Marathon Acquisition Corp. to Acquire Global Ship Lease, Inc. for $1 Billion
March 24 2008 - 7:01AM
PR Newswire (US)
Acquisition To Create Strong Platform For Growth NEW YORK, March 24
/PRNewswire-FirstCall/ -- Global Ship Lease, Inc. ("Global Ship
Lease") and Marathon Acquisition Corp.
(AMEX:MAQ.UAMEX:MAQAMEX:MAQ.WS) ("Marathon") announced today that
Global Ship Lease will access the public equity markets through a
merger with Marathon valued at approximately $1 billion pursuant to
an agreement and plan of merger ("Merger Agreement"). Global Ship
Lease is a rapidly growing containership charter owner currently a
subsidiary of CMA CGM S.A. of France ("CMA CGM"), the world's third
largest container shipping company. 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 world-class container liner
companies. The container shipping industry is the fastest growing
sector of international shipping, showing an average annual volume
increase of more than 10% per year since the early 1990s as a
result of growing world trade, increasing global sourcing and
manufacturing and continuing penetration of the general cargo
market. Global Ship Lease currently owns 12 vessels and has
contracts in place to purchase an additional five vessels from CMA
CGM expected for delivery between December 2008 and July 2009. The
transaction values Global Ship Lease and its 17 vessel fleet at
approximately $1.0 billion. Following stockholder and warrantholder
approval of the merger, Marathon's stockholders will own
approximately 66% of Global Ship Lease and CMA CGM will own
approximately 34%. Once all of the contracted vessels have been
delivered, Global Ship Lease will have a 17 vessel fleet with total
capacity of 66,297 TEU and an average age of 5.5 years. All of the
contracted vessels are under long-term charters to CMA CGM with an
average remaining charter term of approximately 11 years. After
consummation of the merger, Global Ship Lease intends to pay
quarterly dividends beginning with an initial base dividend of
$0.18 per share payable for the third quarter of 2008. Supporting
the company's objective of growing its dividend, payable for the
third quarter of 2009, Global Ship Lease intends to increase its
base quarterly dividend to $0.19 per share. Thus, the annualized
dividend payout of $0.72 per share will increase to $0.76 per
share. Based on Marathon's closing share price of $7.87 per share
as of March 20, 2008, the resulting implied dividend yield is 9.1%.
Marathon founders and CMA CGM will collectively own 10 million
non-cumulative subordinated shares which will not be entitled to
receive dividends for the period prior to the first quarter of
2009, at which time four of the five contracted vessels are due to
have been delivered. Thereafter, dividends will be paid on
subordinated shares provided that common stockholders have received
full payment of all base dividends. Upon delivery of all 17
contracted vessels, Global Ship Lease will have $511 million of net
debt outstanding (approximately $173 million of which will be
outstanding at closing of the merger) under its $800 million credit
facility priced at LIBOR plus 75 to 110 bps, based on certain
leverage levels. Existing lenders have already consented to the
transaction. With over $270 million in available credit capacity
after delivery of the full contracted fleet, Global Ship Lease is
well positioned to continue to expand its fleet to serve new
counterparties. The available debt capacity under the existing
credit facility and the cash proceeds of up to $240 million from
the exercise of the warrants held by the Marathon warrantholders
will provide Global Ship Lease with significant financial capacity
to continue to expand its fleet and increase distributable cash
flow per share. "This is a logical next step in the development of
our company and we are excited to merge into Marathon as Global
Ship Lease enters its next phase of growth. This transaction
represents a significant opportunity to continue to expand our
fleet and our customer base," said Ian Webber, Chief Executive
Officer of Global Ship Lease. "The container shipping industry is
high growth, benefiting from and providing stimulus to changes in
world trade because of the advantages it offers in terms of cost,
security, efficiency and speed. We believe that this is an exciting
time for containership charter owners as the industry looks to
increasing levels of capital investment. With our industry
relationships, the support of the Marathon team and the public
currency and capital in place to secure new accretive vessel
acquisitions, we will be able to continue to grow our asset base
and increase returns for our stockholders." "Our stated investment
goal when we founded Marathon was to extensively evaluate a full
array of investment opportunities and identify the one that would
provide investors with superior growth potential," said Michael
Gross, Chairman and Chief Executive Officer of Marathon. "Global
Ship Lease is an ideal candidate for a SPAC: Marathon's upfront
cash payment will enable Global Ship Lease to expand its fleet, and
the cash proceeds from warrant exercises are expected to provide
built-in financing for future fleet growth. This transaction
creates a company well-positioned to capitalize on growth in global
trade and positive trends in the container shipping industry.
Global Ship Lease's contracted revenues and relatively fixed
expenses, dividend visibility, lack of dependence on the U.S.
economy, and asset value transparency provide investors with an
attractive opportunity that fits Marathon's investment criteria.
The Global Ship Lease management team's relationships and industry
acumen, coupled with our acquisition and financing expertise, is a
powerful combination that creates a strong platform for future
acquisitions. Global Ship Lease is a high-quality public story in
its own right, yet it will benefit from Marathon's sponsorship as
it seeks to expand its charter counterparty base and fleet, and
provide consistent dividend growth to its public stockholders."
Management of Global Ship Lease has over 40 years of shipping
experience and extensive industry relationships that will allow the
company to capitalize on the attractive growth opportunities that
exist in the rapidly growing container shipping industry which
increasingly looks to charter owners such as Global Ship Lease to
charter vessels as an alternative to direct ownership. The existing
Global Ship Lease senior management team will continue to lead the
company post closing of the transaction. Chief Executive Officer
Ian Webber most recently served as Chief Financial Officer of CP
Ships, where he worked for the previous ten years. Chief Financial
Officer Susan Cook is the former Group Head of Specialized Finance
at P&O and Chief Commercial Officer Thomas Lister is a former
ship financier at DVB Bank. Following the closing of the
transaction, Global Ship Lease will have an independent board with
no representation by CMA CGM. Former GSL Chairman Flemming Jacobs,
who was instrumental in the creation of Global Ship Lease, has
chosen to step down for reasons unrelated to the merger, which he
fully supports. In addition to the approximately $511 million of
net debt outstanding upon delivery of all 17 vessels expected by
July 2009, other transaction consideration includes approximately
$310 million in cash from the Marathon trust account and 25.2
million shares. The merger is expected to be completed during the
early part of third quarter of 2008, pending Marathon stockholder
and warrantholder approval and other customary closing conditions.
The parties intend to seek the listing of Global Ship Lease shares
and warrants on the New York Stock Exchange following the closing.
Citi is serving as exclusive financial advisor to Global Ship
Lease. Jefferies & Co. is serving as exclusive financial
advisor to Marathon Acquisition Corp. Legal counsel to Global Ship
Lease is Orrick, Herrington & Sutcliffe LLP. Legal counsel to
Marathon is Simpson Thacher & Bartlett LLP and Akin Gump
Strauss Hauer & Feld LLP. Certain additional information will
be contained in a management presentation, which will be made
public and filed later today by Marathon with the U.S. Securities
and Exchange Commission. Investor Presentation--Conference Call
Global Ship Lease and Marathon will host a conference call on
Monday, March 24, 2008 at 10 a.m. Eastern Time (ET) to discuss the
proposed transaction. The call will be open to the public. All
interested parties who would like to listen to the call should dial
1-888-542-1101 (within the U.S.) or 1-719-325-2169 (outside the
U.S.) 10 minutes prior to the scheduled start of the call. The
presentation slides will be available at the SEC website
(http://www.sec.gov/) as part of today's MAQ 8-K filing. For those
unable to listen to the live broadcast, a replay will be available
by dialing 1-888-203-1112 (within the U.S.) or 1-719-457-0820
(outside the U.S.) approximately two hours after the event (replay
participant passcode: 4408108). About Marathon and Necessary Steps
for Consummation Marathon Acquisition Corp. is a "blank check"
company formed to acquire, through a merger, capital stock
exchange, asset acquisition or similar business combination, one or
more businesses. In August 2006, Marathon through its initial
public offering raised net of fees and expenses, approximately
$308.8 million, which included $5.5 million in a private placement
of sponsor warrants that were deposited into a trust account.
Marathon has dedicated its time since the initial public offering
to seeking and evaluating business combination opportunities.
Marathon, upon obtaining the stockholder and warrantholder approval
described below, will merge into GSL Holdings, Inc., its
newly-formed Marshall Islands-incorporated subsidiary ("GSL"), and
then Global Ship Lease will merge into GSL with the combined
company to be renamed Global Ship Lease, Inc. Subject to the terms
and conditions of the Merger Agreement, which has been unanimously
approved by the board of directors of Marathon: (i) each share of
Marathon Acquisition Corp. common stock, par value $0.0001 per
share, will be converted into the right to receive one share of
Global Ship Lease common stock, par value $0.01 per share; and (ii)
each outstanding warrant of Marathon will be assumed by Global Ship
Lease with the same terms and restrictions, except that each will
be exercisable for common stock of Global Ship Lease. As provided
in Marathon's Certificate of Incorporation, holders of Marathon
common stock have the right to convert their shares for cash if
such stockholder votes against the merger, elects to exercise
conversion rights and the merger is approved and completed.
Marathon cannot complete the merger unless (1) a majority of the
shares issued in the initial public offering cast at the
stockholders meeting are voted in favor of the merger; (2) holders
of no more than 8,007,169 shares of common stock (such number
representing 20 percent minus one share of the 40,035,850 shares of
Marathon issued in the initial public offering), vote against the
merger and exercise their conversion rights to have their shares
converted into cash, (3) the holders of at least a majority of the
issued and outstanding warrants of Marathon approve an amendment to
the Warrant Agreement to allow Marathon to merge into a non-U.S.
corporation as contemplated by the Merger Agreement and (4) other
customary conditions are satisfied. All of Marathon's officers and
directors have agreed to vote an aggregate of 9,375,000 shares, or
19.0% of Marathon's outstanding common stock, issued to them prior
to the initial public offering in accordance with the vote of the
holders of a majority of the shares issued in the initial public
offering and have agreed to vote any of shares acquired in or
following the initial public offerings in favor of the Merger
Agreement. Regulation FD Disclosure Marathon intends to hold
presentations for certain stockholders of Marathon and certain
other persons in connection with the Merger Agreement. A copy of
the presentation materials will be included in the filing with the
U.S. Securities and Exchange Commission. Important Legal
Information In connection with the proposed acquisition, Marathon
will prepare a Registration Statement containing a proxy
statement/prospectus to be filed with the U.S. Securities and
Exchange Commission. When completed, a definitive proxy
statement/prospectus and a form of proxy will be mailed to the
stockholders and warrantholders of Marathon, seeking their approval
of the transaction. Before making any voting decision, Marathon's
stockholders are urged to read the proxy statement/prospectus
regarding the merger carefully and in its entirety because it will
contain important information about the proposed merger. Marathon's
stockholders and warrantholders will be able to obtain, without
charge, a copy of the proxy statement/prospectus (when available)
and other relevant documents filed with the U.S. Securities and
Exchange Commission from the Commission's website at
http://www.sec.gov/. Marathon's stockholders and warrantholders
will also be able to obtain, without charge, a copy of the proxy
statement/prospectus and other relevant documents (when available)
by directing a request by mail to Michael Gross at Marathon
Acquisition Corp., 500 Park Avenue, 5th Floor, New York, New York
10022 or by telephone at (212) 993-1670. Marathon and its directors
and officers may be deemed to be participants in the solicitation
of proxies from Marathon's stockholders with respect to the
proposed merger. Information about Marathon's directors and
executive officers and their ownership of Marathon's common stock
is set forth in Marathon's annual report on Form 10-K for the
fiscal year ended December 31, 2007. Stockholders may obtain
additional information regarding the interests of Marathon and its
directors and executive officers in the merger, which may be
different than those of Marathon's stockholders generally, by
reading the proxy statement/prospectus and other relevant documents
regarding the proposed merger, when filed with the U.S. Securities
and Exchange Commission. Safe Harbor Statement This communication
contains "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended, regarding the
plans and objectives of management for future operations. This
information may involve known and unknown risks, uncertainties and
other factors which may cause our actual results, performance or
achievements to be materially different from future results,
performance or achievements expressed or implied by any
forward-looking statements. Forward-looking statements, which
involve assumptions and describe our future plans, strategies and
expectations, are generally identifiable by use of the words "may,"
"will," "should," "expect," "anticipate," "estimate," "believe,"
"intend" or "project" or the negative of these words or other
variations on these words or comparable terminology. These
forward-looking statements are based on assumptions that may be
incorrect, and Marathon 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, uncertainties and other factors also relate to
inherent business, economic and competitive uncertainties and
contingencies relating to the business of Global Ship Lease
including: -- future operating or financial results; --
expectations regarding the strength of the future growth of the
shipping industry, including the rate of annual demand growth in
the international containership industry; -- future payments of
dividends and the availability of cash for payment of dividends; --
Global Ship Lease's expectations relating to dividend payments and
forecasts of its ability to make such payments; -- future
acquisitions, business strategy and expected capital spending; --
operating expenses, availability of crew, number of off-hire days,
drydocking (beyond the disclosed reserve) and survey requirements
and insurance costs; -- general market conditions and shipping
industry trends, including charter rates and factors affecting
supply and demand; -- Global Ship Lease's ability to repay its
credit facility and grow using the available funds under its credit
facility; -- assumptions regarding interest rates and inflation; --
change in the rate of growth of global and various regional
economies; -- risks incidental to vessel operation, including
discharge of pollutants and vessel collisions; -- Global Ship
Lease's financial condition and liquidity, including its ability to
obtain additional financing in the future (from warrant exercises
or outside services) to fund capital expenditures, acquisitions and
other general corporate activities; -- estimated future capital
expenditures needed to preserve Global Ship Lease's capital base;
-- ability to effect a previous acquisition and to meet target
returns -- Global Ship Lease's 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 Lease's
continued ability to enter into long-term, fixed- rate charters; --
Global Ship Lease's ability to capitalize on its management team's
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; and -- potential
liability from future litigation. Certain of these and other
applicable risks, cautionary statements and factors that could
cause actual results to differ from Marathon's forward- looking
statements are included in Marathon's filings with the U.S.
Securities and Exchange Commission, specifically as described in
Marathon's annual report on Form 10-K for the fiscal year ended
December 31, 2007. Marathon undertakes no obligation to update or
revise any forward-looking statements to reflect subsequent events
or circumstances. Media Contact: Chris Tofalli Chris Tofalli Public
Relations, LLC (914) 834-4334 DATASOURCE: Marathon Acquisition
Corp. CONTACT: Chris Tofalli of Chris Tofalli Public Relations,
LLC, +1-914-834-4334, for Marathon Acquisition Corp.
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