As filed with the Securities and Exchange Commission on
January 15, 2009
Registration No. 333-154952
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Amendment No. 3
to
Form F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SEANERGY MARITIME HOLDINGS
CORP.
(Exact name of Registrant as
specified in its charter)
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Republic of the Marshall Islands
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4412
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Not Applicable
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(State or other jurisdiction
of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification Number)
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1-3 Patriarchou Grigoriou
166 74 Glyfada
Athens, Greece
Tel: 30 210 9638461
(Address, including zip code,
and telephone number, including area code, of Registrants
principal executive offices)
Georgios Koutsolioutsos,
Chairman of the Board of Directors
Seanergy Maritime Holdings
Corp.
1-3 Patriarchou
Grigoriou
166 74 Glyfada
Athens, Greece
Tel: 30 210 9638461
(Address, including zip code,
and telephone number, including area code, of agent for
service)
With a copy to:
Mitchell S.
Nussbaum, Esq.
Loeb & Loeb LLP
345 Park Avenue
New York, New York
10154
(212) 407-4000
(212) 407-4990
Facsimile
Approximate date of commencement of proposed sale to the
public:
As soon as practicable after the
effective date of this registration statement.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, check the
following
box.
þ
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same
offering.
o
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering.
o
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering.
o
CALCULATION
OF REGISTRATION FEE CHART
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Proposed Maximum
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Proposed Maximum
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Title of Each Class
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Amount Being
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Offering Price
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Aggregate Offering
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Amount of
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of Securities Being Registered
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Registered
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per Security(1)
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Price(1)
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Registration Fee
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Common Stock
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22,361,227
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Shares
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$4.30
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$96,153,276.10
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$3,778.82
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Warrants
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38,984,667
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Warrants
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(2)
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Common Stock underlying the Warrants
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38,984,667
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Shares
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$6.50
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$253,400,335.50
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$9,958.63
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Shares of Common Stock included as part of the
underwriters unit purchase option(3)
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1,000,000
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Shares
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$12.50
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$12,500,000
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$491.25
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Warrants included as part of the underwriters unit
purchase option(3)
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1,000,000
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Warrants
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(2)
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Shares of Common Stock underlying the Warrants included as part
of the underwriters unit purchase option(4)
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1,000,000
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Shares
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$6.50
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$6,500,000
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$255.45
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Total
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103,330,561
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$368,553,611.60
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$14,484.15
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(1)
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Estimated solely for the purpose of
calculating the registration fee in accordance with
Rule 457(c) and 457(g) under the Securities Act of 1933, as
amended, based on the closing sale price on October 29,
2008, as reported by the Nasdaq Stock Market.
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(2)
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No fee pursuant to Rule 457(g).
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(3)
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An option to purchase
1,000,000 units was sold to the representative of the
underwriters in connection with Seanergy Maritimes initial
public offering. It reflects the 1,000,000 shares of Common
Stock and the 1,000,000 Warrants comprising the units underlying
the unit purchase option.
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(4)
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It reflects the shares of Common
Stock issuable upon the exercise of the Warrants comprising the
units underlying the unit purchase option.
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The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
The
information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities and is not soliciting an offer to buy these
securities in any state where the offer or sale is not
permitted.
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SUBJECT TO COMPLETION,
JANUARY 15, 2009
PRELIMINARY PROSPECTUS
Seanergy Maritime Holdings
Corp.
22,361,227 Shares of
Common Stock
38,984,667 Common Stock Purchase Warrants
38,984,667 Shares of Common Stock underlying the Warrants
1,000,000 Shares of Common Stock included as part of the
underwriters unit purchase option
1,000,000 Warrants included as part of the underwriters
unit purchase option
1,000,000 shares of Common Stock underlying the Warrants
included as part of the underwriters unit purchase
option
This prospectus relates to (i) the distribution of
22,361,227 shares of our common stock (the Common
Shares), (ii) up to an aggregate of 38,984,667 of our
common stock purchase warrants (the Warrants),
(iii) up to an aggregate of 38,984,667 shares of our
common stock issuable upon the exercise of the Warrants (the
Warrant Shares and, together with the Common Shares,
the Shares), (iv) 1,000,000 Common Shares
included as part of the underwriters unit purchase option,
(v) 1,000,000 Warrants included as part of the
underwriters unit purchase option and (vi) 1,000,000
Warrant Shares included as part of the underwriters unit
purchase option in connection with the dissolution and
liquidation of Seanergy Maritime Corp. (Seanergy
Maritime) as described below.
We, Seanergy Maritime Holdings Corp. (Seanergy),
were incorporated under the laws of the Republic of the Marshall
Islands on January 4, 2008, originally under the name
Seanergy Merger Corp. We changed our name to Seanergy Maritime
Holdings Corp. on July 11, 2008. We are a wholly owned
subsidiary of Seanergy Maritime. Seanergy Maritime was
incorporated in the Marshall Islands on August 15, 2006 as
a blank check company formed to acquire, through a merger,
capital stock exchange, asset acquisition or other similar
business combination, one or more businesses in the maritime
shipping industry or related industries. On September 28,
2007, Seanergy Maritime consummated its initial public offering
of 23,100,000 units, including 1,100,000 units issued
upon the partial exercise of the underwriters
over-allotment option, with each unit consisting of one share of
its common stock and one warrant. On August 26, 2008,
shareholders of Seanergy Maritime approved a proposal to acquire
six dry bulk vessels, and holders of fewer than 35% of Seanergy
Maritimes shares issued in its initial public offering
voted against the proposal and properly exercised their
redemption rights (the vessel acquisition).
Shareholders of Seanergy Maritime also approved a proposal for
the dissolution and liquidation of Seanergy Maritime (the
dissolution and liquidation). Liquidating Seanergy
Maritime will save substantial accounting, legal and compliance
costs related to the U.S. federal income tax filings
necessary because of Seanergy Maritimes status as a
partnership for U.S. federal income tax purposes. In
connection with the dissolution and liquidation, Seanergy
Maritime will distribute to each holder of shares of common
stock of Seanergy Maritime one share of our common stock for
each share of Seanergy Maritime common stock owned by such
shareholders. All outstanding warrants of Seanergy Maritime
concurrently will become our obligations and become exercisable
to purchase shares of our common stock.
We will not receive any proceeds from the distribution of the
Common Shares in connection with the dissolution and
liquidation. However, we will receive the proceeds from any
exercise of Warrants. See Use of Proceeds.
We will be paying the expenses in connection with the
registration of the Shares and the Warrants.
Seanergy Maritimes shares of common stock and warrants are
listed on Nasdaq Stock Market under the symbols SHIP
and SHIP.W, respectively. On January 12, 2009, the
closing price of the common stock and warrants was $5.00 and
$0.20, respectively. Upon the dissolution and liquidation of
Seanergy Maritime, the Common Shares and the Warrants will
commence trading on the Nasdaq Stock Market.
Investing in our Common Shares involves risk. You should
carefully consider the risk factors beginning on
page 14 of this prospectus before acquiring our Common
Shares.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE
SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this prospectus
is ,
2009
Table of
Contents
You should rely only on the information contained or
incorporated by reference in this prospectus. We have not
authorized anyone to provide you with different information. We
are not making an offer of these securities in any jurisdiction
where the offer is not permitted.
We obtained statistical data, market data and other industry
data and forecasts used throughout this prospectus from publicly
available information. While we believe that the statistical
data, industry data, forecasts and market research are reliable,
we have not independently verified the data, and we do not make
any representation as to the accuracy of the information.
ENFORCEABILITY
OF CIVIL LIABILITIES
Seanergy Maritime Holdings Corp. is a Marshall Islands company
and our executive offices are located outside of the United
States in Athens, Greece. All of our directors, officers and
some of the experts named in this prospectus reside outside the
United States. In addition, a substantial portion of our assets
and the assets of our directors, officers and experts are
located outside of the United States. As a result, you may have
difficulty serving legal process within the United States upon
us or any of these persons. You may also have difficulty
enforcing, both in and outside the United States, judgments you
may obtain in U.S. courts against us or these persons in
any action, including actions based upon the civil liability
provisions of U.S. federal or state securities laws.
Furthermore, there is substantial doubt that the courts of the
Marshall Islands or Greece would enter judgments in original
actions brought in those courts predicated on U.S. federal
or state securities laws.
ii
PROSPECTUS
SUMMARY
This summary highlights certain information appearing
elsewhere in this prospectus. For a more complete understanding
of this offering, you should read the entire prospectus
carefully, including the risk factors and the financial
statements.
References in this prospectus to Seanergy,
we, us or our company refer
to Seanergy Maritime Holdings Corp. and its subsidiaries, but,
if the context otherwise requires, may refer only to Seanergy
Maritime Holdings Corp.
The
Company
Incorporation
of Seanergy and Seanergy Maritime
We, Seanergy Maritime Holdings Corp. (Seanergy),
were incorporated under the laws of the Republic of the Marshall
Islands pursuant to the Marshall Islands Business Corporation
Act on January 4, 2008, originally under the name Seanergy
Merger Corp. We changed our name to Seanergy Maritime Holdings
Corp. on July 11, 2008. We are a wholly owned subsidiary of
Seanergy Maritime Corp. (Seanergy Maritime).
Seanergy Maritime was incorporated in the Marshall Islands on
August 15, 2006 as a blank check company formed to acquire,
through a merger, capital stock exchange, asset acquisition or
other similar business combination, one or more businesses in
the maritime shipping industry or related industries.
Initial
public offering of Seanergy Maritime
On September 28, 2007, our parent, Seanergy Maritime,
consummated its initial public offering of
23,100,000 units, including 1,100,000 units issued
upon the partial exercise of the underwriters
over-allotment option, with each unit consisting of one share of
its common stock and one warrant. Each warrant entitles the
holder to purchase one share of Seanergy Maritime common stock
at an exercise price of $6.50 per share. The units sold in
Seanergy Maritimes initial public offering were sold at an
offering price of $10.00 per unit, generating gross proceeds of
$231,000,000. This resulted in a total of $231,000,000 in net
proceeds, including certain deferred offering costs that were
held in a trust account maintained by Continental Stock
Transfer & Trust Company, which we refer to as
the Trust Account.
Vessel
acquisition by Seanergy
We are a holding company that owns our vessels through separate
wholly owned subsidiaries. On August 26, 2008, shareholders
of Seanergy Maritime approved a proposal to acquire six dry bulk
carriers from the Restis family (which were originally purchased
for an aggregate purchase price of $143 million), including
two newly built vessels (the vessel acquisition),
for an aggregate purchase price of (i) $367,030,750 in
cash, (ii) $28,250,000 in the form of a convertible
promissory note (the Note), and (iii) up to an
aggregate of 4,308,075 shares of our common stock (which
shares are exchangeable for shares of Seanergy Maritime common
stock), subject to us meeting an Earnings Before Interest,
Taxes, Depreciation and Amortization, or EBITDA, target of
$72 million to be earned between October 1, 2008 and
September 30, 2009. We believe the earnout can be achieved
with the current charters provided that the ships have a
utilization rate of more than 90% (no down time due to
breakdowns and no slow steaming due to poor maintenance) and
assuming that the operating expenses reflect the expected
budgeted amounts. This acquisition was made pursuant to the
terms and conditions of a Master Agreement, dated May 20,
2008 (the Master Agreement), by and among us,
Seanergy Maritime, the several sellers parties thereto who are
affiliated with members of the Restis family, and the several
investors parties thereto who are affiliated with members of the
Restis family, and six separate memoranda of agreement, which we
collectively refer to as the MOAs, between our
vessel-owning subsidiaries and each seller, each dated as of
May 20, 2008. The acquisition was completed with funds from
the Seanergy Maritime Trust Account and with financing provided
by Marfin Bank S.A. of Greece. Based on current estimates
for the period from October 1, 2008 to September 30,
2009, the payment of principal and interest related to the
acquisition amounts to approximately 43% of the cash flow from
operations.
On August 28, 2008, we completed the acquisition, through
our designated nominees (which are wholly owned subsidiaries) of
three of the six dry bulk vessels, which included two
2008 built Supramax vessels
1
and one 1997-built Handysize vessel. On that date, we took
delivery of the M/V Davakis G ($88,500,000 purchase price), the
M/V Delos Ranger ($83,500,000 purchase price) and the M/V
African Oryx ($44,080,750 purchase price). On September 11,
2008, we completed the acquisition, through our designated
nominee, of the fourth vessel, the M/V Bremen Max ($70,350,000
purchase price), a 1993-built, Panamax vessel. On
September 25, 2008, we completed the acquisition, through
our designated nominees, of the final two vessels, the M/V
Hamburg Max ($74,350,000 purchase price), a 1994-built, Panamax
vessel, and the M/V African Zebra ($34,500,000 purchase price),
a 1985-built, Handymax vessel. These purchase prices do not
include any amounts that would result from the earn out of the
4,308,075 shares.
Dissolution
and Liquidation
On August 26, 2008, shareholders of Seanergy Maritime also
approved a proposal for the dissolution and liquidation of
Seanergy Maritime (the dissolution and liquidation,
which was originally filed with the SEC on June 17, 2008,
subsequently amended on July 31, 2008 and supplemented on
August 22, 2008). Seanergy Maritime proposed the
dissolution and liquidation because following the vessel
acquisition, Seanergy Maritime was no longer needed. After the
dissolution and liquidation of Seanergy Maritime, which is
treated as a partnership for U.S. federal income tax
purposes, the former holders of common stock and warrants of
Seanergy Maritime will hold common stock and warrants in
Seanergy, which is treated as a foreign corporation for
U.S. federal income tax purposes. The dissolution and
liquidation of Seanergy Maritime will save substantial
accounting, legal and compliance costs related to the
U.S. federal income tax filings necessary because of
Seanergy Maritimes status as a partnership for
U.S. federal income tax purposes, which have been
approximately $300,000 annually. In addition to the cost savings
involved, certain non-corporate U.S. Holders (as such term
is defined under Taxation U.S. Federal
Income Taxation General) of Seanergys
common stock after the dissolution and liquidation should
benefit from the reduced rate of U.S. federal income tax of
15% on dividends from Seanergy (assuming the common stock of
Seanergy continues to be listed on the Nasdaq Stock Market or
other qualified stock exchange after Seanergy Maritimes
dissolution and liquidation and certain other requirements are
met). See the discussion below at Taxation
U.S. Federal Income Taxation
U.S. Holders Taxation of
Distributions Paid on Common Stock. Without the
dissolution and liquidation, the reduced rate of
U.S. federal income tax generally should not apply to
dividends paid from Seanergy to Seanergy Maritime. For a more
complete discussion of the material U.S. federal income tax
consequences of the ownership and disposition of our common
stock and warrants after the dissolution and liquidation, see
the discussion below at Taxation
U.S. Federal Income Taxation.
In connection with the dissolution and liquidation of Seanergy
Maritime, Seanergy Maritime will (i) act in accordance with
its plan of dissolution and liquidation; (ii) pay or
adequately provide for the payment of its liabilities;
(iii) file Articles of Dissolution with the Registrar of
Corporations of the Marshall Islands in accordance with Marshall
Islands law; and (iv) distribute to each holder of shares
of common stock of Seanergy Maritime one share of our common
stock for each share of Seanergy Maritime common stock owned by
such shareholders. All outstanding warrants of Seanergy Maritime
concurrently will become our obligation and become exercisable
to purchase our common stock. Seanergy Maritime expects to file
the Articles of Dissolution with the Registrar of Corporations
of the Marshall Islands, and, accordingly, distribute to its
shareholders shares of our common stock promptly after the
effective date of this prospectus.
2
The
Vessel Purchase
The following chart illustrates the structure of the vessel
acquisition:
The following chart shows the structure of Seanergy Maritime and
its subsidiaries prior to the dissolution and liquidation:
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*
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Enterprise Shipping and Trading, S.A., South African Marine
Corporation S.A., Waterfront S.A., and Safbulk Pty Ltd., are
each affiliated with members of the Restis family.
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Upon dissolution and liquidation of Seanergy Maritime, Seanergy
will become the parent company.
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Seanergys
Fleet
We own and operate, through our vessel-owning subsidiaries, six
dry bulk carriers, including two newly built vessels, that
transport a variety of dry bulk commodities. The following table
provides summary information about our fleet:
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Term of
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Daily Time
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Time
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Charter
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Year
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Charter
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Hire
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Vessel(1)
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Vessel-Owning Subsidiary(2)
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Type
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Dwt
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Built
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Party
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Rate(3)(4)
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African Oryx
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Cynthera Navigation Ltd.
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Handysize
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24,110
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1997
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1 year
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$
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30,000
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African Zebra
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Waldeck Maritime Co.
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Handymax
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38,632
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1985
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1 year
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$
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36,000
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Bremen Max
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Martinique Intl. Corp.
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Panamax
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73,503
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1993
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1 year
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$
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65,000
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Hamburg Max
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Harbour Business Intl. Corp.
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Panamax
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73,498
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1994
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1 year
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$
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65,000
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Davakis G. (ex. Hull No. KA215)
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Amazons Management Inc.
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Supramax
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54,000
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2008
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1 year
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$
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60,000
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Delos Ranger (ex. Hull No. KA216)
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Lagoon Shipholding Ltd.
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Supramax
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54,000
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2008
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1 year
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$
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60,000
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Total
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317,743
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(1)
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Each vessel is registered in the Bahamas except the M/V Bremen
Max and M/V Hamburg Max, which are registered in the Isle of Man.
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(2)
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These are our vessel-owning subsidiaries that own and operate
the vessels and which were incorporated specifically for this
acquisition.
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(3)
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Daily time charter rates represent the hire rates that South
African Marine Corporation S.A., an affiliate, or SAMC, pays to
charter the respective vessels from Seanergys
vessel-owning subsidiaries.
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(4)
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All charter hire rates are inclusive of a commission of 1.25%
payable to Safbulk Pty, Ltd., an affiliate, or Safbulk, as
commercial broker, and 2.5% address commission payable to SAMC,
as charterer.
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The global dry bulk carrier fleet is divided into three
categories based on a vessels carrying capacity. These
categories are:
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Panamax.
Panamax vessels have a carrying
capacity of between 60,000 and 100,000 deadweight tons, or dwt.
These vessels are designed to meet the physical restrictions of
the Panama Canal locks (hence their name
Panamax the largest vessels able to
transit the Panama Canal, making them more versatile than larger
vessels). These vessels carry coal, grains, and, to a lesser
extent, minerals such as bauxite/alumina and phosphate rock. As
the availability of capesize vessels has dwindled, panamaxes
have also been used to haul iron ore cargoes.
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Handymax/Supramax.
Handymax vessels have a
carrying capacity of between 30,000 and 60,000 dwt. These
vessels operate on a large number of geographically dispersed
global trade routes, carrying primarily grains and minor bulks.
The standard vessels are usually built with
25-30
ton
cargo gear, enabling them to discharge cargo where grabs are
required (particularly industrial minerals), and to conduct
cargo operations in countries and ports with limited
infrastructure. This type of vessel offers good trading
flexibility and can therefore be used in a wide variety of bulk
and neobulk trades, such as steel products. Supramax are a
sub-category of this category typically having a cargo carrying
capacity of between 50,000 and 60,000 dwt.
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Handysize.
Handysize vessels have a carrying
capacity of up to 30,000 dwt. These vessels are almost
exclusively carrying minor bulk cargo. Increasingly, vessels of
this type operate on regional trading routes, and may serve as
trans-shipment feeders for larger vessels. Handysize vessels are
well suited for small ports with length and draft restrictions.
Their cargo gear enables them to service ports lacking the
infrastructure for cargo loading and unloading.
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4
Management
of the Fleet
We currently have only four employees, Mr. Dale Ploughman,
our chief executive officer, Ms. Christina Anagnostara, our
chief financial officer, Mr. Ioannis Tsigkounakis, our
secretary, and Ms. Theodora Mitropetrou, our general
counsel. In the near future, we intend to employ such number of
additional shore-based executives and employees as may be
necessary to ensure the efficient performance of our activities.
We outsource the management and commercial brokerage of our
fleet to companies that are affiliated with members of the
Restis family. For example, the commercial brokerage of our
fleet has been contracted out to Safbulk Pty Ltd, or Safbulk,
and the management of our fleet has been contracted out to
Enterprise Shipping and Trading, S.A., or EST. Both of these
entities are controlled by members of the Restis family.
Brokerage
Agreement
Under the terms of the Brokerage Agreement entered into by
Safbulk, as exclusive commercial broker, with Seanergy
Management Corp., or Seanergy Management, Safbulk provides
commercial brokerage services to our subsidiaries, which
include, among other things, seeking and negotiating employment
for the vessels owned by the vessel-owning subsidiaries in
accordance with the instructions of Seanergy Management, one of
our wholly owned subsidiaries that oversees the provision of
certain services to the Seanergy group of vessel-owning
subsidiaries. Safbulk is entitled to receive a commission of
1.25% calculated on the collected gross hire/freight/demurrage
payable when such amounts are collected. The Brokerage Agreement
is for a term of two years and is automatically renewable for
consecutive periods of one year, unless either party is provided
with three months written notice prior to the termination
of such period.
A vessel trading in the spot market may be employed under a
voyage charter or a time charter of short duration, generally
less than three months. A time charter is a contract to charter
a vessel for an agreed period of time at a set daily rate. A
voyage charter is a contract to carry a specific cargo for a per
ton carry amount. Under voyage charters, we would pay voyage
expenses such as port, canal and fuel costs. Under time
charters, the charterer would pay these voyage expenses. Under
both types of charters, we would pay for vessel operating
expenses, which include crew costs, provisions, deck and engine
stores, lubricating oil, insurance, maintenance and repairs. We
would also be responsible for each vessels intermediate
drydocking and special survey costs. Alternatively, vessels can
be chartered under bareboat contracts whereby the
charterer is responsible for the vessels maintenance and
operations, as well as all voyage expenses. Currently, we have
employed our vessels under 11 to 13-month time charters.
Vessels operating on time charter provide more predictable cash
flows, but can yield lower profit margins, than vessels
operating in the spot market during periods characterized by
favorable market conditions. Vessels operating in the spot
market generate revenues that are less predictable but may
enable us to increase profit margins during periods of
increasing dry bulk rates. However, we would then be exposed to
the risk of declining dry bulk rates, which may be higher or
lower than the rates at which we charter our vessels. We
constantly evaluate opportunities for time charters, but only
expect to enter into additional time charters if we can obtain
contract terms that satisfy our criteria.
Management
Agreement
Under the terms of the Management Agreement entered into by EST,
as manager of all vessels owned by our subsidiaries, with
Seanergy Management, EST performs certain duties that include
general administrative and support services necessary for the
operation and employment of all vessels owned by all of our
subsidiaries, including, without limitation, crewing and other
technical management, insurance, freight management, accounting
related to vessels, provisions, bunkering, operation and,
subject to our instructions, sale and purchase of vessels.
Under the terms of the Management Agreement, EST is entitled to
receive a daily fee of Euro 416.00 per vessel until
December 31, 2008, which fee may thereafter be increased
annually by an amount equal to the percentage change during the
preceding period in the Harmonised Indices of Consumer Prices
All Items for
5
Greece published by Eurostat from time to time. Such fee is
payable monthly in advance on the first business day of each
following month.
EST is also an affiliate of members of the Restis family. EST
has been in business for over 34 years and manages
approximately 95 vessels (inclusive of new vessel build
supervision), including the fleet of vessels of affiliates of
members of the Restis family. As with Safbulk, we believe that
EST has achieved a strong reputation in the international
shipping industry for efficiency and reliability and has
achieved economies of scale that should result in the cost
effective operation of our vessels.
The Management Agreement is for a term of two years, and is
automatically renewable for consecutive periods of one year,
unless either party is provided with three months written
notice prior to the termination of such period.
Restis
Industry History and Relationship
|
|
|
*
|
|
Each of these affiliates involved with Seanergy are indirectly
owned by the named Restis family member or members through one
or more intermediary entities.
|
Safbulk, EST, SAMC, Waterfront, S.A., the sellers of the vessels
that Seanergy acquired and certain shareholders of Seanergy
Maritime are affiliates of members of the Restis family. As of
December 8, 2008, the total beneficial ownership of the
Restis family, including shares actually owned, shares issuable
upon exercise of warrants exercisable within 60 days and
shares governed by the voting agreement described elsewhere in
the prospectus, in Seanergy Maritime was 84.12%. Between the
period commencing on May 20, 2008 when the Restis affiliate
shareholders became shareholders of Seanergy Maritime and the
date of this prospectus, the Restis affiliate shareholders
beneficial ownership interest has increased as a result of the
following: (i) the determination to purchase shares of
Seanergy Maritimes common stock because a substantial
number of shareholders were likely to vote against the approval
of the proposed vessel acquisition
6
in which the Restis affiliate shareholders had an interest,
which resulted in the purchase of 8,929,781 shares of our
common stock; (ii) the decrease in the number of shares
outstanding for Seanergy Maritime resulting from shareholders
electing to have their shares redeemed upon the consummation of
the vessel acquisition; (iii) the increase of
8,008,334 shares deemed beneficially owned resulting from
the warrants becoming exercisable upon the consummation of the
vessel acquisition; and (iv) the determination to purchase
shares for investment purposes, which resulted in the purchase
of 4,454,134 shares of our common stock.
The Restis family has been engaged in the international shipping
industry for more than 40 years, including the ownership
and operation of more than 60 vessels in various segments
of the shipping industry, including cargo and chartering
interests. The separate businesses controlled by members of the
Restis family, when taken together, comprise one of the largest
independent shipowning and management groups in the dry bulk
sector of the shipping industry. Through our separate agreements
with affiliates of members of the Restis family in respect of
the management and chartering of the vessels in our initial
fleet, we believe we will benefit from their extensive industry
experience and established relationships. We believe that
Safbulk has achieved a strong reputation in the international
shipping industry for efficiency and reliability that should
create new employment opportunities for us with a variety of
well known charterers.
Shipping
Committee
We have established a shipping committee. The purpose of the
shipping committee is to consider and vote upon all matters
involving shipping and vessel finance. The shipping industry
often demands very prompt review and decision-making with
respect to business opportunities. In recognition of this, and
in order to best utilize the experience and skills that the
Restis family board appointees bring to us, our board of
directors has delegated all such matters to the shipping
committee. Transactions that involve the issuance of our
securities or transactions that involve a related party,
however, will not be delegated to the shipping committee but
instead will be considered by the entire board of directors. The
shipping committee is comprised of three directors. In
accordance with the Voting Agreement dated as of May 20,
2008 among Seanergy Maritime, Mr. Panagiotis Zafet,
Mr. Simon Zafet, shareholders of Seanergy Maritime who are
affiliated with members of the Restis family, or referred to as
Restis affiliate shareholders, Seanergy Maritimes founding
shareholders and Messrs. Georgios Koutsolioutsos, Alexios
Komninos, Ioannis Tsigkounakis, Dale Ploughman, Kostas
Koutsoubelis and Elias M. Culucundis, as amended (the
Voting Agreement), the Master Agreement and the
amended and restated by-laws of Seanergy, two of the directors
are nominated by the Restis affiliate shareholders and one of
the directors is nominated by the founding shareholders of
Seanergy Maritime, comprised of Mr. Georgios
Koutsolioutsos, our chairman of the board of directors,
Mr. Alexios Komninos, our director, and Mr. Ioannis
Tsigkounakis, our director and our secretary. The Voting
Agreement requires that the directors appoint the selected
nominees.
The initial members of the shipping committee are
Messrs. Dale Ploughman and Kostas Koutsoubelis, who are the
Restis affiliate shareholders nominees, and Mr. Elias
M. Culucundis, who is the founding shareholders nominee.
The Voting Agreement further requires that the directors fill
any vacancies on the shipping committee with the nominees
selected by the party that nominated the person whose
resignation or removal caused the vacancy.
Voting
Agreement
Pursuant to the Voting Agreement, upon the execution of the
Master Agreement, our board of directors was required to consist
of seven persons and following Seanergy Maritimes 2008
annual meeting of shareholders on December 18, 2008, our
board of directors was required to consist of 13 persons.
The new directors were elected pursuant to the written consent
of the sole shareholder of Seanergy on December 18, 2008.
Through May 20, 2010, the Restis affiliate shareholders, on
the one hand, and Seanergy Maritimes founding shareholders
on the other have agreed to vote or cause to be voted certain
shares they own or control in Seanergy so as to cause
(i) six people named by the Restis affiliate shareholders
to be elected to our board of directors, (ii) six people
named by the founding shareholders to be elected to our board of
directors, and (iii) one person jointly selected by the
Restis affiliate shareholders and the founding shareholders to
be elected to our board of directors.
7
THE
OFFERING
|
|
|
Securities offered:
|
|
Upon the dissolution and liquidation of
Seanergy Maritime,
Seanergy Maritime will distribute to
each holder of common
stock of Seanergy Maritime one share of common stock of Seanergy
for each share of
Seanergy Maritime
common stock owned by such shareholder.
In addition, all
outstanding warrants of Seanergy Maritime, concurrently will
become obligations of Seanergy and will become exercisable to
purchase Seanergy common stock. We are registering for
distribution (i) 22,361,227 shares of our common stock
(the Common Shares), (ii) up to an aggregate of
38,984,667 of our common stock purchase warrants (the
Warrants), (iii) up to an aggregate of
38,984,667 shares of our common stock issuable upon the
exercise of the Warrants (the Warrant Shares and,
together with the Common Shares, the Shares), (iv)
1,000,000 Common Shares included as part of the
underwriters unit purchase option, (v) 1,000,000
Warrants included as part of the underwriters unit
purchase option and (vi) 1,000,000 Warrant Shares included as
part of the underwriters unit purchase option. The unit
purchase option was issued to Maxim Group LLC, the
representative of the underwriters, for $100, to purchase up to
a total of 1,000,000 units at $12.50 per unit in connection
with Seanergy Maritimes initial public offering, which is
equal to 125% of the initial public offering price of a unit.
Each unit consists of one share of common stock and one warrant.
The unit price option is exercisable commencing on
September 28, 2007 until September 28, 2012. The
warrants are exercisable at a price of $6.50 per share.
|
|
Common Shares:
|
|
|
Number of Common Shares outstanding
before this offering
|
|
67,653,969 Common Shares. On September 15, 2008, we
effected a 676,539.69 for one stock split so that the number of
issued and outstanding shares of Seanergy was equal to the
number of issued and outstanding shares of Seanergy Maritime, on
a diluted basis as described below. Specifically, because
Seanergy is unable to determine how many of the Warrants may
actually be exercised prior to the dissolution and liquidation,
whether the unit purchase option or any of the underlying
Warrants will be exercised prior to the dissolution and
liquidation, or whether the Restis affiliate shareholders will
exercise their right to receive up to an aggregate of
4,308,075 shares of Seanergy common stock (which shares are
exchangeable for shares of Seanergy Maritime common stock)
originally issuable upon Seanergy meeting an EBITDA target of
$72 million to be earned between October 1, 2008 and
September 30, 2009, for purposes of calculating the ratio
for the stock split, all of the 45,424,742 shares common
stock underlying these Warrants and the unit purchase option and
issuable to the Restis affiliate shareholders upon meeting the
definitive predetermined criteria described above were deemed
outstanding. Furthermore, to the extent that any of these
Warrants and/or the unit purchase option (or underlying
Warrants) remain unexercised on the effective date of this
registration statement or the Restis affiliate shareholders do
not exercise their right to exchange shares described above,
|
8
|
|
|
|
|
then Seanergy will redeem an equal number of shares of common
stock immediately prior to the dissolution and liquidation so
that its outstanding shares are equal to those of Seanergy
Maritime on such effective date.
|
|
Number of Common Shares to be outstanding after this offering
|
|
67,653,969 Common Shares, subject to reduction as described above
|
|
Warrants:
|
|
|
Number of Seanergy Maritime warrants outstanding before this
offering
|
|
38,984,667 warrants
|
|
Number of Warrants to be outstanding after this offering
|
|
38,984,667 Warrants
|
|
Exercisability
|
|
Each Warrant is exercisable for one share of our common stock.
|
|
Exercise price
|
|
$6.50
|
|
Exercise period
|
|
The Seanergy Maritime warrants became exercisable on
September 24, 2008.
|
|
|
|
The Warrants will expire at 5:00 p.m., New York City time,
on September 24, 2011 or earlier upon redemption.
|
|
Redemption:
|
|
We may call the outstanding Warrants for redemption:
|
|
|
|
in whole and not in part,
|
|
|
|
at a price of $.01 per Warrant at any time,
|
|
|
|
upon a minimum of 30 days prior written
notice of redemption, and
|
|
|
|
if, and only if, the last sale price of the Common
Shares equals or exceeds $14.25 per share for any 20 trading
days within a 30 trading day period ending three business days
before we send the notice of redemption; provided that a current
registration statement under the Securities Act of 1934, as
amended, relating to the Warrant Shares is effective.
|
|
|
|
We have established the above criteria to provide warrant
holders with (i) adequate notice of exercise only after the
then prevailing Common Share price is substantially above the
warrant exercise price and (ii) a sufficient differential
between the then prevailing Common Share price and the Warrant
exercise price so there is a reasonable cushion to absorb a
negative market reaction, if any, to our redemption call.
However, there can be no assurance that the price of the Common
Shares will exceed the call trigger price or the Warrant
exercise price after the redemption call is made.
|
9
|
|
|
Nasdaq Stock Market symbols for our:
|
|
|
|
Common Shares
|
|
SHIP
|
|
Warrants
|
|
SHIP.W
|
Risks
The securities offered by this prospectus are speculative and
involve a high degree of risk and investors purchasing
securities should not purchase the securities unless they can
afford the loss of their entire investment. See Risk
Factors beginning on page 14.
10
SUMMARY
FINANCIAL DATA
COMBINED
SELECTED HISTORICAL FINANCIAL INFORMATION AND OTHER DATA FOR THE
VESSELS
The following selected historical statement of operations and
balance sheet data were derived from the audited combined
financial statements and accompanying notes prepared in
accordance with International Financial Reporting Standards, or
IFRS, as issued by the International Accounting Standards Board,
of Goldie Navigation Ltd., Pavey Services Ltd., Shoreline
Universal Ltd., Valdis Marine Corp., Kalistos Maritime S.A. and
Kalithea Maritime S.A. for the years ended December 31,
2007, 2006 and 2005 and the unaudited combined financial
statements and notes prepared in accordance with IFRS for the
six months ended June 30, 2008 and 2007, included elsewhere
in this prospectus. The information is only a summary and should
be read in conjunction with the combined financial statements
and related notes included elsewhere in this prospectus and the
sections entitled, Risk Factors and
Managements Discussion and Analysis of Financial
Condition and Results of Operations for the Vessels. The
historical data included below and elsewhere in this prospectus
is not necessarily indicative of our future performance.
All amounts in the tables below are in thousands of
U.S. dollars, except for share data, fleet data and average
daily results.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
Year Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
28,227
|
|
|
$
|
13,751
|
|
|
$
|
32,297
|
|
|
$
|
15,607
|
|
|
$
|
17,016
|
|
Revenue from vessel, related party
|
|
|
|
|
|
$
|
3,430
|
|
|
$
|
3,420
|
|
|
$
|
10,740
|
|
|
$
|
10,140
|
|
Direct voyage expenses
|
|
$
|
(759
|
)
|
|
$
|
(60
|
)
|
|
$
|
(82
|
)
|
|
$
|
(64
|
)
|
|
$
|
(139
|
)
|
Crew cost
|
|
$
|
(2,143
|
)
|
|
$
|
(1,343
|
)
|
|
$
|
(2,803
|
)
|
|
$
|
(2,777
|
)
|
|
$
|
(1,976
|
)
|
Other operating expenses
|
|
$
|
(1,831
|
)
|
|
$
|
(1,471
|
)
|
|
$
|
(3,228
|
)
|
|
$
|
(2,842
|
)
|
|
$
|
(3,085
|
)
|
Depreciation expense
|
|
$
|
(16,314
|
)
|
|
$
|
(6,260
|
)
|
|
$
|
(12,625
|
)
|
|
$
|
(6,567
|
)
|
|
$
|
(6,970
|
)
|
Impairment reversal/(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
19,311
|
|
|
$
|
(19,311
|
)
|
Management fees to a related party
|
|
$
|
(411
|
)
|
|
$
|
(387
|
)
|
|
$
|
(782
|
)
|
|
$
|
(752
|
)
|
|
$
|
(644
|
)
|
Finance income
|
|
$
|
36
|
|
|
$
|
81
|
|
|
$
|
143
|
|
|
$
|
132
|
|
|
$
|
24
|
|
Finance expense
|
|
$
|
(1,014
|
)
|
|
$
|
(1,540
|
)
|
|
$
|
(2,980
|
)
|
|
$
|
(3,311
|
)
|
|
$
|
(2,392
|
)
|
Net profit/(loss)
|
|
$
|
5,791
|
|
|
$
|
6,201
|
|
|
$
|
13,360
|
|
|
$
|
29,477
|
|
|
$
|
(7,337
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
June 30, 2008
|
|
|
2007
|
|
|
2006
|
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
$
|
19,246
|
|
|
$
|
7,005
|
|
|
$
|
5,842
|
|
Vessels
|
|
$
|
250,022
|
|
|
$
|
244,801
|
|
|
$
|
114,967
|
|
Total assets
|
|
$
|
269,268
|
|
|
$
|
251,806
|
|
|
$
|
120,809
|
|
Total current liabilities, including current portion of
long-term debt
|
|
$
|
20,208
|
|
|
$
|
13,569
|
|
|
$
|
10,396
|
|
Long-term debt
|
|
$
|
48,520
|
|
|
$
|
38,580
|
|
|
$
|
41,354
|
|
Total shareholders equity
|
|
$
|
200,540
|
|
|
$
|
199,657
|
|
|
$
|
69,059
|
|
The figures shown below are non-GAAP/non-IFRS statistical ratios
used by management to measure performance of the vessels and are
not included in financial statements prepared under IFRS.
11
PERFORMANCE
INDICATORS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
Year Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Fleet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of vessels(1)
|
|
|
4.21
|
|
|
|
3.83
|
|
|
|
3.85
|
|
|
|
3.81
|
|
|
|
3.21
|
|
Ownership days(2)
|
|
|
769
|
|
|
|
724
|
|
|
|
1,460
|
|
|
|
1,460
|
|
|
|
1,250
|
|
Available days(3) (equals operating days for the three-year
period(4))
|
|
|
767
|
|
|
|
693
|
|
|
|
1,411
|
|
|
|
1,393
|
|
|
|
1,166
|
|
Fleet utilization(5)
|
|
|
99.7
|
%
|
|
|
95.7
|
%
|
|
|
96.6
|
%
|
|
|
95.4
|
%
|
|
|
93.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Daily Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average TCE rate(6)
|
|
$
|
35,812
|
|
|
$
|
24,706
|
|
|
$
|
25,256
|
|
|
$
|
18,868
|
|
|
$
|
23,170
|
|
Vessel operating expenses(7)
|
|
$
|
5,168
|
|
|
$
|
3,887
|
|
|
$
|
4,130
|
|
|
$
|
3,849
|
|
|
$
|
4,049
|
|
Management fees(8)
|
|
$
|
535
|
|
|
$
|
535
|
|
|
$
|
535
|
|
|
$
|
515
|
|
|
$
|
515
|
|
Total vessel operating expenses(9)
|
|
$
|
5,703
|
|
|
$
|
4,422
|
|
|
$
|
4,665
|
|
|
$
|
4,364
|
|
|
$
|
4,564
|
|
|
|
|
(1)
|
|
Average number of vessels is the number of vessels that
constituted the sellers fleet for the relevant period, as
measured by the sum of the number of days each vessel was a part
of the sellers fleet during the period divided by the
number of available days in the period.
|
|
(2)
|
|
Ownership days are the total number of days in a period during
which the vessels in a fleet have been owned. Ownership days are
an indicator of the size of the sellers fleet over a
period and affect both the amount of revenues and the amount of
expenses that the sellers recorded during a period.
|
|
(3)
|
|
Available days are the number of ownership days less the
aggregate number of days that vessels are off-hire due to major
repairs, drydockings or special or intermediate surveys. The
shipping industry uses available days to measure the number of
ownership days in a period during which vessels should be
capable of generating revenues.
|
|
(4)
|
|
Operating days are the number of available days in a period less
the aggregate number of days that vessels are off-hire due to
any reason, including unforeseen circumstances. The shipping
industry uses operating days to measure the aggregate number of
days in a period during which vessels actually generate revenues.
|
|
(5)
|
|
Fleet utilization is calculated by dividing the number of the
fleets operating days during a period by the number of
ownership days during that period. The shipping industry uses
fleet utilization to measure a companys efficiency in
finding suitable employment for its vessels and minimizing the
amount of days that its vessels are off-hire for reasons such as
scheduled repairs, vessel upgrades, or drydockings or special or
intermediate surveys.
|
|
(6)
|
|
Time charter equivalent, or TCE, is a measure of the average
daily revenue performance of a vessel on a per voyage basis. The
sellers method of calculating TCE is consistent with
industry standards and is determined by dividing operating
revenues (net of voyage expenses) by operating days for the
relevant time period. Voyage expenses primarily consist of port,
canal and fuel costs that are unique to a particular voyage,
which would otherwise be paid by the charterer under a time
charter contract. TCE is a standard shipping industry
performance measure used primarily to compare period-to-period
changes in a shipping companys performance despite changes
in the mix of charter types (i.e., spot charters, time charters
and bareboat charters) under which the vessels may be employed
between the periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
Year Ended December 31,
|
|
|
2008
|
|
2007
|
|
2007
|
|
2006
|
|
2005
|
|
Revenues from vessels
|
|
$
|
28,227
|
|
|
$
|
17,181
|
|
|
$
|
35,717
|
|
|
$
|
26,347
|
|
|
$
|
27,156
|
|
Direct voyage expenses
|
|
$
|
(759
|
)
|
|
$
|
(60
|
)
|
|
$
|
(82
|
)
|
|
$
|
(64
|
)
|
|
$
|
(139
|
)
|
Net operating revenues
|
|
$
|
27,468
|
|
|
$
|
17,121
|
|
|
$
|
35,635
|
|
|
$
|
26,283
|
|
|
$
|
27,017
|
|
Operating days
|
|
|
767
|
|
|
|
693
|
|
|
|
1,411
|
|
|
|
1,393
|
|
|
|
1,166
|
|
Time charter equivalent rates
|
|
$
|
35,812
|
|
|
$
|
24,706
|
|
|
$
|
25,256
|
|
|
$
|
18,868
|
|
|
$
|
23,170
|
|
12
|
|
|
(7)
|
|
Average daily vessel operating expenses, which includes crew
costs, provisions, deck and engine stores, lubricating oil,
insurance, maintenance and repairs, is calculated by dividing
vessel operating expenses by ownership days for the relevant
time periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
Year Ended December 31,
|
|
|
2008
|
|
2007
|
|
2007
|
|
2006
|
|
2005
|
|
Crew costs and other operating expenses
|
|
$
|
3,974
|
|
|
$
|
2,814
|
|
|
$
|
6,031
|
|
|
$
|
5,619
|
|
|
$
|
5,061
|
|
Ownership days
|
|
|
769
|
|
|
|
724
|
|
|
|
1,460
|
|
|
|
1,460
|
|
|
|
1,250
|
|
Daily vessel operating expense
|
|
$
|
5,168
|
|
|
$
|
3,887
|
|
|
$
|
4,130
|
|
|
$
|
3,849
|
|
|
$
|
4,049
|
|
|
|
|
(8)
|
|
Daily management fees are calculated by dividing total
management fees by ownership days for the relevant time period.
|
|
(9)
|
|
Total vessel operating expenses, or TVOE, is a measurement of
total expenses associated with operating the vessels. TVOE is
the sum of vessel operating expenses and management fees. Daily
TVOE is calculated by dividing TVOE by fleet ownership days for
the relevant time period.
|
PER
MARKET SHARE INFORMATION
The table below sets forth, for the calendar periods indicated,
the high and low sales prices on the American Stock Exchange or
the Nasdaq Stock Market for the common stock, warrants and units
of the Company, as applicable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Warrants
|
|
|
Units
|
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
Annual highs and lows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
$
|
9.67
|
|
|
$
|
9.26
|
|
|
$
|
1.66
|
|
|
$
|
1.13
|
|
|
$
|
10.94
|
|
|
$
|
9.83
|
|
Quarterly highs and lows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended 12/31/2007
|
|
$
|
9.48
|
|
|
$
|
9.08
|
|
|
$
|
1.66
|
|
|
$
|
1.13
|
|
|
$
|
10.94
|
|
|
$
|
10.17
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended 03/31/2008
|
|
$
|
9.48
|
|
|
$
|
9.01
|
|
|
$
|
1.35
|
|
|
$
|
0.37
|
|
|
$
|
10.61
|
|
|
$
|
9.45
|
|
Quarter ended 06/30/2008
|
|
$
|
10.00
|
|
|
$
|
9.15
|
|
|
$
|
2.62
|
|
|
$
|
0.42
|
|
|
$
|
12.31
|
|
|
$
|
9.47
|
|
Quarter ended 09/30/2008
|
|
$
|
10.00
|
|
|
$
|
7.21
|
|
|
$
|
2.50
|
|
|
$
|
0.75
|
|
|
$
|
11.90
|
|
|
$
|
8.70
|
|
Quarter ended 12/31/2008*
|
|
$
|
8.55
|
|
|
$
|
3.15
|
|
|
$
|
0.92
|
|
|
$
|
0.11
|
|
|
$
|
9.10
|
|
|
$
|
6.50
|
|
Monthly highs and lows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 2008
|
|
$
|
9.89
|
|
|
$
|
9.52
|
|
|
$
|
2.62
|
|
|
$
|
1.81
|
|
|
$
|
12.31
|
|
|
$
|
11.55
|
|
July 2008
|
|
$
|
9.91
|
|
|
$
|
9.44
|
|
|
$
|
2.50
|
|
|
$
|
1.30
|
|
|
$
|
11.90
|
|
|
$
|
10.51
|
|
August 2008
|
|
$
|
10.00
|
|
|
$
|
8.20
|
|
|
$
|
1.90
|
|
|
$
|
1.45
|
|
|
$
|
11.70
|
|
|
$
|
9.85
|
|
September 2008
|
|
$
|
9.40
|
|
|
$
|
7.21
|
|
|
$
|
1.85
|
|
|
$
|
0.75
|
|
|
$
|
10.47
|
|
|
$
|
8.70
|
|
October 2008*
|
|
$
|
8.65
|
|
|
$
|
3.15
|
|
|
$
|
0.92
|
|
|
$
|
0.15
|
|
|
$
|
9.10
|
|
|
$
|
6.50
|
|
November 2008*
|
|
$
|
5.90
|
|
|
$
|
4.25
|
|
|
$
|
0.30
|
|
|
$
|
0.15
|
|
|
|
N/A
|
|
|
|
N/A
|
|
December 2008*
|
|
$
|
6.50
|
|
|
$
|
4.25
|
|
|
$
|
0.27
|
|
|
$
|
0.11
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
*
|
|
Seanergy Maritimes common stock, warrants and units were
previously listed on the American Stock Exchange. On
October 15, 2008, Seanergy Maritimes common stock and
warrants commenced trading on the Nasdaq Stock Market. Seanergy
Maritimes units were separated prior to being listed on
the Nasdaq Stock Market and, therefore, were not listed on the
Nasdaq Stock Market. Seanergy Maritimes units stopped
trading on the American Stock Exchange on October 14, 2008
and were not listed on the Nasdaq Stock Market.
|
13
RISK
FACTORS
An investment in our securities involves a high degree of
risk. You should consider carefully all of the material risks
described below, together with the other information contained
in this prospectus before making a decision to invest in our
securities. References in this prospectus to
Seanergy, we, us, or
our company refer to Seanergy Maritime Holdings
Corp. and its subsidiaries, but, if the context otherwise
requires, may refer only to Seanergy Maritime Holdings Corp.
Risk
Factors Relating to Seanergy
If
Seanergy fails to manage its planned growth properly, it may not
be able to successfully expand its fleet, adversely affecting
overall financial position.
While Seanergy has no plans to immediately expand its fleet, it
does intend to continue to expand its fleet in the future.
Growth will depend on:
|
|
|
|
|
locating and acquiring suitable vessels;
|
|
|
|
identifying and consummating acquisitions or joint ventures;
|
|
|
|
identifying reputable shipyards with available capacity and
contracting with them for the construction of new vessels;
|
|
|
|
integrating any acquired vessels successfully with its existing
operations;
|
|
|
|
enhancing its customer base;
|
|
|
|
managing its expansion; and
|
|
|
|
obtaining required financing, which could include debt, equity
or combinations thereof.
|
Growing any business by acquisition presents numerous risks such
as undisclosed liabilities and obligations, difficulty
experienced in obtaining additional qualified personnel,
managing relationships with customers and suppliers and
integrating newly acquired operations into existing
infrastructures. Seanergy has not identified expansion
opportunities, and the nature and timing of any such expansion
is uncertain. Seanergy may not be successful in growing and may
incur significant expenses and losses.
Our
management made certain assumptions about our future operating
results that may differ significantly from our actual results,
which may result in shareholder claims against us or our
directors.
In connection with our vessel acquisition described above, our
management made certain assumptions about the future operating
results for our business. To the extent our actual results are
significantly lower than the projected results, there could be
adverse consequences to us. These consequences could include
potential claims by our shareholders against our directors for
violating their fiduciary duties to our shareholders in
recommending a transaction that was not fair to shareholders.
Any such claims, even if ultimately unsuccessful, would divert
financial resources and managements time and attention
from operating our business.
Our
debt financing contains restrictive covenants that may limit our
liquidity and corporate activities.
The debt financing that our subsidiaries entered into with
Marfin Bank S.A. of Greece on August 28, 2008 in connection
with the vessel acquisition imposes, and any future loan
agreements we or our subsidiaries may execute may impose,
operating and financial restrictions on us or our subsidiaries.
These restrictions may, subject to certain exceptions, limit our
or our subsidiaries ability to:
|
|
|
|
|
incur additional indebtedness;
|
|
|
|
create liens on our or our subsidiaries assets;
|
|
|
|
sell capital stock of our subsidiaries;
|
|
|
|
engage in any business other than the operation of the vessels;
|
14
|
|
|
|
|
pay dividends in excess of 60% of net cash flow;
|
|
|
|
change or terminate the management of the vessels or terminate
or materially amend the management agreement relating to each
vessel; and
|
|
|
|
sell the vessels.
|
Therefore, we may need to seek permission from our lenders in
order to engage in some important corporate actions. Our current
and any future lenders interests may be different from our
interests, and we cannot guarantee that we will be able to
obtain such lenders permission when needed. This may
prevent us from taking actions that are in our best interest.
Servicing
debt will limit funds available for other purposes, including
capital expenditures and payment of dividends.
Marfin Bank S.A. of Greece has extended to us pursuant to a
financial agreement dated August 28, 2008, a term loan of
up to $165,000,000 and a revolving facility not to exceed
$90,000,000. We are required to dedicate a portion of our cash
flow from operations to pay the principal and interest on our
debt. These payments limit funds otherwise available for working
capital expenditures and other purposes, including payment of
dividends. Based on current estimates for the period from
October 1, 2008 to September 30, 2009, the payment of
principal and interest amounts to approximately 43% of the cash
flow from operations. We have not yet determined whether to
purchase additional vessels or incur debt in the near future for
additional vessel acquisitions. If we are unable to service our
debt, it could have a material adverse effect on our financial
condition and results of operations. We have currently drawn
down the full amount of the term loan and $54,800,000 of the
revolving facility.
Credit
market volatility may affect our ability to refinance our
existing debt, borrow funds under our revolving credit facility
or incur additional debt.
The credit markets have been experiencing extreme volatility and
disruption for more than 12 months. In recent weeks, the
volatility and disruption have reached unprecedented levels. In
many cases, the markets have limited credit capacity for certain
issuers, and lenders have requested shorter terms. The market
for new debt financing is extremely limited and in some cases
not available at all. In addition, the markets have increased
the uncertainty that lenders will be able to comply with their
previous commitment. If current levels of market disruption and
volatility continue or worsen, we may not be able to refinance
our existing debt, draw upon our revolving credit facility or
incur additional debt, which may require us to seek other
funding sources to meet our liquidity needs or to fund planned
expansion. For example, our existing revolving credit facility
is tied to the market value of the vessels. We may need to seek
permission from its lenders in order to make further use of our
revolving credit facility, depending on the aggregate market
value of vessels. We cannot assure you that we will be able to
obtain debt or other financing on reasonable terms, or at all.
Increases
in interest rates could increase interest payable under our
variable rate indebtedness.
We are subject to interest rate risk in connection with our
variable rate indebtedness. Changes in interest rate could
increase the amount of our interest payments and thus negatively
impact our future earnings and cash flows. Fluctuations in
interest rates could be exacerbated in future periods as a
result of the current worldwide instability in the banking and
credit markets. Although we do not currently have hedging
arrangements for our variable rate indebtedness, we expect to
hedge interest rate exposure at the appropriate time. However,
these arrangements may prove inadequate or ineffective.
In the
highly competitive international dry bulk shipping industry, we
may not be able to compete for charters with new entrants or
established companies with greater resources, which may
adversely affect our results of operations.
We employ our fleet in a highly competitive market that is
capital intensive and highly fragmented. Competition arises
primarily from other vessel owners, some of whom have
substantially greater resources than ours. Competition for the
transportation of dry bulk cargoes can be intense and depends on
price, location, size, age, condition and the acceptability of
the vessel and its managers to the charterers. Due in part
15
to the highly fragmented market, competitors with greater
resources could operate larger fleets through consolidations or
acquisitions that may be able to offer better prices and fleets.
Because
SAMC is the sole counterparty on the time charters for all six
vessels in our initial fleet, the failure of such counterparty
to meet its obligations could cause us to suffer losses on such
contracts, thereby decreasing revenues, operating results and
cash flows.
We have chartered all six vessels acquired as part of the vessel
acquisition to SAMC, a company affiliated with members of the
Restis family, and therefore will be dependent on performance by
our charterer. Our charters may terminate earlier than the dates
indicated in this prospectus. Under our charter agreements, the
events or occurrences that will cause a charter to terminate or
give the charterer the option to terminate the charter generally
include a total or constructive total loss of the related
vessel, the requisition for hire of the related vessel or the
failure of the related vessel to meet specified performance
criteria. In addition, the ability of our charterer to perform
its obligations under a charter will depend on a number of
factors that are beyond our control. These factors may include
general economic conditions, the condition of the dry bulk
shipping industry, the charter rates received for specific types
of vessels, the ability of the charterer to obtain letters of
credit from its customers and various operating expenses. In
addition, SAMC, like other operators, manages its tonnage
operations through a mix of time period charters (medium to
long) and spot charters. It is Seanergys understanding
that SAMC operates three of the vessels on period charters that
are in excess of one year and three vessels on the spot market.
The spot market is highly competitive and spot rates fluctuate
significantly. Vessels operating in the spot market generate
revenues that are less predictable than those on period time
charters. Therefore, SAMC may be exposed to the risk of
fluctuating spot drybulk charter rates, which may have an
adverse impact on its financial performance and its obligations.
The costs and delays associated with the default by a charterer
of a vessel may be considerable and may adversely affect our
business, results of operations, cash flows, financial condition
and our ability to pay dividends.
We cannot predict whether our charterer will, upon the
expiration of its charters, re-charter our vessels on favorable
terms or at all. If our charterer decides not to re-charter our
vessels, we may not be able to re-charter them on terms similar
to our current charters or at all. In the future, we may also
employ our vessels in the spot charter market, which is subject
to greater rate fluctuation than the time charter market.
If we receive lower charter rates under replacement charters or
are unable to re-charter all of our vessels, the amounts
available, if any, to pay dividends to our shareholders may be
significantly reduced or eliminated.
We
will not be able to take advantage of favorable opportunities in
the current spot market with respect to our vessels, all of
which are employed on 11 to 13 month time
charters.
All of the six vessels in our fleet are employed under
medium-term time charters, with expiration dates ranging from
11 months to 13 months from the time of delivery.
Although medium-term time charters provide relatively steady
streams of revenue, vessels committed to medium-term charters
may not be available for spot voyages during periods of
increasing charter hire rates, when spot voyages might be more
profitable.
We may
not be able to attract and retain key management personnel and
other employees in the shipping industry, which may negatively
affect the effectiveness of our management and our results of
operations.
Our success will depend to a significant extent upon the
abilities and efforts of our management team. We currently have
four employees, our chief executive officer, chief financial
officer, secretary and general counsel. Our success will depend
upon our ability to retain key members of our management team
and the ability of our management to recruit and hire suitable
employees. The loss of any of these individuals could adversely
affect our business prospects and financial condition.
Difficulty in hiring and retaining personnel could adversely
affect our results of operations.
We are
dependent on each of EST and Safbulk for the management and
commercial brokerage of our fleet.
Mr. Dale Ploughman, our chief executive officer,
Ms. Christina Anagnostara, our chief financial officer,
Mr. Ioannis Tsigkounakis, our secretary, and Ms. Theodora
Mitropetrou, our general counsel are our only officers, and we
currently have no plans to hire additional officers. As we
subcontract the management and commercial brokerage of our
fleet, including crewing, maintenance and repair, to each of EST
and Safbulk,
16
both affiliates of members of the Restis family, the loss of
services of, or the failure to perform by, either of these
entities could materially and adversely affect our results of
operations. Although we may have rights against either of these
entities if they default on their obligations to us, you will
have no recourse directly against them. Further, we expect that
we will need to seek approval from our lenders to change our
manager.
EST,
Safbulk and SAMC are privately held companies and there is
little or no publicly available information about
them.
The ability of EST and Safbulk to continue providing services
for our benefit and for SAMC to continue performing under the
charters will depend in part on their respective financial
strength. Circumstances beyond our control could impair their
financial strength, and because they are privately held, it is
unlikely that information about their financial strength would
become public unless any of these entities began to default on
their respective obligations. As a result, our shareholders
might have little advance warning of problems affecting EST,
Safbulk or SAMC, even though these problems could have a
material adverse effect on us.
We
outsource the management and commercial brokerage of our fleet
to companies that are affiliated with members of the Restis
family, which may create conflicts of interest.
We outsource the management and commercial brokerage of our
fleet to EST and Safbulk, companies that are affiliated with
members of the Restis family. Companies affiliated with members
of the Restis family own and may acquire vessels that compete
with our fleet. Both EST and Safbulk have responsibilities and
relationships to owners other than us which could create
conflicts of interest between us, on the one hand, and EST or
Safbulk, on the other hand. These conflicts may arise in
connection with the chartering of the vessels in our fleet
versus dry bulk carriers managed by other companies affiliated
with members of the Restis family.
Risks
involved with operating ocean-going vessels could affect our
business and reputation, which would adversely affect our
revenues.
The operation of an ocean-going vessel carries inherent risks.
These risks include the possibility of:
|
|
|
|
|
crew strikes
and/or
boycotts;
|
|
|
|
marine disaster;
|
|
|
|
piracy;
|
|
|
|
environmental accidents;
|
|
|
|
cargo and property losses or damage; and
|
|
|
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business interruptions caused by mechanical failure, human
error, war, terrorism, political action in various countries or
adverse weather conditions.
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Any of these circumstances or events could increase our costs or
lower our revenues.
Our
vessels may suffer damage and we may face unexpected drydocking
costs, which could adversely affect our cash flow and financial
condition.
If our vessels suffer damage, they may need to be repaired at a
drydocking facility. The costs of drydock repairs are
unpredictable and can be substantial. We may have to pay
drydocking costs that our insurance does not cover. The loss of
earnings while these vessels are being repaired and
reconditioned may not be covered by insurance in full and thus
these losses, as well as the actual cost of these repairs, would
decrease our earnings.
Purchasing
and operating second hand vessels may result in increased
operating costs and vessel off-hire, which could adversely
affect our earnings.
We have inspected the second hand vessels that we acquired from
the sellers and considered the age and condition of the vessels
in budgeting for operating, insurance and maintenance costs. If
we acquire additional second hand vessels in the future, we may
encounter higher operating and maintenance costs due to the age
and condition of those additional vessels.
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However, our inspection of second hand vessels prior to purchase
does not provide us with the same knowledge about their
condition and cost of any required or anticipated repairs that
we would have had if these vessels had been built for and
operated exclusively by us. Except for the two newly constructed
vessels, we will not receive the benefit of warranties on second
hand vessels.
In general, the costs to maintain a dry bulk carrier in good
operating condition increase with the age of the vessel. The
average age of the four second hand vessels in our initial fleet
of six dry bulk carriers that we acquired from the sellers is
approximately 10.5 years. The two newly built vessels have
a useful life of 25 years. Older vessels are typically less
fuel-efficient and more costly to maintain than more recently
constructed dry bulk carriers due to improvements in engine
technology. Cargo insurance rates increase with the age of a
vessel, making older vessels less desirable to charterers.
Governmental regulations, safety or other equipment standards
related to the age of vessels may require expenditures for
alterations, or the addition of new equipment, to our vessels
and may restrict the type of activities in which the vessels may
engage. As our vessels age, market conditions may not justify
those expenditures or enable us to operate our vessels
profitably during the remainder of their useful lives.
Turbulence
in the financial services markets and the tightening of credit
may affect the ability of purchasers of dry bulk cargo to obtain
letters of credit to purchase dry bulk goods, resulting in
declines in the demand for vessels.
Turbulence in the financial markets has led many lenders to
reduce, and in some cases, cease to provide credit, including
letters of credit, to borrowers. Purchasers of dry bulk cargo
typically pay for cargo with letters of credit. The tightening
of the credit markets has reduced the issuance of letters of
credit and as a result decreased the amount of cargo being
shipped as sellers determine not to sell cargo without a letter
of credit. Reductions in cargo results in less business for
charterers and declines in the demand for vessels. Any material
decrease in the demand for vessels may decrease charter rates
and make it more difficult for Seanergy to charter its vessels
in the future at competitive rates. Reduced charter rates would
reduce Seanergys revenues.
Rising
fuel prices may adversely affect our profits.
The cost of fuel is a significant factor in negotiating charter
rates. As a result, an increase in the price of fuel beyond our
expectations may adversely affect our profitability. The price
and supply of fuel is unpredictable and fluctuates based on
events outside our control, including geo-political
developments, supply and demand for oil, actions by members of
the Organization of the Petroleum Exporting Countries and other
oil and gas producers, war and unrest in oil producing countries
and regions, regional production patterns and environmental
concerns and regulations.
Our
worldwide operations will expose us to global risks that may
interfere with the operation of our vessels.
We conduct our operations worldwide. Changing economic,
political and governmental conditions in the countries where we
are engaged in business or in the countries where we have
registered our vessels, affect our operations. In the past,
political conflicts, particularly in the Persian Gulf, resulted
in attacks on vessels, mining of waterways and other efforts to
disrupt shipping in the area. Acts of terrorism and piracy have
also affected vessels trading in regions such as the South China
Sea and off the coast of Somalia. The likelihood of future acts
of terrorism may increase, and our vessels may face higher risks
of being attacked. In addition, future hostilities or other
political instability in regions where our vessels trade could
have a material adverse effect on our trade patterns and
adversely affect our operations and performance.
We may
not have adequate insurance to compensate us if we lose our
vessels, which may have a material adverse effect on our
financial condition and results of operation.
We have procured hull and machinery insurance and protection and
indemnity insurance, which includes environmental damage and
pollution insurance coverage and war risk insurance for our
fleet. We do not expect to maintain for all of our vessels
insurance against loss of hire, which covers business
interruptions that result from the loss of use of a vessel. We
may not be adequately insured against all risks. We may not be
able to
18
obtain adequate insurance coverage for our fleet in the future.
The insurers may not pay particular claims. Our insurance
policies may contain deductibles for which we will be
responsible and limitations and exclusions which may increase
our costs or lower our revenue. Moreover, insurers may default
on claims they are required to pay. If our insurance is not
enough to cover claims that may arise, the deficiency may have a
material adverse effect on our financial condition and results
of operations.
We are
incorporated in the Republic of the Marshall Islands, which does
not have a well-developed body of corporate law, which may
negatively affect the ability of shareholders to protect their
interests.
Our corporate affairs are governed by our amended and restated
articles of incorporation and amended and restated by-laws and
by the Marshall Islands Business Corporations Act, or BCA. The
provisions of the BCA resemble provisions of the corporation
laws of a number of states in the United States. However, there
have been few judicial cases in the Republic of the Marshall
Islands interpreting the BCA. The rights and fiduciary
responsibilities of directors under the laws of the Republic of
the Marshall Islands are not as clearly established as the
rights and fiduciary responsibilities of directors under
statutes or judicial precedent in existence in certain
U.S. jurisdictions. Shareholder rights may differ as well.
While the BCA does specifically incorporate the non-statutory
law, or judicial case law, of the State of Delaware and other
states with substantially similar legislative provisions,
shareholders may have more difficulty in protecting their
interests in the face of actions by the management, directors or
controlling shareholders than would shareholders of a
corporation incorporated in a U.S. jurisdiction.
We are
incorporated under the laws of the Republic of the Marshall
Islands and our directors and officers are
non-U.S.
residents, and although you may bring an original action in the
courts of the Marshall Islands or obtain a judgment against us
or our directors or management based on U.S. laws in the event
you believe your rights as a shareholder have been infringed, it
may be difficult to enforce judgments against us or our
directors or management.
We are incorporated under the laws of the Republic of the
Marshall Islands, and all of our assets are, and will be,
located outside of the United States. Our business is operated
primarily from our offices in Athens, Greece. In addition, our
directors and officers, are non-residents of the United States,
and all or a substantial portion of the assets of these
non-residents are located outside the United States. As a
result, it may be difficult or impossible for you to bring an
action against us, or against these individuals in the United
States if you believe that your rights have been infringed under
securities laws or otherwise. Even if you are successful in
bringing an action of this kind, the laws of the Marshall
Islands and of other jurisdictions may prevent or restrict you
from enforcing a judgment against our assets or the assets of
our directors and officers. Although you may bring an original
action against us or our affiliates in the courts of the
Marshall Islands based on U.S. laws, and the courts of the
Marshall Islands may impose civil liability, including monetary
damages, against us, or our affiliates for a cause of action
arising under Marshall Islands laws, it may impracticable for
you to do so given the geographic location of the Marshall
Islands. For more information regarding the relevant laws of the
Marshall Islands, please read Enforceability of Civil
Liabilities.
Anti-takeover
provisions in our amended and restated articles of incorporation
and by-laws, as well as the terms and conditions of a Voting
Agreement, could make it difficult for shareholders to replace
or remove our current board of directors or could have the
effect of discouraging, delaying or preventing a merger or
acquisition, which could adversely affect the market price of
our common shares.
Several provisions of our amended and restated articles of
incorporation and by-laws, as well as the terms and conditions
of the Voting Agreement could make it difficult for shareholders
to change the composition of our board of directors in any one
year, preventing them from changing the composition of our
management. In addition, the same provisions may discourage,
delay or prevent a merger or acquisition that shareholders may
consider favorable.
These provisions include those that:
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authorize our board of directors to issue blank
check preferred stock without shareholder approval;
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provide for a classified board of directors with staggered,
three-year terms;
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require a super-majority vote in order to amend the provisions
regarding our classified board of directors with staggered,
three-year terms;
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permit the removal of any director from office at any time, with
or without cause, at the request of the shareholder group
entitled to designate such director;
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allow vacancies on the board of directors to be filled by the
shareholder group entitled to name the director whose
resignation or removal led to the occurrence of the vacancy;
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require that our board of directors fill any vacancies on the
shipping committee with the nominees selected by the party that
nominated the person whose resignation or removal has caused
such vacancies; and
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prevent our board of directors from dissolving the shipping
committee or altering the duties or composition of the shipping
committee without an affirmative vote of not less than 80% of
the board of directors.
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These anti-takeover provisions could substantially impede the
ability of shareholders to benefit from a change in control and,
as a result, may adversely affect the market price of our common
stock and your ability to realize any potential change of
control premium.
Our
shipping committee is controlled by appointees nominated by
affiliates of members of the Restis family, which could
create conflicts of interest detrimental to us.
Our board of directors has created a shipping committee, which
has been delegated exclusive authority to consider and vote upon
all matters involving shipping and vessel finance, subject to
certain limitations. Affiliates of members of the Restis family
have the right to appoint two of the three members of the
shipping committee and as a result such affiliates will
effectively control all decisions with respect to our shipping
operations that do not involve a transaction with a Restis
affiliate. Messrs. Dale Ploughman, Kostas Koutsoubelis and
Elias Culucundis currently serve on our shipping committee. Each
of Messrs. Ploughman and Koutsoubelis also will continue to
serve as officers
and/or
directors of other entities affiliated with members of the
Restis family that operate in the dry bulk sector of the
shipping industry. The dual responsibilities of members of the
shipping committee in exercising their fiduciary duties to us
and other entities in the shipping industry could create
conflicts of interest. Although Messrs. Ploughman and
Koutsoubelis intend to maintain as confidential all information
they learn from one company and not disclose it to the other
entities for whom they serve; in certain instances this could be
impossible given their respective roles with various companies.
There can be no assurance that Messrs. Ploughman and
Koutsoubelis would resolve any conflicts of interest in a manner
beneficial to us.
We may
be classified as a passive foreign investment company, or PFIC,
which could result in adverse U.S. federal income tax
consequences to U.S. holders of our common stock or
warrants.
We generally will be treated as a PFIC for any taxable year in
which either (1) at least 75% of our gross income (looking
through certain corporate subsidiaries) is passive income or
(2) at least 50% of the average value of our assets
(looking through certain corporate subsidiaries) produce, or are
held for the production of, passive income. Passive income
generally includes dividends, interest, rents, royalties, and
gains from the disposition of passive assets. If we were a PFIC
for any taxable year during which a U.S. Holder (as such
term is defined in the section entitled
Taxation U.S. Federal Income
Taxation General) held our common stock or
warrants, the U.S. Holder may be subject to increased
U.S. federal income tax liability and may be subject to
additional reporting requirements. Based on the current and
expected composition of our and our subsidiaries assets
and income, it is not anticipated that we will be treated as a
PFIC. Our actual PFIC status for any taxable year, however, will
not be determinable until after the end of such taxable year.
Accordingly there can be no assurances regarding our status as a
PFIC for the current taxable year or any future taxable year.
See the discussion in the section entitled
Taxation U.S. Federal Income
Taxation U.S. Holders Passive
Foreign Investment Company Rules. We urge
U.S. Holders to consult with their own tax advisors
regarding the possible application of the PFIC rules.
20
We, or
any of our vessel-owning subsidiaries, may become subject to
U.S. federal income taxation on our U.S. source shipping
income.
Each of the vessels acquired is operated under a time charter or
voyage charter that allows the charterer to determine the
vessels ports of call. If a vessel operates to or from the
United States, a portion of the charter income from the vessel
attributable to such trips may constitute United States
source gross transportation income. We cannot predict
whether we or any of our vessel-owning subsidiaries will earn
any such income. United States source gross transportation
income generally is subject to U.S. federal income tax at a
4% rate, unless exempt under Section 883 of the Internal
Revenue Code of 1986, as amended, or the Code. Section 883
of the Code generally provides an exemption from
U.S. federal income tax in respect of gross income earned
by certain foreign corporations from the international operation
of ships, but only if a number of requirements are met
(including requirements concerning the ownership of the foreign
corporation). Because of the factual nature of determining
whether this tax exemption applies, it is unclear at this time
whether the exemption will be available to us or any of our
vessel-owning subsidiaries for any United States source gross
transportation income that we or our subsidiaries might earn.
You should consult with your own tax advisors as to the risk
that we or our vessel-owning subsidiaries may be subject to
U.S. federal income tax.
We, as
a
non-U.S.
company, have elected to comply with the less stringent
reporting requirements of the Exchange Act, as a foreign private
issuer.
We are a Marshall Islands company, and our corporate affairs are
governed by our amended and restated articles of incorporation,
the BCA and the common law of the Republic of the Marshall
Islands. Upon the dissolution and liquidation of Seanergy
Maritime, we intend to commence reporting under the Exchange Act
as a
non-U.S. company
with foreign private issuer status. Some of the differences
between the reporting obligations of a foreign private issuer
and those of a U.S. domestic company are as follows:
Foreign private issuers are not required to file their annual
report on
Form 20-F
until six months after the end of each fiscal year while
U.S. domestic issuers that are accelerated filers are
required to file their annual report of
Form 10-K
within 75 days after the end of each fiscal year. However,
in August 2008, the Securities and Exchange Commission
(SEC), adopted changes in the content and timing of
disclosure requirements for foreign private issuers, including
requiring foreign private issuers to file their annual report on
Form 20-F
no later than four months after the end of each fiscal year,
after a three-year transition period. Additionally, other new
disclosure requirements that will be added to
Form 20-F
include disclosure of disagreements with or changes in
certifying accountants, fees, payments and other charges related
to American Depository Receipts, and significant differences in
corporate governance practices as compared to United States
issuers. In addition, foreign private issuers are not required
to file regular quarterly reports on
Form 10-Q
that contain unaudited financial and other specified information.
However, if a foreign private issuer makes interim reports
available to shareholders, the foreign private issuer will be
required to submit copies of such reports to the SEC on a
Form 6-K.
Foreign private issuers are also not required to file current
reports on
Form 8-K
upon the occurrence of specified significant events. However,
foreign private issuers are required to file reports on
Form 6-K
disclosing whatever information the foreign private issuer has
made or is required to make public pursuant to its home
countrys laws or distributes to its shareholders and that
is material to the issuer and its subsidiaries. Foreign private
issuers are also exempt from the requirements under the
U.S. proxy rules prescribing the content of proxy
statements and annual reports to shareholders. Although the
Nasdaq Stock Market
does
require
that a listed
company prepare and deliver to shareholders annual reports and
proxy statements in connection with all meeting of shareholders,
these documents will not be required to comply with the detailed
content requirements of the SECs proxy regulations.
Officers, directors and 10% or more shareholders of foreign
private issuers are exempt from requirements to file
Forms 3, 4 and 5 to report their beneficial ownership of
the issuers common stock under Section 16(a) of the
Exchange Act and are also exempt from the related short-swing
profit recapture rules under Section 16(b) of the Exchange
Act. Foreign private issuers are also not required to comply
with the provisions of Regulation FD aimed at preventing
issuers from making selective disclosures of material
information.
In addition, as a foreign private issuer, we may be exempted
from, and you may not be provided with the benefits of, some of
the Nasdaq Stock Market corporate governance requirements,
including that:
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a majority of our board of directors must be independent
directors;
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the compensation of our chief executive officer must be
determined or recommended by a majority of the independent
directors or a compensation committee comprised solely of
independent directors; and
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our director nominees must be selected or recommended by a
majority of the independent directors or a nomination committee
comprised solely of independent directors.
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As a result, our independent directors may not have as much
influence over our corporate policy as they would if we were not
a foreign private issuer.
As a result of all of the above, our public shareholders may
have more difficulty in protecting their interests in the face
of actions taken by management, members of the board of
directors or controlling shareholders than they would as
shareholders of a U.S. company.
The
Republic of Marshall Islands has no bankruptcy
act.
The Republic of Marshall Islands has no bankruptcy, insolvency
or any similar act that governs the liquidation or
rehabilitation of an insolvent debtor, and thus the Marshall
Islands may not have a sound legal framework and corresponding
caliber of professional legal infrastructure to adequately
address or recognize the rights and needs of domestic or foreign
creditors and investors. It does have a little-used device
pursuant to which, at the request of a judgment creditor, a
court can appoint a receiver to either run or wind up the
affairs of a corporation. A court can also appoint a trustee if
a corporation files for dissolution to wind up the affairs.
Finally, it would be possible for a Marshall Islands court to
apply the law of any jurisdiction with laws similar to those of
the Marshall Islands, such as those of the United States. There
can be no assurance, however, that a Marshall Islands court
would apply the insolvency laws, including, without limitation,
the priority schemes, of the United States or of any other
foreign country, in the event of the Companys insolvency,
and thus it is difficult to predict the outcome of any such
proceedings. Additionally, to the extent the Company has
creditors or assets in countries other than the Marshall
Islands, there can be no assurance that a foreign court would
recognize and extend comity to the Marshall Islands insolvency
proceedings.
Investors
should not rely on an investment in us if they require dividend
income. It is not certain that we will pay a dividend and the
only return on an investment in us may come from appreciation of
our common stock, if any.
We intend to pay dividends as described in Description of
Securities Dividends. However, we may incur
other expenses or liabilities that would reduce or eliminate the
cash available for distribution as dividends. Our loan
agreements, including the credit facility agreement, may also
prohibit or restrict the declaration and payment of dividends
under some circumstances.
In addition, the declaration and payment of dividends will be
subject at all times to the discretion of our board of
directors. The timing and amount of dividends will be in the
discretion of our board of directors and be dependent on our
earnings, financial condition, cash requirements and
availability, fleet renewal and expansion, restrictions in our
loan agreements, the provisions of Marshall Islands law
affecting the payment of dividends and other factors. Marshall
Islands law generally prohibits the payment of dividends other
than from surplus or while a company is insolvent or would be
rendered insolvent upon the payment of such dividends, or if
there is no surplus, dividends may be declared or paid out of
net profits for the fiscal year in which the dividend is
declared and for the preceding fiscal year. We may not pay
dividends in the anticipated amounts and frequency set forth in
this prospectus or at all.
We are
a holding company and will depend on the ability of our
subsidiaries to distribute funds to us in order to satisfy
financial obligations or to make dividend
payments.
We are a holding company and our subsidiaries, all of which are,
or upon their formation will be, wholly owned by us either
directly or indirectly, conduct all of our operations and own
all of our operating assets. We have no significant assets other
than the equity interests in our wholly owned subsidiaries. As a
result, our ability to make dividend payments depends on our
subsidiaries and their ability to distribute funds to us. If we
are unable to obtain funds from our subsidiaries, our board of
directors may exercise its discretion not to pay dividends.
22
The
Seanergy Maritime warrants, which will become our obligation
after the dissolution and liquidation, are currently exercisable
and you may experience dilution.
Seanergy Maritime has 38,984,667 warrants to purchase its
common stock issued and outstanding at an exercise price of
$6.50 per share, which will become our obligations upon
completion of Seanergy Maritimes dissolution and
liquidation. As a result, you may experience dilution if such
warrants are exercised.
Registration
rights held by Seanergy Maritimes founding shareholders
and the Restis affiliate shareholders may have an adverse effect
on the market price of our common stock.
Pursuant to a Registration Rights Agreement, no later than
thirty days from the effective date of the dissolution and
liquidation, we are obligated to file a registration statement
with the Securities and Exchange Commission registering the
resale of the 5.5 million shares in the aggregate owned by
Seanergy Maritimes founding shareholders and the Restis
affiliate shareholders and the 16,016,667 shares of common
stock underlying their private placement warrants. However, the
5,500,000 shares will not be released from escrow before
the first year anniversary of the consummation of the vessel
acquisition. In addition, we have agreed to register for resale
in such registration statement an aggregate of
6,568,075 shares of common stock, consisting of
4,308,075 shares of common stock issuable to the Restis
affiliate shareholders if we achieve certain earnings targets
and 2,260,000 shares of common stock issuable upon
conversion of the Note.
Upon the effectiveness of such registration statement, there
will be up to an additional 28,084,742 shares of common
stock eligible for trading in the public market. The presence of
these additional shares may have an adverse effect on the market
price of our common stock.
Following
the completion of the dissolution and liquidation of Seanergy
Maritime, the Restis affiliate shareholders will hold
approximately 71.93% of our outstanding common stock and the
founding shareholders of Seanergy Maritime will hold
approximately 14.72% of our outstanding common stock. If we
achieve certain earnings targets and the Restis affiliate
shareholders convert the Note into Shares, the Restis affiliate
shareholders may receive an additional 6,568,075 of our
outstanding common stock within two years after closing. This
may limit your ability to influence our actions.
As of December 8, 2008, the total beneficial ownership of the
Restis family, including shares actually owned, shares issuable
upon exercise of warrants exercisable within 60 days and
shares governed by the Voting Agreement, in Seanergy Maritime
was 84.12%. Between the period commencing on May 20, 2008
when the Restis affiliate shareholders became shareholders of
Seanergy Maritime and the date of this prospectus, the Restis
affiliate shareholders beneficial ownership interest has
increased as a result of the following: (i) the
determination to purchase shares of Seanergy Maritimes
common stock because a substantial number of shareholders were
likely to vote against the approval of the proposed vessel
acquisition in which the Restis affiliate shareholders had an
interest, which resulted in the purchase of
8,929,781 shares of our common stock; (ii) the
decrease in the number of shares outstanding for Seanergy
Maritime resulting from shareholders electing to have their
shares redeemed upon the consummation of the vessel acquisition;
(iii) the increase of 8,008,334 shares deemed beneficially
owned resulting from the warrants becoming exercisable upon the
consummation of the vessel acquisition; and (iv) the
determination to purchase shares for investment purposes, which
resulted in the purchase of 4,454,134 shares of our common
stock.
Following the completion of the dissolution and liquidation of
Seanergy Maritime, the Restis affiliate shareholders will own
approximately 71.93% of our outstanding common stock (including
70,000 shares of common stock owned by Argonaut SPC, a fund
whose investment manager is an affiliate of members of the
Restis family), or approximately 39.49% of our outstanding
capital stock on a fully diluted basis, assuming exercise of all
outstanding Warrants. Assuming issuance of the earnout shares
and conversion of the Note, the Restis affiliate shareholders
will own approximately 78.28% of our outstanding common stock,
or approximately 45.17% of our outstanding common stock on a
fully diluted basis, assuming exercise of all outstanding
Warrants. Following completion of Seanergy Maritimes
dissolution and liquidation, the founding shareholders of
Seanergy Maritime will own approximately 14.72% of our
outstanding common stock, or 17.83% of our outstanding capital
stock on a fully diluted basis. In addition, Seanergy Maritime
has entered into the Voting
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Agreement with the Restis affiliate shareholders and the
founding shareholders of Seanergy Maritime whereby the Restis
affiliate shareholders and founding shareholders will jointly
nominate our board of directors. Collectively, the parties to
the Voting Agreement will own 86.65% of our outstanding common
stock, or approximately 57.32% on a fully diluted basis.
Seanergy Maritimes major shareholders (which will become
our major shareholders following Seanergy Maritimes
dissolution and liquidation) will have the power to exert
considerable influence over our actions and matters which
require shareholder approval, which will limit your ability to
influence our actions.
The
market price of our common stock may in the future be subject to
significant fluctuations.
The market price of our common stock may in the future be
subject to significant fluctuations as a result of many factors,
some of which are beyond our control. Among the factors that
could in the future affect our stock price are:
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quarterly variations in our results of operations;
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changes in sales or earnings estimates or publication of
research reports by analysts;
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speculation in the press or investment community about our
business or the shipping industry generally;
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changes in market valuations of similar companies and stock
market price and volume fluctuations generally;
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strategic actions by us or our competitors such as acquisitions
or restructurings;
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regulatory developments;
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additions or departures of key personnel;
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general market conditions; and
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domestic and international economic, market and currency factors
unrelated to our performance.
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In addition, in recent months, the stock market has experienced
significant price and volume fluctuations. This volatility has
had a significant impact on the market price of securities
issued by many companies, including companies in the dry bulk
shipping industry. The changes frequently appear to occur
without regard to the operating performance of the affected
companies. Hence, the price of our common stock could fluctuate
based upon factors that have little or nothing to do with us,
and these fluctuations could materially reduce our share price.
Because
we expect to generate all of our revenues in U.S. dollars but
incur a portion of our expenses in other currencies, exchange
rate fluctuations could have an adverse impact on our results of
operations.
We expect to generate substantially all of our revenues in
U.S. dollars but certain of our expenses will be incurred
in currencies other than the U.S. dollar. This difference
could lead to fluctuations in net income due to changes in the
value of the U.S. dollar relative to these other
currencies, in particular the Euro. Expenses incurred in foreign
currencies against which the U.S. dollar falls in value
could increase, decreasing our net income and cash flow from
operations. For example, during 2007, the value of the
U.S. dollar declined by approximately 10.37% as compared to
the Euro and declined approximately 8.22% during the first six
months of 2008. However, the value of the U.S. dollar increased
by approximately 3.41% as compared to the Euro during the first
nine months of 2008 and increased approximately 10.75% for the
three months ended September 30, 2008. Furthermore, the
value of the U.S. dollar increased by 13.87% as compared to
the Euro during 2008 and increased approximately 6.29% for the
three months ended December 31, 2008.
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Industry
Risk Factors Relating to Seanergy
The
dry bulk shipping industry is cyclical and volatile, and this
may lead to reductions and volatility of charter rates, vessel
values and results of operations.
The degree of charter hire rate volatility among different types
of dry bulk carriers has varied widely. If we enter into a
charter when charter hire rates are low, our revenues and
earnings will be adversely affected. In addition, a decline in
charter hire rates likely will cause the value of the vessels
that we own, to decline and we may not be able to successfully
charter our vessels in the future at rates sufficient to allow
us to operate our business profitably or meet our obligations.
The factors affecting the supply and demand for dry bulk
carriers are outside of our control and are unpredictable. The
nature, timing, direction and degree of changes in dry bulk
shipping market conditions are also unpredictable.
Factors that influence demand for seaborne transportation of
cargo include:
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demand for and production of dry bulk products;
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the distance cargo is to be moved by sea;
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global and regional economic and political conditions;
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environmental and other regulatory developments; and
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changes in seaborne and other transportation patterns, including
changes in the distances over which cargo is transported due to
geographic changes in where commodities are produced and cargoes
are used.
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The factors that influence the supply of vessel capacity include:
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the number of new vessel deliveries;
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the scrapping rate of older vessels;
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vessel casualties;
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price of steel;
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number of vessels that are out of service;
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changes in environmental and other regulations that may limit
the useful life of vessels; and
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port or canal congestion.
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We anticipate that the future demand for our vessels will be
dependent upon continued economic growth in the worlds
economies, including China and India, seasonal and regional
changes in demand, changes in the capacity of the worlds
dry bulk carrier fleet and the sources and supply of cargo to be
transported by sea. If the global vessel capacity increases in
the dry bulk shipping market, but the demand for vessel capacity
in this market does not increase or increases at a slower rate,
the charter rates could materially decline. Adverse economic,
political, social or other developments could have a material
adverse effect on our business, financial condition, results of
operations and ability to pay dividends.
Future
growth in dry bulk shipping will depend on a return to economic
growth in the world economy that exceeds growth in vessel
capacity. A decline in charter rates would adversely affect our
revenue stream and could have an adverse effect on our financial
condition and results of operations.
Charter rates for the dry bulk carriers have been at extremely
low rates recently mainly due to the current global financial
crisis which is also affecting this industry. We anticipate that
future demand for our vessels, and in turn future charter rates,
will be dependent upon a return to economic growth in the
worlds economy, particularly in China and India, as well
as seasonal and regional changes in demand and changes in the
capacity of the worlds fleet. The worlds dry bulk
carrier fleet is expected to increase in 2008 as a result of
scheduled deliveries of newly constructed vessels but will be
leveled off by higher forecasts for scrapping of existing
vessels as compared to 2007. A return to economic growth in the
world economy that exceeds growth
25
in vessel capacity will be necessary to sustain current charter
rates. There can be no assurance that economic growth will not
continue to decline or that vessel scrapping will occur at an
even lower rate than forecasted.
Despite Seanergys current strong charter revenue as a
result of current charter agreements being secured for 11-13
months which are currently at above market value, there is a
risk that due to the current volatility in the dry bulk sector,
which is primarily caused by among other things, a decrease in
letters of credit being provided, significant drop in demand for
goods being shipped, reduction in volumes of goods and
cancellation of orders, there is a possibility that charterers
could seek to renegotiate the time charter rates. A decline in
charter rates would adversely affect our revenue stream and
could have a material adverse effect on our business, financial
condition and results of operations.
Significant
volatility in the world economy could have a material adverse
effect on our business, financial position and results of
operations.
Our vessels are engaged in global seaborne transportation of
commodities, involving the loading or discharging of raw
materials and semi-finished goods around the world. As a result,
significant volatility in the world economy and negative changes
in global economic conditions, may have an adverse effect on our
business, financial position and results of operations, as well
as future prospects. In particular, in recent years China has
been one of the fastest growing economies in terms of gross
domestic product. Given the current global conditions, the
Chinese economy has experienced slowdown and stagnation and
there is no assurance that continuous growth will be sustained
or that the Chinese economy will not experience further
contraction or stagnation in the future. Moreover, any further
slowdown in the U.S. economy, the European Union or certain
other Asian countries may continue to adversely affect world
economic growth. Negative world economic conditions may result
in global production cuts, changes in the supply and demand for
the seaborne transportation of drybulk goods, downward adjusted
pricings for goods and freights and cancellation of
transactions/orders placed. As a result, our future revenues and
net income, may be materially reduced, and our future prospects
may be materially affected, by a continuous global economic
downturn.
An
oversupply of dry bulk carrier capacity may lead to reductions
in charter rates and our profitability.
The market supply of dry bulk carriers, primarily Capesize and
Panamax vessels, has been increasing, and the number of such dry
bulk carriers on order is near historic highs. Newly constructed
vessels were delivered and are expected to continue in
significant numbers starting at the beginning of 2006 through
2009. As of December 2007, newly constructed vessels orders had
been placed for an aggregate of more than 60% of the current
global dry bulk fleet, with deliveries expected during the next
four to five years. An oversupply of dry bulk carrier capacity
may result in a reduction of our charter rates. If such a
reduction occurs, when our vessels current charters expire
or terminate, we may only be able to recharter our vessels at
reduced or unprofitable rates or we may not be able to charter
these vessels at all.
Changes
in the economic and political environment in China and policies
adopted by the government to regulate its economy may have a
material adverse effect on our business, financial condition and
results of operations.
The Chinese economy differs from the economies of most countries
belonging to the Organization for Economic Cooperation and
Development, or OECD, in such respects as structure, government
involvement, level of development, growth rate, capital
reinvestment, allocation of resources, rate of inflation and
balance of payments position. Prior to 1978, the Chinese economy
was a planned economy. Since 1978, increasing emphasis has been
placed on the utilization of market forces in the development of
the Chinese economy. There is an increasing level of freedom and
autonomy in areas such as allocation of resources, production,
pricing and management and a gradual shift in emphasis to a
market economy and enterprise reform. Although
limited price reforms were undertaken, with the result that
prices for certain commodities are principally determined by
market forces, many of the reforms are experimental and may be
subject to change or abolition. We cannot assure you that the
Chinese government will continue to pursue a policy of economic
reform. The level of imports to and exports from China could be
adversely affected by changes to these economic reforms, as well
as by changes in political, economic and social conditions or
other relevant policies
26
of the Chinese government, such as changes in laws, regulations
or export and import restrictions, all of which could, adversely
affect our business, financial condition and operating results.
An
economic slowdown in the Asia Pacific region could have a
material adverse effect on our business, financial position and
results of operations.
A significant number of the port calls made by our vessels may
involve the loading or discharging of raw materials and
semi-finished products in ports in the Asia Pacific region. As a
result, a negative change in economic conditions in any Asia
Pacific country, but particularly in China or India, may have an
adverse effect on our future business, financial position and
results of operations, as well as our future prospects. In
recent years, China has been one of the worlds fastest
growing economies in terms of gross domestic product. We cannot
assure you that such growth will be sustained or that the
Chinese economy will not experience contraction in the future.
In particular, in recent months, the demand for dry bulk goods
from emerging markets, such as China and India, has
significantly declined as growth projections for these
nations economies have been adjusted downwards. Moreover,
any slowdown in the economies of the United States, the European
Union or certain Asian countries may adversely effect economic
growth in China and elsewhere. Our business, financial position
and results of operations, as well as our future prospects, will
likely be materially and adversely affected by an economic
downturn in any of these countries.
We may
become dependent on spot charters in the volatile shipping
markets which may have an adverse impact on stable cash flows
and revenues.
We may employ one or more of our vessels on spot charters,
including when time charters on vessels expire. The spot charter
market is highly competitive and rates within this market are
subject to volatile fluctuations, while longer-term period time
charters provide income at predetermined rates over more
extended periods of time. If we decide to spot charter our
vessels, there can be no assurance that we will be successful in
keeping all our vessels fully employed in these short-term
markets or that future spot rates will be sufficient to enable
our vessels to be operated profitably. A significant decrease in
charter rates could affect the value of our fleet and could
adversely affect our profitability and cash flows with the
result that our ability to pay debt service to our lenders and
dividends to our shareholders could be impaired.
Our
operations are subject to seasonal fluctuations, which could
affect our operating results and the amount of available cash
with which we can pay dividends.
We operate our vessels in markets that have historically
exhibited seasonal variations in demand and, as a result, in
charter hire rates. This seasonality may result in volatility in
our operating results, which could affect the amount of
dividends that we pay to our shareholders from period to period.
The dry bulk carrier market is typically stronger in the fall
and winter months in anticipation of increased consumption of
coal and other raw materials in the northern hemisphere during
the winter months. In addition, unpredictable weather patterns
in these months tend to disrupt vessel scheduling and supplies
of certain commodities. As a result, revenues of dry bulk
carrier operators in general have historically been weaker
during the fiscal quarters ended June 30 and September 30,
and, conversely, been stronger in fiscal quarters ended December
31 and March 31. This seasonality may materially affect our
operating results and cash available for dividends.
We are
subject to regulation and liability under environmental laws
that could require significant expenditures and affect our cash
flows and net income.
Our business and the operation of our vessels are materially
affected by government regulation in the form of international
conventions, national, state and local laws and regulations in
force in the jurisdictions in which our vessels operate, as well
as in the country or countries of their registration. Because
such conventions, laws, and regulations are often revised, we
cannot predict the ultimate cost of complying with such
conventions, laws and regulations or the impact thereof on the
resale prices or useful lives of our vessels. Additional
conventions, laws and regulations may be adopted which could
limit our ability to do business or increase the cost of our
doing business and which may materially and adversely affect our
operations. We are
27
required by various governmental and quasi-governmental agencies
to obtain certain permits, licenses and certificates with
respect to our operations.
The operation of our vessels is affected by the requirements set
forth in the United Nations International Maritime
Organizations International Management Code for the Safe
Operation of Ships and Pollution Prevention, or ISM Code. The
ISM Code requires vessel owners, vessel managers and bareboat
charterers to develop and maintain an extensive Safety
Management System that includes the adoption of a safety
and environmental protection policy setting forth instructions
and procedures for safe operation and describing procedures for
dealing with emergencies. The failure of a vessel owner or
bareboat charterer to comply with the ISM Code may subject it to
increased liability, may invalidate existing insurance or
decrease available insurance coverage for the affected vessels
and may result in a denial of access to, or detention in,
certain ports. Each of our vessels is ISM code-certified but we
cannot assure that such certificate will be maintained
indefinitely.
We maintain, for each of our vessels, pollution liability
coverage insurance in the amount of $1 billion per
incident. If the damages from a catastrophic incident exceeded
our insurance coverage, it could have a material adverse effect
on our financial condition and results of operations.
The
operation of dry bulk carriers has particular operational risks
which could affect our earnings and cash flow.
The operation of certain vessel types, such as dry bulk
carriers, has certain particular risks. With a dry bulk carrier,
the cargo itself and its interaction with the vessel can be an
operational risk. By their nature, dry bulk cargoes are often
heavy, dense, easily shifted, and react badly to water exposure.
In addition, dry bulk carriers are often subjected to battering
treatment during unloading operations with grabs, jackhammers
(to pry encrusted cargoes out of the hold) and small bulldozers.
This treatment may cause damage to the vessel. Vessels damaged
due to treatment during unloading procedures may be more
susceptible to breach while at sea. Hull breaches in dry bulk
carriers may lead to the flooding of the vessels holds. If
a dry bulk carrier suffers flooding in its forward holds, the
bulk cargo may become so dense and waterlogged that its pressure
may buckle the vessels bulkheads leading to the loss of a
vessel. If we are unable to adequately maintain our vessels, we
may be unable to prevent these events. Any of these
circumstances or events could result in loss of life, vessel
and/or
cargo
and negatively impact our business, financial condition, results
of operations and ability to pay dividends. In addition, the
loss of any of our vessels could harm our reputation as a safe
and reliable vessel owner and operator.
If any
of our vessels fails to maintain its class certification and/or
fails any annual survey, intermediate survey, drydocking or
special survey, it could have a material adverse impact on our
financial condition and results of operations.
The hull and machinery of every commercial vessel must be
classed by a classification society authorized by its country of
registry. The classification society certifies that a vessel is
safe and seaworthy in accordance with the applicable rules and
regulations of the country of registry of the vessel and the
International Convention for the Safety of Life at Sea, or
SOLAS. Our vessels are classed with one or more classification
societies that are members of the International Association of
Classification Societies.
A vessel must undergo annual surveys, intermediate surveys,
drydockings and special surveys. In lieu of a special survey, a
vessels machinery may be on a continuous survey cycle,
under which the machinery would be surveyed periodically over a
five-year period. Our vessels are on special survey cycles for
hull inspection and continuous survey cycles for machinery
inspection. Every vessel is also required to be drydocked every
two to three years for inspection of the underwater parts of
such vessels.
Currently, the African Zebra and the Hamburg Max are scheduled
to be drydocked in February 2009. The costs of such drydockings
are expected to aggregate between $1.9 million and
$2.1 million.
If any vessel does not maintain its class
and/or
fails
any annual survey, intermediate survey, drydocking or special
survey, the vessel will be unable to carry cargo between ports
and will be unemployable and
28
uninsurable. Any such inability to carry cargo or be employed,
or any such violation of covenants, could have a material
adverse impact on our financial condition and results of
operations.
Because
our seafaring employees are covered by industry-wide collective
bargaining agreements, failure of industry groups to renew those
agreements may disrupt our operations and adversely affect our
earnings.
Our vessel-owning subsidiaries employ a large number of
seafarers. All of the seafarers employed on the vessels in our
fleet are covered by industry-wide collective bargaining
agreements that set basic standards. We cannot assure you that
these agreements will prevent labor interruptions. Any labor
interruptions could disrupt our operations and harm our
financial performance.
Maritime
claimants could arrest our vessels, which could interrupt its
cash flow.
Crew members, suppliers of goods and services to a vessel,
shippers of cargo and other parties may be entitled to a
maritime lien against that vessel for unsatisfied debts, claims
or damages. In many jurisdictions, a maritime lien holder may
enforce its lien by arresting a vessel through foreclosure
proceedings. The arresting or attachment of one or more of our
vessels could interrupt our cash flow and require us to pay
large sums of funds to have the arrest lifted which would have a
material adverse effect on our financial condition and results
of operations.
In addition, in some jurisdictions, such as South Africa, under
the sister ship theory of liability, a claimant may
arrest both the vessel which is subject to the claimants
maritime lien and any associated vessel, which is
any vessel owned or controlled by the same owner. Claimants
could try to assert sister ship liability against
one of our vessels for claims relating to another of our vessels.
Governments
could requisition our vessels during a period of war or
emergency, resulting in loss of earnings.
A government could requisition for title or seize our vessels.
Requisition for title occurs when a government takes control of
a vessel and becomes the owner. Also, a government could
requisition our vessels for hire. Requisition for hire occurs
when a government takes control of a vessel and effectively
becomes the charterer at dictated charter rates. Generally,
requisitions occur during a period of war or emergency.
Government requisition of one or more of our vessels could have
a material adverse effect on our financial condition and results
of operations.
Because
we operate our vessels worldwide, terrorism and other events
outside our control may negatively affect our operations and
financial condition.
Because we operate our vessels worldwide, terrorist attacks such
as the attacks on the United States on September 11, 2001,
the bombings in Spain on March 11, 2004 and in London on
July 7, 2005, and the continuing response of the United
States to these attacks, as well as the threat of future
terrorist attacks, continue to cause uncertainty in the world
financial markets and may affect our business, results of
operations and financial condition. The continuing conflict in
Iraq may lead to additional acts of terrorism and armed conflict
around the world, which may contribute to further economic
instability in the global financial markets. These uncertainties
could also have a material adverse effect on our ability to
obtain additional financing on terms acceptable to us or at all.
In the past, political conflicts have also resulted in attacks
on vessels, mining of waterways and other efforts to disrupt
international shipping, particularly in the Arabian Gulf region.
Acts of terrorism and piracy have also affected vessels trading
in regions such as the South China Sea and off the coast of
Somalia. Any of these occurrences could have a material adverse
impact on our operating results, revenues and costs.
Terrorist attacks and armed conflicts may also negatively affect
our operations and financial condition and directly impact our
vessels or our customers. Future terrorist attacks could result
in increased volatility of the financial markets in the United
States and globally and could result in an economic recession in
the United States or the world. Any of these occurrences could
have a material adverse impact on our financial condition.
29
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains certain forward-looking statements. Our
forward-looking statements include, but are not limited to,
statements regarding our or our managements expectations,
hopes, beliefs, intentions or strategies regarding the future
and other statements other than statements of historical fact.
In addition, any statements that refer to projections, forecasts
or other characterizations of future events or circumstances,
including any underlying assumptions, are forward-looking
statements. The words anticipates,
believe, continue, could,
estimate, expect, intends,
may, might, plan,
possible, potential,
predicts, project, should,
would and similar expressions may identify
forward-looking statements, but the absence of these words does
not mean that a statement is not forward-looking.
Forward-looking statements in this prospectus may include, for
example, statements about our:
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success in retaining or recruiting, or changes required in, our
officers, key employees or directors;
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securities ownership being concentrated;
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risks associated with operating in the shipping industry;
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risks associated with the availability and terms of credit to
us, our charterers and their customers; and
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public securities limited liquidity and trading, as well
as the current lack of a trading market.
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The forward-looking statements contained in this prospectus are
based on our current expectations and beliefs concerning future
developments and their potential effects on us. There can be no
assurance that future developments affecting us will be those
that we have anticipated. These forward-looking statements
involve a number of risks, uncertainties (some of which are
beyond our control) or other assumptions that may cause actual
results or performance to be materially different from those
expressed or implied by these forward-looking statements. These
risks and uncertainties include, but are not limited to, those
factors described under the heading Risk Factors.
Should one or more of these risks or uncertainties materialize,
or should any of our assumptions prove incorrect, actual results
may vary in material respects from those projected in these
forward-looking statements. We undertake no obligation to update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except as may be
required under applicable securities laws
and/or
if
and when management knows or has a reasonable basis on which to
conclude that previously disclosed projections are no longer
reasonably attainable.
30
USE OF
PROCEEDS
We will not receive any proceeds from the distribution of our
common stock to shareholders of Seanergy Maritime.
We will receive proceeds from the exercise of the Warrants and
issuance of the Warrant Shares to the extent that the Warrants
are exercised. We expect to use the proceeds, if any, for
working capital. Of the 38,984,667 Warrants, 16,016,667 Warrants
that were issued in the private placement, which occurred prior
to Seanergy Maritimes initial public offering of its
shares of common stock in which all of Seanergy Maritimes
executive officers purchased such Warrants from Seanergy
Maritime (see section entitled Description of
Securities), are exercisable on a cashless basis.
Accordingly, if all of the remaining Warrants were exercised in
full, the proceeds would be approximately $149,292,000. We can
make no assurances that any of the Warrants will be exercised,
or if exercised, over the quantity which will be exercised or in
the period in which they will be exercised.
31
CAPITALIZATION
OF SEANERGY MARITIME
The following table sets forth the capitalization of Seanergy
Maritime as of June 30, 2008:
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on an actual basis;
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on an as adjusted basis giving effect to:
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the drawdown of the revolving credit facility of
$54.8 million and the term loan facility of
$165 million in connection with the vessel acquisition;
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the vessel acquisition and
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the redemption of 6,370,773 common shares subject to possible
redemption.
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There are no significant adjustments to Seanergy Maritimes
capitalization since June 30, 2008, other than those
reflected in the As Adjusted column below. You
should read this capitalization table together with the section
entitled, Managements Discussion and Analysis of
Financial Condition and Results of Operations for Seanergy
Maritime and Seanergy, the Financial Statements of
Seanergy Maritime Corp. and related notes, the Combined
Financial Statements of Goldie Navigation Ltd., Pavey Services
Ltd., Shoreline Universal Ltd., Valdis Marine Corp., Kalistos
Maritime S.A., and Kalithea Maritime S.A. and related notes and
the Unaudited Pro Forma Condensed Combined Financial Statements
and related notes for Seanergy Maritime Corp. and Subsidiary and
Restis Family Affiliated Vessels Acquired, all appearing
elsewhere in this prospectus. Following the dissolution and
liquidation, Seanergys capitalization will be identical to
Seanergy Maritimes capitalization.
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As of June 30, 2008
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Actual
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As Adjusted
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(In thousands)
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Debt:
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Unsecured convertible note payable to Restis family
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$
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$
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28,250
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Long-term revolving financing (secured), including current
portion of $18,000
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54,800
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Long-term acquisition financing (secured), including current
portion of $30,000
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165,000
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Total debt
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248,050
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Common stock subject to possible redemption
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80,850
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Shareholders equity(1):
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Preferred stock, $0.0001 par value; 1,000,000 shares
authorized, none issued
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Common stock, $0.0001 par value, authorized
89,000,000 shares; issued and outstanding
28,600,000 shares, inclusive of shares subject to possible
redemption actual, 22,229,227 shares, as adjusted
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3
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2
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Additional paid-in capital
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146,926
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165,502
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Retained earnings
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3,456
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3,456
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Shareholder distributions
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(3,173
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)
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(3,173
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Total shareholders equity
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147,212
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165,787
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Total capitalization
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$
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228,062
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$
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413,837
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(1)
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As of January 7, 2009, 132,000 of the public warrants,
which became exercisable on September 24, 2008, were
exercised.
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32
SEANERGYS
BUSINESS
Seanergy was formed under the laws of the Republic of the
Marshall Islands on January 4, 2008, as a wholly owned
subsidiary of Seanergy Maritime. Seanergy Maritime was formed on
August 15, 2006, under the laws of the Republic of the
Marshall Islands and has its principal offices located in
Athens, Greece. Since the consummation of the business
combination, Seanergy has provided global transportation
solutions in the dry bulk shipping sector through its
vessel-owning subsidiaries for a broad range of dry bulk
cargoes, including coal, iron ore, and grains, or major bulks,
as well as bauxite, phosphate, fertilizers and steel products,
or minor bulks.
Vessel
Acquisition
Seanergy is a holding company that owns its vessels through
separate wholly owned subsidiaries. On August 26, 2008,
shareholders of Seanergy Maritime approved a proposal to acquire
six dry bulk carriers from six entity sellers that are
controlled by members of the Restis family, including two newly
built vessels. This acquisition was made pursuant to the Master
Agreement and the several MOAs in which Seanergy agreed to
purchase these vessels for an aggregate purchase price of
(i) $367,030,750 in cash to the sellers,
(ii) $28,250,000 in the form of the Note, which is
convertible into 2,260,000 shares of Seanergys common
stock, issued to the Restis affiliate shareholders as nominees
for the sellers, and (iii) up to an aggregate of
4,308,075 shares of common stock of Seanergy (which shares
are exchangeable for shares of Seanergy Maritime common stock)
issued to the Restis affiliate shareholders as nominees for the
sellers, subject to Seanergy meeting an EBITDA target of
$72 million to be earned between October 1, 2008 and
September 30, 2009. The Restis affiliate shareholders,
United Capital Investment Corp., Atrion Shipholding S.A., Plaza
Shipholding Corp., and Comet Shipholding Inc., and the sellers
are owned and controlled by the following members of the Restis
family: Victor Restis, Bella Restis, Katia Restis and Claudia
Restis. The Restis affiliate shareholders are four personal
investment companies. Each company is controlled by one of these
four individuals. Each seller is a single purpose entity
organized for the purpose of owning and operating one of the six
dry bulk carriers sold pursuant to the terms of the Master
Agreement and the individual related MOA. Following the sale of
the vessels under the Master Agreement and related MOAs, the
sellers have had no further operations. The Restis affiliate
shareholders purchased shares of Seanergy Maritimes common
stock from two of Seanergy Maritimes original founders,
Messrs. Panagiotis and Simon Zafet, and serve as nominees
of the sellers for purposes of receiving payments under the Note
and the shares issuable upon meeting the EBITDA targets
described above. The Restis affiliate shareholders do not have
any direct participation in Seanergy Maritimes operations
as they are not officers, directors or employees of Seanergy
Maritime or Seanergy. Pursuant to the terms of the Voting
Agreement, the Restis affiliate shareholders have the right to
nominate members to the Board of Directors and to appoint
officers as described more fully below.
The Master Agreement also provided that Seanergy Maritime and
Seanergy cause their respective officers to resign as officers,
other than Messrs. Ploughman and Koutsolioutsos, and the
Restis affiliate shareholders have the right to appoint such
other officers as they deem appropriate in their discretion. The
Master Agreement also required that directors resign and be
appointed so as to give effect to the Voting Agreement. Pursuant
to the Master Agreement, Seanergy Maritime and Seanergy also
established shipping committees of three directors and delegated
to them the exclusive authority to consider and vote upon all
matters involving shipping and vessel finance, subject to
certain limitations. Messrs. Ploughman, Koutsoubelis and
Culucundis were appointed to such committees. See
Seanergys Business Shipping
Committee. In addition, in connection with the Master
Agreement, Seanergy entered into the Management Agreement and
the Brokerage Agreement, whereby Seanergy agreed to outsource
the management and commercial brokerage of its fleet to
affiliates of the Restis family.
On August 28, 2008, Seanergy completed the acquisition,
through its designated nominees, of three of the six dry bulk
vessels, which included two 2008 built Supramax
vessels and one Handysize vessel. On that date, Seanergy took
delivery of the M/V Davakis G ($88,500,000 purchase price), the
M/V Delos Ranger ($83,500,000 purchase price) and the M/V
African Oryx ($44,080,000 purchase price). On September 11,
2008, Seanergy completed the acquisition, through its designated
nominee, of the fourth vessel, the M/V
33
Bremen Max ($70,350,000 purchase price), a 1993-built, Panamax
vessel. On September 25, 2008, Seanergy completed the
acquisition, through its designated nominees, of the final two
vessels, the M/V Hamburg Max ($74,350,000 purchase price), a
1994-built, Panamax vessel, and the M/V African Zebra
($34,500,000 purchase price), a 1985-built, Handymax vessel.
These purchase prices do not include any amounts that would
result from the earn out of the 4,308,075 shares.
Seanergys
Fleet
Seanergy owns and operates, through its vessel-owning
subsidiaries, six dry bulk carriers, including two newly built
vessels, that transport a variety of dry bulk commodities. The
following table provides summary information about its fleets.
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Term of
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Daily
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Time
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Time
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Year
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Charter
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Charter
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Vessel(1)
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Vessel-Owning Subsidiary(2)
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Type
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Dwt
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Built
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Party
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Hire Rate(3)(4)
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African Oryx
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Cynthera Navigation Ltd.
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Handysize
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24,110
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1997
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1 year
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$
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30,000
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African Zebra
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Waldeck Maritime Co.
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Handymax
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38,632
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1985
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1 year
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$
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36,000
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Bremen Max
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Martinique Intl. Corp.
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Panamax
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73,503
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1993
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1 year
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$
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65,000
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Harbour Business Intl.
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Hamburg Max
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Corp.
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Panamax
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73,498
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1994
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1 year
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$
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65,000
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Davakis G. (ex. Hull No. KA215)
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Amazons Management Inc.
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Supramax
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54,000
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2008
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1 year
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$
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60,000
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Delos Ranger (ex. Hull No. KA216)
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Lagoon Shipholding Ltd.
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Supramax
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54,000
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2008
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1 year
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$
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60,000
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Total
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317,743
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(1)
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Each vessel is registered in the Bahamas except the M/V Bremen
Max and M/V Hamburg Max, which are registered in the Isle of Man.
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(2)
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These are the vessel-owning subsidiaries that own and operate
the vessels.
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(3)
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Daily time charter rates represent the hire rates that SAMC pays
to charter the respective vessels from Seanergys
vessel-owning subsidiaries.
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(4)
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All charter hire rates are inclusive of a commission of 1.25%
payable to Safbulk, as commercial broker, and 2.5% address
commission payable to SAMC, as charterer. Address commission is
a commission payable by the ship owner to the charterer,
expressed as a percentage of freight or hire. Address commission
is a standard commission that most charterers invoke when they
enter into a contract with a tonnage supplier. The commission is
used by the charterer to defray some of his voyage management
costs. In return, the charterers agents, which owners are
obliged to use, invariably do not charge the owners for their
services when handling the owners normal husbandry matters.
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The global dry bulk carrier fleet is divided into three
categories based on a vessels carrying capacity. These
categories are:
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Panamax.
Panamax vessels have a carrying
capacity of between 60,000 and 100,000 dwt. These vessels are
designed to meet the physical restrictions of the Panama Canal
locks (hence their name Panamax the
largest vessels able to transit the Panama Canal, making them
more versatile than larger vessels). These vessels carry coal,
grains, and, to a lesser extent, minerals such as
bauxite/alumina and phosphate rock. As the availability of
capesize vessels has dwindled, panamaxes have also been used to
haul iron ore cargoes.
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Handymax/Supramax.
Handymax vessels have a
carrying capacity of between 30,000 and 60,000 dwt. These
vessels operate on a large number of geographically dispersed
global trade routes, carrying primarily grains and minor bulks.
The standard vessels are usually built with
25-30
ton
cargo gear, enabling them to discharge cargo where grabs are
required (particularly industrial minerals), and to conduct
cargo operations in countries and ports with limited
infrastructure. This type of vessel offers
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good trading flexibility and can therefore be used in a wide
variety of bulk and neobulk trades, such as steel products.
Supramax are a sub-category of this category typically having a
cargo carrying capacity of between 50,000 and 60,000 dwt.
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Handysize.
Handysize vessels have a carrying
capacity of up to 30,000 dwt. These vessels are almost
exclusively carrying minor bulk cargo. Increasingly, vessels of
this type operate on regional trading routes, and may serve as
trans-shipment feeders for larger vessels. Handysize vessels are
well suited for small ports with length and draft restrictions.
Their cargo gear enables them to service ports lacking the
infrastructure for cargo loading and unloading.
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Charter
Party Agreements
Pursuant to individual charter party agreements dated
May 26, 2008 between SAMC and each of Seanergys
vessel-owning subsidiaries, Cynthera Navigation Ltd (vessel
African Oryx), Waldeck Maritime Co. (vessel African Zebra),
Martinique Intl. Corp., (vessel Bremen Max), Harbour Business
Intl. Corp. (vessel Hamburg Max), Amazons Management Inc (vessel
Davakis G.) and Lagoon Shipholding Ltd (vessel Delos Ranger),
all of Seanergys vessels are chartered under daily fixed
rates from the time of their delivery and for a period of
11-13 months
time charter, at the charterers option. The daily gross
charter rates paid by SAMC are $30,000, 36,000, $65,000,
$65,000, $60,000 and $60,000, respectively. All charter rates
are inclusive of a commission of 1.25% payable to Safbulk as
commercial broker and 2.5% to SAMC as charterer. SAMC sub
charters these vessels in the market and takes the risk that the
rate it receives is better than the period rate it is paying
Seanergy. SAMC, like other operators, manages its tonnage
operations through a mix of time period charters (medium to
long) and spot charters. It is Seanergys understanding
that SAMC operates three of the vessels on period charters that
are in excess of one year and three vessels on the spot market.
SAMC is an affiliate of the Restis family. It is involved in the
chartering of a fleet of 15 vessels, including the Seanergy
fleet.
Management
of the Fleet
We currently have only four employees, Mr. Dale Ploughman,
our chief executive officer, Ms. Christina Anagnostara, our
chief financial officer, Mr. Ioannis Tsigkounakis, our
secretary, and Ms. Theodora Mitropetrou, our general
counsel. We intend to employ such number of additional
shore-based executives and employees as may be necessary to
ensure the efficient performance of our activities.
We outsource the management and commercial brokerage of our
fleet to companies that are affiliated with members of the
Restis family. For example, the commercial brokerage of our
fleet has been contracted out to Safbulk and the management of
our fleet has been contracted out to EST. Both of these entities
are controlled by members of the Restis family.
Brokerage
Agreement
Under the terms of the Brokerage Agreement entered into by
Safbulk, as exclusive commercial broker, with Seanergy
Management, Safbulk provides commercial brokerage services to
our subsidiaries, which include, among other things, seeking and
negotiating employment for the vessels owned by the
vessel-owning subsidiaries in accordance with the instructions
of Seanergy Management. Safbulk is entitled to receive a
commission of 1.25% calculated on the collected gross
hire/freight/demurrage payable when such amounts are collected.
The Brokerage Agreement is for a term of two years, and is
automatically renewable for consecutive periods of one year,
unless either party is provided with three months written
notice prior to the termination of such period.
A vessel trading in the spot market may be employed under a
voyage charter or a time charter of short duration, generally
less than three months. A time charter is a contract to charter
a vessel for an agreed period of time at a set daily rate. A
voyage charter is a contract to carry a specific cargo for a per
ton carry amount. Under voyage charters, Seanergy would pay
voyage expenses such as port, canal and fuel costs. Under time
charters, the charterer would pay these voyage expenses. Under
both types of charters, Seanergy would pay for vessel operating
expenses, which include crew costs, provisions, deck and engine
stores, lubricating oil, insurance, maintenance and repairs.
Seanergy would also be responsible for each vessels
intermediate
35
drydocking and special survey costs. Alternatively, vessels can
be chartered under bareboat contracts whereby the
charterer is responsible for the vessels maintenance and
operations, as well as all voyage expenses. Currently, we have
employed our vessels for 11 to 13 month time charters.
Vessels operating on time charter provide more predictable cash
flows, but can yield lower profit margins, than vessels
operating in the spot market during periods characterized by
favorable market conditions. Vessels operating in the spot
market generate revenues that are less predictable but may
enable Seanergy to increase profit margins during periods of
increasing dry bulk rates. However, Seanergy would then be
exposed to the risk of declining dry bulk rates, which may be
higher or lower than the rates at which Seanergy chartered its
vessels. Seanergy constantly evaluates opportunities for time
charters, but only expects to enter into additional time
charters if it can obtain contract terms that satisfy its
criteria.
Management
Agreement
Under the terms of the Management Agreement entered into by EST,
as manager of all vessels owned by Seanergys subsidiaries,
with Seanergy Management, EST performs certain duties that
include general administrative and support services necessary
for the operation and employment of all vessels owned by all
subsidiaries of Seanergy, including, without limitation, crewing
and other technical management, insurance, freight management,
accounting related to vessels, provisions, bunkering, operation
and, subject to Seanergys instructions, sale and purchase
of vessels.
Under the terms of the Management Agreement, EST is entitled to
receive a daily fee of Euro 416.00 per vessel until
December 31, 2008, which fee may thereafter be increased
annually by an amount equal to the percentage change during the
preceding period in the Harmonised Indices of Consumer Prices
All Items for Greece published by Eurostat from time to time.
Such fee is payable monthly in advance on the first business day
of each following month. Seanergy is currently under
negotiations to keep the daily fee of Euro 416 per vessel at the
same level for one more year.
EST is also an affiliate of members of the Restis family. EST
has been in business for over 34 years and manages
approximately 95 vessels (inclusive of new vessel build
supervision), including the fleet of vessels of affiliates of
members of the Restis family. As with Safbulk, we believe that
EST has achieved a strong reputation in the international
shipping industry for efficiency and reliability and has
achieved economies of scale that should result in the cost
effective operation of our vessels.
The Management Agreement is for a term of two years, and is
automatically renewable for consecutive periods of one year,
unless either party is provided with three months written
notice prior to the termination of such period.
Safbulk, EST, SAMC, Waterfront, the sellers of the vessels that
Seanergy acquired and the Restis affiliate shareholders are
affiliates of members of the Restis family. The Restis family
has been engaged in the international shipping industry for more
than 40 years, including the ownership and operation of
more than 60 vessels in various segments of the shipping
industry, including cargo and chartering interests. The separate
businesses controlled by members of the Restis family, when
taken together, comprise one of the largest independent
shipowning and management groups in the dry bulk sector of the
shipping industry. Through our separate agreements with
affiliates of members of the Restis family in respect of the
management and chartering of the vessels in our initial fleet,
we believe we benefit from their extensive industry experience
and established relationships. We believe that Safbulk has
achieved a strong reputation in the international shipping
industry for efficiency and reliability that should create new
employment opportunities for us with a variety of well known
charterers.
Shipping
Committee
We have established a shipping committee. The purpose of the
shipping committee is to consider and vote upon all matters
involving shipping and vessel finance. The shipping industry
often demands very prompt review and decision-making with
respect to business opportunities. In recognition of this, and
in order to best utilize the experience and skills that the
Restis family board appointees bring to us, our board of
directors has delegated all such matters to the shipping
committee. Transactions that involve the issuance of our
securities or transactions that involve a related party,
however, will not be delegated to the shipping committee but
36
instead will be considered by our entire board of directors. The
shipping committee is comprised of three directors. In
accordance with the Voting Agreement, the Master Agreement and
the amended and restated by-laws of Seanergy, two of the
directors are nominated by the Restis affiliate shareholders and
one of the directors is nominated by the founding shareholders
of Seanergy Maritime. The initial members of the shipping
committee are Messrs. Dale Ploughman and Kostas
Koutsoubelis, who are the Restis affiliate shareholders
nominees, and Mr. Elias M. Culucundis, who is the founding
shareholders nominee. The Voting Agreement further
requires that the directors appoint the selected nominees and
that the directors fill any vacancies on the shipping committees
with the nominees selected by the party that nominated the
person whose resignation or removal caused the vacancy.
Distinguishing
Factors and Business Strategy
The international dry bulk shipping industry is highly
fragmented and is comprised of approximately 6,300 ocean-going
vessels of tonnage size greater than 10,000 dwt which are owned
by approximately 1,500 companies. Seanergy competes with
other owners of dry bulk carriers, some of which may have a
different mix of vessel sizes in their fleet. It has, however,
identified the following factors that distinguish it in the dry
bulk shipping industry.
Extensive Industry Visibility.
Seanergys
management and directors have extensive shipping and public
company experience as well as relationships in the shipping
industry and with charterers in the coal, steel and iron ore
industries. Seanergy capitalizes on these relationships and
contacts to gain market intelligence, source sale and purchase
opportunities and identify chartering opportunities with leading
charterers in these core commodities industries, many of whom
consider the reputation of a vessel owner and operator when
entering into time charters.
Established Customer Relationships.
Seanergy
believes that its directors and management team have established
relationships with leading charterers and a number of
chartering, sales and purchase brokerage houses around the
world. Seanergy believes that its directors and management team
have maintained relationships with, and have achieved acceptance
by, major national and private industrial users, commodity
producers and traders.
Experienced and Dedicated Management
Team.
Seanergy believes that the members of its
management team have developed strong industry relationships
with leading charterers, shipbuilders, insurance underwriters,
protection and indemnity associations and financial
institutions. Additionally, Seanergys management team
comes equipped with extensive public company experience and with
a successful track record of creating shareholder value. All of
its officers dedicate the necessary amount of time and effort to
fulfill their obligations to Seanergy and its shareholders.
Highly efficient operations.
Seanergy believes
that its directors and executive officers long
experience in third-party technical management of dry bulk
carriers enable Seanergy to maintain cost-efficient operations.
Seanergy actively monitors and controls vessel operating
expenses while maintaining the high quality of its fleet through
regular inspections, comprehensive planned maintenance systems
and preventive maintenance programs and by retaining and
training qualified crew members.
Balanced Chartering Strategies.
All of
Seanergys vessels are under medium-term charters with
terms of eleven to thirteen months and provide for fixed
semi-monthly payments in advance. Seanergy believes that these
charters will provide it with high fleet utilization and stable
revenues. Seanergy may in the future pursue other market
opportunities for its vessels to capitalize on favorable market
conditions, including entering into short-term time and voyage
charters, pool arrangements or bareboat charters.
Focused Fleet Profile.
Seanergy focuses on the
medium size segments of the dry bulk sector such as Panamax,
Handymax/Supramax and Handysize dry bulk carriers. However, it
may consider dry bulk carriers of other sizes if the market
conditions and other financial considerations make the
acquisition of such vessel sizes attractive. Furthermore,
Seanergys targeted fleet profile enables it to serve its
customers in both major and minor bulk trades. Seanergys
vessels are able to trade worldwide in a multitude of trade
routes carrying a wide range of cargoes for a number of
industries. Seanergys dry bulk carriers can carry coal and
iron ore for
37
energy and steel production as well as grain and steel products,
fertilizers, minerals, forest products, ores, bauxite, alumina,
cement and other cargoes. Seanergys fleet includes sister
ships. Operating sister and similar ships provides Seanergy with
operational and scheduling flexibility, efficiencies in employee
training and lower inventory and maintenance expenses. Seanergy
believes that operating sister ships allows it to maintain lower
operating costs and streamline its operations.
High Quality Fleet.
Seanergy believes that its
ability to maintain and increase its customer base depends
largely on the quality and performance of its fleet. Seanergy
believes that owning a high quality fleet reduces operating
costs, improves safety and provides it with a competitive
advantage in obtaining employment for its vessels. Seanergy
carries out regular inspections and maintenance of its fleet in
order to maintain its high quality.
Fleet Growth Potential.
Seanergy has the right
of first refusal to acquire two additional vessels from
affiliates of members of the Restis family on or prior to the
second anniversary of the initial closing of the vessel
acquisition. Furthermore, Seanergy intends to acquire additional
dry bulk carriers or enter into new vessel construction
contracts through timely and selective acquisitions of vessels
in a manner that it determines would be accretive to cash flow.
Seanergy is currently in a period of consolidation as it
transitions into an operating company, and it has not identified
any expansion opportunities. Accordingly, the timing and terms
of any such expansion are uncertain. Seanergy expects to fund
acquisitions of additional vessels using amounts borrowed under
its credit facility, future borrowings under other agreements as
well as with gross proceeds of up to approximately $150,000,000
from the possible exercise of the Warrants or through other
sources of debt and equity. However, there can be no assurance
that Seanergy will be successful in obtaining future funding or
that all of the Warrants will be exercised.
Pay quarterly dividends.
Seanergy anticipates
paying dividends in the aggregate amount of $1.20 per share
on a quarterly basis during the one-year period commencing with
the second full quarter following the initial closing of the
vessel acquisition. Seanergy Maritimes founding
shareholders and the Restis affiliate shareholders have agreed
with Seanergy for such one year period to subordinate their
rights to receive dividends with respect to the original
5,500,000 shares owned by them to the rights of Seanergy public
shareholders, but only to the extent that Seanergy has
insufficient funds to make such dividend payments. The
declaration and payment of any dividend is subject to the
discretion of Seanergys boards of directors. The timing
and amount of dividend payments will be in the discretion of
Seanergys board of directors and be dependent upon its
earnings, financial condition, cash requirements and
availability, fleet renewal and expansion, restrictions in its
loan agreements, the provisions of Marshall Islands law
affecting the payment of dividends to shareholders and other
factors. Seanergys board of directors may review and amend
our dividend policy from time to time in light of its plans for
future growth and other factors.
Properties
Seanergy leases its executive office space in Athens, Greece
pursuant to the terms of a sublease agreement between Seanergy
Management and Waterfront S.A., or Waterfront, a company which
is beneficially owned by Victor Restis. The sublease fee is
approximately EURO 500,000, per annum. The initial term is
from November 17, 2008 to November 16, 2011. Seanergy
has the option to extend the term until February 2, 2014.
The premises are approximately 1,000 square meters in a
prime location in the Southern suburbs of Athens. The agreement
includes furniture, parking space and building maintenance.
Seanergy Management has been granted Ministerial Approval
(issued in the Greek Government Gazette) for the establishment
of an office in Greece under Greek Law
89/67
as a
managing company.
Competition
Seanergy operates in markets that are highly competitive and
based primarily on supply and demand. Seanergy competes for
charters on the basis of price, vessel location, size, age and
condition of the vessel, as well as on its reputation. Safbulk
negotiates the terms of our charters (whether voyage charters,
period time charters, bareboat charters or pools) based on
market conditions. Seanergy competes primarily with other owners
of dry bulk carriers in the Panamax, Handymax/Supramax and
Handysize sectors. Ownership of dry bulk carriers is highly
fragmented and is divided among state controlled and independent
bulk carrier owners.
38
Environmental
and Other Regulations
Government regulation significantly affects the ownership and
operation of Seanergys vessels. The vessels are subject to
international conventions, national, state and local laws and
regulations in force in the countries in which Seanergys
vessels may operate or are registered.
A variety of governmental and private entities subject
Seanergys vessels to both scheduled and unscheduled
inspections. These entities include the local port authorities
(U.S. Coast Guard, harbor master or equivalent),
classification societies, flag state administration (country of
registry) and charterers. Certain of these entities require
Seanergy to obtain permits, licenses and certificates for the
operation of its vessels. Failure to maintain necessary permits
or approvals could cause Seanergy to incur substantial costs or
temporarily suspend operation of one or more of its vessels.
Seanergy believes that the heightened level of environmental and
quality concerns among insurance underwriters, regulators and
charterers is leading to greater inspection and safety
requirements on all vessels and may accelerate the scrapping of
older vessels throughout the dry bulk shipping industry.
Increasing environmental concerns have created a demand for
vessels that conform to stricter environmental standards.
Seanergy is required to maintain operating standards for all of
its vessels that emphasize operational safety, quality
maintenance, continuous training of its officers and crews and
compliance with United States and international regulations.
Seanergy believes that the operation of its vessels is in
substantial compliance with applicable environmental laws and
regulations applicable to Seanergy.
International
Maritime Organization
The IMO has negotiated international conventions that impose
liability for oil pollution in international waters and in each
signatorys territorial waters. In September 1997, the IMO
adopted Annex VI to the International Convention for the
Prevention of Pollution from Ships to address air pollution from
ships. Annex VI was ratified in May 2004, and became
effective in May 2005. Annex VI set limits on sulfur oxide
and nitrogen oxide emissions from ship exhausts and prohibits
deliberate emissions of ozone depleting substances, such as
chlorofluorocarbons. Annex VI also includes a global cap on
the sulfur content of fuel oil and allows for special areas to
be established with more stringent controls on sulfur emissions.
Seanergys fleet has conformed to the Annex VI
regulations. In February 2007, the United States proposed a
series of amendments to Annex VI regarding particulate
matter, NOx and SOx emission standards. The proposed emission
program would reduce air pollution from ships by establishing a
new tier of performance-based standards for diesel engines on
all vessels and stringent emission requirements for ships that
operate in coastal areas with air-quality problems. On
June 28, 2007, the World Shipping Council announced its
support for these amendments. If these amendments are formally
adopted and implemented, Seanergy may incur costs to comply with
the proposed standards. Additional or new conventions, laws and
regulations may also be adopted that could adversely affect
Seanergys ability to operate its vessels.
The operation of Seanergys vessels is also affected by the
requirements set forth in the ISM Code. The ISM Code requires
shipowners and bareboat charterers to develop and maintain an
extensive Safety Management System that includes the
adoption of a safety and environmental protection policy setting
forth instructions and procedures for safe operation and
describing procedures for dealing with emergencies. The failure
of a shipowner or management company to comply with the ISM Code
may subject such party to increased liability, may decrease
available insurance coverage for the affected vessels, and may
result in a denial of access to, or detention in, certain ports.
Each of Seanergys vessels is ISM Code-certified. However,
there can be no assurance that such certification will be
maintained indefinitely.
The
United States Oil Pollution Act of 1990
The United States Oil Pollution Act of 1990, or OPA, established
an extensive regulatory and liability regime for the protection
and cleanup of the environment from oil spills. OPA affects all
owners and operators whose vessels trade in the United States,
its territories and possessions or whose vessels operate in
United States waters, which includes the United
States territorial sea and its 200 nautical mile exclusive
economic zone.
39
Under OPA, vessel owners, operators, charterers and management
companies are responsible parties and are jointly,
severally and strictly liable (unless the spill results solely
from the act or omission of a third party, an act of God or an
act of war) for all containment and
clean-up
costs and other damages arising from discharges or threatened
discharges of oil from their vessels, including bunkers (fuel).
OPA previously limited the liability of responsible parties for
dry bulk vessels to the greater of $600 per gross ton or
$0.5 million (subject to possible adjustment for
inflation). Amendments to OPA signed into law in July 2006
increased these limits on the liability of responsible parties
for dry bulk vessels to the greater of $950 per gross ton
or $0.8 million. These limits of liability do not apply if
an incident was directly caused by violation of applicable
United States federal safety, construction or operating
regulations or by a responsible partys gross negligence or
willful misconduct, or if the responsible party fails or refuses
to report the incident or to cooperate and assist in connection
with oil removal activities.
Seanergy maintains pollution liability coverage insurance for
each of its vessels in the amount of $1 billion per
incident. If the damages from a catastrophic pollution liability
incident exceed its insurance coverage, it could have a material
adverse effect on Seanergys financial condition and
results of operations.
OPA requires owners and operators of vessels to establish and
maintain with the U.S. Coast Guard evidence of financial
responsibility sufficient to meet their potential liabilities
under the OPA. In December 1994, the Coast Guard implemented
regulations requiring evidence of financial responsibility in
the amount of $900 per gross ton, which includes the OPA
limitation on liability of $600 per gross ton and the
U.S. Comprehensive Environmental Response, Compensation,
and Liability Act liability limit of $300 per gross ton. Under
the regulations, vessel owners and operators may evidence their
financial responsibility by showing proof of insurance, surety
bond, self-insurance, or guaranty. The U.S. Coast Guard
recently proposed amendments to its financial responsibility
regulations that would increase the required amount of evidence
of financial responsibility to reflect the higher limits on
liability imposed by the 2006 amendments to OPA, as described
above.
OPA specifically permits individual states to impose their own
liability regimes with regard to oil pollution incidents
occurring within their boundaries, and some states have enacted
legislation providing for unlimited liability for oil spills. In
some cases, states that have enacted such legislation have not
yet issued implementing regulations defining vessels
owners responsibilities under these laws. Seanergy
complies with all applicable state regulations in the ports
where its vessels call.
The
United States Clean Water Act
The U.S. Clean Water Act, or CWA, prohibits the discharge
of oil or hazardous substances in navigable waters and imposes
strict liability in the form of penalties for any unauthorized
discharges. The CWA also imposes substantial liability for the
costs of removal, remediation and damages and complements the
remedies available under the more recent OPA and CERCLA.
Currently, under U.S. Environmental Protection Agency, or
EPA, regulations that have been in place since 1978, vessels are
exempt from the requirement to obtain CWA permits for the
discharge in U.S. ports of ballast water and other
substances incidental to their normal operation. However, on
March 30, 2005, the United States District Court for the
Northern District of California ruled in
Northwest
Environmental Advocate v. EPA
, 2005 U.S. Dist.
LEXIS 5373, that the EPA exceeded its authority in creating an
exemption for ballast water. On September 18, 2006, the
court issued an order invalidating the blanket exemption in the
EPAs regulations for all discharges incidental to the
normal operation of a vessel as of September 30, 2008, and
directing the EPA to develop a system for regulating all
discharges from vessels by that date. Under the courts
ruling, owners and operators of vessels visiting U.S. ports
would be required to comply with any CWA permitting program to
be developed by the EPA or face penalties. Although the EPA has
appealed this decision to the Ninth Circuit Court of Appeals,
the outcome of this litigation cannot be predicted. If the
District Courts order is ultimately upheld, Seanergy will
incur certain costs to obtain CWA permits for its vessels and
meet any treatment requirements.
40
Other
Environmental Initiatives
The European Union is considering legislation that will affect
the operation of vessels and the liability of owners for oil
pollution. It is difficult to predict what legislation, if any,
may be promulgated by the European Union or any other country or
authority. In 2005, the European Union adopted a directive on
ship-source pollution, imposing criminal sanctions for
intentional, reckless or negligent pollution discharges by
ships. The directive could result in criminal liability for
pollution from vessels in waters of European countries that
adopt implementing legislation. Criminal liability for pollution
may result in substantial penalties or fines and increased civil
liability claims.
Although the United States is not a party thereto, many
countries have ratified and currently follow the liability plan
adopted by the IMO and set out in the International Convention
on Civil Liability for Oil Pollution Damage of 1969, or the 1969
Convention. Under this convention, and depending on whether the
country in which the damage results is a party to the 1992
Protocol to the International Convention on Civil Liability for
Oil Pollution Damage, a vessels registered owner is
strictly liable for pollution damage caused in the territorial
waters of a contracting state by discharge of persistent oil,
subject to certain complete defenses. The limits on liability
outlined in the 1992 Protocol use the International Monetary
Fund currency unit of Special Drawing Rights, or SDR. Under an
amendment to the 1992 Protocol that became effective in November
2003, for vessels of 5,000 to 140,000 gross tons, liability
is limited to approximately 4.51 million SDR plus 631 SDR
for each additional gross ton over 5,000. For vessels of over
140,000 gross tons, liability is limited to
89.77 million SDR. The exchange rate between SDRs and
U.S. dollars was 0.615181 SDR per U.S. dollar on
April 29, 2008. Under the 1969 Convention, the right to
limit liability is forfeited where the spill is caused by the
owners actual fault; under the 1992 Protocol, a shipowner
cannot limit liability where the spill is caused by the
owners intentional or reckless conduct. Vessels trading in
jurisdictions that are parties to these conventions must provide
evidence of insurance covering the liability of the owner. In
jurisdictions where the 1969 Convention has not been adopted,
including the United States, various legislative schemes or
common law govern, and liability is imposed either on the basis
of fault or in a manner similar to that convention. Seanergy
believes that its protection and indemnity insurance will cover
the liability under the plan adopted by the IMO.
The U.S. National Invasive Species Act, or NISA, was
enacted in 1996 in response to growing reports of harmful
organisms being released into U.S. ports through ballast
water taken on by ships in foreign ports. The U.S. Coast
Guard adopted regulations under NISA, which became effective in
August 2004, that impose mandatory ballast water management
practices for all vessels equipped with ballast water tanks
entering U.S. waters. These requirements can be met by
performing mid-ocean ballast exchange, which is the exchange of
ballast water on the waters beyond the exclusive economic zone
from an area more than 200 miles from any shore, by
retaining ballast water on board the ship, or by using
environmentally sound alternative ballast water management
methods approved by the U.S. Coast Guard. (However,
mid-ocean ballast exchange is mandatory for ships heading to the
Great Lakes or Hudson Bay, or vessels engaged in the foreign
export of Alaskan North Slope crude oil.) Mid-ocean ballast
exchange is the primary method for compliance with the
U.S. Coast Guard regulations, since holding ballast water
can prevent ships from performing cargo operations upon arrival
in the United States, and alternative methods are still under
development. Vessels that are unable to conduct mid-ocean
ballast exchange due to voyage or safety concerns may discharge
minimum amounts of ballast water (in areas other than the Great
Lakes and the Hudson River), provided that they comply with
recordkeeping requirements and document the reasons they could
not follow the required ballast water management requirements.
The U.S. Coast Guard is developing a proposal to establish
ballast water discharge standards, which could set maximum
acceptable discharge limits for various invasive species,
and/or
lead
to requirements for active treatment of ballast water. A number
of bills relating to regulation of ballast water management have
been recently introduced in the U.S. Congress, but it is
difficult to predict which, if any, will be enacted into law.
The IMO adopted an International Convention for the Control and
Management of Ships Ballast Water and Sediments, or the
BWM Convention, in February 2004. The BWM Conventions
implementing regulations call for a phased introduction of
mandatory ballast water exchange requirements (beginning in
2009), to be replaced in time with mandatory concentration
limits. The BWM Convention will not be in force until
12 months after it has been adopted by 30 countries, the
combined merchant fleets of which represent not less
41
than 35% of the gross tonnage of the worlds merchant
shipping. As of March 31, 2008, the BWM Convention had been
adopted by 13 states, representing 3.6% of world tonnage.
Vessel
Security Regulations
Since the terrorist attacks of September 11, 2001, there
have been a variety of initiatives by United States authorities
intended to enhance vessel security. On November 25, 2002,
the Maritime Transportation Security Act of 2002, or MTSA, came
into effect. To implement certain portions of the MTSA, in July
2003, the U.S. Coast Guard issued regulations requiring the
implementation of certain security requirements aboard vessels
operating in waters subject to the jurisdiction of the United
States. Similarly, in December 2002, amendments to the SOLAS,
created a new chapter of the convention dealing specifically
with maritime security. The new chapter went into effect in July
2004, and imposes various detailed security obligations on
vessels and port authorities, most of which are contained in the
newly created International Ship and Port Facility Security
Code, or ISPS Code. Among the various requirements are:
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on-board installation of automatic information systems to
enhance
vessel-to-vessel
and
vessel-to-shore
communications;
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on-board installation of ship security alert systems;
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the development of vessel security plans; and
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compliance with flag state security certification requirements.
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The U.S. Coast Guard regulations, intended to align with
international maritime security standards, exempt
non-U.S. vessels
from MTSA vessel security measures provided such vessels have on
board, by July 1, 2004, a valid International Ship Security
Certificate that attests to the vessels compliance with
SOLAS security requirements and the ISPS Code. Seanergys
vessels are in compliance with the various security measures
addressed by the MTSA, SOLAS and the ISPS Code. Seanergy does
not believe these additional requirements will have a material
financial impact on its operations.
Inspection
by Classification Societies
The hull and machinery of every commercial vessel must be
classed by a classification society authorized by its country of
registry. The classification society certifies that a vessel is
safe and seaworthy in accordance with the applicable rules and
regulations of the country of registry of the vessel and the
SOLAS. Seanergys vessels are classed with a classification
society that is a member of the International Association of
Classification Societies.
A vessel must undergo annual surveys, intermediate surveys,
drydockings and special surveys. In lieu of a special survey, a
vessels machinery may be on a continuous survey cycle,
under which the machinery would be surveyed periodically over a
five-year period. Seanergys vessels are on special survey
cycles for hull inspection and continuous survey cycles for
machinery inspection. Every vessel is also required to be
drydocked every two to three years for inspection of the
underwater parts of such vessel. The following table sets forth
information regarding the next scheduled drydock for the
existing vessels in the fleet and the estimated cost for each
next scheduled drydock.
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Vessel
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Next Schedule Drydock
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Estimated Cost
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African Oryx
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October 2010
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To be determined (TBD)
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African Zebra
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February 2009
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$800,000 $900,000
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Bremen Max
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May 2011
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TBD
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Hamburg Max
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February 2009
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$1,100,000 $1,200,000
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Davakis G. (ex. Hull No. KA215)]
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May 2011
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TBD
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Delos Ranger (ex. Hull No. KA216)]
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August 2011
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TBD
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If any vessel does not maintain its class
and/or
fails
any annual survey, intermediate survey, drydocking or special
survey, the vessel will be unable to carry cargo between ports
and will be unemployable and
42
uninsurable. Any such inability to carry cargo or be employed,
or any such violation of covenants, could have a material
adverse impact on Seanergys financial condition and
results of operations.
At an owners application, the surveys required for class
renewal may be split according to an agreed schedule to extend
over the entire period of class. This process is referred to as
continuous class renewal.
All areas subject to survey as defined by the classification
society are required to be surveyed at least once per class
period, unless shorter intervals between surveys are prescribed
elsewhere. The period between two subsequent surveys of each
area must not exceed five years.
Most insurance underwriters make it a condition for insurance
coverage and lending that a vessel be certified as in
class by a classification society which is a member of the
International Association of Classification Societies.
Seanergys vessels are certified as being in
class by classification societies that are members of the
International Association of Classification Societies.
Risk of
Loss and Liability Insurance
General
The operation of any cargo vessel includes risks such as
mechanical failure, physical damage, collision, property loss,
cargo loss or damage and business interruption due to political
circumstances in foreign countries, hostilities and labor
strikes. In addition, there is always an inherent possibility of
marine disaster, including oil spills and other environmental
mishaps, and the liabilities arising from owning and operating
vessels in international trade. OPA, which imposes virtually
unlimited liability upon owners, operators and demise charterers
of any vessel trading in the United States exclusive economic
zone for certain oil pollution accidents in the United States,
has made liability insurance more expensive for ship owners and
operators trading in the United States market. While Seanergy
believes that its insurance coverage is adequate, not all risks
can be insured, and there can be no guarantee that any specific
claim will be paid, or that it will always be able to obtain
adequate insurance coverage at reasonable rates.
Hull
and Machinery Insurance
Seanergy maintains marine hull and machinery and war risk
insurance, which includes the risk of actual or constructive
total loss, for all of its vessels. The vessels are covered up
to at least fair market value, with deductibles in amounts of
approximately $100,000 to $125,000.
Seanergy arranges, as necessary, increased value insurance for
its vessels. With the increased value insurance, in case of
total loss of the vessel, Seanergy will be able to recover the
sum insured under the increased value policy in addition to the
sum insured under the hull and machinery policy. Increased value
insurance also covers excess liabilities which are not
recoverable in full by the hull and machinery policies by reason
of under insurance. Seanergy expects to maintains delay cover
insurance for certain of its vessels. Delay cover insurance
covers business interruptions that result in the loss of use of
a vessel.
Protection
and Indemnity Insurance
Protection and indemnity insurance is provided by mutual
protection and indemnity associations, or P&I Associations,
which cover Seanergys third-party liabilities in
connection with its shipping activities. This includes
third-party liability and other related expenses of injury or
death of crew, passengers and other third parties, loss or
damage to cargo, claims arising from collisions with other
vessels, damage to other third-party property, pollution arising
from oil or other substances, and salvage, towing and other
related costs, including wreck removal. Protection and indemnity
insurance is a form of mutual indemnity insurance, extended by
protection and indemnity mutual associations.
Seanergys protection and indemnity insurance coverage for
pollution is $1.0 billion per vessel per incident. The
13 P&I Associations that comprise the International Group
insure approximately 90% of the worlds commercial tonnage
and have entered into a pooling agreement to reinsure each
associations liabilities. Each of Seanergys vessels
entered with P&I Associations of the International Group.
Under the International Group reinsurance program, each P&I
club in the International Group is responsible for the first
$7.0 million of every claim. In every claim the amount in
excess of $7.0 million and up to $50.0 million is
shared by the clubs under a pooling agreement. In every claim
the amount in excess of $50.0 million is
43
reinsured by the International Group under the general excess of
loss reinsurance contract. This policy currently provides an
additional $3.0 billion of coverage. Claims which exceed
this amount are pooled by way of overspill calls. As
a member of a P&I Association, which is a member of the
International Group, Seanergy is subject to calls payable to the
associations based on its claim records as well as the claim
records of all other members of the individual associations, and
members of the pool of P&I Associations comprising the
International Group. The P&I Associations policy year
commences on February 20th. Calls are levied by means of
estimated total costs, or ETC, and the amount of the final
installment of the ETC varies according to the actual total
premium ultimately required by the club for a particular policy
year. Members have a liability to pay supplementary calls which
might be levied by the board of directors of the club if the ETC
is insufficient to cover amounts paid out by the club.
Legal
Proceedings
Seanergy is not currently a party to any material lawsuit that,
if adversely determined, would have a material adverse effect on
its financial position, results of operations or liquidity.
Exchange
Controls
Under Marshall Islands law, there are currently no restrictions
on the export or import of capital, including foreign exchange
controls or restrictions that affect the remittance of
dividends, interest or other payments to non-resident holders of
Seanergys shares.
44
MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS FOR SEANERGY MARITIME AND
SEANERGY
You should read the following discussion and analysis of
Seanergy Maritimes consolidated financial condition and
results of operations together with Seanergy Maritimes
consolidated financial statements and notes thereto that appear
elsewhere in this prospectus. Seanergy Maritimes
consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the
United States of America (GAAP). This discussion and
analysis contains forward-looking statements that involve risks,
uncertainties, and assumptions. Actual results may differ
materially from those anticipated in these forward-looking
statements.
The historical consolidated financial results of Seanergy
Maritime described below are presented in United States dollars.
Overview
Seanergy Maritime was formed on August 15, 2006 to acquire,
through a merger, capital stock exchange, asset acquisition or
other similar business combination, one or more businesses in
the maritime shipping industry or related industries. Its
initial business combination must be with a target business or
businesses whose fair market value is at least equal to 80% of
the amount in the Trust Account (excluding any funds held
for the benefit of the underwriters and Maxim Group LLC) at
the time of such acquisition.
Recent
Developments
On May 20, 2008, Seanergy Maritime entered into definitive
agreements pursuant to which Seanergy would purchase, for an
aggregate purchase price of (i) $367,030,750 in cash,
(ii) $28,250,000 in the form of a convertible promissory
note, and (iii) up to 4,308,075 shares of Seanergy
common stock (subject to Seanergy meeting certain EBITDA
thresholds post-closing), six dry bulk vessels from companies
associated with members of the Restis family, including four
second hand vessels and two newly built vessels.
Approval of the proposed acquisition required that a majority of
the votes cast at the shareholders meeting be cast in
favor of the proposed acquisition and that holders of fewer than
35% of Seanergy Maritimes shares of common stock issued in
the initial public offering (8,084,999 shares) voted
against the proposed acquisition. On August, 26, 2008,
shareholders of Seanergy Maritime approved the proposed
acquisition, with holders of 6,514,175 shares voting
against the proposed acquisition. Of the shareholders voting
against the proposed acquisition, holders of
6,370,773 shares properly demanded redemption of their
shares and were paid $63,707,730, or $10.00 per share,
which included a forfeited portion of the deferred
underwriters contingent fee.
On August 28, 2008, Seanergy completed the acquisition,
through its designated nominee companies (which are wholly owned
subsidiaries), of three of the six dry bulk vessels, including
two Supramax vessels and one Handysize vessel. On that date,
Seanergy took delivery of the 2008-built M/V Davakis G (54,000
dwt), the 2008-built M/V Delos Ranger (54,000 dwt), and the
1997-built M/V African Oryx (24,110 dwt). Each of these vessels
is chartered for
11-13
months
to SAMC, an affiliate of the Restis family, at charter rates of
$60,000, $60,000 and $30,000 per day, respectively. On
September 11, 2008, Seanergy completed the acquisition,
through its designated nominee company, of a fourth vessel, the
M/V Bremen Max (73,503 dwt), a 1993-built, Panamax vessel,
chartered at the rate of $65,000 per day to SAMC for
11-13
months. On September 25, 2008, Seanergy completed the
acquisition, through its designated nominee companies, of the
final two vessels, the M/V Hamburg Max (73,498 dwt), a
1994-built, Panamax vessel, and the M/V African Zebra (38,632
dwt), a 1985-built, Handymax vessel. The M/V Hamburg Max and the
M/V African Zebra are chartered at rates of $65,000 and
$36,000 per day, respectively, to SAMC for
11-13
months. Seanergy has completed all of the acquisitions
contemplated by the definitive agreements dated May 20,
2008.
Pursuant to individual charter party agreements dated
May 26, 2008 between SAMC and each of Seanergys
vessel-owning subsidiaries, Cynthera Navigation Ltd (vessel
African Oryx), Waldeck Maritime Co. (vessel African Zebra),
Martinique Intl. Corp., (vessel Bremen Max), Harbour Business
Intl. Corp. (vessel Hamburg Max), Amazons Management Inc (vessel
Davakis G.) and Lagoon Shipholding Ltd (vessel Delos Ranger),
the daily gross charter rates paid by SAMC are $30,000,
36,000,$65,000,$65,000, $60,000 and $60,000, respectively. All
vessels are chartered from the time of the vessels
delivery and for a period of
45
11-13 months,
at the charterers option. SAMC pays daily time charter
rates to charter Seanergys fleet. All charter rates are
inclusive of a commission of 1.25% payable to Safbulk as
commercial broker and 2.5% to SAMC as charterer. Seanergys
current time charter coverage is very favorable to Seanergy.
The acquisition of the vessels was completed with funds from
Seanergy Maritimes Trust Account and with financing
provided by Marfin Bank S.A. of Greece. Pursuant to a financing
agreement dated August 28, 2008, Seanergys vessel
owning subsidiaries, as borrowers, are permitted to borrow, with
Seanergy Maritime and Seanergy acting as guarantors, a maximum
of $255,000,000 in connection with the purchase of the vessels,
subject to how many public shareholders exercised their
redemption rights. Seanergy is required to dedicate a portion of
its cash flow from operations to pay the principal and interest
on such debt, which limits the funds that would otherwise be
available for working capital expenditures and other purposes,
including the payment of dividends. The credit facilities
consists of a term loan facility in the amount of $165,000,000
to fund 45% of the cash portion of the purchase price of
the vessel acquisition and a revolving credit facility of up to
$90,000,000 for investment and working capital purposes,
including the payments to the redeeming public shareholders upon
exercise of their redemption rights. The term loan was made
available in tranches to assist the six designated nominee
companies to acquire the six vessels. The term loan is to be
repaid over a period of seven years commencing upon delivery of
the last vessel. The amount available for draw down under the
revolving facility is tied to the market values of the vessels.
The revolving facility will be gradually reduced each year and
will be fully repaid together with the term loan. Both the term
loan and revolving facility are secured by mortgages over the
vessels and other usual security interests, including charter
assignments. The obligations of the nominee companies have been
guaranteed by Seanergy Maritime and Seanergy. The draw down to
date of the revolving credit facility amounts to
$54.8 million and $165 million for the term loan
facility.
Despite the recent economic crisis, Seanergy is currently able
to meet its working capital needs and debt obligations. Seanergy
has a short-term solid and secured cash flow and is currently
well positioned to endure the current down turn in charter
rates. The current plunge in charter rates may not affect
Seanergy as it has the charters locked in for an
11-13
month
period and, therefore, Seanergy has secured approximately
$110 million of revenues, net of commissions payable to
Safbulk and SAMC (as mentioned above), for the period.
Therefore, Seanergy has covered 100% of its fleet for the period
up to September 2009. When the current term ends, Seanergy could
renew the charters with SAMC at the prevailing market rate at
that time. Although Seanergy has not currently done so, it
intends to charter its vessels to a broader charter base for the
2009 2010 period. However, if the current market
conditions persist after the fourth quarter of 2009, Seanergy
will have to make use of its cash flows not committed with the
repayment of the term loan and revolving facility mentioned
above to meet its financial obligations and put its expansion
plans on hold, unless new capital is raised from the capital
markets, in the form of rights offerings or private placements
and the warrants are exercised in which case it will use capital
generated from the capital markets and the warrants for
expansion purposes. We make no assurances that funds will be
raised through capital markets or that the warrants will be
exercised, or if exercised, over the quantity which will be
exercised or in the period in which they will be exercised.
Furthermore, Seanergys revolving credit facility is tied
to the market value of the vessels and not to the prevailing
(spot) market rates. For example, Seanergy may need to seek
permission from its lenders in order to make further use of its
revolving credit facility, depending on the aggregate market
value of vessels.
Recent
Accounting Pronouncements
In December 2007, Financial Accounting Standards Board (the
FASB) issued SFAS No. 141(R),
Business Combinations
(SFAS No. 141(R)), which requires an
acquirer to recognize in its financial statements as of the
acquisition date (i) the identifiable assets acquired, the
liabilities assumed, and any noncontrolling interest in the
acquiree, measured at their fair values on the acquisition date,
and (ii) goodwill as the excess of the consideration
transferred plus the fair value of any noncontrolling interest
in the acquiree at the acquisition date over the fair values of
the identifiable net assets acquired. Acquisition-related costs,
which are the costs an acquirer incurs to effect a business
combination, will be accounted for as expenses in the periods in
which the costs are incurred and the services are received,
except that costs to issue debt or equity securities will be
recognized in accordance with other applicable
U.S. generally accepted accounting principals
(GAAP) SFAS No. 141(R) makes significant
amendments to other Statements and other authoritative guidance
to provide additional guidance or to conform the guidance in
that literature to that
46
provided in SFAS No. 141(R). SFAS No. 141(R)
also provides guidance as to what information is to be disclosed
to enable users of financial statements to evaluate the nature
and financial effects of a business combination.
SFAS No. 141(R) is effective for financial statements
issued for fiscal years beginning on or after December 15,
2008. Early adoption is prohibited. The adoption of
SFAS No. 141(R) will affect how Seanergy accounts for
a business combination concluded after December 31, 2008.
In December 2007, the FASB issued SFAS No. 160,
Noncontrolling Interests in Consolidated Financial
Statements an amendment of ARB No. 51
(SFAS No. 160), which requires that
ownership interests in subsidiaries held by parties other than
the parent, and the amount of consolidated net income, be
clearly identified, labeled and presented in the consolidated
financial statements. SFAS No. 160 also requires that
once a subsidiary is deconsolidated, any retained noncontrolling
equity investment in the former subsidiary be initially measured
at fair value. Sufficient disclosures are required to clearly
identify and distinguish between the interests of the parent and
the interests of the noncontrolling owners.
SFAS No. 160 amends FASB No. 128 to provide that
the calculation of earnings per share amounts in the
consolidated financial statements will continue to be based on
the amounts attributable to the parent. SFAS No. 160
is effective for financial statements issued for fiscal years,
and interim periods within those fiscal years, beginning on or
after December 15, 2008, and requires retroactive adoption
of the presentation and disclosure requirements for existing
minority interests. All other requirements are applied
prospectively. Early adoption is prohibited. Seanergy Maritime
does not currently anticipate that the adoption of
SFAS No. 160 will have any impact on its financial
statement presentation or disclosures.
In February 2008, the FASB issued FASB Staff Position (the
FSP)
FAS 157-2,
Effective Date of FASB Statement No. 157, which
delays the effective date of SFAS No. 157 for
non-financial assets and non-financial liabilities that are not
remeasured at fair value on a recurring basis (at least
annually) until fiscal years beginning after November 15,
2008, and interim periods within those fiscal years. Seanergy
Maritime is currently assessing the impacts of adopting
SFAS No. 157 for non-financial assets and
non-financial liabilities on its financial statement
presentation or disclosures.
In March 2008, the FASB issued SFAS No. 161,
Disclosures about Derivative Instruments and Hedging
Activities an amendment of FASB Statement
No. 133 (SFAS No. 161).
SFAS No. 161 amends and expands the disclosure
requirements of SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities
(SFAS No. 133). The objective of
SFAS No. 161 is to provide users of financial
statements with an enhanced understanding of how and why an
entity uses derivative instruments, how derivative instruments
and related hedged items are accounted for under
SFAS No. 133 and its related interpretations, and how
derivative instruments and related hedged items affect an
entitys financial position, financial performance, and
cash flows. SFAS No. 161 requires qualitative
disclosures about objectives and strategies for using
derivatives, quantitative disclosures about fair value amounts
of and gains and losses on derivative instruments, and
disclosures about credit-risk-related contingent features in
derivative agreements. SFAS No. 161 applies to all
derivative financial instruments, including bifurcated
derivative instruments (and nonderivative instruments that are
designed and qualify as hedging instruments pursuant to
paragraphs 37 and 42 of SFAS No. 133) and
related hedged items accounted for under SFAS No. 133
and its related interpretations. SFAS No. 161 also
amends certain provisions of SFAS No. 131.
SFAS No. 161 is effective for financial statements
issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged.
SFAS No. 161 encourages, but does not require,
comparative disclosures for earlier periods at initial adoption.
Seanergy Maritime is currently assessing whether the adoption of
SFAS No. 161 will have any impact on its financial
statement presentation or disclosures.
In June 2008, the FASB ratified Emerging Issues Task Force
(EITF)
07-5,
Determining Whether an Instrument (or Embedded Feature) is
Indexed to an Entitys Own Stock
(EITF 07-5).
EITF 07-5
addresses the determination of whether a financial instrument
(or an embedded feature) is indexed to an entitys own
stock.
EITF 07-5
is effective for fiscal years beginning after December 15,
2008, and interim periods within those fiscal years. Seanergy
Maritime is currently assessing the impacts of adopting
EITF 07-5
on its financial statement presentation or disclosures.
47
Adoption
of New Accounting Policies
In September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements
(SFAS No. 157), which establishes a formal
framework for measuring fair value under GAAP.
SFAS No. 157 defines and codifies the many definitions
of fair value included among various other authoritative
literature, clarifies and, in some instances, expands on the
guidance for implementing fair value measurements, and increases
the level of disclosure required for fair value measurements.
SFAS No. 157 applies to all other accounting
pronouncements requiring or permitting fair value measurements,
except for: SFAS No. 123R, share-based payment and
related pronouncements, the practicability exceptions to fair
value determinations allowed by various other authoritative
pronouncements, and SFAS No. 13, Accounting for
Leases, and other accounting pronouncements that address fair
value measurements for purposes of lease classification or
measurement under SFAS No. 13. The scope exception of
SFAS No. 13 does not apply to assets acquired and
liabilities assumed in a business combination that are required
to be measured at fair value under Statement 141 or Statement
141(R), regardless of whether those assets and liabilities are
related to leases. Seanergy Maritime adopted
SFAS No. 157 on January 1, 2008.
In February 2007, the FASB issued SFAS No. 159,
The Fair Value Option for Financial Assets and Financial
Liabilities (SFAS No. 159), which
provides companies with an option to report selected financial
assets and liabilities at fair value.
SFAS No. 159s objective is to reduce both
complexity in accounting for financial instruments and the
volatility in earnings caused by measuring related assets and
liabilities differently. Generally accepted accounting
principles have required different measurement attributes for
different assets and liabilities that can create artificial
volatility in earnings. SFAS No. 159 helps to mitigate
this type of accounting-induced volatility by enabling companies
to report related assets and liabilities at fair value, which
would likely reduce the need for companies to comply with
detailed rules for hedge accounting. SFAS No. 159 also
establishes presentation and disclosure requirements designed to
facilitate comparisons between companies that choose different
measurement attributes for similar types of assets and
liabilities. SFAS No. 159 requires companies to
provide additional information that will help investors and
other users of financial statements to more easily understand
the effect of Seanergy Maritimes choice to use fair value
on its earnings. SFAS No. 159 also requires companies
to display the fair value of those assets and liabilities for
which Seanergy Maritime has chosen to use fair value on the face
of the balance sheet. SFAS No. 159 does not eliminate
disclosure requirements included in other accounting standards,
including requirements for disclosures about fair value
measurements included in SFAS No. 157 and
SFAS No. 107. Seanergy Maritime adopted
SFAS No. 159 on January 1, 2008.
In May 2008, the FASB issued The Hierarchy of Generally
Accepted Accounting Principles
(SFAS No. 162). SFAS No. 162
identifies the sources of generally accepted accounting
principles and provides a framework, or hierarchy, for selecting
the principles to be used in preparing U.S. GAAP financial
statements for nongovernmental entities. Seanergy Maritime
adopted SFAS No. 162 on November 15, 2008, the
effective date of this pronouncement.
The adoption of SFAS No. 157 and
SFAS No. 159 on January 1, 2008 and
SFAS No. 162 on November 15, 2008 did not have
any effect on Seanergy Maritimes financial statement
presentation or disclosures.
Critical
Accounting Policies and Estimates
Seanergy Maritime has prepared the consolidated financial
statements in accordance with GAAP. The preparation of these
consolidated financial statements requires the use of estimates
and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and
liabilities at the date of the consolidated financial statements
and the reported amount of expenses during the reporting period.
Seanergy Maritimes management periodically evaluates the
estimates and judgments made. Seanergy Maritimes
management bases its estimates and judgments on historical
experience and on various factors that are believed to be
reasonable under the circumstances. Actual results may differ
from these estimates as a result of different assumptions or
conditions.
The following critical accounting policies affect the more
significant judgments and estimates used in the preparation of
Seanergy Maritimes consolidated financial statements.
48
Income
Taxes
Seanergy Maritime accounts for income taxes pursuant to
SFAS No. 109, Accounting for Income Taxes
(SFAS No. 109), which establishes
financial accounting and reporting standards for the effects of
income taxes that result from an enterprises activities
during the current and preceding years. SFAS No. 109
requires an asset and liability approach for financial
accounting and reporting for income taxes. For U.S. federal
income tax purposes, Seanergy Maritime has elected to be
classified as a partnership effective January 1, 2007.
Seanergy Maritime makes quarterly distributions of interest
income earned on the trust account to its public shareholders on
a pro rata basis. Substantially all of the funds in the trust
account are invested in tax exempt money market accounts that
generate income which is generally exempt from United States
federal income tax.
Results
of Operations
Seanergy Maritime completed its initial public offering on
September 28, 2007. Accordingly, during the six months
ended June 30, 2007, Seanergy Maritime focused on capital
raising efforts and had nominal operations during such periods.
Six
Months ended June 30, 2008 as compared to Six Months ended
June 30, 2007
Seanergy Maritime had net income of $2,015,352 for the six
months ended June 30, 2008, as compared to a net loss of
$3,499 for the six months ended June 30, 2007. Net income
for the six months ended June 30, 2008 of $2,015,352
consisted of $2,612,060 of interest income, offset by $596,708
of operating expenses. The net loss for the six months ended
June 30, 2007 of $3,499 consisted of interest income of
$5,989, offset by operating expenses of $675 and interest
expense-shareholder of $8,813.
For the six months ended June 30, 2008, Seanergy Maritime
operating expenses of $596,708, as compared to $675 for the six
months ended June 30, 2007. Operating expenses for the six
months ended June 30, 2008 consisted of consulting and
professional fees of $466,951, rent and office services of
$36,672, insurance costs of $45,000, investor relations of
$25,502, and other operating expenses of $22,583.
Period
from August 15, 2006 (Inception) through June 30,
2008
Seanergy Maritime had net income of $3,456,230 for the period
from August 15, 2006 (inception) through June 30,
2008. Net income consisted of $4,516,638 in interest income,
offset by $1,046,322 of operating expenses and $14,086 of
interest expense.
For the period from August 15, 2006 (inception) through
June 30, 2008, Seanergy Maritime incurred operating
expenses of $1,046,322, which consisted of consulting and
professional fees of $824,902, rent and office services of
$59,172, insurance costs of $69,998, investor relations of
$58,468, and other operating expenses of $36,735, offset by a
foreign exchange adjustment of $2,953.
Year
Ended December 31, 2007 and the period from August 15,
2006 (Inception) to December 31, 2006
For the year ended December 31, 2007, we had a net income
of $1,445,250. The net income consisted of $1,948,192 of
interest income offset by operating expenses of $445,039 and
interest expenses of $57,903 ($44,642 related to the underwriter
and $13,261 related to shareholders). Operating expenses of
$445,039 consisted of consulting and professional fees of
$356,951, rent and office services expense of $22,500, insurance
expense of $24,998, investor relations expense of $32,966, and
other operating costs of $7,624.
For the period from August 15, 2006 (Inception) to
December 31, 2006, we had a net loss of $4,372. The net
loss consisted of $1,028 of interest income offset by interest
expense of $824, accounting fees of $1,000, organization
expenses of $3,450 and other operating expenses of $126.
Liquidity
and Capital Resources
On September 28, 2007, and prior to the consummation of the
initial public offering described above, all of Seanergy
Maritimes executive officers purchased from Seanergy
Maritime an aggregate of 16,016,667 warrants at $0.90 per
warrant in a private placement in accordance with
Regulation S under the Securities Act of 1933, as amended
(the Private Placement). On September 28, 2007,
Seanergy Maritime consummated its initial public offering of
23,100,000 units, which included 1,100,000 units
exercised as part of the underwriters over-allotment
option. Each unit in the initial public offering consisted of
one share of common stock and
49
one redeemable common stock purchase warrant. Each warrant
entitles the holder to purchase from Seanergy Maritime one share
of its common stock at an exercise price of $6.50.
On September 28, 2007, the closing date of Seanergy
Maritimes public offering, $231,000,000, or 100% of the
proceeds of the initial public offering, including $5,362,500 of
contingent underwriting compensation payable to Maxim Group LLC
upon the consummation of a business combination, but which would
be forfeited in part if the public shareholders had elected to
have their shares redeemed for cash and in full if a business
combination was not consummated, was placed in a trust account
at Deutsche Bank Trust Company maintained by Continental Stock
Transfer & Trust Company, New York, New York, as
trustee. On May 16, 2008, Seanergy Maritime instructed
Continental Stock Transfer & Trust Company to
establish a new trust account at HSBC Bank Plc., the London
affiliate of HSBC Bank, and to transfer the funds in Seanergy
Maritimes trust account from Deutsche Bank Trust Company
Americas to the new HSBC trust account in London, England. In
connection therewith, on May 19, 2008, Seanergy Maritime
determined that it fell under the definition of a Foreign
Private Issuer as defined under the Securities Exchange
Act of 1934, as amended.
Until the completion of a business combination, Seanergy
Maritime was required to make distributions to its public
shareholders on a quarterly basis, equivalent to the interest
earned on the funds in the Trust Account, subject to
certain permitted adjustments. On January 15, 2008,
Seanergy Maritime paid its first quarterly distribution of
$1,630,791, or $0.0706 per share. On April 15, 2008,
Seanergy Maritime paid its regular quarterly distribution for
the three months ended March 31, 2008, in the amount of
$1,542,349, or $0.0668 per share. On July 15, 2008,
Seanergy Maritime paid its regular quarterly distribution for
the three months ended June 30, 2008, in the amount of
$1,080,934, or $0.0468 per share.
On May 20, 2008, Seanergy Maritime entered into definitive
agreements pursuant to which Seanergy would purchase, for an
aggregate purchase price of (i) $367,030,750 in cash,
(ii) $28,250,000 in the form of a convertible promissory
note, and (iii) up to 4,308,075 shares of Seanergy
common stock (subject to Seanergy meeting certain EBITDA
thresholds post-closing), six dry bulk vessels from companies
associated with members of the Restis family, including four
second hand vessels and two newly built vessels. We believe the
earnout can be achieved with the current charters provided that
the ships have a utilization rate of more than 90% (no down time
due to breakdowns and no slow steaming due to poor maintenance)
and assuming that the operating expenses reflect the expected
budgeted amounts.
On August 28, 2008, Seanergy completed the acquisition,
through its designated nominee companies (which are wholly owned
subsidiaries), of three of the six dry bulk vessels, including
two Supramax vessels and one Handysize vessel. On that date,
Seanergy took delivery of the 2008-built M/V Davakis G (54,000
dwt), the 2008-built M/V Delos Ranger (54,000 dwt), and the
1997-built M/V African Oryx (24,110 dwt). On September 11,
2008, Seanergy completed the acquisition, through its designated
nominee company of a fourth vessel, the M/V Bremen Max (73,503
dwt), a 1993-built, Panamax vessel. On September 25, 2008,
Seanergy completed the acquisition, through its designated
nominee companies, of the final two vessels, the M/V Hamburg Max
(73,498 dwt), a 1994-built, Panamax vessel, and the M/V African
Zebra (38,632 dwt), a 1985-built, Handymax vessel.
The acquisition of the vessels was completed with funds from
Seanergy Maritimes Trust Account and with financing
provided by Marfin Bank S.A. of Greece. Pursuant to a financing
agreement dated August 28, 2008, Seanergys vessel
owning subsidiaries, as borrowers, were permitted to borrow,
with Seanergy Maritime and Seanergy acting as guarantors, a
maximum of $255 million in connection with the purchase of the
vessels, subject to how many public shareholders exercised their
redemption rights. The draw down to date of the revolving credit
facility amounts to $54.8 million and $165 million for
the term loan facility. The total drawn down to date amounts to
$219.8 million. Seanergy is required to dedicate a portion of
its cash flow from operations to pay the principal and interest
on such debt, which limits the funds that would otherwise be
available for working capital expenditures and other purposes,
including the payment of dividends. The acquisition was
completed with funds from the Seanergy Maritime Trust Account
and with financing provided by Marfin Bank S.A. of Greece.
Based on current estimates, the payment of principal and
interest related to the acquisition amounts to approximately 43%
of the cash flow from operations for the period from
October 1, 2008 to September 30, 2008. Seanergy
believes that its cash from operations will be sufficient to
meet these debt service requirements and for it to pay its other
budgeted obligations.
50
After a period of several years of rising charter rates that
culminated in all-time high charter rates in 2008, charter rates
fell to extremely low levels in recent months due to the current
global financial crisis, which is also affecting the dry bulk
shipping industry. Seanergy cannot be certain how long this
trend will continue and whether charter rates will rebound if
and when the global economy does so. The charters for
Seanergys vessels will expire in less than one year. If
charter rates remain at low levels at the time of the expiration
of these charters, any new charters will be entered into at
substantially lower rates than the existing rates. This could
have a material adverse effect on Seanergys future
revenues.
Additional
information with respect to this transaction is provided above
at Recent Developments.
Subsequent to the completion of the transaction described above,
Seanergy believes that its working capital resources, combined
with the funds available to it pursuant to the loan facilities
described above, will be sufficient to allow it to operate for
the next
11-13
months.
Commitments
and Contractual Obligations
As of December 31, 2007, we did not have any long-term
debt, capital lease obligations, operating lease obligations,
purchase obligations or other long term liabilities. In May
2008, we entered into definitive agreements in which we agreed
to purchase six dry bulk vessels from companies associated with
members of the Restis family. In May 2008, we entered into the
Master Agreement, the Brokerage Agreement, Management Agreement
and other related agreements with, among other parties,
affiliates of the Restis family. On August 28, 2008, we
completed the acquisition of three of the six dry bulk vessels.
On September 11, 2008, we completed the acquisition of a
fourth vessel. And on September 25, 2008, we completed the
acquisition of the two remaining vessels. Our subsidiaries,
acting as borrowers, drew down on a portion of the revolving
credit facility ($54.8 million) and the term loan facility ($165
million) in connection with each of the several vessels
acquired. For further discussion, please refer to Note 11
in the Financial Statements of Seanergy Maritime Corp. and
Subsidiary.
Off-balance
Sheet Arrangements
As of June 30, 2008, we did not have any off-balance sheet
arrangements as defined in Item 303(a)(4)(ii) of
Regulation S-K.
51
SELECTED
SUMMARY FINANCIAL INFORMATION
COMBINED
SELECTED HISTORICAL FINANCIAL INFORMATION AND OTHER DATA FOR THE
VESSELS
The following selected historical statement of operations and
balance sheet data were derived from the audited combined
financial statements and accompanying notes prepared in
accordance with International Financial Reporting Standards, or
IFRS, as issued by the International Accounting Standards Board,
of Goldie Navigation Ltd., Pavey Services Ltd., Shoreline
Universal Ltd., Valdis Marine Corp., Kalistos Maritime S.A. and
Kalithea Maritime S.A. for the years ended December 31,
2007, 2006 and 2005 and the unaudited combined financial
statements and notes prepared in accordance with IFRS for the
six months ended June 30, 2008 and 2007, included elsewhere
in this prospectus. The information is only a summary and should
be read in conjunction with the combined annual and condensed
combined interim financial statements and related notes included
elsewhere in this prospectus and the sections entitled,
Risk Factors and Managements Discussion
and Analysis of Financial Condition and Results of Operations
for the Vessels. The historical data included below and
elsewhere in this prospectus is not necessarily indicative of
our future performance.
All amounts in the tables below are in thousands of
U.S. dollars, except for share data, fleet data and average
daily results.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
Year Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
28,227
|
|
|
$
|
13,751
|
|
|
$
|
32,297
|
|
|
$
|
15,607
|
|
|
$
|
17,016
|
|
Revenue from vessel, related party
|
|
|
|
|
|
$
|
3,430
|
|
|
$
|
3,420
|
|
|
$
|
10,740
|
|
|
$
|
10,140
|
|
Direct voyage expenses
|
|
$
|
(759
|
)
|
|
$
|
(60
|
)
|
|
$
|
(82
|
)
|
|
$
|
(64
|
)
|
|
$
|
(139
|
)
|
Crew cost
|
|
$
|
(2,143
|
)
|
|
$
|
(1,343
|
)
|
|
$
|
(2,803
|
)
|
|
$
|
(2,777
|
)
|
|
$
|
(1,976
|
)
|
Other operating expenses
|
|
$
|
(1,831
|
)
|
|
$
|
(1,471
|
)
|
|
$
|
(3,228
|
)
|
|
$
|
(2,842
|
)
|
|
$
|
(3,085
|
)
|
Depreciation expense
|
|
$
|
(16,314
|
)
|
|
$
|
(6,260
|
)
|
|
$
|
(12,625
|
)
|
|
$
|
(6,567
|
)
|
|
$
|
(6,970
|
)
|
Impairment reversal/(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
19,311
|
|
|
$
|
(19,311
|
)
|
Management fees to a related party
|
|
$
|
(411
|
)
|
|
$
|
(387
|
)
|
|
$
|
(782
|
)
|
|
$
|
(752
|
)
|
|
$
|
(644
|
)
|
Finance income
|
|
$
|
36
|
|
|
$
|
81
|
|
|
$
|
143
|
|
|
$
|
132
|
|
|
$
|
24
|
|
Finance expense
|
|
$
|
(1,014
|
)
|
|
$
|
(1,540
|
)
|
|
$
|
(2,980
|
)
|
|
$
|
(3,311
|
)
|
|
$
|
(2,392
|
)
|
Net profit/(loss)
|
|
$
|
5,791
|
|
|
$
|
6,201
|
|
|
$
|
13,360
|
|
|
$
|
29,477
|
|
|
$
|
(7,337
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
June 30, 2008
|
|
|
2007
|
|
|
2006
|
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
$
|
19,246
|
|
|
$
|
7,005
|
|
|
$
|
5,842
|
|
Vessels
|
|
$
|
250,022
|
|
|
$
|
244,801
|
|
|
$
|
114,967
|
|
Total assets
|
|
$
|
269,268
|
|
|
$
|
251,806
|
|
|
$
|
120,809
|
|
Total current liabilities, including current portion of
long-term debt
|
|
$
|
20,208
|
|
|
$
|
13,569
|
|
|
$
|
10,396
|
|
Long-term debt
|
|
$
|
48,520
|
|
|
$
|
38,580
|
|
|
$
|
41,354
|
|
Total shareholders equity
|
|
$
|
200,540
|
|
|
$
|
199,657
|
|
|
$
|
69,059
|
|
52
MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR VESSELS
The following managements discussion and analysis should
be read in conjunction with the combined annual and condensed
combined interim financial statements and accompanying notes
prepared in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards
Board (IASB), included elsewhere in this prospectus,
of Goldie Navigation Ltd., Pavey Services Ltd., Shoreline
Universal Ltd., Valdis Marine Corp., Kalistos Marine S.A. and
Kalithea Marine S.A. (together, the Group). This
discussion relates to the operations and financial condition of
the sellers and not of Seanergy. Although as of
September 25, 2008, we had purchased the six vessels that
are included in the sellers financial statements, we did
not purchase the other assets of the sellers or assume any of
their liabilities. In addition, although we charter these
vessels and earn revenue from charter hire, as the sellers did,
we have chartered the vessels to different charterers on
different terms than the sellers. The expense structure of the
sellers is also different from ours, as the sellers, which are
part of a larger group of companies controlled by members of the
Restis family, do not employ any executive officers. Certain
vessel-related fees, such as management fees, will also vary
from the amount that was previously paid by the sellers. As a
result, the sellers financial statements and this
discussion of them may not be indicative of what our historical
results of operations would have been for the comparable periods
had we operated these vessels at that time nor the results if
the sellers had operated these vessels on a stand-alone basis.
In addition, the sellers results of operations and
financial condition may not be indicative of what our results of
operations and financial condition might be in the future.
This discussion contains forward-looking statements that reflect
our current views with respect to future events and financial
performance. Our actual results may differ materially from those
anticipated in these forward-looking statements as a result of
various factors, such as those set forth in the section entitled
Risk Factors and elsewhere in this prospectus.
General
The sellers are six ship-owning companies that collectively
owned and operated four vessels in the dry bulk shipping market.
In addition, two newly built vessels were delivered to the
sellers in May 2008 and August 2008, both of which had no
operating history. These vessels represented a portion of the
vessels owned
and/or
operated by companies associated with members of the Restis
family. As of September 25, 2008, the sellers had sold
these vessels, including the two newly built vessels, to us
pursuant to the Master Agreement and the MOAs during August 2008
and September 2008. The combined financial statements of the
Group for 2005, 2006 and 2007 include the assets, liabilities
and results of operations for four of the vessels from the dates
they were placed in service by the sellers in 2005. The
condensed combined interim financial statements for the six
months ended June 30, 2008 include the assets, liabilities
and results from operations of these four vessels for the entire
period and one vessel delivered and placed in service in May
2008. The final vessel was delivered in August 2008 and had no
operations through June 30, 2008.
The operations of the sellers vessels were managed by EST,
which is an affiliate of members of the Restis family. Following
the vessel acquisition, EST continued to manage the vessels
pursuant to the Management Agreement. EST provided the sellers
with a wide range of shipping services. These services included,
at a daily fee per vessel (payable monthly), the required
technical management, such as managing
day-to-day
vessel operations including supervising the crewing, supplying,
maintaining and drydocking of the vessels. Safbulk, which is
also an affiliate of the sellers, provided commercial brokerage
services to the sellers and earned fees in connection with the
charter of the vessels. Safbulk continues to provide these
services for us pursuant to the Brokerage Agreement.
53
The following table details the vessels owned by the sellers
that were sold to us:
Current fleet:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Date of Delivery to
|
Vessel Name
|
|
Dwt
|
|
|
Vessel Type
|
|
Built
|
|
|
Seanergy
|
|
African Oryx
|
|
|
24,110
|
|
|
Handysize
|
|
|
1997
|
|
|
August 28, 2008
|
African Zebra
|
|
|
38,632
|
|
|
Handymax
|
|
|
1985
|
|
|
September 25, 2008
|
Bremen Max
|
|
|
73,503
|
|
|
Panamax
|
|
|
1993
|
|
|
September 11, 2008
|
Hamburg Max
|
|
|
73,498
|
|
|
Panamax
|
|
|
1994
|
|
|
September 25, 2008
|
Davakis G. (ex. Hull No. KA 215)
|
|
|
54,000
|
|
|
Supramax
|
|
|
2008
|
|
|
August 28, 2008
|
Delos Ranger (ex. Hull No. KA 216)
|
|
|
54,000
|
|
|
Supramax
|
|
|
2008
|
|
|
August 28, 2008
|
Important
Measures for Analyzing the Sellers Results of
Operations
The sellers believe that the important non-GAAP/non-IFRS
measures and definitions for analyzing their results of
operations consist of the following:
|
|
|
|
|
Ownership days.
Ownership days are the total
number of calendar days in a period during which the sellers
owned each vessel in their fleet. Ownership days are an
indicator of the size of the fleet over a period and affect both
the amount of revenues and the amount of expenses recorded
during that period.
|
|
|
|
Available days.
Available days are the number
of ownership days less the aggregate number of days that the
sellers vessels are off-hire due to major repairs,
drydockings or special or intermediate surveys. The shipping
industry uses available days to measure the number of ownership
days in a period during which vessels are actually capable of
generating revenues.
|
|
|
|
Operating days.
Operating days are the number
of available days in a period less the aggregate number of days
that vessels are off-hire due to any reason, including
unforeseen circumstances. The shipping industry uses operating
days to measure the aggregate number of days in a period during
which vessels actually generate revenues.
|
|
|
|
Fleet utilization.
Fleet utilization is
determined by dividing the number of operating days during a
period by the number of ownership days during that period. The
shipping industry uses fleet utilization to measure a
companys efficiency in finding suitable employment for its
vessels and minimizing the amount of days that its vessels are
off-hire for any reason including scheduled repairs, vessel
upgrades, drydockings or special or intermediate surveys.
|
|
|
|
Off-hire.
The period a vessel is unable to
perform the services for which it is required under a charter.
Off-hire periods typically include days spent undergoing repairs
and drydocking, whether or not scheduled.
|
|
|
|
Time charter.
A time charter is a contract for
the use of a vessel for a specific period of time during which
the charterer pays substantially all of the voyage expenses,
including port costs, canal charges and fuel expenses. The
vessel owner pays the vessel operating expenses, which include
crew wages, insurance, technical maintenance costs, spares,
stores and supplies and commissions on gross voyage revenues.
Time charter rates are usually fixed during the term of the
charter. Prevailing time charter rates do fluctuate on a
seasonal and
year-to-year
basis and may be substantially higher or lower from a prior time
charter agreement when the subject vessel is seeking to renew
the time charter agreement with the existing charterer or enter
into a new time charter agreement with another charterer.
Fluctuations in time charter rates are influenced by changes in
spot charter rates.
|
|
|
|
Voyage charter.
A voyage charter is an
agreement to charter the vessel for an agreed per-ton amount of
freight from specified loading port(s) to specified discharge
port(s). In contrast to a time charter, the vessel owner is
required to pay substantially all of the voyage expenses,
including port costs, canal charges and fuel expenses, in
addition to the vessel operating expenses.
|
54
|
|
|
|
|
TCE.
Time charter equivalent, or TCE, is a
measure of the average daily revenue performance of a vessel on
a per voyage basis. The sellers method of calculating TCE
is consistent with industry standards and is determined by
dividing operating revenues (net of voyage expenses) by
operating days for the relevant time period. Voyage expenses
primarily consist of port, canal and fuel costs that are unique
to a particular voyage, which would otherwise be paid by the
charterer under a time charter contract. TCE is a standard
shipping industry performance measure used primarily to compare
period-to-period changes in a shipping companys
performance despite changes in the mix of charter types (i.e.,
spot charters, time charters and bareboat charters) under which
the vessels may be employed between the periods.
|
Revenues
The sellers revenues were driven primarily by the number
of vessels they operated, the number of operating days during
which their vessels generated revenues, and the amount of daily
charter hire that their vessels earned under charters. These, in
turn, were affected by a number of factors, including the
following:
|
|
|
|
|
The nature and duration of the sellers charters;
|
|
|
|
The amount of time that the sellers spent repositioning
their vessels;
|
|
|
|
The amount of time that the sellers vessels spent in
drydock undergoing repairs;
|
|
|
|
Maintenance and upgrade work;
|
|
|
|
The age, condition and specifications of the sellers
vessels;
|
|
|
|
The levels of supply and demand in the dry bulk carrier
transportation market; and
|
|
|
|
Other factors affecting charter rates for dry bulk carriers
under voyage charters.
|
A voyage charter is generally a contract to carry a specific
cargo from a load port to a discharge port for an
agreed-upon
total amount. Under voyage charters, voyage expenses such as
port, canal and fuel costs are paid by the vessel owner. A time
charter trip and a period time charter or period charter are
generally contracts to charter a vessel for a fixed period of
time at a set daily rate. Under time charters, the charterer
pays voyage expenses. Under both types of charters, the vessel
owners pay for vessel operating expenses, which include crew
costs, provisions, deck and engine stores, lubricating oil,
insurance, maintenance and repairs. The vessel owners are also
responsible for each vessels drydocking and intermediate
and special survey costs.
Vessels operating on period time charters provide more
predictable cash flows, but can yield lower profit margins than
vessels operating in the spot charter market for single trips
during periods characterized by favorable market conditions.
Vessels operating in the spot charter market generate revenues
that are less predictable, but can yield increased profit
margins during periods of improvements in dry bulk rates. Spot
charters also expose vessel owners to the risk of declining dry
bulk rates and rising fuel costs. The sellers vessels were
chartered on period time charters during the six months ended
June 30, 2008, fiscal 2007, fiscal 2006 and fiscal 2005.
A standard maritime industry performance measure is the
time charter equivalent or TCE. TCE
revenues are voyage revenues minus voyage expenses divided by
the number of operating days during the relevant time period.
Voyage expenses primarily consist of port, canal and fuel costs
that are unique to a particular voyage and that would otherwise
be paid by a charterer under a time charter. Some companies in
our industry believe that the daily TCE neutralizes the
variability created by unique costs associated with particular
voyages or the employment of dry bulk carriers on time charter
or on the spot market and presents a more accurate
representation of the revenues generated by dry bulk carriers.
The sellers average TCE rates for 2007, 2006 and 2005 were
$25,256, $18,868 and $23,170, respectively, and $35,812 and
$24,706 for the six months ended June 30, 2008 and 2007,
respectively.
55
Vessel
Operating Expenses
Vessel operating expenses include crew wages and related costs,
the cost of insurance, expenses relating to repairs and
maintenance, the costs of spares and consumable stores, tonnage
taxes and other miscellaneous expenses. Vessel operating
expenses generally represent costs of a fixed nature. Some of
these expenses are required, such as insurance costs and the
cost of spares.
Depreciation
During the years ended December 31, 2007, 2006 and 2005 and
the six months ended June 30, 2008, the sellers
depreciated their vessels on a straight-line basis over their
then remaining useful lives after considering the residual
value. The residual value for 2008 was increased to $500 from
$175 in 2007 per light weight tonnage reflecting an increase in
steel scrap prices. The estimated useful lives as of
June 30, 2008 were between 3 and 16 years, based on an
industry-wide accepted estimated useful life of 25 years
from the original build dates of the vessels, for financial
statement purposes. The sellers capitalized the total
costs associated with a drydocking and amortized these costs on
a straight-line basis over the period before the next drydocking
became due, which was generally 2.5 years.
Seasonality
Coal, iron ore and grains, which are the major bulks of the dry
bulk shipping industry, are somewhat seasonal in nature. The
energy markets primarily affect the demand for coal, with
increases during hot summer periods when air conditioning and
refrigeration require more electricity and towards the end of
the calendar year in anticipation of the forthcoming winter
period. The demand for iron ore tends to decline in the summer
months because many of the major steel users, such as automobile
makers, reduce their level of production significantly during
the summer holidays. Grains are completely seasonal as they are
driven by the harvest within a climate zone. Because three of
the five largest grain producers (the United States of America,
Canada and the European Union) are located in the northern
hemisphere and the other two (Argentina and Australia) are
located in the southern hemisphere, harvests occur throughout
the year and grains require dry bulk shipping accordingly.
Principal
Factors Affecting the Sellers Business
The principal factors that affected the sellers financial
position, results of operations and cash flows included the
following:
|
|
|
|
|
Number of vessels owned and operated;
|
|
|
|
Charter market rates and periods of charter hire;
|
|
|
|
Vessel operating expenses and voyage costs, which were incurred
in both U.S. Dollars and other currencies, primarily Euros;
|
|
|
|
Cost of drydocking and special surveys;
|
|
|
|
Depreciation expenses, which were a function of the cost, any
significant post-acquisition improvements, estimated useful
lives and estimated residual scrap values of sellers
vessels;
|
|
|
|
Financing costs related to indebtedness associated with the
vessels; and
|
|
|
|
Fluctuations in foreign exchange rates.
|
56
Performance
Indicators
The sellers believe that the unaudited information provided
below is important for measuring trends in the results of
operations. The figures shown below are statistical
ratios/non-GAAP/non-IFRS financial measures and definitions used
by management to measure performance of the vessels. They are
not included in financial statements prepared under IFRS.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
|
|
|
|
Six Months Ended June 30,
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Fleet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of vessels(1)
|
|
|
4.21
|
|
|
|
3.83
|
|
|
|
3.85
|
|
|
|
3.81
|
|
|
|
3.21
|
|
Ownership days(2)
|
|
|
769
|
|
|
|
724
|
|
|
|
1,460
|
|
|
|
1,460
|
|
|
|
1,250
|
|
Available days(3) (equals operating days for the periods
listed(4))
|
|
|
767
|
|
|
|
693
|
|
|
|
1,411
|
|
|
|
1,393
|
|
|
|
1,166
|
|
Fleet utilization(5)
|
|
|
99.7
|
%
|
|
|
95.7
|
%
|
|
|
96.6
|
%
|
|
|
95.4
|
%
|
|
|
93.3
|
%
|
Average Daily Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average TCE rate(6)
|
|
$
|
35,812
|
|
|
$
|
24,706
|
|
|
|
25,256
|
|
|
$
|
18,868
|
|
|
$
|
23,170
|
|
Vessel operating expenses(7)
|
|
$
|
5,168
|
|
|
$
|
3,887
|
|
|
|
4,130
|
|
|
$
|
3,849
|
|
|
$
|
4,049
|
|
Management fees(8)
|
|
$
|
535
|
|
|
$
|
535
|
|
|
|
535
|
|
|
$
|
515
|
|
|
$
|
515
|
|
Total vessel operating expenses(9)
|
|
$
|
5,703
|
|
|
$
|
4,422
|
|
|
|
4,665
|
|
|
$
|
4,364
|
|
|
$
|
4,564
|
|
|
|
|
(1)
|
|
Average number of vessels is the number of vessels the sellers
owned for the relevant period, as measured by the sum of the
number of days each vessel was owned during the period divided
by the number of available days in the period.
|
|
(2)
|
|
Ownership days are the total number of days in a period during
which the sellers owned each vessel. Ownership days are an
indicator of the size of the sellers fleet over a period
and affect both the amount of revenues and the amount of
expenses that sellers recorded during a period.
|
|
(3)
|
|
Available days are the number of ownership days less the
aggregate number of days that the sellers vessels were
off-hire due to major repairs, drydockings or special or
intermediate surveys. The shipping industry uses available days
to measure the number of ownership days in a period during which
vessels should be capable of generating revenues.
|
|
(4)
|
|
Operating days are the number of available days in a period less
the aggregate number of days that the sellers vessels were
off-hire due to any reason, including unforeseen circumstances.
The shipping industry uses operating days to measure the
aggregate number of days in a period during which vessels
actually generate revenues.
|
|
(5)
|
|
Fleet utilization is calculated by dividing the number of
operating days during a period by the number of ownership days
during the period. The shipping industry uses fleet utilization
to measure a companys efficiency in finding suitable
employment for its vessels and minimizing the amount of days
that its vessels are off-hire for reasons such as scheduled
repairs, vessel upgrades, or drydockings or special or
intermediate surveys.
|
|
(6)
|
|
Time charter equivalent, is a measure of the average daily
revenue performance of a vessel on a per voyage basis. The
sellers method of calculating TCE was consistent with
industry standards and was determined by dividing operating
revenues (net of voyage expenses and commissions) by operating
days for the relevant time period. Voyage expenses primarily
consist of port, canal and fuel costs that are unique to a
particular voyage, which would otherwise be paid by the
charterer under a time charter contract. TCE is a standard
shipping industry performance measure used primarily to compare
period-to-period
changes in a
|
57
|
|
|
|
|
shipping companys performance despite changes in the mix
of charter types (i.e., spot charters, time charters and
bareboat charters) under which the vessels may be employed
between the periods:
|
The following table is unaudited and includes information that
is extracted directly from the combined financial statements, as
well as other information used by the sellers for monitoring
performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
Twelve Months Ended December 31,
|
|
|
2008
|
|
2007
|
|
2007
|
|
2006
|
|
2005
|
|
|
(Dollars in thousands except per diem amounts)
|
|
Operating revenues
|
|
$
|
28,227
|
|
|
$
|
17,181
|
|
|
$
|
35,717
|
|
|
$
|
26,347
|
|
|
$
|
27,156
|
|
Voyage expenses
|
|
$
|
(759
|
)
|
|
$
|
(60
|
)
|
|
$
|
(82
|
)
|
|
$
|
(64
|
)
|
|
$
|
(139
|
)
|
Net operating revenues
|
|
$
|
27,468
|
|
|
|
17,121
|
|
|
$
|
35,635
|
|
|
$
|
26,283
|
|
|
$
|
27,017
|
|
Operating days
|
|
|
767
|
|
|
|
693
|
|
|
|
1,411
|
|
|
|
1,393
|
|
|
|
1,166
|
|
Average TCE daily rate
|
|
$
|
35,812
|
|
|
$
|
24,706
|
|
|
$
|
25,256
|
|
|
$
|
18,868
|
|
|
$
|
23,170
|
|
|
|
|
(7)
|
|
Average daily vessel operating expenses, which includes crew
costs, provisions, deck and engine stores, lubricating oil,
insurance, maintenance and repairs, is calculated by dividing
vessel operating expenses by ownership days for the relevant
time periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
Twelve Months Ended December 31,
|
|
|
2008
|
|
2007
|
|
2007
|
|
2006
|
|
2005
|
|
|
(Dollars in thousands except per diem amounts)
|
|
Crew costs and other operating expenses
|
|
$
|
3,974
|
|
|
$
|
2,814
|
|
|
$
|
6,031
|
|
|
$
|
5,619
|
|
|
$
|
5,061
|
|
Ownership days
|
|
|
769
|
|
|
|
724
|
|
|
|
1460
|
|
|
|
1460
|
|
|
|
1250
|
|
Daily vessel operating expense
|
|
$
|
5,168
|
|
|
$
|
3,887
|
|
|
$
|
4,130
|
|
|
$
|
3,849
|
|
|
$
|
4,049
|
|
|
|
|
(8)
|
|
Daily management fees are calculated by dividing total
management fees expensed on vessels owned by ownership days for
the relevant time period.
|
|
(9)
|
|
Total vessel operating expenses, is a measurement of total
expenses associated with operating sellers vessels. TVOE
is the sum of daily vessel operating expense and daily
management fees. Daily TVOE is calculated by dividing TVOE by
fleet ownership days for the relevant time period.
|
Critical
Accounting Policies
The discussion and analysis of the sellers financial
condition and results of operations is based upon their combined
financial statements, which have been prepared in accordance
with International Financial Reporting Standards as issued by
the IASB, or IFRS. The preparation of those financial statements
requires the sellers to make estimates and judgments that affect
the reported amount of assets and liabilities, revenues and
expenses and related disclosure of contingent assets and
liabilities at the date of their financial statements. Actual
results may differ from these estimates under different
assumptions or conditions.
Critical accounting policies are those that reflect significant
judgments or uncertainties, and potentially result in materially
different results under different assumptions and conditions.
The sellers have described below what they believe are the
estimates and assumptions that have the most significant effect
on the amounts recognized in their combined financial
statements. These estimates and assumptions relate to useful
lives of their vessels, valuation and impairment losses on
vessels, and dry docking costs because the sellers believe that
the shipping industry is highly cyclical, experiencing
volatility in profitability, vessel values and charter rates
resulting from changes in the supply of and demand for shipping
capacity. In addition, the dry bulk market is affected by the
current international financial crisis which has slowed down
world trade and caused drops in charter rates. The lack of
financing, global steel production cuts and outstanding
agreements between iron ore producers and Chinese industrial
customers have temporarily brought the market to a stagnation.
Useful Lives of Vessels.
The sellers evaluated
the periods over which their vessels were depreciated to
determine if events or changes in circumstances had occurred
that would require modification to their useful lives. In
evaluating useful lives of vessels, the sellers review certain
indicators of potential impairment, such as
58
the age of the vessels. The sellers depreciated each of their
vessels on a straight-line basis over its estimated useful life,
which during the six months ended June 30, 2008 was
estimated to be between 3 and 16 years. Newly constructed
vessels were depreciated using an estimated useful life of
25 years from the date of their initial delivery from the
shipyard. Depreciation was based on cost less the estimated
residual scrap value. Furthermore, the sellers estimated the
residual values of their vessels to be $500.00 per
lightweight ton as of June 30, 2008 as compared to $175.00
as of December 31, 2007, due to substantial increases in
the price of steel. An increase in the useful life of a vessel
or in the residual value would have the effect of decreasing the
annual depreciation charge and extending it into later periods.
A decrease in the useful life of the vessel or in the residual
value would have the effect of increasing the annual
depreciation charge. However, when regulations place limitations
on the ability of a vessel to trade on a worldwide basis, the
vessels useful life was adjusted to end at the date such
regulations become effective.
Valuation of Vessels and Impairment.
The
sellers originally valued their vessels at cost less accumulated
depreciation and accumulated impairment losses. Vessels were
subsequently measured at fair value on an annual basis.
Increases in an individual vessels carrying amount as a
result of the revaluation was recorded in recognized income and
expense and accumulated in equity under the caption revaluation
surplus. The increase is recorded in the combined statements of
income to the extent that it reversed a revaluation decrease of
the related asset. Decreases in an individual vessels
carrying amount is recorded in the combined statements of income
as a separate line item. However, the decrease were recorded in
recognized income and expense to the extent of any credit
balance existing in the revaluation surplus in respect of the
related asset. The decrease recorded in recognized income and
expense reduced the amount accumulated in equity under the
revaluation surplus. The fair value of a vessel was determined
through market value appraisal, on the basis of a sale for
prompt, charter-free delivery, for cash, on normal commercial
terms, between willing sellers and willing buyers of a vessel
with similar characteristics.
The sellers consider this to be a critical accounting policy
because assessments need to be made due to the shipping industry
being highly cyclical, experiencing volatility in profitability,
vessel values and fluctuation in charter rates resulting from
changes in the supply of and demand for shipping capacity. In
the current time the dry bulk market is affected by the current
international financial crisis which has slowed down world trade
and caused drops in charter rates. The lack of financing, global
steel production cuts and outstanding agreements between iron
ore producers and Chinese industrial customers have temporarily
brought the market to a stagnation.
To determine whether there is an indication of impairment , we
compare the recoverable amount of the vessel, which is the
greater of the fair value less costs to sell or value in use.
Fair value represents the market price of a vessel in an active
market, and value in use is based on estimations on future cash
flows resulting from the use of each vessel less operating
expenses and its eventual disposal. The assumptions to be used
to determine the greater of the fair value or value in use
requires a considerable degree of estimation on the part of our
management team. Actual results could differ from those
estimates, which could have a material effect on the
recoverability of the vessels.
The most significant assumptions used are: the determination of
the possible future new charters, future charter rates, on-hire
days which are estimated at levels that are consistent with the
on-hire statistics, future market values, time value of money.
Estimates are based on market studies and appraisals made by
leading independent shipping analysts and brokers, and
assessment by management on the basis of market information,
shipping newsletters, chartering and sale of comparable vessels
reported in the press and historical charter rates for similar
vessels.
An impairment loss will be recognized if the carrying value of
the vessel exceeds its estimated recoverable amount.
Drydocking Costs.
From time to time the
sellers vessels were required to be drydocked for
inspection and re-licensing at which time major repairs and
maintenance that could not be performed while the vessels were
in operation were generally performed (generally every
2.5 years). At the date of acquisition of a second hand
vessel, management estimated the component of the cost that
corresponded to the economic benefit to be derived from
capitalized drydocking cost, until the first scheduled
drydocking of the vessel under the
59
ownership of the sellers, and this component was depreciated on
a straight-line basis over the remaining period to the estimated
drydocking date.
Results
of Operations
Six
months ended June 30, 2008 as compared to six months ended
June 30, 2007
REVENUES
Operating revenues for the six
months ended June 30, 2008 were $28,227,000, an increase of
$11,046,000, or 64.29%, over the comparable period in 2007.
Revenues increased primarily as a result of improved time
charter rates and a higher number of operating days. Revenue
from Swiss Marine Services S.A., an affiliate of the sellers,
amounted to $0 in the six months ended June 30, 2008 and
$3,430,000 for the comparable period in 2007. Related party
revenue decreased as a result of third party charterers
completely replacing related party charterers.
DIRECT VOYAGE EXPENSES
Direct voyage
expenses, which include classification fees and surveys, fuel
expenses, port expenses, tugs, commissions and fees, and
insurance and other voyage expenses, totaled $759,000 for the
six months ended June 30,2008, as compared to $60,000 for
the comparable period in 2007, which represents an increase of
1,165%. This increase of $699,000 in direct voyage expenses
primarily reflects increased bunkers expenses due to the
inclusion of Davakis G. (delivered on May 20,
2008) fuel.
CREW COSTS
Crew costs for the six months
ended June 30, 2008 were $2,143,000, an increase of
$800,000, or 59.6%, compared to the comparable period in 2007.
This increase is primarily due to (a) salary increases
which became effective as of January 1, 2008, (b) the
addition of crew cost for the Davakis G, which was delivered on
May 20, 2008, and (c) increased bonuses to the crews
of certain vessels.
MANAGEMENT FEES RELATED PARTY
Management fees related party represent a fixed fee
per day for each vessel in operation paid to EST for technical
management services. The fee per day amounted to $535 for the
six months ended June 30, 2008 and $535 for the six months
ended June 30, 2007. Total management fees
related party for the six months ended June 30, 2008
totaled $411,000, as compared to $387,000 for the six months
ended June 30, 2007. This increase of 6.2% was due to the
increase in operating days in 2008 resulting from the delivery
of the Davakis G on May 20, 2008.
OTHER OPERATING EXPENSES
Other operating
expenses were $1,831,000 for the six months ended June 30,
2008, an increase of $360,000, or 24.5%, over $1,471,000 for the
comparable period in 2007. Other operating expenses include the
costs of chemicals and lubricants, repairs and maintenance,
insurance and administration expenses for the vessels. These
expenses increased during the six months ended June 30,
2008, primarily due to increases in prices for these items and
the addition of the Davakis G on May 20, 2008.
DEPRECIATION
For the six months ended
June 30, 2008, depreciation expense totaled $16,314,000, as
compared to $6,260,000 for the comparable period in 2007, which
represented an increase of $10,054,000, or 106.61%. This
increase resulted from the higher carrying amount of the vessels
because the vessels were revalued to a higher fair value at the
end of fiscal 2007 and due to additional depreciation from the
Davakis G delivered on May 20, 2008, partially reduced by
lower depreciation charges of $1,053,000 in 2008 due to the
increase in the estimated residual value of the vessels used in
calculating depreciation from $175 to $500 per light-weight
tonnage due to the increase in steel prices compared to 2007.
RESULTS FROM OPERATING ACTIVITIES
For the six
months ended June 30, 2008, operating income was
$6,769,000, which represents a decrease of $891,000, or 11.6%,
compared to operating income of $7,660,000 for the comparable
period in 2007. The primary reason for the decline in operating
income was the increase in depreciation and amortization cost in
the six months ended June 30, 2008 by $10,054,000, which
amount was partially offset by the improvement in revenue by
$11,046,000.
NET FINANCE COSTS
Net finance cost for the
six months ended June 30, 2008 was $978,000, which
represents a decrease of $481,000, or 32.9%, compared to
$1,459,000 for the comparable period in 2007. The net decrease
in finance costs resulted primarily from the timing of
repayments of the sellers loan outstanding during the six
months ended June 30, 2007, as compared to June 30,
2008.
60
NET PROFIT
The net profit for the six months
ended June 30, 2008 was $5,791,000, as compared to
$6,201,000 for the comparable period in 2007. This decrease of
$410,000, or 11.6%, is primarily due the increase in
depreciation and amortization cost in the six months ended
June 30, 2008 by $10,054,000, which amount was partially
offset by the improvement in revenue for the six months ended
June 30, 2008 by $11,046,000.
Year
ended December 31, 2007 (fiscal 2007) as
compared to year ended December 31, 2006 (fiscal
2006)
REVENUES
Operating revenues for fiscal 2007
were $35,717,000, an increase of $9,370,000, or 35.6%, over
fiscal 2006. Revenues increased primarily as a result of
improved time charter rates and a higher number of operating
days. Revenue from Swiss Marine Services S.A., an affiliate of
the sellers, amounted to $3,420,000 in fiscal 2007 and
$10,740,000 in fiscal 2006, a decrease of 68.2%. Related party
revenue decreased as a result of third party charterers
replacing related party charterers.
DIRECT VOYAGE EXPENSES
Direct voyage
expenses, which include classification fees and surveys, fuel
expenses, port expenses, tugs, commissions and fees, and
insurance and other voyage expenses, totaled $82,000 for fiscal
2007, as compared to $64,000 for fiscal 2006, which represents
an increase of 28%. This increase of $18,000 in direct voyage
expenses primarily reflects additional fuel consumed in
positioning the M/V Hamburg Max for drydocking. No vessels were
in drydock during fiscal 2006.
CREW COSTS
Crew costs for fiscal 2007 were
$2,803,000, an increase of $26,000, of 0.9%, compared to fiscal
2006. This increase is primarily due to an increase in basic
wages and crew signing-on expenses (including fees charged by
the flag state for endorsement of seafarer certificates).
MANAGEMENT FEES RELATED PARTY
Management fees related party represent a fixed fee
per day for each vessel in operation paid to EST for technical
management services. The fee per day amounted to $535 in 2007
and $515 in 2006. Total Management fees related
party for fiscal 2007 totaled $782,000, as compared to $752,000
for fiscal 2006. This increase of 4% was mutually agreed for
2007 between the sellers and EST to offset increases in the
overhead of EST.
OTHER OPERATING EXPENSES
Other operating
expenses were $3,228,000 for fiscal 2007, an increase of
$386,000, or 13.58%, over $2,842,000 for fiscal 2006. Other
operating expenses include the costs of chemicals and
lubricants, repairs and maintenance, insurance and
administration expenses for the vessels. These expenses
increased in fiscal 2007 primarily due to increases in prices
for these items (in particular an approximately 33% increase in
the costs of lubricants) and repairs and maintenance to the M/V
Hamburg Max.
DEPRECIATION
For fiscal 2007, depreciation
expense totaled $12,625,000, as compared to $6,567,000 for
fiscal 2006, which represented an increase of $6,058,000, or
92.24%. This increase resulted from the higher carrying amount
of the vessels because the vessels were revalued to a higher
fair value at the end of fiscal 2006.
IMPAIRMENT REVERSAL (LOSS)
At year end the
sellers adjust their vessels to fair value. During fiscal 2006,
the sellers reversed an impairment loss associated with the
value of each of the vessels amounting in total to $19,311,000.
No such reversals were made by the sellers during fiscal 2007.
The primary reason for the reversal of the impairment loss in
fiscal 2006 was the increase in the fair value of the vessels in
the year ended December 31, 2006. At December 31,
2006, due to changing market conditions, the fair value of the
vessels exceeded the carrying value by $44,430,000, and
accordingly, an amount of $19,311,000 was recorded as an
impairment reversal. The remaining surplus of $25,119,000 was
recorded as recognized income and expense under the caption
revaluation reserve in the combined statement of changes in
equity. At December 31, 2007, due to prevailing positive
market conditions, the fair value of the individual vessels
exceeded the carrying amount again and a revaluation surplus of
$129,265,000 arose and is recorded as recognized income and
expense under the caption revaluation reserve in the combined
statement of changes in equity.
RESULTS FROM OPERATING ACTIVITIES
For fiscal
2007, results from operating activities were $16,197,000, which
represents a decrease of $16,459,000, or 50.4%, compared to
operating income of $32,656,000 for fiscal 2006. The primary
reasons for the decline in the results from operating activities
were
61
the reversal of the impairment loss in fiscal 2006, which
increased operating income by $19,311,000, and the increase in
depreciation and amortization cost in fiscal 2007 by $6,058,000,
which amounts were partially offset by the improvement in
revenue during fiscal 2007 by $9,370,000.
NET FINANCE COSTS
Net finance cost for fiscal
2007 was $2,837,000, which represents a decrease of $342,000, or
10.7%, compared to $3,179,000 fiscal 2006. The net decrease in
finance costs resulted primarily from the reduction in the
principal amount of sellers loan outstanding during fiscal
2007.
NET PROFIT
The net profit for fiscal 2007 was
$13,360,000, as compared to $29,477,000 for fiscal 2006. This
decrease of $16,117,000, or 54.67%, is primarily due to the
reversal of the impairment loss in fiscal 2006 in the amount of
$19,311,000 together with the increase in depreciation in fiscal
2007 by $6,058,000, which was partially offset by the increase
in revenue during fiscal 2007 by $9,370,000.
Year
Ended December 31, 2006 (fiscal 2006) as
compared to year ended December 31, 2005 (fiscal
2005)
REVENUES
Operating revenues for fiscal 2006
were $26,347,000, a decrease of $809,000, or 2.97%, over fiscal
2005. Revenues decreased primarily as a result of decreased
charter rates and TCE, which decrease was partially offset by
the increased number of operating days in fiscal 2006. The
sellers acquired four vessels in fiscal 2005, and thus the
vessels were not operated by the sellers for the full fiscal
year. Revenue from Swiss Marine Services S.A., an affiliate of
the sellers, amounted to $10,740,000 in fiscal 2006 and
$10,140,000 in fiscal 2005, which represents an increase of
5.9%. Related party revenue increased as a result of increased
operating days under the related party charters in fiscal 2006.
DIRECT VOYAGE EXPENSES
Direct voyage expenses
totaled $64,000 for fiscal 2006, as compared to $139,000 for
fiscal 2005, which represents a decrease of 53.95%. This
decrease of $75,000 is due to the favorable (compared to market)
fixed values at which the sellers repurchased fuel remaining on
board the vessels at the time of their redeliveries to the
sellers from time charterers.
CREW COSTS
Crew costs for fiscal 2006 were
$2,777,000, an increase of $801,000, of 40.53%, compared to
fiscal 2005. This increase is primarily due to the increase in
the number of ownership days from 1,250 in 2005 to 1,460 in 2006
and thus the number of days the sellers paid crew wages.
MANAGEMENT FEES RELATED PARTY
Management fees related party represent a fixed fee
per day for each vessel in operation paid to EST for technical
management services. The fee per day amounted to $515 in 2006
and 2005. Total Management fees related party for
fiscal 2006 were $752,000, as compared to $644,000 for fiscal
2005. This increase of 16.77% resulted primarily from the
increase in the number of ownership days from 1,250 in 2005 to
1,460 in 2006.
OTHER OPERATING EXPENSES
Other operating
expenses were $2,842,000 for fiscal 2006, a decrease of
$243,000, or 7.87%, over $3,085,000 for fiscal 2005. Other
operating expenses decreased in fiscal 2006 primarily due to a
charge of $716,000 in fiscal 2005 representing reimbursements to
time charterers.
DEPRECIATION
For fiscal 2006, depreciation
expense totaled $6,567,000, as compared to $6,970,000 for fiscal
2005, which represented a decrease of $403,000, or 5.78%. This
decrease resulted from the lower carrying amount of the vessels
during 2006 because the fair value of the vessels had declined,
and thus they were impaired as of December 31, 2005.
IMPAIRMENT REVERSAL (LOSS)
At
December 31, 2006 due to changing market conditions, the
fair value of vessels exceeded the carrying value by
$44,430,000, and accordingly, an amount of $19,311,000 was
recorded as an impairment reversal. The impairment loss of
$19,311,000 was originally recorded as of December 31,
2005. The primary reason for the recording of the impairment
loss was a decrease in the fair value of vessels in the dry bulk
market generally, which caused a decrease in the fair value of
sellers vessels. The sellers determined that the
impairment loss should be reversed in fiscal 2006 when the
market for dry bulk vessels rebounded. The remaining surplus of
$25,119,000 is recorded as recognized income and expense under
the caption revaluation reserve in the combined
statement of changes in equity.
62
RESULTS FROM OPERATING ACTIVITIES
For fiscal
2006, results from operating activities were $32,656,000, which
represents an increase of $37,625,000, compared to an operating
loss of $4,969,000 for fiscal 2005. The primary reasons for the
improvement in the results from operating activities in fiscal
2006 were the reversal of the impairment loss originally
recorded in fiscal 2005, which increased operating income by
$19,311,000 in fiscal 2006 as well as decreasing operating
income by this same amount during fiscal 2005, and the absence
of any other impairment losses during fiscal 2006.
NET FINANCE COST
Net finance cost for fiscal
2006 was $3,179,000, which represents an increase of $811,000,
or 34.2%, compared to $2,368,000 in fiscal 2005. The increase
was primarily due to an increase in the LIBOR rate associated
with the sellers long-term debt during fiscal 2006 and the
higher principal balance of sellers long-term debt during
all of fiscal 2006, which reflects the greater number of
ownership days in fiscal 2006 compared to fiscal 2005.
NET PROFIT (LOSS)
The net profit for fiscal
2006 was $29,477,000, as compared to a net loss of $7,337,000
for fiscal 2005. This improvement of $36,814,000, is primarily
due to the reversal of the impairment loss in fiscal 2006, which
loss was originally recorded in fiscal 2005, which reversal
improved net income by $19,311,000, and the absence of any other
impairment losses during fiscal 2006.
Liquidity
and Capital Resources
The sellers principal sources of funds have been equity
provided by their shareholders, operating cash flows and
long-term borrowings. Their principal uses of funds have been
capital expenditures to acquire and maintain their fleet,
payments of dividends, working capital requirements and
principal repayments on outstanding loan facilities. Based on
current market conditions, the sellers expect to rely upon
operating cash flows to fund their working capital needs in the
near future. On May 20, 2008 and August 22, 2008, Hull
KA 215 (Davakis G.) and Hull KA 216 (Delos Ranger), respectively
were delivered to the sellers. Sellers do not anticipate any
other capital expenditures in the foreseeable future due to the
sale of these vessels to Seanergy on August 28, 2008.
Because the sellers are part of a larger group of companies in
the shipping business associated with members of the Restis
family, the sellers (other than the owners of the two newly
built vessels) obtained, together with other affiliated
companies as co-borrowers, a syndicated loan in the amount of
$500,000,000 on December 24, 2004. The loan is allocated to
each of the sellers (other than the owners of the two newly
built vessels), among other affiliates of Lincoln Finance Corp.,
an affiliate of the sellers, based upon the acquisition cost of
each vessel at the date of acquisition. The syndicated loan is
payable in variable principal installments plus interest at
variable rates (LIBOR plus a spread of 0.875%) with an original
balloon installment due in March 2015 of $45,500,000 (which as
of June 30, 2008 was $23,702,000). This debt was secured by
a mortgage on each of the vessels, assignments of earnings,
insurance and requisition compensation of the mortgaged vessel
and is guaranteed by Lincoln Finance Corp. and Nouvelle
Enterprises S.A., which is the sole shareholder of Lincoln. The
sellers that own the second hand vessels used the syndicated
loan to finance some or all of the acquisition costs of their
respective vessels. As of June 30, 2008, December 31,
2007 and 2006, the long-term debt of the sellers represented the
allocated amount of the remaining balance of the syndicated loan
after taking into account vessel sales. The long-term debt
applicable to the sellers as of June 30, 2008,
December 31, 2007 and 2006 was $60,884,000, $48,330,000 and
$49,774,000, respectively. We have not assumed any portion of
this loan, and the sellers delivered the four vessels to us free
and clear of all liens and encumbrances.
On December 24, 2004, certain of the sellers entered into
memoranda of agreement with third parties pursuant to which they
agreed to purchase the African Oryx f/k/a the M.V. Gangga
Nagara, the African Zebra f/k/a the M.V. Handy Tiger, the Bremen
Max f/k/a the M.V. Bunga Saga Satu and the Hamburg Max f/k/a the
Bunga Saga Empat for a purchase price of $20.5 million,
$14.0 million, $29.0 million and $32.0 million,
respectively. The African Oryx, the African Zebra, the Bremen
Max and the Hamburg Max were delivered to the respective sellers
on April 4, 2005, January 3, 2005, January 26,
2005 and April 1, 2005, respectively.
On June 23, 2006, the sellers that own the two newly built
vessels and a third vessel-owning company that is not one of the
sellers, entered into a loan facility of up to $20,160,000 and a
guarantee of up to
63
$28,800,000 each to be used to partly finance and guarantee
payment to the shipyard for the newly constructed vessels. The
loan bears interest at variable rates (LIBOR plus a spread of
0.65%) and was repayable in full at the earlier of May 18,
2009 or the date the newly constructed vessels are delivered by
the shipyard. This loan has been paid in full. We have not
assumed any portion of this loan and the sellers delivered the
two newly constructed vessels to us free and clear of all liens
and encumbrances.
The sellers financed the purchase price of the vessels as
follows:
|
|
|
|
|
|
|
|
|
Vessel
|
|
Financed(1)
|
|
|
Cash(2)
|
|
|
Africa Oryx
|
|
$
|
13,851,850
|
|
|
$
|
6,648,150
|
|
Africa Zebra
|
|
$
|
9,459,800
|
|
|
$
|
4,540,200
|
|
Bremen Max
|
|
$
|
19,595,300
|
|
|
$
|
9,404,700
|
|
Hamburg Max
|
|
$
|
21,622,400
|
|
|
$
|
10,377,600
|
|
Davakis G (ex. Hull No. KA 215)
|
|
$
|
16,674,000
|
|
|
$
|
7,146,000
|
|
Delos Ranger (ex. Hull No. KA 216)
|
|
$
|
16,674,000
|
|
|
$
|
7,146,000
|
|
|
|
|
(1)
|
|
Financed with the credit facilities described above.
|
|
(2)
|
|
Cash provided to the sellers by their shareholders.
|
The dry bulk carriers the sellers owned had an average age of
10.5 years as of June 30, 2008. For financial
statement purposes, the sellers used an estimated remaining
useful life as June 30, 2008 of between 3 and 16 years
for its vessels other than the newly constructed vessels, which
vessels life it estimated as 25 years. However, economics,
rather than a set number of years, determines the actual useful
life of a vessel. As a vessel ages, the maintenance costs rise
particularly with respect to the cost of surveys. So long as the
revenue generated by the vessel sufficiently exceeds its
maintenance costs, the vessel will remain in use, which time
period could well exceed the useful life estimate described
above. If the revenue generated or expected future revenue does
not sufficiently exceed the maintenance costs, or if the
maintenance costs exceed the revenue generated or expected
future revenue, then the vessel owner usually sells the vessel
for scrap.
Cash
Flows
OPERATING ACTIVITIES
Net cash from operating
activities totaled $17,993,000 during the six months ended
June 30, 2008, as compared to $4,094,000 during the
comparable period in 2007. This increase reflected is primarily
due to increased revenue as a result of improved time charter
rates and higher operating days. Net cash from operating
activities totaled $25,577,000 during fiscal 2007, as compared
to $19,161,000 during fiscal 2006. This increase reflected
primarily the increase in vessel revenues received in 2007. The
decrease in net cash from operating activities from fiscal 2006
as compared to fiscal 2005, during which net cash from operating
activities totaled $26,169,000, resulted primarily from a slight
decrease in charter revenue during 2006 and the repayment of
amounts due to related parties in 2006.
INVESTING ACTIVITIES
The sellers used
$21,499,000 of cash in investing activities during the six month
period ended June 30, 2008 as compared to $5,534,000 used
in investing activities during the comparable period in 2007.
The increase was primarily a result of amounts paid under the
vessel construction contracts for the two newly constructed
vessels during the first six months of 2008, one of which was
delivered and put into operation in May 2008. The sellers used
$13,531,000 of cash in investing activities during fiscal 2007
as compared to $6,474,000 used in investing activities during
fiscal 2006. The increase was primarily a result of amounts paid
under the vessel construction contracts for the newly
constructed vessels in fiscal 2007. The sellers used $86,711,000
of cash in investing activities during fiscal 2005, which
related primarily to the purchase of four vessels.
FINANCING ACTIVITIES
Net cash provided by
financing activities during the six months ended June 30,
2008 was $7,646,000, which includes $12,812,000 of dividend
payments to the shareholders of sellers and $9,081,000 of
repayments of long term debt, offset by $7,904,000 of capital
contributions and $21,635,000 of proceeds from long term debt
used to finance vessel acquisitions. Net cash used in financing
activities during fiscal 2007 was $13,471,000, which includes
$15,932,000 of dividend payments to the
64
shareholders of the sellers and $9,844,000 of repayments of long
term debt, partially offset by capital contributions from the
sellers shareholders of $3,905,000 and proceeds from
long-term debt of $8,400,000. Net cash used in financing
activities in fiscal 2006 was $11,248,000, which primarily
reflects $11,838,000 of dividend payments to the shareholders of
the sellers and $7,573,000 of repayments of long term debt,
partially offset by capital contributions from the sellers
shareholders of $8,163,000. Net cash provided by financing
activities in fiscal 2005 was $60,549,000, which primarily
reflects proceeds of borrowings of $55,070,000 used by the
sellers to acquire four vessels and capital contributions from
the sellers shareholders of $15,980,000, which was
partially offset by $3,319,000 of dividend payments to the
shareholders of the sellers and repayment of long-term debt of
$7,182,000.
Quantitative
and Qualitative Disclosures of Market Risk
Interest
rate risk
The sellers long-term debt in relation to the four vessels
and the new buildings bears an interest rate of LIBOR plus a
spread of 0.875% and 0.65%, respectively. A 100 basis-point
increase in LIBOR would result in an increase to the finance
cost of $568,000 in the next year. The sellers have no further
obligation, with respect to their long-term debt, in relation to
the six vessels it sold to Seanergy in August and September 2008.
Foreign
exchange risk
The sellers generated revenue in U.S. dollars and incurred
minimal expenditures relating to consumables in foreign
currencies. The foreign currency risk was minimal.
Inflation
The sellers did not consider inflation to be a significant risk
to direct expenses in the current and foreseeable future.
Capital
Requirements
On May 20, 2008 and August 22, 2008, the Davakis G
(Hull No. KA 215) and the Delos Ranger (ex. Hull
No. KA 216), respectively, were delivered to the sellers.
As of June 30, 2008, the capital commitment was
approximately $11.8 million. The sellers do not anticipate
any other capital expenditures during the year ending
December 31, 2008 as these vessels have been sold to
Seanergy on August 28, 2008.
Off-Balance
Sheet Arrangements
As of December 31, 2007 and June 30, 2008, the sellers
did not have off-balance sheet arrangements.
Contractual
Obligations and Commercial Commitments
The following tables summarize the sellers contractual
obligations as of December 31, 2007 and June 30, 2008.
The sellers neither have capital leases nor operating leases.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments due by period
|
|
|
|
|
|
|
Less than
|
|
|
|
|
|
|
|
|
More than
|
|
December 31, 2007
|
|
Total
|
|
|
1 year
|
|
|
1-2 years
|
|
|
2-5 years
|
|
|
5 years
|
|
|
|
(Dollars in thousands)
|
|
|
Long-term debt(1)
|
|
$
|
48,330
|
|
|
$
|
9,750
|
|
|
$
|
4,724
|
|
|
$
|
14,171
|
|
|
$
|
19,685
|
|
Management fees(2)
|
|
$
|
3,317
|
|
|
$
|
973
|
|
|
$
|
1,172
|
|
|
$
|
1,172
|
|
|
|
|
|
Capital commitments for vessel construction
|
|
$
|
30,840
|
|
|
$
|
30,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total obligations
|
|
$
|
82,487
|
|
|
$
|
41,563
|
|
|
$
|
5,896
|
|
|
$
|
15,343
|
|
|
$
|
19,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments due by period
|
|
|
|
|
|
|
Less than
|
|
|
|
|
|
|
|
|
More than
|
|
June 30, 2008
|
|
Total
|
|
|
1 year
|
|
|
1-2 years
|
|
|
2-5 years
|
|
|
5 years
|
|
|
|
(Dollars in thousands)
|
|
|
Long-term debt
|
|
$
|
60,884
|
|
|
$
|
12,364
|
|
|
$
|
5,643
|
|
|
$
|
16,931
|
|
|
$
|
25,946
|
|
Management fees
|
|
$
|
2,901
|
|
|
$
|
1,143
|
|
|
$
|
1,172
|
|
|
$
|
586
|
|
|
|
|
|
Capital commitments for vessel construction
|
|
$
|
11,820
|
|
|
$
|
11,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total obligations
|
|
$
|
75,605
|
|
|
$
|
25,327
|
|
|
$
|
6,815
|
|
|
$
|
17,517
|
|
|
$
|
25,946
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The long-term debt has been repaid or reallocated as of the
dates the vessels were delivered to Seanergy in August and
September 2008.
|
|
(2)
|
|
EST provides management services in exchange for a fixed fee per
day for each vessel in operation. These agreements are entered
into with an initial three-year term until terminated by the
other party. The amounts indicated above are based on a
management fee of $535 dollars per day per vessel. This
management fee agreement has been terminated as of the dates the
vessels were delivered to Seanergy in August and September 2008.
|
Recent
Accounting Pronouncements
A number of new standards, amendments to standards and
interpretations are not yet effective for the year ended
December 31, 2007 or the six months ended June 30,
2008, and have not been applied in preparing the sellers
combined financial statements:
(i) IFRS 8 Operating Segments introduces the
management approach to segment reporting.
IFRS 8, which becomes mandatory for the financial
statements of 2009, will require the disclosure of segment
information based on the internal reports regularly reviewed by
the sellers Chief Operating Decision Maker in order to
assess each segments performance and to allocate resources
to them. The sellers are evaluating the impact of this standard
on the combined financial statements.
(ii) Revised IAS 23 Borrowing Costs removes the option to
expense borrowing costs and requires that an entity capitalize
borrowing costs directly attributable to the acquisition,
construction or production of a qualifying asset as part of the
cost of that asset. Currently, the sellers capitalize borrowing
costs directly attributable to the construction of the vessels
and therefore the revised IAS 23 which will become mandatory for
the sellers 2009 financial statements is not expected to
have a significant effect.
(iii) IFRIC 11 IFRS 2 Group and Treasury Share Transactions
requires a share-based payment arrangement in which an entity
receives goods or services as consideration for its own equity
instruments to be accounted for as an equity-settled share-based
payment transaction, regardless of how the equity instruments
are obtained. IFRIC 11 will become mandatory for the
sellers 2008 financial statements, with retrospective
application required. This standard does not have an effect on
the combined financial statements as it is not relevant to the
sellers operations.
(iv) IFRIC 12 Service Concession Arrangements provides
guidance on certain recognition and measurement issues that
arise in accounting for
public-to-private
service concession arrangements. IFRIC 12, which becomes
mandatory for the sellers 2008 financial statements.
IFRIC 12 does not have an effect on the combined financial
statements as it is not relevant to the sellers operations.
(v) IFRIC 13 Customer Loyalty Programs addresses the
accounting by entities that operate, or otherwise participate
in, customer loyalty programs for their customers. It relates to
customer loyalty programs under which the customer can redeem
credits for awards such as free or discounted goods or services.
IFRIC 13, which becomes mandatory for the sellers
2009 financial statements, is not expected to have any impact on
the combined financial statements.
(vi) IFRIC 14 IAS 19 The Limit on a Defined Benefit Asset,
Minimum Funding Requirements and their Interaction clarifies
when refunds or reductions in future contributions in relation
to defined benefit
66
assets should be regarded as available and provides guidance on
the impact of minimum funding requirements (MFR) on such assets.
It also addresses when a MFR might give rise to a liability.
IFRIC 14 will become mandatory for the sellers 2008
financial statements, with retrospective application required.
IFRIC 14 does not have an effect on the combined financial
statements as it is not relevant to the sellers operations.
(vii) Revision to IAS 1, Presentation of Financial
Statements: The revised standard is effective for annual periods
beginning on or after January 1, 2009. The revision to IAS
1 is aimed at improving users ability to analyze and
compare the information given in financial statements. The
changes made are to require information in financial statements
to be aggregated on the basis of shared characteristics and to
introduce a statement of comprehensive income. This will enable
readers to analyze changes in equity resulting from transactions
with owners in their capacity as owners (such as dividends and
share repurchases) separately from non-owner changes
(such as transactions with third parties). In response to
comments received through the consultation process, the revised
standard gives preparers of financial statements the option of
presenting items of income and expense and components of other
comprehensive income either in a single statement of
comprehensive income with sub-totals, or in two separate
statements (a separate income statement followed by a statement
of comprehensive income). Management is currently assessing the
impact of this revision on the sellers financial
statements.
(viii) Revision to IFRS 3 Business Combinations and an
amended version of IAS 27 Consolidated and Separate Financial
Statements: These versions were issued by IASB on
January 10, 2008, which take effect on July 1, 2009.
The main changes to the existing standards include:
(i) minority interests (now called non-controlling
interests) are measured either as their proportionate interest
in the net identifiable assets (the existing IFRS 3 requirement)
or at fair value; (ii) for step acquisitions, goodwill is
measured as the difference at acquisition date between the fair
value of any investment in the business held before the
acquisition, the consideration transferred and the net assets
acquired (therefore there is no longer the requirement to
measure assets and liabilities at fair value at each step to
calculate a portion of goodwill); (iii) acquisition-related
costs are generally recognized as expenses (rather than included
in goodwill); (iv) contingent consideration must be
recognized and measured at fair value at acquisition date with
any subsequent changes in fair value recognized usually in the
profit or loss (rather than by adjusting goodwill) and
(v) transactions with non-controlling interests which do
not result in loss of control are accounted for as equity
transactions. Management is currently assessing the impact that
these revisions will have on the sellers.
(ix) Revision to IFRS 2 Share-based Payment: The
revision is effective for annual periods on or after
January 1, 2009 and provides clarification for the
definition of vesting conditions and the accounting treatment of
cancellations. It clarifies that vesting conditions are service
conditions and performance conditions only. Other features of a
share-based payment are not vesting conditions. It also
specifies that all cancellations, whether by the entity or other
parties, should receive the same accounting treatment. The
sellers do not expect this standard to affect its combined
financial statements as currently there are no share-based
payment plans.
67
SEANERGY
MARITIME CORP. AND SUBSIDIARY AND RESTIS FAMILY
AFFILIATED VESSELS ACQUIRED
UNAUDITED PRO FORMA SUMMARY FINANCIAL DATA
Anticipated
Accounting Treatment
Vessel Acquisition and Other Intangible
Assets
The acquisition of the vessels and other
intangible assets by Seanergy will be accounted for by the
purchase method and accordingly, the total acquisition cost will
be allocated to the acquired vessels and other intangible assets
by separately measuring the fair values of such assets acquired,
based on preliminary estimates of the respective fair values,
which are subject to change. No other tangible assets were
acquired and no liabilities were assumed.
Dissolution and Liquidation
Upon the
dissolution and liquidation of Seanergy Maritime, Seanergy
Maritime will distribute to each holder of shares of common
stock of Seanergy Maritime one share of Seanergy common stock
for each share of common stock of Seanergy Maritime, at such
time as a registration statement filed with the SEC under the
Securities Act or an Information Statement under
Section 14(a) of the Exchange Act, by Seanergy relating to
the dissolution and liquidation, is declared effective.
Basis of Accounting
Future financial
statements will be prepared in accordance with accounting
principles generally accepted in the United States of America
(U.S. GAAP). The consolidated statements of Seanergy
Maritime as of December 31, 2008 will include the financial
position of Seanergy and its acquired wholly owned subsidiaries
and the results of operations and cash flows from the period
August 28, 2008 (the date of the completion of the business
combination), to December 31, 2008. The consolidated
financial statements as of December 31, 2007 and for the
period from August 15, 2006 (date of inception) through
December 31, 2006 will include only Seanergy Maritime. In
addition, upon the dissolution of Seanergy Maritime the assets
and liabilities of Seanergy Maritime will be assumed by and
combined with the assets and liabilities of Seanergy at their
respective historical values, which include the impact of fair
value purchase price allocations from August 28, 2008.
The following unaudited pro forma summary financial information
has been prepared assuming that the vessel acquisition have
occurred at the beginning of the applicable period for pro forma
statements of operations data and at the respective date for pro
forma balance sheet data.
The presentation has taken into consideration the actual shares
redeemed of 6,370,773, as further explained in the Unaudited Pro
Forma Condensed Balance Sheet as of June 30, 2008
Note I.
The unaudited pro forma summary information is for illustrative
purposes only. You should not rely on the unaudited pro forma
summary balance sheet and statement of operations as being
indicative of the historical financial position and results of
operations that would have been achieved had the vessel
acquisition been consummated as of the balance sheet date or at
the beginning of the applicable period of the statements of
operations. See Risk Factors Our management
made certain assumptions about our future operating results that
may differ significantly from our actual results, which may
result in claims against us or our directors.
The unaudited pro forma balance sheet data reflects the
acquisition of the vessels and the drawdown of the loan to
partially finance that transaction as further discussed herein.
The historical balance sheet of Seanergy at June 30, 2008
used in the preparation of the unaudited pro forma financial
information has been derived from the unaudited balance sheet of
Seanergy at June 30, 2008. The unaudited pro forma
financial information of the vessels for the year ended
December 31, 2007 and six months ended June 30, 2008
have been derived from the unaudited combined statement of
operations of Restis family affiliated vessels acquired.
68
Seanergy
Maritime Corp. and Subsidiary and Restis Family Affiliated
Vessels Acquired
(In
thousands of U.S. Dollars, except per share amounts, and US
GAAP)
Restis
Family Affiliated Vessels Acquired
Unaudited Condensed Combined Statement of Operations
Conversion From IFRS to U.S. GAAP
Year Ended December 31, 2007
(In thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
|
|
|
IFRS to U.S. GAAP
|
|
|
As
|
|
|
|
Reported In
|
|
|
Adjustments to Convert
|
|
|
Reported In
|
|
|
|
IFRS
|
|
|
Debit
|
|
|
Credit
|
|
|
U.S. GAAP
|
|
|
Revenue from vessels
|
|
$
|
35,717
|
|
|
|
|
|
|
|
|
|
|
$
|
35,717
|
|
Direct voyage expenses
|
|
|
82
|
|
|
|
|
|
|
|
|
|
|
|
82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,635
|
|
|
|
|
|
|
|
|
|
|
|
35,635
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crew costs
|
|
|
2,803
|
|
|
|
|
|
|
|
|
|
|
|
2,803
|
|
Management fees related party
|
|
|
782
|
|
|
|
|
|
|
|
|
|
|
|
782
|
|
Other operating expenses
|
|
|
3,228
|
|
|
|
|
|
|
|
|
|
|
|
3,228
|
|
Depreciation expense
|
|
|
12,625
|
|
|
|
|
|
|
|
830
|
(1)
|
|
|
6,311
|
|
|
|
|
|
|
|
|
|
|
|
|
5,484
|
(2)
|
|
|
|
|
Amortization of dry docking
|
|
|
|
|
|
|
830
|
(1)
|
|
|
|
|
|
|
830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
19,438
|
|
|
|
|
|
|
|
|
|
|
|
13,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
16,197
|
|
|
|
|
|
|
|
|
|
|
|
21,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
143
|
|
|
|
|
|
|
|
|
|
|
|
143
|
|
Interest expense
|
|
|
(2,980
|
)
|
|
|
|
|
|
|
|
|
|
|
(2,980
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense)
|
|
|
(2,837
|
)
|
|
|
|
|
|
|
|
|
|
|
(2,837
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
13,360
|
|
|
|
|
|
|
|
|
|
|
$
|
18,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
to Convert From IFRS to U.S. GAAP (in thousands of U.S. Dollars,
unless otherwise noted):
|
|
|
(1)
|
|
To reclassify the amortization of dry docking expenses that are
considered a component of depreciation under IFRS.
|
|
(2)
|
|
To eliminate depreciation expense relating to the revaluation of
the vessels to their fair value under IFRS.
|
Note:
These adjustments represent only certain significant adjustments
from IFRS to U.S. GAAP and may not capture full conversion to
U.S. GAAP.
69
Seanergy
Maritime Corp. and Subsidiary and Restis Family Affiliated
Vessels Acquired
Unaudited Pro Forma Condensed Combined Statement of
Operations
Year Ended December 31, 2007
(In thousands of U.S. Dollars, except share and per share
amounts, and US GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
|
|
|
|
Restis
|
|
|
|
|
|
|
|
|
|
|
|
Combined
|
|
|
|
Family
|
|
|
Seanergy
|
|
|
|
|
|
|
|
|
Companies
|
|
|
|
Affiliated
|
|
|
Maritime
|
|
|
|
|
|
|
|
|
(with Actual
|
|
|
|
Vessels
|
|
|
Corp.
|
|
|
Pro Forma
|
|
|
Stock
|
|
|
|
Acquired
|
|
|
and
|
|
|
Adjustments and Eliminations
|
|
|
Redemption -
|
|
|
|
(Note A)
|
|
|
Subsidiary
|
|
|
Debit
|
|
|
Credit
|
|
|
See Note F
|
|
|
Revenue from vessels
|
|
$
|
35,717
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
35,717
|
|
Direct voyage expenses
|
|
|
82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,635
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,635
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
Crew costs
|
|
|
2,803
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,803
|
|
Management fees related party
|
|
|
782
|
|
|
|
|
|
|
|
7
|
(10)
|
|
|
|
|
|
|
789
|
|
Other operating expenses
|
|
|
3,228
|
|
|
|
445
|
|
|
|
|
|
|
|
|
|
|
|
3,673
|
|
Depreciation expense (Note D)
|
|
|
6,311
|
|
|
|
|
|
|
|
20,001
|
(9)
|
|
|
|
|
|
|
26,312
|
|
Amortization of dry docking
|
|
|
830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
13,954
|
|
|
|
445
|
|
|
|
|
|
|
|
|
|
|
|
34,407
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
21,681
|
|
|
|
(445
|
)
|
|
|
|
|
|
|
|
|
|
|
1,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense) Interest income
|
|
|
143
|
|
|
|
1,948
|
|
|
|
1,948
|
(5)
|
|
|
|
|
|
|
143
|
|
Interest expense
|
|
|
(2,980
|
)
|
|
|
(58
|
)
|
|
|
236
|
(1)
|
|
|
2,980
|
(6)
|
|
|
(7,887
|
)
|
|
|
|
|
|
|
|
|
|
|
|
4,520
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
963
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,022
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense)
|
|
|
(2,837
|
)
|
|
|
1,890
|
|
|
|
|
|
|
|
|
|
|
|
(7,744
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
18,844
|
|
|
$
|
1,445
|
|
|
|
|
|
|
|
|
|
|
$
|
(6,516
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share basic and diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.29
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares
outstanding basic and diluted (Note E)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,229,227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends paid per common share (Note B)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
Adjustments (in thousands of U.S. Dollars, except for share
and per share data, unless otherwise noted):
|
|
|
(1)
|
|
To record amortization of deferred loan facility arrangement and
underwriting fees based on provisions of the facility agreements
($1,650 / 84 mo × 12 mo).
|
|
|
|
(2)
|
|
To record interest expense on the 7 year Marfin Egnatia
S.A. term loan facility as if it had been in place from the
beginning of the period presented. Pursuant to the term loan
facility, interest is calculated based upon the 3 month
LIBOR rate, plus an applicable margin, as defined in the
agreement. For calculation purposes, the LIBOR rate at
December 31, 2008 of 1.44% per annum, plus a margin of
1.50% was utilized. See Note G below. For each
1
/
8
percentage
point change in the annual interest rate charged, the resulting
interest expense would change by $192 per year.
|
70
|
|
|
(3)
|
|
To record interest expense on the 7 year Marfin Egnatia
S.A. revolving facility as if it had been in place from the
beginning of the period presented. Pursuant to the revolving
facility, interest is calculated based upon the 3 month
LIBOR rate, plus an applicable margin of 2.25%, as defined in
the agreement. For calculation purposes, the LIBOR rate at
December 31, 2008 of 1.44% per annum was utilized. For each
1
/
8
percentage
point change in the annual interest rate charged, the resulting
interest expense would change by $69 per year.
|
|
|
|
(4)
|
|
To record interest expense on the unsecured convertible note
payable to Restis family as if it had been in place from the
beginning of the period presented. Interest at 2.9% per annum is
due at maturity, in two years. Additionally, an arrangement fee
of $288 is due at maturity and note prepayment is not permitted.
($28,250 × 2.9% + $288 / 2 years = $963)
|
|
(5)
|
|
To eliminate interest income earned on funds held in trust.
|
|
(6)
|
|
To eliminate, effective January 1, 2007, interest expense
on indebtedness of the Restis family affiliates to be acquired
that is to be repaid pursuant to the agreements.
|
|
(7)
|
|
To record commitment fee on 7 year revolving facility at
0.25% per annum, payable quarterly in arrears, on the un-drawn
revolving facility amount. These pro formas are based upon the
assumption that operations are sufficient to fund working
capital and dividend payment needs and any drawdown on the
revolving facility will be for the purpose of funding the
redemption of common stock.
[($90,000 − $54,800) × 0.25% =$88]
|
|
(8)
|
|
Not used.
|
|
(9)
|
|
To record additional depreciation expense with respect to the
four operating vessels, as a result of the
step-up
in
basis related to the purchase of the vessels. This adjustment
does not include any depreciation on newly-built vessels,
delivered and put into service in May and August 2008,
respectively.
|
|
(10)
|
|
To record increment in management fees per the management
agreement dated May 20, 2008 of Euro 416 (US$540 at
October 23, 2008) per day for the first year of the
agreement. (New daily fee of $540, less former daily fee of
$535, times 365 days, times 4 vessels)
|
Pro Forma
Notes (in thousands of U.S. Dollars, except for share and
per share data, unless otherwise noted):
|
|
|
(A)
|
|
Six vessels owned by the following Restis Family Affiliates were
acquired by Seanergy: Goldie Navigation Ltd., Pavey Services
Ltd., Shoreline Universal Ltd., Valdis Marine Corp., Kalistos
Maritime S.A. and Kalithea Maritime S.A. Two of the six vessels
are newly-built, delivered and put into service in 2008.
|
|
(B)
|
|
The cash dividends paid per common share is the amount as
contemplated in the Master Agreement, however, such dividend may
not be able to be paid if sufficient cash from operations is not
available or if the lenders under the credit facility place
restrictions on the payment of dividends. Seanergy
Maritimes founding shareholders and the Restis affiliate
shareholders have agreed with Seanergy for a one-year period to
subordinate their rights to receive dividends with respect to
the 5,500,000 original shares owned by them to the rights of
Seanergys public shareholders, but only to the extent that
Seanergy has insufficient funds to pay dividends in the
aggregate amount of $1.20 per share.
|
|
(C)
|
|
Pro forma entries are recorded to the extent they are a direct
result of the vessel acquisition and are expected to have
continuing future impact.
|
|
(D)
|
|
No consideration has been given to up to 4,308,075 shares
of Seanergy Maritime common stock potentially issuable to the
Restis family as additional investment shares based upon
attaining certain earnings thresholds. Management currently
believes the earnings based thresholds can be achieved with the
charters executed on the acquisition date, subject to achieving
expected utilization and budgeted operating expense levels. Any
shares issued upon attainment of these earnings thresholds will
be treated as additional purchase consideration. See also
Note E.
|
71
|
|
|
(E)
|
|
Basic common shares outstanding reflect the issuance of
5,500,000 net shares to Seanergy Maritimes founding
shareholders and 23,100,000 common shares issued in
Seanergy Maritimes September 2007 initial public offering
as if these shares had been outstanding from January 1,
2007. In addition, basic common shares outstanding assume the
redemption of 6,370,773 common shares as of January 1,
2007 as described in Note F. Basic and diluted earnings per
share are the same as all common stock equivalents, convertible
securities and contingently issuable shares are antidilutive.
Basic and diluted pro forma weighted average number of common
shares outstanding is calculated as follows:
|
|
|
|
|
|
|
|
Number of
|
|
|
|
Shares
|
|
|
Seanergy Maritimes founding shareholders shares
|
|
|
5,500,000
|
|
Number of shares issued in connection with Seanergy
Maritimes initial public offering
|
|
|
23,100,000
|
|
Pro forma shares:
|
|
|
|
|
Shares redeemed by public shareholders (Note F)
|
|
|
(6,370,773
|
)
|
|
|
|
|
|
Pro forma weighted average number of common shares
outstanding basic and diluted
|
|
|
22,229,227
|
|
|
|
|
|
|
|
|
|
|
|
Dilutive common shares outstanding exclude as antidilutive
23,100,000 common stock units, 16,016,667 Founders
warrants, 2,000,000 underwriters purchase options,
2,260,000 shares issuable upon conversion of notes to the
sellers and 4,308,075 common shares issuable to Restis upon
the attainment of certain earnings thresholds.
|
|
(F)
|
|
On August 26, 2008, shareholders of Seanergy Maritime
approved the vessel acquisition, with holders of
6,514,175 shares voting against the vessel acquisition. Of
the shareholders voting against the vessel acquisition, holders
of 6,370,773 shares properly demanded redemption of their
shares and were paid $63,707,730, or $10.00 per share, which
included a forfeited portion of the deferred underwriters
contingent fee.
|
|
|
|
(G)
|
|
The margin on the Marfin term facility is 1.5% per annum, if the
Total Assets to Total Liabilities ratio is greater than 165% and
1.75% if the ratio is less than 165%, to be tested quarterly.
Based upon a calculation of the December 31, 2007 pro forma
balance sheet, the ratio of Total Assets to Total Liabilities is
167%, accordingly, a margin of 1.5% has been utilized in these
pro formas.
|
72
Seanergy
Maritime Corp. and Subsidiary and Restis Family Affiliated
Vessels Acquired
Unaudited Pro Forma Condensed Combined Balance Sheet
June 30, 2008
(In thousands of U.S. Dollars, except share and per share
amounts, and US GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined
|
|
|
|
Seanergy
|
|
|
|
|
|
|
|
|
Companies
|
|
|
|
Maritime
|
|
|
|
|
|
|
|
|
(with Actual
|
|
|
|
Corp.
|
|
|
Pro Forma
|
|
|
Stock
|
|
|
|
and
|
|
|
Adjustments and Eliminations
|
|
|
Redemption -
|
|
|
|
Subsidiary
|
|
|
Debit
|
|
|
Credit
|
|
|
See Note I)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,403
|
|
|
|
232,153
|
(1)
|
|
|
4,036
|
(2)
|
|
$
|
9,317
|
|
|
|
|
|
|
|
|
163,350
|
(5)
|
|
|
7,414
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
54,800
|
(10)
|
|
|
367,031
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,708
|
(8)
|
|
|
|
|
Money market funds held in trust
|
|
|
232,153
|
|
|
|
|
|
|
|
232,153
|
(1)
|
|
|
|
|
Trade accounts and other assets
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
233,584
|
|
|
|
|
|
|
|
|
|
|
|
9,345
|
|
Deferred acquisition costs
|
|
|
1,501
|
|
|
|
|
|
|
|
1,501
|
(4)
|
|
|
|
|
Deferred loan costs
|
|
|
|
|
|
|
1,650
|
(5)
|
|
|
|
|
|
|
1,650
|
|
Vessels, net
|
|
|
|
|
|
|
395,281
|
(3)
|
|
|
|
|
|
|
403,016
|
|
|
|
|
|
|
|
|
7,735
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
235,085
|
|
|
|
|
|
|
|
|
|
|
$
|
414,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of Marfin Egnatia S.A. term facility
|
|
$
|
|
|
|
|
|
|
|
|
30,000
|
(5)
|
|
$
|
30,000
|
|
Current portion of Marfin Egnatia S.A. revolving facility
|
|
|
|
|
|
|
|
|
|
|
18,000
|
(10)
|
|
|
18,000
|
|
Trade accounts payable and accrued expenses
|
|
|
1,554
|
|
|
|
200
|
(7)
|
|
|
|
|
|
|
174
|
|
|
|
|
|
|
|
|
1,180
|
(4)
|
|
|
|
|
|
|
|
|
Amounts due to underwriter
|
|
|
5,469
|
|
|
|
1,433
|
(9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,036
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
7,023
|
|
|
|
|
|
|
|
|
|
|
|
48,174
|
|
Marfin Egnatia S.A. term facility, excluding current portion
|
|
|
|
|
|
|
|
|
|
|
135,000
|
(5)
|
|
|
135,000
|
|
Marfin Egnatia S.A. revolving facility, excluding current portion
|
|
|
|
|
|
|
|
|
|
|
36,800
|
(10)
|
|
|
36,800
|
|
Unsecured convertible note payable to Restis family
|
|
|
|
|
|
|
|
|
|
|
28,250
|
(3)
|
|
|
28,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
7,023
|
|
|
|
|
|
|
|
|
|
|
|
248,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock subject to possible redemption
|
|
|
80,850
|
|
|
|
80,850
|
(6)
|
|
|
|
|
|
|
|
|
Shareholders equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined
|
|
|
|
Seanergy
|
|
|
|
|
|
|
|
|
Companies
|
|
|
|
Maritime
|
|
|
|
|
|
|
|
|
(with Actual
|
|
|
|
Corp.
|
|
|
Pro Forma
|
|
|
Stock
|
|
|
|
and
|
|
|
Adjustments and Eliminations
|
|
|
Redemption -
|
|
|
|
Subsidiary
|
|
|
Debit
|
|
|
Credit
|
|
|
See Note I)
|
|
|
Common stock, $0.0001 par value
|
|
|
3
|
|
|
|
1
|
(8)
|
|
|
|
|
|
|
2
|
|
Additional paid-in capital
|
|
|
146,926
|
|
|
|
63,707
|
(8)
|
|
|
80,850
|
(6)
|
|
|
165,502
|
|
|
|
|
|
|
|
|
|
|
|
|
1,433
|
(9)
|
|
|
|
|
Retained earnings
|
|
|
3,456
|
|
|
|
|
|
|
|
|
|
|
|
3,456
|
|
Shareholder distributions
|
|
|
(3,173
|
)
|
|
|
|
|
|
|
|
|
|
|
(3,173
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity
|
|
|
147,212
|
|
|
|
|
|
|
|
|
|
|
|
165,787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity
|
|
$
|
235,085
|
|
|
|
|
|
|
|
|
|
|
$
|
414,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Adjustments and Eliminations (in thousands of
U.S. Dollars, except for share and per share data, unless
otherwise noted):
|
|
|
(1)
|
|
To liquidate investments held in trust.
|
|
(2)
|
|
To pay deferred underwriters compensation charged to
capital at time of initial public offering but contingently
payable upon the consummation of a business combination of
$3,930, plus interest accrued thereon of $106.
|
|
(3)
|
|
To record the acquisition of six dry bulk carriers and other
intangibles by Seanergy Maritime Holdings Corp.
(Seanergy), a wholly owned subsidiary of Seanergy
Maritime Corp. (Seanergy Maritime), pursuant to the
purchase method of accounting for an aggregate purchase price of
$395,281, comprised of (i) $367,031 in cash,
(ii) $28,250 in the form of a convertible promissory note,
convertible into 2,260,000 shares of Seanergy common stock
at $12.50 per shares, and (iii) up to 4,308,075 shares
of Seanergy common stock, subject to Seanergy meeting certain
predetermined earnings thresholds. See Notes (C), (E) and
(F) below. For purposes of the pro forma presentation, the
entire amount of the acquisition cost has been preliminarily
allocated to vessels as the purchase price allocation has not
yet been finalized. We are still assessing the value of the
vessels and whether other intangible assets have been acquired,
including goodwill. However, based on our preliminary
assessment, we have not identified any material intangible
assets and expect to allocate substantially all of the
acquisition cost to the vessels acquired. We believe that this
is consistent within the shipping industry.
|
If identifiable intangible assets are recorded upon completion
of the purchase price allocation, then the cost of such assets
could be amortized over a different period of time rather than
over the useful lives of the vessels. If goodwill is recorded,
it would not be amortized but tested annually for impairment.
Should intangible assets, including goodwill, be identified, we
do not currently believe such amounts would be material.
74
|
|
|
(4)
|
|
To record payment of estimated direct transaction costs for the
preparation and negotiation of the agreement related to the
vessel acquisition based upon engagement letters, actual
invoices and/or currently updated fee estimates as follows. See
Note (F) below:
|
|
|
|
|
|
Merger and acquisition advisors fee
|
|
$
|
3,826
|
|
Finders fee
|
|
|
1,950
|
|
Legal fees
|
|
|
1,250
|
|
Accountants fees
|
|
|
50
|
|
Proxy solicitor fees
|
|
|
35
|
|
Printing and mailing
|
|
|
100
|
|
Road show fees and costs
|
|
|
190
|
|
Vessel due diligence
|
|
|
60
|
|
Fairness opinion
|
|
|
174
|
|
Miscellaneous costs
|
|
|
100
|
|
|
|
|
|
|
Total estimated direct transaction costs
|
|
$
|
7,735
|
|
|
|
|
|
|
Total estimated costs do not include contingent underwriters
fees of approximately $5,363 and contingent legal fees of $200
that are payable upon consummation of the vessel acquisition as
these costs were incurred in connection with Seanergy
Maritimes initial public offering and have already been
provided for on Seanergys Maritimes books. As of
June 30, 2008, acquisition costs of $1,501 have been
incurred including $1,180 of which is reflected in accounts
payable and accrued expenses.
|
|
|
(5)
|
|
To record drawdown on Marfin Egnatia Bank S.A. term loan
facility of $165,000, including loan arrangement and
underwriting fees of $1,650. Per the facility agreement, the
first four quarterly installments of the term facility are to be
$7,500 each.
|
|
(6)
|
|
To reclassify common stock subject to redemption to permanent
equity see also Note (8).
|
|
(7)
|
|
To record the payment of legal fees contingently payable upon
the consummation of a business combination.
|
|
(8)
|
|
To record redemption of 6,370,773 shares of Seanergy
Maritime shares of common stock issued in Seanergy
Maritimes initial public offering, at June 30, 2008
redemption value of $10.00 per share of which $0.225 per share
represents a portion of the underwriters contingent fee,
which the underwriters have agreed to forego for each
share redeemed and which is included in amounts due to
underwriter and has already been charged to additional paid-in
capital. See Note I below.
|
|
(9)
|
|
To reverse portion of deferred underwriters fee forfeited
to redeeming shareholders ($0.225 per share times
6,370,773 shares).
|
|
|
|
(10)
|
|
To record drawdown on Marfin Egnatia Bank S.A. $90,000 revolving
facility. Per the agreement, first principal reduction due on
the revolving facility is one year from the date of the facility
agreement in the amount of $18,000.
|
Pro Forma Notes (in thousands of U.S. Dollars, except
for share and per share data, unless otherwise noted):
|
|
|
(A)
|
|
The current market prices of Seanergy Maritimes common
stock, common stock purchase warrants and common stock units
were as follows as of January 12, 2009:
|
|
|
|
|
|
Market price per share of common stock (Nasdaq SHIP)
|
|
$
|
5.00
|
|
|
|
|
|
|
Market price per common stock warrant (Nasdaq SHIPW)
|
|
$
|
0.20
|
|
|
|
|
|
|
|
|
|
(B)
|
|
On May 20, 2008, the Restis Family purchased
2,750,000 shares of Seanergy Maritime founding shareholders
common stock and 8,008,334 private placement warrants for the
purchase of shares of Seanergy Maritime common stock from
Messrs. Panagiotis and Simon Zafet for approximately
$25,000. These common shares and common share warrants are
currently being held in escrow and will remain in escrow until
12 months after the vessel acquisition.
|
75
|
|
|
(C)
|
|
No consideration has been given to up to 4,308,075 shares
of Seanergy common stock potentially issuable to the Restis
Family as additional investment shares based upon attaining
certain earnings based thresholds. Management currently believes
the earnings based thresholds can be achieved with the charters
executed on the acquisition date, subject to achieving expected
utilization and budgeted operating expense levels. Any shares
issued upon attainment of these earnings will be treated as
additional purchase consideration. See also Note F below.
|
|
(D)
|
|
Pro forma entries are recorded to the extent they are a direct
result of the vessel acquisition and are expected to have
continuing future impact and are factually supportable,
regardless of whether or not they have continuing future impact
or are non-recurring.
|
|
|
|
(E)
|
|
Six vessels owned by the following Restis Family Affiliates were
acquired by Seanergy: Goldie Navigation Ltd., Pavey Services
Ltd., Shoreline Universal Ltd., Valdis Marine Corp., Kalistos
Maritime S.A. And Kalithea Maritime S.A. Two of the six vessels
are newly-built, delivered and put into service in May and
August 2008, respectively.
|
|
(F)
|
|
The acquisition of the six dry bulk carriers, including two
newly built vessels, by Seanergy, will be accounted for by the
purchase method and accordingly, based upon managements
preliminary estimates, the total acquisition cost will be
allocated to the acquired vessels. Actual allocations may
differ. See also Note C above. These aggregate acquisition
cost are summarized as follows:
|
|
|
|
|
|
Cash paid to the Restis family
|
|
$
|
367,031
|
|
Unsecured convertible note payable issued to the Restis family
|
|
|
28,250
|
|
Direct transaction costs
|
|
|
7,735
|
|
|
|
|
|
|
Total acquisition cost allocated to vessels
|
|
$
|
403,016
|
|
|
|
|
|
|
|
|
|
(G)
|
|
On July 15, 2008, Seanergy Maritime paid a distribution,
consisting of the interest earned on the money market
funds held in trust for the period April 1,
2008 to June 30, 2008, subject to certain permitted
adjustments, of $1,081 in total or $0.0468 per share to
shareholders of record on July 9, 2008.
|
|
(H)
|
|
These pro formas are based upon the assumption that operations
are sufficient to fund working capital and dividend payment
needs and any drawdown on the revolving facility will be for the
purpose of funding the redemption of common stock. In the event
additional funds are needed to fund working capital and dividend
payment needs, certain of Seanergys subsidiaries, as
borrowers, have available, under a revolving facility,
approximately $35,200 after taking into account actual
redemptions.
|
|
|
|
(I)
|
|
On August, 26, 2008, shareholders of Seanergy Maritime approved
the vessel acquisition, with holders of 6,514,175 shares
voting against the vessel acquisition. Of the shareholders
voting against the vessel acquisition, holders of
6,370,773 shares properly demanded redemption of their
shares and were paid $63,707,730, or $10.00 per share, which
included a forfeited portion of the deferred underwriters
contingent fee.
|
76
Restis
Family Affiliated Vessels Acquired
Unaudited Condensed Combined Statement of Operations
Conversion From IFRS to U.S. GAAP
Six Months Ended June 30, 2008
(In thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
|
|
|
Adjustments to Convert
|
|
|
As
|
|
|
|
Reported In
|
|
|
IFRS to U.S. GAAP
|
|
|
Reported In
|
|
|
|
IFRS
|
|
|
Debit
|
|
|
Credit
|
|
|
U.S. GAAP
|
|
|
Revenue from vessels
|
|
$
|
28,227
|
|
|
|
|
|
|
|
|
|
|
$
|
28,227
|
|
Direct voyage expenses
|
|
|
759
|
|
|
|
|
|
|
|
|
|
|
|
759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,468
|
|
|
|
|
|
|
|
|
|
|
|
27,468
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crew costs
|
|
|
2,143
|
|
|
|
|
|
|
|
|
|
|
|
2,143
|
|
Management fees related party
|
|
|
411
|
|
|
|
|
|
|
|
|
|
|
|
411
|
|
Other operating expenses
|
|
|
1,831
|
|
|
|
|
|
|
|
|
|
|
|
1,831
|
|
Depreciation expense
|
|
|
16,314
|
|
|
|
|
|
|
|
605
|
(1)
|
|
|
4,779
|
|
|
|
|
|
|
|
|
|
|
|
|
10,930
|
(2)
|
|
|
|
|
Amortization of dry docking
|
|
|
|
|
|
|
605
|
(1)
|
|
|
|
|
|
|
605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
20,699
|
|
|
|
|
|
|
|
|
|
|
|
9,769
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
6,769
|
|
|
|
|
|
|
|
|
|
|
|
17,699
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
36
|
|
|
|
|
|
|
|
|
|
|
|
36
|
|
Interest expense
|
|
|
(1,014
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,014
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense)
|
|
|
(978
|
)
|
|
|
|
|
|
|
|
|
|
|
(978
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
5,791
|
|
|
|
|
|
|
|
|
|
|
$
|
16,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to Convert From IFRS to U.S. GAAP (in
thousands of U.S. Dollars, unless otherwise noted):
|
|
|
(1)
|
|
To reclassify the amortization of dry docking expenses that are
considered a component of depreciation under IFRS.
|
|
(2)
|
|
To eliminate depreciation expense relating to the revaluation of
the vessels to their fair value under IFRS.
|
Note:
These adjustments represent only certain significant
adjustments from IFRS to U.S. GAAP and may not capture full
conversion to U.S. GAAP.
77
Seanergy
Maritime Corp. and Subsidiary and Restis Family Affiliated
Vessels Acquired
Unaudited Pro Forma Condensed Combined Statement of
Operations
Six Months Ended June 30, 2008
(In thousands of U.S. Dollars, except share and per share
amounts, and US GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
|
|
|
|
Restis
|
|
|
|
|
|
|
|
|
|
|
|
Combined
|
|
|
|
Family
|
|
|
Seanergy
|
|
|
|
|
|
|
|
|
Companies
|
|
|
|
Affiliated
|
|
|
Maritime
|
|
|
|
|
|
|
|
|
(with Actual
|
|
|
|
Vessels
|
|
|
Corp.
|
|
|
Pro Forma
|
|
|
Stock
|
|
|
|
Acquired
|
|
|
and
|
|
|
Adjustments and Eliminations
|
|
|
Redemption -
|
|
|
|
(Note A)
|
|
|
Subsidiary
|
|
|
Debit
|
|
|
Credit
|
|
|
See Note F)
|
|
|
Revenue from vessels
|
|
$
|
28,227
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
28,227
|
|
Direct voyage expenses
|
|
|
759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,468
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,468
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crew costs
|
|
|
2,143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,143
|
|
Management fees related party
|
|
|
411
|
|
|
|
|
|
|
|
4
|
(10)
|
|
|
|
|
|
|
415
|
|
Other operating expenses
|
|
|
1,831
|
|
|
|
597
|
|
|
|
|
|
|
|
|
|
|
|
2,428
|
|
Depreciation expense (Note D)
|
|
|
4,779
|
|
|
|
|
|
|
|
7,588
|
(9)
|
|
|
|
|
|
|
12,367
|
|
Amortization of dry docking
|
|
|
605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
9,769
|
|
|
|
597
|
|
|
|
|
|
|
|
|
|
|
|
17,958
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
17,699
|
|
|
|
(597
|
)
|
|
|
|
|
|
|
|
|
|
|
9,510
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
36
|
|
|
|
2,612
|
|
|
|
2,612
|
(5)
|
|
|
|
|
|
|
36
|
|
Interest expense
|
|
|
(1,014
|
)
|
|
|
|
|
|
|
118
|
(1)
|
|
|
1,014
|
(6)
|
|
|
(4,024
|
)
|
|
|
|
|
|
|
|
|
|
|
|
2,370
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
481
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,011
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense)
|
|
|
(978
|
)
|
|
|
2,612
|
|
|
|
|
|
|
|
|
|
|
|
(3,988
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
16,721
|
|
|
$
|
2,015
|
|
|
|
|
|
|
|
|
|
|
$
|
5,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
(Notes D and E) -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,229,227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,497,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends paid per common share (Note B)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78
Pro Forma Adjustments (in thousands of U.S. Dollars,
except for share and per share data, unless otherwise noted):
|
|
|
(1)
|
|
To record amortization of deferred loan facility arrangement and
underwriting fees based on provisions of the facility agreements
($1,650 / 84 mo X 6 mo).
|
|
|
|
(2)
|
|
To record interest expense on the 7 year Marfin Egnatia
S.A. term loan facility as if it had been in place from the
beginning of the period presented. Pursuant to the term loan
facility, interest is calculated based upon the 3 month
LIBOR rate, plus an applicable margin, as defined in the
agreement. For calculation purposes, the LIBOR rate at
December 31, 2008 of 1.44% per annum, plus a margin of
1.50% was utilized. For each 1/8 percentage point change in
the annual interest rate charged, the resulting interest expense
would change by $101 during the six month period.
|
|
|
|
(3)
|
|
To record interest expense on the 7 year Marfin Egnatia
S.A. revolving facility as if it had been in place from the
beginning of the period presented. Pursuant to the revolving
facility, interest is calculated based upon the 3 month
LIBOR rate, plus an applicable margin of 2.25%, as defined in
the agreement. For calculation purposes, the LIBOR rate at
December 31, 2008 of 1.44% per annum was utilized. For each
1/8 percentage point change in the annual interest rate
charged, the resulting interest expense would change by $34
during the six month period.
|
|
|
|
(4)
|
|
To record interest expense on the unsecured convertible note
payable to Restis family as if it had been in place from the
beginning of the period presented. Interest at 2.9% per annum is
due at maturity, in two years. Additionally, an arrangement fee
of $288 is due at maturity and note prepayment is not permitted.
($28,250 X 2.9% / 12 mo X 6 mo + $288 / 24 mo X 6 mo = $481)
|
|
(5)
|
|
To eliminate interest income earned on funds held in trust.
|
|
(6)
|
|
To eliminate, effective January 1, 2008, interest expense
on indebtedness of the Restis family affiliates to be acquired
that is to be repaid pursuant to the agreements.
|
|
(7)
|
|
To record commitment fee on 7 year revolving facility at
0.25% per annum, payable quarterly in arrears, on the un-drawn
revolving facility amount. These pro formas are based upon the
assumption that operations are sufficient to fund working
capital and dividend payment needs and any drawdown on the
revolving facility will be for the purpose of funding the
redemption of common stock. [($90,000 $54,800) X
0.25% / 12 mo X 6 mo = $44]
|
|
(8)
|
|
Not used.
|
|
(9)
|
|
To record additional depreciation expense with respect to the
four vessels in operation from January 1, 2008, as a result
of the
step-up
in
basis related to the purchase of the vessels. One newly built
vessel was put into operation on May 20, 2008 and therefore
depreciation has been recorded from that date. This adjustment
does not include any depreciation on the vessel still under
construction as of June 30, 2008.
|
|
|
|
(10)
|
|
To record increment in management fees per the management
agreement dated May 20, 2008 of Euro 416 (US$540 at
October 23, 2008) per day for the first year of the
agreement. (New daily fee of $540, less former daily fee of
$535, times 182 days, times 4 vessels, plus new daily
fee of $540, less former daily fee of $535, times 41 days
for a vessel put into operation on May 20, 2008)
|
Pro Forma Notes (in thousands of U.S. Dollars, except
for share and per share data, unless otherwise noted):
|
|
|
(A)
|
|
Six vessels owned by the following Restis Family Affiliates were
acquired by Seanergy: Goldie Navigation Ltd., Pavey Services
Ltd., Shoreline Universal Ltd., Valdis Marine Corp., Kalistos
Maritime S.A. and Kalithea Maritime S.A. Two of the six vessels
are newly-built, delivered and put into service in May and
August 2008, respectively.
|
|
(B)
|
|
The cash dividends paid per common share is the amount required
under the share purchase agreement, however, such dividend may
not be able to be paid if sufficient cash from operations is not
available or if the lenders under the credit facility place
restrictions on the payment of dividends. The Restis family and
Seanergy Maritime founders have agreed to waive dividends if
Seanergy has insufficient funds to pay its scheduled dividend to
all of its public shareholders, in which case such dividend
shall be accrued and paid to them once Seanergy is current in
the payment of its dividend to its public shareholders.
|
79
|
|
|
(C)
|
|
Pro forma entries are recorded to the extent they are a direct
result of the vessel acquisition and are expected to have
continuing future impact.
|
|
|
|
(D)
|
|
No consideration has been given to up to 4,308,075 shares
of Seanergy common stock potentially issuable to the Restis
family as additional investment shares based upon attaining
certain earnings thresholds. Management currently believes the
earnings based thresholds can be achieved with the charters
executed on the acquisition date, subject to achieving expected
utilization and budgeted operating expense levels. Any shares
issued upon attainment of these earnings thresholds will be
treated as additional purchase consideration. See also
Note E below.
|
|
|
|
(E)
|
|
The actual number of shares redeemed have been utilized for both
basic and dilutive shares outstanding, and the calculation is
retroactively adjusted to eliminate such shares for the entire
period (see Note F). Dilutive warrants include 23,100,000
public common stock warrants and 16,016,667 insider common stock
warrants issued to the founders, less the number of treasury
shares that could be repurchased with the assumed proceeds on
exercise based on average stock prices during the reporting
period. Basic and diluted pro forma weighted average number of
common shares outstanding is calculated as follows:
|
|
|
|
|
|
|
|
Number of
|
|
|
|
Shares
|
|
|
Actual number of common shares outstanding
|
|
|
28,600,000
|
|
Pro forma shares:
|
|
|
|
|
Shares redeemed by public shareholders (Note F)
|
|
|
(6,370,773
|
)
|
|
|
|
|
|
Pro forma weighted average number of common shares
outstanding basic
|
|
|
22,229,227
|
|
Effect of dilutive warrants
|
|
|
12,267,846
|
|
|
|
|
|
|
Pro forma weighted average number of common shares
outstanding diluted
|
|
|
34,497,073
|
|
|
|
|
|
|
Dilutive common shares outstanding exclude 2,000,000 and
2,260,000 common shares issuable for underwriter purchase
options and convertible notes payable to Restis as these
instruments are antidilutive. Additionally, dilutive common
shares outstanding exclude 4,308,075 contingently issuable
shares related to the sellers earnout as it is assumed that
earnings targets have not been met. If these shares were
considered outstanding for the purposes of calculating dilutive
common shares outstanding, diluted earnings per share would be
$0.14.
|
|
|
(F)
|
|
On August, 26, 2008, shareholders of Seanergy Maritime approved
the vessel acquisition, with holders of 6,514,175 shares
voting against the vessel acquisition. Of the shareholders
voting against the vessel acquisition, holders of
6,370,773 shares properly demanded redemption of their
shares and were paid $63,707,730, or $10.00 per share, which
included a forfeited portion of the deferred underwriters
contingent fee.
|
|
|
|
(G)
|
|
The margin on the Marfin term facility is 1.5% per annum, if the
Total Assets to Total Liabilities ratio is greater than 165% and
1.75% if the ratio is less than 165%, to be tested quarterly.
Based upon the June 30, 2008 pro forma balance sheet, the
ratio of Total Assets to Total Liabilities is 167%; accordingly,
a margin of 1.5% has been utilized in these pro formas.
|
80
Restis
Family Affiliated Vessels Acquired
Unaudited Condensed Combined Statement of Operations
Conversion From IFRS to U.S. GAAP
Six Months Ended June 30, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Reported
|
|
|
Adjustments to Convert IFRS to U.S. GAAP
|
|
|
As Presented
|
|
|
|
under IFRS
|
|
|
Debit
|
|
|
Credit
|
|
|
under U.S. GAAP
|
|
|
|
(In thousands of U.S. dollars)
|
|
|
Revenue from vessels
|
|
$
|
28,227
|
|
|
|
|
|
|
|
|
|
|
$
|
28,227
|
|
Direct voyage expenses
|
|
|
759
|
|
|
|
|
|
|
|
|
|
|
|
759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,468
|
|
|
|
|
|
|
|
|
|
|
|
27,468
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crew costs
|
|
|
2,143
|
|
|
|
|
|
|
|
|
|
|
|
2,143
|
|
Management fees related party
|
|
|
411
|
|
|
|
|
|
|
|
|
|
|
|
411
|
|
Other operating expenses
|
|
|
1,831
|
|
|
|
|
|
|
|
|
|
|
|
1,831
|
|
Depreciation expense
|
|
|
16,314
|
|
|
|
|
|
|
|
605
|
(1)
|
|
|
4,779
|
|
|
|
|
|
|
|
|
|
|
|
|
10,930
|
(2)
|
|
|
|
|
Amortization of dry docking
|
|
|
|
|
|
|
605
|
(1)
|
|
|
|
|
|
|
605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
20,699
|
|
|
|
|
|
|
|
|
|
|
|
9,769
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
6,769
|
|
|
|
|
|
|
|
|
|
|
|
17,699
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
36
|
|
|
|
|
|
|
|
|
|
|
|
36
|
|
Interest expense
|
|
|
(1,014
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,014
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense)
|
|
|
(978
|
)
|
|
|
|
|
|
|
|
|
|
|
(978
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
5,791
|
|
|
|
|
|
|
|
|
|
|
$
|
16,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
to Convert From IFRS to U.S. GAAP (in thousands of
U.S. Dollars, unless otherwise noted):
|
|
|
(1)
|
|
To reclassify the amortization of dry docking expenses that are
considered a component of depreciation under IFRS.
|
|
(2)
|
|
To eliminate depreciation expense relating to the revaluation of
the vessels to their fair value under IFRS.
|
Note:
These adjustments represent only certain significant adjustments
from IFRS to U.S. GAAP and may not capture full conversion
to U.S. GAAP.
81
Restis
Family Affiliates to be Acquired
Unaudited
Condensed Combined Balance Sheet conversion
from IFRS to US GAAP
June 30,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restis Family
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliates to be
|
|
|
|
Restis Family
|
|
|
|
|
|
|
|
|
Acquired After
|
|
|
|
Affiliates to be
|
|
|
Adjustments
|
|
|
Adjustments
|
|
|
|
Acquired (Note E)
|
|
|
Debit
|
|
|
Credit
|
|
|
(Note E)
|
|
|
|
(In thousands of U.S. dollars)
|
|
|
ASSETS
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
4,161
|
|
|
|
|
|
|
|
|
|
|
$
|
4,161
|
|
Restricted cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds held in trust
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade accounts and other receivables
|
|
|
1,605
|
|
|
|
|
|
|
|
|
|
|
|
1,605
|
|
Inventories
|
|
|
458
|
|
|
|
|
|
|
|
|
|
|
|
458
|
|
Due from related parties
|
|
|
13,022
|
|
|
|
|
|
|
|
|
|
|
|
13,022
|
|
Amount due from Restis Family
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
$
|
19,246
|
|
|
|
|
|
|
|
|
|
|
$
|
19,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred loan costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessels
|
|
|
250,022
|
|
|
|
10,930
|
(A1)
|
|
|
1,177
|
(A2)
|
|
|
91,563
|
|
|
|
|
|
|
|
|
5,483
|
(A4)
|
|
|
154,384
|
(A3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,311
|
(A4)
|
|
|
|
|
Dry Docking
|
|
|
|
|
|
|
1,177
|
(A2)
|
|
|
|
|
|
|
1,177
|
|
Deferred Finance Charges
|
|
|
|
|
|
|
266
|
(A5)
|
|
|
|
|
|
|
266
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
269,268
|
|
|
$
|
17,856
|
|
|
$
|
174,872
|
|
|
$
|
112,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
$
|
12,364
|
|
|
|
|
|
|
|
|
|
|
$
|
12,364
|
|
Current portion of Marfin Egnatia S.A. term loan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marfin Egnatia S.A. revolving credit agreement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due to related parties
|
|
|
1,395
|
|
|
|
|
|
|
|
|
|
|
|
1,395
|
|
Trade accounts payable and accrued expenses
|
|
|
4,110
|
|
|
|
|
|
|
|
|
|
|
|
4,110
|
|
Amounts due to underwriter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued interest Restis Family
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred revenue
|
|
|
2,339
|
|
|
|
|
|
|
|
|
|
|
|
2,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
$
|
20,208
|
|
|
|
|
|
|
|
|
|
|
$
|
20,208
|
|
Long-term debt, excluding current portion
|
|
|
48,520
|
|
|
|
|
|
|
|
266
|
(A5)
|
|
|
48,786
|
|
Marfin Egnatia S.A. term loan, excluding current portion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured convertible note payable to Restis Family
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$
|
68,728
|
|
|
|
|
|
|
$
|
266
|
|
|
$
|
68,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock subject to possible redemption
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $0.0001 par value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
48,769
|
|
|
|
|
|
|
|
|
|
|
|
48,769
|
|
Revaluation reserve
|
|
|
154,384
|
|
|
|
154,384
|
(A3)
|
|
|
0
|
|
|
|
|
|
Retained earnings
|
|
|
(2,613
|
)
|
|
|
19,311
|
(A4)
|
|
|
10,930
|
(A1)
|
|
|
(5,511
|
)
|
|
|
|
|
|
|
|
|
|
|
|
5,483
|
(A4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity
|
|
$
|
200,540
|
|
|
$
|
173,695
|
|
|
$
|
16,413
|
|
|
$
|
43,258
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity
|
|
$
|
269,268
|
|
|
$
|
173,695
|
|
|
$
|
16,679
|
|
|
$
|
112,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments and Eliminations to convert from IFRS to
U.S. GAAP (in thousands of U.S. Dollars, except for
share and per share data, unless otherwise noted):
|
|
|
(A1)
|
|
Recalculation of accumulated depreciation in accordance with
historical cost basis.
|
|
(A2)
|
|
Reclassification of dry docking expenses that under IFRS are
considered a component of the asset.
|
|
(A3)
|
|
Reversal of revaluations reserves recorded under IFRS.
|
|
(A4)
|
|
Impairment loss under USGAAP can not be reversed.
|
|
(A5)
|
|
Reclassification of deferred financing charges from a reduction
of the associated debt to a deferred cost.
|
82
MANAGEMENT
Directors
and Executive Officers
Set forth below are the names, ages and positions of
Seanergys current directors and executive officers:
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
|
Class
|
|
|
|
|
|
|
|
|
|
|
|
|
Christina Anagnostara
|
|
|
38
|
|
|
Chief Financial Officer and Director
|
|
|
B
|
|
Elias M. Culucundis
|
|
|
65
|
|
|
Director
|
|
|
A
|
|
Kyriakos Dermatis
|
|
|
61
|
|
|
Director
|
|
|
C
|
|
Alexios Komninos
|
|
|
42
|
|
|
Director
|
|
|
B
|
|
Georgios Koutsolioutsos
|
|
|
39
|
|
|
Chairman of the Board of Directors
|
|
|
C
|
|
Kostas Koutsoubelis
|
|
|
53
|
|
|
Director
|
|
|
C
|
|
Dimitrios N. Panagiotopoulos
|
|
|
47
|
|
|
Director
|
|
|
A
|
|
Alexander Papageorgiou
|
|
|
35
|
|
|
Director
|
|
|
C
|
|
Lambros Papakonstantinou
|
|
|
43
|
|
|
Director
|
|
|
A
|
|
Dale Ploughman
|
|
|
60
|
|
|
Chief Executive Officer and Director
|
|
|
B
|
|
George Taniskidis
|
|
|
47
|
|
|
Director
|
|
|
A
|
|
Ioannis Tsigkounakis
|
|
|
42
|
|
|
Secretary and Director
|
|
|
B
|
|
George Tsimpis
|
|
|
62
|
|
|
Director
|
|
|
B
|
|
The business address of each of our directors and executive
officers listed below is
1-3
Patriarchou Grigoriou; 166 74 Glyfada; Athens, Greece. Our board
of directors is divided into three classes, Class A,
Class B and Class C, with only one class of directors
being elected in each year, beginning at the third annual
meeting. The term of office of the Class A directors will
expire at our third annual meeting of shareholders. The term of
office of the Class B directors will expire at the fourth
annual meeting. The term of office of the Class C directors
will expire at the fifth annual meeting.
Christina Anagnostara
has served as our chief financial
officer since November 17, 2008. Prior to joining us, she
served as chief financial officer and a board member for Global
Oceanic Carriers Ltd, a dry bulk shipping company listed on AIM
of the London Stock Exchange, since February 2007. Between 1999
and 2006, she was a senior manager at EFG Audit &
Consulting Services, the auditors of the Geneva-based EFG Group,
an international banking group specializing in global private
banking and asset management. Prior to EFG Group, she worked
from 1998 to 1999 in the internal audit group of Eurobank EFG, a
bank with a leading position in Greece; and between 1995 and
1998 as a senior auditor at Ernst & Young Hellas, SA,
Greece, the international auditing firm. Ms. Anagnostara
studied Economics in Athens and has been a Certified Chartered
Accountant since 2002.
Elias M. Culucundis
has been a member of our board of
directors since our inception. Mr. Culucundis has
experience in the negotiation of acquisitions, as well as the
oversight of due diligence. Since 2002, Mr. Culucundis has
been a member of the board of directors of Folli Follie S.A. and
since 2006 an executive member of the board of directors of
Hellenic Duty Free Shops S.A. Since 1999, Mr. Culucundis
has been president, chief executive officer and director of
Equity Shipping Company Ltd., a company specializing in
starting, managing and operating commercial and technical
shipping projects the value of which exceeded $100 million
as of the end of 2006. Additionally, from 1996 to 2000, he was a
director of Kassian Maritime Shipping Agency Ltd., a vessel
management company operating a fleet of ten bulk carriers with
revenues of approximately $180 million in 2006. During this
time, Mr. Culucundis was also a director of Point Clear
Navigation Agency Ltd, a marine project company instrumental in
opening the Chinese shipbuilding market to Greek shipping. Point
Clear Navigation Agency Ltd. aided in technically and
commercially structuring the first panamax bulk carrier and the
first panamax tanker to be built in Shanghai, China that
subsequently became the prototype for over 50 subsequent orders
for Greek shipping. From 1981 to 1995, Mr. Culucundis was a
director of Kassos Maritime Enterprises Ltd., a company engaged
in vessel management. While at Kassos, he was initially a
technical director and eventually ascended to the position of
chief executive officer, overseeing
83
a large fleet of panamax, aframax and VLCC tankers, as well as
overseeing new vessel building contracts, specifications and the
construction of new vessels. From 1971 to 1980,
Mr. Culucundis was a director and the chief executive
officer of Off Shore Consultants Inc. and Naval Engineering
Dynamics Ltd. Off Shore Consultants Inc. was a pioneer in FPSO
(Floating Production, Storage and Offloading vessel,
FPSO) design and construction and responsible for
the technical and commercial supervision of a pentagon-type
drilling rig utilized by Royal Dutch Shell plc. Seven
FPSOs were designed and constructed that were subsequently
utilized by Pertamina, ARCO, Total and Elf-Aquitaine. Naval
Engineering Dynamics Ltd. was responsible for purchasing,
re-building and operating vessels that had suffered major
damage. From 1966 to 1971, Mr. Culucundis was employed as a
Naval Architect for A.G. Pappadakis Co. Ltd., London,
responsible for tanker and bulk carrier new buildings and
supervising the technical operation of our fleet. He is a
graduate of Kings College, Durham University, Great Britain,
with a degree in Naval Architecture and Shipbuilding. He is a
member of several industry organizations, including the Council
of the Union of Greek Shipowners and American Bureau of
Shipping. Mr. Culucundis is a fellow of the Royal Institute
of Naval Architects and a Chartered Engineer.
Kyriakos G. Dermatis
has extensive experience in
brokering and negotiating the sale and acquisition of commercial
vessels, chartering, ship management and operations. He is the
founder and President of Intermodal Shipbrokers Co, a
shipbrokering company involved in ship sale and purchase, new
building contracting and special project activities.
Mr. Dermatis began his career in October 1965 as a deck
apprentice on seagoing tankers vessels. He quickly climbed up to
Chief mate with various shipping companies and ships until 1975
when he moved on shore and continued his career as a shipbroker
with Thenamaris SA in July 1976. Later he joined
Balkanfracht Hamburg as a shipbroker for
approximately a year. He returned to Greece in October 1978 and
joined Balkanfracht Piraeus as Senior Dry Cargo
Broker. In 1979, he moved to A.Bacolitsas
S.A. a shipowning company, operating a fleet
of 18 ships of several types and sizes, as chartering manager
and was soon promoted to General Manager of the subject company
where he stayed until April 1983. From April 1983 until
September 1983, he was chartering Director in Greece for
European Navigation Fleet. In January 1985, he established
Intermodal Shipmanagement Inc, a company specialized
in sale and purchase of ships, tanker chartering, management of
small tankers and other more specialized projects. In 1992 the
company was renamed Intermodal Shipbrokers Co. In
2003, Mr. Dermatis moved the companys headquarters in
North Athens and in 2005 he established a branch office in
Shanghai, China in order to support the constantly rising new
building activity. Since 2004, Intermodal has negotiated
contracts for more than 120 ships in China and 6 Prototype
RoRo-tankers in Romania for major Greek, as well as UAE,
Argentinean, Malaysian and Italian, shipowners. Kyriakos
Dermatis remains an active board member of The Hellenic
Shipbrokers Association, a member of the Mediterranean committee
of China Classification Society, a member of Shell Marine panel
as an external professional advisor to Shell for the past
20 years, and a member of Marine Club. Mr. Kyriakos
Dermatis graduated from the University of Piraeus in March, 1973
by obtaining a BSC in Economics and he attended the London
School of Foreign Trade based in London from
1974-1975
where he obtained a diploma in Shipping Business. Then he
completed the Post Graduate Diploma in Port & Shipping
Administration in 1976 from the University of Wales with
recommendation. In 1984, he received an MSC in maritime studies
from Cardiff University.
Alexios Komninos
has been a member of our board of
directors since our inception and was our chief financial
officer from our inception through November 16, 2008. Since
1991, he has been a major shareholder and chief operating
officer of N. Komninos Securities SA, one of the oldest members
of the Athens Stock Exchange and member of the Athens
Derivatives Exchange, with total revenues of approximately
$40 million in 2006. Mr. Komninos has extensive
experience with respect to the review and assessment of
companies financial positions as well as experience with
respect to analysis of potential acquisitions. He has been
involved in more than twenty successful initial public offerings
and secondary offerings of companies listed on the Athens Stock
Exchange, including Rokkas Energy S.A. (ATSE: ROKKA), a windmill
parks company, Folli Follie S.A. (ATSE: FOLLI), a luxury goods
company, Flexopack S.A. (ATSE: FLEXO), a packaging company,
Eurobrokers S.A. (ATSE: EUBRK), an insurance broking company,
and Edrasi S.A. (ATSE: EDRA), a specialized construction
company. Mr. Komninos is primarily engaged in the business
of securities portfolio management and currently manages a
portfolio exceeding $450 million. Throughout 2004 and 2005,
he was a financial adviser to Capital Maritime &
Trading Corp., a holding company with revenues of approximately
84
$188 million in 2004. Mr. Komninos also advises
numerous other public companies in Greece on capital
restructuring, mergers and acquisitions and buy-out projects.
Mr. Komninos received his B.Sc. in economics from the
University of Sussex in the United Kingdom and his M.Sc. in
Shipping Trade and Finance from the City University Business
School in London.
Georgios Koutsolioutsos
has served as sole Chairman of
our board of directors since May 20, 2008. From our
inception to May 19, 2008, Mr. Koutsolioutsos served
as our president and co-chairman of the board of directors.
Mr. Koutsolioutsos has significant experience in the
management and operations of public companies. He began his
career at Folli Follie S.A. (ATSE: FOLLI) in 1992. Folli Follie
is an international company with a multinational luxury goods
brand and over three hundred points of sale (POS).
Mr. Koutsolioutsos, who is currently the vice-president and
an executive member of the board of directors, has assisted with
the growth of Folli Follie to a market capitalization of over
$1.1 billion with revenues of over $500 million in
2006. Additionally, in 1997, Folli Follie was listed on the
Athens Stock Exchange following an initial public offering
conducted under his management. Mr. Koutsolioutsos also has
extensive knowledge of business operations in the Asian markets
where, for more than a decade, Folli Follie has had a presence.
Furthermore, since 2002, Folli Follie was among the first
companies in mainland China to obtain a full retail license. In
1999, Mr. Koutsolioutsos became a member of the board of
directors of Hellenic Duty Free Shops S.A. (HDFS
(ATSE: HDF)) and subsequently, as of May 2006, became the
chairman of the board of directors. HDFS is the exclusive
duty-free operator in Greece, one of the top fifteen duty-free
operators worldwide and has a market capitalization of
approximately $1 billion. In 2003, Mr. Koutsolioutsos
was awarded Manager of the Year in Greece. Mr. Georgios
Koutsolioutsos received his B.Sc. in business and marketing from
the University of Hartford, Connecticut. He is fluent in five
languages.
Kostas Koutsoubelis
has been a member of our board of
directors since May 20, 2008. Mr. Kostas Koutsoubelis
is the group financial director of the Restis group of companies
and also the chairman of Golden Energy Marine Corp. Furthermore,
he is a member of the board of the directors of the following
public listed companies: Freeseas Inc., Hellenic Seaways S.A.,
FG Europe, Imperio Argo Group A.M.E., IMAKO Media S.A., First
Business Bank, South African Marine Corp. and Swissmarine
Corporation Ltd. Mr. Koutsoubelis is also the vice
president and treasurer of FreeSeas. Before joining the Restis
group he served as head of shipping of Credit Lyonnais, Greece.
After graduating from St. Louis University, St. Louis,
Missouri, he held various positions in Mobil Oil Hellas S.A. and
after his departure he joined International Reefer Services,
S.A., a major shipping company, as financial director. In the
past he has also served as director in Egnatia Securities S.A.,
a stock exchange company, and Egnatia Mutual Fund S.A. He
is a governor in the Propeller Club Port of Piraeus
and member of the Board of the Association of Banking and
Financial Executives of Hellenic Shipping.
Dimitrios Panagiotopoulos
is the head of shipping and
corporate banking of Proton Bank, a Greek private bank, where he
has served since April 2004. From January 1997 to March 2004, he
served as deputy head of the Greek shipping desk of BNP Paribas
and before that for four years as senior officer of the shipping
department of Credit Lyonnais Greece. From 1990 to 1993, he
worked as chief accountant in Ionia Management, a Greek shipping
company. He also serves as a director of FreeSeas Inc., a
publicly traded shipping company. He holds a degree in economics
from Athens University and an MSC in Shipping, Trade and Finance
from City University of London. He served his obligatory
military duty as an officer of the Greek Special Forces and
today is a captain of the reserves of the Hellenic Army.
Alexander Papageorgiou
has been the chief executive
officer of Assos Capital Limited since the establishment of the
company in May 2006. Between March 2005 and May 2006, he was the
chief financial officer of Golden Energy Marine Corp., an
international shipping company transporting a variety of crude
oil and petroleum products based in Athens, Greece. From March
2004 to March 2005, Mr. Papageorgiou served as a director
in the equities group in the London office of Citigroup Global
Markets Inc. where he was responsible for the management and
development of Citigroups Portfolio Products business in
the Nordic region. From March 2001 to March 2004,
Mr. Papageorgiou served as a vice president in the equities
group in the London office of Morgan Stanley & Co.,
where he was responsible for Portfolio Products sales and
sales-trading coverage for the Nordic region and the Dutch
institutional client base. From April 1997 to March 2001, he was
an associate at J.P. Morgan Securities Ltd. in the Fixed
Income and Investment Banking
85
divisions. Mr. Papageorgiou holds an MSC in Shipping, Trade
and Finance from City University Business School in London,
Great Britain and a BA (Hons) in Business Economics from Vrije
Universiteit in Brussels, Belgium.
Lambros Papakonstantinou
is the chairman and chief
executive officer of National P&K Securities SA, a
securities brokerage firm that provides sales, trading and
brokerage services, where he has served since 2006. From 1996 to
2006, he served as the chairman and chief executive officer of
P&K Securities. From
1995-1996,
Mr. Papakonstantinou served as director in ABN Amro
Investment Banking international financial institution. From
1992 to 1995, Mr. Papakonstantinou served as a Director,
Corporate Finance at Barclays Bank plc.
Mr. Papakonstantinou is also a member of the board of
directors of Finansinvest (Turkey), a securities brokerage,
corporate finance and investment banking firm and ETEBA Romania
(Romania), an affiliate of the National Bank of Greece.
Mr. Papakonstantinou holds an MSC in Chemical Engineering
from National Technical University of Athens and an MBA from
INSEAD.
Dale Ploughman
has served as a member of our board of
directors and our chief executive officer since May 20,
2008. He has over 43 years of shipping industry experience.
Since 1999, Mr. Ploughman has been the chairman of South
African Marine Corporation (Pty) Ltd., a dry bulk shipping
company based in South Africa and affiliate to members of the
Restis family, and the chairman of the Bahamas Ship Owners
Association. In addition, Mr. Ploughman has served as
president, chief executive officer and a director of Golden
Energy Marine Corp. since February 2005. Mr. Ploughman also
serves as president and chief executive officer of numerous
private shipping companies controlled by members of the Restis
family. From 1989 to 1999, Mr. Ploughman was the president
of Great White Fleet, a fleet owned by Chiquita Brands
International Inc., which was one of the largest shipping
carriers to and from Central America. Mr. Ploughman has
previously worked as president and chief executive officer of
Lauritzen Reefers A.S., a shipping company based in Denmark, the
managing director of Dammers and Vander Hiede Shipping and
Trading Inc., a shipping company based in the Netherlands and as
the chairman of Mackay Shipping, a shipping company based in New
Zealand. He holds degrees in Business Administration and
Personnel Management and Masters level Sea
Certificates and was educated at the Thames Nautical Training
College, HMS Worcester.
George Taniskidis
is the chairman and managing director
of Millennium Bank, a position he has held since 2002.
Mr. Taniskidis is a member of the board of directors of
Euroseas Limited, where he has served since 2005. He is also a
member of the board of directors of Millennium Bank, Turkey and
a member of the executive committee of the Hellenic Banks
Association. From 2003 until 2005, he was a member of the board
of directors of Visa International Europe, elected by the Visa
issuing banks of Cyprus, Malta, Portugal, Israel and Greece.
From 1990 to 1998, Mr. Taniskidis worked at XIOSBANK (until
its acquisition by Piraeus Bank in 1998) in various
positions, with responsibility for the banks credit
strategy and network. Mr. Taniskidis studied law at the
National University of Athens and at the University of
Pennsylvania Law School, where he received an LL.M. After law
school, he joined the law firm of Rogers & Wells in
New York, where he worked from 1986 until 1989 and was also a
member of the New York State Bar Association. He is a member of
the Young Presidents Organization.
Ioannis Tsigkounakis
has been our secretary and a member
of our board of directors since our inception. Since 1992, he
has been a practicing lawyer specializing in Shipping and
Capital Markets law. In that capacity he has gained significant
experience with respect to the negotiation of acquisitions and
in all aspects of legal due diligence. In 1994, he joined the
law firm of Vgenopoulos and Partners, one of the largest
international practice firms in Greece. Mr. Tsigkounakis
advises Greek issuers, brokers, investment firms and banking
institutions on capital markets and investment banking matters.
He has been involved in capital finance transactions, mergers
and acquisitions, take-overs and buy-outs, both in Greece and
abroad, including: (i) the acquisition through the Athens
Exchange of a controlling interest in Proton Bank of Greece by
IRF European Finance Investments Ltd., in May 2006, a company
listed on the Alternative Investment Market of the London Stock
Exchange (AIM), (ii) the public tender offer made by Laiki
Bank Public Co. Ltd. of Cyprus to Egnatia Bank and Marfin
Holdings of Greece, in September 2006, (iii) the
acquisition of Links of London Ltd., in July 2006, and
(iv) the issuance of a bond loan by HSBC, Alfa Bank,
Piraeus Bank, BNP Paribas and National Bank of Greece, of
$280 million for Folli Follie S.A., in June 2006. Since
2002, he has been a member of the board of directors of
Aspropirgos Maritime Ltd., a company that owns a crude oil
tanker owning and is a
86
subsidiary of Paradise Tankers Corp., a large tanker carrier
group with 2006 revenues of approximately $48 million.
Between 2003 and 2004, he was also a non-executive member of the
board of directors of Marfin Bank Private Fund, a fund with
$225 million under management. He is currently an executive
member of the board of directors of Hellenic Duty Free Shops, a
company listed on the Athens Exchange (ATSE: HDF).
Mr. Tsigkounakis received his law degree from the National
University of Athens and a masters degree (DEA) in
International and Banking Law from the University of Pantheon,
Sorbonne I, France. Since 2005, he has been a member of the
Greek Legal Society of Banking and Capital Markets Law.
George Tsimpis
served as shipping advisor at BNP Paribas,
Greece from 2006 through 2007, upon retiring as Head of the
Greek Shipping Desk from BNP Paribas in 2006, a position he had
held since 1992. From 1986 to 1992, Mr. Tsimpis served as
chief financial officer of Pirelli Tyres. From 1978 to 1986,
Mr. Tsimpis was Delegate Manager and Treasurer at Bank of
America, Greece. Mr. Tsimpis joined Citibank, Greece in
1971, where he served as chief trader from 1974 to 1978.
Mr. Tsimpis holds a Bachelor of Arts Degree in Economics
from the University of Piraeus.
Voting
Agreement
Pursuant to the Voting Agreement, upon the execution of the
Master Agreement, our board of directors was required to consist
of seven persons and following Seanergy Maritimes 2008
annual meeting of shareholders on December 18, 2008, our
board of directors was required to consist of 13 persons.
Initially, the Restis affiliate shareholders and the Seanergy
Maritimes founding shareholders have agreed to vote or
cause to be voted certain shares they own or control in Seanergy
so as to cause (i) three people named by the Restis
affiliate shareholders to be elected to our board of directors,
(ii) three people named by the founding shareholders to be
elected to our board of directors, and (iii) one person
jointly selected by the Restis affiliate shareholders and the
founding shareholders to be elected to our board of directors.
Following our 2008 annual meeting of shareholders on
December 18, 2008 and continuing until May 20, 2010,
the Restis affiliate shareholders, on the one hand, and the
founding shareholders on the other have agreed to vote or cause
to be voted certain shares they own or control in Seanergy so as
to cause (i) six people named by the Restis affiliate
shareholders to be elected to our board of directors,
(ii) six people named by the founding shareholders to be
elected to our board of directors, and (iii) one person
jointly selected by the Restis affiliate shareholders and the
founding shareholders to be elected to our board of directors.
The new directors were elected pursuant to the written consent
of the sole shareholder of Seanergy on December 18, 2008.
The six members of our board of directors designated by each of
the Restis affiliate shareholders and the founding shareholders
have been divided as equally as possible among Class A,
Class B and Class C directors. The six members of our
board of directors designated by each of the Restis affiliate
shareholders, on the one hand, and the founding shareholders, on
the other hand, will include at least three
independent directors, as defined in the rules of
the SEC and the rules of any applicable stock exchange.
Both Messrs. Ploughman and Koutsoubelis were selected as
directors by the Restis affiliate shareholders pursuant to the
Voting Agreement. Because each of Messrs. Ploughman and
Koutsoubelis was appointed by the Restis affiliate shareholders
and employed by affiliates of the Restis affiliate shareholders
in other vessel-owning ventures, the Restis affiliate
shareholders are in a position to exert influence over such
individuals in their capacities as directors of Seanergy.
Accordingly, these board members may encounter conflicts of
interest in considering future acquisitions of vessels on behalf
of Seanergy.
Any director may be removed from office at any time, with or
without cause, at the request of the shareholder group entitled
to designate such director, and a director so removed shall be
replaced by a nominee selected by the shareholder group entitled
to designate such director. Vacancies on the board of directors
will also be filled by the shareholder group entitled to name
the director whose resignation or removal led to the occurrence
of the vacancy.
In addition, pursuant to the Voting Agreement, our board of
directors established a shipping committee consisting of three
directors to consider and vote upon all matters involving
shipping and vessel finance. The Voting Agreement requires that
our board of directors appoint selected nominees as described
below and that the board of directors fill any vacancies on the
shipping committee with the nominees selected by the party
87
that nominated the person whose resignation or removal has
caused the vacancy. See Management Board
Committees Shipping Committee.
With respect to our officers, the parties agreed that
Messrs. Dale Ploughman and Georgios Koutsolioutsos would
serve as chief executive officer and chairman of the board of
directors, respectively. If Mr. Ploughman is unable or
unwilling to serve in such position, the Restis affiliate
shareholders shall have the right to appoint his replacement.
Board
Committees
Our board of directors has an audit committee, a compensation
committee, a nominating committee and a shipping committee. Our
board of directors has adopted a charter for each of these
committees.
Audit
Committee
Our audit committee consists of Messrs. Dimitrios N.
Panagiotopoulos, Lambros Papakonstantinou and George Tsimpis,
each of whom is an independent director. Mr. Dimitrios N.
Panagiotopoulos has been designated the Audit Committee
Financial Expert under the SEC rules and the current
listing standards of the Nasdaq Marketplace Rules.
The audit committee has powers and performs the functions
customarily performed by such a committee (including those
required of such a committee under the Nasdaq Marketplace Rules
and the SEC). The audit committee is responsible for selecting
and meeting with our independent registered public accounting
firm regarding, among other matters, audits and the adequacy of
our accounting and control systems.
Compensation
Committee
Our compensation committee consists of Messrs. Kyriakos
Dermatis, Lambros Papakonstantinou and George Taniskidis, each
of whom is an independent director. The compensation committee
reviews and approves the compensation of our executive officers.
Nominating
Committee
Our nominating committee consists of Messrs. Elias M.
Culucundis, Dimitrios N. Panagiotopoulos and George Tsimpis,
each of whom is an independent director. The nominating
committee is responsible for overseeing the selection of persons
to be nominated to serve on our board of directors, subject to
the terms of the Voting Agreement.
Shipping
Committee
We have established a shipping committee. The purpose of the
shipping committee is to consider and vote upon all matters
involving shipping and vessel finance. The shipping industry
often demands very prompt review and decision-making with
respect to business opportunities. In recognition of this, and
in order to best utilize the experience and skills that the
Restis family board appointees bring to us, our board of
directors has delegated all such matters to the shipping
committee. Transactions that involve the issuance of our
securities or transactions that involve a related party,
however, shall not be delegated to the shipping committee but
instead shall be considered by the entire board of directors.
The shipping committee is comprised of three directors. In
accordance with the Voting Agreement, the Master Agreement and
our by-laws, two of the directors are nominated by the Restis
affiliate shareholders and one of the directors is nominated by
Seanergy Maritimes founding shareholders. The initial
members of the shipping committee are Messrs. Dale
Ploughman and Kostas Koutsoubelis, who are the Restis affiliate
shareholders nominees, and Mr. Elias M. Culucundis,
who is the founding shareholders nominee. The Voting
Agreement further requires that the directors appoint the
selected nominees and that the directors fill any vacancies on
the shipping committee with the nominees selected by the party
that nominated the person whose resignation or removal caused
the vacancy.
In order to assure the continued existence of the shipping
committee, our board of directors has agreed that the shipping
committee may not be dissolved and that the duties or
composition of the shipping committee may not be altered without
the affirmative vote of not less that 80% of our board of
directors. In addition, the duties and powers of Seanergys
chief executive officer, which is currently Mr. Ploughman,
may not be altered without a similar vote. These duties and
powers include voting the shares of stock that Seanergy owns in
its
88
subsidiaries. The purpose of this provision is to ensure that
Seanergy will cause each of its shipping-related subsidiaries to
have a board of directors with members that are identical to the
shipping committee. In addition to these agreements, Seanergy
has amended certain provisions in its articles of incorporation
and by-laws to incorporate these requirements. As a result of
these various provisions, in general, all shipping-related
decisions will be made by the Restis family appointees to our
board of directors unless 80% of the board members vote to
change the duties or composition of the shipping committee.
Director
Independence
Our securities are listed on the Nasdaq Stock Market. We have
evaluated whether our directors are independent
directors within the meaning of the rules of the Nasdaq
Stock Market and have determined that each of Elias M.
Culucundis, Kyriakos Dermatis, Dimitrios N. Panagiotopoulos,
Alexander Papageorgiou, Lambros Papakonstantinou, George
Taniskidis, and George Tsimpis is independent. Such rules
provide generally that a director will not qualify as an
independent director unless the board of directors
of the listed company affirmatively determines that the director
has no material relationship with the listed company that would
interfere with the exercise of independent judgment. In
addition, such rules generally provide that a director will not
qualify as an independent director if: (i) the
director is, or in the past three years has been, employed by
the listed company; (ii) the director has an immediate
family member who is, or in the past three years has been, an
executive officer of the listed company; (iii) the director
or a member of the directors immediate family has received
payments from the listed company of more than $60,000 during the
current or any of the past three years, other than for (among
other things) service as a director and payments arising solely
from investments in securities of the listed company;
(iv) the director or a member of the directors
immediate family is a current partner of the independent
auditors of the listed company or is, or in the past three
years, has been, employed by such auditors in a professional
capacity and worked on the audit of the listed company;
(v) the director or a member of the directors
immediate family is, or in the past three years has been,
employed as an executive officer of a company where one of the
executive officers of the listed company serves on the
compensation committee; or (vi) the director or a member of
the directors immediate family is a partner in, or a
controlling shareholder or an executive officer of, an entity
that makes payments to or receive payments from the listed
company in an amount which, in any fiscal year during the past
three years, exceeds the greater of $200,000 or 5% of the other
entitys consolidated gross revenues.
Our independent directors will meet in executive session as
often as necessary to fulfill their duties, but no less
frequently than annually.
Our by-laws provide that transactions must be approved by a
majority of our independent and disinterested directors (i.e.,
those directors that are not expected to derive any personal
financial benefit from the transaction).
Code of
Conduct and Ethics
We have adopted a code of conduct and ethics applicable to our
directors, officers and employees in accordance with applicable
federal securities laws and the Nasdaq Marketplace Rules.
Compensation
of Directors and Executive Officers
For the period ended December 31, 2007, no executives of
Seanergy received any compensation from Seanergy. No service
contract exists between any director and the Company or any of
its subsidiaries providing for benefits upon termination of
employment.
Our compensation policies with respect to our directors and
executive officers are established, administered and the subject
of periodic review by our independent directors in accordance
with the Nasdaq Marketplace Rules.
89
PRINCIPAL
SHAREHOLDERS OF SEANERGY MARITIME
The following table sets forth information regarding the
beneficial ownership of Seanergy Maritimes common stock as
of January 13, 2009, based upon filings publicly available
as at January 13, 2009, by:
|
|
|
|
|
Each person known by us to be the beneficial owner of more than
5% of our outstanding shares of common stock;
|
|
|
|
Each of Seanergy Maritimes officers and directors; and
|
|
|
|
Seanergy Maritimes officers and directors as a group.
|
Unless otherwise indicated, we believe that all persons named in
the table have sole voting and investment power with respect to
all shares of common stock beneficially owned by them.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
|
|
|
|
|
|
Percentage of
|
|
|
|
|
|
|
Outstanding
|
|
|
Investment
|
|
|
Outstanding
|
|
Name and Address of Beneficial Owner(1)
|
|
Voting Power
|
|
|
Common Stock
|
|
|
Power
|
|
|
Common Stock
|
|
|
Georgios Koutsolioutsos(2)
|
|
|
21,638,161
|
(3)(4)(8)
|
|
|
74.39
|
%
|
|
|
9,568,380
|
(6)
|
|
|
32.89
|
%
|
Alexios Komninos(2)
|
|
|
15,753,378
|
(3)(8)
|
|
|
67.78
|
%
|
|
|
1,183,417
|
(6)
|
|
|
5.09
|
%
|
Ioannis Tsigkounakis(2)
|
|
|
15,272,877
|
(3)(8)
|
|
|
67.10
|
%
|
|
|
557,916
|
(6)
|
|
|
2.45
|
%
|
Dale Ploughman
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Kostas Koutsoubelis
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
Elias M. Culucundis
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
United Capital Investments Corp.(7)(8)
|
|
|
19,159,295
|
(3)(5)(8)
|
|
|
76.07
|
%
|
|
|
7,649,030
|
(6)
|
|
|
30.37
|
%
|
Atrion Shipholding S.A.(7)(8)
|
|
|
17,874,544
|
(3)(8)
|
|
|
73.37
|
%
|
|
|
5,751,278
|
(6)
|
|
|
23.61
|
%
|
Plaza Shipholding Corp.(4)(8)
|
|
|
18,008,138
|
(3)(5)(8)
|
|
|
73.91
|
%
|
|
|
5,884,872
|
(6)
|
|
|
24.15
|
%
|
Comet Shipholding Inc.(7)(8)
|
|
|
17,953,885
|
(3)
|
|
|
73.45
|
%
|
|
|
5,251,278
|
(6)
|
|
|
23.85
|
%
|
Benbay Limited
|
|
|
7,649,030
|
(6)
|
|
|
30.37
|
%
|
|
|
7,149,030
|
(6)
|
|
|
28.38
|
%
|
United Capital Trust, Inc.
|
|
|
7,649,030
|
(6)
|
|
|
30.37
|
%
|
|
|
7,149,030
|
(6)
|
|
|
28.38
|
%
|
QVT Financial LP(9)
|
|
|
1,800,670
|
|
|
|
8.05
|
%
|
|
|
1,800,670
|
|
|
|
8.05
|
%
|
HBK Investments LP(10)
|
|
|
2,314,587
|
|
|
|
10.35
|
%
|
|
|
2,314,587
|
|
|
|
10.35
|
%
|
Fir Tree, Inc.(11)
|
|
|
1,760,000
|
|
|
|
7.87
|
%
|
|
|
1,760,000
|
|
|
|
7.87
|
%
|
Aldebaran Investments LLC(12)
|
|
|
3,366,650
|
|
|
|
13.09
|
%
|
|
|
3,366,650
|
|
|
|
13.09
|
%
|
Nisswa Acquisition Master Fund Ltd.(13)
|
|
|
3,300,874
|
|
|
|
14.76
|
%
|
|
|
3,300,874
|
|
|
|
14.76
|
%
|
Integrated Core Strategies (US) LLC(14)
|
|
|
1,561,712
|
|
|
|
6.5
|
%
|
|
|
1,561,712
|
|
|
|
6.5
|
%
|
All directors and executive officers as a group (6 individuals)
|
|
|
22,919,494
|
(3)(4)
|
|
|
75.47
|
%
|
|
|
11,309,713
|
|
|
|
37.24
|
%
|
|
|
|
*
|
|
Less than one (1%) percent.
|
|
(1)
|
|
Unless otherwise indicated, the business address of each of the
shareholders is 1-3 Patriarchou Grigoriou,
166 74 Glyfada, Athens, Greece.
|
|
(2)
|
|
Includes 6,727,000, 880,927, and 400,416 shares of our
common stock for Mr. Koutsolioutsos, Mr. Komninos and
Mr. Tsigkounakis, respectively, issuable upon exercise of
warrants, which became exercisable on September 24, 2008.
|
|
(3)
|
|
Includes an aggregate of 14,872,461 shares of our common
stock owned by the Restis affiliated shareholders, United
Capital Investments, Atrion, Plaza and Comet, and Seanergy
Maritimes founding shareholders, which are subject to the
Voting Agreement, as amended, described above.
|
|
(4)
|
|
Includes 38,700 shares of our common stock purchased on
August 29, 2008, as to which Mr. Koutsolioutsos has
sole voting power.
|
|
(5)
|
|
Includes 70,000 shares of common stock owned by Argonaut
SPC, a fund managed by Oxygen Capital AEPEY an entity affiliated
with Victor Restis and Katia Restis.
|
90
|
|
|
(6)
|
|
None of the Restis affiliate shareholders, or other shareholders
who are affiliates of the Restis family, or Seanergy
Maritimes founding shareholders has shared voting power
and investment power with respect to any of the shares
beneficially owned, except for (i) 19,159,295 and
7,649,030 shares included for United Capital Investments
Corp. as to which it has shared voting power and investment
power, respectively, (ii) 14,872,461 shares and
70,000 shares included for Plaza Shipholding Corp. as to
which each of United and Plaza have shared voting power and
investment power, respectively, and
(iii) 14,872,461 shares included for Atrion
Shipholding Corp., Comet Shipholding Inc., George
Koutsolioutsos, Alex Komninos and Ioannis Tsigkounakis as to
which each such person or entity has shared voting power; and
(iv) 7,649,030 shares included for United Capital
Investments Corp., United Capital Trust, Inc. and Benbay Limited
as to which each of United Capital Investments, United Capital
Trust and Benbay have shared voting and investment power.
|
|
(7)
|
|
On May 20, 2008, each of United Capital Investments,
Atrion, Plaza and Comet, each of which is controlled by Victor
Restis, Bella Restis, Katia Restis and Claudia Restis,
respectively, purchased a beneficial interest in
687,500 shares of Seanergy common stock (for an aggregate
of 2,750,000 shares) from Messrs. Panagiotis and Simon
Zafet, each of whom was a former officer and director of
Seanergy. These shares are subject to the same restrictions as
the founding shares issued to Seanergy Maritimes founding
shareholders. Does not include up to an aggregate of
2,260,000 shares of Seanergy common stock issuable to these
entities if they convert the Note and up to an aggregate of
4,308,075 shares of Seanergy common stock issuable to these
entities if Seanergy achieves certain definitive predetermined
criteria described in this prospectus, for a total of up to an
aggregate of 6,568,075, which shares are exchangeable for
Seanergy Maritime common stock on a one-for-one basis. Each of
United Capital Investments Corp., Atrion Shipholding S.A., Plaza
Shipholding Corp. and Comet Shipholding Inc. is an affiliate of
members of the Restis family. The address of each of United
Capital Investments Corp., Atrion Shipholding S.A., Plaza
Shipholding Corp., and Comet Shipholding Inc., is
c/o 11
Poseidonos Avenue, 16777 Elliniko, Athens, Greece, Attn: Evan
Breibart.
|
|
(8)
|
|
Includes 2,826,584, 2,002,038, 2,002,084, and
2,081,133 shares of our common stock for United Capital
Investments, Atrion, Plaza and Comet, respectively, in
connection with the exercise of the Warrants, which became
exercisable on September 24, 2008.
|
|
(9)
|
|
Represents the aggregate holdings of QVT Financial LP, QVT
Financial GP LLC, QVT Fund LP, and QVT Associates GP LLC.
Based on an amended Schedule 13G filed on January 25, 2008,
QVT Financial LP is the beneficial owner of
1,800,670 shares; QVT Financial GP LLC is the beneficial
owner of 1,800,670 shares; QVT Fund LP is the
beneficial owner of 1,483,397 shares; and QVT Associates GP
LLC is the beneficial owner of 1,643,519 shares. The
address of each of QVT Financial LP, QVT Financial GP LLC and
QVT Associates GP LLC is 1177 Avenue of the Americas,
9th Floor, New York, New York 10036. The address of QVT
Fund LP is Walkers SPV, Walkers House, Grand Cayman, KY1
9001 Cayman Islands.
|
|
(10)
|
|
Represents the aggregate holdings of HBK Investments LP, HBK
Services LLC, HBK Partners II LP, HBK Management LLC, and
HBK Master Fund LP. Based on an amended Schedule 13G
filed on February 8, 2008, each of HBK Investments LP, HBK
Services LLC, HBK Partners II LP, HBK Management LLC, and
HBK Master Fund LP is the beneficial owner of
2,314,587 shares (or 8.09% of our outstanding common
stock). The address of each of HBK Investments L.P., HBK
Services LLC, HBK Partners II L.P., HBK Management LLC, and
HBK Master Fund L.P. is 300 Crescent Court, Suite 700,
Dallas, Texas 75201.
|
|
(11)
|
|
Represents the aggregate holdings of Fir Tree, Inc., Fir Tree
Capital Opportunity Master Fund, LP, and Sapling LLC. Based on
an amended Schedule 13G filed on February 14, 2008, Fir
Tree, Inc. is the beneficial owner of 1,760,000 shares;
Sapling LLC is the beneficial owner of 1,514,500 shares;
and Fir Tree Capital Opportunity Master Fund LP is the
beneficial owner of 245,500 shares; Fir Tree, Inc. is the
investment manager of both Sapling and Fir Tree Capital. The
address of each of Fir Tree, Inc. and Sapling, LLC is
505 Fifth Avenue, 23rd Floor, New York, NY 10017. The
address of Fir Tree Capital Opportunity Master Fund, L.P. is
c/o Admiral
Administration Ltd., Admiral Financial Center, 5th Floor,
90 Fort Street, Box 32021 SMB, Grand Cayman Islands,
Cayman Islands.
|
91
|
|
|
(12)
|
|
Represents shares issuable upon exercise of Warrants which
became exercisable on September 24, 2008. The address is
500 Park Avenue,
5
th
Floor,
New York, NY 10022.
|
|
(13)
|
|
Based on Schedule 13G filed on September 5, 2008.
Mr. Brian Taylor, who is the sole member of Pine River
Capital Management L.P. and director of Nisswa Acquisition
Master Fund Ltd., and Pine River Capital Management L.P.,
Nisswa Acquisition Master Funds investment manager,
initially had shared voting power and shared investment power
for 5,073,467 shares. Nisswa Acquisition Master
Fund Ltd. initially had shared voting power and shared
investment power for 4,856,253 shares. The address of each
of Mr. Taylor, Pine River Capital Management L.P. and
Nisswa Acquisition Master Fund Ltd. is
c/o Pine
River Capital Management L.P., 601 Carlson Parkway,
Suite 330, Minnetonka, MN 55305.
|
|
(14)
|
|
Based on Schedule 13G filed on December 29, 2008.
Represents shares issuable upon exercise of Warrants which
became exercisable on September 24, 2008. Integrated Core
Strategies (US) LLC, Millennium Management LLC and Israel A.
Englander have shared voting power and shared investment power
for these 1,561,712 shares. The address is
c/o Millennium
Management LLC, 666 Fifth Avenue, New York, NY 10103.
|
The beneficial ownership of our common stock will be identical
to the beneficial ownership of the common stock of Seanergy
Maritime immediately prior to its dissolution and liquidation.
Escrow of
Shares Held by Seanergy Maritimes Founding
Shareholders
The 5,500,000 shares initially owned by Seanergy
Maritimes founding shareholders, including those that were
transferred by Seanergy Maritimes former chief executive
officer and former chief operating officer to the Restis
affiliate shareholders, have been placed in an escrow account
maintained by Continental Stock Transfer & Trust
Company, as escrow agent. These shares will be exchanged for
shares of our common stock but will remain in escrow until
12 months after the vessel acquisition.
During the period these shares are held in escrow, they may not
be transferred other than (i) by gift to a member of the
shareholders immediate family or to a trust or other
entity, the beneficiary of which is such shareholder or a member
of such shareholders immediate family, (ii) by virtue
of the laws of descent and distribution upon death of such
shareholder, or (iii) pursuant to a qualified domestic
relations order; provided, however, that any transferee of the
shares agrees to be bound by the terms of the escrow agreement.
The escrow agreement provides that the shareholder will retain
all other rights as our shareholders, including, without
limitation, the right to vote their shares of common stock and
the right to receive cash dividends, if declared. If dividends
are declared and payable in shares of common stock, such
dividends will also be placed in escrow. In addition, in
connection with the vessel acquisition, each of the Restis
affiliate shareholders and Seanergy Maritimes founding
shareholders has agreed to subordinate its rights to receive
dividends to the extent we do not have sufficient funds to pay
dividends to the public shareholders.
Pursuant to the terms of the escrow agreement, Seanergy
Maritime, Maxim and Continental Stock Transfer & Trust
Company were required to, and did, consent to the transfer of
beneficial ownership of 2,750,000 shares of Seanergy
Maritimes common stock by its former chief executive
officer and its former chief operating officer to the Restis
affiliate shareholders.
If we consummate a liquidation, merger, stock exchange or other
similar transaction which results in all of its shareholders
having the right to exchange their common shares for cash,
securities or other property, then Continental Stock
Transfer & Trust Company will, upon consummation of
such transaction, release the escrow shares to our founding
shareholders so that they can similarly participate. Continental
Stock Transfer & Trust Company will then have no
further duties under the terms of the escrow agreement.
92
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Master
Agreement
On August 26, 2008, shareholders of Seanergy Maritime
approved a proposal to acquire six dry bulk carriers from six
individual sellers that are controlled by members of the Restis
family, including two newly built vessels. This acquisition was
made pursuant to the Master Agreement and the several MOAs in
which Seanergy agreed to purchase these vessels for an aggregate
purchase price of (i) $367,030,750 in cash to the sellers,
(ii) $28,250,000 in the form of the Note, which are
convertible into 2,260,000 shares of Seanergys common
stock, issued to the Restis affiliate shareholders as nominees
for the sellers, and (iii) up to an aggregate of
4,308,075 shares of common stock of Seanergy (which shares
are exchangeable for shares of Seanergy Maritime common stock)
issued to the Restis affiliate shareholders as nominees for the
sellers, subject to Seanergy meeting an EBITDA target of
$72 million to be earned between October 1, 2008 and
September 30, 2009. The Restis affiliate shareholders,
United Capital Investment Corp., Atrion Shipholding S.A., Plaza
Shipholding Corp., and Comet Shipholding Inc., and the sellers
are owned and controlled by the following members of the Restis
family: Victor Restis, Bella Restis, Katia Restis and Claudia
Restis. The Restis affiliate shareholders are four personal
investment companies. Each company is controlled by one of these
four individuals. Each seller is a single purpose entity
organized for the purpose of owning and operating one of the six
dry bulk carriers sold pursuant to the terms of the Master
Agreement and the individual related MOA. Following the sale of
the vessels under the Master Agreement and related MOAs, the
sellers have had no further operations. The Restis affiliate
shareholders purchased shares of Seanergys common stock
from two of our original founds, Messrs. Panagiotis and
Simon Zafet, and serve as nominees of the sellers for purposes
of receiving payments under the Note and the shares issuable
upon meeting the EBITDA targets described above. The Restis
affiliate shareholders do not have any direct participation in
our operations as they are not officers, directors or employees
of Seanergy Maritime or Seanergy. Pursuant to the terms of the
Voting Agreement, the Restis affiliate shareholders have the
right to nominate members to the Board of Directors and to
appoint officers as described more fully below.
The Master Agreement also provided that Seanergy Maritime and
Seanergy cause their respective officers to resign as officers,
other than Messrs. Ploughman and Koutsolioutsos, and the
Restis affiliate shareholders have the right to appoint such
other officers as they deem appropriate in their discretion. The
Master Agreement also required that directors resign and be
appointed so as to give effect to the Voting Agreement. Pursuant
to the Master Agreement, Seanergy Maritime and Seanergy also
established shipping committees of three directors and delegated
to them the exclusive authority to consider and vote upon all
matters involving shipping and vessel finance, subject to
certain limitations. Messrs. Ploughman, Koutsoubelis and
Culucundis were appointed to such committees. See
Seanergys Business Shipping
Committee. In addition, in connection with the Master
Agreement, Seanergy entered into the Management Agreement and
the Brokerage Agreement, whereby Seanergy agreed to outsource
the management and commercial brokerage of its fleet to
affiliates of the Restis family.
Registration
Rights
Pursuant to a Registration Rights Agreement, no later than
thirty days from the effective date of the dissolution and
liquidation, we are obligated to file a registration statement
with the Securities and Exchange Commission registering the
resale of the 5.5 million shares in the aggregate owned by
Seanergy Maritimes founding shareholders and the Restis
affiliate shareholders and the 16,016,667 shares of common
stock underlying their private placement warrants. However, the
5.5 million shares will not be released from escrow before
the first year anniversary of the consummation of the vessel
acquisition. In addition, we have agreed to register for resale
in such registration statement an aggregate of
6,568,075 shares of common stock, consisting of
4,308,075 shares of common stock issuable to the Restis
affiliate shareholders if we achieve certain earnings targets
and 2,260,000 shares of common stock issuable upon
conversion of the Note.
The holders of such securities are also entitled to certain
piggy-back registration rights on registration
statements filed subsequent to such date. We will bear the
expenses incurred in connection with any such registration
statements, other than underwriting discounts
and/or
commissions.
93
Management
of the Fleet
Seanergy outsources the management and commercial brokerage of
its fleet to affiliates of members of the Restis family. The
commercial brokerage of its fleet has been contracted out to
Safbulk and the management of its fleet has been contracted out
to EST.
Brokerage
Agreement
Under the terms of the Brokerage Agreement entered into by
Safbulk, as exclusive commercial broker, with Seanergy
Management, Safbulk provides commercial brokerage services to
Seanergys subsidiaries, which include, among other things,
seeking and negotiating employment for the vessels owned by the
vessel-owning subsidiaries in accordance with the instructions
of Seanergy Management. Safbulk is entitled to receive a
commission of 1.25% calculated on the collected gross
hire/freight/demurrage payable when such amounts are collected.
The Brokerage Agreement is for a term of two years, and is
automatically renewable for consecutive periods of one year,
unless either party is provided with three months written
notice prior to the termination of such period.
Management
Agreement
Under the terms of the Management Agreement entered into by EST,
as manager of all vessels owned by Seanergys subsidiaries,
with Seanergy Management, EST performs certain duties that
include general administrative and support services necessary
for the operation and employment of all vessels owned by all our
subsidiaries, including, without limitation, crewing and other
technical management, insurance, freight management, accounting
related to vessels, provisions, bunkering, operation and,
subject to our instructions, sale and purchase of vessels.
Under the terms of the Management Agreement, EST is entitled to
receive a daily fee of Euro 416.00 per vessel until
December 31, 2008, which fee may thereafter be increased
annually by an amount equal to the percentage change during the
preceding period in the Harmonised Indices of Consumer Prices
All Items for Greece published by Eurostat from time to time.
Such fee is payable monthly in advance on the first business day
of each following month.
The Management Agreement is for a term of two years, and is
automatically renewable for consecutive periods of one year,
unless either party is provided with three months written
notice prior to the termination of such period.
Shipping
Committee
We have established a shipping committee. The purpose of the
shipping committee is to consider and vote upon all matters
involving shipping and vessel finance. The shipping industry
often demands very prompt review and decision-making with
respect to business opportunities. In recognition of this, and
in order to best utilize the experience and skills that the
Restis family board appointees bring to us, our board of
directors has delegated all such matters to the shipping
committee. Transactions that involve the issuance of our
securities or transactions that involve a related party,
however, shall not be delegated to the shipping committee but
instead shall be considered by the entire board of directors.
The shipping committee is comprised of three directors. In
accordance with the Voting Agreement, the Master Agreement and
our by-laws, two of the directors are nominated by the Restis
affiliate shareholders and one of the directors is nominated by
Seanergy Maritimes founding shareholders. The initial
members of the shipping committee are Messrs. Dale
Ploughman and Kostas Koutsoubelis, who are the Restis affiliate
shareholders nominees, and Mr. Elias M. Culucundis,
who is the founding shareholders nominee. The Voting
Agreement further requires that the directors appoint the
selected nominees and that the directors fill any vacancies on
the shipping committee with nominees selected by the party that
nominated the person whose resignation or removal caused the
vacancy.
In order to assure the continued existence of the shipping
committee, our board of directors has agreed that the shipping
committee may not be dissolved and that the duties or
composition of the shipping committee may not be altered without
the affirmative vote of not less that 80% of our board of
directors. In addition, the duties of Seanergys chief
executive officer, which is currently Mr. Ploughman, may
not be altered without a similar vote. These duties include
voting the shares of stock that Seanergy owns in its
subsidiaries. The purpose of this provision is to ensure that
Seanergy will cause each of its shipping-related subsidiaries to
have a board of directors with members that are identical to the
shipping committee. In addition to these
94
agreements, Seanergy has amended certain provisions in its
articles of incorporation and by-laws to incorporate these
requirements. As a result of these various provisions, in
general, all shipping-related decisions will be made by the
Restis family appointees to our board of directors unless 80% of
the board members vote to change the duties or composition of
the shipping committee.
The
Charters
Our relevant vessel-owning subsidiaries have entered into time
charter parties for all six vessels with SAMC, a company
associated with members of the Restis family. Each charter party
reflects rates for a one-year period as follows (inclusive of a
total of 2.5% address and charter commission in favor of parties
nominated by the sellers): (i) $30,000 per day for the
African Oryx; (ii) $36,000 per day for the African
Zebra; (iii) $60,000 per day for the Davakis G. (ex.
Hull No. KA215); (iv) $60,000 per day for the
Delos Ranger (ex. Hull No. KA216);
(v) $65,000 per day for the Bremen Max; and
(vi) $65,000 per day for the Hamburg Max, with some
flexibility permitted with regard to the per vessel type
charters secured by the sellers so long as the operating day and
duration weighted average revenues are consistent with the
foregoing.
EST, Safbulk and SAMC are each an affiliate of members of the
Restis family.
Voting
Agreement
Pursuant to the Voting Agreement, upon the execution of the
Master Agreement, our board of directors was required to consist
of seven persons and following Seanergy Maritimes 2008
annual meeting of shareholders, our board of directors is
required to consist of 13 persons. Initially, the Restis
affiliate shareholders and Seanergy Maritimes founding
shareholders have agreed to vote or cause to be voted certain
shares they own or control in Seanergy so as to cause
(i) three people named by the Restis affiliate shareholders
to be elected to our board of directors, (ii) three people
named by the founding shareholders to be elected to our board of
directors, and (iii) one person jointly selected by the
Restis affiliate shareholders and the founding shareholders to
be elected to our board of directors. Upon the occurrence of our
2008 annual meeting of shareholders and continuing until
May 20, 2010, the Restis affiliate shareholders, on the one
hand, and the founding shareholders on the other have agreed to
vote or cause to be voted certain shares they own or control in
Seanergy so as to cause (i) six people named by the Restis
affiliate shareholders to be elected to our board of directors,
(ii) six people named by the founding shareholders to be
elected to our board of directors, and (iii) one person
jointly selected by the Restis affiliate shareholders and the
founding shareholders to be elected to our board of directors.
The new directors were elected pursuant to the written consent
of the sole shareholder of Seanergy on December 18, 2008.
The six members of our board of directors designated by each of
the Restis affiliate shareholders and the founding shareholders
will be divided as equally as possible among Class A,
Class B and Class C directors. The six members of our
board of directors designated by each of the Restis affiliate
shareholders, on the one hand, and the founding shareholders, on
the other hand, will include at least three
independent directors, as defined in the rules of
the SEC and the rules of any applicable stock exchange.
Both Messrs. Ploughman and Koutsoubelis were selected as
directors by the Restis affiliate shareholders pursuant to the
Voting Agreement. Because each of Messrs. Ploughman and
Koutsoublies was appointed by the Restis affiliate shareholders
and is employed by affiliates of the Restis affiliate
shareholders in other vessel-owning ventures, the Restis
affiliate shareholders are in a position to exert influence over
such individuals in their capacities as directors of Seanergy.
Accordingly, these board members may encounter conflicts of
interest in considering future acquisitions of vessels on behalf
of Seanergy.
Any director may be removed from office at any time, with or
without cause, at the request of the shareholder group entitled
to designate such director, and a director so removed shall be
replaced by a nominee selected by the shareholder group entitled
to designate such director. Vacancies on the board of directors
shall also be filled by the shareholder group entitled to name
the director whose resignation or removal led to the occurrence
of the vacancy.
In addition, pursuant to the Voting Agreement, our board of
directors established a shipping committee consisting of three
directors to consider and vote upon all matters involving
shipping and vessel finance. The Voting Agreement requires that
our board of directors appoint selected nominees as described
above and that the board of directors fill any vacancies on the
shipping committee with the nominees selected by the party
95
that nominated the person whose resignation or removal has
caused the vacancy. See Management Board
Committees Shipping Committee.
With respect to our officers, the parties agreed that
Messrs. Dale Ploughman and Georgios Koutsolioutsos will
serve as chief executive officer and chairman of the board of
directors, respectively. If Mr. Ploughman is unable or
unwilling to serve in such position, the Restis affiliate
shareholders shall have the right to appoint his replacement.
Stock
Purchase Agreement
On May 20, 2008, the Restis affiliate shareholders
purchased the beneficial interests in all of the securities of
Seanergy Maritime owned by Messrs. Panagiotis Zafet and
Simon Zafet, the former chief executive officer and chief
operating officer of Seanergy Maritime, respectively. The
securities owned by the Zafets consisted of 2,750,000 founding
shares and 8,008,334 private placement warrants. The aggregate
purchase price for the founding shares and private placement
warrants, which was negotiated between the Zafets and the Restis
affiliate shareholders, was $25,000,000.
Because the securities purchased by the Restis affiliate
shareholders were founding shares and private placement
warrants, they are subject to a number of restrictions not
applicable to Seanergy Maritime common stock and warrants. Some
of these restrictions are as follows:
|
|
|
|
|
The founding shares are held in escrow by Continental Stock
Transfer & Trust Company and cannot be transferred
until 12 months after a business combination, which is why
the Restis affiliate shareholders could only purchase the
beneficial interests in such shares, including voting rights, as
the founding shares must remain in the registered names of the
Zafets; and
|
|
|
|
The private placement warrants were being held by Maxim subject
to the terms of a
lock-up
agreement and could not be transferred until the consummation of
a business combination, which was why the Restis affiliate
shareholders could only purchase the beneficial interests in
such warrants as the private placement warrants must remain in
the registered names of the Zafets.
|
In connection with the purchase by the Restis affiliate
shareholders of all of the Zafets beneficial interest in
the founding shares and private placement warrants, the Zafets
agreed to resign as directors and officers of Seanergy Maritime
and terminated all business relationships they had with Seanergy
Maritime.
Seanergy Maritime is not a party to the stock purchase agreement
and was not involved in the negotiation of the purchase price.
Accordingly, Seanergy Maritime believes that the fair value of
the founding shares and private placement warrants sold by the
Zafets to the Restis affiliate shareholders is the contractual
purchase price of $25,000,000. In addition, because neither
Seanergy Maritime nor the founding shareholders other than the
Zafets is a party to the stock purchase agreement, the parties
to the stock purchase agreement could not and did not enter into
a voting agreement. The Voting Agreement was entered into in
connection with the Master Agreement between Seanergy Maritime
and the sellers, among others.
Vgenopoulos
and Partners
Mr. Ioannis Tsigkounakis, a member of our board of
directors, is a partner of Vgenopoulos and Partners, which
Seanergy Maritime has retained in connection with certain
matters relating to the vessel acquisition and the drafting of
the definitive agreement. Seanergy Maritime has paid
Mr. Tsigkounakis law firm no remuneration for the
fiscal year ended December 31, 2007. During the current
fiscal year through the date of this prospectus, Seanergy
Maritime has paid Mr. Tsigkounakis law firm $475,000.
Seanergy anticipates continued retention of
Mr. Tsigkounakis law firm for the near future.
Sublease
Agreement
Seanergy leases its executive office space in Athens, Greece
pursuant to the terms of a sublease agreement between Seanergy
Management and Waterfront S.A., a company which is beneficially
owned by Victor Restis. The sublease fee is approximately
EURO 500,000, per annum. The initial term is from
November 17, 2008 to November 16, 2011. Seanergy has
the option to extend the term until February 2, 2014. The
premises are approximately 1,000 square meters in a prime
location in the Southern suburbs of Athens. The agreement
includes furniture, parking space and building maintenance.
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DESCRIPTION
OF SECURITIES
Seanergy Maritime shareholders who receive shares of Seanergy in
the dissolution and liquidation will become shareholders of
Seanergy. Seanergy is a corporation organized under the laws of
the Republic of the Marshall Islands and is subject to the
provisions of Marshall Islands law.
Below is a summary of the material features of Seanergys
securities. This summary is not a complete discussion of the
amended and restated articles of incorporation and amended and
restated by-laws of Seanergy that create the rights of its
shareholders. You are urged to read carefully the amended and
restated articles of incorporation and amended and restated
by-laws of Seanergy.
General
Seanergy is authorized to issue 100,000,000 shares of
common stock, par value $0.0001, and 1,000,000 shares of
preferred stock, par value $0.0001.
Seanergy originally had 100 shares of issued and
outstanding common stock all of which were held by Seanergy
Maritime. On September 15, 2008, in connection with the
planned distribution of shares of common stock of Seanergy to
the holders of Seanergy Maritime upon the dissolution and
liquidation of Seanergy Maritime, the board of directors of
Seanergy approved a 676,539.69-for-one stock split of
Seanergys issued and outstanding common stock so that the
number of issued and outstanding shares of Seanergy was equal to
the number of issued and outstanding shares of Seanergy
Maritime, on a diluted basis as described below. Specifically,
because Seanergy is unable to determine how many of the Warrants
may actually be exercised, whether the unit purchase option or
any of the underlying Warrants will be exercised, or whether the
Restis affiliate shareholders will exercise their right to
exchange shares of our common stock for shares of Seanergy
Maritime originally issuable upon Seanergy meeting an EBITDA
target of $72 million to be earned between October 1,
2008 and September 30, 2009, for purposes of calculating
the ratio for the stock split, all of the 45,424,742 shares
common stock underlying these Warrants, the unit purchase option
and the right to exchange shares as described above were deemed
outstanding. Furthermore, to the extent that any of these
Warrants
and/or
the
unit purchase option (or underlying Warrants) remain unexercised
and outstanding on the effective date of this registration
statement or the Restis affiliate shareholders do not exercise
their right to exchange shares as described above, then Seanergy
will redeem an equal number of shares of common stock
immediately prior to the dissolution and liquidation so that its
outstanding shares are equal to those of Seanergy Maritime on
such effective date.
No shares of preferred stock are currently issued and
outstanding.
Common
Stock
Upon consummation of the dissolution and liquidation, Seanergy
will have outstanding 22,361,227 shares of common stock as a
result of the stock split. In addition, Seanergy will have
40,984,667 shares of common stock reserved for issuance upon the
exercise of the underwriters purchase option and the warrants
and 6,568,075 shares reserved for issuance to the Restis
affiliate shareholders upon meeting an EBITDA target of
$72 million to be earned between October 1, 2008 and
September 30, 2009 and conversion of the Note.
Each outstanding share of common stock entitles the holder to
one vote on all matters submitted to a vote of shareholders.
Subject to preferences that may be applicable to any outstanding
shares of preferred stock, holders of shares of common stock are
entitled to receive ratably all dividends, if any, declared by
Seanergys board of directors out of funds legally
available for dividends. All of Seanergy Maritimes
founding shareholders and the Restis affiliate shareholders
agreed with Seanergy to subordinate their right to receive
dividends with respect to the 5,500,000 original shares owned by
them in Seanergy Maritimes initial public offering for a
period of one year commencing on the second full quarter
following the initial closing of the vessel acquisition to the
extent that Seanergy has insufficient funds to make such
dividend payments. Holders of common stock do not have
conversion, redemption or preemptive rights to subscribe to any
of Seanergys securities. All outstanding shares of common
stock are fully paid and non-assessable. The rights, preferences
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and privileges of holders of common stock are subject to the
rights of the holders of any shares of preferred stock which
Seanergy may issue in the future.
There are no limitations on the right of non-residents of the
Republic of the Marshall Islands to hold or vote Seanergys
common shares.
Preferred
Stock
Seanergys amended and restated articles of incorporation
authorizes the issuance of 1,000,000 shares of blank check
preferred stock with such designation, rights and preferences as
may be determined from time to time by its board of directors.
Accordingly, its board of directors is empowered, without
shareholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting or other rights which could
adversely affect the voting power or other rights of the holders
of Seanergy common stock. The preferred stock could be utilized
as a method of discouraging, delaying or preventing a change in
control of us. Although there is no current intent to issue any
shares of preferred stock, we cannot assure you that Seanergy
will not do so in the future.
Warrants
Upon the dissolution and liquidation of Seanergy Maritime, each
outstanding Seanergy Maritime warrant will become
Seanergys obligation with the same terms and restrictions
except that each will be exercisable for common stock of
Seanergy.
Each Seanergy Maritime warrant became exercisable on
September 24, 2008 at a price of $6.50 per share,
subject to adjustment as discussed below. The Seanergy Maritime
warrants will expire on September 24, 2011 at
5:00 p.m., New York City time.
The Seanergy Maritime warrants began to trade separately on
October 26, 2007.
After the dissolution and liquidation of Seanergy Maritime, we
may call the Warrants for redemption:
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in whole and not in part;
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at a price of $0.01 per Warrant at any time;
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upon not less than 30 days prior written notice of
redemption to each warrant holder; and
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if, and only if, the reported last sale price of the Common
Shares equals or exceeds $14.25 per share, for any 20
trading days within a 30 trading day period ending on the third
business day prior to the notice of redemption to warrant
holders; provided that a current registration statement under
the Securities Act relating to the Warrant Shares is then
effective.
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This criterion was established to provide warrant holders with a
(i) adequate notice of exercise only after the then
prevailing Common Share price is substantially above the Warrant
exercise price and (ii) a sufficient differential between
the then prevailing Common Share price and the Warrant exercise
price so there is a reasonable cushion against a negative market
reaction, if any, to our redemption call. The Seanergy Maritime
warrants originally issued in the pre-offering private placement
may not be redeemed if held by the initial holders or their
permitted assigns.
The exercise price and number of Warrant Shares may be adjusted
in certain circumstances including in the event of a stock
dividend, or our recapitalization, reorganization, merger or
consolidation. However, the Warrants will not be adjusted for
issuances of common stock at a price below their exercise price.
The Warrants may be exercised upon surrender of the Warrant
certificate on or prior to the expiration date at the offices of
the Warrant agent, with the exercise form on the reverse side of
the Warrant certificate completed and executed as indicated,
accompanied by full payment of the exercise price, by certified
check payable to us, for the number of Warrants being exercised.
The warrant holders do not have the rights or privileges of
holders of common stock and any voting rights until they
exercise their Warrants and receive
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Common Shares. After the issuance of Warrant Shares, each holder
will be entitled to one vote for each share held of record on
all matters to be voted on by shareholders.
No Warrants will be exercisable unless at the time of exercise a
prospectus relating to Warrants Shares is current and the
Warrant Shares have been registered or qualified or deemed to be
exempt under the securities laws of the state of residence of
the holder of the Warrants. Under the terms of the Warrant
agreement, we will agree to meet these conditions and use our
best efforts to maintain a current prospectus relating to
Warrant Shares until the expiration of the Warrants. If we are
unable to maintain the effectiveness of such registration
statement until the expiration of the Warrants, and therefore
are unable to deliver registered shares, the Warrants may become
worthless and we will not be required to net-cash settle the
Warrants. In such a case, the purchasers of units will have paid
the full purchase price of the units solely for the Common
Shares underlying such units. Additionally, the market for the
Warrants may be limited if the prospectus relating to the
Warrant Shares is not current or if the Warrant Shares are not
qualified or exempt from qualification in the jurisdictions in
which the holders of the Warrants reside. In no event will the
registered holders of a Warrant be entitled to receive a
net-cash settlement, stock, or other consideration in lieu of
physical settlement in Common Shares.
The private placement warrants are identical to the warrants
sold in Seanergy Maritimes initial public offering, except
that (i) the private placement warrants are not subject to
redemption if held by the initial holders and (ii) the
warrants may be exercised on a cashless basis. Because the
private placement warrants were originally issued pursuant to an
exemption from the registration requirements under the federal
securities laws, the holders of such warrants (and the
corresponding Warrants) will be able to exercise their warrants
(or Warrants) even if, at the time of exercise, a prospectus
relating to the common stock issuable upon exercise of such
warrants (or Warrants) is not current. As described above, the
holders of the warrants purchased in the initial public offering
(and the corresponding Warrants) will not be able to exercise
them unless we have a current registration statement covering
the shares issuable upon their exercise.
No fractional shares will be issued upon exercise of the
Warrants. If, upon exercise of the Warrants, a holder would be
entitled to receive a fractional interest in a share, we will,
upon exercise, round up to the nearest whole number the Warrant
Shares to be issued to the warrant holder.
Purchase
Option
Upon the dissolution and liquidation of Seanergy Maritime, we
will assume Seanergy Maritimes obligation under the
underwriters unit purchase option it granted to Maxim
Group LLC for the purchase up to a total of 1,000,000 units
at a per unit price of $12.50. The units issuable upon exercise
of the option will consist of one share of our common stock and
one warrant. The warrant will be identical to the warrants
described above.
Dividends
Seanergy Maritime distributed quarterly to its public
shareholders on a pro rata basis, interest earned on the
Trust Account (subject to certain deductions) from the
period of its initial public offering to the close of its
business combination.
Seanergy anticipates paying dividends in the aggregate amount of
$1.20 per share on a quarterly basis during the one-year
period commencing with the second full quarter following the
initial closing of the vessel acquisition and intangible assets,
which is the quarter ending March 31, 2009. Seanergy
Maritimes founding shareholders and the Restis affiliate
shareholders have agreed with Seanergy for such one-year period
to subordinate their rights to receive dividends with respect to
the 5,500,000 original shares owned by them to the rights of
Seanergys public shareholders, but only to the extent that
Seanergy has insufficient funds to make such dividend payments.
The declaration and payment of any dividend is subject to the
discretion of Seanergys board of directors. The timing and
amount of dividend payments will be in the discretion of
Seanergys board of directors and be dependent upon its
earnings, financial condition, cash requirements and
availability, fleet renewal and expansion, restrictions in its
loan agreements, the provisions of Marshall Islands law
affecting the payment of dividends to shareholders and other
factors. Seanergys board of directors may
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review and amend its dividend policy from time to time in light
of its plans for future growth and other factors.
Our
Transfer Agent and Warrant Agent
The transfer agent for our common stock and warrant agent for
our warrants is Continental Stock Transfer & Trust
Company.
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TAXATION
U.S.
Federal Income Taxation
General
In the opinion of Loeb & Loeb LLP, the following is a
summary of the material U.S. federal income tax
consequences of the ownership and disposition of our common
stock and warrants. The discussion below of the
U.S. federal income tax consequences to
U.S. Holders will apply to a beneficial owner
of our common stock and warrants that is treated for
U.S. federal income tax purposes as:
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an individual citizen or resident of the United States;
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a corporation (or other entity treated as a corporation for
U.S. federal income tax purposes) that is created or
organized (or treated as created or organized) in or under the
laws of the United States, any state thereof or the District of
Columbia;
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an estate whose income is includible in gross income for
U.S. federal income tax purposes regardless of its
source; or
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a trust if (i) a U.S. court can exercise primary
supervision over the trusts administration and one or more
U.S. persons are authorized to control all substantial
decisions of the trust, or (ii) it has a valid election in
effect under applicable U.S. Treasury regulations to be
treated as a U.S. person.
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If you are not described as a U.S. Holder and are not an
entity treated as a partnership or other pass-through entity for
U.S. federal income tax purposes, you will be considered a
Non-U.S. Holder.
The U.S. federal income tax consequences applicable to
Non-U.S. Holders
is described below under the heading
Non-U.S. Holders.
This summary is based on the Code, its legislative history,
Treasury regulations promulgated thereunder, published rulings
and court decisions, all as currently in effect. These
authorities are subject to change, possibly on a retroactive
basis.
This summary does not address all aspects of U.S. federal
income taxation that may be relevant to any particular holder
based on such holders individual circumstances. In
particular, this discussion considers only holders that will own
and hold our common stock and warrants as capital assets within
the meaning of Section 1221 of the Code and does not
address the potential application of the alternative minimum tax
or the U.S. federal income tax consequences to holders that
are subject to special rules, including:
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financial institutions or financial services
entities;
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broker-dealers;
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taxpayers who have elected mark-to-market accounting;
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tax-exempt entities;
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governments or agencies or instrumentalities thereof;
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insurance companies;
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regulated investment companies;
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real estate investment trusts;
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certain expatriates or former long-term residents of the United
States;
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persons that actually or constructively own 10% or more of our
voting shares;
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persons that hold our common stock and warrants as part of a
straddle, constructive sale, hedging, conversion or other
integrated transaction; or
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persons whose functional currency is not the U.S. dollar.
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This summary does not address any aspect of U.S. federal
non-income tax laws, such as gift or estate tax laws, or state,
local or
non-U.S. tax
laws. Additionally, this discussion does not consider the tax
treatment of partnerships or other pass-through entities or
persons who hold our common stock or warrants through such
entities. If a partnership (or other entity classified as a
partnership for U.S. federal income tax purposes) is the
beneficial owner of our common stock or warrants, the
U.S. federal income tax treatment of a partner in the
partnership generally will depend on the status of the partner
and the activities of the partnership.
We have not sought, nor will we seek, a ruling from the Internal
Revenue Service, or the IRS, or an opinion of counsel as to any
U.S. federal income tax consequence described herein. The
IRS may disagree with the description herein, and its
determination may be upheld by a court.
BECAUSE OF THE COMPLEXITY OF THE TAX LAWS AND BECAUSE THE TAX
CONSEQUENCES TO ANY PARTICULAR HOLDER OF OUR COMMON STOCK AND
WARRANTS MAY BE AFFECTED BY MATTERS NOT DISCUSSED HEREIN, EACH
SUCH HOLDER IS URGED TO CONSULT WITH ITS TAX ADVISOR WITH
RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE OWNERSHIP AND
DISPOSITION OF OUR COMMON STOCK AND WARRANTS, INCLUDING THE
APPLICABILITY AND EFFECT OF STATE, LOCAL AND
NON-U.S. TAX
LAWS, AS WELL AS U.S. FEDERAL TAX LAWS.
U.S.
Holders
Taxation
of Distributions Paid on Common Stock
Subject to the passive foreign investment company, or PFIC,
rules discussed below, a U.S. Holder generally will be
required to include in gross income the amount of any
distribution paid on our common stock. A distribution on such
common stock should be treated as a dividend for
U.S. federal income tax purposes to the extent the
distribution is paid out of our current or accumulated earnings
and profits (as determined under U.S. federal income tax
principles). Such dividend should not be eligible for the
dividends-received deduction generally allowed to
U.S. corporations in respect of dividends received from
other U.S. corporations. Distributions in excess of such
earnings and profits should be applied against and reduce the
U.S. Holders tax basis in our common stock (but not
below zero) and, to the extent in excess of such basis, should
be treated as gain from the sale or exchange of such common
stock.
With respect to non-corporate U.S. Holders of our common
stock, for taxable years beginning before January 1, 2011,
dividends may be taxed at the lower rate applicable to long-term
capital gains (see the section entitled
Taxation on the Disposition of Common Stock
and Warrants, below) provided that (1) our common
stock is readily tradable on an established securities market in
the United States, (2) we are not a PFIC, as discussed
below, for either the taxable year in which the dividend was
paid or the preceding taxable year, and (3) certain holding
period requirements are met. Under published IRS guidance, for
purposes of clause (1) above, common stock is considered to
be readily tradable on an established securities market in the
United States only if it is listed on certain exchanges, which
include the Nasdaq Stock Market. We expect that our stock will
be listed on the Nasdaq Stock Market. Nevertheless, you should
consult with your own tax advisors regarding the availability of
the lower capital gains tax rate for any dividends paid with
respect to our common stock.
Taxation
on the Disposition of Common Stock and Warrants
Upon a sale or other taxable disposition of our common stock or
warrants (which, in general, would include a redemption of our
common stock or warrants), and subject to the PFIC rules
discussed below, a U.S. Holder generally should recognize
capital gain or loss in an amount equal to the difference
between the amount realized on such disposition and the
U.S. Holders tax basis in the common stock or
warrants. See the section entitled
Exercise or Lapse of a Warrant
below for a discussion regarding a U.S. Holders tax
basis in the common stock acquired pursuant to the exercise of a
warrant.
Capital gains recognized by a U.S. Holder generally are
subject to U.S. federal income tax at the same rate as
ordinary income, except that long-term capital gains recognized
by a non-corporate U.S. Holder are
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generally subject to U.S. federal income tax at a maximum
rate of 15% for taxable years beginning before January 1,
2011, and 20% thereafter. Capital gain or loss will constitute
long-term capital gain or loss if the U.S. Holders
holding period under the Code for the common stock or warrants
exceeds one year. The deductibility of capital losses is subject
to various limitations.
Exercise
or Lapse of a Warrant
Subject to the PFIC rules discussed below, a U.S. Holder
generally should not recognize gain or loss upon the exercise of
a warrant to acquire our common stock. Common stock acquired
pursuant to the exercise of a warrant for cash generally should
have a tax basis equal to the U.S. Holders tax basis
in the warrant, increased by the amount paid to exercise the
warrant. The holding period of such common stock generally
should begin on the day after the date of exercise of the
warrant. If the terms of a warrant provide for any adjustment to
the number of shares of common stock for which the warrant may
be exercised or to the exercise price of the warrants, such
adjustment may, under certain circumstances, result in a
constructive distribution that could be taxable as a dividend to
the U.S. Holder of the warrant. Conversely, the absence of
an appropriate adjustment similarly may result in a constructive
distribution that could be taxable as a dividend to the
U.S. Holders of our common stock. See the section entitled
Taxation of Distributions Paid on Common
Stock above. If a warrant is allowed to lapse unexercised,
a U.S. Holder generally should recognize a capital loss
equal to such holders tax basis in the warrant.
U.S. Holders should consult with their own tax advisors
concerning the effect of any adjustment provisions contained in
our warrants.
Passive
Foreign Investment Company Rules
A foreign corporation will be a PFIC if at least 75% of its
gross income in a taxable year, including its pro rata share of
the gross income of any company in which it is considered to own
at least 25% of the shares by value, is passive income.
Alternatively, a foreign corporation will be a PFIC if at least
50% of its assets in a taxable year, ordinarily determined based
on fair market value and averaged quarterly over the year,
including its pro rata share of the assets of any company in
which it is considered to own at least 25% of the shares by
value, are held for the production of, or produce, passive
income. Passive income generally includes dividends, interest,
rents, royalties, and gains from the disposition of passive
assets.
Based on the current and expected composition of the assets and
income of us and our subsidiaries, it is not anticipated that we
will be treated as a PFIC. Although there is no legal authority
directly on point, such position is based principally on the
view that, for purposes of determining whether we are a PFIC,
the gross income we derive (or are deemed to derive) from the
time chartering and voyage chartering activities of our wholly
owned subsidiaries should constitute service income, rather than
rental income. We intend to take the position that such income
does not constitute passive income and that the assets owned and
operated by us or our subsidiaries in connection with the
production of such income (in particular, the vessels) do not
constitute passive assets under the PFIC rules. While there is
analogous legal authority supporting this position, consisting
of case law and IRS pronouncements concerning the
characterization of income derived from time charters and voyage
charters as services income for other tax purposes, in the
absence of any direct legal authority specifically relating to
the statutory provisions governing PFICs, the IRS or a court
could disagree with such position. Our actual PFIC status for
any taxable year will not be determinable until after the end of
the taxable year, and, accordingly, there can be no assurance
that we will not be considered a PFIC for the current taxable
year or any future taxable year.
If we were a PFIC for any taxable year during which a
U.S. Holder held our common stock or warrants, and such
U.S. Holder did not make a timely qualified electing fund,
or QEF, election for the first taxable year of its holding
period for the common stock or mark-to-market election, as
described below, such holder should be subject to special rules
with respect to:
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any gain recognized (or deemed recognized) by the
U.S. Holder on the sale or other taxable disposition of our
common stock or warrants; and
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any excess distribution made to the U.S. Holder
(generally, any distributions to such holder during a taxable
year that are greater than 125% of the average annual
distributions received by such holder in
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respect of our common stock during the three preceding taxable
years or, if shorter, such holders holding period for the
common stock).
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Under these rules,
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the U.S. Holders gain or excess distribution will be
allocated ratably over the U.S. Holders holding
period for the common stock or warrants;
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the amount allocated to the taxable year in which the
U.S. Holder recognized the gain or received the excess
distribution, or to any taxable year prior to the first taxable
year in which we are a PFIC, will be taxed as ordinary income;
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the amount allocated to other taxable years will be taxed at the
highest tax rate in effect for that year and applicable to the
U.S. Holder; and
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the interest charge generally applicable to underpayments of tax
will be imposed in respect of the tax attributable to each such
other taxable year.
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In addition, if we were a PFIC, a distribution to a
U.S. Holder that is characterized as a dividend and is not
an excess distribution generally should not be eligible for the
reduced rate of tax applicable to certain dividends paid before
2011 to non-corporate U.S. Holders, as discussed above.
Furthermore, if we were a PFIC, a U.S. Holder that acquires
our common stock or warrants from a deceased U.S. Holder
who dies before January 1, 2010, generally should be denied
the
step-up
of U.S. federal income tax basis in such stock or warrants
to their fair market value at the date of the deceased
holders death. Instead, such U.S. Holder would have a
tax basis in such stock or warrants equal to the deceased
holders tax basis, if lower.
In general, a U.S. Holder may avoid the PFIC tax
consequences described above in respect of our common stock by
making a timely QEF election to include in income such
holders pro rata share of our net capital gains (as
long-term capital gain) and other earnings and profits (as
ordinary income), on a current basis, in each case whether or
not distributed. A U.S. Holder may make a separate election
to defer the payment of taxes on undistributed income inclusions
under the QEF rules, but if deferred, any such taxes will be
subject to an interest charge.
A U.S. Holder may not make a QEF election or, as described
below, a mark-to-market election with respect to our warrants.
As a result, if a U.S. Holder sells or otherwise disposes
of a warrant to purchase our common stock (other than upon
exercise of a warrant), any gain recognized on such disposition
generally should be subject to the special tax and interest
charge rules treating the gain as an excess distribution, as
described above, if we were a PFIC at any time during the period
the U.S. Holder held the warrants.
If a U.S. Holder that exercises such warrants properly
makes a QEF election with respect to the newly acquired common
stock (or has previously made a QEF election with respect to our
common stock), the QEF election should apply to the newly
acquired common stock, but the adverse tax consequences relating
to PFIC shares, adjusted to take into account the current
inclusions from the QEF election, generally should continue to
apply with respect to such newly acquired common stock (which
generally will be deemed to have a holding period for the
purposes of the PFIC rules that includes the period that the
U.S. Holder held the warrants), unless the holder makes a
purging election. The purging election creates a deemed sale of
such stock at its fair market value. The gain recognized by the
holder by reason of the purging election should be subject to
the special tax and interest charge rules treating the gain as
an excess distribution, as described above. As a result of the
purging election, a U.S. Holder should have a new basis and
holding period in the common stock acquired upon the exercise of
the warrants for purposes of the PFIC rules.
The QEF election is made on a
shareholder-by-shareholder
basis and, once made, can be revoked only with the consent of
the IRS. A U.S. Holder generally makes a QEF election by
attaching a completed IRS Form 8621 (Return by a
Shareholder of a Passive Foreign Investment Company or Qualified
Electing Fund), including the information provided in a PFIC
annual information statement, to a timely filed
U.S. federal income tax return for the tax year to which
the election relates. Retroactive QEF elections may only be made
by filing a protective statement with such return or with the
consent of the IRS.
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In order to comply with the requirements of a QEF election, a
U.S. Holder must receive certain information from us. There
is no assurance, however, that we will have timely knowledge of
our status as a PFIC in the future or that we will be willing or
able to provide a U.S. Holder with the information needed
to support a QEF election.
If a U.S. Holder makes a QEF election with respect to our
common stock, and the special tax and interest charge rules do
not apply to such stock (because of a timely QEF election for
the first tax year of the U.S. Holders holding period
for such stock or a purge of the PFIC taint pursuant to a
purging election), any gain recognized on the appreciation of
such stock generally should be taxable as capital gain and no
interest charge should be imposed. As discussed above, if a
U.S. Holder has made a QEF election, such holder should be
currently taxed on its pro rata share of the our earnings and
profits, whether or not distributed. In such case, a subsequent
distribution of such earnings and profits that were previously
included in income should not be taxable as a dividend. The
U.S. Holders tax basis in shares will be increased by
amounts that are included in income pursuant to the QEF election
and decreased by amounts distributed but not taxed as dividends
under the above rules. Similar basis adjustments apply to
property if by reason of holding such property the
U.S. Holder is treated under the applicable attribution
rules as owning shares in a PFIC with respect to which a QEF
election was made.
Although a determination as to our PFIC status will be made
annually, an initial determination that we are a PFIC generally
should apply for subsequent years if the U.S. Holder held
our common stock or warrants while we were a PFIC, whether or
not we met the test for PFIC status in those subsequent years.
However, if a U.S. Holder makes the QEF election discussed
above for the first tax year in which the such holder holds (or
is deemed to hold) our common stock and for which we are
determined to be a PFIC, such holder should not be subject to
the PFIC tax and interest charge rules (or the denial of basis
step-up
at
death) discussed above with respect to such stock. In addition,
such U.S. Holder should not be subject to the QEF inclusion
regime with respect to such stock for the tax years in which we
are not a PFIC. On the other hand, if the QEF election is not
effective for each of the tax years in which we are a PFIC and
the U.S. Holder holds (or is deemed to hold) our common
stock, the PFIC rules discussed above will continue to apply to
such stock unless the holder makes a purging election and pays
the tax and interest charge with respect to the gain inherent in
such stock attributable to the pre-QEF election period.
Alternatively, if a U.S. Holder owns common stock in a PFIC
that is treated as marketable stock, the U.S. Holder may
make a mark-to-market election. If the U.S. Holder makes a
valid mark-to-market election for the first tax year in which
the U.S. Holder holds (or is deemed to hold) our common
stock and for which we are determined to be a PFIC, such holder
generally should not be subject to the PFIC rules described
above in respect of such common stock. Instead, the
U.S. Holder generally should include as ordinary income
each year the excess, if any, of the fair market value of our
common stock at the end of such holders taxable year over
its tax basis in our common stock. The U.S. Holder also
should be allowed to take an ordinary loss in respect of the
excess, if any, of its tax basis in our common stock over the
fair market value of such stock at the end of such holders
taxable year (but only to the extent of the net amount of
previously included income as a result of the mark-to-market
election). The U.S. Holders tax basis in our common
stock will be adjusted to reflect any such income or loss
amounts, and any further gain recognized on a sale or other
taxable disposition of the common stock should be treated as
ordinary income.
Currently, a mark-to-market election may not be made with
respect to warrants. As a result, if a U.S. Holder
exercises a warrant and properly makes a mark-to-market election
with respect to the newly acquired common stock (or has
previously made a mark-to-market election in respect of our
common stock), the PFIC tax and interest charge rules generally
should apply to any gain deemed recognized by such holder under
the mark-to-market rules for the first tax year for which such
election applies in respect of such newly acquired stock (which
generally should be deemed to have a holding period for purposes
of the PFIC rules that includes the period such holder held the
warrants).
The mark-to-market election generally is available only for
stock that is regularly traded on a national securities exchange
that is registered with the Securities and Exchange Commission
(e.g., the Nasdaq Stock Market) or on a foreign exchange or
market that the IRS determines has rules sufficient to ensure
that the market price represents a legitimate and sound fair
market value. While we expect that our common stock will
105
be regularly traded on the Nasdaq Stock Market, there can be no
assurance of that. U.S. Holders should consult with their
own tax advisors regarding the availability and tax consequences
of a mark-to-market election in respect of our common stock
under their particular circumstances.
If we are a PFIC and, at any time, have a
non-U.S. subsidiary
that is classified as a PFIC, a U.S. Holder generally
should be deemed to own a portion of the shares of such
lower-tier PFIC, and generally could incur liability for
the deferred tax and interest charge described above if we
receive a distribution from, or dispose of all or part of our
interest in, the lower-tier PFIC. There is no assurance,
however, that we will have timely knowledge of the status of any
such subsidiary as a PFIC in the future or that we will be
willing or able to provide a U.S. Holder with the
information needed to support a QEF election with respect to a
lower-tier PFIC. U.S. Holders are urged to consult
their own tax advisors regarding the tax issues raised by
lower-tier PFICs.
If a U.S. Holder owns (or is deemed to own) stock in a PFIC
during any year, such holder may have to file an IRS
Form 8621 (whether or not a QEF or mark-to-market election
is made).
The rules dealing with PFICs and with the QEF and mark-to-market
elections are very complex and are affected by various factors
in addition to those described above. Accordingly,
U.S. Holders should consult their own tax advisors
concerning the application of the PFIC rules to our common stock
and warrants under their particular circumstances.
Non-U.S.
Holders
Dividends paid to a
Non-U.S. Holder
with respect to our common stock generally should not be subject
to U.S. federal income tax, unless the dividends are
effectively connected with the
Non-U.S. Holders
conduct of a trade or business within the United States (and, if
required by an applicable income tax treaty, are attributable to
a permanent establishment or fixed base that such holder
maintains in the United States).
In addition, a
Non-U.S. Holder
generally should not be subject to U.S. federal income tax
on any gain attributable to a sale or other disposition of our
common stock or warrants unless such gain is effectively
connected with its conduct of a trade or business in the United
States (and, if required by an applicable income tax treaty, is
attributable to a permanent establishment or fixed base that
such holder maintains in the United States) or the
Non-U.S. Holder
is an individual who is present in the United States for
183 days or more in the taxable year of sale or other
disposition and certain other conditions are met (in which case
such gain from United States sources may be subject to tax at a
30% rate or a lower applicable tax treaty rate).
Dividends and gains that are effectively connected with the
Non-U.S. Holders
conduct of a trade or business in the United States (and, if
required by an applicable income tax treaty, are attributable to
a permanent establishment or fixed base in the United States)
generally should be subject to tax in the same manner as for a
U.S. Holder and, if the
Non-U.S. Holder
is a corporation for U.S. federal income tax purposes, it
also may be subject to an additional branch profits tax at a 30%
rate or a lower applicable tax treaty rate.
Backup
Withholding and Information Reporting
In general, information reporting for U.S. federal income
tax purposes should apply to distributions made on our common
stock within the United States to a non-corporate
U.S. Holder and to the proceeds from sales and other
dispositions of our common stock or warrants to or through a
U.S. office of a broker by a non-corporate
U.S. Holder. Payments made (and sales and other
dispositions effected at an office) outside the United States
will be subject to information reporting in limited
circumstances.
In addition, backup withholding of U.S. federal income tax,
currently at a rate of 28%, generally should apply to
distributions paid on our common stock to a non-corporate
U.S. Holder and the proceeds from sales and other
dispositions of our common stock or warrants by a non-corporate
U.S. Holder, who:
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|
|
fails to provide an accurate taxpayer identification number;
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|
|
|
is notified by the IRS that backup withholding is
required; or
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|
|
in certain circumstances, fails to comply with applicable
certification requirements.
|
106
A
Non-U.S. Holder
generally may eliminate the requirement for information
reporting and backup withholding by providing certification of
its foreign status, under penalties of perjury, on a duly
executed applicable IRS
Form W-8
or by otherwise establishing an exemption.
Backup withholding is not an additional tax. Rather, the amount
of any backup withholding generally should be allowed as a
credit against a U.S. Holders or a
Non-U.S. Holders
U.S. federal income tax liability and may entitle such
holder to a refund, provided that certain required information
is timely furnished to the IRS.
Marshall
Islands Taxation
Seanergy is incorporated in the Marshall Islands. Under current
Marshall Islands law, Seanergy is not subject to tax on income
or capital gains, no Marshall Islands withholding tax will be
imposed upon payment of dividends by Seanergy to its
shareholders, and holders of common stock or warrants of
Seanergy that are not residents of or domiciled or carrying on
any commercial activity in the Marshall Islands will not be
subject to Marshall Islands tax on the sale or other disposition
of such common stock or warrants.
EXPENSES
RELATING TO THIS OFFERING
Set forth below is an itemization of the total expenses that we
expect to incur in connection with this distribution. With the
exception of the SEC registration fee, all amounts are estimates.
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SEC Registration Fee
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|
$
|
14,484.15
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Printing Expenses
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$
|
100,000
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|
Legal Fees and Expenses
|
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$
|
326,000
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|
Accounting Fees and Expenses
|
|
$
|
330,000
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|
Miscellaneous
|
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$
|
500
|
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Total
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$
|
770,984.15
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The above expenses will be paid by us.
LEGAL
MATTERS
The validity of the securities offered in this prospectus are
being passed upon for us by Reeder &
Simpson, P.C., Piraeus, Greece. Loeb & Loeb LLP,
as special United States counsel, has provided an opinion
related to the tax disclosure under the caption
Taxation U.S. Federal Income
Taxation, which is filed as an exhibit to this
registration statement.
EXPERTS
The financial statements of Seanergy Maritime Corp. included in
this prospectus and in the registration statement have been
audited by Weinberg & Company, P.A., independent
registered public accounting firm, to the extent and for the
period set forth in their report appearing elsewhere in this
prospectus and in the registration statement. The financial
statements and the report of Weinberg & Company, P.A.
are included in reliance upon their report given upon the
authority of Weinberg & Company, P.A. as experts in
auditing and accounting.
The combined financial statements of Goldie Navigation Ltd.,
Pavey Services Ltd., Shoreline Universal Ltd., Valdis Marine
Corp., Kalistos Maritime S.A. and Kalithea Maritime S.A.
(together, the Group) as of December 31, 2007
and 2006 and for each of the years in the three-year period
ended December 31, 2007, prepared in conformity with
International Financial Reporting Standards as issued by the
International Accounting Standards Board, have been included
herein and in this registration statement in reliance upon the
report of KPMG Certified Auditors A.E., independent registered
public accounting firm, appearing elsewhere, and upon the
authority of said firm as experts in accounting and auditing.
Such report contains an explanatory paragraph stating that the
combined financial statements referred to above present the
aggregated financial information of the six vessel-owning
companies and an allocation of long-term debt and that the
combined financial statements may not necessarily be indicative
of the Groups financial position, results of operations,
or cash flows had the Group operated as a separate entity during
the period presented or for future periods.
107
INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS
Effective December 1, 2008, the audit committee of Seanergy
Maritime dismissed Seanergy Maritimes principal
accountant, Weinberg & Company, P.A.
(Weinberg).
The termination of Weinberg is not a result of any disagreements
with Weinberg on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or
procedure. Weinbergs report on Seanergy Maritimes
financial statements for the year ended December 31, 2007,
period from August 15, 2006 (Inception) to
December 31, 2006, and August 15, 2006 (Inception) to
December 31, 2007, did not contain an adverse opinion or a
disclaimer of opinion nor was such report qualified or modified
as to uncertainty, audit scope or accounting principles.
Further to Seanergy Maritimes transfer of its accounting
function to Greece, it retained KPMG Certified Auditors A.E. in
Athens, Greece as its new independent registered public
accounting firm for the fiscal year ending December 31,
2008.
WHERE YOU
CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on
Form F-1,
which includes exhibits, schedules and amendments, under the
Securities Act, with respect to this offering of our securities.
Although this prospectus, which forms a part of the registration
statement, contains all material information included in the
registration statement, parts of the registration statement have
been omitted as permitted by rules and regulations of the SEC.
We refer you to the registration statement and its exhibits for
further information about us, our securities and this offering.
The registration statement and its exhibits, as well as our
other reports filed with the SEC, can be inspected and copied at
the SECs public reference room at 100 F Street,
N.E., Washington, D.C.
20549-1004.
The public may obtain information about the operation of the
public reference room by calling the SEC at
1-800-SEC-0330.
In addition, the SEC maintains a web site at
http://www.sec.gov
which contains the
Form F-1
and other reports, proxy and information statements and
information regarding issuers that file electronically with the
SEC.
108
FINANCIAL
STATEMENTS
INDEX TO
FINANCIAL STATEMENTS
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Page
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Financial Statements of Seanergy Maritime Corp.
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F-2
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F-3
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F-4
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F-5
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F-6
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F-7
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F-18
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F-19
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F-20
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F-21
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|
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F-22
|
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Combined Financial Statements of Goldie Navigation Ltd.,
Pavey Services Ltd., Shoreline Universal Ltd., Valdis
Marine Corp., Kalistos Maritime S.A., and Kalithea Maritime
S.A.
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F-36
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F-37
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F-38
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F-39
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F-40
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F-41
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F-62
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F-63
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F-64
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F-65
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F-66
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F-1
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders
Seanergy Maritime Corp.
We have audited the accompanying balance sheets of Seanergy
Maritime Corp. (a corporation in the development stage) (the
Company) as of December 31, 2007 and 2006, and
the related statements of operations, shareholders equity
and cash flows for the year ended December 31, 2007, the
period from August 15, 2006 (Inception) to
December 31, 2006, and the period from August 15, 2006
(Inception) to December 31, 2007 (Cumulative). These
financial statements are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Seanergy Maritime Corp. as of December 31, 2007 and
2006, and the results of its operations and its cash flows for
the year ended December 31, 2007, the period from
August 15, 2006 (Inception) to December 31, 2006, and
the period from August 15, 2006 (Inception) to
December 31, 2007 (Cumulative), in conformity with
accounting principles generally accepted in the United States of
America.
/s/ Weinberg &
Company, P.A.
Weinberg & Company, P.A.
Boca Raton, Florida
March 12, 2008
F-2
SEANERGY
MARITIME CORP.
(a corporation in the development stage)
BALANCE SHEETS
DECEMBER 31, 2007 AND 2006
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2007
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2006
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ASSETS
|
Current assets:
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Cash and cash equivalents
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$
|
2,210,726
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$
|
355,938
|
|
Money market funds held in trust
|
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232,923,020
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|
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|
Prepaid expenses and other current assets
|
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79,978
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|
20,000
|
|
|
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Total current assets
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235,213,724
|
|
|
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375,938
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|
Deferred offering costs
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256,253
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|
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Total assets
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|
$
|
235,213,724
|
|
|
$
|
632,191
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LIABILITIES AND SHAREHOLDERS EQUITY
|
Current liabilities:
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Accounts payable and accrued expenses
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|
$
|
587,872
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|
|
$
|
184,753
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|
Amounts due to underwriter
|
|
|
5,407,142
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|
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|
Accrued interest payable to shareholders
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|
824
|
|
Due to shareholders
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|
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|
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75,986
|
|
Notes payable to shareholders
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350,000
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Total current liabilities
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5,995,014
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|
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|
611,563
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Common stock subject to possible redemption
8,084,999 shares at redemption value
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80,849,990
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Commitments and contingencies
|
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Shareholders equity:
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Preferred stock, $0.0001 par value; authorized
1,000,000 shares; issued none
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Common stock, $0.0001 par value; authorized
89,000,000 shares; issued and outstanding
28,600,000 shares, inclusive of 8,084,999 shares
subject to possible redemption, at December 31, 2007 and
7,264,893 shares at December 31, 2006
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|
|
2,860
|
|
|
|
726
|
|
Additional paid-in capital
|
|
|
146,924,982
|
|
|
|
24,274
|
|
Retained earnings (deficit)
|
|
|
1,440,878
|
|
|
|
(4,372
|
)
|
|
|
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|
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Total shareholders equity
|
|
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148,368,720
|
|
|
|
20,628
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|
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Total liabilities and shareholders equity
|
|
$
|
235,213,724
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|
|
$
|
632,191
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See accompanying notes to financial statements.
F-3
SEANERGY
MARITIME CORP.
(a corporation in the development stage)
STATEMENTS
OF OPERATIONS
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Period from
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Period from
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August 15, 2006
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August 15, 2006
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(Inception) to
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Year Ended
|
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(Inception) to
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December 31, 2007
|
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December 31, 2007
|
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|
December 31, 2006
|
|
|
(Cumulative)
|
|
|
Operating expenses
|
|
$
|
(445,039
|
)
|
|
$
|
(4,576
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)
|
|
$
|
(449,615
|
)
|
Interest income
|
|
|
1,948,192
|
|
|
|
1,028
|
|
|
|
1,949,220
|
|
Interest expense underwriter
|
|
|
(44,642
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)
|
|
|
|
|
|
|
(44,642
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)
|
Interest expense shareholders
|
|
|
(13,261
|
)
|
|
|
(824
|
)
|
|
|
(14,085
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
1,445,250
|
|
|
$
|
(4,372
|
)
|
|
$
|
1,440,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.12
|
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.10
|
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
11,754,095
|
|
|
|
7,264,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
15,036,283
|
|
|
|
7,264,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
See accompanying notes to financial statements.
F-4
|
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|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Retained
|
|
|
Total
|
|
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Earnings
|
|
|
Shareholders
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
(Deficit)
|
|
|
Equity
|
|
|
Balance, August 15, 2006 (Inception)
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
Sale of shares to founding shareholders at $0.0034 per share
|
|
|
7,264,893
|
|
|
|
726
|
|
|
|
24,274
|
|
|
|
|
|
|
|
25,000
|
|
Net loss for the period from August 15, 2006 (Inception) to
December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,372
|
)
|
|
|
(4,372
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2006
|
|
|
7,264,893
|
|
|
|
726
|
|
|
|
24,274
|
|
|
|
(4,372
|
)
|
|
|
20,628
|
|
Shares surrendered and cancelled
|
|
|
(1,764,893
|
)
|
|
|
(176
|
)
|
|
|
176
|
|
|
|
|
|
|
|
|
|
Sale of shares and warrants in private placement and public
offering, net of offering costs of $18,062,268
|
|
|
23,100,000
|
|
|
|
2,310
|
|
|
|
227,350,422
|
|
|
|
|
|
|
|
227,352,732
|
|
Sale of underwriters purchase option
|
|
|
|
|
|
|
|
|
|
|
100
|
|
|
|
|
|
|
|
100
|
|
Capital contributed by founding shareholders
|
|
|
|
|
|
|
|
|
|
|
400,000
|
|
|
|
|
|
|
|
400,000
|
|
Shares reclassified to Common stock subject to mandatory
redemption
|
|
|
|
|
|
|
|
|
|
|
(80,849,990
|
)
|
|
|
|
|
|
|
(80,849,990
|
)
|
Net income for the year ended December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,445,250
|
|
|
|
1,445,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2007
|
|
|
28,600,000
|
|
|
$
|
2,860
|
|
|
$
|
146,924,982
|
|
|
$
|
1,440,878
|
|
|
$
|
148,368,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial statements.
F-5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
|
|
|
|
|
Period
|
|
|
from
|
|
|
|
|
|
|
from
|
|
|
August 15,
|
|
|
|
|
|
|
August 15,
|
|
|
2006
|
|
|
|
Year
|
|
|
2006
|
|
|
(Inception) to
|
|
|
|
Ended
|
|
|
(Inception) to
|
|
|
December 31,
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
2007
|
|
|
|
2007
|
|
|
2006
|
|
|
(Cumulative)
|
|
|
Net income (loss)
|
|
$
|
1,445,250
|
|
|
$
|
(4,372
|
)
|
|
$
|
1,440,878
|
|
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) decrease in
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
(59,978
|
)
|
|
|
(20,000
|
)
|
|
|
(79,978
|
)
|
Increase (decrease) in
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
|
155,335
|
|
|
|
3,500
|
|
|
|
158,835
|
|
Accrued interest payable to shareholders
|
|
|
(824
|
)
|
|
|
824
|
|
|
|
|
|
Accrued interest payable to underwriter
|
|
|
44,642
|
|
|
|
|
|
|
|
44,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
1,584,425
|
|
|
|
(20,048
|
)
|
|
|
1,564,377
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in trust account from interest earned on funds held in
trust
|
|
|
(1,923,020
|
)
|
|
|
|
|
|
|
(1,923,020
|
)
|
Funds placed in trust account from offerings
|
|
|
(231,000,000
|
)
|
|
|
|
|
|
|
(231,000,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(232,923,020
|
)
|
|
|
|
|
|
|
(232,923,020
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from initial sale of common stock
|
|
|
|
|
|
|
25,000
|
|
|
|
25,000
|
|
Gross proceeds from private placement
|
|
|
14,415,000
|
|
|
|
|
|
|
|
14,415,000
|
|
Gross proceeds from public offering
|
|
|
231,000,000
|
|
|
|
|
|
|
|
231,000,000
|
|
Payment of offering costs
|
|
|
(11,795,731
|
)
|
|
|
(75,000
|
)
|
|
|
(11,870,731
|
)
|
Proceeds from underwriters purchase option
|
|
|
100
|
|
|
|
|
|
|
|
100
|
|
Proceeds from shareholders loans
|
|
|
|
|
|
|
350,000
|
|
|
|
350,000
|
|
Repayment of shareholders loans
|
|
|
(450,986
|
)
|
|
|
|
|
|
|
(450,986
|
)
|
Advances from shareholders, net
|
|
|
25,000
|
|
|
|
75,986
|
|
|
|
100,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
233,193,383
|
|
|
|
375,986
|
|
|
|
233,569,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash
|
|
|
1,854,788
|
|
|
|
355,938
|
|
|
|
2,210,726
|
|
Cash at beginning of period
|
|
|
355,938
|
|
|
|
|
|
|
|
|
|
Cash at end of period
|
|
$
|
2,210,726
|
|
|
$
|
355,938
|
|
|
$
|
2,210,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
14,086
|
|
|
|
|
|
|
$
|
14,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital contributed by founding shareholders in the form of
legal fees paid
|
|
$
|
400,000
|
|
|
$
|
|
|
|
$
|
400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in accrued offering costs and placement fees
|
|
$
|
5,610,284
|
|
|
$
|
181,253
|
|
|
$
|
5,791,537
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholder advances converted to notes payable
|
|
$
|
100,986
|
|
|
$
|
|
|
|
$
|
100,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock subject to possible redemption
|
|
$
|
84,849,990
|
|
|
$
|
|
|
|
$
|
80,849,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Par value of common stock surrendered and cancelled
|
|
$
|
176
|
|
|
$
|
|
|
|
$
|
176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of unit purchase option issued to underwriters
|
|
$
|
7,390,000
|
|
|
$
|
|
|
|
$
|
7,390,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial statements.
F-6
|
|
1.
|
Organization
and Proposed Business Operations
|
Seanergy Maritime Corp. (the Company) was
incorporated in the Marshall Islands on August 15, 2006,
originally under the name Seanergy Maritime Acquisition Corp.,
as a blank check company formed to acquire, through a merger,
capital stock exchange, asset acquisition or other similar
business combination, one or more businesses in the maritime
shipping industry or related industries. The Company changed its
name to Seanergy Maritime Corp. on February 20, 2007.
At December 31, 2007, the Company had not yet commenced any
business operations and is therefore considered a
corporation in the development stage. All activity
through December 31, 2007 related to the Companys
formation and capital raising efforts, as described below. The
Company is subject to the risks associated with development
stage companies. The Company has selected December 31 as its
fiscal year-end.
The Companys ability to acquire an operating business was
contingent upon obtaining adequate financial resources through a
Private Placement and a Public Offering (together with the
Private Placement, the Offerings), which are
discussed in Note 3. The Companys management has
broad discretion with respect to the specific application of the
net proceeds of the Offerings, although substantially all of the
net proceeds of the Offerings are intended to be generally
applied toward consummating a business combination with an
operating company. As used herein, a target business
shall include one or more operating businesses or assets in the
maritime shipping industry, or related industries, or a
combination thereof, and a business combination
shall mean the acquisition by the Company of such a target
business. There can be no assurances that the Company will be
able to successfully effect a business combination.
|
|
2.
|
Summary
of Significant Accounting Policies
|
Cash
Equivalents and Concentrations of Credit Risk
The Company considers all highly liquid investments with an
original maturity of three months or less when purchased to be
cash equivalents.
The Company maintains its non-trust cash and cash equivalent
accounts with a financial institution located in Greece. The
balances in such accounts are insured by the Central Bank of
Greece up to 20,000 Euros (approximately $29,500 at
December 31, 2007). At December 31, 2007, the
Companys uninsured non-trust cash balance amounted to
approximately $2,181,300.
The Company maintains its cash and cash equivalent accounts held
in trust with a financial institution located in the United
States. Such cash and cash equivalents held in trust, at times,
may exceed federally insured limits. The Company maintains its
cash and cash equivalents held in trust with financial
institutions with high credit ratings.
Income
Taxes
The Company accounts for income taxes pursuant to Statement of
Financial Accounting Standards No. 109, Accounting
for Income Taxes (SFAS No. 109),
which establishes financial accounting and reporting standards
for the effects of income taxes that result from an
enterprises activities during the current and preceding
years. SFAS No. 109 requires an asset and liability
approach for financial accounting and reporting for income taxes.
In July 2006, the Financial Accounting Standards Board
(FASB) issued FASB Interpretation No. 48,
Accounting for Uncertainty in Income Taxes, an
interpretation of FASB Statement No. 109
(FIN 48), which provides criteria for the
recognition, measurement, presentation and disclosure of
uncertain tax positions. A tax benefit from an uncertain
position may be recognized only if it is more likely than
not that
F-7
SEANERGY
MARITIME CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL
STATEMENTS (Continued)
DECEMBER 31, 2007 AND 2006
the position is sustainable based on its technical merits. The
provisions of FIN 48 are effective for fiscal years
beginning after December 15, 2006. The adoption of
FIN 48 on January 1, 2007 did not have a material
effect on the Companys financial statements.
For United States federal income tax purposes, the Company has
elected to be classified as a partnership effective
January 1, 2007. The Company makes quarterly distributions
of interest income earned on the trust account to its Public
Shareholders on a pro rata basis (see Note 3). The Company
anticipates that substantially all of the funds in the trust
account will be invested in tax exempt money market accounts
that will generate income, which generally should be exempt from
United States federal income tax.
Earnings
Per Share
The Company computes earnings per share in accordance with
SFAS No. 128, Earnings per Share and SEC
Staff Accounting Bulletin No. 98
(SAB 98). SFAS No. 128 requires
companies with complex capital structures to present basic and
diluted EPS. Basic EPS is measured as the income available to
common shareholders divided by the weighted average common
shares outstanding for the period. Diluted EPS is similar to
basic EPS but presents the dilutive effect on a per share basis
of potential common shares (e.g., warrants) as if they had been
converted at the beginning of the periods presented, or issuance
date, if later. Potential common shares that have an
anti-dilutive effect (i.e., those that increase income per share
or decrease loss per share) are excluded from the calculation of
diluted EPS. At December 31, 2007, potentially dilutive
securities consisted of outstanding warrants to acquire an
aggregate of 41,116,667 shares of common stock, of which
warrants to acquire 1,000,000 shares were anti-dilutive at
such date. The calculation of diluted weighted average common
shares outstanding for the year ended December 31, 2007 is
based on the average of the closing price of the Companys
common stock for the period that it was quoted on the American
Stock Exchange.
The calculation of net income (loss) per share is summarized as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from
|
|
|
|
|
|
|
August 15,
|
|
|
|
|
|
|
2006
|
|
|
|
Year Ended
|
|
|
(Inception) to
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
1,445,250
|
|
|
$
|
(4,372
|
)
|
Weighted average common shares outstanding
|
|
|
11,754,095
|
|
|
|
7,264,893
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share basic
|
|
$
|
0.12
|
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
1,445,250
|
|
|
$
|
(4,372
|
)
|
Weighted average common shares outstanding
|
|
|
11,754,095
|
|
|
|
7,264,893
|
|
Effect of dilutive warrants
|
|
|
3,282,188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average common shares outstanding
|
|
|
15,036,283
|
|
|
|
7,264,893
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share diluted
|
|
$
|
0.10
|
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
F-8
SEANERGY
MARITIME CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL
STATEMENTS (Continued)
DECEMBER 31, 2007 AND 2006
Use of
Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of
expenses during the reporting period. Actual results could
differ from those estimates.
Fair
Value of Financial Instruments
The carrying amounts of cash and cash equivalents, cash held in
trust, prepaid expenses, accounts payable, accrued expenses, due
to underwriter, due to shareholders and notes payable to
shareholders approximate their respective fair values, due to
the short-term nature of these items
and/or
the
current interest rates payable in relation to current market
conditions.
Share-Based
Payments
The Company accounts for share-based payments pursuant to
Statement of Financial Accounting Standards No. 123R,
Share-Based Payments
(SFAS No. 123R). SFAS No. 123R
requires all share-based payments, including grants of employee
stock options to employees, to be recognized in the financial
statements based on their fair values. The Company adopted
SFAS No. 123R on August 15, 2006 (Inception) and
expects that it could have a material impact on the
Companys financial statements to the extent that the
Company grants stock-based compensation in future periods.
Foreign
Currency Translation
The Companys reporting currency is the United States
dollar. Although the Company maintains a cash account with a
bank in Greece, it is denominated in United States dollars, and
most of the Companys expenditures have been and are
expected to continue to be denominated in United States dollars.
Accordingly, the Company has designated its functional currency
as the United States dollar.
For amounts not initially designated in United States dollars,
asset and liability accounts are translated using the exchange
rate in effect at the balance sheet date, and statement of
operations accounts are translated using the average exchange
rate for each quarterly reporting period.
Gains or losses resulting from translation adjustments, to the
extent material, are included in other income (expense) in the
statement of operations.
Recent
Accounting Pronouncements
In September 2006, the FASB issued Statement of Financial
Accounting Standards No. 157, Fair Value
Measurements (SFAS No. 157), which
establishes a formal framework for measuring fair value under
Generally Accepted Accounting Principles (GAAP).
SFAS No. 157 defines and codifies the many definitions
of fair value included among various other authoritative
literature, clarifies and, in some instances, expands on the
guidance for implementing fair value measurements, and increases
the level of disclosure required for fair value measurements.
Although SFAS No. 157 applies to and amends the
provisions of existing FASB and American Institute of Certified
Public Accountants (AICPA) pronouncements, it does
not, of itself, require any new fair value measurements, nor
does it establish valuation standards. SFAS No. 157
applies to all other accounting pronouncements requiring or
permitting fair value measurements, except for:
SFAS No. 123R, share-based payment and related
pronouncements, the practicability exceptions to fair value
determinations allowed by various other authoritative
pronouncements, and AICPA Statements of Position
97-2
and
98-9
that
deal with software revenue recognition. SFAS No. 157
is effective for financial statements issued for fiscal
F-9
SEANERGY
MARITIME CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL
STATEMENTS (Continued)
DECEMBER 31, 2007 AND 2006
years beginning after November 15, 2007, and interim
periods within those fiscal years. The Company is currently
assessing the potential effect of SFAS No. 157 on its
financial statements.
In February 2007, the FASB issued Statement of Financial
Accounting Standards No. 159, The Fair Value Option
for Financial Assets and Financial Liabilities
(SFAS No. 159), which provides companies
with an option to report selected financial assets and
liabilities at fair value. SFAS No. 159s
objective is to reduce both complexity in accounting for
financial instruments and the volatility in earnings caused by
measuring related assets and liabilities differently. Generally
accepted accounting principles have required different
measurement attributes for different assets and liabilities that
can create artificial volatility in earnings.
SFAS No. 159 helps to mitigate this type of
accounting-induced volatility by enabling companies to report
related assets and liabilities at fair value, which would likely
reduce the need for companies to comply with detailed rules for
hedge accounting. SFAS No. 159 also establishes
presentation and disclosure requirements designed to facilitate
comparisons between companies that choose different measurement
attributes for similar types of assets and liabilities.
SFAS No. 159 requires companies to provide additional
information that will help investors and other users of
financial statements to more easily understand the effect of the
companys choice to use fair value on its earnings.
SFAS No. 159 also requires companies to display the
fair value of those assets and liabilities for which the company
has chosen to use fair value on the face of the balance sheet.
SFAS No. 159 does not eliminate disclosure
requirements included in other accounting standards, including
requirements for disclosures about fair value measurements
included in SFAS No. 157 and SFAS No. 107.
SFAS No. 159 is effective as of the beginning of a
companys first fiscal year beginning after
November 15, 2007. Early adoption is permitted as of the
beginning of the previous fiscal year provided the company makes
that choice in the first 120 days of that fiscal year and
also elects to apply the provisions of SFAS No. 157.
The Company is currently assessing the potential effect of
SFAS No. 159 on its financial statements.
In December 2007, the FASB issued SFAS No. 141(R),
Business Combinations
(SFAS No. 141(R)), which requires an
acquirer to recognize in its financial statements as of the
acquisition date (i) the identifiable assets acquired, the
liabilities assumed, and any noncontrolling interest in the
acquiree, measured at their fair values on the acquisition date,
and (ii) goodwill as the excess of the consideration
transferred plus the fair value of any noncontrolling interest
in the acquiree at the acquisition date over the fair values of
the identifiable net assets acquired. Acquisition-related costs,
which are the costs an acquirer incurs to effect a business
combination, will be accounted for as expenses in the periods in
which the costs are incurred and the services are received,
except that costs to issue debt or equity securities will be
recognized in accordance with other applicable GAAP.
SFAS No. 141(R) makes significant amendments to other
Statements and other authoritative guidance to provide
additional guidance or to conform the guidance in that
literature to that provided in SFAS No. 141(R).
SFAS No. 141(R) also provides guidance as to what
information is to be disclosed to enable users of financial
statements to evaluate the nature and financial effects of a
business combination. SFAS No. 141(R) is effective for
financial statements issued for fiscal years beginning on or
after December 15, 2008. Early adoption is prohibited. The
Company has not yet determined the effect on its consolidated
financial statements, if any, upon adoption of
SFAS No. 141(R).
In December 2007, the FASB issued SFAS No. 160,
Noncontrolling Interests in Consolidated Financial
Statements an amendment of ARB No. 51
(SFAS No. 160), which revises the
relevance, comparability, and transparency of the financial
information that a reporting entity provides in its consolidated
financial statements by establishing accounting and reporting
standards that require (i) the ownership interests in
subsidiaries held by parties other than the parent be clearly
identified, labeled, and presented in the consolidated statement
of financial position within equity, but separate from the
parents equity, (ii) the amount of consolidated net
income attributable to the parent and to the noncontrolling
interest be clearly identified and presented on the face of the
consolidated statement of income, (iii) changes in a
parents ownership
F-10
SEANERGY
MARITIME CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL
STATEMENTS (Continued)
DECEMBER 31, 2007 AND 2006
interest while the parent retains its controlling financial
interest in its subsidiary be accounted for consistently as
equity transactions, (iv) when a subsidiary is
deconsolidated, any retained noncontrolling equity investment in
the former subsidiary be initially measured at fair value, with
the gain or loss on the deconsolidation of the subsidiary being
measured using the fair value of any noncontrolling equity
investment rather than the carrying amount of that retained
investment, and (v) entities provide sufficient disclosures
that clearly identify and distinguish between the interests of
the parent and the interests of the noncontrolling owners.
SFAS No. 160 amends FASB No. 128 to provide that
the calculation of earnings per share amounts in the
consolidated financial statements will continue to be based on
the amounts attributable to the parent. SFAS No. 160
is effective for financial statements issued for fiscal years,
and interim periods within those fiscal years, beginning on or
after December 15, 2008. Early adoption is prohibited.
SFAS No. 160 shall be applied prospectively as of the
beginning of the fiscal year in which it is initially applied,
except for the presentation and disclosure requirements, which
shall be applied retrospectively for all periods presented. The
Company has not yet determined the effect on its consolidated
financial statements, if any, upon adoption of
SFAS No. 160.
|
|
3.
|
Private
Placement and Public Offering
|
On September 28, 2007, the Company, pursuant to its Public
Offering, sold 23,100,000 units, which included
1,100,000 units exercised pursuant to the
underwriters over-allotment option, at a price of $10.00
per unit. Each unit consisted of one share of the Companys
common stock, $0.0001 par value, and one redeemable common
stock purchase warrant. Each warrant entitles the holder to
purchase from the Company one share of common stock at an
exercise price of $6.50 per share commencing the later of the
completion of a business combination with a target business or
one year from the effective date of the Public Offering and
expires on September 28, 2011, four years from the date of
the offering prospectus. The warrants will be redeemable at a
price of $0.01 per warrant upon 30 days notice after the
warrants become exercisable, only in the event that the last
sale price of the common stock is at least $14.25 per share for
any 20 trading days within a 30 trading day period ending on the
third day prior to date on which notice of redemption is given.
Pursuant to the terms of the warrant agreement governing the
warrants, in no event will a warrant holder be entitled to
receive a net-cash settlement in lieu of physical settlement in
shares of common stock in the event that the Company is not in
compliance with its obligation to register and maintain a
current registration statement under the Securities Act of 1933,
as amended, with respect to the underlying shares of common
stock. Accordingly, the warrants may never be redeemed and could
expire unexercised since a valid registration statement covering
the underlying shares of common stock is required in either
case, because there is no net-cash settlement. Subsequently, the
underwriter notified the Company that it was not going to
exercise any of the remaining units as part of its
over-allotment option. The common stock and warrants included in
the units began to trade separately on October 26, 2007.
The Company agreed to pay the underwriters in the Public
Offering an underwriting discount of 3.75% of the gross proceeds
and upon the consummation of a business combination the
underwriters will receive an additional contingent underwriting
discount equal to 2.25% of the gross proceeds. With respect to
units sold pursuant to the underwriters over-allotment
option, the underwriters are to receive an underwriting discount
of 2.25% of the gross proceeds and upon the consummation of a
business combination the underwriters will receive an additional
contingent underwriting discount equal to 3.75% of the gross
proceeds. With respect to the 23,100,000 units sold on
September 28, 2007, the total contingent underwriting
discount was $5,362,500. As of December 31, 2007, the
amount due to underwriter consisted of the total contingent
underwriting discount of $5,362,500, plus $44,642 of accrued
interest, as described at Note 8.
Pursuant to the underwriting agreement, the Company also paid a
1.0% non-accountable expense allowance, and issued a unit
purchase option to Maxim, for $100, to purchase up to a total of
1,000,000 units
F-11
SEANERGY
MARITIME CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL
STATEMENTS (Continued)
DECEMBER 31, 2007 AND 2006
at $12.50 per unit. Pursuant to the terms of the unit purchase
option, under no circumstances will the Company be required to
net-cash settle the exercise of the Unit Purchase Option or the
underlying warrants. This would be applicable in the event that
the Company is not in compliance with its obligation to register
and maintain a current registration statement under the
Securities Act of 1933, as amended, with respect to the
underlying shares of common stock. Accordingly the underlying
warrants may never be redeemed and could expire unexercised as a
current registration statement covering the underlying shares of
common stock is required in either case. Because there is no
net-cash settlement, the Company accounted for the fair value of
the unit purchase option, inclusive of the receipt of the $100
cash payment, as a cost of the Public Offering, resulting in a
charge directly to shareholders equity. The Company
estimates that the fair value of this unit purchase option is
approximately $7,390,000 ($7.39 per unit) using a Black- Scholes
option-pricing model. The fair value of the unit purchase option
granted to Maxim is estimated as of the date of grant using the
following assumptions: (1) expected volatility of 100.0%,
(2) risk-free interest rate of 5.0% and (3) expected
life of 5 years. The unit purchase option may be exercised
for cash or on a cashless basis, at the
holders option, such that the holder may use the
appreciated value of the unit purchase option (the difference
between the exercise prices of the unit purchase option and the
underlying warrants and the market price of the units and
underlying securities) to exercise the unit purchase option
without the payment of any cash. The warrants underlying such
units will be exercisable at $6.50 per share.
On September 28, 2007, the closing date of the Offerings,
100% of the proceeds of the Public Offering, which consisted of
$231,000,000, including $5,362,500 of contingent underwriting
compensation, which will be paid to Maxim if a business
combination is consummated, but which will be forfeited in part
if the public shareholders elect to have their shares redeemed
for cash and in full if a business combination is not
consummated, was placed in a trust account at Deutsche Bank
Trust Company Americas maintained by Continental Stock
Transfer & Trust Company, New York, New York, as
trustee (Trust Account), and invested until the
earlier of (i) the consummation of the Companys first
business combination or (ii) the liquidation of the
Company. In the event that the over-allotment option was to have
been exercised in full, the first quarterly interest
distribution to the public shareholders following the closing of
the over-allotment was to have been reduced by up to $742,500 to
permit the Company to draw from the interest earned on the
proceeds in the Trust Account up to an aggregate of
$742,500 to replace up to $742,500 of the costs and expenses
incurred and paid in connection with the exercise of the
over-allotment option, in order to ensure that at all times
there is a minimum of $10.00 per unit held in the
Trust Account. On September 28, 2007, one-third of the
over-allotment option had been exercised; accordingly, the
Company is only permitted to draw one-third of the $742,500, or
$247,500, from the interest earned on the proceeds in the Trust
Account. The expenses that the Company may incur prior to
consummation of a business combination may only be paid from the
net proceeds of the Public Offering and the Private Placement
not held in the Trust Account.
On September 28, 2007, and prior to the consummation of the
Public Offering described above, all of the Companys
executive officers purchased from the Company an aggregate of
16,016,667 warrants at $0.90 per warrant in a Private Placement.
All insider warrants issued in the Private Placement are
identical to the warrants in the units sold in the Public
Offering, except that: (i) subject to certain limited
exceptions, none of the warrants are transferable or saleable
until after the Company completes a business combination;
(ii) the warrants are not subject to redemption if held by
the initial holders thereof; and (iii) the warrants may be
exercised on a cashless basis if held by the initial holders
thereof. A portion of the proceeds from the sale of these
insider warrants has been added to the proceeds from the Public
Offering held in the Trust Account pending the completion
of the Companys initial business combination, with the
balance held outside the Trust Account to be used for
working capital purposes. No placement fees were payable on the
warrants sold in the Private Placement. The sale of the warrants
to management did not result in the recognition of any
stock-based compensation expense because they were sold at
approximate fair market value.
F-12
SEANERGY
MARITIME CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL
STATEMENTS (Continued)
DECEMBER 31, 2007 AND 2006
After the Company signs a definitive agreement for the
acquisition of a target business, it will submit such
transaction for shareholder approval. In the event that public
shareholders owning 35.0% or more of the outstanding stock sold
in the offerings vote against the business combination and elect
to have the Company redeem their shares for cash, the business
combination will not be consummated. All of the Companys
shareholders prior to the offerings, including all of the
officers and directors of the Company (Initial
Shareholders), have agreed to vote their 5,500,000
founding shares of common stock in accordance with the vote of
the majority of shares purchased in the Public Offering with
respect to any business combination and to vote any shares they
acquire in the Public Offering, or in the aftermarket, in favor
of the business combination. After consummation of the
Companys first business combination, all of these voting
safeguards will no longer be applicable.
With respect to the first business combination which is approved
and consummated, any holder of shares sold in the Public
Offering, other than the Initial Shareholders and their nominees
(the Public Shareholders), who vote against the
business combination may demand that the Company redeem their
shares. The per share redemption price will equal $10.00 per
share (inclusive of a pro rata portion of the contingent
underwriting compensation of $0.225 per share). Accordingly,
Public Shareholders holding up to one share less than 35.0% of
the aggregate number of shares sold in the offerings, or
8,084,999 shares, may seek redemption of their shares in
the event of a business combination.
On September 24, 2007, the Company amended its Amended and
Restated Articles of Incorporation and filed its Second Amended
and Restated Articles of Incorporation to provide for mandatory
liquidation of the Company on September 28, 2009. A
proposal to amend this provision may only be submitted to
shareholders in connection with any proposed Business
Combination pursuant to the terms of the Second Amended and
Restated Articles of Incorporation.
|
|
4.
|
Money
Market Funds Held In trust
|
Money market funds held in trust at
December 31, 2007 consists primarily of an investment in
the BlackRock MuniFund with a market value of $232,913,036 and
an annualized tax-exempt yield of 3.16% at December 31,
2007.
The BlackRock MuniFund commenced operations on February 4,
1980, and invests in money market instruments: U.S. state
and sub-division tax-exempt obligations with remaining
maturities of less than 13 months, bonds rated AA, notes
rated SP-1/MIG-1, and variable rate demand notes rated VMIG-1.
Certain portions of this investment fund may not be covered by
insurance.
|
|
5.
|
Notes
Payable and Due to Shareholders
|
On December 14, 2006, the Company issued a series of
unsecured promissory notes totaling $350,000 to its Initial
Shareholders. The notes bear interest at the rate of 4.0% per
annum and were due and payable on the earlier of
(i) December 14, 2007 or (ii) the date on which
the Company consummated an initial public offering of its
securities. The notes, including related accrued interest of
$11,219, were paid in full on September 28, 2007.
Prior to December 31, 2006, three of the Companys
Initial Shareholders had advanced a total of $75,986 in cash and
other expenditures to the Company on a non-interest bearing
basis. On January 5, 2007, an additional $25,000 was
similarly advanced. On January 12, 2007, these advances
were converted into unsecured promissory notes bearing interest
at the rate of 4.0% per annum and made due and payable on the
earlier of (i) January 12, 2008 or (ii) the date
on which the Company consummated an initial public offering of
its securities. The notes, including related accrued interest of
$2,867, were paid in full on September 28, 2007.
F-13
SEANERGY
MARITIME CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL
STATEMENTS (Continued)
DECEMBER 31, 2007 AND 2006
The Company is authorized to issue 89,000,000 shares of its
common stock with a par value $0.0001 per share. On
October 31, 2006, the Companys Initial Shareholders
subscribed to 7,264,893 shares of common stock for a total
of $25,000. All subscriptions were paid in full in November 2006.
On February 20, 2007, an aggregate of 1,764,893 shares
of common stock were surrendered to the Company for cancellation
by the Initial Shareholders on a pro rata basis, thus reducing
the common shares outstanding on such date to
5,500,000 shares.
On July 6, 2007, the Company approved a resolution to
effect a one and one-half-for-one stock split in the form of a
stock dividend, which resulted in the issuance of an additional
1,250,000 shares of the Companys common stock to its
shareholders; on August 6, 2007, the Company approved a
resolution to effect a one and one-third-for-one stock split in
the form of a stock dividend which resulted in the issuance of
an additional 1,250,000 shares of the Companys common
stock to its shareholders; and on September 24, 2007, the
Company approved a resolution to effect a one and
one-tenth-for-one stock split in the form of a stock dividend
which resulted in the issuance of an additional
500,000 shares of the Companys common stock to its
shareholders. The Companys financial statements and
footnotes thereto give retroactive effect to all such stock
splits.
On September 28, 2007, the Initial Shareholders contributed
$400,000 to the capital of the Company in the form of legal fees
paid on the Companys behalf.
The Company is authorized to issue 1,000,000 shares of
preferred stock with a par value $0.0001 per share, with such
designations, voting and other rights and preferences, as may be
determined from time to time by the Board of Directors.
|
|
8.
|
Commitments
and Contingencies
|
Pursuant to the Companys Second Amended and Restated
Articles of Incorporation, the Company is required to make
distributions to its public shareholders, equivalent to the
interest earned on the trust (less any taxes payable by the
Company and exclusive of (i) up to $420,000 of interest
earned on Maxims deferred underwriting compensation and
(ii) up to an aggregate of $742,500 of interest income on
the proceeds in the trust account that the Company may draw in
the event the over-allotment option is exercised in full) on a
pro-rata basis to its public shareholders until the earlier of
the consummation of a business combination or the Companys
liquidation. On January 2, 2008, the Company announced that
it would pay its first quarterly distribution of $1,630,791, or
$0.0706 per share, on January 15, 2008, to shareholders of
record on January 9, 2008. The distribution consisted of
interest earned on the Trust Account, less permitted
adjustments for interest earned on the deferred underwriting
commission of $44,642, and $247,500 relating to the
over-allotment option.
The Company will not proceed with a business combination if
Public Shareholders owning 35.0% or more of the shares sold in
the Public Offering vote against the business combination and
exercise their redemption rights. Accordingly, the Company may
effect a business combination if Public Shareholders owning up
to one share less than 35.0% of the aggregate shares sold in the
Public Offering exercise their redemption rights. If this
occurred, the Company would be required to redeem for cash up to
8,084,999 shares of common stock, at an expected initial
per share redemption price of $10.00. However, the ability of
shareholders to receive $10.00 per unit is subject to any valid
claims by the Companys creditors which are not covered by
amounts held in the Trust Account or the indemnities
provided by the Companys officers and
F-14
SEANERGY
MARITIME CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL
STATEMENTS (Continued)
DECEMBER 31, 2007 AND 2006
directors. The expected redemption price per share is greater
than each shareholders initial pro rata share of the
Trust Account of approximately $9.775 per share. Of the
excess redemption price, approximately $0.225 per share
represents a portion of the underwriters contingent fee,
which they have agreed to forego for each share that is
redeemed. Accordingly, the total deferred underwriting
compensation payable to the underwriters in the event of a
business combination will be reduced by approximately $0.225 for
each share that is redeemed. The balance will be paid from
proceeds held in the Trust Account, which are payable to
the Company upon consummation of a business combination. Even if
less than 35.0% of the shareholders exercise their redemption
rights, the Company may be unable to consummate a business
combination if such redemption leaves the Company with funds
representing less than a fair market value at least equal to
80.0% of the amount in the Trust Account (excluding any
deferred underwriting compensation plus interest thereon held
for the benefit of Maxim) at the time of such acquisition, which
amount is required as a condition to the consummation of the
Companys initial business combination, and the Company may
be forced to find additional financing to consummate such a
business combination (or a different business combination) or to
liquidate.
On June 21, 2006, the Company engaged Maxim, on a
non-exclusive basis, as its agent for the solicitation of the
exercise of the warrants. To the extent not inconsistent with
the guidelines of the NASD and the rules and regulations of the
Securities and Exchange Commission, the Company has agreed to
pay the representative for bona fide services rendered a
commission equal to 5.0% of the exercise price for each warrant
exercised more than one year after the date of the Public
Offering if the exercise was solicited by the underwriters.
The Company has agreed to pay to Balthellas Chartering S.A., a
company controlled by Panagiotis Zafet, the Companys
Co-Chairman of the Board of Directors and Chief Executive
Officer, and Simon Zafet, the Companys Chief Operating
Officer and a director, $7,500 per month for 24 months, for
office space and reimbursement of general and administrative
expenses, commencing on the date of the Public Offering and
terminating upon the date the Company consummates a business
combination or liquidates.
On May 23, 2007, the Company entered into a seven-month
agreement, automatically renewable for an additional one year,
for investor relations and financial media support services for
a minimum monthly fee of $4,000 before a business combination,
or $7,000 after a business combination.
The holders of the Companys 5,500,000 issued and
outstanding shares immediately prior to the completion of the
Public Offering and the holders of the warrants to purchase
16,016,667 shares of common stock acquired in the Private
Placement are entitled to registration rights covering the
resale of their shares and the resale of their warrants and
shares acquired upon exercise of their warrants. The holders of
the majority of these shares are entitled to make up to two
demands that the Company register their shares, warrants and
shares that they are entitled to acquire upon the exercise of
warrants. The holders of the majority of these shares can elect
to exercise these registration rights at any time after the date
on which these shares of common stock are released from escrow.
In addition, these shareholders have certain
piggyback registration rights on registration
statements filed subsequent to the date on which these shares of
common stock are released from escrow. The Company will bear the
expenses incurred in connection with the filing of any of the
foregoing registration statements.
In the event that a registration statement is not effective at
the time of exercise, the holder of such warrant shall not be
entitled to exercise such warrant and in no event will the
Company be required to net cash settle the warrant exercise.
Consequently, the warrants may expire unexercised.
F-15
SEANERGY
MARITIME CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL
STATEMENTS (Continued)
DECEMBER 31, 2007 AND 2006
The unit purchase option and its underlying securities have been
registered under the registration statement for the Public
Offering; however, the option also grants holders demand and
piggy back registration rights for periods of five
years and seven years, respectively, from the date of the Public
Offering. These rights apply to all of the securities directly
and indirectly issuable upon exercise of the option. The Company
will bear all fees and expenses attendant to registering the
securities issuable on exercise of the option, other than
underwriting commissions incurred and payable by the holders.
|
|
10.
|
Quarterly
Results of Operations (Unaudited)
|
The following table sets forth unaudited quarterly results of
operations for the period from August 15, 2006 (Inception)
to December 31, 2006 and for the year ended
December 31, 2007. This unaudited quarterly information has
been derived from the Companys unaudited financial
statements and, in the Companys opinion, includes all
adjustments, including normal recurring adjustments, necessary
for a fair presentation of the information for the periods
covered. The operating results for any quarter are not
necessarily indicative of the operating results for any future
period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
|
|
March 31,
|
|
|
June 30,
|
|
|
September 30,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2007
|
|
|
2007
|
|
|
2007
|
|
|
2007
|
|
|
Operating expenses
|
|
$
|
(270
|
)
|
|
$
|
(405
|
)
|
|
$
|
(16,735
|
)
|
|
$
|
(427,629
|
)
|
|
$
|
(445,039
|
)
|
Interest income
|
|
|
3,775
|
|
|
|
2,213
|
|
|
|
1,121
|
|
|
|
1,941,083
|
|
|
|
1,948,192
|
|
Interest expense underwriter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(44,642
|
)
|
|
|
(44,642
|
)
|
Interest expense shareholders
|
|
|
(4,315
|
)
|
|
|
(4,498
|
)
|
|
|
(4,448
|
)
|
|
|
|
|
|
|
(13,261
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(810
|
)
|
|
$
|
(2,690
|
)
|
|
$
|
(20,062
|
)
|
|
$
|
1,468,812
|
|
|
$
|
1,445,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
0.05
|
|
|
$
|
0.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
0.04
|
|
|
$
|
0.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
6,480,496
|
|
|
|
5,500,000
|
|
|
|
6,253,261
|
|
|
|
28,600,000
|
|
|
|
11,754,095
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
6,480,496
|
|
|
|
5,500,000
|
|
|
|
6,253,261
|
|
|
|
41,210,513
|
|
|
|
15,036,283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-16
SEANERGY
MARITIME CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL
STATEMENTS (Continued)
DECEMBER 31, 2007 AND 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from
|
|
|
|
|
|
Period from
|
|
|
|
August 15,
|
|
|
Three
|
|
|
August 15,
|
|
|
|
2006
|
|
|
Months
|
|
|
2006
|
|
|
|
(Inception) to
|
|
|
Ended
|
|
|
(Inception) to
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2006
|
|
|
2006
|
|
|
2006
|
|
|
Operating expenses
|
|
$
|
(950
|
)
|
|
$
|
(3626
|
)
|
|
$
|
(4,576
|
)
|
Interest income
|
|
|
|
|
|
|
1,028
|
|
|
|
1,028
|
|
Interest expense shareholders
|
|
|
|
|
|
|
(824
|
)
|
|
|
(824
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(950
|
)
|
|
$
|
(3,422
|
)
|
|
$
|
(4,372
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
7,264,893
|
|
|
|
7,264,893
|
|
|
|
7,264,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11.
|
Subsequent
Events (Unaudited)
|
On January 2, 2008, the Company announced that the record
date for public shareholders to receive the Companys first
quarterly distribution was January 9, 2008. The
distribution, which was paid on January 15, 2008, consisted
of interest earned in the Trust Account, subject to certain
permitted adjustments, of $1,630,791 in total or $0.0706 per
share for such period.
On January 4, 2008, the Company formed a new subsidiary
under the laws of the Marshall Islands named Seanergy Merger
Corp.
F-17
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(Unaudited)
|
|
|
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,402,660
|
|
|
$
|
2,210,726
|
|
Money market funds held in trust
|
|
|
232,153,251
|
|
|
|
232,923,020
|
|
Prepaid expenses and other current assets
|
|
|
28,153
|
|
|
|
79,978
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
233,584,064
|
|
|
|
235,213,724
|
|
Deferred acquisition costs
|
|
|
1,500,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
235,084,649
|
|
|
$
|
235,213,724
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
1,553,625
|
|
|
$
|
587,872
|
|
Amounts due to underwriter
|
|
|
5,468,679
|
|
|
|
5,407,142
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
7,022,304
|
|
|
|
5,995,014
|
|
|
|
|
|
|
|
|
|
|
Common stock subject to possible redemption
8,084,999 shares at redemption value
|
|
|
80,849,990
|
|
|
|
80,849,990
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
Shareholders equity:
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value; authorized
1,000,000 shares; issued none
|
|
|
|
|
|
|
|
|
Common stock, $0.0001 par value; authorized
89,000,000 shares; issued and outstanding
28,600,000 shares, inclusive of 8,084,999 shares
subject to possible redemption
|
|
|
2,860
|
|
|
|
2,860
|
|
Additional paid-in capital
|
|
|
146,926,405
|
|
|
|
146,924,982
|
|
Retained earnings
|
|
|
3,456,230
|
|
|
|
1,440,878
|
|
Shareholder distributions
|
|
|
(3,173,140
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity
|
|
|
147,212,355
|
|
|
|
148,368,720
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity
|
|
$
|
235,084,649
|
|
|
$
|
235,213,724
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements.
F-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 15,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Inception) to
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
|
2008
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
(Cumulative)
|
|
|
Operating expenses
|
|
$
|
(136,945
|
)
|
|
$
|
(405
|
)
|
|
$
|
(596,708
|
)
|
|
$
|
(675
|
)
|
|
$
|
(1,046,322
|
)
|
Interest income
|
|
|
1,057,078
|
|
|
|
2,213
|
|
|
|
2,612,060
|
|
|
|
5,989
|
|
|
|
4,516,638
|
|
Interest expense shareholders
|
|
|
|
|
|
|
(4,497
|
)
|
|
|
|
|
|
|
(8,813
|
)
|
|
|
(14,086
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
920,133
|
|
|
$
|
(2,689
|
)
|
|
$
|
2,015,352
|
|
|
$
|
(3,499
|
)
|
|
$
|
3,456,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.03
|
|
|
$
|
(0.00
|
)
|
|
$
|
0.07
|
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.02
|
|
|
$
|
(0.00
|
)
|
|
$
|
0.05
|
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
28,600,000
|
|
|
|
5,500,000
|
|
|
|
28,600,000
|
|
|
|
5,987,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
41,148,398
|
|
|
|
5,500,000
|
|
|
|
40,867,846
|
|
|
|
5,987,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements.
F-19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Retained
|
|
|
|
|
|
Total
|
|
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Earnings
|
|
|
Shareholder
|
|
|
Shareholders
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
(Deficit)
|
|
|
Distributions
|
|
|
Equity
|
|
|
Balance, August 15, 2006 (Inception)
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Sale of shares to founding shareholders at $0.0034 per share
|
|
|
7,264,893
|
|
|
|
726
|
|
|
|
24,274
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
Net loss for the period from August 15, 2006 (Inception) to
December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,372
|
)
|
|
|
|
|
|
|
(4.372
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2006
|
|
|
7,264,893
|
|
|
|
726
|
|
|
|
24,274
|
|
|
|
(4,372
|
)
|
|
|
|
|
|
|
20,628
|
|
Shares surrendered and cancelled
|
|
|
(1,764,893
|
)
|
|
|
(176
|
)
|
|
|
176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of shares and warrants in private placement and public
offering, net of offering costs of $18,062,268
|
|
|
23,100,000
|
|
|
|
2,310
|
|
|
|
227,350,422
|
|
|
|
|
|
|
|
|
|
|
|
227,352,732
|
|
Sale of underwriters purchase option
|
|
|
|
|
|
|
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
100
|
|
Capital contributed by founding shareholders
|
|
|
|
|
|
|
|
|
|
|
400,000
|
|
|
|
|
|
|
|
|
|
|
|
400,000
|
|
Shares reclassified to Common stock subject to possible
redemption
|
|
|
|
|
|
|
|
|
|
|
(80,849,990
|
)
|
|
|
|
|
|
|
|
|
|
|
(80,849,990
|
)
|
Net income for the year ended December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,445,250
|
|
|
|
|
|
|
|
1,445,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2007
|
|
|
28,600,000
|
|
|
|
2,860
|
|
|
|
146,924,982
|
|
|
|
1,440,878
|
|
|
|
|
|
|
|
148,368,720
|
|
Adjustment to offering costs
|
|
|
|
|
|
|
|
|
|
|
1,423
|
|
|
|
|
|
|
|
|
|
|
|
1,423
|
|
Net income for the six months ended June 30, 2008
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,015,352
|
|
|
|
|
|
|
|
2,015,352
|
|
Distributions paid to public shareholders (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,173,140
|
)
|
|
|
(3,173,140
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2008 (Unaudited)
|
|
|
28,600,000
|
|
|
$
|
2,860
|
|
|
$
|
146,926,405
|
|
|
$
|
3,456,230
|
|
|
$
|
(3,173,140
|
)
|
|
$
|
147,212,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements.
F-20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from
|
|
|
|
|
|
|
|
|
|
August 15,
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
(Inception) to
|
|
|
|
Six Months Ended
|
|
|
June 30,
|
|
|
|
June 30,
|
|
|
2008
|
|
|
|
2008
|
|
|
2007
|
|
|
(Cumulative)
|
|
|
Net income (loss)
|
|
$
|
2,015,352
|
|
|
$
|
(3,499
|
)
|
|
$
|
3,456,230
|
|
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) decrease in Prepaid expenses and other
current assets
|
|
|
51,825
|
|
|
|
15,000
|
|
|
|
(28,153
|
)
|
Increase (decrease) in Accounts payable and accrued
expenses
|
|
|
(212,476
|
)
|
|
|
(3,500
|
)
|
|
|
(53,641
|
)
|
Accrued interest payable to shareholders
|
|
|
|
|
|
|
8,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
1,854,701
|
|
|
|
16,814
|
|
|
|
3,374,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in trust account from interest earned on funds held in
trust
|
|
|
(3,670,268
|
)
|
|
|
|
|
|
|
(5,548,646
|
)
|
Withdrawals from trust account
|
|
|
4,501,574
|
|
|
|
|
|
|
|
4,501,574
|
|
Payment of acquisition costs
|
|
|
(320,933
|
)
|
|
|
|
|
|
|
(320,933
|
)
|
Funds placed in trust account from offerings
|
|
|
|
|
|
|
|
|
|
|
(231,000,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
510,373
|
|
|
|
|
|
|
|
(232,368,005
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from initial sale of common stock
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
Gross proceeds from private placement
|
|
|
|
|
|
|
|
|
|
|
14,415,000
|
|
Gross proceeds from public offering
|
|
|
|
|
|
|
|
|
|
|
231,000,000
|
|
Distribution to public shareholders
|
|
|
(3,173,140
|
)
|
|
|
|
|
|
|
(3,173,140
|
)
|
Payment of offering costs
|
|
|
|
|
|
|
(270,843
|
)
|
|
|
(11,870,731
|
)
|
Proceeds from underwriters purchase option
|
|
|
|
|
|
|
|
|
|
|
100
|
|
Proceeds from shareholders loans
|
|
|
|
|
|
|
|
|
|
|
350,000
|
|
Repayment of shareholders loans
|
|
|
|
|
|
|
|
|
|
|
(450,986
|
)
|
Advances from shareholders, net
|
|
|
|
|
|
|
25,000
|
|
|
|
100,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(3,173,140
|
)
|
|
|
(245,843
|
)
|
|
|
230,396,229
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
|
(808,066
|
)
|
|
|
(229,029
|
)
|
|
|
1,402,660
|
|
Cash at beginning of period
|
|
|
2,210,726
|
|
|
|
355,938
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at end of period
|
|
$
|
1,402,660
|
|
|
$
|
126,909
|
|
|
$
|
1,402,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
|
|
|
$
|
|
|
|
$
|
14,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital contributed by founding shareholders in the form of
legal fees paid
|
|
$
|
|
|
|
$
|
|
|
|
$
|
400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in accrued offering costs and placement fees
|
|
$
|
|
|
|
$
|
430,816
|
|
|
$
|
5,791,537
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in accrued acquisition costs
|
|
$
|
1,179,652
|
|
|
$
|
|
|
|
$
|
1,179,652
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholder advances converted to notes payable
|
|
$
|
|
|
|
$
|
100,986
|
|
|
$
|
100,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock subject to possible redemption
|
|
$
|
|
|
|
$
|
|
|
|
$
|
80,849,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Par value of common stock surrendered and cancelled
|
|
$
|
|
|
|
$
|
176
|
|
|
$
|
176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of unit purchase option issued to underwriters
|
|
$
|
|
|
|
$
|
|
|
|
$
|
7,390,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements.
F-21
The condensed consolidated financial statements of Seanergy
Maritime Corp. (the Company) at June 30, 2008,
for the three months ended June 30, 2008 and 2007, the six
months ended June 30, 2008 and 2007, and for the period
from August 15, 2006 (inception) to June 30, 2008
(cumulative), are unaudited. In the opinion of management, all
adjustments (including normal recurring accruals) have been made
that are necessary to present fairly the financial position of
the Company as of June 30, 2008 and the results of its
operations for the three months ended June 30, 2008 and
2007, the six months ended June 30, 2008 and 2007, and for
the period from August 15, 2006 (inception) to
June 30, 2008 (cumulative), and its cash flows for the six
months ended June 30, 2008 and 2007, and for the period
from August 15, 2006 (inception) to June 30, 2008
(cumulative). Operating results for the interim periods
presented are not necessarily indicative of the results to be
expected for a full fiscal year. The condensed balance sheet at
December 31, 2007 has been derived from the Companys
audited financial statements included in its Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007, as filed with
the Securities and Exchange Commission.
The statements and related notes have been prepared pursuant to
the rules and regulations of the Securities and Exchange
Commission. Accordingly, certain information and footnote
disclosures normally included in financial statements prepared
in accordance with U.S. Generally Accepted Accounting
Principles have been omitted pursuant to such rules and
regulations. These condensed consolidated financial statements
should be read in conjunction with the financial statements and
other information included in the Companys Annual Report
on
Form 10-K
for the fiscal year ended December 31, 2007, as filed with
the Securities and Exchange Commission.
|
|
2.
|
Organization
and Proposed Business
|
Seanergy Maritime Corp. was incorporated in the Marshall Islands
on August 15, 2006, originally under the name Seanergy
Maritime Acquisition Corp., as a blank check company formed to
acquire, through a merger, capital stock exchange, asset
acquisition or other similar business combination, one or more
businesses in the maritime shipping industry or related
industries. The Company changed its name to Seanergy Maritime
Corp. on February 20, 2007.
At June 30, 2008, the Company had not yet commenced any
business operations and was therefore considered a
corporation in the development stage. All activity
through June 30, 2008 related to the Companys
formation and capital raising efforts and, subsequent to the
Public Offering in September 2007, efforts to acquire an
operating business, as described below. The Company is subject
to the risks associated with development stage companies. The
Company has selected December 31 as its fiscal year-end.
The Companys ability to acquire an operating business was
contingent upon obtaining adequate financial resources through a
private placement in accordance with Regulation S under the
Securities Act of 1933, as amended (Private
Placement) and a public offering (Public
Offering, and together with the Private Placement, the
Offerings), which are discussed in Note 4. The
Companys management has broad discretion with respect to
the specific application of the net proceeds of the Offerings,
although substantially all of the net proceeds of the Offerings
are intended to be generally applied toward consummating a
business combination with an operating company. As used herein,
a target business includes one or more operating
businesses or assets in the maritime shipping industry, or
related industries, or a combination thereof, and a
business combination means the acquisition by the
Company of such a target business.
On January 4, 2008, the Company formed a new wholly owned
subsidiary, Seanergy Merger Corp. (subsequently renamed Seanergy
Maritime Holdings Corp.), under the laws of the Marshall Islands.
F-22
SEANERGY
MARITIME CORP. AND SUBSIDIARY
(a corporation in the development stage)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (Continued)
Three Months and Six Months Ended June 30, 2008 and
2007
On May 19, 2008, the Company determined that it now falls
within the definition of a Foreign Private Issuer as
defined under the Securities Exchange Act of 1934, as amended,
because (i) the majority of its executive officers and
directors are not United States citizens or residents,
(ii) all of its assets are located outside of the United
States, and (iii) the Companys business is not
administered principally in the United States.
On May 20, 2008, the Company entered into definitive
agreements pursuant to which Seanergy Maritime Holdings Corp.
(formerly Seanergy Merger Corp.) would purchase, for an
aggregate purchase price of (i) $367,030,750 in cash,
(ii) $28,250,000 in the form of a convertible promissory
note, and (iii) up to 4,308,075 shares of Seanergy
Maritime Holdings Corp. common stock (subject to Seanergy
Maritime Holdings Corp. meeting certain EBITDA thresholds
post-closing), six dry bulk vessels from companies associated
with members of the Restis family, including four second hand
vessels and two newly built vessels. On August 28, 2008,
Seanergy Maritime Holdings Corp. completed the acquisition,
through its designated nominee companies (which are wholly owned
subsidiaries), of three of the six dry bulk vessels, including
two Supramax vessels and one Handysize vessel. On that date,
Seanergy Maritime Holdings Corp. took delivery of the 2008-built
M/V Davakis G (54,000 dwt), the 2008-built M/V Delos Ranger
(54,000 dwt), and the 1997-built M/V African Oryx (24,110 dwt).
Each of these vessels is chartered for a one-year term to South
African Marine Corporation S.A., an affiliate of the Restis
family, at charter rates of $60,000, $60,000 and $30,000 per
day, respectively. On September 11, 2008, Seanergy Maritime
Holdings Corp. completed the acquisition, through its designated
nominee company, of a fourth vessel, the M/V Bremen Max (73,503
dwt), a 1993-built, Panamax vessel, chartered at the rate of
$65,000 per day to South African Maritime Corporation S.A. for a
one-year term. On September 25, 2008, Seanergy Maritime
Holdings Corp. completed the acquisition, through its designated
nominee companies, of the final two vessels, the M/V Hamburg Max
(73,498 dwt), a 1994-built, Panamax vessel, and the M/V African
Zebra (38,632 dwt), a 1985-built, Handymax vessel. The M/V
Hamburg Max and the M/V African Zebra are chartered at rates of
$65,000 and $36,000 per day, respectively, to South African
Marine Corporation S.A. for a one-year term. Seanergy Maritime
Holdings Corp. has completed all of the acquisitions
contemplated by the definitive agreements dated May 20,
2008. The acquisition of the vessels was completed with funds
from the Companys Trust Account and with financing
provided by Marfin Bank S.A. of Greece. Pursuant to a financing
agreement dated August 28, 2008, Seanergy Maritime Holdings
Corp.s vessel-owning subsidiaries were permitted to
borrow, with the Company and Seanergy Maritime Holdings Corp.
acting as guarantors, a maximum of $255,000,000 in connection
with the purchase of the vessels, subject to how many public
shareholders of the Company exercised their redemption rights.
Additional information with respect to this transaction is
presented at Note 11.
|
|
3.
|
Summary
of Significant Accounting Policies
|
Principles
of Consolidation
The accompanying condensed consolidated financial statements
include the financial statements of the Company and its wholly
owned subsidiary, Seanergy Maritime Holdings Corp. All
intercompany balances and transactions have been eliminated in
consolidation.
Cash
Equivalents and Concentrations of Credit Risk
The Company considers all highly liquid investments with an
original maturity of three months or less when purchased to be
cash equivalents.
The Company maintains its non-trust cash and cash equivalent
accounts with a financial institution located in Greece. The
balances in such accounts are insured by the Central Bank of
Greece up to 20,000
F-23
SEANERGY
MARITIME CORP. AND SUBSIDIARY
(a corporation in the development stage)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (Continued)
Three Months and Six Months Ended June 30, 2008 and
2007
Euros (approximately $31,600 at June 30, 2008). At
June 30, 2008, the Companys uninsured non-trust cash
balance amounted to approximately $1,371,000.
The Company maintains its cash and cash equivalent accounts held
in trust with a financial institution located in London,
England. Such cash and cash equivalents held in trust may, at
times, exceed insured limits. The Company maintains its cash and
cash equivalents held in trust with financial institutions with
high credit ratings.
Income
Taxes
The Company accounts for income taxes pursuant to Statement of
Financial Accounting Standards (SFAS) No. 109,
Accounting for Income Taxes, which establishes
financial accounting and reporting standards for the effects of
income taxes that result from an enterprises activities
during the current and preceding years. SFAS No. 109
requires an asset and liability approach for financial
accounting and reporting for income taxes.
In July 2006, the Financial Accounting Standards Board
(FASB) issued FASB Interpretation No. 48,
Accounting for Uncertainty in Income Taxes, an
interpretation of FASB Statement No. 109
(FIN 48), which provides criteria for the
recognition, measurement, presentation and disclosure of
uncertain tax positions. A tax benefit from an uncertain
position may be recognized only if it is more likely than
not that the position is sustainable based on its
technical merits. The provisions of FIN 48 are effective
for fiscal years beginning after December 15, 2006. The
adoption of FIN 48 on January 1, 2007 did not have a
material effect on the Companys condensed consolidated
financial statements.
For United States federal income tax purposes, the Company has
elected to be classified as a partnership effective
January 1, 2007. The Company makes quarterly distributions
of interest income earned on the trust account to its Public
Shareholders on a pro rata basis (see Note 4). The Company
anticipates that substantially all of the funds in the trust
account will be invested in tax exempt money market accounts
that will generate income, which generally should be exempt from
United States federal income tax.
Earnings
Per Share
The Company computes earnings per share (EPS) in
accordance with SFAS No. 128, Earnings per
Share and SEC Staff Accounting Bulletin No. 98
(SAB 98). SFAS No. 128 requires
companies with complex capital structures to present basic and
diluted EPS. Basic EPS is measured as the income available to
common shareholders divided by the weighted average common
shares outstanding for the period. Diluted EPS is similar to
basic EPS but presents the dilutive effect on a per share basis
of potential common shares (e.g., warrants) as if they had been
converted at the beginning of the periods presented, or issuance
date, if later. Potential common shares that have an
anti-dilutive effect (i.e., those that increase income per share
or decrease loss per share) are excluded from the calculation of
diluted EPS.
F-24
SEANERGY
MARITIME CORP. AND SUBSIDIARY
(a corporation in the development stage)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (Continued)
Three Months and Six Months Ended June 30, 2008 and
2007
The calculation of net income (loss) per common share is
summarized below. The calculation of diluted weighted average
common shares outstanding for the three months and six months
ended June 30, 2008 is based on the average of the closing
price of the Companys common stock as quoted on the
American Stock Exchange.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
920,133
|
|
|
$
|
(2,689
|
)
|
|
$
|
2,015,352
|
|
|
$
|
(3,499
|
)
|
Weighted average common shares outstanding
|
|
|
28,600,000
|
|
|
|
5,500,000
|
|
|
|
28,600,000
|
|
|
|
5,987,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share basic
|
|
$
|
0.03
|
|
|
$
|
(0.00
|
)
|
|
$
|
0.07
|
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
920,133
|
|
|
$
|
(2,689
|
)
|
|
$
|
2,015,352
|
|
|
$
|
(0.00
|
)
|
Weighted average common shares outstanding
|
|
|
28,600,000
|
|
|
|
5,500,000
|
|
|
|
28,600,000
|
|
|
|
5,987,540
|
|
Effect of dilutive warrants
|
|
|
12,548,398
|
|
|
|
|
|
|
|
12,267,846
|
|
|
|
|
|
Diluted weighted average common shares outstanding
|
|
|
41,148,398
|
|
|
|
5,500,000
|
|
|
|
40,867,846
|
|
|
|
5,987,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share diluted
|
|
$
|
0.02
|
|
|
$
|
(0.00
|
)
|
|
$
|
0.05
|
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2008, potentially dilutive securities consisted
of outstanding warrants and options to acquire an aggregate of
41,116,667 shares of common stock, as follows, of which
options to acquire 2,000,000 shares were anti-dilutive at
such date.
|
|
|
|
|
Insiders warrants
|
|
|
16,016,667
|
|
Public warrants
|
|
|
23,100,000
|
|
Underwriters purchase option
|
|
|
2,000,000
|
|
|
|
|
|
|
Total
|
|
|
41,116,667
|
|
|
|
|
|
|
Use of
Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of
expenses during the reporting period. Actual results could
differ from those estimates.
Fair
Value of Financial Instruments
The carrying amounts of cash and cash equivalents, cash held in
trust, prepaid expenses, accounts payable, accrued expenses, due
to underwriter, due to shareholders and notes payable to
shareholders approximate their respective fair values, due to
the short-term nature of these items and the current interest
rates payable in relation to current market conditions.
Share-Based
Payments
The Company accounts for share-based payments pursuant to
SFAS No. 123R, Share-Based Payments.
SFAS No. 123R requires all share-based payments,
including grants of employee stock options to employees,
F-25
SEANERGY
MARITIME CORP. AND SUBSIDIARY
(a corporation in the development stage)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (Continued)
Three Months and Six Months Ended June 30, 2008 and
2007
to be recognized in the financial statements based on their fair
values. The Company adopted SFAS No. 123R on
August 15, 2006 (Inception) and expects that it could have
a material impact on the Companys condensed consolidated
financial statements to the extent that the Company grants
stock-based compensation in future periods.
Foreign
Currency Translation
The Companys reporting currency is the United States
dollar. Although the Company maintains a cash account with a
bank in Greece, it is denominated in United States dollars, and
most of the Companys expenditures to date have been
denominated in United States dollars. Accordingly, the Company
has designated its functional currency as the United States
dollar.
For amounts not initially designated in United States dollars,
asset and liability accounts are translated using the exchange
rate in effect at the balance sheet date, and statement of
operations accounts are translated using the average exchange
rate for each quarterly reporting period.
Gains or losses resulting from translation adjustments, which to
date have not been material, are included in operating expenses
in the statement of operations.
Adoption
of New Accounting Policies
In September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements, which establishes a formal
framework for measuring fair value under (GAAP).
SFAS No. 157 defines and codifies the many definitions
of fair value included among various other authoritative
literature, clarifies and, in some instances, expands on the
guidance for implementing fair value measurements, and increases
the level of disclosure required for fair value measurements.
SFAS No. 157 applies to all other accounting
pronouncements requiring or permitting fair value measurements,
except for: SFAS No. 123R, share-based payment and
related pronouncements, the practicability exceptions to fair
value determinations allowed by various other authoritative
pronouncements, and AICPA Statements of Position
97-2
and
98-9
that
deal with software revenue recognition. The Company adopted
SFAS No. 157 on January 1, 2008.
In February 2007, the FASB issued SFAS No. 159,
The Fair Value Option for Financial Assets and Financial
Liabilities, which provides companies with an option to
report selected financial assets and liabilities at fair value.
SFAS No. 159s objective is to reduce both
complexity in accounting for financial instruments and the
volatility in earnings caused by measuring related assets and
liabilities differently. Generally accepted accounting
principles have required different measurement attributes for
different assets and liabilities that can create artificial
volatility in earnings. SFAS No. 159 helps to mitigate
this type of accounting-induced volatility by enabling companies
to report related assets and liabilities at fair value, which
would likely reduce the need for companies to comply with
detailed rules for hedge accounting. SFAS No. 159 also
establishes presentation and disclosure requirements designed to
facilitate comparisons between companies that choose different
measurement attributes for similar types of assets and
liabilities. SFAS No. 159 requires companies to
provide additional information that will help investors and
other users of financial statements to more easily understand
the effect of the Companys choice to use fair value on its
earnings. SFAS No. 159 also requires companies to
display the fair value of those assets and liabilities for which
the Company has chosen to use fair value on the face of the
balance sheet. SFAS No. 159 does not eliminate
disclosure requirements included in other accounting standards,
including requirements for disclosures about fair value
measurements included in SFAS No. 157 and
SFAS No. 107. The Company adopted
SFAS No. 159 on January 1, 2008.
F-26
SEANERGY
MARITIME CORP. AND SUBSIDIARY
(a corporation in the development stage)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (Continued)
Three Months and Six Months Ended June 30, 2008 and
2007
The adoption of SFAS No. 157 and
SFAS No. 159 on January 1, 2008 did not have any
effect on the Companys financial statement presentation or
disclosures.
Recent
Accounting Pronouncements
In December 2007, the FASB issued SFAS No. 141(R),
Business Combinations, which requires an acquirer to
recognize in its financial statements as of the acquisition date
(i) the identifiable assets acquired, the liabilities
assumed, and any noncontrolling interest in the acquiree,
measured at their fair values on the acquisition date, and
(ii) goodwill as the excess of the consideration
transferred plus the fair value of any noncontrolling interest
in the acquiree at the acquisition date over the fair values of
the identifiable net assets acquired. Acquisition-related costs,
which are the costs an acquirer incurs to effect a business
combination, will be accounted for as expenses in the periods in
which the costs are incurred and the services are received,
except that costs to issue debt or equity securities will be
recognized in accordance with other applicable GAAP.
SFAS No. 141(R) makes significant amendments to other
Statements and other authoritative guidance to provide
additional guidance or to conform the guidance in that
literature to that provided in SFAS No. 141(R).
SFAS No. 141(R) also provides guidance as to what
information is to be disclosed to enable users of financial
statements to evaluate the nature and financial effects of a
business combination. SFAS No. 141(R) is effective for
financial statements issued for fiscal years beginning on or
after December 15, 2008. Early adoption is prohibited. The
adoption of SFAS No. 141(R) will affect how the
Company accounts for a business combination concluded after
December 31, 2008.
In December 2007, the FASB issued SFAS No. 160,
Noncontrolling Interests in Consolidated Financial
Statements an amendment of ARB No. 51,
which requires that ownership interests in subsidiaries held by
parties other than the parent, and the amount of consolidated
net income, be clearly identified, labeled and presented in the
consolidated financial statements. SFAS No. 160 also
requires that once a subsidiary is deconsolidated, any retained
noncontrolling equity investment in the former subsidiary be
initially measured at fair value. Sufficient disclosures are
required to clearly identify and distinguish between the
interests of the parent and the interests of the noncontrolling
owners. SFAS No. 160 amends FASB No. 128 to
provide that the calculation of earnings per share amounts in
the consolidated financial statements will continue to be based
on the amounts attributable to the parent.
SFAS No. 160 is effective for financial statements
issued for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2008, and
requires retroactive adoption of the presentation and disclosure
requirements for existing minority interests. All other
requirements are applied prospectively. Early adoption is
prohibited. The Company does not currently anticipate that the
adoption of SFAS No. 160 will have any impact on its
financial statement presentation or disclosures.
In March 2008, the FASB issued SFAS No. 161,
Disclosures about Derivative Instruments and Hedging
Activities an amendment of FASB Statement
No. 133. SFAS No. 161 amends and expands
the disclosure requirements of SFAS No. 133,
Accounting for Derivative Instruments and Hedging
Activities. The objective of SFAS No. 161 is to
provide users of financial statements with an enhanced
understanding of how and why an entity uses derivative
instruments, how derivative instruments and related hedged items
are accounted for under SFAS No. 133 and its related
interpretations, and how derivative instruments and related
hedged items affect an entitys financial position,
financial performance, and cash flows. SFAS No. 161
requires qualitative disclosures about objectives and strategies
for using derivatives, quantitative disclosures about fair value
amounts of and gains and losses on derivative instruments, and
disclosures about credit-risk-related contingent features in
derivative agreements. SFAS No. 161 applies to all
derivative financial instruments, including bifurcated
derivative instruments (and nonderivative instruments that are
designed and qualify as hedging instruments pursuant to
paragraphs 37 and 42 of SFAS No. 133) and
related hedged items accounted for under SFAS No. 133
and its related interpretations. SFAS No. 161 also
amends certain provisions of SFAS No. 131.
F-27
SEANERGY
MARITIME CORP. AND SUBSIDIARY
(a corporation in the development stage)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (Continued)
Three Months and Six Months Ended June 30, 2008 and
2007
SFAS No. 161 is effective for financial statements
issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged.
SFAS No. 161 encourages, but does not require,
comparative disclosures for earlier periods at initial adoption.
The Company does not currently anticipate that the adoption of
SFAS No. 161 will have any impact on its financial
statement presentation or disclosures.
|
|
4.
|
Private
Placement and Public Offering
|
On September 28, 2007, the Company, pursuant to its Public
Offering, sold 23,100,000 units, which included
1,100,000 units exercised pursuant to the
underwriters over-allotment option, at a price of $10.00
per unit. Each unit consisted of one share of the Companys
common stock, $0.0001 par value, and one redeemable common
stock purchase warrant. Each warrant entitles the holder to
purchase from the Company one share of common stock at an
exercise price of $6.50 per share commencing the later of the
completion of a business combination with a target business or
one year from the effective date of the Public Offering and
expires on September 28, 2011, four years from the date of
the offering prospectus. The warrants will be redeemable at a
price of $0.01 per warrant upon 30 days notice after the
warrants become exercisable, only in the event that the last
sale price of the common stock is at least $14.25 per share for
any 20 trading days within a 30 trading day period ending on the
third day prior to date on which notice of redemption is given.
Pursuant to the terms of the warrant agreement governing the
warrants, in no event will a warrant holder be entitled to
receive a net-cash settlement in lieu of physical settlement in
shares of common stock in the event that the Company is not in
compliance with its obligation to register and maintain a
current registration statement under the Securities Act of 1933,
as amended, with respect to the underlying shares of common
stock. Accordingly, the warrants may never be redeemed and could
expire unexercised since a valid registration statement covering
the underlying shares of common stock is required in either
case, because there is no net-cash settlement. The underwriters
did not exercise any of the remaining units as part of their
over-allotment option. The common stock and warrants included in
the units began to trade separately on October 26, 2007.
The Company agreed to pay the underwriters in the Public
Offering an underwriting discount of 3.75% of the gross
proceeds, and upon the consummation of a business combination
the underwriters will receive an additional contingent
underwriting discount equal to 2.25% of the gross proceeds. With
respect to units sold pursuant to the underwriters
over-allotment option, the underwriters received an underwriting
discount of 2.25% of the gross proceeds, and upon the
consummation of a business combination the underwriters will
receive an additional contingent underwriting discount equal to
3.75% of the gross proceeds. With respect to the
23,100,000 units sold on September 28, 2007, the total
contingent underwriting discount was $5,362,500. As of
June 30, 2008, the amount due to underwriter consisted of
the total contingent underwriting discount of $5,362,500, plus
$106,179 of accrued interest, as described at Note 9. At
December 31, 2007, the amount due to underwriter consisted
of the total contingent underwriting discount of $5,362,500,
plus $44,642 of accrued interest.
Pursuant to the underwriting agreement, the Company also paid a
1.0% non-accountable expense allowance, and issued a unit
purchase option to Maxim, for $100, to purchase up to a total of
1,000,000 units at $12.50 per unit. Pursuant to the terms
of the unit purchase option, under no circumstances will the
Company be required to net-cash settle the exercise of the Unit
Purchase Option or the underlying warrants. This would be
applicable in the event that the Company is not in compliance
with its obligation to register and maintain a current
registration statement under the Securities Act of 1933, as
amended, with respect to the underlying shares of common stock.
Accordingly the underlying warrants may never be redeemed and
could expire unexercised as a current registration statement
covering the underlying shares of common stock is required in
either case. Because there is no net-cash settlement, the
Company accounted for the fair value of the unit purchase
option, inclusive of the receipt of the $100 cash payment, as a
cost of the Public Offering, resulting
F-28
SEANERGY
MARITIME CORP. AND SUBSIDIARY
(a corporation in the development stage)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (Continued)
Three Months and Six Months Ended June 30, 2008 and
2007
in a charge directly to shareholders equity. The Company
estimates that the fair value of this unit purchase option is
approximately $7,390,000 ($7.39 per unit) using a Black- Scholes
option-pricing model. The fair value of the unit purchase option
granted to Maxim was estimated as of the date of grant using the
following assumptions: (1) expected volatility of 100.0%,
(2) risk-free interest rate of 5.0%, and (3) expected
life of 5 years. The unit purchase option may be exercised
for cash or on a cashless basis, at the
holders option, such that the holder may use the
appreciated value of the unit purchase option (the difference
between the exercise prices of the unit purchase option and the
underlying warrants and the market price of the units and
underlying securities) to exercise the unit purchase option
without the payment of any cash. The warrants underlying such
units will be exercisable at $6.50 per share.
On September 28, 2007, the closing date of the Offerings,
100% of the proceeds of the Public Offering, which consisted of
$231,000,000, including $5,362,500 of contingent underwriting
compensation, which will be paid to Maxim if a business
combination is consummated, but which will be forfeited in part
if the public shareholders elect to have their shares redeemed
for cash and in full if a business combination is not
consummated, was placed in a trust account at Deutsche Bank
Trust Company Americas maintained by Continental Stock
Transfer & Trust Company, New York, New York, as
trustee (Trust Account), and invested until the
earlier of (i) the consummation of the Companys first
business combination or (ii) the liquidation of the
Company. In the event that the over-allotment option had been
exercised in full, the first quarterly interest distribution to
the public shareholders following the closing of the
over-allotment would have been reduced by $742,500 to permit the
Company to draw down from the interest earned on the proceeds in
the Trust Account of $742,500 to replace the $742,500 of
the costs and expenses incurred and paid in connection with the
exercise of the over-allotment option, in order to ensure that
at all times there was a minimum of $10.00 per unit held in the
Trust Account. On September 28, 2007, one-third of the
over-allotment option was exercised, as a result of which the
Company was only permitted to draw down one-third of the
$742,500, or $247,500, from the interest earned on the proceeds
in the Trust Account. The expenses that the Company may
incur prior to consummation of a business combination may only
be paid from the net proceeds of the Public Offering and the
Private Placement not held in the Trust Account, which
initially was $3,000,000, subject to the Companys ability
to draw down an additional $247,500 of interest earned on the
Trust Account as described above.
On September 28, 2007, and prior to the consummation of the
Public Offering described above, all of the Companys
executive officers purchased from the Company an aggregate of
16,016,667 warrants at $0.90 per warrant in a Private Placement.
All insider warrants issued in the Private Placement are
identical to the warrants in the units sold in the Public
Offering, except that: (i) subject to certain limited
exceptions, none of the warrants are transferable or saleable
until after the Company completes a business combination;
(ii) the warrants are not subject to redemption if held by
the initial holders thereof; and (iii) the warrants may be
exercised on a cashless basis if held by the initial holders
thereof. A portion of the proceeds from the sale of these
insider warrants has been added to the proceeds from the Public
Offering held in the Trust Account pending the completion
of the Companys initial business combination, with the
balance held outside the Trust Account to be used for
working capital purposes. No placement fees were payable on the
warrants sold in the Private Placement. The sale of the warrants
to management did not result in the recognition of any
stock-based compensation expense because they were sold at
approximate fair market value.
Upon signing a definitive agreement for the acquisition of a
target business, the Company was required to submit such
transaction for shareholder approval. In the event that public
shareholders owning 35.0% or more of the outstanding stock sold
in the public offering voted against the business combination
and elected to have the Company redeem their shares for cash,
the business combination would not be consummated. All of the
Companys shareholders prior to the Offerings, including
all of the officers and directors of the Company (Initial
Shareholders), have agreed to vote their 5,500,000
founding shares of common stock in accordance
F-29
SEANERGY
MARITIME CORP. AND SUBSIDIARY
(a corporation in the development stage)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (Continued)
Three Months and Six Months Ended June 30, 2008 and
2007
with the vote of the majority of shares purchased in the Public
Offering with respect to any business combination and to vote
any shares they acquire in the Public Offering, or in the
aftermarket, in favor of the business combination. After
consummation of the Companys first business combination,
all of these voting safeguards will no longer be applicable.
With respect to the first business combination that was approved
and consummated, any holder of shares sold in the Public
Offering, other than the Initial Shareholders and their nominees
(the Public Shareholders), who voted against the
business combination required that the Company redeem their
shares. The per share redemption price was equal to $10.00 per
share (inclusive of a pro rata portion of the contingent
underwriting compensation of $0.225 per share). Accordingly,
Public Shareholders holding up to one share less than 35.0% of
the aggregate number of shares sold in the Offerings, or
8,084,999 shares, could require that the Company redeem
their shares in the event of a business combination.
On September 24, 2007, the Company amended its Amended and
Restated Articles of Incorporation and filed its Second Amended
and Restated Articles of Incorporation to provide for mandatory
liquidation of the Company on September 28, 2009. A
proposal to amend this provision may only be submitted to
shareholders in connection with any proposed Business
Combination pursuant to the terms of the Second Amended and
Restated Articles of Incorporation.
On May 20, 2008, the Company entered into definitive
agreements pursuant to which Seanergy Maritime Holdings Corp.
(formerly Seanergy Merger Corp.) would purchase, for an
aggregate purchase price of (i) $367,030,750 in cash,
(ii) $28,250,000 in the form of a convertible promissory
note, and (iii) up to 4,308,075 shares of Seanergy
Maritime Holdings Corp. common stock (subject to Seanergy
Maritime Holdings Corp. meeting certain EBITDA thresholds
post-closing), six dry bulk vessels from companies associated
with members of the Restis family, including four second hand
vessels and two newly built vessels. On August 28, 2008,
Seanergy Maritime Holdings Corp. completed the acquisition,
through its designated nominee companies (which are wholly owned
subsidiaries), of three of the six dry bulk vessels, including
two Supramax vessels and one Handysize vessel. On that date,
Seanergy Maritime Holdings Corp. took delivery of the 2008-built
M/V Davakis G (54,000 dwt), the 2008-built M/V Delos Ranger
(54,000 dwt), and the 1997-built M/V African Oryx (24,110 dwt).
Each of these vessels is chartered for a one-year term to South
African Marine Corporation S.A., an affiliate of the Restis
family, at charter rates of $60,000, $60,000 and $30,000 per
day, respectively. On September 11, 2008, Seanergy Maritime
Holdings Corp. completed the acquisition, through its designated
nominee company, of a fourth vessel, the M/V Bremen Max (73,503
dwt), a 1993-built, Panamax vessel, chartered at the rate of
$65,000 per day to South African Maritime Corporation S.A. for a
one-year term. On September 25, 2008, Seanergy Maritime
Holdings Corp. completed the acquisition, through its designated
nominee companies, of the final two vessels, the M/V Hamburg Max
(73,498 dwt), a 1994-built, Panamax vessel, and the M/V African
Zebra (38,632 dwt), a 1985-built, Handymax vessel. The M/V
Hamburg Max and the M/V African Zebra are chartered at rates of
$65,000 and $36,000 per day, respectively, to South African
Marine Corporation S.A. for a one-year term. Seanergy Maritime
Holdings Corp. has completed all of the acquisitions
contemplated by the definitive agreements dated May 20,
2008. The acquisition of the vessels was completed with funds
from the Companys Trust Account and with financing
provided by Marfin Bank S.A. of Greece. Pursuant to a financing
agreement dated August 28, 2008, Seanergys
vessel-owning subsidiaries were permitted to borrow, with the
Company and Seanergy Maritime Holdings Corp. acting as
guarantors, a maximum of $255,000,000 in connection with the
purchase of the vessels, subject to how many public shareholders
of the Company exercised their redemption rights. Additional
information with respect to this transaction is presented at
Note 11.
F-30
SEANERGY
MARITIME CORP. AND SUBSIDIARY
(a corporation in the development stage)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (Continued)
Three Months and Six Months Ended June 30, 2008 and
2007
|
|
5.
|
Money
Market Funds Held in Trust
|
On May 16, 2008, the Company instructed Continental Stock
Transfer & Trust Company, the trustee of the
Companys Trust Account, to establish a new
Trust Account at HSBC Bank Plc., the London affiliate of
HSBC Bank, and to transfer the funds in the Companys
Trust Account from Deutsche Bank Trust Company
Americas to the new HSBC trust account in London, England.
Money market funds held in trust at June 30,
2008 consist of an investment in the Lehman Brothers Tax-Exempt
Portfolio with a market value of $232,153,251, and annualized
tax-exempt yield of 1.58%.
The Lehman Brothers Tax-Exempt Portfolio invests in
high-quality, short-term municipal securities of state and local
governments and their agencies located in any of the fifty
states, the District of Columbia, Puerto Rico, and other
U.S. territories and possessions denominated in United
States dollars with ratings of Aaa (Moodys Investor
Services) and AAA/V1+ (Fitch Ratings). Most of the
portfolios performance is dependent on credit quality and
interest rates. The Lehman Brothers Tax-Exempt Portfolio is not
covered by insurance.
Money market funds held in trust at
December 31, 2007 consist primarily of an investment in the
BlackRock MuniFund with a market value of $232,913,036, and an
annualized tax-exempt yield 3.16%.
The BlackRock MuniFund commenced operations on February 4,
1980, and invests in money market instruments: U.S. state
and sub-division tax-exempt obligations with remaining
maturities of less than 13 months, bonds rated AA, notes
rated SP-1/MIG-1, and variable rate demand notes rated VMIG-1.
Certain portions of this investment fund may not be covered by
insurance.
|
|
6.
|
Notes
Payable and Due to Shareholders
|
On December 14, 2006, the Company issued a series of
unsecured promissory notes totaling $350,000 to its Initial
Shareholders. The notes bear interest at the rate of 4.0% per
annum and were due and payable on the earlier of
(i) December 14, 2007 or (ii) the date on which
the Company consummated an initial public offering of its
securities. The notes, including related accrued interest of
$11,219, were paid in full on September 28, 2007.
Prior to December 31, 2006, three of the Companys
Initial Shareholders had advanced a total of $75,986 in cash and
other expenditures to the Company on a non-interest bearing
basis. On January 5, 2007, an additional $25,000 was
advanced on a similar basis. On January 12, 2007, these
advances were converted into unsecured promissory notes bearing
interest at the rate of 4.0% per annum and made due and payable
on the earlier of (i) January 12, 2008 or
(ii) the date on which the Company consummated an initial
public offering of its securities. The notes, including related
accrued interest of $2,867, were paid in full on
September 28, 2007.
The Company is authorized to issue 89,000,000 shares of its
common stock with a par value $0.0001 per share. On
October 31, 2006, the Companys Initial Shareholders
subscribed to 7,264,893 shares of common stock for a total
of $25,000. All subscriptions were paid in full in November 2006.
On February 20, 2007, an aggregate of 1,764,893 shares
of common stock were surrendered to the Company for cancellation
by the Initial Shareholders on a pro rata basis, thus reducing
the common shares outstanding on such date to
5,500,000 shares.
F-31
SEANERGY
MARITIME CORP. AND SUBSIDIARY
(a corporation in the development stage)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (Continued)
Three Months and Six Months Ended June 30, 2008 and
2007
On July 6, 2007, the Company approved a resolution to
effect a one and one-half-for-one stock split in the form of a
stock dividend, which resulted in the issuance of an additional
1,250,000 shares of the Companys common stock to its
shareholders; on August 6, 2007, the Company approved a
resolution to effect a one and one-third-for-one stock split in
the form of a stock dividend which resulted in the issuance of
an additional 1,250,000 shares of the Companys common
stock to its shareholders; and on September 24, 2007, the
Company approved a resolution to effect a one and
one-tenth-for-one stock split in the form of a stock dividend
which resulted in the issuance of an additional
500,000 shares of the Companys common stock to its
shareholders. The Companys condensed consolidated
financial statements and footnotes thereto give retroactive
effect to all such stock splits.
On September 28, 2007, the Initial Shareholders contributed
$400,000 to the capital of the Company in the form of legal fees
paid on the Companys behalf.
The Company is authorized to issue 1,000,000 shares of
preferred stock with a par value $0.0001 per share, with such
designations, voting and other rights and preferences as may be
determined from time to time by the Board of Directors.
|
|
9.
|
Commitments
and Contingencies
|
Pursuant to the Companys Second Amended and Restated
Articles of Incorporation, the Company is required to make
distributions to its public shareholders on a quarterly basis,
equivalent to the interest earned on the trust (less any taxes
payable by the Company and exclusive of (i) up to $420,000
of interest earned on Maxims deferred underwriting
compensation and (ii) up to an aggregate of $742,500 of
interest income on the proceeds in the Trust Account that
the Company was permitted to draw down in the event the
over-allotment option was exercised in full) on a pro-rata basis
to its public shareholders until the earlier of the consummation
of a business combination or the Companys liquidation.
Please see Note 4 for further discussion regarding draw
down on interest income.
On January 2, 2008, the Company announced that it would pay
its first quarterly distribution of $1,630,791, or $0.0706 per
share, on January 15, 2008, to shareholders of record on
January 9, 2008. The distribution consisted of interest
earned on the Trust Account, less permitted adjustments for
interest earned on the deferred underwriting commission of
$44,642, and $247,500 relating to the over-allotment option.
On April 1, 2008, the Company announced that it would pay
its regular quarterly distribution for the three months ended
March 31, 2008, in the amount of $1,542,349, or $0.0668 per
share, on April 15, 2008, to shareholders of record on
April 9, 2008. The distribution for the three months ended
March 31, 2008 consisted of interest earned on the
Trust Account, less a permitted adjustment for interest
earned on the deferred underwriting commission of $36,653.
On July 1, 2008, the Company announced that it would pay
its regular quarterly distribution for the three months ended
June 30, 2008, in the amount of $1,080,934, or $0.0468 per
share, on July 15, 2008, to shareholders of record on
July 9, 2008. The distribution for the three months ended
June 30, 2008 consisted of interest earned on the
Trust Account, less a permitted adjustment for interest
earned on the deferred underwriting commission of $24,882.
The Company was not permitted to proceed with a business
combination if Public Shareholders owning 35.0% or more of the
shares sold in the Public Offering voted against the business
combination and exercised their redemption rights. Accordingly,
the Company could effect a business combination if Public
Shareholders owning up to one share less than 35.0% of the
aggregate shares sold in the Public Offering exercise their
F-32
SEANERGY
MARITIME CORP. AND SUBSIDIARY
(a corporation in the development stage)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (Continued)
Three Months and Six Months Ended June 30, 2008 and
2007
redemption rights. Under such circumstances, the Company is
required to redeem for cash up to 8,084,999 shares of
common stock, at an expected initial per share redemption price
of $10.00. However, the ability of shareholders to receive
$10.00 per unit is subject to any valid claims by the
Companys creditors which are not covered by amounts held
in the Trust Account or the indemnities provided by the
Companys officers and directors. The expected redemption
price per share is greater than each shareholders initial
pro rata share of the Trust Account of approximately $9.775
per share. Of the excess redemption price, approximately $0.225
per share represents a portion of the underwriters
contingent fee, which they have agreed to forego for each share
that is redeemed. Accordingly, the total deferred underwriting
compensation payable to the underwriters in the event of a
business combination would be reduced by approximately $0.225
for each share that is redeemed. The balance would be paid from
proceeds held in the Trust Account, which are payable to
the Company upon consummation of a business combination. Even if
less than 35.0% of the shareholders exercise their redemption
rights, the Company would not be able to consummate a business
combination if such redemption left the Company with funds
representing less than a fair market value at least equal to
80.0% of the amount in the Trust Account (excluding any
deferred underwriting compensation plus interest thereon held
for the benefit of Maxim) at the time of such acquisition, which
amount was required as a condition to the consummation of the
Companys initial business combination, and the Company
would therefore be forced to arrange additional financing to
consummate such a business combination (or a different business
combination) or to liquidate.
On June 21, 2006, the Company engaged Maxim, on a
non-exclusive basis, as its agent for the solicitation of the
exercise of the warrants. To the extent not inconsistent with
the guidelines of the NASD and the rules and regulations of the
Securities and Exchange Commission, the Company has agreed to
pay the representative for bona fide services rendered a
commission equal to 5.0% of the exercise price for each warrant
exercised more than one year after the date of the Public
Offering if the exercise was solicited by the underwriters.
The Company had agreed to pay to Balthellas Chartering S.A., a
company controlled by Panagiotis Zafet, the Companys
former Co-Chairman of the Board of Directors and Chief Executive
Officer, and Simon Zafet, the Companys former Chief
Operating Officer and a director, $7,500 per month for
24 months, for office space and reimbursement of general
and administrative expenses, commencing on the date of the
Public Offering and terminating upon the date the Company
consummates a business combination or liquidates. The agreement
was effectively terminated during May 2008.
On May 23, 2007, the Company entered into a seven-month
agreement, automatically renewable for an additional one year,
for investor relations and financial media support services for
a minimum monthly fee of $4,000 before a business combination,
or $7,000 after a business combination.
The holders of the Companys 5,500,000 issued and
outstanding shares immediately prior to the completion of the
Public Offering and the holders of the warrants to purchase
16,016,667 shares of common stock acquired in the Private
Placement are entitled to registration rights covering the
resale of their shares and the resale of their warrants and
shares acquired upon exercise of their warrants. The holders of
the majority of these shares are entitled to make up to two
demands that the Company register their shares, warrants and
shares that they are entitled to acquire upon the exercise of
warrants. The holders of the majority of these shares can elect
to exercise these registration rights at any time after the date
on which these shares of common stock are released from escrow.
In addition, these shareholders have certain
piggyback registration rights on registration
statements filed subsequent to the date on which these shares of
common stock are released from escrow. The Company will bear the
expenses incurred in connection with the filing of any of the
foregoing registration statements.
F-33
SEANERGY
MARITIME CORP. AND SUBSIDIARY
(a corporation in the development stage)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (Continued)
Three Months and Six Months Ended June 30, 2008 and
2007
In the event that a registration statement is not effective at
the time of exercise, the holder of such warrant shall not be
entitled to exercise such warrant and in no event will the
Company be required to net cash settle the warrant exercise.
Consequently, the warrants may expire unexercised.
The unit purchase option and its underlying securities have been
registered under the registration statement for the Public
Offering; however, the option also grants holders demand and
piggyback registration rights for periods of five
years and seven years, respectively, from the date of the Public
Offering. These rights apply to all of the securities directly
and indirectly issuable upon exercise of the option. The Company
will bear all fees and expenses attendant to registering the
securities issuable on exercise of the option, other than
underwriting commissions incurred and payable by the holders.
On May 20, 2008, the Company entered into definitive
agreements pursuant to which Seanergy Maritime Holdings Corp.
agreed to purchase, for an aggregate purchase price of
(i) $367,030,750 in cash, (ii) $28,250,000 in the form
of a convertible promissory note, and (iii) up to
4,308,075 shares of Seanergy Maritime Holdings Corp. common
stock (subject to Seanergy Maritime Holdings Corp. meeting
certain EBITDA thresholds post-closing), six dry bulk vessels
from companies associated with members of the Restis family,
including four second-hand vessels and two newly-built vessels.
Approval of the proposed acquisition required that a majority of
the votes cast at the shareholders meeting be cast in
favor of the proposed acquisition and that holders of fewer than
35% of the Companys shares of common stock issued in the
initial public offering (8,084,999 shares) voted against
the proposed acquisition. On August, 26, 2008, shareholders of
the Company approved the proposed acquisition, with holders of
6,514,175 shares voting against the proposed acquisition.
Of the shareholders voting against the proposed acquisition,
holders of 6,370,773 shares properly demanded redemption of
their shares and were paid $63,707,730, or $10.00 per share,
which included a forfeited portion of the deferred
underwriters contingent fee.
On August 28, 2008, Seanergy Maritime Holdings Corp.
completed the acquisition, through its designated nominee
companies (which are wholly owned subsidiaries), of three of the
six dry bulk vessels, including two Supramax vessels and one
Handysize vessel. On that date, Seanergy Maritime Holdings Corp.
took delivery of the 2008-built M/V Davakis G (54,000 dwt), the
2008-built M/V Delos Ranger (54,000 dwt), and the 1997-built M/V
African Oryx (24,110 dwt). Each of these vessels is chartered
for a one-year term to South African Marine Corporation S.A., an
affiliate of the Restis family, at charter rates of $60,000,
$60,000 and $30,000 per day, respectively. On September 11,
2008, Seanergy Maritime Holdings Corp. completed the
acquisition, through its designated nominee company, of a fourth
vessel, the M/V Bremen Max (73,503 dwt), a 1993-built, Panamax
vessel, chartered at the rate of $65,000 per day to South
African Maritime Corporation S.A. for a one-year term. On
September 25, 2008, Seanergy Maritime Holdings Corp.
completed the acquisition, through its designated nominee
companies, of the final two vessels, the M/V Hamburg Max (73,498
dwt), a 1994-built, Panamax vessel, and the M/V African Zebra
(38,632 dwt), a 1985-built, Handymax vessel. The M/V Hamburg Max
and the M/V African Zebra are chartered at rates of $65,000 and
$36,000 per day, respectively, to South African Marine
Corporation S.A. for a one-year term. Seanergy Maritime Holdings
Corp. has completed all of the acquisitions contemplated by the
definitive agreements dated May 20, 2008.
The acquisition of the vessels was completed with funds from the
Companys Trust Account and with financing provided by
Marfin Bank S.A. of Greece. Pursuant to a financing agreement
dated August 28, 2008, Seanergy Maritime Holdings
Corp.s vessel-owning subsidiaries were permitted to
borrow, with the Company and Seanergy Maritime Holdings Corp.
acting as guarantors, a maximum of $255,000,000 in connection
with the purchase of the vessels, subject to how many public
shareholders of the Company exercised their
F-34
SEANERGY
MARITIME CORP. AND SUBSIDIARY
(a corporation in the development stage)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (Continued)
Three Months and Six Months Ended June 30, 2008 and
2007
redemption rights. Seanergy Maritime Holdings Corp. will be
required to dedicate a portion of its cash flow from operations
to pay the principal and interest on such debt, which will limit
the funds that would otherwise be available for working capital
expenditures and other purposes, including the payment of
dividends. The credit facilities consisted of a term loan
facility in the amount of $165,000,000 to fund 45% of the
cash portion of the purchase price of the vessel acquisition
cost, and a revolving credit facility of up to $90,000,000 for
investment and working capital purposes, including the payments
to the redeeming public shareholders upon exercise of their
redemption rights. The term loan was made available in tranches
to assist the six designated nominee companies to acquire the
six vessels. The term loan is to be repaid over a period of
seven years commencing upon delivery of the last vessel. The
amount available for draw down under the revolving facility is
tied to the market values of the vessels. The revolving facility
will be gradually reduced each year and will be fully repaid
together with the term loan. Both the term loan and revolving
facility are secured by mortgages over the vessels and other
usual security interests, including charter assignments.
The acquisition of the vessels will be accounted for by the
purchase method and accordingly, the total acquisition cost will
be allocated to the acquired vessels and to other intangible
assets, as necessary, by separately measuring the fair values of
such assets acquired, based on preliminary estimates of the
respective fair values, which are subject to change. No other
tangible assets will be acquired and no liabilities assumed. The
operations of the vessels will be consolidated with the
operations of the Company commencing with their respective
acquisition dates.
F-35
Report of
Independent Registered Public Accounting Firm
The Board of Directors and Shareholders:
Goldie Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd., Valdis Marine Corp.,
Kalistos Maritime S.A. and Kalithea Maritime S.A.
We have audited the accompanying combined balance sheets of
Goldie Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd., Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A. (together the Group) as of
December 31, 2007 and 2006, and the related combined
statements of income, changes in equity and cash flows for each
of the years in the three-year period ended December 31,
2007. These combined financial statements are the responsibility
of the Groups management. Our responsibility is to express
an opinion on these combined financial statements based on our
audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the combined financial statements referred to
above present fairly, in all material respects, the financial
position of the Group as of December 31, 2007 and 2006, and
the results of its operations and its cash flows for each of the
years in the three-year period ended December 31, 2007, in
conformity with International Financial Reporting Standards, as
issued by the International Accounting Standards Board.
As discussed in Note 1 of the combined financial
statements, the combined financial statements present the
aggregated financial information of the six vessel-owning
companies and an allocation of long-term debt. The combined
financial statements may not necessarily be indicative of the
Groups financial position, results of operations, or cash
flows had the Group operated as a separate entity during the
period presented or for future periods.
/s/ KPMG Certified Auditors A.E.
Athens, Greece
June 16, 2008, except as to Note 20(i), which is as of
July 25, 2008
F-36
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Combined
Balance Sheets
December 31, 2007 and 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
|
2007
|
|
|
2006
|
|
|
|
(In thousands of US dollars)
|
|
|
ASSETS
|
Vessels, net
|
|
|
7
|
|
|
|
244,801
|
|
|
|
114,487
|
|
Due from related parties
|
|
|
19
|
|
|
|
|
|
|
|
480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-current assets
|
|
|
|
|
|
|
244,801
|
|
|
|
114,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
8
|
|
|
|
223
|
|
|
|
212
|
|
Trade accounts receivable and other assets
|
|
|
9
|
|
|
|
928
|
|
|
|
343
|
|
Due from related parties
|
|
|
19
|
|
|
|
5,833
|
|
|
|
3,841
|
|
Cash and cash equivalents
|
|
|
10
|
|
|
|
21
|
|
|
|
1,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
|
|
|
|
7,005
|
|
|
|
5,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
|
|
251,806
|
|
|
|
120,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital contributions
|
|
|
11
|
|
|
|
40,865
|
|
|
|
36,960
|
|
Revaluation reserve
|
|
|
7
|
|
|
|
154,384
|
|
|
|
25,119
|
|
Retained earnings
|
|
|
|
|
|
|
4,408
|
|
|
|
6,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
|
|
|
|
199,657
|
|
|
|
69,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
Long-term debt, net
|
|
|
12
|
|
|
|
38,580
|
|
|
|
41,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-current liabilities
|
|
|
|
|
|
|
38,580
|
|
|
|
41,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt, net
|
|
|
12
|
|
|
|
9,750
|
|
|
|
8,420
|
|
Trade accounts payable
|
|
|
13
|
|
|
|
1,180
|
|
|
|
604
|
|
Accrued expenses
|
|
|
14
|
|
|
|
1,098
|
|
|
|
352
|
|
Deferred revenue
|
|
|
|
|
|
|
781
|
|
|
|
651
|
|
Due to related parties
|
|
|
19
|
|
|
|
720
|
|
|
|
353
|
|
Accrued interest expense
|
|
|
|
|
|
|
40
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
|
|
|
|
13,569
|
|
|
|
10,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity and liabilities
|
|
|
|
|
|
|
251,806
|
|
|
|
120,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages F-41 to F-61 are an integral part of these
combined financial statements
F-37
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Combined
Statements of Income
For the three years ended December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands of US dollars)
|
|
|
Revenue from vessels
|
|
|
|
|
|
|
32,297
|
|
|
|
15,607
|
|
|
|
17,016
|
|
Revenue from vessels related party
|
|
|
19
|
|
|
|
3,420
|
|
|
|
10,740
|
|
|
|
10,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,717
|
|
|
|
26,347
|
|
|
|
27,156
|
|
Direct voyage expenses
|
|
|
3
|
|
|
|
(82
|
)
|
|
|
(64
|
)
|
|
|
(139
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,635
|
|
|
|
26,283
|
|
|
|
27,017
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crew costs
|
|
|
4
|
|
|
|
(2,803
|
)
|
|
|
(2,777
|
)
|
|
|
(1,976
|
)
|
Management fees related party
|
|
|
19
|
|
|
|
(782
|
)
|
|
|
(752
|
)
|
|
|
(644
|
)
|
Other operating expenses
|
|
|
5
|
|
|
|
(3,228
|
)
|
|
|
(2,842
|
)
|
|
|
(3,085
|
)
|
Depreciation
|
|
|
7
|
|
|
|
(12,625
|
)
|
|
|
(6,567
|
)
|
|
|
(6,970
|
)
|
Impairment reversal/(loss)
|
|
|
7
|
|
|
|
|
|
|
|
19,311
|
|
|
|
(19,311
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results from operating activities
|
|
|
|
|
|
|
16,197
|
|
|
|
32,656
|
|
|
|
(4,969
|
)
|
Finance income
|
|
|
6
|
|
|
|
143
|
|
|
|
132
|
|
|
|
24
|
|
Finance expense
|
|
|
6
|
|
|
|
(2,980
|
)
|
|
|
(3,311
|
)
|
|
|
(2,392
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net finance cost
|
|
|
|
|
|
|
(2,837
|
)
|
|
|
(3,179
|
)
|
|
|
(2,368
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit/(loss) for the year
|
|
|
|
|
|
|
13,360
|
|
|
|
29,477
|
|
|
|
(7,337
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages F-41 to F-61 are an integral part of these
combined financial statements
F-38
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Combined
Statements of Changes in Equity
For the three years ended December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit)/
|
|
|
|
|
|
|
Capital
|
|
|
Revaluation
|
|
|
Retained
|
|
|
|
|
|
|
Contributions
|
|
|
Reserve
|
|
|
Earnings
|
|
|
Total
|
|
|
|
(In thousands of US dollars)
|
|
|
Balance at January 1, 2005
|
|
|
12,817
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
12,814
|
|
Net (loss) for the year
|
|
|
|
|
|
|
|
|
|
|
(7,337
|
)
|
|
|
(7,337
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recognized income and expense
|
|
|
|
|
|
|
|
|
|
|
(7,337
|
)
|
|
|
(7,337
|
)
|
Capital contributions
|
|
|
15,980
|
|
|
|
|
|
|
|
|
|
|
|
15,980
|
|
Dividends paid
|
|
|
|
|
|
|
|
|
|
|
(3,319
|
)
|
|
|
(3,319
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2005
|
|
|
28,797
|
|
|
|
|
|
|
|
(10,659
|
)
|
|
|
18,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit for the year
|
|
|
|
|
|
|
|
|
|
|
29,477
|
|
|
|
29,477
|
|
Revaluation of vessels
|
|
|
|
|
|
|
25,119
|
|
|
|
|
|
|
|
25,119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recognized income and expense
|
|
|
|
|
|
|
25,119
|
|
|
|
29,477
|
|
|
|
54,596
|
|
Capital contributions
|
|
|
8,163
|
|
|
|
|
|
|
|
|
|
|
|
8,163
|
|
Dividends paid
|
|
|
|
|
|
|
|
|
|
|
(11,838
|
)
|
|
|
(11,838
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2006
|
|
|
36,960
|
|
|
|
25,119
|
|
|
|
6,980
|
|
|
|
69,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit for the year
|
|
|
|
|
|
|
|
|
|
|
13,360
|
|
|
|
13,360
|
|
Revaluation of vessels
|
|
|
|
|
|
|
129,265
|
|
|
|
|
|
|
|
129,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recognized income and expense
|
|
|
|
|
|
|
129,265
|
|
|
|
13,360
|
|
|
|
142,625
|
|
Capital contributions
|
|
|
3,905
|
|
|
|
|
|
|
|
|
|
|
|
3,905
|
|
Dividends paid
|
|
|
|
|
|
|
|
|
|
|
(15,932
|
)
|
|
|
(15,932
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
|
40,865
|
|
|
|
154,384
|
|
|
|
4,408
|
|
|
|
199,657
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages F-41 to F-61 are an integral part of these
combined financial statements
F-39
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Combined
Statements of Cash Flows
For the three years ended December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands of US dollars)
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit/(loss)
|
|
|
13,360
|
|
|
|
29,477
|
|
|
|
(7,337
|
)
|
Adjustments for
:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
12,625
|
|
|
|
6,567
|
|
|
|
6,970
|
|
Impairment loss on trade accounts receivable and due from
related parties
|
|
|
|
|
|
|
870
|
|
|
|
|
|
Impairment (reversal) loss on vessels
|
|
|
|
|
|
|
(19,311
|
)
|
|
|
19,311
|
|
Interest expense
|
|
|
2,914
|
|
|
|
3,272
|
|
|
|
2,371
|
|
Interest income
|
|
|
(143
|
)
|
|
|
(132
|
)
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,756
|
|
|
|
20,743
|
|
|
|
21,302
|
|
Due from related parties
|
|
|
(1,512
|
)
|
|
|
1,589
|
|
|
|
6,726
|
|
Inventories
|
|
|
(11
|
)
|
|
|
(56
|
)
|
|
|
(156
|
)
|
Trade accounts receivable and other assets
|
|
|
(585
|
)
|
|
|
(216
|
)
|
|
|
(768
|
)
|
Trade accounts payable
|
|
|
576
|
|
|
|
96
|
|
|
|
488
|
|
Accrued expenses
|
|
|
746
|
|
|
|
178
|
|
|
|
174
|
|
Deferred revenue
|
|
|
130
|
|
|
|
(260
|
)
|
|
|
911
|
|
Due to related parties
|
|
|
367
|
|
|
|
352
|
|
|
|
(144
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,467
|
|
|
|
22,426
|
|
|
|
28,533
|
|
Interest paid
|
|
|
(2,890
|
)
|
|
|
(3,265
|
)
|
|
|
(2,364
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash from operating activities
|
|
|
25,577
|
|
|
|
19,161
|
|
|
|
26,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest received
|
|
|
143
|
|
|
|
132
|
|
|
|
13
|
|
Additions for vessels
|
|
|
(12,685
|
)
|
|
|
(5,038
|
)
|
|
|
(86,706
|
)
|
Dry-docking costs
|
|
|
(989
|
)
|
|
|
(1,568
|
)
|
|
|
(18
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(13,531
|
)
|
|
|
(6,474
|
)
|
|
|
(86,711
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid
|
|
|
(15,932
|
)
|
|
|
(11,838
|
)
|
|
|
(3,319
|
)
|
Capital contributions
|
|
|
3,905
|
|
|
|
8,163
|
|
|
|
15,980
|
|
Proceeds from long-term debt
|
|
|
8,400
|
|
|
|
|
|
|
|
55,070
|
|
Repayment of long-term debt
|
|
|
(9,844
|
)
|
|
|
(7,573
|
)
|
|
|
(7,182
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided from financing activities
|
|
|
(13,471
|
)
|
|
|
(11,248
|
)
|
|
|
60,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalents
|
|
|
(1,425
|
)
|
|
|
1,439
|
|
|
|
7
|
|
Cash and cash equivalents at January 1
|
|
|
1,446
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at December 31
|
|
|
21
|
|
|
|
1,446
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages F-41 to F-61 are an integral part of these
combined financial statements
F-40
December 31, 2007 and 2006
(In thousands of US Dollars, except for share and per share
data, unless otherwise stated)
|
|
1.
|
Business
and basis of presentation
|
On May 20, 2008, companies affiliated with members of the
Restis family collectively acquired a 9.62% interest in Seanergy
Maritime Corp. (Seanergy) for $25 million in
cash from existing shareholders and officers of Seanergy (the
Founders) via the acquisition of
2,750,000 shares (the Shares) of the common
stock (the Common Stock) of Seanergy and 8,008,334
warrants to purchase shares of Seanergys Common Stock (the
Warrants and collectively with the Shares, the
Securities). The Common Stock is subject to an
Escrow Agreement dated September 24, 2007 entered into by
the Founders pursuant to which the Shares remain in escrow with
an escrow agent until the date that is 12 months after the
consummation of a business combination such as that discussed in
Note 20(d) (the Business Combination). The
Warrants are subject to a
Lock-Up
Agreement dated September 24, 2007 (the
Lock-Up)
also entered into by the Founders pursuant to which the Warrants
would not be transferred until the consummation of the Business
Combination. On June 5, 2008 and June 10, 2008, a
further 413,000 shares and 200,000 shares of common
stock, respectively, were acquired by companies affiliated with
members of the Restis family on the open market, thereby
bringing their total interest in Seanergy to 11.76% (see
Note 20(i)). However the voting rights associated with the
Securities are governed by a voting agreement. Also on
May 20, 2008 Seanergy, a Marshall Islands Corporation and
its subsidiary Seanergy Merger Corp., a Marshall Islands
Corporation (Buyer) entered into a Master Agreement
pursuant to which the Buyer has agreed to purchase for an
aggregate purchase price of: (i) $367,030 in cash;
(ii) $28,250 in the form of a promissory note convertible
to 2,260,000 shares of Buyers common stock at $12.50
per share; and (iii) up to 4,308,075 shares of
Buyers common stock if Buyer achieves certain earnings
before interest, tax and depreciation thresholds, six dry bulk
vessels from companies associated with members of the Restis
family, which include four second hand vessels and two new
buildings, one of which was delivered on May 20, 2008 (see
Note 20(c)). In connection with the foregoing, six
Memoranda of Agreement were entered into with the vessel-owning
companies indicated below.
The combined financial statements include the assets,
liabilities and results of operations of the vessel-owning
companies which include the second-hand dry bulk carriers and
the two newbuildings (formerly Hull KA 215 and Hull KA 216)
(together the Group). The vessel-owning companies
which include the two newbuildings reflect no trading activities
for all periods presented.
The combined financial statements include the following
vessel-owning companies:
|
|
|
|
|
|
|
|
|
Country
|
|
Date
|
|
Vessel Name
|
Vessel-owning Company
|
|
of Incorporation
|
|
of Incorporation
|
|
or Hull Number
|
|
Goldie Navigation Ltd.
|
|
Marshall Islands
|
|
November 23, 2004
|
|
African Zebra
|
Pavey Services Ltd.
|
|
British Virgin Islands
|
|
October 29, 2004
|
|
Bremen Max
|
Shoreline Universal Ltd.
|
|
British Virgin Islands
|
|
November 25, 2004
|
|
Hamburg Max
|
Valdis Marine Corp.
|
|
Marshall Islands
|
|
November 3, 2004
|
|
African Oryx
|
Kalistos Maritime S.A.
|
|
Marshall Islands
|
|
February 16, 2004
|
|
KA 215
|
Kalithea Maritime S.A.
|
|
Marshall Islands
|
|
February 16, 2004
|
|
KA 216
|
The vessel-owning companies with the second hand dry bulk
vessels above are subsidiaries of Lincoln Finance Corp.
(Lincoln), which in turn is a wholly owned subsidiary of
Nouvelle Enterprises (Nouvelle). The vessel-owning companies
with the new buildings (Hull numbers KA 215 and KA 216) are
indirect wholly owned subsidiaries of First Financial
Corporation (First). First is the controlling shareholder of the
six vessel-owning companies. Lincoln, Nouvelle and First are
incorporated under the laws of the Republic of the
F-41
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Combined Financial
Statements (Continued)
December 31, 2007 and 2006
Marshall Islands with registered offices at Trust Company
Complex, Ajeltake Island, P.O. Box 1405, Majuro,
Marshall Islands and are owned by members of the Restis family.
The technical management of the Group is performed by
Enterprises Shipping & Trading Company (EST), a
corporation situated in Liberia, beneficially owned by certain
members of the Restis family. EST provides the Company and other
related vessel-owning companies with a wide range of shipping
services that include technical support and maintenance,
insurance advice, financial and accounting services for a fixed
fee (refer to Note 19).
As of December 31, 2007 and 2006, the Group does not employ
any executive officers or personnel other than crew aboard the
vessels. The Directors of the six vessel-owning companies do not
receive remuneration for the services they provide.
|
|
(b)
|
Basis
of presentation
|
The combined financial statements have been prepared in
accordance with International Financial Reporting Standards
(IFRS), as issued by the International Accounting Standards
Board (IASB).
These combined financial statements reflect all of the assets,
liabilities, revenues and expenses and cash flows of the Group
for all periods presented. These combined financial statements
exclude the assets, liabilities, revenues, expenses and cash
flows that do not belong to the Group. The combined financial
statements may not necessarily be indicative of the Groups
financial position, results of operations or cash flows had the
Group operated as a separate entity during the periods presented
or for future periods.
The companies of the Group are included in the consolidated
financial statements of Lincoln and First, however these
companies are independent legal entities with separate
accounting records. The companies of this Group have applied the
same accounting policies as when they were included in the
consolidated financial statements of Lincoln and First,
respectively. Therefore, in these combined financial statements,
all expenses, revenues, assets and liabilities refer
specifically to the Group had it operated on a standalone basis
and no allocation methodology for expenses or assets and
liabilities was required, except for the long-term debt (refer
to Note 12). Management believes the assumptions underlying
the combined financial statements are reasonable. For the
purposes of the transaction the balance sheet, statement of
income, statement of changes in equity and statement of cash
flows have been presented on a combined basis for a three-year
period.
|
|
(c)
|
Statement
of compliance
|
The combined financial statements were approved by the Directors
of the Group on June 12, 2008.
|
|
(d)
|
Basis
of measurement and functional presentation
currency
|
These combined financial statements are prepared on the
historical cost basis, except for the vessels which are measured
at fair value. The combined financial statements are presented
in US dollars ($), which is the functional currency of the
vessel-owning companies in the Group. All financial information
presented in US dollars has been rounded to the nearest thousand.
|
|
(e)
|
Use of
estimates and judgments
|
The preparation of these combined financial statements in
accordance with IFRS, requires management to make judgments,
estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from
these estimates.
F-42
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Combined Financial
Statements (Continued)
December 31, 2007 and 2006
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognized in the
period in which the estimate is revised and in any future
periods affected. The estimates and assumptions that have the
most significant effect on the amounts recognized in the
combined financial statements, are estimations in relation to
the revaluation of vessels, useful lives of vessels, impairment
losses on vessels and on trade accounts receivable.
|
|
2.
|
Significant
accounting policies
|
A summary of the significant accounting policies used in the
presentation of the accompanying combined unaudited financial
statements is presented below:
|
|
(a)
|
Principles
of combination
|
The combined financial statements include the combined assets,
liabilities and results of operations for the six vessel-owning
companies (see Note 1).
Intercompany balances, transactions and unrealized gains and
losses on transactions between the companies included in these
combined financial statements have been eliminated in full.
All intercompany balances with entities outside the Group but
which were originally included in the consolidated financial
statements of Lincoln and First have not been eliminated and are
presented as balances and transactions with related parties.
Transactions in foreign currencies are translated to the
functional currency using the exchange rates at the date of the
transactions. Monetary assets and liabilities denominated in
foreign currencies at the reporting date are retranslated to the
functional currency at the foreign exchange rate at that date.
The foreign currency gain or loss on monetary items is the
difference between amortized cost in the functional currency at
the beginning of the period, adjusted for effective interest and
payments during the period and the amortized cost in foreign
currency translated at the exchange rate at the end of the
period. Non-monetary assets and liabilities denominated in
foreign currencies that are measured at fair value are
retranslated to the functional currency at the exchange rate at
the date the fair value was determined. Foreign currency
differences arising on translation are recognized in the
combined statement of income.
Vessels are originally recorded at cost less accumulated
depreciation and accumulated impairment losses.
Vessel cost includes the contract price of the vessel and
expenditure that is directly attributable to the acquisition of
the vessel (initial repairs, delivery expenses and other
expenditure to prepare the vessel for its initial voyage) and
borrowing costs incurred during the construction period.
When parts of a vessel have different useful lives, they are
accounted for as separate items (major components) of the
vessels (see Note 2(d)).
Subsequent expenditures for major improvements are also
recognized in the carrying amount if it is probable that the
future economic benefits embodied within the part will flow to
the Group and its cost can be measured reliably. The carrying
amount of the replaced part is derecognized. Routine maintenance
and repairs are recognized in the combined statement of income
as incurred.
F-43
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Combined Financial
Statements (Continued)
December 31, 2007 and 2006
Vessels are subsequently measured at fair value on an annual
basis. Increases in the individual vessels carrying amount
as a result of the revaluation is recorded in recognized income
and expense and accumulated in equity under the caption
revaluation surplus. The increase is recorded in the combined
statements of income to the extent that it reverses a
revaluation decrease of the related asset. Decreases in the
individual vessels carrying amount is recorded in the
combined statements of income as a separate line item. However,
the decrease is recorded in recognized income and expense to the
extent of any credit balance existing in the revaluation surplus
in respect of the related asset. The decrease recorded in
recognized income and expense reduces the amount accumulated in
equity under the revaluation surplus. The fair value of a vessel
is determined through market value appraisal, on the basis of a
sale for prompt, charter-free delivery, for cash, on normal
commercial terms, between willing sellers and willing buyers of
a vessel with similar characteristics.
Depreciation is recognized in the combined statement of income
on a straight line basis over the individual vessels
remaining estimated useful life, after considering the estimated
residual value. Each vessels residual value is equal to
the product of its light-weight tonnage and estimated scrap rate.
Management estimates the useful life of the new vessels to be
25 years from the date of initial delivery from the
shipyard. Second hand vessels are depreciated from the date of
their acquisition over their remaining estimated useful life.
Depreciation, useful lives and residual values are reviewed at
each reporting date.
A vessel is derecognized upon disposal or when no future
economic benefits are expected from its use. Gains or losses on
disposal are determined by comparing the proceeds from disposal
with the carrying amount of the vessel and are recognized in the
combined statement of income.
From time to time the Groups vessels are required to be
dry-docked for inspection and re-licensing at which time major
repairs and maintenance that cannot be performed while the
vessels are in operation are generally performed. The Group
defers the costs associated with dry-docking as they are
incurred by capitalizing them together with the cost of the
vessel. The Group then depreciates these costs on a
straight-line basis over the year until the next scheduled
dry-docking, generally 2.5 years. In the cases whereby the
dry-docking takes place earlier than in 2.5 years, the
carrying amount of the previous dry-docking is derecognized. In
the event of a vessel sale, the respective carrying values of
dry-docking costs are written-off at the time of sale to the
combined statement of income.
At the date of acquisition of a second-hand vessel, management
estimates the component of the cost that corresponds to the
economic benefit to be derived from capitalized dry-docking
cost, until the first scheduled dry-docking of the vessel under
the ownership of the Group, and this component is depreciated on
a straight-line basis over the remaining period to the estimated
dry-docking date.
|
|
(e)
|
Financial
instruments
|
Non-derivative financial instruments comprise trade and other
receivables, cash and cash equivalents, long term debt and trade
accounts payable. Non-derivative financial instruments are
recognized initially at fair value plus, for instruments not at
fair value through profit or loss, any directly attributable
transaction costs. Subsequent to initial recognition
non-derivative financial instruments are measured as explained
in notes (f) to (j) below.
The Group does not have any derivative financial instruments.
F-44
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Combined Financial
Statements (Continued)
December 31, 2007 and 2006
|
|
(f)
|
Trade
accounts receivable
|
Trade accounts receivable are stated at their amortized cost
using the effective interest method, less any impairment losses.
The Group recognizes insurance claim recoveries for insured
losses incurred on damage to vessels. Insurance claim recoveries
are recorded, net of any deductible amounts, at the time the
Groups vessels suffer insured damages. Recoveries from
insurance companies for the claims are provided if the amounts
are virtually certain to be received. Claims are submitted to
the insurance company, which may increase or decrease the
claims amount. Such adjustments are recorded in the year
they become virtually certain and were not material to the
Groups combined financial position or results of operation
in 2007, 2006 and 2005.
|
|
(h)
|
Cash
and cash equivalents
|
Cash and cash equivalents comprise cash balances, call deposits
and certificates of deposit (term deposits) with original
maturity of three months or less.
|
|
(i)
|
Trade
and other amounts payable
|
Trade and other amounts payable are stated at amortized cost.
Long-term debt is initially recognized at the fair value of the
consideration received and is recorded net of issue costs
directly attributable to the borrowing. After initial
recognition, issue costs are amortized using the effective
interest rate method and are recorded as finance expense in the
combined statement of income.
Inventories (lubricants) are measured at the lower of cost and
net realizable value. The cost of inventories is based on the
first-in,
first-out principle.
|
|
(l)
|
Impairment
of financial assets
|
A financial asset is assessed at each reporting date to
determine whether there is any objective evidence that it is
impaired.
A financial asset is considered to be impaired if objective
evidence indicates that one or more events have had a negative
effect on the estimated future cash flows of that asset. An
impairment loss in respect of a financial asset measured at
amortized cost is calculated as the difference between its
carrying amount, and the present value of the estimated future
cash flows discounted at the original effective interest rate.
Individually significant financial assets are tested for
impairment on an individual basis. The remaining financial
assets are assessed collectively in groups that share similar
credit risk characteristics.
All impairment losses are recognized in the combined statement
of income.
An impairment loss is reversed if the reversal can be related
objectively to an event occurring after the impairment loss was
recognized. For financial assets measured at amortized cost, the
reversal is recognized in the combined statement of income.
F-45
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Combined Financial
Statements (Continued)
December 31, 2007 and 2006
|
|
(m)
|
Impairment
of non-financial assets
|
The carrying amounts of the Groups non-financial assets,
primarily vessels, other than inventories are reviewed at each
reporting date to determine whether there is any indication of
impairment. If any such indication exists, then the assets
recoverable amount is estimated. Vessels are individually tested
for impairment (see Note 7).
The recoverable amount of vessels is the greater of its value in
use and its fair value less costs to sell. In assessing value in
use, the estimated future cash flows are discounted to their
present value using a discount rate that reflects current market
assessments of the time value of money and the risks specific to
the asset.
Recoverability for vessels is measured by comparing the carrying
amount, including unamortized dry-docking and special survey
costs, to the greater of fair value (see note 2(c)) less
costs to sell or value in use. An impairment loss is recognized
if the carrying amount of the vessel exceeds its estimated
recoverable amount. Impairment losses are recognized in the
combined statement of income.
Impairment losses recognized in prior periods are assessed at
each reporting date for any indications that the loss has
decreased or no longer exists as a result of events or changes
to conditions occurring after the impairment loss was
recognized. An impairment loss is reversed only to the extent
that the assets carrying amount does not exceed the
carrying amount that had been recognized (see Note 7).
There are no legal requirements to hold a shareholders
meeting, nor is there a requirement in the vessel-owning
companies Articles of Incorporation or Bylaws to
distribute dividends. Dividends may be declared or paid out of
profits resulting from current or preceding years. Thus the
decision to distribute dividends is made by management of the
Group and they are therefore recognized as a liability in the
period in which they are declared by management.
A provision is recognized as a result of a past event when the
Group has a present legal or constructive obligation that can be
reliably estimated and it is probable that an outflow of
economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected future
cash flows that reflect current market assessments of the time
value of money and the risks specific to the liability.
The Group has no obligations to defined contribution or defined
benefit plans. Short-term employee benefits are measured on an
undiscounted basis and are expensed as the related service is
provided. A liability is recognized for the amount expected to
be paid under short-term cash bonus if the Group has a present
legal or constructive obligation to pay this amount as a result
of past service provided by the employee and the obligation can
be estimated reliably.
The Group generates its revenues from charterers for the charter
hire of its vessels. Vessels are chartered using time-charters,
where a contract is entered into for the use of a vessel for a
specific period of time and a specified daily charter hire rate.
If a charter agreement exists and collection of the related
revenue is reasonably assured, revenue is recognized and it is
earned, ratably over the duration of the year of time-charter.
F-46
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Combined Financial
Statements (Continued)
December 31, 2007 and 2006
Deferred revenue represents invoices issued, or cash received in
advance for services not yet rendered.
|
|
(r)
|
Vessel
voyage and other operating expenses
|
Vessel voyage expenses primarily consisting of port, canal and
bunker expenses that are unique to a particular charter are paid
for by the charterer under time-charter arrangements. Vessel
voyage and other operating expenses are expensed as incurred.
|
|
(s)
|
Finance
income and expenses
|
Finance income comprises of interest income on funds invested
and foreign currency gains. Interest income is recognized as it
accrues, using the effective interest method.
Finance expense comprises of interest expense on borrowings,
foreign currency losses and impairment losses on recognized
financial assets. All borrowing costs are recognized in the
combined statement of income using the effective interest method.
Under the laws of the countries of the vessel-owning
companies incorporation
and/or
vessels registration, the vessel-owning companies are not
subject to tax on international shipping income but are subject
only to certain minor registration and tonnage taxes that are
charged to operating expenses as incurred. The vessel-owning
companies however, are subject to United States federal income
taxation in respect of income that is derived from the
international operation of ships and the performance of services
directly related thereto, unless exempt from United States
federal income taxation. If the vessel-owning companies do not
qualify for the exemption from tax, they will be subject to a 4%
tax on its U.S. source income, imposed without the
allowance for any deductions. For these purposes,
U.S. source shipping income means 50% of the shipping
income that will be derived by the vessel-owning companies that
is attributable to transportation that begins or ends, but that
does not both begin and end, in the United States.
The vessel-owning companies did not incur any U.S. source
shipping income in 2007, 2006 and 2005. Therefore, the Group
does not have any current income tax or deferred taxes as of
December 31, 2007, 2006 and 2005.
A segment is a distinguishable component of the Group that is
engaged in providing related products or services (business
segment) or in providing products or services within a
particular economic environment (geographical segment), which is
subject to risks and returns that are different from the other
segments. The Group reports financial information and evaluates
its operations by charter revenues and not, for example, by
a) the length of ship employment for its customers or
b) the size of vessel. The Group does not have discrete
financial information to evaluate the operating results for each
type of charter. Although revenue can be identified for these
charters, management cannot and does not identify expenses,
profitability or other financial information for these charters.
As a result, management, including the chief operating decision
maker, reviews operating results by revenue per day and
operating results of the fleet and thus the Group has determined
that it operates under one reportable segment. Furthermore, when
the Group charters a vessel to a charterer, the charter is free
to trade the vessel worldwide and, as a result the disclosure of
geographic information is impracticable. Also, as management of
the Group monitors its results per revenue and not by customer,
the geographical location of the customer is not relevant for
segment information.
F-47
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Combined Financial
Statements (Continued)
December 31, 2007 and 2006
|
|
(v)
|
New
standards and interpretations not yet adopted
|
A number of new standards, amendments to standards and
interpretations are not yet effective for the year ended
December 31, 2007, and have not been applied in preparing
these financial statements:
(i) IFRS 8 Operating Segments
introduces the
management approach to segment reporting. IFRS 8,
which becomes mandatory for the financial statements of 2009,
will require the disclosure of segment information based on the
internal reports regularly reviewed by the Groups Chief
Operating Decision Maker in order to assess each segments
performance and to allocate resources to them. The Group is
evaluating the impact of this standard on the combined financial
statements.
(ii) Revised IAS 23 Borrowing Costs
removes the
option to expense borrowing costs and requires that an entity
capitalize borrowing costs directly attributable to the
acquisition, construction or production of a qualifying asset as
part of the cost of that asset. Currently, the Group capitalizes
interest on the construction of the vessels and therefore the
revised IAS 23 which will become mandatory for the Groups
2009 financial statements is not expected to have a significant
effect on the Groups financial statements.
(iii) IFRIC 11 IFRS 2 Group and Treasury Share
Transactions
requires a share-based payment arrangement in
which an entity receives goods or services as consideration for
its own equity instruments to be accounted for as an
equity-settled share-based payment transaction, regardless of
how the equity instruments are obtained. IFRIC 11 will become
mandatory for the Groups 2008 financial statements, with
retrospective application required. This standard is not
expected to have any significant impact on the combined
financial statements as it is not relevant to the Groups
operations.
(iv) IFRIC 12 Service Concession Arrangements
provides guidance on certain recognition and measurement
issues that arise in accounting for public-to-private service
concession arrangements. IFRIC 12, which becomes mandatory for
the Groups 2008 financial statements, is not expected to
have any effect on the combined financial statements as it is
not relevant to the Groups operations.
(v) IFRIC 13 Customer Loyalty Programmes
addresses
the accounting by entities that operate, or otherwise
participate in, customer loyalty programs for their customers.
It relates to customer loyalty programs under which the customer
can redeem credits for awards such as free or discounted goods
or services. IFRIC 13, which becomes mandatory for the
Groups 2009 financial statements, is not expected to have
any impact on the combined financial statements.
(vi) IFRIC 14 IAS 19 The Limit on a Defined Benefit
Asset
,
Minimum Funding Requirements and their Interaction
clarifies when refunds or reductions in future contributions
in relation to defined benefit assets should be regarded as
available and provides guidance on the impact of minimum funding
requirements (MFR) on such assets. It also addresses when a MFR
might give rise to a liability. IFRIC 14 will become mandatory
for the Groups 2008 financial statements, with
retrospective application required. IFRIC 14 is not expected to
have any effect on the combined financial statements.
(vii) Revision to IAS 1, Presentation of Financial
Statements
: The revised standard is effective for
annual periods beginning on or after January 1, 2009. The
revision to IAS 1 is aimed at improving users ability to
analyze and compare the information given in financial
statements. The changes made are to require information in
financial statements to be aggregated on the basis of shared
characteristics and to introduce a statement of comprehensive
income. This will enable readers to analyze changes in equity
resulting from transactions with owners in their capacity as
owners (such as dividends and share repurchases) separately from
non-owner changes (such as transactions with third
parties). In response to comments received through the
consultation process, the revised standard gives preparers of
financial
F-48
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Combined Financial
Statements (Continued)
December 31, 2007 and 2006
statements the option of presenting items of income and expense
and components of other comprehensive income either in a single
statement of comprehensive income with sub-totals, or in two
separate statements (a separate income statement followed by a
statement of comprehensive income). Management is currently
assessing the impact of this revision on the Groups
financial statements.
(viii) Revision to IFRS 3 Business Combinations
and
an amended version of
IAS 27 Consolidated and Separate
Financial Statements
: This standard is required
to be applied prospectively to business combinations for which
the acquisition date is on or after the beginning of the first
annual reporting period beginning on or after July 1, 2009.
Earlier application is permitted. However, this standard will be
applied only at the beginning of an annual reporting period that
begins on or after June 30, 2007. If an entity applies this
standard before July 1, 2009, it will be required to
disclose that fact and apply IAS 27 (as amended in 2008) at
the same time. The main changes to the existing standards
include: (i) minority interests (now called non-controlling
interests) are measured either as their proportionate interest
in the net identifiable assets (the existing IFRS 3 requirement)
or at fair value; (ii) for step acquisitions, goodwill is
measured as the difference at acquisition date between the fair
value of any investment in the business held before the
acquisition, the consideration transferred and the net assets
acquired (therefore there is no longer the requirement to
measure assets and liabilities at fair value at each step to
calculate a portion of goodwill); (iii) acquisition-related
costs are generally recognized as expenses (rather than included
in goodwill); (iv) contingent consideration must be
recognized and measured at fair value at acquisition date with
any subsequent changes in fair value recognized usually in the
profit or loss (rather than by adjusting goodwill) and
(v) transactions with non-controlling interests which do
not result in loss of control are accounted for as equity
transactions. Management is currently assessing the impact that
these revisions will have on the Group.
(ix) Revision to IFRS 2 Share-based
Payment
: The revision is effective for annual
periods on or after January 1, 2009 and provides
clarification for the definition of vesting conditions and the
accounting treatment of cancellations. It clarifies that vesting
conditions are service conditions and performance conditions
only. Other features of a share-based payment are not vesting
conditions. It also specifies that all cancellations, whether by
the entity or other parties, should receive the same accounting
treatment. The Group does not expect this standard to affect its
combined financial statements as currently there are no
share-based payment plans.
|
|
3.
|
Direct
voyage expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Classification fees and surveys
|
|
|
8
|
|
|
|
6
|
|
|
|
33
|
|
Bunkers expenses
|
|
|
40
|
|
|
|
25
|
|
|
|
40
|
|
Port expenses
|
|
|
9
|
|
|
|
15
|
|
|
|
24
|
|
Tugs
|
|
|
2
|
|
|
|
3
|
|
|
|
27
|
|
Commission and fees
|
|
|
13
|
|
|
|
8
|
|
|
|
14
|
|
Insurance and other voyage expenses
|
|
|
10
|
|
|
|
7
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82
|
|
|
|
64
|
|
|
|
139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-49
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Combined Financial
Statements (Continued)
December 31, 2007 and 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Basic and supplementary wages
|
|
|
1,162
|
|
|
|
1,183
|
|
|
|
920
|
|
Overtime
|
|
|
633
|
|
|
|
635
|
|
|
|
500
|
|
Vacation
|
|
|
342
|
|
|
|
338
|
|
|
|
200
|
|
Bonus
|
|
|
448
|
|
|
|
88
|
|
|
|
48
|
|
Other crew expenses
|
|
|
218
|
|
|
|
533
|
|
|
|
308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,803
|
|
|
|
2,777
|
|
|
|
1,976
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crew costs represents the amounts due to the crew on board the
vessels under short-term contracts, i.e. no more than
9 months. The Group is not obliged to contribute to any
pension plans or post-employment benefits for the crew on board.
|
|
5.
|
Other
operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Chemicals and lubricants
|
|
|
1,432
|
|
|
|
1,192
|
|
|
|
1,151
|
|
Repairs and maintenance
|
|
|
1,176
|
|
|
|
1,055
|
|
|
|
740
|
|
Insurance
|
|
|
566
|
|
|
|
558
|
|
|
|
424
|
|
Administration expenses for vessels
|
|
|
54
|
|
|
|
37
|
|
|
|
54
|
|
Reimbursement to time charters
|
|
|
|
|
|
|
|
|
|
|
716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,228
|
|
|
|
2,842
|
|
|
|
3,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reimbursements to time charters represent a fee for cancellation
of contracts.
|
|
6.
|
Financial
income and expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Financial income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
143
|
|
|
|
132
|
|
|
|
13
|
|
Foreign exchange gain
|
|
|
|
|
|
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
143
|
|
|
|
132
|
|
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
2,914
|
|
|
|
3,272
|
|
|
|
2,371
|
|
Amortization of finance costs
|
|
|
59
|
|
|
|
22
|
|
|
|
21
|
|
Foreign exchange loss
|
|
|
7
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,980
|
|
|
|
3,311
|
|
|
|
2,392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net finance cost
|
|
|
2,837
|
|
|
|
3,179
|
|
|
|
2,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-50
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Combined Financial
Statements (Continued)
December 31, 2007 and 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advances to
|
|
|
|
|
|
|
|
|
|
|
|
|
Shipyards
|
|
|
|
|
|
|
|
|
|
|
|
|
for Vessels
|
|
|
|
|
|
|
|
|
|
|
|
|
Under
|
|
|
|
|
|
|
|
|
|
Vessels
|
|
|
Construction
|
|
|
Dry-Docking
|
|
|
Total
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2006
|
|
|
76,970
|
|
|
|
|
|
|
|
18
|
|
|
|
76,988
|
|
Additions
|
|
|
116
|
|
|
|
4,922
|
|
|
|
1,568
|
|
|
|
6,606
|
|
Revaluation
|
|
|
25,119
|
|
|
|
|
|
|
|
|
|
|
|
25,119
|
|
Reversal of impairment loss
|
|
|
19,311
|
|
|
|
|
|
|
|
|
|
|
|
19,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2006
|
|
|
121,516
|
|
|
|
4,922
|
|
|
|
1,586
|
|
|
|
128,024
|
|
Additions
|
|
|
24
|
|
|
|
12,661
|
|
|
|
989
|
|
|
|
13,674
|
|
Revaluation
|
|
|
129,265
|
|
|
|
|
|
|
|
|
|
|
|
129,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
|
250,805
|
|
|
|
17,583
|
|
|
|
2,575
|
|
|
|
270,963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2006
|
|
|
(6,970
|
)
|
|
|
|
|
|
|
|
|
|
|
(6,970
|
)
|
Depreciation
|
|
|
(6,083
|
)
|
|
|
|
|
|
|
(484
|
)
|
|
|
(6,567
|
)
|
Balance December 31, 2006
|
|
|
(13,053
|
)
|
|
|
|
|
|
|
(484
|
)
|
|
|
(13,537
|
)
|
Depreciation
|
|
|
(11,795
|
)
|
|
|
|
|
|
|
(830
|
)
|
|
|
(12,625
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2007
|
|
|
(24,848
|
)
|
|
|
|
|
|
|
(1,314
|
)
|
|
|
(26,162
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value January 1, 2006
|
|
|
70,000
|
|
|
|
|
|
|
|
18
|
|
|
|
70,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value December 31, 2006
|
|
|
108,463
|
|
|
|
4,922
|
|
|
|
1,102
|
|
|
|
114,487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value December 31, 2007
|
|
|
225,957
|
|
|
|
17,583
|
|
|
|
1,261
|
|
|
|
244,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the year ended December 31, 2005, four vessel-owning
companies took delivery of their vessels (African Zebra, Bremen
Max, Hamburg Max and African Oryx). The total acquisition price
amounted to $96,282, of which $9,576 was paid as an advance in
2004.
The estimated remaining useful lives of the Groups vessels
is between 3 to 16 years as of December 31, 2007.
Vessels are measured at fair value at year end. At
December 31, 2005 the fair value of the individual vessels
indicated that the carrying value of the individual vessels was
impaired and as a result the Group recognized an impairment loss
of $19,311 which is recorded as a separate line item in the
combined statement of income since there was no revaluation
surplus recorded in the combined statement of changes in equity
(see note 2(c)). At December 31, 2006, due to the
changing market conditions, the fair value exceeded the carrying
value by $44,430 and accordingly an amount of $19,311 was
recorded as a separate line item in the combined statement of
income since it reversed a revaluation decrease recorded in the
previous year. The remaining surplus of $25,119 is recorded as
recognized income and expense under the caption revaluation
reserve in the combined statement of changes in equity. At
December 31, 2007 due to the prevailing positive market
conditions, the fair value of the individual vessels exceeded
the carrying amount and a revaluation surplus of $129,265 arose
and is recorded as recognized income and expense under the
caption revaluation reserve in the combined statement of changes
in equity.
F-51
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Combined Financial
Statements (Continued)
December 31, 2007 and 2006
Kalistos Maritime S.A. and Kalithea Maritime S.A. have entered
into shipbuilding contracts with a shipyard for the construction
of two newbuildings with the expected delivery dates in 2008
(refer to Note 20(c)) and 2009, respectively. As of
December 31, 2007 Kalistos Maritime S.A. and Kalithea
Maritime S.A. were committed to the construction of these two
vessels at a total contract cost of $47,640. Payments against
the contract cost through December 31, 2007 and 2006
totaled $12,000 and $4,800, respectively, and are included under
the caption advances to shipyards for vessels under
construction. Capitalized interest included under the caption
advances to shipyards for vessels under construction as of
December 31, 2007 and 2006 amounted to $249 and nil,
respectively.
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
Lubricants
|
|
|
223
|
|
|
|
209
|
|
Other
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
223
|
|
|
|
212
|
|
|
|
|
|
|
|
|
|
|
|
|
9
|
Trade
accounts receivable and other assets
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
Charterers
|
|
|
1,237
|
|
|
|
717
|
|
Insurance claims
|
|
|
22
|
|
|
|
26
|
|
Prepayments for insurance premiums
|
|
|
238
|
|
|
|
209
|
|
Agents
|
|
|
48
|
|
|
|
33
|
|
Other
|
|
|
43
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,588
|
|
|
|
1,003
|
|
Impairment loss (Note 15(b))
|
|
|
(660
|
)
|
|
|
(660
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
928
|
|
|
|
343
|
|
|
|
|
|
|
|
|
|
|
|
|
10
|
Cash and
cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
On demand
|
|
|
21
|
|
|
|
506
|
|
Term deposits
|
|
|
|
|
|
|
940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21
|
|
|
|
1,446
|
|
|
|
|
|
|
|
|
|
|
The amounts shown in the combined balance sheet as capital
contributions represent payments made by the shareholders at
various dates to finance vessel acquisition in excess of the
amounts of the bank loans obtained. There is no contractual
obligation to repay the amounts.
F-52
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Combined Financial
Statements (Continued)
December 31, 2007 and 2006
The authorized share capitals of the companies that comprise the
Group are analyzed as follows:
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Par Value per
|
|
Vessel-Owning Companies
|
|
Shares
|
|
|
Share
|
|
|
Goldie Navigation Ltd.
|
|
|
500
|
|
|
|
|
|
Pavey Services Ltd.
|
|
|
50,000
|
|
|
$
|
1
|
|
Shoreline Universal Ltd.
|
|
|
50,000
|
|
|
$
|
1
|
|
Valdis Marine Corp.
|
|
|
500
|
|
|
|
|
|
Kalistos Maritime S.A.
|
|
|
500
|
|
|
|
|
|
Kalithea Maritime S.A.
|
|
|
500
|
|
|
|
|
|
Long-term debt is analyzed as follows:
|
|
|
|
|
|
|
|
|
Borrower
|
|
2007
|
|
|
2006
|
|
|
Goldie Navigation Ltd.
|
|
|
5,858
|
|
|
|
7,279
|
|
Valdis Marine Corp.
|
|
|
8,576
|
|
|
|
10,684
|
|
Pavey Services Ltd.
|
|
|
12,134
|
|
|
|
15,124
|
|
Shoreline Universal Ltd.
|
|
|
13,390
|
|
|
|
16,687
|
|
Kalistos Maritime S.A.
|
|
|
5,026
|
|
|
|
|
|
Kalithea Maritime S.A.
|
|
|
3,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
48,330
|
|
|
|
49,774
|
|
Less: Current portion
|
|
|
9,750
|
|
|
|
8,420
|
|
|
|
|
|
|
|
|
|
|
Long-term portion
|
|
|
38,580
|
|
|
|
41,354
|
|
|
|
|
|
|
|
|
|
|
The long-term debt, denominated in US Dollars, of Goldie
Navigation Ltd., Valdis Marine Corp., Pavey Services Ltd.
and Shoreline Universal Ltd. represents the amounts allocated to
each vessel-owning company from the syndicated loan of $500,000
concluded on December 24, 2004 for the purchase of
32 vessels by each of 32 vessel-owning companies, with
Lincoln and Nouvelle as corporate guarantors (the syndicated
loan). The syndicated loan was allocated to each vessel-owning
company based upon each vessels acquisition cost. The
Group adjusts the amount outstanding each time one of the
vessels in the syndicated loan is sold without repayment of the
associated debt or a portion of the loan is paid and allocates
it proportionately to the remaining vessels.
The long-term debt initially allocated to each vessel-owning
company represents approximately 67.5% of the vessel acquisition
cost. The syndicated loan is payable in variable principal
installments plus interest at variable rates (LIBOR plus a
spread of 0.875%) with an original balloon installment of
$45,500 in March 2015. The balloon installment outstanding as of
December 31, 2007 amounted to $26,153. The terms and
conditions of the long-term debt for each vessel-owning company
are the same as the syndicated loan (see Note 20(h)).
The long-term debt is secured by a mortgage on the vessels, a
corporate guarantee of Lincoln and Nouvelle, and assignments on
earnings, insurance and requisition compensation of the
mortgaged vessel.
As of December 31, 2007 and 2006 the long-term debt of
Goldie Navigation Ltd., Valdis Marine Corp., Pavey Services Ltd.
and Shoreline Universal Ltd. represents the allocated amount of
the remaining balance of the syndicated loan after taking into
account vessel sales.
F-53
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Combined Financial
Statements (Continued)
December 31, 2007 and 2006
Details of the long-term debt, for each of the vessel-owning
companies is as follows:
Goldie Navigation Ltd.:
The allocated initial
amount for Goldie Navigation Ltd. was $9,460 to partly finance
the acquisition of vessel African Zebra. At December 31,
2006, the outstanding balance was $7,306 ($7,279 net of
deferred direct cost) payable in three equal quarterly principal
installments of $422 and in thirty equal quarterly principal
installments of $174 plus interest at floating rates (LIBOR plus
a spread of 0.875%) with a balloon installment of $824 due in
2015. At December 31, 2007, the outstanding balance was
$5,881 ($5,858 net of principal repayment of $1,425 in 2007
and deferred direct cost) payable in twenty-nine equal quarterly
principal installments of $174 plus interest at variable rates
(LIBOR plus a spread of 0.875%) with a balloon installment of
$861 due in 2015.
Valdis Marine Corp.:
The allocated initial
amount for Valdis Marine Corp. was $13,852 to partly finance the
acquisition of vessel African Oryx. At December 31, 2006,
the outstanding balance was $10,724 ($10,684 net of
deferred direct cost) payable in three equal quarterly principal
installments of $619 and in thirty equal quarterly principal
installments of $253 plus interest at floating rates (LIBOR plus
a spread of 0.875%) with a balloon installment of $1,262 due in
2015. At December 31, 2007, the outstanding balance was
$8,612 ($8,576 net of principal repayment of $2,114 in 2007
and deferred direct cost) payable in twenty-nine equal quarterly
principal installments of $254 plus interest at variable rates
(LIBOR plus a spread of 0.875%) with a balloon installment of
$1,261 due in 2015.
Pavey Services Ltd.:
The allocated initial
amount for Pavey Services Ltd. was $19,595 to partly finance the
acquisition of vessel Bremen Max. At December 31, 2006, the
outstanding balance of $15,179 ($15,124 net of deferred
direct cost) was payable in three equal quarterly principal
installments of $880 and in thirty equal quarterly principal
installments of $359 plus interest at variable rates (LIBOR plus
a spread of 0.875%) with a balloon installment of $1,779 due in
2015. At December 31, 2007, the outstanding balance was
$12,182 ($12,134 net of principal repayments of $3,000 in
2007 and deferred direct cost) payable in twenty-nine equal
quarterly principal installments of $359 plus interest at
variable rates (LIBOR plus a spread of 0.875%) with a balloon
installment of $1,783 due in 2015.
Shoreline Universal Ltd.:
The allocated
initial amount for Shoreline Universal Ltd. was $21,622 to
finance the acquisition of the vessel Hamburg Max. At
December 31, 2006, the outstanding balance of $16,747
($16,687 net of deferred direct cost) was payable in three
equal quarterly principal installments of $973 and in thirty
equal quarterly principal installments of $396 plus interest at
variable rates (LIBOR plus a spread of 0.875%) with a balloon
installment of $1,943 due in 2015. At December 31, 2007,
the outstanding balance was $13,443 ($13,390 net of
principal repayments of $3,305 in 2007 and direct cost) payable
in twenty-nine equal quarterly principal installments of $396
plus interest at variable rates (LIBOR plus a spread of 0.875%)
with a balloon installment of $1,968 due in 2015.
The original loan agreements for all of the vessels include
covenants deriving from the syndicated loan that require the
vessel-owning companies to maintain minimum hull values in
connection with the vessels outstanding loans, insurance
coverage of the vessels against all customary risks. The
corporate guarantors are required to have minimum levels of
available cash and cash equivalents, liquidity funds on a
consolidated basis of no less than $30,000, leverage ratio
(defined as Debt to Total assets) not higher than 0.7:0.1 and
net worth (total assets less the amount of the consolidated
debt) not less than $250,000. In addition, the covenants do not
permit the borrowers to sell the vessels and assets and change
the beneficial ownership or management of the vessels, without
the prior consent of the banks. The individual vessel-owning
companies and the corporate guarantors are in compliance with
the debt covenants as of December 31, 2007.
F-54
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Combined Financial
Statements (Continued)
December 31, 2007 and 2006
On June 23, 2006 Kalistos Maritime S.A., Kalithea Maritime
S.A. and a third affiliated vessel-owning company entered into a
loan facility of up to $20,160 and a guarantee facility of up to
$28,800 each to be used to partly finance and guarantee the
payment to the shipyards for the newbuilding.
Kalistos Maritime S.A.:
Kalistos Maritime S.A.
loan facility is for up to $6,720, plus interest at variable
rates (LIBOR plus a spread of 0.65%), to finance a portion of
the construction cost of the Hull KA 215. Gross drawdowns
against this facility in 2007 and 2006 amounted to $5,040 and
nil, respectively ($5,026 in total, net of deferred direct
costs). The loan is repayable in full at the earlier of
December 18, 2008 and the date the newbuilding is delivered
by the shipyard. The loan was repaid in March 2008 (see
Note 20(c)).
Kalithea Maritime S.A.:
Kalithea Maritime S.A.
loan facility is for up to $6,720 plus interest at variable
rates (LIBOR plus a spread of 0.65%), to finance a portion of
the construction cost of the Hull KA 216. Gross drawdowns
against this facility in 2007 and 2006 amounted to $3,360 and
nil, respectively ($3,346 in total, net of deferred direct
costs). The loan is repayable in full at the earlier of
May 18, 2009 and the date the newbuilding is delivered by
the shipyard.
The weighted average effective interest rate for all long-term
debt for the years ended December 31, 2007, 2006 and 2005
was approximately 6.1%, 6.12% and 4.16%, respectively. Interest
expense for the years ended December 31, 2007, 2006 and
2005 amounted to $2,914, $3,272 and $2,371, respectively, and is
included in finance expense in the accompanying combined
statements of income.
The principal repayments are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
More
|
|
|
|
|
Year of
|
|
1 Year
|
|
1 to 2
|
|
2 to 5
|
|
Than
|
|
|
|
|
Maturity
|
|
or Less
|
|
Years
|
|
Years
|
|
5 Years
|
|
Total
|
|
31 December 2006
|
|
|
2015
|
|
|
|
8,420
|
|
|
|
4,724
|
|
|
|
14,171
|
|
|
|
22,459
|
|
|
|
49,774
|
|
31 December 2007
|
|
|
2015
|
|
|
|
9,750
|
|
|
|
4,724
|
|
|
|
14,171
|
|
|
|
19,685
|
|
|
|
48,330
|
|
|
|
13
|
Trade
accounts payable
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
Suppliers
|
|
|
883
|
|
|
|
350
|
|
Insurance agents
|
|
|
167
|
|
|
|
125
|
|
Agents
|
|
|
16
|
|
|
|
|
|
Other
|
|
|
114
|
|
|
|
129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,180
|
|
|
|
604
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
Masters accounts
|
|
|
225
|
|
|
|
179
|
|
Expenses for vessels
|
|
|
784
|
|
|
|
120
|
|
Charterers accounts
|
|
|
51
|
|
|
|
35
|
|
Other
|
|
|
38
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,098
|
|
|
|
352
|
|
|
|
|
|
|
|
|
|
|
F-55
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Combined Financial
Statements (Continued)
December 31, 2007 and 2006
Overview
The Group has exposure to the following risks from its use of
financial instruments:
1 Credit risk;
2 Liquidity risk;
3 Market risk defined as interest rate risk and currency
risk.
This note represents information about the Groups exposure
to cash of the above risks, the Groups objectives,
policies and processes for measuring and managing risk and the
Groups management of capital.
The Group does not enter into transactions involving derivative
financial instruments (or otherwise engage in other hedging
activities) to reduce exposure to fluctuations in interest and
foreign exchange rates and these are subject to the risk of
market rates changing subsequent to acquisition.
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations in relation to each class of
recognized financial assets. The maximum credit risk in relation
to such assets is represented by the carrying amount of those
assets in the combined balance sheets.
The main credit exposure is from trade accounts receivable,
amounts due from related parties and cash and cash equivalents.
The Group places its cash and cash equivalents, consisting
mostly of deposits, with financial institutions. The Group
performs annual evaluations of the relative credit-standing of
those financial institutions. Credit risk with respect to trade
accounts receivable is generally managed by chartering vessels
to established operators, rather than to more speculative or
undercapitalized entities. The vessels are chartered under
time-charter agreements where, per the industry practice, the
charterer pays for the transportation service within one week of
issue of the hire statement (invoice) which is issued
approximately 15 days prior to the service, thereby
supporting the management of trade receivables.
The Groups exposure to credit risk is influenced mainly by
the individual characteristics of each customer.
As of December 31, 2007 and 2006 two charterers and one
charterer, respectively, individually accounted for more than
10% of the Groups trade accounts receivable as follows:
|
|
|
|
|
|
|
|
|
Charterer
|
|
2007
|
|
2006
|
|
B
|
|
|
50
|
%
|
|
|
100
|
%
|
E
|
|
|
43
|
%
|
|
|
|
|
F-56
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Combined Financial
Statements (Continued)
December 31, 2007 and 2006
For the years ended December 31, 2007, 2006 and 2005,
three, three and two charterers, respectively, individually
accounted for more than 10% of the Groups revenue as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Charterer
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
A related party (Note 19)
|
|
|
|
|
|
|
38
|
%
|
|
|
37
|
%
|
B
|
|
|
33
|
%
|
|
|
37
|
%
|
|
|
43
|
%
|
C
|
|
|
25
|
%
|
|
|
|
|
|
|
|
|
D
|
|
|
|
|
|
|
17
|
%
|
|
|
|
|
E
|
|
|
28
|
%
|
|
|
|
|
|
|
|
|
The aging of trade and other accounts receivable is as follows:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
Up to 30 days
|
|
|
928
|
|
|
|
243
|
|
Past due 31 120 days
|
|
|
|
|
|
|
100
|
|
Over 120 days
|
|
|
660
|
|
|
|
660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,588
|
|
|
|
1,003
|
|
|
|
|
|
|
|
|
|
|
The impairment loss of $660 relates to a disagreement with a
specific charterer for a specific trip.
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The
Groups policy is to ensure, as far as possible, that it
will have sufficient liquidity to meet its liabilities when they
fall due. Furthermore, Lincoln, Nouvelle and First are the
guarantors of the loans and these entities pay the financial
obligations on behalf of the vessel-owning companies. In
addition, during the normal course of business, Lincoln,
Nouvelle and First support the Group for working capital needs.
The Group aims to mitigate liquidity risk by managing cash
generation from its operations, applying cash collection targets
throughout the Group. The vessels are chartered under
time-charter agreements where, per industry practice, the
charterer pays for the transportation service in advance,
supporting the management of cash generation.
Excess cash used in managing liquidity is only invested in
financial instruments exposed to insignificant risk of change in
market value, by being placed in interest-bearing deposits with
maturities fixed at no more than 3 months.
The contractual terms of the Groups interest bearing loans
including estimated interest payments are depicted in
Note 12.
Interest rate risk arises from the possibility that changes in
interest rates will affect the future cash outflows of the
Groups long-term debt as the long-term debt is at variable
rates.
The profile of interest-bearing financial assets and financial
liabilities as of December 31, 2007 and 2006, is as
follows. In addition, the associated cash flows are disclosed in
Notes 10 and 12.
F-57
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Combined Financial
Statements (Continued)
December 31, 2007 and 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective
|
|
|
|
|
|
|
|
|
|
Note
|
|
|
Interest Rate
|
|
|
Total
|
|
|
1 Year or Less
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term deposits
|
|
|
10
|
|
|
|
5.13
|
%
|
|
|
(940
|
)
|
|
|
(940
|
)
|
Bank loan
|
|
|
12
|
|
|
|
6.12
|
%
|
|
|
49,774
|
|
|
|
8,420
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank loan
|
|
|
12
|
|
|
|
6.1
|
%
|
|
|
48,330
|
|
|
|
9,750
|
|
In managing the interest rate risk the Group aims to reduce the
impact of short-term fluctuations on the Groups earnings.
Over the longer term, however, permanent changes in interest
rates would have an impact on earnings.
At December 31, 2007 it is estimated that an increase of
one percentage point in interest rates would decrease the
Groups net profit by approximately $483 (2006: $488).
The Groups exposure to foreign currency risk is minimum.
Amounts in foreign currencies are included in trade accounts
payable and include amounts payable to suppliers in foreign
denominated currencies and are analyzed as follows:
|
|
|
|
|
|
|
US
|
|
|
|
Dollars
|
|
|
2007
|
|
|
|
|
Euro
|
|
|
149
|
|
GBP, JPY, ZAR
|
|
|
88
|
|
2006
|
|
|
|
|
Euro
|
|
|
104
|
|
GBP, JPY, ZAR
|
|
|
89
|
|
All amounts are shown at their fair value as they have a
maturity of no more than twelve months, except for long-term
debt. The carrying value of the Groups long-term debt
approximates fair value because the debt bears interest at
floating rates.
Managements policy is to maintain a strong capital base so
as to maintain creditor and market confidence and to sustain
future development of the business. Management monitors the
return on capital. There are no stock plans or options.
Each entity of the Group seeks to maintain a balance between
long-term debt and capital. There are no capital requirements.
In its funding strategy, the Groups objective is to
maintain a balance between continuity of funding and flexibility
through the use of debt. The Groups policy with vessel
acquisitions is that not more than 70% of the acquisition cost
of vessels will be funded through borrowings. For all the
acquisitions made, the bank financing was not more than 70% of
the total acquisition cost.
F-58
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Combined Financial
Statements (Continued)
December 31, 2007 and 2006
Various claims, suits and complaints, including those involving
government regulations and product liability, arise in the
ordinary course of the shipping business. In addition, losses
may arise from disputes with charterers, agents, insurance and
other claims with suppliers relating to the operation of the
Groups vessels. Currently, management is not aware of any
such contingent liabilities which should be disclosed or for
which a provision should be established in the accompanying
combined financial statements.
The Group accrues for the cost of environmental liabilities when
management becomes aware that a liability is probable and is
able to reasonably estimate the probable exposure. Currently,
management is not aware of any such claims or contingent
liabilities which should be disclosed, or for which a provision
should be established in the accompanying combined financial
statements.
As of December 31, 2007 and 2006 Kalistos Maritime S.A. and
Kalithea Maritime S.A. are committed to the purchase of Hulls KA
215 and KA 216 for a total cost of $47,640.
The related party balances are:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
Due from related parties non current
|
|
|
|
|
|
|
|
|
Due from EST
|
|
|
|
|
|
|
480
|
|
|
|
|
|
|
|
|
|
|
Due from related parties current
|
|
|
|
|
|
|
|
|
Due from EST
|
|
|
480
|
|
|
|
|
|
Due from Lincoln
|
|
|
4,909
|
|
|
|
3,551
|
|
Charter revenue receivable from Swiss Marine Services S.A.
|
|
|
444
|
|
|
|
290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,833
|
|
|
|
3,841
|
|
|
|
|
|
|
|
|
|
|
Due to related parties current
|
|
|
|
|
|
|
|
|
Due to EST
|
|
|
386
|
|
|
|
299
|
|
Due to First
|
|
|
334
|
|
|
|
54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
720
|
|
|
|
353
|
|
|
|
|
|
|
|
|
|
|
The related party transactions included in the combined
statements of income are:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
2006
|
|
2005
|
|
Voyage revenue (Swiss Marine Services S.A.)
|
|
|
3,420
|
|
|
|
10,740
|
|
|
|
10,140
|
|
Management fees (EST)
|
|
|
(782
|
)
|
|
|
(752
|
)
|
|
|
(644
|
)
|
The related parties identified are:
The directors of the Group do not receive remuneration for the
non-executive services they offer. The identity and the
description of the other related parties of the Group are given
below.
F-59
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Combined Financial
Statements (Continued)
December 31, 2007 and 2006
Each vessel-operating company of the Group has a management
agreement with EST, to provide management services in exchange
for a fixed fee per day for each vessel in operation and a fixed
monthly fee per hull under construction. These agreements are
entered into with an initial three-year term until terminated by
either party upon written notice, in which case the agreements
terminate within two months after the date notice was given. In
the event that the agreement with EST is terminated, the fee
payable to EST shall continue to be payable for three months
from the termination date. In addition, EST provides crew for
the vessel and receives a reimbursement for crew support costs
for three months. Finally, if the agreement is terminated EST
will receive crew severance costs of up to $50 per vessel.
Management agreements with EST require the vessel-owning
companies with vessels in operation, to make an interest-free
advance of $120 each, to cover the working capital requirements
arising from the handling of the majority of the expenditure
generated from the vessels operations. This advance is
made ten days before the delivery of the vessel for which EST is
appointed as the manager.
Lincoln and First are the parent companies of the vessel and
hull-owning companies, respectively (see Note 1(a)). The
amounts due to and due from them represent expenses paid and
funds collected on the Groups behalf.
|
|
(d)
|
Swiss
Marine Services S.A. (SwissMarine)
|
Based on charter party agreements, certain of the Groups
vessels are chartered to SwissMarine, an affiliated company,
beneficially owned by certain members of the Restis family.
(a) Drawdowns on loan facility:
On
January 28, 2008, Kalithea Maritime S.A. and Kalistos
Maritime S.A. each drew down $1,680 representing the third
installment of their loan facilities, in order to finance 70% of
their third and fourth delivery payment installments,
respectively for Hulls KA 216 and KA 215, respectively ($2,400
each).
(b) Loan facility:
On March 11,
2008, Kalithea Maritime S.A., Kalistos Maritime S.A. and another
vessel-owning company not included in the Group signed a
commitment letter for a preferred ship variable rate mortgage
bank loan for up to $50,022 to finance a maximum of 70% of the
acquisition of three vessels under construction at the shipyards.
The loan will bear interest at LIBOR plus a spread and will be
repayable in equal consecutive quarterly installments of $230
commencing three months after the delivery date of the vessels
with any unpaid balance on the final maturity date (May
2018) becoming due at that time as a balloon payment.
The covenants require, among others, the vessel-owning companies
to maintain minimum hull values in connection with the
vessels outstanding loans, insurance coverage of the
vessels against all customary risks and to maintain a ratio of
the fair market value of the vessels over the debt at a minimum
of 125%. The Guarantor will require minimum levels of available
cash and cash equivalents, liquidity funds on a consolidated
basis not less than $10,000, leverage ratio (defined as total
consolidated liabilities over total consolidated assets adjusted
to reflect the market value of the vessels not to exceed 70%),
not to have further indebtedness or issuing guarantees. In
addition, the covenants do not permit the borrowers to sell the
vessels and assets and change the beneficial ownership or
management of the vessels, without the prior consent of the
banks. First will be the guarantor of the loan.
F-60
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Combined Financial
Statements (Continued)
December 31, 2007 and 2006
(c) Delivery of Hull KA 215:
On
May 20, 2008, Hull KA 215 (vessel Davakis G.) was delivered
from the shipyard and the last installment of $11,820 was paid.
To finance 70% of the vessel acquisition cost amounting to
$23,820, a commitment letter for the preferred ship variable
rate mortgage was concluded (see (b) above). The total
drawdown against this mortgage was $16,674 which was used to
repay the existing loan facility of $6,720 and the remaining
drawdown was used to finance the vessel.
(d) Master Agreement:
On May 20,
2008, Goldie Navigation Ltd., Pavey Services Ltd., Shoreline
Universal Ltd., Valdis Marine Corp., Kalistos Maritime S.A. and
Kalithea Maritime S.A. concluded the Master Agreement with
Seanergy Merger Corp., Marshall Islands Corporations, to sell
six dry bulk vessels which include four second-hand vessels and
two newbuildings for an aggregate purchase price of $367,030 in
cash, $28,250 in the form of a note convertible into
2,260,000 shares of Seanergy Marine Corp. common stock at a
price of $12.50 per share and up to 4,308,075 shares of
Seanergy Marine Corp. common stock if Seanergy Marine Corp.
achieves a certain level of earnings before interest, taxes
depreciation and amortization. Seanergy Maritime Corp. is
expected, within thirty days of the closing, to file a
registration statement. The Master Agreement specifies that EST
will manage the fleet and a brokerage agreement with Safbulk Pty
Ltd. (Safbulk) for the chartering of the fleet will also be
entered into. In addition, time charters for all vessels will be
entered into with South African Marine Corporation S.A. which
will include a 3.75% address commission in favour of South
African Marine Corporation S.A. Both these entities are
affiliated and beneficially owned by certain members of the
Restis family.
(e) Brokerage agreement:
On May 20,
2008, a brokerage agreement between a subsidiary of Seanergy
Merger Corp. and Safbulk, was concluded for the provision of
chartering services for an initial period of two years from the
date of signing. Safbulk will receive a commission of 1.25% on
the collected vessel revenue.
(f) Management agreement:
On May 20,
2008, a management agreement between a subsidiary of Seanergy
Merger Corp. and EST was concluded for the provision of
technical management services relating to the vessels for an
initial period of two years from the date of signing. EST will
be entitled to a fee of EUR 416 (four hundred and sixteen
Euros) per vessel per day until December 31, 2008
thereafter adjusted on an annual basis as defined.
(g) Charter agreement:
On May 26,
2008, time charter agreements for 11 to
13-month
periods at a time charter daily rate of between $30 and $65,
were concluded for vessels African Oryx, African Zebra, Davakis
G., Bremen Max, Hamburg Max and Hull KA 216 (Delos Ranger) with
South African Marine Corporation S.A. which would become
effective upon the consummation of the business combination.
(h) Payment of long term debt:
The
outstanding total balloon installment as of December 31,
2007 of $26,153 (see Note 12) has been reduced to
$23,702 as a result of the repayment of the syndicated loan
arising from the sale of three vessels in 2008 included in three
affiliated vessel-owning companies and therefore there will also
be a reallocation (reduction) of approximately $1,264 to the
long-term portion of the Groups debt in 2008.
(i) Acquisition of common stock:
On
July 15, 2008, a company affiliated with members of the
Restis family purchased 2,896,171 shares of common stock
from three shareholders of Seanergy for an aggregate purchase
price of $28,610. On July 23 and 24, 2008, the same affiliated
company purchased a total of 3,785,590 shares of common
stock from two shareholders of Seanergy for an aggregate
purchase price of $37,753. On July 23, 2008, another
company affiliated with members of the Restis family purchased
70,000 shares of common stock of Seanergy in the open
market for an aggregate purchase price of $691, bringing their
total interest in Seanergy to 35.37%.
F-61
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Condensed
Combined Unaudited Interim Balance Sheets
June 30, 2008 and December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
|
June 30, 2008
|
|
|
December 31, 2007
|
|
|
|
(In thousands of US dollars)
|
|
|
ASSETS
|
Vessels, net
|
|
|
10
|
|
|
|
250,022
|
|
|
|
244,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-current assets
|
|
|
|
|
|
|
250,022
|
|
|
|
244,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
|
|
|
|
458
|
|
|
|
223
|
|
Trade accounts receivable and other assets
|
|
|
11
|
|
|
|
1,605
|
|
|
|
928
|
|
Due from related parties
|
|
|
19
|
|
|
|
13,022
|
|
|
|
5,833
|
|
Cash and cash equivalents
|
|
|
12
|
|
|
|
4,161
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
|
|
|
|
19,246
|
|
|
|
7,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
|
|
269,268
|
|
|
|
251,806
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital contributions
|
|
|
13
|
|
|
|
48,769
|
|
|
|
40,865
|
|
Revaluation reserve
|
|
|
|
|
|
|
154,384
|
|
|
|
154,384
|
|
(Accumulated deficit) retained earnings
|
|
|
|
|
|
|
(2,613
|
)
|
|
|
4,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
|
|
|
|
200,540
|
|
|
|
199,657
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
Long-term debt, net
|
|
|
14
|
|
|
|
48,520
|
|
|
|
38,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-current liabilities
|
|
|
|
|
|
|
48,520
|
|
|
|
38,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt, net
|
|
|
14
|
|
|
|
12,364
|
|
|
|
9,750
|
|
Trade accounts payable
|
|
|
15
|
|
|
|
3,234
|
|
|
|
1,180
|
|
Accrued expenses
|
|
|
|
|
|
|
862
|
|
|
|
1,098
|
|
Deferred revenue
|
|
|
16
|
|
|
|
2,339
|
|
|
|
781
|
|
Due to related parties
|
|
|
19
|
|
|
|
1,395
|
|
|
|
720
|
|
Accrued interest expense
|
|
|
|
|
|
|
14
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
|
|
|
|
20,208
|
|
|
|
13,569
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity and liabilities
|
|
|
|
|
|
|
269,268
|
|
|
|
251,806
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages F-66 to F-76 are an integral part of these
condensed combined unaudited interim financial statements.
F-62
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Condensed
Combined Unaudited Interim Statements of Income
For the six months ended June 30, 2008 and 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands of US dollars)
|
|
|
Revenue from vessels
|
|
|
|
|
|
|
28,227
|
|
|
|
13,751
|
|
Revenue from vessels related party
|
|
|
19
|
|
|
|
|
|
|
|
3,430
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,227
|
|
|
|
17,181
|
|
Direct voyage expenses
|
|
|
6
|
|
|
|
(759
|
)
|
|
|
(60
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,468
|
|
|
|
17,121
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Crew costs
|
|
|
7
|
|
|
|
(2,143
|
)
|
|
|
(1,343
|
)
|
Management fees related party
|
|
|
19
|
|
|
|
(411
|
)
|
|
|
(387
|
)
|
Other operating expenses
|
|
|
8
|
|
|
|
(1,831
|
)
|
|
|
(1,471
|
)
|
Depreciation
|
|
|
10
|
|
|
|
(16,314
|
)
|
|
|
(6,260
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results from operating activities
|
|
|
|
|
|
|
6,769
|
|
|
|
7,660
|
|
Finance income
|
|
|
9
|
|
|
|
36
|
|
|
|
81
|
|
Finance expense
|
|
|
9
|
|
|
|
(1,014
|
)
|
|
|
(1,540
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net finance cost
|
|
|
|
|
|
|
(978
|
)
|
|
|
(1,459
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit for the period
|
|
|
|
|
|
|
5,791
|
|
|
|
6,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages F-66 to F-76 are an integral part of these
condensed combined unaudited interim financial statements.
F-63
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Condensed
Combined Unaudited Interim Statements of Changes in Equity
For the six months ended June 30, 2008 and 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Accumulated
|
|
|
|
|
|
|
Capital
|
|
|
Revaluation
|
|
|
Deficit)/ Retained
|
|
|
|
|
|
|
Contributions
|
|
|
Reserve
|
|
|
Earnings
|
|
|
Total
|
|
|
|
(In thousands of US dollars)
|
|
|
Balance at December 31, 2006
|
|
|
36,960
|
|
|
|
25,119
|
|
|
|
6,980
|
|
|
|
69,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit for the period
|
|
|
|
|
|
|
|
|
|
|
6,201
|
|
|
|
6,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recognized income and expense
|
|
|
|
|
|
|
|
|
|
|
6,201
|
|
|
|
6,201
|
|
Capital contributions
|
|
|
1,508
|
|
|
|
|
|
|
|
|
|
|
|
1,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2007
|
|
|
38,468
|
|
|
|
25,119
|
|
|
|
13,181
|
|
|
|
76,768
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
|
40,865
|
|
|
|
154,384
|
|
|
|
4,408
|
|
|
|
199,657
|
|
Net profit for the period
|
|
|
|
|
|
|
|
|
|
|
5,791
|
|
|
|
5,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recognized income and expense
|
|
|
|
|
|
|
|
|
|
|
5,791
|
|
|
|
5,791
|
|
Capital contributions
|
|
|
7,904
|
|
|
|
|
|
|
|
|
|
|
|
7,904
|
|
Dividends paid
|
|
|
|
|
|
|
|
|
|
|
(12,812
|
)
|
|
|
(12,812
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2008
|
|
|
48,769
|
|
|
|
154,384
|
|
|
|
(2,613
|
)
|
|
|
200,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages F-66 to F-76 are an integral part of these
condensed combined unaudited interim financial statements.
F-64
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Condensed
Combined Unaudited Interim Statements of Cash Flows
For the six months ended June 30, 2008 and 2007
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands of US dollars)
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
Net profit
|
|
|
5,791
|
|
|
|
6,201
|
|
Adjustments for
:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
16,314
|
|
|
|
6,260
|
|
Interest expense
|
|
|
993
|
|
|
|
1,519
|
|
Interest income
|
|
|
(36
|
)
|
|
|
(81
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
23,062
|
|
|
|
13,899
|
|
Due from related parties
|
|
|
(7,189
|
)
|
|
|
(8,467
|
)
|
Inventories
|
|
|
(235
|
)
|
|
|
(32
|
)
|
Trade accounts receivable and other assets
|
|
|
(677
|
)
|
|
|
(280
|
)
|
Trade accounts payable
|
|
|
2,054
|
|
|
|
295
|
|
Accrued expenses
|
|
|
(236
|
)
|
|
|
(55
|
)
|
Deferred revenue
|
|
|
1,558
|
|
|
|
91
|
|
Due to related parties
|
|
|
675
|
|
|
|
178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,012
|
|
|
|
5,629
|
|
Interest paid
|
|
|
(1,019
|
)
|
|
|
(1,535
|
)
|
|
|
|
|
|
|
|
|
|
Net cash from operating activities
|
|
|
17,993
|
|
|
|
4,094
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
Interest received
|
|
|
36
|
|
|
|
81
|
|
Dry docking costs
|
|
|
(521
|
)
|
|
|
(5,071
|
)
|
Additions for vessels
|
|
|
(21,014
|
)
|
|
|
(544
|
)
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(21,499
|
)
|
|
|
(5,534
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
Dividends paid
|
|
|
(12,812
|
)
|
|
|
|
|
Capital contributions
|
|
|
7,904
|
|
|
|
1,508
|
|
Proceeds from long-term debt
|
|
|
21,635
|
|
|
|
3,360
|
|
Repayment of long-term debt
|
|
|
(9,081
|
)
|
|
|
(4,854
|
)
|
|
|
|
|
|
|
|
|
|
Net cash from financing activities
|
|
|
7,646
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents
|
|
|
4,140
|
|
|
|
(1,426
|
)
|
Cash and cash equivalents at January 1
|
|
|
21
|
|
|
|
1,446
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at June 30
|
|
|
4,161
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
The notes on pages F-66 to F-76 are an integral part of these
condensed combined unaudited interim financial statements.
F-65
1 Business
and basis of presentation
The combined financial statements include the assets,
liabilities and results of operations of the following
vessel-owning companies which include the second-hand dry bulk
carriers and the two newbuildings (Davakis G. (formerly Hull KA
215) and Delos Ranger (formerly Hull KA 216) (together
the Group). The vessel-owning company of the vessel
Davakis G. reflects trading activities from May 20, 2008
and the vessel-owning company of the vessel Delos Ranger
reflects no trading activities for all periods presented:
|
|
|
|
|
|
|
|
|
|
|
Country of
|
|
Date of
|
|
|
|
|
Vessel-Owning Company
|
|
Incorporation
|
|
Incorporation
|
|
Vessel Name
|
|
Date of Delivery
|
|
Goldie Navigation Ltd.
|
|
Marshall Islands
|
|
November 23, 2004
|
|
African Zebra
|
|
January 3, 2005
|
Pavey Services Ltd.
|
|
British Virgin Islands
|
|
October 29, 2004
|
|
Bremen Max
|
|
January 26, 2005
|
Shoreline Universal Ltd.
|
|
British Virgin Islands
|
|
November 25, 2004
|
|
Hamburg Max
|
|
April 1, 2005
|
Valdis Marine Corp.
|
|
Marshall Islands
|
|
November 3, 2004
|
|
African Oryx
|
|
April 4, 2005
|
Kalistos Maritime S.A.
|
|
Marshall Islands
|
|
February 16, 2004
|
|
Davakis G.
|
|
May 20, 2008
|
Kalithea Maritime S.A.
|
|
Marshall Islands
|
|
February 16, 2004
|
|
Delos Ranger
|
|
August 22, 2008
|
The vessel-owning companies with the second hand dry bulk
vessels above are subsidiaries of Lincoln Finance Corp.
(Lincoln), which in turn is a wholly owned subsidiary of
Nouvelle Enterprises (Nouvelle). The vessel-owning companies
with the newbuildings (Davakis G. and Delos Ranger) are indirect
wholly owned subsidiaries of First Financial Corporation
(First). First is the controlling shareholder of the six
vessel-owning Companies. Lincoln, Nouvelle and First are
incorporated under the laws of the Republic of the Marshall
Islands with registered offices at Trust Company Complex,
Ajeltake Island, P.O. Box 1405, Majuro, Marshall
Islands and are owned by members of the Restis family.
The technical management of the Group is performed by
Enterprises Shipping & Trading Company (EST), a
corporation situated in Liberia, beneficially owned by certain
members of the Restis family. EST provides the Company and other
related vessel-owning companies with a wide range of shipping
services that include technical support and maintenance,
insurance advice, financial and accounting services for a fixed
fee (refer to Note 19).
As of June 30, 2008 and December 31, 2007, the Group
does not employ any executive officers or personnel other than
crew aboard the vessels. The Directors of the six vessel-owning
companies do not receive remuneration for the non-executive
services they provide.
On May 20, 2008, companies affiliated with members of the
Restis family collectively acquired a 9.62% interest in Seanergy
Maritime Corp. (Seanergy) for $25 million in
cash from existing shareholders and officers of Seanergy (the
Founders) via the acquisition of
2,750,000 shares (the Shares) of the common
stock (the Common Stock) of Seanergy and 8,008,334
warrants to purchase shares of Seanergys Common Stock (the
Warrants and collectively with the Shares, the
Securities). The Common Stock is subject to an
Escrow Agreement dated September 24, 2007 entered into by
the Founders pursuant to which the Shares remain in escrow with
an escrow agent until the date that is 12 months after the
consummation of a business combination. The Warrants are subject
to a
Lock-Up
Agreement dated September 24, 2007 (the
Lock-Up)
also entered into by the Founders pursuant to which the Warrants
would not be transferred until the consummation of the Business
Combination. On June 5, 2008 and June 10, 2008, a
further 413,000 shares and 200,000 shares of common
stock, respectively, were acquired by companies affiliated with
members of the Restis family on the open market, thereby
bringing their total interest in Seanergy to 11.76%. On various
dates from July 15, 2008 through August 11, 2008, a
further 8,316,781 shares of common stock were acquired by
companies affiliated with members of the Restis family either
through the open market or directly from shareholders, thereby
bringing their total interest in Seanergy to 40.84% (see
Note 20(d)). Following the
F-66
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Condensed Combined Unaudited Interim Financial
Statements (Continued)
June 30, 2008 and December 31, 2007
(In Thousands of US dollars)
shareholders approval on August 26, 2008 (see
Note 20(b)), the non-voting shareholders redeemed 6,370,773
Seanergy shares and thereby bringing the total interest of the
Restis family in Seanergy to 52.54% (see Note 20(d)). The
voting rights associated with the Securities are governed by a
voting agreement.
Also on May 20, 2008 Seanergy, a Marshall Islands
Corporation and its subsidiary Seanergy Merger Corp., a Marshall
Islands Corporation (Buyer) entered into a Master
Agreement pursuant to which the Buyer agreed to purchase for an
aggregate purchase price of: (i) $367,030 in cash;
(ii) $28,250 in the form of a promissory note convertible
to 2,260,000 shares of Buyers common stock at $12.50
per share; and (iii) up to 4,308,075 shares of
Buyers common stock if Buyer achieves certain earnings
before interest, tax and depreciation thresholds, six dry bulk
vessels from companies associated with members of the Restis
family, which include four second-hand vessels and two
newbuildings, which were delivered on May 20, 2008 and
August 22, 2008 (see Notes 10 and 20(a)). In
connection with the foregoing, Seanergy entered into six
Memoranda of Agreement with the vessel-owning companies.
2 Statement
of compliance
The condensed combined unaudited interim financial statements
have been prepared in accordance with International Financial
Reporting Standards (IFRS) IAS 34 Interim Financial
Reporting. They do not include all of the information
required for full annual financial statements, and should be
read in connection with the combined financial statements of the
Group as of and for the year ended December 31, 2007.
These condensed combined unaudited interim financial statements
were approved by the Directors of the Group on October 31,
2008.
3 Significant
accounting policies
The accounting policies applied by the Group in the accompanying
condensed combined unaudited interim financial statements are
the same as those applied by the Group in its combined financial
statements as of December 31, 2007.
4 Use
of estimates and judgments
The preparation of interim financial statements requires
management to make judgments, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual
results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognized in the
period in which the estimate is revised and in any future
periods affected. The estimates and assumptions that have the
most significant effect on the amounts recognized in the
combined financial statements are estimations in relation to the
revaluation of vessels, useful lives of vessels, impairment
losses on vessels and on trade accounts receivable.
In preparing these condensed combined unaudited interim
financial statements, the significant judgments made by
management in applying the Groups accounting policies and
the sources of estimation uncertainty were the same as those
that applied to the combined financial statements as of and for
the year ended December 31, 2007, except for an increase in
the estimated residual value of the vessels used in calculating
depreciation, resulting in a lower depreciation charge to the
condensed combined unaudited income statement for the six months
ended June 30, 2008 of $1,053.
F-67
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Condensed Combined Unaudited Interim Financial
Statements (Continued)
June 30, 2008 and December 31, 2007
(In Thousands of US dollars)
5 Financial
risk management and capital management
The Groups financial risk management and capital
management objectives and policies are consistent with those
disclosed in the combined financial statements as of and for the
year ended December 31, 2007.
6 Direct
voyage expenses
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Classification fees and surveys
|
|
|
1
|
|
|
|
4
|
|
Bunkers expenses
|
|
|
608
|
|
|
|
38
|
|
Port expenses
|
|
|
11
|
|
|
|
5
|
|
Tugs
|
|
|
|
|
|
|
2
|
|
Commission and fees
|
|
|
5
|
|
|
|
4
|
|
Insurance and other voyage expenses
|
|
|
|
|
|
|
7
|
|
Accrued voyage expenses
|
|
|
134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
759
|
|
|
|
60
|
|
|
|
|
|
|
|
|
|
|
7 Crew
costs
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Basic and supplementary wages
|
|
|
654
|
|
|
|
579
|
|
Overtime
|
|
|
447
|
|
|
|
319
|
|
Vacation
|
|
|
218
|
|
|
|
164
|
|
Bonus
|
|
|
517
|
|
|
|
151
|
|
Other crew expenses
|
|
|
307
|
|
|
|
130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,143
|
|
|
|
1,343
|
|
|
|
|
|
|
|
|
|
|
Crew costs represent the amounts due to the crew on board the
vessels under short-term contracts, i.e. no more than
9 months. The Group is not obliged to contribute to any
pension plans or post-employment benefits for the crew on board.
8 Other
operating expenses
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Chemicals and lubricants
|
|
|
837
|
|
|
|
689
|
|
Repairs and maintenance
|
|
|
508
|
|
|
|
458
|
|
Insurance
|
|
|
334
|
|
|
|
272
|
|
Other operating expenses
|
|
|
152
|
|
|
|
52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,831
|
|
|
|
1,471
|
|
|
|
|
|
|
|
|
|
|
F-68
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Condensed Combined Unaudited Interim Financial
Statements (Continued)
June 30, 2008 and December 31, 2007
(In Thousands of US dollars)
9 Financial
income and expense
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Financial income:
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
36
|
|
|
|
81
|
|
|
|
|
|
|
|
|
|
|
Financial expense:
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
993
|
|
|
|
1,519
|
|
Amortization of finance costs
|
|
|
13
|
|
|
|
11
|
|
Foreign exchange loss, net
|
|
|
8
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,014
|
|
|
|
1,540
|
|
|
|
|
|
|
|
|
|
|
Net finance cost
|
|
|
978
|
|
|
|
1,459
|
|
|
|
|
|
|
|
|
|
|
10 Vessels
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advances to
|
|
|
|
|
|
|
|
|
|
|
|
|
Shipyards for
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessels Under
|
|
|
|
|
|
|
|
|
|
Vessels
|
|
|
Construction
|
|
|
Dry-Docking
|
|
|
Total
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2007
|
|
|
121,516
|
|
|
|
4,922
|
|
|
|
1,586
|
|
|
|
128,024
|
|
Additions
|
|
|
24
|
|
|
|
12,661
|
|
|
|
989
|
|
|
|
13,674
|
|
Revaluation
|
|
|
129,265
|
|
|
|
|
|
|
|
|
|
|
|
129,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
|
250,805
|
|
|
|
17,583
|
|
|
|
2,575
|
|
|
|
270,963
|
|
Additions
|
|
|
675
|
|
|
|
20,339
|
|
|
|
521
|
|
|
|
21,535
|
|
Transfers
|
|
|
25,127
|
|
|
|
(25,127
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2008
|
|
|
276,607
|
|
|
|
12,795
|
|
|
|
3,096
|
|
|
|
292,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2007
|
|
|
(13,053
|
)
|
|
|
|
|
|
|
(484
|
)
|
|
|
(13,537
|
)
|
Depreciation
|
|
|
(11,795
|
)
|
|
|
|
|
|
|
(830
|
)
|
|
|
(12,625
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2007
|
|
|
(24,848
|
)
|
|
|
|
|
|
|
(1,314
|
)
|
|
|
(26,162
|
)
|
Depreciation
|
|
|
(15,709
|
)
|
|
|
|
|
|
|
(605
|
)
|
|
|
(16,314
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance June 30, 2008
|
|
|
(40,557
|
)
|
|
|
|
|
|
|
(1,919
|
)
|
|
|
(42,476
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value January 1, 2007
|
|
|
108,463
|
|
|
|
4,922
|
|
|
|
1,102
|
|
|
|
114,487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value December 31, 2007
|
|
|
225,957
|
|
|
|
17,583
|
|
|
|
1,261
|
|
|
|
244,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value June 30, 2008
|
|
|
236,050
|
|
|
|
12,795
|
|
|
|
1,177
|
|
|
|
250,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kalistos Maritime S.A. and Kalithea Maritime S.A. had entered
into shipbuilding contracts with a shipyard for the construction
of two newbuildings with the expected delivery dates in 2008. On
May 20, 2008, one newbuilding, vessel Davakis G., was
delivered from the shipyard and the last installment of $11,820
was paid.
F-69
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Condensed Combined Unaudited Interim Financial
Statements (Continued)
June 30, 2008 and December 31, 2007
(In Thousands of US dollars)
As of June 30, 2008 Kalithea Maritime S.A. was committed to
the construction of its vessel, Delos Ranger, at a total
contract cost of $23,820. Payments against the contract cost
through June 30, 2008 totaled $12,000 and are included
under the caption advances to shipyards for vessels under
construction. The vessel Delos Ranger was delivered from the
shipyard on August 22, 2008 (refer to Note 20(a)).
Capitalized interest included under the caption advances to
shipyards for vessels under construction as of June 30,
2008 and December 31, 2007 amounted to $795 and $249
respectively.
On various dates in August 2008 and September 2008, the vessels
were sold (refer to Note 20(b)).
11 Trade
accounts receivable and other assets
|
|
|
|
|
|
|
|
|
|
|
June 30, 2008
|
|
|
December 31, 2007
|
|
|
Charterers
|
|
|
1,324
|
|
|
|
1,237
|
|
Insurance claims
|
|
|
14
|
|
|
|
22
|
|
Prepayments for insurance premiums
|
|
|
675
|
|
|
|
238
|
|
Agents
|
|
|
252
|
|
|
|
48
|
|
Other
|
|
|
|
|
|
|
43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,265
|
|
|
|
1,588
|
|
Impairment loss
|
|
|
(660
|
)
|
|
|
(660
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
1,605
|
|
|
|
928
|
|
|
|
|
|
|
|
|
|
|
12 Cash
and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
June 30, 2008
|
|
December 31, 2007
|
|
On demand
|
|
|
61
|
|
|
|
21
|
|
Term deposits
|
|
|
4,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,161
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
13 Capital
contributions
Capital contributions represents payments made by the
shareholders at various dates to finance vessel acquisitions in
excess of the amounts of the bank loans obtained. There is no
contractual obligation to repay the amounts.
F-70
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Condensed Combined Unaudited Interim Financial
Statements (Continued)
June 30, 2008 and December 31, 2007
(In Thousands of US dollars)
14 Long-term
debt
Long-term debt is analyzed as follows:
|
|
|
|
|
|
|
|
|
Borrower
|
|
June 30, 2008
|
|
|
December 31, 2007
|
|
|
Goldie Navigation Ltd.
|
|
|
5,513
|
|
|
|
5,858
|
|
Valdis Marine Corp.
|
|
|
8,072
|
|
|
|
8,576
|
|
Pavey Services Ltd.
|
|
|
11,421
|
|
|
|
12,134
|
|
Shoreline Universal Ltd.
|
|
|
12,602
|
|
|
|
13,390
|
|
Kalistos Maritime S.A.
|
|
|
16,617
|
|
|
|
5,026
|
|
Kalithea Maritime S.A.
|
|
|
6,659
|
|
|
|
3,346
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
60,884
|
|
|
|
48,330
|
|
Less: Current portion
|
|
|
12,364
|
|
|
|
9,750
|
|
|
|
|
|
|
|
|
|
|
Long-term portion
|
|
|
48,520
|
|
|
|
38,580
|
|
|
|
|
|
|
|
|
|
|
The weighted average effective interest rate for all long-term
debt for the three months and six months ended 30, June 2008 and
2007 was approximately 4.61% and 6.23%, respectively. Interest
expense for the six months ended 30, June 2008 and 2007 amounted
to $993 and $1,519, respectively, and is included in finance
expense in the accompanying condensed combined unaudited interim
statements of income.
The principal repayments are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year of
|
|
|
1 Year or
|
|
|
1 to 2
|
|
|
2 to 5
|
|
|
More Than
|
|
|
|
|
|
|
Maturity
|
|
|
Less
|
|
|
Years
|
|
|
Years
|
|
|
5 Years
|
|
|
Total
|
|
|
December 31, 2007
|
|
|
2015
|
|
|
|
9,750
|
|
|
|
4,724
|
|
|
|
14,171
|
|
|
|
19,685
|
|
|
|
48,330
|
|
June 30, 2008
|
|
|
2015
|
|
|
|
12,364
|
|
|
|
5,643
|
|
|
|
16,931
|
|
|
|
25,946
|
|
|
|
60,884
|
|
(a) Goldie
Navigation Ltd., Valdis Marine Corp., Pavey Services Ltd. and
Shoreline Universal Ltd. loan facilities:
The long-term debt, denominated in US Dollars, of Goldie
Navigation Ltd., Valdis Marine Corp., Pavey Services Ltd. and
Shoreline Universal Ltd. represents the amounts allocated to
each vessel-owning company from the syndicated loan of $500,000
concluded on December 24, 2004 for the purchase of
32 vessels by each of 32 vessel-owning companies, with
Lincoln and Nouvelle as corporate guarantors (the syndicated
loan). The syndicated loan was allocated to each vessel-owning
company based upon each vessels acquisition cost. The
Group adjusts the amount outstanding each time one of the
vessels in the syndicated loan is sold without repayment of the
associated debt or a portion of the loan is paid and allocates
it proportionately to the remaining vessel-owning companies.
The long-term debt initially allocated to each vessel-owning
company represents approximately 67.5% of the vessel acquisition
cost. The syndicated loan is payable in variable principal
installments plus interest at variable rates (LIBOR plus a
spread of 0.875%) with an original balloon installment of
$45,500 in March 2015. The balloon installment outstanding as of
June 30, 2008 and December 31, 2007 amounted to
$23,702 and $26,153, respectively.
The long-term debt is secured by a mortgage on the vessels, a
corporate guarantee of Lincoln and Nouvelle, and assignments on
earnings, insurance and requisition compensation of the
mortgaged vessel.
F-71
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Condensed Combined Unaudited Interim Financial
Statements (Continued)
June 30, 2008 and December 31, 2007
(In Thousands of US dollars)
The original loan agreements for all of the vessels include
covenants deriving from the syndicated loan that require the
vessel-owning companies to maintain minimum hull values in
connection with the vessels outstanding loans, insurance
coverage of the vessels against all customary risks. The
corporate guarantors are required to have minimum levels of
available cash and cash equivalents, liquidity funds on a
consolidated basis of no less than $30,000, leverage ratio
(defined as Debt to Total assets) not higher than 0.7:0.1 and
net worth (total assets less the amount of the consolidated
debt) not less than $250,000. In addition, the covenants do not
permit the borrowers to sell the vessels and assets and change
the beneficial ownership or management of the vessels, without
the prior consent of the banks. The individual vessel-owning
companies and the corporate guarantors are in compliance with
the debt covenants as of June 30, 2008 and
December 31, 2007.
Goldie Navigation Ltd.
: The allocated initial
amount for Goldie Navigation Ltd. was $9,460 to partly finance
the acquisition of vessel African Zebra. At December 31,
2007, the outstanding balance was $5,881 ($5,858 net of
principal repayment of $1,425 in 2007 and deferred direct cost)
payable in twenty-nine equal quarterly principal installments of
$174 plus interest at variable rates (LIBOR plus a spread of
0.875%) with a balloon installment of $861 due in 2015. At
June 30, 2008, the outstanding balance was $5,535
($5,513 net of principal repayment of $346 in 2008 and
deferred direct cost) payable in twenty-seven equal quarterly
principal installments of $173 plus interest at variable rates
(LIBOR plus a spread of 0.875%) with a balloon installment of
$861 due in 2015. On September 25, 2008, the vessel African
Zebra was sold and the outstanding amount in the syndicated loan
was allocated proportionately to the remaining vessel-owning
companies which were part of the original syndicated loan and
whose vessels have not been sold (see Note (20c)).
Valdis Marine Corp.
: The allocated initial
amount for Valdis Marine Corp. was $13,852 to partly finance the
acquisition of vessel African Oryx. At December 31, 2007,
the outstanding balance was $8,612 ($8,576 net of principal
repayment of $2,114 in 2007 and deferred direct cost) payable in
twenty-nine equal quarterly principal installments of $254 plus
interest at variable rates (LIBOR plus a spread of 0.875%) with
a balloon installment of $1,261 due in 2015. At June 30,
2008, the outstanding balance was $8,105 ($8,072 net of
principal repayment of $507 in 2008 and deferred direct cost)
payable in twenty-seven equal quarterly principal installments
of $253 plus interest at variable rates (LIBOR plus a spread of
0.875%) with a balloon installment of $1,261 due in 2015. On
August 28, 2008, the vessel African Oryx was sold and the
outstanding amount in the syndicated loan was allocated
proportionately to the remaining vessel-owning companies which
were part of the original syndicated loan and whose vessels have
not been sold (see Note (20c)).
Pavey Services Ltd.
: The allocated initial
amount for Pavey Services Ltd. was $19,595 to partly finance the
acquisition of vessel Bremen Max. At December 31, 2007, the
outstanding balance was $12,182 ($12,134 net of principal
repayments of $3,000 in 2007 and deferred direct cost) payable
in twenty-nine equal quarterly principal installments of $359
plus interest at variable rates (LIBOR plus a spread of 0.875%)
with a balloon installment of $1,783 due in 2015. At
June 30, 2008, the outstanding balance was $11,465
($11,421 net of principal repayment of $717 in 2008 and
deferred direct cost) payable in twenty-seven equal quarterly
principal installments of $359 plus interest at variable rates
(LIBOR plus a spread of 0.875%) with a balloon installment of
$1,783 due in 2015. On September 11, 2008, the vessel
Bremen Max was sold and the outstanding amount in the syndicated
loan was allocated proportionately to the remaining
vessel-owning companies which were part of the original
syndicated loan and whose vessels have not been sold (see Note
(20c)).
Shoreline Universal Ltd.
: The allocated
initial amount for Shoreline Universal Ltd. was $21,622 to
finance the acquisition of the vessel Hamburg Max. At
December 31, 2007, the outstanding balance was $13,443
($13,390 net of principal repayments of $3,305 in 2007 and
direct cost) payable in twenty-nine equal
F-72
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Condensed Combined Unaudited Interim Financial
Statements (Continued)
June 30, 2008 and December 31, 2007
(In Thousands of US dollars)
quarterly principal installments of $396 plus interest at
variable rates (LIBOR plus a spread of 0.875%) with a balloon
installment of $1,968 due in 2015. At June 30, 2008, the
outstanding balance was $12,651 ($12,602 net of principal
repayment of $791 in 2008 and deferred direct cost) payable in
twenty-seven equal quarterly principal installments of $396 plus
interest at variable rates (LIBOR plus a spread of 0.875%) with
a balloon installment of $1,968 due in 2015. On
September 25, 2008, the vessel Hamburg Max was sold and the
outstanding amount in the syndicated loan was allocated
proportionately to the remaining vessel-owning companies which
were part of the original syndicated loan and whose vessels have
not been sold (see Note (20c)).
(b) Kalistos
Maritime S.A. and Kalithea Maritime S.A.. loan
facilities:
(i)
Original loan facility
: On
June 23, 2006 Kalistos Maritime S.A., Kalithea Maritime
S.A. and a third affiliated vessel-owning company entered into a
loan facility of up to $20,160 and a guarantee facility of up to
$28,800 each to be used to partly finance and guarantee the
payment to the shipyards for the newbuilding.
(ii)
2nd loan facility
: On
March 11, 2008, Kalithea Maritime S.A., Kalistos Maritime
S.A. and another vessel-owning company not included in the Group
signed a commitment letter for a preferred ship variable rate
mortgage bank loan for up to $50,022 to finance a maximum of 70%
of the acquisition of three vessels under construction at the
shipyards.
The loan bears interest at LIBOR plus a spread and is repayable
in equal consecutive quarterly installments of $230 commencing
three months after the delivery date of the vessels with any
unpaid balance on the final maturity date (May
2018) becoming due at that time as a balloon payment.
The covenants require, among others, the vessel-owning companies
to maintain minimum hull values in connection with the
vessels outstanding loans, insurance coverage of the
vessels against all customary risks and to maintain a ratio of
the fair market value of the vessels over the debt at a minimum
of 125%. The Guarantor will require minimum levels of available
cash and cash equivalents, liquidity funds on a consolidated
basis not less than $10,000, leverage ratio (defined as total
consolidated liabilities over total consolidated assets adjusted
to reflect the market value of the vessels not to exceed 70%),
not to have further indebtedness or issuing guarantees. In
addition, the covenants do not permit the borrowers to sell the
vessels and assets and change the beneficial ownership or
management of the vessels, without the prior consent of the
banks. First will be the guarantor of the loan. The individual
vessel-owning companies and the Guarantor are in compliance with
the debt covenants as of June 30, 2008 and
December 31, 2007.
Kalistos Maritime S.A.
: Kalistos Maritime S.A.
loan facility (from the original loan facility) was for up to
$6,720, plus interest at variable rates (LIBOR plus a spread of
0.65%), to finance a portion of the construction cost of Davakis
G. Gross drawdowns against this facility at December 31,
2007 and June 30, 2008 amounted to $5,040 ($5,026 in total,
net of deferred direct costs) and $1,680, respectively. The loan
was repayable in full at the earlier of December 18, 2008
or the date the newbuilding was delivered by the shipyard. On
May 20, 2008, vessel Davakis G. was delivered from the
shipyard and the last building installment of $11,820 was paid.
To finance 70% of the vessel acquisition cost amounting to
$23,820, a commitment letter for a preferred ship variable rate
mortgage was concluded (2nd facility). The total drawdown
against this mortgage was $16,674 which was used to repay the
original loan facility of $6,720 and the remaining drawdown was
used to finance the vessel. At June 30, 2008, the
outstanding balance was $16,617 net of deferred direct
costs. On August 28, 2008, the vessel Davakis G. was sold
and the related loan was repaid (refer to Note 20(b)).
F-73
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Condensed Combined Unaudited Interim Financial
Statements (Continued)
June 30, 2008 and December 31, 2007
(In Thousands of US dollars)
Kalithea Maritime S.A.
: Kalithea Maritime S.A.
loan facility (from the original loan facility) was for up to
$6,720 plus interest at variable rates (LIBOR plus a spread of
0.65%), to finance a portion of the construction cost of Delos
Ranger. Gross drawdowns against the original facility at
December 31, 2007 amounted to $3,360 ($3,346 net of
deferred direct costs). Gross cumulative drawdowns against this
facility at June 30, 2008 amounted to $6,720 ($6,659 in
total, net of deferred direct costs). The loan is repayable in
full at the earlier of May 18, 2009 or the date the
newbuilding is delivered by the shipyard. The vessel Delos
Ranger was delivered on August 22, 2008 (refer to
Note 20(a)). On August 28, 2008, the vessel Delos
Ranger was sold and the related loan was repaid (refer to
Notes 20(a) and 20(b)).
15 Trade
accounts payable
|
|
|
|
|
|
|
|
|
|
|
June 30, 2008
|
|
|
December 31, 2007
|
|
|
Suppliers
|
|
|
2,463
|
|
|
|
883
|
|
Insurance agents
|
|
|
543
|
|
|
|
167
|
|
Other
|
|
|
228
|
|
|
|
130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,234
|
|
|
|
1,180
|
|
|
|
|
|
|
|
|
|
|
16 Deferred
revenue
Deferred revenue represents voyages invoiced but not earned up
to June 30, 2008.
17 Contingencies
Various claims, suits and complaints, including those involving
government regulations and product liability, arise in the
ordinary course of the shipping business. In addition, losses
may arise from disputes with charterers, agents, insurance and
other claims with suppliers relating to the operation of the
Groups vessels. Currently, management is not aware of any
such contingent liabilities which should be disclosed or for
which a provision should be established in the accompanying
condensed combined unaudited interim financial statements.
The Group accrues for the cost of environmental liabilities when
management becomes aware that a liability is probable and is
able to reasonably estimate the probable exposure. Currently,
management is not aware of any such claims or contingent
liabilities which should be disclosed, or for which a provision
should be established in the accompanying condensed combined
unaudited interim financial statements.
18 Commitments
As of June 30, 2008 Kalithea Maritime S.A. is committed to
the purchase of Delos Ranger for a total cost of $23,820
(excluding capitalized interest of $795). Payments outstanding
amount to $11,820 (see also Note 20(a)).
F-74
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Condensed Combined Unaudited Interim Financial
Statements (Continued)
June 30, 2008 and December 31, 2007
(In Thousands of US dollars)
19 Related
parties
The related party balances are:
|
|
|
|
|
|
|
|
|
|
|
June 30, 2008
|
|
|
December 31, 2007
|
|
|
Due from related parties current
|
|
|
|
|
|
|
|
|
Due from EST
|
|
|
600
|
|
|
|
480
|
|
Due from Lincoln
|
|
|
11,978
|
|
|
|
4,909
|
|
Charter revenue receivable from Swiss Marine Services S.A.
|
|
|
444
|
|
|
|
444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,022
|
|
|
|
5,833
|
|
|
|
|
|
|
|
|
|
|
Due to related parties current
|
|
|
|
|
|
|
|
|
Due to EST
|
|
|
1,020
|
|
|
|
386
|
|
Due to First
|
|
|
375
|
|
|
|
334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,395
|
|
|
|
720
|
|
|
|
|
|
|
|
|
|
|
The related party transactions included in the condensed
combined unaudited statements of income for the six months ended
June 30, 2008 and 2007 are:
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
2007
|
|
Voyage revenue (Swiss Marine Services S.A.)
|
|
|
|
|
|
|
3,430
|
|
Management fees (EST)
|
|
|
411
|
|
|
|
387
|
|
The related parties identified are:
(a) Directors
The directors of the Group do not receive remuneration for the
non-executive services they offer. The identity and the
description of the other related parties of the Group are given
below.
(b) Lincoln
and First
Lincoln and First are the parent companies of the vessel and
hull-owning companies, respectively (see Note 1). The
amounts due to and due from them represent expenses paid and
funds collected on the Groups behalf.
(c) EST
Each vessel-owning company of the Group has a management
agreement with EST, to provide management services in exchange
for a fixed fee per day for each vessel in operation and a fixed
monthly fee per hull under construction. These agreements are
entered into with an initial three-year term until terminated by
either party upon written notice, in which case the agreements
terminate within two months after the date notice was given. In
the event that the agreement with EST is terminated, the fee
payable to EST shall continue to be payable for three months
from the termination date. In addition, EST provides crew for
the vessel and receives a reimbursement for crew support costs
for three months. Finally, if the agreement is terminated EST
will receive crew severance costs of up to $50 per vessel.
Management agreements with EST require the vessel-owning
companies with vessels in operation, to make an interest-free
advance of $120 each, to cover the working capital requirements
arising from the handling of the majority of the expenditure
F-75
Goldie
Navigation Ltd., Pavey Services Ltd., Shoreline Universal
Ltd.,
Valdis Marine Corp., Kalistos Maritime S.A. and Kalithea
Maritime S.A.
Notes to Condensed Combined Unaudited Interim Financial
Statements (Continued)
June 30, 2008 and December 31, 2007
(In Thousands of US dollars)
generated from the vessels operations. This advance is
made ten days before the delivery of the vessel for which EST is
appointed as the manager.
(d) Swiss
Marine Services S.A. (SwissMarine)
Based on charter party agreements, certain of the Groups
vessels are chartered to SwissMarine, an affiliated company,
beneficially owned by certain members of the Restis family.
20 Subsequent
events
(a) Delivery of Delos Ranger
: On
August 22, 2008, vessel Delos Ranger was delivered from the
shipyard and the last installment of $11,820 (excluding
capitalized interest of $795) was paid. To finance 70% of the
vessel acquisition cost amounting to $23,820, a commitment
letter for the preferred ship variable rate mortgage was
concluded (see Note 14). The total drawdown against this
mortgage on August 22, 2008 of $16,674 was used to repay
the existing loan facility of $6,720 and the remaining drawdown
was used to finance the vessel. The vessel Delos Ranger was sold
on August 28, 2008 and the loan was repaid in full (see
Note 20(b)).
(b) Sale of vessels
: On August 26,
2008, Seanergy approved the acquisition of the 6 dry bulk
vessels from the Group and on August 28, 2008,
September 11, 2008 and September 25, 2008, the Group
sold its vessels to subsidiaries of Seanergy (see
Note 1) for an aggregate sales price of $395,280 plus
a contingent consideration as mentioned in Note 1.
(c) Settlement of long term debt
: The
long-term debt (see Note 14), denominated in
US Dollars, of Goldie Navigation Ltd., Valdis Marine Corp.,
Pavey Services Ltd. and Shoreline Universal Ltd. represents the
amounts allocated to each vessel-owning company from the
syndicated loan of $500,000 concluded on December 24, 2004
for the purchase of 32 vessels by each of
32 vessel-owning companies, with Lincoln and Nouvelle as
corporate guarantors (the syndicated loan). The syndicated loan
was allocated to each vessel-owning company based upon each
vessels acquisition cost. The Group adjusts the amount
outstanding each time one of the vessels in the syndicated loan
is sold without repayment of the associated debt or a portion of
the loan is paid and allocates it proportionately to the
remaining vessel-owning companies. Therefore, as the vessels
owned by these companies have been sold (see 20(b)), the
outstanding balances will be allocated to the vessel-owning
companies which were part of the original syndicated loan and
whose vessels have not been sold.
(d) Acquisition of common stock
: On
various dates from July 15, 2008 through August 11,
2008 companies affiliated with members of the Restis family
purchased 8,246,781 shares of common stock from
shareholders of Seanergy or from the open market for an
aggregate purchase price of $82,013. On July 23, 2008,
another company affiliated with members of the Restis family
purchased 70,000 shares of common stock of Seanergy from
the open market for an aggregate purchase price of $691,
bringing their total interest in Seanergy to 40.84%. Following
the shareholders approval on August 26, 2008 (see
Note 20(b)), the non-voting shareholders redeemed 6,370,773
Seanergy shares thereby bringing the total interest of the
Restis family in Seanergy to 52.54%.
Subsequent to October 13, 2008, companies affiliated with
members of the Restis family purchased in open market
transactions 4,454,134 shares of common stock for an
aggregate purchase price of $23,618. Following these purchases
of common stock, the total interest of the Restis family and its
affiliates in Seanergy is 72%.
F-76
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
|
|
Item 6.
|
Indemnification
of Directors and Officers.
|
Under the Amended and Restated Articles of Incorporation, our
By-laws and under Section 60 of the Marshall Islands
Business Corporations Act (BCA), we may indemnify
anyone who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or
proceeding (other than an action by or in the right of the
corporation) whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a
director or officer of the corporation, or is or was serving at
the request of the corporation as a director or officer of
another corporation, partnership, joint venture, trust or other
enterprise.
A limitation on the foregoing is the statutory proviso (also
found in our By-laws) that, in connection with such action, suit
or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe that
his conduct was unlawful.
Further, under Section 60 of the BCA and our By-laws, the
termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of no contest, or
its equivalent, does not, of itself, create a presumption that
the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
In addition, under Section 60 of the BCA and under our
By-laws, a corporation may indemnify any person who was or is a
party, or is threatened to be made a party, to any threatened,
pending, or completed action or suit by or in the right of the
corporation to procure judgment in its favor by reason of the
fact that he is or was a director or officer of the corporation,
or is or was serving at the request of the corporation as a
director or officer of another corporation, partnership, joint
venture, trust or other enterprise. Such indemnification may be
made against expenses (including attorneys fees) actually
and reasonably incurred such person or in connection with the
defense or settlement of such action or suit if he acted in good
faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation. Again, this is
provided that no indemnification may be made in respect of any
claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the
performance of his duty to the corporation unless and only to
the extent that the court in which such action or suit was
brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
Further, and as provided by both our By-laws and Section 60
of the BCA, when a director or officer of a corporation has been
successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in the foregoing instances, or in
the defense of a related claim, issue or matter, he will be
indemnified against expenses (including attorneys fees)
actually and reasonably incurred by him in connection with such
matter.
Likewise, pursuant to our By-laws and Section 60 of the
BCA, expenses (our By-laws specifically includes attorneys
fees in expenses) incurred in defending a civil or criminal
action, suit or proceeding by an officer or director may be paid
in advance of the final disposition of the action, suit or
proceeding upon receipt of an undertaking by or on behalf of the
director or officer to repay such amount if it is ultimately
determined that he is not entitled to indemnification. The
By-laws further provide that with respect to other employees,
such expenses may be paid on the terms and conditions, if any,
as the Board may deem appropriate.
Both Section 60 of the BCA and our By-laws further provided
that the foregoing indemnification and advancement of expenses
are not exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under
any bylaw, agreement, vote of shareholders or disinterested
directors or otherwise, both as to action in his official
capacity
and/or
as to
action in another capacity while holding office.
II-1
Under both Section 60 of the BCA and our By-laws, we also
have the power to purchase and maintain insurance on behalf of
any person who is or was a director or officer of the
corporation or is or was serving at the request of the
corporation as a director or officer against any liability
asserted against him and incurred by him in such capacity
regardless of whether the corporation would have the power to
indemnify him against such liability under the foregoing.
Under Section 60 of the BCA (and as provided in our
By-laws), the indemnification and advancement of expenses
provided by, or granted under the foregoing continue with regard
to a person who has ceased to be a director, officer, employee
or agent and inure to the benefit of his heirs, executors and
administrators unless otherwise provided when authorized or
ratified. Additionally, under Section 60 of the BCA and our
Bylaws, the indemnification and advancement of expenses provided
by, or granted under the foregoing continue with regard to a
person who has ceased to be a director, officer, employee or
agent and inure to the benefit of his heirs, executors and
administrators unless otherwise provided when authorized or
ratified.
In addition to the above, our By-laws provide that references to
us includes constituent corporations, and defines other
enterprises to include employee benefit plans,
fines to include excise taxes imposed on a person
with respect to an employee benefit plan, and further defines
the term serving at the request of the corporation.
Our Amended and Restated Articles of Incorporation set out a
much abbreviated version of the foregoing and make reference to
the provisions of the By-laws.
Such limitation of liability and indemnification does not affect
the availability of equitable remedies. In addition, we have
been advised that in the opinion of the SEC, indemnification for
liabilities arising under the Securities Act is against public
policy as expressed in the Securities Act and is therefore
unenforceable.
Pursuant to the Underwriting Agreement filed as Exhibit 1.1
to this Registration Statement, we have agreed to indemnify the
Underwriters and the Underwriters have agreed to indemnify us
against certain civil liabilities that may be incurred in
connection with this offering, including certain liabilities
under the Securities Act.
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|
Item 7.
|
Recent
Sales of Unregistered Securities.
|
(a) During the past three years, Seanergy Maritime has sold
the following shares of common stock without registration under
the Securities Act:
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|
|
|
|
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|
Number of
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|
Shareholders
|
|
Shares
|
|
|
Georgios Koutsolioutsos
|
|
|
1,386,934
|
|
Panagiotis Zafet
|
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825,556
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Simon Zafet
|
|
|
825,556
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Alexios Komninos
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181,622
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Ioannis Tsigkounakis
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|
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82,556
|
|
Such shares were issued on November 27, 2006 in connection
with our organization pursuant to the exemption from
registration contained in Section 4(2) as they were sold to
sophisticated, wealthy non U.S. Person
individuals and such shares were issued to these individuals and
entities above at an aggregate offering price of $25,000, or
$0.008 per share, giving effect to the stock dividend. No
underwriting discounts or commissions were paid with respect to
such sales.
On February 20, 2007, such shareholders surrendered for
cancellation an aggregate of 802,224 of such shares on a
pro-rata basis.
In addition, on September 28, 2007, and prior to the
consummation of the initial public offering of the shares of
Seanergy Maritimes common stock, all of Seanergy
Maritimes executive officers purchased from Seanergy
Maritime an aggregate of 16,016,667 warrants at $0.90 per
warrant in a private placement in accordance with
Regulation S under the Securities Act of 1933.
II-2
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|
Item 8.
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Exhibits
and Financial Statement Schedules.
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(a) The following exhibits are filed as part of this
Registration Statement:
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Exhibit No.
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Description
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|
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3
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.1
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Form of Amended and Restated Articles of Incorporation++
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3
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.2
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Form of Amended and Restate By-laws++
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4
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.1
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Specimen Common Stock Certificate
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4
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.2
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Specimen Public Warrant Certificate
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4
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.3
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Specimen Private Warrant Certificate
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4
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.4
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Form of Warrant Agreement between Continental Stock Transfer
& Trust Company and the Registrant++++
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5
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.1
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Opinion of Reeder & Simpson, P.C., Marshall
Islands counsel to the Registrant
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8
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.1
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Opinion of Loeb & Loeb LLP, special counsel to the
Registrant, relating to tax matters
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10
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.1
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Master Agreement dated as May 20, 2008++
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10
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.2
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Amendment to Master Agreement dated July 25, 2008++
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10
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.3
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Memorandum of Agreement relating to the African Oryx dated
May 20, 2008 between Seanergy Maritime Corp., as buyer, and
Valdis Marine Corp., as seller, as amended++
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10
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.4
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Memorandum of Agreement relating to the African Zebra dated
May 20, 2008 between Seanergy Maritime Corp., as buyer, and
Goldie Navigation Ltd., as seller, as amended++
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10
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.5
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Memorandum of Agreement relating to the Domestic Trade Ministry
Kouan Shipping Industry Co. Davakis G. (ex. Hull No. KA215)
dated May 20, 2008 between Seanergy Maritime Corp., as
buyer, and Kalistos Maritime S.A., as seller, as amended++
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10
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.6
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Memorandum of Agreement relating to the Domestic Trade Ministry
Kouan Shipping Industry Co. Hull No. KA216 dated
May 20, 2008 between Seanergy Maritime Corp., as buyer, and
Kalithea Maritime S.A., as seller, as amended++
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10
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.7
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Memorandum of Agreement relating to the Bremen Max dated
May 20, 2008 between Seanergy Maritime Corp., as buyer, and
Pavey Services Ltd., as seller, as amended++
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10
|
.8
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Memorandum of Agreement relating to the Hamburg Max dated
May 20, 2008 between Seanergy Maritime Corp., as buyer, and
Shoreline Universal Limited, as seller, as amended++
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10
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.9
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Management Agreement dated as of May 20, 2008++
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10
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.10
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Brokerage Agreement dated as of May 20, 2008++
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10
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.11
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Voting Agreement dated as of May 20, 2008++
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10
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.12
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Amendment to Voting Agreement dated July 25, 2008++
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10
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.13
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Second Amendment to Voting Agreement dated August 21,
2008+++
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10
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.14
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Third Amendment to Voting Agreement dated August 27, 2008+
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10
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.15
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Fourth Amendment to Voting Agreement dated November 20,
2008+
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10
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.16
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Form Convertible Unsecured Promissory Note++
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10
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.17
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Form of Plan of Dissolution and Liquidation++
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10
|
.18
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Form of Stock Escrow Agreement++++
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10
|
.19
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Form of Joinder Agreement
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23
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.1
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Consent of Weinberg & Company, P.A.
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23
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.2
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Consent of KPMG Certified Auditors A.E.
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23
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.3
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Consent of Reeder & Simpson, P.C., Marshall
Islands counsel to the Registrant (included in Exhibit 5.1)
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23
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.4
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Form of Consent of Loeb & Loeb LLP, special counsel to the
Registrant, relating to tax matters (included in
Exhibit 8.1)
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24
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Power of Attorney (included on the signature page).
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+
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Incorporated by reference to the corresponding agreement in the
Exhibit filed with Seanergys
Form F-1
filed with the SEC on December 12, 2008.
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++
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Incorporated by reference to the corresponding agreement in the
Annex filed with Seanergy Maritimes proxy statement on
Form 6-K
filed with the SEC on July 31, 2008.
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+++
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Incorporated by reference to the corresponding agreement in the
Annex filed with Seanergy Maritimes supplemental proxy
statement on
Form 6-K
filed with the SEC on August 22, 2008.
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++++
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Incorporated by reference to the corresponding agreement in the
Exhibit filed with Seanergy Maritimes Form F-1 filed with
the SEC on July 10, 2007.
|
II-3
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
i. To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
ii. To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than 20 percent change in the maximum aggregate
offering price set forth in the Calculation of
Registration Fee table in the effective registration
statement.
iii. To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(4) If the registrant is a foreign private issuer, to file
a post-effective amendment to the registration statement to
include any financial statements required by Item 8.A. of
Form 20-F
at the start of any delayed offering or throughout a continuous
offering. Financial statements and information otherwise
required by Section 10(a)(3) of the Act need not be
furnished, provided that the registrant includes in the
prospectus, by means of a post-effective amendment, financial
statements required pursuant to this paragraph (a)(4) and other
information necessary to ensure that all other information in
the prospectus is at least as current as the date of those
financial statements. Notwithstanding the foregoing, with
respect to registration statements on
Form F-1,
a post-effective amendment need not be filed to include
financial statements and information required by
Section 10(a)(3) of the Act or
Rule 3-19
of this chapter if such financial statements and information are
contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the
Form F-1.
(5) That for the purpose of determining any liability under
the Securities Act of 1933 in a primary offering of securities
of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell
the securities to the purchaser, if the securities are offered
or sold to such purchaser by means of any of the following
communications, the undersigned registrant will be a seller to
the purchaser and will be considered to offer or sell such
securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the
undersigned registrant relating to the offering required to be
filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering
prepared by or on behalf of the undersigned registrant or used
or referred to by the undersigned registrant;
II-4
(iii) The portion of any other free writing prospectus
relating to the offering containing material information about
the undersigned registrant or its securities provided by or on
behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the
offering made by the undersigned registrant to the purchaser
(b) The undersigned hereby undertakes to provide to the
underwriter at the closing specified in the underwriting
agreements, certificates in such denominations and registered in
such names as required by the underwriter to permit prompt
delivery to each purchaser.
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to
be part of this registration statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on
Form F-1
and has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in New
York City, New York, United States of America on
January 15, 2009.
SEANERGY MARITIME HOLDINGS CORP.
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|
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By:
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/s/ Georgios
Koutsolioutsos
|
Georgios Koutsolioutsos
Chairman of the Board of Directors
POWER OF
ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities held on the dates indicated.
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Signature
|
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Title
|
|
Date
|
|
|
|
|
|
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/s/ Dale
Ploughman
Dale
Ploughman
|
|
Chief Executive Officer and Director
|
|
January 15, 2009
|
|
|
|
|
|
*
Christina
Anagnostara
|
|
Chief Financial Officer
(principal financial and
accounting officer)
|
|
January 15, 2009
|
|
|
|
|
|
*
Alexios
Komninos
|
|
Director
|
|
January 15, 2009
|
|
|
|
|
|
*
Georgios
Koutsolioutsos
|
|
Chairman of the Board of Directors
|
|
January 15, 2009
|
|
|
|
|
|
*
Ioannis
Tsigkounakis
|
|
Secretary and Director
|
|
January 15, 2009
|
|
|
|
|
|
*
Elias
M. Culucundis
|
|
Director
|
|
January 15, 2009
|
|
|
|
|
|
*
Kyriakos
Dermatis
|
|
Director
|
|
January 15, 2009
|
|
|
|
|
|
*
Kostas
Koutsoubelis
|
|
Director
|
|
January 15, 2009
|
|
|
|
|
|
*
Dimitrios
N. Panagiotopoulos
|
|
Director
|
|
January 15, 2009
|
|
|
|
|
|
*
Alexander
Papageorgiou
|
|
Director
|
|
January 15, 2009
|
II-6
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
*
Lambros
Papakonstantinou
|
|
Director
|
|
January 15, 2009
|
|
|
|
|
|
*
George
Taniskidis
|
|
Director
|
|
January 15, 2009
|
|
|
|
|
|
*
George
Tsimpis
|
|
Director
|
|
January 15, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Dale
Ploughman
Name: Dale
Ploughman
Title: Attorney-in-fact
|
|
|
|
|
II-7
SIGNATURE
OF AUTHORIZED REPRESENTATIVE IN THE UNITED STATES
Pursuant to the Securities Act of 1933, the undersigned, the
duly authorized representative in the United States of Seanergy
Maritime Holdings Corp. has signed this registration statement
or amendment thereto in Newark, Delaware on
January 15, 2009.
Authorized U.S. Representative
Puglisi & Associates
|
|
|
|
By:
|
/s/
Donald
J. Puglisi
|
Name: Donald J. Puglisi
II-8