d890595_f-3.htm
As filed with the
Securities and Exchange Commission on June 10, 2008
Registration
Statement No. 333 -
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
F-3
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
EXCEL
MARITIME CARRIERS LTD.
(Exact
name of registrant as specified in its charter)
Liberia
(State
or other jurisdiction of
incorporation
or organization)
|
|
N/A
(I.R.S.
Employer
Identification
No.)
|
17th
km National Road Athens
Lamia
& Finikos Street,
145-64
Nea Kifisia,
Athens,
Greece
(011)(30)
(210) 620-9520
(Address
and telephone number of Registrant’s principal executive
offices)
|
|
Seward
& Kissel LLP
Attention: Gary
J. Wolfe, Esq.
One
Battery Park Plaza
New
York, New York 10004
(212)
574-1200
(Name,
address and telephone number of agent for
service)
|
Excel
Maritime Carriers Ltd.
Attn:
Eleftherios Papatrifon
17th
km National Road Athens
Lamia
& Finikos Street,
145-64
Nea Kifisia
Athens,
Greece
(011)(30)
(210) 620-9520
|
Gary
J. Wolfe, Esq.
Seward
& Kissel LLP
One
Battery Park Plaza
New
York, New York 10004
(212)
574-1200 (phone)
(212)
480-8421 (facsimile)
|
Approximate date of commencement of
proposed sale to the public: From time
to time after this registration statement becomes effective as determined by
market conditions and other factors.
If only
securities being registered on this Form are being offered pursuant to dividend
or interest reinvestment plans, please check the following box. o
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. x
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. o
If this
form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective Registration Statement for the same
offering. o
If
delivery of the prospectus is expected to be made pursuant to Rule 434, please
check the following box. o
If this
Form is a registration statement pursuant to General Instruction I.C. or a
post-effective amendment thereto that shall become effective upon filing with
the Securities and Exchange Commission pursuant to Rule 462(e) under the
Securities Act, check the following box. x
If this
Form is a post-effective amendment to a registration statement pursuant to
General Instruction I.C. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act, check
the following box. o
CALCULATION OF REGISTRATION FEE
|
|
|
|
Title
of Each Class of Securities to be Registered
|
Amount
to be Registered
|
Proposed
Maximum Aggregate Offering Price
|
Amount
of Registration Fee
|
1.875%
Convertible Senior Notes due 2027
|
$150,000,000
(1)
|
100%
(1)
|
$5,895
|
Class
A Common Shares, par value
$0.01
per share
|
(2)
|
(2)
|
(3)
|
Class
A Common Shares, par value
$0.01
per share
|
(4)
|
(4)
|
(3)
|
Total
|
$150,000,000
|
$150,000,000 |
$5,895 |
|
|
|
|
(1)
|
Estimated
solely for the purpose of computing the amount of registration fee
pursuant to Rule 457(o) under the Securities
Act.
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(2)
|
There
are being registered hereunder an indeterminate number of Class A common
shares, par value $0.01 per share, issuable upon conversion of the
notes. The notes are convertible into cash, shares, or a
combination thereof, as described herein. Initially,
approximately 1,642,936 shares of Class A common shares would be issuable
upon conversion of the notes based on the initial conversion price of
$91.30. Pursuant to Rule 416 under the Securities Act, the
Class A common shares being registered hereby also include an
indeterminate number of additional shares resulting from stock splits,
dividends or similar transactions that may be initiated to prevent
dilution.
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(3)
|
Pursuant
to Rule 457(i) under the Securities Act, there is no additional filing fee
with respect to the common stock issuable upon conversion of the notes
because no additional consideration will be received in connection with
the exercise of the conversion
privilege.
|
(4)
|
There
are being registered hereunder an indeterminate number of Class A common
shares, par value $0.01 per share, in connection with the resale by the
selling securityholders resulting from the conversion of the notes as
described in note (2) above. The Class A common shares
registered hereby also include an indeterminate number of additional
shares resulting from stock splits, dividends or similar transactions that
may be initiated to prevent
dilution.
|
Subject
to completion dated June 10, 2008
$150,000,000
1.875% Convertible Senior Notes Due 2027
and
Class A
Common Shares Issuable Upon Conversion of the Notes
Excel
Maritime Carriers Ltd.
Through
this prospectus, the selling securityholders are offering:
1.
|
$150,000,000
of our 1.875% Convertible Senior Notes due 2027 and convertible into
shares of our Class A common shares, par value $ 0.01 per share;
and
|
2.
|
such
number of shares of our Class A common stock as may be issuable upon
exercise of the conversion
privilege.
|
We have
issued $150,000,000 aggregate principal amount of our 1.875% Convertible Senior
Notes due 2027, which we will refer to as the “notes,” in a private placement in
October 2007. The selling securityholders will use this prospectus to
resell their notes and the shares of our Class A common stock issuable upon
conversion of the notes. We will not receive any proceeds from the
selling securityholders’ sale of the notes or the shares of our Class A common
stock issuable upon conversion.
The notes
bear interest at a rate of 1.875%, payable semi-annually in arrears on April 15
and October 15 of each year, beginning on April 15, 2008, to holders of record
at the close of business on the preceding April 1 and October 1,
respectively.
The notes
are convertible into shares of our Class A common stock as described in more
detail below. The notes are our senior unsecured obligations, rank
equal in right of payment to all of our other senior unsecured debt, and rank
senior to all of our future subordinated debt. The notes are
effectively subordinated to all present and future secured and unsecured debt
and other obligations of our subsidiaries. The notes are not
guaranteed by any of our subsidiaries, as of the date of the original
issuance. Holders may convert their notes into shares of our Class A
common stock at any time prior to the close of business on April 15, 2014 if any
of the following conditions are satisfied: (1) during any calendar
quarter commencing after the date of original issuance of the notes, if the
closing sale price of our Class A common stock for at least 20 trading days in
the period of 30 consecutive trading days ending on the last trading day of the
calendar quarter preceding the quarter in which the conversion occurs is more
than 125% of the conversion price of the notes in effect on that last trading
day; (2) during the ten consecutive trading-day period following any five
consecutive trading-day period in which the trading price for the notes for each
such trading day was less than 98% of the closing sale price of our Class A
common stock on such date multiplied by the then current applicable conversion
rate; (3) if the notes have been called by us for redemption; or (4) if we make
certain significant distributions to holders of our Class A common stock, or we
enter into specific corporate transactions. After April 15, 2014,
holders may surrender their notes for conversion at any time prior to the close
of business on the business day immediately preceding the maturity date
regardless of whether any of the foregoing conditions have been
satisfied.
The base
conversion price is approximately $91.30 per share of our Class A common stock,
equal to a base conversion rate of 10.9529 shares of our Class A common stock,
subject to adjustment. If the applicable stock price (as defined in
this prospectus) is greater than the base conversion price, then the applicable
conversion rate will be increased pursuant to the formula described in this
prospectus. Upon conversion of the notes, holders will receive, at
our election, cash, shares of our Class A common stock, or a combination of cash
and shares of our Class A common stock. However, we may at any time
irrevocably elect for the remaining term of the notes to satisfy our conversion
obligation in cash up to 100% of the principal amount of the notes converted,
with any remaining amount to be satisfied at our election in cash, shares of our
Class A common stock, or a combination of cash and shares of our Class A common
stock. We have elected to satisfy our conversion obligation with respect to the
remaining
term of the notes exclusively in cash for 100% of the principal amount of the
notes converted, and we elected also to satisfy exclusively in cash any
remaining amount with respect to such converted notes.
In
addition, following certain corporate transactions that also constitute a
fundamental change (as defined in this prospectus), we will increase the
applicable conversion rate for a holder who elects to convert its notes in
connection with such corporate transactions in certain
circumstances.
On or
after October 22, 2014, we may redeem for cash all or a portion of the notes at
a redemption price of 100% of the principal amount of the notes to be redeemed
plus accrued and unpaid interest (including additional interest, if any) to, but
not including, the redemption date.
Subject
to certain conditions described in this prospectus, holders may require us to
purchase all or a portion of their notes on each of October 15, 2014, October
15, 2017 and October 15, 2022. In addition, if we experience
specified types of corporate transactions, holders may require us to purchase
all or a portion of their notes. Any repurchase of the notes pursuant
to these provisions will be for cash at a price equal to 100% of the principal
amount of the notes to be purchased plus any accrued and unpaid interest
(including additional interest, if any) to, but not including such purchase
date.
Our Class
A common stock is listed on the New York Stock Exchange under the symbol
“EXM.” On June 6, 2008, the last reported sale price of our Class A
common stock was $48.99 per share. Class B shareholders together own
100% of the shares of our issued and outstanding Class B common stock,
representing approximately 76% % of the voting power of our outstanding capital stock.
Investing
in the notes and the underlying shares of our Class A common stock involves
significant risks. See the section titled “Risk Factors” beginning on
page 14 of this
prospectus. You should read this prospectus and any accompanying prospectus
supplement carefully before you make
your investment decision.
_________________
The
notes are not and will not be listed on any national securities exchange or
quoted on any automated quotation system.
The
securities issued under this prospectus may be offered directly or through
underwriters, agents or dealers as set forth in the prospectus.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS
APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date
of this prospectus is June 10, 2008
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
|
i
|
PROSPECTUS
SUMMARY
|
1
|
RISK
FACTORS
|
14
|
FORWARD
LOOKING STATEMENTS
|
35
|
RATIO
OF EARNINGS TO FIXED CHARGES
|
36
|
PER
SHARE MARKET PRICE INFORMATION
|
37
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USE
OF PROCEEDS
|
38
|
CAPITALIZATION
|
39
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ENFORCEMENT
OF CIVIL LIABILITIES
|
40
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DESCRIPTION
OF THE NOTES
|
41
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TAXATION |
65 |
DESCRIPTION
OF CAPITAL STOCK
|
72
|
SELLING
SECURITYHOLDERS
|
75
|
PLAN
OF DISTRIBUTION
|
76
|
EXPENSES
|
78
|
LEGAL
MATTERS
|
78
|
EXPERTS
|
78
|
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
|
78
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ABOUT
THIS PROSPECTUS
In this
prospectus, “we”, “us”, “our” and the “Company” all refer to Excel Maritime
Carriers Ltd.
Unless
otherwise indicated, all dollar references in this prospectus are to U.S.
dollars and financial information presented in this prospectus that is derived
from financial statements incorporated by reference is prepared in accordance
with accounting principles generally accepted in the United States.
This
prospectus is part of a registration statement that we filed with the Securities
and Exchange Commission, or Commission. You should read carefully
both this prospectus and the additional information described
below.
This
prospectus is part of a registration statement that we filed with the Commission
utilizing a shelf registration process. Under this shelf registration
process, the selling securityholders may sell, from time to time, the notes as
well as shares of our Class A common stock into which the notes are convertible,
after exercise of the selling securityholders’ conversion rights This
prospectus provides you with a general description of the notes and shares of
our Class A common stock. When the selling securityholders sell the
notes or shares of our Class A common stock registered under the registration
statement of which this prospectus is part, we may provide a prospectus
supplement that will contain specific information about the terms of the notes
or shares of our Class A common stock offered, and about their
offering. A prospectus supplement may also add, supplement, update or
change information in this prospectus.
In
addition, this prospectus does not contain all the information provided in the
registration statement that we filed with the Commission. For further
information about us or the securities offered hereby, you should refer to that
registration statement, which you can obtain from the Commission as described
below under “Where You Can Find More Information.”
PROSPECTUS
SUMMARY
This
section summarizes some of the information that is contained later in this
prospectus or in other documents incorporated by reference into this
prospectus. As an investor or prospective investor, you should review
carefully the risk factors and the more detailed information that appears later
in this prospectus or is contained in the documents that we incorporate by
reference into the prospectus.
Our
Company
We are an
international provider of dry bulk seaborne transportation services, with a
focus on the transport of iron ore, coal and grain, collectively referred to as
“major bulks,” and steel products, fertilizers, cement, bauxite, sugar and scrap
metal, collectively referred to as “minor bulks.” Our Class A common
stock trades on the New York Stock Exchange, or NYSE under the symbol
“EXM.” We recently completed an acquisition of Quintana Maritime
Limited, or Quintana, formerly a NASDAQ-listed international provider of dry
bulk seaborne transportation services, in which Quintana merged with one of our
wholly-owned subsidiaries.
We
currently operate a fleet of 47 dry bulk vessels consisting of four Capesize, 14
Kamsarmax, 21 Panamax, six Handymax, and two Supramax vessels, representing a
total carrying capacity of approximately 3.7 million dwt. We acquired
29 of our vessels in the merger with Quintana, and we own all of the 47 vessels
we operate except for seven Panamax vessels that we operate under bareboat
charters pursuant to sale and lease-back transactions entered into by Quintana
in July 2007. Currently, the average age of our vessels is
approximately 8.5 years.
In
addition, we have acquired Quintana’s interests in seven joint venture
vessel-owning companies that were each formed in 2007 to purchase a newbuilding
Capesize drybulk vessel. We own a 50% interest in six of these joint
venture companies and a 42.8% interest in the other. The seven new
vessels are expected to be delivered to the joint ventures during 2010 and will
have a total carrying capacity of approximately 1.3 million dwt. We
expect to manage these vessels on behalf of the joint ventures and to receive
management fees from the joint ventures. For four of these vessels,
no refund guarantee has yet been received. Until such time as a refund guarantee
is received, no installments will be paid for these vessels and as a result,
these vessels may be delivered late or may never be delivered at all. We have
also assumed Quintana’s contract to purchase a Capesize vessel with expected
delivery in the fourth quarter of 2008.
The
technical management of our fleet is conducted by our wholly-owned subsidiary
Maryville Maritime Inc. (“Maryville”).
Our
Fleet
The
following is a list of the 47 vessels in our current fleet as of June 1, 2008,
all of which are dry bulk carriers:
Vessel Name |
|
DWT
|
|
Year
Built
|
Type
|
Iron
Miner
|
|
177,000
|
|
2007
|
Capesize
|
Lowlands
Beilun
|
|
170,162
|
|
1999
|
Capesize
|
Iron
Beauty
|
|
165,500
|
|
2001
|
Capesize
|
Kirmar
|
|
165,500
|
|
2001
|
Capesize
|
Iron
Bradyn
|
|
82,769
|
|
2005
|
Kamsarmax
|
Coal
Gypsy
|
|
82,300
|
|
2006
|
Kamsarmax
|
Coal
Hunter
|
|
82,300
|
|
2006
|
Kamsarmax
|
Iron
Brooke
|
|
82,300
|
|
2007
|
Kamsarmax
|
Iron
Lindrew
|
|
82,300
|
|
2007
|
Kamsarmax
|
Iron
Manolis
|
|
82,300
|
|
2007
|
Kamsarmax
|
Pascha
|
|
82,300
|
|
2006
|
Kamsarmax
|
Santa
Barbara
|
|
82,266
|
|
2006
|
Kamsarmax
|
Iron
Fuzeyya
|
|
82,229
|
|
2006
|
Kamsarmax
|
Ore
Hansa
|
|
82,229
|
|
2006
|
Kamsarmax
|
Iron
Kalypso
|
|
82,204
|
|
2006
|
Kamsarmax
|
Iron
Anne
|
|
82,000
|
|
2006
|
Kamsarmax
|
Iron
Bill
|
|
82,000
|
|
2006
|
Kamsarmax
|
Iron
Vassilis
|
|
82,000
|
|
2006
|
Kamsarmax
|
Grain
Express
|
|
76,466
|
|
2004
|
Panamax
|
Iron
Knight
|
|
76,429
|
|
2004
|
Panamax
|
Grain
Harvester
|
|
76,417
|
|
2004
|
Panamax
|
Isminaki
|
|
74,577
|
|
1998
|
Panamax
|
Angela
Star
|
|
73,798
|
|
1998
|
Panamax
|
Elinakos
|
|
73,751
|
|
1997
|
Panamax
|
Coal Glory
(1)
|
|
73,670
|
|
1995
|
Panamax
|
Fearless I
(1)
|
|
73,427
|
|
1997
|
Panamax
|
Barbara
(1)
|
|
73,390
|
|
1997
|
Panamax
|
Linda Leah
(1)
|
|
73,390
|
|
1997
|
Panamax
|
King Coal
(1)
|
|
72,873
|
|
1997
|
Panamax
|
Coal Age
(1)
|
|
72,861
|
|
1997
|
Panamax
|
Iron Man
(1)
|
|
72,861
|
|
1997
|
Panamax
|
Rodon |
|
73,670
|
|
1993
|
Panamax
|
Coal
Pride
|
|
72,600
|
|
1999
|
Panamax
|
Happy
Day
|
|
71,694
|
|
1997
|
Panamax
|
Birthday
|
|
71,504
|
|
1993
|
Panamax
|
Renuar
|
|
70,128
|
|
1993
|
Panamax
|
Powerful
|
|
70,083
|
|
1994
|
Panamax
|
Fortezza
|
|
69,634
|
|
1993
|
Panamax
|
First
Endeavour
|
|
69,111
|
|
1994
|
Panamax
|
July
M
|
|
55,567
|
|
2005
|
Supramax
|
Mairouli
|
|
53,206
|
|
2005
|
Supramax
|
Emerald
|
|
45,588
|
|
1998
|
Handymax
|
Marybelle
|
|
42,552
|
|
1987
|
Handymax
|
Attractive
|
|
41,524
|
|
1985
|
Handymax
|
Lady
|
|
41,090
|
|
1985
|
Handymax
|
Princess
I
|
|
38,858
|
|
1994
|
Handymax
|
Swift
|
|
37,687
|
|
1984
|
Handymax
|
|
|
|
|
|
|
TOTAL
DWT
|
|
3,718,065
|
|
|
|
|
(1)
Indicates a vessel sold to a third party in July 2007 and
subsequently leased back to the Company under a bareboat
charter.
|
Our
Business Strategy
We intend
to increase our profitability and strengthen our core business through the
following principal strategies:
Fleet Expansion
and Reduction in Average Age. We intend to continue to grow and, over
time, reduce the average age of our fleet. Most significantly, our recent merger
with Quintana has allowed us to add 29 young and well maintained dry bulk
carriers to our fleet. Our acquisition candidates generally are chosen based on
economic and technical criteria. We also expect to explore
opportunities to sell some of our older vessels at attractive
prices.
Balanced Fleet
Deployment Strategy. Our fleet deployment strategy seeks to maximize
charter revenue throughout industry cycles while maintaining cash flow
stability. We intend to achieve this through a balanced portfolio of spot and
period time charters. As of June 1, 2008, 11 vessels in our fleet are
on spot or short duration charters and 36 are on period time
charters. Upon completion of their current charters, our recently
acquired vessels may or may not be employed on spot / short-duration time
charters, depending on the market conditions at the time. We
currently expect that the combined fleet charter coverage, following the
acquisition of Quintana’s fleet, is expected
to be approximately 75% for the second half of 2008 with projected net revenues
under these time charters for the second-half of 2008 being approximately $188
million.
Capitalizing on
our Established Reputation. We believe that we have established a
reputation in the international shipping community for maintaining high
standards of performance, reliability and safety. We further believe that our
acquisition of Quintana will only enhance our reputation for maintaining such
high standards. In addition, Maryville carries the distinction of being one of
the first Greece-based ship management companies to have been certified ISO
14001 compliant by Bureau Veritas.
Expansion of
Operations and Client Base. We aim to become one of the world's premier
full service dry bulk shipping companies. The acquisition of Quintana was an
important step towards achieving this goal. Following the merger, we now operate
a fleet of 47 vessels with a total carrying capacity of 3.7 million dwt and a
current average age of approximately 8.5 years, which makes us one of the
largest dry bulk shipping companies in the industry and gives us the largest dry
bulk fleet by dwt operated by any U.S.-listed company. We also anticipate
considerable synergy benefits from the merger.
Competitive
Strengths
We
believe that we possess a number of competitive strengths in our
industry:
Experienced
Management Team. Our management team has significant experience in
operating dry bulk carriers and expertise in all aspects of commercial,
technical, operational and financial areas of our business, promoting a focused
marketing effort, tight quality and cost controls, and effective operations and
safety monitoring. We have added to our ranks several experienced
members of the previous Quintana management team, including our new president
and Chief Executive Officer, Mr. Stamatis Molaris.
Strong Customer
Relationships. We have strong relationships with our customers and
charterers that we believe are the result of the quality of our fleet and our
reputation for quality vessel operations. Through our wholly-owned
management subsidiary, Maryville, we have many long-established customer
relationships, and our management believes it is well regarded within the
international shipping community. During the past 16 years, vessels
managed by Maryville have been repeatedly chartered by subsidiaries of major dry
bulk operators, including Oldendorff Carriers GMBH & Co. KG and Rizzo
Bottiglieri De Carlini Armatori Spa. In 2007, we derived approximately 44% of
our gross revenues from five charterers (out of which 11.5% was derived from a
single charterer, Armada (Singapore) Pte Ltd.). However, we expect
that our customer base will broaden significantly following the
merger. In addition, we anticipate opportunities to establish or
strengthen relationships with Quintana's existing customers, such as EDF
Trading, BHP Billiton, Bunge and Cargill.
Cost Efficient
Operations. We have historically operated our fleet on a high quality,
cost effective basis by carefully selecting quality second hand vessels,
competitively commissioning and actively supervising cost efficient shipyards to
perform repair, reconditioning and systems upgrading work, together with a
proactive preventive maintenance program both ashore and at sea, and employing
professional, well-trained masters, officers and crews. We believe
that this combination has allowed us to minimize off-hire periods, effectively
manage insurance costs and control overall operating expenses. We
expect to achieve further cost efficiencies following our merger with Quintana,
including improved purchasing and placing power, enhanced fleet utilization
(e.g., fewer dry docking days) and lower general and administrative expenses
through the elimination of redundancies, which are expected to yield annual
savings of between $15 million and $20 million.
Corporate
Structure
Excel
Maritime Carriers Ltd. is a holding company, incorporated under the laws of The
Republic of Liberia on November 2, 1988. We own our vessel-owning
subsidiaries through Point Holdings Ltd., a wholly-owned subsidiary incorporated
in Liberia and Bird Acquisition Corp., a wholly-owned subsidiary incorporated in
the Marshall Islands. We own each of our vessels through separate wholly-owned
subsidiaries. In addition, we own approximately 18.9% of the outstanding
common stock of Oceanaut Inc., a corporation in the development stage,
organized in May 2006 under the laws of the Republic of the Marshall Islands.
Oceanaut is a blank check company formed to acquire vessels or one or more
operating businesses in the shipping industry. On April 15, 2008, we
completed our merger with Quintana, which is described below in “—Recent
Developments.”
We
maintain our principal executive offices at 17th km National Road Athens,
Lamia & Finikos Street, 145-64 Nea Kifisia, Athens, Greece. Our telephone
number at that address is (011)(30) (210) 620-9520. In addition, our registered
office is located at 14 Par-la-Villa Road, Hamilton HM, JX Bermuda. Our website
is www.excelmaritime.com. As of September 15, 2005, our Class A common shares
have been listed on the NYSE under the symbol “EXM.” Previously, our shares were
listed on the American Stock Exchange under the symbol “EXM.”
The
Securities We Are Registering
We
are using this prospectus to register:
·
|
$150,000,000
of our 1.875% Convertible Senior Notes due 2027, and convertible into
shares of our Class A common stock, par value $ 0.01 per share;
and
|
·
|
such
number of shares of our Class A common stock as may be issuable upon
exercise of the conversion
privilege.
|
We have
exercised our right to satisfy our conversion obligation with respect to the
remaining term of the notes exclusively in cash for 100% of the principal amount
of the notes converted, and we elected also to satisfy exclusively in cash
any remaining amount with respect to such converted notes.
The
summary below describes the principal terms of the notes we have
issued. Certain of the terms and conditions described below are
subject to important limitations and exceptions. The “Description of
the Notes” section of this prospectus contains a more detailed description of
the terms of the notes.
Issuer
|
Excel
Maritime Carriers Ltd., a company incorporated under the laws of The
Republic of Liberia.
|
Notes
Offered
|
$150,000,000
principal amount of our 1.875% Convertible Senior Notes due
2027.
|
Maturity
|
October
15, 2027, unless earlier redeemed, repurchased or converted.
|
R
Ranking
|
The
notes are our senior unsecured obligations, rank equal in right of payment
to all of our other senior unsecured debt and rank senior to all of our
future subordinated debt. The notes are structurally
subordinated to all present and future secured and unsecured debt and
other obligations of our subsidiaries. The notes are not
guaranteed by any of our subsidiaries, as of the date of the original
issuance.
The
terms of the indenture under which the notes were issued do not limit our
ability to incur additional indebtedness, senior or
otherwise.
|
In
Interest
|
1.875%
per annum. Interest on the notes began accruing on October 15,
2007. Interest (including additional interest, if any) is payable
semiannually in arrears on April 15 and October 15 of each year, beginning
April 15, 2008.
|
C Conversion
Rights
|
Holders
may convert their notes at any time prior to the close of business on
April 15, 2014, in multiples of $1,000 principal amount, at the option of
the holder under any of the following circumstances:
· during
any calendar quarter commencing after the date of original issuance of the
notes, if the closing sale price of our Class A common stock for at least
20 trading days in the period of 30 consecutive trading days ending on the
last trading day of the calendar quarter preceding the quarter in which
the conversion occurs is more than 125% of the conversion price of the
notes in effect on that last trading day;
· during
the ten consecutive trading-day period following any five consecutive
trading-day period in which the trading price for the notes for each such
trading day was less than 98% of the closing sale price of our Class A
common stock on such date multiplied by the then current conversion
rate;
· if
the notes have been called for redemption;
· if
we make certain significant distributions to holders of our Class A common
stock; or
· upon
the occurrence of specified corporate transactions described under
“Description of the Notes — Conversion Rights — Conversion Upon Specified
Corporate Transactions.”
|
|
Holders
may also convert their notes at their option at any time beginning on
April 15, 2014, and ending at the close of business on the business day
immediately preceding October 15, 2027 regardless of whether any of the
foregoing circumstances has occurred.
|
Conversion
Rate
|
The
applicable conversion rate is determined as
follows:
|
●
|
if
the applicable stock price is less than or equal to the base conversion
price, then the applicable conversion rate
is a number
of shares of our Class A common stock equal to the base
conversion rate.
|
|
|
●
|
if
the applicable stock price is greater than the base conversion price, then
the applicable conversion rate is determined in accordance with the
following formula:
|
|
|
Base
Conversion Rate + (Applicable
Stock Price—Base
Conversion Price) × Incremental
Share Factor
Applicable
Stock Price
|
|
The
“base conversion rate” is equal to $1,000 divided by the then applicable
conversion price at the time of determination (initially approximately
10.9529 shares of our Class A Common Stock).
|
|
|
|
The
“base conversion price” is a dollar amount (initially $91.30) per share of
our Class A common stock, subject to adjustment as described under
“Description of the Notes — Conversion Price
Adjustments.”
|
|
|
|
The
“incremental share factor” is 5.4765 shares of our Class A common stock,
subject to the same proportional adjustment as the applicable conversion
rate. The applicable stock price means the volume weighted
average price on the principal exchange or over-the-counter market on
which our Class A common stock (or other security) is then listed or
traded from 9:30 a.m. to 4:30 p.m. as displayed under the heading
“Bloomberg VWAP” on Bloomberg EXM Equity AQR, subject to limited
exceptions. For additional information see “Description of the
Notes — Conversion of Notes — Calculation of Applicable Conversion
Rate.”
|
|
In
addition, following certain corporate transactions that also constitute a
fundamental change (as defined in this prospectus), we will increase the
applicable conversion rate for a holder who elects to convert its notes in
connection with such corporate transactions in certain
circumstances. See “Description of the Notes — Conversion
Rights — Conversion Price Adjustments — Adjustment to Conversion Rate Upon
Certain Fundamental Changes.”
|
Conversion
Settlement
|
Upon
conversion, we will settle our conversion obligations, at our election, in
cash, shares of our Class A common stock or a combination of cash and
shares of our Class A common stock, in each case calculated as described
under “Description of the Notes —Conversion of Notes — Settlement upon
Conversion.” We have elected to satisfy our conversion obligation with
respect to the remaining term of the notes exclusively in cash for 100% of
the principal amount of the notes converted, and we have elected also to
satisfy exclusively in cash any remaining amount with respect to such
converted notes.
|
|
You
will not receive any additional cash payment or additional shares
representing accrued and unpaid interest, including additional interest,
if any, upon conversion of a note, except in limited
circumstances. Instead, interest will be deemed paid by the
cash issued to you upon conversion as described under
“Description of the Notes—Conversion of Notes—Settlement upon
Conversion,” rather than cancelled, extinguished or
forfeited.
|
Redemption
at Our Option
|
Prior
to October 22, 2014, the notes are not redeemable. On or after
October 22, 2014, we may redeem for cash all or a portion of the notes at
a redemption price of 100% of the principal amount of the notes to be
redeemed plus accrued and unpaid interest (including additional interest,
if any) to, but not including, the redemption date.
|
Additional
Amounts
|
All
payments (including the delivery of cash, shares of our Class A common
stock or combination thereof, upon conversion of the notes) by us in
respect of the notes will be made free and clear of, and without
withholding or deduction for or on account of, any present or future
taxes, duties, assessments or other governmental charges of whatever
nature imposed or levied by or on behalf of Liberia, or any authority
therein or thereof or any other jurisdiction in which we are, or our
successor is, organized, doing business or otherwise subject to the power
to tax, or through or from which payment in respect of the notes (or
shares of our Class A common stock upon conversion of the notes, if any)
is made, unless we are compelled by law to deduct or withhold such taxes,
duties, assessments or governmental charges. In such event, we will make,
subject to certain exceptions, such deduction or withholding, make payment
of the amount so withheld to the appropriate governmental authority and
pay such additional amounts as may be necessary to ensure that the
net amounts receivable by holders of notes after such withholding or
deduction shall equal amounts which would have been receivable in respect
of the notes in the absence of such withholding or
deduction. See “Description of the Notes—Additional
Amounts.”
|
Purchase
of Notes by Us at the Option of the Holder
|
Holders
have the right to require us to purchase all or a portion of their notes
for cash on October 15, 2014, 2017 and 2022, each of which we refer to as
a “purchase date.” In each case, we will pay a purchase price
equal to 100% of the principal amount of the notes to be repurchased plus
accrued and unpaid interest (including additional interest, if any) to
such purchase date.
|
Fundamental
Change
|
If
we undergo a fundamental change, you will have the option to require us to
purchase all or any portion of your notes. The fundamental change purchase
price will be 100% of the principal amount of the notes to be purchased
plus any accrued and unpaid interest (including additional, if any), to
but excluding the fundamental change purchase date, payable in cash. We
will pay cash for all notes so purchased. See “Description of the Notes —
Purchase of Notes at Your Option Upon a Fundamental Change.”
|
Registration
Rights
|
Under
a registration rights agreement that we entered into with the initial
purchaser, we are required to use commercially reasonable efforts to (i)
file a shelf registration statement covering resales of the notes and the
shares of our Class A common stock issuable upon conversion of the notes
within 120 days and (ii) use commercially reasonable efforts to cause it
to become effective under the Securities Act no later than May 7, 2008,
which was 210 days after the original date of the issuance of the notes.
As a result of our acquisition of Quintana, the preparation of the
unaudited pro forma condensed combined financial statements necessary for
the filing of this registration statement was not completed in time for us
to file this registration statement prior to either of these two
deadlines. Accordingly, beginning on May 8, 2008 and ending on the date we
filed this registration statement, pursuant to the registration rights
agreement we accrued a penalty per day at a rate of 0.5% per annum of the
principal amount of the Notes for an aggregate amount of approximately
$70,000. This amount will be paid on the next occurring Damages Payment
Date under the indenture, October 15, 2008, to record holders of the
Notes. By filing the registration statement of which this prospectus is a
part, we have fulfilled our obligations under the registration rights
agreement and will no longer accrue any penalty.
|
Book-Entry
Form
|
The
notes were issued in book-entry form and are represented by permanent
global certificates deposited with, or on behalf of, The Depository Trust
Company (“DTC”) and registered in the name of a nominee of DTC. Beneficial
interests in any of the notes will be shown on, and transfers will be
effected only through, records maintained by DTC or its nominee and any
such interest may not be exchanged for certificated securities, except in
limited circumstances.
|
|
|
U.S.
Federal Income Tax Considerations
|
See
“Taxation — U.S. Federal Income Tax Considerations” for a general summary
of the U.S. federal income taxation of the ownership and disposition of
the notes and the Class A common stock into which the notes are
convertible. Holders are urged to consult their respective tax advisers
with respect to the application of the U.S. federal income tax laws to
their own particular situation as well as any tax consequences of the
ownership and disposition of the notes and the shares of Class A common
stock into which the notes are convertible arising under the federal
estate or gift tax rules or under the laws of any state, local, foreign or
other taxing jurisdiction or under any applicable
treaty.
|
|
|
Trading
|
The
notes are eligible for trading on the PORTAL Market. We do not intend to
apply for the listing of the notes in any automated quotation
system.
|
|
|
Trading
Symbol for our Class A Common Stock
|
Our
Class A common shares are traded on the New York Stock Exchange under the
symbol “EXM.”
|
|
|
Additional
Notes
|
We
may, without the consent of the holders, reopen the notes and issue
additional notes under the indenture with the same terms and with the same
CUSIP number as the notes offered hereby in an unlimited aggregate
principal amount, provided that no such additional notes may be issued
unless they are fungible with the notes issued hereby for U.S. federal
income tax purposes. The notes offered hereby, and any such additional
notes, would be treated as a single class for all purposes under the
indenture and would vote together as one class on all matters with respect
to the notes.
|
|
|
Risk
Factors
|
Investing
in the notes involves substantial risks. In evaluating an investment in
the notes, prospective investors should carefully consider, along with the
other information set forth in this prospectus, the specific factors set
forth under “Risk Factors” beginning on page 14 for risks involved with an
investment in the notes.
|
Recent
Developments
The
Merger Agreement
On
January 29, 2008, the Company announced that it had entered into an Agreement
and Plan of Merger, dated as of January 29, 2008 (the “Merger Agreement”), with
Quintana and Bird Acquisition Corp. (the “Merger Sub”), a direct wholly-owned
subsidiary of the Company. Pursuant to the terms of the Merger Agreement, Merger
Sub merged with and into Quintana, with Merger Sub as the surviving corporation
(the “Merger”). The Merger Agreement was amended on February 7,
2008. On April 14, 2008, the shareholders of Quintana approved the
Merger, and the Merger became effective on April 15, 2008.
In the
Merger, each share of common stock of Quintana, other than (a) those shares held
in the treasury of Quintana, (b) those shares owned by the Company or Merger Sub
or (c) those shares with respect to which dissenters rights are properly
exercised, was converted into the right to receive (i) 0.3979 of a share of the
common stock of
the Company and (ii) $13.00 in cash, without interest (collectively, the “Merger
Consideration”). In addition, each outstanding restricted stock award subject to
vesting or other lapse restrictions vested and became free of such restrictions
and the holder thereof received the Merger Consideration with respect to each
share of restricted stock held by such holder.
Completion
of the Merger was subject to various conditions, including, among others, (i)
approval of the holders of a majority in voting power of the outstanding shares
of the common stock of Quintana, (ii) absence of any order, injunction or other
judgment or decree prohibiting the consummation of the Merger, (iii) receipt of
required governmental consents and approvals, (iv) the Company’s receipt of the
debt financing and (v) subject to certain exceptions, the accuracy of the
representations and warranties of the Company and Quintana, as applicable, and
compliance by the Company and Quintana with their respective obligations under
the Merger Agreement. These conditions were fulfilled on the
effective date of the Merger.
This
description of the Merger Agreement is only a summary and is qualified in its
entirety by reference to the Merger Agreement, which is attached as an exhibit
to the registration statement of which this prospectus is a part.
The
Credit Facility
In
anticipation of the Merger, the Company entered into a Credit Facility with
Nordea Bank Finland PLC, London Branch (“Nordea”), DVB Bank AG, Deutsche Bank AG
Filiale Deutschlandgeschäft, General Electric Capital Corporation, HSH Nordbank
AG and/or their affiliates, as lead arrangers and National Bank of Greece,
Credit Suisse, Fortis Bank SA/NV and/or their affiliates, as co-arrangers
(together, the “Arrangers”) to provide up to $1.4 billion in senior secured
financing to the Company (the “Credit Facility”). With the proceeds of the
Credit Facility, the Company (i) refinanced certain vessels currently owned
by the Company and certain vessels previously owned by Quintana (the “Vessels”)
and to paid the fees and expenses related thereto, (ii) financed some of
the cash portion of the acquisition and (iii) the remainder of the proceeds
will be used for working capital, capital expenditures and general corporate
purposes. Nordea agreed to act as administrative agent and syndication agent,
and the Arrangers may syndicate all or a portion of their respective
commitments. The Company agreed to pay certain fees to the Arrangers and lenders
under the Credit Facility.
The
Credit Facility consists of a $1 billion term loan and a $400 million revolving
loan (the “Loans”) with a maturity of eight years from the date of the execution
and delivery of a definitive financing agreement (the “Financing Agreement”) and
related documentation, which was April 14, 2008. The term loan amortizes in
thirty-two quarterly installments. The Loans will be maintained as Eurodollar
loans bearing interest at the London Interbank Offered Rate plus 1.25% per
annum with overdue principal and interest bearing interest at a rate of
2% per annum in excess of the rate applicable to the Loans. The Credit
Facility is guaranteed by certain direct and indirect subsidiaries of the
Company (the “Guarantors”), and the security for the Credit Facility will
include (among other assets) (i) mortgages on, and assignments of
insurances and earnings with respect to, each of the vessels owned by the
Company’s subsidiaries, with the exception of vessels Mairouli and July M (which
are mortgaged under a separate credit facility) and (ii) a pledge of shares
in certain material subsidiaries of the Company.
The
credit facility is guaranteed by certain direct and indirect subsidiaries of
Excel and the security for the credit facility includes, among other assets,
mortgages on certain vessels currently owned by Excel and the vessels currently
owned by Quintana and assignments of earnings with respect to certain vessels
currently owned by Excel and the vessels currently owned and/or operated by
Quintana.
The
foregoing summary of the Credit Facility is solely a summary of the Financing
Agreement and is qualified in its entirety by reference to the Financing
Agreement, which is attached as an exhibit hereto.
Appointment
of CEO and Removal of Director
On
February 15, 2008 and following the resignation of Mr. Christopher Georgakis,
the Company appointed Mr. Gabriel Panayotides as acting Chief Executive Officer
pending the consummation of its acquisition of Quintana Maritime
Limited. Following the completion of the acquisition of Quintana, on
April 15, 2008 the Company appointed
Mr. Stamatis Molaris as President and CEO of the Company. Mr. Molaris held the
identical positions at Quintana prior the acquisition of Quintana by the
Company.
Termination
of Oceanaut’s Definitive Agreements Dated October 12, 2007
On February
19, 2008, Oceanaut, Inc. and third party companies entered into an agreement on
a mutual basis to terminate the definitive agreements pursuant to which Oceanaut
would have purchased nine dry bulk carriers for an aggregate purchase price of
$700.0 million and issued shares of its common stock in exchange for an
aggregate investment of $82.5 million by companies associated with the third
party companies. Under the terms of the Termination and Release Agreement (the
“Termination and Release Agreement”), the parties agreed to release any and all
claims they may have against the other, as more fully set forth in such
agreement. The management of Oceanaut is currently pursuing other business
opportunities.
Executive
Officers Bonus
In February
and March 2008, based on proposals of the Compensation Committee and following
the approval of the Company’s Board of Directors, a cash bonus of $0.9 million
was granted to the Company’s executive officers and the chairman of the Board of
Directors, which was accrued and is included in General and Administrative
expenses in the consolidated statement of income for the year 2007. In addition,
10,996 shares were also granted to the executive officers in the form of
restricted stock and 10,420 restricted shares were granted to the chairman of
the Board of Directors. Half of the shares will vest on the first anniversary of
the grant date and the remainder on the second anniversary of the grant date.
The Chairman has the option to take the restricted stock in either Class A or
Class B shares.
Declaration
of Dividend
On March 17,
2008, the Company announced a quarterly dividend of $0.20 per share, payable on
April 11, 2008 to shareholders of record as of March 31, 2008. On May 19, 2008,
the Company announced a quarterly dividend of $0.20 per share, payable on June
16, 2008 to shareholders of record on June 2, 2008.
Special
Meeting of Shareholders
On April 1,
2008, the Company held a Special Meeting of Shareholders, at which the Company’s
shareholders approved amendments to the Company’s Articles of Incorporation as
required under the Merger Agreement.
Repayment
of Loans
On April
15, 2008 the following loans were repaid in full:
Lender
|
Original
Facility
|
Amount
repaid
|
|
|
|
HSH
Nordbank
|
$170
million
|
$104
million
|
HSH
Nordbank
|
$27
million
|
$
8.7 million
|
National
Bank of Greece
|
$9.3
million
|
$
4.2 million
|
ABN
Amro
|
$95
million
|
|
$58.8
million
|
|
Total
|
|
|
$176
million
|
Upon
repayment of the above loans, approximately $0.7 million of deferred financing
costs were written-off.
Fortis
Bank Swap Agreement
Upon
completion of the acquisition of Quintana, on April 15, 2008 Excel entered into
an agreement with Fortis to guarantee the fulfillment of the obligations under
the master swap agreement entered into by Quintana. Under the guarantee, Excel
guarantees the due payment of all amounts payable under the master agreement and
fully indemnifies Fortis in respect of all claims, expenses, liabilities and
losses which are made or brought against or incurred by the Bank as a result of
or in connection with any obligation or liability guaranteed by the Guarantor
being or becoming unenforceable, invalid, void or illegal. Under the terms of
the swap, the Company makes quarterly payments to Fortis based on the relevant
notional amount at a fixed rate of 5.135%, and Fortis makes quarterly
floating-rate payments at LIBOR to the Company based on the same notional
amount. The swap is effective until December 31, 2010. In addition, Fortis has
the option to enter into an additional swap with the Company effective December
31, 2010 to June 30, 2014. Under the terms of the optional swap, the Company
will make quarterly fixed-rate payments of 5.00% to Fortis based on a decreasing
notional amount of $504 million, and Fortis will make quarterly floating-rate
payments at LIBOR to the Company based on the same notional amount. The swap
does not meet hedge accounting criteria and accordingly changes in their fair
values will be reported in earnings.
Issue
of Restricted Stock
On 10 April,
2008, the Compensation Committee proposed and agreed that 500,000 of restricted
stock were to be granted to the Chairman of Excel, Mr. Gabriel Panayotides in
recognition of his initiatives and efforts deemed to be outstanding and crucial
to the success of the Company up to 2007. 50% of the shares will be
vested on December 31, 2008 and the remaining 50% will vest on December 31,
2009, provided that Mr. Panayotides continues to serve as a director of the
Company. All stock awarded will be in Class A shares. The Board of Directors
approved the grant on April 11, 2008.
SUMMARY
CONSOLIDATED FINANCIAL AND OTHER DATA
The
following tables set forth summary consolidated financial data as of and for
each of the three years ended December 31, 2005, 2006 and 2007. This
data was derived from our audited consolidated financial statements included in
our annual report on Form 20-F for the year ended December 31, 2007, which is
incorporated by reference herein. The consolidated data do not
include those of Quintana, as the acquisition was completed as of April 15,
2008. The financial data below should be read together with, and are
qualified in their entirety by reference to, our historical consolidated
financial statements and the accompanying notes and the “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” which are set
forth in such annual report on Form 20-F.
|
|
Year
ended December 31,
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
|
(in
thousands of U.S. Dollars, except for share, per share, fleet data and
average daily results)
|
|
INCOME
STATEMENT DATA:
|
|
|
|
|
|
|
|
|
|
Voyage
revenues
|
|
$ |
118,082 |
|
|
$ |
123,551 |
|
|
$ |
176,689 |
|
Revenues
from managing related party vessels
|
|
|
522 |
|
|
|
558 |
|
|
|
818 |
|
Voyage
expenses
|
|
|
(11,693 |
) |
|
|
(8,109 |
) |
|
|
(11,077 |
) |
Voyage
expenses – related party
|
|
|
(1,412 |
) |
|
|
(1,536 |
) |
|
|
(2,204 |
) |
Vessel
operating expenses
|
|
|
(24,215 |
) |
|
|
(30,414 |
) |
|
|
(33,637 |
) |
Depreciation
and amortization
|
|
|
(20,714 |
) |
|
|
(30,000 |
) |
|
|
(31,768 |
) |
Management
fees – related party
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
General
and administrative expenses
|
|
|
(6,520 |
) |
|
|
(10,049 |
) |
|
|
(12,953 |
) |
Gain
on sale of vessels
|
|
|
26,795 |
|
|
|
— |
|
|
|
6,194 |
|
Contract
termination expense
|
|
|
(4,963 |
) |
|
|
— |
|
|
|
— |
|
Operating
income
|
|
|
75,882 |
|
|
|
44,001 |
|
|
|
92,062 |
|
Interest
and finance costs, net
|
|
|
(7,878 |
) |
|
|
(12,617 |
) |
|
|
(7,490 |
) |
Other,
net
|
|
|
66 |
|
|
|
145 |
|
|
|
(66 |
) |
US source
income taxes
|
|
|
(311 |
) |
|
|
(426 |
) |
|
|
(486 |
) |
Minority
interest
|
|
|
— |
|
|
|
3 |
|
|
|
2 |
|
Income
from investment in affiliate
|
|
|
— |
|
|
|
— |
|
|
|
873 |
|
Net
income
|
|
$ |
67,759 |
|
|
$ |
31,106 |
|
|
$ |
84,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share
|
|
$ |
3.64 |
|
|
$ |
1.56 |
|
|
$ |
4.26 |
|
Weighted
average basic shares outstanding
|
|
|
18,599,876 |
|
|
|
19,947,411 |
|
|
|
19,949,644 |
|
Diluted
earnings per share
|
|
$ |
3.64 |
|
|
$ |
1.56 |
|
|
$ |
4.25 |
|
Weighted
average diluted shares outstanding
|
|
|
18,599,876 |
|
|
|
19,947,411 |
|
|
|
19,965,676 |
|
Dividends
declared per share
|
|
|
— |
|
|
|
— |
|
|
$ |
0.60 |
|
BALANCE
SHEET DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
58,492 |
|
|
$ |
86,289 |
|
|
$ |
243,672 |
|
Current
assets, including cash
|
|
|
70,547 |
|
|
|
95,788 |
|
|
|
252,734 |
|
Vessels
net / advances for vessel acquisition
|
|
|
465,668 |
|
|
|
437,418 |
|
|
|
527,164 |
|
Total
assets
|
|
|
561,025 |
|
|
|
549,351 |
|
|
|
824,396 |
|
Current
liabilities, including current portion of long—term debt
|
|
|
57,110 |
|
|
|
43,719 |
|
|
|
55,990 |
|
Total
long—term debt, excluding current portion
|
|
|
215,926 |
|
|
|
185,467 |
|
|
|
368,585 |
|
Stockholders’
equity
|
|
|
287,989 |
|
|
|
320,161 |
|
|
|
399,821 |
|
|
|
Year
ended December 31,
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
|
(in
thousands of U.S. Dollars, except for share, per share, fleet data and
average daily results)
|
|
OTHER
FINANCIAL DATA:
|
|
|
|
|
|
|
|
|
|
Net
cash from operating activities
|
|
$ |
73,639 |
|
|
$ |
58,344 |
|
|
$ |
108,733 |
|
Net
cash (used in) investing activities
|
|
|
(417,743 |
) |
|
|
(662 |
) |
|
|
(123,609 |
) |
Net
cash from (used in) financing activities
|
|
|
337,693 |
|
|
|
(29,885 |
) |
|
|
172,259 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FLEET
DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of
vessels (1)
|
|
|
14.4 |
|
|
|
17.0 |
|
|
|
16.5 |
|
Available days for
fleet (2)
|
|
|
5,070 |
|
|
|
5,934 |
|
|
|
5,646 |
|
Calendar days for
fleet (3)
|
|
|
5,269 |
|
|
|
6,205 |
|
|
|
6,009 |
|
Fleet utilization
(4)
|
|
|
96.2 |
% |
|
|
95.6 |
% |
|
|
94.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE
DAILY RESULTS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Time charter
equivalent (5)
|
|
$ |
20,705 |
|
|
$ |
19,195 |
|
|
$ |
28,942 |
|
Vessel operating
expenses(6)
|
|
|
4,596 |
|
|
|
4,901 |
|
|
|
5,598 |
|
General and
administrative expenses (7)
|
|
|
1,237 |
|
|
|
1,620 |
|
|
|
2,156 |
|
Total vessel
operating expenses (8)
|
|
|
5,833 |
|
|
|
6,521 |
|
|
|
7,754 |
|
(1)
|
Average
number of vessels is the number of vessels that constituted our fleet for
the relevant period, as measured by the sum of the number of calendar days
each vessel was a part of our fleet during the period divided by the
number of calendar days in that
period.
|
(2)
|
Available
days for fleet are the total calendar days the vessels were in our
possession for the relevant period after subtracting for off hire days
associated with major repairs, dry-dockings or special or intermediate
surveys.
|
(3)
|
Calendar
days are the total days we possessed the vessels in our fleet for the
relevant period including off hire days associated with major repairs,
dry-dockings or special or intermediate
surveys.
|
(4)
|
Fleet
utilization is the percentage of time that our vessels were available for
revenue generating available days, and is determined by dividing available
days by fleet calendar days for the relevant
period.
|
(5)
|
Time
charter equivalent, or TCE, is a measure of the average daily revenue
performance of a vessel on a per voyage basis. Our method of calculating
TCE is consistent with industry standards and is determined by dividing
voyage revenues (net of voyage expenses) by available days for the
relevant time period. Voyage expenses primarily consist of port, canal and
fuel costs, net of gains or losses from the sales of bunkers to time
charterers that are unique to a particular voyage, which would otherwise
be paid by the charterer under a time charter contract, as well as
commissions. Time charter equivalent revenue and TCE are not measures of
financial performance under U.S. GAAP and may not be compared to similarly
titled measures of other companies.
TCE
is a standard shipping industry performance measure used primarily to
compare period-to-period changes in a shipping company’s performance
despite changes in the mix of charter types (i.e., spot voyage charters,
time charters and bareboat charters) under which the vessels may be
employed between the periods. The following table reflects the calculation
of our TCE rates for the periods presented.
|
|
|
Year
Ended December 31,
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
|
(in
thousands of U.S Dollars, except for TCE rates, which are expressed in U.S
Dollars, and available days)
|
|
Voyage
revenues
|
|
$ |
118,082 |
|
|
$ |
123,551 |
|
|
$ |
176,689 |
|
Voyage
expenses
|
|
|
(13,105 |
) |
|
|
(9,645 |
) |
|
|
(13,281 |
) |
Time
charter equivalent revenue
|
|
|
104,977 |
|
|
|
113,906 |
|
|
|
163,408 |
|
Available
days for fleet
|
|
|
5,070 |
|
|
|
5,934 |
|
|
|
5,646 |
|
Time
charter equivalent (TCE) rate
|
|
$ |
20,705 |
|
|
$ |
19,195 |
|
|
$ |
28,942 |
|
(6)
|
Daily
vessel operating expenses, which include 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.
|
(7)
|
Daily
general and administrative expenses are calculated by dividing general and
administrative expenses by fleet calendar days for the relevant time
period.
|
(8)
|
Total
vessel operating expenses, or TVOE, is a measurement of our total expenses
associated with operating our vessels. TVOE is the sum of vessel operating
expenses and general and administrative expenses. Daily TVOE is the sum of
daily vessel operating expenses and daily general and administrative
expenses.
|
RISK
FACTORS
We have
identified a number of risk factors which you should consider before buying the
notes or shares of our Class A common stock into which the notes are
convertible. The occurrence of one or more of those risk factors could adversely
impact our results of operations or financial condition. You should
carefully consider the risk factors set forth below as well as the other
information included in this prospectus in evaluating us or our business before
deciding to purchase any notes or Class A common stock. The risks
described below are not the only risks that we face. Additional risks
and uncertainties not currently known to us or that we currently deem to be
immaterial may also impair our business operations. The occurrence of
any of the events described in this section or any of these risks may have a
material adverse effect on our business, financial condition, results of
operations and cash flows. In that case, you may lose all or part of
your investment in the notes or Class A common stock.
Risks
Relating to Our Business
Some of
the following risks relate principally to the industry in which we operate and
our business in general. The risks and uncertainties described below are not the
only ones we face. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial also may impair our business
operations. If any of the following risks occur, our business,
financial condition, operating results and cash flows could be materially
adversely affected and the trading price of our securities could
decline.
The
cyclical nature of the shipping industry may lead to volatile changes in freight
rates and vessel values which may adversely affect our earnings.
We are an
independent shipping company that operates in the dry bulk shipping markets. One
of the factors that impacts our profitability is the freight rates we are able
to charge. The dry bulk shipping industry is cyclical with attendant
volatility in charter hire rates, vessel values, and
profitability. The degree of charter hire rate and vessel value
volatility among different types of dry bulk vessels has varied widely, and
charter hire rates for dry bulk vessels have recently surged to historically
high levels. Fluctuations in charter rates result from changes in the
supply and demand for vessel capacity and changes in the supply and demand for
the major commodities carried by sea internationally. Because the
factors affecting the supply and demand for vessels are outside of our control
and are unpredictable, the nature, timing, direction and degree of changes in
industry conditions are also unpredictable.
Factors
that influence demand for vessel capacity include:
·
|
supply
and demand for dry bulk products;
|
·
|
global
and regional economic conditions;
|
·
|
the
distance dry bulk cargoes are to be moved by sea;
and
|
·
|
changes
in seaborne and other transportation
patterns.
|
The
factors that influence the supply of vessel capacity include:
·
|
the
number of newbuilding deliveries;
|
·
|
the
scrapping rate of older vessels;
|
·
|
the
level of port congestion;
|
·
|
changes
in environmental and other regulations that may limit the useful life of
vessels;
|
·
|
the
number of vessels that are out of service;
and
|
·
|
changes
in global dry bulk commodity
production.
|
We
anticipate that the future demand for our dry bulk vessels will be dependent
upon continued economic growth in the world’s economies, including China and
India, seasonal and regional changes in demand, changes in the capacity of the
global dry bulk fleet and the sources and supply of dry bulk cargo to be
transported by sea. The capacity of the global dry bulk carrier fleet seems
likely to increase and there can be no assurance that economic growth, including
the growth in China and India, will continue. Adverse economic, political,
social or other developments could have a material adverse effect on our
business and operating results.
Due
to the fact that the market value of our vessels may fluctuate significantly, we
may incur losses when we sell vessels or we may be required to write down their
carrying value, which may adversely affect our earnings.
The fair
market values of our vessels have generally experienced high
volatility. Market prices for second-hand dry bulk vessels have
recently been at historically high levels. You should expect the market values
of our vessels to fluctuate depending on general economic and market conditions
affecting the shipping industry and prevailing charter hire rates, competition
from other shipping companies and other modes of transportation, the types,
sizes and ages of our vessels, applicable governmental regulations and the cost
of new-buildings.
If a
determination is made that a vessel’s future useful life is limited or its
future earnings capacity is reduced, it could result in an impairment of its
value on our financial statements that would result in a charge against our
earnings and in the reduction of our shareholder’s equity. If for any reason we
sell our vessels at a time when prices have fallen, the sale may be less than
the vessel’s carrying amount on our financial statements, and we would incur a
loss and a reduction in earnings.
Rising
fuel prices may affect our profitability.
If
we violate environmental laws or regulations, the resulting liability may
adversely affect our earnings and financial condition.
Our
business and the operation of our vessels are materially affected by government
regulation in the form of international conventions, national, state and local
laws and regulations in force in the jurisdictions in which the vessels operate,
as well as in the country or countries of their registration. Because such
conventions, laws, and regulations are often revised, we cannot predict the
ultimate cost of complying with such conventions, laws and regulations or the
impact thereof on the resale price or useful life of our
vessels. Additional conventions, laws and regulations may be adopted
which could limit our ability to do business or increase the cost of our doing
business and which may materially adversely affect our operations. We
are required by various governmental and quasi-governmental agencies to obtain
certain permits, licenses and certificates with respect to our
operations.
The
operation of our vessels is affected by the requirements set forth in the IMO’s
International Management Code for the Safe Operation of Ships and Pollution
Prevention or the ISM Code. The ISM Code requires ship owners, ship
managers and bareboat charterers to develop and maintain an extensive “Safety
Management System” that includes the adoption of a safety and environmental
protection policy setting forth instructions and procedures for safe operation
and describing procedures for dealing with emergencies. If we fail to
comply with the ISM Code, we may be subject to increased liability, our existing
insurance coverage may be invalidated or our available insurance coverage may be
decreased, and our vessels may be detained or denied access to certain
ports. Currently, each of our vessels, including those vessels
delivered to us upon acquiring Quintana Maritime Limited (“Quintana”) on April
15, 2008, is ISM code-certified by Bureau Veritas or American Bureau of Shipping
and we expect that any vessel that we agree to purchase will be ISM
code-certified upon delivery to us. Bureau Veritas and American
Bureau of Shipping have awarded ISM certification to Maryville Maritime Inc.
(“Maryville”), our vessel management company and a wholly-owned subsidiary of
ours. However, there can be no assurance that such certification will
be maintained indefinitely.
Our
commercial vessels are subject to inspection by a classification
society.
The hull
and machinery of every commercial vessel must be classed by a classification
society authorized by its country of registry. Classification societies are
non-governmental, self-regulating organizations and certify that a vessel is
safe and seaworthy in accordance with the applicable rules and regulations of
the country of registry of the vessel and the Safety of Life at Sea
Convention. The Company’s vessels, including those vessels delivered
to us upon our acquisition of Quintana on April 15, 2008, are currently enrolled
with Bureau Veritas, American Bureau of Shipping, Nippon Kaiji Kyokai, Det
Norske Veritas and Lloyd’s Register of Shipping.
A vessel
must undergo Annual Surveys, Intermediate Surveys and Special Surveys. In lieu
of a Special Survey, a vessel’s machinery may be on a continuous survey cycle,
under which the machinery would be surveyed periodically over a five-year
period. Our vessels are on Special Survey cycles for hull inspection
and continuous survey cycles for machinery inspection. Every vessel
is also required to be dry-docked every two to three years for inspection of the
underwater parts of such vessel. Generally, we will make a decision
to scrap a vessel or continue operations at the time of a vessel’s fifth Special
Survey.
Delays
in deliveries of or failure to deliver newbuildings under construction could
materially and adversely harm our operating results and could lead to the
termination of related time charter agreements.
Upon
completion of our acquisition of Quintana on April 15, 2008, we assumed
contracts to purchase eight newbuilding vessels through wholly-owned
subsidiaries or seven joint ventures in which we participate. Four of
these vessels are under construction at Korea Shipyard Co., Ltd., a greenfield
shipyard for which there is no historical track record. The relevant
joint ventures have not yet received refund guarantees with respect to these
vessels, which may imply that the shipyard will not be able to timely deliver
the vessels. The delivery of any one or more of these vessels could
be delayed or may not occur, which would delay our receipt of revenues under the
time charters for these vessels or otherwise deprive us of the use of the
vessel, and thereby adversely affect our results of operations and financial
condition. In addition, under some time charters, we may be required
to deliver a vessel to the charterer even if the relevant newbuilding has not
been delivered to us. If the delivery of the newbuildings is delayed
or does not occur, we may be required to enter into a bareboat charter at a rate
in excess of the charterhire payable to us. If we are unable to
deliver the newbuilding or a vessel that we have chartered at our cost, the
customer may terminate the time charter which could adversely affect our results
of operations and financial condition.
The
delivery of the newbuildings could be delayed or may not occur because
of:
·
|
work
stoppages or other labor disturbances or other event that disrupts the
operations of the shipbuilder;
|
·
|
quality
or engineering problems;
|
·
|
changes
in governmental regulations or maritime self-regulatory organization
standards;
|
·
|
lack
of raw materials and finished
components;
|
·
|
failure
of the builder to finalize arrangements with
sub-contractors;
|
·
|
failure
to provide adequate refund
guarantees;
|
·
|
bankruptcy
or other financial crisis of the
shipbuilder;
|
·
|
a
backlog of orders at the
shipbuilder;
|
·
|
hostilities,
political or economic disturbances in the country where the vessels are
being built;
|
·
|
weather
interference or catastrophic event, such as a major earthquake or
fire;
|
·
|
our
requests for changes to the original vessel
specifications;
|
·
|
shortages
of or delays in the receipt of necessary construction materials, such as
steel;
|
·
|
our
inability to obtain requisite permits or approvals;
or
|
·
|
a
dispute with the shipbuilder.
|
In
addition, the shipbuilding contracts for the new vessels contain a “force
majeure” provision whereby the occurrence of certain events could delay delivery
or possibly terminate the contract. If delivery of a vessel is
materially
delayed or if a shipbuilding contract is terminated, it could adversely affect
our results of operations and financial condition and our ability to pay
dividends to our shareholders.
Maritime
claimants could arrest our vessels, which could interrupt our cash
flow.
Crew
members, suppliers of goods and services to a vessel, shippers of cargo and
other parties may be entitled to a maritime lien against a vessel for
unsatisfied debts, claims or damages. In many jurisdictions, a maritime
lienholder may enforce its lien by arresting a vessel through foreclosure
proceedings. The arrest or attachment of one or more of our vessels could
interrupt our cash flow and require us to make significant payments to have the
arrest lifted.
In
addition, in some jurisdictions, such as South Africa, under the “sister ship”
theory of liability, a claimant may arrest both the vessel which is subject to
the claimant's maritime lien and any “associated” vessel, which is any vessel
owned or controlled by the same owner. Claimants could try to assert “sister
ship” liability against one vessel in our fleet for claims relating to another
of our ships.
Governments
could requisition our vessels during a period of war or emergency, resulting in
loss of earnings.
A
government could requisition for title or seize our vessels. Requisition for
title occurs when a government takes control of a vessel and becomes its owner.
Also, a government could requisition our vessels for hire. Requisition for hire
occurs when a government takes control of a vessel and effectively becomes its
charterer at dictated charter rates. Generally, requisitions occur during a
period of war or emergency. Government requisition of one or more of our vessels
would negatively impact our revenues.
World
events outside our control may negatively affect the shipping industry, which
could adversely affect our operations and financial condition.
Terrorist
attacks like those in New York on September 11, 2001, London on July 7, 2005 and
other countries and the United States’ continuing response to these attacks, as
well as the threat of future terrorist attacks, continue to cause uncertainty in
the world financial markets and may affect our business, results of operations
and financial condition. The continuing conflicts in Iraq and elsewhere may lead
to additional acts of terrorism and armed conflict around the world. In the
past, political conflicts resulted in attacks on vessels, mining of waterways
and other efforts to disrupt international shipping. For example, in October
2002, the VLCC Limburg was attacked by terrorists in Yemen. Acts of terrorism
and piracy have also affected vessels trading in regions such as the South China
Sea. Future terrorist attacks could result in increased volatility of the
financial markets in the United States and globally and could result in an
economic recession in the United States or the world. These uncertainties could
adversely affect our ability to obtain additional financing on terms acceptable
to us or at all. In addition, future hostilities or other political instability
in regions where our vessels trade could affect our trade patterns. Any of these
occurrences could have a material adverse impact on our operating results,
revenue, and costs.
We
are affected by voyage charters in the spot market and short-term time charters
in the time charter market, which are volatile.
We
charter some of our vessels on voyage charters, which are charters for one
specific voyage, and some on a short-term time charter basis. A short-term time
charter is a charter with a term of less than six months. Although
dependence on voyage charters and short-term time charters is not unusual in the
shipping industry, the voyage charter and short-term time charter markets are
highly competitive and rates within those markets may fluctuate significantly
based upon available charters and the supply of and demand for sea borne
shipping capacity. While our focus on the voyage and short-term time
charter markets may enable us to benefit if industry conditions strengthen, we
must consistently procure this type of charter business to obtain these
benefits. Conversely, such dependence makes us vulnerable to declining market
rates for this type of charters.
Moreover,
to the extent our vessels are employed in the voyage charter market, our voyage
expenses will be more significantly impacted by increases in the cost of bunkers
(fuel). Unlike time charters in which the charterer bears all of the
bunker costs, port charges and canal dues, in voyage charters we bear the bunker
costs, port charges and canal dues. As a result, increases in fuel
costs in any given period could have a material adverse effect on our cash flow
and results of operations for the period in which the increase
occurs.
There can
be no assurance that we will be successful in keeping all our vessels fully
employed in these short-term markets or that future spot and short-term charter
rates will be sufficient to enable our vessels to be operated
profitably.
A
drop in spot market charter rates may provide an incentive for some charterers
to default on their time charters.
When we
enter into a time charter, charter rates under that time charter are fixed for
the term of the charter. If the spot charter rates in the dry bulk
shipping industry become significantly lower than the time charter rates that
some of our charterers are obligated to pay us under our existing time charters,
the charterers may have incentive to default under that time charter or attempt
to renegotiate the time charter, which may adversely affect our operating
results and cash flows by reducing our revenues.
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.
We have
historically derived a significant part of our revenue from a small number of
charterers. During during 2006, we derived approximately 45% of our
gross revenues from five charterers, while during 2007 we derived approximately
44 % of our gross revenues from five charterers.
In
particular, following our acquisition of Quintana on April 15, 2008, we will
depend on Bunge Limited (“Bunge”), which is an agribusiness, for revenues from a
substantial portion of our fleet and are therefore exposed to risks in the
agribusiness market. Changes in the economic,
political, legal and other conditions in agribusiness could adversely affect our
business and results of operations. Based on Bunge’s filings with the United
States Securities and Exchange Commission (“SEC”), these risks include the
following, among others:
|
·
|
The
availability and demand for the agricultural commodities and agricultural
commodity products that Bunge uses and sells in its business, which can be
affected by weather, disease and other factors beyond Bunge’s
control;
|
|
·
|
Bunge’s
vulnerability to cyclicality in the oilseed processing
industry;
|
|
·
|
Bunge’s
vulnerability to increases in raw material prices; and
|
|
·
|
Bunge’s
exposure to economic and political instability and other risks of doing
business globally and in emerging
markets.
|
Deterioration
in Bunge’s business as a result of these or other factors could have a material
adverse impact on Bunge’s ability to make timely charter hire payments to us and
to renew its time charters with us. This could have a material adverse impact on
our financial condition and results of operations.
When
our time charters end, we may not be able to replace them promptly or with
profitable ones.
We cannot
assure you that we will be able to obtain charters at comparable rates or with
comparable charterers, if at all, when the charters on the vessels in our fleet
expire. The charterers under these charters have no obligation to renew or
extend the charters. We will generally attempt to recharter our vessels at
favorable rates with reputable charterers as the charters expire, unless
management determines at that time to employ the vessel in the spot market. We
cannot assure you that we will succeed. Failure to obtain replacement charters
will reduce or eliminate our revenue, our ability to expand our fleet and our
ability to pay dividends to shareholders.
If dry
bulk vessel charter hire rates are lower than those under our current charters,
we may have to enter into charters with lower charter hire rates. Also, it is
possible that we may not obtain any charters. In addition, we may have to
reposition our vessels without cargo or compensation to deliver them to future
charterers or to move vessels to areas where we believe that future employment
may be more likely or advantageous. Repositioning our vessels would increase our
vessel operating costs.
As
we expand our business, we may need to improve our operating and financial
systems and expand our commercial and technical management staff, and will need
to recruit suitable employees and crew for our vessels.
Our fleet
has experienced rapid growth. If we continue to expand our fleet, we will need
to recruit suitable additional administrative and management personnel. Although
we believe that our current staffing levels are adequate, we cannot guarantee
that we will be able to continue to hire suitable employees as we expand our
fleet. If we encounter business or financial difficulties, we may not be able to
adequately staff our vessels. If we are unable to grow our financial and
operating systems or to recruit suitable employees as we expand our fleet, our
financial performance may be adversely affected and, among other things, the
amount of cash available for dividends to our shareholders may be
reduced.
We
may be unable to retain key management personnel and other employees in the
shipping industry, which may negatively impact the effectiveness of our
management and results of operations.
Our
success depends to a significant extent upon the abilities and efforts of our
management team. Our ability to retain key members of our management team and to
hire new members as may be necessary will contribute to that success. The loss
of any of these individuals could adversely affect our business prospects and
financial condition. Difficulty in hiring and retaining replacement personnel
could have a similar effect. We do not maintain “key man” life insurance on any
of our officers.
An
over-supply of dry bulk carrier capacity may lead to reductions in charter hire
rates and profitability.
The
market supply of dry bulk carriers has been increasing, and the number of dry
bulk carriers on order are near historic highs. These newbuildings
were delivered in significant numbers starting at the beginning of 2006 and are
expected to continue to be delivered in significant numbers through
2010. An over-supply of dry bulk carrier capacity may result in a
reduction of charter hire rates. If such a reduction occurs, upon the
expiration or termination of our vessels’ current charters, we may only be able
to re-charter our vessels at reduced or unprofitable rates, or we may not be
able to charter these vessels at all.
We
face strong competition.
We obtain
charters for our vessels in highly competitive markets in which our market share
is insufficient to enforce any degree of pricing discipline. Although we believe
that no single competitor has a dominant position in the markets in which we
compete, we are aware that certain competitors may be able to devote greater
financial and other resources to their activities than we can, resulting in a
significant competitive threat to us.
We cannot
give assurances that we will continue to compete successfully with our
competitors or that these factors will not erode our competitive position in the
future.
If
we do not adequately manage the construction of the newbuilding vessels, the
vessels may not be delivered on time or in compliance with their
specifications.
Following
our purchase of Quintana on April 15, 2008, we assumed contracts to purchase
eight newbuilding vessels through wholly owned subsidiaries or through joint
ventures in which we participate. We are obliged to supervise the construction
of these vessels. If we are denied supervisory access to the construction of
these vessels by the relevant shipyard or otherwise fail to adequately manage
the shipbuilding process, the delivery of the vessels may be delayed or the
vessels may not comply with their specifications, which could compromise their
performance. Both delays in delivery and failure to meet specifications could
result in lower revenues from the operations of the vessels, which could reduce
our earnings.
If
our joint venture partners do not honor their commitments under the joint
venture agreements, the joint ventures may not take delivery of the newbuilding
vessels.
We rely
on our joint venture partners to honor their financial commitments under the
joint venture agreements, including the payment of their portions of
installments due under the shipbuilding contracts or memoranda of agreement. If
our partners do not make these payments, we may be in default under these
contracts.
Some of our
directors may have conflicts of interest, and the resolution of these conflicts
of interest may not be in our or our shareholders’ best
interest.
Following our purchase of Quintana on April 15, 2008 we became partners in seven
joint ventures, that were previously entered into by Quintana, to purchase
vessels. One of the ventures, named Christine Shipco LLC, is a joint venture
among the Company, Robertson Maritime Investors LLC, or RMI, in which Corbin J.
Robertson, III participates, and AMCIC Cape Holdings LLC, or AMCIC, an affiliate
of Hans J. Mende, to purchase the Christine, a newbuilding Capesize drybulk
carrier. In addition, we have entered into six additional joint ventures with
AMCIC to purchase six newbuilding Capesize vessels. It is currently anticipated
that each of these joint ventures will enter into a management agreement with us
for the provision of construction supervision prior to delivery of the relevant
vessel and technical management of the relevant vessel subsequent to
delivery.
Corbin J.
Robertson, III is a member of our Board of Directors. Mr. Mende is a member of
our Board and serves on the board of directors of Christine Shipco LLC, Hope
Shipco LLC, Lillie Shipco LLC, Fritz Shipco LLC, Iron Lena Shipco LLC, Gayle
Frances Shipco LLC, and Benthe Shipco LLC. Stamatis Molaris, our chief executive
officer, president and a member of our Board, will also serve as a director of
the seven joint ventures.
The
presence of Mr. Mende and Mr. Molaris on the board of directors of each of the
other six joint ventures may create conflicts of interest because Mr. Mende and
Mr. Molaris have responsibilities to these joint ventures. Their duties as
directors of the joint ventures may conflict with their duties as our directors
regarding business dealings between the joint ventures and us. In addition, Mr.
Robertson III and Mr. Mende each have a direct or indirect economic interest in
Christine Shipco LLC, and Mr. Mende has direct or indirect economic interests in
each of the other six joint ventures. The economic interests of Mr. Robertson
and Mr. Mende in the joint ventures may conflict with their duties as our
directors regarding business dealings between the joint ventures and
us.
As a
result of these joint venture transactions, conflicts of interest may arise
between the joint ventures and us. These conflicts may include, among others,
the following situations:
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each
joint venture will be engaged in the business of chartering or
rechartering its drybulk carrier and may compete with us for
customers;
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Mr.
Molaris, our chief executive officer, president, and a member of our
Board, will also serve as a director of each of the seven joint ventures,
which may result in his spending less time than is appropriate or
necessary in order to manage our business successfully;
and
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disputes
may arise under the joint venture agreements and the related management
agreement and resolutions of such disputes by our chief executive officer
and members of our Board could be influenced by such individuals’
investment in or their capacity as members or directors of the joint
ventures.
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If we acquire
additional dry bulk carriers and those vessels are not delivered on time or are
delivered with significant defects, our earnings and financial condition could
suffer.
We expect
to acquire additional vessels in the future. A delay in the delivery of any of
these vessels to us or the failure of the contract counterparty to deliver a
vessel at all could cause us to breach our obligations under a related time
charter and could adversely affect our earnings, our financial condition and the
amount of dividends, if any, that we pay in the future. The delivery of these
vessels could be delayed or certain events may arise which could result in us
not taking delivery of a vessel, such as a total loss of a vessel, a
constructive loss of a vessel, or substantial damage to a vessel prior to
delivery. In addition, the delivery of any of these vessels with substantial
defects could have similar consequences.
Supply
of dry bulk vessels may increase upon the conversion of tankers to dry bulk
vessels, which may have adverse financial consequences for us.
Recently,
some tanker vessel operators have begun converting tanker vessels into dry bulk
vessels. Although the number of such conversions is currently small,
more tanker vessels may be converted into dry bulk vessels in the
future. When such converted vessels come on-line, the number of
available dry bulk vessels will increase, which may have an adverse effect on
charter rates and negatively impact our operating results and cash flows by
reducing our revenues.
We
are a holding company, and we depend on the ability of our subsidiaries to
distribute funds to us in order to satisfy our financial
obligations.
We are a
holding company and our subsidiaries conduct all of our operations and own all
of our operating assets. We have no significant assets other than the equity
interests in our subsidiaries. As a result, our ability to satisfy our financial
obligations depends on our subsidiaries and their ability to distribute funds to
us. The ability of a subsidiary to make these distributions could be affected by
a claim or other action by a third party, including a creditor, or by the law of
the jurisdiction of their incorporation, which regulates the payment of
dividends by companies.
Unless
we set aside reserves for vessel replacement, at the end of a vessel’s useful
life our revenue will decline.
Unless we
maintain cash reserves for vessel replacement, we may be unable to replace the
vessels in our fleet upon the expiration of their useful lives. Our cash flows
and income are dependent on the revenues earned by the chartering of our vessels
to customers. If we are unable to replace the vessels in our fleet upon the
expiration of their useful lives, our business, results of operations, financial
condition and ability to pay dividends will be adversely affected. Any reserves
set aside for vessel replacement would not be available for other cash needs or
dividends. While we have not set aside cash reserves to date, pursuant to our
dividend policy, we expect to pay less than all of our available cash from
operations so as to retain funds for capital expenditures, working capital and
debt service. In periods where we make acquisitions, our board of directors may
limit the amount or percentage of our cash from operations available to pay
dividends.
The
aging of our fleet may result in increased operating costs in the future, which
could adversely affect our earnings.
In
general, the cost of maintaining a vessel in good operating condition increases
with the age of the vessel. Our current operating fleet, including
the vessels acquired upon our acquisition of Quintana on April 15, 2008, has an
average age of approximately 8.5 years. As our fleet ages, we will
incur increased costs. Older vessels are typically less fuel
efficient and more costly to maintain than more recently constructed vessels due
to improvements in engine technology. Cargo insurance rates also
increase with the age of a vessel, making older vessels less desirable to
charterers. Governmental regulations, including environmental
regulations, safety or other equipment standards related to the age of vessels
may require expenditures for alterations, or the addition of new equipment, to
our vessels and may restrict the type of activities in which our vessels may
engage. We cannot assure you that, as our vessels age, market
conditions will justify those expenditures or enable us to operate our vessels
profitably during the remainder of their useful lives.
Our
ability to successfully implement our business plans depends on our ability to
obtain additional financing, which may affect the value of your investment in
the Company.
We will
require substantial additional financing to fund the acquisition of additional
vessels and to implement our business plans. We cannot be certain
that sufficient financing will be available on terms that are acceptable to us
or at all. If we cannot raise the financing we need in a timely
manner and on acceptable terms, we may not be able to acquire the vessels
necessary to implement our business and growth plans and, consequently, you may
lose some or all of your investment in the Company.
While we
expect that a significant portion of the financing resources needed to acquire
vessels will be through long term secured debt financing, we may raise
additional funds through additional unsecured debt or equity
offerings. New equity investors (including investors in debt that is
convertible to equity) may dilute the percentage of the ownership interest of
existing shareholders in the company. Sales or the possibility of
sales of substantial amounts of shares of our Class A common stock in the public
markets could adversely affect the market price of our Class A common
stock.
Risks
associated with the purchase and operation of second hand vessels that compose
part of our fleet may affect our results of operations.
The
majority of our vessels were acquired second-hand, and we estimate their useful
lives to be 28 years from their date of delivery from the yard, depending on
various market factors and management's ability to comply with government and
industry regulatory requirements. Part of our business strategy includes the
continued acquisition of second hand vessels when we find attractive
opportunities.
In
general, expenditures necessary for maintaining a vessel in good operating
condition increase as a vessel ages. Second hand vessels may also develop
unexpected mechanical and operational problems despite adherence to regular
survey schedules and proper maintenance. Cargo insurance rates also tend to
increase with a vessel's age, and older vessels tend to be less fuel-efficient
than newer vessels. While the difference in fuel consumption is factored into
the freight rates that our older vessels earn, if the cost of bunker fuels were
to increase significantly, it could disproportionately affect our vessels and
significantly lower our profits. In addition, changes in governmental
regulations, safety or other equipment standards may require:
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expenditures
for alterations to existing
equipment;
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·
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the
addition of new equipment; or
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·
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restrictions
on the type of cargo a vessel may transport or the ports in which a vessel
may call.
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We cannot
give assurances that future market conditions will justify such expenditures or
enable us to operate our vessels profitably during the remainder of their
economic lives.
Our
recent acquisition of Quintana imposes significant additional responsibilities
on us that we may not be able to meet if we cannot hire and retain qualified
personnel.
As a
result of our acquisition of Quintana, our fleet significantly
increased. This imposes significant additional responsibilities on
our management and staff, as well as on the management and staff of our
wholly-owned subsidiary, Maryville. Although we believe that our
current staffing levels are adequate, future events that we cannot predict may
require both us and Maryville to increase the number of
personnel. There can be no assurance that we will be able to hire
qualified personnel when needed. Difficulty in hiring and retaining
qualified personnel could adversely affect our results of
operations.
We
may fail to realize the anticipated benefits of the merger, and the integration
process could adversely impact our ongoing operations.
We and
Quintana entered into the agreement and plan of merger with the expectation that
the merger would result in various benefits, including, among other things,
improved purchasing and placing power, an expanded customer base and ongoing
cost savings and operating efficiencies. The success of the merger
will depend, in part, on our ability to realize such anticipated benefits from
combining our businesses with Quintana’s. The anticipated benefits and cost
savings of the merger may not be realized fully, or at all, or may take longer
to realize than expected. Failure to achieve anticipated benefits
could result in increased costs and decreases in the amounts of expected
revenues of the combined company.
We and
Quintana operated independently until the completion of the
merger. It is possible that the integration process could result in
the loss of key employees, the disruption of each company's ongoing businesses
or inconsistencies in standards, controls, procedures or policies that adversely
affect our ability to maintain relationships with customers and employees or to
achieve the anticipated benefits of the merger. Integration efforts
between the two companies will also divert management attention and
resources. These integration matters could have an adverse effect on
us and Quintana during the transition period. The integration may
take longer than anticipated and may have unanticipated adverse results relating
to our existing business.
Our
vessels may suffer damage and we may face unexpected drydocking costs which
could affect our cash flow and financial condition.
If our
vessels suffer damage, they may need to be repaired at a drydocking facility for
an indeterminable period of time. The costs of drydock repairs are unpredictable
and can be substantial. We may have to pay drydocking costs that our insurance
does not cover. This would decrease earnings.
Risk
of loss and lack of adequate insurance may affect our results.
Adverse
weather conditions, mechanical failures, human error, war, terrorism, piracy and
other circumstances and events create an inherent risk of catastrophic marine
disasters and property loss in the operation of any ocean-going vessel. In
addition, business interruptions may occur due to political circumstances in
foreign countries, hostilities, labour strikes, and boycotts. Any such event may
result in loss of revenues or increased costs.
Our
business is affected by a number of risks, including mechanical failure of our
vessels, human error, collisions, property loss to the vessels, cargo loss or
damage, adverse weather conditions, piracy, terrorism, and business interruption
due to political circumstances in foreign countries, hostilities and labor
strikes. Any such event may result in loss of revenues or increased costs. In
addition, the operation of any ocean-going vessel is subject to the inherent
possibility of catastrophic marine disaster, including oil spills and other
environmental mishaps, severe weather conditions, and the liabilities arising
from owning and operating vessels in international trade. The United States Oil
Pollution Act of 1990, or OPA, by imposing potentially unlimited liability upon
owners, operators and bareboat charterers for certain oil pollution accidents in
the U.S., has made liability insurance more expensive for ship owners and
operators and has also caused insurers to consider reducing available liability
coverage.
We carry
insurance to protect against most of the accident-related risks involved in the
conduct of our business and we maintain environmental damage and pollution
insurance coverage. We do not carry insurance covering the loss of revenue
resulting from vessel off-hire time. We believe that our insurance coverage is
adequate to protect us against most accident-related risks involved in the
conduct of our business and that we maintain appropriate levels of environmental
damage and pollution insurance coverage. Currently, the available amount of
coverage for pollution is $1.0 billion for dry bulk carriers per vessel per
incident. However, there can be no assurance that all risks are adequately
insured against, that any particular claim will be paid or that we will be able
to procure adequate insurance coverage at commercially reasonable rates in the
future. More stringent environmental regulations in the past have resulted in
increased costs for insurance against the risk of environmental damage or
pollution. In the future, we may be unable to procure adequate insurance
coverage to protect us against environmental damage or pollution.
Because
most of our employees are covered by industry-wide collective bargaining
agreements, failure of industry groups to renew those agreements may disrupt our
operations and adversely affect our earnings.
We
currently employ approximately 1,100 seafarers and 126 land-based employees in
our Athens office. The 126 employees in Athens are covered by industry-wide
collective bargaining agreements that set basic employment standards. We cannot
assure you that these agreements will prevent labour interruptions. Any labour
interruptions could disrupt our operations and harm our financial
performance.
Because
we generate all of our revenues in U.S. dollars but incur a significant portion
of our expenses in other currencies, exchange rate fluctuations could hurt our
results of operations.
We
generate all of our revenues in U.S. dollars but incur approximately 20% of our
vessel operating expenses in currencies other than U.S. dollars. This variation
in operating revenues and expenses could lead to fluctuations in net income due
to changes in the value of the U.S. dollar relative to the other currencies, in
particular the Japanese yen, the Euro, the Singapore dollar and the British
pound sterling. Expenses incurred in foreign currencies against which the U.S.
dollar falls in value may increase as a result of these fluctuations, therefore
decreasing our net income. We do not currently hedge against these currency
fluctuation risks. Our results of operations could suffer as a
result.
We
may not be exempt from Liberian taxation which would materially reduce our net
income and cash flow by the amount of the applicable tax.
The
Republic of Liberia enacted a new income tax law generally effective as of
January 1, 2001, (the “New Act”), which repealed in its entirety the prior
income tax law (the “Prior Law”), in effect since 1977, pursuant to which we and
our Liberian subsidiaries, as non-resident domestic corporations, were wholly
exempt from Liberian tax.
In 2004,
the Liberian Ministry of Finance issued regulations pursuant to which a
non-resident domestic corporation engaged in international shipping such as
ourselves will not be subject to tax under the New Act retroactive to January 1,
2001 (the “New Regulations”). In addition, the Liberian Ministry of
Justice issued an opinion
that the New Regulations were a valid exercise of the regulatory authority of
the Ministry of Finance. Therefore, assuming that the New Regulations are valid,
we and our Liberian subsidiaries will be wholly exempt from tax as under the
Prior Law. If we were subject to Liberian income tax under the New Act, we and
our Liberian subsidiaries would be subject to tax at a rate of 35% on our
worldwide income. As a result, our net income and cash flow would be
materially reduced by the amount of the applicable tax. In addition, our
shareholders would be subject to Liberian withholding tax on dividends at rates
ranging from 15% to 20%.
U.S.
tax authorities could treat us as a “passive foreign investment company,” which
could have adverse U.S. federal income tax consequences to U.S.
holders.
A foreign
corporation will be treated as a "passive foreign investment company," or PFIC,
for U.S. federal income tax purposes if either (1) at least 75% of its gross
income for any taxable year consists of certain types of "passive income" or (2)
at least 50% of the average value of the corporation's assets produce or are
held for the production of those types of "passive income." For
purposes of these tests, "passive income" includes dividends, interest, and
gains from the sale or exchange of investment property and rents and royalties
other than rents and royalties which are received from unrelated parties in
connection with the active conduct of a trade or business. For
purposes of these tests, income derived from the performance of services does
not constitute "passive income." U.S. shareholders of a PFIC are
subject to a disadvantageous U.S. federal income tax regime with respect to the
income derived by the PFIC, the distributions they receive from the PFIC and the
gain, if any, they derive from the sale or other disposition of their shares in
the PFIC.
Based on
our proposed method of operation, we do not believe that we will be a PFIC with
respect to any taxable year. In this regard, we intend to treat the gross income
we derive or are deemed to derive from our time chartering activities as
services income, rather than rental income. Accordingly, we believe
that our income from our time chartering activities does not constitute "passive
income," and the assets that we own and operate in connection with the
production of that income do not constitute passive assets.
There is,
however, no direct legal authority under the PFIC rules addressing our proposed
method of operation. Accordingly, no assurance can be given that the U.S.
Internal Revenue Service, or IRS, or a court of law will accept our position,
and there is a risk that the IRS or a court of law could determine that we are a
PFIC. Moreover, no assurance can be given that we would not
constitute a PFIC for any future taxable year if there were to be changes in the
nature and extent of our operations.
If the
IRS were to find that we are or have been a PFIC for any taxable year, our U.S.
shareholders will face adverse U.S. tax consequences. Under the PFIC
rules, unless those shareholders make an election available under the Code
(which election could itself have adverse consequences for such shareholders, as
discussed below under “Taxation”), such shareholders would be liable to pay U.S.
federal income tax at the then prevailing income tax rates on ordinary income
plus interest upon excess distributions and upon any gain from the disposition
of our common shares, as if the excess distribution or gain had been recognized
ratably over the shareholder's holding period of our common shares.
Please
see the section of this prospectus entitled “Taxation—U.S. Federal Income Tax
Considerations” beginning on page 66 for a more comprehensive discussion of the
U.S. federal income tax consequences to U.S. shareholders if we are a passive
foreign investment company.
We
may have to pay tax on United States source income, which would reduce our
earnings.
Under the
United States Internal Revenue Code of 1986, or the Code, 50% of the gross
shipping income of a vessel owning or chartering corporation, such as ourselves
and our subsidiaries, that is attributable to transportation that begins or
ends, but that does not both begin and end, in the United States may be subject
to a 4% United States federal income tax without allowance for deduction, unless
that corporation qualifies for exemption from tax under section 883 of the Code
and the applicable Treasury Regulations recently promulgated
thereunder.
We do not
believe that we are currently entitled to exemption under Section 883 for any
taxable year. Therefore, we are subject to an effective 2% United
States federal income tax on the shipping income that we derive during the year
that are attributable to the transport or cargoes to or from the United
States.
Oceanaut,
Inc., a company in which we own stock, may complete an acquisition that would
result in Oceanaut competing with us.
We own
18.9% of Oceanaut, Inc., or Oceanaut, a newly organized special purpose
acquisition company formed for the purpose of acquiring, through a merger,
capital stock exchange, asset acquisition, stock purchase or other similar
business combination, vessels or one or more operating businesses in the
shipping industry, including the dry bulk industry. Until Oceanaut makes such an
acquisition, our management also acts as management for Oceanaut. We have the
right of first refusal of any proposed acquisition in the dry bulk industry by
Oceanaut, pursuant to which our independent directors have the right to review
any proposed acquisition to determine whether the proposed transaction would be
a transaction that we, rather than Oceanaut, should complete. If the proposed
transaction involves assets in the dry bulk industry and we do not exercise our
right of first refusal, it is possible that Oceanaut may compete with
us.
If
Oceanaut does not complete a business combination within the time limits
required by the terms of its public offering and is liquidated, we will
experience a loss of some of our investment in Oceanaut and we may be required
to cover any shortfall in Oceanaut’s trust account for third party
claims.
We have
invested a total of $11 million into Oceanaut, for which we acquired 18.9% of
Oceanaut’s common stock, 1,125,000 units, each of which consists of one share of
common stock and one warrant, and 2,000,000 warrants. 500,000 of the units and
2,000,000 warrants, which we acquired for $6 million, have no liquidation
rights. This means that if Oceanaut fails to perform a business combination
within the time limits (September 6, 2008 or March 6, 2009 if certain extension
criteria have been satisfied) required by the terms of its public offering and
Oceanaut is liquidated, we would lose our $6 million investment in the units and
warrants. In addition, in the event of a dissolution and liquidation of
Oceanaut, we are required to cover any shortfall in Oceanaut’s trust account
resulting from any claims of vendors, prospective target businesses or other
entities for services rendered or products sold to Oceanaut, if such vendor or
prospective target business or other third party does not execute a valid and
enforceable waiver of any rights or claims to the trust account.
Risks
Relating to the Notes and Our Other Indebtedness
Although
the notes are referred to as “senior notes,” the notes are effectively
subordinated to the rights of our existing and future secured creditors and any
liabilities of our subsidiaries.
The notes
are our senior unsecured obligations and rank equally in right of payment to all
of our other senior existing and future senior indebtedness.
The notes
are not guaranteed by any of our subsidiaries and accordingly are structurally
subordinated to all of the indebtedness and other liabilities of our
subsidiaries, including all outstanding borrowings under credit facilities, all
of which are secured by assets and are direct obligations or guaranteed by our
subsidiaries.
In
addition, the notes are effectively subordinated to existing secured financings
and any other secured indebtedness incurred by us to the extent of the value of
the assets securing such indebtedness. As a result, in the event of
any distribution or payment of our assets in any bankruptcy, liquidation or
dissolution, holders of secured indebtedness will have prior claim to those
assets that constitute their collateral. Holders of the notes will
participate ratably with all holders of our unsecured indebtedness that is
deemed to be of the same class as the notes, and potentially with all of our
general creditors, based on the respective amounts owed to each holder or
creditor, in our remaining assets. In any of the foregoing events, we
cannot assure you that there will be sufficient assets to pay amounts due on the
notes.
As of
June 1, 2008, we had approximately $1,668 million of outstanding senior
indebtedness, including the $150 million of convertible notes, all of which
represented secured indebtedness and all of which are direct obligations or
guaranteed by our subsidiaries. The notes are structurally
subordinated to the indebtedness outstanding as of June 1, 2008.
As
a holding company, our only source of cash is distributions from our
subsidiaries.
We are a
holding company with no operations of our own and we conduct all of our business
through our subsidiaries. The notes are exclusively obligations of
Excel Maritime Carriers Ltd. We are wholly dependent on the cash flow
of our subsidiaries and dividends and distributions to us from our subsidiaries
in order to service our current
indebtedness, including the notes, and any of our future
obligations. Our subsidiaries are separate and distinct legal
entities and have no obligation, contingent or otherwise, to pay any amounts due
pursuant to the notes or to make any funds available therefor. The
ability of our subsidiaries to pay such dividends and distributions will be
subject to, among other things, statutory or contractual restrictions including
those restriction provisions contained in our subsidiaries’
indebtedness. We cannot assure you that our subsidiaries will
generate cash flow sufficient to pay dividends or distributions to us in order
to pay interest or other payments on the notes or declare dividends under our
dividend policy.
A
fundamental change may adversely affect us or the notes.
You may
have the right to require us to repurchase your notes upon the occurrence of a
fundamental change as described in “Description of the Notes — Purchase of Notes
at Your Option Upon a Fundamental Change.” Future debt we may incur may limit
our ability to repurchase the notes upon a fundamental change. Also,
if a fundamental change occurs, we cannot assure you that we will have enough
funds to repurchase all the notes.
Furthermore,
the fundamental change provisions, including the provisions requiring us to
increase the applicable conversion rate by a number of additional shares related
to conversions in connection with a fundamental change, may in certain
circumstances make more difficult or discourage a takeover of our company and
the removal of incumbent management.
We
may not have the ability to raise the funds necessary to settle conversion of
the notes or to purchase the notes upon a fundamental change or on other
purchase dates, and our future debt may contain, limitations on our ability to
pay cash upon conversion or repurchase of the notes.
Upon
conversion of the notes, we will satisfy the principal amount and any remaining
amount of the notes in cash. In addition, on October 15, 2014,
October 15, 2017 and October 15, 2022, holders of the notes may require us to
purchase their notes for cash. See “Description of the Notes —
Purchase of Notes by Us at the Option of the Holder.” Holders may also require
us to purchase their notes upon a fundamental change as described under
“Description of the Notes — Purchase of Notes at Your Option Upon a Fundamental
Change.” We cannot assure you that we would have sufficient financial resources,
or would be able to arrange financing, to pay the settlement amount in cash, or
the purchase price or fundamental change purchase price for the notes tendered
by the holders in cash.
Further,
our ability to pay the settlement amount in cash, or the purchase price or
fundamental change purchase price for the notes in cash may be subject to
limitations in other indebtedness we may have in the future. Failure
by us to pay the settlement amount upon conversion or purchase the notes when
required will result in an event of default with respect to the notes, which may
also result in the acceleration of our other indebtedness.
Future
sales of our Class A common stock or the issuance of other equity may adversely
affect the market price of our Class A common stock and the value of the
notes.
Sales of
our Class A common stock or other equity-related securities could depress the
market price of the notes, our Class A common stock, or both, and impair our
ability to raise capital through the sale of additional equity
securities. We cannot predict the effect that future sales of our
Class A common stock or other equity-related securities would have on the market
price of our Class A common stock or the value of the notes. The
price of our Class A common stock could be affected by possible sales of our
Class A common stock by investors who view the notes as a more attractive means
of equity participation in our company and by hedging or arbitrage trading
activity that we expect to develop involving our Class A common
stock. The hedging or arbitrage could, in turn, affect the market
price of the notes.
The
market price of the notes is significantly affected by the market price of our
Class A common stock and other factors.
The
market price of our notes is, and we expect that it will continue to be,
significantly affected by the market price of our Class A common
stock. This may result in greater volatility in the market price of
the notes than would be expected for nonconvertible debt
securities. The market price of our Class A common stock will likely
continue to fluctuate in response to factors including the factors discussed
elsewhere in “Risk Factors” and in “Forward-Looking Statements,” many of which
are beyond our control.
The
conditional conversion feature of the notes could result in your receiving less
than the value of the Class A common stock or cash and Class A common stock, as
applicable, into which a note would otherwise be convertible.
Prior to
April 15, 2014, the notes are convertible only if specified conditions are met.
If the specific conditions for conversion are not met, you will not be able to
convert your notes, and you may not be able to receive the value of the
cash (or, if we elect to change the settlement consideration, the shares of
our Class A common stock or the combination of cash and shares of our Class A
common stock) into which the notes would otherwise be convertible.
The
notes are not protected by restrictive covenants.
The
indenture governing the notes does not contain any financial or operating
covenants or restrictions on the payments of dividends, the incurrence of
indebtedness or the issuance or repurchase of securities by us or any of our
subsidiaries. The indenture contains no covenants or other provisions
to afford protection to holders of the notes in the event of a fundamental
change involving us except to the extent described under “Description of the
Notes — Purchase of Notes at your Option Upon a Fundamental Change,”
“Description of the Notes—Conversion of Notes—Conversion Price Adjustments” and
“Description of the Notes — Adjustments to Shares Delivered upon Conversion Upon
a Qualifying Fundamental Change.”
The
adjustment to the conversion rate for notes converted in connection with
specified corporate transactions may not adequately compensate you for any lost
value of your notes as a result of such transaction.
If a
specified corporate transaction that constitutes a fundamental change occurs
prior to April 15, 2014, we will, under certain circumstances, increase the
applicable conversion rate by a number of additional shares of our Class A
common stock for notes converted in connection with such specified corporate
transaction. The increase in the applicable conversion rate will be
determined based on the date on which the specified corporate transaction
becomes effective and the price paid per share of our Class A common stock in
such transaction, as described below under “Description of the Notes —
Adjustments to Shares Delivered Upon Conversion Upon Certain Fundamental
Changes.” The adjustment to the applicable conversion rate for notes converted
in connection with a specified corporate transaction may not adequately
compensate you for any lost value of your notes as a result of such
transaction. In addition, if the price of our Class A common stock in
the transaction is greater than $500.00 per share or less than $58.90
(in each case, subject to adjustment), no adjustment will be made to the
applicable conversion rate. In addition, in no event will the total
number of shares of Class A common stock issuable upon conversion as a result of
this adjustment exceed 16.9778 shares per $1,000 principal amount of notes,
subject to adjustments in the same manner as the base conversion rate as set
forth under “Description of the Notes — Conversion of Notes — Conversion Price
Adjustments.”
Our
obligation to increase the applicable conversion rate in connection with any
such specified corporate transaction could be considered a penalty, in which
case the enforceability thereof would be subject to general principles of
reasonableness of economic remedies.
The
conversion price of the notes may not be adjusted for all dilutive
events.
The
conversion price of the notes is subject to adjustment only for certain
specified events, including, but not limited to, the issuance of stock dividends
on our Class A common stock, the issuance of certain rights or warrants,
subdivisions, combinations, distributions of capital stock, indebtedness, or
assets, cash dividends and certain issuer tender or exchange offers as described
under “Description of the Notes — Conversion of Notes — Conversion Price
Adjustments.” However, the base conversion rate will not be adjusted for other
events, such as a third party tender or exchange offer or an issuance of Class A
common stock for cash, that may adversely affect the trading price of the notes
or the Class A common stock.
Some
significant restructuring transactions may not constitute a fundamental change,
in which case we would not be obligated to offer to repurchase the
notes.
Upon the
occurrence of a fundamental change, you have the right to require us to
repurchase your notes. See “Description of the Notes — Purchase of
Notes at your Option Upon a Fundamental Change.” However, the fundamental change
provisions will not afford protection to holders of notes in the event of
certain transactions. For example, transactions such as leveraged
recapitalizations, refinancings, restructurings, or acquisitions initiated by us
may not constitute a fundamental change requiring us to repurchase the
notes. In the event of any such transaction, the holders would not
have the right to require us to repurchase the notes, even though each of these
transactions could increase the amount of our indebtedness, or otherwise
adversely affect our capital structure or any credit ratings, thereby adversely
affecting the holders of notes.
There
is no public market for the notes and we cannot assure you that an active
trading market will develop for the notes.
There is
no established trading market for the notes and we cannot assure you that an
active trading market will ever develop for the notes. The notes are
eligible for trading on the PORTAL Market, and we do not intend to apply for
listing of the notes on any securities exchange or for quotation of the notes on
any automated dealer quotation system. The lack of an active trading
market may adversely affect your ability to sell the notes and the price at
which you may be able to sell the notes. Following this registration
of the notes, the liquidity of the trading market, if any, and trading prices of
the notes depends on many factors, including, among other things, the market
price of our Class A common stock and the shares of Class A common stock
issuable upon conversion of the notes, prevailing interest rates, our operating
results, financial performance and prospects, the market for similar securities
and the overall securities market. Unfavorable changes in these
factors may adversely affect the liquidity of the trading market, if any, and
trading prices of the notes. Historically, the market for convertible
debt has been subject to disruptions that have caused volatility in
prices. It is possible that the market for the notes will be subject
to disruptions which may have a negative effect on the holders of the notes,
regardless of our operating results, financial performance or
prospects.
Conversion
of notes into cash, shares of our Class A common stock or a combination thereof
will require U.S. holders to recognize taxable gains.
Upon the
conversion of a note into cash (or, if we elect to change the settlement
consideration, shares of our Class A common stock or a combination of cash and
shares of our Class A common stock), a U.S. holder generally will be required to
recognize gain on the conversion for U.S. federal income tax purposes.
Prospective investors should carefully review the information regarding tax
considerations relevant to an investment in the notes set forth under
“Taxation—U.S. Federal Income Tax Considerations” and are also urged to consult
their own tax advisors prior to investing in the notes.
Any adverse rating of the notes may
cause the value of the notes to fall.
If
you hold notes, you are not entitled to any rights with respect to our Class A
common stock, but you are subject to all changes made with respect to our Class
A common stock.
If you
hold notes, you are not entitled to any rights with respect to our Class A
common stock (including, without limitation, voting rights and rights to receive
any dividends or other distributions on our Class A common stock), but you are
subject to all changes affecting the Class A common stock. You will
only be entitled to rights on the Class A common stock if and when we deliver
shares of Class A common stock to you upon conversion of your notes and in
limited cases under the anti-dilution adjustments of the notes. For
example, in the event that an amendment is proposed to our certificate of
incorporation or by-laws requiring stockholder approval and the record date for
determining the stockholders of record entitled to vote on the amendment occurs
prior to delivery of the Class A
common stock, you will not be entitled to vote on the amendment, although you
will nevertheless be subject to any changes in the powers, preferences or
special rights of our Class A common stock.
The
fundamental change purchase feature of the notes may delay or prevent an
otherwise beneficial takeover attempt of our company.
The terms
of the notes require us to purchase the notes for cash in the event of a
fundamental change. A takeover of our company would trigger the
requirement that we purchase the notes. This may have the effect of
delaying or preventing a takeover of our company that would otherwise be
beneficial to investors.
In
the event we elect to satisfy our conversion obligation with shares of our Class
A common stock or a combination of cash and shares of our Class A common
stock, conversion of the notes may dilute the ownership interest of
existing stockholders, including holders who have previously converted their
notes.
In the
event we elect to satisfy our conversion obligation with shares of our Class A
common stock or a combination of cash and shares of our Class A common stock,
the conversion of the notes may dilute the ownership interests of existing
stockholders, including holders who have previously converted their
notes. Any sales in the public market of our Class A common stock
issuable upon such conversion could adversely affect prevailing market prices of
our Class A common stock.
We have a substantial amount of
indebtedness, which may adversely affect our cash flow and our ability to
operate our business, remain in compliance with debt covenants of the notes and future credit
facilities and make payments on our debt, including the
notes.
As of
June 1, 2008, after giving effect to the recently completed offering and
drawdown of the $1.4 billion credit facility following the acquisition of
Quintana, we had total debt of approximately $1,668 million, including the $150
million of convertible notes. Our level of debt could have important
consequences for you, including the following:
·
|
we
may have difficulty borrowing money in the future for acquisitions,
capital expenditures or to meet our operating expenses or other general
corporate obligations;
|
·
|
we
will need to use a substantial portion of our cash flows to pay interest
on our debt, which will reduce the amount of money we have for operations,
working capital, capital expenditures, expansion, acquisitions or general
corporate or other business
activities;
|
·
|
we
may have a higher level of debt than some of our competitors, which may
put us at a competitive
disadvantage;
|
·
|
we
may be more vulnerable to economic downturns and adverse developments in
our industry or the economy in general;
and
|
·
|
our
debt level, and the financial covenants in our various debt agreements,
could limit our flexibility in planning for, or reacting to, changes in
our business and the industry in which we
operate.
|
To
service our indebtedness, we will require a significant amount of cash. Our
ability to generate cash depends on many factors beyond our control, and any
failure to meet our debt obligations could harm our business, financial
condition and results of operations.
Our
ability to make scheduled payments on and to refinance our indebtedness,
including the notes, and to fund future capital expenditures will depend on our
ability to generate cash from operations in the future. This, to a
certain extent, is subject to general economic, financial, competitive,
legislative, regulatory and other factors that are beyond our
control. We cannot assure you that our business will generate
sufficient cash flow from operations in an amount sufficient to enable us to pay
our indebtedness, including the notes, or to fund our other liquidity
needs. If our cash flow and capital resources are insufficient to
fund our debt obligations, we may be forced to sell assets, seek additional
equity or debt capital or restructure our debt. We cannot assure you
that any of these remedies could, if necessary, be effected on commercially
reasonable terms, or at all. In addition, any failure to make
scheduled payments of interest and principal on the notes or any other
outstanding indebtedness would likely result in a reduction of our credit
rating, which could harm our ability to incur additional indebtedness on
acceptable terms. Our cash flow and capital resources may be
insufficient for payment of interest on and principal of our debt in the future,
including payments on the notes, and any such alternative measures may be
unsuccessful or may not permit us
to meet scheduled debt service obligations, which could cause us to default on
our obligations and could impair our liquidity.
We
have taken on substantial additional indebtedness to finance our acquisition of
Quintana, and this additional indebtedness, together with the
restrictions and limitations that will be contained in the credit agreement we
expect to enter into, could significantly impair our ability to operate our
business.
In
connection with the merger, we entered into a $1.4 billion senior secured credit
facility that consists of a $1.0 billion term loan and a $400 million revolving
loan. The security for the credit facility includes, among other
assets, mortgages on certain vessels previously owned by us and the vessels
previously owned by Quintana and assignments of earnings with respect to certain
vessels previously owned by us and the vessels previously operated by Quintana.
Such increased indebtedness could limit our financial and operating flexibility,
by requiring us to dedicate a substantial portion of our cash flow from
operations to the repayment of our debt and the interest on its debt, making it
more difficult to obtain additional financing on favorable terms, limiting our
ability to capitalize on significant business opportunities and making us more
vulnerable to economic downturns.
The
credit facility contains covenants that, among other things, will limit our
ability and the ability of certain of our subsidiaries to:
·
|
incur
additional indebtedness;
|
·
|
engage
in mergers, acquisitions or
consolidations;
|
·
|
create
liens on assets;
|
·
|
enter
into sale-leaseback transactions;
and
|
·
|
enter
into transactions with affiliates.
|
In
addition, we will be required to comply with certain financial covenants in
connection with the credit facility. Failure to comply with any of
these covenants could result in a default under the credit
facility. A default would permit lenders to accelerate the maturity
of the debt and to foreclose upon any collateral securing the
debt. Under such circumstances, we may not have sufficient funds or
other resources to satisfy all of its obligations. In addition, the
limitations imposed on our ability to incur additional debt and to take other
action might significantly impair our ability to obtain other
financing. There can be no assurance that we will be granted waivers
or amendments to these covenants if for any reason we are unable to comply with
such covenants or that we will be able to refinance its debt on terms acceptable
to us, or at all.
Our
substantial operations outside the United States expose us to political,
governmental and economic instability, which could harm our operations.
Because
our operations are primarily conducted outside of the United States, they may be
affected by economic, political and governmental conditions in the countries
where we are engaged in business or where our vessels are registered. Future
hostilities or political instability in regions where we operate or may operate
could have a material adverse effect on our business, results of operations and
ability to pay dividends. In addition, tariffs, trade embargoes and other
economic sanctions by the United States or other countries against countries
where our vessels trade may limit trading activities with those countries, which
could also harm our business, financial condition, results of operations and
ability to pay dividends.
A decline in the market value of our
vessels could lead to a default under our loan agreements and the loss of our
vessels.
When the
market value of a vessel declines, it reduces our ability to refinance the
outstanding debt or obtain future financing. Also, declining vessel values could
cause us to breach of some of the covenants under our financing
agreements. In such an event, if we are unable to pledge additional
collateral, or obtain waivers from the lenders, the lenders could accelerate the
debt and in general, if we are unable to service such accelerated debt, we may
have vessels repossessed by our lenders.
Servicing
our debt limits funds available for other purposes, and if we cannot service our
debt, we may lose our vessels.
We must
dedicate a large part of our cash flow from operations to paying principal and
interest on our indebtedness. These payments limit the funds that are available
to us for working capital, capital expenditures and other purposes and if we
cannot service our debt, we may lose our vessels.
Restrictive
covenants in the senior credit facility we executed in connection with our
acquisition of Quintana (the “Credit Facility”) impose financial and other
restrictions on us, including our ability to pay dividends.
Our
Credit Facility imposes operating and financial restrictions on us and requires
us to comply with certain financial covenants. These restrictions and
covenants limit our ability to, among other things:
·
|
pay
dividends if an event of default has occurred and is continuing under our
proposed new revolving credit facility or if the payment of the dividend
would result in an event of
default;
|
·
|
incur
additional indebtedness, including through the issuance of
guarantees;
|
·
|
change
the flag, class or management of our
vessels;
|
·
|
create
liens on our assets;
|
·
|
sell
our vessels without replacing such vessels or prepaying a portion of our
loan;
|
·
|
merge
or consolidate with, or transfer all or substantially all our assets to,
another person; or
|
Therefore,
we may need to seek permission from our lenders in order to engage in some
corporate actions. Our lenders’ interests may be different from ours
and we cannot guarantee that we will be able to obtain our lenders’ consent when
needed. If we do not comply with the restrictions and covenants in our revolving
credit facility, we will not be able to pay dividends to you, finance our future
operations, make acquisitions or pursue business opportunities.
Loan agreements may prohibit or
impose certain conditions on the payment of dividends.
Certain
of our subsidiaries have entered into loan facilities that contain a number of
financial covenants and general covenants prohibit, among other things, a
subsidiary from paying dividends without the consent of our lenders until the
respective loan facility is paid in full. This prohibition on paying dividends
means that these subsidiaries cannot pay dividends to us until the respective
loan facilities are paid in full or with out the consent of our lenders, which
in turn may affect our ability to make dividend payments to our shareholders.
There can be no assurance that our subsidiaries will pay dividends to us or that
we will make dividend payments to our shareholders even after all loan
facilities are paid in full.
Our obligations to issue shares of
Class A common stock to Excel Management Ltd. (“Excel
Management”) under the
terms of our management termination agreement are dilutive to our other
investors.
In the
management termination agreement that we entered into in early March 2005 with
Excel Management, our previous vessel manager, we agreed to issue to Excel
Management 205,442 shares of our Class A common stock, which, on March 2, 2005,
was approximately 1.5% of the total number of shares of our outstanding Class A
common stock. On June 19, 2007 we issued to Excel Management 298,403
shares of our Class A common stock for approximately $2.0 million. We are
further required to issue to Excel Management, at any time that we issue
additional shares of our Class A common stock to any third party for any reason,
such number of additional shares of Class A common stock which, together with
the shares of Class A common stock issued to Excel Management in the original
issuance, equals 1.5% of our total outstanding Class A common stock after taking
into account the third-party issuance and the shares to be issued to Excel
Management under the anti-dilution provisions of the agreement. We
will not receive any consideration from Excel Management, other than that
already received, for any shares of Class A common stock issued by us to Excel
Management pursuant to an anti-dilution issuance. Our obligation with respect to
anti-dilution issuances ends on December 31, 2008. Any issuance of
Class A common shares due to the conversion of the notes prior to January 1,
2009 would require us to issue shares to Excel Management pursuant to the
anti-dilution provision. Issuances of shares of Class A common stock
to Excel Management as a result of the original issuance and anti-dilution
issuances would be dilutive to our shareholders. As of December 31,
2007 we have issued to Excel Management 298,403 shares of our Class A common
stock, consisting of the initial 205,442 shares plus the 92,961 anti-dilution
shares required to be issued as a result of the March 21, 2005 share issuance to
other third parties. In addition, we are required to issue to Excel
Management 357,812 shares of our Class A common stock under the anti-dilutive
provisions of the management termination agreement as a result of our merger
with Quintana.
Issuance of preferred stock may
adversely affect the voting power of our shareholders and have the effect of
discouraging, delaying or preventing a merger or acquisition, which could
adversely affect the market price of our common stock.
Our
articles of incorporation currently authorize our board of directors to issue
preferred shares in one or more series and to determine the rights, preferences,
privileges and restrictions, with respect to, among other things, dividends,
conversion, voting, redemption, liquidation and the number of shares
constituting any series subject to prior shareholders’ approval. If our board of
directors determines to issue preferred shares, such issuance may discourage,
delay or prevent a merger or acquisition that shareholders may consider
favorable. The issuance of preferred shares with voting and
conversion rights may also adversely affect the voting power of the holders of
common shares. This could substantially impede the ability of public
shareholders to benefit from a change in control and, as a result, may adversely
affect the market price of our common stock and your ability to realize any
potential change of control premium.
Class
B shareholders can exert considerable control over us, which may limit future
shareholders’ ability to influence our actions.
As of
December 31, 2007, we had 135,326 Class B common shares issued and outstanding.
Our Class B common shares have 1,000 votes per share and our Class A common
shares have one vote per share. Class B shareholders, including certain
executive officers and directors, together own 100% of our issued and
outstanding Class B common shares, representing approximately 76.0% of the
voting power of our outstanding capital stock.
Because
of the dual class structure of our capital stock, the holders of Class B common
shares have the ability to control and will be able to control all matters
submitted to our stockholders for approval even if they come to own less than
50% of our outstanding common shares. Even though we are not aware of any
agreement, arrangement or understanding by the holders of our Class B common
shares relating to the voting of their shares of common stock, the holders of
our Class B common shares have the power to exert considerable influence over
our actions.
As of
June 1, 2008, Argon S.A. owned approximately 11.6% of our outstanding Class A
common shares and none of our outstanding Class B common shares, representing
approximately 2.8% of the total voting power of our outstanding capital
stock. Argon S.A. holds the shares pursuant to a trust in favor of
Starling Trading Co., a corporation, whose sole shareholder is Ms. Ismini
Panayotides, the adult daughter of our Chairman, Mr. Panayotides. Ms.
Panayotides has no power of voting or disposition of these shares, and she has
disclaimed beneficial ownership of these shares.
As of
June 1, 2008, Boston Industries S.A.owned approximately 0.3% of our outstanding
Class A common shares and approximately 41.1% of our outstanding Class B common
shares, together representing approximately 31.2% of the total voting power of
our outstanding capital stock. Based on publicly available
information, Boston Industries S.A. is controlled by Mrs. Mary Panayotides, the
wife of our Chairman. Our Chairman disclaims beneficial ownership of
these shares.
As of
June 1, 2008, our Chairman owned approximately 15.1% of our outstanding Class B
common shares and through his controlling interest in Excel Management, 0.7% of
our outstanding Class A common shares, representing approximately 11.6% of the
total voting power of our capital stock. Under the anti-dilutive provisions of
the management termination agreement between us and Excel Management, we are
required to issue to Excel Management an addition 357,812 shares of our Class A
common shares following the completion of the acquisition of
Quintana. After such issuance, Excel Management will own 656,215
shares of our Class A common shares, and Chairman, through his controlling
interest in Excel Management, will have beneficial ownership over stock
representing 11.8% of our voting power.
Because
we are a foreign corporation, you may not have the same rights that a
shareholder in a U.S. corporation may have.
We are a
Liberian corporation. Our articles of incorporation and bylaws and the Business
Corporation Act of Liberia 1976 govern our affairs. While the Liberian Business
Corporation Act resembles provisions of the corporation laws of a number of
states in the United States, Liberian law does not as clearly establish your
rights and the fiduciary responsibilities of our directors as do statutes and
judicial precedent in some U.S. jurisdictions. However, while the Liberian
courts generally follow U.S. court precedent, there have been few judicial cases
in Liberia interpreting the Liberian Business Corporation Act. Investors may
have more difficulty in protecting their interests in the face of actions by the
management, directors or controlling shareholders than would shareholders of a
corporation incorporated in a U.S. jurisdiction which has developed a
substantial body of case law.
The price of our Class A common
stock may be volatile.
The price
of our Class A common stock prior to and after an offering may be volatile, and
may fluctuate due to factors such as:
·
|
actual
or anticipated fluctuations in quarterly and annual
results;
|
·
|
mergers
and strategic alliances in the shipping
industry;
|
·
|
market
conditions in the industry;
|
·
|
changes
in government regulation;
|
·
|
fluctuations
in our quarterly revenues and earnings and those of our publicly held
competitors;
|
·
|
shortfalls
in our operating results from levels forecast by securities
analysts;
|
·
|
announcements
concerning us or our competitors;
and
|
·
|
the
general state of the securities
markets.
|
Future sales of our Class A common
stock may depress our stock price.
The
market price of our Class A common stock could decline as a result of sales of
substantial amounts of our Class A common stock in the public market or the
perception that these sales could occur. In addition, these factors could make
it more difficult for us to raise funds through future equity
offerings.
Additionally,
in connection with the acquisition of Quintana, we have issued restricted
shares of our Class A common stock to certain persons who previously were
officers and directors of Quintana. We have agreed to file in the
immediate future a shelf registration statement to enable such shareholders to
sell these shares to the public. The sales of these shares under such
registration statement could also adversely affect the market price of our Class
A common stock.
It
may be difficult to enforce a U.S. judgment against us, our officers and
directors in The Republic of Liberia or the United States, or to
assert U.S. securities laws claims in The Republic of Liberia or serve process
on our officers and directors.
None of
our executive officers and directors are residents of the United States, and
substantially all of our assets and the assets of these persons are located
outside the United States. Therefore, it may be difficult for an
investor, or any other person or entity, to enforce a U.S. court judgment based
upon the civil liability provisions of the U.S. federal securities laws against
us or any of these persons in a U.S. or Liberian court, or to effect service of
process upon these persons in the United States. Additionally, it may
be difficult for an investor, or any other person or entity, to assert U.S.
securities law claims in original actions instituted in the Republic of
Liberia.
Matters
discussed in this document may constitute forward-looking
statements. The Private Securities Litigation Reform Act of 1995
provides safe harbor protections for forward-looking statements in order to
encourage companies to provide prospective information about their
business. Forward-looking statements include statements concerning
plans, objectives, goals, strategies, future events or performance, and
underlying assumptions and other statements, which are other than statements of
historical facts.
We desire
to take advantage of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 and are including this cautionary statement in
connection with this safe harbor legislation. This document and any
other written or oral statements made by us or on our behalf may include
forward-looking statements which reflect our current views with respect to
future events and financial performance. The words “believe”,
“anticipate”, “intend”, “estimate”, “forecast”, “project”, “plan”, “potential”,
“will”, “may”, “should”, “expect” and similar expressions identify
forward-looking statements.
The
forward-looking statements in this document are based upon various assumptions,
many of which are based, in turn, upon further assumptions, including without
limitation, management’s examination of historical operating trends, data
contained in our records and other data available from third
parties. Although we believe that these assumptions were reasonable
when made, because these assumptions are inherently subject to significant
uncertainties and contingencies which are difficult or impossible to predict and
are beyond our control, we cannot assure you that we will achieve or accomplish
these expectations, beliefs or projections.
In
addition to these important factors and matters discussed elsewhere in this
prospectus, and in the documents incorporated by reference in this prospectus,
important factors that, in our view, could cause actual results to differ
materially from those discussed in the forward-looking statements include the
strength of world economies and currencies, general market conditions, including
fluctuations in charterhire rates and vessel values, changes in demand in the
dry bulk vessel market, changes in the company’s operating expenses, including
bunker prices, drydocking and insurance costs, changes in governmental rules and
regulations or actions taken by regulatory authorities including those that may
limit the commercial useful lives of dry bulk vessels, potential liability from
pending or future litigation, general domestic and international political
conditions, potential disruption of shipping routes due to accidents or
political events, and other important factors described from time to time in the
reports we file with the Commission and the NYSE. We caution readers
of this prospectus and any prospectus supplement not to place undue reliance on
these forward-looking statements, which speak only as of their
dates. We undertake no obligation to update or revise any
forward-looking statements.
RATIO
OF EARNINGS TO FIXED CHARGES
The
following table sets forth our ratio of earnings to fixed charges for each of
the five years ended December 31, 2003, 2004, 2005, 2006 and
2007.(1)
|
For
the years ended December 31,
|
|
|
|
2003 |
|
|
2004 |
|
|
2005 |
|
|
2006 |
|
|
2007 |
|
Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
income
|
|
$ |
8,645 |
|
|
$ |
32,050 |
|
|
$ |
68,070 |
|
|
$ |
31,529 |
|
|
$ |
84,506 |
|
Add:
Fixed charges
|
|
|
450 |
|
|
|
299 |
|
|
|
10,091 |
|
|
|
15,900 |
|
|
|
14,522 |
|
Total
earnings
|
|
|
9,095 |
|
|
|
32,349 |
|
|
|
78,161 |
|
|
|
47,429 |
|
|
|
99,028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
charges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expensed
|
|
|
411 |
|
|
|
260 |
|
|
|
9,565 |
|
|
|
15,413 |
|
|
|
14,011 |
|
Amortization
and write-off of capitalized expenses relating to
indebtedness
|
|
|
39 |
|
|
|
39 |
|
|
|
526 |
|
|
|
487 |
|
|
|
511 |
|
Total
fixed charges
|
|
$ |
450 |
|
|
$ |
299 |
|
|
$ |
10,091 |
|
|
$ |
15,900 |
|
|
$ |
14,522 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio
of earnings to fixed charges
|
|
|
20.2 |
x |
|
|
108.0 |
x |
|
|
7.7 |
x |
|
|
3.0 |
x |
|
|
6.8 |
x |
____________
(1)
We have not issued any preferred stock as of the date of this
prospectus.
For
purposes of computing the consolidated ratio of earnings to fixed charges,
earnings consist of pre-tax income available to common stockholders before
adjustment for minority interest in consolidated subsidiaries and income from
equity investees, plus fixed charges, amortization of capitalized
interest, and distributed income of equity investees, less interest
capitalized. Fixed charges consist of interest expensed and
capitalized, interest portion of rental expense, and amortization and write-off
of capitalized expenses relating to indebtedness.
PER
SHARE MARKET PRICE INFORMATION
Our Class
A common stock has traded on the NYSE under the symbol “EXM” since September 15,
2005. Prior to that date, our Class A common stock was trading on
AMEX under the same symbol. You should carefully review the tables,
for the quarters and years indicated, the high and low closing prices of Excel
Class A common shares under the heading “The Offer and Listing” in our
annual report on Form 20-F for the year ended December 31, 2007, which is
incorporated by reference herein.
The table
below sets forth the high and low closing prices for each of the calendar months
indicated for Excel Class A common shares.
The high
and low closing prices for the Class A common shares, by year, from 2005 to 2007
were as follows:
For
The Year Ended
|
|
NYSE
Low (US$)
|
|
|
NYSE
High (US$)
|
|
|
|
|
|
|
|
|
December
31, 2005
|
|
|
11.30 |
|
|
|
28.47 |
|
December
31, 2006
|
|
|
7.66 |
|
|
|
14.61 |
|
December
31, 2007
|
|
|
14.71 |
|
|
|
81.38 |
|
The high and low
closing prices for the Class A common shares, by quarter, in 2006 and 2007 were
as follows:
For
The Quarter Ended
|
|
NYSE
Low (US$)
|
|
|
NYSE
High (US$)
|
|
|
|
|
|
|
|
|
March
31, 2006
|
|
|
9.78 |
|
|
|
12.34 |
|
June
30, 2006
|
|
|
7.66 |
|
|
|
10.35 |
|
September
30, 2006
|
|
|
8.99 |
|
|
|
12.40 |
|
December
31, 2006
|
|
|
11.48 |
|
|
|
14.6 |
|
March
31, 2007
|
|
|
14.71 |
|
|
|
20.17 |
|
June
30, 2007
|
|
|
17.36 |
|
|
|
27.01 |
|
September
30, 2007
|
|
|
25.86 |
|
|
|
58.21 |
|
December
31, 2007
|
|
|
37.68 |
|
|
|
81.38 |
|
March
31, 2008
|
|
|
24.76 |
|
|
|
39.86 |
|
The high and low closing prices for the Class A common shares, by month, over
the six months ended May 31, 2008 were as follows:
For
The Six Months Ended
|
|
NYSE
Low (US$)
|
|
|
NYSE
High (US$)
|
|
|
|
|
|
|
|
|
November
2007
|
|
|
37.68 |
|
|
|
53.57 |
|
December
2007
|
|
|
39.95 |
|
|
|
54.37 |
|
January
2008
|
|
|
27.10 |
|
|
|
39.86 |
|
February
2008
|
|
|
31.21 |
|
|
|
37.46 |
|
March
2008
|
|
|
24.76 |
|
|
|
32.03 |
|
April
2008
|
|
|
28.05 |
|
|
|
44.81 |
|
May
2008
|
|
|
57.72 |
|
|
|
40.06 |
|
June
1 to June 9, 2008
|
|
|
48.99 |
|
|
|
52.77 |
|
On April 15, we completed our
acquistion of Quintana. After payment of the merger compensation of
approximately $768 million in cash and approximately 23.5 million shares of our
Class A common stock, there were 43,389,880 Class A and 135,326 Class B shares
of common stock issued and outstanding.
USE
OF PROCEEDS
We will
not receive any proceeds from the sale of the notes or common stock offered
under this prospectus.
CAPITALIZATION
The
following table sets forth our consolidated capitalization at December 31,
2007:
·
|
on
an actual basis; and
|
·
|
on
an adjusted basis to give effect
to:
|
-
|
the $4.0
million dividend payment on April 11,
2008;
|
-
|
the
payment of scheduled loan principal installments of $8.4
million;
|
-
|
the
loan of $1.4 billion obtained to partially finance the cost of the
Company’s merger with Quintana;
|
-
|
$43
million of debt owed by Quintana’s joint venture subsidiaries, $13
million of which were incurred subsequent to December 31, 2007 and
was assumed by us as a result of Quintana’s
acquisition;
|
-
|
repayment
of certain debt facilities, in aggregate $176.0 million, outstanding at
the date of the merger with Quintana;
and
|
-
|
issuance
of approximately 23.5 million Class A shares to Quintana shareholders as
part of the merger consideration for the acquisition of Quintana on April
15, 2008.
|
There have been no significant
changes to our capitalization since December 31, 2007, as so
adjusted.
|
|
As
of December 31, 2007
|
|
|
|
Actual
|
|
|
Adjusted
for Subsequent Events
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
(dollars
in thousands, except share amounts)
|
|
|
|
|
|
Debt:
|
|
|
|
|
|
|
Current
portion of long-term debt (secured and guaranteed)
|
|
$ |
39,498 |
|
|
$ |
128,150 |
|
Total
long-term debt, net of current portion (secured and
guaranteed)
|
|
|
219,348 |
|
|
|
1,389,460 |
|
1.875%
convertible senior notes due 2027 (unsecured)
|
|
|
150,000 |
|
|
|
150,000 |
|
Total
debt(1)
|
|
$ |
408,846 |
|
|
$ |
1,667,610 |
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity:
|
|
|
|
|
|
|
|
|
Preferred
stock, $0.1 par value: 5,000,000 shares authorized, none
issued
|
|
$ |
- |
|
|
$ |
- |
|
Common
stock $0.01 par value; 100,000,000 Class A shares and 1,000,000 Class B
shares authorized; 19,893,556 Class A shares and 135,326 Class B shares,
issued and outstanding, actual; 43,389,880 Class A shares and 135,326
Class B shares, issued and outstanding, as adjusted(2)
|
|
|
200 |
|
|
|
435 |
|
Additional
paid-in capital
|
|
|
193,897 |
|
|
|
875,995 |
|
Accumulated
other comprehensive loss
|
|
|
(65 |
) |
|
|
(65 |
) |
Retained
earnings
|
|
|
|
|
|
|
|
|
Less:
Treasury stock (78,650 Class A shares and 588 Class B
shares)
|
|
|
(189 |
) |
|
|
(189 |
) |
Total
stockholders’ equity
|
|
$ |
399,821 |
|
|
$ |
1,078,165 |
|
Total
capitalization
|
|
$ |
808,667 |
|
|
$ |
2,745,775 |
|
(1)
Total Debt does not include the fair value of the derivative
liabilities including the derivative liability assumed upon acquisition of
Quintana.
(2)
Outstanding common stock does not reflect shares of common stock issuable, for
instance, upon exercise of stock options, under other equity compensation plans,
and upon conversion of the convertible notes offered hereby, as well as 357,812
Excel Class A common shares that will be issued to Excel Management Ltd., a
related party, pursuant to an anti-dilution clause in the management termination
agreement, as a result of issuance of shares with respect to Quintana's
acquisition.
ENFORCEMENT
OF CIVIL LIABILITIES
We
are a Liberian corporation, and our executive offices and administrative
activities and assets, as well as those of certain of the experts named in this
prospectus, are located outside the United States. As a result, it
may be difficult for investors to effect service of process within the United
States upon us or those persons or to enforce both in the United States and
outside the United States judgments against us or those persons obtained in
United States courts in any action, including actions predicated upon the civil
liability provisions of the federal securities laws of the United
States. In addition, our directors and officers are residents of
jurisdictions other than the United States, and all or a substantial portion of
the assets of those persons are or may be located outside the United
States. As a result, it may be difficult for investors to effect
service of process within the United States on those persons or to enforce
against them judgments obtained in United States courts, including judgments
predicated upon the civil liability provisions of the federal securities laws of
the United States. We have been advised by our legal counsel, Seward
& Kissel LLP, that there is uncertainty as to whether the courts of Liberia
would (i) enforce judgments of United States courts obtained against us or such
persons predicated upon the civil liability provisions of the federal securities
laws of the United States or (ii) entertain original actions brought in Liberian
courts against us or such persons predicated upon the federal securities laws of
the United States.
DESCRIPTION
OF THE NOTES
We have
issued the notes under an indenture between us and Deutsche Bank Trust Company
Americas, as trustee. We have entered into a registration rights agreement with
the initial purchaser pursuant to which we are, for the benefit of the holders
of the notes, filing this shelf registration statement with the Commission
covering resales of the notes, as well as the shares of our Class A common stock
issuable upon conversion of the notes. The following summarizes some, but not
all, of the provisions of the notes, the indenture and the registration rights
agreement. We urge you to read the indenture, the registration rights agreement
and the form of certificate evidencing the notes in their entirety, because
they, and not this description, define your rights as a holder of the notes. You
may request a copy of these documents at our address shown under “Where You Can
Find More Information.”
In this
section entitled “Description of the Notes,” when we refer to “Excel Maritime,”
“we,” “our” or “us,” we are referring to Excel Maritime Carriers Ltd. and not
any of its subsidiaries.
General
We have
issued $150.0 million aggregate principal amount of notes. The notes
are convertible into cash and Class A common stock, if any, as described under
“—Conversion of Notes.” The notes will mature on October 15, 2027,
unless earlier converted by you, redeemed by us or purchased by us at your
option upon the occurrence of a fundamental change (as defined
below).
The notes
are our senior unsecured obligations and rank pari passu with all of our other
senior unsecured debt and senior to all of our future subordinated debt. The
notes are effectively subordinated to all present and future debt and other
obligations of our subsidiaries. In addition, the notes are effectively
subordinated to all of our present and future secured debt to the extent of the
collateral securing that debt.
Neither
we nor our subsidiaries are restricted from paying dividends, incurring debt or
issuing or repurchasing our securities under the indenture. In addition, there
are no financial covenants in the indenture. You are not protected by the
indenture in the event of a highly leveraged transaction, a change in control of
Excel Maritime or a termination in the trading of our Class A common stock,
except to the extent described under “—Purchase of Notes at Your Option Upon a
Fundamental Change” and “—Conversion of Notes—Conversion Upon Specified
Corporate Transactions.”
We will
pay interest on the notes at a rate of 1.875% per annum, payable semi-annually
in arrears on April 15 and October 15 of each year, or if any such day is not a
business day, the immediately following business day (each, an “interest payment
date”), commencing April 15, 2008, to holders of record at the close of business
on the preceding April 1 and October 1, respectively. Interest is
computed on the basis of a 360-day year comprising twelve 30-day
months. In the event of the maturity, conversion, redemption or
purchase by us at the option of the holder, interest ceases to accrue on the
notes under the terms of and subject to the conditions of the indenture. We
will, however, pay interest on the maturity date to holders of record of the
notes on the record date therefor regardless of whether such holders convert
their notes after the record date. A “business day” is any day other than (x) a
Saturday, (y) a Sunday or (z) a day on which state or federally chartered
banking institutions in New York, New York are not required to be
open.
We may,
without the consent of the holders, reopen the notes and issue additional notes
under the indenture with the same terms and with the same CUSIP numbers as the
notes offered hereby in an unlimited aggregate principal amount, provided that
no such additional notes may be issued unless fungible with the notes offered
hereby for U.S. federal income tax purposes. The notes offered hereby and any
such additional notes would be treated as a single class for all purposes under
the indenture and would vote together as one class on all matters that holders
of notes are entitled to vote on. We may also from time to time
repurchase the notes in open market purchases or negotiated transactions without
any notice to holders.
We will
maintain an office in New York City where the notes may be presented for
registration of transfer, exchange or conversion. This office will initially be
an office or agency of the trustee. Except under limited circumstances described
below, the notes will be issued only in fully-registered book-entry form,
without coupons, and will be represented by one or more global notes. There will
be no service charge for any registration of transfer or exchange of notes. We
may, however, require holders to pay a sum sufficient to cover any tax or other
governmental charge payable in connection with certain transfers or
exchanges.
Additional
Amounts
All
payments (including the delivery of cash, shares of our Class A common stock or
a combination thereof upon conversion of the notes) by us in respect of the
notes will be made free and clear of, and without withholding or deduction for
or on account of, any present or future taxes, duties, assessments, or other
governmental charges of whatever nature imposed or levied by or on behalf of
Liberia, or any authority therein or thereof or any other jurisdiction in which
we are, or our successor is, organized, doing business or otherwise subject to
the power to tax (any of the aforementioned being a “taxing jurisdiction”),
unless we are compelled by law to deduct or withhold such taxes, duties,
assessments, or governmental charges. In such event, we will make such deduction
or withholding, make payment of the amount so withheld to the appropriate
governmental authority and pay such additional amounts as may be necessary to
ensure that the net amounts receivable by holders of notes after such
withholding or deduction shall equal amounts which would have been receivable in
respect of the notes in the absence of such withholding or deduction.
Notwithstanding the foregoing, no such additional amounts shall be
payable:
(1) to,
or to a third party on behalf of, a holder who is liable for such taxes, duties,
assessments or governmental charges in respect of such note by reason of the
existence of any present or former connection between such holder (or between a
fiduciary, settlor, beneficiary, member or shareholder of such holder, if such
holder is an estate, a trust, a partnership or a corporation) and the relevant
taxing jurisdiction, including, without limitation, such holder (or such
fiduciary, settlor, beneficiary, member or shareholder) being or having been a
citizen or resident thereof or being or having been engaged in a trade or
business or present therein or having, or having had, a permanent establishment
therein, other than the mere holding of the note or enforcement of rights under
the indenture and the receipt of payments with respect to the note;
(2) in
respect of notes surrendered or presented for conversion or payment (if
surrender or presentment is required) more than 30 days after the relevant date
(as defined below) except to the extent that payments under such note would have
been subject to withholding and the holder of such note would have been entitled
to such additional amounts, on surrender of such note for payment on the last
day of such period of 30 days;
(3) to,
or to a third party on behalf of, a holder who is liable for such taxes, duties,
assessments or other governmental charges by reason of such holder’s failure to
comply with any certification, identification, documentation or other reporting
requirement concerning the nationality, residence, identity or connection with
the relevant taxing jurisdiction of such holder, if (a) compliance is required
by law (or administrative or judicial interpretation thereof) as a precondition
to, exemption from, or reduction in the rate of, the tax, assessment or other
governmental charge and (b) we have given the holders at least 30 days’ notice
that holders will be required to provide such certification, identification,
documentation or other requirement;
(4) in
respect of any estate, inheritance, gift, sales, transfer, capital gains, excise
or personal property or similar tax, assessment or governmental charge (other
than tax assessment or governmental charge imposed upon delivery of cash, shares
of our Class A common stock or a combination thereof upon conversion of the
notes);
(5) in
respect of any tax, assessment or other governmental charge imposed on payment
on the notes (other than on delivery of cash, shares of our Class A common stock
or a combination thereof upon conversion of the notes) which is payable other
than by deduction or withholding from payments of principal of or interest on
the note;
(6) in
respect of any tax imposed on overall net income or any bank profits tax;
or
(7) in
respect of any combination of the above.
In
addition, no additional amounts shall be paid with respect to any payment on a
note to a holder who is a fiduciary, a partnership, a limited liability company
or other than the sole beneficial owner of that payment to the extent that
payment would be required by the relevant taxing jurisdiction to be included in
the income, for tax purposes, of a beneficiary or settlor with respect to the
fiduciary, a member of that partnership, an interest holder in a limited
liability company or a beneficial owner who would not have been entitled to the
additional amounts had that beneficiary, settlor, member or beneficial owner
been the holder.
“Relevant
date” means, with respect to any payment on a note, whichever is the later of:
(i) the date on which such payment first becomes due; and (ii) if the full
amount payable has not been received by the trustee on or prior to such due
date, the date on which notice is given to the holders that the full amount has
been received by the trustee.
The notes are subject in all cases to any tax, fiscal or other law or regulation
or administrative or judicial interpretation. Except as specifically provided
above or otherwise in this prospectus, we shall not be required to make a
payment with respect to any tax, assessment or governmental charge imposed by
any government or a political subdivision or taxing authority thereof or
therein.
In the
event that additional amounts actually paid with respect to the notes described
above are based on rates of deduction or withholding of withholding taxes in
excess of the appropriate rate applicable to the holder of such notes, and, as a
result thereof such holder is entitled to make claim for a refund or credit of
such excess from the authority imposing such withholding tax, then such holder
shall, by accepting such notes, be deemed to have assigned and transferred all
right, title, and interest to any such claim for a refund or credit of such
excess to us.
Any
reference in this prospectus, the indenture or the notes to principal, interest
or any other amount payable in respect of the notes by us (including conversion
into cash, shares of our Class A common stock or a combination thereof) will be
deemed also to refer to any additional amounts, unless the context requires
otherwise, that may be payable with respect to that amount under the obligations
referred to in this subsection.
The
foregoing obligation will survive termination or discharge of the
indenture.
Guarantees
The notes
were not guaranteed by any of our subsidiaries as of the date of original
issuance. As of the date of filing of this registration statement,
none of our subsidiaries has guaranteed any portion of the notes. We
may not permit any of our subsidiaries to guarantee, or become a co-obligor on,
any of our debt securities or the debt securities of any other of our
subsidiaries or issue any debt securities, unless such subsidiaries fully and
unconditionally guarantee the notes on a senior basis. Each
subsidiary delivering a guarantee of the notes is referred to as a “subsidiary
guarantor.”
The
obligations of the subsidiary guarantors under their notes guarantees may be
limited as necessary to recognize certain defenses generally available to
guarantors (including those that relate to fraudulent conveyance or transfer,
voidable preference, financial assistance, corporate purpose, capital
maintenance or similar laws, regulations or defenses affecting the rights of
creditors generally) or other considerations under applicable law.
A
subsidiary guarantor’s notes guarantee will be automatically and unconditionally
released:
·
|
in
connection with any sale or other disposition of all or substantially all
of the capital stock (or the shares of any holding company of such
guarantor (other than us)) of that subsidiary guarantor to a person that
is not (either before or after giving effect to such transaction) us or a
subsidiary, if the liability with respect to any debt securities in
connection with which the notes guarantee was executed, or would have been
executed pursuant to this covenant had a notes guarantee not been executed
previously, is also released;
|
·
|
upon
satisfaction and discharge of the notes as provided below under the
caption “Satisfaction and
Discharge;”
|
·
|
so
long as no event of default has occurred and is continuing, such
subsidiary guarantor is unconditionally released and discharged from its
liability with respect to all such debt securities in connection with
which such notes guarantee was executed, or would have been executed
pursuant to the second preceding paragraph if such subsidiary guarantor
had not already executed a notes guarantee;
or
|
·
|
upon
the full and final payment and performance of all of our obligations under
the notes.
|
For the
purposes of this section, debt securities does not include (i) debt under any
credit facility or loan agreement with a commercial bank or any lender that
invests in bank loans in the ordinary course of business or is a fund that is
managed by the same investment advisor as any entity that invests in bank loans
in the ordinary course of business or (ii) debt that may not be traded under
Rule 144A of the Securities Act in the public capital markets.
Optional
Redemption
Prior
to October 22, 2014, the notes will not be redeemable. On or after
October 22, 2014, we may redeem for cash all or a portion of the notes, upon not
less than 30, nor more than 60, calendar days notice before the redemption date
to each holder of the notes, at a redemption price of 100% of the principal
amount of the notes to be redeemed plus accrued and unpaid interest (including
additional interest, if any) to, but not including, the redemption date (unless
the redemption date is between a regular record date and the interest payment
date to which it relates, in which case we will pay accrued and unpaid interest
to the holder on such regular record date).
If
we decide to redeem fewer than all of the outstanding notes, the trustee will
select the notes to be redeemed (in principal amounts of $1,000 or multiples
thereof) by lot, or on a pro rata basis or by another method the trustee
considers fair and appropriate, including any method required by DTC or any
successor depositary. If the trustee selects a portion of your note
for partial redemption and you convert a portion of the same note, the converted
portion will be deemed to be from the portion selected for
redemption.
In
the event of redemption in part, we will not be required to register the
transfer of or exchange any note so selected for redemption, in whole or in
part, except the unredeemed portion of any note being redeemed in
part.
Conversion
of Notes
General
Holders
may surrender notes for conversion at any time prior to the close of business on
April 15, 2014, and receive the consideration described below under “—Payment
Upon Conversion,” only if any of the following conditions is
satisfied:
·
|
during
any calendar quarter commencing after the date of original issuance of the
notes, if the closing sale price of our Class A common stock for at least
20 trading days in the period of 30 consecutive trading days ending on the
last trading day of the calendar quarter preceding the quarter in which
the conversion occurs is more than 125% of the conversion price of the
notes in effect on that last trading
day;
|
·
|
during
the ten consecutive trading-day period following any five consecutive
trading-day period in which the trading price for the notes for each such
trading day was less than 98% of the closing sale price of our Class A
common stock on such date multiplied by the then current conversion
rate;
|
·
|
in
the event that the notes are called by us for redemption;
or
|
·
|
if
we make certain significant distributions to holders of our Class A common
stock, or if we enter into specified corporate
transactions.
|
We
describe each of these conditions in greater detail below.
However,
after April 15, 2014, holders may surrender their notes for conversion at any
time prior to the close of business on the business day immediately preceding
the maturity date regardless of whether any of the foregoing conditions is
satisfied.
Notes
that are validly surrendered for conversion will be deemed to have been
converted immediately prior to the close of business on the conversion date and
the converting holder will be treated as a shareholder of record of Excel
Maritime as of that time.
Upon
conversion of a note, a holder will not receive any cash payment of interest
(unless such holder is the holder on a regular record date and such conversion
occurs between such regular record date and the interest payment date to which
it relates) and we will not adjust the applicable conversion rate to account for
accrued and unpaid interest. Our delivery to the holder of cash, shares of our
Class A common stock or a combination thereof at our election as described under
“—Settlement upon Conversion” will be deemed to satisfy our obligation with
respect to such note. Accordingly, any accrued but unpaid interest
will be deemed to be paid in full upon conversion, rather than cancelled,
extinguished or forfeited.
Holders
of notes at the close of business on a regular record date will receive payment
of interest payable on the corresponding interest payment date notwithstanding
the conversion of such notes at any time after the close of business on the
applicable regular record date. Notes surrendered for conversion by a holder
after the close of business on any regular record date but prior to the next
interest payment date must be accompanied by payment of an amount equal to the
interest that will be payable on the notes; provided, however, that no such
payment need be made (1) if the notes have been called by us for redemption, (2)
if we have specified a purchase date following a fundamental change that is
after a record date and on or prior to the next interest payment date, (3) with
respect to any notes surrendered for conversion following the record date for
the payment of interest immediately preceding the stated maturity date or (4)
only to the extent of overdue interest, if any overdue interest exists at the
time of conversion with respect to such note.
If we
call notes for redemption, a holder of notes may convert notes only until the
close of business on the second scheduled trading day (as defined below) prior
to the redemption date unless we fail to pay the redemption price. If a holder
of notes has submitted notes for repurchase upon a fundamental change (as
defined under “—Purchase of Notes at Your Option Upon a Fundamental Change”) or
on a purchase date that is unrelated to a fundamental change, the holder may
convert those notes only if that holder withdraws the repurchase notice
delivered by that holder in accordance with the terms of the indenture and the
holder is otherwise entitled to convert.
Calculation
of Applicable Conversion Rate
The
applicable conversion rate for any notes to be converted will be determined as
follows for each trading day in the conversion period (as defined
below):
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if
the applicable stock price (as defined below) for such notes is less than
or equal to the base conversion price (as defined below), the applicable
conversion rate for such notes will be equal to the base conversion rate,
as may be adjusted as described below,
and
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·
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if
the applicable stock price for such notes is greater than the base
conversion price, the applicable conversion rate for such notes will be
determined in accordance with the following
formula:
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Base
Conversion Rate + (Volume Weighted Average
Price—Base Conversion Price)
× Incremental
Share Factor
Volume
Weighted Average Price
The “base
conversion rate” is initially approximately 10.9529 shares of our Class A common
stock. The applicable conversion rate per $1,000 principal amount of
notes is equal to $1,000 divided by the then applicable conversion price at the
time of determination. The conversion price is subject to adjustment
as described under “—Conversion Price Adjustments.” Accordingly, an
adjustment to the conversion price will result in a corresponding inverse
adjustment to the conversion rate. The “base conversion price” is
initially $91.30 per share of our Class A common stock, subject to
adjustment.
The
“incremental share factor” is initially 5.4765, subject to the same proportional
adjustment as the base conversion rate, in each case based upon adjustments to
the base conversion price.
The
“volume weighted average price” per share of our Class A common stock (or any
security that is part of the reference property into which our Class A common
stock has been converted, if applicable) on any trading day means the volume
weighted average price on the principal exchange or over-the-counter market on
which our Class A common stock (or other security) is then listed or traded,
from 9:30 a.m. to 4:00 p.m. (New York City time) on that trading day as
displayed under the heading “Bloomberg VWAP” on Bloomberg Page EXM Equity AQR
(or the Bloomberg Page for any security that is part of the reference property
into which our Class A common stock has been converted, if applicable, or if
such volume weighted average price is not available (or the reference
property in question is not a security), our board of directors’ reasonable,
good faith estimate of the volume weighted average price of the shares of our
Class A common stock, or other reference property, on such trading
day.
The
“closing sale price” of our Class A common stock on any date means the per share
closing sale price (or, if no closing sale price is reported, the average of the
bid and ask prices or, if more than one in either case, the average of the
average bid and the average ask prices) at 4:00 p.m. (New York City time) on
such date as reported in composite transactions for the principal U.S.
securities exchange on which our Class A common stock is traded or, if
our Class
A common stock is not listed on a U.S. national or regional securities exchange,
as reported by the National Quotation Bureau Incorporated.
A
“trading day” means a day on which (i) there is no market disruption event (as
defined below) and (ii) the NYSE or, if our Class A common stock is not listed
on the NYSE, the principal other U.S. national or regional securities exchange
on which our Class A common stock is then listed is open for trading or, if our
Class A common stock is not so listed, any business day. So long as
our Class A common stock is listed on a U.S. national or regional securities
exchange, a “trading day” only includes those days that have a scheduled closing
time of 4:00 p.m. (New York City time) or the then standard closing time for
regular trading on the relevant exchange or trading system.
A “market
disruption event” means the occurrence or existence for more than one half-hour
period in the aggregate on any trading day for our Class A common stock of any
suspension or limitation imposed on trading (by reason of movements in price
exceeding limits permitted by the NYSE or otherwise) in our Class A common stock
or in any options, contracts or future contracts relating to our Class A common
stock, and such suspension or limitation occurs or exists at any time before
1:00 p.m. (New York City time) on such day.
Conversion
Upon Satisfaction of Market Price Condition
Holders
may surrender notes for conversion during any calendar quarter commencing after
the date of original issuance of the notes if the closing sale price of our
Class A common stock, for at least 20 trading days in the period of 30
consecutive trading days ending on the last trading day of the calendar quarter
preceding the quarter in which the conversion occurs, is more than 125% of the
conversion price of the notes in effect on that last trading
day.
Conversion
Upon Trading Price of Notes Falling Below Conversion Value of the
Notes
If the
trading price (as defined below) for the notes on each trading day during any
five consecutive trading-day period was less than 98% of the closing sale price
of our Class A common stock on such date multiplied by the then applicable
conversion rate, a holder may surrender notes for conversion at any time during
the following 10 trading days.
Upon
request, the conversion agent (which shall initially be the trustee) will, on
our behalf, determine if the notes are convertible and will notify us and the
trustee accordingly. The conversion agent shall have no obligation to
determine the trading price of the notes unless we have requested such
determination in writing, and we shall have no obligation to make such request
unless the trustee provides us with reasonable evidence that the trading price
of the notes on any trading day would be less than 98% of the product of the
then current conversion rate times the closing sale price of our Class A common
stock on that date. At such time, we shall instruct the conversion agent to
determine the trading price of the notes beginning on such trading day and on
each successive four trading days.
“Trading
price” means, on any date of determination, the average of the secondary bid
quotations per note obtained by the conversion agent for $5,000,000 principal
amount of the notes at approximately 3:30 p.m. (New York City time), on such
determination date from three independent nationally recognized securities
dealers we select; provided that, if at least three such bids cannot reasonably
be obtained, but two such bids can reasonably be obtained, then the average of
these two bids shall be used; provided, further, that, if at least two such
bids cannot reasonably be obtained, but one such bid can reasonably be obtained,
this one bid shall be used. If on any date of determination the conversion agent
cannot reasonably obtain at least one bid for $5,000,000 principal amount
of the notes from an independent nationally recognized securities dealer, then
the trading price of the notes on such date of determination will be deemed to
be less than 98% of the conversion value.
Conversion
Upon Notice of Redemption
If we
call any or all of the notes for redemption, holders may convert notes that have
been so called for redemption at any time prior to the close of the business on
the second scheduled trading day prior to the redemption date, even if the notes
are not otherwise convertible at such time, after which time the holder’s right
to convert will expire unless we default in the payment of the redemption
price.
Conversion
Upon Specified Corporate Transactions
If we
elect to distribute to all or substantially all holders of our Class A common
stock:
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specified
rights or warrants entitling them to subscribe for or purchase our Class A
common stock at less than the current market price (as defined below) on
the record date for such issuance; or
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cash,
debt securities (or other evidence of indebtedness) or other assets
(excluding dividends or distributions described in clauses (1) or (3) of
the description below under “—Conversion Price Adjustments”), which
distribution, together with all other such distributions within the
preceding twelve months, has a per share value exceeding 10% of the
current market price of our Class A common stock as of the trading day
immediately preceding the declaration date for such
distribution,
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we must
notify the holders of the notes at least 40 days prior to the ex-dividend date
for such distribution. Once we have given such notice (each such notice, a
“Notice of Specified Corporate Transaction”), holders may surrender their notes
for conversion at any time until the earlier of the close of business on the
business day prior to the ex-dividend date or our announcement that such
distribution will not take place.
In
addition, in the event of a fundamental change, a holder may surrender notes for
conversion at any time on or after the date that is 40 days prior to the
anticipated effective time of the fundamental change, as set forth in the Notice
of Specified Corporate Transaction, until the close of business on the second
scheduled trading day immediately preceding the fundamental change purchase date
(as defined under “—Purchase of Notes at Your Option Upon a Fundamental
Change”). The holder may also require us to purchase all or a portion of its
notes upon the occurrence of a fundamental change as described under “—Purchase
of Notes at Your Option Upon a Fundamental Change.” To the extent
practicable, we will give notice to holders of the anticipated effective date
for a fundamental change not more than 60 days nor less than 30 days prior to
the anticipated effective date.
Holders
will also have the right to surrender notes for conversion if we are a party to
a combination, merger, binding share exchange or sale or conveyance of all or
substantially all of our property and assets that does not also constitute a
fundamental change, in each case pursuant to which our Class A common stock
would be converted into cash, securities or other property. In such event,
holders will have the right to surrender notes for conversion at any time from
or after the date that is 30 days prior to the anticipated effective date of
such transaction and ending on the 15th day following the effective date of such
transaction. We will notify holders at least 30 days prior to the anticipated
effective date of such transaction. If the transaction also constitutes a
fundamental change, in lieu of the conversion right described in this paragraph,
holders will have the conversion right described in the preceding paragraph and
will have the right to require us to purchase their notes as set forth below
under “— Purchase of Notes at Your Option Upon a Fundamental
Change.”
Conversion
after April 15, 2014
After
April 15, 2014 and on or prior to the close of business on the business day
immediately prior to the stated maturity date, holders may surrender their notes
for conversion regardless of whether any of the conditions described in
“—Conversion Upon Satisfaction of Market Price Condition,” “—Conversion Upon
Trading Price of Notes Falling Below Conversion Value of the Notes,” or
“—Conversion Upon Specified Corporate Transactions” has been
satisfied.
Settlement
upon Conversion
In
satisfaction of our obligation upon conversion of notes, we may elect to
deliver, at our option, cash, shares of our Class A common stock or a
combination of cash and shares of our Class A common stock. We
elected to satisfy our conversion obligation with respect to the remaining term
of the notes exclusively in cash for 100% of the principal amount of the notes
converted, and we elected also to satisfy exclusively in cash any remaining
amount with respect to such converted notes. Except as described
under “—Conversion after upon Notice of Redemption” and “—Conversion after April
15, 2014,” if we receive any notice of conversion on or prior to the date that
is 25 scheduled trading days immediately preceding the maturity date of the
notes (the “final notice date”), the following procedures will apply:
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If
we elect to satisfy all or any portion of our conversion obligation in
cash, we will notify holders through the trustee of the dollar amount to
be satisfied in cash (which must be expressed either as 100% of the
conversion obligation or as a fixed dollar amount) at any time on or
before the date that is two business days following the conversion date
(the “cash settlement notice period”). If we timely elect to
pay cash for any portion of our conversion obligation, holders may retract
the conversion notice at any time during the two
business days following the final day of the cash settlement notice period
(the “conversion retraction period”). No such retraction can be made (and
a conversion notice shall be irrevocable) if we do not elect to deliver
cash in lieu of shares (other than cash in lieu of fractional shares).
Upon the expiration of a conversion retraction period, a conversion notice
shall be irrevocable. If we elect to satisfy all or any portion of the
conversion obligation in cash, and the conversion notice has not been
retracted, then settlement (in cash or in cash and shares) will occur on
the third business day following the conversion settlement averaging
period. The “conversion settlement averaging period” with respect to any
notes to be converted means the 20-consecutive-trading-day period
beginning:
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·
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on
the redemption date if prior to the relevant conversion date we have
called the notes that are being converted for
redemption;
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·
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for
notes that are converted during the period beginning on the 30th trading
day prior to the maturity date of the notes, on the 27th trading day
immediately preceding the maturity date;
and
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·
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in
all other instances, on the trading day after the final day of the
conversion retraction period.
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If
in the future we elect not to satisfy any part of the conversion
obligation in cash (other than cash in lieu of any fractional shares),
delivery of the shares of our Class A common stock into which the notes
are converted (and cash in lieu of any fractional shares) will occur as
soon as practicable on or after the conversion
date.
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Notwithstanding
the foregoing, if a holder surrenders a note for conversion in connection
with a qualifying fundamental change (as described under “—Adjustment to
Conversion Rate Upon a Qualifying Fundamental Change”), we will deliver
any related additional conversion consideration after the effective date
of the qualifying fundamental change it relates to even if the settlement
date in respect of the other conversion consideration occurs earlier and
conversion consideration may be delivered in two payments rather than
one.
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Settlement amounts will be computed as follows:
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Settlement in
Shares. If we had chosen to satisfy the entire
conversion obligation in shares, we would deliver to holders a number of
shares equal to (i) the aggregate principal amount of notes to be
converted divided by $1,000 multiplied by (ii) the applicable conversion
rate on the conversion date. We have elected to satisfy the
entire conversion obligation in cash as set forth
below.
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Settlement in Cash.
As
we have elected to satisfy the entire conversion obligation in cash, for
each $1,000 principal amount of notes to be converted, we will deliver
cash in an amount equal to the sum of the daily conversion values (as
defined below) for each trading day during the conversion settlement
averaging period. The “daily conversion value” for each
trading day during the conversion settlement averaging period for
each $1,000 aggregate principal amount of notes is equal to one-twentieth
of the product of the then applicable conversion rate multiplied by the
volume weighted average price of our Class A common stock on that
day.
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Settlement in Cash and
Shares. If we had chosen to satisfy a fixed portion
(other than 100%) of our conversion obligation in cash, we would deliver
to holders, for each $1,000 principal amount of notes surrendered for
conversion:
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●
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cash
in any amount we specify (the “specified cash amount”), provided that in no
event shall the specified cash amount exceed the conversion value and, if
it does, then we will settle our conversion obligation entirely in cash as
described above under “—Settlement in Cash”;
and
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a
number of shares of our Class A common stock equal to the greater of (i)
zero and (ii) the sum of the excess, if any, for each of the 20 trading
days in the conversion settlement averaging period of (a) the daily share
amount, over (b)
the number of shares equal to the quotient of (x) one-twentieth of the
specified cash amount divided by (y) the
volume weighted average price of our Class A common stock on such trading
day.
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We
have elected to satisfy the entire obligation in cash as set forth
above.
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The
“daily share amount” for each trading day during the conversion settlement
averaging period for each $1,000 aggregate principal amount of notes is equal to
one-twentieth of the applicable conversion rate on that trading
day.
With
respect to conversion notices that we receive after the final notice date or
after we have issued a notice of redemption and prior to the redemption date, we
will not send individual notices of our election to satisfy all or any portion
of the conversion obligation in cash. If we choose to satisfy all or
any portion of the conversion obligation with respect to conversion (i) after
the final notice date in cash, on or before the final notice date, or (ii) after
we issue a notice of redemption and prior to the redemption date, we will send a
single notice to holders (which may be included in the notice of redemption, if
applicable) indicating the dollar amount to be satisfied in cash (which must be
expressed either as 100% of the conversion obligation or as a fixed dollar
amount). In the event that we receive a notice of conversion from
holders of notes after the final notice date or after a notice of redemption and
prior to the redemption date, settlement amounts will be computed and settlement
dates will be determined in the same manner as set forth
above. If a conversion notice is received from holders of notes after
the final notice date or after a notice of redemption and prior to the
redemption date, such holders will not be allowed to retract the conversion
notice.
To the
extent we would have chosen to settle all or a portion of our conversion
obligation in shares of our Class A common stock, no fractional shares would
have been issued upon conversion; in lieu thereof, a holder that would otherwise
be entitled to fractional shares of our Class A common stock will receive a
number of shares of our Class A common stock equal to the aggregate of the
fractional shares otherwise deliverable for each trading day during the
conversion settlement averaging period (rounding down to the nearest whole
number) and cash equal to the remainder multiplied by the volume weighted
average price of our Class A common stock on the last trading day of the
conversion settlement averaging period.
The cash
and any shares of our Class A common stock (including cash in lieu of fractional
shares) deliverable upon conversion of the notes will be delivered through the
conversion agent. Unless we have elected to settle our conversion
obligation entirely in shares of our Class A common stock, this delivery will
generally be made three business days after the last day of the conversion
settlement averaging period. If a holder surrenders a note for
conversion in connection with a qualifying fundamental change (as described
under “—Adjustment to Conversion Rate Upon a Qualifying Fundamental Change”),
however, we will not deliver any related additional conversion consideration
until after the effective date of the qualifying fundamental change it relates
to even if the settlement date in respect of other conversion consideration
occurs earlier and conversion consideration will be delivered in two payments
rather than one as a result.
If a
holder tenders notes for conversion (and, if applicable, the daily conversion
value is being determined) at a time when the notes are convertible into other
property in addition to or in lieu of our Class A common stock, the settlement
amount will be determined based on the kind and amount of shares of stock,
securities or other property or assets (including cash or any combination
thereof) that a holder of a number of shares of our Class A common stock equal
to the conversion rate would have owned or been entitled to receive in such
transaction (and, if applicable, the value thereof for each
applicable trading day during the conversion settlement averaging period,
as described below under “— Conversion Price Adjustments.”
Generally,
the conversion date for any notes will be the date on which the notes have been
delivered as described under “—Conversion Procedures” below and the requirements
for conversion have been met, if all requirements for conversion have been
satisfied by 11:00 a.m. (New York City time) on that day, or the next succeeding
business day if such requirements are satisfied after 11:00 a.m. (New York City
time).
Conversion
Price Adjustments
The
conversion price will be adjusted:
(1) upon
the issuance of shares of our Class A common stock as a dividend or distribution
on shares of our Class A common stock;
(2) upon
the subdivision or combination of our outstanding our Class A common
stock;
(3) upon
the issuance to all or substantially all holders of our Class A common stock of
rights or warrants entitling them for a period of not more than 45 days to
subscribe for or purchase shares of our Class A common stock, or securities
convertible into our Class A common stock, at a price per share or a conversion
price per share less than the current market price per share on the trading day
immediately preceding the “ex” date (as defined below) for the issuance,
provided that the conversion price will be readjusted to the extent that the
rights or warrants are not exercised prior to this expiration or are not
distributed;
(4) upon
the distribution to all or substantially all holders of our Class A common stock
of shares of our capital stock, evidences of indebtedness or other non-cash
assets, or rights or warrants, excluding:
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dividends,
distributions and rights or warrants referred to in clause (1) or (3)
above;
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·
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dividends
or distributions exclusively in cash referred to in clause (5)
below;
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·
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distributions
of securities referred to in clause (6) below;
and
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distribution
of rights to all or substantially all holders of Class A common stock
pursuant to an adoption of a shareholder rights
plan;
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(5) upon
the occurrence of any cash dividends or other cash distributions to all or
substantially all holders of our Class A common stock (other than (x)
distributions described in clause (6) below, (y) any dividend or distribution in
connection with our liquidation, dissolution or winding up or (z) any regular
quarterly cash dividend on our Class A common stock to the extent that the
aggregate amount of such cash dividend per share of our Class A common stock
does not exceed the dividend threshold amount (subject to adjustment, as
indicated below)), in which event the conversion price shall be reduced so that
it equals the price determined by multiplying the conversion price in effect on
the trading day immediately preceding the “ex” date with respect to the cash
distribution or dividend by a fraction,
(a) the
numerator of which will be the closing sale price of a share of our Class A
common stock as of the trading day immediately preceding the “ex” date with
respect to the dividend or distribution less the dividend adjustment amount,
and
(b) the
denominator of which will be the closing sale price of a share of our Class A
common stock as of the trading day immediately preceding the “ex” date with
respect to the dividend or distribution;
(6) upon the
distribution of shares of capital stock or similar equity interests of any
subsidiary or business unit, which we refer to as a “spin-off,” the conversion
price in effect immediately before the close of business on the trading day
immediately preceding the “ex” date with respect to that distribution will be
decreased by multiplying the conversion price by a fraction,
(a) the
numerator of which is the average of the closing sale prices of a share of our
Class A common stock on each of the 10 consecutive trading days beginning on the
“ex” date with respect to the spin-off, and
(b) the
denominator of which is the average of the closing sale prices of a share of our
Class A common stock on each of the 10 consecutive trading days beginning on the
“ex” date with respect to the spin-off plus the average of the closing sale
prices of the portion of those shares of capital stock or similar equity
interests so distributed applicable to one share of our Class A common stock on
each of those 10 consecutive trading days; and
(7) upon
the purchase of our Class A common stock pursuant to a tender offer made by us
or any of our subsidiaries at a price per share in excess of the current market
price for one share of our Class A common stock on the last date tenders may be
made pursuant to the tender offer, which we refer to as the “expiration date,”
in which case, immediately prior to the opening of business on the day after the
expiration date, the conversion price shall be reduced so that it equals the
price determined by multiplying the conversion price in effect immediately prior
to the close of business on the expiration date by a fraction,
(a) the numerator of which
will be the product of the number of shares of our Class A common stock
outstanding (including tendered shares but excluding any shares held by us in
treasury) immediately before the last time at which tenders may be made pursuant
to the tender offer, which we refer to as the “expiration time,” multiplied by
the current market price per share of our Class A common stock on the trading
day next succeeding the expiration date; and
(b) the denominator of which will be
the sum of (x) the aggregate consideration payable to stockholders based on the
acceptance (up to any maximum specified in the terms of the tender offer) of all
shares validly tendered and not withdrawn as of the expiration time, which we
refer to as the “purchased shares,” and (y) the product of the number of shares
of our Class A common stock outstanding (less any purchased shares
and excluding any shares held by us in treasury) immediately before the
expiration time and the current market price per share of our Class A common
stock on the trading day next succeeding the expiration date.
“current
market price” means, with respect to any date of determination, the closing sale
price of our Class A common stock on the date of determination. For purposes
hereof, the term “ex” date, when used with respect to any dividend or
distribution, means the first date on which the Class A common stock trades,
regular way, on the relevant exchange or in the relevant market from which the
sale price was obtained without the right to receive such dividend or
distribution.
“dividend
adjustment amount” means the full amount of the dividend or distribution to the
extent payable in cash applicable to one share of our Class A common stock less
the dividend threshold amount.
“dividend
threshold amount” means $0.20 per share of Class A common stock per quarter in
the case of regular cash dividends, adjusted in a manner proportional to
adjustments made to the conversion price other than pursuant to clause (5) or
(7) above and to account for any change in the frequency of payment of our
regular cash dividend, and $0.00 in all other cases.
To the
extent that we have a rights plan in effect upon conversion of the notes into
Class A common stock, you will receive, in addition to the Class A common stock,
the rights under the rights plan, whether or not the rights have separated from
the Class A common stock at the time of conversion, subject to certain limited
exceptions.
In the
event of:
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any
reclassification of our Class A common
stock;
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·
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a
consolidation, merger or combination involving Excel Maritime;
or
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·
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a
sale or conveyance to another person of the property and assets of Excel
Maritime as an entirety or substantially as an
entirety,
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the
settlement amount in respect of our conversion obligation will be computed as
set forth under “— Settlement upon Conversion” above, based on the kind and
amount of shares of stock, securities, or other property or assets (including
cash or any combination thereof) that holders of our common stock are entitled
to receive in respect of each share of our common stock in such transaction (the
“reference property”), and reference property will be delivered in lieu of the
shares of our common stock that would have otherwise been deliverable upon
conversion. Throughout this section (“—Conversion of Notes”), if our
Class A common stock has been replaced by reference property as a result of any
transaction described in the preceding sentence, references to our Class A
common stock are intended to refer to such reference property.
In the
event that holders of our Class A common stock have the opportunity to elect the
form of consideration to be received in any transaction described in the
preceding paragraph, we will make adequate provision so that the holders of the
notes, treated as a single class, have the timely opportunity to determine the
composition of the reference property that will replace any Class A common stock
that would otherwise be deliverable upon conversion of the notes. The
reference property will be based on the blended, weighted average of elections
made by holders of the notes and will be subject to any limitations applicable
to all holders of our Class A common stock (such as pro rata reductions made to
any portion of the consideration payable). The determination of the
reference property will apply to all of the notes and we will notify the trustee
of the composition of the reference property promptly after it is
determined.
We are
permitted to reduce the conversion price of the notes by any amount for a period
of at least 20 business days if our board of directors determines that such
reduction would be in our best interest. We are required to give at least 15
days’ prior notice of any reduction in the conversion price. We may also reduce
the conversion price to avoid or diminish income tax to holders of our Class A
common stock in connection with a dividend or distribution of stock or similar
event.
You may,
in some circumstances, be deemed to have received a distribution or dividend
subject to U.S. federal income tax as a result of an adjustment or the
non-occurrence of an adjustment to the conversion price. See
“Material U.S. Federal Income Tax Considerations” below for a relevant
discussion.
Notwithstanding
anything in this section “—Conversion Price Adjustments” to the contrary, we
will not be required to adjust the conversion price unless the adjustment would
result in a change of at least 1% of the conversion price. However, we will
carry forward any adjustments that are less than 1% of the conversion price and
make such carried forward adjustments, regardless of whether the aggregate
adjustment is less than 1%, within one year of the first such adjustment carried
forward, upon required purchases of the notes in connection with a fundamental
change and five business days prior to the stated maturity of the notes. Except
as stated above, the conversion price will not be adjusted for the issuance of
our Class A common stock or any securities convertible into or exchangeable for
our Class A common stock or carrying the right to purchase our Class A common
stock or any such security. No adjustment to the conversion price
need be made for a given transaction if holders of the notes will participate in
that transaction without conversion of the notes.
Conversion
Procedures
Holders
may convert their notes only in denominations of $1,000 principal amount and
integral multiples thereof. Delivery of our Class A common stock and cash upon
conversion in accordance with the terms of the notes will be deemed to satisfy
our obligation to pay the principal amount of the notes.
The right
of conversion attaching to any note may be exercised (a) if such note is
represented by a global security, by book-entry transfer to the conversion agent
through the facilities of DTC or (b) if such note is represented by a
certificated security, by delivery of such note at the specified office of the
conversion agent, accompanied, in either case, by a duly signed and completed
notice of conversion and appropriate endorsements and transfer documents if
required by the conversion agent. A holder delivering a note for conversion will
be required to pay any taxes or duties payable in respect of the issue or
delivery of our Class A common stock upon conversion in a name other than that
of the holder.
We will
not issue fractional shares of Class A common stock upon conversion of
notes.
If you
have submitted your notes for purchase upon a fundamental change, you may only
convert your notes if you withdraw your purchase notice prior to the fundamental
change purchase date, as described below under “—Purchase of Notes at Your
Option Upon a Fundamental Change.” If your notes are submitted for purchase
following a fundamental change, your right to withdraw your purchase notice and
convert the notes that are subject to purchase will terminate at 5:00 p.m. (New
York City time) on the business day before such purchase date.
Adjustment
to Conversion Rate Upon a Qualifying Fundamental Change
If a
qualifying fundamental change occurs prior to maturity, upon the conversion of
the notes as described above under “—Conversion of Notes—Conversion Upon
Specified Corporate Transactions”, the conversion rate will be increased by an
additional number of shares of Class A common stock (these shares being referred
to as the “additional shares”) as described below. We will notify holders of the
anticipated effective date of such qualifying fundamental change and issue
a press release as soon as practicable after we first determine the anticipated
effective date of such qualifying fundamental change.
A
“qualifying fundamental change” is (i) any “change in control” included in the
first or second bullet of the definition of that term below under “—Purchase of
Notes at Your Option Upon a Fundamental Change” and (ii) any “termination of
trading” as defined below under “—Purchase of Notes at Your Option Upon a
Fundamental Change.” A merger, consolidation, assignment, conveyance,
sale, transfer, lease or other disposition otherwise constituting a change in
control will not constitute a qualifying fundamental change if at least 90% of
the consideration paid for our Class A common stock in that transaction,
excluding cash payments for fractional shares and cash payments made pursuant to
dissenters’ appraisal rights, consists of shares of common stock traded on a
U.S.
national securities exchange, or will be so traded immediately following the
merger or consolidation, and, as a result of the merger or consolidation, the
notes become convertible into such shares of such common stock.
The
number of additional shares by which the conversion rate will be increased for
conversions in connection with a qualifying fundamental change will be
determined by reference to the table below, based on the date on which the
qualifying fundamental change occurs or becomes effective, which we refer to as
the effective date, and (1) the price paid per share of our Class A common
stock in the change in control in the case of a qualifying fundamental change
described in the second bullet of the definition of change in control, or (2)
the average of the last reported sale prices of our Class A common stock over
the five trading-day period ending on the trading day preceding the effective
date of such other qualifying fundamental change, which we refer to as the stock
price, in the case of any other qualifying fundamental change. If holders of our
Class A common stock receive only cash in the case of a qualifying fundamental
change described in the second bullet under the definition of change in control,
the stock price shall be the cash amount paid per share.
The stock
prices set forth in the first row of the table below (i.e., column headers) will
be adjusted as of any date on which the conversion price of the notes is
adjusted as described under “—Conversion of Notes—Conversion Price Adjustments.”
The stock prices in the table will be adjusted by the same adjustment
factor applied to the conversion price as described under—Conversion of
Notes—Conversion Price Adjustments” above and the number of additional shares
will be adjusted by the inverse of that adjustment factor.
The
following table sets forth the increase in the conversion rate, expressed as a
number of additional shares to be added per $1,000 principal amount of
notes.
|
Stock
Price
|
Effective
Date |
$58.90
|
$60.00
|
$70.00
|
$80.00
|
$90.00
|
$100.00
|
$125.00
|
$150.00
|
$175.00
|
$200.00
|
$250.00
|
$300.00
|
$400.00
|
$500.00
|
October
10, 2007
|
6.0200
|
6.0200
|
5.9786
|
5.4599
|
5.1075
|
4.3852
|
3.0404
|
2.2251
|
1.6896
|
1.3180
|
0.8464
|
0.5695
|
0.2772
|
0.1387
|
October
15, 2008
|
6.0200
|
6.0200
|
5.9166
|
5.3560
|
4.9785
|
4.2423
|
2.8874
|
2.0781
|
1.5540
|
1.1943
|
0.7459
|
0.4887
|
0.2253
|
0.1054
|
October
15, 2009
|
6.0200
|
6.0200
|
5.8056
|
5.1977
|
4.7947
|
4.0456
|
2.6864
|
1.8900
|
1.3834
|
1.0419
|
0.6261
|
0.3954
|
0.1686
|
0.0711
|
October
15, 2010
|
6.0200
|
6.0200
|
5.6233
|
4.9641
|
4.5341
|
3.7738
|
2.4203
|
1.6481
|
1.1696
|
0.8551
|
0.4860
|
0.2910
|
0.1102
|
0.0389
|
October
15, 2011
|
6.0200
|
6.0200
|
5.3331
|
4.6143
|
4.1579
|
3.3901
|
2.0608
|
1.3337
|
0.9009
|
0.6288
|
0.3275
|
0.1800
|
0.0555
|
0.0133
|
October
15, 2012
|
6.0200
|
6.0200
|
4.8629
|
4.0707
|
3.5882
|
2.8243
|
1.5611
|
0.9212
|
0.5710
|
0.3682
|
0.1668
|
0.0804
|
0.0172
|
0.0016
|
October
15, 2013
|
5.9102
|
5.6844
|
4.1226
|
3.2012
|
2.6828
|
1.9416
|
0.8441
|
0.3931
|
0.1974
|
0.1074
|
0.0391
|
0.0164
|
0.0018
|
0.0009
|
October
15, 2014
|
6.0200
|
5.7106
|
3.3301
|
1.5448
|
0.1921
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
The stock
prices and additional share amounts set forth above are based upon a common
share closing sale price of $58.90 on October 3, 2007 and an initial conversion
price of $91.30.
Notwithstanding
anything in the indenture to the contrary, we may not increase the conversion
rate to more than 16.9778 shares per $1,000 principal amount of notes pursuant
to the events described in this section, though we will adjust such number of
shares for the same events for which we must adjust the conversion price as
described under “—Conversion of Notes—Conversion Price Adjustments” above, by
the inverse of the adjustment factor applied to the conversion price under that
section.
The exact
stock prices and effective dates may not be set forth in the table above, in
which case if the stock price is:
·
|
between
two stock price amounts in the table or the effective date is between two
effective dates in the table, the number of additional shares will be
determined by a straight-line interpolation between the number of
additional shares set forth for the higher and lower stock price amounts
and the two dates, as applicable, based on a 365-day
year;
|
·
|
in
excess of $500.00 per share (subject to adjustment), no increase in the
conversion rate will be made; and
|
·
|
less
than $58.90 per share (subject to adjustment), no increase in the
conversion rate will be made.
|
Because
we cannot calculate and deliver the additional conversion consideration due as a
result of an increase in the conversion rate resulting from a given qualifying
fundamental change until after the effective date of that qualifying fundamental
change has occurred, we will not deliver such additional conversion
consideration until after the effective date of the qualifying fundamental
change it relates to even if the settlement date in respect of other
conversion consideration occurs earlier. As a result, you may receive conversion
consideration in two payments rather than one. We will deliver the
portion of the conversion consideration that is payable on account of the
increase in the conversion rate as soon as practicable, but in no event after
the third business day after the later of:
·
|
the
date the holder surrenders the note for
conversion;
|
·
|
the
last trading day in the applicable conversion period;
and
|
·
|
the
effective date of the qualifying fundamental
change.
|
If you
surrender a note for conversion in connection with a qualifying fundamental
change we have announced, but the qualifying fundamental change is not
consummated, then you will not be entitled to the increased conversion rate
referred to above in connection with the conversion.
Purchase of Notes by Us at the Option of the
Holder
Holders
have the right to require us to purchase the notes on October 15, 2014, October
15, 2017 and October 15, 2022 (each, a “purchase date”). We will be required to
purchase any outstanding notes for which a holder delivers a written purchase
notice to the paying agent. This notice must be delivered during the period
beginning at any time from the opening of business on the date that is 20
business days prior to the relevant purchase date until the close of business on
the second business day prior to the purchase date. If the purchase notice is
given and withdrawn during such period, we will not be obligated to purchase the
related notes. Also, our ability to satisfy our purchase obligations
may be affected by the factors described in “Risk Factors” under the caption
“—Risks Related to the Notes and Our Indebtedness—We may not have the ability to
raise the funds necessary to settle conversion of the notes or to purchase the
notes upon a fundamental change or on other purchase dates, and our future debt
may contain, limitations on our ability to pay cash upon conversion or
repurchase of the notes.”
The
purchase price payable will be equal to 100% of the principal amount of the
notes to be purchased plus any accrued and unpaid interest (including any
additional interest) to such purchase date. All notes purchased by us will be
paid for in cash.
On or
before the 20th business day prior to each purchase date, we will provide to the
trustee, the paying agent and to all holders of the notes, and to beneficial
owners as required by applicable law, a notice (delivered in any manner
permitted by the indenture, including through DTC) stating, among other
things:
·
|
the
last date on which a holder may exercise the purchase
right;
|
·
|
the
name and address of the paying
agent;
|
·
|
the
procedures the holders must follow to require us to purchase their
notes.
|
Simultaneously
with providing such notice, we will publish a notice containing this information
in a newspaper of general circulation in The City of New York or publish the
information on our website or through such other public medium as we may use at
that time.
A notice
electing to require us to purchase your notes must state:
·
|
if
certificated notes have been issued, the certificate numbers of the notes,
or if not certificated, your notice must comply with appropriate DTC
procedures;
|
·
|
the
portion of the principal amount of notes to be purchased, in multiples of
$1,000; and
|
·
|
that
the notes are to be purchased by us pursuant to the applicable provisions
of the notes and the indenture.
|
No notes may be purchased at the
option of holders if there has occurred and is continuing an event of default
other than an event of default that is cured by the payment of the purchase
price of the notes.
If a
holder of notes has given purchase notice, the holder may convert those notes
only if that holder withdraws the purchase notice delivered by that holder in
accordance with the terms of the indenture and the holder is otherwise entitled
to convert. You may withdraw any purchase notice in whole or in part
by a written notice of withdrawal delivered to the paying agent prior to the
close of business on the business day prior to the purchase date. The notice of
withdrawal must state:
·
|
the
principal amount of the withdrawn
notes;
|
·
|
if
certificated notes have been issued, the certificate numbers of the
withdrawn notes, or if not certificated, your notice must comply with
appropriate DTC procedures; and
|
·
|
the
principal amount, if any, which remains subject to the purchase
notice.
|
You must
either effect book-entry transfer or deliver the notes, together with necessary
endorsements, to the office of the paying agent after delivery of the purchase
notice to receive payment of the purchase price. You will receive payment
promptly following the later of the purchase date or the time of book-entry
transfer or the delivery of the notes. If the paying agent holds money
sufficient to pay the purchase price of the notes on the business day following
the purchase date, then:
·
|
the
notes will cease to be outstanding and interest, including any additional
interest, will cease to accrue (whether or not book-entry transfer of the
notes is made or whether or not the note is delivered to the paying
agent); and
|
·
|
all
other rights of the holder will terminate (other than the right to receive
the purchase price and previously accrued and unpaid interest and
additional interest upon delivery on transfer of the
notes).
|
We will
be responsible for making all determinations with respect to the adequacy of all
notices electing to require us to purchase notes and all notices withdrawing
such elections and any such determination shall be binding on the applicable
holder.
We will
comply with the provisions of Rule 13e-4 and any other rules under the Exchange
Act that may be applicable.
Purchase
of Notes at Your Option Upon a Fundamental Change
If a
fundamental change occurs, you will have the option to require us to purchase
for cash all or any part of your notes on the day that is 35 business days after
the occurrence of such fundamental change, referred to as the “fundamental
change purchase date,” at a purchase price equal to 100% of the principal amount
of the notes, plus accrued and unpaid interest, including any additional amounts
payable in cash. Notes submitted for purchase must be in integral
multiples of $1,000 principal amount.
We will
mail to the trustee and to each holder a written notice of the fundamental
change within 10 business days after the occurrence of such fundamental change.
This notice shall state certain specified information, including:
information
about, and the terms and conditions of, the fundamental change, including the
amount of additional shares that are deliverable, if any;
·
|
information
about the holders’ right to convert the
notes;
|
·
|
information
about the holders’ right to require us to purchase the
notes;
|
·
|
the
fundamental change purchase
date;
|
·
|
the
procedures required for exercise of the purchase option upon the
fundamental change; and |
|
|
·
|
the
name and address of the paying and conversion
agents.
|
You must
deliver written notice of your exercise of this purchase right to the paying
agent during the period between the fundamental change notice and the close of
business on the second scheduled trading day prior to the fundamental change
purchase date. The written notice must specify the notes for which the purchase
right is being exercised. If you wish to withdraw this election, you must
provide a written notice of withdrawal to the paying agent at any time
prior to the close of business on the second scheduled trading day prior to the
fundamental change purchase date.
“fundamental
change” means the occurrence of a change in control or a termination of
trading.
A “change
in control” will be deemed to have occurred if any of the following
occurs:
·
|
any
“person” or “group”, other than any of the permitted holders, is or
becomes the “beneficial owner,” directly or indirectly, of shares of our
voting stock representing 50% or more of the total voting power of all
outstanding classes of our voting stock or has the power, directly or
indirectly, to elect a majority of the members of our board of
directors;
|
·
|
we
consolidate with, or merge with or into, another person or we sell,
assign, convey, transfer, lease or otherwise dispose of all or
substantially all of our assets, or any person consolidates with, or
merges with or into, us, in any such event other than pursuant to a
transaction in which the persons that “beneficially owned,” directly or
indirectly, the shares of our voting stock immediately prior to such
transaction “beneficially own,” directly or indirectly, shares of our
voting stock representing at least a majority of the total voting power of
all outstanding classes of voting stock of the surviving or transferee
person;
|
·
|
a
majority of the members of our board of directors are not continuing
directors; or
|
·
|
the
holders of our capital stock approve any plan or proposal for the
liquidation or dissolution of Excel Maritime (whether or not otherwise in
compliance with the indenture).
|
However,
notwithstanding the foregoing, holders of the notes will not have the right to
require us to purchase any notes under the first or second clause above, and we
will not be required to deliver the fundamental change notice incidental thereto
as a result of any merger, consolidation, assignment, conveyance, sale,
transfer, lease or other disposition otherwise constituting a change in control
in which at least 90% of the consideration paid for our Class A common stock,
excluding cash payments for fractional shares and cash payments made pursuant to
dissenters’ appraisal rights, consists of shares of common stock traded on a
U.S. national securities exchange, or will be so traded immediately following
the merger or consolidation, and, as a result of the merger or consolidation,
the notes become convertible into such shares of such Class A common
stock.
For
purposes of this change in control definition:
·
|
“person”
or “group” have the meanings given to them for purposes of Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended, or the
Exchange Act, or any successor provisions, and the term “group” includes
any group acting for the purpose of acquiring, holding or disposing of
securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act,
or any successor provision;
|
·
|
a
“beneficial owner” will be determined in accordance with Rule 13d-3 under
the Exchange Act, as in effect on the date of the indenture, except that
the number of shares of our voting stock will be deemed to include, in
addition to all outstanding shares of our voting stock and unissued shares
deemed to be held by the “person” or “group” or other person with respect
to which the change in control determination is being made, all unissued
shares deemed to be held by all other
persons;
|
·
|
“continuing
directors” means, as of any date of determination, any member of our board
of directors who
|
·
|
was
a member of such board of directors on the date of the original issuance
of the notes, or
|
|
|
·
|
was
nominated for election or elected to such board of directors with the
approval of a majority of the continuing directors who were members of
such board at the time of such nomination or election, or by a Permitted
Holder;
|
·
|
“beneficially
own” and “beneficially owned” have meanings correlative to that of
beneficial owner;
|
·
|
“permitted
holders” means:
|
(i)
|
Mr.
Gabriel Panayotides, his estate, guardians, conservators, administrators,
committees or personal
representatives;
|
(ii)
|
immediate
family members and lineal descendants of Mr. Gabriel Panayotides and their
respective guardians, conservators, administrators, committees or personal
representatives;
|
(iii)
|
trusts
or other entities created for the benefit of any of the persons listed in
(i) or (ii) above or for the benefit of a trust covered by this clause
(iii);
|
(iv)
|
either
of Argon S.A. or Boston Industries S.A. and their respective subsidiaries,
in each case so long as the persons or entities covered by clauses (i),
(ii) and (iii), directly or indirectly, control such entities;
and
|
(v)
|
entities
that are, directly or indirectly, controlled by any of the persons or
entities listed in clauses (i), (ii), (iii) and (iv)
above.
|
·
|
“unissued
shares” means shares of voting stock not outstanding that are subject to
options, warrants, rights to purchase or conversion privileges exercisable
within 60 days of the date of determination of a change in control;
and
|
·
|
“voting
stock” means any class or classes of capital stock or other interests then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of the board of directors, managers
or trustees.
|
The term
“all or substantially all” as used in the definition of change in control will
likely be interpreted under applicable state law and will be dependent upon
particular facts and circumstances. There may be a degree of uncertainty in
interpreting this phrase. As a result, we cannot assure you how a court would
interpret this phrase under applicable law if you elect to exercise your rights
following the occurrence of a transaction which you believe constitutes a
transfer of “all or substantially all” of our assets.
A
“termination of trading” means that our Class A common stock or other securities
into which the notes are convertible are neither approved for listing on a U.S.
national securities exchange nor approved for quotation on an established
over-the-counter securities markets in the United States, or cease to be traded
or quoted in contemplation of a delisting or withdrawal of
approval.
In
connection with any purchase of notes in the event of a fundamental change, we
will in accordance with the indenture:
·
|
comply
with the provisions of Rule 13e-4, Rule 14e-1 and any other tender offer
rules under the Exchange Act to the extent applicable to
us;
|
·
|
file
a Schedule TO or any successor or similar schedule, if required, under the
Exchange Act; and
|
·
|
otherwise
comply with all federal and state securities laws to the extent applicable
by us in connection with any offer by us to purchase the notes upon a
fundamental change.
|
No notes may
be purchased by us at the option of holders upon a fundamental change if the
principal amount of the notes has been accelerated, and such acceleration has
not been rescinded, on or prior to the purchase date for such fundamental
change.
This
fundamental change purchase feature may make more difficult or discourage a
takeover of us and the removal of incumbent management. We are not, however,
aware of any specific effort to accumulate shares of our Class A common stock or
to obtain control of us by means of a merger, tender offer, solicitation or
otherwise. In addition, the fundamental change purchase feature is not part of a
plan by management to adopt a series of anti-takeover provisions. Instead, the
fundamental change purchase feature is a standard term contained in other
similar convertible debt offerings.
We could,
in the future, enter into certain transactions, including recapitalizations,
that would not constitute a fundamental change but would increase the amount of
debt, including senior indebtedness, outstanding, or otherwise adversely affect
a holder. Neither we nor our subsidiaries are prohibited from incurring debt,
including senior indebtedness, under the indenture. The incurrence of
significant amounts of additional debt could adversely affect our ability to
service our debt, including the notes.
If a
fundamental change were to occur, we may not have sufficient funds to pay the
fundamental change purchase price for the notes tendered by holders. We may in
the future incur debt that may contain provisions prohibiting purchase of the
notes under some circumstances or expressly prohibit our purchase of the notes
upon a fundamental change or may provide that a fundamental change constitutes
an event of default under that agreement. If a fundamental change occurs at a
time when we are prohibited from purchasing notes, we could seek the consent of
our lenders to purchase the notes or attempt to refinance this debt. If we do
not obtain any required consent, we would not be permitted to purchase the
notes. Our failure to purchase tendered notes would constitute an event of
default under the indenture, which could constitute an event of default under
our senior indebtedness then outstanding, if any, and might constitute a default
under the terms of our other indebtedness then outstanding, if any.
Events
of Default
Each of
the following will constitute an event of default under the
indenture:
(1) we fail to
pay the principal of any note when due, including any additional amounts, if
any;
(2) we
fail to pay the cash, shares of our Class A common stock or a combination
thereof owing upon conversion of any note (including any additional shares)
within the time period required by the indenture;
(3) we fail to
pay any interest amounts, including any additional amounts, if any, on any note
when due if such failure continues for 30 days;
(4) we fail to
perform any other covenant required of us in the indenture if such failure
continues for 60 days after notice is given in accordance with the
indenture;
(5) we fail to
pay the purchase price or redemption price of any note when due;
(6) we fail to
provide timely notice of a fundamental change;
(7) any
indebtedness for money borrowed by us or one of our significant subsidiaries in
an outstanding principal amount in excess of $15.0 million is not paid at final
maturity as such final maturity may be extended by waiver or amendment or is
accelerated and such indebtedness is not discharged, or such default in payment
or acceleration is not cured or rescinded, within 30 days after written notice
as provided in the indenture;
(8) we fail or
any of our significant subsidiaries (as such term is defined in Rule 1-02 of
Regulation S-X) fails to pay one or more final and non-appealable judgments
entered by a court or courts of competent jurisdiction, the aggregate uninsured
or unbonded portion of which is in excess of $15.0 million, if the judgments are
not paid, discharged or stayed within 30 days; and
(9) certain
events of bankruptcy, insolvency or reorganization of us or any of our
significant subsidiaries.
If an
event of default, other than an event of default described in clause (9) above
with respect to us, occurs and is continuing, either the trustee or the holders
of at least 25% in aggregate principal amount of the outstanding notes may
declare the principal amount of the notes to be due and payable immediately. If
an event of default described in clause (9) above occurs with respect to us, the
principal amount of the notes, including any additional amounts, if any, will
automatically become immediately due and payable.
After any
such acceleration, but before a judgment or decree based on acceleration, the
holders of a majority in aggregate principal amount of the notes may, under
certain circumstances, rescind and annul such acceleration if all events of
default, other than the non-payment of accelerated principal, including any
additional amounts, if any, have been cured or waived.
Notwithstanding
the foregoing, the sole remedy under the indenture for an event of default
relating to the failure to comply with our reporting obligations to the trustee
and the Commission, as set forth in the indenture, and for any failure to comply
with the requirements of Section 314(a)(1) of the Trust Indenture Act, will, for
the 180 days after the occurrence of such an event of default, consist
exclusively of the right to receive additional interest on the notes at an
annual rate equal to 0.50% of the aggregate principal amount of the notes to,
but not including, the 181st day thereafter (or, if applicable, the earlier date
on which the event of default relating to the reporting obligations is cured or
waived). Any such additional interest will be payable in the same
manner and on the same dates as the stated interest payable on the
notes. If the event of default is continuing on the 181st day after
an event of default relating to a failure to comply with the provision of the
indenture relating to reporting obligations, as such reporting obligations may
be applicable to us as a foreign private issuer, the notes will be subject to
acceleration as provided above. The provisions of the indenture
described in this paragraph will not affect the rights of holders of notes in
the event of the occurrence of any other events of
default. References to interest on the notes in this prospectus are,
except as otherwise required by the context, intended to refer to any additional
interest as well as to regular interest.
Subject
to the trustee’s duties in the case of an event of default, the trustee will not
be obligated to exercise any of its rights or powers at the request of the
holders unless the holders have offered to the trustee reasonable indemnity.
Subject to the indenture, applicable law and the trustee’s indemnification, the
holders of a majority in aggregate principal amount of the outstanding notes
will have the right to direct in writing the time, method and place of
conducting any proceeding for any remedy available to the trustee or exercising
any trust or power conferred on the trustee with respect to the
notes.
No holder
will have any right to institute any proceeding under the indenture, or for the
appointment of a receiver or a trustee, or for any other remedy under the
indenture unless:
·
|
the
holder has previously given the trustee written notice of a continuing
event of default;
|
·
|
the
holders of at least 25% in aggregate principal amount of the notes then
outstanding have made a written request and have offered reasonable
indemnity to the trustee to institute such proceeding as trustee;
and
|
·
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the
trustee has failed to institute such proceeding within 60 days after such
notice, request and offer and has not received from the holders of a
majority in aggregate principal amount of the notes then outstanding a
direction inconsistent with such request within 60 days after such notice,
request and offer.
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However,
the above limitations do not apply to a suit instituted by a holder for the
enforcement of payment of the principal of, interest including any additional
amounts, if any, on any note on or after the applicable due date or the right to
convert the note in accordance with the indenture.
Generally,
the holders of not less than a majority of the aggregate principal amount of
outstanding notes may waive any default or event of default unless:
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we
fail to pay the principal of or any interest amounts, including any
additional amounts, if any, on any note when
due;
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·
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we
fail to pay the cash and deliver the shares of Class A common stock owing
upon conversion of any note (including additional shares) within the time
period required by the indenture; or
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·
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we
fail to comply with any of the provisions of the indenture that would
require the consent of the holder of each outstanding note
affected.
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We are
required to furnish to the trustee, on an annual basis, a statement by our
officers as to whether or not Excel Maritime, to the officers’ knowledge, is in
default in the performance or observance of any of the terms, provisions and
conditions of the indenture, specifying any known defaults.
Modification
and Waiver
We and
the trustee may amend or supplement the indenture with respect to the notes with
the consent of the holders of a majority in aggregate principal amount of the
outstanding notes. In addition, the holders of a majority in aggregate principal
amount of the outstanding notes may waive our compliance in any instance with
any provision of the indenture without notice to the other holders of notes.
However, no amendment, supplement or waiver may be made without the consent
of each holder of outstanding notes affected thereby if such amendment,
supplement or waiver would:
·
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change
the stated maturity of the principal of, or any interest amounts on, the
notes;
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·
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reduce
the principal amount of or interest amounts on the
notes;
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·
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reduce
the amount of principal payable upon acceleration of the maturity of the
notes;
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·
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change
the currency of payment of principal of or interest amounts on the
notes;
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·
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impair
the right to institute suit for the enforcement of any payment on, or with
respect to, the notes;
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·
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modify
the provisions with respect to the purchase rights of the holders as
described above under “Optional Redemption,” “Conversion of
Notes—Conversion Upon Notice of Redemption” and ‘‘Purchase of Notes at
Your Option Upon a Fundamental Change” in a manner adverse to holders of
notes;
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·
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adversely
affect the right of holders to convert
notes;
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·
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reduce
the percentage in principal amount of outstanding notes required for
modification or amendment of the
indenture;
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·
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reduce
the percentage in principal amount of outstanding notes necessary for
waiver of compliance with certain provisions of the indenture or for
waiver of certain defaults;
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·
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change
our obligation to pay additional amounts;
or
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·
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modify
provisions with respect to modification and waiver (including waiver of
events of default), except to increase the percentage required for
modification or waiver or to provide for consent of each affected holder
of notes.
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We and
the trustee may amend or supplement the indenture or the notes without notice
to, or the consent of, the note holders to, among other things, cure any
ambiguity, defect or inconsistency or make any other change that does not
adversely affect the rights of any note holder. Any amendment or
supplement made solely to conform the provisions of the indenture and notes to
the description of the indenture and the notes contained herein will be deemed
not to adversely affect the rights of any note holder.
Consolidation,
Merger and Sale of Assets
We may
not consolidate with or merge into any person in a transaction in which we are
not the surviving person or convey, transfer or lease our properties and assets
substantially as an entirety to any successor person, unless:
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the
successor person, if any, is a corporation organized and existing under a
permitted flag jurisdiction and assumes our obligations on the notes and
under the indenture;
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·
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immediately
after giving effect to the transaction, no default or event of default
shall have occurred and be continuing;
and
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·
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other
conditions specified in the indenture are
met.
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A
“permitted flag jurisdiction” means the Marshall Islands, the United States of
America, any State of the United States or the District of Columbia, the
Commonwealth of the Bahamas, the Republic of Liberia, the Republic of Panama,
the Commonwealth of Bermuda, Singapore, the British Virgin Islands, the Cayman
Islands, the Isle of Man, Cyprus, the Philippines, Norway, Greece, the United
Kingdom, Argentina, Malta, Brazil, Chile, Paraguay, India, Bolivia, Spain,
Uruguay and any other jurisdiction generally acceptable to institutional lenders
in the shipping industry, as determined in good faith by our board of
directors.
Satisfaction
and Discharge
We may
satisfy and discharge our obligations under the indenture by delivering to the
registrar for cancellation all outstanding notes or, after the notes have become
due and payable, depositing with the trustee an amount sufficient to pay and
discharge all outstanding notes.
Notwithstanding
the foregoing, the Company shall not discharge its obligations with respect to
conversion and payment of cash or delivery of shares of our Class A common
stock, if any, in connection therewith until such time as all such payment or
delivery of shares of our Class A common stock has been made.
Transfer
and Exchange
We have
initially appointed the trustee as the security registrar, paying agent and
conversion agent, acting through its corporate trust office. We reserve the
right to:
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vary
or terminate the appointment of the security registrar, paying agent or
conversion agent;
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appoint
additional paying agents or conversion agents;
or
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·
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approve
any change in the office through which any security registrar or any
paying agent or conversion agent
acts.
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Purchase
and Cancellation
All notes
surrendered for payment, redemption, registration of transfer or exchange or
conversion shall, if surrendered to any person other than the trustee, be
delivered to the trustee. All notes delivered to the trustee shall be cancelled
promptly by the trustee. No notes shall be authenticated in exchange for any
notes cancelled as provided in the indenture.
We may,
to the extent permitted by law, purchase notes in the open market or by tender
offer at any price or by private agreement. Any notes purchased by us may, to
the extent permitted by law, be reissued or resold or may, at our option, be
surrendered to the trustee for cancellation. Any notes surrendered for
cancellation may not be reissued or resold and will be promptly cancelled. Any
notes held by us or one of our subsidiaries shall be disregarded for voting
purposes in connection with any notice, waiver, consent or direction requiring
the vote or concurrence of note holders.
Replacement
of Notes
We will
replace mutilated, destroyed, stolen or lost notes at your expense upon delivery
to the trustee of the mutilated notes, or evidence of the loss, theft or
destruction of the notes satisfactory to us and the trustee. In the case of a
lost, stolen or destroyed note, indemnity satisfactory to the trustee and us may
be required at the expense of the holder of such note before a replacement note
will be issued.
Calculations
in Respect of the Notes
We will
be responsible for making many of the calculations called for under the notes.
These calculations include, but are not limited to, determination of the closing
sale price of our Class A common stock in the absence of reported or quoted
prices, the applicable conversion rate and adjustments to the conversion price.
We will make all these calculations in good faith and, absent manifest error,
our calculations will be final and binding on the holders of notes. We will
provide a schedule of our calculations to the trustee, and the trustee is
entitled to rely conclusively on the accuracy of our calculations without
independent verification.
Governing
Law
The
indenture and the notes are governed by, and construed in accordance with, the
laws of the State of New York.
Concerning
the Trustee
Deutsche
Bank Trust Company Americas serves as the trustee under the indenture. The
trustee is an affiliate of the initial purchaser and is permitted to deal with
us and any of our affiliates with the same rights as if it were not trustee.
However, under the Trust Indenture Act, if the trustee acquires any conflicting
interest and there exists a default with respect to the notes, the trustee must
eliminate such conflict or resign.
The
holders of a majority in principal amount of all outstanding notes will have the
right to direct the time, method and place of conducting any proceeding for
exercising any remedy or power available to the trustee. However, any such
direction may not conflict with any law or the indenture, may not be unduly
prejudicial to the rights of another holder or the trustee and may not involve
the trustee in personal liability.
Book-Entry,
Delivery and Form
We
initially issued the notes in the form of one or more global securities. The
global security was deposited with the trustee as custodian for The Depository
Trust Company and registered in the name of a nominee of DTC. Except as set
forth below, the global security may be transferred, in whole and not in part,
only to DTC or another nominee of DTC. You may hold your beneficial interests in
the global security directly through DTC if you have an account with DTC or
indirectly through organizations that have accounts with DTC. Notes in
definitive, fully registered, certificated form, referred to as “certificated
securities,” will be issued only in certain limited circumstances described
below.
DTC has
advised us that it is:
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a
limited purpose trust company organized under the laws of the State of New
York;
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·
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a
member of the Federal Reserve
System;
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·
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a
“clearing corporation” within the meaning of the New York Uniform
Commercial Code; and
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·
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a
“clearing agency” registered pursuant to the provisions of Section 17A of
the Exchange Act.
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DTC was
created to hold securities of institutions that have accounts with DTC, referred
to as “participants,” and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. DTC’s
participants include securities brokers and dealers, which may include the
initial purchaser, banks, trust companies, clearing corporations and certain
other organizations. Access to DTC’s book-entry system is also available to
others such as banks, brokers, dealers and trust companies, referred to
as the
“indirect participants,” that clear through or maintain a custodial relationship
with a participant, whether directly or indirectly.
Pursuant
to procedures established by DTC upon the deposit of the global security with
DTC, DTC has credited, on its book-entry registration and transfer system, the
principal amount of notes represented by such global security to the accounts of
participants. The accounts credited were designated by the initial purchaser.
Ownership of beneficial interests in the global security are limited to
participants or persons that may hold interests through participants. Ownership
of beneficial interests in the global security are shown on, and the transfer of
those beneficial interests will be effected only through, records maintained by
DTC (with respect to participants’ interests), the participants and the indirect
participants. The laws of some jurisdictions may require that certain purchasers
of securities take physical delivery of such securities in definitive form.
These limits and laws may impair the ability to transfer or pledge
beneficial interests in the global security.
Owners of
beneficial interests in global securities who desire to convert their interests
into cash, shares of our Class A common stock or any combination thereof at our
election as described under “—Settlement upon Conversion” should contact their
brokers or other participants or indirect participants through whom they hold
such beneficial interests to obtain information on procedures, including proper
forms and cut-off times, for submitting requests for conversion.
So long
as DTC, or its nominee, is the registered owner or holder of a global security,
DTC or its nominee, as the case may be, will be considered the sole owner or
holder of the notes represented by the global security for all purposes under
the indenture and the notes. In addition, no owner of a beneficial interest in a
global security will be able to transfer that interest except in accordance with
the applicable procedures of DTC. Except as set forth below, as an owner of a
beneficial interest in the global security, you will not be entitled to have the
notes represented by the global security registered in your name, will not
receive or be entitled to receive physical delivery of certificated securities
and will not be considered to be the owner or holder of any notes under the
global security. We understand that under existing industry practice, if an
owner of a beneficial interest in the global security desires to take any action
that DTC, as the holder of the global security, is entitled to take, DTC
would authorize the participants to take such action, and the participants would
authorize beneficial owners owning through such participants to take such action
or would otherwise act upon the instructions of beneficial owners owning through
them.
We will
make payments of principal of, and any interest amounts, including any
additional amounts, if any, on the notes represented by the global security
registered in the name of and held by DTC or its nominee to DTC or its nominee,
as the case may be, as the registered owner and holder of the global security.
Neither we, the trustee nor any paying agent will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial interests in the global security or for maintaining, supervising
or reviewing any records relating to such beneficial interests.
We expect
that DTC or its nominee, upon receipt of any payment of principal of, and
premium, if any, or any interest amounts, including any additional amounts, if
any, on the global security, will credit participants’ accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of the global security as shown on the records of DTC or its nominee. We
also expect that payments by participants or indirect participants to owners of
beneficial interests in the global security held through such participants or
indirect participants will be governed by standing instructions and customary
practices and will be the responsibility of such participants or indirect
participants. We will not have any responsibility or liability for any aspect of
the records relating to, or payments made on account of, beneficial interests in
the global security for any note or for maintaining, supervising or reviewing
any records relating to such beneficial interests or for any other aspect of the
relationship between DTC and its participants or indirect participants or the
relationship between such participants or indirect participants and the owners
of beneficial interests in the global security owning through such
participants.
Transfers
between participants in DTC will be effected in the ordinary way in accordance
with DTC rules and will be settled in same-day funds.
DTC has
advised us that it will take any action permitted to be taken by a holder of
notes only at the direction of one or more participants to whose account the DTC
interests in the global security is credited and only in respect of such portion
of the aggregate principal amount of notes as to which such participant or
participants has or have given such direction. However, if DTC notifies us that
it is unwilling to be a depository for the global security or ceases to be a
clearing agency or there is an event of default under the notes, DTC will
exchange the global security for certificated securities which it will
distribute to its participants. In addition, if any event of
default
occurs and is continuing, any notes in book-entry form at DTC may, at the
holder's option, be exchanged for notes in certificated form registered in the
name of the beneficial owner or its nominee.
Although
DTC is expected to follow the foregoing procedures in order to facilitate
transfers of interests in the global security among participants of DTC, it is
under no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. Neither we nor the trustee will have
any responsibility, or liability, for the performance by DTC or the participants
or indirect participants of their respective obligations under the rules and
procedures governing their respective operations.
Restrictions
on Transfer; Legends
Until
this registration statement becomes effective, the notes and the Class A common
stock issuable upon conversion of the notes are subject to certain restrictions
on transfer set forth on the notes and in the indenture, and certificates
evidencing the notes or such stock will bear the legend regarding such transfer
restrictions set forth under “Notice to Investors; Transfer
Restrictions.”
TAXATION
The
following discussion summarizes the material U.S. federal income tax and
Liberian tax consequences to U.S. Holders and Non-U.S. Holders (both as defined
below) of the purchase, ownership and disposition of our notes and any of our
Class A common stock received upon their conversion. This summary
does not purport to deal with all aspects of U.S. federal income taxation or
Liberian taxation that may be relevant to an investor’s decision to purchase
notes, nor any tax consequences arising under the laws of any state, locality or
other foreign jurisdiction. This summary is not intended to be
applicable to all categories of investors, such as dealers in securities, banks,
thrifts or other financial institutions, insurance companies, regulated
investment companies, tax-exempt organizations, U.S. expatriates, persons that
hold the notes or Class A common stock as part of a straddle, conversion
transaction or hedge, persons who own 10% or more of our outstanding stock,
persons deemed to sell the notes or the Class A common stock under the
constructive sale provisions of the U.S. Internal Revenue Code of 1986, as
amended, or the Code, U.S. Holders (as defined below) whose “functional
currency” is other than the U.S. dollar, partnerships or other pass-through
entities, or persons who acquire or are deemed to have acquired the notes in an
exchange or for property other than cash, or holders subject to the alternative
minimum tax, each of which may be subject to special rules. In
addition, this discussion is limited to persons who hold the notes and Class A
common stock as “capital assets” (generally, property held for investment)
within the meaning of Code Section 1221.
U.S.
Federal Income Tax Considerations
In the
opinion of Seward & Kissel LLP, our U.S. counsel, the following are the
material U.S. federal income tax consequences to us of our activities and to
U.S. Holders and Non-U.S. Holders (both as defined below) of the notes and any
of our Class A common stock received upon their conversion. The
following discussion of U.S. federal income tax matters is based on the Code,
judicial decisions, administrative pronouncements, and existing and proposed
regulations issued by the U.S. Department of the Treasury, all of which are
subject to change, possibly with retroactive effect. Except as
otherwise noted, this discussion is based on the assumption that we will not
maintain an office or other fixed place of business within the United
States. References in the following discussion to “we” and “us” are
to Excel Maritime Carriers Ltd. and its subsidiaries on a consolidated
basis.
U.S.
Federal Income Taxation of U.S. Holders
As used
in this section, a “U.S. Holder” is a beneficial owner of notes or Class A
common stock that is: (1) an individual citizen or resident alien of the United
States, (2) a corporation or other entity that is taxable as a corporation,
created or organized under the laws of the United States or any state thereof or
the District of Columbia, (3) an estate, the income of which is subject to U.S.
federal income taxation regardless of its source, and (4) a trust, if a U.S.
court can exercise primary supervision over the administration of such trust and
one or more U.S. persons has the authority to control all substantial decisions
of the trust.
If a
partnership or other entity treated as a partnership for U.S. federal income tax
purposes holds the notes or the Class A common stock, the U.S. federal income
tax treatment of a partner will generally depend upon the status of the partner
and upon the activities of the partnership. Partners of partnerships
holding the notes or the Class A common stock are encouraged to consult their
own tax advisors.
Payment
of Interest
Interest
on a note generally will be includable in the income of a U.S. Holder as
ordinary income at the time such interest is received or accrued, in accordance
with such holder's regular method of accounting for U.S. federal income tax
purposes. Interest on a note will be income from sources outside the
United States and will generally constitute “passive category income” or, in the
case of certain U.S. Holders, “general category income” for U.S. foreign tax
credit limitation purposes.
Sale,
Exchange or Redemption of a Note or Conversion of a Note Solely in Exchange for
Cash
Upon the
sale, exchange or redemption of a note or conversion of a note solely in
exchange for cash, a U.S. Holder generally will recognize capital gain or loss
equal to the difference between (1) the amount of cash proceeds and the fair
market value of any property received on the sale, exchange or redemption,
except to the extent such amount is attributable to accrued interest not
previously included in income, which is taxable as ordinary income, and (2)
such U.S. Holder's adjusted tax basis in the note. A U.S. Holder's adjusted tax
basis in a note generally will equal the cost of the note to such U.S. Holder
plus the amount, if any, included in income on an adjustment to the conversion
rate of the notes, as described in "—Adjustments to Conversion Rate"
below. U.S. Holders are encouraged to consult their tax advisors
regarding the treatment of capital gains (which may be taxed at lower rates than
ordinary income for U.S. Holders who are individuals, trusts or estates) and
losses (the deductibility of which is subject to limitations). Such
gain or loss will generally be treated as gain or loss from sources within the
United States for U.S. foreign tax credit limitation purposes.
Adjustments
to Conversion Rate
The
conversion rate of the notes is subject to adjustment under certain
circumstances, as described under "Description of Notes—Conversion of
Notes—Conversion Price Adjustments." Section 305 of the Code and the Treasury
Regulations issued thereunder may treat the holders of the notes as having
received a constructive distribution, resulting in dividend treatment (as
described below) to the extent of the Company's current and/or accumulated
earnings and profits as determined under U.S. federal income tax principles, if,
and to the extent that, certain adjustments in the conversion rate (or certain
other corporate transactions) increase the proportionate interest of a holder of
notes in the fully diluted Class A common stock (particularly an adjustment to
reflect a taxable dividend to holders of Class A common stock), whether or not
such holder ever exercises its conversion privilege. Moreover, if there is not a
full adjustment to the conversion rate of the notes to reflect a stock
dividend or other event increasing the proportionate interest of the holders of
outstanding Class A common stock in the assets or earnings and profits of the
Company, then such increase in the proportionate interest of the holders of the
Class A common stock may be treated as a distribution to such holders, taxable
as a dividend (as described below) to the extent of the Company's current and/or
accumulated earnings and profits.
Conversion
of the Notes Into Class A Common Stock
If a U.S.
Holder receives a combination of shares of our Class A common stock and cash
upon conversion of a note, and such cash is not merely received in lieu of a
fractional share, the U.S federal income tax treatment to the U.S. Holder is
uncertain. For U.S. federal income tax purposes, the transaction will
be treated as an exchange of the note for a combination of cash and shares of
our common stock. Assuming the note is a “security” for U.S. federal
income tax purposes, which is likely, a U.S. Holder will be required to
recognize gain (but not loss) realized on this exchange in an amount equal to
the lesser of (i) the gain realized (being the excess, if any, of the fair
market value of the shares received plus the cash received over the adjusted tax
basis of the note exchanged therefor) and (ii) the cash
received. Such gain generally will be capital gain, and will be
long-term capital gain if the U.S. Holder’s holding period for the note is more
than one year at the time of the exchange. The U.S. Holder’s adjusted
tax basis in the shares of our Class A common stock received generally will
equal the adjusted tax basis in the note exchanged, decreased by the cash
received and increased by the amount of gain recognized. The U.S.
Holder’s holding period in the shares of our Class A common stock received upon
exchange of the note will include the holding period of the note so
exchanged.
Alternatively,
the cash payment might be treated as the proceeds from the redemption of a
portion of the note and taxed in the manner described above under “Sale,
Exchange or Redemption of a Note or Conversion of a Note Solely in Exchange for
Cash.” In such case, the U.S. Holder’s adjusted tax basis in the note
would be allocated pro rata between the shares of our common stock received
and the portion of the note that is treated as redeemed for cash. The
holding period for the shares of our Class A common stock received in the
conversion would include the holding period for the note.
In either
case, a U.S. Holder should be entitled to treat any cash received in the
exchange as applied first to the satisfaction of any accrued but unpaid interest
on the note. U.S. Holders are encouraged to consult their tax
advisors regarding the proper treatment to them of the receipt of a combination
of cash and shares of our Class A common stock upon a conversion.
Cash
received in lieu of a fractional share of Class A common stock upon conversion
will be treated as a payment in exchange for the fractional share of Class A
common stock. Accordingly, the receipt of cash in lieu of a fractional share of
Class A common stock generally will result in capital gain or loss, measured by
the difference between the cash received for the fractional share and the U.S.
Holder's adjusted tax basis in the fractional share, and will be taxable as
described below under "—Tax Consequences of Ownership of the Common Stock—Sale,
Exchange or Other Disposition of Common Stock."
Taxation
of Distributions on Class A Common Stock
Subject
to the discussion below under “Passive Foreign Investment Company Status and
Significant Tax Consequences,” distributions, if any, paid on our Class A common
stock generally will be includable in a U.S. Holder’s income as dividend income
to the extent made from our current or accumulated earnings and profits, as
determined under U.S. federal income tax principles. Distributions in
excess of our earnings and profits will be treated first as a nontaxable return
of capital to the extent of the U.S. Holder’s tax basis in his common stock on a
dollar for dollar basis and thereafter as capital gain. Such
distributions will not be eligible for the dividends-received deduction, but may
qualify for taxation at preferential rates (for taxable years beginning on or
before December 31, 2010) in the case of a U.S. Holder which is an individual,
trust or estate, provided that the Class A common stock is traded on an
established securities market in the United States (such as the New York Stock
Exchange on which our Class A common stock is currently traded) and such holder
meets certain holding period and other requirements, and provided further that
we do not constitute a passive foreign investment company, as described
below. Legislation has been recently introduced in the U.S. Congress
which, if enacted in its present form, would preclude our dividends from
qualifying for such preferential rates prospectively from the date of the
enactment. Dividends paid on our Class A common stock will be income
from sources outside the United States and will generally constitute “passive
category income” or, in the case of certain U.S. Holders, “general category
income” for U.S. foreign tax credit limitation purposes.
Sale,
Exchange or Other Disposition of Class A common stock
Subject
to the discussion below under “Passive Foreign Investment Company Status and
Significant Tax Consequences,” upon the sale, exchange or other disposition of
Class A common stock, a U.S. Holder generally will recognize capital gain or
capital loss equal to the difference between the amount realized on such sale or
exchange and such holder’s adjusted tax basis in such Class A common
stock. U.S. Holders are encouraged to consult their tax advisors
regarding the treatment of capital gains (which may be taxed at lower rates than
ordinary income for U.S. Holders who are individuals, trusts or estates) and
losses (the deductibility of which is subject to limitations). A U.S.
Holder's gain or loss will generally be treated (subject to certain exceptions)
as gain or loss from sources within the United States for U.S. foreign tax
credit limitation purposes.
Passive
Foreign Investment Company Status and Significant Tax Consequences
Special
U.S. federal income tax rules apply to a U.S. Holder that holds stock in a
foreign corporation classified as a passive foreign investment company for U.S.
federal income tax purposes. In general, we will be treated as a
passive foreign investment company with respect to a U.S. Holder of our Class A
common stock if, for any taxable year in which such holder held our Class A
common stock, either:
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•
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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
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•
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at
least 50% of the average value of the assets held by the corporation
during such taxable year produce, or are held for the production of,
passive income.
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Based on
our current operations and future projections, we do not believe that we are,
nor do we expect to become, a passive foreign investment company with respect to
any taxable year. Although there is no legal authority directly on
point, our belief is based principally on the position that, for purposes of
determining whether we are a passive foreign investment company, the gross
income we derive or are deemed to derive from the time chartering and voyage
chartering activities of our wholly-owned subsidiaries should constitute active
income from the performance of services rather than passive,
rental income. Correspondingly, such income should not
constitute passive income, and the assets that we or our wholly-owned
subsidiaries own and operate in connection with the production of such income,
in particular, the vessels, should not constitute passive assets for
purposes of determining whether we were a passive foreign investment
company. Although we believe there is substantial legal authority
supporting our position consisting of case law and Internal Revenue Service, or
IRS, pronouncements concerning the characterization of income derived from time
charters and voyage charters as services income for other tax purposes, the IRS
or a court could disagree with our position. In addition, although we
intend to conduct our affairs in a manner to avoid being classified as a passive
foreign investment company with respect to any taxable year, we cannot assure
you that the nature of our operations will not change in the
future.
If we
were to be treated as a passive foreign investment company for any taxable year,
a U.S. Holder of our Class A common stock would be subject to a disadvantageous
tax regime. Among other things, upon certain distributions by us or
the disposition of the Class A common stock, a U.S. Holder would be required to
treat such income as ordinary income and pay an interest charge on the amount of
taxes deferred during the U.S. Holder’s holding period of the Class A common
stock.
A U.S.
Holder is encouraged to consult its tax advisor regarding the potential tax
consequences of owning the Class A common stock if we were to be treated as a
passive foreign investment company.
U.S.
Federal Income Taxation of Non-U.S. Holders
A
“Non-U.S. Holder” is a beneficial owner of the notes or Class A common stock
that is neither a “U.S. Holder,” as defined above, nor a partnership or other
entity treated as a partnership for U.S. federal income tax
purposes. In general, payments on the notes or the Class A common
stock to a Non-U.S. Holder and gain realized by a Non-U.S. Holder on the sale,
exchange, redemption or conversion of the notes or the Class A common stock will
not be subject to U.S. federal income or withholding tax, unless:
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(1)
|
such
income is effectively connected with a trade or business conducted by such
Non-U.S. Holder in the United States (or, in the case of an applicable tax
treaty, is attributable to the Non-U.S. Holder's permanent establishment
in the United States),
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|
(2)
|
in
the case of gain, such Non-U.S. Holder is a nonresident alien individual
who is present in the United States for more than 182 days in the taxable
year of the sale of the notes and certain other requirements are met,
or
|
|
(3)
|
the
certification described below (see "Information Reporting and Backup
Withholding") has not been fulfilled with respect to such Non-U.S.
Holder.
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Except as
may otherwise be provided in an applicable income tax treaty between the United
States and a foreign country, a Non-U.S. Holder will generally be subject to tax
in the same manner as a U.S. Holder with respect to payments of interest if such
payments are effectively connected with the conduct of a trade or business by
the Non-U.S. Holder in the United States. Such a Non-U.S. Holder will be
required to provide the withholding agent with a properly executed IRS Form
W-8ECI. In addition, if the Non-U.S. Holder is a corporation, such holder may be
subject to a branch profits tax at a 30% rate (or such lower rate provided by an
applicable tax treaty) of its effectively connected earnings and profits for the
taxable year, subject to certain adjustments. A Non-U.S. Holder will not be
considered to be engaged in a trade or business within the United States for
U.S. federal income tax purposes solely by reason of holding the notes or the
Class A common stock.
Information
Reporting and Backup Withholding
Under
certain circumstances, the Code requires "information reporting" annually to the
IRS and to each U.S. Holder and Non-U.S. Holder (collectively, a "Holder"), and
"backup withholding" with respect to certain payments made on or with respect to
the notes or the Class A common stock. Certain Holders are exempt
from backup withholding, including corporations, tax-exempt organizations,
qualified pension and profit sharing trusts, and individual retirement accounts
that provide a properly completed IRS Form W-9. Backup withholding will apply to
a non-exempt U.S. Holder if such U.S. Holder (1) fails to furnish its Taxpayer
Identification Number, or TIN, which, for an individual would be his or her
Social Security Number, (2) furnishes an incorrect TIN, (3) is notified by the
IRS that it has failed to properly report payments of interest and dividends, or
(4) under certain circumstances, fails to certify, under penalties of perjury,
that it has furnished a correct TIN and has not been notified by the IRS
that it is subject to backup withholding for failure to report interest and
dividend payments.
A
Non-U.S. Holder which receives payments made on or with respect to the notes or
the Class A common stock through the U.S. office of a broker, will be not be
subject to either IRS reporting requirements or backup withholding if such
Non-U.S. Holder provides to the withholding agent either IRS Form W-8BEN or
W-8IMY, as applicable, together with all appropriate attachments, signed under
penalties of perjury, identifying the Non-U.S. Holder and stating that the
Non-U.S. Holder is not a U.S. person.
The
payment of the proceeds on the disposition of the notes or the Class A common
stock to or through the U.S. office of a broker generally will be subject to
information reporting and backup withholding unless the Holder provides
the certification described above or otherwise establishes an exemption from
such reporting and withholding requirements.
Backup
withholding is not an additional tax. Rather, the U.S. federal income tax
liability of persons subject to backup withholding will be offset by the amount
of tax withheld. If backup withholding results in an overpayment of U.S. federal
income tax, a refund or credit may be obtained from the IRS, provided that
certain required information is furnished. Copies of the information returns
reporting such interest and withholding may be made available to the tax
authorities in the country in which a Non-U.S. Holder is a resident under the
provisions of an applicable income tax treaty or agreement.
Taxation
of the Company’s Operating Income
In
General
Unless
exempt from U.S. federal income taxation under the rules discussed below, a
foreign corporation is subject to U.S. federal income taxation in respect of any
income that is derived from the use of vessels (e.g., through a contract of
affreightment), from the hiring or leasing of vessels for use on a time, voyage
or bareboat charter basis, from the participation in a pool, partnership,
strategic alliance, joint operating agreement, code sharing arrangements or
other joint venture it directly or indirectly owns or participates in that
generates such income, or from the performance of services directly related to
those uses, which we refer to as "shipping income," to the extent that the
shipping income is derived from sources within the United
States. Shipping income includes income derived both from vessels
which are owned by a foreign corporation as well as those vessels that are
chartered in by a foreign corporation. For these purposes, 50% of
shipping income that is attributable to transportation that begins or ends, but
that does not both begin and end, in the United States constitutes income from
sources within the United States, which we refer to as "U.S.-source shipping
income."
Shipping
income attributable to transportation that both begins and ends in the United
States is considered to be 100% from sources within the United
States. We are not permitted by law to engage in transportation that
produces income which is considered to be 100% from sources within the United
States.
Shipping
income attributable to transportation exclusively between non-U.S. ports will be
considered to be 100% derived from sources outside the United States. Shipping
income derived from sources outside the United States will not be subject to any
U.S. federal income tax.
In the
absence of exemption from tax under Code Section 883, our gross U.S. source
shipping income would be subject to a 4% tax imposed without allowance for
deductions as described below.
Exemption of Operating
Income from U.S. Federal Income Taxation
Under
Code Section 883 and the regulations thereunder, we will be exempt from U.S.
federal income taxation on our U.S.-source shipping income if:
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(1)
|
we
are organized in a foreign country (our "country of organization") that
grants an "equivalent exemption" to corporations organized in the United
States; and
|
(2) either
|
(A)
|
more
than 50% of the value of our stock is owned, directly or indirectly, by
individuals who are "residents" of our country of organization or of
another foreign country that grants an "equivalent exemption" to
corporations organized in the United States, which we refer to as the "50%
Ownership Test," or
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(B)
|
our
stock is "primarily and regularly traded on an established securities
market" in our country of organization, in another country that grants an
"equivalent exemption" to United States corporations, or in the United
States, which we refer to as the "Publicly-Traded
Test."
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Liberia,
the Marshall Islands and Cyprus, the jurisdictions where we and our ship-owning
subsidiaries are incorporated, each has been formally recognized by the IRS as a
foreign country that grants an “equivalent exemption”
to United States corporations. Liberia was so recognized based on a
Diplomatic Exchange of Notes entered into with the United States in 1988. It is
not clear whether the IRS will still recognize Liberia as an "equivalent
exemption" jurisdiction as a result of the New Act, discussed below, which on
its face does not grant the requisite equivalent exemption to United States
corporations. If the IRS does not so recognize Liberia as an "equivalent
exemption" jurisdiction, we and our Liberian subsidiaries will not qualify for
exemption under Code section 883 and would not have so qualified for 2002 and
subsequent years. Assuming, however, that the New Act does not nullify the
effectiveness of the Diplomatic Exchange of Notes, the IRS will continue to
recognize Liberia as an equivalent exemption jurisdiction and we will be exempt
from United States federal income taxation with respect to our U.S. source
shipping income if either the 50% Ownership Test or the Publicly Traded Test is
met. As discussed below, because our Class A common shares are
publicly traded, it may be difficult for us to establish that we satisfy the 50%
Ownership Test.
Treasury
regulations issued under Code section 883 provide, in pertinent part, that stock
of a foreign corporation will be considered to be “primarily traded” on an
established securities market if the number of shares that are traded during any
taxable year on that market exceeds the number of shares traded, during that
year on any other established securities market. Our Class A common shares are
“primarily traded” on the New York Stock Exchange.
Under the
regulations, stock of a foreign corporation is considered to be “regularly
traded” on an established securities market if (i) one or more classes of its
stock representing 50 percent or more of its outstanding shares, by voting power
and value, is listed on the market and is traded on the market, other than in
minimal quantities, on at least 60 days during the taxable year; and (ii) the
aggregate number of shares of its stock traded during the taxable year is at
least 10% of the average number of shares of the stock outstanding during the
taxable year. Our shares are not “regularly traded” within the
meaning of the regulations because of the voting power held by our Class B
common shares. As a result, we do not satisfy the Publicly-Traded
Test.
Under the
regulations, if we do not satisfy the Publicly-Traded Test and therefore are
subject to the 50% Ownership Test, we would have to satisfy certain
substantiation requirements regarding the identity of our shareholders in order
to qualify for the Code section 883 exemption. These requirements are
onerous and due to the publicly-traded nature of our stock, we do not believe
that we will be able to satisfy them. Since we do not satisfy the
Publicly-Traded Test or the 50% Ownership Test, we will not qualify for the
section 883 exemption.
Section
887
Since we
do not qualify for exemption under section 883 of the Code, our U.S. source
shipping income, to the extent not considered to be “effectively connected” with
the conduct of a U.S. trade or business, as discussed below, is subject to a 4%
tax imposed by section 887 of the Code on a gross basis, without the benefit of
deductions. Since under the sourcing rules described above, no more than 50% of
our shipping income is treated as being derived from U.S. sources, the
maximum effective rate of U.S. federal income tax on our shipping income will
never exceed 2% under the 4% gross basis tax regime. This tax was
$0.4 million for the tax year 2006.
Effectively
Connected Income
To the
extent our U.S. source shipping income is considered to be “effectively
connected” with the conduct of a U.S. trade or business, as described below, any
such “effectively connected” U.S. source shipping income, net of applicable
deductions, would be subject to the U.S. federal corporate income tax currently
imposed at rates of up to 35%. In addition, we may be subject to the 30% “branch
profits” tax on earnings effectively connected with the conduct of such trade or
business, as determined after allowance for certain adjustments, and on certain
interest paid or deemed paid attributable to the conduct of its U.S. trade or
business.
Our U.S.
source shipping income would be considered “effectively connected” with the
conduct of a U.S. trade or business only if:
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•
|
we
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 of our U.S. source shipping income 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.
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We do not
intend to have, or permit circumstances that would result in having any vessel
operating to the United States on a regularly scheduled basis. Based on the
foregoing and on the expected mode of our shipping operations and other
activities, we believe that none of our U.S. source shipping income will be
“effectively connected” with the conduct of a U.S. trade or
business.
United
States Taxation of Gain on Sale of Vessels
We will
not be subject to United States federal income taxation with respect to gain
realized on a sale of a vessel, provided the sale is considered to occur outside
of the United States under United States federal income tax
principles. In general, a sale of a vessel will be considered to
occur outside of the United States for this purpose if title to the vessel, and
risk of loss with respect to the vessel, pass to the buyer outside of the United
States. It is expected that any sale of a vessel by us will be
considered to occur outside of the United States.
Liberian
Tax Considerations
The
Company and certain of its subsidiaries are incorporated in the Republic of
Liberia. The Republic of Liberia enacted a new income tax act
generally effective as of January 1, 2001 (“New Act”). In contrast to
the income tax law previously in effect since 1977 (“Prior Law”), which the New
Act repealed in its entirety, the New Act does not distinguish between the
taxation of non-resident Liberian corporations, such as ourselves and our
Liberian subsidiaries, who conduct no business in Liberia and were wholly
exempted from tax under Prior Law, and the taxation of ordinary resident
Liberian corporations.
In 2004,
the Liberian Ministry of Finance issued regulations pursuant to which a
non-resident domestic corporation engaged in international shipping such as
ourselves will not be subject to tax under the new act retroactive to January 1,
2001 (the “New Regulations”). In addition, the Liberian Ministry of
Justice issued an opinion that the new regulations were a valid exercise of the
regulatory authority of the Ministry of Finance. Therefore, assuming
that the New Regulations are valid, we and our Liberian subsidiaries will
be wholly exempt from Liberian income tax as under Prior Law.
If we
were subject to Liberian income tax under the New Act, we and our Liberian
subsidiaries would be subject to tax at a rate of 35% on our worldwide
income. As a result, our net income and cash flow would be materially
reduced by the amount of the applicable tax.
If we
were subject to Liberian income tax under the New Act, then interest paid on the
notes would be subject to Liberian withholding tax. In addition, upon
a conversion of the notes into Class A common stock, such shareholder would be
subject to Liberian withholding tax on dividends paid by us at rates ranging
from 15% to 20%.
THE
FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF U.S. FEDERAL AND LIBERIAN
INCOME TAXATION THAT MAY BE RELEVANT TO YOU IN LIGHT OF YOUR PARTICULAR
CIRCUMSTANCES. YOU ARE ENCOURAGED TO CONSULT YOUR OWN TAX ADVISOR AS
TO THE PARTICULAR TAX CONSEQUENCES TO YOU OF ACQUIRING, HOLDING, CONVERTING OR
OTHERWISE DISPOSING OF THE NOTES AND SHARES OF OUR CLASS A COMMON STOCK,
INCLUDING THE EFFECT AND APPLICABILITY OF LIBERIAN AND OTHER FOREIGN TAX
LAWS.
DESCRIPTION
OF CAPITAL STOCK
Authorized
and Outstanding Capital Stock
Under our
Amended and Restated Articles of Incorporation (the “Articles”), our authorized
capital stock consists of 100,000,000 Class A common shares, par value $0.01 per
share, and 1,000,000 Class B common shares, par value $0.01 per share, of which,
as of June 9, 2008, 43,525,206 are issued and outstanding in the aggregate in
Class A and Class B, consisting of 43,389,880 and 135,326 outstanding shares,
respectively, and 5,000,000 preferred shares, par value $0.1 per share, of which
none are issued and outstanding. All of our shares are in registered
form. The following summary description of the terms of our capital
stock is not complete and is qualified by reference to our Articles and By-Laws,
copies of which we have filed as exhibits to periodic filings made by us with
the Commission, the certificate of designations which we will file with the
Commission at the time of any offering of our preferred stock, and information
contained in our filings with the Commission to the extent these filings are
incorporated by reference herein as set forth in “Where You Can Find Additional
Information.”
We
granted an option to purchase Class A common stock, as described in “Description
of Capital Stock — Share History.” We have not granted any other
options or warrants, but may do so in the future.
Share
History
In
October 1997, certain of our shareholders purchased approximately 65% of the
common shares of B+H Maritime Carriers Ltd., a Liberian corporation formed in
November 1988 that had disposed of its assets and ceased
operations. We changed our name to Excel Maritime Carriers Ltd. on
April 28, 1998. We effected a 1–for–20 reverse stock split on May 8,
1998, resulting in 221,806 common shares outstanding. Thereafter, our
common shares were approved for listing and commenced trading on the American
Stock Exchange under the symbol “EXM.” On May 22, 1998, we
issued 6,350,000 common shares resulting in 6,571,806 common shares
outstanding.
On August
31, 1999, our shareholders approved amendments to our Articles increasing the
number of shares we may issue to an aggregate of 55,000,000 shares as follows:
5,000,000 shares of Preferred Stock (par value $0.1 per share), 49,000,000 Class
A common shares (par value $0.01 per share), and 1,000,000 Class B common shares
(par value $0.01 per share).
During
September and October 1999, we issued a total of 4,924,347 Class A common shares
as consideration for the acquisition of the shares of four holding companies
that each owned one vessel. On December 27, 1999, we issued to our
existing shareholders a share dividend of one Class B common share for every 100
Class A common shares held by the existing shareholders. Class B
common shares entitle the shareholder to 1,000 votes per share and do not have
an active trading market. The Class B common shares are not listed on
any exchange or quotation system.
On March
21, 2002, we paid a one-time cash dividend of $2.15 per share. During that year,
we sold 51,028 of our treasury shares. During 2003, we acquired 1,300 of our
Class A common shares and 14 of our Class B common shares for an average price
of $1.15.
On
October 4, 2004, we granted Mr. Georgakis, then our Chief Executive Officer,
President and a Director, the option to purchase 100,000 shares of Class A
common stock. Following his resignation, all 100,000 options were
forfeited, and all the options were subsequently
cancelled.
On
December 13, 2004, we issued 2,200,000 shares of Class A common stock at $25.00
per share, and on March 21, 2005, we issued 5,899,000 shares of our Class A
common stock at $21.00 per share in transactions registered pursuant to the
Securities Act.
On March
2, 2005, we agreed to issue 205,442 shares of our Class A common stock to Excel
Management and to issue to Excel Management additional shares at any time before
January 1, 2009 if we issue additional shares of Class A common stock to any
other party for any reason, such that the number of additional Class A common
stock to be issued to Excel Management together with the 205,442 shares of our
Class A common stock to be issued to Excel Management, in the aggregate, equals
1.5% of our total outstanding Class A common stock after taking into account the
third party issuance and the shares to be issued to Excel Management under the
anti-dilution provisions of the termination agreement, in exchange for
terminating the management agreement mentioned above and in exchange
for a one-time cash payment of $2,023,846. On March 2, 2007, Excel
Management informed us of its intention to consummate the transaction regarding
the Management Termination agreement mentioned above. On June 19, 2007, we
received payment in an amount of approximately $2.0 million upon issuance of the
initial 205,442 shares and the 92,961 anti-dilution shares required to be issued
as a result of the March 21, 2005 share issuance to other third parties, total
298,403 shares.
As of
September 15, 2005, our Class A common shares have been listed on the NYSE under
the symbol “EXM.”
On
February 9, 2006, we granted Mr. Panayotides, the Chairman of our Board of
Directors, 20,380 Class A or Class B shares at his option. On July 28, 2006,
upon exercise of his option, we issued 20,380 shares of our Class B common stock
to Mr. Panayotides.
On May
22, 2007, we declared a quarterly cash dividend of $0.20 per share for the first
quarter 2007, payable on June 15, 2007 to shareholders of record on June 1,
2007.
On June
19, 2007, we issued 298,403 shares of Class A common stock to Excel Management
pursuant to an existing contractual obligation in connection with the
termination of our management agreement with Excel Management. We
received approximately $2.0 million from Excel Management for these
shares. Until December 1, 2008, we are obligated to issue additional
shares to Excel Management if we issue Class A common stock, as described in
“Related Party Transactions—Technical Management of Our Fleet by
Maryville.”
On
August 13, 2007, we declared a quarterly cash dividend of $0.20 per share for
the second quarter 2007, payable on September 10, 2007 to shareholders of record
as of August 31, 2007.
On
October 16, 2007, our shareholders approved amendments to our Articles
increasing the number of shares we may issue to an aggregate of 106,000,000
shares as follows: 5,000,000 shares of Preferred Stock (par value $0.1 per
share), 100,000,000 Class A common shares (par value $0.01 per share), and
1,000,000 Class B common shares (par value $0.01 per share).
On
November 13, 2007, we declared a quarterly cash dividend of $0.20 per share for
the third quarter 2007, payable on December 11, 2007 to shareholders of record
on November 30, 2007.
In
February and March 2008, based on proposals of the Compensation committee and
following the approval of the Company’s Board of Directors, a cash bonus of $0.9
million was granted to the Company’s executive officers and the chairman of the
Board of Directors which was accrued and is included in General and
administrative expenses in the accompanying 2007 consolidated statement of
income. In addition, 10,996 shares were also granted to the executive officers
in the form of restricted stock and 10,420 restricted shares were granted to the
chairman of the Board of Directors. Half of the shares will vest on the first
anniversary of the grant date and the remainder on the second anniversary of the
grant date. The Chairman has the option to take the restricted stock in either
Class A or Class B shares.
On March
17, 2008, we declared a quarterly cash dividend of $0.20 per share for the
fourth quarter 2007, payable on April 11, 2008 to shareholders of record on
March 31, 2008. This dividend was paid on April 11, 2008.
On 10
April, 2008, the Compensation Committee proposed and agreed that 500,000 of
restricted stock were to be granted to the Chairman of Excel, Mr. Gabriel
Panayotides in recognition of his initiatives and efforts deemed to be
outstanding and crucial to the success of the Company during 2007. 50% of the
shares will be vested on December 31, 2008 and the remaining 50% will vest on
December 31, 2009, provided that Mr. Panayotides continues to serve as a
director of the Company. All stock awarded will be in Class A shares. The Board
of Directors approved the grant on April 11, 2008.
On April
15, 2008, we completed our acquisition of Quintana, and, pursuant to the Merger
Agreement, each issued and outstanding share of Quintana common stock was
converted into the right to receive (i) $13.00 in cash and (ii) 0.3979 shares of
our Class A common stock. Total compensation paid by us for the acquisition of
Quintana was $768 in cash and 23,496,308 million shares of our Class A common
stock.
On May
19, 2008, we declared a quarterly cash dividend of $0.20 per share for the first
quarter 2008, payable on June 16, 2008 to shareholders of record on June 2,
2008.
We have
elected to satisfy our conversion obligation with respect to the remaining term
of the notes exclusively in cash for 100% of the principal amount of the notes
converted, and we have elected also to satisfy exclusively in cash any remaining
amount with respect to such converted notes.
We have
not granted any options or warrants to acquire any of our capital stock other
than those described above, but may do so in the future.
Common
Shares
We have
both Class A common shares and Class B common shares. As of the date
of this prospectus, we have 43,525,206 common shares outstanding in
the aggregate, in two separate classes, 43,389,880 Class A common shares and
135,326 Class B common shares. The holders of the Class A shares are
entitled to one vote per share on each matter requiring the approval of the
holders of our common shares, whether pursuant to our Articles, our Bylaws, the
Liberian Business Corporation Act or otherwise. The holders of Class
B shares are entitled to 1,000 votes per Class B share. Subject to
preferences that may be applicable to any outstanding preferred shares, holders
of common shares are entitled to receive ratably all dividends, if any, declared
by the board of directors out of funds legally available for
dividends. Holders of common shares do not have conversion,
redemption or preemptive rights to subscribe to any of our
securities. All outstanding common shares are fully paid and
nonassessable. The rights, preferences and privileges of holders of
common shares are subject to the rights of the holders of any preferred shares
which we may issue in the future. Our Class A common shares are
listed on the NYSE under the symbol “EXM.”
SELLING
SECURITYHOLDERS
We
originally issued the notes in a private placement in October 2007 to Deutsche
Bank Securities Inc. (the “Initial Purchaser”). The Initial Purchaser resold the
notes to purchasers it reasonably believed to be “qualified institutional
buyers” in transactions exempt from registration pursuant to Rule 144A under the
Securities Act. The selling securityholders listed below and, to the extent
permitted, their transferees, pledgees, donees, assignees, successors,
partnership distributees and others who later hold any of the selling
securityholders’ interests, to which we collectively refer as the selling
securityholders, may from time to time offer and sell any and all of the notes
and the Class A common shares issuable upon conversion of the notes, including
the ordinary shares represented by the Class A common shares, pursuant to this
prospectus.
The
following table and related footnotes shows information received by us on or
prior to June 1, 2008, with respect to the selling securityholders and the
principal amounts of notes and the Class A common shares issuable upon
conversion of the notes. We prepared this table based on the information
supplied to us by or on behalf of the selling securityholders named in the
table. In addition, we may in the future file prospectus supplements
listing additional selling securityholders for the notes and the Class A common
shares into which notes held by such selling securityholders may be
converted.
The
selling securityholders may offer all, some or none of the notes or the Class A
common shares issuable upon conversion of the notes, including the ordinary
shares represented by the Class A common shares. Thus, we cannot estimate the
amount of the notes or ordinary shares that will be held by the selling
securityholders upon consummation of any sales. The column showing ownership
after completion of the offering assumes that the selling securityholders will
sell all of the securities offered by this prospectus. Unless set forth below,
none of the selling securityholders has held any position or office or had any
material relationship with us or our affiliates within the past three years. All
of the notes were “restricted securities” under the Securities Act prior to
this registration. In addition, the selling securityholders identified below may
have sold, transferred or otherwise disposed of all or a portion of their notes
since the date on which they provided the information about their notes in
transactions exempt from the registration requirements of the Securities
Act.
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Name
|
|
Aggregate
Principal Amount of Notes at
Maturity
that May Be Sold
|
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Ordinary
Shares Registered Hereby(1)
|
|
Ordinary
Shares
Owned After
Completion
of the Offering
|
|
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S.A.C.
Arbitrage Fund, LLC (2)
|
|
$
|
6,500,000
|
|
71,193
|
|
—
|
JMG
Capital Partners, LP(3)
|
|
$
|
13,000,000
|
|
142,387
|
|
—
|
Peoples
Benefit Life Insurance Company Teamsters(4)
|
|
$
|
5,250,000
|
|
57,502
|
|
—
|
Bank
of America Pension Plan(5)
|
|
$
|
3,000,000
|
|
32,858
|
|
—
|
Retail
Clerk Pension Trust #2(6)
|
|
$
|
1,000,000
|
|
10,952
|
|
—
|
DeepRock
& Co.(7)
|
|
$
|
1,000,000
|
|
10,952
|
|
—
|
John
Deere Pension Trust(8)
|
|
$
|
1,000,000
|
|
10,952
|
|
—
|
Equity
Overlay Fund, LLC(9)
|
|
$
|
1,000,000
|
|
10,952
|
|
—
|
Retail
Clerk Pension Trust #1(10)
|
|
$
|
1,250,000
|
|
13,691
|
|
—
|
Institutional
Benchmark Series (Master Feeder) Ltd., in respect of Camden Convertible
Arbitrage Series(11)
|
|
$
|
1,250,000
|
|
13,691
|
|
—
|
Redbourn
Partners Ltd. (12)
|
|
$
|
4,250,000
|
|
46,549
|
|
—
|
Vicis
Capital Master Fund (13)
|
|
$
|
9,000,000
|
|
98,576
|
|
—
|
MAN
MAL I Limited (14)
|
|
$
|
806,000
|
|
8,828
|
|
—
|
Citadel
Equity Fund, Ltd.(15)
|
|
$
|
9,500,000
|
|
104,052
|
|
—
|
Polygon
Global Opportunities Master Fund(16)
|
|
$
|
6,500,000
|
|
71,993
|
|
—
|
Morgan
Stanley & Co. Incorporated(17)
|
|
$
|
3,000,000
|
|
32,858
|
|
98,111
|
Wachovia
Securities International Ltd.(18)
|
|
$
|
7,300,000
|
|
79,956
|
|
—
|
Fore
Convertible Master Fund, Ltd. (19)
|
|
$
|
1,804,000
|
|
19,759
|
|
—
|
Fore
Multi Strategy Master Fund Ltd. (20)
|
|
$
|
514,000
|
|
5,629
|
|
—
|
Fore
ERISA Fund, Ltd. (21)
|
|
$
|
236,000
|
|
2,584
|
|
—
|
AVK
(Avent Claymore) Fund (22) |
|
$ |
2,000,000
|
|
21,905
|
|
—
|
(1)
Assumes conversion of all of the holder’s notes at the initial conversion
rate of 10.9529 of our Class A common shares per $1,000 principal amount
of notes. However, this conversion price will be subject to adjustment as
described under the sections titled “Description of the Notes—Conversion
Rights” and “Description of the Notes—Make Whole Premium Upon a
Fundamental Change.” As a result, the amount of ordinary shares underlying
the Class A common shares issuable upon conversion of the notes may
increase or decrease in the future.
|
(2)
The mailing address for S.A.C Arbitrage Fund, LLC is 72 Cummings Point Rd,
Stamford, CT 06902.
|
(3)
The mailing address for JMG Capital Partners, LP is 11601 Wilshire Blvd,
#2180, Los Angeles, CA 90025.
|
(4)
The mailing address for Peoples Benefit Life Insurance Company Teamsters
is 2049 Century Park East, Suite 330, Los Angeles, CA
90067.
|
(5)
The mailing address for Bank of America Pension Plan is 2049 Century Park
East, Suite 330, Los Angeles, CA 90067.
|
(6)
The mailing address for Retail Clerk Pension Trust #2 is 2049 Century Park
East, Suite 330, Los Angeles, CA 90067.
|
(7)
The mailing address for DeepRock & Co. is 2049 Century Park East,
Suite 330, Los Angeles, CA 90067.
|
(8)
The mailing address for John Deere Pension Trust is 2049 Century Park
East, Suite 330, Los Angeles, CA 90067.
|
(9)
The mailing address for Equity Overlay Fund, LLC is 2049 Century Park
East, Suite 330, Los Angeles, CA 90067.
|
(10)
The mailing address for Retail Clerk Pension Trust #1 is 2049 Century Park
East, Suite 330, Los Angeles, CA 90067.
|
(11)
The mailing address for Institutional Benchmark Series (Master Feeder)
Ltd., in respect of Camden Convertible Arbitrage Series is 2049 Century
Park East, Suite 330, Los Angeles, CA 90067.
|
(12)
The mailing address for Redbourn Partners Ltd. is 2049 Century Park East,
Suite 330, Los Angeles, CA 90067.
|
(13)
The mailing address for Vicis Capital Master Fund is 126 East 56th Street,
Suite 700, New York, NY 10022.
|
(14)
The mailing address for MAN MAL I Limited is 280 Park Ave. 43rd Floor New
York, NY 10017.
|
(15)
The mailing address for Citadel Equity Fund, Ltd. is 131 South Dearborn
Street, Chicago, IL 60603.
|
(16)
The mailing address for Polygon Global Opportunities Master Fund is 399
Park Avenue, 22nd FL, New York, NY 10022.
|
(17)
The mailing address for Morgan Stanley & Co. Incorporated is 1221
Avenue of the Americas, 40th Floor, New York, NY 10017.
|
(18)
The mailing address for Wachovia Securities International Ltd. is 1525 W
Wt Harris Blvd, Charlotte, NC 28262.
|
(19)
The mailing address for Fore Convertible Master Fund, Ltd. is 280 Park
Ave. 43rd Floor New York, NY 10017.
|
(20)
The mailing address for Fore Multi Strategy Master Fund Ltd. is 280 Park
Ave. 43rd Floor New York, NY 10017.
|
(21)
The mailing address for Fore ERISA Fund, Ltd. is 280 Park Ave. 43rd Floor
New York, NY 10017.
|
(22)
The mailing address for AVK (Advent Claymore) Fund is 1065 Ave. of the
Americas, 31st Floor, New York, NY 10018. |
Sales
of Securities by the Selling Securityholders
We
will not receive any of the proceeds of the sale of the notes or the Class A
common shares issuable upon conversion of the notes offered by the selling
securityholders pursuant to this prospectus. The notes and Class A common shares
offered by the selling securityholders pursuant to this prospectus may be sold
from time to time to purchasers:
|
•
|
|
directly
by the selling securityholders, or
|
|
|
|
|
|
•
|
|
through
underwriters, broker-dealers or agents who may receive compensation in the
form of discounts, concessions or commissions from the selling
securityholders or the purchasers of the notes or the Class A common
shares offered by the selling securityholders pursuant to this
prospectus.
|
The
aggregate proceeds to the selling securityholders from the sale of the notes or
Class A common shares issuable upon conversion of the notes offered by the
selling securityholders pursuant to this prospectus will be the purchase price
paid for such securities, less discounts and commissions, if any. Each of the
selling securityholders reserves the right to accept and, together with their
agents from time to time, reject, in whole or in part any proposed purchase of
notes or Class A common shares issuable upon conversion of the notes to be made
directly or through agents.
The
selling securityholders and any such broker-dealers or agents who participate in
the distribution of the notes or Class A common shares issuable upon conversion
of the notes offered by this prospectus may be deemed to be “underwriters”
within the meaning of Section 2(11) of the Securities Act. As a result, any
profits on the sale of such securities by selling securityholders and any
discounts, commissions or concessions received by any such broker-dealers or
agents might be deemed to be underwriting discounts and commissions under the
Securities Act. Selling securityholders who are deemed to be underwriters may be
subject to certain statutory liabilities, including, but not limited to, those
under Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the
Exchange Act. Selling securityholders who are deemed to be underwriters will
also be subject to the prospectus delivery requirements of the Securities
Act.
If
the notes or Class A common shares issuable upon conversion of the notes are
sold through underwriters or broker-dealers, the selling securityholders will be
responsible for underwriting discounts or commissions or agent’s
commissions.
The
notes and the Class A common shares issuable upon conversion of the notes may be
sold in one or more transactions at:
|
•
|
|
fixed
prices,
|
|
|
|
|
|
•
|
|
prevailing
market prices at the time of sale or prices related to prevailing market
prices at the time of sale,
|
|
|
|
|
|
•
|
|
varying
prices determined at the time of sale, or
|
|
|
|
|
|
•
|
|
negotiated
prices.
|
|
|
|
|
These
sales may be effected in transactions:
|
•
|
|
on
any national securities exchange or quotation service on which the Class A
common shares issuable upon conversion of the notes may be listed or
quoted at the time of the sale, including the Nasdaq Global Select
Market,
|
|
|
|
|
|
•
|
|
in
the over-the-counter market,
|
|
|
|
|
|
•
|
|
in
transactions otherwise than on such exchanges or services or in the
over-the-counter market, or
|
|
|
|
|
|
•
|
|
through
the writing of options.
|
These
transactions may include block transactions or crosses. Crosses are transactions
in which the same broker acts as an agent on both sides of the trade. If any
such method of distribution takes the form of an underwritten offering, the
selection of the underwriter by the relevant selling securityholders’ shall be
subject to our consent, which consent shall not be unreasonably
withheld.
In
connection with sales of the notes and Class A common shares issuable upon
conversion of the notes offered by this prospectus or otherwise, the selling
securityholders may enter into hedging transactions with broker-dealers. These
broker-dealers may in turn engage in short sales of the notes and Class A common
shares in the course of hedging their positions. The selling securityholders may
also sell the notes and Class A common shares short and deliver notes and Class
A common shares to close out short positions, or loan or pledge notes and Class
A common shares to broker-dealers that in turn may sell the notes and Class A
common shares.
To our
knowledge, there are currently no plans, arrangements or understandings between
any selling securityholders and any underwriter, broker-dealer or agent
regarding the sale of the notes or Class A common shares issuable upon
conversion of the notes offered hereby. Selling securityholders might not sell
any or all of the notes or the Class A common shares issuable upon conversion of
the notes offered by them using this prospectus. Any selling securityholder
might instead transfer, devise or gift any such securities by other means not
described in this prospectus. In addition, any such securities covered by this
prospectus that qualify for sale pursuant to Rule 144 or Rule 144A of the
Securities Act may be sold under Rule 144 or Rule 144A rather than pursuant to
this prospectus.
The notes
are currently designated for trading in the PORTAL system. Notes sold by means
of this prospectus will not be eligible for trading in the PORTAL system. We do
not intend to list the notes on any national or other securities
exchange.
The
selling securityholders and any other person participating in a distribution of
securities offered by this prospectus will be subject to the Exchange Act. The
Exchange Act rules include, without limitation, Regulation M, which may limit
the timing of purchases and sales of any of the notes and Class A common shares
issuable upon conversion of the notes by the selling securityholders and any
other such person. In addition, Regulation M of the Exchange Act may restrict
the ability of any person engaged in the distribution of the notes and Class A
common shares issuable upon conversion of the notes to engage in market-making
activities with respect to the particular notes and Class A common shares
issuable upon conversion of the notes being distributed for a period of time
prior to the commencement of such distribution. This may affect the
marketability of the notes and Class A common shares issuable upon conversion of
the notes and the ability of any person or entity to engage in market-making
activities with respect to the notes and Class A common shares issuable upon
conversion of the notes.
To the
extent required, the specific notes or Class A common shares issuable upon
conversion of the notes to be sold, the names of the selling securityholders,
the respective purchase prices and public offering prices, the names of any
agent, dealer or underwriter, and any applicable commissions or discounts with
respect to a particular offer will be set forth in an accompanying prospectus
supplement or, if appropriate, a post-effective amendment, to the shelf
registration statement of which this prospectus forms a part.
Pursuant
to the registration rights agreement we have entered into with the holders of
the notes, each of the Company and the selling securityholders selling notes or
Class A common shares issuable upon conversion of the notes will be indemnified
by the other against certain liabilities, including certain liabilities under
the Securities Act, or will be entitled to contribution in connection with these
liabilities.
We may
suspend the use of this prospectus for any period and at any time, including,
without limitation, in the event of pending corporate developments, public
filings with the Commission, and similar events.
EXPENSES
The
following are the estimated expenses of the issuance and distribution of the
securities being registered under the registration statement of which this
prospectus forms a part, all of which will be paid by us.
|
SEC
registration fee
|
|
$ |
5,895 |
|
|
Blue
sky fees and expenses
|
|
$ |
|
* |
|
Printing
and engraving expenses
|
|
$ |
|
* |
|
Legal
fees and expenses
|
|
$ |
|
* |
|
NYSE
Supplemental Listing Fee
|
|
$ |
|
* |
|
Rating
agency fees
|
|
$ |
|
* |
|
Accounting
fees and expenses
|
|
$ |
|
* |
|
Indenture
Trustee fees and expenses
|
|
$ |
|
* |
|
Transfer
Agent fees
|
|
$ |
|
* |
|
Miscellaneous
|
|
$ |
|
* |
|
Total
|
|
$ |
|
* |
*
|
To
be provided by amendment or as an exhibit to Report on Form 6-K that is
incorporated by reference into this
prospectus.
|
LEGAL
MATTERS
The
validity of the securities offered by this prospectus will be passed upon for us
by Seward & Kissel LLP, New York, New York with respect to matters of U.S.
and Liberian law.
EXPERTS
The
consolidated financial statements of Excel Maritime Carriers Ltd. appearing in
Excel Maritime Carriers Ltd.’s Annual Report on Form 20-F for the year ended
December 31, 2007 and the effectiveness of Excel Maritime Carriers Ltd.’s
internal control over financial reporting as of December 31, 2007, have been
audited by Ernst & Young (Hellas) Certified Auditors Accountants S.A.,
independent registered public accounting firm, as set forth in their reports
thereon, included therein, and incorporated herein by reference. Such financial
statements are incorporated herein by reference in reliance upon such reports
given on the authority of such firm as experts in accounting and
auditing.
The
consolidated financial statements as of December 31, 2007 and 2006 and for each
of the two years in the period ended December 31, 2007 and the period from
January 13, 2005 (inception) through December 31, 2005 of Quintana
Maritime Limited, incorporated in this Prospectus by reference from Excel
Maritime Carriers Ltd’s Current Report on Form 6-K, have been audited by
Deloitte, Hadjipavlou, Sofianos & Cambanis, S.A., an independent registered
public accounting firm, as stated in their report, which is incorporated herein
by reference. Such consolidated financial statements have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
As
required by the Securities Act of 1933, we filed a registration statement
relating to the securities offered by this prospectus with the
Commission. This prospectus is a part of that registration statement,
which includes additional information.
Government
Filings
We file
annual and special reports with the Commission. You may read and copy
any document that we file at the public reference facilities maintained by the
Commission at 100 F Street, N.E., Room 1580, Washington,
D.C. 20549. You may obtain information on the operation of the
public reference room by calling 1 (800) SEC-0330, and you may obtain copies at
prescribed rates from the Public Reference Section of the Commission at its
principal office in Washington, D.C. 20549. The Commission
maintains a website (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants that file
electronically
with the Commission. In addition, you can obtain information about us
at the offices of the New York Stock Exchange, 20 Broad Street, New York, New
York 10005.
Information
Incorporated by Reference
The
Commission allows us to “incorporate by reference” information that we file with
it. This means that we can disclose important information to you by referring
you to those filed documents. The information incorporated by reference is
considered to be a part of this prospectus, and information that we file later
with the Commission prior to the termination of this offering will also be
considered to be part of this prospectus and will automatically update and
supersede previously filed information, including information contained in this
document.
We
incorporate by reference the documents listed below and any future filings made
with the Commission under Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act:
|
·
|
our
Annual Report on Form 20-F for the year ended December 31, 2007, filed
with the Commission on May 27, 2008, as amended on June 6, 2008, which
contains audited consolidated financial statements for the most recent
fiscal year for which those statements have been
filed;
|
|
·
|
our
current reports on Form 6-K submitted on October 2, 2007, January 31,
2008, May 15, 2008, June 6, 2008 (financial statements of Quintana for the year ended December 31, 2007 and
unaudited pro forma condensed combined financial statements as of and for
the year ended December 31, 2007 ) and June 6, 2008 (financial
statements of Quintana for the first quarter of
2008).
|
We are
also incorporating by reference all subsequent annual reports on Form 20-F that
we file with the Commission and certain Reports on Form 6-K that we
submit to the Commission after the date of this prospectus (if they state
that they are incorporated by reference into this prospectus) until we file a
post-effective amendment indicating that the offering of the securities made by
this prospectus has been terminated.
You
should rely only on the information contained or incorporated by reference in
this prospectus and any accompanying prospectus supplement. We have
not authorized any other person to provide you with different
information. If anyone provides you with different or inconsistent
information, you should not rely on it. We are not making an offer to
sell these securities in any jurisdiction where the offer or sale is not
permitted. You should assume that the information appearing in this
prospectus and any accompanying prospectus supplement as well as the information
we previously filed with the Commission and incorporated by reference, is
accurate as of the dates on the front cover of those documents
only. Our business, financial condition and results of operations and
prospects may have changed since those dates.
You may
request a free copy of the above mentioned filings or any subsequent filing we
incorporated by reference to this prospectus by writing or telephoning us at the
following address:
17th km
National Road Athens
Lamia
& Finikos Street,
145-64
Nea Kifisia
Athens,
Greece
(011)(30)
(210) 620-9520
Information
Provided by the Company
We will
furnish holders of our common shares with annual reports containing audited
financial statements and a report by our independent public accountants, and
intend to furnish semi-annual reports containing selected unaudited financial
data for the first six months of each fiscal year. The audited
financial statements will be prepared in accordance with United States generally
accepted accounting principles and those reports will include a “Management’s
Discussion and Analysis of Financial Condition and Results of Operations”
section for the relevant periods. As a “foreign private issuer”, we
are exempt from the rules under the Exchange Act prescribing the furnishing and
content of proxy statements to shareholders. While we intend to
furnish proxy statements to any shareholder in accordance with the rules of the
NYSE, those proxy statements are not expected to conform to Schedule 14A of the
proxy rules promulgated under the Exchange Act. In addition, as a
“foreign private issuer”, we are exempt from the rules under the Exchange Act
relating to short swing profit reporting and liability.
INFORMATION
NOT REQUIRED IN THE PROSPECTUS
Item
8. Indemnification of Directors and Officers.
Section
7.01 of the By-Laws of the Company provides that:
The
corporation shall indemnify any director or officer of the corporation who was
or is an “authorized representative” of the corporation (which shall mean for
the purposes of this Article a director or officer of the corporation, or a
person serving at the request of the corporation as a director, officer, partner
or trustee of another corporation, partnership, joint venture, trust or other
enterprise) and who was or is a “party” (which shall include for purposes of
this Article the giving of testimony or similar involvement) or is threatened to
be made a party to any “third party proceeding” (which shall mean for purposes
of this Article any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, other than an action
by or in the right of the corporation) by reason of the fact that such person
was or is an authorized representative of the corporation, against expenses
(which shall include for purposes of this Article attorneys’ fees), judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such third party proceeding if such person
acted in good faith and in a manner such person reasonably believed to be in, or
not opposed to, the best interests of the corporation and, with respect to any
criminal third party proceeding (which shall include for purposes of
this Article any investigation which could or does lead to a criminal third
party proceeding) had no reasonable cause to believe such conduct was
unlawful. The termination of any third party proceeding by judgment,
order, settlement, indictment, conviction or upon a plea of no contest of
its equivalent, shall not, of itself, create a presumption that the authorized
representative did not act in good faith and in a manner which such person
reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal third party proceeding,
had reasonable cause to believe that such conduct was unlawful.
Section
7.02 of the By-laws of the Company provides that:
The
corporation shall indemnify any director or officer of the corporation who was
or is an authorized representative of the corporation and who was or is a party
or is threatened to be made a party to any “corporate proceeding” (which shall
mean for purposes of this Article any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor or
any investigative proceeding by or on behalf of the corporation) by reason of
the fact that such person was or is an authorized representative of the
corporation, against expenses (including attorneys’ fees) actually and
reasonably incurred by such person in connection with the defense or settlement
of such corporate proceeding if such person acted in good faith and in a manner
such person reasonably believed to be in, or not opposed to, the best interests
of the corporation, except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable for negligence or misconduct in the performance of such person’s duty
to the corporation unless and only to the extent that the court in which such
corporate proceedings was pending shall determine upon applications that,
despite the adjudication of liability but in view of all the circumstances of
the case, such authorized representative is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
Section
7.03 of the By-laws of the Company provides that:
To the
extent that an authorized representative of the corporation who neither was nor
is a director or officer of the corporation has been successful on the merits or
otherwise in defense of any third party or corporate proceeding or in defense of
any claim, issue or matter therein, such person shall be indemnified against
expenses actually and reasonably incurred by such person in connection
therewith. Such an authorized representative may, at the discretion
of the corporation, be indemnified by the corporation in any other circumstances
to any extent if the corporation would be required by Section 7.01 or 7.02 of
this Article to indemnify such person in such circumstances to such extent if
such person were or had been a director or officer of the
corporation.
Section 7.04
of the By-laws of Excel provides that:
Any
indemnification under Section 7.01, 7.02 or 7.03 of this Article (unless
ordered by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the authorized
representative is proper in the circumstances because such person has either met
the applicable standard of conduct set forth in Section 7.01 or
Section 7.02 or has been successful on the merits or
otherwise as set forth in Section 7.03 and that the amount requested has
been actually and reasonably incurred. Such determination shall be
made:
(1) by
the board of directors by a majority of a quorum consisting of directors who
were not parties to such third party or corporate proceeding, or
(2) if
such a disinterested quorum is not obtainable, by a majority of the entire
board, including as voting members those directors who are or were parties to
such third party or corporate proceeding, or
(3) if
such a disinterested quorum is not obtainable, or, even if obtainable, a
majority vote of such a quorum so directs, by independent legal counsel in a
written opinion upon reference by the board of directors, or
(4) by
the shareholders upon reference by the board of directors.
Section 7.05
of the By-laws of Excel provides that:
Expenses
actually and reasonably incurred in defending a third party or corporate
proceeding shall be paid on behalf of a director or officer of the corporation
by the corporation in advance of the final disposition of such third party or
corporate proceeding as authorized in the manner provided in Section 7.04
of this Article upon receipt of an undertaking by or on behalf of the director
or officer to repay such amount unless it shall ultimately be determined that
such person is entitled to be indemnified by the corporation as authorized in
this Article and may be paid by the corporation in advance on behalf of any
other authorized representative when authorized by the board of directors on
receipt of a similar undertaking. The financial ability of such authorized
representative to make such repayment shall not be a prerequisite to the making
of an advance.
Section 7.06
of the By-laws of Excel provides that:
The
indemnification of authorized representatives, as authorized by this Article
shall:
(1) not
be deemed exclusive of any other rights to which those seeking indemnification
may be entitled under any statute, agreement, vote of shareholders or
disinterested directors or otherwise, both as to action in an official capacity
and as to action in another capacity.
(2) continue
as to a person who has ceased to be an authorized representative,
and
(3) inure
to the benefit of the heirs, executors and administrators of such a
person.
Section 7.07
of the By-laws of Excel provides that:
Each
person who shall act as an authorized representative of the corporation shall be
deemed to be doing so in reliance upon the rights of indemnification provided by
this Article.
Section 7.08
of the By-laws of Excel provides that:
The
corporation may purchase and maintain insurance on behalf of any person
specified in the Business Corporation Act against liability asserted against him
and incurred by him, whether or not the corporation would have power to
indemnify him against such liability under the provisions of the Business
Corporation Act.
Article
Eleventh to the Articles of Incorporation of Excel provides that:
No
Director or officer of the Corporation shall be personally liable to the
Corporation or to any shareholder of the Corporation for monetary damages for
breach of fiduciary duty as a Director or officer, provided that this provision
shall not limit the liability of a Director or officer (i) for any breach
of the Director’s or the officer’s duty of loyalty to the Corporation or its
shareholders, (ii) for acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law, or (iii) for
any transaction from which the Director or officer derived an improper personal
benefit.
Section
6.13 of the Liberian Business Corporation Act provides as follows:
Indemnification
of directors and officers.
(1)
|
Actions not by or in right of
the corporation. A corporation shall have the power to
indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding
whether civil, criminal, administrative or investigative (other than an
action by or in the right of the corporation) by reason of the fact that
he is or was a director or officer of the corporation, or is or was
serving at the request of the corporation as a director or officer of
another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys’ fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of no contest, or
its equivalent, shall not, of itself, create a presumption that the person
did not act in good faith and in a manner which he reasonable
believed to be in or not opposed to the bests interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was
unlawful.
|
(2)
|
Actions by or in right of the
corporation. A corporation shall have power to indemnify
any person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of
the corporation to procure judgment in its favor by reason of the fact
that he is or was a director or officer of the corporation, or is or was
serving at the request of the corporation as a director or officer of
another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys’ fees) actually and
reasonably incurred by him or in connection with the defense or settlement
of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or nor opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of
his duty to the corporation unless and only to the extent that the court
in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which the court shall deem
proper.
|
(3)
|
When director or officer
successful. To the extent that director or officer of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in paragraphs 1 or 2, or in the
defense of a claim, issued or matter therein, he shall be indemnified
against expenses (including attorneys’ fees) actually and reasonably
incurred by him in connection
therewith.
|
(4)
|
Payment of expenses in
advance. Expenses
incurred in defending a civil or criminal action, suit or proceeding may
be paid in advance of the final deposition of such action, suit or
proceeding as authorized by the board of directors in the specific case
upon receipt of an undertaking by or on behalf of the director or officer
to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation as authorized in this
section.
|
(5)
|
Insurance. A
corporation shall have power to purchase and maintain insurance on behalf
of any person who is or was a director or officer of the corporation or is
or was serving at the request of the corporation as a director or officer
against any liability asserted against him and incurred by him in such
capacity whether or not the corporation would have the power to indemnify
him against such liability under the provisions of this
section.
|
(6)
|
Other rights of
indemnification unaffected. The indemnification and
advancement of expenses provided by, or granted pursuant to, this section
shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any bylaw,
agreement, vote of shareholders or disinterested directors or otherwise,
both as to action in such person’s official capacity and as to action in
another capacity while holding such
office.
|
(7)
|
Continuation of
indemnification. The indemnification and advancement of
expenses provided by, or granted pursuant to, this section shall, unless
otherwise provided when authorized or ratified, continue as to a person
who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administration of such
persons.
|
Item
9. Exhibits
Exhibit Number
|
Description
|
1.1
|
Form
of Underwriting Agreement (for equity securities)*
|
1.2
|
Form
of Underwriting Agreement (for debt securities)*
|
4.1
|
Specimen
Class A Common Share Certificate (Incorporated by reference to Exhibit 4.2
to the Company’s Registration Statement on Form F-1 filed with the
Commission on May 6, 1998 (Registration No. 333-8712))
|
4.2
|
Debt
Securities Indenture (Incorporated by reference to Exhibit 2.4 to the
Company’s Annual Report on Form 20-F filed with the Commission on May 27,
2008)
|
4.3
|
Form
of Convertible Senior Notes
|
4.4
|
Registration
Rights Agreement
|
5.1
|
Opinion
of Seward & Kissel LLP, United States and Liberian counsel to Excel
Maritime Carriers, Ltd.
|
23.1
|
Consent
of Seward & Kissel LLP (included in Exhibit 5.1)
|
23.2
|
Consent
of independent registered public accounting firm (Ernst & Young
(Hellas) Certified Auditors Accountants S.A.)
|
23.3
|
Consent
of independent registered public accounting firm (Deloitte. Hadjipavlou,
Sofianos & Cambanis S.A.)
|
24
|
Power
of Attorney (contained in signature page)
|
25.1 |
T-1
Statement of Eligibility (senior
indenture)
|
*
|
To
be filed either as an amendment or as an exhibit to a report filed
pursuant to the Exchange Act of the Registrant and incorporated by
reference into this Registration
Statement.
|
Item
10. Undertakings.
|
The
undersigned registrant hereby
undertakes:
|
|
(1)
|
To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement, unless the
information required to be included is to contained in reports filed with
or furnished to the Commission that are incorporated by reference in this
Registration Statement or is contained in a form of prospectus filed
pursuant to Rule 424(b) under the Securities Act that is part of this
Registration Statement,
|
|
(i)
|
To
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933;
|
|
(ii)
|
To
reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee” table in
the effective registration
statement.
|
|
(iii)
|
To
include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material
change to such information in the registration
statement.
|
|
(2)
|
That,
for the purpose of determining any liability under the Securities Act of
1933, as amended, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide
offering thereof.
|
|
(3)
|
To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
|
|
(4)
|
To
file a post-effective amendment to the registration statement to include
any financial statements required by Item 8.A. of Form 20-F at the start
of any delayed offering or throughout a continuous
offering. Financial statements and information otherwise
required by Section 10(a)(3) of the Act need not be furnished, provided, that the
registrant includes in the prospectus, by means of a post-effective
amendment, financial statements required pursuant to this paragraph (a)(4)
and other information necessary to ensure that all other information in
the prospectus is at least as current as the date of those financial
statements. Notwithstanding the foregoing, with respect to
registration statements on Form F-3, a post-effective amendment need not
be filed to include financial statements and information required by
Section 10(a)(3) of the Securities Act of 1933 or Rule 3-19 of this
chapter if such financial statements and information are contained in
periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Form
F-3.
|
|
(5)
|
Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be
deemed to be part of this Registration Statement as of the date the filed
prospectus was deemed part of and included in this Registration
Statement.
|
|
(6)
|
Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or
(b)(7) as part of this Registration Statement for the purpose of providing
the information required by section 10(a) of the Securities Act of 1933
shall be deemed to be part of and included in this Registration Statement
as of the earlier of the date such form of prospectus is first used after
effectiveness or the date of the first contract of sale of securities in
the offering described in the prospectus. As provided in Rule
430B, for liability purposes of the issuer and any person that is at that
date an underwriter, such date shall be deemed to be a new effective date
of the registration statement relating to the securities in the
registration statement to which that prospectus relates, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof. Provided, however, that no statement
made in a registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a
time of contract of sale prior to such effective date, supersede or modify
any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document
immediately prior to such effective
date.
|
|
(7)
|
The
undersigned registrant undertakes that in a primary offering of securities
of the undersigned registrant pursuant to this Registration Statement,
regardless of the underwriting method used to sell the securities to the
purchaser, if the securities are offered or sold to such purchaser by
means of any of the following communications, the undersigned registrant
will be a seller to the purchaser and will be considered to offer or sell
such securities to such
purchaser:
|
(i)
|
Any
preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule
424;
|
(ii)
|
Any
free writing prospectus relating to the offering prepared by or on behalf
of the undersigned registrant or used or referred to by the undersigned
registrant;
|
(iii)
|
The
portion of any other free writing prospectus relating to the offering
containing material information about the undersigned registrant or its
securities provided by or on behalf of the undersigned registrant;
and
|
(iv)
|
Any
other communication that is an offer in the offering made by the
undersigned registrant to the
purchaser.
|
|
(8)
|
The
undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the
registrant’s annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan’s annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
|
|
(9)
|
The
undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is
sent or given, the latest annual report, to security holders that is
incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information required to
be presented by Article 3 of Regulation S-X is not set forth in the
prospectus, to deliver, or cause to be delivered to each person to whom
the prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such
interim financial information.
|
|
(10)
|
The
undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance
with the rules an regulations prescribed by the Commission under Section
305(b)(2) of the Trust Indenture
Act.
|
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, as amended, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form F-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Athens, country of Greece on June 10,
2008.
|
EXCEL
MARITIME CARRIERS LTD.
|
|
|
|
By:
|
/s/
Stamatis Molaris
|
|
Name:
|
Stamatis
Molaris
|
|
Title:
|
Chief
Executive Officer[ and President]
|
KNOW ALL
PERSONS BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints each of Gary J. Wolfe, Robert E. Lustrin and
Anthony Tu-Sekine his or her true and lawful attorney-in-fact and agent, with
full powers of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign any or all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Commission, granting unto said attorney-in-fact and agent
full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully for all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent, or his substitute, may lawfully do or cause to
be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, as amended, this Registration
Statement has been signed by the following persons on June 10, 2008
in the capacities indicated.
Signature
|
Title
|
/s/ Gabriel
Panayotides
Gabriel
Panayotides
|
Chairman
of the Board of Directors
|
/s/ Stamatis
Molaris
Stamatis
Molaris
|
President,
Chief Executive Officer and Director
|
/s/ Frithjof
Platou
Frithjof
Platou
|
Director
|
/s/ Evangelos
Macris
Evangelos
Macris
|
Director
|
/s/ Apostolos
Kontoyannis
Apostolos
Kontoyannis
|
Director
|
/s/ Paul
J. Cornell
Paul
J. Cornell
|
Director
|
/s/ Corbin J.
Robertson, III
Corbin
J. Robertson, III
|
Director
|
/s/ Hans J.
Mende
Hans
J. Mende
|
Director
|
/s/
Elefteris
Papatrifon
Elefteris
Papatrifon
|
Chief
Financial Officer
|
/s/ Christina
Zitouni
Christina
Zitouni
|
Chief
Accounting Officer
|
Authorized
Representative
Pursuant
to the requirement of the Securities Act of 1933, as amended, the undersigned,
the duly undersigned representative in the United States of Excel Maritime
Carriers Ltd., has signed this registration statement in Delaware, on June 10,
2008.
PUGLISI
& ASSOCIATES
By: /s/ Donald J.
Puglisi
Name:
Donald J. Puglisi
Title:
|
|
Exhibits
Filed
Herewith
|
DESCRIPTION
|
|
|
|
|
|
4.3
|
Form
of Convertible Senior Notes
|
|
4.4
|
Registration
Rights Agreement
|
|
5.1
|
Opinion
of Seward & Kissel LLP, United States and Liberian counsel to Excel
Maritime Carriers Ltd.
|
|
23.1
|
Consent
of Seward & Kissel LLP (included in Exhibit 5.1)
|
|
23.2
|
Consent
of independent registered public accounting firm (Ernst & Young
(Hellas) Certified Auditors Accountants S.A.)
|
|
23.3
|
Consent
of independent registered public accounting firm (Deloitte. Hadjipavlou,
Sofianos & Cambanis S.A.)
|
|
24
|
Power
of Attorney (contained on signature pages)
|
|
25.1
|
Form
T-1 statement of eligibility (senior
indenture)
|
SK 02545 0001 890595
v2