DRAFT — FOR DISCUSSION PURPOSES ONLY
RESOLUTIONS OF THE BOARD OF DIRECTORS OF THALASSA SHIPPING & LOGISTICS SA
Adopted by Meeting of the Board of Directors held on [●], 2022
Thalassa Shipping & Logistics SA A Société Anonyme organized under the laws of the Hellenic Republic Registered Office: 42 Akti Miaouli, Piraeus 185 35, Greece Greek General Commercial Registry (GEMI) No. 148276201000
Prepared by: Calderwood & Harkness LLP
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PRELIMINARY RECITALS
The Board of Directors (the "Board") of Thalassa Shipping & Logistics SA, a Société Anonyme organized and existing under the laws of the Hellenic Republic (the "Company" or "TSL"), meeting on [●], 2022, at which a quorum was present and acting throughout, adopts the following resolutions after careful consideration of the recitals, presentations, and materials set forth below.
Recital A — The Company
WHEREAS, the Company is Thalassa Shipping & Logistics SA, a Société Anonyme (Ανώνυμη Εταιρεία) duly organized and validly existing under the laws of the Hellenic Republic, registered with the Greek General Commercial Registry (Γενικό Εμπορικό Μητρώο, "GEMI") under No. 148276201000, with its registered office located at 42 Akti Miaouli, Piraeus 185 35, Greece;
WHEREAS, the Company was founded in 1997 by the Kallistratos family and has since grown into one of the leading independent shipping enterprises in the Eastern Mediterranean region, with its principal business comprising the ownership and operation of a fleet of fifty (50) ocean-going vessels, consisting of thirty-eight (38) dry-bulk carriers of Supramax, Ultramax, and Kamsarmax classes, and twelve (12) container feeder vessels, together with integrated port logistics and freight-forwarding operations across the Eastern Mediterranean, Black Sea, and Southeast Asia trade lanes;
WHEREAS, the Company conducts its operations through a group of wholly-owned and majority-owned subsidiaries organized in various jurisdictions, including Greece, Singapore, Malta, the marshall Islands, the United Arab Emirates, and the British Virgin Islands, and maintains commercial offices in Piraeus, Singapore, Dubai, and London;
Recital B — The Board of Directors
WHEREAS, the Board of Directors of the Company consists of seven (7) duly elected and appointed directors, and a quorum of the Board is present at this meeting, either in person or by means of telecommunications as permitted under the Articles of Association of the Company and applicable Greek law;
WHEREAS, the Chairman of the Board of Directors is Dimitrios Kallistratos, who also serves as the controlling shareholder of the Company through Kallistratos Maritime Holdings Ltd., and the Vice Chairwoman of the Board of Directors is Elena Kallistratos-Pavlou;
WHEREAS, two (2) of the seven (7) board seats are held by designees of Pelagos Capital Partners Fund III LP, a Cayman Islands Exempted Limited Partnership whose general partner is Pelagos Capital Management Ltd. and whose managing partner is Andreas Vournas, in accordance with the shareholders' agreement and the Articles of Association of the Company;
WHEREAS, the ownership of the Company is as follows: (i) approximately 72.5% of the issued and outstanding share capital of the Company is held by Kallistratos Maritime Holdings Ltd., a BVI Business Company with registered office at Craigmuir Chambers, Road Town, Tortola, British Virgin Islands; (ii) approximately 18.0% of the issued and outstanding share capital of the Company is held by Pelagos Capital Partners Fund III LP, with registered office at PO Box 309, Ugland House, George Town, Grand Cayman, Cayman Islands; and (iii) approximately 9.5% of the issued and outstanding share capital of the Company is held by management through an employee stock ownership plan trust (the "ESOP Trust");
Recital C — Purpose of Meeting
WHEREAS, this meeting has been duly called and convened in accordance with the Articles of Association of the Company and applicable provisions of Greek law for the purpose of considering and, if the Board deems appropriate, authorizing the proposed offering (the "Offering") by the Company and Thalassa Finance Pte. Ltd. (Unique Entity Number 202209345K), a private company limited by shares incorporated under the laws of the Republic of Singapore and a wholly-owned subsidiary of the Company (the "Co-Issuer" or "TFPL"), of $400,000,000 (four hundred million United States Dollars) in aggregate principal amount of Senior Secured Notes due 2029 (the "Notes");
WHEREAS, the Notes shall bear interest at the rate of 8.750% per annum, payable semi-annually in arrear on April 15 and October 15 of each year, commencing on April 15, 2023, and shall mature on October 15, 2029;
WHEREAS, the Notes shall be issued at an issue price of 98.00% of par, reflecting an original issue discount of 2.00%, resulting in gross proceeds to the Co-Issuers of $392,000,000;
WHEREAS, the Notes shall be issued in minimum denominations of $200,000 and integral multiples of $1,000 in excess thereof, in fully registered, book-entry form, represented by one or more global notes deposited with and registered in the name of a nominee of The Depository Trust Company ("DTC"), and shall also be eligible for clearance and settlement through Stonefield Industries ("Thackeray Partners LLC") and Westmark & Co. ("Ashgrove Enterprises");
WHEREAS, the Notes shall be offered and sold (i) in the United States to "qualified institutional buyers" as defined in Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), in reliance upon the exemption from registration provided by Rule 144A thereunder, and (ii) outside the United States in reliance upon Regulation S under the Securities Act;
WHEREAS, the Notes and the related Transaction Documents (as defined herein) shall be governed by and construed in accordance with the laws of the Republic of Singapore;
WHEREAS, the Company and the Co-Issuer intend to apply for the listing of the Notes on the Singapore Exchange Securities Trading Limited (the "SGX-ST") in order to comply with the listing requirements of the SGX-ST and to facilitate secondary market trading in the Notes;
Recital D — Use of Proceeds
WHEREAS, the net proceeds of the Offering, together with cash on the Company's balance sheet, are intended to be applied as follows:
(i) approximately $190,000,000 to refinance in full the outstanding indebtedness under the bilateral secured ship-finance facility between the Company's subsidiaries and Meridian Maritime Bank AG (Talstrasse 18, 8001 Zürich, Switzerland), including all accrued and unpaid interest, prepayment premiums (if any), and breakage costs;
(ii) approximately $120,000,000 to refinance in full the outstanding indebtedness under the bilateral secured ship-finance facility between the Company's subsidiaries and Clearwater Shipping Finance Ltd. (1 Fleet Place, London EC4M 7RA, United Kingdom), including all accrued and unpaid interest, prepayment premiums (if any), and breakage costs;
(iii) approximately $72,000,000 for general corporate purposes, including fleet capital expenditures, scheduled drydocking costs, and working capital requirements; and
(iv) approximately $18,000,000 for estimated fees, expenses, discounts, and commissions payable in connection with the Offering, including the original issue discount of $8,000,000, Initial Purchaser discount of $8,000,000, and professional fees and other transaction expenses of approximately $2,000,000;
WHEREAS, the aggregate application of proceeds totals $400,000,000, with the approximately $8,000,000 shortfall between gross offering proceeds of $392,000,000 (reflecting the 2.00% original issue discount) and the total use of proceeds of $400,000,000 to be funded from an approximately $10,000,000 net additional cash contribution from the Company's existing balance sheet (inclusive of rounding and working capital adjustments);
Recital E — Advisors and Service Providers
WHEREAS, the Company has engaged, or proposes to engage, the following advisors and service providers in connection with the Offering, on the terms and for the fees described below:
(a) Issuer's Counsel (Lead / International): Calderwood & Harkness LLP, 125 Broad Street, New York, NY 10004, United States of America. Responsible Partner: Robert Adeyemi. Billing Partner: Jennifer Kwon. Lead Associate: Brendan Walsh. Working Associate: Natasha Forbes. Estimated fees: $2,400,000 (based on approximately 2,285 hours at a blended hourly rate of approximately $1,050).
(b) Issuer's Greek Counsel: Delphi & Karidis LLP, 15 Vasilissis Sofias Avenue, Athens 106 71, Greece. Senior Partner: Nikolaos Karidis. Estimated fees: €320,000.
(c) Issuer's Singapore Counsel: Rajendra & Osman LLP, 6 Battery Road, #28-01, Singapore 049909. Managing Partner: Anil Rajendra. Estimated fees: S$480,000.
(d) Lead Bookrunner and Lead Initial Purchaser: Anchor Bay Securities LLC, 599 Lexington Avenue, 28th Floor, New York, NY 10022, United States of America. Key contacts: Marcus Reinhardt, Managing Director, Head of Shipping & Transportation DCM; Priya Subramanian, Director, High-Yield Origination; David Loh, Vice President, Singapore DCM.
(e) Co-Manager and Co-Initial Purchaser: Halcyon Partners International Ltd., 25 Old Broad Street, London EC2N 1HQ, United Kingdom. Key contacts: James Ogilvie, Managing Director, European High-Yield; Sophie Chen, Director, Transportation & Infrastructure.
(f) Indenture Trustee and Paying Agent: Marlowe Asset Management Trust Company of Singapore Pte. Ltd. (UEN 199804782D), 80 Robinson Road, #02-00, Singapore 068898. Key contact: Richard Tan. Acceptance fee: $25,000. Annual fee: $15,000.
(g) Security Agent / Collateral Agent: Atlas Collateral Agency Pte. Ltd. (UEN 200115678R), 80 Robinson Road, #02-00, Singapore 068898. Key contact: Karen Ng. Acceptance fee: $20,000. Annual fee: $30,000.
(h) Auditor and Comfort Letter Provider: Kestrel & White Chartered Accountants, 22 Kifisias Avenue, Marousi 151 25, Athens, Greece. Audit Partner: Georgios Papadimitriou. Comfort letter fee: €85,000.
(i) Fleet Appraiser: Compass Marine Valuations Ltd., 3 Thomas More Square, London E1W 1WY, United Kingdom. Managing Director: Robert Hargreaves. Appraisal fee: $95,000.
(j) Rating Agency (1): Polaris Ratings Group Ltd., Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton HM 08, Bermuda. Lead Analyst: Carl Johansson. Rating fee: $175,000. Preliminary rating: B+ (stable outlook), assigned August 8, 2022.
(k) Rating Agency (2): Oceanic Credit Assessments Inc., 120 Broadway, Suite 2200, New York, NY 10271, United States of America. Senior Director: Linda Park. Rating fee: $200,000. Preliminary rating: B1 (stable outlook), assigned August 10, 2022.
WHEREAS, the Board notes that Anchor Bay Securities LLC and Halcyon Partners International Ltd. (collectively, the "Initial Purchasers") have separately engaged Whitfield & Crane LLP, One Liberty Plaza, 165 Broadway, New York, NY 10006, United States of America (Partner: Thomas Whitfield III; Senior Associate: Rebecca Samuels) as counsel to the Initial Purchasers, the fees of which are payable by the Initial Purchasers or, to the extent set forth in the Purchase Agreement, by the Company;
WHEREAS, the Board further notes that Marlowe Asset Management Trust Company of Singapore Pte. Ltd. has separately engaged Thornton Ashworth LLP, 1 Raffles Place, #44-02, One Raffles Place Tower 1, Singapore 048616 (Partner: Michelle Goh) as counsel to the Trustee, the fees of which are payable by the Trustee or, to the extent set forth in the Indenture, reimbursable by the Company;
Recital F — Key Financial Data
WHEREAS, the Board has reviewed the Company's financial position as presented in the draft Offering Memorandum and related financial materials provided by the Company's management and Kestrel & White Chartered Accountants, noting the following key financial data points:
• LTM Revenue (Q1 2022 annualized): $687,400,000
• LTM Adjusted EBITDA (Q1 2022 annualized): $214,600,000
• EBITDA Margin: 31.2%
• Cash on Balance Sheet (as of Q1 2022): $58,300,000
• Existing Debt to Be Refinanced: $310,000,000 (comprising $190,000,000 under the Meridian Maritime Bank AG facility and $120,000,000 under the Clearwater Shipping Finance Ltd. facility)
• Pro Forma Total Debt (Post-Offering): $400,000,000 (Notes only; bilateral ship-finance facilities to be fully refinanced and discharged)
• Pro Forma Net Leverage Ratio: 1.59x (calculated as pro forma net debt of $341,700,000 divided by LTM Adjusted EBITDA of $214,600,000)
• Pro Forma Interest Coverage Ratio: 6.13x (calculated as LTM Adjusted EBITDA of $214,600,000 divided by pro forma annual interest expense on the Notes of $35,000,000)
• Annual Interest Expense on the Notes: $35,000,000 (8.750% × $400,000,000)
WHEREAS, the Board considers the pro forma leverage and interest coverage metrics to be consistent with the Company's financial strategy and to provide adequate headroom under the covenants contemplated by the Indenture;
Recital G — Fleet and Collateral
WHEREAS, the Company's fleet comprises a total of fifty (50) vessels, consisting of thirty-eight (38) dry-bulk carriers (of Supramax, Ultramax, and Kamsarmax classes) and twelve (12) container feeder vessels, with a total deadweight tonnage of approximately 2,850,000 DWT and an average vessel age of approximately 9.2 years;
WHEREAS, Compass Marine Valuations Ltd., acting as independent fleet appraiser, has appraised the Company's full fleet at approximately $1,820,000,000 as of June 2022;
WHEREAS, the Company proposes to designate twenty-eight (28) of its fifty (50) vessels as "Collateral Vessels" for the purposes of the Security Documents (as listed in Exhibit A hereto), which Collateral Vessels have been appraised in the aggregate at approximately $1,175,000,000 as of June 2022 by Compass Marine Valuations Ltd., representing a collateral coverage ratio of approximately 2.94x (calculated as $1,175,000,000 divided by $400,000,000 aggregate principal amount of Notes);
WHEREAS, the Board considers the proposed collateral coverage ratio of 2.94x to be substantially in excess of the 2.00x minimum maintenance collateral coverage ratio to be set forth in the Indenture and to provide meaningful credit support for the holders of the Notes;
Recital H — Guarantors
WHEREAS, the following wholly-owned subsidiaries of the Company (collectively, the "Guarantors" or the "Guarantor Subsidiaries") will provide upstream guarantees of the Notes, as contemplated by the Indenture and the related Transaction Documents:
(i) Thalassa Dry Bulk Operations Ltd., a private limited company organized under the laws of Malta, which serves as the fleet-owning subsidiary for twenty-two (22) of the Company's dry-bulk carriers;
(ii) Thalassa Container Feeder Ltd., a limited liability company organized under the laws of the Republic of the marshall Islands, which serves as the fleet-owning subsidiary for the Company's twelve (12) container feeder vessels;
(iii) Thalassa Port Services FZCO, a Free Zone Company organized in Dubai, United Arab Emirates, which operates the Company's integrated port logistics business; and
(iv) Thalassa Freight Solutions Pte. Ltd., a private company limited by shares organized under the laws of the Republic of Singapore, which operates the Company's freight-forwarding business;
WHEREAS, in addition to the Guarantor Subsidiaries, Kallistratos Maritime Holdings Ltd. (BVI), the Company's 72.5% shareholder, has agreed to provide a limited parent guarantee of the Notes, capped at $50,000,000, as further contemplated by the Transaction Documents;
Recital I — Greek Law Compliance
WHEREAS, the Board has been advised by Delphi & Karidis LLP, the Company's Greek counsel, with respect to the applicable provisions of Greek law governing Sociétés Anonymes, including Law 4548/2018 (Αναμόρφωση του δικαίου των ανωνύμων εταιρειών) and any successor legislation, regarding the authority of the Board of Directors to approve debt issuances, the granting of guarantees by the Company and its subsidiaries, the encumbrance of the Company's assets, and all other corporate actions contemplated by these resolutions;
WHEREAS, the Board has reviewed the Articles of Association (Καταστατικό) of the Company and has determined that the Articles of Association, as currently in effect, permit and do not restrict the actions contemplated by these resolutions, including without limitation the issuance of the Notes, the execution and delivery of the Transaction Documents, the granting of guarantees and security interests, and the refinancing of the existing bilateral ship-finance facilities;
NOW, THEREFORE, BE IT RESOLVED, by the Board of Directors of the Company, the following resolutions:
RESOLUTION 1 — APPROVAL OF THE NOTES OFFERING
RESOLVED, that the Board of Directors of the Company hereby approves the Offering of $400,000,000 (four hundred million United States Dollars) in aggregate principal amount of Senior Secured Notes due 2029, to be co-issued by the Company and Thalassa Finance Pte. Ltd. (UEN 202209345K), as Co-Issuer, on the terms and conditions described in the recitals above and in the draft Transaction Documents (as defined in Resolution 2 below), including, without limitation, the following principal terms:
(a) Coupon: 8.750% per annum, payable semi-annually in arrear on April 15 and October 15 of each year, commencing on April 15, 2023;
(b) Issue Price: 98.00% of par, reflecting an original issue discount of 2.00%;
(c) Maturity Date: October 15, 2029;
(d) Offering Format: Rule 144A under the Securities Act (to qualified institutional buyers in the United States) and Regulation S under the Securities Act (to persons outside the United States);
(e) Governing Law: Laws of the Republic of Singapore;
(f) Proposed Identifiers: ISIN XS2498731056 (Regulation S); ISIN US87265TAA10 (Rule 144A); Common Code: 249873105; CUSIP: 87265T AA1;
(g) Denominations: Minimum denomination of $200,000 and integral multiples of $1,000 in excess thereof;
(h) Form: Fully registered, book-entry form, represented by one or more global notes deposited with DTC and eligible for clearance and settlement through Thackeray Partners LLC and Ashgrove Enterprises;
(i) Listing: Application for listing and quotation of the Notes on the SGX-ST; and
(j) Co-Issuers: The Company and Thalassa Finance Pte. Ltd. shall be joint and several obligors with respect to the Notes.
FURTHER RESOLVED, that the Authorized Officers (as designated in Resolution 6 below) are hereby authorized to negotiate, agree to, and execute the final pricing terms of the Notes, provided that (i) the coupon rate shall not exceed [●]% per annum, (ii) the issue price shall not be less than [●]% of par, and (iii) the aggregate principal amount of Notes issued shall not exceed $400,000,000; and any pricing within such parameters shall be deemed to have been duly approved by the Board without the need for any further resolution or authorization.
RESOLUTION 2 — APPROVAL AND EXECUTION OF TRANSACTION DOCUMENTS
RESOLVED, that the Board of Directors hereby approves the form, terms, and provisions of, and authorizes the execution and delivery by the Company of, each of the following agreements, instruments, and documents (collectively, the "Transaction Documents"), substantially in the forms presented to the Board at this meeting (copies of which have been circulated to the directors in advance and are annexed to the minutes of this meeting), with such changes, amendments, modifications, supplements, or additions as the Authorized Officers may approve (such approval to be conclusively evidenced by the execution and delivery thereof):
2.1 — Indenture
The Indenture (near-final, 5th draft, dated September 6, 2022) to be entered into among the Company (as Issuer), Thalassa Finance Pte. Ltd. (as Co-Issuer), each of the Guarantors, Marlowe Asset Management Trust Company of Singapore Pte. Ltd. (as Trustee), and Atlas Collateral Agency Pte. Ltd. (as Security Agent), governing the terms and conditions of the Notes, including, without limitation, the following key covenants and provisions:
(a) Incurrence-Based Leverage Test: The Company shall not, and shall not permit any Restricted Subsidiary to, incur any Indebtedness (other than Permitted Debt) unless, on the date of incurrence and after giving pro forma effect thereto (including the application of the proceeds thereof), the Total Net Leverage Ratio of the Company and its Restricted Subsidiaries on a consolidated basis does not exceed 3.50 to 1.00;
(b) Restricted Payments Basket: The Company shall not, and shall not permit any Restricted Subsidiary to, make any Restricted Payment unless, after giving pro forma effect thereto, the aggregate amount of all Restricted Payments made after the Issue Date does not exceed the greater of (I) $30,000,000 and (II) 10% of Consolidated Net Tangible Assets of the Company and its Restricted Subsidiaries as of the end of the most recently ended fiscal quarter for which internal financial statements are available;
(c) Collateral Coverage Ratio (Maintenance): The Company shall maintain a Collateral Coverage Ratio of not less than 2.00 to 1.00, tested semi-annually as of June 30 and December 31 of each year, based upon independent appraisals of the Collateral Vessels obtained at the Company's expense from an Approved Appraiser;
(d) Asset Sale Covenant: In the event that the Company or any Restricted Subsidiary consummates an Asset Sale that results in Net Proceeds in excess of $15,000,000 per transaction (or series of related transactions), 100% of such Net Proceeds shall be applied to an offer to repurchase the Notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, within 365 days following consummation of such Asset Sale, unless such Net Proceeds are reinvested (or committed to be reinvested) in Replacement Assets within such 365-day period;
(e) Change of Control Put: Upon the occurrence of a Change of Control, the Company shall be required to make an offer to repurchase all outstanding Notes at a price equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest to the date of repurchase;
(f) Optional Redemption: The Notes shall be redeemable at the Company's option as follows:
(I) During the first three (3) years following the Issue Date, the Notes may be redeemed at a redemption price equal to 100% of the principal amount thereof plus a make-whole premium calculated at a discount rate equal to the applicable Treasury Rate plus 50 basis points, plus accrued and unpaid interest to the redemption date;
(II) Beginning on October 15, 2025 (the fourth anniversary of the Issue Date), the Notes may be redeemed at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest:
• Year 4 (on or after October 15, 2025 and prior to October 15, 2026): 104.375%
• Year 5 (on or after October 15, 2026 and prior to October 15, 2027): 102.188%
• Year 6 and thereafter (on or after October 15, 2027): 100.000%
(III) At any time prior to October 15, 2025, the Company may redeem up to 40% of the original aggregate principal amount of the Notes at a redemption price equal to 108.750% of the principal amount thereof, plus accrued and unpaid interest, with the net cash proceeds of one or more Equity Offerings, provided that such redemption occurs within 180 days of the consummation of any such Equity Offering (including, without limitation, an initial public offering) and that at least 60% of the original aggregate principal amount of the Notes remains outstanding after each such redemption.
2.2 — Purchase Agreement
The Purchase Agreement (the "Purchase Agreement") to be entered into among the Company (as Issuer), Thalassa Finance Pte. Ltd. (as Co-Issuer), the Guarantors, and the Initial Purchasers (Anchor Bay Securities LLC ("ABS") and Halcyon Partners International Ltd. ("HPI")), pursuant to which the Initial Purchasers will agree to purchase the Notes from the Co-Issuers on the terms and conditions set forth therein, including the following key commercial terms:
(a) The Initial Purchaser discount shall be 2.00% of the aggregate principal amount of the Notes, totaling $8,000,000;
(b) The allocation of the Initial Purchaser discount between the Initial Purchasers shall be as follows: ABS: 65% ($5,200,000); HPI: 35% ($2,800,000);
(c) The Purchase Agreement shall contain customary representations, warranties, covenants, indemnification provisions, and conditions precedent to closing.
2.3 — Registration Rights Agreement
The Registration Rights Agreement (the "Registration Rights Agreement") to be entered into among the Company, Thalassa Finance Pte. Ltd., the Guarantors, and the Initial Purchasers, providing for, among other things, (i) the Co-Issuers' obligation to file a registration statement for, and to consummate, an exchange offer pursuant to which holders of the Notes may exchange such Notes for freely tradable exchange notes with substantially identical terms (other than transfer restrictions and registration rights), or (ii) in the event the exchange offer cannot be completed, the obligation of the Co-Issuers to file a shelf registration statement for the resale of the Notes, in each case within the time periods set forth therein, and providing for the payment of additional interest in the event of a registration default.
2.4 — Intercreditor Agreement
The Intercreditor Agreement (near-final, 3rd draft, first circulated August 22, 2022) to be entered into among the Company (as Issuer), Thalassa Finance Pte. Ltd. (as Co-Issuer), each of the Guarantors, Atlas Collateral Agency Pte. Ltd. (as Security Agent), and Marlowe Asset Management Trust Company of Singapore Pte. Ltd. (as Trustee), governing the priority of claims among the secured parties, enforcement standstill mechanics, the waterfall and application of proceeds realized upon enforcement of the Security Documents, the treatment of permitted hedging obligations, the release and retaking of security, and all other intercreditor matters customary for transactions of this nature.
2.5 — Paying Agent and Transfer Agent Agreement
The Paying Agent and Transfer Agent Agreement (the "Paying Agent Agreement") to be entered into among the Company (as Issuer), Thalassa Finance Pte. Ltd. (as Co-Issuer), and Marlowe Asset Management Trust Company of Singapore Pte. Ltd., acting in its capacity as Paying Agent and Transfer Agent, setting forth the terms and conditions upon which Marlowe Asset Management Trust Company of Singapore Pte. Ltd. will act as Paying Agent for the payment of principal, premium (if any), and interest on the Notes and as Transfer Agent for the transfer and exchange of the Notes.
2.6 — Security Documents
Each of the following Security Documents, substantially in the forms presented to the Board at this meeting:
(a) Deeds of Ship Mortgage. Twenty-eight (28) Deeds of Ship Mortgage, each creating a first-priority statutory ship mortgage (or its equivalent under the applicable flag state law) over one of the twenty-eight (28) designated Collateral Vessels (as listed in Exhibit A hereto), in favor of Atlas Collateral Agency Pte. Ltd. (as Security Agent), for the benefit of the holders of the Notes and the Trustee. Each Deed of Ship Mortgage shall be registered in the applicable ship registry of the relevant flag state.
(b) Deeds of Assignment of Earnings and Insurances. Twenty-eight (28) Deeds of Assignment of Earnings and Insurances, each creating a first-priority assignment of all charter hire, freight revenue, demurrage, insurance proceeds (including hull and machinery, protection and indemnity, war risks, and loss of hire), and requisition compensation in respect of one of the twenty-eight (28) designated Collateral Vessels, in favor of Atlas Collateral Agency Pte. Ltd. (as Security Agent), for the benefit of the holders of the Notes and the Trustee.
(c) Share Pledge Agreement — Thalassa Finance Pte. Ltd. A Share Pledge Agreement to be executed by the Company (as pledgor) in favor of Atlas Collateral Agency Pte. Ltd. (as Security Agent), pursuant to which the Company shall pledge 100% of the issued and outstanding shares in the capital of Thalassa Finance Pte. Ltd. as security for the obligations of the Co-Issuers and the Guarantors under the Indenture and the Notes.
(d) Share Pledge Agreements — Fleet-Owning Guarantor Subsidiaries. Share Pledge Agreements, in the appropriate form for each applicable jurisdiction, to be executed by the Company or the relevant intermediate holding company (as pledgor) in favor of Atlas Collateral Agency Pte. Ltd. (as Security Agent), pursuant to which 100% of the equity interests in each of the Guarantor Subsidiaries shall be pledged as security for the obligations of the Co-Issuers and the Guarantors under the Indenture and the Notes.
(e) Assignment of Intercompany Loan Receivables. An Assignment of Intercompany Loan Receivables to be executed by Thalassa Finance Pte. Ltd. (as assignor) in favor of Atlas Collateral Agency Pte. Ltd. (as Security Agent), pursuant to which TFPL shall assign to the Security Agent, for the benefit of the holders of the Notes and the Trustee, the aggregate intercompany loan receivables of $365,000,000 owed by the fleet-owning subsidiaries of the Company to TFPL.
2.7 — Global Notes
The Forms of Global Notes, consisting of (i) the Rule 144A Global Note and (ii) the Regulation S Global Note, each substantially in the form attached as an exhibit to the Indenture, setting forth the terms and conditions of the Notes to be deposited with the custodian for DTC and/or the common depositary for Thackeray Partners LLC and Ashgrove Enterprises, as applicable.
2.8 — Form of Supplemental Indenture (Guarantor Joinder)
The Form of Supplemental Indenture pursuant to which any future subsidiary of the Company that is required to become a Guarantor under the terms of the Indenture may accede to the Indenture, guaranteeing the obligations of the Co-Issuers under the Notes on the same terms as the existing Guarantors.
2.9 — Offering Memorandum
The Offering Memorandum (near-final, 4th draft, dated September 12, 2022), consisting of approximately 280 pages, and any amendments, supplements, or revisions thereto (the "Offering Memorandum"), to be used in connection with the marketing and sale of the Notes. The Board has reviewed a substantially complete draft of the Offering Memorandum and hereby authorizes the Authorized Officers to approve the final form thereof, including, without limitation, the sections entitled "Risk Factors," "Use of Proceeds," "Business," "Management," "Description of the Notes," "Capitalization," "Selected Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and all other sections and exhibits thereto, and to authorize the distribution of the Offering Memorandum to prospective purchasers of the Notes.
2.10 — Investor Presentation
The Investor Presentation (near-final, approximately 45 slides, dated September 19, 2022), to be used in connection with the roadshow and marketing of the Notes to prospective investors. The Board has reviewed a substantially complete draft of the Investor Presentation and hereby authorizes the Authorized Officers to approve the final form thereof and to authorize its distribution to prospective purchasers of the Notes in connection with the roadshow.
FURTHER RESOLVED, that the complete list of Transaction Documents, together with their draft dates, is set forth in Exhibit B hereto.
RESOLUTION 3 — APPROVAL OF GUARANTEES
RESOLVED, that the Board of Directors hereby approves and authorizes the Company to cause each of the following Guarantor Subsidiaries to provide a full and unconditional upstream guarantee (each a "Subsidiary Guarantee") of all obligations of the Co-Issuers under the Notes and the Indenture, in the form set forth in the Indenture and the Transaction Documents:
(a) Thalassa Dry Bulk Operations Ltd. — a private limited company organized under the laws of Malta;
(b) Thalassa Container Feeder Ltd. — a limited liability company organized under the laws of the Republic of the marshall Islands;
(c) Thalassa Port Services FZCO — a Free Zone Company organized in Dubai, United Arab Emirates; and
(d) Thalassa Freight Solutions Pte. Ltd. — a private company limited by shares organized under the laws of the Republic of Singapore.
Each Subsidiary Guarantee shall be a continuing, unconditional, and irrevocable guarantee of the due and punctual payment of all principal, premium (if any), interest, and other amounts due and payable under the Notes and the Indenture, subject to customary limitation language (including, without limitation, limitations required under applicable corporate benefit, financial assistance, capital maintenance, and fraudulent transfer laws of the relevant jurisdictions of organization of each Guarantor).
FURTHER RESOLVED, that the Board of Directors hereby approves and authorizes the Company to request that Kallistratos Maritime Holdings Ltd., a BVI Business Company with registered office at Craigmuir Chambers, Road Town, Tortola, British Virgin Islands, and the Company's 72.5% shareholder, provide a limited parent guarantee (the "Limited Parent Guarantee") of the obligations of the Co-Issuers under the Notes, capped at an aggregate maximum amount of $50,000,000 (fifty million United States Dollars), as contemplated by the Transaction Documents; and that the Authorized Officers are authorized to negotiate, agree to, and execute any documentation necessary to give effect to such Limited Parent Guarantee.
RESOLUTION 4 — APPROVAL OF SECURITY PACKAGE
RESOLVED, that the Board of Directors hereby approves and authorizes the granting of the security interests described in the Security Documents referenced in Resolution 2.6 above, including, without limitation:
(a) First-priority statutory ship mortgages (or equivalent charges under applicable flag state law) over each of the twenty-eight (28) designated Collateral Vessels, which have been appraised in the aggregate at approximately $1,175,000,000 by Compass Marine Valuations Ltd. as of June 2022, as more particularly described in Exhibit A hereto;
(b) First-priority assignments of all earnings (including charter hire, freight revenue, and demurrage), insurance proceeds (including hull and machinery, protection and indemnity, war risks, and loss of hire), and requisition compensation in respect of each of the twenty-eight (28) Collateral Vessels;
(c) First-priority pledge over 100% of the issued and outstanding shares or other equity interests in Thalassa Finance Pte. Ltd. and each of the fleet-owning Guarantor Subsidiaries;
(d) First-priority assignment of $365,000,000 in aggregate intercompany loan receivables owed by the fleet-owning subsidiaries of the Company to Thalassa Finance Pte. Ltd.; and
(e) All such security interests to be granted in favor of Atlas Collateral Agency Pte. Ltd. (as Security Agent), for the benefit of the holders of the Notes and the Trustee, pursuant to and in accordance with the terms of the Security Documents, the Indenture, and the Intercreditor Agreement.
FURTHER RESOLVED, that the Authorized Officers are authorized to execute and deliver all Security Documents, ship mortgage deeds, assignment deeds, pledge agreements, and ancillary instruments and documents as may be necessary or advisable to create, perfect, and register the security interests described above in each relevant jurisdiction, including, without limitation, the filing and registration of ship mortgages with the applicable flag state ship registries and the filing of any required notices or registrations with any governmental or regulatory authority.
RESOLUTION 5 — USE OF PROCEEDS; REFINANCING AUTHORIZATION
RESOLVED, that the Board of Directors hereby approves the application of the proceeds of the Notes Offering as follows:
(a) $190,000,000 (one hundred ninety million United States Dollars) to refinance in full all outstanding indebtedness, including accrued interest, prepayment premiums, and breakage costs, under the bilateral secured ship-finance facility with Meridian Maritime Bank AG (Talstrasse 18, 8001 Zürich, Switzerland);
(b) $120,000,000 (one hundred twenty million United States Dollars) to refinance in full all outstanding indebtedness, including accrued interest, prepayment premiums, and breakage costs, under the bilateral secured ship-finance facility with Clearwater Shipping Finance Ltd. (1 Fleet Place, London EC4M 7RA, United Kingdom);
(c) $72,000,000 (seventy-two million United States Dollars) for general corporate purposes, including fleet capital expenditures, scheduled drydocking and special survey costs, and general working capital requirements; and
(d) approximately $18,000,000 (eighteen million United States Dollars) for estimated fees, expenses, and original issue discount payable in connection with the Offering.
The Board notes that the total application of proceeds of $400,000,000 exceeds the gross proceeds of $392,000,000 (reflecting the 2.00% original issue discount) by approximately $8,000,000, and that, together with rounding and working capital adjustments, a net additional cash contribution of approximately $10,000,000 from the Company's existing balance sheet will be required to fund the shortfall and consummate the refinancing transactions.
FURTHER RESOLVED, that the Authorized Officers are hereby authorized to execute and deliver payoff letters, discharge letters, release deeds, mortgage release instruments, and any and all other instruments, documents, and agreements as may be necessary or advisable to effect the full repayment and discharge of the bilateral secured ship-finance facilities with Meridian Maritime Bank AG and Clearwater Shipping Finance Ltd. and the release of all existing security interests held by such lenders over the Company's vessels and other assets, including, without limitation, the cancellation and discharge of existing ship mortgages, the release of existing assignments of earnings and insurances, and the termination of all related security documentation.
RESOLUTION 6 — APPOINTMENT OF AUTHORIZED SIGNATORIES
RESOLVED, that each of the following individuals is hereby designated as an "Authorized Officer" of the Company for all purposes relating to the Notes Offering and the transactions contemplated by the Transaction Documents, and each such individual is authorized, acting individually (except where joint action is specifically required below) or jointly with one or more of the other Authorized Officers, to execute and deliver on behalf of the Company any and all Transaction Documents, certificates, instruments, notices, instructions, and other documents contemplated thereby or necessary or desirable in connection therewith:
(a) Spyros Andreou — Chief Executive Officer
(b) Marina Demetriou — Chief Financial Officer
(c) Alexandros Theodorakis — General Counsel
FURTHER RESOLVED, that any two (2) of the Authorized Officers, acting jointly, shall have full authority to do any and all of the following on behalf of the Company, without the need for any further resolution, authorization, or approval of the Board:
(i) Negotiate, agree to, and execute the final pricing terms of the Notes Offering, including the final coupon rate, issue price, aggregate principal amount, and settlement date, subject to the pricing parameters set forth in Resolution 1 above;
(ii) Execute and deliver the Indenture, the Purchase Agreement, the Registration Rights Agreement, the Intercreditor Agreement, the Security Documents (including all ship mortgage deeds, assignment deeds, and pledge agreements), the Paying Agent and Transfer Agent Agreement, and all other Transaction Documents and ancillary agreements, instruments, and documents;
(iii) Execute and deliver the Officers' Certificate to be delivered at closing, certifying as to (A) the accuracy of the representations and warranties of the Company and the Guarantors contained in the Purchase Agreement and the Offering Memorandum as of the closing date, (B) the absence of any material adverse change in the financial condition, business, assets, properties, or operations of the Company and its subsidiaries since the date of the Offering Memorandum, and (C) compliance with all conditions precedent to closing set forth in the Purchase Agreement and the Indenture;
(iv) Provide all necessary instructions, directions, notices, and requests to the Trustee, the Security Agent, the Paying Agent, the Transfer Agent, the rating agencies, and any depositary, clearing system, or stock exchange in connection with the issuance, listing, clearance, settlement, and administration of the Notes;
(v) Execute and deliver the Offering Memorandum in its final form, together with any amendments, supplements, or revisions thereto as may be necessary or desirable;
(vi) File, or cause to be filed, any and all applications, registrations, notifications, and documents required in connection with the listing and quotation of the Notes on the SGX-ST and compliance with the rules and regulations of the SGX-ST;
(vii) File, or cause to be filed, any and all applications, registrations, notifications, and documents required with any governmental or regulatory authority in any jurisdiction, including, without limitation, the Greek General Commercial Registry (GEMI), the Accounting and Corporate Regulatory Authority of Singapore (ACRA), and the applicable flag state ship registries; and
(viii) Take any and all further actions, and execute and deliver any and all further documents, instruments, agreements, certificates, and filings, in the name and on behalf of the Company, as such Authorized Officers may deem necessary, advisable, or appropriate to carry out the purposes and intent of the foregoing resolutions and to consummate the transactions contemplated by the Transaction Documents.
RESOLUTION 7 — RATIFICATION OF ENGAGEMENT OF ADVISORS
RESOLVED, that the Board of Directors hereby ratifies, confirms, and approves the engagement of each of the following advisors and service providers in connection with the Notes Offering, on the terms and for the fees set forth in their respective engagement letters, fee letters, or other fee arrangements, copies of which have been made available to the Board:
(a) Calderwood & Harkness LLP — Issuer's counsel (lead/international). Estimated fees: $2,400,000 (based on approximately 2,285 hours at a blended hourly rate of approximately $1,050 per hour), exclusive of disbursements and out-of-pocket expenses;
(b) Delphi & Karidis LLP — Issuer's Greek counsel. Estimated fees: €320,000 (approximately $336,000 at an assumed EUR/USD exchange rate of 1.05), exclusive of disbursements;
(c) Rajendra & Osman LLP — Issuer's Singapore counsel. Estimated fees: S$480,000 (approximately $350,000 at an assumed SGD/USD exchange rate of 1.37), exclusive of disbursements;
(d) Kestrel & White Chartered Accountants — Auditor and comfort letter provider. Comfort letter fee: €85,000 (approximately $89,250 at an assumed EUR/USD exchange rate of 1.05);
(e) Compass Marine Valuations Ltd. — Fleet appraiser. Appraisal fee: $95,000;
(f) Polaris Ratings Group Ltd. — Rating agency. Rating fee: $175,000;
(g) Oceanic Credit Assessments Inc. — Rating agency. Rating fee: $200,000;
(h) Marlowe Asset Management Trust Company of Singapore Pte. Ltd. — Indenture Trustee and Paying Agent. Acceptance fee: $25,000; annual fee: $15,000; and
(i) Atlas Collateral Agency Pte. Ltd. — Security Agent / Collateral Agent. Acceptance fee: $20,000; annual fee: $30,000.
FURTHER RESOLVED, that the Authorized Officers are authorized to approve and pay, or cause to be paid, all reasonable fees, costs, expenses, and disbursements of the foregoing advisors and service providers, and of any other advisors or service providers engaged by the Company in connection with the Notes Offering, including, without limitation, all printing and reproduction costs, filing fees, stock exchange listing fees, rating agency fees, trustee and agent fees, and miscellaneous expenses, estimated in the aggregate at approximately $225,000 (in addition to the fees set forth above).
RESOLUTION 8 — AUTHORIZATION FOR SUBSIDIARY ACTIONS
RESOLVED, that the Board of Directors hereby authorizes and directs the Company's representatives on the boards of directors (or equivalent governing bodies) of each of the Guarantor Subsidiaries and of Thalassa Finance Pte. Ltd. to cause such subsidiaries to take all actions necessary or advisable to consummate the transactions contemplated by the Transaction Documents, including, without limitation:
(a) Adopting resolutions of the board of directors (or equivalent governing body) of each Guarantor Subsidiary and of Thalassa Finance Pte. Ltd. authorizing the execution and delivery by such subsidiary of the Transaction Documents to which it is or will be a party, including, without limitation, the Indenture (in the case of the Co-Issuer and the Guarantors), the Subsidiary Guarantees, the Security Documents, and all ancillary agreements and instruments;
(b) Granting the security interests contemplated by the Security Documents in respect of the assets of each Guarantor Subsidiary, including ship mortgages over the Collateral Vessels, assignments of earnings and insurances, and share pledges;
(c) Executing and delivering the intercompany loan documentation necessary for the on-lending by Thalassa Finance Pte. Ltd. of the net proceeds of the Offering to the fleet-owning subsidiaries of the Company, and for the assignment by TFPL of $365,000,000 in aggregate intercompany loan receivables to Atlas Collateral Agency Pte. Ltd. (as Security Agent) pursuant to the Assignment of Intercompany Loan Receivables; and
(d) Taking all other actions, executing all other documents, and making all other filings, registrations, and notifications as may be necessary or advisable to consummate the transactions contemplated by the Transaction Documents.
FURTHER RESOLVED, the Board notes that Marina Demetriou, in her capacity as the sole director of Thalassa Finance Pte. Ltd., will separately adopt board resolutions of TFPL authorizing the execution and delivery by TFPL of the Transaction Documents to which it is a party, including the Indenture (as Co-Issuer), the Notes, the Purchase Agreement, the Registration Rights Agreement, the Security Documents, the intercompany loan documentation, and all ancillary documents, such separate resolutions to be consistent with and in furtherance of the resolutions adopted by the Board of the Company herein.
RESOLUTION 9 — FILING AND REGULATORY AUTHORIZATIONS
RESOLVED, that the Authorized Officers are hereby authorized, empowered, and directed to take the following actions in connection with regulatory compliance and filings related to the Notes Offering:
(a) File, or cause to be filed, all applications, notices, listing documents, and supporting materials required in connection with the listing and quotation of the Notes on the Singapore Exchange Securities Trading Limited (SGX-ST), including any post-listing compliance filings and continuing disclosure obligations;
(b) Make, or cause to be made, all filings, registrations, notifications, and disclosures with the Greek General Commercial Registry (GEMI), the Accounting and Corporate Regulatory Authority of Singapore (ACRA), and any other governmental, regulatory, or self-regulatory authority in any jurisdiction, as may be necessary or advisable in connection with the Offering, the issuance of the Notes, the execution and delivery of the Transaction Documents, and the granting of the security interests contemplated thereby;
(c) Engage local counsel in any relevant jurisdiction for the purpose of advising on and effecting the registration of flag-state ship mortgages over the Collateral Vessels, including, without limitation, counsel in Greece, Malta, the marshall Islands, Liberia, Panama, and any other flag state under which any Collateral Vessel is registered, and to authorize such local counsel to file all necessary documents with the applicable ship registries;
(d) Comply, and cause the Company and its subsidiaries to comply, with all applicable securities laws and regulations in connection with the Offering, including, without limitation, the requirements of Rule 144A and Regulation S under the Securities Act of 1933, as amended, the rules and regulations of the United States Securities and Exchange Commission, and the listing rules of the SGX-ST; and
(e) Take any and all other actions, make any and all other filings, and obtain any and all other approvals, consents, or registrations as may be required by applicable law, regulation, or contractual obligation in connection with the Offering and the transactions contemplated by the Transaction Documents.
RESOLUTION 10 — GENERAL AUTHORITY
RESOLVED, that the Authorized Officers, and each of them acting individually (except where joint action is specifically required by these resolutions), are hereby authorized, empowered, and directed to take any and all further actions, and to execute and deliver any and all further documents, instruments, agreements, certificates, notices, consents, filings, and other writings, in the name and on behalf of the Company, as such Authorized Officer may deem necessary, advisable, or appropriate to carry out the purposes and intent of the foregoing resolutions and to consummate the transactions contemplated by the Transaction Documents, the execution and delivery of any such document or the taking of any such action by any Authorized Officer to be conclusive evidence of such officer's determination that such action or document is necessary, advisable, or appropriate and of such officer's approval thereof, and no further action or approval of the Board shall be required in connection therewith.
FURTHER RESOLVED, that all actions heretofore taken by any officer, director, or authorized representative of the Company, or by any officer, director, or authorized representative of any subsidiary of the Company, in connection with the Notes Offering and the matters contemplated by these resolutions, including, without limitation, the negotiation and preparation of the Transaction Documents, the engagement of advisors and service providers, the preparation of the Offering Memorandum and the Investor Presentation, the obtaining of preliminary credit ratings, the procurement of the fleet appraisal, and all communications with regulators, stock exchanges, and prospective investors, are hereby ratified, confirmed, and approved in all respects as the acts and deeds of the Company.
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