Global Ship Lease, Inc.
Interim Unaudited Condensed Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars except share data)
| |
|
|
|
|
As of
|
|
| |
|
Note
|
|
|
September 30,
2024
|
|
|
December 31,
2023
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
$
|
260,456
|
|
|
$
|
138,640
|
|
|
Time deposits
|
|
|
|
|
|
26,450
|
|
|
|
14,000
|
|
|
Restricted cash
|
|
|
|
|
|
59,209
|
|
|
|
56,803
|
|
|
Accounts receivable, net
|
|
|
|
|
|
12,847
|
|
|
|
4,741
|
|
|
Inventories
|
|
|
|
|
|
15,757
|
|
|
|
15,764
|
|
|
Prepaid expenses and other current assets
|
|
|
|
|
|
28,861
|
|
|
|
40,464
|
|
|
Derivative assets
|
|
|
5
|
|
|
|
15,178
|
|
|
|
24,639
|
|
|
Due from related parties
|
|
|
7
|
|
|
|
495
|
|
|
|
626
|
|
|
Total current assets
|
|
|
|
|
|
$
|
419,253
|
|
|
$
|
295,677
|
|
|
NON - CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessels in operation
|
|
|
3
|
|
|
$
|
1,633,329
|
|
|
$
|
1,664,101
|
|
|
Advances for vessels acquisitions and other additions
|
|
|
3
|
|
|
|
12,447
|
|
|
|
12,210
|
|
|
Deferred charges, net
|
|
|
|
|
|
|
82,907
|
|
|
|
73,720
|
|
|
Other non-current assets
|
|
|
2g
|
|
|
|
24,595
|
|
|
|
23,935
|
|
|
Derivative assets, net of current portion
|
|
|
5
|
|
|
|
6,520
|
|
|
|
16,867
|
|
|
Restricted cash, net of current portion
|
|
|
|
|
|
|
58,954
|
|
|
|
85,270
|
|
|
Total non - current assets
|
|
|
|
|
|
|
1,818,752
|
|
|
|
1,876,103
|
|
|
TOTAL ASSETS
|
|
|
|
|
|
$
|
2,238,005
|
|
|
$
|
2,171,780
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
|
|
$
|
22,853
|
|
|
$
|
17,601
|
|
|
Accrued liabilities
|
|
|
|
|
|
|
38,556
|
|
|
|
28,538
|
|
|
Current portion of long - term debt
|
|
|
6
|
|
|
|
152,522
|
|
|
|
193,253
|
|
|
Current portion of deferred revenue
|
|
|
|
|
|
|
40,870
|
|
|
|
40,331
|
|
|
Due to related parties
|
|
|
7
|
|
|
|
707
|
|
|
|
717
|
|
|
Total current liabilities
|
|
|
|
|
|
$
|
255,508
|
|
|
$
|
280,440
|
|
|
LONG - TERM LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long - term debt, net of current portion and deferred financing costs
|
|
|
6
|
|
|
$
|
528,015
|
|
|
$
|
619,175
|
|
|
Intangible liabilities - charter agreements
|
|
|
4
|
|
|
|
1,139
|
|
|
|
5,662
|
|
|
Deferred revenue, net of current portion
|
|
|
|
|
|
|
65,963
|
|
|
|
82,115
|
|
|
Total non - current liabilities
|
|
|
|
|
|
|
595,117
|
|
|
|
706,952
|
|
|
Total liabilities
|
|
|
|
|
|
$
|
850,625
|
|
|
$
|
987,392
|
|
|
Commitments and Contingencies
|
|
|
8
|
|
|
|
-
|
|
|
|
-
|
|
|
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A common shares - authorized
214,000,000 shares with a $0.01 par value
35,440,224 shares issued and outstanding (2023 – 35,188,323 shares)
|
|
|
9
|
|
|
$
|
355
|
|
|
$
|
351
|
|
|
Series B Preferred Shares - authorized
104,000 shares with a $0.01 par value
43,592 shares issued and outstanding (2023 - 43,592 shares)
|
|
|
9
|
|
|
|
-
|
|
|
|
-
|
|
|
Additional paid in capital
|
|
|
|
|
|
|
678,713
|
|
|
|
676,592
|
|
|
Retained Earnings
|
|
|
|
|
|
|
699,583
|
|
|
|
488,105
|
|
|
Accumulated other comprehensive income
|
|
|
|
|
|
|
8,729
|
|
|
|
19,340
|
|
|
Total shareholders' equity
|
|
|
|
|
|
|
1,387,380
|
|
|
|
1,184,388
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
$
|
2,238,005
|
|
|
$
|
2,171,780
|
|
See accompanying notes to interim unaudited condensed consolidated financial statements
Global Ship Lease, Inc.
Interim Unaudited Condensed Consolidated Statements of Income
(Expressed in thousands of U.S. dollars except share and per share data)
| |
|
|
|
|
Nine months ended
September 30,
|
|
| |
|
|
|
|
|
|
| |
|
Note
|
|
|
2024
|
|
|
2023
|
|
|
OPERATING REVENUES
|
|
|
|
|
|
|
|
|
|
|
Time charter revenues
|
|
|
|
|
$
|
524,099
|
|
|
$
|
489,338
|
|
|
Amortization of intangible liabilities-charter agreements
|
|
|
4
|
|
|
|
4,523
|
|
|
|
6,563
|
|
|
Total Operating Revenues
|
|
|
|
|
|
|
528,622
|
|
|
|
495,901
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessel operating expenses (include related party vessel operating expenses of $16,289 and $14,072 for each of the periods ended September 30, 2024, and 2023, respectively)
|
|
|
7
|
|
|
|
141,628
|
|
|
|
132,268
|
|
|
Time charter and voyage expenses (include related party time charter and voyage expenses of $6,487 and $5,801 for each of the periods ended September 30, 2024, and 2023, respectively)
|
|
|
7
|
|
|
|
17,051
|
|
|
|
18,185
|
|
|
Depreciation and amortization
|
|
|
3
|
|
|
|
73,775
|
|
|
|
67,336
|
|
|
General and administrative expenses
|
|
|
|
|
|
|
13,038
|
|
|
|
13,748
|
|
|
Operating Income
|
|
|
|
|
|
|
283,130
|
|
|
|
264,364
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-OPERATING INCOME/(EXPENSES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
|
|
|
|
12,532
|
|
|
|
6,895
|
|
|
Interest and other finance expenses
|
|
|
|
|
|
|
(32,883
|
)
|
|
|
(33,623
|
)
|
|
Other income, net
|
|
|
|
|
|
|
3,243
|
|
|
|
857
|
|
|
Fair value adjustment on derivative asset
|
|
|
5
|
|
|
|
(4,957
|
)
|
|
|
(1,037
|
)
|
|
Total non-operating expenses
|
|
|
|
|
|
|
(22,065
|
)
|
|
|
(26,908
|
)
|
|
Income before income taxes
|
|
|
|
|
|
|
261,065
|
|
|
|
237,456
|
|
|
Income taxes
|
|
|
|
|
|
|
(1
|
)
|
|
|
(5
|
)
|
|
Net Income
|
|
|
|
|
|
|
261,064
|
|
|
|
237,451
|
|
|
Earnings allocated to Series B Preferred Shares
|
|
|
9
|
|
|
|
(7,152
|
)
|
|
|
(7,152
|
)
|
|
Net Income available to Common Shareholders
|
|
|
|
|
|
$
|
253,912
|
|
|
$
|
230,299
|
|
|
Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of Class A common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
11
|
|
|
|
35,272,574
|
|
|
|
35,473,382
|
|
|
Diluted
|
|
|
11
|
|
|
|
35,621,199
|
|
|
|
36,071,632
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Earnings per Class A common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
11
|
|
|
$
|
7.20
|
|
|
$
|
6.49
|
|
|
Diluted
|
|
|
11
|
|
|
$
|
7.13
|
|
|
$
|
6.38
|
|
See accompanying notes to interim unaudited condensed consolidated financial statements
Global Ship Lease, Inc.
Interim Unaudited Condensed Consolidated Statements of Comprehensive Income
(Expressed in thousands of U.S. dollars)
| |
|
|
|
|
Nine months ended
September 30,
|
|
| |
|
|
|
|
|
|
| |
|
Note
|
|
|
2024
|
|
|
2023
|
|
|
Net Income available to Common Shareholders
|
|
|
|
|
$
|
253,912
|
|
|
$
|
230,299
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow Hedge:
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on derivative assets
|
|
|
5
|
|
|
|
(14,961
|
)
|
|
|
(5,611
|
)
|
|
Amortization of interest rate cap premium
|
|
|
|
|
|
|
3,473
|
|
|
|
3,085
|
|
|
Amounts reclassified to/(from) earnings
|
|
|
|
|
|
|
877
|
|
|
|
(80
|
)
|
|
Total Other Comprehensive Loss
|
|
|
|
|
|
|
(10,611
|
)
|
|
|
(2,606
|
)
|
|
Total Comprehensive Income
|
|
|
|
|
|
$
|
243,301
|
|
|
$
|
227,693
|
|
See accompanying notes to interim unaudited condensed consolidated financial statements
Global Ship Lease, Inc.
Interim Unaudited Condensed Consolidated Statements of Cash Flows
(Expressed in thousands of U.S. dollars)
| |
|
|
|
|
Nine months ended
September 30,
|
|
| |
|
|
|
|
|
|
| |
|
Note
|
|
|
2024
|
|
|
2023
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
|
|
|
261,064
|
|
|
|
237,451
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
3
|
|
|
|
73,775
|
|
|
|
67,336
|
|
|
Amounts reclassified to/(from) other comprehensive income
|
|
|
|
|
|
|
877
|
|
|
|
(80
|
)
|
|
Amortization of derivative assets’ premium
|
|
|
|
|
|
|
3,473
|
|
|
|
3,085
|
|
|
Amortization of deferred financing costs
|
|
|
6
|
|
|
|
5,920
|
|
|
|
4,115
|
|
|
Amortization of intangible liabilities - charter agreements
|
|
|
4
|
|
|
|
(4,523
|
)
|
|
|
(6,563
|
)
|
|
Fair value adjustment on derivative asset
|
|
|
5
|
|
|
|
4,957
|
|
|
|
1,037
|
|
|
Prepayment fees on debt repayment
|
|
|
|
|
|
|
870
|
|
|
|
-
|
|
|
Stock-based compensation expense
|
|
|
10
|
|
|
|
6,582
|
|
|
|
7,684
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease/(increase) in accounts receivable and other assets
|
|
|
|
|
|
|
2,837
|
|
|
|
(3,511
|
)
|
|
Decrease/(increase) in inventories
|
|
|
|
|
|
|
7
|
|
|
|
(1,877
|
)
|
|
Increase in derivative asset
|
|
|
5
|
|
|
|
(109
|
)
|
|
|
-
|
|
|
Increase/(decrease) in accounts payable and other liabilities
|
|
|
|
|
|
|
10,949
|
|
|
|
(6,098
|
)
|
|
Decrease in related parties' balances, net
|
|
|
7
|
|
|
|
121
|
|
|
|
-
|
|
|
Decrease in deferred revenue
|
|
|
|
|
|
|
(15,613
|
)
|
|
|
(468
|
)
|
|
Payments for drydocking and special survey costs
|
|
|
|
|
|
|
(26,879
|
)
|
|
|
(32,562
|
)
|
|
Unrealized foreign exchange gain
|
|
|
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
Net cash provided by operating activities
|
|
|
|
|
|
$
|
324,307
|
|
|
$
|
269,549
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of vessels
|
|
|
|
|
|
|
-
|
|
|
|
(123,300
|
)
|
|
Cash paid for vessel expenditures
|
|
|
|
|
|
|
(9,350
|
)
|
|
|
(12,569
|
)
|
|
Advances for vessels acquisitions and other additions
|
|
|
|
|
|
|
(11,993
|
)
|
|
|
(6,786
|
)
|
|
Net proceeds from sale of vessel
|
|
|
|
|
|
|
-
|
|
|
|
5,940
|
|
|
Time deposits acquired
|
|
|
|
|
|
|
(12,450
|
)
|
|
|
(5,450
|
)
|
|
Net cash used in investing activities
|
|
|
|
|
|
$
|
(33,793
|
)
|
|
$
|
(142,165
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from drawdown of credit facilities
|
|
|
6
|
|
|
|
300,000
|
|
|
|
76,000
|
|
|
Repayment of credit facilities and sale and leaseback
|
|
|
6
|
|
|
|
(144,045
|
)
|
|
|
(151,267
|
)
|
|
Repayment of refinanced debt, including prepayment fees
|
|
|
6
|
|
|
|
(292,010
|
)
|
|
|
-
|
|
|
Deferred financing costs paid
|
|
|
6
|
|
|
|
(2,625
|
)
|
|
|
(1,140
|
)
|
|
Net proceeds from offering of Class A common shares, net of offering costs
|
|
|
9
|
|
|
|
652
|
|
|
|
-
|
|
|
Cancellation of Class A common shares
|
|
|
9
|
|
|
|
(4,994
|
)
|
|
|
(20,421
|
)
|
|
Class A common shares - dividend paid
|
|
|
9
|
|
|
|
(42,434
|
)
|
|
|
(39,991
|
)
|
|
Series B Preferred Shares - dividend paid
|
|
|
9
|
|
|
|
(7,152
|
)
|
|
|
(7,152
|
)
|
|
Net cash used in financing activities
|
|
|
|
|
|
$
|
(192,608
|
)
|
|
$
|
(143,971
|
)
|
|
Net increase/(decrease) in cash and cash equivalents and restricted cash
|
|
|
|
|
|
|
97,906
|
|
|
|
(16,587
|
)
|
|
Cash and cash equivalents and restricted cash at beginning of the period
|
|
|
|
|
|
|
280,713
|
|
|
|
269,930
|
|
|
Cash and cash equivalents and restricted cash at end of the period
|
|
|
|
|
|
$
|
378,619
|
|
|
$
|
253,343
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary Cash Flow Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
|
|
|
|
$
|
43,280
|
|
|
$
|
51,012
|
|
|
Cash received from interest rate caps
|
|
|
|
|
|
|
21,198
|
|
|
|
24,380
|
|
|
Non-cash financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid offering costs
|
|
|
|
|
|
|
115
|
|
|
|
-
|
|
|
Unrealized loss on derivative assets
|
|
|
|
|
|
|
(14,961
|
)
|
|
|
(5,611
|
)
|
See accompanying notes to interim unaudited condensed consolidated financial statements
Global Ship Lease, Inc.
Interim Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity
(Expressed in thousands of U.S. dollars except share data)
| |
|
Number of
Common Shares
at par value
$0.01
|
|
|
Number of Series B
Preferred Shares
at par value $0.01
|
|
|
Common
Shares
|
|
|
Series B
Preferred
Shares
|
|
|
Additional
paid-in
capital
|
|
|
Retained
Earnings
|
|
|
Accumulated Other Comprehensive Income
|
|
|
Total
Shareholders'
Equity
|
|
|
Balance
at December 31, 2022
|
|
|
35,990,288
|
|
|
|
43,592
|
|
|
$
|
359
|
|
|
$
|
-
|
|
|
$
|
688,262
|
|
|
$
|
246,390
|
|
|
$
|
31,480
|
|
|
$
|
966,491
|
|
|
Stock-based compensation expense (Note 10)
|
|
|
82,944
|
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
2,673
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,674
|
|
|
Cancellation of Class A common shares (Note 9)
|
|
|
(582,178
|
)
|
|
|
-
|
|
|
|
(6
|
)
|
|
|
-
|
|
|
|
(9,982
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(9,988
|
)
|
|
Issuance of Series B Preferred shares, net of offering costs (Note 9)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
102
|
|
|
|
-
|
|
|
|
-
|
|
|
|
102
|
|
|
Other comprehensive loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(7,182
|
)
|
|
|
(7,182
|
)
|
|
Net Income for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
74,604
|
|
|
|
-
|
|
|
|
74,604
|
|
|
Series B Preferred Shares dividend (Note 9)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,384
|
)
|
|
|
-
|
|
|
|
(2,384
|
)
|
|
Class A common shares dividend (Note 9)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(13,351
|
)
|
|
|
-
|
|
|
|
(13,351
|
)
|
|
Balance
at March 31, 2023
|
|
|
35,491,054
|
|
|
|
43,592
|
|
|
$
|
354
|
|
|
$
|
-
|
|
|
$
|
681,055
|
|
|
$
|
305,259
|
|
|
$
|
24,298
|
|
|
$
|
1,010,966
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense (Note 10)
|
|
|
59,924
|
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
2,504
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,505
|
|
|
Cancellation of Class A common shares (Note 9)
|
|
|
(385,064
|
)
|
|
|
-
|
|
|
|
(4
|
)
|
|
|
-
|
|
|
|
(6,988
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,992
|
)
|
|
Other comprehensive income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,711
|
|
|
|
3,711
|
|
|
Net Income for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
77,776
|
|
|
|
-
|
|
|
|
77,776
|
|
|
Series B Preferred Shares dividend (Note 9)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,384
|
)
|
|
|
-
|
|
|
|
(2,384
|
)
|
|
Class A common shares dividend (Note 9)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(13,340
|
)
|
|
|
-
|
|
|
|
(13,340
|
)
|
|
Balance
at June 30, 2023
|
|
|
35,165,914
|
|
|
|
43,592
|
|
|
$
|
351
|
|
|
$
|
-
|
|
|
$
|
676,571
|
|
|
$
|
367,311
|
|
|
$
|
28,009
|
|
|
$
|
1,072,242
|
|
|
Stock-based compensation expense (Note 10)
|
|
|
213,594
|
|
|
|
-
|
|
|
|
2
|
|
|
|
-
|
|
|
|
2,503
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,505
|
|
|
Cancellation of Class A common shares (Note 9)
|
|
|
(187,479
|
)
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
-
|
|
|
|
(3,439
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,441
|
)
|
|
Other comprehensive income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
865
|
|
|
|
865
|
|
|
Net Income for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
85,071
|
|
|
|
-
|
|
|
|
85,071
|
|
|
Series B Preferred Shares dividend (Note 9)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,384
|
)
|
|
|
-
|
|
|
|
(2,384
|
)
|
|
Class A common shares dividend (Note 9)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(13,300
|
)
|
|
|
-
|
|
|
|
(13,300
|
)
|
|
Balance
at September 30, 2023
|
|
|
35,192,029
|
|
|
|
43,592
|
|
|
$
|
351
|
|
|
$
|
-
|
|
|
$
|
675,635
|
|
|
$
|
436,698
|
|
|
$
|
28,874
|
|
|
$
|
1,141,558
|
|
Global Ship Lease, Inc.
Interim Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity
(Expressed in thousands of U.S. dollars except share data)
| |
|
Number of
Common Shares
at par value
$0.01
|
|
|
Number of Series B
Preferred Shares
at par value $0.01
|
|
|
Common
Shares
|
|
|
Series B
Preferred
Shares
|
|
|
Additional
paid-in
capital
|
|
|
Retained
Earnings
|
|
|
Accumulated Other Comprehensive Income
|
|
|
Total
Shareholders'
Equity
|
|
|
Balance
at December 31, 2023
|
|
|
35,188,323
|
|
|
|
43,592
|
|
|
$
|
351
|
|
|
$
|
-
|
|
|
$
|
676,592
|
|
|
$
|
488,105
|
|
|
$
|
19,340
|
|
|
$
|
1,184,388
|
|
|
Stock-based compensation expense (Note 10)
|
|
|
141,356
|
|
|
|
-
|
|
|
|
2
|
|
|
|
-
|
|
|
|
2,302
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,304
|
|
|
Cancellation of Class A common shares (Note 9)
|
|
|
(251,772
|
)
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
-
|
|
|
|
(4,992
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,994
|
)
|
|
Other comprehensive income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
241
|
|
|
|
241
|
|
|
Net Income for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
91,890
|
|
|
|
-
|
|
|
|
91,890
|
|
|
Series B Preferred Shares dividend (Note 9)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,384
|
)
|
|
|
-
|
|
|
|
(2,384
|
)
|
|
Class A common shares dividend (Note 9)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(13,214
|
)
|
|
|
-
|
|
|
|
(13,214
|
)
|
|
Balance
at March 31, 2024
|
|
|
35,077,907
|
|
|
|
43,592
|
|
|
$
|
351
|
|
|
$
|
-
|
|
|
$
|
673,902
|
|
|
$
|
564,397
|
|
|
$
|
19,581
|
|
|
$
|
1,258,231
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense (Note 10)
|
|
|
182,122
|
|
|
|
-
|
|
|
|
2
|
|
|
|
-
|
|
|
|
2,154
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,156
|
|
|
Other comprehensive loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,719
|
)
|
|
|
(1,719
|
)
|
|
Net Income for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
88,027
|
|
|
|
-
|
|
|
|
88,027
|
|
|
Series B Preferred Shares dividend (Note 9)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,384
|
)
|
|
|
-
|
|
|
|
(2,384
|
)
|
|
Class A common shares dividend (Note 9)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(13,255
|
)
|
|
|
-
|
|
|
|
(13,255
|
)
|
|
Balance
at June 30, 2024
|
|
|
35,260,029
|
|
|
|
43,592
|
|
|
$
|
353
|
|
|
$
|
-
|
|
|
$
|
676,056
|
|
|
$
|
636,785
|
|
|
$
|
17,862
|
|
|
$
|
1,331,056
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense (Note 10)
|
|
|
153,089
|
|
|
|
-
|
|
|
|
2
|
|
|
|
-
|
|
|
|
2,120
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,122
|
|
|
Issuance of Class A common shares, net of offering costs
|
|
|
27,106
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
537
|
|
|
|
-
|
|
|
|
-
|
|
|
|
537
|
|
|
Other comprehensive loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(9,133
|
)
|
|
|
(9,133
|
)
|
|
Net Income for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
81,147
|
|
|
|
-
|
|
|
|
81,147
|
|
|
Series B Preferred Shares dividend (Note 9)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,384
|
)
|
|
|
-
|
|
|
|
(2,384
|
)
|
|
Class A common shares dividend (Note 9)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(15,965
|
)
|
|
|
-
|
|
|
|
(15,965
|
)
|
|
Balance
at September 30, 2024
|
|
|
35,440,224
|
|
|
|
43,592
|
|
|
$
|
355
|
|
|
$
|
-
|
|
|
$
|
678,713
|
|
|
$
|
699,583
|
|
|
$
|
8,729
|
|
|
$
|
1,387,380
|
|
See accompanying notes to interim unaudited condensed consolidated financial statements
Global Ship Lease, Inc.
Notes to the Interim Unaudited Condensed Consolidated Financial Statements
(Expressed in thousands of U.S. dollars except share data)
1. Description of Business
The Company’s business is to own and charter out containerships to leading liner companies.
On August 14, 2008, Global Ship Lease, Inc. (the “Company”) merged indirectly with Marathon Acquisition Corp., a company then listed on The American Stock Exchange, and with the pre-existing Global Ship Lease,
Inc. GSL Holdings, Inc. was the surviving entity (the “Marathon Merger”), changed its name to Global Ship Lease, Inc. and became listed on The New York Stock Exchange (the “NYSE”).
On November 15, 2018, the Company completed a transformative transaction and acquired Poseidon Containers’ 20 containerships, one of which, the Argos, was contracted to be sold, which sale was completed in
December 2018, (the “Poseidon Transaction”).
In 2021, the Company purchased 23 vessels. The Company purchased seven containerships of approximately 6,000 TEU each (the “Seven Vessels”), 12 containerships from Borealis Finance LLC (the “Twelve Vessels”) and
four 5,470 TEU Panamax containerships (the “Four Vessels”). Also on June 30, 2021, vessel La Tour was sold.
During the second quarter of 2023, the Company purchased four 8,544 TEU vessels for an aggregate purchase price of $123,300, which were delivered in various dates in May and June 2023.
With these transactions and following the sale of GSL Amstel on March 23, 2023, the Company’s fleet comprises 68 containerships with average age weighted by TEU capacity of 18.0 years.
The following table provides information about the 68 vessels owned as at September 30, 2024.
|
Company Name (1)
|
Country of Incorporation
|
Vessel
Name
|
Capacity
in TEUs (2)
|
Year Built
|
Earliest Charter
Expiry Date
|
|
Global Ship Lease 54 LLC
|
Liberia
|
CMA CGM Thalassa
|
11,040
|
2008
|
4Q25
|
|
Laertis Marine LLC
|
Marshall Islands
|
Zim Norfolk
|
9,115
|
2015
|
2Q27
|
|
Penelope Marine LLC
|
Marshall Islands
|
Zim Xiamen
|
9,115
|
2015
|
3Q27
|
|
Telemachus Marine LLC
|
Marshall Islands
|
Anthea Y
|
9,115
|
2015
|
3Q25
|
|
Global Ship Lease 53 LLC
|
Liberia
|
MSC Tianjin
|
8,603
|
2005
|
3Q27(4)
|
|
Global Ship Lease 52 LLC
|
Liberia
|
MSC Qingdao
|
8,603
|
2004
|
3Q27(4)
|
|
Global Ship Lease 43 LLC
|
Liberia
|
GSL Ningbo
|
8,603
|
2004
|
3Q27
|
|
Global Ship Lease 72 LLC
|
Liberia
|
GSL Alexandra
|
8,544
|
2004
|
3Q25(5)
|
|
Global Ship Lease 73 LLC
|
Liberia
|
GSL Sofia
|
8,544
|
2003
|
3Q25(5)
|
|
Global Ship Lease 74 LLC
|
Liberia
|
GSL Effie
|
8,544
|
2003
|
3Q25(5)
|
|
Global Ship Lease 75 LLC
|
Liberia
|
GSL Lydia
|
8,544
|
2003
|
2Q25(5)
|
|
Global Ship Lease 30 Limited
|
Marshall Islands
|
GSL Eleni
|
7,847
|
2004
|
4Q27(6)
|
|
Global Ship Lease 31 Limited
|
Marshall Islands
|
GSL Kalliopi
|
7,847
|
2004
|
4Q27(6)
|
|
Global Ship Lease 32 Limited
|
Marshall Islands
|
GSL Grania
|
7,847
|
2004
|
4Q27(6)
|
|
Alexander Marine LLC
|
Marshall Islands
|
Colombia Express
|
7,072
|
2013
|
4Q28(7)
|
|
Hector Marine LLC
|
Marshall Islands
|
Kristina
|
7,072
|
2013
|
4Q29(7)
|
|
Ikaros Marine LLC
|
Marshall Islands
|
Costa Rica Express (ex Katherine) (14)
|
7,072
|
2013
|
2Q29(7)
|
|
Philippos Marine LLC
|
Marshall Islands
|
Alexandra
|
7,072
|
2013
|
2Q29(7)
|
|
Aristoteles Marine LLC
|
Marshall Islands
|
Mexico Express (ex Alexis) (14)
|
6,910
|
2015
|
3Q29(7)
|
|
Menelaos Marine LLC
|
Marshall Islands
|
Jamaica Express (ex Olivia I) (14)
|
6,910
|
2015
|
3Q29(7)
|
|
Global Ship Lease 35 LLC
|
Liberia
|
GSL Nicoletta
|
6,840
|
2002
|
1Q28(8)
|
|
Global Ship Lease 36 LLC
|
Liberia
|
GSL Christen
|
6,840
|
2002
|
4Q27(8)
|
|
Global Ship Lease 48 LLC
|
Liberia
|
CMA CGM Berlioz
|
7,023
|
2001
|
4Q25
|
|
Leonidas Marine LLC
|
Marshall Islands
|
Agios Dimitrios
|
6,572
|
2011
|
2Q27(4)
|
|
Global Ship Lease 33 LLC
|
Liberia
|
GSL Vinia
|
6,080
|
2004
|
1Q28(9)
|
|
Global Ship Lease 34 LLC
|
Liberia
|
GSL Christel Elisabeth
|
6,080
|
2004
|
1Q28(9)
|
1. Description of Business (continued)
|
Company Name (1)
|
Country of Incorporation
|
Vessel
Name
|
Capacity
in TEUs (2)
|
Year
Built
|
Earliest Charter
Expiry Date
|
|
GSL Arcadia LLC
|
Liberia
|
GSL Arcadia
|
6,008
|
2000
|
1Q25(10)
|
|
GSL Melita LLC
|
Liberia
|
GSL Melita
|
6,008
|
2001
|
3Q25(10)
|
|
GSL Maria LLC
|
Liberia
|
GSL Maria
|
6,008
|
2001
|
4Q25(10)
|
|
GSL Violetta LLC
|
Liberia
|
GSL Violetta
|
6,008
|
2000
|
2Q25(10)
|
|
GSL Tegea LLC
|
Liberia
|
GSL Tegea
|
5,994
|
2001
|
3Q25(10)
|
|
GSL Dorothea LLC
|
Liberia
|
GSL Dorothea
|
5,992
|
2001
|
2Q25(10)
|
|
GSL MYNY LLC
|
Liberia
|
GSL MYNY
|
6,008
|
2000
|
2Q25(10)
|
|
Tasman Marine LLC
|
Marshall Islands
|
Tasman
|
5,936
|
2000
|
1Q25
|
|
Hudson Marine LLC
|
Marshall Islands
|
Dimitris Y
|
5,936
|
2000
|
2Q25
|
|
Drake Marine LLC
|
Marshall Islands
|
Ian H
|
5,936
|
2000
|
4Q27(11)
|
|
Global Ship Lease 68 LLC (3)
|
Liberia
|
GSL Kithira
|
5,470
|
2009
|
4Q27(12)
|
|
Global Ship Lease 69 LLC (3)
|
Liberia
|
GSL Tripoli
|
5,470
|
2009
|
3Q27(12)
|
|
Global Ship Lease 70 LLC (3)
|
Liberia
|
GSL Syros
|
5,470
|
2010
|
4Q27(12)
|
|
Global Ship Lease 71 LLC (3)
|
Liberia
|
GSL Tinos
|
5,470
|
2010
|
3Q27(12)
|
|
Hephaestus Marine LLC
|
Marshall Islands
|
Dolphin II
|
5,095
|
2007
|
1Q25
|
|
Zeus One Marine LLC
|
Marshall Islands
|
Orca I
|
5,095
|
2006
|
2Q25
|
|
Global Ship Lease 47 LLC
|
Liberia
|
GSL Château d’If
|
5,089
|
2007
|
4Q26
|
|
GSL Alcazar Inc.
|
Marshall Islands
|
CMA CGM Alcazar
|
5,089
|
2007
|
3Q26
|
|
Global Ship Lease 55 LLC
|
Liberia
|
GSL Susan
|
4,363
|
2008
|
3Q27
|
|
Global Ship Lease 50 LLC
|
Liberia
|
CMA CGM Jamaica
|
4,298
|
2006
|
1Q28
|
|
Global Ship Lease 49 LLC
|
Liberia
|
CMA CGM Sambhar
|
4,045
|
2006
|
1Q28
|
|
Global Ship Lease 51 LLC
|
Liberia
|
CMA CGM America
|
4,045
|
2006
|
1Q28
|
|
Global Ship Lease 57 LLC
|
Liberia
|
GSL Rossi
|
3,421
|
2012
|
1Q26
|
|
Global Ship Lease 58 LLC
|
Liberia
|
GSL Alice
|
3,421
|
2014
|
2Q25
|
|
Global Ship Lease 59 LLC
|
Liberia
|
GSL Melina
|
3,404
|
2013
|
4Q26
|
|
Global Ship Lease 60 LLC
|
Liberia
|
GSL Eleftheria
|
3,421
|
2013
|
3Q25
|
|
Global Ship Lease 61 LLC
|
Liberia
|
GSL Mercer
|
2,824
|
2007
|
1Q27(13)
|
|
Global Ship Lease 62 LLC
|
Liberia
|
Matson Molokai
|
2,824
|
2007
|
2Q25
|
|
Global Ship Lease 63 LLC
|
Liberia
|
GSL Lalo
|
2,824
|
2006
|
2Q25
|
|
Global Ship Lease 42 LLC
|
Liberia
|
GSL Valerie
|
2,824
|
2005
|
1Q25
|
|
Pericles Marine LLC
|
Marshall Islands
|
Athena
|
2,980
|
2003
|
2Q25
|
|
Global Ship Lease 64 LLC
|
Liberia
|
GSL Elizabeth
|
2,741
|
2006
|
2Q26
|
|
Global Ship Lease 65 LLC
|
Liberia
|
GSL Chloe
|
2,546
|
2012
|
1Q27(13)
|
|
Global Ship Lease 66 LLC
|
Liberia
|
GSL Maren
|
2,546
|
2014
|
1Q26
|
|
Aris Marine LLC
|
Marshall Islands
|
Maira
|
2,506
|
2000
|
4Q24
|
|
Aphrodite Marine LLC
|
Marshall Islands
|
Nikolas
|
2,506
|
2000
|
4Q24
|
|
Athena Marine LLC
|
Marshall Islands
|
Newyorker
|
2,506
|
2001
|
1Q25
|
|
Global Ship Lease 38 LLC
|
Liberia
|
Manet
|
2,288
|
2001
|
4Q24
|
|
Global Ship Lease 40 LLC
|
Liberia
|
Keta
|
2,207
|
2003
|
1Q25
|
|
Global Ship Lease 41 LLC
|
Liberia
|
Julie
|
2,207
|
2002
|
2Q25
|
|
Global Ship Lease 45 LLC
|
Liberia
|
Kumasi
|
2,220
|
2002
|
1Q25
|
|
Global Ship Lease 44 LLC
|
Liberia
|
Akiteta
|
2,220
|
2002
|
4Q24
|
1. Description of Business (continued)
(1) All subsidiaries are 100% owned, either directly or indirectly;
(2) Twenty-foot Equivalent Units;
(3) Currently, under a sale and leaseback transaction (see note 2g);
(4) MSC Tianjin, MSC Qingdao and Agios Dimitrios were fixed for minimum 36 months – maximum 38 months. The new charters commenced after the vessels were drydocked. Agios Dimitrios new charter
commenced in 2Q 2024. MSC Tianjin and MSC Qingdao new charters commenced in 3Q 2024. MSC Qingdao & Agios Dimitrios are fitted with Exhaust Gas Cleaning Systems (“scrubbers”);
(5) GSL Alexandra, GSL Sofia, GSL Lydia and GSL Effie delivered in 2Q 2023. Contract cover for each vessel is for a minimum firm period of 24 months from the date each vessel was delivered,
with charterers holding one year extension options;
(6) GSL Eleni, GSL Kalliopi
and GSL Grania were forward fixed for 35 – 38 months to commence after drydocking, after which the charterer has the option to extend each charter for a further 12 – 16 months;
(7) Colombia Express (ex Mary), Kristina, Costa Rica Express (ex Katherine), Alexandra, Mexico Express (ex Alexis), Jamaica Express (ex Olivia I) were forward fixed for 60 months +/- 45 days,
after which the charterer has the option to extend each charter for a further two years. The new charter for Colombia Express commenced in early 2024 and the new charters for Costa Rica Express, Alexandra and Jamaica Express commenced in 3Q
2024. The new charters for Kristina and Mexico Express are scheduled to commence in 4Q 2024 upon completion of drydocking;
(8) GSL Nicoletta and GSL Christen were forward fixed for 39 – 42 months and 37 – 40 months, respectively, expected to commence in 4Q 2024;
(9) GSL Vinia and GSL Christel Elizabeth were both forward fixed for 36 – 40 months to commence after drydocking, after which the charterer has the option to extend each charter for a further
12 – 15 months. The new charters are both scheduled to commence in 1Q 2025;
(10) GSL Maria, GSL Violetta, GSL Arcadia, GSL MYNY, GSL Melita, GSL Tegea and GSL Dorothea. Contract cover for each vessel is for a firm period of at least three years from the date each
vessel was delivered in 2021. Thereafter, the charterer has the option to extend each charter for a further 12 months, after which they have the option to extend each charter for a second time – for a period concluding immediately prior to each
respective vessel’s 25th year drydocking and special survey. GSL Arcadia, GSL Dorothea, GSL Tegea, GSL Melita and GSL MYNY charterer’s first options were exercised in 1H 2024, GSL Maria and GSL Violetta charterer’s first options were
exercised in 3Q 2024;
(11) Ian H was forward fixed for 35 – 36 months. The new charter is scheduled to commence in 4Q 2024, following the completion of its scheduled drydocking;
(12) GSL Kithira, GSL Tripoli, GSL Syros, GSL Tinos were chartered for a period of three years from their delivery dates in 2021, after which the charterer had the option to extend each
charter for a further three years. GSL Tripoli, GSL Syros, GSL Tinos charterer’s options were exercised in 2Q 2024. GSL Kithira charterer’s option was exercised in 3Q 2024;
(13) GSL Mercer and GSL Chloe were both forward fixed for 23.5 – 26 months. The new charters are both expected to commence in 1Q 2025;
(14) On July 9, 2024, Katherine was renamed to Costa Rica Express. On August 20, 2024, Olivia I was renamed to Jamaica Express. On September 20, 2024, Alexis was renamed to Mexico Express.
2. Summary of Significant Accounting Policies and Disclosures
|
(a)
|
Basis of Presentation
|
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 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 condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements as of December 31, 2023 filed with the Securities and Exchange
Commission on March 20, 2024 in the Company’s Annual Report on Form 20-F.
The Company has made reclassifications to the prior year statement of cash flows to correct and reclassify payments for drydocking and special survey costs from investing
outflows to operating outflows which resulted in a decrease in investing outflows and increase in operating outflows of $6,305, $18,300, and $33,386 for the three months ended March 31, 2023, six
months ended June 30, 2023, and nine months ended September 30, 2023, respectively. The Company evaluated the reclassifications from both a quantitative and qualitative perspective and determined the impacts were immaterial to the previously
issued interim financial statements.
2. Summary of Significant Accounting Policies and Disclosures (continued)
Adoption of new accounting standards
In March 2020, the FASB issued ASU 2020-4, “Reference Rate Reform (Topic 848)” (“ASU 2020-4”), which provides optional guidance intended to ease the potential burden in accounting for the expected discontinuation
of LIBOR as a reference rate in the financial markets. The guidance can be applied to modifications made to certain contracts to replace LIBOR with a new reference rate. The guidance, if elected, will permit entities to treat such modifications
as the continuation of the original contract, without any required accounting reassessments or remeasurements. ASU 2020-4 was effective for the Company beginning on March 12, 2020, and the Company applied the amendments prospectively through
December 31, 2022. Because the current relief in Topic 848 may not cover a period of time during which a significant number of modifications may take place, in December 2022 the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848)”. The
amendments of this update defer the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. During 2023, all
Company’s loan agreements have been amended and restated to take into effect the transition from LIBOR to the Secured Overnight Financing Rate (“SOFR”) and the relevant provisions on a replacement rate. In addition, the Company’s interest
rate caps automatically transited to 1-month Compounded SOFR on July 1, 2023, at a level of 0.64%. There was no impact to the Company’s interim unaudited condensed consolidated financial statements for the period ended September 30, 2024, as a result of adopting this standard.
|
(b)
|
Principles of Consolidation
|
The accompanying interim unaudited condensed consolidated financial information include the financial statements of the Company and its wholly owned subsidiaries; the Company has no other interests. All
significant intercompany balances and transactions have been eliminated in the Company’s interim unaudited condensed consolidated financial statements.
The preparation of interim unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the interim unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could
differ from those estimates under different assumptions and/or conditions.
Vessels are generally recorded at their historical cost, which consists of the acquisition price and any material expenses incurred upon acquisition, adjusted for the fair value of intangible
assets or liabilities associated with above or below market charters attached to the vessels at acquisition. See Intangible Assets and Liabilities at note 2(e) below. Vessels acquired in a corporate transaction accounted for as an asset
acquisition are stated at the acquisition price, which consists of consideration paid, plus transaction costs, considering pro rata allocation based on vessels fair value at the acquisition date. Vessels acquired in a corporate transaction
accounted for as a business combination are recorded at fair value. Vessels acquired as part of the Marathon Merger in 2008 were accounted for under ASC 805, which required that the vessels be recorded at fair value, less the negative goodwill
arising as a result of the accounting for the merger.
Subsequent expenditures for major improvements and upgrades are capitalized, provided they appreciably extend the life, increase the earnings capacity or improve the efficiency or safety of
the vessels.
Borrowing costs incurred during the construction of vessels or as part of the prefinancing of the acquisition of vessels are capitalized. There was no capitalized interest for
the nine months ended September 30, 2024, and 2023.
Vessels are stated less accumulated depreciation and impairment, if applicable. Vessels are depreciated to their estimated residual value using the straight-line method over their estimated
useful lives which are reviewed on an ongoing basis to ensure they reflect current technology, service potential and vessel structure. The useful lives are estimated to be 30 years from original delivery by the shipyard.
Management estimates the residual values of the Company’s container vessels based on a scrap value cost of steel times the weight of the vessel noted in lightweight tons (LWT). Residual
values are periodically reviewed and revised to recognize changes in conditions, new regulations or other reasons. Revision of residual values affect the depreciable amount of the vessels and affects depreciation expense in the period of the
revision and future periods. Management estimated the residual values of its vessels based on scrap rate of $400 per LWT.
2. Summary of Significant Accounting Policies and Disclosures (continued)
|
(d)
|
Vessels in operation (continued)
|
For any vessel group which is impaired, the impairment charge is recorded against the cost of the vessel and the accumulated depreciation as at the date of impairment is removed from the
accounts.
The cost and related accumulated depreciation of assets retired or sold are removed from the accounts at the time of sale or retirement and any gain or loss is included in the interim
unaudited condensed Consolidated Statements of Income.
|
(e)
|
Intangible assets and liabilities – charter agreements
|
The Company’s intangible assets and liabilities consist of unfavorable lease terms on charter agreements acquired in assets acquisitions. When intangible assets or liabilities associated with
the acquisition of a vessel are identified, they are recorded at fair value. Fair value is determined by reference to market data and the discounted amount of expected future cash flows. Where charter rates are higher than market charter rates,
an intangible asset is recorded, based on the difference between the acquired charter rate and the market charter rate for an equivalent vessel and equivalent duration of charter party at the date the vessel is delivered. Where charter rates
are less than market charter rates, an intangible liability is recorded, based on the difference between the acquired charter rate and the market charter rate for an equivalent vessel. The determination of the fair value of acquired assets and
liabilities requires the Company to make significant assumptions and estimates of many variables including market charter rates (including duration), the level of utilization of its vessels and its weighted average cost-of capital (“WACC”). The
estimated market charter rate (including duration) is considered a significant assumption. The use of different assumptions could result in a material change in the fair value of these items, which could have a material impact on the Company’s
financial position and results of operations. The amortizable value of favorable and unfavorable leases is amortized over the remaining life of the relevant lease term and the amortization expense or income respectively is included under the
caption “Amortization of intangible liabilities-charter agreements” in the interim unaudited condensed Consolidated Statements of Income. For any vessel group which is impaired, the impairment charge is recorded against the cost of the vessel
and the accumulated depreciation as at the date of impairment is removed from the accounts.
|
(f)
|
Impairment of Long-lived assets
|
Tangible fixed assets, such as vessels, that are held and used or to be disposed of by the Company are reviewed for impairment when events or changes in circumstances indicate that their
carrying amounts may not be recoverable. In these circumstances, the Company performs step one of the impairment test by comparing the undiscounted projected net operating cash flows for each vessel group to its carrying value. A vessel group
comprises the vessel, the unamortized portion of deferred drydocking related to the vessel and the related carrying value of the intangible asset or liability (if any) with respect to the time charter attached to the vessel at its purchase. If
the undiscounted projected net operating cash flows of the vessel group are less than its carrying amount, management proceeds to step two of the impairment assessment by comparing the vessel group’s carrying amount to its fair value, including
any applicable charter, and an impairment loss is recorded equal to the difference between the vessel group’s carrying value and fair value. Fair value is determined with the assistance from valuations obtained from third party independent ship
brokers.
The Company uses a number of assumptions in projecting its undiscounted net operating cash flows analysis including, among others, (i) revenue assumptions for charter rates on expiry of
existing charters, which are based on forecast charter rates, where relevant, in the four years from the date of the impairment test and a reversion to the historical mean of time charter rates for each vessel thereafter (ii) off-hire days,
which are based on actual off-hire statistics for the Company’s 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 from original delivery by the shipyard and (vi) scrap values.
Revenue assumptions are based on contracted charter rates up to the end of the existing contract of each vessel, and thereafter, estimated time charter rates for the remaining life of the
vessel. The estimated time charter rate used for non-contracted revenue days of each vessel is considered a significant assumption. Recognizing that the container shipping industry is cyclical and subject to significant volatility based on
factors beyond the Company’s control, management believes that using forecast charter rates in the four years from the date of the impairment assessment and a reversion to the historical mean of time charter rates thereafter, represents a
reasonable benchmark for the estimated time charter rates for the non-contracted revenue days, and takes into account the volatility and cyclicality of the market.
2. Summary of Significant Accounting Policies and Disclosures (continued)
|
(f)
|
Impairment of Long-lived assets
|
During the nine months ended September 30, 2024, and 2023, the Company evaluated the impact of the current economic situation on the recoverability of all its vessel groups and has determined that there were no
events or changes in circumstances which indicated that their carrying amounts may not be recoverable. Accordingly, there were no triggering events and no impairment test was performed for the nine months ended September 30, 2024 and 2023.
Through the latter part of 2023, the Company noted that events and circumstances triggered the existence of potential impairment for some of the Company’s vessel groups. These indicators included volatility in the charter market and the vessels’ market values, as well as the potential impact of the current container sector on management’s expectation for future revenues. As a
result, the Company performed step one of the impairment assessment of each of the Company’s vessel groups by comparing the undiscounted projected net operating cash flows for each vessel group to
their carrying value and step two of the impairment analysis was required for two vessel groups, as their undiscounted projected net operating cash flows did not exceed their carrying value. As a result, as of December 31, 2023, the Company
recorded an impairment loss of $18,830 for two vessel groups with a total aggregate carrying amount of $43,830 which was written down to their fair value of $25,000 (see note 3).
|
(g)
|
Revenue recognition and related expense
|
The Company charters out its vessels on time charters which involves placing a vessel at a charterer’s disposal for a specified period of time during which the charterer uses the vessel in
return for the payment of a specified daily hire rate. Such charters are accounted for as operating leases and therefore revenue is recognized on a straight-line basis as the average revenues over the rental periods of such charter agreements,
as service is performed. Cash received in excess of earned revenue is recorded as deferred revenue. If a time charter contains one or more consecutive option periods, then subject to the options being exercisable solely by the Company, the time
charter revenue will be recognized on a straight-line basis over the total remaining life of the time charter, including any options which are more likely than not to be exercised. If a time charter is modified, including the agreement of a
direct continuation at a different rate, the time charter revenue will be recognized on a straight-line basis over the total remaining life of the time charter from the date of modification. During the nine month periods ended September 30,
2024, and 2023, an amount of $8,854 and $1,244 loss, respectively, has been recorded in time charter-revenues for such modifications and revenues recognized on a straight-line basis. Any difference between the charter rate invoiced and the time
charter revenue recognized is classified as, or released from, deferred revenue. As of September 30, 2024, current and non-current portion from implementing the straight-line basis, amounting to $8,654 ($9,027 as for December 31, 2023) and
$17,093 ($15,139 as for December 31, 2023), respectively, are presented in the interim condensed unaudited Consolidated Balance Sheets in the line item “Prepaid expenses and other current assets” and “Other non-current assets”, respectively.
Revenues are recorded net of address commissions, which represent a discount provided directly to the charterer based on a fixed percentage of the agreed upon charter rate. Charter revenue
received in advance which relates to the period after a balance sheet date is recorded as deferred revenue within current liabilities until the respective charter services are rendered.
Under time charter arrangements the Company, as owner, is responsible for all the operating expenses of the vessels, such as crew costs, insurance, repairs and maintenance, and such costs are
expensed as incurred and are included in vessel operating expenses. Commission paid to brokers to facilitate the agreement of a new charter are included in time charter and voyage expenses as are certain expenses related to a voyage, such as
the costs of bunker fuel consumed when a vessel is off-hire or idle.
Leases: In cases of lease agreements where the Company acts as the lessee, the Company recognizes an operating lease asset and a corresponding lease
liability on the interim unaudited condensed Consolidated Balance Sheets. Following initial recognition and with regards to subsequent measurement the Company remeasures lease liability and right of use asset at each reporting date.
Leases where the Company acts as the lessor are classified as either operating or sales-type / direct financing leases.
In cases of lease agreements where the Company acts as the lessor under an operating lease, the Company keeps the underlying asset on the interim unaudited condensed Consolidated Balance
Sheets and continues to depreciate the assets over its useful life. In cases of lease agreements where the Company acts as the lessor under a sales-type / direct financing lease, the Company derecognizes the underlying asset and records a net
investment in the lease. The Company acts as a lessor under operating leases in connection with all of its charter out – bareboat-out arrangements.
2. Summary of Significant Accounting Policies and Disclosures (continued)
|
(g)
|
Revenue recognition and related expense (continued)
|
In cases of sale and leaseback transactions, if the transfer of the asset to the lessor does not qualify as a sale, then the transaction constitutes a failed sale and leaseback and is
accounted for as a financial liability. For a sale to have occurred, the control of the asset would need to be transferred to the lessor, and the lessor would need to obtain substantially all the benefits from the use of the asset. During 2021,
the Company entered into six agreements which qualified as failed sale and leaseback transactions as the Company was required to repurchase the vessels at the end of the lease term and the Company had accounted for the six agreements as
financing transactions. Following the full prepayment of (i) the $54,000 sale and leaseback agreement with CMBFL on August 27, 2024, and (ii) the $14,735 sale and leaseback agreement with Neptune on September 12, 2024, the Company as of
September 30, 2024, has accounted for four agreements as financing transactions.
The Company elected the practical expedient which allows the Company to treat the lease and non-lease components as a single lease component for the leases where the timing and pattern of
transfer for the non-lease component and the associated lease component to the lessees are the same and the lease component, if accounted for separately, would be classified as an operating lease. The combined component is therefore accounted
for as an operating lease under ASC 842, as the lease components are the predominant characteristics.
|
(h)
|
Fair Value Measurement and Financial Instruments
|
Financial instruments carried on the interim unaudited condensed Consolidated Balance Sheets include cash and cash equivalents, time deposits, restricted cash, trade receivables and payables,
other receivables and other liabilities and long-term debt. The particular recognition methods applicable to each class of financial instrument are disclosed in the applicable significant policy description of each item or included below as
applicable.
Fair Value Measurement: Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability
(i.e. the “exit price”) in an orderly transaction between market participants at the measurement date. The hierarchy is broken down into three levels based on the observability of inputs as follows:
Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.
Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a
significant degree of judgement.
Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either
directly or indirectly.
Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
In December 2021, the Company purchased interest rate caps with an aggregate notional amount of $484,106, which amortizes over time as the Company’s outstanding debt balances
decline. In February 2022, the Company further hedged its exposure by putting in place two USD one-month LIBOR interest rate caps of 0.75% through fourth quarter 2026, on $507,891 of its floating rate debt. The second interest rate cap was
not designated as a cash flow hedge and therefore the negative fair value adjustment of $4,957 for nine months ended September 30, 2024 was recorded through interim unaudited condensed Consolidated Statements of Income ($1,037 negative fair
value adjustment for nine months ended September 30, 2023). ASC 815-20-25-13a stipulates that an entity may designate either all or certain future interest payments on variable-rate debt as the hedged exposure in a cash flow hedge
relationship. The Company is designating certain future interest payments on its outstanding variable-rate debt as the hedged item in this relationship. Under ASC 815-20-25-106e, “for cash flow hedges of the interest payments on only a
portion of the principal amount of the interest-bearing asset or liability, the notional amount of the interest rate cap designated as the hedging instrument matches the principal amount of the portion of the asset or liability on which the
hedged interest payments are based”. In this case, the Company has designated only a portion of its outstanding debt (initially, $253,946) as the hedged item, and any interest payments beyond the notional amount of the interest rate cap in
any given period are not designated as being hedged. During 2023, all Company’s loan agreements have been amended and restated to take into effect the transition from LIBOR to the Secured Overnight Financing Rate (“SOFR”) and the relevant
provisions on a replacement rate. In addition, the Company’s interest rate caps automatically transited to 1-month Compounded SOFR on July 1, 2023, at a level of 0.64%.
2. Summary of Significant Accounting Policies and Disclosures (continued)
|
(h)
|
Fair Value Measurement and Financial Instruments (continued)
|
Fair value measurement (continued)
The Company assesses the effectiveness of the hedges on an ongoing basis. The amounts included in accumulated other comprehensive income will be reclassified to interest expense should the
hedge no longer be considered effective.
The objective of the hedges is to reduce the variability of cash flows associated with the interest rates relating to the Company’s variable rate borrowings. When derivatives are used, the
Company is exposed to credit loss in the event of non-performance by the counterparties; however, non-performance is not anticipated. ASC 815, Derivatives and Hedging, requires companies to recognize
all derivative instruments as either assets or liabilities at fair value in the balance sheet. The fair values of the interest rate derivatives are based on quoted market prices for similar instruments from commercial banks (based on
significant observable inputs - Level 2 inputs).
On April 4, 2024, the Company entered into a foreign exchange option strip (“FX option”) to purchase €3,000, with monthly settlements, starting April 11, 2024, and ending March 13, 2025. The
strike price is EURUSD 1.10. The Company entered to this option to hedge the downside foreign exchange risk associated with expenses denominated in EUR against fluctuations between the US Dollar and Euro. This FX option is designated as a cash
flow hedge of anticipated expenses totalling €3,000, expected to occur each month. Changes in the fair value of the option other than “intrinsic value” are excluded from the assessment of effectiveness. The effectiveness of the hedging
relationship will be periodically assessed during the life of the hedge by comparing the terms of the option and the forecasted expenses to ensure that they continue to coincide. Should the critical terms no longer match exactly, hedge
effectiveness (both prospective and retrospective) will be assessed by evaluating the dollar-offset ratio of the spot intrinsic value of the actual option contract and a hypothetically perfect option contract.
Financial Risk Management: The Company activities expose it to a variety of financial risks including fluctuations in, time charter
rates, credit and interest rates risk. Risk management is carried out under policies approved by executive management. Guidelines are established for overall risk management, as well as specific areas of operations.
Credit Risk: The Company closely monitors its credit exposure to customers and
counter-parties for credit risk. The Company has entered into commercial management agreement with Conchart Commercial Inc. (“Conchart”), pursuant to which Conchart has agreed to provide commercial management services to the Company, including
the negotiation, on behalf of the Company, vessel employment contracts (see note 7). Conchart has policies in place to ensure that it trades with customers and counterparties with an appropriate credit history. Financial instruments that
potentially subject the Company to concentrations of credit risk are accounts receivable, cash and cash equivalents and time deposits. The Company does not believe its exposure to credit risk is likely to have a material adverse effect on its
financial position, results of operations or cash flows.
Liquidity Risk: Prudent liquidity risk management implies maintaining sufficient cash and
marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Company monitors cash balances appropriately to meet working capital needs.
Foreign Exchange Risk: Foreign currency transactions are translated into the measurement currency rates prevailing at the dates of
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the interim unaudited condensed
Consolidated Statements of Income. The Company, on April 4, 2024, entered into a FX option to purchase €3,000, with monthly settlements, starting April 11, 2024, and ending March 13, 2025, in order to mitigate foreign exchange risk.
|
(i)
|
Derivative instruments
|
The Company is exposed to interest rate risk relating to its variable rate borrowings. In December 2021, the Company purchased interest rate caps with an aggregate notional amount of $484,106
(“December 2021 hedging"), which amount reduces over time as the Company’s outstanding debt balances amortize. The objective of the hedges is to reduce the variability of cash flows associated with the interest relating to its variable rate
borrowings.
At the inception of the transaction, the Company documented the relationship between hedging instruments and hedged items, as well as its risk management objective and the strategy for undertaking various hedging
transactions. The Company also documented its assessment, both at the hedge inception and on an ongoing basis, of whether the derivative financial instruments that are used in hedging transactions are highly effective in offsetting changes in
fair values or cash flows of hedged items.
2. Summary of Significant Accounting Policies and Disclosures (continued)
|
(i)
|
Derivative instruments (continued)
|
This transaction is designated as a cash flow hedge, and under ASU 2017-12, cash flow hedge accounting allows all changes in fair value to be recorded through Other Comprehensive Income once
hedge effectiveness has been established. Under ASC 815-30-35-38, amounts in accumulated other comprehensive income shall be reclassified into earnings in the same period or periods during which the hedged forecasted transaction affects
earnings (i.e., each quarter) and shall be presented in the same income statement line item as the earnings effect of the hedged item in accordance with paragraph 815-20-45-1A.
The premium paid related to this derivative was classified in the interim unaudited condensed Consolidated Statements of Cash Flows as operating activities in the line item “Derivative
asset”. The premium shall be amortized into earnings “on a systematic and rational basis over the period in which the hedged transaction affects earnings” (ASC 815-30-35-41A); that is, the Company will expense the premium over the life of the
interest rate cap in accordance with the “caplet method,” as described in Derivatives Implementation Group (DIG) Issue G20. DIG Issue G20 dictates that the cost of the interest rate cap is recognized on earnings over time, based on the value of
each periodic caplet. The cost per period will change as the caplet for that period changes in value. Given that the interest rate cap is forward-starting, expensing of the premium will not begin until the effective start date of the interest
rate cap, in order to match potential cap revenue with the cap expenses in the period in which they are incurred.
In February 2022, the Company further purchased two interest rate caps with an aggregate notional amount of $507,891. The first interest rate cap of $253,946 which has been
designated as a cash flow hedge, has the same accounting treatment as described above for the December 2021 hedging. The second interest rate cap was not designated as a cash flow hedge and therefore the negative fair value adjustment of
$4,957 as at September 30, 2024 ($1,037 negative fair value adjustment as at September 30, 2023) was recorded through interim unaudited condensed Consolidated Statements of Income. ASC 815-20-25-13a stipulates that an entity may designate
either all or certain future interest payments on variable-rate debt as the hedged exposure in a cash flow hedge relationship. In this case, the Company has designated only a portion of its outstanding debt (initially $253,946) as the hedged
item, and any interest payments beyond the notional amount of the interest rate cap in any given period are not designated as being hedged (see note 5). As of September 30, 2024, all Company’s loan agreements have been amended and restated to
take into effect the transition from LIBOR to the Secured Overnight Financing Rate (“SOFR”) and the relevant provisions on a replacement rate. In addition, the Company’s interest rate caps automatically transited to 1-month Compounded SOFR on
July 1, 2023, at a level of 0.64%.
The amounts included in accumulated other comprehensive income will be reclassified to interest expense should the hedge no longer be considered effective. The Company assesses the
effectiveness of the hedges on an ongoing basis. As of September 30, 2024, and September 30, 2023, following a quantitative assessment, part of the hedge was no longer considered effective and an amount of $877 and $(80) was reclassified
to/(from) other comprehensive income to the interim unaudited condensed Consolidated Statements of Income.
On April 4, 2024, the Company entered into a FX option to purchase €3,000, with monthly settlements, starting April 11, 2024, and ending March 13, 2025. The initial value of the excluded
component is equal to the option premium of €417 and are recognized in earnings using the amortization approach as per ASC 815-20-25-83A. As of September 30, 2024, following a quantitative assessment, no amount has been reclassified to other
comprehensive income to the interim unaudited condensed Consolidated Statements of Income.
|
(j)
|
Recent accounting pronouncements
|
On November 27, 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This standard improves reportable segment disclosures by
adding and enhancing interim disclosure requirements, clarifying circumstances in which entities can disclose multiple segment measures of profit or loss, providing new segment disclosure requirements for entities with a single reportable
segment, and adding other disclosure requirements. This standard is effective for all entities that are subject to Topic 280, Segment Reporting for annual periods beginning after December 15, 2023, but early adoption is permitted. The Company
is currently evaluating the impacts of this guidance on its interim unaudited condensed consolidated financial statement presentation or results.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Taxes Disclosures, which requires greater disaggregation of income tax disclosures. The new
standard requires additional information to be disclosed with respect to the income tax rate reconciliation and income taxes paid disaggregated by jurisdiction. This ASU should be applied prospectively for fiscal years beginning after December
15, 2024, with retrospective application permitted. The Company is evaluating currently the impacts of this guidance on its interim unaudited condensed consolidated financial statement presentation or results.
| |
|
Vessel Cost,
as adjusted for
Impairment charges
|
|
|
Accumulated
Depreciation
|
|
|
Net Book
Value
|
|
|
As of January 1, 2023
|
|
$
|
1,886,158
|
|
|
$
|
(262,851
|
)
|
|
$
|
1,623,307
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
|
138,802
|
|
|
|
-
|
|
|
|
138,802
|
|
|
Depreciation
|
|
|
-
|
|
|
|
(72,443
|
)
|
|
|
(72,443
|
)
|
|
Impairment loss
|
|
|
(25,544
|
)
|
|
|
6,714
|
|
|
|
(18,830
|
)
|
|
Disposals
|
|
|
(6,803
|
)
|
|
|
68
|
|
|
|
(6,735
|
)
|
|
As of December 31, 2023
|
|
$
|
1,992,613
|
|
|
$
|
(328,512
|
)
|
|
$
|
1,664,101
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
|
25,310
|
|
|
|
-
|
|
|
|
25,310
|
|
|
Depreciation
|
|
|
-
|
|
|
|
(56,082
|
)
|
|
|
(56,082
|
)
|
|
As of September 30, 2024
|
|
$
|
2,017,923
|
|
|
$
|
(384,594
|
)
|
|
$
|
1,633,329
|
|
As of September 30, 2024, and December 31, 2023, the Company had made additions for vessel expenditures, reefers, emissions management and ERP modules. As of September 30, 2024, and September 30, 2023, unpaid
capitalized expenses were $6,883 and $5,298, respectively.
2023 Vessels acquisitions
In May and June 2023, the Company took delivery of the four 8,544 TEU Vessels as per below:
|
Name
|
Capacity in TEUs
|
Year Built
|
Purchase Price
|
Delivery date
|
|
GSL Alexandra
|
8,544
|
2004
|
$30,000
|
June 2, 2023
|
|
GSL Sofia
|
8,544
|
2003
|
$30,000
|
May 22, 2023
|
|
GSL Effie
|
8,544
|
2003
|
$30,000
|
May 30, 2023
|
|
GSL Lydia
|
8,544
|
2003
|
$33,300
|
June 26, 2023
|
2023 Sale of Vessel
On March 23, 2023, the Company sold GSL Amstel for net proceeds of $5,940, and the vessel was released as collateral under the Company’s $140,000 loan facility with Credit Agricole Corporate and Investment Bank,
Hamburg Commercial Bank AG, E.Sun Commercial Bank, Ltd, CTBC Bank Co. Ltd. and Taishin International Bank.
Impairment
The Company has evaluated the impact of current economic situation on the recoverability of all its vessel groups and has determined that there were no events or changes in circumstances which indicated that
their carrying amounts may not be recoverable. Accordingly, there was no triggering event and no impairment test was performed during the nine months ended September 30, 2024.
Through the latter part of 2023, the Company noted that events and circumstances triggered the existence of potential impairment for some of the Company’s vessel groups. These indicators included volatility in the charter market and the vessels’ market values, as well as the potential impact of the current container sector on management’s expectation for future revenues. As a
result, the Company performed step one of the impairment assessment of each of the Company’s vessel groups by comparing the undiscounted projected net operating cash flows for each vessel group to
their carrying value and step two of the impairment analysis was required for two vessel groups, as their undiscounted projected net operating cash flows did not exceed their carrying value. As a result, as of December 31, 2023, the
Company recorded an impairment loss of $18,830 for two vessel groups with a total aggregate carrying amount of $43,830 which was written down to their fair value of $25,000.
Collateral
As of September 30, 2024, 20 vessels were pledged as collateral under the 5.69% Senior Secured Notes due 2027 and 32 vessels under the Company’s loan facilities.
Sixteen vessels were unencumbered as of September 30, 2024.
3. Vessels in Operation (continued)
Advances for vessels acquisitions and other additions
As of September 30, 2024, and December 31, 2023, there were no advances for vessel acquisitions, as all vessels had been delivered as at these dates. As of September 30, 2024, and December 31, 2023, the Company
had advances for other vessel additions totalling $12,447 and $12,210, respectively.
4. Intangible Liabilities – Charter Agreements
Intangible Liabilities – Charter Agreements as of September 30, 2024, and December 31, 2023, consisted of the following:
| |
|
September 30,
2024
|
|
|
December 31,
2023
|
|
|
Opening balance
|
|
$
|
5,662
|
|
|
$
|
14,218
|
|
|
Disposals (*)
|
|
|
-
|
|
|
|
(476
|
)
|
|
Amortization
|
|
|
(4,523
|
)
|
|
|
(8,080
|
)
|
|
Total
|
|
$
|
1,139
|
|
|
$
|
5,662
|
|
(*) The acceleration of the unamortized portion of GSL Amstel intangible liability-charter agreement when the vessel was sold on March 23, 2023.
Intangible liabilities are related to (i) acquisition of the Seven, the Twelve and the Four Vessels, and (ii) management’s estimate of the fair value of below-market charters on August 14, 2008, the date of the
Marathon Merger (see note 1). These intangible liabilities are being amortized over the remaining life of the relevant lease terms and the amortization income is included under the caption “Amortization of
intangible liabilities-charter agreements” in the interim unaudited condensed Consolidated Statements of Income.
Amortization income of intangible liabilities-charter agreements for each of the nine months ended September 30, 2024, and 2023 was $4,523 and $6,563, respectively. The aggregate amortization of the intangible liabilities in each of the 12-month periods up to September 30, 2026, is estimated to be as follows:
| |
|
Amount
|
|
|
September 30, 2025
|
|
$
|
1,003
|
|
|
September 30, 2026
|
|
|
136
|
|
| |
|
$
|
1,139
|
|
The weighted average useful lives are 0.21 years for the remaining intangible liabilities-charter agreements terms.
5. Derivative Assets
In December 2021, the Company purchased interest rate caps with an aggregate notional amount of $484,106, which amount reduces over time as the Company’s outstanding debt
balances amortize. The objective of the hedges is to reduce the variability of cash flows associated with the interest relating to its variable rate borrowings. The Company receives payments on the caps for any period that the one-month USD
LIBOR rate is above beyond the strike rate, which is 0.75%. The termination date of the interest rate cap agreements is November 30, 2026. The premium paid to purchase the interest caps was $7,000,
which was paid out of cash on December 22, 2021. The premium is being amortized over the life of the interest rate cap by using the caplet method.
In February 2022, the Company further hedged its exposure to a potential rising interest rate environment by putting in place two USD one-month LIBOR interest rate caps of 0.75%
through fourth quarter 2026, on $507,891 of its floating rate debt. The second interest rate cap was not designated as a cash flow hedge and therefore the negative fair value adjustment of $4,957 as at September 30, 2024 ($1,037 negative fair
value adjustment as at September 30, 2023) was recorded through Interim Unaudited Condensed Consolidated Statements of Income. The premium paid by the Company to purchase the interest rate caps was $15,370, which was paid out of cash on the
settlement date. ASC 815-20-25-13a stipulates that an entity may designate either all or certain future interest payments on variable-rate debt as the hedged exposure in a cash flow hedge relationship. In this case, the Company has designated
only a portion of its outstanding debt (initially, $253,946) as the hedged item, and any interest payments beyond the notional amount of the interest rate cap in any given period are not designated as being hedged. Amount received
from interest rate caps for each of the nine month periods ended September 30, 2024, and 2023, was $21,198 and $24,380, respectively.
5. Derivative Assets (continued)
On April 4, 2024, the Company entered into a foreign exchange option strip (“FX option”) to buy €3,000, with monthly settlements on the 11th calendar day of each month, starting April 11,
2024, and ending March 13, 2025. The initial value of the excluded component is equal to the option premium of €417 and is recognized in earnings using the amortization approach as per ASC 815-20-25-83A. As of September 30, 2024, and September
30, 2023, following a quantitative assessment, no amount has been reclassified to other comprehensive income to the interim unaudited condensed Consolidated Statements of Income.
| |
|
September 30,
2024
|
|
|
December 31,
2023
|
|
|
Opening balance
|
|
$
|
41,506
|
|
|
$
|
63,503
|
|
|
FX option premium
|
|
|
109
|
|
|
|
-
|
|
|
Unrealized loss on derivative assets (interest rate caps)
|
|
|
(15,280
|
)
|
|
|
(16,625
|
)
|
|
Unrealized gain on FX option
|
|
|
320
|
|
|
|
-
|
|
|
Fair value adjustment on derivative asset
|
|
|
(4,957
|
)
|
|
|
(5,372
|
)
|
|
Closing balance
|
|
$
|
21,698
|
|
|
$
|
41,506
|
|
|
Less: Current portion of derivative assets (interest rate caps)
|
|
|
(14,749
|
)
|
|
|
(24,639
|
)
|
|
Less: Current portion of FX option
|
|
|
(429
|
)
|
|
|
-
|
|
|
Non-current portion of derivative assets (interest rate caps)
|
|
$
|
6,520
|
|
|
$
|
16,867
|
|
The amounts included in accumulated other comprehensive income will be reclassified to interest expense should the hedge no longer be considered effective. The Company assesses the
effectiveness of the hedges on an ongoing basis. As of September 30, 2024, and September 30, 2023, following a quantitative assessment, part of the hedge was no longer considered effective and an amount of $877 and $(80) was reclassified
to/(from) other comprehensive income to the interim unaudited condensed Consolidated Statements of Income.
Long-term debt as of September 30, 2024, and December 31, 2023, consisted of the following:
|
Facilities
|
|
September 30,
2024
|
|
|
December 31, 2023
|
|
|
2024 Senior Secured Term Loan Facility (a)
|
|
$
|
300,000
|
|
|
$
|
-
|
|
|
Macquarie loan (b)
|
|
|
29,500
|
|
|
|
66,000
|
|
|
2027 Secured Notes (c)
|
|
|
245,000
|
|
|
|
284,375
|
|
|
E.SUN, MICB, Cathay, Taishin Credit Facility (d)
|
|
|
10,700
|
|
|
|
28,500
|
|
|
Sinopac Credit Facility (e)
|
|
|
-
|
|
|
|
8,220
|
|
|
HCOB, CACIB, ESUN, CTBC, Taishin Credit Facility (f)
|
|
|
57,404
|
|
|
|
73,283
|
|
|
Deutsche Credit Facility (g)
|
|
|
-
|
|
|
|
40,046
|
|
|
HCOB Credit Facility (h)
|
|
|
-
|
|
|
|
24,744
|
|
|
CACIB, Bank Sinopac, CTBC Credit Facility (i)
|
|
|
-
|
|
|
|
38,950
|
|
|
Chailease Credit Facility (j)
|
|
|
-
|
|
|
|
2,608
|
|
|
Syndicated Senior Secured Credit Facility (CACIB, ABN, First-Citizens & Trust Company, Siemens, CTBC, Bank Sinopac, Palatine) (k)
|
|
|
-
|
|
|
|
149,200
|
|
|
Total credit facilities
|
|
$
|
642,604
|
|
|
$
|
715,926
|
|
|
Sale and Leaseback Agreement CMBFL - $120,000 (l)
|
|
|
45,388
|
|
|
|
64,438
|
|
|
Sale and Leaseback Agreement CMBFL - $54,000 (m)
|
|
|
-
|
|
|
|
36,018
|
|
|
Sale and Leaseback Agreement - Neptune $14,735 (n)
|
|
|
-
|
|
|
|
6,796
|
|
|
Total Sale and Leaseback Agreements
|
|
$
|
45,388
|
|
|
$
|
107,252
|
|
|
Total borrowings
|
|
$
|
687,992
|
|
|
$
|
823,178
|
|
|
Less: Current portion of long-term debt
|
|
|
(145,997
|
)
|
|
|
(164,888
|
)
|
|
Less: Current portion of Sale and Leaseback Agreements (l,m,n)
|
|
|
(6,525
|
)
|
|
|
(28,365
|
)
|
|
Less: Deferred financing costs (p)
|
|
|
(7,455
|
)
|
|
|
(10,750
|
)
|
|
Non-current portion of Long-Term Debt
|
|
$
|
528,015
|
|
|
$
|
619,175
|
|
6. Long-Term Debt (continued)
|
a)
|
$300.0 Million Senior Secured Term Loan Facility CACIB, ABN, Bank of America, First Citizens Bank
|
On August 7, 2024, the Company entered into a $300.0 million senior secured term loan facility (the “2024 Senior Secured Term Loan Facility”) with Credit Agricole
Corporate and Investment Bank (“CACIB”), ABN AMRO Bank N.V. (“ABN”), Bank of America N.A. (“BofA”) and First Citizens Bank & Trust Company (“First Citizens”) to refinance, or prepay, in full or in part, certain of its outstanding debt
facilities.
All three tranches were drawdown in the third quarter of 2024 and the term loan facility has a maturity in the third quarter of 2030.
The term loan facility is repayable in 12 equal consecutive quarterly instalments of $12,000, four equal consecutive quarterly instalments of $10,000, four equal consecutive
quarterly instalments of $8,000 and four equal consecutive quarterly instalments of $6,000 together with a final balloon payment of $60,000 on the term loan facility termination date.
This facility’s interest rate is SOFR plus a margin of 1.85% per annum payable quarterly in arrears.
The Company used the net proceeds from the 2024 Senior Secured Term Loan Facility to refinance or prepay, in full or in part, the following (a) existing debt facilities
(i) Sinopac Credit Facility, (ii) Deutsche Credit Facility, (iii) HCOB Credit Facility, (iv) CACIB, Bank Sinopac, CTBC Credit Facility, (v) Chailease Credit Facility, (v) Syndicated Senior Secured Credit
Facility (CACIB, ABN, First-Citizens & Trust Company, Siemens, CTBC, Bank Sinopac, Palatine), (vi) Macquarie loan and (vii) E.SUN, MICB, Cathay, Taishin Credit Facility and (b) existing sale and
lease back agreements (i) $54.0 Million Sale and Leaseback agreement – CMBFL and (ii) $14.7 Million Sale and Leaseback agreement - Neptune Maritime Leasing.
As of September 30, 2024, the aggregate principal amount outstanding under the 2024 Senior Secured Term Loan Facility was $300,000.
|
b)
|
Macquarie Credit Facility
|
On May 18, 2023, the Company via its subsidiaries Global Ship Lease 72 LLC, Global Ship Lease 73 LLC, Global Ship Lease 74 LLC and Global Ship Lease 75 LLC entered into a new credit facility
agreement with Macquarie Bank Limited (“Macquarie”) for an amount of $76,000 to finance part of the acquisition cost of four containership, each with carrying capacity of, 8,544 TEU vessels, for an aggregate purchase price of $123,300. The
vessels were delivered during the second quarter of 2023.
All four tranches were drawdown in the second quarter of 2023 and the credit facility has a maturity in May 2026.
The facility is repayable in two equal consecutive quarterly instalments of $5,000, six equal consecutive quarterly instalments of $6,000 and one quarterly instalments of $3,000
and two equal consecutive quarterly instalments of $1,000 with a final balloon payment of $25,000 payable three years after the first utilisation date.
This facility’s interest rate is SOFR plus a margin of 3.50% per annum payable quarterly in arrears.
On September 10, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on
August 7, 2024, to partially prepay the amount of $18,500 under this facility (prepayment was deducted from the final ballon payment).
As of September 30, 2024, the outstanding balance of this facility was $29,500.
|
c)
|
5.69% Senior Secured Notes due 2027
|
On June 16, 2022, Knausen Holding LLC (the "Issuer"), an indirect wholly-owned subsidiary of the Company, closed on the private placement of $350,000 of publicly rated/investment grade 5.69%
Senior Secured Notes due 2027 (the “2027 Secured Notes”) to a limited number of accredited investors. The fixed interest rate was determined on June 1, 2022, based on the interpolated interest rate of 2.84% plus a margin 2.85%.
The Company used the net proceeds from the private placement for the repayment of the remaining outstanding balances on its New Hayfin Credit Facility and the Hellenic Bank Credit Facility
(releasing five unencumbered vessels), and our 2024 Notes. The remaining amount of net proceeds were allocated for general corporate purposes.
6. Long-Term Debt (continued)
|
c)
|
5.69% Senior Secured Notes due 2027 (continued)
|
An amount equal to 15% per annum of the original principal balance of each Note is payable in equal quarterly instalments on the 15th day of each of January, April, July, and October starting
October 15, 2022, and the remaining unpaid principal balance shall be due and payable on the maturity date of July 15, 2027. Interest accrues on the unpaid balance of the Notes, payable quarterly on the 15th day of January, April, July, and
October in each year, such interest commencing and accruing on and from June 14, 2022.
The 2027 Secured Notes are senior obligations of the Issuer, secured by first priority mortgages on 20 identified vessels owned by subsidiaries of the Issuer (the “Subsidiary Guarantors”) and
certain other associated assets and contract rights, as well as share pledges over the Subsidiary Guarantors. In addition, the 2027 Secured Notes are fully and unconditionally guaranteed by the Company.
As of September 30, 2024, the aggregate principal amount outstanding under the 2027 Secured Notes was $245,000.
|
d)
|
$60.0 Million E.SUN, MICB, Cathay, Taishin Credit Facility
|
On December 30, 2021, the Company via its subsidiaries Zeus One Marine LLC, Hephaestus Marine LLC and Pericles Marine LLC, entered into a new syndicated senior secured debt facility with
E.SUN Commercial Bank Ltd (“E.SUN”), Cathay United Bank (“Cathay”), Mega International Commercial Bank Co. Ltd (“MICB”) and Taishin International Bank (“Taishin”). The Company used a portion of the net proceeds from this credit facility to
fully prepay the outstanding balance of the Blue Ocean Junior Credit Facility at that time, amounting to $26,205 plus a prepayment fee of $3,968. All three tranches were drawn down in January 2022.
The facility was repayable in eight equal consecutive quarterly instalments of $4,500 and ten equal consecutive quarterly instalments of $2,400.
This facility’s interest is SOFR plus a margin of 2.75% per annum plus Credit Adjustment Spread (“CAS”) payable quarterly in arrears.
On September 11, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on
August 7, 2024, to partially prepay the amount of $8,500 under this facility. Following the prepayment, the outstanding balance of the facility is repayable in four equal consecutive quarterly instalments of $2,400 and one quarterly
instalment of $1,100 and new maturity will be in October 2025.
As of September 30, 2024, the outstanding balance of this facility was $10,700.
|
e)
|
$12.0 Million Sinopac Capital International Credit Facility
|
On August 27, 2021, the Company via its subsidiary Global Ship Lease 42 LLC entered into a secured credit facility for an amount of $12,000 with Sinopac Capital International (HK) Limited (“Sinopac Credit
Facility”), which was partially used to fully refinance the Hayfin Credit Facility. The full amount was drawn down in September 2021 and the credit facility has a maturity in September 2026.
The facility was repayable in 20 equal consecutive quarterly instalments of $420 with a final balloon of $3,600 payable together with the final instalment.
This facility bore interest at SOFR plus a margin of 3.25% per annum payable quarterly in arrears.
On September 11, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on
August 7, 2024, to fully prepay the amount of $6,960 under this facility.
As of September 30, 2024, the outstanding balance of this facility was $nil.
6. Long-Term Debt (continued)
|
f)
|
$140.0 Million HCOB, CACIB, ESUN, CTBC, Taishin Credit Facility
|
On July 6, 2021, the Company entered into a facility with Credit Agricole Corporate and Investment Bank (“CACIB”), Hamburg Commercial Bank AG (“HCOB”), E.Sun Commercial Bank, Ltd (“ESUN”), CTBC Bank Co. Ltd.
(“CTBC”) and Taishin International Bank (“Taishin”) for a total of $140,000 to finance the acquisition of the Twelve Vessels. The full amount was drawdown in July 2021 and the credit facility has a maturity in July 2026.
The facility is repayable in six equal consecutive quarterly instalments of $8,000, eight equal consecutive quarterly instalments of $5,400 and six equal consecutive quarterly
instalments of $2,200 with a final balloon payment of $35,600 payable together with the final instalment. On March 23, 2023, due to the sale of GSL Amstel, the Company repaid $2,838 on this facility of which $1,000 was deducted from the final
balloon payment, and the vessel was released as collateral.
This facility’s interest rate is SOFR plus a margin of 3.25% per annum plus CAS payable quarterly in arrears.
As of September 30, 2024, the outstanding balance of this facility was $57,404.
|
g)
|
$51.7 Million Deutsche Bank AG Credit Facility
|
On May 6, 2021, the Company via its subsidiary Laertis Marine LLC entered into a secured facility for an amount of $51,670 with Deutsche Bank AG in order to refinance one of the
three previous tranches of the $180,500 Deutsche, CIT, HCOB, Entrust, Blue Ocean Credit Facility, that had a maturity date on
June 30, 2022, of an amount $48,527.
The facility was repayable in 20 equal consecutive quarterly instalments of $1,162.45 with a final balloon of $28,421 payable together with the final instalment.
This facility bore interest at SOFR plus a margin of 3.25% per annum payable quarterly in arrears.
On August 12, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August
7, 2024, to fully prepay the amount of $36,558 under this facility.
As of September 30, 2024, the outstanding balance of this facility was $nil.
|
h)
|
$64.2 Million Hamburg Commercial Bank AG Credit Facility
|
On April 15, 2021, the Company entered into a Senior Secured term loan facility with Hamburg Commercial Bank AG “the HCOB Credit Facility” for an amount of up to $64,200 in order to finance the acquisition of six
out of the Seven Vessels.
Tranche A, E and F amounting to $32,100 were drawn down in April 2021 and have a maturity date in April 2025, Tranche B and D amounting to $21,400 were drawn down in May 2021 and have a
maturity date in May 2025, and Tranche C amounting to $10,700 was drawn down in July 2021 and has a maturity date in July 2025.
Each Tranche of the facility was repayable in 16 equal consecutive quarterly instalments of $668.75.
This facility bore interest at SOFR plus a margin of 3.50% per annum payable quarterly in arrears.
On September 5, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on
August 7, 2024, to fully prepay the amount of $12,706 under this facility.
As of September 30, 2024, the outstanding balance of this facility was $nil.
|
i)
|
$51.7 Million CACIB, Bank Sinopac, CTBC Credit Facility
|
On April 13, 2021, the Company via its subsidiary Penelope Marine LLC entered into a secured facility for an amount of $51,700 in order to refinance one of the three previous tranches
of the $180,500 Deutsche, CIT, HCOB, Entrust, Blue Ocean Credit Facility, that had a maturity date on June 30, 2022, of an outstanding
amount of $48,648. The secured credit facility has a maturity in April 2026.
6. Long-Term Debt (continued)
|
i)
|
$51.7 Million CACIB, Bank Sinopac, CTBC Credit Facility (continued)
|
The lenders are Credit Agricole Corporate and Investment Bank (“CACIB”), Bank Sinopac Co. Ltd. (“Bank Sinopac”) and CTBC Bank Co. Ltd. (“CTBC”). The facility is repayable in 20 equal
consecutive quarterly instalments of $1,275 with a final balloon of $26,200 payable together with the final instalment.
This facility bore interest at SOFR plus a margin of 2.75% per annum plus CAS payable quarterly in arrears.
On August 9, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August
7, 2024, to fully prepay the amount of $35,125 under this facility.
As of September 30, 2024, the outstanding balance of this facility was $nil.
|
j)
|
$9.0 Million Chailease Credit Facility
|
On February 26, 2020, the Company via its subsidiaries, Athena Marine LLC, Aphrodite Marine LLC and Aris Marine LLC entered into a secured term facility agreement with Chailease International
Financial Services Pte., Ltd. for an amount of $9,000. The Chailease Credit Facility was used to refinance the DVB Credit Facility.
The facility was repayable in 36 consecutive monthly instalments of $156 and 24 monthly instalments of $86 with a final balloon of $1,314 payable together with the final instalment.
This facility bore interest at SOFR plus a margin of 4.20% per annum.
On September 12, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on
August 7, 2024, to fully prepay the amount of $1,831 under this facility.
As of September 30, 2024, the outstanding balance of this facility was $nil.
|
k)
|
$268.0 Million Syndicated Senior Secured Credit Facility (CACIB, ABN, First-Citizens & Trust Company, Siemens, CTBC, Bank Sinopac,
Palatine)
|
On September 19, 2019, the Company entered into a Syndicated Senior Secured Credit Facility in order to refinance existing credit facilities that had a maturity date in December 2020, of an
outstanding amount of $224,310.
The Senior Syndicated Secured Credit Facility was agreed to be borrowed in two tranches. The Lenders are Credit Agricole Corporate and Investment Bank (“CACIB”), ABN Amro Bank N.V. (“ABN”),
First-Citizens & Trust Company, Siemens Financial Services Inc (“Siemens”), CTBC Bank Co. Ltd. (“CTBC”), Bank Sinopac Ltd. (“Bank Sinopac”) and Banque Palatine (“Palatine”).
Tranche A amounting to $230,000 was drawn down in full on September 24, 2019 and is scheduled to be repaid in 20 consecutive quarterly instalments of $5,200 starting
from December 12, 2019 and a balloon payment of $126,000 payable on September 24, 2024.
Tranche B amounts to $38,000 was drawn down in full on February 10, 2020 and was scheduled to be repaid in 20 consecutive quarterly instalments of $1,000 and a balloon payment of $18,000
payable in the termination date on the fifth anniversary from the utilization date of Tranche A, which falls in September 24, 2024. In January 2022, the Company agreed a new senior secured debt facility to refinance its outstanding Syndicated
Senior Secured Credit Facility, which extended the maturity date from September 2024 to December 2026, amended certain covenants in the Company’s favor at an unchanged rate of LIBOR + 3.00%. On July 1, 2022, the interest rate was SOFR plus a
margin of 3.00% plus CAS and was payable at each quarter end date.
On August 9, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August
7, 2024, to fully prepay the amount of $133,200 under this facility.
As of September 30, 2024, the outstanding balance of this facility was $nil.
6. Long-Term Debt (continued)
|
l)
|
$120.0 Million Sale and Leaseback agreements - CMBFL Four Vessels
|
On August 26, 2021, the Company via its subsidiaries Global Ship Lease 68 LLC, Global Ship Lease 69 LLC, Global Ship Lease 70 LLC and Global Ship Lease 71 LLC, entered into four $30,000 sale
and leaseback agreements with CMB Financial Leasing Co. Ltd. (“CMBFL”) to finance the acquisition of the Four Vessels. As at September 30, 2021, the Company had drawdown a total of $90,000. The drawdown for the fourth vessel, amounting to
$30,000, took place on October 13, 2021 together with the delivery of this vessel. The Company has a purchase obligation to acquire the Four Vessels at the end of their lease terms and under ASC 842-40, the transaction has been accounted for as
a failed sale. In accordance with ASC 842-40, the Company did not derecognize the respective vessels from its balance sheet and accounted for the amounts received under the sale and leaseback agreement as financial liabilities.
Each sale and leaseback agreement is repayable in 12 equal consecutive quarterly instalments of $1,587.5 and 12 equal consecutive quarterly instalments of $329.2 with a repurchase obligation
of $7,000 on the final repayment date.
The sale and leaseback agreements for the three vessels mature in September 2027 and for the fourth vessel in October 2027 and bear interest at SOFR plus a margin of 3.25% per annum plus CAS
payable quarterly in arrears.
As of September 30, 2024, the outstanding balance of these sale and lease back agreements was $45,388.
|
m)
|
$54.0 Million Sale and Leaseback agreement - CMBFL
|
On May 20, 2021, the Company via its subsidiary Telemachus Marine LLC entered into a $54,000 sale and leaseback agreement with CMB Financial Leasing Co. Ltd. (“CMBFL”) to refinance one of the
three previous tranches of the $180,500 Deutsche, CIT, HCOB, Entrust, Blue Ocean Credit Facility, that had a maturity date on June 30, 2022, of an amount $46,624. The Company had a purchase obligation to acquire the vessel at the end of the
lease term and under ASC 842-40, the transaction had been accounted for as a failed sale. In accordance with ASC 842-40, the Company did not derecognize the respective vessel from its balance sheet and accounted for the amount received under
the sale and leaseback agreement as a financial liability.
The sale and leaseback agreement was repayable in eight equal consecutive quarterly instalments of $2,025 each and 20 equal consecutive quarterly instalments of $891 with a repurchase
obligation of $19,980 on the final repayment date.
The sale and leaseback agreement matured in May 2028 and bore interest at SOFR plus a margin of 3.25% per annum plus CAS payable quarterly in arrears.
In May 2021, on the actual delivery date of the vessel, the Company drew $54,000, which represented vessel purchase price $75,000 less advanced hire of $21,000, which advanced hire neither
bore any interest nor was refundable and was set off against payment of the purchase price payable to the Company by the unrelated third party under this agreement.
On August 27, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August
7, 2024, to fully prepay the amount of $33,345 under this facility.
As of September 30, 2024, the outstanding balance of this sale and leaseback agreement was $nil.
|
n)
|
$14.7 Million Sale and Leaseback agreement - Neptune Maritime Leasing
|
On May 12, 2021, the Company via its subsidiary GSL Violetta LLC entered into a $14,735 sale and leaseback agreement with Neptune Maritime Leasing (“Neptune”) to finance the acquisition of
GSL Violetta delivered in April 2021. The Company has a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transaction has been accounted for as a failed sale. In accordance with ASC 842-40, the
Company did not derecognize the respective vessel from its balance sheet and accounted for the amount received under the sale and leaseback agreement as a financial liability. In May 2021, the Company drew $14,735 under this agreement.
The sale and leaseback agreement was repayable in 15 equal consecutive quarterly instalments of $793.87 each and four equal consecutive quarterly instalments of $469.12 with a repurchase
obligation of $950 on the last repayment date.
6. Long-Term Debt (continued)
|
n)
|
$14.7 Million Sale and Leaseback agreement - Neptune Maritime Leasing (continued)
|
The sale and leaseback agreement matured in February 2026 and bore interest at SOFR plus a margin of 4.64% per annum payable quarterly in arrears.
On September 12, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on
August 7, 2024, to fully prepay the amount of $4,414 under this facility.
As of September 30, 2024, the outstanding balance of this sale and leaseback agreement was $nil.
Maturities of long-term debt for the periods subsequent to September 30, 2024, are as follows:
|
Payment due by period ended
|
|
Amount
|
|
|
September 30, 2025
|
|
|
152,522
|
|
|
September 30, 2026
|
|
|
157,874
|
|
|
September 30, 2027
|
|
|
214,267
|
|
|
September 30, 2028
|
|
|
47,329
|
|
|
September 30, 2029
|
|
|
116,000
|
|
| |
|
$
|
687,992
|
|
|
p)
|
Deferred Financing Costs
|
| |
|
September 30,
2024
|
|
|
December 31,
2023
|
|
|
Opening balance
|
|
$
|
10,750
|
|
|
$
|
15,136
|
|
|
Expenditure in the period
|
|
|
2,625
|
|
|
|
1,140
|
|
|
Amortization included within interest expense
|
|
|
(5,920
|
)
|
|
|
(5,526
|
)
|
|
Closing balance
|
|
$
|
7,455
|
|
|
$
|
10,750
|
|
For the nine-month period ended September 30, 2024, total costs amounting to $2,625 were incurred in connection with 2024 Senior Secured Term Loan Facility (CACIB, ABN, BofA) (see note 6a).
During 2023, total costs amounting to $1,140 were incurred in connection with the Macquarie Credit Facility (see note 6b).
For the nine-month periods ended September 30, 2024, and 2023, the Company recognized a total of $5,920 and $4,115, respectively, in respect of amortization of deferred financing costs.
|
q)
|
Debt covenants-securities
|
Amounts drawn under the facilities listed above are secured by first priority mortgages on certain of the Company’s vessels and other
collateral. The credit facilities contain a number of restrictive covenants that limit the Company from, among other things: incurring or guaranteeing indebtedness; charging, pledging or encumbering the vessels; and changing the flag, class, management or ownership of the vessel owning entities. The credit facilities also require the vessels to
comply with the ISM Code and ISPS Code and to maintain valid safety management certificates and documents of compliance at all times. Additionally, specific credit facilities require compliance with a number of financial covenants including
asset cover ratios and minimum liquidity and corporate guarantor requirements. Among other events, it will be an event of default under the credit facilities if the financial covenants are not complied with or remedied.
As of September 30, 2024, and December 31, 2023, the Company was in compliance with its debt covenants.
7. Related Party Transactions
Ship Management Agreements
Technomar Shipping Inc. (“Technomar”) is presented as a related party, as the Company’s Executive Chairman is a significant shareholder. The Company has currently a number of ship management
agreements with Technomar under which the ship manager is responsible for all day-to-day ship management, including crewing, purchasing stores, lubricating oils and spare parts, paying wages, pensions and insurance for the crew, and organizing
other ship operating necessities, including EU Allowances (“EUAs”) monitoring and reporting and the arrangement and management of dry-docking. During 2022, Technomar provided all day-to-day technical ship management services for all but five
(excluding GSL Amstel which was sold in March 23, 2023) of the Twelve Vessels. Management agreements of another third-party ship manager of these five vessels were terminated between May and July 2023. From those dates and onwards Technomar
manages the five vessels. The management fees charged to the Company by third party managers for the nine months ended September 30, 2024, and 2023, amounted to $nil and $981, respectively, and are shown in “Vessel operating expenses” in the
interim unaudited condensed Consolidated Statements of Income. Technomar continued to supervise management for the five outsourced vessels up to the termination of the underlying management agreements between May and July 2023.
The management fees charged to the Company by Technomar for the nine months ended September 30, 2024, amounted to $16,289 (nine months ended September 30, 2023 - $14,072) and are shown under
“Vessel operating expenses-related parties” in the interim unaudited condensed Consolidated Statements of Income. Additionally, as of September 30, 2024, outstanding receivables due from Technomar totaling $495 are presented under “Due from
related parties” (December 31, 2023 - $626).
Conchart Commercial Inc. (“Conchart”) provides commercial management services to the Company for all its vessels pursuant to commercial management agreements. The Company’s Executive Chairman
is the sole beneficial owner of Conchart. Under the management agreements, Conchart is responsible for (i) marketing of the Company’s vessels, (ii) seeking and negotiating employment of the Company’s vessels, (iii) advise the Company on market
developments and developments of new rules and regulations, (iv) assisting in calculation of hires, freights, demurrage and/or dispatch monies and collection any sums related to the operation of vessels, (v) communicating with agents, and (vi)
negotiating sale and purchase transactions.
The fees charged to the Company by Conchart for the nine months ended September 30, 2024, amounted to $6,487 (nine months ended September 30, 2023: $5,801) and are disclosed
within “Time charter and voyage expenses-related parties” in the interim unaudited condensed Consolidated Statements of Income. Any outstanding fees due to Conchart are presented in the interim unaudited condensed Consolidated Balance Sheets under "Due to related parties" totaling to $707, and $717 as of September 30, 2024, and December 31, 2023, respectively.
The Company as per commercial management agreements has agreed to pay to the commercial manager who shall be named broker in each memorandum of agreement (or equivalent agreement) providing
for the sale of all vessels and purchase of some vessels, a commission of 1.00% based on the sale and purchase price for any sale and purchase of a vessel, which shall be payable upon request of the commercial manager.
8. 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 minimum contracted future charter hire receivable, net of address
commissions, not allowing for any unscheduled off-hire, assuming expiry at earliest possible dates and assuming options callable by the Company included in the charters are not exercised, for the 68 vessels as at September 30, 2024 is as
follows:
|
Period ending
|
|
Amount
|
|
|
September 30, 2025
|
|
$
|
638,865
|
|
|
September 30, 2026
|
|
|
450,954
|
|
|
September 30, 2027
|
|
|
368,130
|
|
|
September 30, 2028
|
|
|
140,510
|
|
|
September 30, 2029
|
|
|
67,938
|
|
|
September 30, 2030
|
|
|
488
|
|
|
Total minimum lease revenue, net of address commissions
|
|
$
|
1,666,885
|
|
9. Share Capital
Common shares
As of September 30, 2024, the Company has one class of Class A common shares.
Restricted stock units or incentive stock units have been granted periodically to the Directors and management, under the Company’s Equity Incentive Plans, as part of their compensation
arrangements (see note 10). In April 2020, 184,270 shares were issued under grants made under the 2019 Omnibus Incentive Plan (the “2019 Plan”). In 2023, 2022 and 2021, 440,698, 586,819 and 747,604 Class A common shares were issued under the
2019 Plan, respectively.
During the nine months ended September 30, 2024, and 2023, a further 476,567 and 356,462 Class A common shares were issued under the 2019 Plan, respectively.
On January 26, 2021, the Company completed its underwritten public offering of 5,400,000 Class A common shares, at a public offering price of $13.00 per share, for gross proceeds to the
Company of approximately $70,200, prior to deducting underwriting discounts, commissions and other offering expenses. The Company intended to use the net proceeds of the offering for funding the expansion of the Company’s fleet, general
corporate purposes, and working capital. On February 17, 2021, the Company issued an additional 141,959 Class A common shares in connection with the underwriters’ partial exercise of their option to purchase additional shares (together, the
“January 2021 Equity Offering”). The net proceeds the Company received in the January 2021 Equity Offering, after underwriting discounts and commissions and expenses, were approximately $67,758.
On September 1, 2021, the Company purchased 521,650 shares and retired them, reducing the issued and outstanding shares. In April 2022, September 2022 and October 2022, the Company
repurchased 184,684, 568,835 and 307,121 Class A common shares, respectively, reducing the issued and outstanding shares. During the nine-month period ended September 30, 2024, and 2023, the Company repurchased 251,772 and 1,154,721 Class A
common shares, reducing the issued and outstanding shares. During 2023, the Company repurchased 1,242,663 Class A common shares, reducing the issued and outstanding shares. As at September 30, 2024, the Company had 35,440,224 Class A common
shares outstanding.
On August 16, 2024, the Company entered into a new equity distribution agreement (the “Sales Agreement”) with Evercore Group L.L.C. (the “Agent”) under which the Company may offer and sell
its Class A common shares having an aggregate offering price of up to $100,000. As of September 30, 2024, the Company has issued 27,106 Class A common shares at an average price of $27.02.
On May 10, August 3, and November 9, 2023, the Company announced a dividend of $0.375 per Class A common share from the earnings of
the first, second and third quarter of 2023, respectively, each paid on June 2, September 4, 2023, and December 4, 2023, to common shareholders of record as of May 24, August 23, and November 24, 2023, respectively, each amounting to $13,340,
$13,300 and $13,258.
On February 12, 2024, the Company announced a dividend of $0.375 per Class A common share from the earnings of the fourth quarter of
2023 paid on March 6, 2024, to common shareholders of record as of February 22, 2024, amounting to $13,214.
On May 10, 2024, the Company announced a dividend of $0.375 per Class A common share from the earnings of the first quarter of 2024
paid on June 3, 2024, to common shareholders of record as of May 24, 2024, amounting to $13,255.
On August 5, 2024, the Company announced a dividend of $0.45 per Class A common share from the earnings of the second quarter of 2024 paid on September 4, 2024, to common shareholders of
record as of August 23, 2024, amounting to $15,965.
Preferred shares
On August 20, 2014, the Company issued 1,400,000 Depositary Shares (the "Depositary Shares"), each of which represents 1/100th of one share of the Company's 8.75% Series B Cumulative
Perpetual Preferred Shares ("Series B Preferred Shares") representing an interest in 14,000 Series B Preferred Shares, par value $0.01 per share, with a liquidation preference of $2,500.00 per share (equivalent to $25.00 per Depositary Share)
(NYSE:GSL-B), priced at $25.00 per Depositary Share. The net proceeds from the offering were $33,497. 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).
9. Share Capital (continued)
Preferred shares (continued)
These shares are classified as Equity in the interim unaudited condensed Consolidated Balance Sheets. The dividends payable on the Series B Preferred Shares are presented as a reduction of
Retained Earnings in the interim unaudited condensed Consolidated Statements of Changes in Shareholders’ Equity, when and if declared by the Board of Directors. An initial dividend was declared on September 22, 2014, for the third quarter 2014.
Dividends have been declared for all subsequent quarters.
On December 29, 2022, the Company entered into a new At Market Issuance Sales Agreement with B. Riley Securities, Inc. (the “Agent”), pursuant to which the Company may offer and sell, from
time to time, up to $150,000,000 of its Depositary Shares. This new ATM Agreement terminated and replaced, in its entirety, the former at-the-market program that the Company had in place with the Agent for the Depositary Shares. Up to September
30, 2024, no sales had occurred under the new ATM Agreement.
As of September 30, 2024, there were 4,359,190 Depositary Shares outstanding, representing an interest in 43,592 Series B Preferred Shares.
10. Share-Based Compensation
On February 4, 2019, the Board of Directors adopted the 2019 Plan.
The purpose of the 2019 Plan is to provide directors, officers and employees, whose initiative and efforts are deemed to be important to the successful conduct of our business, with
incentives to (a) enter into and remain in the service of our company or our subsidiaries and affiliates, (b) acquire a proprietary interest in the success of the Company, (c) maximize their performance and (d) enhance the long-term performance
of our company. The 2019 Plan is administered by the Compensation Committee of the Board of Directors, or such other committee of the Board of Directors as may be designated by them. Unless terminated earlier by the Board of Directors, the 2019
Plan will expire 10 years from the date on which it was adopted by the Board of Directors.
Following the adoption of the 2019 Plan, previous plans adopted in 2015 and 2008 were terminated.
In 2019, the Board of Directors approved awards to the Company’s executive officers under the 2019 Plan, providing those executive officers with the opportunity to receive up to 1,359,375
Class A common shares in aggregate. The Board of Directors approved additional awards of 61,625 of Class A common shares to two other employees resulting in a total amount of awards of up to 1,421,000 shares. In July 2021, the Board of
Directors approved the issuance of 17,720 shares to one member of senior management as a special bonus.
The 1,421,000 shares of incentive stock may be issued pursuant to the awards, in four tranches. The first tranche was to vest conditioned only on continued service over the three-year period
which commenced January 1, 2019. Tranches two, three and four would vest when the Company’s stock price exceeded $8.00, $11.00 and $14.00, respectively, over a 60-day period. The $8.00 threshold was achieved in January 2020, the $11.00
threshold was achieved in January 2021 and the $14.00 threshold was achieved in March 2021. Accordingly, 113,279 incentive shares vested in the year ended December 31, 2019, 317,188 incentive shares vested in the year ended December 31, 2020,
and 1,008,253 incentive shares vested in the year ended December 31, 2021. Of the total of 430,467 incentive shares which vested up to December 31, 2020, 184,270 were settled and issued as Class A common shares in April 2020. A further 747,604
Class A common shares were settled and issued during the year ended December 31, 2021. A total of 1,438,720 incentive shares had vested as at December 31, 2021, of which 931,874 and 408,096 had been issued in 2021 and 2022, respectively.
On September 29, 2021, the Compensation Committee and the Board of Directors approved an increase in the aggregate number of Class A common shares available for issuance as awards under the 2019 Plan by 1,600,000
to 3,412,500, and approved new awards to senior management, totaling 1,500,000 shares of incentive stock, in three tranches, with a grant date October 1, 2021. The first tranche, representing 55% of the total, is to vest quarterly conditioned
only on continued service over the four-year period which commenced October 1, 2021. Tranches two and three, each representing 22.5% of the total, were to vest quarterly up to September 30, 2025, once the Company’s stock price exceeded $27.00
and $30.00, respectively, over a 60-day period. The Compensation Committee and Board of Directors also approved an increase the maximum number of Class A common shares that each non-employee director may be granted in any one year to 25,000 and
subsequently approved stock-based awards to the then seven non-executive directors totaling 105,000 shares of incentive stock, or 15,000 each, to vest in a similar manner to those awarded to senior management.
10. Share-Based Compensation (continued)
During the year ended December 31, 2022, 28,528 unvested share awards were cancelled or withdrawn on the resignations of two directors and an award of 13,780 was made to one new director to vest in a similar
manner to the other awards, with the first tranche adjusted for the date of appointment of the director.
As at December 31, 2022, 3,028,972 incentive Class A common shares had been awarded under the 2019 Plan leaving 383,528 Class A common shares available to be awarded under the 2019 Plan.
In March 2023, the Compensation Committee and the Board of Directors approved an amendment to the awards agreed in September 2021 for senior management and non-employee directors such that
10% of the second tranche would be forfeit with the remaining 90% vesting from April 2023 and quarterly thereafter with the last such vesting to be October 2025. The price at which the third tranche was to vest was amended to $21.00. All other
terms of the awards remain unchanged. The threshold for the third tranche was met in second quarter 2024.
During the years ended December 31, 2023, 2022 and 2021, 399,727, 218,366 and 55,175 incentive shares vested, respectively, under the amended September 2021 awards. A total of 2,111,988
incentive shares under both plans had vested as at December 31, 2023. Of the total incentive shares which vested under both plans up to December 31, 2023, 152,598 had not been issued.
On January 2, 2024, the Company approved awards to a non-employee director amounting to 4,884 shares of incentive stock which vested and were issued immediately, and 8,311 shares, to vest in a similar manner to
the awards to other non-employee directors, adjusted for the date of appointment of the director, up to September 30, 2025.
As a result of the Chief Executive Officer (“CEO”) transition in March 2024, the Board of Directors approved a new award of 6,465 shares of incentive stock to the new non-employee director
and 51,750 a new award to the new CEO, both structured in the same way as existing equivalent awards, adjusted for the dates of appointment. 155,250 shares were forfeited, due to retirement of the then CEO.
On October 9, 2024, the Company filed an amendment to original registration statement of the Company’s 2019 Plan to supplement the list of selling securityholders and to update the amounts of
Class A common shares available to be resold by them. The file amended prospectus may be used for reoffers and resales of up to an aggregate of 1,669,533 Class A common shares on a continuous or delayed basis that were issued, or are issuable,
to certain employees, directors and/or officers of the Company.
Share based awards since January 1, 2023, are summarized as follows:
| |
|
Restricted Stock Units
|
|
| |
|
Number of Units
|
|
| |
|
Number
|
|
|
Weighted Average
Fair Value
on Grant Date
|
|
|
Actual Fair
Value on
Vesting Date
|
|
|
Unvested as at January 1, 2023
|
|
|
1,316,711
|
|
|
$
|
22.35
|
|
|
|
n/a
|
|
|
Vested in year ended December 31, 2023
|
|
|
(399,727
|
)
|
|
|
n/a
|
|
|
|
18.87
|
|
|
Forfeit in March 2023
|
|
|
(35,771
|
)
|
|
|
n/a
|
|
|
|
n/a
|
|
|
Unvested as at December 31, 2023
|
|
|
881,213
|
|
|
$
|
22.35
|
|
|
|
n/a
|
|
|
Vested in nine months ended September 30, 2024
|
|
|
(448,748
|
)
|
|
|
n/a
|
|
|
|
26.78
|
|
|
Granted in January 2024
|
|
|
13,195
|
|
|
|
18.82
|
|
|
|
n/a
|
|
|
Granted in March 2024
|
|
|
58,215
|
|
|
|
17.80
|
|
|
|
n/a
|
|
|
Forfeit in March 2024
|
|
|
(155,250
|
)
|
|
|
n/a
|
|
|
|
n/a
|
|
|
Unvested as at September 30, 2024
|
|
|
348,625
|
|
|
$
|
21.92
|
|
|
|
n/a
|
|
10. Share-Based Compensation (continued)
Using the graded vesting method of expensing the restricted stock unit grants, the weighted average fair value of the stock units is recognized as compensation costs in the
interim unaudited condensed Consolidated Statements of Income over the vesting period. The fair value of the restricted stock units for this purpose is calculated by multiplying the number of stock
units by the fair value of the shares at the grant date. The Company has not factored any anticipated forfeiture into these calculations based on the limited number of participants.
For the nine months ended September 30, 2024, and 2023, the Company recognized a total of $6,582 (includes $345 positive net effect from the amendment to the stock-based awards
consequent on the CEO transition) and $7,684 (includes $451 effect from the amendment to the stock-based awards), respectively, in respect of stock-based compensation.
11. Earnings per Share
Under the two-class method, net income, 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.
Earnings are only allocated to participating securities in a period of net income if, based on the contractual terms, the relevant common shareholders have an obligation to participate in
such earnings. As a result, earnings are only be allocated to the Class A common shareholders.
At September 30, 2024 and December 31, 2023, there were 348,625 and 881,213, respectively, shares of incentive share grants unvested as part of senior management’s and non-executive directors
incentive awards approved on September 29, 2021.
| |
|
Nine months ended
September 30,
|
|
| |
|
2024
|
|
|
2023
|
|
|
Numerator:
|
|
|
|
|
|
|
|
Net income available to common shareholders:
|
|
$
|
253,912
|
|
|
$
|
230,299
|
|
| |
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
Class A Common shares
|
|
|
|
|
|
|
|
|
|
Basic weighted average number of common shares outstanding
|
|
|
35,272,574
|
|
|
|
35,473,382
|
|
|
Plus weighted average number of RSUs with service conditions
|
|
|
348,625
|
|
|
|
598,250
|
|
|
Common share and common share equivalents, dilutive
|
|
|
35,621,199
|
|
|
|
36,071,632
|
|
| |
|
|
|
|
|
|
|
|
|
Basic earnings per share:
|
|
|
|
|
|
|
|
|
|
Class A
|
|
|
7.20
|
|
|
|
6.49
|
|
| |
|
|
|
|
|
|
|
|
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
Class A
|
|
|
7.13
|
|
|
|
6.38
|
|
12. Subsequent events
On November 11, 2024, the Company announced a dividend of $0.45 per Class A common share for the third quarter of 2024, to be paid on or about December 4, 2024, to common shareholders of
record as of November 22, 2024.