Doubles fleet size to 38 containerships and
expands charter-adjusted fleet value to $1.3 billion while
increasing net asset value per share by 52%
Global Ship Lease, Inc. (NYSE:GSL) (“GSL” or the “Company”), and
Poseidon Containers Holdings LLC and K&T Marine LLC (together
“Poseidon Containers”), announced today that they had (i) closed
the previously announced stock-for-stock merger between the Company
and Poseidon Containers and (ii) opportunistically refinanced
$228.8 million of Poseidon Containers’ secured bank debt,
crystalizing a debt reduction of $48.2 million. The combined
company will have a fleet of 38 vessels with a total capacity of
198,793 TEU, and, as of September 30, 2018, an average fleet age
weighted by TEU of 10.7 years, and with the recently announced new
charters, contracted revenue of approximately $720
million.
Closing of the Merger
All conditions precedent were met and the
Company closed on its stock-for-stock merger with Poseidon
Containers. Under the terms of the merger agreement, the Company
issued 24.045 million shares of Class A common stock and 0.250
million shares of Series C perpetual preferred stock, which are
convertible in limited circumstances into an aggregate of 103.642
million shares of Class A common stock. Affiliates of Kelso
& Company L.P. are the sole holder of the convertible preferred
stock, which is not entitled to any preferred dividend payments
other than any dividend which might be payable to common
shareholders and represents approximately 49.2% of the voting power
and approximately 56.4% of the economic interest in the Company. In
aggregate, the owners of Poseidon Containers own approximately
69.5% of the economic interest of the Company. The Board of
Directors of Global Ship Lease was expanded to eight directors, of
whom two were nominated by Poseidon, and three, including two
independent directors, were nominated by GSL. The remaining three
independent directors have been selected jointly.
The closing of the merger creates a market
leader with an asset base of more than $1.3 billion, which the
Company believes will allow it to capitalize on favorable market
fundamentals in the mid-sized and smaller containership
segments.
Ian Webber, Chief Executive Officer of Global
Ship Lease, commented, “The completion of this transformational
merger marks an important milestone in the evolution of Global Ship
Lease. This transaction provides us with an attractive portfolio of
assets, greatly enhanced financial and strategic flexibility, and
preferential access to a highly capable, integrated platform.
In addition, the closing of Poseidon Containers’ refinancing prior
to the closing of this transaction further reduces our pro forma
leverage and adds significant net asset value beyond what was
contemplated at the time of our original announcement. The
additional equity value created through the merger transaction,
including the refinancing and the new charters, results in a total
net asset value per share increase of 52%, to $2.58.”
George Youroukos, Executive Chairman of Global
Ship Lease, concluded, “With a modern, 38-vessel fleet of mid-sized
and smaller containerships, we are in a strong position to provide
leading liner companies with greater scale and vessel diversity to
best meet their exacting needs. Our balance of fixed rate,
longer-term charters and short-to-medium-term charters provides us
with a solid base of predictable cash flows, while still
maintaining exposure to significant cash flow upside in a rising
charter market. Driven by supportive market fundamentals and the
expanded capabilities and commercial relationships of the enlarged
Company, we are confident in the long-term prospects for our newly
expanded fleet and believe that GSL is in an excellent position to
take advantage of attractive growth opportunities, further reduce
leverage, and create lasting value for all stakeholders.”
Opportunistic Refinancing of a Portion
of Poseidon Containers’ Secured Bank Debt
Prior to closing the merger, Poseidon Containers
opportunistically refinanced $228.8 million of its secured bank
debt that is collateralized by three new eco-design, wide-beam
9,115 TEU vessels. The refinancing achieved a 21% debt reduction of
$48.2 million for no consideration. The new secured credit facility
is for $180.5 million and matures in June 2022.
As a result of the opportunistic refinancing and
the previously announced new charters, and based on gross debt and
annualized third quarter Adjusted EBITDA, financial leverage will
be approximately 4.7 times or 4.2 times based on debt net of
cash. Further, the combined Company’s leverage is further
reduced to 61% on a loan, net of cash, to charter-adjusted value
basis.
Previously Announced New
Charters
The Company previously announced that it has
entered into the following new charters, materially improving its
long-term cash flow visibility:
- Entered into five-year charters with CMA CGM for four
2013-built, 6,927 TEU containerships, Mary, Kristina, Katherine and
Alexandra. The charters will deliver incremental annualized
EBITDA of approximately $11.0 million compared to third quarter
2018 contracted rates. The new charter for Mary commenced
recently, and the remaining three new charters will commence upon
expiry of their existing charters during the first half of 2019.
The new five-year charters are expected to generate total EBITDA of
approximately $135 million over the five-year contract
period.
- Entered into a new time charter with ANL, a wholly owned
subsidiary of CMA CGM, for the 2003-built, 2,207 TEU containership,
GSL Keta (formerly Delmas Keta). The new charter, commencing on or
around November 20, 2018, is for a period of between seven and 10
months (at charterer’s option) at a rate of $8,450 per day, up from
$7,800 per day under the preceding charter.
- Exercised options to extend the existing charters of the
2002-built, 2,207 TEU Marie Delmas and Kumasi to CMA CGM through
December 31, 2019, at a rate of $9,800 per day. The Company retains
additional options, in its favor, to further extend both charters
through 2020.
The Company’s contracted revenue is
approximately $720 million on a combined basis as of September 30,
2018. The enhanced long-term visibility through 2024 from
contracted revenue and cash flow from new charters will strengthen
GSL’s balance sheet and contribute to further deleveraging, which,
together with increased EBITDA, will drive improvements in
financial leverage, financial flexibility and refinancing
opportunities.
About Global Ship Lease
Global Ship Lease is a leading independent owner
of containerships with a diversified and fuel-efficient fleet of
containerships. Incorporated in the Marshall Islands, Global Ship
Lease commenced operations in December 2007 with a business of
owning and chartering out containerships under mainly long-term,
fixed-rate charters to top tier container liner companies.
Global Ship Lease now owns 38 vessels ranging
from 2,207 to 11,040 TEU, of which nine are Post-Panamax new-design
eco wide beam, with a total capacity of 198,793 TEU and an average
age, weighted by TEU capacity, of 10.7 years determined as at
September 30, 2018.
The average remaining term of the charters at
September 30, 2018 was 2.4 years on a weighted basis.
Safe Harbor Statement
This press release contains forward-looking
statements. Forward-looking statements provide the Company's
current expectations or forecasts of future events. Forward-looking
statements include statements about the Company's 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 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 the Company
cannot assure you that the events or expectations 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,
including the factors described in "Risk Factors" in the Company's
Annual Report on Form 20-F and the factors and risks the Company
describes in subsequent reports filed from time to time with the
U.S. Securities and Exchange Commission. Accordingly, you should
not unduly rely on these forward-looking statements, which speak
only as of the date of this press release. The Company undertakes
no obligation to publicly revise any forward-looking statement to
reflect circumstances or events after the date of this press
release or to reflect the occurrence of unanticipated events.
Investor and Media Contact:The IGB GroupBryan
Degnan646-673-9701orLeon Berman212-477-8438
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