan, representing 20% of directors base fee for
2016. The number of shares issued was determined on the basis of a notional value per share of $4.00 rather than market values.
Page 12
Global Ship Lease, Inc.
Notes to the Interim Unaudited Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars except share data)
Basic earnings per common share is presented under the
two-class
method and is computed by dividing the earnings applicable to common stockholders by the weighted average number of common shares outstanding for the period.
Under the two class method, net income available to common stockholders, if any, is first reduced by the amount of dividends declared in
respect of common shares for the current period, if any, and the remaining earnings are allocated to common shares and participating securities to the extent that each security can share the earnings assuming all earnings for the period are
distributed. The Class B common shareholders dividend rights are subordinated to those of holders of Class A common shares (see note 8). Net income for the relevant period is allocated based on the contractual rights of each class of
security and as there was insufficient net income to allow any dividend on the Class B common shares no earnings were allocated to Class B common shares.
Losses are only allocated to participating securities in a period of net loss if, based on the contractual terms, the relevant common
shareholders have an obligation to participate in such losses. No such obligation exists for Class B common shareholders and, accordingly, losses would only be allocated to the Class A common shareholders.
At September 30, 2017, there were 500,000 restricted stock units granted and unvested as part of managements equity incentive plan.
As of September 30, 2017 only Class A and B common shares are participating securities.
For the three and nine months ended
September 30, 2017, the diluted weighted average number of Class A common shares outstanding is the same as the basic weighted average number of shares outstanding, including the RSUs without service conditions. The diluted weighted
average number of shares excludes any outstanding share-based incentive awards as these would have had an antidilutive effect. For the three and nine months ended September 30, 2016, the diluted weighted average number of shares includes the
incremental effect of outstanding stock based incentive awards.
Page 13
Global Ship Lease, Inc.
Notes to the Interim Unaudited Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars except share data)
10.
|
Earnings per Share (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands, except share data)
|
|
Three months ended
September 30,
|
|
|
Nine months ended
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Class A common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding (B)
|
|
|
47,575,609
|
|
|
|
47,558,640
|
|
|
|
47,575,609
|
|
|
|
47,550,139
|
|
Weighted average number of RSUs without service conditions (note 9) (B)
|
|
|
400,000
|
|
|
|
300,000
|
|
|
|
400,000
|
|
|
|
300,000
|
|
Dilutive effect of share-based awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares and common share equivalents (F)
|
|
|
47,975,609
|
|
|
|
47,858,640
|
|
|
|
47,975,609
|
|
|
|
47,850,139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class B common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average number of common shares outstanding (D)
|
|
|
7,405,956
|
|
|
|
7,405,956
|
|
|
|
7,405,956
|
|
|
|
7,405,956
|
|
Dilutive effect of share-based incentive awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares (H)
|
|
|
7,405,956
|
|
|
|
7,405,956
|
|
|
|
7,405,956
|
|
|
|
7,405,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to shareholders
|
|
$
|
8,878
|
|
|
$
|
(23,685
|
)
|
|
$
|
22,496
|
|
|
$
|
(13,085
|
)
|
Available to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Class A shareholders for period
|
|
$
|
8,878
|
|
|
$
|
(23,685
|
)
|
|
$
|
22,496
|
|
|
$
|
(13,085
|
)
|
- Class A shareholders for arrears
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Class B shareholders for period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- allocate
pro-rata
between Class A and B
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available for Class A (A)
|
|
$
|
8,878
|
|
|
$
|
(23,685
|
)
|
|
$
|
22,496
|
|
|
$
|
(13,085
|
)
|
Net income available for Class B (C)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A (A/B)
|
|
$
|
0.19
|
|
|
$
|
(0.49
|
)
|
|
$
|
0.47
|
|
|
$
|
(0.27
|
)
|
Class B (C/D)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common shareholders
|
|
$
|
8,878
|
|
|
$
|
(23,685
|
)
|
|
$
|
22,496
|
|
|
$
|
(13,085
|
)
|
Available to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Class A shareholders for period
|
|
$
|
8,878
|
|
|
$
|
(23,685
|
)
|
|
$
|
22,496
|
|
|
$
|
(13,085
|
)
|
- Class A shareholders for arrears
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Class B shareholders for period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- allocate pro rata between Class A and B
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available for Class A (E)
|
|
$
|
8,878
|
|
|
$
|
(23,685
|
)
|
|
$
|
22,496
|
|
|
$
|
(13,085
|
)
|
Net income (loss) available for Class B (G)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A (E/F)
|
|
$
|
0.19
|
|
|
$
|
(0.49
|
)
|
|
$
|
0.47
|
|
|
$
|
(0.27
|
)
|
Class B (G/H)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A new time charter was agreed with CMA CGM for the vessel OOCL
Tianjin, which will be renamed GSL Tianjin, for a period of three to eight months at a fixed rate of $13,000 per day. It commenced on October 25, 2017, immediately upon
re-delivery
from its
previous charter.
Page 14
Global Ship Lease, Inc.
Notes to the Interim Unaudited Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars except share data)
11.
|
Subsequent Events (continued)
|
On October 31, 2017, the Company closed an offering
of $360 million aggregate principal amount of 9.875% first priority secured notes due 2022. The net proceeds of this offering, together with borrowings under a new super senior secured term loan facility of $54.8 million and cash on hand,
are to be used to refinance the existing 10.000% notes due 2019. In addition all outstanding borrowings under both the existing revolving credit facility and the existing secured term loan have been repaid and terminated.
Page 15