CONFIDENTIAL — INTERNAL MEMORANDUM
CALDERWOOD & HARKNESS LLP 125 Broad Street, New York, NY 10004
MATTER OPENING MEMORANDUM
TO: New Matter File
FROM: Robert Adeyemi, Responsible Partner, Capital Markets
DATE: June 13, 2022
RE: Matter Opening — Thalassa Shipping & Logistics SA — $400,000,000 Senior Secured Notes due 2029
MATTER NO.: 1044-00004
CLIENT NO.: 80214-TSL
PRACTICE AREA: Capital Markets
STATUS: Active — New Engagement
Right-click to update Table of Contents
1. Purpose
This memorandum establishes the new matter file for Calderwood & Harkness LLP's representation of Thalassa Shipping & Logistics SA ("TSL" or the "Issuer") as issuer's counsel in connection with a proposed offering of $400,000,000 aggregate principal amount of Senior Secured Notes due 2029 (the "Notes" or the "Offering"). Calderwood & Harkness LLP ("C&H" or the "Firm") has been retained as lead international counsel to the Issuer, and this memorandum sets forth the relevant client information, transaction summary, engagement scope, staffing, billing arrangements, conflicts clearance, and anticipated timeline necessary to facilitate the orderly administration of this matter.
This memorandum is to be circulated to the Firm's Conflicts Committee, the Finance and Billing Department, and Capital Markets Practice Group leadership for their respective records and administrative processing. Each recipient is reminded that the contents of this memorandum are strictly confidential and are not to be disclosed to any person outside of Calderwood & Harkness LLP without the prior written authorization of the Responsible Partner identified herein.
The engagement letter between Calderwood & Harkness LLP and Thalassa Shipping & Logistics SA was duly executed as of June 13, 2022, and a copy has been filed in the matter file. The engagement letter governs the scope, fee arrangements, limitation of liability provisions, and other terms applicable to the Firm's representation in this matter. All team members staffed on this matter should familiarize themselves with the terms of the engagement letter prior to commencing substantive work.
2. Client Information
2.1 Client Identity
Full Legal Name: Thalassa Shipping & Logistics SA
Short Name / Nickname: TSL / Thalassa
Entity Type: Société Anonyme (SA) organized and existing under the laws of the Hellenic Republic
Greek General Commercial Registry (GEMI) No.: 148276201000
Registered Office and Headquarters: 42 Akti Miaouli, Piraeus 185 35, Greece
TSL is a privately held Greek shipping company with a well-established presence in the dry-bulk and container feeder segments of the international maritime industry. The company was founded in 1997 and has grown, through a combination of organic fleet expansion and selective acquisitions, into a mid-market operator with a diversified fleet and complementary logistics operations.
2.2 Client Business Description
TSL owns and operates a fleet of 50 vessels, consisting of 38 dry-bulk carriers across the Supramax, Ultramax, and Kamsarmax size classes, and 12 container feeder vessels deployed primarily on intra-regional trade routes. In addition to its core vessel-owning and chartering operations, TSL maintains integrated port logistics and freight-forwarding operations across the Eastern Mediterranean, Black Sea, and Southeast Asian trade lanes. These ancillary operations provide a diversified revenue base and complement the company's vessel chartering activities by enabling TSL to offer end-to-end supply chain solutions to its customer base.
The company was founded in 1997 by the Kallistratos family, which continues to serve as the controlling shareholder group and remains actively involved in the strategic management and fleet investment decisions of the business. The Kallistratos family's deep-rooted presence in the Piraeus shipping community and extensive relationships with charterers, shipyards, and financial institutions across Europe and Asia have been instrumental in TSL's growth trajectory.
Key operating and financial metrics as of the most recent reporting period are summarized below:
• Fleet Appraised Value (June 2022): Approximately $1.82 billion (based on an independent desktop valuation prepared by Compass Marine Valuations Ltd., dated June 2022)
• Last Twelve Months ("LTM") Revenue (Q1 2022 annualized): $687.4 million
• LTM Adjusted EBITDA (Q1 2022 annualized): $214.6 million
• Total Deadweight Tonnage ("DWT"): Approximately 2,850,000
• Average Vessel Age: 9.2 years
The strong LTM Adjusted EBITDA figure reflects favorable dry-bulk charter rate conditions experienced through the second half of 2021 and into the first quarter of 2022, driven by post-pandemic supply chain recovery, port congestion effects, and firm commodity demand. TSL's relatively young fleet (average age of 9.2 years) positions it well from both a fuel efficiency and a regulatory compliance perspective in light of the International Maritime Organization's increasingly stringent emissions standards (including EEXI and CII requirements taking effect in January 2023).
2.3 Ownership Structure
The equity ownership of TSL is concentrated in three principal holders, as described below:
Kallistratos Maritime Holdings Ltd. ("KMH") — 72.5%
KMH is a BVI Business Company with its registered office at Craigmuir Chambers, Road Town, Tortola, British Virgin Islands. KMH is beneficially owned 100% by Dimitrios Kallistratos, who serves as Chairman of TSL's Board of Directors. Through KMH, Mr. Kallistratos exercises effective control over all matters submitted to a vote of TSL's shareholders, including the election of directors, approval of significant corporate transactions, and amendments to the company's articles of incorporation. This concentrated control position is expected to be disclosed as a risk factor in the Offering Memorandum.
Pelagos Capital Partners Fund III LP ("Pelagos Fund III") — 18.0%
Pelagos Fund III is a Cayman Islands Exempted Limited Partnership. The general partner of Pelagos Fund III is Pelagos Capital Management Ltd., a Cayman Islands entity. The Managing Partner of the Pelagos Capital group is Andreas Vournas. Pelagos Fund III has total assets under management of approximately $1.4 billion and is focused on investments in the transportation and maritime infrastructure sectors. Pelagos Fund III holds two of seven seats on TSL's Board of Directors. The terms of any shareholder agreement, co-sale rights, or other governance arrangements between KMH and Pelagos Fund III will need to be reviewed in the context of the due diligence process and disclosed in the Offering Memorandum as appropriate.
Management (ESOP Trust) — 9.5%
The remaining 9.5% of TSL's equity is held through an employee stock ownership plan (ESOP) trust for the benefit of senior management. The specific terms of the ESOP, including vesting schedules, put/call mechanics, and change-of-control provisions, will need to be reviewed during the diligence process for purposes of assessing any potential impact on the security package and the covenant framework in the Indenture.
2.4 Key Client Contacts
The following individuals have been identified as the primary contacts at TSL for purposes of this engagement. All substantive communications regarding the transaction should be directed to the individuals listed below and, on the C&H side, coordinated through the Lead Associate (Brendan Walsh) or the Responsible Partner (Robert Adeyemi), as appropriate.
All client correspondence and file copies of substantive communications should be maintained in the document management system under matter number 1044-00004. The engagement team should be mindful of time zone differentials (Piraeus is GMT+3; Singapore is GMT+8) when scheduling calls and circulating documents.
3. Transaction Summary
3.1 Overview. The proposed transaction involves the offering of $400,000,000 aggregate principal amount of Senior Secured Notes due 2029. The Notes will be co-issued by Thalassa Shipping & Logistics SA (as primary issuer) and Thalassa Finance Pte. Ltd. ("TFPL"), a wholly-owned Singapore subsidiary established as the co-issuer vehicle for purposes of this transaction.
The key terms of the proposed Notes offering are summarized as follows:
• Co-Issuers: Thalassa Shipping & Logistics SA and Thalassa Finance Pte. Ltd.
• TFPL Details: UEN 202209345K; registered office at 8 Marina Boulevard, #36-02, Marina Bay Financial Centre Tower 1, Singapore 018981; sole director: Marina Demetriou. TFPL holds intercompany loans to the fleet-owning subsidiaries of the TSL group, which form part of the collateral package (described in Section 3.2 below).
• Aggregate Principal Amount: $400,000,000
• Maturity: 7 years from issue; anticipated issue date of October 15, 2022, with maturity on October 15, 2029
• Indicative Coupon: 8.750% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, commencing April 15, 2023
• Issue Price: 98.00% of par (reflecting an original issue discount ("OID") of 2.00%), resulting in gross proceeds to the Issuers of $392,000,000
• Indicative Yield to Maturity: Approximately 9.12%
• Denominations: Minimum denomination of $200,000 and integral multiples of $1,000 in excess thereof
• Form and Distribution: Rule 144A and Regulation S; global notes to be held through The Depository Trust Company ("DTC"), Stonefield Industries, and Harborview Industries
• Governing Law: The laws of the Republic of Singapore
• Listing: Application to be made for listing and quotation of the Notes on the Singapore Exchange Securities Trading Limited ("SGX-ST")
The choice of Singapore governing law and the SGX-ST listing reflects TSL's significant operational presence in the Asia-Pacific region through its Singapore-incorporated subsidiaries and its existing commercial banking relationships in Singapore. The co-issuer structure utilizing TFPL as the Singapore-incorporated vehicle is a common arrangement in cross-border high-yield offerings and facilitates the flow of funds from noteholders to the fleet-owning subsidiaries through the existing intercompany loan structure.
3.2 Security Package
The Notes will be secured by a comprehensive first-priority security package designed to provide noteholders with direct recourse to the core operating assets of the TSL group. The principal components of the security package are as follows:
• Ship Mortgages: First-priority ship mortgages over 28 of the 50 vessels in the TSL fleet (the "Collateral Vessels"). The Collateral Vessels have been appraised at an aggregate value of approximately $1.175 billion as of June 2022 (based on the independent desktop valuation prepared by Compass Marine Valuations Ltd.), resulting in a collateral coverage ratio of approximately 2.94x the aggregate principal amount of the Notes. The specific flag-state registrations of the Collateral Vessels will determine the applicable mortgage documentation requirements and the jurisdictions in which local counsel opinions will be required. The engagement team should anticipate mortgage documentation under Greek, Maltese, and marshall Islands law.
• Assignment of Earnings, Insurances, and Requisition Compensation: First-priority assignment of all earnings (including charter hire, freight revenues, and demurrage), insurance proceeds (hull & machinery, P&I, and war risk), and requisition compensation attributable to the Collateral Vessels.
• Equity Pledges: First-priority pledge over 100% of the issued and outstanding equity interests of TFPL and each fleet-owning guarantor subsidiary identified in Section 3.3 below.
• Assignment of Intercompany Loan Receivables: First-priority assignment of the intercompany loan receivables from TFPL to the fleet-owning subsidiaries, in an aggregate amount of $365 million. These intercompany loans represent the primary mechanism through which the Notes proceeds flow downstream to the vessel-owning entities in the TSL group structure.
Security Agent: The security agent for the Notes will be Atlas Collateral Agency Pte. Ltd. ("ACA"), located at 80 Robinson Road, #02-00, Singapore 068898 (UEN: 200115678R). The key contact at ACA is Karen Ng, Associate Director, Collateral Services. ACA is an established collateral agency with significant experience in maritime and transportation-sector secured notes transactions.
3.3 Guarantees. The Notes will benefit from upstream guarantees provided by each of the following Guarantor Subsidiaries:
(a) Thalassa Dry Bulk Operations Ltd. — a company organized under the laws of Malta, serving as the fleet-owning subsidiary for 22 of TSL's dry-bulk carriers;
(b) Thalassa Container Feeder Ltd. — a company organized under the laws of the Republic of the marshall Islands, serving as the fleet-owning subsidiary for 12 container feeder vessels;
(c) Thalassa Port Services FZCO — a free zone company organized in the Dubai Multi Commodities Centre Free Zone, conducting the group's port logistics operations in the Middle East and Indian subcontinent; and
(d) Thalassa Freight Solutions Pte. Ltd. — a company organized under the laws of the Republic of Singapore, conducting the group's freight-forwarding operations in Southeast Asia.
In addition, the Notes will benefit from a limited parent guarantee from Kallistratos Maritime Holdings Ltd. (BVI), capped at $50,000,000 in aggregate. The limited nature of the KMH guarantee, and the rationale for the cap, will need to be clearly disclosed in the Offering Memorandum and addressed in the risk factors section. The engagement team should coordinate with Whitfield & Crane LLP (counsel to the Initial Purchasers) to ensure that the cap amount and triggering conditions are satisfactory from the Initial Purchasers' perspective.
3.4 Use of Proceeds
The anticipated application of the gross proceeds from the Offering is set forth below:
The primary purpose of the Offering is to refinance the two existing bilateral secured ship-finance facilities described in Section 3.5 below, thereby simplifying the group's capital structure, extending the maturity profile, and providing operational flexibility through the elimination of amortization requirements and financial maintenance covenants associated with the existing bank facilities. The residual proceeds will be applied to general corporate purposes and fleet capital expenditures, including scheduled drydockings and ballast water treatment system installations required for regulatory compliance.
3.5 Existing Indebtedness (to be Refinanced)
TSL's existing funded indebtedness consists of two bilateral secured ship-finance facilities that will be refinanced in full with the proceeds of the Notes:
• Meridian Maritime Bank AG Facility: A $190,000,000 bilateral secured ship-finance facility provided by Meridian Maritime Bank AG, with offices at Talstrasse 18, 8001 Zürich, Switzerland. The key contact at Meridian Maritime is Hans-Peter Gerber, Senior Director, Shipping Finance. This facility is secured by first-priority ship mortgages over a portion of the TSL fleet and contains financial maintenance covenants, including minimum collateral coverage and leverage ratio tests.
• Clearwater Shipping Finance Ltd. Facility: A $120,000,000 bilateral secured ship-finance facility provided by Clearwater Shipping Finance Ltd., with offices at 1 Fleet Place, London EC4M 7RA, United Kingdom. The key contact at Clearwater is Emma Blackwood, Director, Structured Ship Finance. This facility is similarly secured by first-priority ship mortgages and contains customary financial maintenance covenants.
The total existing debt to be refinanced is $310,000,000. The payoff and discharge of these facilities will require close coordination with the existing lenders and their counsel to ensure that all existing security interests are properly released contemporaneously with the closing of the Offering and the granting of new first-priority security in favor of the Notes. The engagement team should request payoff letters from each existing lender at the earliest practicable date and should coordinate with the Security Agent (ACA) regarding the sequencing of release and re-registration of ship mortgages.
3.6 Key Pro Forma Financial Metrics
The following key financial metrics are presented on a pro forma basis, giving effect to the completion of the Offering and the application of the proceeds as described in Section 3.4:
The pro forma leverage and coverage metrics are attractive relative to comparable maritime high-yield issuances and should support a constructive engagement with the rating agencies. The net leverage ratio of 1.59x and interest coverage ratio of 6.13x provide meaningful headroom against anticipated covenant levels in the Indenture and are consistent with a mid-single-B to low-BB credit profile in the maritime sector.
3.7 Preliminary Ratings
TSL has engaged two credit rating agencies to provide preliminary ratings in connection with the Offering:
• Polaris Ratings Group Ltd. — a Bermuda exempted company registered with the European Securities and Markets Authority ("ESMA") as a credit rating agency under the CRA Regulation. Headquarters: Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton HM 08, Bermuda. Key contact: Carl Johansson, Lead Analyst. The rating engagement is underway and a preliminary rating is expected to be assigned in advance of the planned launch date.
• Oceanic Credit Assessments Inc. — a Delaware corporation registered with the U.S. Securities and Exchange Commission as a nationally recognized statistical rating organization ("NRSRO"). Headquarters: 120 Broadway, Suite 2200, New York, NY 10271. Key contact: Linda Park, Senior Director. The rating engagement is underway and a preliminary rating is expected to be assigned in advance of the planned launch date.
The engagement team should coordinate with TSL's CFO, Marina Demetriou, regarding the preparation of rating agency presentations and the provision of financial data packages to each rating agency. C&H will review the rating agency presentations for consistency with the disclosure in the Offering Memorandum.
4. Scope of Calderwood & Harkness Engagement
Calderwood & Harkness LLP has been retained as issuer's counsel (lead international counsel) for the proposed Notes offering. The scope of the Firm's engagement encompasses the following workstreams:
(a) Indenture. Drafting and negotiation of the Indenture governing the Notes, which will be governed by the laws of the Republic of Singapore. The Indenture will contain customary high-yield covenants, including limitations on indebtedness, restricted payments, asset sales, affiliate transactions, and merger/consolidation, as well as events of default, optional and mandatory redemption provisions, and change of control offer mechanics.
(b) Purchase Agreement. Drafting and negotiation of the Purchase Agreement between the Issuers, the Guarantors, and the Initial Purchasers, setting forth the terms and conditions of the Initial Purchasers' commitment to purchase the Notes.
(c) Registration Rights Agreement. Drafting and negotiation of the Registration Rights Agreement providing for the exchange offer and/or shelf registration of the Notes within applicable time periods.
(d) Intercreditor Agreement. Drafting and negotiation of the Intercreditor Agreement among the Issuers, the Guarantors, the Trustee, and the Security Agent, governing the relative priorities and enforcement rights with respect to the shared collateral.
(e) Security Documents. Drafting and negotiation of the Security Documents, including ship mortgages over the Collateral Vessels, assignments of earnings and insurances, share pledge agreements over the equity of TFPL and the Guarantor Subsidiaries, and assignments of intercompany loan receivables from TFPL to the fleet-owning subsidiaries. C&H will coordinate with local counsel in the relevant flag-state jurisdictions regarding the form and execution requirements of the ship mortgages.
(f) Offering Memorandum. Drafting of the Offering Memorandum (anticipated to be approximately 280 pages in length), in coordination with TSL management and the Initial Purchasers. The Offering Memorandum will include a detailed description of the business, risk factors, financial information (including audited financial statements and unaudited interim financial statements), description of the Notes, security package, and other customary disclosure sections.
(g) Due Diligence. Coordination of the due diligence process, including management presentations, data room review, and business and legal diligence. C&H will prepare the due diligence request list, organize and review the virtual data room, and participate in due diligence sessions with management and the Initial Purchasers' counsel.
(h) Legal Opinions. Preparation of the C&H Singapore-law opinion (to the extent the Firm is qualified to deliver same under the engagement letter) and coordination and review of local counsel opinions from Delphi & Karidis LLP (Greek-law opinion on TSL's corporate existence, authority, and enforceability under Greek law) and Rajendra & Osman LLP (Singapore-law opinion on TFPL's capacity, authority, and enforceability under Singapore law, including the validity and enforceability of the Singapore-governed Indenture and Security Documents).
(i) Comfort Letter Process. Coordination of the comfort letter process with Kestrel & White Chartered Accountants, including preparation of the comfort letter request identifying specific financial data items and periods to be covered by the comfort procedures.
(j) Corporate Authorizations. Preparation of board resolutions and corporate authorizations for TSL (board of directors and shareholder resolutions, as applicable under Greek corporate law) and TFPL (sole director resolutions under Singapore law).
(k) Closing Deliverables. Preparation of closing deliverables, including officers' certificates, secretary's certificates, signature pages, and the closing checklist and closing memorandum.
(l) Investor Presentation Review. Review of the investor presentation and roadshow deck for consistency with the Offering Memorandum disclosure.
(m) Payoff and Discharge Coordination. Coordination of payoff and discharge mechanics with the existing lenders (Meridian Maritime Bank AG and Clearwater Shipping Finance Ltd.), including the preparation and negotiation of payoff letter requests and coordination of the simultaneous release and re-grant of security interests at closing.
(n) SGX-ST Listing. Support for the SGX-ST listing application, including preparation and review of the listing application materials and liaison with the SGX-ST as needed.
(o) Risk Factors Drafting Memorandum. Preparation of a risk factors drafting memorandum identifying key risk areas for disclosure in the Offering Memorandum.
(p) 10b-5 Disclosure Letter Framework. Coordination with Whitfield & Crane LLP regarding the 10b-5 negative assurance letter framework and disclosure review process.
Out-of-Scope Items. For the avoidance of doubt, the following items are outside the scope of the Firm's engagement:
• Kestrel & White Chartered Accountants' own audit reports and the conduct of the audit procedures underlying such reports. C&H will review the audit reports solely for purposes of ensuring consistency with the Offering Memorandum disclosure and the comfort letter process.
• The independent fleet appraisal work performed by Compass Marine Valuations Ltd. C&H will review the appraisal report for Offering Memorandum disclosure purposes only and will not independently verify or take responsibility for the valuation conclusions set forth therein.
5. Engagement Team
5.1 Calderwood & Harkness Staffing
The following attorneys have been staffed on this matter:
Additional staffing may be required as the transaction progresses, particularly in connection with the intensive drafting and negotiation period anticipated during August and September 2022. Any additional staffing will be approved by the Responsible Partner and communicated to the Billing Partner for fee estimate adjustment purposes.
Estimated Total Fees: $2,400,000, based on approximately 2,285 hours at a blended rate of approximately $1,050 per hour. This estimate reflects the Firm's experience with comparable maritime high-yield notes offerings and takes into account the complexity of the multi-jurisdictional security package, the co-issuer structure, and the anticipated volume of negotiation with the Initial Purchasers' counsel. Billing arrangements are as set forth in the engagement letter dated June 13, 2022.
5.2 Fee Estimate in Context of Total Transaction Costs
For informational purposes, the estimated total transaction costs associated with the Offering are approximately $13.7 million, broken down as follows:
Calderwood & Harkness's fees represent the single largest legal cost item among issuer's counsel and the second largest professional fee (after the Initial Purchaser discount) in the overall transaction cost structure. The engagement team should be mindful of the fee estimate throughout the engagement and should flag any anticipated overruns to the Billing Partner promptly.
6. Other Transaction Parties and Advisors
6.1 Initial Purchasers
The total Initial Purchaser discount is 2.00% of the aggregate principal amount of the Notes, or $8,000,000 in the aggregate. The allocation of economics between Anchor Bay Securities LLC ("ABS") and Halcyon Partners International Ltd. ("Halcyon") reflects ABS's role as lead-left bookrunner and its assumption of the primary underwriting risk and distribution responsibility for the Offering. ABS will serve as the primary point of contact among the Initial Purchasers for purposes of the due diligence process, roadshow coordination, and investor feedback.
6.2 Trustee. Marlowe Asset Management Trust Company of Singapore Pte. Ltd. (UEN: 199804782D) 80 Robinson Road, #02-00, Singapore 068898
Key contact: Richard Tan, Vice President, Corporate Trust
• Trustee acceptance fee: $25,000
• Annual trustee fee: $15,000 per year
Trustee's Counsel: Thornton Ashworth LLP, 1 Raffles Place, #44-02, One Raffles Place Tower 1, Singapore 048616. Key contact: Michelle Goh, Partner, Banking & Finance. The Trustee's counsel will review the Indenture and related documents from the Trustee's perspective and will provide comments reflecting the Trustee's standard institutional requirements regarding indemnification, liability limitations, and operational provisions.
6.3 Security Agent / Collateral Agent
Atlas Collateral Agency Pte. Ltd. (as described in Section 3.2 above) 80 Robinson Road, #02-00, Singapore 068898 (UEN: 200115678R)
Key contact: Karen Ng, Associate Director, Collateral Services
• Security Agent acceptance fee: $20,000
• Annual Security Agent fee: $30,000 per year
ACA will serve as the Security Agent under the Indenture and the Intercreditor Agreement and will hold the collateral on behalf of the Trustee and the holders of the Notes. ACA has extensive experience in maritime collateral agency mandates and maintains relationships with ship registries in multiple flag states.
6.4 Counsel to Initial Purchasers
Whitfield & Crane LLP One Liberty Plaza, 165 Broadway, New York, NY 10006
Key contacts: Thomas Whitfield III, Partner, Capital Markets; Rebecca Samuels, Senior Associate, High-Yield
• Estimated fees: $1,800,000
Whitfield & Crane LLP will represent the Initial Purchasers in all aspects of the Offering, including the negotiation of the Purchase Agreement, the due diligence process (including the delivery of the 10b-5 negative assurance letter), and the review of the Offering Memorandum. C&H's Lead Associate (Brendan Walsh) will serve as the primary point of contact for day-to-day communications with Whitfield & Crane.
6.5 Local Counsel (Issuer Side)
C&H will coordinate closely with both local counsel firms to ensure consistency in the legal opinion framework and the corporate authorization documentation. Drafts of local counsel opinions should be circulated to C&H for review no later than three weeks prior to the anticipated closing date.
6.6 Auditor / Comfort Letter Provider
Kestrel & White Chartered Accountants (Greek SA; member of Kestrel & White International network) 22 Kifisias Avenue, Marousi 151 25, Athens, Greece
Key contact: Georgios Papadimitriou, Audit Partner
Kestrel & White serves as the independent auditor of TSL and will provide the comfort letter (under SAS 72 / ISAE equivalent standards) in connection with the Offering. The comfort letter will cover specified financial data in the Offering Memorandum, including the audited financial statements, unaudited interim financial statements, and certain pro forma financial information. C&H will prepare the comfort letter request and coordinate the bring-down comfort letter for delivery at closing.
• Comfort letter fee: €85,000 (~$89,250)
6.7 Fleet Appraiser
Compass Marine Valuations Ltd. (English private limited company) 3 Thomas More Square, London E1W 1WY, United Kingdom
Key contact: Robert Hargreaves, Managing Director
Compass Marine Valuations Ltd. has prepared an independent desktop fleet valuation of the TSL fleet, dated June 2022, which will be referenced in the Offering Memorandum and utilized in connection with the collateral coverage ratio calculations. The appraisal covers all 50 vessels in the fleet, with individual vessel valuations provided on a charter-free, as-is basis.
• Appraisal fee: $95,000
As noted in Section 4 above, C&H's scope does not extend to the independent verification of the appraisal conclusions. C&H will review the appraisal report for Offering Memorandum disclosure purposes only.
6.8 Rating Agencies
Preliminary ratings from both agencies are expected to be received in advance of the planned launch date. The engagement team should ensure that the Offering Memorandum disclosure regarding ratings is consistent with the agencies' published methodologies and that any rating agency disclaimers are properly reflected.
7. Proposed ISINs and Identifiers
The following securities identifiers have been proposed for the Notes and will be confirmed prior to closing:
These identifiers are proposed only and remain subject to confirmation by the relevant numbering agencies (CUSIP Global Services, ANNA, and the relevant local numbering agency). Final identifiers should be confirmed with the Trustee and the Initial Purchasers no later than two business days prior to the anticipated pricing date and reflected accurately in the final Offering Memorandum and the forms of Global Notes.
8. Anticipated Timeline and Key Milestones
The following timeline sets forth the currently anticipated schedule for the transaction. All dates are approximate and subject to change based on market conditions, the progress of due diligence and document negotiations, and the receipt of preliminary ratings. The engagement team should track progress against these milestones and report any material delays to the Responsible Partner promptly.
The overall timeline from engagement opening to targeted closing is approximately four months, which is consistent with C&H's experience on comparable maritime high-yield notes offerings. However, the multi-jurisdictional nature of the security package, the co-issuer structure, and the need to coordinate payoff and discharge of two existing bilateral facilities introduce execution complexity that the engagement team should monitor closely.
9. Conflicts Clearance
Reference is made to the Conflict Check Memorandum dated June 10, 2022, prepared by Natasha Forbes (Working Associate) and approved by Robert Adeyemi (Responsible Partner). The conflict check was conducted in accordance with the Firm's standard conflicts clearance procedures and covered all identified transaction parties and their respective affiliates, as well as the principals, beneficial owners, and key personnel of such parties.
The Conflict Check Memorandum confirms that no conflicts of interest were identified with respect to any of the following parties:
• Thalassa Shipping & Logistics SA
• Kallistratos Maritime Holdings Ltd.
• Dimitrios Kallistratos (individually)
• Pelagos Capital Partners Fund III LP and Pelagos Capital Management Ltd.
• Anchor Bay Securities LLC
• Halcyon Partners International Ltd.
• Meridian Maritime Bank AG
• Clearwater Shipping Finance Ltd.
• Marlowe Asset Management Trust Company of Singapore Pte. Ltd.
• Atlas Collateral Agency Pte. Ltd.
• Thalassa Finance Pte. Ltd.
• Thalassa Dry Bulk Operations Ltd.
• Thalassa Container Feeder Ltd.
• Thalassa Port Services FZCO
• Thalassa Freight Solutions Pte. Ltd.
• Any other identified transaction party or advisor
The Conflict Check Memorandum has been submitted to the Conflicts Committee for its records. Any conflict waivers that may be required in connection with ancillary matters or future engagements involving any of the above-listed parties have been addressed in the engagement letter. The engagement team is reminded of its obligation to promptly report any potential conflicts that may arise during the course of the engagement to the Responsible Partner and the Conflicts Committee.
10. Administrative and Billing Instructions
The following administrative and billing instructions apply to all time entries, expenses, and disbursements incurred in connection with this matter:
Matter Number: 1044-00004
Client Number: 80214-TSL
Practice Area Code: Capital Markets
Time Entry Coding: All time entries by attorneys and other timekeepers working on this matter must be coded to matter number 1044-00004. Timekeepers should use descriptive narrative entries that identify the specific workstream (e.g., "Indenture drafting," "OM risk factors," "due diligence review," "security documents — ship mortgage") to facilitate accurate budgeting, tracking, and client reporting.
Billing Partner: Jennifer Kwon
Billing Arrangements: Monthly invoicing in accordance with the terms set forth in the engagement letter dated June 13, 2022. Invoices will be prepared by the Billing Partner and reviewed by the Responsible Partner prior to submission to the client. The estimated total fees for this engagement are $2,400,000.
Expense Approval and Disbursement Protocols: All expenses and disbursements (including travel, filing fees, courier charges, and external service provider costs) shall be incurred in accordance with the Firm's standard expense reimbursement policies. Travel to Piraeus for the due diligence session (anticipated late July 2022) and travel for the roadshow (anticipated late September 2022) should be pre-approved by the Responsible Partner. Material expense items (exceeding $5,000 individually) should be flagged to the Billing Partner in advance.
Document Management: All documents, correspondence, and work product generated in connection with this matter must be filed in the Firm's document management system under matter number 1044-00004. The engagement team should establish and maintain an organized folder structure reflecting the principal document workstreams identified in Section 11 below. A working group site (virtual data room or secure collaboration platform) will be established for document sharing among the deal parties, and access credentials will be managed by the Lead Associate.
11. Document Workstream Overview
The following is a summary enumeration of the principal documents that Calderwood & Harkness will be responsible for drafting, reviewing, or coordinating in connection with this engagement. This list is intended to provide a high-level overview of the document production workload and is not exhaustive; additional ancillary documents, correspondence, and deliverables may be required as the transaction progresses.
1. Indenture (Singapore law governed) — the primary governing instrument for the Notes, containing covenants, events of default, redemption provisions, collateral provisions, and related terms
2. Purchase Agreement — the agreement among the Issuers, the Guarantors, and the Initial Purchasers governing the purchase and sale of the Notes
3. Registration Rights Agreement — the agreement providing for the exchange offer and/or shelf registration of the Notes
4. Intercreditor Agreement — the agreement governing the relative priorities, enforcement rights, and remedies of the secured parties with respect to the shared collateral
5. Security Documents:
(a) Ship mortgages over the 28 Collateral Vessels (multiple flag-state jurisdictions)
(b) Assignments of earnings and insurances for the Collateral Vessels
(c) Share pledge agreements over the equity of TFPL and each Guarantor Subsidiary
(d) Assignment of intercompany loan receivables from TFPL to fleet-owning subsidiaries
6. Offering Memorandum — anticipated to be approximately 280 pages in length, including business description, risk factors, capitalization and indebtedness, selected financial data, management's discussion and analysis, description of the Notes, description of the security, and financial statements