☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Common Stock, par value $0.01 per share |
GASS |
The Nasdaq Stock Market LLC |
Large accelerated filer | ☐ | Accelerated filer | ☒ | Non-accelerated filer |
☐ | Emerging growth company | ☐ |
U.S. GAAP ☒ | International Financial Reporting Standards as issued by the | Other ☐ | ||||||
International Accounting Standards Board | ☐ |
1 | ||||||
Part I | 2 | |||||
Item 1. | 2 | |||||
Item 2. | 2 | |||||
Item 3. | 2 | |||||
Item 4. | 32 | |||||
Item 4A. | 45 | |||||
Item 5. | 45 | |||||
Item 6. | 64 | |||||
Item 7. | 70 | |||||
Item 8. | 74 | |||||
Item 9. | 75 | |||||
Item 10. | 75 | |||||
Item 11. | 88 | |||||
Item 12. | 90 | |||||
PART II | 91 | |||||
Item 13. | 91 | |||||
Item 14. | 91 | |||||
Item 15. | 91 | |||||
Item 16A. | 94 | |||||
Item 16B. | 94 | |||||
Item 16C. | 94 | |||||
Item 16D. | 95 | |||||
Item 16E. | 95 | |||||
Item 16F. | 95 | |||||
Item 16G. | 95 | |||||
Item 16H. | 95 | |||||
Item 16I. | 95 | |||||
PART III | 96 | |||||
Item 17. | 96 | |||||
Item 18. | 96 | |||||
Item 19. | 96 |
• | future operating or financial results; |
• | global and regional economic and political conditions, including the conflict in Ukraine and related global response and sanctions; |
• | the impact of the COVID-19 pandemic and efforts throughout the world to contain its spread, including effects on global economic activity, demand for seaborne transportation of LPG, the ability and willingness of charterers to fulfill their obligations to us and prevailing charter rates, availability of shipyards performing scrubber installations, drydocking and repairs, changing vessel crews and availability of financing; |
• | pending or recent acquisitions, business strategy and expected capital spending or operating expenses; |
• | our cooperation with our joint venture partners and any expected benefits from such joint venture arrangements; |
• | competition in the LPG marine transportation industry; |
• | shipping market trends, including charter rates, factors affecting supply and demand and world fleet composition; |
• | potential disruption of shipping routes due to accidents, diseases, pandemics, political events, piracy or acts by terrorists, including the impact of the COVID-19 pandemic and the ongoing efforts throughout the world to contain it; |
• | ability to employ our vessels profitably; |
• | performance by the counterparties to our charter agreements; |
• | future liquefied petroleum gas (“LPG”) prices and production; |
• | future supply and demand for oil and natural gas of which LPG is a byproduct; |
• | our financial condition and liquidity, including our ability to obtain financing in the future to fund capital expenditures, acquisitions and other general corporate activities, the terms of such financing and our ability to comply with covenants set forth in our existing and future financing arrangements; |
• | performance by the shipyards constructing our newbuilding vessels; and |
• | expectations regarding vessel acquisitions and dispositions. |
Item 1. |
Identity of Directors, Senior Management and Advisers |
Item 2. |
Offer Statistics and Expected Timetable |
Item 3. |
Key Information |
• | The cyclical nature of the demand for LPG transportation may lead to significant changes in our chartering and vessel utilization, which may result in difficulty finding profitable charters for our vessels. |
• | Economic and political factors, including increased trade protectionism and tariffs and health pandemics, such as the COVID-19 pandemic, and the conflict in Ukraine and related sanctions, could materially adversely affect our business, financial position and results of operations. |
• | The impact of the COVID-19 pandemic and efforts throughout the world to contain its spread, including effects on global economic activity, demand for energy and seaborne energy transportation, the ability and willingness of charterers to fulfill their obligations to us, charter rates for LPG carriers, drydocking and repairs, changing vessel crews and availability of financing. |
• | Our revenues, operations and future growth could be adversely affected by a decrease in supply of liquefied natural gas, or natural gas. |
• | An over-supply of ships may lead to a reduction in charter rates, vessel values and profitability. |
• | The market values of our vessels may remain at relatively low levels for a prolonged period and over time may fluctuate significantly. When the market values of our vessels are low, we may incur a loss on sale of a vessel or record an impairment charge, which may adversely affect our profitability and possibly lead to defaults under our loan agreements. |
• | Technological innovation could reduce our charter hire income and the value of our vessels. |
• | Changes in fuel, or bunker, prices may adversely affect profits. |
• | We are subject to regulation and liability under environmental laws that could require significant expenditures and affect our financial conditions and results of operations. |
• | Risks involved with operating ocean-going vessels could affect our business and reputation, which would adversely affect our revenues and stock price. |
• | Governments could requisition our vessels during a period of war or emergency, and maritime claimants could arrest our vessels. |
• | Our operations outside the United States expose us to global risks, such as political conflict, terrorism and public health concerns, which may interfere with the operation of our vessels. |
• | We are dependent on the ability and willingness of our charterers to honor their commitments to us for all our revenues . |
• | We are exposed to the volatile spot market and charters at attractive rates may not be available when the charters for our vessels expire which would have an adverse impact on our revenues and financial condition. |
• | We depend upon a few significant customers for a large part of our revenues. The loss of one or more of these customers could adversely affect our financial performance. |
• | Our loan agreements or other financing arrangements contain restrictive covenants that may limit our liquidity and corporate activities. |
• | The market values of our vessels may decrease, which could cause us to breach covenants in our credit and loan facilities, and could have a material adverse effect on our business, financial condition and results of operations. |
• | A significant increase in our debt levels may adversely affect us and our cash flows. |
• | We depend on our manager, Stealth Maritime Corporation S.A., to operate our business. |
• | Delays in the delivery of any newbuilding or secondhand LPG carriers we agree to acquire could harm our operating results. |
• | We are exposed to volatility in, and related to the phasing out of, LIBOR. |
• | We may enter into derivative contracts to hedge our exposure to fluctuations in interest rates, which could result in higher than market interest rates and charges against our income. |
• | We may have to pay tax on U.S.-source income or may become a passive foreign investment company. |
• | As a foreign private issuer we are entitled to claim an exemption from certain Nasdaq corporate governance standards, and if we elected to rely on this exemption, you may not have the same protections afforded to stockholders of companies that are subject to all of the Nasdaq corporate governance requirements. |
• | We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of corporate law or a bankruptcy act, and it may be difficult to enforce service of process and judgments against us and our officers and directors. |
• | The market price of our common stock has fluctuated and may continue to fluctuate in the future, and we may not pay dividends on our common stock. |
• | Anti-takeover provisions in our organizational documents and other agreements could make it difficult for our stockholders to replace or remove our current Board of Directors or have the effect of discouraging, delaying or preventing a merger or acquisition, which could adversely affect the market price of our common stock. |
• | supply and demand for LPG products; |
• | the price of oil; |
• | global and regional economic conditions; |
• | the distance LPG products are to be moved by sea; |
• | availability of alternative transportation means; |
• | changes in seaborne and other transportation patterns; |
• | environmental and other regulatory developments; |
• | weather; and |
• | pandemics, such as the outbreak and spread of COVID-19; |
• | the number of newbuilding deliveries; |
• | the scrapping rate of older vessels; |
• | LPG carrier prices; |
• | changes in environmental and other regulations that may limit the useful lives of vessels; and |
• | the number of vessels that are out of service. |
• | adverse global or regional economic or political conditions, particularly in LPG consuming regions, which could reduce energy consumption; |
• | a reduction in global or general industrial activity specifically in the plastics and chemical industries; |
• | a decline in the price of oil which makes LPG a less attractive alternative for some uses and generally leads to reduced production of oil and gas; |
• | changes in the cost of petroleum and natural gas from which LPG is derived; |
• | decreases in the consumption of LPG or natural gas due to availability of new alternative energy sources, or increases in the price of LPG or natural gas relative to other energy sources, or other factors making consumption of LPG or natural gas less attractive; and |
• | increases in pipelines for LPG, which are currently few in number, linking production areas and industrial and residential areas consuming LPG, or the conversion of existing non-petroleum gas pipelines to petroleum gas pipelines in those markets. |
• | general economic and market conditions affecting the shipping industry; |
• | age, sophistication and condition of our vessels; |
• | types and sizes of vessels; |
• | availability of other modes of transportation; |
• | cost and delivery of schedules for new-buildings; |
• | governmental and other regulations; |
• | supply and demand for LPG products; |
• | prevailing level of LPG charter rates; and |
• | technological advances. |
• | marine accident or disaster; |
• | piracy and terrorism; |
• | explosions; |
• | environmental accidents; |
• | pollution; |
• | loss of life; |
• | cargo and property losses or damage; and |
• | business interruptions caused by mechanical failure, human error, war, political action in various countries, labor strikes or adverse weather conditions. |
• | incur additional indebtedness; |
• | create liens on our assets; |
• | sell capital stock of our subsidiaries; |
• | make investments; |
• | engage in mergers or acquisitions; |
• | pay dividends; and |
• | make capital expenditures. |
• | the administration, chartering and operations supervision of our fleet; |
• | our recognition and acceptance as owners of LPG carriers, including our ability to attract charterers; |
• | relations with charterers and charter brokers; |
• | operational expertise; and |
• | management experience. |
• | locating and acquiring suitable vessels; |
• | identifying and completing acquisitions or joint ventures; |
• | integrating any acquired business successfully with our existing operations; |
• | expanding our customer base; and |
• | obtaining required financing. |
• | authorizing our Board of Directors to issue “blank check” preferred stock without stockholder approval; |
• | providing for a classified Board of Directors with staggered three-year terms; |
• | prohibiting cumulative voting in the election of directors; |
• | authorizing the removal of directors only for cause and only upon the affirmative vote of the holders of 80% of the outstanding shares of our common stock entitled to vote for the directors; |
• | limiting the persons who may call special meetings of stockholders; |
• | establishing advance notice requirements for nominations for election to our Board of Directors or for proposing matters that can be acted on by stockholders at stockholder meetings; and |
• | prohibiting certain transactions with interested stockholders. |
Item 4. |
Information on the Company |
Name |
Year Built |
Vessel Size (cbm) |
Vessel Type |
Employment Status |
Expiration of Charter(1) | |||||
Eco Arctic |
2018 | 22,363 | semi-refrigerated |
Time Charter | November 2022 | |||||
Eco Ice |
2018 | 22,358 | semi-refrigerated | Spot | — | |||||
Eco Freeze |
2018 | 22,353 | semi-refrigerated | Time Charter | April 2022 | |||||
Eco Frost |
2017 | 22,359 | semi-refrigerated | Time Charter | August 2022 | |||||
Eco Blizzard |
2021 | 11,013 | fully-pressurized | Time Charter | October 2022 | |||||
Eco Alice |
2020 | 7,543 | fully-pressurized | Time Charter | July 2022 | |||||
Eco Nical(4) |
2016 | 7,541 | fully-pressurized | Time Charter | October 2022 | |||||
Gas Husky |
2012 | 7,516 | fully-pressurized | Time Charter | July 2022 | |||||
Gas Esco |
2012 | 7,514 | fully-pressurized | Spot | — | |||||
Eco Dominator(6) |
2016 | 7,221 | fully-pressurized | Time Charter | March 2023 | |||||
Eco Galaxy |
2015 | 7,213 | fully-pressurized | Time Charter | December 2022 | |||||
Eco Chios |
2014 | 7,211 | fully-pressurized | Bareboat Charter | May 2022 | |||||
Eco Stream |
2014 | 7,210 | fully-pressurized | Spot | — | |||||
Gas Flawless |
2007 | 6,337 | fully-pressurized | Time Charter | April 2022 | |||||
Gas Prodigy |
2003 | 5,031 | fully-pressurized | Time Charter | April 2022 | |||||
Eco Enigma |
2015 | 5,025 | fully-pressurized | Time Charter | January 2023 | |||||
Eco Universe(6) |
2015 | 5,025 | fully-pressurized | Time Charter | February 2023 | |||||
Eco Czar |
2015 | 5,020 | fully-pressurized | Time Charter | June 2022 | |||||
Eco Nemesis(6) |
2015 | 5,019 | fully-pressurized | Time Charter | March 2023 | |||||
Gas Monarch(7) |
1997 | 5,018 | fully-pressurized | Spot | — | |||||
Gas Elixir |
2011 | 5,018 | fully-pressurized | Spot | — | |||||
Gas Cerberus |
2011 | 5,018 | fully-pressurized | Time Charter | April 2022 | |||||
Gas Myth(6) |
2011 | 5,018 | fully-pressurized | Time Charter | January 2023 | |||||
Eco Invictus(6) |
2014 | 5,016 | fully-pressurized | Time Charter | November 2022 | |||||
Eco Texiana |
2020 | 5,030 | fully-pressurized | Time Charter | July 2022 | |||||
Eco Green(6) |
2015 | 4,991 | fully-pressurized | Time Charter | June 2022 | |||||
Eco Dream |
2015 | 4,989 | fully-pressurized | Time Charter | June 2022 | |||||
Gas Spirit |
2001 | 4,112 | fully-pressurized | Time Charter | April 2022 | |||||
Eco Elysium(5) |
2014 | 3,526 | fully-pressurized | Time Charter | June 2024 | |||||
Eco Royalty(6) |
2015 | 3,525 | fully-pressurized | Time Charter | February 2023 | |||||
Eco Corsair |
2014 | 3,524 | fully-pressurized | Time Charter | February 2023 | |||||
Gas Astrid |
2009 | 3,514 | fully-pressurized | Bareboat Charter | April 2022 | |||||
Gas Exelero |
2009 | 3,513 | fully-pressurized | Bareboat Charter | June 2022 | |||||
Gas Alice(6) |
2006 | 3,513 | fully-pressurized | Time Charter | August 2023 | |||||
Gas Galaxy |
1997 | 3,312 | fully-pressurized | Time Charter | September 2022 | |||||
259,508 cbm |
||||||||||
JV LPG Vessels (7 vessels) |
||||||||||
Eco Nebula(2) |
2007 | 38,898 | fully-refrigerated | Time Charter | July 2022 | |||||
Gaschem Bremen(3) |
2010 | 35,232 | fully-refrigerated | Time Charter | March 2023 | |||||
Eco Evoluzione (ex. Gaschem Stade)(3) |
2010 | 35,214 | fully-refrigerated | Time Charter | August 2022 | |||||
Gas Haralambos(2)(6) |
2007 | 7,020 | fully-pressurized | Time Charter | June 2022 | |||||
Gas Defiance(2) |
2008 | 5,018 | fully-pressurized | Time Charter | May 2022 | |||||
Gas Shuriken(2) |
2008 | 5,018 | fully-pressurized | Time Charter | December 2022 | |||||
Eco Lucidity(2)(6) |
2015 | 3,517 | fully-pressurized | Time Charter | December 2022 | |||||
129,918 cbm |
||||||||||
Total LPG Carrier Fleet: 42 vessels |
389,426 cbm |
(1) | Earliest date charters could expire. |
(2) | JV vessel owned by a joint venture established in 2019 in which we own a 50.1% equity interest. |
(3) | JV vessel owned by a joint venture established in 2020 in which we own a 51% equity interest. |
(4) | Charterer has the option to extend charter for an additional six months. |
(5) | Charterer has option to extend charter for an additional three-year period. |
(6) | Charterer has option to extend charter for an additional year. |
(7) | On April 19, 2022, the Company entered into a memorandum of agreement for the disposal of the vessel “Gas Monarch” to an unaffiliated third party for $2,375,000, which sale remains subject to customary conditions. |
• | natural resources damage and the costs of assessment thereof; |
• | real and personal property damage; |
• | net loss of taxes, royalties, rents, fees and other lost revenues; |
• | lost profits or impairment of earning capacity due to property or natural resources damage; and |
• | net cost of public services necessitated by a spill response, such as protection from fire, safety or health hazards, and loss of subsistence use of natural resources. |
• | on-board installation of automatic information systems, or AIS, to enhance vessel-to-vessel vessel-to-shore |
• | 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 |
Item 5. |
Operating and Financial Review and Prospects |
• | Charters and revenues. |
• | Charters and expenses. |
particular voyage. Under a bareboat charter, the charterer is responsible for all vessel operating expenses and voyage expenses incurred during the term of the charter. Under a voyage or spot charter, we are responsible for both the vessel operating expenses and the voyage expenses incurred in performing the charter. |
• | Calendar days off-hire days associated with major repairs, dry dockings or special or intermediate surveys. Calendar days are an indicator of the size of our fleet over a period and affect both the amount of revenue and the amount of expense that we record during that period. In the first quarter of 2019, we agreed to sell a 49.9% equity interest in the entities owning four of our LPG carriers. We may also elect to sell additional vessels in our fleet from time to time, such as the two LPG carriers we sold in the first quarter of 2022, the two LPG carriers we sold in 2021 (including one JV vessel), the two LPG carriers we sold in 2020, the one LPG carrier we sold in 2019 (excluding four of our vessels in which we sold a 49.9% equity interest in our joint venture arrangement). During the same period we acquired seven LPG carriers thus increasing the total number of calendar days. |
• | Voyage days off-hire days associated with major repairs, dry dockings or special or intermediate surveys. The shipping industry uses voyage days (also referred to as available days) to measure the number of days in a period during which vessels are available to generate revenues. |
• | Fleet utilization; Fleet operational utilization off-hire for reasons such as scheduled repairs, vessel upgrades or drydockings and other surveys, and uses fleet operational utilization to also measure a company’s efficiency in finding suitable employment for its vessels. |
• | Cyclicality |
of, and demand for, LPG carrier capacity. From the last quarter of 2011 until the third quarter of 2014, LPG carrier market conditions generally improved from low levels with higher LPG carrier charter rates and utilization levels, however, the impact of the dramatic decline in oil prices on demand for LPG adversely affected LPG carrier charter rates and utilization levels from the fourth quarter of 2014 until the latter part of 2017, particularly in the smaller vessel classes. In 2017, there were increases in oil prices and in the second half of 2017 some limited improvement in LPG carrier charter rates and utilization levels which continued in 2018 and until the beginning of 2020, when the broader shipping market was globally affected by the outbreak of the COVID-19 virus and the resulting disruptions to the international shipping industry and energy demand, have and could continue to negatively affect small and medium range LPG carrier charter rates. |
• | Seasonality |
• | revenue estimates based on nine-year historical average rates (base rate) for periods for which there is no charter in place for vessels of less than twenty years of age and, |
• | revenue estimates based on five-year historical average rates for periods for which there is no charter in place for vessels of twenty years of age and above, |
• | 96.4% for vessels of less than twenty years of age, and |
• | actual five-year historical average utilization rate for the vessels of twenty years of age and above. |
Percentage difference between our average 2021 rates as compared with the base rates for the vessels |
5-year historicalaverage rate |
3-year historicalaverage rate |
1-year historicalaverage rate |
|||||||||||||||||||||||||||||
of less than twenty years of age |
of twenty years of age and above |
No. of vessels |
Amount ($ million) |
No. of vessels |
Amount ($ million) |
No. of vessels |
Amount ($ million) |
|||||||||||||||||||||||||
LPG Carriers |
0.59 | % | -1.86 | % | — | — | — | — | 1 | 1.8 |
Year Ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
INCOME STATEMENT DATA |
||||||||||||
Revenues |
$ | 144,259,312 | $ | 145,003,021 | $ | 150,204,527 | ||||||
Revenues—related party |
— | — | — | |||||||||
Total Revenues |
$ | 144,259,312 | $ | 145,003,021 | $ | 150,204,527 | ||||||
Operating expenses: |
||||||||||||
Voyage expenses |
15,201,978 | 12,259,795 | 20,342,186 | |||||||||
Voyage expenses—related party |
1,788,543 | 1,799,209 | 1,867,100 | |||||||||
Vessels’ operating expenses |
48,619,594 | 52,344,721 | 60,443,813 | |||||||||
Vessels’ operating expenses—related party |
966,500 | 950,500 | 1,065,750 | |||||||||
Charter hire expenses |
6,268,988 | 318,606 | — | |||||||||
Dry-docking costs |
1,094,306 | 3,640,327 | 5,285,490 | |||||||||
Management fees |
5,730,910 | 5,599,351 | 5,831,900 | |||||||||
General and administrative expenses |
3,706,320 | 2,301,308 | 4,337,013 | |||||||||
Depreciation |
37,693,733 | 37,455,093 | 37,125,903 | |||||||||
Impairment loss |
993,916 | 3,857,307 | 44,616,214 | |||||||||
Other operating costs |
— | — | — | |||||||||
Net loss on sale of vessels |
485,516 | 1,134,854 | 304,210 | |||||||||
Total expenses |
122,550,304 | 121,661,071 | 181,219,579 | |||||||||
Income/(Loss) from operations |
21,709,008 | 23,341,950 | (31,015,052 | ) | ||||||||
Interest and finance costs |
(20,978,065 | ) | (14,129,893 | ) | (12,678,101 | ) | ||||||
Gain on deconsolidation on subsidiaries |
145,000 | — | — | |||||||||
(Loss)/Gain on derivatives |
(107,550 | ) | (50,976 | ) | 240,153 | |||||||
Interest income |
846,271 | 167,794 | 26,379 | |||||||||
Foreign exchange loss |
(8,235 | ) | (54,374 | ) | (23,288 | ) | ||||||
Other expenses, net |
(20,102,579 | ) | (14,067,449 | ) | (12,434,857 | ) | ||||||
Equity earnings in joint ventures |
486,695 | 2,709,984 | 8,326,701 | |||||||||
Net income/(loss) |
2,093,124 | 11,984,485 | (35,123,208 | ) |
Year Ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
FLEET DATA |
||||||||||||
Average number of vessels(1) |
42.6 | 41.6 | 41.3 | |||||||||
Total voyage days for fleet(2) |
16,230 | 15,079 | 14,786 | |||||||||
Total time and bareboat charter days for fleet(3) |
13,541 | 12,442 | 11,714 | |||||||||
Total spot market days for fleet(4) |
2,689 | 2,637 | 3,072 | |||||||||
Total calendar days for fleet(5) |
16,328 | 15,292 | 15,071 | |||||||||
Fleet utilization(6) |
99.4 | % | 98.6 | % | 98.1 | % | ||||||
Fleet operational utilization(7) |
97.5 | % | 96.1 | % | 94.9 | % | ||||||
AVERAGE DAILY RESULTS |
||||||||||||
Adjusted average charter rate(8) |
$ | 7,842 | $ | 8,684 | $ | 8,657 | ||||||
Vessel operating expenses(9) |
3,037 | 3,485 | 4,081 | |||||||||
General and administrative expenses |
227 | 150 | 288 | |||||||||
Management fees(11) |
351 | 366 | 387 | |||||||||
Total daily operating expenses(12) |
$ | 3,264 | $ | 3,635 | $ | 4,369 | ||||||
(1) | Average number of vessels is the number of owned vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the period divided by the number of calendar days in that period. |
(2) | Our total voyage days for our fleet reflect the total days the vessels we operated were in our possession for the relevant periods, net of off-hire days associated with major repairs, drydockings or special or intermediate surveys. |
(3) | Total time and bareboat charter days for fleet are the number of voyage days the vessels in our fleet operated on time or bareboat charters for the relevant period. |
(4) | Total spot market charter days for fleet are the number of voyage days the vessels in our fleet operated on spot market charters for the relevant period. |
(5) | Total calendar days are the total days the vessels we operated were in our possession for the relevant period including off-hire days associated with major repairs, drydockings or special or intermediate surveys. |
(6) | Fleet utilization is the percentage of time that our vessels were available for revenue generating voyage days, and is determined by dividing voyage days by fleet calendar days for the relevant period. |
(7) | Fleet operational utilization is the percentage of time that our vessels generated revenue, and is determined by dividing voyage days (excluding commercially idle days) by fleet calendar days for the relevant period. |
(8) | Adjusted average charter rate is a measure of the average daily revenue performance of a vessel on a per voyage basis. We determine the adjusted average charter rate by dividing voyage revenues (net of voyage expenses) by voyage days for the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage and are payable by us under a spot charter (which would otherwise be paid by the charterer under a time or bareboat charter contract), as well as commissions or any voyage costs incurred while the vessel is idle. Charter equivalent revenues and adjusted average charter rate are non-GAAP measures which provide additional meaningful information in conjunction with voyage revenues, the most directly comparable GAAP measure, because they assist Company management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance. They are also standard shipping industry performance measures used primarily to compare period-to-period |
expenses, unlike spot charters and time charters; Reconciliation of charter equivalent revenues as reflected in the consolidated statements of operations and calculation of adjusted average charter rate follow: |
Year Ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Voyage revenues |
$ | 144,259,312 | $ | 145,003,021 | $ | 150,204,527 | ||||||
Voyage expenses |
(16,990,521 | ) | (14,059,004 | ) | (22,209,286 | ) | ||||||
Charter equivalent revenues |
$ | 127,268,791 | $ | 130,944,017 | $ | 127,995,241 | ||||||
Total voyage days for fleet |
16,230 | 15,079 | 14,786 | |||||||||
Adjusted average charter rate |
$ | 7,842 | $ | 8,684 | $ | 8,657 | ||||||
(9) | Vessel operating expenses, including related party vessel operating expenses, consist of crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs, is calculated by dividing vessel operating expenses by fleet calendar days for the relevant time period. |
(10) | Daily general and administrative expenses are calculated by dividing total general and administrative expenses by fleet calendar days for the relevant period. |
(11) | Management fees are based on a fixed rate management fee of $440 per day for each vessel in our fleet under spot or time charter and a fixed rate fee of $125 per day for each of the vessels operating on bareboat charter. In addition to these fees there is also a fixed daily fee of $280 charged to four LPG vessels for which some services are currently provided by third party managers. Daily management fees are calculated by dividing total management fees by fleet calendar days for the relevant period. |
(12) | Total operating expenses, or “TOE”, is a measurement of our total expenses associated with operating our vessels. TOE is the sum of vessel operating expenses and general and administrative expenses. Daily TOE is calculated by dividing TOE by fleet calendar days for the relevant time period. |
Payments due by period (in thousands) |
||||||||||||||||||||
Total |
Less than 1 year (2022) |
1-3 years(2023-2024) |
3-5 years(2025-2026) |
More than 5 years (After January 1, 2027) |
||||||||||||||||
Long-term debt obligations |
303,167 | 39,639 | 61,214 | 154,656 | 47,658 | |||||||||||||||
Interest on principal amounts outstanding(1) |
35,224 | 6,951 | 16,415 | 10,378 | 1,479 | |||||||||||||||
Interest on interest rate swap arrangements outstanding(1) |
1,390 | 1,233 | 566 | (192 | ) | (216 | ) | |||||||||||||
Management fees(2) |
8,025 | 5,350 | 2,675 | — | — | |||||||||||||||
Executive fees |
524 | 524 | — | — | — | |||||||||||||||
Total |
348,330 | 53,697 | 80,870 | 164,842 | 48,921 | |||||||||||||||
(1) | Based on assumed 3M LIBOR rates (or replacement benchmark rate) of 0.52% for 2022, 1.31% for 2023, 1.60% for 2024, 1.65% for 2025, 1.63% for 2026 and 1.71% thereafter and the effect of our interest rate swap arrangements. |
(2) | Based on our management agreement with Stealth Maritime, we pay $125 per vessel per day for vessels on bareboat charter and $440 per vessel per day for vessels not on bareboat charter for our existing fleet (apart from four vessels for which some services are currently provided by third party managers, where a fixed daily fee of $280 is charged by Stealth Maritime). We also pay 1.25% of the gross freight, demurrage and charter hire collected from employment of our ships and 1% of the contract price of any vessels bought or sold on our behalf. The initial term of our management agreement with Stealth Maritime expired in June 2010, but is extended on a year-to-year |
Year Ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Net cash provided by operating activities |
$ | 30,818,599 | $ | 52,113,096 | $ | 41,038,681 | ||||||
Net cash provided by/(used in) investing activities |
33,487,288 | (58,074,154 | ) | (19,247,631 | ) | |||||||
Net cash used in financing activities |
(61,616,546 | ) | (23,119,072 | ) | (29,130,715 | ) |
Credit Facility Issue Date |
Outstanding Principal Amount (in millions) |
Maturity |
Installment Frequency |
Installment Amount (in millions) |
Balloon (in millions) |
Mortgaged Vessels | ||||||||||||||
December 14, 2018 |
$ | 7.08 | Dec 2023 | Quarterly | $ | 0.20 | $ | 5.48 | Eco Invictus | |||||||||||
July 5, 2019 |
$ | 15.08 | July 2026 | Quarterly | $ | 0.79 | $ | 0.0 | Gas Husky Gas Esco | |||||||||||
March 29, 2019 |
$ | 3.04 | Dec 2022 | Quarterly | $ | 0.38 | $ | 1.54 | Gas Alice Gas Inspiration | |||||||||||
January 11, 2021 |
$ | 7.19 | Jan 2026 | Quarterly | $ | 0.24 | $ | 3.09 | Eco Stream | |||||||||||
$ | 7.19 | Jan 2026 | Quarterly | $ | 0.24 | $ | 3.09 | Eco Chios | ||||||||||||
$ | 8.30 | Jan 2026 | Quarterly | $ | 0.24 | $ | 4.30 | Eco Galaxy | ||||||||||||
July 29, 2014 |
$ | 6.07 | Jul 2023 | Quarterly | $ | 0.26 | $ | 4.23 | Eco Enigma | |||||||||||
$ | 6.07 | Jul 2023 | Quarterly | $ | 0.26 | $ | 4.23 | Eco Universe | ||||||||||||
January 19, 2021 |
$ | 6.61 | Jan 2028 | Quarterly | $ | 0.17 | $ | 2.41 | Eco Czar | |||||||||||
$ | 6.61 | Jan 2028 | Quarterly | $ | 0.17 | $ | 2.41 | Eco Nemesis | ||||||||||||
$ | 6.59 | Jan 2028 | Quarterly | $ | 0.17 | $ | 2.39 | Eco Corsair | ||||||||||||
$ | 6.59 | Jan 2028 | Quarterly | $ | 0.17 | $ | 2.39 | Eco Elysium | ||||||||||||
$ | 7.17 | Jan 2028 | Quarterly | $ | 0.18 | $ | 2.79 | Eco Royalty | ||||||||||||
$ | 7.17 | Jan 2028 | Quarterly | $ | 0.18 | $ | 2.79 | Eco Loyalty | ||||||||||||
May 18, 2016 |
$ | 23.36 | May 2025 | Quarterly | $ | 0.51 | $ | 16.25 | Eco Frost | |||||||||||
$ | 25.38 | Dec 2025 | Quarterly | $ | 0.52 | $ | 16.57 | Eco Ice | ||||||||||||
March 1, 2017 |
$ | 26.00 | Jan 2026 | Quarterly | $ | 0.63 | $ | 15.23 | Eco Arctic | |||||||||||
$ | 26.45 | Apr 2026 | Quarterly | $ | 0.63 | $ | 15.11 | Eco Freeze | ||||||||||||
June 19, 2020 |
$ | 10.35 | June 2026 | Quarterly | $ | 0.19 | $ | 6.90 | Eco Texiana | |||||||||||
April 30, 2020 |
$ | 14.73 | Nov 2026 | Quarterly | $ | 0.22 | $ | 10.62 | Eco Alice | |||||||||||
$ | 18.06 | Feb 2027 | Quarterly | $ | 0.26 | $ | 12.83 | Eco Blizzard | ||||||||||||
August 5, 2021 |
$ | 5.85 | Aug 2026 | Quarterly | $ | 0.27 | $ | 0.71 | Gas Elixir | |||||||||||
$ | 10.22 | Aug 2026 | Quarterly | $ | 0.25 | $ | 5.42 | Eco Dream | ||||||||||||
$ | 11.28 | Aug 2026 | Quarterly | $ | 0.27 | $ | 6.10 | Eco Nical | ||||||||||||
$ | 11.29 | Aug 2026 | Quarterly | $ | 0.26 | $ | 6.30 | Eco Dominator | ||||||||||||
$ | 5.88 | Aug 2026 | Quarterly | $ | 0.25 | $ | 1.20 | Gas Myth | ||||||||||||
$ | 5.86 | Aug 2026 | Quarterly | $ | 0.27 | $ | 0.75 | Gas Cerberus | ||||||||||||
$ | 3.84 | Aug 2026 | Quarterly | $ | 0.18 | $ | 0.37 | Gas Astrid | ||||||||||||
$ | 3.84 | Aug 2026 | Quarterly | $ | 0.18 | $ | 0.37 | Gas Exelero |
• | ensure that our leverage, which is defined as total debt net of cash/total market adjusted assets, does not at any time exceed 80%; |
• | maintain a ratio of the aggregate market value of the vessels securing the loan to the principal amount outstanding under such loan (which we sometimes refer to as the value maintenance or security coverage clause) at all times in excess of a range from 120% to 135% depending on our different loan agreements; |
• | ensure that our ratio of EBITDA (as defined in the loan agreements) to interest expense over the preceding twelve months is at all times more than 2.5 times; and |
• | to maintain on a monthly basis a cash balance amounting to $2,198,775 representing a proportionate amount of the next installment and relevant interest plus a minimum aggregate cash balance amounting to $12,197,611 in the earnings account with the relevant banks. |
Item 6. |
Directors, Senior Management and Employees |
Name |
Age |
Positions |
Year Became Director |
Year Director’s Current Term Expires |
||||||||||
Harry N. Vafias |
44 | Chief Executive, President, Chief Financial Officer and Class III Director | 2004 | 2024 | ||||||||||
Michael G. Jolliffe |
72 | Chairman of the Board, Class II Director | 2004 | 2022 | ||||||||||
Markos Drakos |
62 | Class I Director | 2006 | 2023 | ||||||||||
John Kostoyannis |
56 | Class II Director | 2010 | 2022 |
• | a Code of Business Conduct and Ethics; |
• | a Nominating and Corporate Governance Committee Charter; |
• | a Compensation Committee Charter; and |
• | an Audit Committee Charter. |
• | integrity of the Company’s financial statements, including its system of internal controls; |
• | Company’s compliance with legal and regulatory requirements; |
• | independent auditor’s appointment, qualifications and independence; |
• | retention, setting of compensation for, termination and evaluation of the activities of the Company’s independent auditors, subject to any required shareholder approval; and |
• | performance of the Company’s independent audit function and independent auditors, as well preparing an Audit Committee Report to be included in our annual proxy statement. |
• | reviewing the Board structure, size and composition and making recommendations to the Board with regard to any adjustments that are deemed necessary; |
• | evaluating and recommending to the Board the slate of nominees for directors to be elected by the stockholders at the Company’s next annual meeting of stockholders and, where applicable, to fill vacancies; |
• | recommending to the Board the responsibilities of the Board committees, including each committee’s structure, operations, and authority to delegate to subcommittees; |
• | evaluating and recommending to the Board those directors to be appointed to the various Board committees, including the persons recommended to serve as chairperson of each committee; |
• | reviewing annually the compensation of non-employee directors and the principles upon which such compensation is determined; |
• | consulting with the Chief Executive Officer, as appropriate, and other Board members to ensure that its decisions are consistent with the sound relationship among the Board, Board committees, individual directors and management; |
• | overseeing the Board’s annual evaluation of its own performance and the performance of other Board committees; |
• | retaining, setting compensation and retentions terms for and terminating any search firm to be used to identify candidates; and |
• | developing and recommending to the Board for adoption a set of Corporate Governance Guidelines applicable to the Company and periodically reviewing the same. |
• | establishing and periodically reviewing the Company’s compensation programs; |
• | administering the Company’s equity compensation plan; |
• | reviewing the performance of directors, officers and employees of the Company who are eligible for awards and benefits under any plan or program and adjust compensation arrangements as appropriate based on performance; |
• | reviewing and monitoring management development and succession plans and activities; |
• | from time to time when necessary, reviewing with the Chief Executive Officer the latter’s proposed succession plan for each executive officer and the Chief Executive Officer’s evaluation of each such executive officer; |
• | in case of unexpected unavailability, reviewing with the Board the Company’s succession plan for the CEO and other executive officers, including plans for emergency succession; |
• | retaining, setting compensation and retention terms for, and terminating any consultants, legal counsel or other advisors that the Compensation Committee determines to employ to assist it in the performance of its duties; and |
• | preparing any Compensation Committee report included in our annual proxy statement. |
Item 7. |
Major Shareholders and Related Party Transactions |
• | each person or entity that we know beneficially owns 5% or more of our shares of common stock; |
• | our Chief Executive Officer and our other members of senior management; |
• | each of our directors; and |
• | all of our current directors and executive officers as a group. |
Shares of Common Stock Beneficially Owned |
||||||||
Name of Beneficial Owner |
Number |
Percentage |
||||||
Principal Stockholders |
||||||||
Flawless Management Inc.(1) |
7,105,453 | 18.6 | % | |||||
Glendon Capital Management L.P.(2) |
6,498,794 | 17.0 | % | |||||
MSDC Management, L.P.(3) |
3,516,652 | 9.2 | % | |||||
Redwood Capital Management, LLC(4) |
2,404,887 | 6.3 | % | |||||
TowerView LLC(5) |
2,160,465 | 5.7 | % | |||||
Renaissance Technologies LLC(6) |
2,013,302 | 5.3 | % | |||||
Executive Officers and Directors |
||||||||
Harry N. Vafias(1)(7) |
8,375,069 | 21.9 | % | |||||
Michael G. Jolliffe |
* | * | ||||||
Markos Drakos |
* | * | ||||||
John Kostoyannis |
* | * | ||||||
All executive officers and directors as a group (four persons) |
8,459,009 | 22.1 | % |
* | Less than 1%. |
(1) | According to Amendment No. 2 to Schedule 13D jointly filed with the SEC on June 1, 2021 by Flawless Management Inc. and Harry N. Vafias, Harry N. Vafias has sole voting power and sole dispositive power with respect to all such shares owned by Flawless Management Inc. and Harry N. Vafias. |
(2) | Based on filings made by Glendon Capital Management L.P. with the SEC. According to these filings, these shares are directly owned by Glendon Opportunities Fund, L.P. (the “Fund”), Altair Global Credit Opportunities Fund LLC (the “Sub-Advised Fund”) and a separately managed account. According to these filings, (i) the Fund is beneficial owner of over 10% of the issuer’s securities on an individual basis, (ii) the Sub-Advised Fund and the separately managed account do not own 10% of the issuer’s securities on an individual basis and (iii) Glendon Capital Management LP is the investment manager to the Fund and the separately managed account and the investment sub-adviser to the Sub-Advised Fund, and may be deemed to beneficially own these securities under the Securities Exchange Act of 1934. |
(3) | According to Amendment No. 3 to a Schedule 13G jointly filed by and on behalf of each of MSDC Management, L.P. (“MSDC”) and MSD Credit Opportunity Master Fund, L.P. with the SEC on February 12, 2021, MSDC is the investment manager of, and may be deemed to beneficially own 3,516,652 shares of common stock beneficially owned by, MSD Credit Opportunity Master Fund, L.P. and has sole voting power and joint dispositive power with respect to all such shares. |
(4) | According to Amendment No. 3 to a Schedule 13G jointly filed by and on behalf of each Redwood Capital Management, LLC, Redwood Capital Management Holdings, LP, Double Twins K, LLC, Redwood Master Fund, Ltd. and Ruben Kliksberg, which may each be deemed to have shared voting power and joint dispositive power with respect to all such shares, on February 16, 2021. |
(5) | According to a Schedule 13G filed by TowerView LLC on November 12, 2021. |
(6) | According to Amendment No. 2 to a Schedule 13G jointly filed by and on behalf of Renaissance Technologies LLC and Renaissance Technologies Holdings Corporation on February 11, 2022. |
(7) | Includes 125,000 shares subject to stock options which are scheduled to vest on May 26, 2022, and excludes 125,000 shares subject to stock options which are scheduled to vest on May 26, 2023. |
Item 8. |
Financial Information |
Item 9. |
The Offer and Listing |
Item 10. |
Additional Information |
• | persons who are the beneficial owners of 15% or more of the outstanding voting stock of the corporation; and |
• | persons who are affiliates or associates of the corporation and who hold 15% or more of the corporation’s outstanding voting stock at any time within three years before the date on which the person’s status as an interested stockholder is determined. |
• | certain mergers or consolidations of the corporation or any direct or indirect majority-owned subsidiary of the company; |
• | the sale, lease, exchange, mortgage, pledge, transfer or other disposition of assets having an aggregate market value equal to 10% or more of either the aggregate market value of all assets of the corporation, determined on a consolidated basis, or the aggregate value of all the outstanding stock of the corporation; |
• | certain transactions that result in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; |
• | any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series, or securities convertible into the stock of any class or series, of the corporation that is owned directly or indirectly by the interested stockholder; and |
• | any receipt by the interested stockholder of the benefit (except as a stockholder) of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation. |
• | before a person becomes an interested stockholder, the board of directors of the corporation approves the business combination or transaction in which the stockholder became an interested stockholder; |
• | upon consummation of the transaction that resulted in the interested stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, other than certain excluded shares; |
• | following a transaction in which the person became an interested stockholder, the business combination is (a) approved by the board of directors of the corporation and (b) authorized at a regular or special meeting of stockholders, and not by written consent, by the vote of the holders of at least two-thirds of the voting stock of the corporation not owned by the stockholder; or |
• | a transaction with a stockholder that was or became an interested stockholder prior to the consummation of our initial public offering. |
• | we or our subsidiaries have, or are considered to have, a fixed place of business in the United States involved in the earning of shipping income; and |
• | substantially all (at least 90%) of our United States-source shipping income, other than leasing income or that of a subsidiary, is attributable to regularly scheduled transportation, such as the operation of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the United States. |
• | we or our subsidiaries have, or are considered to have, a fixed place of business in the United States that is involved in the meaning of such leasing income; and |
• | substantially all (at least 90%) of our United States-source shipping income from leasing or that of a subsidiary is attributable to such fixed place of business. |
• | at least 75% of our gross income 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% of the average value of our assets 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 common stock; |
• | the amount allocated to the current taxable year or to any portion of the United States Holder’s holding period prior to the first taxable year for which we were a PFIC 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. |
• | the gain is effectively connected with the Non-United States Holder’s conduct of a trade or business in the United States. If the Non-United States Holder is entitled to the benefits of an income tax treaty with respect to that gain, that gain generally is taxable only if it is attributable to a permanent establishment maintained by the Non-United States Holder in the United States; or |
• | the Non-United States Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met. |
• | fails to provide an accurate taxpayer identification number; |
• | is notified by the Internal Revenue Service that you have failed to report all interest or dividends required to be shown on your federal income tax returns; or |
• | in certain circumstances, fails to comply with applicable certification requirements. |
Item 11. |
Quantitative and Qualitative Disclosures About Market Risk |
Effective Date |
Termination Date |
Notional Amount on Effective Date (in millions) |
Fixed Rate (StealthGas pays) |
Floating Rate (StealthGas Receives) |
Fair Value December 31, 2021 (in millions) |
Notional Amount December 31, 2021 (in millions) |
Estimated Notional Amount December 31, 2022 (in millions) |
|||||||||||||||||||
Swap 1 |
August 16, 2017 | May 16, 2025 | $ | 16.0 | 2.12 | % | 3 month U.S. dollar LIBOR | $ | (0.36 | ) | $ | 11.7 | $ | 10.7 | ||||||||||||
Swap 2 |
April 10, 2018 | December 11, 2025 | $ | 32.6 | 2.74 | % | 3 month U.S. dollar LIBOR | $ | (1.40 | ) | $ | 25.4 | $ | 23.3 | ||||||||||||
Swap 3 |
February 16, 2019 | February 16, 2024 | $ | 14.5 | 2.89 | % | 3 month U.S. dollar LIBOR | $ | (0.49 | ) | $ | 11.7 | $ | 10.7 | ||||||||||||
Swap 4 |
January 21, 2021 | January 21, 2028 | $ | 14.2 | 0.73 | % | 3 month U.S. dollar LIBOR | $ | (0.29 | ) | $ | 13.2 | $ | 11.8 | ||||||||||||
Swap 5 |
January 21, 2021 | January 21, 2028 | $ | 14.2 | 0.73 | % | 3 month U.S. dollar LIBOR | $ | (0.29 | ) | $ | 13.2 | $ | 11.9 | ||||||||||||
Swap 6 |
January 21, 2021 | January 21, 2028 | $ | 15.4 | 0.74 | % | 3 month U.S. dollar LIBOR | $ | (0.32 | ) | $ | 14.3 | $ | 13.0 | ||||||||||||
Total |
$ | (3.15 | ) | $ | 89.5 | $ | 81.4 |
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 |
2021 |
2020 |
|||||||
Audit fees |
$ |
450 |
$ |
381 |
||||
Assurance/audit related fees |
— |
— |
||||||
Tax fees |
— |
— |
||||||
All other fees |
— |
— |
||||||
Total |
$ |
450 |
$ |
381 |
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 16H. |
Mine Safety Disclosures |
Item 16I. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. |
Item 17. |
Financial Statements |
Item 18. |
Financial Statements |
Item 19. |
Exhibits |
Number |
Description | |
1.1 |
||
1.2 |
||
2.1 |
||
4.1 |
||
4.2 |
||
4.3 |
||
4.4 |
||
8 |
||
12.1 |
||
12.2 |
||
13.1 |
||
13.2 |
||
15.1 |
||
15.2 |
||
15.3 |
||
101.INS |
Inline XBRL Instance Document | |
101.SCH |
Inline XBRL Taxonomy Extension Schema | |
101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase | |
101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase | |
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase | |
104 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
(1) |
Previously filed as Exhibit 3.1 to the Company’s Registration Statement on Form F-1 (File No. 333-127905) filed with the SEC and hereby incorporated by reference to such Registration Statement. |
(2) |
Previously filed as Exhibit 99.1 to a Report on Form 6-K filed with the SEC on December 24, 2014. |
(3) |
Previously filed as Exhibit 4.1 to the Company’s Annual Report on Form 20-F for the year ended December 31, 2006 filed with the SEC on June 5, 2007. |
(4) |
Previously filed as Exhibit 10.2 to the Company’s Registration Statement on Form F-1 (File No. 333-127905) filed with the SEC and hereby incorporated by reference to such Registration Statement. |
(5) |
Previously filed as Exhibit 4.4 to the Company’s Registration Statement on Form S-8 (File No. 333-207168) filed with the SEC on September 28, 2015. |
STEALTHGAS INC. | ||
By: |
/s/ Harry N. Vafias | |
Name: |
Harry N. Vafias | |
Title: |
President and Chief Executive Officer |
Pages |
||||
F-2 |
||||
F-4 |
||||
F-5 |
||||
F-6 |
||||
F-7 |
||||
F-8 |
||||
F-10 |
• |
We tested the effectiveness of relevant controls over management’s review of the impairment analysis, including the future charter rates used within the undiscounted future cash flows analysis. |
• |
We evaluated the Company’s methodology for estimating the future charter rates by using our industry experience and by comparing actual results to management’s historical forecasts. |
• |
We evaluated the Company’s assumptions regarding future charter rates by comparing the future charter rates utilized in the undiscounted future cash flow analysis to 1) the Company’s historical rates, 2) the Company’s budget, and 3) historical rate information by vessel class published by third parties. |
December 31, |
||||||||||||
Note |
2020 |
2021 |
||||||||||
Assets |
||||||||||||
Current assets |
||||||||||||
Cash and cash equivalents |
38,242,411 | 31,304,151 | ||||||||||
Receivables from related party |
3 |
— | 63,767 | |||||||||
Trade and other receivables |
3,602,764 | 2,117,636 | ||||||||||
Other current assets |
16 | 309,608 | 298,984 | |||||||||
Claims receivable |
120,547 | 62,652 | ||||||||||
Inventories |
4 | 3,687,098 | 2,772,532 | |||||||||
Advances and prepayments |
782,125 | 637,881 | ||||||||||
Restricted cash |
1,308,971 | 2,198,775 | ||||||||||
Vessel held for sale |
6 | — | 12,250,000 | |||||||||
|
|
|
|
|||||||||
Total current assets |
48,053,524 |
51,706,378 |
||||||||||
|
|
|
|
|||||||||
Non current assets |
||||||||||||
Advances for vessel under construction |
3,5 | 6,539,115 | — | |||||||||
Operating lease right-of-use |
20 | — | 104,168 | |||||||||
Vessels, net |
3,6 | 832,335,059 | 681,337,153 | |||||||||
Other receivables |
26,427 | — | ||||||||||
Restricted cash |
13,488,820 | 12,197,611 | ||||||||||
Investments in joint ventures |
7 | 43,177,657 | 53,323,032 | |||||||||
Deferred finance charges |
385,705 | — | ||||||||||
|
|
|
|
|||||||||
Total non current assets |
895,952,783 |
746,961,964 |
||||||||||
|
|
|
|
|||||||||
Total assets |
944,006,307 |
798,668,342 |
||||||||||
|
|
|
|
|||||||||
Liabilities and Stockholders’ Equity |
||||||||||||
Current liabilities |
||||||||||||
Payable to related parties |
3 | 4,659,861 | 1,491,705 | |||||||||
Trade accounts payable |
9,974,751 | 8,592,124 | ||||||||||
Accrued liabilities |
8 | 3,773,499 | 3,842,879 | |||||||||
Operating lease liabilities |
20 | — | 104,168 | |||||||||
Customer deposits |
10 | 968,000 | — | |||||||||
Deferred income |
9 | 2,995,657 | 5,666,285 | |||||||||
Fair value of derivatives |
12 | 141,447 | — | |||||||||
Current portion of long-term debt |
11 | 40,547,892 | 31,836,619 | |||||||||
Current portion of long-term debt associated with vessel held for sale |
11 |
— | 7,173,988 | |||||||||
|
|
|
|
|||||||||
Total current liabilities |
63,061,107 |
58,707,768 |
||||||||||
|
|
|
|
|||||||||
Non current liabilities |
||||||||||||
Fair value of derivatives |
12 | 5,099,464 | 3,151,880 | |||||||||
Deferred income |
9 |
— | 76,949 | |||||||||
Long-term debt |
11 | 311,249,321 | 261,960,975 | |||||||||
|
|
|
|
|||||||||
Total non current liabilities |
316,348,785 |
265,189,804 |
||||||||||
|
|
|
|
|||||||||
Total liabilities |
379,409,892 |
323,897,572 |
||||||||||
|
|
|
|
|||||||||
Commitments and contingencies |
19 | |||||||||||
Stockholders’ equity |
||||||||||||
Capital stock, 5,000,000 preferred shares authorized and zero outstanding with a par value of $0.01 per share, 100,000,000 common shares authorized 43,183,684 shares issued and 37,858,437 shares outstanding at December 31, 2020 and 43,527,428 shares issued and 38,202,181 shares outstanding at December 31, 2021 with a par value of $0.01 per share |
13 | 431,836 | 435,274 | |||||||||
Treasury stock, 5,325,247 at both December 31, 2020 and December 31, 2021 with a par value of $0.01 per share |
13 | (25,373,380 | ) | (25,373,380 | ) | |||||||
Additional paid-in capital |
13 | 499,564,087 | 443,009,334 | |||||||||
Retained earnings |
94,926,695 | 59,803,487 | ||||||||||
Accumulated other comprehensive loss |
(4,952,823 | ) | (3,103,945 | ) | ||||||||
|
|
|
|
|||||||||
Total stockholders’ equity |
564,596,415 |
474,770,770 |
||||||||||
|
|
|
|
|||||||||
Total liabilities and stockholders’ equity |
944,006,307 |
798,668,342 |
||||||||||
|
|
|
|
December 31, |
||||||||||||||||
Note |
2019 |
2020 |
2021 |
|||||||||||||
Revenues |
||||||||||||||||
Revenues |
144,259,312 | 145,003,021 | 150,204,527 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Total revenues |
16 |
144,259,312 |
145,003,021 |
150,204,527 |
||||||||||||
|
|
|
|
|
|
|||||||||||
Expenses |
||||||||||||||||
Voyage expenses |
15,201,978 | 12,259,795 | 20,342,186 | |||||||||||||
Voyage expenses – related party |
3 | 1,788,543 | 1,799,209 | 1,867,100 | ||||||||||||
Charter hire expenses |
20 | 6,268,988 | 318,606 | — | ||||||||||||
Vessels’ operating expenses |
17 | 48,619,594 | 52,344,721 | 60,443,813 | ||||||||||||
Vessels’ operating expenses – related party |
3,17 | 966,500 | 950,500 | 1,065,750 | ||||||||||||
Dry-docking costs |
1,094,306 | 3,640,327 | 5,285,490 | |||||||||||||
Management fees – related party |
3 | 5,730,910 | 5,599,351 | 5,831,900 | ||||||||||||
General and administrative expenses (including $1,205,683, $1,084,961 and $1,126,112 to related party) |
3 | 3,706,320 | 2,301,308 | 4,337,013 | ||||||||||||
Depreciation |
6 | 37,693,733 | 37,455,093 | 37,125,903 | ||||||||||||
Impairment loss |
3,6,12 | 993,916 | 3,857,307 | 44,616,214 | ||||||||||||
Net loss on sale of vessels |
3,6 | 485,516 | 1,134,854 | 304,210 | ||||||||||||
|
|
|
|
|
|
|||||||||||
Total expenses |
122,550,304 |
121,661,071 |
181,219,579 |
|||||||||||||
|
|
|
|
|
|
|||||||||||
Income/(Loss) from operations |
21,709,008 |
23,341,950 |
(31,015,052 |
) | ||||||||||||
|
|
|
|
|
|
|||||||||||
Other (expenses)/income |
||||||||||||||||
Interest and finance costs |
(20,978,065 | ) | (14,129,893 | ) | (12,678,101 | ) | ||||||||||
Gain on deconsolidation of subsidiaries |
145,000 | — | — |
|||||||||||||
Loss/(gain) on derivatives |
12 | (107,550 | ) | (50,976 | ) | 240,153 | ||||||||||
Interest income and other income |
846,271 | 167,794 | 26,379 | |||||||||||||
Foreign exchange loss |
(8,235 | ) | (54,374 | ) | (23,288 | ) | ||||||||||
|
|
|
|
|
|
|||||||||||
Other expenses, net |
(20,102,579 |
) |
(14,067,449 |
) |
(12,434,857 |
) | ||||||||||
|
|
|
|
|
|
|||||||||||
Income/(Loss) before equity in earnings of investees |
1,606,429 |
9,274,501 |
(43,449,909 |
) | ||||||||||||
Equity earnings in joint ventures |
7 | 486,695 | 2,709,984 | 8,326,701 | ||||||||||||
|
|
|
|
|
|
|||||||||||
Net Income/(Loss) |
2,093,124 |
11,984,485 |
(35,123,208 |
) | ||||||||||||
|
|
|
|
|
|
|||||||||||
Earnings/(Loss) per share |
||||||||||||||||
– Basic and diluted |
15 | 0.05 | 0.31 | (0.93 | ) | |||||||||||
|
|
|
|
|
|
|||||||||||
Weighted average number of shares |
||||||||||||||||
– Basic and diluted |
39,800,434 | 38,357,893 | 37,858,437 | |||||||||||||
|
|
|
|
|
|
December 31, |
||||||||||||||||
Note |
2019 |
2020 |
2021 |
|||||||||||||
Net income/(loss) |
2,093,124 |
11,984,485 |
(35,123,208 |
) | ||||||||||||
|
|
|
|
|
|
|||||||||||
Other comprehensive (loss)/income |
||||||||||||||||
Cash flow hedges |
||||||||||||||||
Effective portion of changes in fair value of interest swap contracts |
12 | (2,848,056 | ) | (2,632,826 | ) | 2,114,488 | ||||||||||
Reclassification adjustment |
12 | (84,966 | ) | (60,954 | ) | (265,610 | ) | |||||||||
|
|
|
|
|
|
|||||||||||
Total other comprehensive (loss)/income |
(2,933,022 |
) |
(2,693,780 |
) |
1,848,878 |
|||||||||||
|
|
|
|
|
|
|||||||||||
Total comprehensive (loss)/income |
(839,898 |
) |
9,290,705 |
(33,274,330 |
) | |||||||||||
|
|
|
|
|
|
Capital stock |
Treasury stock |
|||||||||||||||||||||||||||||||
Number |
Number |
Additional |
Accumulated |
|||||||||||||||||||||||||||||
of |
of |
Paid-in |
Other |
|||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
Capital |
Retained |
Comprehensive |
||||||||||||||||||||||||||
(Note 13) |
(Note 13) |
(Note 13) |
(Note 13) |
(Note 13) |
Earnings |
Income / (loss) |
Total |
|||||||||||||||||||||||||
Balance, January 1, 2019 |
44,549,729 | 445,496 | (4,424,545 | ) | (22,523,528 | ) | 501,807,478 | 80,849,086 | 673,979 | 561,252,511 | ||||||||||||||||||||||
Stock based compensation |
— | — | — | — | 611,644 | — | — | 611,644 | ||||||||||||||||||||||||
Stock repurchase |
— | — | (540,910 | ) | (1,837,617 | ) | — | — | — | (1,837,617 | ) | |||||||||||||||||||||
Comprehensive loss for the year |
— | — | — | — | — | 2,093,124 | (2,933,022 | ) | (839,898 | ) | ||||||||||||||||||||||
Balance, December 31, 2019 |
44,549,729 | 445,496 | (4,965,455 | ) | (24,361,145 | ) | 502,419,122 | 82,942,210 | (2,259,043 | ) | 559,186,640 | |||||||||||||||||||||
Stock repurchase |
— | — | (359,792 | ) | (1,012,235 | ) | — | — | — | (1,012,235 | ) | |||||||||||||||||||||
Stock repurchase and cancellation |
(1,366,045 | ) | (13,660 | ) | — | — | (2,855,035 | ) | — | — | (2,868,695 | ) | ||||||||||||||||||||
Comprehensive income for the year |
— | — | — | — | — | 11,984,485 | (2,693,780 | ) | 9,290,705 | |||||||||||||||||||||||
Balance, December 31, 2020 |
43,183,684 | 431,836 | (5,325,247 | ) | (25,373,380 | ) | 499,564,087 | 94,926,695 | (4,952,823 | ) | 564,596,415 | |||||||||||||||||||||
Issuance of restricted shares and stock based compensation |
343,744 | 3,438 | — | — | 607,350 | — | — | 610,788 | ||||||||||||||||||||||||
Distribution of net assets (Note 1) |
— | — | — | — | (57,162,103 | ) | — | — | (57,162,103 | ) | ||||||||||||||||||||||
Comprehensive loss for the year |
— | — | — | — | — | (35,123,208 | ) | 1,848,878 | (33,274,330 | ) | ||||||||||||||||||||||
Balance, December 31, 2021 |
43,527,428 | 435,274 | (5,325,247 | ) | (25,373,380 | ) | 443,009,334 | 59,803,487 | (3,103,945 | ) | 474,770,770 | |||||||||||||||||||||
December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Cash flows from operating activities |
||||||||||||
Net income/(loss) for the year |
2,093,124 | 11,984,485 | (35,123,208 | ) | ||||||||
Adjustments to reconcile net income/(loss) to net cash provided by operating activities: |
||||||||||||
Depreciation |
37,693,733 | 37,455,093 | 37,125,903 | |||||||||
Amortization of deferred finance charges |
885,191 | 698,364 | 1,157,804 | |||||||||
Amortization of operating lease right-of-use |
1,572,943 | 473,132 | 89,638 | |||||||||
Share based compensation |
611,644 | — | 610,788 | |||||||||
Change in fair value of derivatives |
255,650 | (38,561 | ) | (240,153 | ) | |||||||
Equity earnings in joint ventures |
(486,695 | ) | (2,709,984 | ) | (8,326,701 | ) | ||||||
Impairment loss |
993,916 | 3,857,307 | 44,616,214 | |||||||||
Net loss on sale of vessels |
485,516 | 1,134,854 | 304,210 | |||||||||
Gain on deconsolidation of subsidiaries |
(145,000 | ) | — | — | ||||||||
Changes in operating assets and liabilities: |
||||||||||||
(Increase)/decrease in |
||||||||||||
Trade and other receivables |
(1,506,590 | ) | 874,825 | (977,005 | ) | |||||||
Other current assets |
16,055 | (191,362 | ) | 10,624 | ||||||||
Claims receivable |
(1,307,763 | ) | 193,670 | 57,895 | ||||||||
Inventories |
617,468 | (1,239,395 | ) | 644,079 | ||||||||
Changes in operating lease liabilities |
(1,572,943 | ) | (473,132 | ) | (89,638 | ) | ||||||
Advances and prepayments |
339,858 | (32,444 | ) | (100,482 | ) | |||||||
Increase/(decrease) in |
||||||||||||
Balances with related parties |
(5,845,771 | ) | 1,617,032 | (3,231,923 | ) | |||||||
Trade accounts payable |
(1,316,668 | ) | 761,193 | 262,569 | ||||||||
Accrued liabilities |
(217,409 | ) | (2,403,644 | ) | 557,086 | |||||||
Deferred income |
(2,347,660 | ) | 151,663 | 3,690,981 | ||||||||
|
|
|
|
|
|
|||||||
Net cash provided by operating activities |
30,818,599 |
52,113,096 |
41,038,681 |
|||||||||
|
|
|
|
|
|
|||||||
Cash flows from investing activities |
||||||||||||
Insurance proceeds |
993,546 | — | — | |||||||||
Proceeds from sale of interests in subsidiaries |
20,720,975 | — | — | |||||||||
Vessels’ acquisitions and advances for vessels under construction |
(2,988,903 | ) | (48,121,422 | ) | (25,224,746 | ) | ||||||
Proceeds from sale of vessels, net |
18,721,123 | 5,264,768 | 7,795,790 | |||||||||
Investment in joint ventures |
(11,322,600 | ) | (41,998,500 | ) | (3,348,675 | ) | ||||||
Return of investments from joint ventures |
7,363,147 | 26,781,000 | 1,530,000 | |||||||||
Advances to joint ventures |
(5,083,919 | ) | (29,245 | ) | — | |||||||
Advances from joint ventures |
5,083,919 | 29,245 | — | |||||||||
|
|
|
|
|
|
|||||||
Net cash provided by/(used in) investing activities |
33,487,288 |
(58,074,154 |
) |
(19,247,631 |
) | |||||||
|
|
|
|
|
|
|||||||
Cash flows from financing activities |
||||||||||||
Stock repurchase |
(1,837,617 | ) | (3,880,930 | ) | — | |||||||
Deferred finance charges paid |
(477,201 | ) | (538,004 | ) | (1,463,766 | ) | ||||||
Advances from joint ventures |
4,958,250 | 1,841,380 | — | |||||||||
Advances to joint ventures |
— | (5,841,672 | ) | — | ||||||||
Customer deposits paid |
(368,000 | ) | — | (600,000 | ) | |||||||
Loan repayments |
(97,371,978 | ) | (41,804,846 | ) | (173,012,428 | ) | ||||||
Proceeds from long-term debt |
33,480,000 | 27,105,000 | 150,650,000 | |||||||||
Cash retained by Imperial at spin-off |
— | — | (4,704,521 | ) | ||||||||
|
|
|
|
|
|
|||||||
Net cash used in financing activities |
(61,616,546 |
) |
(23,119,072 |
) |
(29,130,715 |
) | ||||||
|
|
|
|
|
|
|||||||
Net increase/(decrease) in cash and cash equivalents |
2,689,341 | (29,080,130 | ) | (7,339,665 | ) | |||||||
Cash and cash equivalents and restricted cash at beginning of year |
79,430,991 | 82,120,332 | 53,040,202 | |||||||||
|
|
|
|
|
|
|||||||
Cash and cash equivalents and restricted cash at end of year |
82,120,332 |
53,040,202 |
45,700,537 |
|||||||||
|
|
|
|
|
|
December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Cash breakdown |
||||||||||||
Cash and cash equivalents |
68,465,342 | 38,242,411 | 31,304,151 | |||||||||
Restricted cash, current |
1,589,768 | 1,308,971 | 2,198,775 | |||||||||
Restricted cash, non-current |
12,065,222 | 13,488,820 | 12,197,611 | |||||||||
|
|
|
|
|
|
|||||||
Total cash, cash equivalents and restricted cash shown in the statements of cash flows |
82,120,332 |
53,040,202 |
45,700,537 |
|||||||||
|
|
|
|
|
|
|||||||
Supplemental Cash Flow Information: |
||||||||||||
Cash paid during the year for interest, net of amounts capitalized |
20,768,672 | 12,905,065 | 8,607,590 | |||||||||
Non cash investing activity – Vessels |
63,752 |
387,220 | 217,570 | |||||||||
Non cash financing activity – Deferred finance charges |
— | 32,464 | — | |||||||||
Distribution of net assets of Imperial Petroleum Inc. to stockholders (Note 1) |
— | — | 57,162,103 | |||||||||
|
|
|
|
|
|
Year ended December 31, |
||||||||||||
Charterer |
2019 |
2020 |
2021 |
|||||||||
A |
12 | % | 15 | % | — | |||||||
B |
10 | % | — | — | ||||||||
C |
10 | % | 10 | % | — |
December 3, 2021 |
||||
Cash, including restricted cash |
4,704,521 | |||
Trade and other receivables |
2,488,560 | |||
Inventories |
270,489 | |||
Advances and prepayments |
244,725 | |||
Vessels, net (after impairment of $40,185,873) |
80,500,000 | |||
Trade accounts payable |
(1,618,146 | ) | ||
Accrued and other liabilities |
(312,642 | ) | ||
Deferred income |
(943,404 | ) | ||
Customer deposits |
(368,000 | ) | ||
Debt |
(27,804,000 | ) | ||
|
|
|||
Net assets of Imperial distributed to stockholders |
57,162,103 |
Year ended December 31, |
||||||||||||||
Location in statement of operations |
2019 |
2020 |
2021 |
|||||||||||
Management fees |
Management fees – related party | 5,730,910 | 5,599,351 | 5,831,900 | ||||||||||
Brokerage commissions |
Voyage expenses – related party | 1,788,543 | 1,799,209 | 1,867,100 | ||||||||||
Superintendent fees |
Vessels’ operating expenses – related party | 104,000 | 38,000 | 117,000 | ||||||||||
Crew management fees |
Vessels’ operating expenses – related party | 862,500 | 912,500 | 948,750 | ||||||||||
Commissions - vessels sold |
Net loss on sale of vessels | 109,000 | 54,000 | 81,000 | ||||||||||
Commissions - vessel held for sale |
Impairment loss | — | — | 125,000 | ||||||||||
Executive compensation |
General and administrative expenses | 1,118,491 | 994,840 | 1,028,386 | ||||||||||
Rental expense |
General and administrative expenses | 87,192 | 90,121 | 97,726 |
December 31, |
||||||||||||||
Location in balance sheet |
2019 |
2020 |
2021 |
|||||||||||
Commissions - vessels purchased |
Vessels, net | — | 435,000 | 289,347 | ||||||||||
Supervision fees |
Advances for vessel under construction/Vessels, net | — | 210,970 | 236,521 |
December 31, |
||||||||
2020 |
2021 |
|||||||
Bunkers |
2,152,601 | 1,120,372 | ||||||
Lubricants |
1,534,497 | 1,652,160 | ||||||
|
|
|
|
|||||
Total |
3,687,098 |
2,772,532 |
||||||
|
|
|
|
Balance, December 31, 2019 |
2,988,903 |
|||
Advance for vessel under construction |
2,891,283 | |||
Capitalized interest |
168,344 | |||
Supervision fees (Note 3) |
210,970 | |||
Other capitalized expenses |
279,615 | |||
|
|
|||
Balance, December 31, 2020 |
6,539,115 |
|||
Advance for vessel under construction |
23,152,125 | |||
Supervision fees (Note 3) |
236,521 | |||
Commissions - vessels purchased (Note 3) |
289,347 | |||
Capitalized interest |
20,060 | |||
Other capitalized expenses |
129,729 | |||
Transfer to vessels. Net (Note 6) |
(30,366,897 | ) | ||
Balance, December 31, 2021 |
— |
Vessel cost |
Accumulated Depreciation |
Net Book Value |
||||||||||
Balance, December 31, 2019 |
1,087,601,983 |
(252,449,580 |
) |
835,152,403 |
||||||||
Additions |
44,894,678 | — | 44,894,678 | |||||||||
Impairment loss |
(14,511,735 | ) | 10,654,428 | (3,857,307 | ) | |||||||
Disposals |
(6,500,000 | ) | 100,378 | (6,399,622 | ) | |||||||
Depreciation for the year |
— | (37,455,093 | ) | (37,455,093 | ) | |||||||
|
|
|
|
|
|
|||||||
Balance, December 31, 2020 |
1,111,484,926 |
(279,149,867 |
) |
832,335,059 |
||||||||
Transfer from Advances for vessel under construction and acquisitions (Note 5) |
30,366,897 | — | 30,366,897 | |||||||||
Other additions |
|
|
1,227,314 |
|
|
|
— |
|
|
|
1,227,314 |
|
Impairment loss |
(169,553,060 | ) | 124,936,846 | (44,616,214 | ) | |||||||
Disposals |
(8,100,000 | ) | — | (8,100,000 | ) | |||||||
Transfer to Vessel held for sale |
(12,250,000 | ) | — | (12,250,000 | ) | |||||||
Spin-off of tankers (Note 1) |
(80,500,000 | ) | — | (80,500,000 | ) | |||||||
Depreciation for the year |
— | (37,125,903 | ) | (37,125,903 | ) | |||||||
Balance, December 31, 2021 |
872,676,077 |
(191,338,924 |
) |
681,337,153 |
||||||||
|
|
|
|
|
|
December 31, |
||||||||
2020 |
2021 |
|||||||
Interest on long-term debt |
1,887,414 | 1,883,321 | ||||||
Administrative expenses |
209,553 | 210,930 | ||||||
Vessel operating and voyage expenses |
1,676,532 | 1,748,628 | ||||||
|
|
|
|
|||||
Total |
3,773,499 |
3,842,879 |
||||||
|
|
|
|
(a) | On October 12, 2015 an amount of $736,000 was received from the bareboat charterer of Product carrier “Clean Thrasher” (ex. “Stealth Falcon”) which is equal to three-months hire. On May 30, 2019 the amount of $368,000 was paid to the bareboat charterers. The remaining amount of $368,000 was kept as a guarantee for another vessel chartered to the same charterer and was included in the net assets of Imperial that were distributed to the stockholders of the Company (Note 1). |
(b) | On February 21, 2015 an amount of $1,820,700 was received from the bareboat charterer of Aframax tanker “Stealth Berana” (ex. “Spike”) which is equal to five-months hire. An amount of $1,220,700 was returned to the charterer at the end of the bareboat charter on March 7, 2018. The remaining amount of $600,000 was kept as a guarantee for the new bareboat charter which commenced on March 7, 2018. The bareboat charter ended during 2020 and the balance was fully settled in 2021 following the agreement reached with the charterers (Note 19). |
Term Loans |
Drawn Amount |
December 31, 2020 |
2021 |
|||||||||||
Issue Date/ Refinancing Date |
Maturity Date | |||||||||||||
December 14, 2018 |
November 10, 2021 | 14,094,184 | 9,694,184 | — | ||||||||||
May 28, 2019 |
August 6, 2021 | 11,000,000 | 9,080,000 | — | ||||||||||
August 6, 2019 |
August 6, 2021 | 27,675,000 | 18,600,000 | — | ||||||||||
July 5, 2019 |
July 11, 2026 | 22,230,000 | 18,260,357 | 15,084,643 | ||||||||||
March 29, 2019 |
December 29, 2022 | 25,458,432 | 13,701,816 | 3,039,647 | ||||||||||
January 11, 2021 |
January 14, 2026 | 50,225,000 | 25,420,000 | 22,675,000 | ||||||||||
December 14, 2018 |
December 18, 2023 | 9,480,000 | 7,880,000 | 7,080,000 | ||||||||||
June 20, 2014 |
January 21, 2021 | 20,925,000 | 12,760,000 | — | ||||||||||
August 6, 2019 |
August 6, 2021 | 67,200,000 | 43,635,000 | — | ||||||||||
December 24, 2015 |
January 25, 2021 | 22,400,000 | 14,933,360 | — | ||||||||||
January 19, 2021 |
January 21, 2028 | 43,800,000 | 14,218,750 | 40,731,975 | ||||||||||
July 29, 2014 |
July 7, 2023 | 25,350,000 | 14,259,375 | 12,146,875 | ||||||||||
December 7, 2017 |
November 10, 2021 | 22,275,000 | 14,010,000 | — | ||||||||||
May 18, 2016 |
December 31, 2025 | 65,650,000 | 52,842,620 | 48,739,300 | ||||||||||
March 1, 2017 |
April 17, 2026 | 70,787,500 | 57,512,495 | 52,456,243 | ||||||||||
June 17, 2020 |
June 19, 2026 | 11,505,000 | 11,121,500 | 10,354,500 | ||||||||||
April 30, 2020 |
November 7, 2026 | 15,600,000 | 15,600,000 | 14,733,333 | ||||||||||
April 30, 2020 |
February 4, 2027 | 18,850,000 | — |
18,064,582 | ||||||||||
August 5, 2021 |
August 6, 2026 | 60,000,000 | — | 58,060,931 | ||||||||||
|
|
|
|
|||||||||||
Total |
353,529,457 |
303,167,029 |
||||||||||||
Current portion of long-term debt |
41,161,686 | 32,464,732 | ||||||||||||
Current portion of long-term debt associated with vessel held for sale |
— | 7,173,988 | ||||||||||||
Long-term debt |
312,367,771 | 263,528,309 | ||||||||||||
|
|
|
|
|||||||||||
Total debt |
353,529,457 |
303,167,029 |
||||||||||||
Current portion of deferred finance charges |
613,794 | 628,113 | ||||||||||||
Deferred finance charges non-current |
1,118,450 | 1,567,334 | ||||||||||||
|
|
|
|
|||||||||||
Total deferred finance charges |
1,732,244 |
2,195,447 |
||||||||||||
|
|
|
|
|||||||||||
Total debt |
353,529,457 | 303,167,029 | ||||||||||||
Less: Total deferred finance charges |
1,732,244 | 2,195,447 | ||||||||||||
|
|
|
|
|||||||||||
Total debt, net of deferred finance charges |
|
351,797,213 |
300,971,582 |
|||||||||||
Less: Current portion of long-term debt, net of current portion of deferred finance charges |
40,547,892 |
31,836,619 |
||||||||||||
Less: Current portion of long-term debt, associated with vessel held for sale |
— |
7,173,988 |
||||||||||||
|
|
|
|
|||||||||||
Long-term debt |
|
311,249,321 |
261,960,975 |
|||||||||||
|
|
|
|
• | the aggregate market value of the mortgaged vessels at all times exceeds a certain percentage of the amounts outstanding as defined in the term loans, ranging from 120% to 135%, |
• | the leverage of the Company defined as Total Debt net of Cash should not exceed 80% of total market value adjusted assets, |
• | the Interest Coverage Ratio of the Company which is EBITDA (as defined in the loan agreements) to interest expense to be at all times greater than 2.5:1, |
• | at least a certain percentage of the Company is to always be owned by members of the Vafias family, |
• | the Company should maintain on a monthly basis a cash balance amounting to $2,198,775 representing a proportionate amount of the next instalment and relevant interest plus a minimum aggregate cash balance amounting to $12,197,611 in the earnings accounts with the relevant banks, |
• | dividends paid by the borrower will not exceed 50% of the Company’s free cash flow in any rolling 12 month period. |
December 31, |
Amount |
|||
202 2 |
39,638,720 | |||
202 3 |
30,607,086 | |||
202 4 |
30,607,086 | |||
202 5 |
62,933,106 | |||
202 6 |
91,723,313 | |||
Thereafter |
47,657,718 | |||
|
|
|||
Total |
303,167,029 |
|||
|
|
Effective Date |
Termination Date |
Fixed Rate (Company pays) |
Floating Rate (Company Receives) |
Fair Value Asset/ (Liability) December 31, 2020 |
Notional Amount December 31, 2020 |
Fair Value Asset/ (Liability) December 31, 2021 |
Notional Amount December 31, 2021 |
|||||||||||||||||||
Swap 1 |
November 4, 2015 | August 4, 2021 | 1.52 | % | 3 month U.S. dollar LIBOR | $ | (69,821 | ) | $ | 7,109,375 | — | — | ||||||||||||||
Swap 2 |
December 3, 2015 | September 3, 2021 | 1.55 | % | 3 month U.S. dollar LIBOR | $ | (71,626 | ) | $ | 7,109,375 | — | — | ||||||||||||||
Swap 3 |
August 16, 2017 | May 16, 2025 | 2.12 | % | 3 month U.S. dollar LIBOR | $ | (857,234 | ) | $ | 12,695,750 | $ | (358,988 | ) | $ | 11,680,250 | |||||||||||
Swap 4 |
March 12, 2018 | December 11, 2022 | 2.74 | % | 3 month U.S. dollar LIBOR | $ | (598,572 | ) | $ | 14,010,000 | — | — | ||||||||||||||
Swap 5 |
April 10, 2018 | December 11, 2025 | 2.74 | % | 3 month U.S. dollar LIBOR | $ | (2,682,391 | ) | $ | 27,452,000 | $ | (1,398,025 | ) | $ | 25,380,000 | |||||||||||
Swap 6 |
February 16, 2019 | February 16, 2024 | 2.89 | % | 3 month U.S. dollar LIBOR | $ | (961,267 | ) | $ | 12,695,750 | $ | (486,439 | ) | $ | 11,680,250 | |||||||||||
Swap 7 |
January 21, 2021 | January 21, 2028 | 0.73 | % | 3 month U.S. dollar LIBOR | — | — | $ | (293,862 | ) | $ | 13,210,750 | ||||||||||||||
Swap 8 |
January 21, 2021 | January 21, 2028 | 0.73 | % | 3 month U.S. dollar LIBOR | — | — | $ | (292,709 | ) | $ | 13,173,250 | ||||||||||||||
Swap 9 |
January 21, 2021 | January 21, 2028 | 0.74 | % | 3 month U.S. dollar LIBOR | — | — | $ | (321,857 | ) | $ | 14,347,975 | ||||||||||||||
Total |
$ |
(5,240,911 |
) |
$ |
81,072,250 |
$ |
(3,151,880 |
) |
$ |
89,472,475 |
Derivatives designated as hedging instruments |
Balance Sheet Location |
December 31, |
||||||||||||||||
2020 |
2021 |
|||||||||||||||||
Asset Derivatives |
Liability Derivatives |
Asset Derivatives |
Liability Derivatives |
|||||||||||||||
Interest Rate Swap Agreements |
Current liabilities — Fair value of derivatives | — | 141,447 | — | — | |||||||||||||
Interest Rate Swap Agreements |
Non current liabilities — Fair value of derivatives | — | 5,099,464 | — | 3,151,880 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Total derivatives designated as hedging instruments |
— | 5,240,911 | — | 3,151,880 | ||||||||||||||
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments |
Location of Gain/(Loss) Recognized |
Year Ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||||
Interest Rate Swap — Reclassification from OCI |
Loss on derivatives | 84,966 | 60,954 | 265,610 | ||||||||||
Interest Rate Swap — Change in Fair Value |
Loss on derivatives | (327,147 | ) | 7,186 | — | |||||||||
Interest Rate Swap — Realized income/(expense) |
Loss on derivatives | 134,631 | (119,116 | ) | (25,457 | ) | ||||||||
|
|
|
|
|
|
|||||||||
Total loss/(gain) on derivatives |
(107,550 | ) | (50,976 | ) | 240,153 | |||||||||
|
|
|
|
|
|
Derivatives designated as hedging instruments |
Location of (Loss)/Gain Recognized |
Year Ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||||
Interest Rate Swap — Realized Income/(Loss) |
Interest and finance costs | 67,424 | (1,190,400 | ) | (2,183,187 | ) | ||||||||
|
|
|
|
|
|
|||||||||
Total loss on derivatives |
67,424 | (1,190,400 | ) | (2,183,187 | ) | |||||||||
|
|
|
|
|
|
Unrealized Gain / (Loss) on cash flow hedges |
||||
Balance, January 1, 2019 |
673,979 | |||
Effective portion of changes in fair value of interest swap contracts |
(2,848,056 | ) | ||
Reclassification adjustment |
(84,966 | ) | ||
|
|
|||
Balance, December 31, 2019 |
(2,259,043 | ) | ||
Effective portion of changes in fair value of interest swap contracts |
(2,632,826 | ) | ||
Reclassification adjustment |
(60,954 | ) | ||
|
|
|||
Balance, December 31, 2020 |
(4,952,823 | ) | ||
|
|
|||
Effective portion of changes in fair value of interest swap contracts |
2,114,488 | |||
Reclassification adjustment |
(265,610 | ) | ||
|
|
|||
Balance, December 31, 2021 |
(3,103,945 | ) | ||
|
|
Fair Value as of December 31, 2020 |
Fair Value Measurements Using |
|||||||||||||||
Description |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
Assets/(Liabilities): |
||||||||||||||||
Interest Rate Swap Agreements |
(5,240,911 | ) | — | (5,240,911 | ) | — | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
(5,240,911 |
) |
— |
(5,240,911 |
) |
— |
||||||||||
|
|
|
|
|
|
|
|
Fair Value as of December 31, 2021 |
Fair Value Measurements Using |
|||||||||||||||
Description |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
Assets/(Liabilities): |
||||||||||||||||
Interest Rate Swap Agreements |
(3,151,880 | ) | — | (3,151,880 | ) | — | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
(3,151,880 |
) |
— |
(3,151,880 |
) |
— |
||||||||||
|
|
|
|
|
|
|
|
Fair Value as of June 30, 2020 |
Fair Value Measurements Using |
|||||||||||||||||||
Description |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Impairment Loss |
||||||||||||||||
Long-lived assets held and used |
3,000,000 | — | 3,000,000 | — | (305,607 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
3,000,000 |
— |
3,000,000 |
— |
(305,607) |
Fair Value as of December 31, 2020 |
Fair Value Measurements Using |
|||||||||||||||||||
Description |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Impairment Loss |
||||||||||||||||
Long-lived assets held and used |
3,500,000 | — | 3,500,000 | — | (714,895 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
3,500,000 |
— |
3,500,000 |
— |
(714,895) |
Fair Value as of June 30, 2021 |
Fair Value Measurements Using |
|||||||||||||||||||
Description |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Impairment Loss |
||||||||||||||||
Long-lived assets held for sale |
12,500,000 | — | 12,500,000 | — | (1,125,243 | ) | ||||||||||||||
Long-lived assets held and used |
|
|
3,250,000 |
|
|
|
— |
|
|
|
3,250,000 |
|
|
|
— |
|
|
|
(49,977 |
) |
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
15,750,000 |
— |
15,750,000 |
— |
(1,175,220) |
Fair Value as of December 31, 2021 |
Fair Value Measurements Using |
|||||||||||||||||||
Description |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Impairment Loss |
||||||||||||||||
Long-lived assets held and used |
12,650,000 | — | 12,650,000 | — | (1,333,950 | ) | ||||||||||||||
Total |
12,650,000 |
— |
12,650,000 |
— |
(1,333,950) |
Number of restricted shares |
Weighted average grant date fair value per non-vested share |
|||||||
Non-vested, January 1, 2021 |
— | — | ||||||
Granted |
343,744 | 2.99 | ||||||
Non-vested, December 31, 2021 |
343,744 | 2.99 | ||||||
December 31, 2021 |
||||||||
Option shares # |
Weighted-Average Exercise Price $ |
|||||||
Outstanding – beginning of year |
— | — | ||||||
Granted |
250,000 | 2.99 | ||||||
Exercised |
— | — | ||||||
Outstanding – end of year |
250,000 | 2.99 | ||||||
|
|
|||||||
Exercisable – end of year |
— | |||||||
|
|
Year Ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Numerator |
||||||||||||
Net income/(loss) |
2,093,124 | 11,984,485 | (35,123,208 | ) | ||||||||
Less: Undistributed earnings allocated to non-vested shares |
(8,922 | ) | — | — | ||||||||
|
|
|
|
|
|
|||||||
Net income/(loss) attributable to common shareholders, basic |
2,084,202 | 11,984,485 | (35,123,208 | ) | ||||||||
|
|
|
|
|
|
|||||||
Denominator |
||||||||||||
Weighted average number of shares outstanding, basic and diluted |
39,800,434 | 38,357,893 | 37,858,437 | |||||||||
|
|
|
|
|
|
|||||||
Earnings/( Loss) per share, basic and diluted |
0.05 | 0.31 | (0.93 | ) | ||||||||
|
|
|
|
|
|
Year ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Time charter revenues |
97,249,537 | 101,837,425 | 105,966,167 | |||||||||
Bareboat revenues |
21,764,102 | 16,876,956 | 9,624,684 | |||||||||
Voyage charter revenues |
24,018,198 | 25,161,401 | 33,813,496 | |||||||||
Other income |
1,227,475 | 1,127,239 | 800,180 | |||||||||
|
|
|
|
|
|
|||||||
Total |
144,259,312 |
145,003,021 |
150,204,527 |
|||||||||
|
|
|
|
|
|
Year ended December 31, |
||||||||||||
Vessels’ Operating Expenses |
2019 |
2020 |
2021 |
|||||||||
Crew wages and related costs |
30,874,618 | 32,073,496 | 38,454,397 | |||||||||
Insurance |
2,162,523 | 1,889,041 | 2,196,444 | |||||||||
Repairs and maintenance |
5,677,033 | 6,590,006 | 7,282,481 | |||||||||
Spares and consumable stores |
7,783,902 | 7,990,022 | 9,123,975 | |||||||||
Miscellaneous expenses |
3,088,018 | 4,752,656 | 4,452,266 | |||||||||
|
|
|
|
|
|
|||||||
Total |
49,586,094 |
53,295,221 |
61,509,563 |
|||||||||
|
|
|
|
|
|
• | From time to time the Company expects to be subject to legal proceedings and claims in the ordinary course of its business, principally personal injury and property casualty claims. Such claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. During 2020, our Aframax tanker “Stealth Berana” was arrested in relation to claims of the charterers of the vessel for alleged losses in connection with the redelivery of the vessel to the Company. The Company commenced arbitration in accordance with the provisions of the charter party agreement in respect of all disputes arising under the charter party agreement, including the claims of the charterers. The Company in order to release the vessel promptly from arrest, provided security for the claims of the charterers by way of a payment of $1,473,000 into an escrow account. In August 2021, the Company reached a settlement agreement with the charterers. Based on the settlement agreement, the funds held in the escrow account were released and the Company received the net amount of $765,031 in full and final settlement of the claims of the Company and the charterers including the liabilities of the Company due to the customer deposits (Note 10). |
• |
The Company has guaranteed to the respective banks the performance of the loan agreements entered into by Spacegas Inc., Financial Power Inc. and MGC Agressive Holdings Inc. (Note 7). The vessels owned by these entities have been provided as collateral to secure these loan agreements. Total outstanding loan balances and accrued interest of Spacegas Inc., Financial Power Inc. and MGC Agressive Holdings Inc. as of December 31, 2021 amounted to $36,823,331 and $122,287, respectively. The Company assigns a remote possibility of default to the abovementioned loan agreements and hence has not established any provisions for losses relating to this matter. With regards to the guarantee provided for the loan agreement entered into by MGC Agressive Holdings Inc., the joint venture party owning 49% equity interest in MGC Agressive Holdings Inc. has provided a counter guarantee to the Company amounting to 49% of the outstanding loan balances of MGC Agressive Holdings Inc. Total outstanding loan balances and accrued interest of MGC Agressive Holdings Inc. as of December 31, 2021 amounted to $27,083,331 and $ 86,497, respectively. |
• |
Future minimum contractual charter revenues, gross of commissions, based on vessels committed to non-cancellable, time and bareboat charter contracts as of December 31, 2021, amount to $49,979,039 during 2022, $5,998,565 during 2023 and $1,537,510 during 2024. |
Description |
Location in balance sheet |
December 31, 2020 |
December 31, 2021 |
|||||||
Non current assets: |
||||||||||
Office leases |
Operating lease right-of-use |
$ |
— | $ |
104,168 | |||||
$ | — | $ | 104,168 | |||||||
Liabilities: |
||||||||||
Office leases |
Current portion of operating lease liabilities | $ |
— | $ |
104,168 | |||||
Lease liabilities - current portion |
$ | — | $ | 104,168 | ||||||
Description |
Location in statement of operations |
2019 |
2020 |
2021 |
||||||||||
Lease expense for chartered-in contracts 12 months or less |
Charter hire expenses | $ | 4,708,988 | — | — | |||||||||
Lease expense for chartered-in contracts greater than 12 months |
Charter hire expenses | 1,560,000 | 318,606 | — | ||||||||||
Total charter hire expenses | 6,268,988 | 318,606 | — | |||||||||||
Lease expense for office leases |
General and administrative expenses | 87,192 | 90,121 | 97,726 | ||||||||||
Sub lease income from chartered-in contracts greater than 12 months * |
Revenues | 3,091,390 | 860,227 | — |
* | The sub-lease income represents only time charter revenue earned on the chartered-in contracts greater than 12 months. There is additional revenue of $482,879 earned from voyage charters on the same chartered-in contract which is recorded in Revenues in our consolidated statement of operations for the year ended December 31, 2019 (2020 & 2021: nil). Additionally, there is revenue earned from time charters from chartered-in contracts 12 months or less which is included in Revenues in our consolidated statements of operations for the year ended December 31, 2019. No such contracts existed for the years ended December 31, 2020 and 2021. |
Year |
Office leases |
Total Operating leases |
||||||
Discount rate upon adoption |
5.6 | % | 5.6 | % | ||||
2022 (undiscounted lease payments) |
$ | 107,520 | $ | 107,520 | ||||
107,520 | 107,520 | |||||||
Present value of lease liability |
104,168 | 104,168 | ||||||
Lease liabilities - short term |
104,168 | 104,168 | ||||||
Total lease liabilities |
104,168 | 104,168 | ||||||
Discount based on incremental borrowing rate (Difference between undiscounted lease payments and present value of lease liability) |
$ | 3,352 | $ | 3,352 |
Exhibit 2.1
DESCRIPTION OF STEALTHGAS INC.S SECURITIES
REGISTERED PURSUANT TO SECTION 12
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
References in this description to the Company, we, our, or us are to StealthGas Inc. Defined terms used but not defined herein have the meaning given to them in our Annual Report on Form 20-F to which this description is an exhibit.
The common stock of StealthGas Inc., par value $0.01 per share (the Common Stock) is the only security of the Company registered under Section 12 of the Securities Exchange Act of 1934, as amended. None of the Companys preferred stock, par value $0.01 per share (the Preferred Stock) is so registered. This description does not describe every aspect of the Companys capital stock and is subject to, and qualified in its entirety by reference to, the provisions of the Companys Amended and Restated Articles of Incorporation and the Companys Amended and Restated By-laws, each as currently in effect, each of which is incorporated by reference as an exhibit to the Annual Report on Form 20-F of the Company, to which this description is filed as Exhibit 2.1.
Share Capital
Under our articles of incorporation, our authorized capital stock consists of 5,000,000 shares of preferred stock, $0.01 par value per share, none of which is issued or outstanding and 100,000,000 shares of common stock, $0.01 par value per share, of which 43,527,248 shares were issued, including 5,325,247 shares repurchased by the Company and held as treasury stock, and 38,202,181 shares outstanding and fully paid as of December 31, 2021 and April 1, 2022. All of our shares of stock are in registered form.
Common Stock
Each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders. Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of shares of common stock are entitled to receive ratably all dividends, if any, declared by our Board of Directors out of funds legally available for dividends. Holders of common stock do not have conversion, redemption or preemptive rights to subscribe to any of our securities. All outstanding shares of common stock are, and the shares to be sold in this offering when issued and paid for will be, fully paid and non-assessable. The rights, preferences and privileges of holders of common stock are subject to the rights of the holders of any shares of preferred stock which we may issue in the future.
Blank Check Preferred Stock
Under the terms of our articles of incorporation, our Board of Directors has authority, without any further vote or action by our stockholders, to issue up to 5,000,000 shares of blank check preferred stock. Our Board of Directors could issue shares of preferred stock on terms calculated to discourage, delay or prevent a change of control of our company or the removal of our management.
Dividends
We have not paid a dividend since March 2009. In the first quarter of 2009, our Board of Directors determined to suspend the payment of cash dividends as a result of weak market conditions in the international shipping industry and to preserve the Companys liquid cash resources. Our board of directors will evaluate our dividend policy consistent with our cash flows and liquidity requirements.
Declaration and payment of any dividend is subject to the discretion of our Board of Directors. The timing and amount of dividend payments will be dependent upon our earnings, financial condition, cash requirements and availability, restrictions in our loan agreements, or other financing arrangements, the provisions of Marshall Islands law affecting the payment of distributions to stockholders and other factors. Because we are a holding company with no material assets other than the stock of our subsidiaries, our ability to pay dividends will depend on the earnings and cash flow of our subsidiaries and their ability to pay dividends to us. Marshall Islands law generally prohibits the payment of dividends other than from surplus or while a company is insolvent or would be rendered insolvent upon the payment thereof.
Under the terms of our existing credit facilities, we are generally permitted to declare or pay cash dividends in any twelve- month period as long as the amount of the dividends and share repurchases do not exceed 50% of the Companys free cash flow (as defined in our credit agreements) and provided we are not in default under the other covenants contained in these credit facilities.
Articles of Incorporation and Bylaws
Our purpose is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the Marshall Islands Business Corporations Act, or BCA. Our articles of incorporation and bylaws do not impose any limitations on the ownership rights of our stockholders.
Under our bylaws, annual stockholder meetings will be held at a time and place selected by our Board of Directors. The meetings may be held in or outside of the Marshall Islands. Special meetings may be called by the Board of Directors. Our Board of Directors may set a record date between 15 and 60 days before the date of any meeting to determine the stockholders that will be eligible to receive notice and vote at the meeting.
Directors. Our directors are elected by a plurality of the votes cast at a meeting of the stockholders by the holders of shares entitled to vote in the election. There is no provision for cumulative voting.
The Board of Directors may change the number of directors by a vote of a majority of the entire board. Each director shall be elected to serve until his successor shall have been duly elected and qualified, except in the event of his death, resignation, removal, or the earlier termination of his term of office. The Board of Directors has the authority to fix the amounts which shall be payable to the members of our Board of Directors for attendance at any meeting or for services rendered to us.
Dissenters Rights of Appraisal and Payment. Under the BCA, our stockholders have the right to dissent from various corporate actions, including any merger or sale of all or substantially all of our assets not made in the usual course of our business, and receive payment of the fair value of their shares. However, the right of a dissenting stockholder under the BCA to receive payment of the fair value of his shares is not available for the shares of any class or series of stock, which shares or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of the stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a securities exchange or admitted for trading on an interdealer quotation system or (ii) held of record by more than 2,000 holders. The right of a dissenting stockholder to receive payment of the fair value of his or her shares shall not be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation. In the event of any further amendment of our articles of incorporation, a stockholder also has the right to dissent and receive payment for his or her shares if the amendment alters certain rights in respect of those shares. The dissenting stockholder must follow the procedures set forth in the BCA to receive payment. In the event that we and any dissenting stockholder fail to agree on a price for the shares, the BCA procedures involve, among other things, the institution of proceedings in the circuit court in the judicial circuit in the Marshall Islands in which our Marshall Islands office is situated. The value of the shares of the dissenting stockholder is fixed by the court after reference, if the court so elects, to the recommendations of a court-appointed appraiser.
Stockholders Derivative Actions. Under the BCA, any of our stockholders may bring an action in our name to procure a judgment in our favor, also known as a derivative action, provided that the stockholder bringing the action is a holder of common stock both at the time the derivative action is commenced and at the time of the transaction to which the action relates.
Anti-takeover Provisions of our Charter Documents. Several provisions of our articles of incorporation and bylaws may have anti-takeover effects. These provisions are intended to avoid costly takeover battles, lessen our vulnerability to a hostile change of control and enhance the ability of our Board of Directors to maximize stockholder value in connection with any unsolicited offer to acquire us. However, these anti-takeover provisions, which are summarized below, could also discourage, delay or prevent (1) the merger or acquisition of our company by means of a tender offer, a proxy contest or otherwise, that a stockholder may consider in its best interest and (2) the removal of incumbent officers and directors.
Blank Check Preferred Stock. Under the terms of our articles of incorporation, our Board of Directors has authority, without any further vote or action by our stockholders, to issue up to 5,000,000 shares of blank check preferred stock. Our Board of Directors may issue shares of preferred stock on terms calculated to discourage, delay or prevent a change of control of our company or the removal of our management.
Classified Board of Directors. Our articles of incorporation provide for a Board of Directors serving staggered, three-year terms. Approximately one-third of our Board of Directors will be elected each year. This classified board provision could discourage a third party from making a tender offer for our shares or attempting to obtain control of our company. It could also delay stockholders who do not agree with the policies of the Board of Directors from removing a majority of the Board of Directors for two years.
Election and Removal of Directors. Our articles of incorporation and bylaws prohibit cumulative voting in the election of directors. Our bylaws require parties other than the Board of Directors to give advance written notice of nominations for the election of directors. Our bylaws also provide that our directors may be removed only for cause and only upon the affirmative vote of the holders of at least 80% of the outstanding shares of our capital stock entitled to vote for those directors. These provisions may discourage, delay or prevent the removal of incumbent officers and directors.
Calling of Special Meetings of Stockholders. Our bylaws provide that special meetings of our stockholders may be called only by resolution of our Board of Directors.
Advance Notice Requirements for Stockholder Proposals and Director Nominations. Our bylaws provide that stockholders seeking to nominate candidates for election as directors or to bring business before an annual meeting of stockholders must provide timely notice of their proposal in writing to the corporate secretary.
Generally, to be timely, a stockholders notice must be received at our principal executive offices not less than 90 days or more than 120 days prior to the first anniversary date of the previous years annual meeting. If, however, the date of our annual meeting is more than 30 days before or 60 days after the first anniversary date of the previous years annual meeting, a stockholders notice must be received at our principal executive offices by the later of (i) the close of business on the 90th day prior to the annual meeting date or (ii) the close of business on the tenth day following the date on which such annual meeting date is first publicly announced or disclosed by us. Our bylaws also specify requirements as to the form and content of a stockholders notice. These provisions may impede stockholders ability to bring matters before an annual meeting of stockholders or make nominations for directors at an annual meeting of stockholders.
Business Combinations. Our articles of incorporation prohibit us from engaging in a business combination with certain persons for three years following the date the person becomes an interested stockholder. Interested stockholders generally include:
| persons who are the beneficial owners of 15% or more of the outstanding voting stock of the corporation; and |
| persons who are affiliates or associates of the corporation and who hold 15% or more of the corporations outstanding voting stock at any time within three years before the date on which the persons status as an interested stockholder is determined. |
Subject to certain exceptions, a business combination includes, among other things:
| certain mergers or consolidations of the corporation or any direct or indirect majority-owned subsidiary of the company; |
| the sale, lease, exchange, mortgage, pledge, transfer or other disposition of assets having an aggregate market value equal to 10% or more of either the aggregate market value of all assets of the corporation, determined on a consolidated basis, or the aggregate value of all the outstanding stock of the corporation; |
| certain transactions that result in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; |
| any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series, or securities convertible into the stock of any class or series, of the corporation that is owned directly or indirectly by the interested stockholder; and |
| any receipt by the interested stockholder of the benefit (except as a stockholder) of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation. |
These provisions of our articles of incorporation do not apply to a business combination if:
| before a person becomes an interested stockholder, the board of directors of the corporation approves the business combination or transaction in which the stockholder became an interested stockholder; |
| upon consummation of the transaction that resulted in the interested stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, other than certain excluded shares; |
| following a transaction in which the person became an interested stockholder, the business combination is (a) approved by the board of directors of the corporation and (b) authorized at a regular or special meeting of stockholders, and not by written consent, by the vote of the holders of at least two-thirds of the voting stock of the corporation not owned by the stockholder; or |
| a transaction with a stockholder that was or became an interested stockholder prior to the consummation of our initial public offering. |
Registrar and Transfer Agent
The registrar and transfer agent for our common stock is American Stock Transfer & Trust Company.
Exhibit 4.4
CONTRIBUTION AND DISTRIBUTION AGREEMENT
This contribution and distribution agreement (this Agreement) is entered into as of November 10, 2021, by and between StealthGas Inc., a Marshall Islands corporation (StealthGas), and Imperial Petroleum Inc., a Marshall Islands corporation (Imperial Petroleum). The foregoing shall be referred to individually as a Party and collectively as the Parties.
RECITALS
A. | StealthGas intends to transfer a portion of its fleet comprising its tankers to a wholly-owned subsidiary, which subsidiary will subsequently be spun off to current shareholders of StealthGas (the Spin-Off). Concurrently with the Spin-Off, StealthGas intends to list the shares of the subsidiary to be spun off on the Nasdaq Capital Market. |
B. To accomplish the objectives and purposes in the preceding recital, the following actions have been taken prior to the date of this Agreement:
(1) | StealthGas formed Imperial Petroleum pursuant to the Marshall Islands Business Corporation Act and contributed $1,000 in exchange for all of the outstanding shares of Imperial Petroleum; |
(2) | StealthGas owns all of the outstanding shares (the Vessel-Owning Subsidiary Shares) of (a) Clean Power Inc. (CPI), which owns the MR tanker vessel Magic Wand, (b) MR. Roi Inc. (MRRI), which owns the MR tanker vessel Clean Thrasher, (c) King of Hearts Inc. (KHI), which owns the MR tanker vessel Falcon Maryam and (d) Tankpunk Inc. (TankPunk and, together, with CPI, MRRI and KHI, the Vessel-Owning Subsidiaries), which owns the tanker Stealth Berana (the Magic Wand, the Clean Thrasher, the Falcon Maryam and the Stealth Berana, collectively, the Vessels). |
C. Each of the following transactions shall occur in accordance with and pursuant to this Agreement:
(1) StealthGas will contribute all of the Vessel-Owing Subsidiary Shares to Imperial Petroleum as a capital contribution in exchange for 4,774,772 shares of common stock, par value $0.01 per share, of Imperial Petroleum (the Imperial Petroleum Common Shares) and 795,878 shares of 8.75% Series A Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share, of Imperial Petroleum with a liquidation preference of $25.00 per share and the other terms set forth in the Statement of Designation, substantially in the form attached hereto as Exhibit A (the Imperial Petroleum Preferred Shares and, together with the Imperial Petroleum Common Shares, the Imperial Petroleum Shares);
(2) | Imperial Petroleum, as guarantor, and its subsidiaries, as borrowers, will enter into, and draw down $28.0 million under, a new senior secured term loan facility with DNB (the IP Senor Secured Loan) and pay a portion of such amount to StealthGas as a dividend; |
(3) | StealthGas will distribute the Imperial Petroleum Common Shares and Imperial Petroleum Preferred Shares to its shareholders pro rata as a special dividend (the Distribution); and |
(4) | The articles of incorporation and bylaws of the aforementioned entities will be amended and restated to the extent necessary to reflect the applicable matters set forth above and in Article I of this Agreement, to the extent required. |
AGREEMENT
NOW, THEREFORE, in consideration of their mutual undertakings and agreements hereunder, the Parties undertake and agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:
Action means any claim, demand, action, cause of action, suit, countersuit, arbitration, litigation, inquiry, proceeding or investigation by or before any Governmental Authority or any arbitration or mediation tribunal or authority.
Affiliate means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such specified Person; provided, however, that for purposes of this Agreement, no member of either Group shall be deemed to be an Affiliate of any member of the other Group. As used herein, control means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities or other interests, by contract or otherwise.
Agreement means this Agreement, as the same may be modified, amended or supplemented from time to time.
Asset means any right, property or asset, whether real, personal or mixed, tangible or intangible, of any kind, nature and description, whether accrued, contingent or otherwise, and wheresoever situated and whether or not carried or reflected, or required to be carried or reflected, on the books of any Person.
Consents means any consents, waivers, notices, reports or other filings to be made, or any registrations, licenses, permits, authorizations to be obtained from, or approvals from, or notification requirements to, any third parties, including any Governmental Authority.
Contribution has the meaning assigned to such term in the Recitals hereto.
Distribution has the meaning assigned to such term in the Recitals hereto.
Distribution Agent means American Stock Transfer & Trust Company LLC.
Distribution Agent Agreement has the meaning assigned to such term in Section 3.1(b).
Distribution Date means the date on which the Distribution shall be effected, such date to be determined by, or under the authority of, the Board of Directors of StealthGas in its sole and absolute discretion.
Effective Time means the time at which the Distribution occurs on the Distribution Date.
Exchange Act means the United States Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.
Governmental Authority means any federal, state, local, foreign or international court, government, department, commission, board, bureau or agency, or any other regulatory, self-regulatory, administrative or governmental organization or authority, including the Nasdaq Stock Market.
Law means any applicable foreign, federal, national, state, provincial or local law (including common law), statute, ordinance, rule, regulation, code or other requirement enacted, promulgated, issued or entered into, or act taken, by a Governmental Authority.
Imperial Petroleum has the meaning assigned to such term in the Preamble hereto.
Imperial Petroleum Articles of Incorporation means the Amended and Restated Articles of Incorporation of Imperial Petroleum substantially in the form of Exhibit B hereto.
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Imperial Petroleum Bylaws means the Bylaws of Imperial Petroleum substantially in the form of Exhibit C hereto.
Imperial Petroleum Cash Dividend means (i) the borrowing of $28.0 million under the new credit facility to be entered into by Imperial Petroleum, as guarantor, as its subsidiaries, as borrowers, as described in the Registration Statement and (ii) the distribution of a portion of the proceeds of such borrowing in one or more transactions.
Imperial Petroleum Common Shares has the meaning assigned to such term in the Recitals hereto.
Imperial Petroleum Preferred Shares has the meaning assigned to such term in the Recitals hereto.
Imperial Petroleum Shares has the meaning assigned to such term in the Recitals hereto.
IP Senior Secured Loan has the meaning assigned to such term in the Recitals hereto.
Nasdaq means the Nasdaq Stock Market LLC.
Parties has the meaning assigned to such term in the Preamble hereto.
Person means any natural person, corporation, general or limited partnership, limited liability company or partnership, joint stock company, joint venture, association, trust, bank, trust company, land trust, business trust or other organization, whether or not a legal entity, and any Governmental Authority.
Prospectus means the final prospectus contained in the Registration Statement and filed with the SEC under Rule 424(b).
Pre-Distribution Transactions means, collectively, the Contribution and the Imperial Petroleum Cash Dividend.
Record Date means the date to be determined by the Board of Directors of StealthGas as the record date for determining stockholders of StealthGas entitled to receive Imperial Petroleum Shares pursuant to the Distribution.
Registration Statement means the Registration Statement on Form F-1 of Imperial Petroleum relating to the registration under the Securities Act of Imperial Petroleum Common Shares and Imperial Petroleum Preferred Shares, including any amendments or supplements thereto.
SEC means the United States Securities and Exchange Commission.
Securities Act means the U.S. Securities Act of 1933, as amended.
StealthGas has the meaning assigned to such term in the Preamble hereto.
StealthGas Common Stock has the meaning assigned to such term in the Recitals hereto.
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Subsidiary means, with respect to any Person, any other Person of which a Person (either alone or through or together with any other Subsidiary of such Person) owns, directly or indirectly, a majority of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity.
Vessels has the meaning assigned to such term in the Recitals hereto.
Vessel-Owning Subsidiaries has the meaning assigned to such term in the Recitals hereto.
Vessel-Owning Subsidiary Shares has the meaning assigned to such term in the Recitals hereto.
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ARTICLE II
THE PRE-DISTRIBUTION TRANSACTIONS
Section 2.1 Contributions and Specific Conveyances. On the applicable dates specified below and in any case on or prior to the Distribution Date (and prior to the Imperial Petroleum Cash Dividend and the Distribution), and subject to satisfaction or waiver of the conditions set forth in Section 2.3, the Parties acknowledge and agree that the following actions hereby occur in the following order:
(a) | Contribution on the date of this Agreement by StealthGas of all right, title and interest in the Vessel-Owning Subsidiary Shares to Imperial Petroleum free and clear of all liens and encumbrances as a capital contribution; |
(b) | Delivery by Imperial Petroleum (i) of 4,774,772 Imperial Petroleum Common Shares to StealthGas on the date of this Agreement and (ii) of 795,878 Imperial Petroleum Preferred Shares to StealthGas on or prior to the Distribution Date, each in exchange for StealthGass capital contribution of all right, title and interest in the Vessel-Owning Subsidiary Shares to Imperial Petroleum pursuant to Section 2.1(a) of this Agreement; and such Imperial Petroleum Shares owned by StealthGas will constitute all of the issued and outstanding capital stock of Imperial Petroleum; and |
(c) | To further evidence the transfer of the Imperial Petroleum Shares or the Vessel-Owning Subsidiary Shares reflected in this Agreement, each party making such transfer will have, to the extent necessary, executed and delivered to the party receiving the Imperial Petroleum Shares or Vessel-Owning Subsidiary Shares, as applicable, certain conveyance, stock transfer form, assignment and bill of sale instruments (the Specific Conveyances). The Specific Conveyances shall evidence and perfect such transfer made by this Agreement and shall not constitute a second conveyance of any assets or interests therein and shall be subject to the terms of this Agreement. |
(d) | On or prior to the Distribution Date, Imperial Petroleum will, and will cause its applicable subsidiaries to, enter into and execute a management agreement with Stealth Maritime Corporation S.A. for administrative, commercial and technical management services, substantially in the form attached hereto as Exhibit D, which shall have an initial term expiring on December 31, 2025 and otherwise be on substantially the same terms, including the same fee levels, as the existing management agreement between StealthGas and Stealth Maritime Corporation S.A. |
Section 2.2 Imperial Petroleum Cash Dividend. On the date of this Agreement (and in any case prior to the Distribution Date and the Distribution) and subject to the satisfaction or waiver of the conditions set forth in Sections 2.1 and 2.3, Imperial Petroleum shall effect the Imperial Petroleum Cash Dividend and StealthGas shall apply the proceeds it receives from the Imperial Petroleum Cash Dividend to repay the amounts outstanding under any loans collateralized by the Vessels or the Vessel-Owning Subsidiary Shares and other assets of the Vessel-Owning Subsidiaries.
Section 2.3 Conditions Precedent to Consummation of the Pre-Distribution Transactions. The obligations of the Parties to consummate each of the Pre-Distribution Transactions is subject to the prior or simultaneous satisfaction, or waiver by StealthGas in its sole and absolute discretion, of each of the following conditions:
(a) final approval of each of the Pre-Distribution Transactions shall have been given by the Board of Directors of StealthGas in its sole and absolute discretion; and
Each of the foregoing conditions is for the benefit of StealthGas and StealthGas may, in its sole and absolute discretion, determine whether to waive any such condition. Any determination made by StealthGas prior to any of the Pre-Distribution Transactions concerning the satisfaction or waiver of any or all of the conditions set forth in this Section 2.3 shall be conclusive and binding on the Parties.
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ARTICLE III
THE DISTRIBUTION
Section 3.1 Actions Prior to the Distribution. Subject to the satisfaction or waiver of the conditions set forth in Section 3.3, the actions set forth in this Section 3.1 shall be taken prior to the Distribution Date.
(a) The Board of Directors of StealthGas shall establish the Distribution Date and any appropriate procedures in connection with the Distribution. StealthGas and Imperial Petroleum shall use commercially reasonable efforts to (i) cooperate with each other with respect to the preparation of the Registration Statement on Form F-1 relating to the registration under the Securities Act of Imperial Petroleum Common Shares and Imperial Petroleum Preferred Shares, including any amendments or supplements thereto, (ii) cause the Registration Statement to become effective under the Securities Act, and (iii) mail, promptly after effectiveness of the Registration Statement and on or promptly after the Record Date, and in any event prior to the Distribution Date, to the holders of StealthGas Common Stock as of the Record Date, the Prospectus.
(b) StealthGas shall enter into a distribution agent agreement (the Distribution Agent Agreement) with the Distribution Agent providing for, among other things, (i) the payment of the Distribution to the holders of StealthGas Common Stock in accordance with this Article III and the Distribution Agent Agreement, and (ii) the designation of Imperial Petroleum as a third party beneficiary.
(c) StealthGas and Imperial Petroleum shall deliver to the Distribution Agent (i) book-entry transfer authorizations for all of the outstanding shares of Imperial Petroleum Common Shares and Imperial Petroleum Preferred Shares to be distributed in connection with the payment of the Distribution and (ii) all information required to complete the Distribution on the basis set forth herein and under the Distribution Agent Agreement. Following the Distribution Date, upon the request of the Distribution Agent, Imperial Petroleum shall provide to the Distribution Agent book-entry transfer authorizations of Imperial Petroleum Common Stock that the Distribution Agent shall require in order to further effect the Distribution.
(d) Each of StealthGas and Imperial Petroleum shall execute and deliver to the other Party, or cause the appropriate members of its Group to execute and deliver to the other Party, any other document necessary to effect the transactions contemplated by this Agreement.
(e) StealthGas will establish the Record Date and give Nasdaq the required notice of the Record Date in compliance with Rule 10b-17 under the Exchange Act and Nasdaq rules.
(f) Each Party shall cooperate with the other Party to accomplish the Distribution and shall take any and all actions necessary or desirable to effect the Distribution.
(g) The Parties will take all actions and make all filings as StealthGas, in consultation with Imperial Petroleum but ultimately in its sole and absolute discretion, determines are necessary or appropriate, to cause the transfer or issuance of all material Consents in order for StealthGas and Imperial Petroleum to operate their respective Businesses independently of each other in the manner contemplated hereunder. Imperial Petroleum will prepare, file and use commercially reasonable efforts to make effective an application for listing of the Imperial Petroleum Common Shares and the Imperial Petroleum Preferred Shares on the Nasdaq Capital Market, subject to official notice of issuance.
(h) StealthGas shall, in its sole discretion, determine (i) whether to proceed with all or part of the Distribution, (ii) the Distribution Date, (iii) the timing and conditions to the Distribution and (iv) the terms thereof. StealthGas may, at any time and from time to time prior to the Effective Time, change the terms of the Distribution, including by delaying or accelerating the timing of the Distribution. StealthGas shall use good faith efforts to provide notice to Imperial Petroleum of any such change. StealthGas may select, for itself and for Imperial Petroleum, outside financial advisors, outside counsel, agents and the financial printer employed in connection with the transactions hereunder in its sole and absolute discretion.
(i) StealthGas and Imperial Petroleum shall take all actions necessary so that the Imperial Petroleum Articles of Incorporation and the Imperial Petroleum Bylaws shall be in effect at or prior to the Effective Time.
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(j) StealthGas and Imperial Petroleum shall take all such actions as StealthGas, in consultation with Imperial Petroleum but ultimately in its sole and absolute discretion, determines are necessary or appropriate under applicable federal or state securities or blue sky laws of the United States (and any comparable laws under any foreign jurisdiction) in connection with the Distribution.
Section 3.2 The Distribution. Subject to the satisfaction or waiver of the conditions set forth in Section 3.3, the actions set forth in this Section 3.2 shall be taken on the Distribution Date.
(a) StealthGas shall effect the Distribution by causing all of the issued and outstanding shares of Imperial Petroleum Common Shares and Imperial Petroleum Preferred Shares beneficially owned by StealthGas to be distributed to record holders of shares of StealthGas Common Stock as of the Record Date, other than with respect to shares of StealthGas Common Stock held in the treasury of StealthGas, by means of a pro rata dividend of such Imperial Petroleum Common Shares and Imperial Petroleum Preferred Shares to such record holders of shares of StealthGas Common Stock, on the terms and subject to the conditions set forth in this Agreement.
(b) Each record holder of StealthGas Common Stock on the Record Date (or such holders designated transferee or transferees), other than in respect of shares of StealthGas Common Stock held in the treasury of StealthGas, will be entitled to receive in the Distribution, one (1) Imperial Petroleum Common Share with respect to every eight (8) shares of StealthGas Common Stock held by such record holder on the Record Date and one (1) Imperial Petroleum Preferred Share with respect to every forty-eight (48) shares of StealthGas Common Stock held by such record holder on the Record Date. StealthGas shall direct the Distribution Agent to distribute on the Distribution Date or as soon as reasonably practicable thereafter the appropriate number of Imperial Petroleum Common Shares and Imperial Petroleum Preferred Shares to each such record holder or designated transferee(s) of such holder of record.
(c) StealthGas shall direct the Distribution Agent to determine, as soon as is practicable after the Distribution Date, the number of fractional shares, if any, of Imperial Petroleum Common Shares and Imperial Petroleum Preferred Shares allocable to each holder of record of StealthGas Common Stock entitled to receive Imperial Petroleum Common Shares and Imperial Petroleum Preferred Shares, respectively, in the Distribution and to promptly thereafter aggregate all such fractional shares and sell the whole shares obtained thereby, in open market transactions or otherwise at the then-prevailing trading prices, and to cause to be distributed to each such holder, in lieu of any fractional share, such holders ratable share of the proceeds of such sale, after making appropriate deductions of the amounts required to be withheld for federal income tax purposes and after deducting an amount equal to all brokerage charges, commissions and transfer taxes attributed to such sale.
(d) Any Imperial Petroleum Common Shares or Imperial Petroleum Preferred Shares or cash in lieu of fractional shares with respect to Imperial Petroleum Common Shares or Imperial Petroleum Preferred Shares that remains unclaimed by any holder of record 180 days after the Distribution Date shall be delivered to Imperial Petroleum. Imperial Petroleum shall hold such Imperial Petroleum Common Shares, Imperial Petroleum Preferred Shares and/or cash for the account of such holder of record and any such holder of record shall look only to Imperial Petroleum for such Imperial Petroleum Common Shares, Imperial Petroleum Preferred Shares and/or cash, if any, in lieu of fractional share interests, subject in each case to applicable escheat or other abandoned property laws.
Section 3.3 Conditions to Distribution. The obligation of StealthGas to consummate the Distribution is subject to the prior or simultaneous satisfaction, or waiver by StealthGas, in its sole and absolute discretion, of each of the following conditions:
(a) final approval of the Distribution shall have been given by the Board of Directors of StealthGas, and the Board of Directors of StealthGas shall have declared the dividend of Imperial Petroleum Common Shares and of Imperial Petroleum Preferred Shares, each such action in its sole and absolute discretion;
(b) the Registration Statement shall have been filed with, and declared effective by, the SEC, and there shall be no stop-order in effect with respect thereto and the Prospectus shall have been mailed to StealthGas shareholders;
(c) the actions and filings necessary or appropriate under applicable federal and state securities laws of the United States (and any comparable laws under any foreign jurisdictions) in connection with the Distribution (including, if applicable, any actions and filings relating to the Registration Statement) and any other necessary and applicable Consents from any Governmental Authority shall have been taken, obtained and, where applicable, have become effective or been accepted, each as the case may be;
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(d) the Imperial Petroleum Common Shares and Imperial Petroleum Preferred Shares to be delivered in the Distribution shall have been approved for listing on the Nasdaq Capital Market, subject to official notice of issuance;
(e) no order, injunction or decree issued by any Governmental Authority or other legal restraint or prohibition preventing the consummation of the Pre-Distribution Transactions or the Distribution or any of the other transactions contemplated by this Agreement shall have been threatened or be in effect;
(g) StealthGas shall have established the Record Date and shall have given the Nasdaq not less than ten (10) days advance notice of the Record Date in compliance with Rule 10b-17 under the Exchange Act and Nasdaq rules;
(h) the Distribution will not violate or result in a breach of Law or any material agreement;
(i) all material Consents required in connection with the transactions contemplated hereby (that are not referred to in Section 3.3(c)) shall have been received and be in full force and effect;
(j) each of the Pre-Distribution Transactions shall have been consummated in accordance with this Agreement;
(k) the Parties shall have performed or complied with all of their respective covenants, obligations and agreements contained herein as required to be performed or complied with prior to the Effective Time; and
(l) the Board of Directors of StealthGas shall have not determined that any event or development shall have occurred or exists, or might occur or exist, that makes it inadvisable to effect the Distribution.
Each of the foregoing conditions is for the sole benefit of StealthGas and StealthGas may, in its sole and absolute discretion, determine whether to waive any such condition. Any determination made by StealthGas, in its sole and absolute discretion, prior to the Distribution concerning the satisfaction or waiver of any or all of the conditions set forth in this Section 3.3 shall be conclusive and binding on the Parties. Each Party will use good faith efforts to keep the other Party apprised of its efforts with respect to, and the status of, each of the foregoing conditions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF STEALTHGAS; DISCLAIMER
4.1 Representations and Warranties. StealthGas hereby represents and warrants that:
(a) Each of the Vessel-Owning Subsidiaries has been duly formed or incorporated and is validly existing in good standing under the laws of its respective jurisdiction of formation or incorporation and has all requisite power and authority to operate its assets, including the vessel owned by each such Vessel-Owning Subsidiary, and conduct its business as described in the Registration Statement;
(b) The execution and delivery of this Agreement and all documents, instruments and agreements required to be executed and delivered by it pursuant to this Agreement in connection with the completion of the transactions contemplated by this Agreement, have been duly authorized by all necessary actions by StealthGas and, to the extent applicable, each Vessel-Owning Subsidiary, and this Agreement has been duly executed and delivered by StealthGas and constitutes a legal, valid and binding obligation of StealthGas enforceable in accordance with its terms, except as may be limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction and other similar laws of general application affecting the enforceability of remedies and rights of creditors and except that equitable remedies such as specific performance and injunction are in the discretion of a court;
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(c) The execution, delivery and performance by it of this Agreement will not conflict with or result in any violation of or constitute a breach of any of the terms or provisions of, or result in the acceleration of any obligation under, or constitute a default under any provision of: (i) the articles of association, articles of incorporation or by-laws or other organizational documents of StealthGas or any of the Vessel-Owning Subsidiaries (the StealthGas Parties and each, a StealthGas Party); (ii) any lien, encumbrance, security interest, pledge, mortgage, charge, other claim, bond, indenture, agreement, contract, franchise license, permit or other instrument or obligation to which any StealthGas Party is a party or is subject or by which any of such StealthGas Partys assets or properties may be bound; (iii) any applicable laws, statutes, ordinances, rules or regulations promulgated by a governmental authority, orders of a governmental authority, judicial decisions, decisions of arbitrators or determinations of any governmental authority or court; or (iv) any charter or vessel management agreement to which any StealthGas Party is a party or any material provision of any material contract to which a StealthGas Party is a party or by which a StealthGas Partys properties are bound;
(d) Except as have already been obtained or that will be obtained in the ordinary course of business, no consent, permit, approval or authorization of, notice or declaration to or filing with any governmental authority or any other person, including those related to any environmental laws or regulations or the charters or vessel management agreements related to the vessels owned by the Vessel-Owning Subsidiaries, is required in connection with the execution and delivery by any StealthGas Party of this Agreement or the consummation by any StealthGas Party of the transactions contemplated hereunder;
(e) The Vessel-Owning Subsidiary Shares have been duly and validly issued, are fully paid and non-assessable and free of preemptive rights. StealthGas has, and will convey to Imperial Petroleum, good and valid title to the Vessel-Owning Subsidiary Shares which comprise all of the issued and outstanding shares in the Vessel-Owning Subsidiaries, free and clear of all mortgages, liens, security interests, covenants, options, claims, restrictions, or encumbrances of any kind. There are no outstanding options, warrants or other rights to acquire any shares of capital stock or securities convertible into or exercisable for the capital stock of any Vessel-Owning Subsidiary. With respect to the Vessel-Owning Subsidiary Shares, there is no further obligation to make any capital contribution to the applicable Vessel-Owning Subsidiary.
(f) There is no outstanding agreement, contract, option, commitment or other right or understanding in favor of, or held by, any person to acquire the Vessel-Owning Subsidiary Shares or the assets of the Vessel-Owning Subsidiaries, including but not limited to the Vessels, that has not been terminated or otherwise waived;
(g) Each of the charters to which each applicable Vessel-Owning Subsidiary is a party (as amended to the date of this Agreement) has been made available to Imperial Petroleum and is a valid and binding agreement of the Vessel-Owning Subsidiary party to such charter or agreement enforceable in accordance with its terms and, to the knowledge of such Vessel-Owning Subsidiary, of all other parties thereto enforceable in accordance with its terms;
(h) The Vessel-Owning Subsidiaries have fulfilled all material obligations required pursuant to the charters (described in (g) above) and the vessel management agreements to have been performed by them prior to the date of this Agreement and have not waived any material rights thereunder; and no material default or breach exists in respect thereof on their part or, to their knowledge, any of the other parties thereto and, to their knowledge, no event has occurred which, after giving of notice or the lapse of time, or both, would constitute such a material default or breach;
(i) Except for such liabilities, debts obligations, encumbrances, defects, restrictions or claims of a general nature and magnitude that would arise in connection with the operation of vessels of the same type as the Vessels in the ordinary course of business and as disclosed to Imperial Petroleum, there are no liabilities, debts or obligations of, encumbrances, defects or restrictions with respect to, or claims against the Vessel-Owning Subsidiaries or any of the assets owned by the Vessel-Owning Subsidiaries, including the Vessels (other than those arising under the credit facilities described in the annual report on Form 20-F of StealthGas filed with the Securities and Exchange Commission on April 27, 2021, as amended, to be repaid in full by StealthGas on the date hereof); and
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(o) The Vessels are (i) adequate and suitable for use by the Vessel-Owning Subsidiaries in the Vessel-Owning Subsidiaries business as presently conducted by them in all material respects as described in the Registration Statement, ordinary wear and tear excepted; (ii) seaworthy in all material respects for hull and machinery insurance warranty purposes and is in good running order and repair; (iii) insured against all risks, and in amounts, consistent with common industry practices; (iv) in compliance with maritime laws and regulations; (v) duly registered under the flag of the Marshall Islands; and (vi) in compliance in all material respects with the requirements of its present class and classification society; and all class certificates of each of the Vessels are clean and valid and free of recommendations affecting class.
4.2 Disclaimer of Warranties. EXCEPT TO THE EXTENT PROVIDED IN THIS AGREEMENT OR IN ANY OTHER DOCUMENT EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT, THE PARTIES ACKNOWLEDGE AND AGREE THAT NONE OF THE PARTIES HAS MADE, DOES NOT MAKE, AND EACH SUCH PARTY SPECIFICALLY NEGATES AND DISCLAIMS, ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, ORAL OR WRITTEN, PAST OR PRESENT, REGARDING (A) THE VALUE, NATURE, QUALITY OR CONDITION OF THE ASSETS OWNED BY THE VESSEL-OWNING SUBSIDIARIES, INCLUDING, WITHOUT LIMITATION, THE ENVIRONMENTAL CONDITION OF THE ASSETS GENERALLY, INCLUDING, WITHOUT LIMITATION, THE PRESENCE OR LACK OF HAZARDOUS SUBSTANCES OR OTHER MATTERS ON SUCH ASSETS, (B) THE INCOME TO BE DERIVED FROM SUCH ASSETS, (C) THE SUITABILITY OF SUCH ASSETS FOR ANY AND ALL ACTIVITIES AND USES THAT MAY BE CONDUCTED THEREON OR THEREWITH, (D) THE COMPLIANCE OF OR BY SUCH ASSETS OR THEIR OPERATION WITH ANY LAWS (INCLUDING WITHOUT LIMITATION ANY ZONING, ENVIRONMENTAL PROTECTION, POLLUTION OR LAND USE LAWS, RULES, REGULATIONS, ORDERS OR REQUIREMENTS), OR (E) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF SUCH ASSETS. EXCEPT TO THE EXTENT PROVIDED IN ANY OTHER DOCUMENT EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT, EACH PARTY ACKNOWLEDGES AND AGREES THAT SUCH PARTY HAS HAD THE OPPORTUNITY TO INSPECT THE ASSETS OF THE VESSEL-OWNING SUBSIDIARIES, AND SUCH PARTY IS RELYING SOLELY ON ITS OWN INVESTIGATION OF THE ASSETS OF THE VESSEL-OWNING SUBSIDIARIES AND NOT ON ANY INFORMATION PROVIDED OR TO BE PROVIDED BY THE OTHER PARTY. EXCEPT TO THE EXTENT PROVIDED IN ANY OTHER DOCUMENT EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT, EACH OF THE PARTIES HEREBY ACKNOWLEDGES THAT, TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE ASSETS OWNED BY THE SUBSIDIARIES, AS PROVIDED FOR HEREIN, ARE CONVEYED ON AN AS IS, WHERE IS CONDITION WITH ALL FAULTS, AND THE ASSETS OF THE SUBSIDIARIES ARE CONVEYED SUBJECT TO ALL OF THE MATTERS CONTAINED IN THIS SECTION. THIS SECTION SHALL SURVIVE THE CONTRIBUTION AND CONVEYANCE OF THE VESSEL-OWNING SUBSIDIARY SHARES OR THE TERMINATION OF THIS AGREEMENT. THE PROVISIONS OF THIS SECTION HAVE BEEN NEGOTIATED BY THE PARTIES AFTER DUE CONSIDERATION AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT TO THE ASSETS OF THE VESSEL-OWNING SUBSIDIARIES THAT MAY ARISE PURSUANT TO ANY LAW NOW OR HEREAFTER IN EFFECT, OR OTHERWISE, EXCEPT AS SET FORTH IN THIS AGREEMENT OR ANY OTHER DOCUMENT EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT.
ARTICLE V
FURTHER ASSURANCES
5.1 Further Assurances. From time to time after the date of this Agreement, and without any further consideration, the Parties agree to execute, acknowledge and deliver all such additional deeds, assignments, bills of sale, conveyances, instruments, notices, releases, acquittances and other documents, and will do all such other acts and things, all in accordance with applicable Law, as may be necessary or appropriate (a) more fully to assure that the applicable Parties own all of the properties, rights, titles, interests, estates, remedies, powers and privileges granted by this Agreement, or which are intended to be so granted, (b) more fully and effectively to vest in the applicable Parties and their respective successors and assigns beneficial and record title to the interests contributed and assigned by this Agreement or intended so to be and (c) to more fully and effectively carry out the purposes and intent of this Agreement.
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ARTICLE VI
TERMINATION
Section 6.1 Termination. This Agreement may be terminated by StealthGas in its sole discretion at any time prior to the consummation of the Distribution.
Section 6.2 Effect of Termination. In the event of any termination of this Agreement prior to consummation of the Distribution, neither Party (nor any of its directors or officers) shall have any liability or further obligation to the other Party.
ARTICLE VII
MISCELLANEOUS
7.1 Survival of Representations and Warranties. The representations and warranties of the Parties in this Agreement and in or under any documents, instruments and agreements delivered pursuant to this Agreement, will survive the completion of the transactions contemplated hereby regardless of any independent investigations that Imperial Petroleum may make or cause to be made, or knowledge it may have, prior to the date of this Agreement and will continue in full force and effect.
7.2 Costs. Imperial Petroleum shall pay any and all sales, use and similar taxes arising out of the contributions, conveyances and deliveries to be made hereunder, and shall pay all documentary, filing, recording, transfer, deed, and conveyance taxes and fees required in connection therewith.
7.3 Headings; References; Interpretation. All Article and Section headings in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any of the provisions hereof. The words hereof, herein and hereunder and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement. All references herein to Articles and Sections shall, unless the context requires a different construction, be deemed to be references to the Articles and Sections of this Agreement, respectively. All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders, and the singular shall include the plural and vice versa. The use herein of the word including following any general statement, term or matter shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as without limitation, but not limited to, or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter.
7.4 Successors and Assigns. The Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns.
7.5 No Third Party Rights. The provisions of this Agreement are intended to bind the Parties as to each other and are not intended to and do not create rights in any other person or confer upon any other person any benefits, rights or remedies and no person is or is intended to be a third party beneficiary of any of the provisions of this Agreement.
7.6 Counterparts. This Agreement may be executed in any number of counterparts, all of which together shall constitute one agreement binding on the parties hereto.
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7.7 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without giving effect to any choice of law rules or provisions (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. Each of the parties hereto submits to the exclusive jurisdiction of the United States District Court for the Southern District of New York (or, if jurisdiction in that court is not available, then any state court located within the Borough of Manhattan, City of New York) for any and all legal actions arising out of or in connection with this Agreement.
7.8 Severability. If any of the provisions of this Agreement are held by any court of competent jurisdiction to contravene, or to be invalid under, the laws of any governmental body having jurisdiction over the subject matter hereof, such contravention or invalidity shall not invalidate the entire Agreement. Instead, this Agreement shall be construed as if it did not contain the particular provision or provisions held to be invalid, and an equitable adjustment shall be made and necessary provision added so as to give effect, as nearly as possible, to the intention of the Parties as expressed in this Agreement at the time of execution of this Agreement.
7.9 Deed; Bill of Sale; Assignment. To the extent required and permitted by applicable law, this Agreement shall also constitute a deed, bill of sale or assignment of the Vessel-Owning Subsidiary Shares.
7.10 Amendment or Modification. This Agreement may be amended or modified from time to time only by the written agreement of all the Parties hereto.
7.11 Integration. This Agreement and the instruments referenced herein supersede all previous understandings or agreements among the Parties, whether oral or written, with respect to its subject matter hereof. This Agreement and such instruments contain the entire understanding of the Parties with respect to the subject matter hereof and thereof. No understanding, representation, promise or agreement, whether oral or written, is intended to be or shall be included in or form part of this Agreement unless it is contained in a written amendment hereto executed by the Parties hereto after the date of this Agreement.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, this Contribution and Distribution Agreement has been duly executed by the parties set forth below.
STEALTHGAS INC. | ||
By: | /s/ Harry N. Vafias | |
Name: Harry N. Vafias | ||
Title: CEO and Director | ||
IMPERIAL PETROLEUM INC. | ||
By: | /s/ Harry N. Vafias | |
Name: Harry N. Vafias | ||
Title: President and Director |
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Exhibit 8
Subsidiaries
Company | Country of Incorporation | |
AMMONIA INTERNATIONAL TRADING INC. |
Marshall Islands | |
AURORA INVESTMENTS INC. |
Marshall Islands | |
BAHLA BEAUTY INC. |
Marshall Islands | |
BARONESS HOLDINGS INC. |
Marshall Islands | |
CANNES VIEW INC.* |
Marshall Islands | |
CALABASAS INDUSTRIES INC. |
Marshall Islands | |
CALIFORNIA GASES INC. |
Marshall Islands | |
CARINTHIA INC. |
Liberia | |
CHIOS LEGACY INC. |
Marshall Islands | |
CLEAN POWER INC. |
Liberia | |
CELCIUS TECHNOLOGIES INC.** |
Liberia | |
COLORADO OIL AND GAS INC.* |
Marshall Islands | |
DAYTONA INDUSTRIES INC. |
Marshall Islands | |
EASTERN EXPLORATION INC. |
Marshall Islands | |
ECOBUTANE INC. |
Marshall Islands | |
ECOGAS TRADING INC. |
Marshall Islands | |
ECOPROPANE INC. |
Marshall Islands | |
ECOVCM INC. |
Marshall Islands | |
EMPIRE SPIRIT LTD. |
Marshall Islands | |
ENERGETIC PENINSULA LIMITED |
Liberia | |
EVOLUTION CRUDE INC. |
Marshall Islands | |
FINANCIAL POWER INC.* |
Marshall Islands | |
GAS ENTERPRISES INTERNATIONAL INC.** |
Marshall Islands | |
GOLDEN SHADOW INC. |
Marshall Islands | |
INTERNATIONAL GASES INC. |
Liberia | |
JAPANESE LEASING SCHEMES INC. |
Marshall Islands | |
K INVESTMENTS INC. |
Marshall Islands | |
KAIZEN INDUSTRIES INC. |
Marshall Islands | |
KING OF HEARTS INC. |
Liberia | |
LUCKYBOY INC. |
Marshall Islands | |
MANAMA PRIDE INC. |
Marshall Islands | |
MR. ROI INC. |
Marshall Islands | |
NORTHERN CAPITAL HOLDING INC. |
Liberia | |
OCTOPUS GAS INC. |
Liberia | |
OXFORDGAS LTD. |
Liberia | |
POWERPLANNING INTERNATIONAL INC. |
Marshall Islands | |
PELORUS INC. |
Liberia | |
PETCHEM TRADING INC. |
Marshall Islands | |
RADIANT ENTERPRISES INC. |
Marshall Islands | |
REVOLUTION INC. |
Marshall Islands | |
RISING SUN INC. |
Liberia | |
SANTA BARBARA INC. |
Marshall Islands | |
SANTA MONICA INC. |
Marshall Islands | |
SENIOR INVESTMENTS INC. |
Marshall Islands | |
SIKOUSIS LEGACY INC. |
Marshall Islands | |
SOLEIL TRUST INC. |
Liberia | |
SOUND EFFEX INC. |
Marshall Islands |
SPACEGAS INC.* |
Marshall Islands | |
STEALTHGAS INC. |
Marshall Islands | |
STEAM POWER INC. |
Marshall Islands | |
TANKPUNK, INC. |
Marshall Islands | |
TATOOSH BEAUTY INC. |
Liberia | |
WOLVERINES INC. |
Marshall Islands | |
UNIVERSAL GAS SUPPLIES INC. |
Marshall Islands | |
FROST INVESTMENTS CORP INC*. |
Marshall Islands | |
MGC AGGRESSIVE HOLDINGS INC**. |
Marshall Islands | |
SUB ZERO INC.** |
Liberia | |
ALASKAN GASES INC.** |
Liberia |
* | We own a 49.9% equity interest in this entity, which is consolidated in our financial statements under the equity method. |
** | We own a 51.0% equity interest in this entity, which is consolidated in our financial statements under the equity method. |
Exhibit 12.1
CERTIFICATIONS
I, Harry N. Vafias, certify that:
1. | I have reviewed this annual report on Form 20-F of StealthGas Inc.; |
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 Companys other certifying officers 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 Companys 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 Companys 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 Companys internal control over financial reporting; and |
5. | The Companys other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Companys auditors and the audit committee of the Companys board of directors (or persons performing the equivalent function): |
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 Companys 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 Companys internal control over financial reporting. |
Date: April 29, 2022
/s/ Harry N. Vafias |
Harry N. Vafias |
President and Chief Executive Officer |
Exhibit 12.2
CERTIFICATIONS
I, Harry N. Vafias, certify that:
1. | I have reviewed this annual report on Form 20-F of StealthGas Inc.; |
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 Companys other certifying officers 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 Companys 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 Companys 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 Companys internal control over financial reporting; and |
5. | The Companys other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Companys auditors and the audit committee of the Companys board of directors (or persons performing the equivalent function): |
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 Companys 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 Companys internal control over financial reporting. |
Date: April 29, 2022
/s/ Harry N. Vafias |
Harry N. Vafias |
Chief Financial Officer |
Exhibit 13.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 20-F of StealthGas Inc. (the Company) for the fiscal year ended December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the Report), the undersigned officer of the Company hereby certifies to the undersigneds knowledge, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that:
1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: April 29, 2022
/s/ Harry N. Vafias |
Harry N. Vafias |
President and Chief Executive Officer |
Exhibit 13.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 20-F of StealthGas Inc. (the Company) for the fiscal year ended December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the Report), the undersigned officer of the Company hereby certifies to the undersigneds knowledge, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that:
1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date April 29, 2022
/s/ Harry N. Vafias |
Harry N. Vafias |
Chief Financial Officer |
Exhibit 15.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-143804 on Form F-3 and Registration Statement Nos. 333-144240 and 333-207168 on Form S-8 of our reports dated April 29, 2022, relating to the consolidated financial statements of StealthGas Inc. and subsidiaries (the Company) and the effectiveness of the Companys internal control over financial reporting appearing in this Annual Report on Form 20-F for the year ended December 31, 2021.
/s/ Deloitte Certified Public Accountants S.A
Athens, Greece
April 29, 2022
Exhibit 15.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statement No. 333-143804 on Form F-3 and Nos. 333-144240 and 333-207168 on Form S-8 of StealthGas Inc. of our report dated April 27, 2021, relating to the balance sheet as of December 31, 2020, and the related statements of comprehensive income/(loss), stockholders equity, and cash flows for the period from February 1, 2019 to December 31, 2019 and for the year ended December 31, 2020, and the related notes to the financial statements of Spacegas Inc. appearing in this Annual Report on Form 20-F for the year ended December 31, 2021.
/s/ Deloitte Certified Public Accountants S.A.
Athens, Greece
April 29, 2022
Deloitte Certified Public Accountants S.A. is a member of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (DTTL). DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as Deloitte Global) does not provide services to clients. Please see www.deloitte.com/about to learn more about our global network of member firms.
Co.Reg. No: 001223601000
© 2019 All rights reserved.
Exhibit 15.3
Spacegas Inc.
Financial statements
Index to financial statements
Page | ||||
Independent Auditors Report |
2 | |||
Balance Sheet as of December 31, 2020 and 2021 |
4 | |||
Statement of Operations for the period from February 1, 2019 (Transaction Date) to December 31, 2019 and for the years ended December 31, 2020 and 2021 |
5 | |||
Statement of Stockholders Equity for the period from February 1, 2019 (Transaction Date) to December 31, 2019 and for the years ended December 31, 2020 and 2021 |
6 | |||
Statement of Cash Flows for the period from February 1, 2019 (Transaction Date) to December 31, 2019 and for the years ended December 31, 2020 and 2021 |
7 | |||
Notes to the Financial Statements |
8 |
1
Independent Auditors Report
To the Board of Directors and Stockholders of
Spacegas Inc.
Opinion
We have audited the financial statements of Spacegas Inc. (the Company), which comprise the balance sheet as of December 31, 2020, and the related statements of comprehensive income/(loss), stockholders equity, and cash flows for the period from February 1, 2019 (Transaction Date) to December 31, 2019 and for the year ended December 31, 2020, and the related notes to the financial statements (collectively referred to as the financial statements).
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the period from February 1, 2019 (Transaction Date) to December 31, 2019 and for the year ended December 31, 2020, in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Companys ability to continue as a going concern for one year after the date that the financial statements are issued.
Auditors Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
| Exercise professional judgment and maintain professional skepticism throughout the audit. |
2
| Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. |
| Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control. Accordingly, no such opinion is expressed. |
| Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. |
| Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Companys ability to continue as a going concern for a reasonable period of time. |
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Other Matter
The accompanying balance sheet of the Company as of December 31, 2021, and the related statements of comprehensive income/(loss), stockholders equity, and cash flows for the year then ended were not audited, reviewed, or compiled by us, and, accordingly, we do not express an opinion or any other form of assurance on them.
/s/ Deloitte Certified Public Accountants S.A.
April 27, 2021
Athens, Greece
3
Spacegas Inc.
Balance sheets
As of December 31, 2020 and 2021
(Expressed in United States Dollars, Except for Share Data)
2020 | 2021 (Unaudited) |
|||||||||||
Assets |
||||||||||||
Current assets |
||||||||||||
Cash and cash equivalents |
1,246,489 | 1,144,200 | ||||||||||
Restricted cash |
67,701 | 132,487 | ||||||||||
Trade and other receivables |
384,345 | 89,685 | ||||||||||
Due from related party |
(Note 3) | 369,851 | 605,591 | |||||||||
Advances and prepayments |
23,228 | 79,787 | ||||||||||
Inventories |
(Note 4) | 71,870 | 287,113 | |||||||||
|
|
|
|
|||||||||
Total current assets |
2,163,484 | 2,338,863 | ||||||||||
|
|
|
|
|||||||||
Non current assets |
||||||||||||
Vessel, net |
(Note 5) | 12,559,048 | 11,900,116 | |||||||||
|
|
|
|
|||||||||
Total non current assets |
12,559,048 | 11,900,116 | ||||||||||
|
|
|
|
|||||||||
Total assets |
14,722,532 | 14,238,979 | ||||||||||
|
|
|
|
|||||||||
Liabilities and stockholders equity |
||||||||||||
Current liabilities |
||||||||||||
Trade accounts payable |
98,642 | 579,121 | ||||||||||
Payable to related parties |
(Note 3) | 268,784 | 109,626 | |||||||||
Current portion of long-term debt |
(Note 7) | 675,740 | 676,998 | |||||||||
Accrued liabilities |
(Note 6) | 75,610 | 51,655 | |||||||||
|
|
|
|
|||||||||
Total current liabilities |
1,118,776 | 1,417,400 | ||||||||||
|
|
|
|
|||||||||
Non current liabilities |
||||||||||||
Long-term debt |
(Note 7) | 4,855,255 | 4,178,257 | |||||||||
|
|
|
|
|||||||||
Total non current liabilities |
4,855,255 | 4,178,257 | ||||||||||
|
|
|
|
|||||||||
Total liabilities |
5,974,031 | 5,595,657 | ||||||||||
|
|
|
|
|||||||||
Commitments and contingencies |
(Note 13) | |||||||||||
Stockholders equity: |
||||||||||||
Capital stock 0.0001 par value; 7,647,000 issued and outstanding |
(Note 9) | 765 | 765 | |||||||||
Additional paid-in capital |
(Note 9) | 7,646,235 | 7,646,235 | |||||||||
Retained earnings |
1,101,501 | 996,322 | ||||||||||
|
|
|
|
|||||||||
Total stockholders equity |
8,748,501 | 8,643,322 | ||||||||||
|
|
|
|
|||||||||
Total liabilities and stockholders equity |
14,722,532 | 14,238,979 | ||||||||||
|
|
|
|
The accompanying notes are an integral part of these financial statements.
4
Spacegas Inc.
Statements of comprehensive income/(loss)
For the period from February 1, 2019 (Transaction Date) to December 31, 2019 and for the years ended December 31, 2020 and 2021
(Expressed in United States dollars)
2019 | 2020 | 2021 (Unaudited) |
||||||||||||||
Revenues |
||||||||||||||||
Revenues |
(Note 10) | 3,362,478 | 3,222,037 | 3,023,283 | ||||||||||||
|
|
|
|
|
|
|||||||||||
Total revenues |
3,362,478 | 3,222,037 | 3,023,283 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Expenses |
||||||||||||||||
Voyage expenses |
11,091 | 594,952 | 689,445 | |||||||||||||
Voyage expenses-related party |
(Notes 3) | 42,031 | 40,275 | 37,784 | ||||||||||||
Vessel operating expenses |
(Note 11) | 1,409,047 | 1,306,031 | 1,445,520 | ||||||||||||
Depreciation |
(Note 4) | 600,636 | 662,316 | 658,932 | ||||||||||||
Management fees |
(Note 3) | 146,960 | 161,040 | 160,600 | ||||||||||||
General and administrative expenses |
30,246 | 5,528 | 4,443 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Total expenses |
2,240,011 | 2,770,142 | 2,996,724 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Income from operations |
1,122,467 | 451,895 | 26,559 | |||||||||||||
Other (expenses)/income |
||||||||||||||||
Interest and finance costs |
(266,586 | ) | (203,371 | ) | (132,492 | ) | ||||||||||
Interest income and other income |
610 | 475 | 143 | |||||||||||||
Foreign exchange (loss)/income |
(1,606 | ) | (2,383 | ) | 611 | |||||||||||
|
|
|
|
|
|
|||||||||||
Other expenses, net |
(267,582 | ) | (205,279 | ) | (131,738 | ) | ||||||||||
|
|
|
|
|
|
|||||||||||
Net income/(loss) |
854,885 | 246,616 | (105,179 | ) | ||||||||||||
|
|
|
|
|
|
|||||||||||
Other comprehensive income |
| | | |||||||||||||
|
|
|
|
|
|
|||||||||||
Total comprehensive income/(loss) |
854,885 | 246,616 | (105,179 | ) | ||||||||||||
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
5
Spacegas Inc.
Statements of stockholders equity
For the period from February 1, 2019 (Transaction Date) to December 31, 2019 and for the years ended December 31, 2020 and 2021
(Expressed in United States Dollars, Except for Number of Shares)
Number of common shares |
Common stock par value (Note 9) |
Additional paid in capital (Note 9) |
Retained earnings |
Total stockholders equity |
||||||||||||||||
Balance, February 1, 2019 (Transaction Date) |
6,897,000 | 690 | 6,896,310 | | 6,897,000 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Issuance of share capital (Note 9) |
750,000 | 75 | 749,925 | | 750,000 | |||||||||||||||
Net income |
| | | 854,885 | 854,885 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, December 31, 2019 |
7,647,000 | 765 | 7,646,235 | 854,885 | 8,501,885 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income |
| | | 246,616 | 246,616 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, December 31, 2020 |
7,647,000 | 765 | 7,646,235 | 1,101,501 | 8,748,501 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loss (unaudited) |
| | | (105,179 | ) | (105,179 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, December 31, 2021 (Unaudited) |
7,647,000 | 765 | 7,646,235 | 996,322 | 8,643,322 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
6
Spacegas Inc.
Statements of cash flows
For the period from February 1, 2019 (Transaction Date) to December 31, 2019 and for the years ended December 31, 2020 and 2021
(Expressed in United States Dollars)
2019 | 2020 | 2021 (Unaudited) |
||||||||||
Cash flows from operating activities: |
||||||||||||
Net income/(loss) |
854,885 | 246,616 | (105,179 | ) | ||||||||
Adjustments to reconcile net income/(loss) to net cash provided by operating activities: |
||||||||||||
Depreciation |
600,636 | 662,316 | 658,932 | |||||||||
Amortization of deferred finance charges |
18,137 | 10,518 | 9,260 | |||||||||
Changes in operating assets and liabilities: |
||||||||||||
(Increase)/decrease in |
||||||||||||
Trade and other receivables |
(124,664 | ) | (259,681 | ) | 294,660 | |||||||
Advances and prepayments |
(13,671 | ) | (9,557 | ) | (56,559 | ) | ||||||
Inventories |
(195,224 | ) | 123,354 | (215,243 | ) | |||||||
Increase/(Decrease) in |
||||||||||||
Trade accounts payable |
250,583 | (151,941 | ) | 480,479 | ||||||||
Balances with related parties |
439,723 | (170,939 | ) | (398,092 | ) | |||||||
Accrued liabilities |
61,340 | 14,270 | (23,955 | ) | ||||||||
|
|
|
|
|
|
|||||||
Net cash provided by operating activities |
1,891,745 | 464,956 | 644,303 | |||||||||
|
|
|
|
|
|
|||||||
Cash flows from investing activities: |
||||||||||||
Cash to joint venture party |
(1,114,738 | ) | | | ||||||||
Cash from joint venture party |
| 744,887 | 3,194 | |||||||||
|
|
|
|
|
|
|||||||
Net cash (used in)/provided by investing activities |
(1,114,738 | ) | 744,887 | 3,194 | ||||||||
|
|
|
|
|
|
|||||||
Cash flows from financing activities |
||||||||||||
Issuance of capital |
750,000 | | | |||||||||
Deferred finance charges paid |
(52,660 | ) | | | ||||||||
Loan repayments |
(685,000 | ) | (685,000 | ) | (685,000 | ) | ||||||
|
|
|
|
|
|
|||||||
Net cash provided by/(used in) financing activities |
12,340 | (685,000 | ) | (685,000 | ) | |||||||
|
|
|
|
|
|
|||||||
Net increase/(decrease) in cash, cash equivalents and restricted cash |
789,347 | 524,843 | (37,503 | ) | ||||||||
|
|
|
|
|
|
|||||||
Cash, cash equivalents and restricted cash at beginning of period |
| 789,347 | 1,314,190 | |||||||||
|
|
|
|
|
|
|||||||
Cash, cash equivalents and restricted cash at end of period |
789,347 | 1,314,190 | 1,276,687 | |||||||||
|
|
|
|
|
|
|||||||
Cash breakdown |
||||||||||||
Cash and cash equivalents |
711,674 | 1,246,489 | 1,144,200 | |||||||||
Restricted cash, current |
77,673 | 67,701 | 132,487 | |||||||||
Total cash, cash equivalents and restricted cash shown in the statements of cash flows |
789,347 | 1,314,190 | 1,276,687 | |||||||||
|
|
|
|
|
|
|||||||
Supplemental cash flow information |
||||||||||||
Interest paid |
199,076 | 207,678 | 172,278 |
The accompanying notes are an integral part of these financial statements.
7
Spacegas Inc.
Notes to the financial statements as of December 31, 2020 and December 31, 2021 (unaudited) and for the period from February 1, 2019 (Transaction Date) to December 31, 2019 and for the years ended December 31, 2020 and December 31, 2021 (unaudited)
1. | Basis of Presentation and General Information |
Spacegas Inc. (the Company) as of December 31, 2021 owned one liquefied petroleum gas (LPG) carrier, Gas Defiance, built on July 30, 2008, which provides worldwide marine transportation services under time or voyage charters. Spacegas Inc. was formed under the laws of the Marshall Islands on March 5, 2008. For the period from its incorporation to February 1, 2019, the Company was fully owned by StealthGas Inc. On February 1, 2019 (the Transaction Date), StealthGas Inc. (the joint venture party) entered into a Shareholder Agreement with MAAS GAS BV pursuant to which MAAS GAS BV acquired 49.9% of the shares of the Company and gained co-ownership and joint control of the vessel Gas Defiance.
The reporting and functional currency of the Company is the United States Dollar. The financial statements have been prepared in conformity with United States generally accepted accounting principles (U.S. GAAP) and present the financial position of the Company as of December 31, 2020 and 2021, and the results of its operations and its cash flows for the period from the Transaction date to December 31, 2019 and for the years ended December 31, 2020 and 2021.
The Companys vessel is managed by Stealth Maritime Corporation S.A. (the Manager), a related party. The Manager is a company incorporated in Liberia and registered in Greece on May 17, 1999 under the provisions of law 89/1967, 378/1968 and article 25 of law 27/75 as amended by article 4 of law 2234/94. (See Note 3).
Coronavirus Outbreak: On March 11, 2020, the World Health Organization declared the 2019 Novel Coronavirus (the 2019-nCoV) outbreak a pandemic. In response to the outbreak, many countries, ports and organizations, including those where the Company conducts a large part of its operations, have implemented measures to combat the outbreak, such as quarantines and travel restrictions, which may continue to cause trade disruptions and volatility in the commodity markets. The Company has experienced and may continue to experience lower LPG rates, as a result of the reduction of the global demand for LPG cargoes. Although to date there has not been any significant effect on the Companys operating activities due to 2019-nCoV other than the decrease in market rates, and increased crew cost, the extent to which a new wave of the 2019-nCoV will impact the Companys results of operations and financial condition will depend on future developments, which are uncertain and cannot be predicted, including among others, new information which may emerge concerning the severity of the virus and the effectiveness of the actions taken to contain or treat its impact or any resurgence or mutation of the virus, the availability and effectiveness of vaccines and their global deployment. Accordingly, an estimate of the future impact cannot be made at this time.
2. | Significant Accounting Policies |
Use of Estimates: The preparation of 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 reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
8
Foreign Currency Translation: The functional currency of the Company is the U.S. Dollar because the Companys vessel operates in international shipping markets, which utilize the U.S. Dollar as the functional currency. The accounting books of the Company 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 date, monetary assets and liabilities, which are denominated in other currencies, are translated to reflect the period end exchange rates. Resulting gains or losses are separately reflected in the accompanying statement of operations.
9
Cash and Cash Equivalents: The Company considers highly liquid investments such as time deposits and certificates of deposit with original maturity of three months or less to be cash equivalents.
Restricted Cash: Restricted cash mainly reflects deposits with certain banks that can only be used to pay the current loan installments or which are required to be maintained as a certain minimum cash balance per mortgaged vessel or cash held in restricted bank accounts for guarantees issued by the bank on the Companys behalf. In the event that the obligation relating to such deposits is expected to be terminated within the next twelve months, these deposits are classified as current assets; otherwise they are classified as non-current assets.
Trade Receivables: The amount shown as trade receivables includes estimated recoveries from charterers for hire, net of allowance for doubtful accounts. At each balance sheet date, all potentially un-collectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. No provision for doubtful accounts was required for the periods presented.
Claims Receivable: Claims receivable are recorded on the accrual basis and represent the claimable expenses, net of deductibles, incurred through each balance sheet date, for which recovery from insurance companies is probable and claim is not subject to litigation.
Inventories: Inventories consist of bunkers and lubricants which are stated at the lower of cost and net realizable value. The cost is determined by the first-in, first-out method. The net realizable value represents estimated selling prices less reasonably predictable costs of disposal and transportation. The Company considers victualing and stores as being consumed when purchased and, therefore, such costs are expensed when incurred.
Vessel Acquisition: Vessel is stated at cost less depreciation and impairment, if any. Cost consists of the contract price less discounts and any material expenses incurred upon acquisition (initial repairs, improvements, acquisition and expenditures made to prepare the vessel for its initial voyage). Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels, or otherwise are charged to expenses as incurred. The Company records all identified tangible and intangible assets associated with the acquisition of a vessel or liabilities at fair value.
10
Impairment or Disposal of Long-lived Assets: The Company follows the Accounting Standards Codification (ASC) Subtopic 360-10, Property, Plant and Equipment (ASC 360-10), which requires impairment losses to be recorded for long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. The Company performs an analysis of the anticipated undiscounted future net cash flows of the related long-lived assets, when an impairment indication exists. If the carrying value of the related asset exceeds the undiscounted cash flows, the carrying value is reduced to its fair value and the difference is recorded as an impairment loss in the statement of operations. Various factors including anticipated future charter rates, estimated scrap values, future dry-docking costs and estimated vessel operating costs are included in this analysis. These factors are based on historical trends as well as future expectations.
Vessels Depreciation: The cost of the Companys vessel is depreciated on a straight-line basis over the vessels remaining economic useful life, after considering the estimated residual value. Management estimates the useful life of the Companys vessel to be 30 years from the date of its construction.
Accounting for Special Survey and Dry-docking Costs: Special survey and dry-docking costs are expensed in the period incurred.
Deferred Finance Charges: Fees incurred for obtaining new loans or refinancing existing ones are deferred and amortized to interest expense over the life of the related debt using the effective interest method. The unamortized deferred financing charges are presented as a direct deduction from the carrying amount of the related loan and credit facility in the balance sheet. Deferred financing costs relating to undrawn facilities are presented under non-current assets in the balance sheet.
Accounting for Revenue and Related Expenses: The Company generates its revenues from charterers for the charter hire of its vessel. The Companys vessel is chartered on time 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 in advance. Operating costs incurred for running the vessel such as crew costs, vessel insurance, repairs and maintenance and lubricants are paid for by the Company under time charter agreements. A time charter generally provides typical warranties and owner protective restrictions. The performance obligations in a time charter are satisfied over the term of the contract beginning when the vessel is delivered to the charterer until it is redelivered back to the owner of the vessel. The Companys time charter contracts are classified as operating leases pursuant to ASC 842 - Leases, and therefore do not fall under the scope of ASC 606 because (i) the vessel is an identifiable asset (ii) the owner of the vessel does not have substantive substitution rights and (iii) the charterer has the right to control the use of the vessel during the term of the contract and derives the economic benefits from such use. Time charter revenues are recognized when a charter agreement exists, the vessel is made available to the charterer and collection of the related revenue is reasonably assured. Time charter revenues are recognized ratably on a straight line basis over the period of the respective charter. Under time charter agreements, all voyages expenses, except commissions are assumed by the charterer.
11
On implementation of ASC 842, the Company, elected to make use of a practical expedient for lessors, not to separate the lease and non-lease components included in the time charter revenue but rather to recognize operating lease revenue as a combined single lease component for all time charter contracts as the related lease component, the hire of a vessel, and non-lease component, the fees for operating and maintaining the vessel, have the same timing and pattern of transfer (both the lease and non-lease components are earned by passage of time) and the predominant component is the lease.
A voyage charter is a contract, in which the vessel owner undertakes to transport a specific amount and type of cargo on a load port-to-discharge port basis, subject to various cargo handling terms. The Company accounts for a voyage charter when all the following criteria are met: (1) the parties to the contract have approved the contract in the form of a written charter agreement and are committed to perform their respective obligations, (2) the Company can identify each partys rights regarding the services to be transferred, (3) the Company can identify the payment terms for the services to be transferred, (4) the charter agreement has commercial substance (that is, the risk, timing, or amount of the Companys future cash flows is expected to change as a result of the contract) and (5) it is probable that the Company will collect substantially all of the consideration to which it will be entitled in exchange for the services that will be transferred to the charterer. The Company determined that its voyage charters consist of a single performance obligation which is met evenly as the voyage progresses and begin to be satisfied once the vessel is ready to load the cargo. The voyage charter party agreement generally has a demurrage/despatch clause according to which, in the case of demurrage the charterer reimburses the vessel owner for any potential delays exceeding the allowed lay-time as per the charter party clause at the ports visited which is recorded as demurrage revenue, while in the case of despatch, the owner reimburses the charterer for the earlier discharging of the cargo from the agreed time. Revenues from voyage charters are recognized on a straight line basis over the voyage duration which commences once the vessel is ready to load the cargo and terminates upon the completion of the discharge of the cargo. Demurrage/despatch revenues are recognized when the amount can be estimated and its collection is probable. In voyage charters, vessel operating and voyage expenses are paid for by the Company. The voyage charters are considered service contracts which fall under the provisions of ASC 606 because the Company retains control over the operations of the vessels such as the routes taken or the vessels speed.
Deferred revenue represents cash received for undelivered performance obligations and deferred revenue resulting from straight-line revenue recognition in respect of charter agreements that provide for varying charter rates. The portion of the deferred revenue that will be earned within the next twelve months is classified as current liability and the remaining as long-term liability.
Vessel voyage expenses are direct expenses to voyage revenues and primarily consist of brokerage commissions, port expenses, canal dues and bunkers. Brokerage commissions are paid to shipbrokers for their time and efforts for negotiating and arranging charter party agreements on behalf of the Company and expensed over the related charter period and all the other voyage expenses are expensed as incurred except for expenses during the ballast portion of the voyage. Any expenses incurred during the ballast portion of a voyage (period between the contract date and the date of the vessels arrival to the load port) such as bunker expenses, canal tolls and port expenses are deferred and are recognized on a straight-line basis, in voyage expenses, over the voyage duration as the Company satisfies the performance obligations under the contract provided these costs are (1) incurred to fulfill a contract that the Company can specifically identify, (2) able to generate or enhance resources of the company that will be used to satisfy performance of the terms of the contract, and (3) expected to be recovered from the charterer. These costs are considered contract fulfillment costs and are included in current assets in the balance sheets.
12
Vessel operating expenses comprise all expenses relating to the operation of the vessel, including crewing, repairs and maintenance, insurance, stores, lubricants and other operating expenses. Vessel operating expenses are expensed as incurred.
Recent Accounting Pronouncements: Reference Rate Reform: In March 2020, the Financial Accounting Standards Board issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04). ASU 2020-04 provides temporary optional expedients and exceptions to the guidance in U.S. GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The ASU 2020-04 is effective for adoption at any time between March 12, 2020 and December 31, 2022, for all entities. As of December 31, 2021, the Company has not yet evaluated the effects of this standard on its consolidated financial position, results of operations, and cash flows.
13
3. | Transactions with Related Parties |
The Manager provides the vessel with a wide range of shipping services such as chartering, technical support and maintenance, insurance, consulting, financial and accounting services, for a fixed daily fee of $440 and a brokerage commission of 1.25% on hire, as per the management agreement between the Manager and the Company. For the year ended December 31, 2021, total brokerage commissions of 1.25% amounted to $37,784 and are included in Voyage expenses related party in the statements of operations (2020: $40,275, 2019: $42,031). For the year ended December 31, 2021, the management fees were $160,600 (2020: $161,040, 2019: $146,960) and are included in Management fees in the statements of operations.
The current account balance with the Manager at December 31, 2021 was a liability of $108,080 (2020: $241,006). The liability represents payments made by the Manager on behalf of the ship-owning company.
The current account balance with StealthGas Inc. at December 31, 2021 was a receivable of $366,657 (2020: $369,851). The receivable mainly represents revenues collected by StealthGas Inc. on behalf of the Company.
In addition, the Company had a receivable from Financial Power Inc. at December 31, 2021, a company under common control, amounting to $238,934 (2020: a payable of $27,778) and relating to funds provided for working capital purposes.
Furthermore, the Company had a payable to Cannes View Inc. at December 31, 2021, a company under common control, amounting to $1,546 and relating to funds received for working capital purposes.
The balances are interest-free, with no repayment terms and are due on demand.
4. | Inventories |
The amounts shown in the accompanying balance sheets are analyzed as follows:
December 31, | ||||||||
2020 | 2021 (Unaudited) |
|||||||
Bunkers |
27,649 | 255,156 | ||||||
Lubricants |
44,221 | 31,957 | ||||||
|
|
|
|
|||||
Total |
71,870 | 287,113 | ||||||
|
|
|
|
14
5. | Vessel, Net |
The amounts shown in the accompanying balance sheets are analyzed as follows:
Vessel cost |
Accumulated depreciation |
Net book value |
||||||||||
Balance, December 31, 2019 |
13,822,000 | (600,636 | ) | 13,221,364 | ||||||||
|
|
|
|
|
|
|||||||
Depreciation for the year |
| (662,316 | ) | (662,316 | ) | |||||||
|
|
|
|
|
|
|||||||
Balance, December 31, 2020 |
13,822,000 | (1,262,952 | ) | 12,559,048 | ||||||||
|
|
|
|
|
|
|||||||
Depreciation for the year (unaudited) |
| (658,932 | ) | (658,932 | ) | |||||||
|
|
|
|
|
|
|||||||
Balance, December 31, 2021 (unaudited) |
13,822,000 | (1,921,884 | ) | 11,900,116 | ||||||||
|
|
|
|
|
|
At December 31, 2021, no impairment indication existed for the Companys vessel since its fair value as determined by independent brokers exceeded its net book value.
As of December 31, 2021, the vessel has been provided as collateral to secure the Companys bank loan as discussed in Note 7.
6. | Accrued Liabilities |
The amounts shown in the accompanying balance sheets are analyzed as follows:
December 31, | ||||||||
2020 | 2021 (unaudited) |
|||||||
Interest on long-term debt |
20,412 | 17,895 | ||||||
Vessel operating and voyage expenses |
55,198 | 33,760 | ||||||
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|
|
|
|||||
Total |
75,610 | 51,655 | ||||||
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|
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7. | Long-Term Debt, Net |
Long-term debt as of the Transaction date amounted to $6,925,000 and related to a loan issued on July 30, 2008. In May 2019, loan repayments amounting to $342,500 were made to the bank.
On June 25, 2019, the Company together with Financial Power Inc., a ship-owning company under common control, entered into a loan agreement for an amount of $13,165,000 with a bank, for the purpose of re-financing in full the then existing borrowings with the same bank of which $6,582,500 related to the Company. The loan bears interest at LIBOR plus a margin of 2% per annum. The loan allocated to the Company amounted to $6,582,500 and is repayable in nine semi-annual instalments of $342,500 each, and a balloon instalment of $3,500,000, payable together with the last instalment in November 2023.
Loan interest expense for the year ended December 31, 2021, amounted to $118,883 (2020: $188,719, 2019: $238,447) and is presented under Interest and finance costs in the accompanying statements of operations.
Weighted average interest rate on the Companys long-term debt for the year ended December 31, 2021 was 2.3% (2020: 3.1%, 2019: 3.8%).
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Long-term debt as at December 31, 2020 and 2021 is analysed as follows:
2020 | 2021 (Unaudited) |
|||||||
Total long-term debt |
5,555,000 | 4,870,000 | ||||||
Less: Deferred debt issuance costs |
(24,005 | ) | (14,745 | ) | ||||
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|
|
|
|||||
Total long-term debt, net |
5,530,995 | 4,855,255 | ||||||
Less: Current portion of long-term debt |
(685,000 | ) | (685,000 | ) | ||||
Add: Current portion of deferred debt issuance costs |
9,260 | 8,002 | ||||||
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|
|
|
|||||
Long-term debt, net |
4,855,255 | 4,178,257 | ||||||
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|
|
|
The annual principal payments to be made, for the abovementioned loan, after December 31, 2021 are as follows:
December 31, 2021 (Unaudited) |
||||
2022 |
685,000 | |||
2023 |
4,185,000 | |||
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|
|||
Total |
4,870,000 | |||
|
|
The performance of the loan agreement has been guaranteed by StealthGas Inc. The loan agreement contains customary ship finance covenants, including restrictions as to changes in management and ownership of the mortgaged vessels, the incurrence of additional indebtedness, the mortgaging of the vessels, the ratio of debt to the vessels Market Value and pledged cash deposits. As of December 31, 2021, the Company was in compliance with all the terms of its loan agreement.
8. | Fair Value of Financial Instruments and Concentration of Credit Risk |
Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of cash and cash equivalents, restricted cash, trade and other receivables, due from related party, payable to related party, trade accounts payable and accrued liabilities. The Company limits its credit risk with respect to accounts receivable by performing ongoing credit evaluations of its customers financial condition and generally does not require collateral for its trade accounts receivable. The Company places its cash and cash equivalents, time deposits and other investments with high credit quality financial institutions. The Company performs periodic evaluations of the relative credit standing of those financial institutions. The carrying values of cash and cash equivalents, restricted cash, receivables from related party, trade and other receivables, payable to related party, trade accounts payable and accrued liabilities are reasonable estimates of their fair value due to the short term nature of these financial instruments. Cash and cash equivalents and restricted cash are considered Level 1 items as they represent liquid assets with short-term maturities. The fair value of long term bank loan is estimated based on current rates offered to the Company for similar debt of the same remaining maturities. Its carrying value approximates its fair market value due to its variable interest rate, being LIBOR. LIBOR rates are observable at commonly quoted intervals for the full terms of the loans and hence floating rate loans are considered Level 2 items in accordance with the fair value hierarchy.
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9. | Capital stock and Additional paid-in capital |
The total authorized and issued share capital of the Company at the Transaction Date was 6,897,000 common shares with a value of 1 US Dollar per share.
During the period ended December 31, 2019, 750,000 shares were issued and capital amounting to $750,000 was contributed to the Company for working capital purposes. No capital was contributed to the Company during the years ended December 31, 2020 and 2021.
10. | Revenues |
The amounts in the accompanying statement of operations are analyzed as follows:
2019 | 2020 | 2021 (Unaudited) |
||||||||||
Time charter revenues |
3,362,478 | 1,470,657 | 1,779,035 | |||||||||
Voyage charter revenues |
| 1,751,380 | 1,244,248 | |||||||||
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|
|
|
|
|||||||
Total |
3,362,478 | 3,222,037 | 3,023,283 | |||||||||
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|
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|
|
|
The amount of revenue earned as demurrage relating to the Companys voyage charters for the year ended December 31, 2021 was $36,234 (2020: $176,272) and is included within Voyage charter revenues in the above table.
As of December 31, 2021, revenues relating to undelivered performance obligations of the Companys voyage charter amounted to $31,486. The Company recognized this amount as revenues in the first quarter of 2022.
11. | Vessel Operating Expenses |
The amounts in the accompanying statements of operations are analyzed as follows:
Vessels Operating Expenses |
2019 | 2020 | 2021 (Unaudited) |
|||||||||
Crew wages and related costs |
815,797 | 881,108 | 962,630 | |||||||||
Insurance |
30,721 | 51,208 | 53,614 | |||||||||
Repairs and maintenance |
90,883 | 89,955 | 47,040 | |||||||||
Lubricants and consumable stores |
234,062 | 174,229 | 200,119 | |||||||||
Miscellaneous expenses |
237,584 | 109,531 | 182,117 | |||||||||
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|
|
|
|
|
|||||||
Total |
1,409,047 | 1,306,031 | 1,445,520 | |||||||||
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|
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12. | Income Taxes |
The Company is incorporated in the Marshall Islands where the laws do not impose tax on international shipping income. However, the Company is subject to registration and tonnage taxes in the country in which the vessel is registered and managed from, which have been included in vessel operating expenses in the accompanying statements of operations.
13. | Commitments and Contingencies |
From time to time the Company expects to be subject to legal proceedings and claims in the ordinary course of its business, principally personal injury and property casualty claims. Such claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. The Company is not aware of any such claims or contingent liabilities which should be disclosed, or for which a provision should be established in the accompanying consolidated financial statements.
As discussed in Note 7, the Company together with Financial Power Inc., a ship-owning company under common control, have entered into a loan agreement for an amount of $13,165,000. The portion of Financial Power Inc. from the outstanding loan balance and accrued interest as of December 31, 2021 amounted to $4,870,000 and $17,895, respectively. The Company is jointly and severally liable for the aforementioned portion in case of any defaults. The extent to which an outflow of funds will be required is dependent on the performance of Financial Power Inc. and its compliance with the relevant terms included in the loan agreement.
The Company together with Financial Power Inc., have guaranteed to the respective bank the loan agreement entered into by Frost Investments Corp., a ship-owning company under common control. Total outstanding loan balance and accrued interest of Frost Investments Corp. as of December 31, 2021 amounted to $9,440,000 and $21,642, respectively. The extent to which an outflow of funds will be required is dependent on the performance of Frost Investments Corp. and its compliance with the relevant terms included in the loan agreement.
The Company assigns a remote possibility of default to the abovementioned loan agreements and hence has not established any provisions for losses.
14. | Subsequent Events |
As of April 29, 2022, the following significant events have occurred since the balance sheet date:
As a result of the recent conflict in Ukraine, the EU, U.S. and other countries have imposed sanctions in response to Russian action. The extent to which this will impact the Companys future results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted. Accordingly, an estimate of the impact cannot be made at this time.
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