o
|
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|
x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Securities registered or to be registered pursuant to Section 12(b) of the Act:
|
|
Title of each class
|
Name of each exchange on which registered
|
Common units representing limited partnership interests
|
Nasdaq Global Market
|
Large accelerated filer
o
|
Accelerated filer
x
|
Non-accelerated filer
o
|
U.S. GAAP
x
|
International Financial Reporting Standards as issued
o
|
Other
o
|
by the International Accounting Standards Board
|
Page
|
||
Special Note Regarding Forward-Looking Statements
|
ii
|
|
Not applicable
|
||
Not applicable
|
||
Not applicable
|
||
Not applicable
|
||
Not applicable
|
||
●
|
expectations of our ability to make cash distributions on the units;
|
●
|
our future financial condition or results of operations and our future revenues and expenses, including revenues from profit sharing arrangements and required levels of reserves;
|
●
|
future levels of operating surplus and levels of distributions as well as our future cash distribution policy;
|
●
|
tanker market conditions and fundamentals, including the balance of supply and demand in the markets in which we operate;
|
●
|
future charter hire rates and vessel values;
|
●
|
anticipated future acquisition of vessels from Capital Maritime & Trading Corp. (“Capital Maritime”) or from third parties;
|
●
|
anticipated chartering arrangements with Capital Maritime in the future;
|
●
|
our anticipated growth strategies;
|
●
|
our ability to access debt, credit and equity markets;
|
●
|
the ability of our customers to meet their obligations under the terms of our charter agreements, including the timely payment of the rates under the agreements;
|
●
|
the financial viability and sustainability of our customers;
|
●
|
the repayment of debt and settling of interest rate swaps, if any;
|
●
|
the effectiveness of our risk management policies and procedures and the ability of counterparties to our derivative contracts to fulfill their contractual obligations;
|
●
|
future refined product and crude oil prices and production;
|
●
|
planned capital expenditures and availability of capital resources to fund capital expenditures;
|
●
|
future supply of, and demand for, refined products and crude oil;
|
●
|
increases in domestic or worldwide oil consumption;
|
●
|
changes in interest rates;
|
●
|
changes in the funding costs due to our banks;
|
●
|
our ability to maintain long-term relationships with major refined product importers and exporters, major crude oil companies, and major commodity traders;
|
●
|
our ability to maximize the use of our vessels, including the re-deployment or disposition of vessels no longer under long-term time charter;
|
●
|
our ability to leverage to our advantage Capital Maritime’s relationships and reputation in the shipping industry;
|
●
|
our continued ability to enter into long-term, fixed-rate time charters with our charterers and to recharter our vessels as their existing charters expire;
|
●
|
obtaining tanker projects that we or Capital Maritime bid on;
|
●
|
changes in the supply of tanker vessels, including newbuildings or lower than anticipated scrapping of older vessels;
|
●
|
our ability to compete successfully for future chartering and newbuilding opportunities;
|
●
|
the expected changes to the regulatory requirements applicable to the oil transportation industry, including, without limitation, requirements adopted by international organizations or by individual countries or charterers and actions taken by regulatory authorities and governing such areas as safety and environmental compliance;
|
●
|
the expected cost of, and our ability to comply with, governmental regulations and maritime self-regulatory organization standards, as well as standard regulations imposed by our charterers applicable to our business;
|
●
|
our anticipated general and administrative expenses and our expenses under the management agreement and the administrative services agreement with Capital Ship Management Corp., a subsidiary of Capital Maritime (“Capital Ship Management”), and for reimbursement for fees and costs of Capital GP L.L.C., our general partner;
|
●
|
increases in costs and expenses under our management agreement following expiration and/or renewal of such agreement in connection with certain of our vessels;
|
●
|
increases in costs and expenses including but not limited to: crew wages, insurance, provisions, lube oil, bunkers, repairs, maintenance and general and administrative expenses;
|
●
|
the adequacy of our insurance arrangements;
|
●
|
the expected impact of heightened environmental and quality concerns of insurance underwriters, regulators and charterers;
|
●
|
the anticipated taxation of our partnership and distributions to our unitholders;
|
●
|
estimated future maintenance and replacement capital expenditures;
|
●
|
expected demand in the shipping sectors in which we operate in general and the demand for our medium range vessels in particular;
|
●
|
the expected lifespan of our vessels;
|
●
|
our ability to employ and retain key employees;
|
●
|
customers’ increasing emphasis on environmental and safety concerns;
|
●
|
expected financial flexibility to pursue acquisitions and other expansion opportunities;
|
●
|
anticipated funds for liquidity needs and the sufficiency of cash flows;
|
●
|
our ability to increase our distributions over time;
|
●
|
future sales of our units in the public market; and
|
●
|
our business strategy and other plans and objectives for future operations.
|
Item 3. |
Key Information.
|
Year Ended
Dec. 31, 2010 (1)
|
Year Ended
Dec. 31, 2009
(1)
|
Year Ended
Dec. 31, 2008 (1)
|
Year Ended
Dec. 31, 2007 (1)
|
Year Ended
Dec. 31, 2006 (1)
|
||||||||||||||||
Income Statement Data:
|
||||||||||||||||||||
Revenues
|
$ | 113,562 | $ | 134,519 | $ | 147,617 | $ | 98,730 | $ | 33,976 | ||||||||||
Revenues – related party
|
11,030 | – | – | – | – | |||||||||||||||
Total revenues
|
124,592 | 134,519 | 147,617 | 98,730 | 33,976 | |||||||||||||||
Expenses:
|
||||||||||||||||||||
Voyage expenses (2)
|
7,009 | 3,993 | 5,981 | 6,238 | 3,103 | |||||||||||||||
Vessel operating expenses—related–party (3)
|
30,261 | 30,830 | 26,193 | 12,958 | 1,319 | |||||||||||||||
Vessel operating expenses (3)
|
1,034 | 2,204 | 5,682 | 7,894 | 6,891 | |||||||||||||||
General and administrative expenses
|
3,506 | 2,876 | 2,817 | 1,477 | – | |||||||||||||||
Depreciation and amortization
|
31,464 | 30,685 | 26,581 | 16,759 | 4,819 | |||||||||||||||
Total operating expenses
|
73,274 | 70,588 | 67,254 | 45,326 | 16,132 | |||||||||||||||
Operating income
|
51,318 | 63,931 | 80,363 | 53,404 | 17,844 | |||||||||||||||
Interest expense and finance costs
|
(33,259 | ) | (32,675 | ) | (26,631 | ) | (14,792 | ) | (6,510 | ) | ||||||||||
Loss on interest rate swap agreement
|
– | – | – | (3,763 | ) | – | ||||||||||||||
Interest and other income
|
860 | 1,460 | 1,254 | 711 | 13 | |||||||||||||||
Foreign currency gain/(loss), net
|
– | – | – | (56 | ) | (78 | ) | |||||||||||||
Net income
|
$ | 18,919 | $ | 32,716 | $ | 54,986 | $ | 35,504 | $ | 11,269 | ||||||||||
Less:
|
||||||||||||||||||||
Net income attributable to CMTC operations:
|
983 | 3,491 | 4,219 | 13,933 | 11,269 | |||||||||||||||
Partnership’s net income
|
17,936 | 29,225 | 50,767 | 21,571 | – | |||||||||||||||
General partner
’
s interest in our net income
|
359 | 584 | 13,485 | 431 | – | |||||||||||||||
Limited partners
’
interest in our net income
|
17,577 | 28,641 | 37,282 | 21,140 | – | |||||||||||||||
Net income allocable to limited partner per (4):
|
||||||||||||||||||||
Common unit (basic and diluted)
|
0.54 | 1.15 | 1.56 | 1.11 | – | |||||||||||||||
Subordinated unit (basic and diluted)
|
– | 1.17 | 1.50 | 0.70 | – | |||||||||||||||
Total unit (basic and diluted)
|
0.54 | 1.15 | 1.54 | 0.95 | – | |||||||||||||||
Weighted–average units outstanding (basic and diluted):
|
||||||||||||||||||||
Common units
|
32,437,314 | 23,755,663 | 15,379,212 | 13,512,500 | – | |||||||||||||||
Subordinated units
|
– | 1,061,488 | 8,805,522 | 8,805,522 | – | |||||||||||||||
Total units
|
32,437,314 | 24,817,151 | 24,184,734 | 22,318,022 | – | |||||||||||||||
Balance Sheet Data
(at end of period)
:
|
||||||||||||||||||||
Vessels, net and under construction
|
$ | 707,339 | $ | 703,707 | $ | 750,815 | $ | 569,223 | $ | 262,972 | ||||||||||
Total assets
|
758,252 | 760,928 | 821,907 | 608,627 | 276,666 | |||||||||||||||
Total partners’ capital / stockholders’ equity (6) (7)
|
239,760 | 188,352 | 214,126 | 209,274 | 71,458 | |||||||||||||||
Number of shares/units
|
38,720,594 | 25,323,623 | 25,323,623 | 22,773,492 | 5,700 | |||||||||||||||
Common units
|
37,946,183 | 24,817,151 | 16,011,629 | 13,512,500 | – | |||||||||||||||
Subordinated units (5)
|
– | – | 8,805,522 | 8,805,522 | – | |||||||||||||||
General Partner units
|
774,411 | 506,472 | 506,472 | 455,470 | – | |||||||||||||||
Dividends declared per unit
|
$ | 1.09 | $ | 2.27 | $ | 1.62 | $ | 0.75 | – | |||||||||||
Cash Flow Data:
|
||||||||||||||||||||
Net cash provided by operating activities
|
50,051 | 72,562 | 76,956 | 55,475 | 11,725 | |||||||||||||||
Net cash used in investing activities
|
(79,202 | ) | (55,770 | ) | (270,003 | ) | (335,696 | ) | (197,391 | ) | ||||||||||
Net cash provided by / (used in) financing activities
|
58,070 | (56,389 | ) | 216,277 | 298,901 | 186,898 |
(1)
|
The amount of historical earnings per unit for:
|
a)
|
the year ended December 31, 2006,
|
|
b)
|
the period from January 1, 2007 to April 3, 2007 for the vessels in our fleet at the time of our initial public offering,
|
|
c)
|
the period from January 1, 2007 to September 23, 2007, March 26, 2008 and April 29, 2008 for the M/T Attikos, the M/T Amore Mio II and the M/T Aristofanis, respectively,
|
|
d)
|
the years ended December 31, 2007 and 2008 and the period from January 1, 2009 to April 6, 2009 and April 12, 2009 for the M/T Agamemnon II, and M/T Ayrton II respectively,
|
|
e)
|
the years ended December 31, 2007, 2008 and 2009 and for the period from January 1, 2010 to June 29, 2010 for the M/T Alkiviadis, and
|
|
f)
|
the period from April 13, 2009 to December 31, 2009 and from January 1, 2010 to February 28, 2010 for the M/T Atrotos, giving retroactive impact to the number of common and subordinated units (and the 2% general partner interest) that were issued, is not presented in our selected historical financial data. We do not believe that a presentation of earnings per unit for these periods would be meaningful to our investors as the vessels comprising our current fleet were either under construction or operated as part of Capital Maritime’s fleet with different terms and conditions than those in place after their acquisition by us.
|
(2)
|
Vessel voyage expenses primarily consist of commissions, port expenses, canal dues and bunkers.
|
(3)
|
Since April 4, 2007, our vessel operating expenses have consisted primarily of management fees payable to Capital Ship Management Corp., our manager, who provides commercial and technical services such as crewing, repairs and maintenance, insurance, stores, spares and lubricants, as well as administrative services pursuant to management and administrative services agreements.
|
(4)
|
On January 1, 2009, we adopted accounting guidance newly available at the time relating to the Application of the Two-Class Method and its application to Master Limited Partnerships which considers whether the incentive distributions of a master limited partnership represent a participating security when considered in the calculation of earnings per unit under the Two-Class Method. This guidance also considers whether the partnership agreement contains any contractual limitations concerning distributions to the incentive distribution rights that would impact the amount of earnings to allocate to the incentive distribution rights for each reporting period. According to the two class method, the portion of net income allocated to nonvested shares reduces the net income available to common unitholders.
|
(5)
|
Following the early termination of the subordination period on February 14, 2009, all of our 8,805,522 subordinated units converted into common units on a one-for-one basis. Please read “Item 8: Financial Information
—
Termination of the Subordination Period” for additional information.
|
(6)
|
In February and August 2010 we successfully completed two equity offerings of 6,281,578 and 6,052,254 common units, which include the partial exercise of the underwriters’ overallotment option of 481,578 and 552,254 common units, respectively. During the same periods we issued, in exchange for cash, 128,195 and 123,515 general partner units, respectively, to our General Partner in order for it to maintain its 2% interest in us.
|
(7)
|
On August 31, 2010, we issued either directly or through our general partner, 795,200 restricted units to the members of our board of directors, to all employees of our general partner, our manager, Capital Maritime and certain key affiliates and other eligible persons. Please read “Item 6E: Share Ownership
—
Omnibus Incentive Compensation Plan” and Note 13 (Omnibus Incentive Compensation Plan) to our Financial Statements included herein for additional information.
|
|
●
|
the rates we obtain from our charters;
|
●
|
our ability to recharter our vessels at competitive rates as their current charters expire;
|
|
●
|
the ability of our customers to meet their obligations under the terms of the charter agreements, including the timely payment of the rates under the agreements;
|
|
●
|
the continued sustainability of our customers;
|
|
●
|
the level of additional revenues we generate from our profit sharing arrangements, if any;
|
●
|
the level of our operating costs, such as the cost of crews and insurance, following the expiration of our management agreement pursuant to which we pay a fixed daily fee for an initial term of approximately five years from the time we take delivery of each vessel, which includes the expenses for its next scheduled special or intermediate survey, as applicable, and related drydocking;
|
|
●
|
the number of unscheduled off-hire days for our fleet and the timing of, and number of days required for, scheduled drydocking of our vessels;
|
|
●
|
the amount of extraordinary costs incurred by our manager while managing our vessels not covered under our fixed fee arrangement which we may have to reimburse our manager for;
|
|
●
|
delays in the delivery of any newbuildings we may contract to acquire and the beginning of payments under charters relating to those vessels;
|
|
●
|
demand for seaborne transportation of refined oil products and crude oil;
|
|
●
|
supply of product and crude oil tankers and specifically the number of newbuildings entering the world tanker fleet each year;
|
|
●
|
force majeure events;
|
|
●
|
prevailing global and regional economic and political conditions; and
|
●
|
the effect of governmental regulations and maritime self-regulatory organization standards on the conduct of our business.
|
●
|
the level of capital expenditures we make, including for maintaining vessels, building new vessels, acquiring existing vessels and complying with regulations;
|
●
|
our debt service requirements, including our obligation to pay increased interest costs in certain circumstances, and restrictions on distributions contained in our debt instruments;
|
●
|
our ability to comply with covenants under our credit facilities, including our ability to comply with certain ‘asset maintenance’ ratios;
|
●
|
our ability to service our debt and, when the non-amortizing period expires in as early as June 2012, to refinance our existing indebtedness or, in the event such indebtedness is not refinanced, our obligation to make principal payments under our credit facilities starting in September 2012;
|
●
|
interest rate fluctuations;
|
●
|
the cost of acquisitions, if any;
|
●
|
fluctuations in our working capital needs;
|
●
|
our ability to make working capital borrowings, including to pay distributions to unitholders; and
|
●
|
the amount of any cash reserves, including reserves for future maintenance and replacement capital expenditures, working capital and other matters, established by our board of directors in its discretion.
|
●
|
the supply for oil and oil products which is influenced by, amongst others:
|
●
|
international economic activity;
|
●
|
geographic changes in oil production, processing and consumption;
|
●
|
oil price levels;
|
●
|
inventory policies of the major oil and oil trading companies;
|
●
|
competition from alternative sources of energy; and
|
●
|
strategic inventory policies of countries such as the United States, China and India.
|
●
|
the demand for oil and oil products;
|
●
|
regional availability of refining capacity;
|
●
|
prevailing economic conditions in the market in which the vessel trades;
|
●
|
availability of credit to charterers and traders in order to finance expenses associated with the relevant trades;
|
●
|
regulatory change;
|
●
|
lower levels of demand for the seaborne transportation of refined products and crude oil;
|
●
|
increases in the supply of vessel capacity; and
|
●
|
the cost of retrofitting or modifying existing ships, as a result of technological advances in vessel design or equipment, changes in applicable environmental or other regulations or standards, or otherwise.
|
● | the cost of our labor and materials; |
● |
the cost and replacement life of suitable replacement vessels;
|
● |
customer/market requirements;
|
● |
increases in the size of our fleet;
|
● |
the age of the vessels in our fleet;
|
● |
charter rates in the market; and
|
● | governmental regulations, industry and maritime self-regulatory organization standards relating to safety, security or the environment. |
●
|
our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired, or such financing may not be available on favorable terms;
|
●
|
we will need a substantial portion of our cash flow to make interest payments and, following the end of the relevant non-amortizing periods, principal payments on our debt, reducing the funds that would otherwise be available for operations, future business opportunities and distributions to unitholders;
|
●
|
our debt level will make us more vulnerable to competitive pressures, or to a downturn in our business or in the economy in general, than our competitors with less debt; and
|
●
|
our debt level may limit our flexibility in responding to changing business and economic conditions.
|
●
|
incur or guarantee indebtedness;
|
●
|
charge, pledge or encumber the vessels;
|
●
|
change the flag, class, management or ownership of our vessels;
|
●
|
change the commercial and technical management of our vessels;
|
●
|
sell or change the beneficial ownership or control of our vessels; and
|
●
|
subordinate our obligations thereunder to any general and administrative costs relating to the vessels, including the fixed daily fee payable under the management agreement.
|
●
|
maintain minimum free consolidated liquidity (50% of which may be in the form of undrawn commitments under the relevant credit facility) of at least $500,000 per collateralized vessel;
|
●
|
maintain a ratio of EBITDA (as defined in each credit facility) to interest expense of at least 2.00 to 1.00 on a trailing four-quarter basis; and
|
●
|
maintain a ratio of net Total Indebtedness to the aggregate Fair Market Value (as defined in each credit facility) of our total fleet, current or future, of no more than 0.80 (the “leverage ratio”).
|
●
|
failure to pay principal or interest when due;
|
●
|
breach of certain undertakings, negative covenants and financial covenants contained in the credit facility, any related security document or guarantee or the interest rate swap agreements, including failure to maintain unencumbered title to any of the vessel-owning subsidiaries or any of the assets of the vessel-owning subsidiaries and failure to maintain proper insurance;
|
●
|
any breach of the credit facility, any related security document or guarantee or the interest rate swap agreements (other than breaches described in the preceding two bullet points) if, in the opinion of the lenders, such default is capable of remedy and continues unremedied for 20 days after written notice of the lenders;
|
●
|
any representation, warranty or statement made by us in the credit facility or any drawdown notice thereunder or related security document or guarantee or the interest rate swap agreements is untrue or misleading when made;
|
●
|
a cross-default of our other indebtedness of $5.0 million or greater or of the indebtedness of our subsidiaries of $750,000 or greater;
|
●
|
we become, in the reasonable opinion of the lenders, unable to pay our debts when due;
|
●
|
any of our or our subsidiaries’ assets are subject to any form of execution, attachment, arrest, sequestration or distress in respect of a sum of $1.0 million or more that is not discharged within 10 business days;
|
●
|
an event of insolvency or bankruptcy;
|
●
|
cessation or suspension of our business or of a material part thereof;
|
●
|
unlawfulness, non-effectiveness or repudiation of any material provision of our credit facility, of any of the related finance and guarantee documents or of our interest rate swap agreements;
|
●
|
failure of effectiveness of security documents or guarantee;
|
●
|
the common units cease to be listed on the Nasdaq Global Market or on any other recognized securities exchange;
|
●
|
any breach under any provisions contained in our interest rate swap agreements;
|
●
|
termination of our interest rate swap agreements or an event of default thereunder that is not remedied within five business days;
|
●
|
invalidity of a security document in any material respect or if any security document ceases to provide a perfected first priority security interest; or
|
●
|
any other event that occurs or circumstance that arises in light of which the lenders reasonably consider that there is a significant risk that we will be unable to discharge our liabilities under the credit facility, related security and guarantee documents or interest rate swap agreements.
|
●
|
the customer faces financial difficulties forcing it to declare bankruptcy or making it impossible for it to perform its obligations under the charter, including the payment of the agreed rates in a timely manner;
|
●
|
the customer fails to make charter payments because of its financial inability, disagreements with us or otherwise;
|
●
|
the customer tries to re-negotiate the terms of the charter agreement due to prevailing economic and market conditions;
|
●
|
the customer exercises certain rights to terminate the charter or purchase the vessel;
|
●
|
the customer terminates the charter because we fail to deliver the vessel within a fixed period of time, the vessel is lost or damaged beyond repair, there are serious deficiencies in the vessel or prolonged periods of off-hire, or we default under the charter; or
|
●
|
a prolonged force majeure event affecting the customer, including damage to or destruction of relevant production facilities, war or political unrest prevents us from performing services for that customer.
|
●
|
renew existing charters upon their expiration;
|
●
|
obtain new charters;
|
●
|
successfully interact with shipyards during periods of shipyard construction constraints;
|
●
|
obtain financing on commercially acceptable terms; or
|
●
|
maintain satisfactory relationships with suppliers and other third parties.
|
●
|
the economic and financial developments globally, including actual and projected global economic growth.
|
●
|
fluctuations in the actual or projected price of refined products and crude oil;
|
●
|
refining capacity and its geographical location;
|
●
|
increases in the production of oil in areas linked by pipelines to consuming areas, the extension of existing, or the development of new, pipeline systems in markets we may serve, or the conversion of existing non-oil pipelines to oil pipelines in those markets;
|
●
|
decreases in the consumption of oil due to increases in its price relative to other energy sources, other factors making consumption of oil less attractive or energy conservation measures;
|
●
|
availability of new, alternative energy sources; and
|
●
|
negative or deteriorating global or regional economic or political conditions, particularly in oil consuming regions, which could reduce energy consumption or its growth.
|
●
|
office assessments and audits of the vessel operator;
|
●
|
the operator’s environmental, health and safety record;
|
●
|
compliance with the standards of the International Maritime Organization (the “IMO”), a United Nations agency that issues international trade standards for shipping;
|
●
|
compliance with heightened industry standards that have been set by several oil companies;
|
●
|
shipping industry relationships, reputation for customer service, technical and operating expertise;
|
●
|
shipping experience and quality of ship operations, including cost-effectiveness;
|
●
|
quality, experience and technical capability of crews;
|
●
|
the ability to finance vessels at competitive rates and overall financial stability;
|
●
|
relationships with shipyards and the ability to obtain suitable berths;
|
●
|
construction management experience, including the ability to procure on-time delivery of new vessels according to customer specifications;
|
●
|
willingness to accept operational risks pursuant to the charter, such as allowing termination of the charter for force majeure events; and
|
●
|
competitiveness of the bid in terms of overall price.
|
●
|
fail to realize anticipated benefits, such as new customer relationships, cost-savings or cash flow enhancements;
|
●
|
be unable to hire, train or retain qualified shore and seafaring personnel to manage and operate our growing business and fleet;
|
●
|
decrease our liquidity by using a significant portion of our available cash or borrowing capacity to finance acquisitions;
|
●
|
significantly increase our interest expense or financial leverage if we incur additional debt to finance acquisitions;
|
●
|
fail to meet the covenants under our loans regarding the fair market value of our vessels;
|
●
|
incur or assume unanticipated liabilities, losses or costs associated with the business or vessels acquired;
|
●
|
incur other significant charges, such as impairment of goodwill or other intangible assets, asset devaluation or restructuring charges; or
|
●
|
not be able to service our debt or make cash distributions.
|
●
|
quality or engineering problems;
|
●
|
changes in governmental regulations or maritime self-regulatory organization standards;
|
●
|
work stoppages or other labor disturbances at the shipyard;
|
●
|
bankruptcy or other financial or liquidity problems of the shipbuilder;
|
●
|
a backlog of orders at the shipyard;
|
●
|
political or economic disturbances in the country or region where the vessel is being built;
|
●
|
weather interference or catastrophic event, such as a major earthquake or fire;
|
●
|
the shipbuilder failing to deliver the vessel in accordance with our vessel specifications;
|
●
|
our requests for changes to the original vessel specifications;
|
●
|
shortages of or delays in the receipt of necessary construction materials, such as steel;
|
●
|
our inability to finance the purchase of the vessel;
|
●
|
a deterioration in Capital Maritime’s relations with the relevant shipbuilder; or
|
●
|
our inability to obtain requisite permits or approvals.
|
●
|
marine disasters;
|
●
|
bad weather;
|
●
|
mechanical failures;
|
●
|
grounding, fire, explosions and collisions;
|
●
|
piracy;
|
●
|
human error; and
|
●
|
war and terrorism.
|
●
|
environmental damage, including potential liabilities or costs to recover any spilled oil or other petroleum products and to restore the eco-system where the spill occurred;
|
●
|
death or injury to persons, loss of property;
|
●
|
delays in the delivery of cargo;
|
●
|
loss of revenues from or termination of charter contracts;
|
●
|
governmental fines, penalties or restrictions on conducting business;
|
●
|
higher insurance rates; and
|
●
|
damage to our reputation and customer relationships generally.
|
●
|
neither our partnership agreement nor any other agreement requires our general partner or Capital Maritime or its affiliates to pursue a business strategy that favors us or utilizes our assets, and Capital Maritime’s officers and directors have a fiduciary duty to make decisions in the best interests of the unitholders of Capital Maritime, which may be contrary to our interests;
|
●
|
the executive officers of our general partner and three of our directors also serve as executive officers and/or directors of Capital Maritime;
|
●
|
our general partner and our board of directors are allowed to take into account the interests of parties other than us, such as Capital Maritime, in resolving conflicts of interest, which has the effect of limiting their fiduciary duties to our unitholders;
|
●
|
our general partner and our directors have limited their liabilities and reduced their fiduciary duties under the laws of the Marshall Islands, while also restricting the remedies available to our unitholders, and, as a result of purchasing our units, unitholders are treated as having agreed to the modified standard of fiduciary duties and to certain actions that may be taken by our general partner and our directors, all as set forth in the partnership agreement;
|
●
|
our general partner and our board of directors will be involved in determining the amount and timing of our asset purchases and sales, capital expenditures, borrowings, and issuances of additional partnership securities and reserves, each of which can affect the amount of cash that is available for distribution to our unitholders;
|
●
|
our general partner may have substantial influence over our board of directors’ decision to cause us to borrow funds in order to permit the payment of cash distributions, even if the purpose or effect of the borrowing is to make a distribution on any subordinated units or to make incentive distributions;
|
●
|
our general partner is entitled to reimbursement of all reasonable costs incurred by it and its affiliates for our benefit;
|
●
|
our partnership agreement does not restrict us from paying our general partner or its affiliates for any services rendered to us on terms that are fair and reasonable or entering into additional contractual arrangements with any of these entities on our behalf; and
|
●
|
our general partner may exercise its right to call and purchase our outstanding units if it and its affiliates own more than 80% of our common units.
|
●
|
amendments to the definition of available cash, operating surplus, adjusted operating surplus;
|
●
|
changes in our cash distribution policy;
|
●
|
elimination of the obligation to pay the minimum quarterly distribution;
|
●
|
elimination of the obligation to hold an annual general meeting;
|
●
|
removal of any appointed director for cause;
|
●
|
transfer of the general partner interest;
|
●
|
transfer of the incentive distribution rights;
|
●
|
the ability of the board to sell, exchange or otherwise dispose of all or substantially all of our assets;
|
●
|
resolution of conflicts of interest;
|
●
|
withdrawal of the general partner;
|
●
|
removal of the general partner;
|
●
|
dissolution of the partnership;
|
●
|
change to the quorum requirements;
|
●
|
approval of merger or consolidation; and
|
●
|
any amendment to the partnership agreement.
|
●
|
permits our general partner to make a number of decisions in its individual capacity, as opposed to in its capacity as our general partner. Where our partnership agreement permits, our general partner may consider only the interests and factors that it desires, and in such cases it has no duty or obligation to give any consideration to any interest of, or factors affecting us, our affiliates or our unitholders. Decisions made by our general partner in its individual capacity will be made by its sole owner, Capital Maritime. Specifically, pursuant to our partnership agreement, our general partner will be considered to be acting in its individual capacity if it exercises its call right, pre-emptive rights or registration rights, consents or withholds consent to any merger or consolidation of the partnership, appoints any directors or votes for the election of any director, votes or refrains from voting on amendments to our partnership agreement that require a vote of the outstanding units, voluntarily withdraws from the partnership, transfers (to the extent permitted under our partnership agreement) or refrains from transferring its units, general partner interest or incentive distribution rights or votes upon the dissolution of the partnership;
|
●
|
provides that our general partner and our directors are entitled to make other decisions in “good faith” if they reasonably believe that the decision is in our best interests;
|
●
|
generally provides that affiliated transactions and resolutions of conflicts of interest not approved by the conflicts committee of our board of directors and not involving a vote of unitholders must be on terms no less favorable to us than those generally being provided to or available from unrelated third parties or be “fair and reasonable” to us and that, in determining whether a transaction or resolution is “fair and reasonable”, our board of directors may consider the totality of the relationships between the parties involved, including other transactions that may be particularly advantageous or beneficial to us; and
|
●
|
provides that neither our general partner and its officers nor our directors will be liable for monetary damages to us, our limited partners or assignees for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our general partner or directors or its officers or directors or those other persons engaged in actual fraud or willful misconduct.
|
●
|
The unitholders will be unable to remove our general partner without its consent because if general partner and its affiliates own sufficient units to be able to prevent such removal. The vote of the holders of at least 66 2/3% of all outstanding units voting together as a single class and a majority vote of our board of directors is required to remove the general partner. As of December 31, 2010, Capital Maritime owned a
31.2
% interest in us, including
11,304,651
common units and a 2% interest in us through its ownership of our general partner while 66.8% of our common units were owned by public unitholders.
|
●
|
Common unitholders elect only four of the seven members of our board of directors. Our general partner in its sole discretion has the right to appoint the remaining three directors.
|
●
|
Election of the four directors elected by common unitholders is staggered, meaning that the members of only one of three classes of our elected directors are selected each year. In addition, the directors appointed by our general partner will serve for terms determined by our general partner.
|
●
|
Our partnership agreement contains provisions limiting the ability of unitholders to call meetings of unitholders, to nominate directors and to acquire information about our operations as well as other provisions limiting the unitholders’ ability to influence the manner or direction of management.
|
●
|
Unitholders’ voting rights are further restricted by the partnership agreement provision providing that if any person or group, other than our general partner, its affiliates, their transferees, and persons who acquired such units with the prior approval of our board of directors, owns beneficially 5% or more of any class of units then outstanding, any such units owned by that person or group in excess of 4.9% may not be voted on any matter and will not be considered to be outstanding when sending notices of a meeting of unitholders, calculating required votes, except for purposes of nominating a person for election to our board, determining the presence of a quorum or for other similar purposes, unless required by law. The voting rights of any such unitholders in excess of 4.9% will be redistributed pro rata among the other common unitholders holding less than 4.9% of the voting power of all classes of units entitled to vote.
|
●
|
We have substantial latitude in issuing equity securities without unitholder approval.
|
●
|
our unitholders’ proportionate ownership interest in us will decrease;
|
●
|
the amount of cash available for distribution on each unit may decrease;
|
●
|
the relative voting strength of each previously outstanding unit may be diminished; and
|
●
|
the market price of the units may decline.
|
Item 4 . | Information on the Partnership. |
|
●
|
Maintain medium to long-term fixed charters
. We believe that the medium to long-term, fixed-rate nature of our charters, our profit sharing arrangements, and our agreement with Capital Ship Management for the commercial and technical management of our vessels provide a stable base of revenue and predictable expenses that will result in stable cash flows in the medium to long-term. As our vessels come up for rechartering we will seek to redeploy them under contracts that reflect our expectations of the market conditions prevailing at the time. We believe that the young age of our fleet, which is one of the youngest in the industry, the high specifications of our vessels and our manager’s ability to meet the rigorous vetting requirements of some of the world’s most selective major international oil companies position us well to recharter our vessels.
|
|
●
|
Expand our fleet through accretive acquisitions.
We intend to continue to evaluate potential acquisitions of additional vessels and to take advantage of our unique relationship with Capital Maritime to make strategic acquisitions in the medium to long term in a prudent manner that is accretive to our unitholders and to long-term distribution growth. In addition, we may pursue opportunities for acquisitions of, or combinations with, other shipping businesses. We will continue to evaluate opportunities to acquire both newbuildings and second-hand vessels, if and when they are chartered for more than two years, from Capital Maritime and from third parties as we seek to grow our fleet in a way that is accretive to our distributions.
|
|
●
|
Capitalize on our relationship with Capital Maritime and expand our charters with recognized charterers
.
We believe that we can leverage our relationship with Capital Maritime and its ability to meet the rigorous vetting processes of leading oil companies in order to attract new customers. We also plan to increase the number of vessels we charter to our existing charterers as well as enter into charter agreements with new customers in order to maintain a portfolio of charters that is diverse from a customer, geography and maturity perspective.
|
|
●
|
Maintain and build on our ability to meet rigorous industry and regulatory safety standards.
We believe that in order for us to be successful in growing our business in the future, we will need to maintain our excellent vessel safety record and maintain and build on our high level of customer service and support. Capital Ship Management has an excellent vessel safety record, is capable of complying with rigorous health, safety and environmental protection standards, and is committed to providing our customers with a high level of customer service and support.
|
|
●
|
Strong relationship with Capital Maritime.
We believe our strong relationship with Capital Maritime and its affiliates provides numerous benefits which are essential to our long-term growth and success. Capital Maritime has a well-established reputation within the shipping industry and strong relationships with many of the world’s leading oil companies, commodity traders and shipping companies. We also benefit from Capital Maritime’s expertise in technical fleet management and its ability to meet the rigorous vetting requirements of some of the world’s most selective major international oil companies, including BP p.l.c., Chevron Corporation, Conoco-Phillips Inc., ExxonMobil Corporation, Royal Dutch Shell plc, Statoil ASA, Total S.A. and many others.
|
|
●
|
Leading position in the product tanker market, with a modern, capable fleet, built to high specifications.
Our fleet of 21 double-hull tankers includes one of the largest Ice Class 1A MR fleets in the world based on number of vessels and carrying capacity. The IMO II/III and Ice Class 1A classification notations of most of our vessels provide a high degree of flexibility as to what cargoes our charterers can choose to trade as they employ our fleet. We also believe that the range in size and the geographic flexibility of our fleet are attractive to our charterers, allowing them to consider a variety of trade routes and cargoes.
With an average age of approximately
4.6
years as of January 31, 2011, our fleet is one of the youngest fleets of its size in the world.
Finally, we believe our vessels’ compliance with existing and expected regulatory standards, the high technical specifications of our vessels and our fleet’s flexibility to transport a wide variety of refined products and crude oil across a wide range of trade routes is attractive to our existing and potential charterers.
|
|
●
|
Financial strength and flexibility.
Subject to compliance with the relevant covenants we currently have $246.0 million in undrawn amounts available under our 10-year non-amortizing credit facilities. We may use these amounts to finance up to 50% of the purchase price of any potential future purchases of modern tanker vessels from Capital Maritime or any third parties. We believe that the terms of our amended credit facilities enhance our financial flexibility to realize new vessel acquisitions from Capital Maritime and third parties.
|
●
|
BP Shipping Limited
, the shipping affiliate of BP p.l.c., one of the world’s largest producers of crude oil and natural gas. BP p.l.c. has exploration and production interests in over 20 countries. BP Shipping provides all logistics for the marketing of BP’s oil and gas cargoes.
|
●
|
Overseas Shipholding Group Inc.
, one of the largest independent shipping companies in the world operating crude and product tankers. As of October 31, 2009
Overseas Shipholding Group Inc.’s operating fleet consisted of 129 vessels, 26 of which were under construction, aggregating 13.1 million dwt.
|
●
|
Petroleo Brasileiro S.A.
(
Petrobras
)
, the Brazilian state-run energy company, is an integrated oil and gas company with interests in exploration, production, refining, marketing and distribution. Petrobras also operates a fleet of close to 200 vessels and is listed on the New York Stock Exchange. Petrobras is one of the world’s biggest companies in the world by market value.
|
●
|
Arrendadora Ocean Mexicana S.A. de C.V.
, is a Mexican company specializing in the supply and operation of vessels for the offshore oil and gas industry.
|
●
|
Capital Maritime & Trading Corp.
, an established shipping company with activities in the sea transportation of wet (crude oil, oil products, chemicals) and dry cargos worldwide with a long history of operating and investing in the shipping markets.
|
Name of Vessel
|
Contracted Purchase at IPO
|
Acquisition/Delivery Date
|
Purchase Price
|
|||
Atrotos (1)
|
Yes
|
May 2007
March 2010
|
$ | 56,000,000 $ 43,000,000 | ||
Akeraios
|
Yes
|
July 2007
|
$ | 56,000,000 | ||
Anemos I
|
Yes
|
September 2007
|
$ | 56,000,000 | ||
Apostolos
|
Yes
|
September 2007
|
$ | 56,000,000 | ||
Attikos
|
No
|
September 2007
|
$ | 23,000,000 | ||
Alexandros II
|
Yes
|
January 2008
|
$ | 48,000,000 | ||
Amore Mio II (2)
|
No
|
March 2008
|
$ | 85,739,320 | ||
Aristofanis (2)
|
No
|
April 2008
|
$ | 21,566,265 | ||
Aristotelis II
|
Yes
|
June 2008
|
$ | 48,000,000 | ||
Aris II
|
Yes
|
August 2008
|
$ | 48,000,000 | ||
Agamemnon II (1)
|
No
|
April 2009
|
$ | 39,774,578 | ||
Ayrton II (1)
|
No
|
April 2009
|
$ | 38,721,322 | ||
Alkiviadis (3)
|
No
|
June 2010
|
$ | 31,500,000 | ||
Assos (1)
|
Yes
|
August 2010
|
$ | 43,500,000 |
1
|
Sister vessels are denoted in the tables by the same letter as follows: (A), (B): these vessels were built by Hyundai MIPO Dockyard Co., Ltd., South Korea, (C): these vessels were built by Baima Shipyard, China, (D): these vessels were built by STX Shipbuilding Co., Ltd., South Korea, (E): this vessel was built by Daewoo Shipbuilding and Marine Engineering Co., Ltd., South Korea.
|
2
|
TC: Time Charter, BC: Bareboat Charter, Spot: Vessel is currently trading on the spot market.
|
3
|
Earliest possible redelivery date. For all charters the redelivery date is +/–30 days at the charterer’s option.
|
4
|
All rates quoted above are the net rates after we or our charterers have paid any relevant commissions on the base rate. The BP time and bareboat charters are subject to 1.25% commissions. No commissions are payable on the BP time charters. The CMTC time charters are subject to 1.25% commissions. The PTRB time charter is subject to 3% commissions. There are no commissions payable on the ARR charters. (See Footnote 6 below for full names of our charterers)
|
5
|
50/50 profit share element for all vessels applies only to voyages that breach Institute Warranty Limits (IWL). With the exception of the BP bareboat charters where no commissions are payable, the amounts received under these profit-sharing arrangements are subject to the same commissions payable on the gross charter rates.
|
6
|
BP: BP Shipping Limited. OSG: certain subsidiaries of Overseas Shipholding Group Inc. CMTC: Capital Maritime & Trading Corp. (our Sponsor). PTRB: Petroleo Brasileiro S.A. (Petrobras). ARR: Arrendadora Ocean Mexicana, S.A. de C.V.
|
7
|
For the duration of the BC these vessels have been renamed British Ensign, British Envoy and British Emissary, respectively.
|
8
|
The last three years of the BC will be at a daily charter rate of $13,433 (net).
|
9
|
For the duration of the BC these vessels have been renamed: Overseas Serifos, Overseas Sifnos and Overseas Kimolos. OSG has an option to purchase each vessel at the end of the eighth, ninth or tenth year of its charter for $38.0 million, $35.5 million and $33.0 million, respectively, which option is exercisable six months before the date of completion of the relevant year of the charter. The expiration date above may therefore change depending on whether the charterer exercises its purchase option.
|
10
|
The M/T Agamemnon II and the M/T Ayrton II were acquired in exchange for the M/T Assos (which was part of our fleet at the time of the IPO) and the M/T Atrotos (which was acquired from Capital Maritime in May 2007) on April 7 and April 13, 2009, respectively. We subsequently re-acquired the M/T Atrotos and the M/T Assos from Capital Maritime in February and August 2010, respectively. Capital Maritime had granted us an offer to acquire all four vessels under the terms of the omnibus agreement. Please see Note 1 (Basis of Presentation and General Information) to our Financial Statements included herein for more information regarding these acquisitions.
|
11
|
Charterers have the option to extend the time charter for one year upon the 2nd anniversary of the charter in March 2011.
|
12
|
For the duration of the TC these vessels have been renamed M/T El Pipila and M/T Insurgentes. ARR has subsequently delivered these vessels to Petroleos Mexicanos (Pemex).
|
13
|
Pursuant to our omnibus agreement with Capital Maritime, Capital Maritime has granted us a right of first offer for any MR tankers in its fleet under charter for two or more years. We are under no obligation to exercise such right.
|
●
|
Hull and machinery insurance
covers loss of or damage to a vessel due to marine perils such as collisions, grounding and weather and the coverage is usually to an agreed
“
insured value
”
which, as a matter of policy, is never less than the particular vessel
’
s fair market value. Cover is subject to policy deductibles which are always subject to change.
|
●
|
Increased value insurance
augments hull and machinery insurance cover by providing a low-cost means of increasing the insured value of the vessels in the event of a total loss casualty.
|
●
|
Protection and indemnity insurance
is the principal coverage for third party liabilities and indemnifies against such liabilities incurred while operating vessels, including injury to the crew, third parties, cargo or third party property loss (including oil pollution) for which the shipowner is responsible. We carry the current maximum available amount of coverage for oil pollution risks, $1.0 billion per vessel per incident.
|
●
|
War Risks insurance
covers such items as piracy and terrorism.
|
●
|
Freight, Demurrage & Defense
cover is a form of legal costs insurance which responds as appropriate to the costs of prosecuting or defending commercial (usually uninsured operating) claims.
|
|
●
|
on-board installation of automatic identification systems to enhance vessel-to-vessel and vessel-to-shore communications;
|
|
●
|
on-board installation of ship security alert systems;
|
|
●
|
the development of vessel security plans; and
|
|
●
|
compliance with flag state security certification requirements.
|
Item 4A. |
Unresolved Staff Comments.
|
●
|
Vessels that had an operating history as part of Capital Maritime’s fleet, prior to their acquisition by us have been treated as an acquisition of business. As a result, transfers of equity interests between entities under common control were accounted for as if the transfer occurred at the beginning of the period, and prior years were retroactively adjusted to furnish comparative information similar to the pooling method.
|
●
|
Vessels that had no operating history and were delivered to us from the shipyards through Capital Maritime have been treated as an acquisition of assets from an entity under common control.
|
|
●
|
the demand for seaborne transportation services;
|
|
●
|
levels of oil product demand and inventories;
|
|
●
|
charter hire levels and our ability to recharter our vessels as their current charters expire;
|
|
●
|
our ability to service our debt and, when the non-amortizing period expires in as early as June 2012, to refinance our existing indebtedness or, in the event such indebtedness is not refinanced, our obligation to make principal payments under our credit facilities starting in September 2012
;
|
|
●
|
supply of product and crude oil tankers and specifically the number of newbuildings entering the world tanker fleet each year;
|
|
●
|
the ability to increase the size of our fleet and make additional acquisitions that are accretive to our unitholders;
|
|
●
|
the ability of Capital Maritime
’
s commercial and chartering operations to successfully employ our vessels at economically attractive rates, particularly as our fleet expands and our charters expire;
|
|
●
|
our ability to benefit from new maritime regulations concerning the phase-out of single-hull vessels and the more restrictive regulations for the transport of certain products and cargoes;
|
|
●
|
our ability to comply with the covenants in our credit facilities, including covenants relating to the maintenance of asset value ratios;
|
|
●
|
the increased costs associated the renewal of our technical management agreement;
|
|
●
|
the effective and efficient technical management of our vessels;
|
|
●
|
Capital Maritime
’
s ability to obtain and maintain major international oil company approvals and to satisfy their technical, health, safety and compliance standards; and
|
|
●
|
the strength of and growth in the number of our customer relationships, especially with major international oil companies and major commodity traders.
|
|
●
|
the charterhire earned by our vessels under time charters and bareboat charters;
|
|
●
|
our ability to recharter our vessels on medium to long term charters at competitive rates;
|
|
●
|
our ability to comply with the covenants in our credit facilities, including covenants relating to the maintenance of asset value ratios, as the recent decline in asset values and charter rates may limit our ability to pursue our business strategy;
|
|
●
|
the prevailing spot market rates and the number of our vessels which we operate on the spot market;
|
|
●
|
our access to debt, and equity and the cost of such capital, required to acquire additional vessels and/or to implement our business strategy;
|
|
●
|
our ability to sell vessels at prices we deem satisfactory;
|
|
●
|
our level of debt and the related interest expense and amortization of principal; and
|
|
●
|
the level of any distribution on our common units.
|
|
●
|
Financial Statements.
Our Financial Statements include the results of operations of different numbers of vessels in each year and have been retroactively adjusted to reflect the results of operations of all non-contracted vessels we acquired prior to July 22, 2010, as if they were owned by us for the entire period from their delivery to Capital Maritime (with the exception of the M/T Assos for the period from April 7, 2009 to August 15, 2010). In certain cases, the Financial Statements have also been adjusted to reflect financial position and cash-flow items prior to delivery of the relevant vessel to Capital Maritime for acquisitions we made prior to July 22, 2010. In addition, the vessel-owning companies of the M/T Assos and the M/T Atrotos were deconsolidated from our accounts as of the date of the transfer to Capital Maritime in April 2009. Results of operations, cash flows, and balances of these vessels prior to their transfer to Capital Maritime were included in our consolidated financial statements. Please read Note 1 of our Financial Statements included herein for a description of the financial treatment of vessel acquisitions and dispositions.
|
|
●
|
Vessel Acquisitions and Disposals
. Vessels that have been acquired or delivered to us prior to July 22, 2010, are included in our results of operations, cash flows and financial position from the date of incorporation of the relevant vessel-owning company or, in the case of the seven vessels we contracted to acquire at the time of our IPO which were delivered during 2007 and 2008, as of their delivery date from the shipyard to Capital Maritime and us. Results of operations, cash flows and financial position of vessels that have been disposed of are included in our Financial Statements up to the date of their disposal. As a result of this accounting treatment, our Financial Statements may include results of operations of more vessels than actually comprised our fleet during the relevant year. Please read
“
—Accounting for Acquisition and Disposal of Vessels
”
above and Note 1 of our Financial Statements included herein for a description of the financial treatment of vessel acquisitions. The table below shows the periods for which the results of operations and cash flows for each vessel-owning subsidiary are included in our Financial Statements.
|
VESSEL INCLUSION IN FINANCIAL STATEMENTS
|
|||||||
Vessel included in Consolidated Financial Statements for the year ended
December 31,
|
|||||||
Vessel
|
Incorporation date of VOC*
|
Date acquired
by Capital Maritime
|
Date acquired
by us
|
2010
|
2009
|
2008
|
|
M/T Atlantas (1)
|
09/16/2003
|
04/26/2006
|
04/04/2007
|
X
|
X
|
X
|
|
M/T Assos (1), (2), (3)
|
03/18/2004
|
05/17/2006
|
04/04/2007
|
Since Aug 16
|
Up to April 6
|
X
|
|
M/T Aktoras (1)
|
08/27/2003
|
07/12/2006
|
04/04/2007
|
X
|
X
|
X
|
|
M/T Agisilaos (1)
|
10/10/2003
|
08/16/2006
|
04/04/2007
|
X
|
X
|
X
|
|
M/T Arionas (1)
|
11/10/2003
|
11/02/2006
|
04/04/2007
|
X
|
X
|
X
|
|
M/T Avax (1)
|
02/10/2004
|
01/12/2007
|
04/04/2007
|
X
|
X
|
X
|
|
M/T Aiolos (1)
|
09/12/2003
|
03/02/2007
|
04/04/2007
|
X
|
X
|
X
|
|
M/T Axios (1)
|
02/10/2004
|
02/28/2007
|
04/04/2007
|
X
|
X
|
X
|
|
M/T Atrotos (4), (5), (3)#
|
02/11/2004
|
05/08/2007
|
05/08/2007
|
Since Mar 1
|
Up to April 12
|
X
|
|
M/T Akeraios (4)
|
02/03/2004
|
07/13/2007
|
07/13/2007
|
X
|
X
|
X
|
|
M/T Apostolos (4)
|
05/26/2004
|
09/20/2007
|
09/20/2007
|
X
|
X
|
X
|
|
M/T Anemos I (4)
|
07/08/2004
|
09/28/2007
|
09/28/2007
|
X
|
X
|
X
|
|
M/T Attikos (6)
|
12/29/2003
|
01/20/2005
|
09/24/2007
|
X
|
X
|
X
|
|
M/T Alexandros II (4)
|
02/07/2006
|
01/29/2008
|
01/29/2008
|
X
|
X
|
X
|
|
M/T Amore Mio II (6)
|
05/29/2007
|
07/31/2007
|
03/27/2008
|
X
|
X
|
X
|
|
M/T Aristofanis (6)
|
02/03/2004
|
06/02/2005
|
04/30/2008
|
X
|
X
|
X
|
|
M/T Aristotelis II (4)
|
02/07/2006
|
06/17/2008
|
06/17/2008
|
X
|
X
|
X
|
|
M/T Aris II (4)
|
01/24/2006
|
08/20/2008
|
08/20/2008
|
X
|
X
|
X
|
|
M/T Agamemnon II (6), (2)
|
07/14/2006
|
11/24/2008
|
04/07/2009
|
X
|
X
|
X
|
|
M/T Ayrton II (6), (5)
|
07/14/2006
|
04/10/2009
|
04/13/2009
|
X
|
X
|
X
|
|
M/T Alkiviadis (6)
|
06/22/2004
|
03/29/2006
|
06/30/2010
|
X
|
X
|
X
|
*
|
VOC: Vessel-Owning Subsidiary
|
|
(1)
|
Initial Vessels. The Financial Statements have been retroactively adjusted to reflect their results of operations as of the incorporation date of their respective vessel-owning companies.
|
|
(2)
|
On April 7, 2009 the M/T Assos was exchanged for the M/T Agamemnon II.
|
|
(3)
|
On March 1, and August 16, 2010 we reacquired the vessel owning company of the M/T Atrotos and the M/T Assos, respectively.
|
|
(4)
|
Committed Vessels. These vessels are newbuildings which were delivered directly to us from Capital Maritime on their delivery dates from the shipyards and had no prior operating history. As such, there is no information to retroactively restate that should be considered and the results of operations are presented in the Financial Statements since their delivery dates.
|
|
(5)
|
On April 13, 2009 the M/T Atrotos was exchanged for the M/T Ayrton II.
|
|
(6)
|
Non-Contracted Vessels. The Financial Statements have been retroactively adjusted to reflect their results of operations as of the incorporation date of their respective vessel-owning companies (with the exception of M/T Assos for the period from April 17, 2009 to August 15, 2010).
|
●
|
Different Structure of Operating Expenses
. On April 3, 2007, we entered into a management agreement with Capital Ship Management pursuant to which Capital Ship Management agreed to provide commercial and technical management services to us for an initial term of approximately five years from when we take delivery of each vessel. Under the agreement we pay Capital Ship Management a fixed daily fee per vessel, which in the case of our time chartered vessels covers vessel operating expenses, including crewing, repairs and maintenance, insurance and the cost of the next scheduled special/intermediate surveys for each vessel, and related drydocking, as applicable. Capital Ship Management is also entitled to supplementary remuneration for extraordinary fees and costs (as defined in our management agreement) of any direct and indirect expenses it reasonably incurs in providing these services which may vary from time to time, and which includes, amongst others, certain costs associated with the vetting of our vessels, repairs related to unforeseen extraordinary events and insurance deductibles. Operating expenses for any vessel in our fleet (apart from M/T Assos and M/T Atrotos from the time they were chartered to Arrendadora) prior to its acquisition by us represent actual costs incurred by the vessel-owning subsidiaries and Capital Ship Management in the operation of the vessels that were operated as part of Capital Maritime’s fleet, including costs associated with any surveys undergone by vessels, including the relevant drydocking.
|
|
●
|
Different Financing Arrangements
. The vessels delivered to Capital Maritime were purchased under financing arrangements with terms that differ significantly from those of the credit facilities currently in place which we have used to finance the acquisition of most of the additional vessels we have purchased from Capital Maritime since our IPO. Importantly, these credit facilities are non-amortizing until June 2012 and March 2013, respectively. In addition, the historical bank debt bore interest at floating rates while we have entered into interest rate swap agreements to fix the LIBOR portion of our interest rate in connection with the debt drawn down under our credit facilities. For a description of our non-amortizing revolving credit facilities, please see
“
—Liquidity and Capital Resources—Revolving Credit Facilities
”
below.
|
|
●
|
The Size of our Fleet Continues to Change.
At the time of our IPO, our fleet consisted of eight vessels and we contracted to purchase an additional seven vessels from Capital Maritime. Between May and September 2007 we took delivery of four of the contracted vessels and also acquired the M/T Attikos from Capital Maritime which we had not contracted to purchase at the time of our IPO. All of the vessels delivered between May and September 2007 were under long-term charters at the time of their delivery.
The remaining three contracted vessels were delivered between January and August 2008. During the first half of 2008 we acquired two additional vessels from Capital Maritime which we had not contracted to purchase at the time of our IPO and during the first half of 2009 we acquired an additional two vessels from Capital Maritime’s fleet identified under our omnibus agreement with Capital Maritime in exchange for one vessel from our IPO fleet and one of the seven newbuildings purchased. In 2010 we reacquired from Capital Maritime the two vessels we had exchanged in the first half of 2009 and also acquired one vessel for which Capital Maritime had granted us an offer to purchase under the omnibus agreement. We intend to continue to evaluate potential acquisitions of vessels or other shipping businesses in a prudent manner that is accretive to our distributable cash flow per unit.
|
○
|
Partner’s Capital - An increase in Partner’s Capital by $82.6 million is due primarily to the proceeds of the two follow-on offerings in February and August of 2010 amounting to $103.6 million. In addition, during 2010, we paid $33.7 million in distributions, incurred an equity compensation expense of $0.8 million, an unrealized gain of $4.4 million on interest rate swaps, Partnership net income in the amount of $17.9 and a decrease in the amount of $10.4 million which is the effect on partner’s capital from the purchase of the M/T Atrotos and the M/T Alkiviadis from our sponsor.
|
||
○
|
Stockholder’s Equity – Elimination of Stockholder’s Equity following the acquisition of the shares of the vessel owning companies of the M/T Atrotos and M/T Alkiviadis by us.
|
○
|
for the period from January 1, 2008 to March 26, 2008 and April 29, 2008 for the M/T Amore Mio II and the M/T Aristofanis, respectively;
|
||
○
|
for the period from January 1, 2008 to April 6, 2009 and to April 12, 2009 for the M/T Agamemnon II and the M/T Ayrton II, respectively,
|
||
○
|
for the period from April 13, 2009 to February 28, 2010 for the M/T Atrotos,
|
||
○
|
for the period from January 1, 2008 to June 29, 2010 for the M/T Alkiviadis,
|
2010
|
2009
|
2008
|
||||||||||
Net Cash Provided by Operating Activities
|
$ | 50.1 | $ | 72.6 | $ | 77.0 | ||||||
Net Cash (Used in) Investing Activities
|
$ | (79.2 | ) | $ | (55.8 | ) | $ | (270.0 | ) | |||
Net Cash Provided by / (Used in) Financing Activities
|
$ | 58.1 | $ | (56.4 | ) | $ | 216.3 |
●
|
Vessel acquisitions and acquisition of above market bare-boat charter of $108.8 which is analyzed as follows:
|
○
|
$64.1 million, representing the net book value of the two vessels acquired during 2010 (the M/T Atrotos and the M/T Alkiviadis) at their respective delivery dates;
|
||
○
|
$43.5 million, representing the amount we paid to our sponsor Capital Maritime for the acquisition of M/T Assos together with the bare boat charter that was attached to the vessel;
|
||
○
|
$0.9 and $0.3 million, representing the amounts paid for upgrading the M/T Attikos and the M/T Aristofanis, respectively;
|
●
|
$0.8 million representing the increase to our restricted cash which is the minimum amount of free cash we were required to maintain under our credit facilities for the period, due to the acquisitions of the M/T Atrotos, M/T Alkiviadis and M/T Assos; and
|
●
|
$81.7 million and $112.1 million, representing purchases of short term investments and maturities of short term investments, respectively.
|
● |
$18.2 million, representing advances paid to the shipyard by Capital Maritime for the construction of the M/T Ayrton II, which we acquired in April 2009;
|
● |
$8.0 million, representing the cash consideration we paid to Capital Maritime under the terms of the agreements for the acquisition of the M/T Agamemnon II and the M/T Ayrton II in exchange for the M/T Assos and the M/T Atrotos, respectively.
|
● |
$0.3 million, representing the amount paid for upgrading the M/T Attikos from product to chemical tanker.
|
● |
$111.9 million and $82.6 million, representing purchases of short term investments, and maturities of short term investments, respectively.
|
●
|
$140.2 million, representing the net book value of the three vessels acquired during 2008 (the M/T Alexandros II, the M/T Aristotelis II and the M/T Aris II) at their respective delivery dates; and
|
●
|
$59.5 million, representing the purchase price as recorded in our Financial Statements of the two non-contracted vessels:
|
○
|
$85.7 million for the M/T Amore Mio II reduced by $37.7 which represents the value of the 2,048,823 common units issued at a price of $18.42 per common unit to Capital Maritime to partially finance the acquisition; and
|
||
○
|
$21.6 million for the M/T Aristofanis reduced by $10.1 million which represents the value of the 501,308 common units issued at a price of $20.08 per common unit to Capital Maritime to partially finance the acquisition,
|
||
○
|
(Please see Note 1 (Basis of Presentation and General Information) to our Financial Statements included herein for more information regarding these acquisitions, including a breakdown of the way they were funded); and
|
●
|
$66.8 million, representing advances paid to the shipyard by Capital Maritime for the construction of the two vessels we acquired in April 2009; the M/T Agamemnon II and the M/T Ayrton II.
|
●
|
$1.2 million, representing the cost of the improvements to the M/T Aristofanis paid by Capital Maritime.
|
Currency
|
Notional Amount
(
millions
)
|
Fixed
rate
|
Trade
date
|
Value
date
|
Maturity
date
|
|
$370.0 million credit facility
|
USD
|
30,000
|
5.1325%
|
02.20.2007
|
04.04.2007
|
06.29.2012
|
USD
|
56,000
|
5.1325%
|
02.20.2007
|
05.08.2007
|
06.29.2012
|
|
USD
|
56,000
|
5.1325%
|
02.20.2007
|
07.13.2007
|
06.29.2012
|
|
USD
|
56,000
|
5.1325%
|
02.20.2007
|
09.28.2007
|
06.29.2012
|
|
USD
|
56,000
|
5.1325%
|
02.20.2007
|
09.20.2007
|
06.29.2012
|
|
USD
|
24,000
|
5.1325%
|
02.20.2007
|
01.29.2008
|
06.29.2012
|
|
USD
|
24,000
|
5.1325%
|
02.20.2007
|
01.29.2008
|
06.29.2012
|
|
USD
|
24,000
|
5.1325%
|
02.20.2007
|
08.20.2008
|
06.29.2012
|
|
USD
|
20,500
|
4.9250%
|
09.20.2007
|
09.24.2007
|
06.29.2012
|
|
USD
|
20,000
|
4.5200%
|
06.13.2008
|
06.17.2008
|
06.28.2012
|
|
$350.0 million credit facility
|
USD
|
46,000
|
3.525%
|
03.25.2008
|
03.27.2008
|
03.27.2013
|
USD
|
11,500
|
3.895%
|
04.24.2008
|
04.30.2008
|
03.28.2013
|
|
USD
|
28,000
|
4.610%
|
06.13.2008
|
06.17.2008
|
03.28.2013
|
|
USD
|
22,000
|
4.099%
|
08.14.2008
|
08.20.2008
|
03.28.2013
|
Payment due by period
|
||||||||||||||||||||
Total
|
Less than 1 year
|
1-3
years
|
3-5
years
|
More than
5 years
|
||||||||||||||||
Long-term Debt Obligations
|
$ | 474,000 | $ | – | $ | 63,038 | $ | 94,800 | $ | 316,162 | ||||||||||
Interest Obligations (1) (2) (3)
|
157,318 | 31,192 | 48,806 | 45,934 | 31,386 | |||||||||||||||
Management fee (4)
|
62,583 | 28,430 | 29,663 | 4,490 | – | |||||||||||||||
Total
|
$ | 693,901 | $ | 59,622 | $ | 141,507 | $ | 145,224 | $ | 347,548 |
(1)
|
We have used the fixed interest rate under our swap interest rate agreements until June 2012 and March 2013 for the 2007 and 2008 credit facilities respectively plus margin.
|
(2)
|
Interest expenses for the three month period ending March 31, 2011, will increase above the fixed swap interest rate by 0.477140% under the 2007 facility and by 0.370550%, under the 2008 facility in accordance with the terms of each facility, as amended, and reflect the increase in funding costs announced by our banks for this three month period.
|
(3)
|
Calculations for interest obligations, upon the expiration of the interest rate swap agreements in June 2012 and March 2013 for the 2007 and 2008 credit facilities respectively, have been based on Bloomberg forward rates plus a margin of 2.5% which reflects our best estimates.
|
(4)
|
The fees payable to Capital Ship Management Corp., represent fees for the provision of commercial and technical services such as crewing, repairs and maintenance, insurance, stores, spares and lubricants, provided pursuant to the management agreement.
|
Item 6. |
Directors, Senior Management and Employees.
|
Name
|
Age
|
Position
|
Evangelos M. Marinakis (1)
|
43
|
Director and Chairman of the Board
|
Ioannis E. Lazaridis (1)
|
43
|
Director and Chief Executive Officer and Chief Financial Officer of our general partner
|
Nikolaos Syntychakis (1)
|
48
|
Director
|
Robert Curt (2)
|
60
|
Director (5)
|
Abel Rasterhoff (3)
|
70
|
Director (5)
|
Evangelos G. Bairactaris (4)
|
39
|
Director and Secretary
|
Keith Forman (4)
|
52
|
Director (5)
|
(2)
|
Class I director (term expires in 2011).
|
(3)
|
Class II director (term expires in 2012).
|
(4)
|
Class III director (term expires in 2013).
|
(5)
|
Member of our audit committee and our conflicts committee.
|
●
|
795,200 restricted units had been issued under our Plan (described below);
|
●
|
Our director Keith Forman has owned a small number of common units since the date of our IPO. In addition, restricted common units were also issued to all members of our board of directors in August 2010 under the terms of our Plan (described below) which they may be deemed to beneficially own, or to have beneficially owned. No member of our board of directors owns common or restricted units in a number representing more than 1.0% of our outstanding common units;
and
|
●
|
The Marinakis family, including our chairman Mr. Marinakis, through its beneficial ownership of Capital Maritime, may be deemed to beneficially own, or to have beneficially owned, all of the units held by Capital Maritime.
|
Item 7. |
Major Unitholders and Related-Party Transactions.
|
Name of Beneficial Owner |
Number of Common
Units Owned
|
Percentage of Total Common Units
|
Capital Maritime (1)(2)
|
11,304,651
|
29.8%
|
All executive officers and directors as a group (7 persons) (2)(3)
|
0
|
0%
|
Kayne Anderson Capital Advisors, L.P. (4)
|
2,745,999
|
11.06%
|
(1)
|
Excludes the 2% general partner interest held by our general partner, a wholly owned subsidiary of Capital Maritime. Includes 8,805,522 common units owned by Capital Maritime following the automatic conversion on a one-for-one basis of all our subordinated units (8,805,522) on February 14, 2009 as a result of the early termination of the subordination period under the terms of our partnership agreement. No other parties owned any of our subordinated units at any time.
|
(2)
|
The Marinakis family, including our chairman Mr. Marinakis, through its ownership of Capital Maritime, may be deemed to beneficially own, or to have beneficially owned, all of the units held by Capital Maritime.
|
(3)
|
Our director Keith Forman has owned a small number of common units since the date of our IPO. In addition, restricted common units were also issued to all members of our board of directors in August 2010 under the terms of our Plan which they may be deemed to beneficially own, or to have beneficially owned. No member of our board of directors owns common or restricted units in a number representing more than 1.0% of our outstanding common units.
|
(4)
|
This information is based on the Schedule 13G filed by Kayne Anderson Capital Advisors, L.P. and Richard A. Kayne with the SEC on December 23, 2010.
|
1.
|
M/T Amore Mio II – Charter Party Agreement with Capital Maritime.
On January 7, 2011, we rechartered the M/T Amore Mio II with Capital Maritime at a net daily charter rate of $25,000 ($25,316.45 gross). The charter commenced directly upon the vessel’s redelivery from its previous charter with BP Shipping Limited on January 9, 2011, and has an earliest scheduled expiration date of December 2011. The transaction was approved by our board of directors following approval by the conflicts committee of independent directors.
|
2.
|
Investor Relations Services Agreement.
On January 1, 2011, we entered into a one-year Investor Relations Agreement with Capital Ship Management to clarify the provisions under which
certain investor relations and corporate support services
to assist us in our communications with holders of units representing limited partnership interests in us shall be provided to us
further to the provisions of the Administrative Services Agreement entered into with Capital Ship Management and subject to its terms. Under the terms of the agreement we pay Capital Ship Management
a fixed monthly fee of $15,000 plus reimbursement of reasonable expenses.
|
1.
|
Restricted Share Issuance under the Plan.
On August 31, 2010, we, either directly or through our General Partner, issued 795,200 (or 2% of our total units outstanding as of December 31, 2010) of the 800,000 units authorized under the Plan, with the majority vesting after 3 years from the date of issue, with the exception of awards issued to our Chairman and to the three independent members of our board of directors which vest in equal annual installments over a three-year period.
|
2.
|
Equity Offering-Re-Acquisition of M/T Assos from Capital Maritime.
On August 9, 2010, we announced the issuance of 5,500,000 common units at a public offering price of $8.63 per common unit under our Form F-3 shelf registration. An additional 552,254 common units were subsequently sold on the same terms following the partial exercise of the over-allotment option granted to the underwriters for the offering. Capital GP L.L.C., our general partner, participated in both the offering and the exercise of the over-allotment option and purchased an additional 123,515 units at the public offering price, thereby maintaining its 2 percent interest in the Partnership. Aggregate proceeds, net of commissions but before expenses relating to the offering, were approximately $50.8 million. The net proceeds from the offering, were used to re-acquire the M/T Assos at an acquisition price of $43.5
million and for general partnership purposes. The M/T Assos was acquired with a bareboat charter attached, as, prior to its acquisition, the vessel had been leased to Arrendadora pursuant to a finance lease agreement, and was renamed M/T Insurgentes and registered under Mexican flat. The vessel was subsequently delivered by Arrendadora to Petroleos Mexicanos, the state-owned Mexican petroleum company (“Pemex”), under a bareboat charter agreement expected to expire in March 2014, at the earliest. The proposed transaction has been approved by our board of directors following approval by the conflicts committee of independent directors. The conflicts committee retained outside legal and financial advisors to assist in evaluating the proposed transaction and the purchase price.
|
3.
|
Purchase of M/T Alkiviadis and Charter Agreement with Capital Maritime.
On June 30, 2010, we entered into a share purchase agreement with Capital Maritime pursuant to which we acquired all of Capital Maritime’s interests in the wholly owned subsidiary that owns the M/T Alkiviadis. The aggregate purchase price for the vessel was $31.5 million under the terms of the share purchase agreement with Capital Maritime, financed with cash. The M/T Alkiviadis is chartered to Capital Maritime for a 24-month period (+/- 30 days) at a net rate of $12,838 with an earliest scheduled expiration date of June 2012. The charter includes 50/50 profit share for voyages outside the IWL. The vessel’s operating expenses are fixed for five years until June 2015 at a daily rate of $7,000 under our Management Agreement with Capital Maritime. The transaction was approved by our board of directors following approval by the conflicts committee of independent directors. Please see Note 1 (Basis of Presentation and General Information) to our Financial Statements included herein for more information regarding this acquisition, including a detailed explanation of its accounting treatment.
|
4.
|
M/T Arionas-Charter Party Agreement with Capital Maritim
e. On June 4, 2010, we rechartered the M/T Arionas with Capital Maritime at a net daily charter rate of $11,850. The charter includes 50/50 profit share for voyages outside the IWL. The charter commenced in October 2010 upon the vessel’s redelivery from its previous charter in October 2010
,
and has an earliest scheduled expiration date of September 2011.
|
5.
|
Equity Offering–Re-Acquisition of M/T Atrotos from Capital Maritime.
On February 23, 2010 we announced the issuance of 5,800,000 common units at a public offering price of $8.85 per common unit under our Form F-3 shelf registration. An additional 481,578 common units were subsequently sold on the same terms following the partial exercise of the over-allotment option granted to the underwriters for the offering. Capital GP L.L.C., our general partner, participated in both the offering and the exercise of the over-allotment option and purchased an additional 128,195 units at the public offering price, thereby maintaining its 2 percent interest us. Aggregate proceeds, net of commissions but before expenses relating to the offering, were approximately $54.0 million. The net proceeds from the offering were used to reacquire the M/T Atrotos at an acquisition price of $43.0 million and for general partnership purposes. The M/T Atrotos was acquired with a bareboat charter attached, as, prior to its acquisition, on March 1, 2010, the vessel had been leased to Arrendadora pursuant to a finance lease agreement, and was renamed M/T El Pipila and registered under Mexican flat. The vessel was subsequently delivered by Arrendadora to Pemex under a bareboat charter agreement expected to expire in March 2014, at the earliest. The proposed transaction has been approved by our board of directors following approval by the conflicts committee of independent directors. The conflicts committee retained outside legal and financial advisors to assist in evaluating the proposed transaction and the purchase price.
|
6.
|
M/T Agisilaos –Charter Party Agreement with Capital Maritime.
On January 21, 2010, we rechartered the M/T Agisilaos with Capital Maritime at a net daily charter rate of $11,850 ($12,000 gross). The charter includes 50/50 profit share for voyages outside the IWL. The charter commenced directly upon the vessel’s redelivery from its previous charter with BP Shipping Limited, in March 2010, and has an earliest scheduled expiration date of February 2011. The transaction was approved by our board of directors following approval by the conflicts committee of independent directors.
|
7.
|
M/T Axios – Charter Party Agreement with Capital Maritime.
On January 21, 2010, we rechartered the M/T Axios with a subsidiary of Capital Maritime at a net daily charter rate of $12, 591 ($12,750 gross). The charter includes 50/50 profit share for voyages outside the IWL. The charter commenced directly upon the vessel’s redelivery from its previous charter with BP Shipping Limited in February 2010 and is expected to expire in February or March 2011. The transaction was approved by our board of directors following approval by the conflicts committee of independent directors.
|
8.
|
Investor Relations Services Agreement.
On January 1, 2010, we entered into a one-year Investor Relations Agreement with Capital Ship Management to clarify the provisions under which
certain investor relations and corporate support services
to assist us in our communications with holders of units representing limited partnership interests in us shall be provided to us
further to the provisions of the Administrative Services Agreement entered into with Capital Ship Management and subject to its terms. Under the terms of the agreement we pay Capital Ship Management
a fixed monthly fee of $15,000 plus reimbursement of reasonable expenses.
|
1.
|
Share Purchase Agreement – Exchange of M/T Atrotos with M/T Ayrton II.
On April 13, 2009, the 2007 built M/T Atrotos, was exchanged for the M/T Ayrton II, a 51,260 dwt chemical/product tanker built in April 2009 at STX Shipbuilding Co. Ltd, South Korea. The M/T Ayrton II has been chartered to BP Shipping Limited under a time charter with expected expiration in March 2012 (third year subject to charterer
’
s option), at a base gross rate of $22,275 per day (net rate $22,000) plus a 50/50 profit share for breaching IWL. The M/T Ayrton II was delivered to Capital Maritime in April 2009 and is one of the vessels identified under our omnibus agreement with Capital Maritime. The vessel’s operating expenses are fixed at a daily rate of $6,500 per day for approximately the next five years under the Management Agreement. Under the terms of the share purchase agreement all assets and liabilities of the vessel-owning company of the M/T Ayrton II, except the vessel, necessary permits and time charter agreement, were retained by Capital Maritime. In exchange, Capital Maritime received all the shares of the vessel-owning company of the M/T Atrotos, and an additional consideration of $4.0 million to reflect the value and longer duration of the charter attached to the vessel, as well as its younger age, and we remained responsible for any costs associated with the delivery of the vessel to Capital Maritime. All assets and liabilities of the vessel-owning company of the M/T Atrotos, except the vessel and necessary permits were retained by us. Lastly, Morgan Stanley Capital Group Inc., the charterer of the M/T Atrotos agreed to compensate us for the early termination of the charter attached to the vessel. The transaction was approved by our board of directors following approval by the conflicts committee of independent directors. Please see “Item 5B: Liquidity and Capital Resources—Net Cash Used in Investing Activities” and Note 1 (Basis of Presentation and General Information) to our Financial Statements included herein for more information regarding this acquisition and the exchange of shares, including a detailed explanation of how it was accounted for.
|
2.
|
Related Party Loan – M/T Ayrton II.
For the financing of the construction of the M/T Ayrton II, Capital Maritime had entered into a loan agreement with a bank on behalf of the related vessel-owning subsidiary. Capital Maritime acted as the borrower and the vessel-owning subsidiary acted as the guarantor in this loan agreement. The M/T Ayrton II had been financed in the amount of $22.9 million as of December 31, 2008. This loan was fully repaid by Capital Maritime upon the delivery of the vessel to the related vessel-owning subsidiary from the shipyard in April 2009, before the vessel was transferred to us.
|
3.
|
Share Purchase Agreement – Exchange of M/T Assos with M/T Agamemnon II.
On April 7, 2009, the 2007 built M/T Assos was exchanged for the M/T Agamemnon II, a 51,238 dwt chemical/product tanker built in 2008 at STX Shipbuilding Co. Ltd, South Korea, which was part of the Capital Maritime fleet at the time, The M/T Agamemnon II has been chartered to BP Shipping Limited under a time charter expected to expire in December 2011, at the earliest, at a base gross rate of $22,275 per day (net rate $22,000) plus a 50/50 profit share for breaching IWL. The M/T Agamemnon II was delivered to Capital Maritime in November 2008 and is one of the vessels identified under our Omnibus Agreement with Capital Maritime. The vessel’s operating expenses are fixed at a daily rate of $6,500 per day for approximately the next five years under the Management Agreement. Under the terms of the share purchase agreement all assets and liabilities of the vessel-owning company of the M/T Agamemnon II, except the vessel, necessary permits and time charter agreement, were retained by Capital Maritime. In exchange, Capital Maritime received all the shares of the vessel-owning company of M/T Assos, and an additional consideration of $4.0 million to reflect the value and longer duration of the charter attached to the vessel, as well as its younger age, and we remained responsible for any costs associated with the delivery of the vessel to Capital Maritime. All assets and liabilities of the vessel-owning company of M/T Assos, except the vessel and necessary permits were retained by us. Lastly, Morgan Stanley Capital Group Inc., the charterer of the M/T Assos agreed to compensate us for the early termination of the charter attached to the vessel. The transaction was approved by our board of directors following approval by the conflicts committee of independent directors. Please see “Item 5B: Liquidity and Capital Resources—Net Cash Used in Investing Activities” and Note 1 (Basis of Presentation and General Information) to our Financial Statements included herein for more information regarding this acquisition and the exchange of shares, including a detailed explanation of how it was accounted for.
|
4.
|
Related Party Loan – M/T Agamemnon II.
Upon delivery of the M/T Agamemnon II to Capital Maritime in November 2008, Capital Maritime entered into a loan agreement with a bank for the financing of the vessel. Capital Maritime acted as the borrower and the vessel-owning subsidiary acted as the guarantor in this loan agreement. As of December 31, 2008 the balance outstanding under this loan was $29.4 million.
T
he vessel-owning subsidiary of the M/T Agamemnon II ceased to be a guarantor under the loan as of the date the vessel was transferred to us.
|
5.
|
Related Party Loan – M/T Atrotos.
Upon acquisition of the M/T Atrotos from Capital Maritime in April 2009, Capital Maritime entered into a loan agreement with a bank for the financing of the vessel. Capital Maritime acted as the borrower and the vessel-owning subsidiary acted as the guarantor in this loan agreement. As of December 31, 2009 the balance outstanding under this loan was $22.2 million.
T
he vessel-owning subsidiary of the M/T Atrotos ceased to be a guarantor under the loan as of the date the vessel was transferred to us on March 1, 2010.
|
6.
|
Agreement with Capital GP L.L.C. re Incentive Distribution Rights (“IDRs”).
On January 30, 2009, we entered into an agreement with our general partner, Capital GP L.L.C., whereby the general partner agreed to defer receipt of a portion of the $12.5 million incentive distribution payment it is entitled to under the terms of our partnership agreement as a result of the payment of an exceptional cash distribution in February 2009. The general partner received the $12.5 million of incentive payments in four equal quarterly installments, with the first installment having been paid on February 13, 2009. These payments were made from the operating surplus. As of December 31, 2009, the $12.5 million incentive distribution payment had paid in full to Capital GP L.L.C.
|
7.
|
Investor Relations Services Agreement.
On January 1, 2009, we entered into a one-year Investor Relations Agreement with Capital Ship Management to clarify the provisions under which
certain investor relations and corporate support services
to assist us in our communications with holders of units representing limited partnership interests in us shall be provided to us
further to the provisions of the Administrative Services Agreement entered into with Capital Ship Management and subject to its terms. Under the terms of the agreement we pay Capital Ship Management
a fixed monthly fee of $15,000 plus reimbursement of reasonable expenses.
|
1.
|
Related Party Loan – M/T Agamemnon II.
For the financing of the construction of the M/T Agamemnon II, Capital Maritime had entered into a loan agreement with a bank on behalf of the related vessel-owning subsidiary. Capital Maritime acted as the borrower and the vessel-owning subsidiary acted as guarantor in this loan agreement. The M/T Agamemnon II had been financed in the amount of $12.2 million during 2008. This loan was fully repaid by Capital Maritime upon the delivery of the vessel to the related vessel-owning subsidiary from the shipyard in November 2008.
|
2.
|
Services Agreements with Capital Maritime.
On July 31, 2008, we entered into two separate agreements with Capital Maritime under which Capital Maritime agreed to arrange for the provision of certain legal, accounting and administrative support services required by us a) in connection with the preparation and filing of our Registration Statement on Form F-3 in August 2008, and b) in connection with our compliance with the provisions of the U.S. Sarbanes-Oxley Act of 2002, and in particular, Section 404. We agreed to reimburse Capital Maritime for its reasonable expenses within 30 days from submission of invoices.
|
3.
|
Related Party Loan – M/T Amore Mio II.
For the financing of the acquisition of the M/T Amore Mio II, Capital Maritime had entered into a loan agreement with a bank on behalf of the related vessel-owning subsidiary. Capital Maritime acted as the borrower and the vessel-owning subsidiary acted as the guarantor in this loan agreement. The outstanding balance of $52.5 million on this loan was fully repaid by Capital Maritime in March 2008, before the vessel was transferred to us.
|
4.
|
Capital Contribution by Capital Maritime.
On April 30, 2008, Capital Maritime, which owns and controls our general partner, Capital GP L.L.C., made a capital contribution of 10,026 common units to our general partner, which our general partner in turn contributed to us in exchange for the issuance of 10,026 general partner units to our general partner in order for it to maintain its 2% general partner interest in us. Following the issuance of common units in connection with the purchase of the M/T Aristofanis, Capital Maritime owned a 46.6% interest in us, including its 2% interest through its ownership of our general partner.
|
5.
|
Purchase of M/T Aristofanis.
On April 30, 2008, we entered into a share purchase agreement with Capital Maritime pursuant to which we acquired all of Capital Maritime’s interests in the wholly owned subsidiary that owns the M/T Aristofanis. The aggregate purchase price for the vessel was $23.0 million under the terms of the share purchase agreement with Capital Maritime. We funded a portion of the purchase price of the vessel through the issuance of 501,308 common units to Capital Maritime at a price of $20.08 per unit, which was the price per unit as quoted on the Nasdaq Stock Exchange on the day prior to the acquisition, and the remainder through the incurrence of $11.5 million of debt under the 2008 facility. The M/T Aristofanis, a 12,000 dwt, 2005 built, double hull product tanker sister vessel to the M/T Attikos, is chartered to
Shell International Trading & Shipping Company Ltd
under a charter with an earliest scheduled expiration date of March 2010 at a base gross rate of $13,250 per day (net rate $12,952). The transaction was approved by our board of directors following approval by the conflicts committee of independent directors. Please see “Item 5B: Liquidity and Capital Resources—Net Cash Used in Investing Activities” and Note 1 (Basis of Presentation and General Information) to our Financial Statements included herein for more information regarding this acquisition, including a detailed explanation of how it was accounted for.
|
6.
|
Capital Contribution by Capital Maritime.
On March 31, 2008, Capital Maritime, which owns and controls our general partner, Capital GP L.L.C., made a capital contribution of 40,976 common units to our general partner, which our general partner in turn contributed to us in exchange for the issuance of 40,976 general partner units to our general partner in order for it to maintain its 2% general partner interest in us. Following the issuance of common units in connection with the purchase of the M/T Amore Mio II and the capital contribution described above, Capital Maritime owned a 45.6% interest in us, including its 2% interest through its ownership of our general partner.
|
7.
|
Purchase of M/T Amore Mio II
. On March 27,
2008
we entered into a share purchase agreement with Capital Maritime pursuant to which we acquired all of Capital Maritime’s interests in the wholly owned subsidiary that owns the M/T Amore Mio II. The aggregate purchase price for the vessel was $95.0 million under the terms of the relevant share purchase agreement with Capital Maritime. We funded a portion of the purchase price of the vessel
through the issuance of 2,048,823
common units to Capital Maritime
at a price of $18.42 per unit, which was the price per unit as quoted on the Nasdaq Stock Exchange on the day prior to the acquisition, and
the remainder through the incurrence of $46.0 million of debt under the 2008 facility and $2.0 million in cash.
The M/T Amore Mio II, a 159,982 dwt,
2001 built, double-hull tanker, is chartered to BP Shipping Limited under a charter with an earliest scheduled expiration date of January 2011 at a
base gross rate of $36,456 per day (net rate $36,000).
The charter is also subject to a profit sharing arrangement which is calculated and settled monthly and which allows each party to share additional revenues above the base rate on a 50/50 basis. The transaction was approved by our board of directors following approval by the conflicts committee of independent directors. Please see “Item 5B: Liquidity and Capital Resources—Net Cash Used in Investing Activities” and Note 1 (Basis of Presentation and General Information) to our Financial Statements included herein for more information regarding this acquisition, including a detailed explanation of how it was accounted for.
|
1.
|
Omnibus Agreement.
In connection with our IPO, we entered into an omnibus agreement with Capital Maritime, Capital GP L.L.C., our general partner, and our operating subsidiary. The following discussion describes provisions of the omnibus agreement.
|
|
Noncompetition
. Under the omnibus agreement, Capital Maritime has agreed, and has caused its controlled affiliates (other than us, our general partner and our subsidiaries) to agree, not to acquire, own or operate medium range tankers under charter for two or more years. This restriction will not prevent Capital Maritime or any of its controlled affiliates (other than us and our subsidiaries) from:
|
a.
|
acquiring, owning, chartering or operating medium range tankers under charter for less than two years;
|
b.
|
acquiring one or more medium range tankers under charter for two or more years if Capital Maritime offers to sell to us the tanker for the acquisition price plus any administrative costs associated with transfer and re-flagging, including related legal costs, to Capital Maritime that would be required to transfer the medium range tankers and related charters to us at the time it is acquired or putting a medium range tanker that Capital Maritime owns or operates under charter for two or more years if Capital Maritime offers to sell the tanker to us for fair market value at the time it is chartered for two or more years and, in each case, at each renewal or extension of that charter for two or more years;
|
|
c. |
acquiring one or more medium range tankers under charter for two or more years as part of the acquisition of a controlling interest in a business or package of assets and owning and operating or chartering those vessels provided, however, that:
|
|
i.
|
if less than a majority of the value of the total assets or business acquired is attributable to those medium range tankers and related charters, as determined in good faith by the board of directors of Capital Maritime; Capital Maritime must offer to sell such medium range tankers and related charters to us for their fair market value plus any additional tax or other similar costs to Capital Maritime that would be required to transfer the medium range tankers and related charters to us separately from the acquired business.
|
|
ii.
|
if a majority or more of the value of the total assets or business acquired is attributable to the medium range tankers and related charters, as determined in good faith by the board of directors of Capital Maritime. Capital Maritime shall notify us in writing, of the proposed acquisition. We shall, not later than the 10th calendar day following receipt of such notice, notify Capital Maritime if we wish to acquire the medium range tankers and related charters forming part of the business or package of assets in cooperation and simultaneously with Capital Maritime acquiring the Non-Medium Range Tankers (as defined below) and related charters forming part of that business or package of assets. If we do not notify Capital Maritime of our intent to pursue the acquisition within 10 calendar days, Capital Maritime may proceed with the acquisition as provided in (i) above.
|
d.
|
acquiring a non-controlling interest in any company, business or pool of assets;
|
e.
|
acquiring, owning or operating medium range tankers under charter for two or more years subject to the offers to us described in paragraphs (b) and (c) above (i) pending our determination whether to accept such offers and pending the closing of any offers we accept, or (ii) if we elect to acquire the medium range tankers and related charter;
|
f.
|
providing ship management services relating to any vessel whatsoever, including to medium range tankers owned by the controlled affiliates of Capital Maritime; or
|
g.
|
acquiring, operating or chartering medium range tankers under charter for two or more years if we have previously advised Capital Maritime that we consent to such acquisition, operation or charter.
|
a.
|
apply to any Non-Medium Range Tanker owned, operated or chartered by us or any of our subsidiaries, and the ownership, operation or chartering of any Non-Medium Range Tanker that replaces any of those Non-Medium Range Tankers in connection with the destruction or total loss of the original tanker; the tanker being damaged to an extent that makes repairing it uneconomical or renders it permanently unfit for normal use, as determined in good faith by our board of directors within 90 days after the occurrence of the damage; or the tanker
’
s condemnation, confiscation, requisition, seizure, forfeiture or a similar taking of title to or use of it that continues for at least six months;
|
b.
|
prevent us or any of our subsidiaries from acquiring Non-Medium Range Tankers and any related charters as part of the acquisition of a controlling interest in a business or package of assets and owning and operating or chartering those vessels, provided, however, that:
|
|
i.
|
if less than a majority of the value of the total assets or business acquired is attributable to Non-Medium Range Tankers and related charters, as determined in good faith by our board of directors we must offer to sell such Non-Medium Range Tankers and related charters to Capital Maritime within 30 days for their fair market value plus any additional tax or other similar costs to us that would be required to transfer the Non-Medium Range Tankers and related charters to Capital Maritime separately from the acquired business;
|
|
ii.
|
if a majority or more of the value of the total assets or business acquired is attributable to Non-Medium Range Tankers and related charters, as determined in good faith by our board of directors we shall notify Capital Maritime in writing of the proposed acquisition. Capital Maritime shall, not later than the 10th calendar day following receipt of such notice, notify us if it wishes to acquire the Non-Medium Range Tankers forming part of the business or package of assets in cooperation and simultaneously with the us acquiring the medium range tankers under charter for two or more years forming part of that business or package of assets. If Capital Maritime does not notify us of its intent to pursue the acquisition within 10 calendar days, we may proceed with the acquisition as provided in (i) above.
|
c.
|
prevent us from acquiring a non-controlling interest in any company, business or pool of assets;
|
d.
|
prevent us or any of our subsidiaries from owning, operating or chartering any Non-Medium Range Tankers subject to the offer to Capital Maritime described in paragraph (b) above, pending its determination whether to accept such offer and pending the closing of any offer it accepts; or
|
e.
|
prevent us or any of our subsidiaries from acquiring, operating or chartering Non-Medium Range Tankers if Capital Maritime has previously advised us that it consents to such acquisition, operation or charter.
|
2.
|
Management Agreement
. We have entered into a Management Agreement with Capital Ship Management, a subsidiary of Capital Maritime, pursuant to which Capital Ship Management provides us with certain commercial and technical management services. These services will be provided in a commercially reasonable manner in accordance with customary ship management practice and under our direction. Capital Ship Management may provide these services to us directly or it may subcontract for certain of these services with other entities, including other Capital Maritime subsidiaries.
|
a.
|
We pay Capital Ship Management a fixed daily fee per time and spot chartered vessel in our fleet to provide the commercial and technical management services and costs to such time chartered vessels, which includes the cost of the first special survey. We pay a fixed daily fee per bareboat chartered vessel in our fleet, mainly to cover compliance costs, which include those costs incurred by Capital Ship Management to remain in compliance with the oil majors
’
requirements, including vetting requirements.
|
|
b.
|
With respect to each vessel in our fleet at the time of our IPO, the management agreement has an initial term of approximately five years beginning from when each vessel commenced operations through and including the date of its next scheduled special or intermediate survey and includes the expenses for such special or intermediate survey, as applicable, and related drydocking.
|
|
c.
|
With respect to each vessel that has been or will be subsequently delivered or acquired the management agreement will have an initial term of approximately five years from when we take delivery of each vessel.
|
|
d.
|
In addition to the fixed daily fees payable under the management agreement, Capital Ship Management is entitled to supplementary remuneration for extraordinary fees and costs (as defined in our management agreement) of any direct and indirect expenses it reasonably incurs in providing these services.
|
3.
|
Administrative Services Agreement
. We have entered into an administrative services agreement with Capital Ship Management, pursuant to which Capital Ship Management will provide certain administrative management services to us. The agreement has an initial term of five years from the closing date of our IPO. The services Capital Ship Management provides us with under the agreement include, among others (a) bookkeeping, audit and accounting services, (b) legal and insurance services, (c) administrative and clerical services including information technology services, (d) banking and financial services, (e) advisory services and (f), client and investor relations services. We reimburse Capital Ship Management for reasonable costs and expenses incurred in connection with the provision of these services within 15 days after Capital Ship Management submits to us an invoice for such costs and expenses, together with any supporting detail that may be reasonably required. Further to the provisions of the administrative services agreement and subject to its terms we have also entered into a five-year Information Technology Services dated April 3, 2007 to clarify the terms under which certain information technology services are to be provided to us.
|
Item 8. |
Financial Information.
|
●
|
Our unitholders have no contractual or other legal right to receive distributions other than the obligation under our partnership agreement to distribute available cash on a quarterly basis, which is subject to the broad discretion of our board of directors to establish reserves and other limitations.
|
●
|
While our partnership agreement requires us to distribute all of our available cash, our partnership agreement, including provisions requiring us to make cash distributions contained therein, may be amended. Following the early termination of the subordination period in February 2008, our partnership agreement, including our cash distribution policy, may be amended with the approval of a majority of the outstanding common units, of which Capital Maritime currently owns 29.8%.
|
●
|
Even if our cash distribution policy is not modified or revoked, the amount of distributions we pay under our cash distribution policy and the decision to make any distribution is determined by our board of directors, taking into consideration the terms of our partnership agreement and the establishment of any reserves for the prudent conduct of our business.
|
●
|
Under Section 51 of the Marshall Islands Limited Partnership Act, we may not make a distribution if the distribution would cause our liabilities to exceed the fair value of our assets.
|
●
|
We may lack sufficient cash to pay distributions to our unitholders due to decreases in net revenues or increases in operating expenses, principal and interest payments on outstanding debt, tax expenses, working capital requirements and maintenance and replacement capital expenditures or anticipated cash needs.
|
●
|
Our distribution policy will be affected by restrictions on distributions under our revolving credit facilities which contain material financial tests and covenants that must be satisfied. Should we be unable to satisfy these restrictions included in our credit facilities or if we are otherwise in default under the credit agreements, our ability to make cash distributions to our unitholders, notwithstanding our stated cash distribution policy, would be materially adversely affected.
|
●
|
If we make distributions out of capital surplus, as opposed to operating surplus, such distributions will constitute a return of capital and will result in a reduction in the quarterly distribution and the target distribution levels. We do not anticipate that we will make any distributions from capital surplus.
|
●
|
If the ability of our subsidiaries to make any distribution to us is restricted by, among other things, the provisions of existing and future indebtedness, applicable partnership and limited liability company laws or any other laws and regulations, our ability to make distributions to our unitholders may be restricted.
|
Distributions for Quarter Ended
:
|
Amount of Cash Distributions
|
Cash Distributions per Unit
|
Jun. 30, 2007
1
|
$8.3 million
|
$0.3626 per unit
|
Sep. 30, 2007
|
$8.8 million
|
$0.385 per unit
|
Dec. 31, 2007
|
$9.0 million
|
$0.395 per unit
|
Mar. 31, 2008
|
$10.1 million
|
$0.400 per unit
|
Jun. 30, 2008
|
$10.4 million
|
$0.410 per unit
|
Sep. 30, 2008
|
$10.4 million
|
$0.410 per unit
|
Dec. 31, 2008
|
$39.3 million
2
|
$1.050 per unit
3
|
Mar. 31, 2009
|
$10.4 million
|
$0.410 per unit
|
Jun. 30, 2009
|
$10.4 million
|
$0.410 per unit
|
Sep. 30, 2009
|
$10.4 million
|
$0.410 per unit
|
Dec. 31, 2009
|
$10.4 million
|
$0.410 per unit
|
Mar. 31, 2010
|
$7.1 million
|
$0.225 per unit
|
Jun. 30, 2010
|
$7.1 million
|
$0.225 per unit
|
Sep. 30, 2010
|
$9.0 million
|
$0.2325 per unit
|
Dec. 31, 2010
|
$9.0 million
|
$0.2325 per unit
|
Marginal Percentage Interest in Distributions
|
|||||||||||
Total Quarterly Distribution Target Amount
|
Unitholders
|
General Partner
|
|||||||||
Minimum Quarterly Distribution
|
$ 0.3750 | 98 | % | 2 | % | ||||||
First Target Distribution
|
up to $0.4313
|
98 | % | 2 | % | ||||||
Second Target Distribution
|
above $0.4313 up to $0.4688
|
85 | % | 15 | % | ||||||
Third Target Distribution
|
above $0.4688 up to $0.5625
|
75 | % | 25 | % | ||||||
Thereafter
|
above $0.5625
|
50 | % | 50 | % |
|
1. |
On January 21, 2011 we declared a cash distribution of $0.2325 per unit, which will be paid on February 15, 2011, to unitholders of record on February 4, 2011.
|
Item 9. |
The Offer and Listing.
|
High
|
Low
|
|
Year Ended: December 31,
|
||
2010
|
10.01
|
6.88
|
2009
|
11.49
|
5.21
|
2008
|
24.93
|
5.51
|
2007*
|
32.50
|
20.80
|
Quarter Ended:
|
||
December 31, 2010
|
9.75
|
8.19
|
September 30, 2010
|
9.29
|
7.80
|
June 30, 2010
|
9.19
|
5.31
|
March 31, 2010
|
10.06
|
7.69
|
Item 10. |
Additional Information.
|
●
|
Share Purchase Agreement dated August 13, 2010, with Capital Maritime to acquire all of its interest in the wholly owned subsidiary that owns the M/T Assos, one of the vessels identified under our Omnibus Agreement with Capital Maritime, using the net proceeds of an equity offering completed on August 9, 2010. The acquisition price of the vessel was $43.5
million. Prior to its acquisition, the vessel had been leased to Arrendadora pursuant to a finance lease agreement, and was renamed M/T Insurgentes and registered under Mexican flat. The vessel was subsequently delivered by Arrendadora to Pemex under a bareboat charter agreement expected to expire in March 2014, at the earliest. Please see Note 1 (Basis of Presentation and General Information) to our Financial Statements included herein for more information regarding this acquisition, including a detailed explanation of how it was accounted for.
|
●
|
Omnibus Incentive Compensation Plan – Amendment. On July 22, 2010, our board of directors amended the Plan to increase the aggregate number of restricted units issuable under the Plan to 800,000 from 500,000.
|
●
|
Share Purchase Agreement dated June 30, 2010, with Capital Maritime to acquire all of its interest in the wholly owned subsidiary that owns the M/T Alkiviadis, one of the vessels identified under our Omnibus Agreement with Capital Maritime. The aggregate purchase price for the vessel was $31.5 million, financed with cash. Please see Note 1 (Basis of Presentation and General Information) to our Financial Statements included herein for more information regarding this acquisition, including a detailed explanation of how it was accounted for.
|
●
|
Share Purchase Agreement dated February 22, 2010, with Capital Maritime to acquire all of its interest in the wholly owned subsidiary that owns the M/T Atrotos, one of the vessels identified under our Omnibus Agreement with Capital Maritime, using the net proceeds of an equity offering completed on February 23, 2010. The acquisition price of the vessel was $43.0
million. Prior to its acquisition, the vessel had been leased to Arrendadora pursuant to a finance lease agreement, and was renamed M/T El Pipila and registered under Mexican flat. The vessel was subsequently delivered by Arrendadora to Pemex under a bareboat charter agreement expected to expire in March 2014, at the earliest. Please see Note 1 (Basis of Presentation and General Information) to our Financial Statements included herein for more information regarding this acquisition, including a detailed explanation of how it was accounted for.
|
●
|
Amendment to the $370.0 million revolving credit facility
effective for a three year period from the end of June 2009 to the end of June 2012
. Under the terms of the amendment the fleet loan-to-value covenant was increased to 80% from 72.5%. It was also agreed to amend the manner in which market valuations of vessels are conducted. The interest margin was increased to 1.35%-1.45% over LIBOR subject to the level of the asset covenants. All other terms in the facility remain unchanged.
|
●
|
Amendment to the $350.0 million revolving credit facility
effective for a three year period from the end of June 2009 to the end of June 2012
. Under the terms of the amendment the fleet loan-to-value covenant was increased to 80% from 72.5%. It was also agreed to amend the manner in which market valuations of vessels are conducted. The interest margin was increased to 135-145 bps over LIBOR subject to the level of the asset covenants. All other terms in the facility remain unchanged.
|
●
|
Share Purchase Agreement dated April 13, 2009, with Capital Maritime to acquire all of its interest in the wholly owned subsidiary that owns the M/T Ayrton II, one of the vessels identified under our Omnibus Agreement with Capital Maritime, in exchange for all of our interest in our wholly owned subsidiary that owns the M/T Atrotos, We paid an additional consideration of $4.0 million to Capital Maritime and remained responsible for any costs associated with the delivery of the vessel to Capital Maritime. Please see “Item 5B: Liquidity and Capital Resources—Net Cash Used in Investing Activities” and Note 1 (Basis of Presentation and General Information) to our Financial Statements included herein for more information regarding this acquisition, including a detailed explanation of how it was accounted for.
|
●
|
Share Purchase Agreement dated April 7, 2009, with Capital Maritime to acquire all of its interest in the wholly owned subsidiary that owns the M/T Agamemnon II, one of the vessels identified under our Omnibus Agreement with Capital Maritime, in exchange for all of the interest in our wholly owned subsidiary that owns the M/T Assos. We paid an additional consideration of $4.0 million to Capital Maritime and remained responsible for any costs associated with the delivery of the vessel to Capital Maritime. Please see “Item 5B: Liquidity and Capital Resources—Net Cash Used in Investing Activities” and Note 1 (Basis of Presentation and General Information) to our Financial Statements included herein for more information regarding this acquisition, including a detailed explanation of how it was accounted for.
|
●
|
Agreement with Capital GP L.L.C. re IDRs dated January 30, 2009, whereby our general partner agreed to defer receipt of a portion of the $12.5 million incentive distribution payment it is entitled to under the terms of our partnership agreement as a result of the payment of an exceptional cash distribution in February 2009.
|
●
|
Omnibus Incentive Compensation Plan. On April 29, 2008, our board of directors adopted the Plan according to which we may issue a limited number of awards, not to exceed 500,000 units initially, to our employees, consultants, officers, directors or affiliates, including the employees, consultants, officers or directors of our general partner, our manager, Capital Maritime and certain key affiliates and other eligible persons. Awards may be made in the form of incentive stock options, non-qualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, unrestricted stock, restricted stock units and performance shares. The Plan is administered by our general partner as authorized by our board of directors.
|
●
|
Revolving Facility Agreement, dated March 19, 2008, as amended, for a 10-year revolving credit facility of up to $350.0 million with HSH Nordbank AG which is non-amortizing until March 2013. The credit facility bears interest at US$ LIBOR plus a margin of 1.35-1.45%, depending on the level of the asset covenants,
and may be used
to finance a portion of the acquisition price of certain identified vessels currently in Capital Maritime’s fleet which we may elect to acquire in the future. We may also use this facility to finance up to 50% of the purchase price of any potential future purchases of modern tanker vessels from Capital Maritime or any third parties.
To date, we have used $107.5
million of this facility to fund part of the acquisition price of the M/T Amore Mio II, M/T Aristofanis, M/T Aristotelis II, and M/T Aris II from Capital Maritime. Please read
“
Item 5B: Liquidity and Capital Resources—Revolving Credit Facilities
”
for a full description of this credit facility.
|
●
|
We are organized in a jurisdiction outside the United States that grants an equivalent exemption from tax to corporations organized in the United States (an “Equivalent Exemption”);
|
|
● |
We satisfy the “Publicly Traded Test” (as described below); and
|
●
|
We meet certain substantiation, reporting and other requirements.
|
|
● |
Special and adverse U.S. federal income tax rules apply to a U.S. Holder that owns an equity interest in a non-U.S. entity taxed as a corporation and classified as a PFIC for U.S. federal income tax purposes. In general, we will be treated as a PFIC with respect to a U.S. Holder if, for any taxable year in which such holder held our units, either: at least 75.0% of our gross income (including the gross income of our vessel-owning subsidiaries) for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of a rental business), or
|
●
|
at least 50.0% of the average value of the assets held by us (including the assets of our vessel-owning subsidiaries) during such taxable year produce, or are held for the production of, passive income.
|
●
|
the excess distribution or gain would be allocated ratably over the Non-Electing Holder’s aggregate holding period for the units;
|
●
|
the amount allocated to the current taxable year and any year prior to the year we were first treated as a PFIC with respect to the Non-Electing Holder would be taxed as ordinary income; and
|
●
|
the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.
|
●
|
In general, payments of distributions on our units or the proceeds of a disposition of our units to a non-corporate U.S. Holder will be subject to information reporting requirements. These payments to a non-corporate U.S. Holder also may be subject to backup withholding, if the non-corporate U.S. Holder: fails to provide an accurate taxpayer identification number;
|
●
|
is notified by the IRS that he has failed to report all interest or corporate distributions required to be shown on its U.S. federal income tax returns; or
|
●
|
in certain circumstances, fails to comply with applicable certification requirements.
|
Item 11. |
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 12. |
Description of Securities Other than Equity Securities.
|
Item 13. |
Defaults, Dividend, Arrearages and Delinquencies.
|
Item 14. |
Material Modifications to the Rights of Security Holders and Use of Proceeds.
|
Item 15. |
Controls and Procedures.
|
Item 16A. |
Audit Committee Financial Expert.
|
Item 16B. |
Code of Ethics.
|
Item 16C. |
Principal Accountant Fees and Services.
|
Fees
|
2010
|
2009
|
||||||
Audit Fees (1)
|
$ | 505.0 | $ | 387.0 | ||||
Audit-Related Fees
|
– | – | ||||||
Tax Fees
(2)
|
67.0 | 33.0 | ||||||
Total
|
$ | 572.0 | $ | 420.0 |
(1)
|
Audit fees represent fees for professional services provided in connection with the audit of our Financial Statements included herein, review of our quarterly consolidated financial statements and audit services provided in connection with other regulatory filings.
|
(2)
|
Tax fees represent fees for professional services provided in connection with various U.S. income tax compliance and information reporting matters.
|
Item 16D. |
Exemptions from the Listing Standards for Audit Committees.
|
Item 16E. |
Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
|
Item 16F. |
Change in Registrant’s Certifying Accountant.
|
Item 16G. |
Corporate Governance.
|
Item 17. |
Financial Statements
|
Item 18. |
Financial Statements
|
INDEX TO FINANCIAL STATEMENTS
|
Page
|
CAPITAL PRODUCT PARTNERS L.P.
|
|
Report of Independent Registered Public Accounting Firm
|
F-1
|
Consolidated Balance Sheets as of December 31, 2010 and 2009
|
F-2
|
Consolidated Statements of Income for the years ended December 31, 2010, 2009 and 2008
|
F-3
|
Consolidated Statement of Changes in Partners’ Capital/ Stockholders’ Equity for the years ended December 31, 2010, 2009 and 2008
|
F-4
|
Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008
|
F-6
|
Notes to the Consolidated Financial Statements
|
F-7
|
(1)
|
Previously filed as an exhibit to Capital Product Partners L.P.’s Registration Statement on Form F-1 (File No. 333-141422), filed with the SEC on March 19, 2007 and hereby incorporated by reference to such Registration Statement.
|
(2)
|
Previously filed as Appendix A to the Partnership’s Rule 424(b)(4) Prospectus filed with the SEC on March 30, 2007, and hereby incorporated by reference to this Annual Report.
|
(3)
|
Previously filed as an exhibit to the registrant’s Annual Report on Form 20-F for the year ended December 31, 2007 and filed with the SEC on April 4, 2008.
|
(4)
|
Previously filed as an exhibit to the registrant’s Registration Statement on Form F-3 filed with the SEC on August 29, 2008.
|
(5)
|
Previously filed as a Current Report on Form 6-K with the SEC on April 30, 2008.
|
(6)
|
Previously filed as an exhibit to the registrant’s Annual Report on Form 20-F for the year ended December 31, 2008 and filed with the SEC on March 27, 2009.
|
(7)
|
Previously filed as an exhibit to the registrant’s Annual Report on Form 20-F for the year ended December 31, 2009 and filed with the SEC on February 4, 2010.
|
(8)
|
Previously filed as a Current Report on Form 6-K with the SEC on February 24, 2010.
|
CAPITAL PRODUCT PARTNERS L.P., | |||
By: | Capital GP L.L.C., its general partner | ||
|
By:
|
/s/ Ioannis E. Lazaridis | |
Name: Ioannis E. Lazaridis | |||
Title: Chief Executive Officer and Chief Financial Officer | |||
of Capital GP L.L.C. |
December 31, 201
0
|
December 31, 2009
|
|||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 32 , 471 | $ | 3,552 | ||||
Short term investments (Note 2)
|
- | 30,390 | ||||||
Trade accounts receivable
|
2,305 | 1,217 | ||||||
Due from related-parties (Note 3)
|
2 | 13,365 | ||||||
Prepayments and other assets
|
278 | 584 | ||||||
Inventories
|
83 | 466 | ||||||
Total current assets
|
35,139 | 49,574 | ||||||
Fixed assets
|
||||||||
Vessels, net (Note 4)
|
707,339 | 703,707 | ||||||
Total fixed assets
|
707,339 | 703,707 | ||||||
Other non-current assets
|
||||||||
Above market acquired bare-boat charter (Note 5)
|
8,062 | - | ||||||
Deferred charges, net
|
2,462 | 3,147 | ||||||
Restricted cash (Notes 2, 6)
|
5,250 | 4,500 | ||||||
Total non-current assets
|
723,113 | 711,354 | ||||||
Total assets
|
$ | 758,252 | $ | 760,928 | ||||
Liabilities and Partners’ Capital/ Stockholders
’
Equity
|
||||||||
Current liabilities
|
||||||||
Current portion of long-term debt (Note 6)
|
$ | - | $ | - | ||||
Current portion of related
-
party long-term debt (Note 3)
|
- | 4,412 | ||||||
Trade accounts payable
|
526 | 778 | ||||||
Due to related parties (Note 3)
|
4,544 | 4,939 | ||||||
Accrued liabilities (Note 8)
|
898 | 2,470 | ||||||
Deferred revenue – current
|
3,207 | 3,456 | ||||||
Total current liabilities
|
9,175 | 16,055 | ||||||
Long-term liabilities
|
||||||||
Long-term debt (Note 6)
|
474,000 | 474,000 | ||||||
Long-term related-party debt (Note 3)
|
- | 43,528 | ||||||
Deferred revenue – long-term
|
2,812 | 2,062 | ||||||
Derivative instruments (Note 7)
|
32,505 | 36,931 | ||||||
Total long-term liabilities
|
509,317 | 556,521 | ||||||
Total liabilities
|
518,492 | 572,576 | ||||||
Commitments and contingencies (Note 15)
|
||||||||
Stockholders’ equity
|
||||||||
Common stock (par value $0 and 1,000 shares issued and outstanding at December 31, 2009)
|
||||||||
Additional paid in capital
|
- | 15,859 | ||||||
Retained earnings
|
- | 15,365 | ||||||
Partners’ capital
|
||||||||
General Partner
|
5,584 | 3,803 | ||||||
Limited Partners - Common (37,946,183 and 24,817,151 units issued and outstanding at December 31, 2010 and 2009, respectively)
|
262,918 | 186,493 | ||||||
Accumulated other comprehensive loss (Notes 2, 7)
|
(28,742 | ) | (33,168 | ) | ||||
Total partners’ capital/ stockholders’ equity
|
239,760 | 188,352 | ||||||
Total liabilities and partners’ capital/ stockholders’ equity
|
$ | 758,252 | $ | 760,928 |
For the years ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Revenues
|
$ | 113,562 | $ | 134,519 | $ | 147,617 | ||||||
Revenues – related party (Note 3)
|
11,030 | - | - | |||||||||
Total revenues
|
124,592 | 134,519 | 147,617 | |||||||||
Expenses:
|
||||||||||||
Voyage expenses (Note 9)
|
7 ,00 9 | 3,993 | 5,981 | |||||||||
Vessel operating expenses - related party (Notes 3, 9)
|
30,261 | 30,830 | 26,193 | |||||||||
Vessel operating expenses (Note 9)
|
1,034 | 2,204 | 5,682 | |||||||||
General and administrative expenses
|
3,506 | 2,876 | 2,817 | |||||||||
Depreciation (Note 4)
|
31,464 | 30,685 | 26,581 | |||||||||
Operating income
|
51,318 | 63,931 | 80,363 | |||||||||
Other income (expense):
|
||||||||||||
Interest expense and finance cost
|
(33 , 259 | ) | (32,675 | ) | (26,631 | ) | ||||||
Interest and other income
|
860 | 1,460 | 1,254 | |||||||||
Total other expense, net
|
(32 , 399 | ) | (31,215 | ) | (25,377 | ) | ||||||
Net income
|
18,919 | 32,716 | 54,986 | |||||||||
Less:
|
||||||||||||
Net income attributable to CMTC operations
|
983 | 3,491 | 4,219 | |||||||||
Partnership’s net income
|
$ | 17,936 | $ | 29,225 | $ | 50,767 | ||||||
General Partner’s interest in Partnership’s net income
|
$ | 359 | $ | 584 | 13,485 | |||||||
Limited Partners’ interest in Partnership’s net income
|
$ | 17,577 | $ | 28,641 | 37,282 | |||||||
Net income per:
|
||||||||||||
● Common units (basic and diluted)
|
$ | 0.54 | $ | 1.15 | 1.56 | |||||||
● S ubordinated units (basic and diluted) | - | $ | 1.17 | 1.50 | ||||||||
●
Total units (basic and diluted)
|
$ | 0.54 | $ | 1.15 | 1.54 | |||||||
Weighted-average units outstanding:
|
||||||||||||
●
Common units (basic and diluted)
|
32,437,314 | 23,755,663 | 15,379,212 | |||||||||
●
Subordinated units (basic and diluted)
|
- | 1,061,488 | 8,805,522 | |||||||||
●
Total units (basic and diluted)
|
32,437,314 | 24,817,151 | 24,184,734 |
Capital Product Partners L.P.
Consolidated Statements of Changes in Partners’ Capital/ Stockholders’ Equity
(In thousands of United States Dollars)
|
||||||||||||||||||||||||||||||||
Partners’ Capital
|
||||||||||||||||||||||||||||||||
Comprehensive
Income
|
Common Stockholders’
Equity
|
General Partner
|
Common
|
Subordinated
|
Total
|
Accumulated Other Comprehensive
Loss
|
Total
|
|||||||||||||||||||||||||
Balance at January 1, 2008
|
$ | 47,335 | $ | 3,444 | $ | 104,339 | $ | 64,444 | $ | 172,227 | $ | (10,288 | ) | $ | 209,274 | |||||||||||||||||
Dividends declared and paid to unitholders
(Note 12) |
(798 | ) | (24,871 | ) | (14,221 | ) | (39,890 | ) | (39,890 | ) | ||||||||||||||||||||||
Capital contribution by CMTC (Note 12)
|
12,135 | 12,135 | ||||||||||||||||||||||||||||||
Net income attributable to CMTC
|
$ | 4,219 | 4,219 | 4,219 | ||||||||||||||||||||||||||||
Equity of contributed companies retained by CMTC (Note 12)
|
(21,738 | ) | (21,738 | ) | ||||||||||||||||||||||||||||
Issuance of common units for vessels’ acquisitions (Notes 1, 4)
|
956 | 28,686 | 18,163 | 47,805 | 47,805 | |||||||||||||||||||||||||||
Excess of purchase price over acquired assets
(Note 4) |
(302 | ) | (9,397 | ) | (5,384 | ) | (15,083 | ) | (15,083 | ) | ||||||||||||||||||||||
Partnership net income
|
50,767 | 13,485 | 24,054 | 13,228 | 50,767 | 50,767 | ||||||||||||||||||||||||||
Other comprehensive income/(loss):
|
||||||||||||||||||||||||||||||||
●
Unrealized loss on derivative instruments (Notes 2, 7)
|
(33,363 | ) | (33,363 | ) | (33,363 | ) | ||||||||||||||||||||||||||
Comprehensive income
|
$ | 21,623 | ||||||||||||||||||||||||||||||
Balance at December 31, 2008
|
41,951 | 16,785 | 122,811 | 76,230 | 215,826 | (43,651 | ) | 214,126 | ||||||||||||||||||||||||
Dividends declared and paid to unitholders
(Note 12) |
(13,880 | ) | (47,337 | ) | (9,246 | ) | (70,463 | ) | (70,463 | ) | ||||||||||||||||||||||
Capital contribution by CMTC (Note 12)
|
48,913 | 48,913 |
Capital Product Partners L.P.
Consolidated Statements of Changes in Partners’ Capital/ Stockholders’ Equity
(In thousands of United States Dollars)
|
||||||||||||||||||||||||||||||||
Partners’ Capital
|
||||||||||||||||||||||||||||||||
Comprehensive
Income
|
Common Stockholders’
Equity
|
General Partner
|
Common
|
Subordinated
|
Total
|
Accumulated Other Comprehensive
Loss
|
Total
|
|||||||||||||||||||||||||
Net income attributable to CMTC
|
3,491 | 3,491 | 3,491 | |||||||||||||||||||||||||||||
Equity of contributed companies retained by CMTC (Note 12)
|
(63,131 | ) | (63,131 | ) | ||||||||||||||||||||||||||||
Partnership net income
|
29,225 | 584 | 27,399 | 1,242 | 29,225 | 29,225 | ||||||||||||||||||||||||||
Conversion of subordinated units (Note 12)
|
68,226 | (68,226 | ) | |||||||||||||||||||||||||||||
Difference of net book values of exchanged vessels net of cash consideration paid (Note 4)
|
314 | 15,394 | 15,708 | 15,708 | ||||||||||||||||||||||||||||
●
Unrealized gain on derivative instruments (Notes 2, 7)
|
10,483 | 10,483 | 10,483 | |||||||||||||||||||||||||||||
Comprehensive income
|
$ | 43,199 | ||||||||||||||||||||||||||||||
Balance at December 31, 2009
|
31,224 | 3,803 | 186,493 | 190,296 | (33,168 | ) | 188,352 | |||||||||||||||||||||||||
Dividends declared and paid to unitholders
(Note 12) |
(674 | ) | (32,991 | ) | (33,665 | ) | (33,665 | ) | ||||||||||||||||||||||||
Issuance of Partnership units
|
2,305 | 101,297 | 103,602 | 103,602 | ||||||||||||||||||||||||||||
Equity compensation expense (Note 13)
|
782 | 782 | 782 | |||||||||||||||||||||||||||||
Net income attributable to CMTC
|
983 | 983 | 983 | |||||||||||||||||||||||||||||
Equity of contributed companies retained by CMTC (Note 12)
|
(32,207 | ) | (32,207 | ) |
Capital Product Partners L.P.
Consolidated Statements of Changes in Partners’ Capital/ Stockholders’ Equity
(In thousands of United States Dollars)
|
||||||||||||||||||||||||||||||||
Partners’ Capital
|
||||||||||||||||||||||||||||||||
Comprehensive
Income
|
Common Stockholders’
Equity
|
General Partner
|
Common
|
Subordinated
|
Total
|
Accumulated Other Comprehensive
Loss
|
Total
|
|||||||||||||||||||||||||
Partnership net income
|
17,936 | 359 | 17,577 | 17,936 | 17,936 | |||||||||||||||||||||||||||
Excess of purchase price over acquired assets
(Note 4) |
(209 | ) | (10,240 | ) | (10,449 | ) | (10,449 | ) | ||||||||||||||||||||||||
Other comprehensive income/(loss):
|
||||||||||||||||||||||||||||||||
●
Unrealized gain on derivative instruments (Notes 2, 7)
|
4,426 | 4,426 | 4,426 | |||||||||||||||||||||||||||||
Comprehensive income
|
$ | 23,345 | ||||||||||||||||||||||||||||||
Balance at December 31, 2010
|
$ | - | $ | 5,584 | $ | 262,918 | $ | - | $ | 268,502 | $ | (28,742 | ) | $ | 239,760 |
For the years ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income
|
$ | 18,919 | $ | 32,716 | $ | 54,986 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities
:
|
||||||||||||
Vessel depreciation and amortization
|
31,464 | 30,685 | 26,581 | |||||||||
Amortization of deferred charges
|
552 | 456 | 408 | |||||||||
Amortization of above market acquired bare-boat charter
|
938 | - | - | |||||||||
Equity compensation expense
|
782 | - | - | |||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Trade accounts receivable
|
(2,717 | ) | 5,381 | (3,543 | ) | |||||||
Due from related parties
|
6 | (1,795 | ) | (6,318 | ) | |||||||
Prepayments and other assets
|
230 | (2 | ) | (563 | ) | |||||||
Inventories
|
237 | (264 | ) | 106 | ||||||||
Trade accounts payable
|
118 | 507 | 1,173 | |||||||||
Due to related parties
|
(570 | ) | 4,460 | 2,584 | ||||||||
Accrued liabilities
|
(409 | ) | 271 | 601 | ||||||||
Deferred revenue
|
501 | 147 | 1,192 | |||||||||
Dry docking expenses paid
|
- | - | (251 | ) | ||||||||
Net cash provided by operating activities
|
50,051 | 72,562 | 76,956 | |||||||||
Cash flows from investing activities:
|
||||||||||||
Vessel acquisitions and new building advances (Note 4)
|
(99,842 | ) | (26,460 | ) | (267,673 | ) | ||||||
Acquisition of above market bare-boat charter
|
(9,000 | ) | - | - | ||||||||
Additions to restricted cash
|
(750 | ) | - | (1,250 | ) | |||||||
Purchase of short term investments
|
(81,729 | ) | (111,850 | ) | (1,080 | ) | ||||||
Maturity of short term investments
|
112,119 | 82,540 | - | |||||||||
Net cash used in investing activities
|
(79,202 | ) | (55,770 | ) | (270,003 | ) | ||||||
Cash flows from financing activities:
|
||||||||||||
Proceeds from issuance of Partnership units
|
105,273 | - | - | |||||||||
Expenses paid for issuance of Partnership units
|
(1,533 | ) | - | (249 | ) | |||||||
Proceeds from issuance of long-term debt
|
- | - | 199,500 | |||||||||
Proceeds from related-party debt
|
- | 26,400 | 112,843 | |||||||||
Payments of long-term debt
|
- | - | (8,080 | ) | ||||||||
Payments of related-party debt/financing
|
(1,556 | ) | (52,171 | ) | (54,275 | ) | ||||||
Loan issuance costs
|
- | (725 | ) | (1,950 | ) | |||||||
Excess of purchase price over book value of vessels acquired from entity under common control (Note 4)
|
(10,449 | ) | - | (3,755 | ) | |||||||
Dividends paid
|
(33,665 | ) | (70,463 | ) | (39,890 | ) | ||||||
Cash balance distributed to previous owner
|
- | - | (2 | ) | ||||||||
Capital contributions by CMTC
|
- | 40,570 | 12,135 | |||||||||
Net cash (used in) / provided by financing activities
|
58,070 | (56,389 | ) | 216,277 | ||||||||
Net (decrease) / increase in cash and cash equivalents
|
28,919 | (39,597 | ) | 23,230 | ||||||||
Cash and cash equivalents at beginning of period
|
3,552 | 43,149 | 19,919 | |||||||||
Cash and cash equivalents at end of period
|
32,471 | 3,552 | 43,149 | |||||||||
Supplemental Cash Flow Information
|
||||||||||||
Cash paid for interest
|
$ | 31,860 | $ | 31,548 | $ | 25,248 | ||||||
Non-Cash Investing and Financing Activities
|
||||||||||||
Net book value of vessels transferred-in, M/T Agamemnon II and M/T Ayrton II less cash paid.
|
- | $ | 68,054 | - | ||||||||
Net book value of vessels transferred-out, M/T Assos and M/T Atrotos
|
- | $ | (70,496 | ) | - | |||||||
Net liabilities assumed by CMTC upon contribution of vessels to the Partnership (Note 11)
|
$ | 31,844 | $ | 31,073 | $ | 74,239 | ||||||
Units issued to acquire vessel-owning company of M/T Amore Mio II (Note 4)
|
- | - | $ | 37,739 | ||||||||
Units issued to acquire vessel-owning company of M/T Aristofanis (Note 4)
|
- | - | $ | 10,066 | ||||||||
Capitalized vessel costs included in liabilities
|
$ | 175 | $ | 870 | - | |||||||
Reduction in deferred offering expenses
|
$ | 107 | - | - | ||||||||
Change in payable offering expenses
|
$ | 31 | - | $ | 49 |
1.
|
Basis of Presentation and General Information
|
●
|
A contribution agreement with Capital Maritime & Trading Corp. (“CMTC”), pursuant to which the Partnership purchased all of the outstanding capital stock of eight wholly owned vessel-owning subsidiaries (“the Initial Vessels”), in exchange for:
|
a.
|
the issuance to CMTC of 11,750,000 common units and 8,805,522 subordinated units,
|
b.
|
the payment to CMTC of a cash dividend in the amount of $25,000,
|
c.
|
the issuance to CMTC of the right to receive an additional dividend of $30,000 in cash or a number of common units necessary to satisfy the underwriters
’
overallotment option or a combination thereof, and
|
d.
|
the issuance to the Partnership’s general partner, Capital GP L.L.C. (“CGP”), a wholly owned subsidiary of CMTC, 419,500 general partner units representing a 2% general partner interest in the Partnership and all of incentive distribution rights which will entitle CGP to increasing percentages of the cash that the Partnership will distribute in excess of $0.4313 per unit per quarter.
|
●
|
An omnibus agreement with CMTC, its sponsor, Capital GP L.L.C. (“CGP”), its general partner, and others governing, among other things, the circumstances under which the Partnership and CMTC can compete with each other and certain rights of first offer on medium range product tankers;
|
●
|
A management agreement with Capital Shipmanagement Corp. (the “Manager” or “CSM”), a wholly owned subsidiary of CMTC, pursuant to which the Manager agreed to provide commercial and technical management services to the Partnership;
|
●
|
An administrative services agreement with the Manager pursuant to which the Manager agreed to provide administrative management services to the Partnership; and
|
●
|
A share purchase agreement with CMTC to purchase for a total consideration of $368,000 its interests in seven wholly owned subsidiaries each of which owns a newly built, double-hull medium-range product tanker (the “Committed Vessels”). These vessels were acquired by the Partnership between May 2007 and August 2008.
|
●
|
Revolving credit facility of up to $370,000 and swapped the interest portion for $366,500 in order to reduce the exposure of interest rates fluctuations (Note 7).
|
1.
|
Basis of Presentation and General Information – Continued
|
1.
|
Basis of Presentation and General Information – Continued
|
1.
|
Basis of Presentation and General Information – Continued
|
1.
|
Basis of Presentation and General Information – Continued
|
Subsidiary
|
Date of
Incorporation
|
Name of Vessel
Owned by
Subsidiary
|
DWT
|
Date acquired
by the Partnership
|
Date acquired
by CMTC
|
Capital Product Operating GP LLC
|
01/16/2007
|
||||
Shipping Rider Co.
|
09/16/2003
|
M/T Atlantas (1)
|
36,760
|
04/04/2007
|
04/26/2006
|
Canvey Shipmanagement Co.
|
03/18/2004
|
M/T Assos (M/T Insurgentes) (1,4)
|
47,872
|
04/04/2007
08/16/2010
|
05/17/2006
|
Centurion Navigation Limited
|
08/27/2003
|
M/T Aktoras (1)
|
36,759
|
04/04/2007
|
07/12/2006
|
Polarwind Maritime S.A.
|
10/10/2003
|
M/T Agisilaos (1)
|
36,760
|
04/04/2007
|
08/16/2006
|
Carnation Shipping Company
|
11/10/2003
|
M/T Arionas (1)
|
36,725
|
04/04/2007
|
11/02/2006
|
Apollonas Shipping Company
|
02/10/2004
|
M/T Avax (1)
|
47,834
|
04/04/2007
|
01/12/2007
|
Tempest Maritime Inc.
|
09/12/2003
|
M/T Aiolos (1)
|
36,725
|
04/04/2007
|
03/02/2007
|
Iraklitos Shipping Company
|
02/10/2004
|
M/T Axios (1)
|
47,872
|
04/04/2007
|
02/28/2007
|
Epicurus Shipping Company
|
02/11/2004
|
M/T Atrotos (M/T El Pipila) (2,5)
|
47,786
|
05/08/2007
03/01/2010
|
05/08/2007
|
Laredo Maritime Inc.
|
02/03/2004
|
M/T Akeraios (2)
|
47,781
|
07/13/2007
|
07/13/2007
|
Lorenzo Shipmanagement Inc.
|
05/26/2004
|
M/T Apostolos (2)
|
47,782
|
09/20/2007
|
09/20/2007
|
Splendor Shipholding S.A.
|
07/08/2004
|
M/T Anemos I (2)
|
47,782
|
09/28/2007
|
09/28/2007
|
Ross Shipmanagement Co.
|
12/29/2003
|
M/T Attikos (3)
|
12,000
|
09/24/2007
|
01/20/2005
|
Sorrel Shipmanagement Inc.
|
02/07/2006
|
M/T Alexandros II (M/T Overseas Serifos) (2)
|
51,258
|
01/29/2008
|
01/29/2008
|
Baymont Enterprises Incorporated
|
05/29/2007
|
M/T Amore Mio II (3)
|
159,982
|
03/27/2008
|
07/31/2007
|
Forbes Maritime Co.
|
02/03/2004
|
M/T Aristofanis (3)
|
12,000
|
04/30/2008
|
06/02/2005
|
Wind Dancer Shipping Inc.
|
02/07/2006
|
M/T Aristotelis II (M/T Overseas Sifnos) (2)
|
51,226
|
06/17/2008
|
06/17/2008
|
Belerion Maritime Co.
|
01/24/2006
|
M/T Aris II (M/T Overseas Kimolos) (2)
|
51,218
|
08/20/2008
|
08/20/2008
|
Mango Finance Corp.
|
07/14/2006
|
M/T Agamemnon II (3), (4)
|
51,238
|
04/07/2009
|
11/24/2008
|
Navarro International S.A.
|
07/14/2006
|
M/T Ayrton II (3), (5)
|
51,238
|
04/13/2009
|
04/10/2009
|
Adrian Shipholding Inc.
|
06/22/2004
|
M/T Alkiviadis (3)
|
36,721
|
06/30/2010
|
03/29/2006
|
2.
|
Significant Accounting Policies
|
(a)
|
Principles of Consolidation and Combination:
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), after giving retroactive effect to the combination of entities under common control in 2008, 2009 and 2010, as described in Note 1 to the consolidated financial statements, and include the accounts of the legal entities comprising the Partnership as discussed in Note 1. Intra-group balances and transactions have been eliminated upon consolidation. Balances and transactions with CMTC and its affiliates have not been eliminated, but are presented as balances and transactions with related parties.
|
(b)
|
Use of Estimates:
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses recognized during the reporting period. Actual results could differ from those estimates. Additionally, these consolidated financial statements include allocations for certain expenses, including corporate overhead expenses that are normally incurred by a listed company.
|
(c)
|
Other Comprehensive Income (Loss):
The Partnership separately records certain transactions directly as components of partners’ capital / stockholders’ equity. For the years ended December 31, 2010, 2009 and 2008 other comprehensive income/(loss) amounted to $4,426, $10,483 and ($33,363), respectively, and is solely comprised of changes in interest rate swaps that qualify as cash flow hedges (Note 7). As of December 31, 2010, 2009 and 2008 the Partnership had Accumulated Other Comprehensive Loss of $28,742, $33,168 and $43,651, respectively.
|
(d)
|
Accounting for Revenue, Voyage and Operating Expenses
: The Partnership generates its revenues from charterers for the charter hire of its vessels. Vessels are chartered on time charters, bareboat charters or voyage charters. A time charter is a contract for the use of a vessel for a specific period of time and a specified daily charter hire rate, which is generally payable monthly in advance. Some of the Partnership’s time charters also include profit sharing provisions, under which the Partnership can realize additional revenues in the event that spot rates are higher than the base rates in these time charters. A bareboat charter is a contract in which the vessel owner provides the vessel to the charterer for a fixed period of time at a specified daily rate, which is generally payable monthly in advance, and the charterer generally assumes all risk and costs of operation during the bareboat charter period. Revenues under voyage charter agreements are recognized when a voyage agreement exists, the price is fixed, service is provided and the collection of the related revenue is reasonably assured, revenues are recorded over the term of the charter as service is provided and recognized on a pro-rata basis over the duration of the voyage. A voyage is deemed to commence upon the later of the completion of discharge of the vessel’s previous cargo or upon vessel arrival to the agreed upon port based on the terms of a voyage contract that is not cancelable and voyage is deemed to end upon the completion of discharge of the delivered cargo.
|
2.
|
Significant Accounting Policies – Continued
|
(d)
|
Accounting for Revenue, Voyage and Operating Expenses – Continued:
|
(e)
|
Foreign Currency Transactions:
The functional currency of the Partnership is the U.S. Dollar because the Partnership’s vessels operate in international shipping markets that utilize the U.S. Dollar as the functional currency. The accounting records of the Partnership are maintained in U.S. Dollars. Transactions involving other currencies during the year are converted into U.S. Dollars using the exchange rates in effect at the time of the transactions. At the balance sheet dates, monetary assets and liabilities, which are denominated in currencies other than the U.S. Dollar, are translated into the functional currency using the exchange rate at that date. Gains or losses resulting from foreign currency transactions and translations are included in interest and other income in the accompanying consolidated statements of income.
|
(f)
|
Cash and Cash Equivalents:
The Partnership considers highly-liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents.
|
(g)
|
Short-term investments:
Short-term investments consist of cash time deposits with original maturity of three to twelve months and amounted to $0 and $30,390 as of December 31, 2010 and 2009, respectively.
|
(h)
|
Restricted cash:
For the Partnership to comply with debt covenants under its credit facility, it must maintain minimum cash deposits. Such deposits are considered by the Partnership to be restricted cash. As of December 31, 2010 and 2009, restricted cash amounted to $5,250 and $4,500, respectively, and is presented under other non-current assets.
|
(i)
|
Trade Accounts Receivable:
The amount shown as trade accounts receivable primarily consists of earned revenue that has not been billed yet or that it has been billed but not yet collected. At each balance sheet date all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. No allowance for doubtful accounts was established as of December 31, 2010 and 2009.
|
(j)
|
Inventories:
Inventories consist of consumable bunkers, lubricants, spares and stores and are stated at the lower of cost or market value. The cost is determined by the first-in, first-out method.
|
(k)
|
Fixed Assets:
Fixed assets consist of vessels which are stated at cost, less accumulated depreciation. Vessel cost consists of the contract price for the vessel and any material expenses incurred upon their construction (improvements and delivery expenses, on-site supervision costs incurred during the construction periods, as well as capitalized interest expense during the construction period). The cost of each of the Partnership’s vessels is depreciated beginning when the vessel is ready for its intended use, on a straight-line basis over the vessels’ remaining economic useful life, after considering the estimated residual value. Management estimates the scrap value of the Partnership’s vessels to be $0.2 per light weight ton (LWT) and useful life to be 25 years.
|
2.
|
Significant Accounting Policies – Continued
|
(l)
|
Impairment of Long-lived Assets:
An impairment loss on long-lived assets is recognized when indicators of impairment are present and the carrying amount of the long-lived asset is greater than its fair value and not believed to be recoverable. In determining future benefits derived from use of long-lived assets, the Partnership performs an analysis of the anticipated undiscounted future net cash flows of the related long-lived assets. If the carrying value of the related asset exceeds its undiscounted future net cash flows, the carrying value is reduced to its fair value. Various factors including future charter rates and vessel operating costs are included in this analysis.
|
(m)
|
Intangible assets:
The Partnership records all identified tangible and intangible assets or any liabilities associated with the acquisition of a business at fair value. When a business is acquired that owns a vessel with an existing charter agreement, the Partnership determines the present value of the difference between: (i) the contractual charter rate and (ii) the prevailing market rate for a charter of equivalent duration. When determining present value the Partnership uses Weighted Average Cost of Capital (“WACC”). The resulting above-market (assets) and below-market (liabilities) charters are amortized using straight line method as a reduction and increase, respectively, to revenues over the remaining term of the charters.
|
(n)
|
Deferred
charges:
are comprised mainly of fees paid to lenders for obtaining new loans or refinancing existing loans and are capitalized as deferred finance charges and amortized to interest expense over the term of the respective loan using the effective interest rate method.
|
(o)
|
Pension and Retirement Benefit Obligations
: The vessel-owning companies included in the consolidated financial statements employ the crew on board under short-term contracts (usually up to seven months) and accordingly, they are not liable for any pension or post retirement benefits.
|
(p)
|
Concentration of Credit Risk:
Financial instruments which potentially subject the Partnership to significant concentrations of credit risk consist principally of cash and cash equivalents, short-term investments, interest rate swaps, and trade accounts receivable. The Partnership places its cash and cash equivalents, consisting mostly of deposits, and enters into interest rate swap agreements with creditworthy financial institutions rated by qualified rating agencies. Most of the Partnership’s revenues were derived from a few charterers. For the year ended December 31, 2010, British Petroleum Shipping Limited, Morgan Stanley Capital Group Inc., and OSG accounted for 49%, 11% and 11% of the Partnership’s total revenue, respectively. For the year ended December 31, 2009 British Petroleum Shipping Limited, Morgan Stanley Capital Group Inc. and OSG accounted for 54%, 20% and 11% of total revenue, respectively. For the year ended December 31, 2008 British Petroleum Shipping Limited and Morgan Stanley Capital Group Inc., accounted for 48% and 29% of total revenue, respectively The Partnership does not obtain rights of collateral from its charterers to reduce its credit risk.
|
(q)
|
Fair Value of Financial Instruments:
On January 1, 2008, the Partnership adopted the accounting guidance for Fair Value Measurements for financial assets and liabilities and any other assets and liabilities carried at fair value. This guidance defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The carrying value of trade receivables, due from related parties, due to related parties, accounts payable and current accrued liabilities approximates their fair value. The fair values of long-term variable rate bank loans approximate the recorded values, due to their variable interest and due to the fact that we have recently amended a financial covenant for our loans and the lenders have increased the margin over LIBOR that we pay to reflect their current risk. We believe the terms of our loans are similar to those that could be procured as of December 31, 2010. Interest rate swaps are recorded at fair value on the consolidated balance sheet.
|
2.
|
Significant Accounting Policies – Continued
|
(r)
|
Interest Rate Swap Agreements:
The Partnership designates its derivatives based upon the intended use, and recognizes all derivatives as either assets or liabilities in the statement of financial position and measures those instruments at fair value. Changes in the fair value of each derivative instrument are recorded depending on the intended use of the derivative and the resulting designation. For a derivative that does not qualify as a hedge, changes in fair value are recognized within the income statement. For derivatives that qualify as cash flow hedges, the changes in fair value of the effective portion are recognized at the end of each reporting period in Other comprehensive income / (loss), until the hedged item is recognized in income. The ineffective portion of a derivative’s change in fair value is immediately recognized in the income statement.
|
(r)
|
Net Income Per Limited Partner Unit:
Basic net income per limited partner unit is calculated by dividing Partnership’s net income less general partner interest in net income (including incentive distribution rights) and less net income allocable to unvested units by the weighted-average number of outstanding limited partner units during the period (Note 14). Diluted net income per limited partner unit reflects the potential dilution that could occur if securities or other contracts to issue limited partner units were exercised.
|
(s)
|
Income Taxes:
The Partnership is not subject to the payment of any income tax on its income. Instead, a tax is levied based on the tonnage of the vessels, which is included in operating expenses (Note 9).
|
(t)
|
Segment Reporting:
The Partnership reports financial information and evaluates its operations by charter revenues and not by the length or type of ship employment for its customers, i.e. time or bareboat charters. The Partnership does not use discrete financial information to evaluate the operating results for each such type of charter. Although revenue can be identified for these types of 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 solely by revenue per day and operating results of the fleet, and thus the Partnership has determined that it operates under one reportable segment.
Furthermore, when the Partnership charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable.
|
(u)
|
Equity incentive plan awards:
Equity compensation expense represents vested and unvested units granted to employees and to non-employee directors, for their services as directors, as well as to non-employees and are included in
“
General and administrative expenses
”
in the
“
Consolidated statements of income.
”
These units are measured at their fair value equal to the market value of the Partnership
’
s common units on the grant date. The units that contain a time-based service vesting condition are considered unvested units on the grant date and a total fair value of such units is recognized on a straight-line basis over the requisite service period. In addition, unvested awards granted to non-employees are measured at their then-current fair value as of the financial reporting dates until non-employees complete the service (Note 13).
|
(v)
|
Recent Accounting Pronouncements
:
There are no recent accounting pronouncements that their adoption would have a material effect on the Partnership’s consolidated financial statements in the current year or expected to have an impact on future years.
|
3.
|
Transactions with Related Parties
|
●
|
Equity investment
,
|
●
|
Loan agreements that CMTC entered into, acting as the borrower, for the financing of the construction or acquisition of the M/T Amore Mio II, M/T Aristofanis, M/T Agamemnon II, M/T Ayrton II, M/T Atrotos and M/T Alkiviadis ,
|
●
|
Manager payments on behalf of the vessel-owning companies and hire receipts from charterers,
|
●
|
Manager fixed monthly fees, (which were based on agreements with different terms and conditions than those in the Partnership’s administrative and management agreements) for providing services such as chartering, technical support and maintenance, insurance, consulting, financial and accounting services, (Note 9),
|
●
|
Funds advanced/received to/from entities with common ownership, and
|
●
|
Loan draw downs in excess of the advances made to the shipyard by the Manager for the funding of vessels’ extra costs.
|
As of
December 31, 2010
|
As of
December 31, 2009
|
|||||||||
Assets:
|
||||||||||
Hire receivable (e)
|
$ | 2 | $ | |||||||
Manager – Vessels’ operation (a)
|
13,365 | |||||||||
Total assets
|
$ | 2 | $ | 13,365 | ||||||
Liabilities:
|
||||||||||
CMTC – loans current portion (b)
|
$ | $ | 4,412 | |||||||
CMTC – loans long–term portion (b)
|
43,528 | |||||||||
Manager – payments on behalf of the Partnership (c)
|
2,048 | 2,691 | ||||||||
Management fee payable to CSM (d)
|
2,496 | 2,248 | ||||||||
Total liabilities
|
$ | 4,544 | $ | 52,879 |
3.
|
Transactions with Related Parties – Continued
|
For the year ended December 31,
|
||||||||||||||
2010
|
2009
|
2008
|
||||||||||||
Revenues (e)
|
$ | 11,030 | $ | - | $ | - | ||||||||
Vessel operating expenses
|
30,261 | 30,830 | 26,193 | |||||||||||
General and administrative expenses
|
1,103 | 1,088 | 1,133 | |||||||||||
Interest expense and finance cost
|
210 | 543 | 1,013 | |||||||||||
|
(a)
|
Vessels’ Operation:
The balance in this line-item relates to funds that are received from charterers less disbursements made by the Manager on behalf of the vessel-owning subsidiaries.
|
|
(b)
|
CMTC – Related party loans
:
On December 22, 2005 CMTC entered into a loan agreement with a bank for the amount of $28,985 for the financing of the construction of the vessel M/T Alkiviadis. The balance of the loan as of December 31, 2009 was $22,190. The related-party loan relating to the M/T Alkiviadis was fully repaid by CMTC on June 30, 2010 (the date the shares of the vessel-owning company of M/T Alkiviadis were transferred to the Partnership).
|
|
Interest expense for the related-party loans for the years ended December 31, 2010, 2009 and 2008 amounted to $210, $543 and $1,013, respectively.
|
|
(c)
|
Manager - Payments on Behalf of Capital Product Partners L.P
.
: Following
the IPO, the Manager invoices the Partnership for payments it makes on behalf of the Partnership and its subsidiaries.
|
|
(d)
|
Management fee payable to CSM
: The amount outstanding as of December 31, 2010 and 2009 represents the management fee payable to CSM as a result of the management agreement the Partnership entered into with CSM (Note 1).
|
|
(e)
|
Revenues:
On January 21, 2010 the vessel-owning companies of M/T Agisilaos and M/T Axios have entered into a one year time charter agreement with CMTC for a daily charter hire of $12 and $12.8, respectively. The charter of M/T Axios commenced on February 3, 2010 and the charter of M/T Agisilaos commenced on March 1, 2010.
|
|
On June 4, 2010 the vessel-owning company of M/T Arionas entered into a one year time charter agreement with CMTC for a daily charter hire of $12. The charter of M/T Arionas commenced on October 23, 2010.
|
|
On June 21, 2010 the vessel-owning company of M/T Alkiviadis entered into a two year time charter agreement with CMTC for a daily charter hire of $13. The charter of M/T Alkiviadis commenced on June 30, 2010.
|
4.
|
Vessels
|
As of
December 31, 2010
|
As of
December 31, 2009
|
|||||||
Cost:
|
||||||||
Vessels
|
813,746 | 778,651 | ||||||
Less: accumulated depreciation
|
(106,407 | ) | (74,944 | ) | ||||
Vessels, net
|
$ | 707,339 | $ | 703,707 |
4.
|
Vessels – Continued
|
5.
|
Above market acquired bare-boat charter
|
Year ended
December 31,
|
Amount
|
|||
2011
|
$ | 2,481 | ||
2012
|
2,488 | |||
2013
|
2,481 | |||
2014
|
612 | |||
Total
|
$ | 8,062 |
6.
|
Long-Term Debt
|
Bank Loans
|
Entity
|
As of
December 31, 2010
|
As of
December 31,
2009
|
|||||||
(i)
|
Issued in April, 2007
maturing in June, 2017
|
Capital Product Partners L.P.
|
$ | 366,500 | $ | 366,500 | ||||
(ii)
|
Issued in March, 2008
maturing in March 2018
|
Capital Product Partners L.P.
|
107,500 | 107,500 | ||||||
Total
|
$ | 474,000 | $ | 474,000 | ||||||
Less: Current portion
|
- | - | ||||||||
Long-term portion
|
$ | 474,000 | $ | 474,000 |
●
|
Partial acquisition cost of up to $57,500 for Amore Mio II and Aristofanis
|
●
|
50% of the acquisition cost of up to $52,500 for M/T Alkiviadis and M/T Aristidis
|
●
|
50% of the acquisition cost of up to $240,000 for any further modern tanker
|
6.
|
Long-Term Debt – Continued
|
Vessel / Entity
|
Date
|
$370,000 Credit Facility
|
$350,000 Credit Facility
|
||||||
Capital Product Partners L.P.
|
04/04/2007
|
$ | 30,000 | ||||||
M/T Atrotos
|
05/08/2007
|
56,000 | |||||||
M/T Akeraios
|
07/13/2007
|
56,000 | |||||||
M/T Apostolos
|
09/20/2007
|
56,000 | |||||||
M/T Attikos
|
09/24/2007
|
20,500 | |||||||
M/T Anemos I
|
09/28/2007
|
56,000 | |||||||
M/T Alexandros II
|
01/29/2008
|
48,000 | |||||||
M/T Amore Mio II
|
03/27/2008
|
$ | 46,000 | ||||||
M/T Aristofanis
|
04/30/2008
|
11,500 | |||||||
M/T Aristotelis II
|
06/17/2008
|
20,000 | 28,000 | ||||||
M/T Aris II
|
08/20/2008
|
24,000 | 22,000 | ||||||
Total
|
$ | 366,500 | $ | 107,500 |
6.
|
Long-Term Debt – Continued
|
Bank loans repayment schedule
|
||||||||||||
Year ended
December 31,
|
(i)
|
(ii)
|
Total
|
|||||||||
2011
|
||||||||||||
2012
|
18,325 | 18,325 | ||||||||||
2013
|
36,650 | 8,063 | 44,713 | |||||||||
2014
|
36,650 | 10,750 | 47,400 | |||||||||
2015
|
36,650 | 10,750 | 47,400 | |||||||||
Thereafter
|
238,225 | 77,937 | 316,162 | |||||||||
Total
|
366,500 | 107,500 | 474,000 |
7.
|
Financial Instruments
|
|
Derivative Instruments
|
December 31, 2010
|
December 31, 2009
|
||||||||||||||||
Interest Rate Swaps
|
Total
|
Interest Rate Swaps
|
Total
|
|
|||||||||||||
Long-term liabilities
|
$ | (32,505 | ) | $ | (32,505 | ) | $ | (36,931 | ) | $ | (36,931 | ) | |||||
$ | (32,505 | ) | $ | (32,505 | ) | $ | (36,931 | ) | $ | (36,931 | ) |
Liability Derivatives
|
||||||||
December 31, 2010
|
December 31, 2009
|
|||||||
Balance Sheet Location
|
Fair value
|
Fair value
|
||||||
Financial instruments Long-term liabilities
|
$ | 32,505 | $ | 36,931 | ||||
Total derivatives designated as hedging instruments
|
$ | 32,505 | $ | 36,931 |
Derivatives for cash flow hedging relationships
|
Amount of Gain/(Loss) Recognized in OCI on
Derivative (Effective Portion)
|
|||||||||||
For the year ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Interest rate swaps
|
$ | 4,426 | $ | 10,483 | $ | (33,363 | ) | |||||
Total
|
4,426 | 10,483 | (33,363 | ) |
7.
|
Financial Instruments
–
Continued
|
Quoted Prices
in Active Markets for Identical Assets |
Significant
Other Observable Inputs |
Significant
Unobservable Inputs |
||||||||
Derivatives
|
Total
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||||
December 31, 2009
|
$ | (36,931 | ) | $ | (36,931 | ) | ||||
December 31, 2010
|
$ | (32,505 | ) | $ | (32,505 | ) |
8.
|
Accrued Liabilities
|
As of December 31,
|
||||||||
2010
|
2009
|
|||||||
Accrued loan interest and loan fees
|
$ | 111 | $ | 155 | ||||
Accrued operating expenses
|
- | 1,757 | ||||||
Accrued voyage expenses and commissions
|
394 | 221 | ||||||
Accrued general and administrative expenses
|
393 | 337 | ||||||
Total
|
$ | 898 | $ | 2,470 |
9.
|
Voyage Expenses and Vessel Operating Expenses
|
For the years ended December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Voyage expenses:
|
||||||||||||
Commissions
|
$ | 1,279 | $ | 1,084 | $ | 1,431 | ||||||
Bunkers
|
4,295 | 2,209 | 2,874 | |||||||||
Port expenses
|
1,412 | 604 | 1,570 | |||||||||
Other
|
23 | 96 | 106 | |||||||||
Total
|
$ | 7,009 | $ | 3,993 | $ | 5,981 | ||||||
Operating expenses:
|
||||||||||||
Crew costs and related costs
|
$ | 551 | $ | 1,332 | $ | 1,669 | ||||||
Insurance expense
|
69 | 162 | 240 | |||||||||
Spares, repairs, maintenance and other expenses
|
269 | 1,015 | 2,962 | |||||||||
Stores and lubricants
|
112 | 256 | 668 | |||||||||
Management fees (Note 3)
|
28,294 | 27 , 191 | 25,191 | |||||||||
Vetting, insurances, spares and repairs (Note 3)
|
1,966 | 2,963 | 1,002 | |||||||||
Other operating expenses
|
34 | 115 | 143 | |||||||||
Total
|
$ | 31,295 | $ | 33,034 | $ | 31,875 |
10.
|
Income Taxes
|
11.
|
Cash Flow
|
As of December 31, 2010
|
As of December 31, 2009
|
As of December 31, 2008
|
||||||||||
Cash and cash equivalents
|
$ | $ | $ | 2 | ||||||||
Trade receivables
|
1,629 | 113 | 1,037 | |||||||||
Due from related parties
|
13,357 | 11 | 4,497 | |||||||||
Prepayments and other assets
|
76 | 69 | 353 | |||||||||
Inventories
|
146 | 272 | 143 | |||||||||
Deferred charges
|
65 | 69 | 251 | |||||||||
Total assets
|
15,273 | 534 | 6,283 | |||||||||
Trade accounts payable
|
401 | 673 | 1,913 | |||||||||
Due to related parties
|
1,777 | 1,194 | ||||||||||
Accrued liabilities
|
332 | 166 | 418 | |||||||||
Deferred revenue
|
||||||||||||
Borrowings
|
46,384 | 28,991 | 76,997 | |||||||||
Total liabilities
|
47,117 | 31,607 | 80,522 | |||||||||
Net liabilities assumed by CMTC upon contribution to the Partnership
|
31,844 | 31,073 | 74,239 |
12.
|
Partners’ Capital / Stockholders’ Equity and Distributions
|
●
|
less the amount of cash reserves established by our board of directors to:
|
●
|
provide for the proper conduct of Partnership’ s business (including reserves for future capital expenditures and for our anticipated credit needs);
|
●
|
comply with applicable law, any of Partnership’s debt instruments, or other agreements; or
|
●
|
provide funds for distributions to Partnership’s unitholders and to general partner for any one or more of the next four quarters;
|
●
|
plus all cash on hand on the date of determination of available cash for the quarter resulting from working capital borrowings made after the end of the quarter. Working capital borrowings are generally borrowings that are made under our credit agreement and in all cases are used solely for working capital purposes or to pay distributions to partners.
|
12.
|
Partners’ Capital / Stockholders’ Equity and Distributions
–
Continued
|
Marginal Percentage Interest
in Distributions
|
||||||||||||
Total Quarterly
Distribution Target Amount |
Unitholders
|
General Partner
|
||||||||||
Minimum Quarterly Distribution
|
$0.3750 | 98 | % | 2 | % | |||||||
First Target Distribution
|
up to |
$0.4313
|
98 | % | 2 | % | ||||||
Second Target Distribution
|
above |
$0.4313 up to $0.4688
|
85 | % | 15 | % | ||||||
Third Target Distribution
|
above |
$0.4688 up to $0.5625
|
75 | % | 25 | % | ||||||
Thereafter
|
above |
$0.5625
|
50 | % | 50 | % |
Early Termination of Subordination Period:
The payment of the exceptional distribution of $1.05 per unit in February 2009 brought annual distributions to unitholders to $2.27 per unit for the year ended December 31, 2008, a level which under the terms of the partnership agreement resulted in the early termination of the subordination period and the conversion of the subordinated units into common units on a one to one basis. Under the partnership agreement the subordination period would have ended in April 2011, if the Partnership had earned and paid at least $0.375 on each outstanding unit and corresponding distribution on the general partners
’
2.0% for any three consecutive four-quarter periods.
|
●
|
first, 98% to the common unitholders, pro rata, and 2.0% to our general partner, until we distribute for each outstanding common unit an amount equal to the minimum quarterly distribution for that quarter;
|
●
|
second, 98% to the common unitholders, pro rata, and 2.0% to our general partner, until we distribute for each outstanding common unit an amount equal to any arrearages in payment of the minimum quarterly distribution on the common units for any prior quarters during the subordination period;
|
●
|
third, 98% to the subordinated unitholders, pro rata, and 2.0% to our general partner, until we distribute for each subordinated unit an amount equal to the minimum quarterly distribution for that quarter; and
|
●
|
Thereafter, in the manner described in the above table under section “General Partner Interest and Incentive Distribution Rights”.
|
12.
|
Partners’ Capital / Stockholders’ Equity and Distributions
–
Continued
|
●
|
first, 98% to all unitholders, pro rata, and 2.0% to our general partner, until we distribute for each outstanding unit an amount equal to the minimum quarterly distribution for that quarter; and
|
●
|
Thereafter, in the manner described in the above table under section “General Partner Interest and Incentive Distribution Rights”.
|
As of December 31, 2010
|
As of December 31, 2009
|
|||||||
Limited partner units
|
37,946,183 | 24,817,151 | ||||||
General partner units
|
774,411 | 506,472 | ||||||
Total partnership units
|
38,720,594 | 25,323,623 |
●
|
the capital contribution made by CMTC in connection with the acquisition of the Non-Contracted Vessels from the shipyards or their previous owners (in the case of the M/T Amore Mio II). For the year ended December 31, 2010, 2009 and 2008, such contributions amounted to $0, $48,913 and, $12,135, respectively,
|
●
|
the cumulative earnings of the Non-Contracted Vessels during their operations as part of CMTC’s fleet and
|
●
|
the reduction in the stockholders’ equity during the years ended December 31, 2010, 2009 and 2008 represents the equity which was retained by CMTC upon the contribution of the Non-Contracted Vessels to the Partnership.
|
13.
|
Omnibus Incentive Compensation Plan
|
|
(a) |
On August 25, 2010 the General Partner awarded 448,000 unvested units to all the members of the Board of Directors of the Partnership. Awards granted to the three independent directors and the chairman of the board of the Partnership will vest in three equal annual installments. Awards granted to other members of the board will vest on August 31, 2013.
|
(b)
|
On August 31, 2010 the Board awarded 347,200 unvested units to employees of
Capital Shipmanagement, Capital Maritime & Trading and other eligible persons under the plan. These awards will vest
on August 31, 2013.
|
13.
|
Omnibus Incentive Compensation Plan
–
Continued
|
Employee equity compensation
|
Non-employee equity compensation
|
|||||||||||||||
Unvested Units
|
Units
|
Weighted-average grant-date fair value
|
Units
|
Weighted-average grant-date fair value
|
||||||||||||
Unvested on January 1, 2010
|
- | - | ||||||||||||||
Granted
|
448,000 | $ | 3,620 | 347,200 | $ | 2,798 | ||||||||||
Vested
|
- | - | - | - | ||||||||||||
Forfeited
|
- | - | - | - | ||||||||||||
Unvested on December 31, 2010
|
448,000 | $ | 3,620 | 347,200 | $ | 2,798 |
14.
|
Net Income Per Unit
|
14.
|
Net Income Per Unit – Continued
|
Numerators
|
2010
|
2009
|
2008
|
|||||||||
Partnership’s net income
|
$ | 17,936 | $ | 29,225 | $ | 50,767 | ||||||
Less:
|
||||||||||||
General Partner’s interest in Partnership’s net income
|
359 | 584 | 13,485 | |||||||||
Subordinated units interest in Partnership’s net income
|
- | 1,242 | 13,228 | |||||||||
Partnership’s net income allocable to unvested units
|
147 | - | - | |||||||||
Partnership’s net income available to common unitholders
|
$ | 17,430 | $ | 27,399 | $ | 24,054 | ||||||
Denominators
|
||||||||||||
Weighted average number of common units outstanding, basic and diluted
|
32,437,314 | 23,755,663 | 15,379,212 | |||||||||
Net income per common unit:
|
||||||||||||
Basic and diluted
|
$ | 0.54 | $ | 1.15 | $ | 1.56 |
15.
|
Commitments and Contingencies
|
●
|
Information available prior to the issuance of the financial statement indicates that it is probable that a liability has been incurred at the date of the financial statements.
|
●
|
The amount of the loss can be reasonably estimated.
|
●
|
The amount is material.
|
15.
|
Commitments and Contingencies – Continued
|
(a)
|
Lease Commitments:
The vessel-owning subsidiaries of the Partnership have entered into time and bareboat charter agreements, which as of December 31, 2010 are summarized as follows:
|
Vessel Name
|
Time
Charter (TC)/
Bare Boat
Charter (BC)
(Years)
|
Commencement of Charter
|
Charterer
|
Profit
Sharing (1)
|
Gross Daily Hire Rate
(Without Profit
Sharing) |
M/T Atlantas
(M/T British Ensign)
|
5+3 BC
|
04/2006
|
B.P. Shipping Ltd
|
|
$15.2 (5y) &
$13.5 (3y)
|
M/T Aktoras
(M/T British Envoy)
|
5+3 BC
|
07/2006
|
B.P. Shipping Ltd
|
|
$15.2 (5y) &
$13.5 (3y)
|
M/T Agisilaos
|
1 TC
|
03/2010
|
CMTC
|
50/50 (3)
|
$12.0
|
M/T Arionas
|
1 TC
|
10/2010
|
CMTC
|
50/50 (3)
|
$12.0
|
M/T Aiolos
(M/T British Emissary)
|
5+3 BC
|
03/2007
|
B.P. Shipping Ltd
|
|
$15.2 (5y) &$13.5 (3y)
|
M/T Avax
|
1 TC
|
05/2010
|
B.P. Shipping Ltd
|
50/50 (3)
|
$12.5
|
M/T Axios
|
1 TC
|
02/2010
|
CMTC
|
50/50 (3)
|
$12.8
|
M/T Alkiviadis
|
2 TC
|
06/2010
|
CMTC
|
50/50 (3)
|
$13.0
|
M/T Assos (3)
|
5 BC
|
04/2009
|
PEMEX
|
|
$16.8
|
M/T Atrotos (4)
|
5 BC
|
04/2009
|
PEMEX
|
|
$16.8
|
M/T Akeraios
|
1 TC
|
06/2010
|
B.P. Shipping Ltd
|
50/50 (3)
|
$12.5
|
M/T Anemos I
|
3 TC
|
09/2010
|
Petrobras
|
|
$14.7
|
M/T Apostolos
|
2 TC
|
10/2010
|
B.P. Shipping Ltd
|
50/50 (3)
|
$14.0
|
M/T Alexandros II
(M/T Overseas Serifos)
|
10 BC
|
01/2008
|
Overseas Shipholding Group Inc. (2)
|
|
$13.0
|
M/T Aristotelis II
(M/T Overseas Sifnos)
|
10 BC
|
06/2008
|
Overseas Shipholding Group Inc. (2)
|
|
$13.0
|
M/T Aris II
(M/T Overseas Kimolos)
|
10 BC
|
08/2008
|
Overseas Shipholding Group Inc. (2)
|
|
$13.0
|
M/T Amore Mio II
|
3 TC
|
10/2007
|
B.P. Shipping Ltd
|
50/50
|
$36.5
|
M/T Agamemnon II
|
3 TC
|
1/2009
|
B.P. Shipping Ltd
|
50/50 (3)
|
$22.3
|
M/T Ayrton II
|
2+1 TC (4)
|
4/2009
|
B.P. Shipping Ltd
|
50/50 (3)
|
$22.3
|
(1)
|
Profit sharing refers to an arrangement between vessel-owning companies and charterers to share a predetermined percentage voyage profit in excess of the basic rate.
|
(2)
|
Overseas Shipholding Group Inc. has an option to purchase each of the three STX vessels delivered or to be delivered in 2008 at the end of the eighth, ninth or tenth year of the charter, for $38.0 million, $35.5 million and $33.0 million, respectively, which option is exercisable six months before the date of completion of the eighth, ninth or tenth year of the charter. The expiration date above may therefore change depending on whether the charterer exercises its purchase option.
|
(3)
|
50/50 profit share for breaching IWL (Institute Warranty Limits -- applies to voyages to certain ports at certain periods of the year).
|
(4)
|
Subject to extension option by the charterers upon the second year anniversary.
|
15.
|
Commitments and Contingencies – Continued
|
Year ended
December 31,
|
Amount
|
|||
2011
|
$ | 57,659 | ||
2012
|
52,346 | |||
2013
|
44,548 | |||
2014
|
26,766 | |||
2015
|
15,033 | |||
Thereafter
|
4,420 | |||
Total
|
$ | 200,772 |
16.
|
Subsequent Events
|
(a)
|
Dividends:
On January 21, 2011 the Partnership’s board of directors declared a cash distribution of $0.2325 per unit, which will be paid on February 15, 2011, to unitholders of record on February 4, 2011.
|
Clause | Page | |
1
|
INTERPRETATION
|
1
|
2
|
AGREEMENT OF THE CREDITOR PARTIES
|
3
|
3
|
CONDITIONS PRECEDENT
|
3
|
4
|
REPRESENTATIONS AND WARRANTIES
|
5
|
5
|
AMENDMENTS TO LOAN AGREEMENT AND OTHER FINANCE DOCUMENTS
|
5
|
6
|
FURTHER ASSURANCES
|
6
|
7
|
FEES AND EXPENSES
|
6
|
8
|
COMMUNICATIONS
|
7
|
9
|
SUPPLEMENTAL
|
7
|
10
|
LAW AND JURISDICTION
|
7
|
SCHEDULE LENDERS | 8 | |
EXECUTION PAGES | 9 |
(1)
|
CAPITAL PRODUCT PARTNERS L.P.
as
Borrower
;
|
(2)
|
THE BANKS AND FINANCIAL INSTITUTIONS
listed in Schedule 1 herein, as
Lenders
;
|
(3)
|
HSH NORDBANK AG
, acting through its office at
Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany
as
Agent
;
|
(4)
|
HSH NORDBANK AG
, acting through its office at
Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany
, as
Security Trustee
;
|
(5)
|
HSH NORDBANK AG
, acting through its office at
Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany
, as
Bookrunner
; and
|
(6)
|
HSH NORDBANK AG
,
acting through its office at
Martensdamm 6, D-24103 Kiel, Germany
as
Swap Bank
.
|
(A)
|
By a loan agreement dated 22 March 2007 (as amended and supplemented by supplemental agreements dated, respectively, 19 September 2007, 11 June 2008, 7 April 2009, 8 April 2009 and 2 October 2009, the “
Loan Agreement
”) and made between (i) the Borrower, (ii) the Lenders, (iii) the Agent, (iv) the Security Trustee, (v) the Bookrunner and (vi) the Swap Bank, the Lenders agreed to make available to the Borrower revolving credit and term loan facilities in an amount of (originally) US$370,000,000 in aggregate of which an amount of US$366,500,000 is on the date hereof outstanding by way of principal.
|
(B)
|
The Borrower has requested that the Lenders agree to:
|
|
(i)
|
the addition of each of Forbes Maritime Co. and Adrian Shipholding Inc. as a Security Party for the purposes of the Loan Agreement; and
|
|
(ii)
|
the granting and/or registration of certain security over and/or in respect of m.t. “ARISTOFANIS” and m.t. “ALKIVIADIS owned by Forbes Maritime Co. and Adrian Shipholding Inc. respectively in favour of the Security Trustee.
|
(C)
|
This Agreement sets out the terms and conditions on which the Creditor Parties agree, with effect on and from the Effective Date, to the Borrower’s requests and to carry out the consequential amendments to the Loan Agreement.
|
1
|
INTERPRETATION
|
1.1
|
Defined expressions.
Words and expressions defined in the Loan Agreement and the other Finance Documents shall have the same meanings when used in this Agreement unless the context otherwise requires.
|
1.2
|
Definitions.
In this Agreement, unless the contrary intention appears:
|
|
“
New
Earnings Account
” means, in respect of each New Owner, an account opened or to be opened in the name of that New Owner with the Agent in Hamburg designated “[
name of New Owner
] - Earnings Account”, or any other account (with that or another office of the Agent) which is designated by the Agent as the Earnings Account for that New Ship for the purposes of the Loan Agreement and, in the plural, means both of them;
|
|
“
New
Earnings Account Pledge
” means, in respect of each New Earnings Account the first priority pledge of that New Earnings Account to be executed by the relevant New Owner in favour of the Lenders in such form as the Lenders may approve or require and, in the plural, means both of them;
|
|
“
New
Finance Documents
” means, together, the New Guarantees, the New Mortgages, the New General Assignments, any New Charterparty Assignments, the New Manager’s Undertakings and the New Earnings Account Pledges and, in the singular, means any of them;
|
|
“
New
General Assignment
” means, in respect of each New Ship, a first priority general assignment of the Earnings, Insurances and Requisition Compensation in respect thereof executed or to be executed by the New Owner owning that New Ship in favour of the Security Trustee in such form as the Lenders may approve or require and, in the plural, means both of them;
|
|
“
New
Guarantee
” means, in respect of each New Owner, the guarantee of the obligations of the Borrower under the Loan Agreement and the other Finance Documents executed or to be executed by that New Owner in favour of the Security Trustee in such form as the Lenders may approve or require and, in the plural, means both of them;
|
|
“
New Manager’s Undertaking
” means, in respect of each New Ship, a letter of undertaking executed or to be executed by the Approved Manager in favour of the Security Trustee in the terms required by the Security Trustee agreeing certain matters in relation to the Approved Manager serving as the manager of that New Ship and subordinating the rights of the Approved Manager against that New Ship and the New Owner thereof to the rights of the Creditor Parties under the Finance Documents, in such form as the Lenders, may approve or require and, in the plural, means both of them;
|
|
“
New
Mortgage
” means:
|
|
(a)
|
in respect of each “ARISTOFANIS”, the first preferred Liberian mortgage; and
|
|
(b)
|
on respect of “ALKIVIADIS”, the first preferred Marshall Islands mortgage,
|
|
“New Owner”
means each of Adrian and Forbes and, in the plural, means both of them; and
|
|
“
New Ship
” means each of “ALKIVIADIS” and “ARISTOFANIS” and, in the plural, means both of them.
|
1.3
|
Application of construction and interpretation provisions of Loan Agreement.
Clauses 1.2 and 1.5 of the Loan Agreement apply, with any necessary modifications, to this Agreement.
|
2
|
AGREEMENT OF THE CREDITOR PARTIES
|
2.1
|
Agreement of the Lenders.
The Lenders agree, subject to and upon the terms and conditions of this Agreement to the:
|
(a)
|
addition of each New Owner as a Security Party for the purposes of the Loan Agreement; and
|
(b)
|
granting and/or registration of certain security by each New Owner including, without limitation, security over the New Ship owned by it (constituted by the relevant New Finance Documents) in favour of the Security Trustee.
|
2.2
|
Agreement of the Creditor Parties.
The Creditor Parties agree, subject to and upon the terms and conditions of this Agreement, to the consequential amendment of the Loan Agreement and the other Finance Documents in connection with the matters referred to in Clause 2.1.
|
2.3
|
Effective Date.
The agreement of the Lenders and the other Creditor Parties contained in Clauses 2.1 and 2.2 shall have effect on and from the Effective Date.
|
3
|
CONDITIONS PRECEDENT
|
3.1
|
General.
The agreement of the Lenders and the other Creditor Parties contained in Clauses 2.1 and 2.2 is subject to the fulfilment of the conditions precedent in Clause 3.2.
|
3.2
|
Conditions precedent.
The conditions referred to in Clause 3.1 are that the Agent shall have received the following documents and evidence in all respects in form and substance satisfactory to the Agent and its lawyers on or before the Effective Date:
|
(a)
|
documents of the kind specified in paragraphs 3, 4 and 5 of Schedule 3, Part A to the Loan Agreement in relation to the Borrower in connection with the execution of this Agreement, updated with appropriate modifications to refer to this Agreement;
|
(b)
|
a certificate of an officer of each New Owner confirming the names of all its directors and shareholders and having attached thereto true and complete copies of its incorporation and constitutional documents;
|
(c)
|
true and complete copies of the resolutions passed at separate meetings of the directors and shareholders of each New Owner authorising and approving the execution of each New Finance Document to which it is a party and authorising its directors or other representatives to execute the same on its behalf;
|
(d)
|
the original of any power of attorney issued by each New Owner pursuant to such resolutions aforesaid;
|
(e)
|
evidence that each New Ship is:
|
|
(i)
|
registered in the name of the relevant New Owner under the laws and flag of:
|
|
(A)
|
in the case of “ALKIVIADIS, the Republic of the Marshall Islands; and
|
|
(B)
|
in the case of “ARISTOFANIS”, the Republic of Liberia; and
|
|
(i)
|
insured in accordance with the relevant provisions of the Loan Agreement and/or the relevant New Mortgage and all requirements thereof in respect of such insurances have been fulfilled;
|
(f)
|
each New Finance Document has been duly executed by the relevant New Owner together with evidence that:
|
|
(i)
|
each New Mortgage has been registered against the relevant New Ship with first priority in accordance with the laws of:
|
|
(ii)
|
all notices required to be served under the relevant New General Assignment and any New Charterparty Assignment to which that New Owner is a party have been served and acknowledged in the manner therein provided; and
|
|
(iii)
|
save for the Security Interests created by or pursuant to the New Mortgages, the New General Assignments and any Charterparty Assignments, there are no Security Interests of any kind whatsoever on the New Ships or their Earnings, Insurances or Requisition Compensation;
|
(g)
|
a certified true copy of any Charterparty entered into in respect of either New Ship duly signed by the parties thereto;
|
(h)
|
evidence that each New Earnings Account has been opened and all mandate forms and all, documentation required by each Creditor Party in relation to the relevant New Owner pursuant to that Creditor Party’s “know your customer” requirements have been received;
|
(i)
|
a true and complete copy of the management agreement in respect of each New Ship;
|
(j)
|
the New Manager’s Undertakings executed by the Approved Manager in favour of the Security Trustee;
|
(k)
|
evidence that each New Owner is a direct or indirect wholly-owned subsidiary of the Borrower;
|
(l)
|
copies of ISM DOC, SMC and the International Ship Security Certificate under the ISPS Code in respect of each New Ship;
|
(m)
|
certified copies of all documents (with a certified translation if an original is not in English) evidencing any other necessary action, approvals or consents with respect to this Agreement and the New Finance Documents (including without limitation) all necessary governmental and other official approvals and consents in such pertinent jurisdictions as the Agent deems appropriate;
|
(n)
|
such legal opinions as the Agent may require in respect of the matters contained in this Agreement and the New Finance Documents; and
|
(o)
|
evidence that the agent referred to in clause 30.4 of the Loan Agreement has accepted its appointment as agent for service of process under this Agreement and the New Finance Documents. |
2
|
REPRESENTATIONS AND WARRANTIES
|
2.1
|
Repetition of Loan Agreement representations and warranties.
The Borrower represents and warrants to the Creditor Parties that the representations and warranties in clause 10 of the Loan Agreement remain true and not misleading if repeated on the date of this Agreement.
|
2
.2
|
Repetition of Finance Document representations and warranties.
The Borrower and each of the other Security Parties represents and warrants to the Creditor Parties that the representations and warranties in the Finance Documents (other than the Loan Agreement) to which it is a party remain true and not misleading if repeated on the date of this Agreement.
|
3
|
AMENDMENTS TO LOAN AGREEMENT AND OTHER FINANCE DOCUMENTS
|
3.1
|
Specific amendments to Loan Agreement.
With effect on and from the Effective Date the Loan Agreement shall be amended as follows:
|
(a)
|
by inserting in clause 1.1 thereof the definitions of “Adrian”, “ALKIVIADIS”,“ARISTOFANIS” and “Forbes” set out in Clause 1.2;
|
(b)
|
by adding the words ““ALKIVIADIS”, ARISTOFANIS, ” after the words “Existing Ships, ” in the second line of the definition of “Ships” in clause 1.1 thereof;
|
(c)
|
in the definition of “Owner” in clause 1.1 thereof by:
|
|
(A)
|
inserting the following new sub-paragraphs (j) and (k):
|
|
(B)
|
redesignating the existing sub-paragraphs (j), (k), (l), (m) and (n) as (l), (m), (n), (o) and (r) respectively;
|
(d)
|
by construing all references therein to “this Agreement” where the context admits as being references to “this Agreement as the same is amended and supplemented by this Agreement and as the same may from time to time be further supplemented and/or amended”; and
|
(e)
|
by construing references to each of the Finance Documents as being references to each such document as it is from time to time supplemented and/or amended.
|
3.2
|
Amendments to Finance Documents
. With effect on and from the Effective Date each of the Finance Documents other than the Loan Agreement shall be, and shall be deemed by this Agreement to have been, amended as follows:
|
(a)
|
the definition of, and references throughout each of the Finance Documents to, the Loan Agreement and any of the other Finance Documents shall be construed as if the same referred to the Loan Agreement and those Finance Documents as amended and supplemented by this Agreement; and
|
(b)
|
by construing references throughout each of the Finance Documents to “this Agreement”, “this Deed”, hereunder and other like expressions as if the same referred to such Finance Documents as amended and supplemented by this Agreement.
|
3.3
|
Finance Documents to remain in full force and effect.
The Finance Documents shall remain in full force and effect as amended and supplemented by:
|
(a)
|
the amendments to the Finance Documents contained or referred to in Clauses 5.1 and 5.2; and
|
(b)
|
such further or consequential modifications as may be necessary to give full effect to the terms of this Agreement.
|
4
|
FURTHER ASSURANCES
|
4.1
|
Borrower’s and each Security Party’s obligation to execute further documents etc.
The Borrower and each Security Party shall:
|
(a)
|
execute and deliver to the Security Trustee (or as it may direct) any assignment, mortgage, power of attorney, proxy or other document, governed by the law of England or such other country as the Security Trustee may, in any particular case, specify;
|
(b)
|
effect any registration or notarisation, give any notice or take any other step,
|
|
which the Agent may, by notice to the Borrower, specify for any of the purposes described in Clause 6.2 or for any similar or related purpose.
|
4.2
|
Purposes of further assurances.
Those purposes are:
|
(a)
|
validly and effectively to create any Security Interest or right of any kind which the Security Trustee intended should be created by or pursuant to the Loan Agreement or any other Finance Document, each as amended and supplemented by this Agreement, and
|
(b)
|
implementing the terms and provisions of this Agreement.
|
4.3
|
Terms of further assurances.
The Security Trustee may specify the terms of any document to be executed by the Borrower or any Security Party under Clause 6.1, and those terms may include any covenants, powers and provisions which the Security Trustee considers appropriate to protect its interests.
|
4.4
|
Obligation to comply with notice.
The Borrower or any Security Party shall comply with a notice under Clause 6.1 by the date specified in the notice.
|
5
|
EXPENSES
|
5.1
|
Expenses.
The provisions of clause 20 (fees and expenses) of the Loan Agreement shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications.
|
6
|
COMMUNICATIONS
|
6.1
|
General.
The provisions of clause 28 (notices) of the Loan Agreement, as amended and supplemented by this Agreement, shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications.
|
7
|
SUPPLEMENTAL
|
7.1
|
Counterparts.
This Agreement may be executed in any number of counterparts.
|
7.2
|
Third Party rights
. A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.
|
8
|
LAW AND JURISDICTION
|
8.1
|
Governing law.
This Agreement shall be governed by and construed in accordance with English law.
|
8.2
|
Incorporation of the Loan Agreement provisions.
The provisions of clause 30 (law and jurisdiction) of the Loan Agreement, as amended and supplemented by this Agreement, shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications.
|
Lender
|
Lending Office
|
||
HSH Nordbank AG
|
Gerhart-Hauptmann-Platz 50
20095 Hamburg
Germany
Fax No: +49 40 33 33 34118
|
||
Alpha Bank A.E.
|
Akti Miaouli 89
185 38 Piraeus
Greece
Fax No: +30 210 429 0348
|
||
Deutsche Schiffsbank AG
|
Domshof 17
D-28195 Bremen
Fax No: +49 421 3609293
|
||
National Bank of Greece S.A.
|
Bouboulinas 2 & Akti Miaouli
185 35 Piraeus
Fax No: +30 210 414 4120
|
||
BNPP Fortis
(previously known as Fortis Bank)
|
94 Vassilisis Sofias & 1 Kerassountos Street
115 28 Athens
Greece
|
AGENT
|
|
SIGNED
by
|
)
|
for and on behalf of
|
)
|
HSH NORDBANK AG
|
)
|
SECURITY TRUSTEE
|
|
SIGNED by
|
)
|
for and on behalf of
|
)
|
HSH NORDBANK AG
|
)
|
Witness to all the
|
)
|
above signatures
|
)
|
Name:
|
|
Address:
|
Clause
|
Page
|
|
1
|
INTERPRETATION
|
1
|
2
|
AGREEMENT OF THE CREDITOR PARTIES
|
3
|
3
|
CONDITIONS PRECEDENT
|
3
|
4
|
REPRESENTATIONS AND WARRANTIES
|
5
|
5
|
AMENDMENTS TO LOAN AGREEMENT AND OTHER FINANCE DOCUMENTS
|
5
|
6
|
FURTHER ASSURANCES
|
7
|
7
|
FEES AND EXPENSES
|
8
|
8
|
COMMUNICATIONS
|
8
|
9
|
SUPPLEMENTAL
|
8
|
10
|
LAW AND JURISDICTION
|
8
|
SCHEDULE LENDERS
|
9
|
|
EXECUTION PAGES
|
10
|
|
(1)
|
CAPITAL PRODUCT PARTNERS L.P.
as
Borrower
;
|
(2)
|
THE BANKS AND FINANCIAL INSTITUTIONS
listed in Schedule 1 herein, as
Lenders
;
|
(3)
|
HSH NORDBANK AG
, acting through its office at
Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany
as
Agent
;
|
(4)
|
HSH NORDBANK AG
, acting through its office at
Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany
, as
Security Trustee
;
|
(5)
|
HSH NORDBANK AG
, acting through its office at
Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany
, as
Bookrunner
; and
|
(6)
|
HSH NORDBANK AG
,
acting through its office at
Martensdamm 6, D-24103 Kiel, Germany
as
Swap Bank
.
|
(A)
|
By a loan agreement dated 22 March 2007 (as amended and supplemented by supplemental agreements dated, respectively, 19 September 2007, 11 June 2008, 7 April 2009,
8 April 2009, 2 October 2009 and 30 June 2010, the “
Loan Agreement
”) and made between (i) the Borrower, (ii) the Lenders, (iii) the Agent, (iv) the Security Trustee, (v) the Bookrunner and (vi) the Swap Bank, the Lenders agreed to make available to the Borrower revolving credit and term loan facilities in an amount of (originally) US$370,000,000 in aggregate of which the principal outstanding aggregate, on the date hereof, is US$366,500,000.
|
(B)
|
The Borrower has requested that the Lenders agree to:
|
|
(i)
|
the addition of Canvey Shipmanagement Co. as a Security Party for the purposes of the Loan Agreement; and
|
|
(ii)
|
the granting and/or registration of certain security over and/or in respect of m.t. “INSURGENTES” in favour of the Security Trustee and/or the Lenders.
|
(C)
|
This Agreement sets out the terms and conditions on which the Creditor Parties agree, with effect on and from the Effective Date, to the Borrower’s requests and to carry out the consequential amendments to the Loan Agreement and the other Finance Documents.
|
1
|
INTERPRETATION
|
1.1
|
Defined expressions.
Words and expressions defined in the Loan Agreement and the other Finance Documents shall have the same meanings when used in this Agreement unless the context otherwise requires.
|
1.2
|
Definitions.
In this Agreement, unless the contrary intention appears:
|
|
“New Finance Documents”
means, together, the Financial Lease Agreement Assignment, the ATA, the GTA, the New Earnings Account Pledge, the New Guarantee, the New General Assignment and the New Manager’s Undertaking and, in the singular, means any of them;
|
|
“New General Assignment”
means a first priority general assignment of the Earnings, Insurances and Requisition Compensation in respect of “INSURGENTES” executed or to be executed by Canvey in favour of the Security Trustee in such form as the Lenders may approve or require;
|
|
“New Guarantee”
means the guarantee of the obligations of the Borrower under the Loan Agreement and the other Finance Documents executed or to be executed by Canvey in favour of the Security Trustee in such form as the Lenders may approve or require;
|
|
“New Manager’s Undertaking”
means a letter of undertaking executed or to be executed by the Approved Manager in favour of the Security Trustee in the terms required by the Lenders agreeing certain matters in relation to the Approved Manager serving as the manager of “INSURGENTES” and, assigning, as co-assured, its rights and interests in the Insurances of “INSURGENTES” in favour of the Security Trustee and subordinating the rights of the Approved Manager against “INSURGENTES” and Canvey to the rights of the Lenders under the Finance Documents, in such form as the Lenders may approve or require; and
|
|
“
Underlying Documents
” means, together, the Financial Lease Agreement and the Bareboat Charter and, in the singular means either of them.
|
1.3
|
Application of construction and interpretation provisions of Loan Agreement.
Clauses 1.2 and 1.5 of the Loan Agreement apply, with any necessary modifications, to this Agreement.
|
2
|
AGREEMENT OF THE CREDITOR PARTIES
|
2.1
|
Agreement of the Lenders.
The Lenders agree, subject to and upon the terms and conditions of this Agreement to the:
|
(a)
|
addition of Canvey as a Security Party for the purposes of the Loan Agreement; and
|
(b)
|
granting and/or registration of certain security by Canvey including, without limitation, security over “INSURGENTES” (constituted by the relevant New Finance Documents) in favour of the Security Trustee.
|
2.2
|
Agreement of the Creditor Parties.
The Creditor Parties agree, subject to and upon the terms and conditions of this Agreement, to the consequential amendment of the Loan Agreement and the other Finance Documents in connection with the matters referred to in Clause 2.1.
|
2.3
|
Effective Date.
The agreement of the Lenders and the other Creditor Parties contained in Clauses 2.1 and 2.2 shall have effect on and from the Effective Date.
|
3
|
CONDITIONS PRECEDENT
|
3.1
|
General.
The agreement of the Lenders and the other Creditor Parties contained in Clauses 2.1 and 2.2 is subject to the fulfilment of the conditions precedent in Clause 3.2.
|
3.2
|
Conditions precedent.
The conditions referred to in Clause 3.1 are that the Agent shall have received the following documents and evidence in all respects in form and substance satisfactory to the Agent and its lawyers on or before the Effective Date:
|
(a)
|
documents of the kind specified in paragraphs 3, 4 and 5 of Schedule 3, Part A to the Loan Agreement in relation to the Borrower in connection with the execution of this Agreement, updated with appropriate modifications to refer to this Agreement;
|
(b)
|
a certificate of an officer of Canvey confirming the names of all its directors and shareholders and having attached thereto true and complete copies of its incorporation and constitutional documents;
|
(c)
|
true and complete copies of the resolutions passed at separate meetings of the directors and shareholders of Canvey authorising and approving the execution of each New Finance Document to which it is a party and authorising its directors or other representatives to execute the same on its behalf;
|
(d)
|
the original of any power of attorney issued by Canvey pursuant to such resolutions aforesaid;
|
(e)
|
evidence satisfactory to the Agent that Canvey is a direct or, as the case may be, indirect wholly-owned subsidiary of the Borrower;
|
(f)
|
evidence that the New Earnings Account has been duly opened by Canvey with the Agent;
|
(g)
|
evidence that “INSURGENTES” is:
|
|
(i)
|
registered in the name of Arrendadora as lessee under the laws and flag of the Republic of Mexico; and
|
|
(ii)
|
insured in accordance with the relevant provisions of the New Guarantee and all requirements thereof in respect of such insurances have been fulfilled;
|
(h)
|
each New Finance Document has been duly executed by Canvey together with evidence that:
|
|
(i)
|
all notices required to be served under the Financial Lease Agreement Assignment, the New General Assignment and the New Manager’s Undertaking have been served and acknowledged in the manner therein provided; and
|
|
(ii)
|
save for the Security Interests created by or pursuant to each New Finance Document there are no Security Interests of any kind whatsoever on “INSURGENTES” or her Earnings, Insurances or Requisition Compensation;
|
(i)
|
certified true copies of each Underlying Document and any other document executed in connection therewith duly signed by the parties thereto;
|
(j)
|
copies of ISM DOC, SMC and the International Ship Security Certificate under the ISPS Code in respect of “INSURGENTES”;
|
(k)
|
at the cost of the Borrower, an insurance opinion from an independent insurance consultant acceptable to the Lenders on such matters relating to the Insurance of “INSURGENTES” as the Agent may require;
|
(l)
|
certified copies of all documents (with a certified translation if an original is not in English) evidencing any other necessary action, approvals or consents with respect to this Second Supplemental Agreement and the New Finance Documents (including without limitation) all necessary governmental and other official approvals and consents in such pertinent jurisdictions as the Lenders deem appropriate;
|
(m)
|
certified copies of all documents (with a certified translation if an original is not in English) evidencing any other necessary action, approvals or consents with respect to this Agreement and the New Finance Documents (including without limitation) all necessary governmental and other official approvals and consents in such pertinent jurisdictions as the Agent deems appropriate;
|
(n)
|
such legal opinions as the Agent may require in respect of the matters contained in this Agreement and the New Finance Documents; and
|
(o)
|
evidence that the agent referred to in clause 30.4 of the Loan Agreement has accepted its appointment as agent for service of process under this Agreement and the New Finance Documents.
|
4
|
REPRESENTATIONS AND WARRANTIES
|
4.1
|
Repetition of Loan Agreement representations and warranties.
The Borrower represents and warrants to the Creditor Parties that the representations and warranties in clause 10 of the Loan Agreement remain true and not misleading if repeated on the date of this Agreement.
|
4.2
|
Repetition of Finance Document representations and warranties.
The Borrower and each of the other Security Parties represents and warrants to the Creditor Parties that the representations and warranties in the Finance Documents (other than the Loan Agreement) to which it is a party remain true and not misleading if repeated on the date of this Agreement.
|
5
|
AMENDMENTS TO LOAN AGREEMENT AND OTHER FINANCE DOCUMENTS
|
5.1
|
Specific amendments to Loan Agreement.
With effect on and from the Effective Date the Loan Agreement shall be amended as follows:
|
(a)
|
by adding in clause 1.1 thereof the definitions of “Arrendadora”, “ATA”, “Bareboat Charter”, “Bareboat Charterer”, “BYNM”, “Canvey” “Financial Lease Agreement”, “Financial Lease Agreement Assignment”, “GTA” and “NBG” which have been set out in Clause 1.1 hereof;
|
(b)
|
by adding the words “or, in the case of “INSURGENTES” during the Lease Period, the Mexican flag” after the words “Marshall Islands flag” in the first line in the definition of “Approved Flag” in clause 1.1 thereof;
|
(c)
|
in the definition of “Owner” in clause 1.1 thereof by inserting the following new sub-paragraph (o):
|
|
“(o)
|
“INSURGENTES”, Canvey;”;
|
(c)
|
by adding the following new definitions in clause 1.1 thereof:
|
|
““
INSURGENTES
” means the medium range product tanker of approximately 47,000 deadweight tons registered:
|
|
(a)
|
during the Lease Period, in the name of Arrendadora, as lessee under Mexican flag with the name “INSURGENTES; or
|
|
(b)
|
at all other times in the name of Canvey under the relevant Approved Flag with the name “ASSOS”;
|
|
“
Lease Period
” means the period commencing on 30 November 2010 and ending on the earlier of:
|
|
(a)
|
the date on which the Financial Lease Agreement is terminated, or rescinded or expires in accordance with its terms; or
|
|
(b)
|
the date on which “INSURGENTES” is redelivered by Arrendadora to Canvey pursuant to the terms of the Financial Lease Agreement;
”;
|
(d)
|
by adding the words “, Arrendadora”:
|
|
(i)
|
after the word “Owner” in the definition of “ISM Code” in clause 1.1 thereof;
|
|
(ii)
|
after the word “Ships’” in the first line of sub-paragraph (c) in the definition of “ISM Code Documentation” in clause 1.1 thereof; and
|
|
(iii)
|
after the word “the Approved Manager” in the second line in clause 10.16 thereof;
|
(e)
|
by adding the words “Arrendadora,” after the words “except” in the first line of the definition of “Security Party” in clause 1.1 thereof;
|
(f)
|
by adding the words “INSURGENTES” after the word “ARISTOFANIS,” in the first line of the definition of “Ships” in clause 1.1 thereof;
|
(g)
|
by adding the words “, Arrendadora, BYNM (in its capacity as trustee pursuant to the ATA and the GTA), the Bareboat Charterer” after the words “Approved Manager” in the third line of clause 11.11 thereof;
|
(h)
|
by adding the words “the Approved Manager, Arrendadora, BYNM (in its capacity as trustee pursuant to the GTA), the Bareboat Charterer” after the word “Borrower” in clause 11.17(a) thereof;
|
(i)
|
by adding the following new clause 11.22:
|
|
“
11.22 Financial Lease Agreement.
If at any time the Financial Lease Agreement is terminated or rescinded or expires (through the passage of time) the Borrower shall procure that Canvey shall immediately:
|
|
(a)
|
provide the Agent with evidence acceptable to it and its lawyers that “INSURGENTES” has been permanently deleted from the Mexican flag;
|
|
(b)
|
provide the Agent with evidence that Canvey has no further obligations under the Financial Lease Agreement and that the ATA and the GTA are no longer in effect;
|
|
(c)
|
permanently register “INSURGENTES” in its name under an Approved Flag with the name “ASSOS”;
|
|
(d)
|
duly register or record (as the case may be) a Mortgage against “INSURGENTES” as a valid first preferred ship or, as the case may be a first priority, mortgage in accordance with the laws of the applicable Approved Flag State;
|
|
(e)
|
execute in favour of the Security Trustee (if applicable) a Charterparty Assignment in respect of any Charterparty for “INSURGENTES”; and
|
|
(f)
|
deliver to the Security Trustee an Approved Manager’s Undertaking in respect of “INSURGENTES” duly executed by the Approved Manager.”;
|
(j)
|
by inserting the words “or, in the case of “INSURGENTES” during the Lease Period, Arrendadora” after the word “Owner” in the first line of clauses 14.10 and 14.11 thereof;
|
(k)
|
by construing all references therein to “this Agreement” where the context admits as being references to “this Agreement as the same is amended and supplemented by this Agreement and as the same may from time to time be further supplemented and/or amended”; and
|
(l)
|
by construing references to each of the Finance Documents as being references to each such document as it is from time to time supplemented and/or amended.
|
5.2
|
Amendments to Finance Documents
. With effect on and from the Effective Date each of the Finance Documents other than the Loan Agreement shall be, and shall be deemed by this Agreement to have been, amended as follows:
|
(a)
|
the definition of, and references throughout each of the Finance Documents to, the Loan Agreement and any of the other Finance Documents shall be construed as if the same referred to the Loan Agreement and those Finance Documents as amended and supplemented by this Agreement; and
|
(b)
|
by construing references throughout each of the Finance Documents to “this Agreement”, “this Deed”, hereunder and other like expressions as if the same referred to such Finance Documents as amended and supplemented by this Agreement.
|
5.3
|
Finance Documents to remain in full force and effect.
The Finance Documents shall remain in full force and effect as amended and supplemented by:
|
(a)
|
the amendments to the Finance Documents contained or referred to in Clauses 5.1 and 5.2; and
|
(b)
|
such further or consequential modifications as may be necessary to give full effect to the terms of this Agreement.
|
6
|
FURTHER ASSURANCES
|
6.1
|
Borrower’s and each Security Party’s obligation to execute further documents etc.
The Borrower and each Security Party shall:
|
(a)
|
execute and deliver to the Security Trustee (or as it may direct) any assignment, mortgage, power of attorney, proxy or other document, governed by the law of England or such other country as the Security Trustee may, in any particular case, specify;
|
(b)
|
effect any registration or notarisation, give any notice or take any other step,
|
|
which the Agent may, by notice to the Borrower, specify for any of the purposes described in Clause 6.2 or for any similar or related purpose.
|
6.2
|
Purposes of further assurances.
Those purposes are:
|
(a)
|
validly and effectively to create any Security Interest or right of any kind which the Security Trustee intended should be created by or pursuant to the Loan Agreement or any other Finance Document, each as amended and supplemented by this Agreement, and
|
(b)
|
implementing the terms and provisions of this Agreement.
|
6.3
|
Terms of further assurances.
The Security Trustee may specify the terms of any document to be executed by the Borrower or any Security Party under Clause 6.1, and those terms may include any covenants, powers and provisions which the Security Trustee considers appropriate to protect its interests.
|
6.4
|
Obligation to comply with notice.
The Borrower or any Security Party shall comply with a notice under Clause 6.1 by the date specified in the notice.
|
7
|
EXPENSES
|
7.1
|
Expenses.
The provisions of clause 20 (fees and expenses) of the Loan Agreement shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications.
|
8
|
COMMUNICATIONS
|
8.1
|
General.
The provisions of clause 28 (notices) of the Loan Agreement, as amended and supplemented by this Agreement, shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications.
|
9
|
SUPPLEMENTAL
|
9.1
|
Counterparts.
This Agreement may be executed in any number of counterparts.
|
9.2
|
Third Party rights
. A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.
|
10
|
LAW AND JURISDICTION
|
10.1
|
Governing law.
This Agreement shall be governed by and construed in accordance with English law.
|
10.2
|
Incorporation of the Loan Agreement provisions.
The provisions of clause 30 (law and jurisdiction) of the Loan Agreement, as amended and supplemented by this Agreement, shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications.
|
SECURITY TRUSTEE
|
|
SIGNED
by
for and on behalf of
HSH NORDBANK AG
|
)
)
)
|
Witness to all the
above signatures
|
)
)
)
|
Name:
Address:
|
|
for and on behalf of
APOLLONAS SHIPPING COMPANY
|
for and on behalf of
NAVARRO INTERNATIONAL S.A.
|
|
for and on behalf of
CARNATION SHIPPING COMPANY
|
for and on behalf of
CENTURION NAVIGATION LIMITED
|
|
for and on behalf of
IRAKLITOS SHIPPING COMPANY
|
for and on behalf of
POLARWIND MARITIME .S.A.
|
|
for and on behalf of
SHIPPING RIDER CO.
|
for and on behalf of
TEMPEST MARINE INC.
|
|
for and on behalf of
ROSS SHIPMANAGEMENT CO.
|
for and on behalf of
LAREDO MARITIME INC.
|
|
for and on behalf of
LORENZO SHIPMANAGEMENT INC.
|
for and on behalf of
SPLENDOR SHIPHOLDING S.A.
|
|
for and on behalf of
MANGO FINANCE CORP.
|
for and on behalf of
SORREL SHIPMANAGEMENT INC.
|
|
for and on behalf of
ADRIAN SHIPHOLDING INC.
|
for and on behalf of
FORBES MARITIME CO.
|
|
Clause | Page | |
1
|
INTERPRETATION
|
2
|
2
|
AGREEMENT OF THE CREDITOR PARTIES
|
3
|
3
|
CONDITIONS PRECEDENT
|
4
|
4
|
REPRESENTATIONS AND WARRANTIES
|
5
|
5
|
AMENDMENTS TO LOAN AGREEMENT AND OTHER FINANCE DOCUMENTS
|
5
|
6
|
FURTHER ASSURANCES
|
8
|
7
|
EXPENSES
|
8
|
8
|
COMMUNICATIONS
|
8
|
9
|
SUPPLEMENTAL
|
8
|
10
|
LAW AND JURISDICTION
|
8
|
SCHEDULE LENDERS
|
10 | |
EXECUTION PAGES | 11 |
(1)
|
CAPITAL PRODUCT PARTNERS L.P.
as
Borrower
;
|
(2)
|
THE BANKS AND FINANCIAL INSTITUTIONS
listed in Schedule 1 herein, as
Lenders
;
|
(3)
|
HSH NORDBANK AG
, acting through its office at
Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany
as
Mandated Lead Arranger
;
|
(4)
|
HSH NORDBANK AG
, acting through its office at
Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany
as
Facility Agent
;
|
(5)
|
HSH NORDBANK AG
, acting through its office at
Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany
, as
Security Trustee
;
|
(6)
|
HSH NORDBANK AG
, acting through its office at
Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany
, as
Bookrunner
;
|
(7)
|
HSH NORDBANK AG
,
acting through its office at
Martensdamm 6, D-24103 Kiel, Germany
as
Swap Bank
; and
|
(8)
|
DnB NOR BANK ASA,
acting through its office at 20 St. Dunstan’s Hill, London EC3R 8HY, England
as
Co-Arranger.
|
(A)
|
By a loan agreement dated 19 March 2008 (as amended and supplemented by a supplemental agreement dated 2 October 2009, the “
Loan Agreement
”) and made between (i) the Borrower, (ii) the Lenders, (iii) the Mandated Lead Arranger, (iv) the Facility Agent, (v) the Security Trustee, (vi) the Bookrunner, (vii) the Swap Bank and (viii) the Co-Arranger, the Lenders agreed to make available to the Borrower revolving credit and term loan facilities in an amount of (originally) US$350,000,000 (the “
Loan
”) in aggregate of which an amount of US$107,500,000 is by way of principal outstanding on the date hereof.
|
(B)
|
The Borrower has requested that the Lenders agree to:
|
|
(i)
|
the release of:
|
|
(a)
|
Forbes Maritime Co. (“
Forbes
”) from all its obligations under the Finance Documents to which it is a party and its substitution by Epicurus Shipping Company (“
Epicurus
”) as guarantor for the obligations of the Borrower under the Loan Agreement; and
|
|
(b)
|
Adrian Shipholdings Inc. (“
Adrian
”) and Atlantas Shipping Company (“
Atlantas
”) from their respective obligations under the Finance Documents to which each is a party; and
|
|
(ii)
|
the substitution of m.t. “ARISTOFANIS” (owned by Forbes) with the m.t. “EL PIPILA” (“
EL PIPILA
”) owned by Epicurus as one of the Ships on which the Loan shall be secured.
|
(C)
|
This Agreement sets out the terms and conditions on which the Lenders agree to:
|
|
(i)
|
substitute Forbes with Epicurus;
|
|
(ii)
|
release Adrian and Atlantas from their respective obligations under the Finance Documents to which each is a party;
|
|
(iii)
|
substitute m.t. “ARISTOFANIS” with m.t. “EL PIPILA”; and
|
|
(iv)
|
the consequential amendments to the Loan Agreement and the other Finance Documents in connection with those matters.
|
1
|
INTERPRETATION
|
1.1
|
Defined expressions.
Words and expressions defined in the Loan Agreement and the other Finance Documents shall have the same meanings when used in this Agreement unless the context otherwise requires.
|
1.2
|
Definitions.
In this Agreement, unless the contrary intention appears:
|
|
“New Earnings Account”
means an account opened or to be opened in the name of Epicurus with the Facility Agent in Hamburg designated “Epicurus Shipping Company – Earnings Account”, or any other account (with that or another office of the Facility Agent) which is designated by the Lenders as the Earnings Account for Epicurus for the purposes of the Loan Agreement;
|
|
“New Finance Documents”
means, together, the Financial Lease Agreement Assignment, the ATA, the GTA, the New Earnings Account Pledge, the New Guarantee, the New General Assignment and the New Manager’s Undertaking and, in the singular, means any of them;
|
|
“New General Assignment”
means a first priority general assignment of the Earnings, Insurances and Requisition Compensation in respect of “EL PIPILA” executed or to be executed by Epicurus in favour of the Security Trustee in such form as the Lenders may approve or require;
|
|
“New Guarantee”
means the guarantee of the obligations of the Borrower under the Loan Agreement and the other Finance Documents executed or to be executed by Epicurus in favour of the Security Trustee in such form as the Lenders may approve or require;
|
|
“New Manager’s Undertaking”
means a letter of undertaking executed or to be executed by the Approved Manager in favour of the Security Trustee in the terms required by the Lenders agreeing certain matters in relation to the Approved Manager serving as the manager of “EL PIPILA” and, assigning, as co-assured, its rights and interests in “EL PIPILA’s” Insurances in favour of the Security Trustee and subordinating the rights of the Approved Manager against “EL PIPILA” and Epicurus to the rights of the Lenders under the Finance Documents, in such form as the Lenders may approve or require; and
|
|
“
Underlying Documents
” means, together, the Financial Lease Agreement and the Bareboat Charter and, in the singular means either of them.
|
1.3
|
Application of construction and interpretation provisions of Loan Agreement.
Clauses 1.2 and 1.5 of the Loan Agreement apply, with any necessary modifications, to this Agreement.
|
2
|
AGREEMENT OF THE
CREDITOR PARTIES
|
2.2
|
Agreement of the Lenders.
The Lenders agree, subject to and upon the terms and conditions of this Agreement:
|
(a)
|
to substitute Forbes with Epicurus as guarantor of the obligations of the Borrower under the Loan Agreement and the other Finance Documents;
|
(b)
|
release of Adrian and Atlantas from their respective obligations under the Finance Documents to which each is a party;
|
(c)
|
to substitute “ARISTOFANIS” with “EL PIPILA” as one of the Ships on which the Loan will be secured; and
|
(d)
|
the amendments/variations to the Loan Agreement and the other Finance Documents referred to in Clause 5.
|
2.3
|
Agreement of the Creditor Parties.
The Creditor Parties agree, subject to and upon the terms and conditions of this Agreement, to the consequential amendment of the Loan Agreement and the other Finance Documents in connection with the matters referred to in Clause 2.1.
|
2.4
|
New Effective Date.
The agreement of the Lenders and the other Creditor Parties contained in Clauses 2.1 and 2.2 shall have effect on and from the New Effective Date.
|
3
|
CONDITIONS
PRECEDENT
|
3.1
|
General.
The agreement of the Lenders and the other Creditor Parties contained in Clauses 2.1 and 2.2 is subject to the fulfilment of the conditions precedent in Clause 3.2.
|
3.2
|
Conditions precedent.
The conditions referred to in Clause 3.1 are that the Facility Agent shall have received the following documents and evidence in all respects in form and substance satisfactory to the Facility Agent and its lawyers on or before the New Effective Date:
|
(a)
|
evidence that the persons executing this Second Supplemental Agreement on behalf of the Borrower are duly authorised to execute the same;
|
(b)
|
a certificate from an officer of Epicurus confirming the names of all its directors and shareholders and having attached thereto true and complete copies of its incorporation and constitutional documents;
|
(c)
|
true and complete copies of the resolutions passed at separate meetings of the directors and shareholders of each of the Borrower and Epicurus authorising and approving the execution of this Second Supplemental Agreement or, as the case may be, the New Finance Documents to which each is a party and any other document or action to which each is or is to be a party and authorising its directors or other representatives to execute the same on its behalf;
|
(d)
|
the original of any power of attorney issued by each of the Borrower and Epicurus pursuant to such resolutions aforesaid;
|
(e)
|
evidence satisfactory to the Agent that Epicurus is a direct or, as the case may be, indirect wholly owned subsidiary of the Borrower;
|
(f)
|
evidence that the New Earnings Account has been duly opened by Epicurus with the Facility Agent;
|
(g)
|
evidence that “EL PIPILA” is:
|
|
(i)
|
registered in the name of Arrendadora as lessee under the laws and flag of the Republic of Mexico; and
|
|
(ii)
|
insured in accordance with the relevant provisions of the Guarantee and all requirements thereof in respect of such insurances have been fulfilled;
|
(h)
|
each New Finance Document has been duly executed by Epicurus together with evidence that:
|
|
(i)
|
all notices required to be served under the Financial Lease Agreement Assignment, the New General Assignment and the New Manager’s Undertaking have been served and acknowledged in the manner therein provided; and
|
|
(ii)
|
save for the Security Interests created by or pursuant to each New Finance Document there are no Security Interests of any kind whatsoever on “EL PIPILA” or her Earnings, Insurances or Requisition Compensation;
|
(i)
|
certified true copies of each Underlying Document and any other document executed in connection therewith duly signed by the parties thereto;
|
(j)
|
copies of ISM DOC, SMC and the International Ship Security Certificate under the ISPS Code in respect of “EL PIPILA”;
|
(k)
|
at the cost of the Borrower, an insurance opinion from an independent insurance consultant acceptable to the Lenders on such matters relating to the insurance for “EL PIPILA” as the Agent may require;
|
(l)
|
certified copies of all documents (with a certified translation if an original is not in English) evidencing any other necessary action, approvals or consents with respect to this Second Supplemental Agreement and the New Finance Documents (including without limitation) all necessary governmental and other official approvals and consents in such pertinent jurisdictions as the Lenders deem appropriate;
|
(m)
|
such legal opinions as the Lenders may require in respect of the matters contained in this Second Supplemental Agreement and the New Finance Documents including, but not limited to, matters relating to Mexican law, Marshall Islands law and Liberian law; and
|
(n)
|
evidence that the agent referred to in clause 30.4 of the Loan Agreement has accepted its appointment as agent for service of process under this Second Supplemental Agreement and the New Finance Documents.
|
4
|
REPRESENTATIONS AND WARRANTIES
|
4.1
|
Repetition of Loan Agreement representations and warranties.
The Borrower represents and warrants to the Creditor Parties that the representations and warranties in clause 10 of the Loan Agreement remain true and not misleading if repeated on the date of this Agreement.
|
4.2
|
Repetition of Finance Document representations and warranties.
The Borrower and each of the other Security Parties represents and warrants to the Creditor Parties that the representations and warranties in the Finance Documents (other than the Loan Agreement) to which it is a party remain true and not misleading if repeated on the date of this Agreement.
|
5
|
AMENDMENTS TO LOAN AGREEMENT AND OTHER FINANCE DOCUMENTS
|
5.1
|
Specific amendments to Loan Agreement.
With effect on and from the New Effective Date the Loan Agreement shall be amended as follows:
|
(a)
|
by adding in clause 1.1 thereof the definitions of “Arrendadora”, “ATA”, “Bareboat Charter”, “Bareboat Charterer”, “BYNM”, “Financial Lease Agreement”, “Financial Lease Agreement Assignment”, “GTA” and “HSBC” which have been set out in Clause 1.1 hereof;
|
(b)
|
by adding the words “or, in the case of “EL PIPILA” during the Lease Period, the Mexican flag” after the words “or flag” in the beginning of the second line in the definition of “Approved Flag” in clause 1.1 thereof;
|
(c)
|
by adding the following new definitions in clause 1.1 thereof:
|
|
““
EL PIPILA
” means the medium range product tanker of approximately 47,000 deadweight tons registered:
|
|
(a)
|
during the Lease Period, in the name of Arrendadora, as lessee under Mexican flag with the name “EL PIPILA; or
|
|
(b)
|
at all other times in the name of Epicurus under the relevant Approved Flag with the name “ATROTOS”;
|
|
(a)
|
the date on which the Financial Lease Agreement is terminated, or rescinded or expires in accordance with its terms; or
|
|
(b)
|
the date on which the Ship is redelivered by Arrendadora to Epicurus pursuant to the terms of the Financial Lease Agreement;”;
|
(d)
|
by deleting sub-paragraph (b) in the definition of “Existing Charter” in clause 1.1 thereof;
|
(e)
|
by deleting the words “and “ARISTOFANIS”” in the second line sub-paragraph (b) of the definition of “Charterparty Assignment” in clause 1.1 thereof;
|
(f)
|
by deleting the word ““ARISTOFANIS”” and replacing it with the word ““EL PIPILA”” in the definition of “Existing Ships” in clause 1.1 thereof;
|
(g)
|
by deleting the words “Forbes Maritime Co. (“
Forbes
”)” and replacing them with the words “Epicurus Shipping Company (“
Epicurus
”)” in sub-paragraph (d) of the definition of “Existing Owner” in clause 1.1 thereof;
|
(h)
|
by adding the words “, Arrendadora”:
|
|
(i)
|
after the word “Owner” in the definition of “ISM Code” in clause 1.1 thereof;
|
|
(ii)
|
after the word “the Approved Manager” in the second line in clause 10.16 thereof;
|
(i)
|
by adding the words “Arrendadora,” after the words “(except” in the first line of the definition of “Security Party” in clause 1.1 thereof;
|
(j)
|
by adding the words “, Arrendadora, BYNM (in its capacity as trustee pursuant to the ATA and the GTA), the Bareboat Charterer” after the words “Approved Manager” in the third line of clause 11.11 thereof;
|
(k)
|
by adding the words “the Approved Manager, Arrendadora, BYNM (in its capacity as trustee pursuant to the GTA), the Bareboat Charterer” after the word “Borrower” in clause 11.17(a) thereof;
|
(l)
|
by adding the following new clause 11.22:
|
|
“11.22 Financial Lease Agreement.
If at any time the Financial Lease Agreement is terminated or rescinded or expires (through the passage of time) the Borrower shall procure that Epicurus shall immediately:
|
|
(a)
|
provide the Facility Agent with evidence acceptable to it and its lawyers that “EL PIPILA” has been permanently deleted from the Mexican flag;
|
|
(b)
|
provide the Facility Agent with evidence that Epicurus has no further obligations under the Financial Lease Agreement and that the ATA and the GTA are no longer in effect;
|
|
(c)
|
permanently register “EL PIPILA” in its name under an Approved Flag with the name “ATROTOS”;
|
|
(d)
|
duly register or record (as the case may be) a Mortgage against “EL PIPILA” as a valid first preferred ship or, as the case may be a first priority mortgage in accordance with the laws of the applicable Approved Flag State;
|
|
(e)
|
Execute in favour of the Security Trustee (if applicable) a Charterparty Assignment in respect of any Charterparty for “El Pipila”; and
|
|
(f)
|
Deliver to the Security Trustee an Approved Manager’s Undertaking in respect of “El Pipila” duly executed by the Approved Manager.”;
|
(l)
|
by inserting the words “or, in the case of “EL PIPILA” during the Lease Period, Arrendadora” after the word “Owner” in the first line of clause 14.10 thereof;
|
(m)
|
by inserting the words “or (in the case of “EL PIPILA”), during the Lease Period, Arrendadora’s” after the word “its” in the first line of clause 14.11(e) thereof;
|
(n)
|
by construing all references therein to “this Agreement” where the context admits as being references to “this Agreement as the same is amended and supplemented by this Second Supplemental Agreement and as the same may from time to time be further supplemented and/or amended”; and
|
(o)
|
by construing references to each of the Finance Documents as being references to each such document as it is from time to time supplemented and/or amended.
|
5.2
|
Amendments to Finance Documents
. With effect on and from the New Effective Date each of the Finance Documents other than the Loan Agreement shall be, and shall be deemed by this Agreement to have been, amended as follows:
|
(a)
|
the definition of, and references throughout each of the Finance Documents to, the Loan Agreement and any of the other Finance Documents shall be construed as if the same referred to the Loan Agreement and those Finance Documents as amended and supplemented by this Agreement; and
|
(b)
|
by construing references throughout each of the Finance Documents to “this Agreement”, “this Deed”, hereunder and other like expressions as if the same referred to such Finance Documents as amended and supplemented by this Agreement.
|
5.3
|
Finance Documents to remain in full force and effect.
The Finance Documents shall remain in full force and effect as amended and supplemented by:
|
(a)
|
the amendments to the Finance Documents contained or referred to in Clauses 5.1 and 5.2; and
|
(b)
|
such further or consequential modifications as may be necessary to give full effect to the terms of this Agreement.
|
6
|
FURTHER ASSURANCES
|
6.1
|
Borrower’s and each Security Party’s obligation to execute further documents etc.
The Borrower and each Security Party shall:
|
(a)
|
execute and deliver to the Security Trustee (or as it may direct) any assignment, mortgage, power of attorney, proxy or other document, governed by the law of England or such other country as the Security Trustee may, in any particular case, specify;
|
(b)
|
effect any registration or notarisation, give any notice or take any other step,
|
|
which the Facility Agent may, by notice to the Borrower, specify for any of the purposes described in Clause 6.2 or for any similar or related purpose.
|
6.2
|
Purposes of further assurances.
Those purposes are:
|
(a)
|
validly and effectively to create any Security Interest or right of any kind which the Security Trustee intended should be created by or pursuant to the Loan Agreement or any other Finance Document, each as amended and supplemented by this Agreement, and
|
(b)
|
implementing the terms and provisions of this Agreement.
|
6.3
|
Terms of further assurances.
The Security Trustee may specify the terms of any document to be executed by the Borrower or any Security Party under Clause 6.1, and those terms may include any covenants, powers and provisions which the Security Trustee considers appropriate to protect its interests.
|
6.4
|
Obligation to comply with notice.
The Borrower or any Security Party shall comply with a notice under Clause 6.1 by the date specified in the notice.
|
7
|
EXPENSES
|
7.1
|
Expenses.
The provisions of clause 20 (fees and expenses) of the Loan Agreement shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications.
|
8
|
COMMUNICATIONS
|
8.1
|
General.
The provisions of clause 28 (notices) of the Loan Agreement, as amended and supplemented by this Agreement, shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications.
|
9
|
SUPPLEMENTAL
|
9.1
|
Counterparts.
This Agreement may be executed in any number of counterparts.
|
9.2
|
Third Party rights
. A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.
|
10
|
LAW AND JURISDICTION
|
10.1
|
Governing law.
This Agreement shall be governed by and construed in accordance with English law.
|
10.2
|
Incorporation of the Loan Agreement provisions.
The provisions of clause 30 (law and jurisdiction) of the Loan Agreement, as amended and supplemented by this Agreement, shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications.
|
Lender
|
Lending Office
|
||
HSH Nordbank AG
|
Gerhart-Hauptmann-Platz 50
20095 Hamburg
Germany
Fax No: +49 40 33 33 34118
|
||
Alpha Bank A.E.
|
Akti Miaouli 89
185 38 Piraeus
Greece
Fax No: +30 210 429 0348
|
||
DnB NOR Bank ASA
|
20 St. Dunstan’s Hill
London EC3R 8HY
England
Fax No: 0044 207 626 5356
|
||
National Bank of Greece S.A.
|
Bouboulinas 2 &
Akti Miaouli
185 35 Piraeus
Fax No: +30 210 414 4120
|
||
Piraeus Bank A.E.
|
47-49 Akti Miaouli
185 36 Piraeus
Fax No: +30 210 429 2669
|
|
A.
|
CLP owns vessels and requires certain commercial and technical management services for the operation of its fleet;
|
|
B.
|
Pursuant to the Management Agreement, CLP engaged CSM to provide such commercial and technical management services to CLP on the terms set out therein;
|
|
C.
|
On 1
st
day March 2010, 2010 CLP acquired Epicurus Shipping Company (“Epicurus”) the vessel owning company of the product tanker “El Pipila” ex name Atrotos (the “
Vessel
”) currently registered in the port of Salina Cruz, Oaxaca, Mexico in the name of Arrendadora Ocean Mexicana S.A. De C.V. of the Republic of Mexico (“
Arrendadora
”) as lessee pursuant to a financial lease agreement (the “
Financial Lease Agreement
”
)
between Arrendadora as lessee and Epicurus as lessor ;
|
|
D.
|
Arrendadora, as lessee, has entered into a bareboat charter (the “
Bareboat Charter
”) with Pemex Refinación (“
Pemex
”) a public organization, decentralized from the federal government of Mexico, as bareboat/demise charterer in respect of the Vessel.
|
|
E.
|
Arrendadora has also entered into a management agreement with CSM, pursuant to which CSM performs a number of technical management services for the normal operation of the Vessel, excluding services related to the following: (i) fuel/bunkers and lubricating oil, (ii) victual/stores to the Vessel, (iii) crew (except that personnel required for the maintenance on board and on shore is to be provided by CSM), (iv) port fees, (v) catering, (vi) all Mexican taxes/duties and (vii) all type of insurances and bonds in relation to the Vessel (the “
Arrendadora Management Agreement
”). The technical and management services to be provided by CSM to Arrendadora are described exclusively and exhaustively in more detail in Schedule 2 of the Arrendadora Management Agreement.
|
|
F.
|
In accordance with the terms of the Arrendadora Management Agreement, Arrendadora pays a fixed daily amount of USD$3,075.00 (Three thousand seventy five 00/100 US Dollars) for the duration of the Financial Lease Agreement (the “
Arrendadora Management Fee
”). Following the formation of an Administrative Trust Agreement amongst, inter alia, Epicurus, CSM and Arrendadora such Arrendadora Management Fee is paid by Arrendadora to CSM through payment made to Epicurus.
|
|
G.
|
CLP has agreed to pay the Arrendadora Management Fee to CSM through Epicurus.
|
|
H.
|
In addition to the services set out in the Arrendadora Management Agreement, CLP has agreed to pay a fixed daily fee of USD$500 to CSM for the provision of certain additional services not provided under the Arrendadora Management Agreement (the “
CLP Bareboat Fee
”);
|
|
I.
|
CLP has requested that CSM agree to amend certain provisions of the Management Agreement, as set forth herein; and
|
|
J.
|
CSM is willing to agree to such amendments as set forth herein.
|
|
(b) Schedule “B” of the Management Agreement is hereby amended to read in its entirety as follows:
|
Vessel Name
|
Daily Fee in US$
|
|
Atlantas
|
250
|
|
Aktoras
|
250
|
|
Agisilaos
|
5,500
|
|
Arionas
|
5,500
|
|
Axios
|
5,500
|
|
Aiolos
|
250
|
|
Avax
|
5,500
|
|
Akeraios
|
5,500
|
|
Anemos I
|
5,500
|
|
Apostolos
|
5,500
|
|
Alexandros II
|
250
|
|
Aristotelis II
|
250
|
|
Aris II
|
250
|
|
Attikos
|
5,500
|
|
Amore Mio II
|
8,500
|
|
Aristofanis
|
5,500
|
|
Agamemnon II
|
6,500
|
|
Ayrton II
|
6,500
|
|
El Pipila
(ex Atrotos)
|
3,575 (3,075 + 500)
|
Vessel Name
|
Expected
Termination Date
|
|
Atlantas
|
January-April 2011
|
|
Aktoras
|
April-July 2011
|
|
Agisilaos
|
May-August 2011
|
|
Arionas
|
August-November 2011
|
|
Axios
|
December 2011-March 2012
|
|
Aiolos
|
November 2011-February 2012
|
|
Avax
|
December 2011-March 2012
|
|
Akeraios
|
May-August 2012
|
|
Anemos I
|
July-October 2012
|
|
Apostolos
|
July-October 2012
|
|
Alexandros II
|
December 2012-March 2013
|
|
Aristotelis II
|
March-June 2013
|
|
Aris II
|
May-August 2013
|
|
Attikos
|
September-November 2012
|
|
Amore Mio II
|
March - April 2013
|
|
Aristofanis
|
March - April 2013
|
|
Agamemnon II
|
October 2013
|
|
Ayrton II
|
March 2014
|
|
El Pipila
(ex Atrotos)
|
March 2014
|
CAPITAL PRODUCT PARTNERS L.P. BY ITS GENERAL PARTNER, CAPITAL GP L.L.C.,
|
|||
By:
|
/s/ Ioannis E. Lazaridis | ||
Name: Ioannis E. Lazaridis | |||
Title: Chief Executive Officer and Chief Financial Officer of
Capital GP L.L.C. |
|||
CAPITAL SHIP MANAGEMENT CORP.,
|
|||
|
By:
|
/s/ Nikolaos Syntichakis | |
Name: Nikolaos Syntichakis | |||
Title: Attorney-in-Fact | |||
|
A.
|
CLP owns vessels and requires certain commercial and technical management services for the operation of its fleet;
|
|
B.
|
Pursuant to the Management Agreement, CLP engaged CSM to provide such commercial and technical management services to CLP on the terms set out therein;
|
|
C.
|
CLP wishes to acquire all of the issued and outstanding shares of capital stock of Adrian Shipholding Inc., a corporation organized under the laws of the Republic of the Marshall Islands which holds record and beneficial ownership title to the Liberian flagged product tanker “Alkiviadis”;
|
|
D.
|
CLP wishes for CSM to provide commercial and technical services under the Management Agreement with respect to the product tanker Alkiviadis;
|
|
E.
|
CLP has requested that CSM agree to amend certain provisions of the Management Agreement, as set forth herein; and
|
|
F.
|
CSM is willing to agree to such amendments as set forth herein.
|
Vessel Name
|
Daily Fee in US$
|
||||
Atlantas
|
250 | ||||
Aktoras
|
250 | ||||
Agisilaos
|
5,500 | ||||
Arionas
|
5,500 | ||||
Axios
|
5,500 | ||||
Aiolos
|
250 | ||||
Avax
|
5,500 | ||||
Akeraios
|
5,500 | ||||
Anemos I
|
5,500 | ||||
Apostolos
|
5,500 | ||||
Alexandros II
|
250 | ||||
Aristotelis II
|
250 | ||||
Aris II
|
250 | ||||
Attikos
|
5,500 | ||||
Amore Mio II
|
8,500 | ||||
Aristofanis
|
5,500 | ||||
Agamemnon II
|
6,500 | ||||
Ayrton II
|
6,500 | ||||
El Pipila
(ex Atrotos)
|
3,575 | (3,075 + 500) | |||
Alkiviadis
|
7,000 |
Vessel Name
|
Expected
Termination Date
|
|
Atlantas
|
January—April 2011
|
|
Aktoras
|
April—July 2011
|
|
Agisilaos
|
May—August 2011
|
|
Arionas
|
August—November 2011
|
|
Axios
|
December 2011—March 2012
|
|
Aiolos
|
November 2011—February 2012
|
|
Avax
|
December 2011—March 2012
|
|
Akeraios
|
May—August 2012
|
|
Anemos I
|
July—October 2012
|
|
Apostolos
|
July—October 2012
|
|
Alexandros II
|
December 2012—March 2013
|
|
Aristotelis II
|
March—June 2013
|
|
Aris II
|
May—August 2013
|
|
Attikos
|
September—November 2012
|
|
Amore Mio II
|
March — April 2013
|
|
Aristofanis
|
March — April 2013
|
|
Agamemnon II
|
October 2013
|
|
Ayrton II
|
March 2014
|
|
El Pipila
(ex Atrotos)
|
March 2014
|
|
Alkiviadis
|
June 2015
|
CAPITAL PRODUCT PARTNERS L.P. BY ITS
GENERAL PARTNER, CAPITAL GP L.L.C.,
|
|||
|
By:
|
/s/ Ioannis E. Lazaridis | |
Name: Ioannis E. Lazaridis | |||
Title: Chief Executive Officer and Chief
Financial Officer of Capital GP L.L.C.
|
|||
CAPITAL SHIP MANAGEMENT CORP.,
|
|||
|
By:
|
/s/ Nikolaos Syntichakis | |
Name: Nikolaos Syntichakis | |||
Title: Attorney-in-Fact
|
|
A.
|
CLP owns vessels and requires certain commercial and technical management services for the operation of its fleet;
|
|
B.
|
Pursuant to the Management Agreement, CLP engaged CSM to provide such commercial and technical management services to CLP on the terms set out therein;
|
|
C.
|
On the 13th day of August 2010, CLP acquired Canvey Shipmanagement Co. (“
Canvey
”), the vessel owning company of the product tanker “Insurgentes”, ex name Assos (the “
Vessel
”), currently registered in the port of Salina Cruz, Oaxaca, Mexico in the name of Arrendadora Ocean Mexicana S.A. De C.V. of the Republic of Mexico (“
Arrendadora
”) as lessee pursuant to a financial lease agreement (the “
Financial Lease Agreement
”
)
between Arrendadora as lessee and Canvey as lessor;
|
|
D.
|
Arrendadora, as lessee, has entered into a bareboat charter (the “
Bareboat Charter
”) with Pemex Refinación (“
Pemex
”) a public organization, decentralized from the federal government of Mexico, as bareboat/demise charterer in respect of the Vessel.
|
|
E.
|
Arrendadora has also entered into a management agreement with CSM, pursuant to which CSM performs a number of technical management services for the normal operation of the Vessel, excluding services related to the following: (i) fuel/bunkers and lubricating oil, (ii) victual/stores to the Vessel, (iii) crew (except that personnel required for the maintenance on board and on shore is to be provided by CSM), (iv) port fees, (v) catering, (vi) all Mexican taxes/duties and (vii) all type of insurances and bonds in relation to the Vessel (the “
Arrendadora Management Agreement
”). The technical and management services to be provided by CSM to Arrendadora are described exclusively and exhaustively in more detail in Schedule 2 of the Arrendadora Management Agreement.
|
|
F.
|
In accordance with the terms of the Arrendadora Management Agreement, Arrendadora pays a fixed daily amount of USD$3,075.00 (Three thousand seventy five 00/100 US Dollars) for the duration of the Financial Lease Agreement (the “
Arrendadora Management Fee
”). Following the formation of an Administrative Trust Agreement amongst, inter alia, Canvey, CSM and Arrendadora such Arrendadora Management Fee is paid by Arrendadora to CSM through payment made to Canvey.
|
|
G.
|
CLP has agreed to pay the Arrendadora Management Fee to CSM through Canvey.
|
|
H.
|
In addition to the services set out in the Arrendadora Management Agreement, CLP has agreed to pay a fixed daily fee of USD$500 to CSM for the provision of certain additional services not provided under the Arrendadora Management Agreement (the “
CLP Bareboat Fee
”);
|
|
I.
|
CLP has requested that CSM agree to amend certain provisions of the Management Agreement, as set forth herein; and
|
|
J.
|
CSM is willing to agree to such amendments as set forth herein.
|
Vessel Name
|
Daily Fee in US$
|
|||
Atlantas
|
250 | |||
Aktoras
|
250 | |||
Agisilaos
|
5,500 | |||
Arionas
|
5,500 | |||
Axios
|
5,500 | |||
Aiolos
|
250 | |||
Avax
|
5,500 | |||
Akeraios
|
5,500 | |||
Anemos I
|
5,500 | |||
Apostolos
|
5,500 | |||
Alexandros II
|
250 | |||
Aristotelis II
|
250 | |||
Aris II
|
250 | |||
Attikos
|
5,500 | |||
Amore Mio II
|
8,500 | |||
Aristofanis
|
5,500 | |||
Agamemnon II
|
6,500 | |||
Ayrton II
|
6,500 | |||
El Pipila
(ex Atrotos)
|
3,575 | (3,075 + 500) | ||
Alkiviadis
|
7,000 | |||
Insurgentes
(ex Assos)
|
3,575 | (3,075 + 500) |
Vessel Name
|
Expected
Termination Date
|
|
Atlantas
|
January-April 2011
|
|
Aktoras
|
April-July 2011
|
|
Agisilaos
|
May-August 2011
|
|
Arionas
|
August-November 2011
|
|
Axios
|
December 2011-March 2012
|
|
Aiolos
|
November 2011-February 2012
|
|
Avax
|
December 2011-March 2012
|
|
Akeraios
|
May-August 2012
|
|
Anemos I
|
July-October 2012
|
|
Apostolos
|
July-October 2012
|
|
Alexandros II
|
December 2012-March 2013
|
|
Aristotelis II
|
March-June 2013
|
|
Aris II
|
May-August 2013
|
|
Attikos
|
September-November 2012
|
|
Amore Mio II
|
March - April 2013
|
|
Aristofanis
|
March - April 2013
|
|
Agamemnon II
|
October 2013
|
|
Ayrton II
|
March 2014
|
|
El Pipila
(ex Atrotos)
|
March 2014
|
|
Alkiviadis
|
June 2015
|
|
Insurgentes
(ex Assos)
|
March 2014
|
CAPITAL PRODUCT PARTNERS L.P. BY ITS
GENERAL PARTNER, CAPITAL GP L.L.C.,
|
||||
|
By:
|
/s/ Ioannis E. Lazaridis | ||
Name: | Ioannis E. Lazaridis | |||
Title: | Chief Executive Officer and Chief Financial Officer of Capital GP L.L.C. | |||
CAPITAL SHIP MANAGEMENT CORP.
,
|
||||
|
By:
|
/s/ Nikolaos Syntichakis | ||
Name: | Nikolaos Syntichakis | |||
Title: | Attorney-in-Fact | |||
SECTION 1.01
|
Definitions
|
2
|
SECTION 2.01
|
Purchase and Sale of Shares
|
4
|
SECTION 2.02
|
Closing
|
5
|
SECTION 2.03
|
Place of Closing
|
5
|
SECTION 2.04
|
Purchase Price for Shares
|
5
|
SECTION 2.05
|
Payment of the Purchase Price
|
5
|
SECTION 3.01
|
Organization and Limited Partnership Authority
|
5
|
SECTION 3.02
|
Agreement Not in Breach of Other Instruments
|
5
|
SECTION 3.03
|
No Legal Bar
|
5
|
SECTION 3.04
|
Independent Investigation
|
6
|
SECTION 4.01
|
Organization and Corporate Authority
|
6
|
SECTION 4.02
|
Agreement Not in Breach
|
6
|
SECTION 4.03
|
No Legal Bar
|
6
|
SECTION 4.04
|
Good and Marketable Title to Shares
|
6
|
SECTION 4.05
|
The Shares
|
7
|
SECTION 4.06
|
Independent Investigation
|
7
|
SECTION 5.01
|
Organization Good Standing and Authority
|
7
|
SECTION 5.02
|
Capitalization
|
7
|
SECTION 5.03
|
Organizational Documents
|
8
|
SECTION 5.04
|
Agreement Not in Breach
|
8
|
SECTION 5.05
|
Litigation
|
8
|
SECTION 5.06
|
Indebtedness to and from Officers, etc.
|
8
|
SECTION 5.07
|
Personnel
|
8
|
SECTION 5.08
|
Contracts and Agreements
|
8
|
SECTION 5.09
|
Compliance with Law
|
9
|
SECTION 5.10
|
No Undisclosed Liabilities
|
9
|
SECTION 5.11
|
Disclosure of Information
|
9
|
SECTION 5.12
|
Payment of Taxes
|
9
|
SECTION 5.13
|
Permits
|
9
|
SECTION 5.14
|
No Material Adverse Change in Business
|
10
|
SECTION 6.01
|
Title to Vessel
|
10
|
SECTION 6.02
|
No Encumbrances
|
10
|
SECTION 6.03
|
Condition
|
10
|
SECTION 7.01
|
Financial Statements
|
11
|
SECTION 7.02
|
Return of Vessel
|
11
|
SECTION 8.01
|
Amendments and Waivers
|
11
|
SECTION 9.01
|
Indemnity by the Seller
|
11
|
SECTION 9.02
|
Indemnity by the Buyer
|
12
|
SECTION 9.03
|
Exclusive Post-Closing Remedy
|
12
|
SECTION 10.01
|
Governing Law
|
12
|
SECTION 10.02
|
Counterparts
|
13
|
SECTION 10.03
|
Complete Agreement
|
13
|
SECTION 10.04
|
Interpretation
|
13
|
SECTION 10.05
|
Severability
|
13 |
SECTION 10.06
|
Third Party Rights
|
13
|
SECTION 10.07
|
Notices
|
13
|
SECTION 10.08
|
Representations and Warranties to Survive
|
14
|
SECTION 10.09
|
Remedies
|
14
|
SECTION 10.10
|
Non-recourse to General Partner
|
14
|
(a)
|
if to Capital Maritime & Trading Corp., as follows:
|
(b)
|
c/o Capital Ship Management Corp.,
3 Iassonos Street, Piraeus, Greece
Attention: Evangelos M. Marinakis
Facsimile: 30 210 428 4286
|
if to Capital Product Partners L.P., as follows:
c/o Capital Ship Management Corp.,
3 Iassonos Street, Piraeus, Greece
Attention: Ioannis E. Lazaridis
Facsimile: 30 210 428 4285
|
CAPITAL MARITIME & TRADING CORP.
|
|
By:
|
/s/ Evangelos M. Marinakis |
Name: |
Evangelos M. Marinakis
|
Title: |
President and Chief Executive Officer
|
CAPITAL PRODUCT PARTNERS L.P.
|
|
By: Capital GP L.L.C., its general partner
|
|
By:
|
/s/ Ioannis E. Lazaridis |
Name: |
Ioannis E. Lazaridis
|
Title: |
Chief Executive Officer and Chief
Financial Officer of Capital GP, L.L.C.
|
SHARE PURCHASE AGREEMENT
Dated June 30
th
2010
between
CAPITAL MARITIME & TRADING CORP.
and
CAPITAL PRODUCT PARTNERS L.P.
|
SECTION 1.01.
|
Definitions
|
1
|
SECTION 2.01.
|
Purchase and Sale of Shares
|
3
|
SECTION 2.02.
|
Closing
|
4
|
SECTION 2.03.
|
Place of Closing
|
4
|
SECTION 2.04.
|
Purchase Price for Shares
|
4
|
SECTION 2.05.
|
Payment of the Purchase Price
|
4
|
SECTION 3.01.
|
Organization and Limited Partnership Authority
|
4
|
SECTION 3.02.
|
Agreement Not in Breach of Other Instruments
|
4
|
SECTION 3.03.
|
No Legal Bar
|
4
|
SECTION 3.04.
|
Independent Investigation
|
5
|
SECTION 4.01.
|
Organization and Corporate Authority
|
5
|
SECTION 4.02.
|
Agreement Not in Breach
|
5
|
SECTION 4.03.
|
No Legal Bar
|
5
|
SECTION 4.04.
|
Good and Marketable Title to Shares
|
5
|
SECTION 4.05.
|
The Shares
|
5
|
SECTION 5.01.
|
Organization Good Standing and Authority
|
6
|
SECTION 5.02.
|
Capitalization
|
6
|
SECTION 5.03.
|
Organizational Documents
|
6
|
SECTION 5.04.
|
Agreement Not in Breach
|
6
|
SECTION 5.05.
|
Litigation
|
7
|
SECTION 5.06.
|
Indebtedness to and from Officers, etc
|
7
|
SECTION 5.07.
|
Personnel
|
7
|
SECTION 5.08.
|
Contracts and Agreements
|
7
|
SECTION 5.09.
|
Compliance with Law
|
8
|
SECTION 5.10.
|
No Undisclosed Liabilities
|
8
|
SECTION 5.11
|
Disclosure of Information
|
8
|
SECTION 5.12
|
Payment of Taxes
|
8
|
SECTION 5.13
|
Permits
|
8
|
SECTION 5.14
|
No Material Adverse Change in Business
|
9
|
SECTION 6.01.
|
Title to Vessel
|
9
|
SECTION 6.02.
|
No Encumbrances
|
9
|
SECTION 6.03.
|
Condition
|
9
|
SECTION 7.01.
|
Financial Statements
|
9
|
SECTION 7.02.
|
Expenses
|
10
|
SECTION 8.01.
|
Amendments and Waivers
|
10
|
SECTION 9.01.
|
Indemnity by the Seller
|
10
|
SECTION 9.02.
|
Indemnity by the Buyer
|
11
|
SECTION 9.03.
|
Exclusive Post-Closing Remedy
|
11
|
SECTION 10.01.
|
Governing Law
|
11
|
SECTION 10.02.
|
Counterparts
|
11
|
SECTION 10.03.
|
Complete Agreement
|
11
|
SECTION 10.04.
|
Interpretation
|
11
|
SECTION 10.05.
|
Severability
|
11
|
SECTION 10.06.
|
Third Party Rights
|
12
|
SECTION 10.07.
|
Notices
|
12
|
SECTION 10.08.
|
Representations and Warranties to Survive
|
12
|
SECTION 10.09.
|
Remedies
|
12
|
SECTION 10.10
|
Non-recourse to General Partner
|
12
|
CAPITAL MARITIME & TRADING CORP., | ||||
|
by
|
/s/ Evangelos M. Marinakis | ||
Name: | Evangelos M. Marinakis | |||
Title: | President and Chief Executive Officer | |||
CAPITAL PRODUCT PARTNERS L.P. | ||||
by Capital GP L.L.C., its general partner | ||||
|
by
|
/s/ Ioannis E. Lazaridis | ||
Name: | Ioannis E. Lazaridis | |||
Title: | Chief Executive Officer and Chief Financial Officer of Capital GP, L.L.C. | |||
Table of Contents
|
|||
Page
|
|||
ARTICLE I
INTERPRETATION
|
|||
SECTION 1.01
|
Definitions
|
2
|
|
ARTICLE II
PURCHASE AND SALE OF SHARES; CLOSING
|
|||
SECTION 2.01
|
Purchase and Sale of Shares
|
4
|
|
SECTION 2.02
|
Closing
|
5
|
|
SECTION 2.03
|
Place of Closing
|
5
|
|
SECTION 2.04
|
Purchase Price for Shares
|
5
|
|
SECTION 2.05
|
Payment of the Purchase Price
|
5
|
|
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
|
|||
SECTION 3.01
|
Organization and Limited Partnership Authority
|
5
|
|
SECTION 3.02
|
Agreement Not in Breach of Other Instruments
|
5
|
|
SECTION 3.03
|
No Legal Bar
|
5
|
|
SECTION 3.04
|
Independent Investigation
|
6
|
|
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
|
|||
SECTION 4.01
|
Organization and Corporate Authority
|
6
|
|
SECTION 4.02
|
Agreement Not in Breach
|
6
|
|
SECTION 4.03
|
No Legal Bar
|
6
|
|
SECTION 4.04
|
Good and Marketable Title to Shares
|
6
|
|
SECTION 4.05
|
The Shares
|
7
|
|
SECTION 4.06
|
Independent Investigation
|
7
|
|
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLER
REGARDING THE VESSEL OWNING SUBSIDIARY
|
|||
SECTION 5.01
|
Organization Good Standing and Authority
|
7
|
|
SECTION 5.02
|
Capitalization
|
7
|
|
SECTION 5.03
|
Organizational Documents
|
8
|
|
SECTION 5.04
|
Agreement Not in Breach
|
8
|
SECTION 5.05
|
Litigation
|
8
|
|
SECTION 5.06
|
Indebtedness to and from Officers, etc.
|
8
|
|
SECTION 5.07
|
Personnel
|
8
|
|
SECTION 5.08
|
Contracts and Agreements
|
8
|
|
SECTION 5.09
|
Compliance with Law
|
9
|
|
SECTION 5.10
|
No Undisclosed Liabilities
|
9
|
|
SECTION 5.11
|
Disclosure of Information
|
9
|
|
SECTION 5.12
|
Payment of Taxes
|
9
|
|
SECTION 5.13
|
Permits
|
9
|
|
SECTION 5.14
|
No Material Adverse Change in Business
|
10
|
|
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF
THE SELLER REGARDING THE VESSEL
|
|||
SECTION 6.01
|
Title to Vessel
|
10
|
|
SECTION 6.02
|
No Encumbrances
|
10
|
|
SECTION 6.03
|
Condition
|
10
|
|
ARTICLE VII
COVENANTS
|
|||
SECTION 7.01
|
Financial Statements
|
11
|
|
SECTION 7.02
|
Return of Vessel
|
11
|
|
ARTICLE VIII
AMENDMENTS AND WAIVERS
|
|||
SECTION 8.01
|
Amendments and Waivers
|
11
|
|
ARTICLE IX
INDEMNIFICATION
|
|||
SECTION 9.01
|
Indemnity by the Seller
|
11
|
|
SECTION 9.02
|
Indemnity by the Buyer
|
12
|
|
SECTION 9.03
|
Exclusive Post-Closing Remedy
|
12
|
|
ARTICLE X
MISCELLANEOUS
|
|||
SECTION 10.01
|
Governing Law
|
12
|
|
SECTION 10.02
|
Counterparts
|
13
|
|
SECTION 10.03
|
Complete Agreement
|
13
|
|
SECTION 10.04
|
Interpretation
|
13
|
SECTION 10.05
|
Severability
|
13
|
|
SECTION 10.06
|
Third Party Rights
|
13
|
|
SECTION 10.07
|
Notices
|
13
|
|
SECTION 10.08
|
Representations and Warranties to Survive
|
14
|
|
SECTION 10.09
|
Remedies
|
14
|
|
SECTION 10.10
|
Non-recourse to General Partner
|
14
|
(a)
|
if to Capital Maritime & Trading Corp., as follows:
|
c/o Capital Ship Management Corp.,
3 Iassonos Street, Piraeus, Greece
Attention: Evangelos M. Marinakis
Facsimile: 30 210 428 4286
|
|
(b)
|
if to Capital Product Partners L.P., as follows:
c/o Capital Ship Management Corp.,
3 Iassonos Street, Piraeus, Greece
Attention: Ioannis E. Lazaridis
Facsimile: 30 210 428 4285
|
CAPITAL MARITIME & TRADING CORP.
|
||||
|
By:
|
/s/ Evangelos M. Marinakis | ||
Name: | Evangelos M. Marinakis | |||
Title: | President and Chief Executive Officer | |||
CAPITAL PRODUCT PARTNERS L.P.
By: Capital GP L.L.C., its general partner |
||||
|
By:
|
/s/ Ioannis E. Lazaridis | ||
Name: | Ioannis E. Lazaridis | |||
Title: |
Chief Executive Officer and Chief
Financial Officer of Capital GP, L.L.C.
|
|||
|
(i)
|
August 31, 2013, or
|
|
(ii)
|
if not then fully vested, in full upon the death or total and permanent disability of the Recipient (such disability as determined in good faith by the Board based on an examination by a qualified medical doctor appointed by the Board), or
|
|
(iii)
|
if not then fully vested, upon the Recipient’s Retirement (defined as the termination of employment after attainment of age 65 or other mutually agreed retirement date, whichever later) pro rata in an amount equal to the Recipient’s Restricted Units times the Number of days from Award Date to Retirement divided by the Number of days from the Award Date to the Vesting Date,
|
Name of Subsidiary
|
Jurisdiction of Incorporation
|
Proportion of Ownership Interest
|
Capital Product Operating GP L.L.C.
|
Republic of The Marshall Islands
|
100%
|
|
1.
|
I have reviewed this annual report on Form 20-F of Capital Product Partners L.P.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
|
|
4.
|
The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d.
|
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
|
|
5.
|
The company’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
|
By: |
/s/ Ioannis E. Lazaridis
|
|
|||
Name:
|
Ioannis E. Lazaridis
|
|
|||
Title: |
Chief Executive Officer
|
|
|
1.
|
I have reviewed this annual report on Form 20-F of Capital Product Partners L.P.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
|
|
4.
|
The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d.
|
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
|
|
5.
|
The company’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
|
By: |
/s/ Ioannis E. Lazaridis
|
|
|||
Name:
|
Ioannis E. Lazaridis
|
|
|||
Title: |
Chief Financial Officer
|
|
1.
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By: |
/s/ Ioannis E. Lazaridis
|
|
|||
Name:
|
Ioannis E. Lazaridis
|
|
|||
Title: |
Chief Executive Officer
|
|