1044-00004 · Client 1044 · Offering Memorandum & Disclosure

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OFFERING MEMORANDUM — CONFIDENTIAL

Near-Final — 4th Draft — Dated September 12, 2022

CONFIDENTIAL — FOR DISTRIBUTION ONLY TO QUALIFIED INSTITUTIONAL BUYERS UNDER RULE 144A AND NON-U.S. PERSONS UNDER REGULATION S

$400,000,000

8.750% Senior Secured Notes due 2029

Co-Issuers:

Thalassa Shipping & Logistics SA (a société anonyme organized under the laws of the Hellenic Republic, GEMI No. 148276201000, registered office at 42 Akti Miaouli, Piraeus 185 35, Greece)

and

Thalassa Finance Pte. Ltd. (a Singapore private company limited by shares, UEN 202209345K, registered office at 8 Marina Boulevard, #36-02, Marina Bay Financial Centre Tower 1, Singapore 018981)

The Notes will bear interest at a rate of 8.750% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, commencing April 15, 2023. The Notes will mature on October 15, 2029.

Issue Price: 98.00% of par (yield to maturity approximately 9.12%)

Minimum Denomination: $200,000 and integral multiples of $1,000 in excess thereof

Form: The Notes are being offered and sold (i) in the United States only to qualified institutional buyers in reliance on Rule 144A under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and (ii) outside the United States to non-U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act. The Notes will be issued in registered, book-entry form only. Rule 144A Notes will be represented by one or more global notes deposited with, or on behalf of, The Depository Trust Company ("DTC"). Regulation S Notes will be represented by one or more global notes deposited with a common depositary for Stonefield Industries ("Thackeray Partners LLC") and Harborview Industries ("Ashgrove Enterprises").

Security: The Notes will be secured on a first-priority basis by (i) ship mortgages over 28 Collateral Vessels (appraised at approximately $1,175,000,000 in aggregate by Compass Marine Valuations Ltd. as of June 2022, representing a collateral coverage ratio of approximately 2.94x), (ii) assignment of earnings and insurances in respect of the Collateral Vessels, (iii) pledges of 100% of the equity interests in the Co-Issuer and each Guarantor Subsidiary, and (iv) assignment of $365,000,000 in intercompany loan receivables.

Guarantees: The Notes will be guaranteed on a joint and several basis by Thalassa Dry Bulk Operations Ltd. (Malta), Thalassa Container Feeder Ltd. (Marshall Islands), Thalassa Port Services FZCO (Dubai), and Thalassa Freight Solutions Pte. Ltd. (Singapore). Kallistratos Maritime Holdings Ltd. (BVI) will provide a limited parent guarantee, capped at $50,000,000.

Ratings: Preliminary B+ (stable outlook) from Polaris Ratings Group Ltd.; Preliminary B1 (stable outlook) from Oceanic Credit Assessments Inc. A credit rating is not a recommendation to buy, sell, or hold securities and may be subject to revision, suspension, or withdrawal at any time by the assigning rating agency.

Listing: Application will be made for the Notes to be listed on the Singapore Exchange Securities Trading Limited ("SGX-ST"). No assurance can be given that such listing will be obtained or maintained.

Governing Law: Singapore

Trustee: Marlowe Asset Management Trust Company of Singapore Pte. Ltd.

Security Agent: Atlas Collateral Agency Pte. Ltd.

THE NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION. THE NOTES ARE BEING OFFERED AND SOLD ONLY (I) IN THE UNITED STATES TO QUALIFIED INSTITUTIONAL BUYERS IN RELIANCE ON RULE 144A UNDER THE SECURITIES ACT AND (II) OUTSIDE THE UNITED STATES TO NON-U.S. PERSONS IN OFFSHORE TRANSACTIONS IN RELIANCE ON REGULATION S UNDER THE SECURITIES ACT.

SEE "RISK FACTORS" BEGINNING ON PAGE [●] FOR A DISCUSSION OF CERTAIN RISKS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NOTES.

Lead Bookrunner and Initial Purchaser

Anchor Bay Securities LLC

Co-Manager and Initial Purchaser

Halcyon Partners International Ltd.

This Offering Memorandum contains forward-looking statements that involve risks and uncertainties. The Co-Issuers' actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under "Risk Factors" and elsewhere in this Offering Memorandum. Prospective investors should carefully consider the risk factors described herein before making an investment decision. This Offering Memorandum does not constitute an offer to sell or a solicitation of an offer to buy the Notes in any jurisdiction in which such offer or solicitation would be unlawful.

IMPORTANT NOTICES

Responsibility Statement. Each of the directors of Thalassa Shipping & Logistics SA ("TSL") and Thalassa Finance Pte. Ltd. ("TFPL" and, together with TSL, the "Co-Issuers") accepts responsibility for the information contained in this Offering Memorandum. To the best of the knowledge and belief of each such director, having taken all reasonable care to ensure that such is the case, the information contained in this Offering Memorandum is in accordance with the facts and does not omit anything likely to affect the import of such information. Each of the directors of TSL and TFPL accepts responsibility accordingly.

No person has been authorized by the Co-Issuers, the Guarantors, the Initial Purchasers, the Trustee, or the Security Agent to give any information or to make any representation other than those contained in this Offering Memorandum in connection with the offering of the Notes, and, if given or made, such information or representation must not be relied upon as having been authorized by the Co-Issuers, the Guarantors, the Initial Purchasers, the Trustee, or the Security Agent. This Offering Memorandum does not constitute an offer to sell or a solicitation of an offer to buy any Notes in any jurisdiction in which such offer or solicitation is unlawful. Neither the delivery of this Offering Memorandum nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Co-Issuers or the Guarantors since the date hereof or that the information contained herein is correct as of any time subsequent to the date of this Offering Memorandum.

Restriction Legends. The Notes have not been and will not be registered under the Securities Act or any state securities laws and may not be offered or sold within the United States except to qualified institutional buyers ("QIBs") as defined in Rule 144A under the Securities Act. The Notes are also being offered and sold outside the United States to non-U.S. persons in offshore transactions in compliance with Regulation S under the Securities Act. Prospective purchasers are hereby notified that sellers of the Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A thereunder.

Singapore Securities and Futures Act. This Offering Memorandum has not been and will not be registered as a prospectus with the Monetary Authority of Singapore. Accordingly, the Notes may not be offered or sold or made the subject of an invitation for subscription or purchase, and this Offering Memorandum or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Notes may not be circulated or distributed, whether directly or indirectly, to any person in Singapore other than (a) to an institutional investor (as defined in Section 4A of the Securities and Futures Act 2001 of Singapore, as amended (the "SFA")) pursuant to Section 274 of the SFA, (b) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA, or (c) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

European Economic Area and United Kingdom Selling Restrictions. The Notes are not intended to be offered, sold, or otherwise made available to, and should not be offered, sold, or otherwise made available to, any retail investor in the European Economic Area ("EEA") or the United Kingdom. For the purposes of this provision, a "retail investor" means a person who is one (or more) of the following: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, "MiFID II"); or (ii) a customer within the meaning of the Insurance Distribution Directive (EU) 2016/97, where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in the Prospectus Regulation (EU) 2017/1129. No key information document required by Regulation (EU) No 1286/2014 (as amended, the "PRIIPs Regulation") for offering or selling the Notes or otherwise making them available to retail investors in the EEA or the United Kingdom has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA or the United Kingdom may be unlawful under the PRIIPs Regulation. The United Kingdom equivalent provisions apply mutatis mutandis.

Greek Regulatory Disclaimers. The Notes are not being publicly offered in the Hellenic Republic. This Offering Memorandum has not been submitted to or approved by the Hellenic Capital Markets Commission. The Notes may only be acquired by investors in the Hellenic Republic falling within the categories set out in applicable Greek law.

Notice Regarding Stabilization. In connection with the offering of the Notes, Anchor Bay Securities LLC (as Stabilization Manager) or any person acting on behalf of the Stabilization Manager may over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail. However, stabilization may not necessarily occur. Any stabilization action may begin on or after the date on which adequate public disclosure of the terms of the offer of the Notes is made and, if begun, may cease at any time, but it must end no later than the earlier of 30 days after the issue date and 60 days after the date of the allotment of the Notes. Any stabilization action or over-allotment must be conducted by the Stabilization Manager (or any person acting on behalf of the Stabilization Manager) in accordance with all applicable laws and rules.

Forward-Looking Statements. This Offering Memorandum contains certain "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and similar legislation in other jurisdictions. These forward-looking statements include, but are not limited to, statements about the Co-Issuers' plans, objectives, expectations, and intentions and other statements contained in this Offering Memorandum that are not historical facts. When used in this Offering Memorandum, the words "expect," "anticipate," "intend," "plan," "believe," "seek," "estimate," "will," "should," "could," "may," "project," and similar expressions are generally intended to identify forward-looking statements. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results, events, or developments to differ materially from those expressed or implied by these forward-looking statements, including the risks described under "Risk Factors." These forward-looking statements are based on current expectations and projections about future events. The Co-Issuers undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Service of Process. TSL has irrevocably appointed Rajendra & Osman LLP, 6 Battery Road, #28-01, Singapore 049909, as its authorized agent for the purpose of accepting service of process in any proceedings in Singapore arising out of or in connection with the Notes and the Indenture.

Industry and Market Data. This Offering Memorandum includes industry and market data obtained from third-party sources, including publicly available industry publications, reports by market research firms, and certain data provided by charterers, brokers, and industry participants. Neither the Co-Issuers nor the Initial Purchasers have independently verified the accuracy or completeness of any such third-party information. While the Co-Issuers believe such data to be reliable, prospective investors should not place undue reliance on such information.

Exchange Rate Conventions. Unless otherwise indicated, conversions of euros into U.S. dollars in this Offering Memorandum have been made at an exchange rate of EUR 1.00 = USD 1.05, and conversions of Singapore dollars into U.S. dollars have been made at an exchange rate of SGD 1.00 = USD 0.73 (or equivalently, USD 1.00 = SGD 1.37). These exchange rates are provided for convenience only and do not represent rates at which euros or Singapore dollars could have been, or may in the future be, exchanged for U.S. dollars.

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SUMMARY

The following summary highlights certain information contained elsewhere in this Offering Memorandum. This summary does not contain all the information that prospective investors should consider before investing in the Notes. Prospective investors should read the entire Offering Memorandum carefully, including the sections entitled "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and the financial statements and related notes included elsewhere herein, before making an investment decision. In this Offering Memorandum, unless the context otherwise requires, references to "we," "us," "our," the "Group," or similar terms refer to Thalassa Shipping & Logistics SA together with its consolidated subsidiaries.

The Offering

The following is a summary of the principal terms of the offering:

The Security Package

The Notes will be secured on a first-priority basis by the following collateral (collectively, the "Collateral"):

• First-priority ship mortgages over 28 Collateral Vessels, which have been independently appraised at approximately $1,175,000,000 in aggregate by Compass Marine Valuations Ltd. as of June 2022, representing a collateral coverage ratio of approximately 2.94x relative to the $400,000,000 aggregate principal amount of the Notes;

• First-priority assignment of all earnings, insurances, and requisition compensation attributable to the Collateral Vessels;

• First-priority pledge of 100% of the equity interests of Thalassa Finance Pte. Ltd. and each fleet-owning Guarantor Subsidiary;

• First-priority assignment of intercompany loan receivables, in an aggregate amount of $365,000,000, owed by the fleet-owning subsidiaries to TFPL.

Atlas Collateral Agency Pte. Ltd. (UEN 200115678R), with its office at 80 Robinson Road, #02-00, Singapore 068898, will act as Security Agent under the Security Documents.

The Guarantees

The Notes will be guaranteed on a joint and several, senior secured basis by the following Guarantor Subsidiaries:

• Thalassa Dry Bulk Operations Ltd. (Malta);

• Thalassa Container Feeder Ltd. (Marshall Islands);

• Thalassa Port Services FZCO (Dubai); and

• Thalassa Freight Solutions Pte. Ltd. (Singapore).

In addition, Kallistratos Maritime Holdings Ltd. (BVI) will provide a limited parent guarantee in respect of the Notes, capped at a maximum aggregate amount of $50,000,000.

The Issuer

TSL is a société anonyme organized under the laws of the Hellenic Republic, with its headquarters located at 42 Akti Miaouli, Piraeus 185 35, Greece, registered with the General Electronic Commercial Registry (GEMI) under number 148276201000. TSL was founded in 1997 by the Kallistratos family and has since grown to become a diversified shipping and logistics company.

TSL owns and operates a fleet of 50 vessels, comprising 38 dry-bulk carriers (across the Supramax, Ultramax, and Kamsarmax vessel classes) and 12 container feeder vessels. The Group also maintains integrated port logistics operations, conducted through Thalassa Port Services FZCO in Dubai, and freight-forwarding operations, conducted through Thalassa Freight Solutions Pte. Ltd. in Singapore. The Group's core trade lanes span the Eastern Mediterranean, the Black Sea, and Southeast Asia.

As of June 2022, the Group's fleet was independently appraised at approximately $1.82 billion by Compass Marine Valuations Ltd. The fleet has an aggregate deadweight tonnage ("DWT") of approximately 2,850,000 and an average vessel age of 9.2 years.

For the last twelve months ended Q1 2022 (annualized), TSL generated revenue of approximately $687.4 million and Adjusted EBITDA of approximately $214.6 million, representing an EBITDA margin of 31.2%.

The Co-Issuer

TFPL is a private company limited by shares incorporated in Singapore under UEN 202209345K. TFPL is a wholly-owned subsidiary of TSL and functions as the Group's financing vehicle, holding intercompany loans to the Group's fleet-owning subsidiaries. Marina Demetriou, TSL's Chief Financial Officer, serves as sole director of TFPL.

Ownership Structure

The equity interests in TSL are held as follows:

Use of Proceeds

The total offering size is $400,000,000. At the issue price of 98.00% of par, gross proceeds to the Co-Issuers will be approximately $392,000,000. The Co-Issuers intend to apply the proceeds of the offering, together with approximately $10,000,000 of cash contributed from TSL's balance sheet, as follows:

Upon completion of the offering and application of proceeds, TSL's only funded indebtedness will consist of the $400,000,000 Notes.

Summary Selected Financial Data

The following table sets forth selected financial data for TSL on a consolidated basis:

Summary Key Credit Metrics (Pro Forma)

TSL's existing funded indebtedness consists of $190,000,000 outstanding under the Meridian Maritime Bank AG bilateral ship-finance facility and $120,000,000 outstanding under the Clearwater Shipping Finance Ltd. bilateral ship-finance facility, both of which will be fully refinanced with the proceeds of this offering.

Summary of Key Covenant Terms

The Indenture governing the Notes will contain, among others, the following covenants:

• Incurrence-Based Leverage Test: Additional indebtedness may only be incurred if the pro forma Total Net Leverage Ratio does not exceed 3.50x.

• Restricted Payments Basket: Restricted payments (including dividends, distributions, equity repurchases, and certain investments) are limited to the greater of $30,000,000 and 10% of Consolidated Net Tangible Assets, plus customary builder baskets and other permitted exceptions.

• Collateral Coverage Ratio (Maintenance): The fair market value of the Collateral Vessels (based on independent appraisal) divided by the outstanding principal amount of the Notes must not fall below 2.00x, tested semi-annually.

• Asset Sale Proceeds: 100% of Net Proceeds from asset sales in excess of $15,000,000 per transaction must be applied to an offer to repurchase Notes at 100% of par within 365 days, unless such proceeds are reinvested in replacement assets during such period.

• Change of Control Put: Upon a Change of Control, each holder may require the Co-Issuers to repurchase its Notes at 101% of par, plus accrued and unpaid interest.

• Optional Redemption: The Notes will be redeemable at the option of the Co-Issuers (i) at any time during the first three years after issuance, at par plus a make-whole premium calculated at the applicable Treasury Rate plus 50 basis points, (ii) in Year 4 at 104.375% of par, (iii) in Year 5 at 102.188% of par, and (iv) in Year 6 and thereafter at 100.000% of par.

• Equity Clawback: Up to 40% of the original aggregate principal amount of the Notes may be redeemed at 108.750% of par within 180 days of an equity offering (including an initial public offering), subject to a requirement that at least 60% of the original aggregate principal amount remain outstanding after such redemption.

Ratings

A credit rating is not a recommendation to buy, sell, or hold securities. Each rating should be evaluated independently of any other rating. The preliminary ratings set forth above are subject to revision, suspension, or withdrawal at any time by the assigning rating organization.

Initial Purchasers

Trustee and Security Agent

RISK FACTORS

Prospective investors should carefully consider the following risk factors, as well as the other information contained in this Offering Memorandum, before making a decision to invest in the Notes. The risks described below are not the only risks facing the Co-Issuers, the Guarantors, and the Group. Additional risks and uncertainties not currently known to us, or that we currently consider immaterial, may also adversely affect our business, results of operations, financial condition, and prospects, and the value and liquidity of the Notes. In such cases, the trading price of the Notes could decline, and investors may lose all or part of their investment. The order in which the following risk factors are presented does not necessarily reflect the likelihood of their occurrence or the magnitude of their potential impact.

Risks Related to Our Business and Industry

We operate in the highly cyclical and volatile dry-bulk and container shipping markets.

The shipping industry is fundamentally cyclical. Our revenue and profitability are highly sensitive to fluctuations in charter rates, freight rates, and vessel values, all of which are subject to significant volatility driven by changes in the supply of and demand for shipping capacity and the commodities transported by our vessels. The Baltic Dry Index ("BDI"), a widely followed composite index of dry-bulk freight rates, exemplifies this volatility. The BDI reached approximately 3,400 in May 2022 but has experienced significant declines from that level, and there can be no assurance that the index will not deteriorate further. Historical BDI data demonstrates that dry-bulk freight rates can decline rapidly and substantially — as occurred during the global financial crisis of 2008–2009 and again during the commodity downturn of 2015–2016 — in response to global macroeconomic conditions, changes in commodity trade flows, fluctuations in the supply of vessel capacity, and other factors beyond our control.

Charter rate compression has the potential to affect all vessel classes in which we operate, including Supramax, Ultramax, and Kamsarmax segments. A sustained decline in charter rates would directly reduce our revenue, gross profit, and Adjusted EBITDA, which in turn would adversely affect our forward-looking financial performance and our ability to comply with the incurrence-based covenants under the Indenture. For example, if our Adjusted EBITDA were to decline to approximately $114.3 million, the pro forma Total Net Leverage Ratio would rise to approximately 3.00x, approaching the 3.50x incurrence limit. Such deterioration could limit our ability to incur additional indebtedness, make capital investments, or pursue strategic opportunities, and could result in a breach of the maintenance collateral coverage ratio if accompanied by declines in vessel values.

Similarly, the container feeder market in which we operate with our 12-vessel feeder fleet is influenced by global containerized trade volumes, transshipment hub dynamics, and the ordering and delivery of new feeder vessels. A downturn in global trade or a shift in transshipment patterns could reduce demand for our container feeder services and adversely affect our results.

Our revenue is concentrated in certain trade lanes.

A significant portion of our revenue is generated from operations in the Eastern Mediterranean, Black Sea, and Southeast Asian trade lanes. This geographic concentration exposes us to risks associated with the economies, trade patterns, and geopolitical environments of these specific regions. The Black Sea region, in particular, presents heightened geopolitical risk. Ongoing geopolitical tensions and conflicts in and around the Black Sea have at times disrupted grain and steel product trade flows, created navigational hazards, and led to increased insurance costs for vessels trading in the region. Any escalation or continuation of such tensions could materially disrupt our Black Sea operations, which represent a meaningful component of our dry-bulk revenue. Trade pattern shifts, such as changes in the sourcing of grain and minor bulk commodities, could reduce ton-mile demand on our core routes. Regional economic slowdowns in Southeast Asia, which is a key market for our coal and nickel ore transport operations as well as our container feeder services, would similarly impact our revenue and profitability.

Vessel values may fluctuate significantly.

Our fleet of 50 vessels was independently appraised at approximately $1.82 billion in aggregate by Compass Marine Valuations Ltd. as of June 2022, and the 28 Collateral Vessels were appraised at approximately $1.175 billion. However, vessel values are inherently volatile and are influenced by many of the same factors that affect charter rates, including the supply of and demand for vessels, newbuilding prices, scrapping rates, and global economic conditions. A decline in vessel values could have several adverse consequences for holders of the Notes:

• The collateral coverage ratio, which currently stands at approximately 2.94x based on the appraised value of the 28 Collateral Vessels, could deteriorate toward or below the maintenance covenant minimum of 2.00x. If the collateral coverage ratio falls below 2.00x, the Co-Issuers would be obligated to pledge additional vessels, offer to prepay the Notes, or deposit cash collateral in order to restore compliance.

• In a scenario where vessel values decline by approximately 32% from the June 2022 appraised values, the collateral coverage ratio would approach the 2.00x minimum threshold. More severe declines in vessel values, as have occurred during prior cyclical downturns, could result in a persistent breach of the maintenance covenant.

• A decline in vessel values would reduce our net asset value and could trigger impairment charges in our financial statements, adversely affecting our reported financial condition.

Our fleet has an average age of 9.2 years and will require significant maintenance capital expenditure.

As of the date of this Offering Memorandum, the average age of our 50-vessel fleet is 9.2 years. While this represents a relatively modern fleet profile compared to industry averages, our vessels will require periodic dry-docking, special surveys, and other maintenance capital expenditure in order to maintain their class certification and continue to trade. Dry-docking costs vary depending on the class and condition of the vessel, but typically range from approximately $0.8 million to $2.5 million per vessel per dry-docking cycle. Special surveys, which are conducted approximately every five years, can be more costly, particularly for older vessels. Our fleet of 50 vessels will generate ongoing dry-docking and maintenance requirements that will represent a material recurring capital expenditure obligation. There can be no assurance that future maintenance costs will not exceed our estimates, or that unexpected repairs or regulatory requirements will not impose additional costs. Moreover, as our fleet ages, maintenance costs may increase, vessel reliability may decrease, and charterers may prefer to employ younger, more fuel-efficient tonnage.

We depend on key charter-party counterparties.

We derive a significant portion of our revenue from charter parties, including time charters, voyage charters, and contracts of affreightment, with a limited number of major charterers. The failure of one or more of our significant charterer counterparties to meet its payment obligations under its charter parties with us could materially adversely affect our revenue and cash flow. Charterer credit risk is heightened during periods of weak freight markets, when charterers may themselves be under financial stress and may seek to renegotiate or terminate their contractual obligations. In addition, our revenue is concentrated among our top charterers, and the loss of or material deterioration in our relationship with any such counterparty could be difficult to replace on comparable terms, particularly in a declining rate environment.

We are subject to environmental and regulatory requirements that may increase operating costs.

The international shipping industry is subject to extensive and evolving environmental and safety regulations imposed by international organizations (principally the International Maritime Organization, or "IMO"), national governments, and regional regulatory bodies. Compliance with these regulations imposes significant costs on our operations and may require substantial capital expenditure. Specifically:

• IMO 2020 Sulfur Cap. Since January 1, 2020, the IMO has imposed a global cap of 0.50% on the sulfur content of marine fuels, compared to the prior limit of 3.50%. We have addressed this requirement through a combination of scrubber installations on select vessels and the procurement of low-sulfur compliant fuels. Compliance with the sulfur cap has increased our operating costs, and any further tightening of emissions standards would impose additional expense.

• EU Emissions Trading System. The European Union has extended the scope of its Emissions Trading System ("EU ETS") to include maritime transport. This will require us to purchase emissions allowances for CO₂ emissions from our voyages to, from, and within the EEA, which will increase operating costs and may adversely affect our competitiveness relative to operators on non-EU trade routes.

• Ballast Water Management. The IMO's Ballast Water Management Convention requires vessels to install ballast water treatment systems. Retrofitting our fleet with compliant systems represents a meaningful capital expenditure obligation.

• Carbon Intensity Regulations. The IMO has introduced the Carbon Intensity Indicator ("CII") and the Energy Efficiency Existing Ship Index ("EEXI") as part of its framework to reduce greenhouse gas emissions from international shipping. Vessels that receive unfavorable CII ratings may face operational restrictions, and compliance with EEXI requirements may necessitate engine power limitation or other technical modifications, potentially reducing vessel speed and earning capacity.

We may not be able to retain key management personnel.

Our success depends in significant part on the continued service of our senior management team, including Dimitrios Kallistratos (Chairman), Spyros Andreou (Chief Executive Officer), and Marina Demetriou (Chief Financial Officer). The Kallistratos family has been central to the Group's operations since its founding in 1997, and Mr. Kallistratos's extensive network of industry relationships, commercial contacts, and strategic vision has been instrumental in the Group's growth and development. The loss of Mr. Kallistratos or any other key member of management could disrupt our operations, impair our ability to execute our business strategy, and adversely affect our relationships with charterers, financial counterparties, and regulatory authorities. Furthermore, the Group's founding-family character introduces succession-planning considerations that may create uncertainty in the longer term.

Competition in the shipping industry is intense.

The global shipping industry is highly fragmented and intensely competitive. We compete with a large number of other vessel owners and operators, many of which may have greater financial resources, larger and more diversified fleets, or lower cost structures than ours. New vessel ordering by competitors may contribute to oversupply conditions in the dry-bulk and container feeder segments in which we operate. Competitive pressures can reduce charter rates, making it more difficult for us to maintain or improve our revenue and profitability. In addition, charterers and shippers are increasingly focused on vessel age, fuel efficiency, and environmental credentials, and our ability to compete effectively may depend on our willingness and ability to invest in fleet renewal and environmental upgrades.

Insurance coverage may not be adequate.

We maintain insurance coverage for our fleet, including hull and machinery insurance, protection and indemnity ("P&I") insurance (through our P&I club membership), war risk insurance, and loss of hire insurance. However, there can be no assurance that our insurance coverage will be adequate to cover all losses and liabilities that we may incur as a result of vessel damage, cargo claims, environmental incidents, or other insurable events. Insurance claims may be disputed, coverage limits may be insufficient, and certain risks (such as losses arising from sanctions violations or acts of war in sanctioned regions) may not be insurable at all or may be subject to exclusions. The cost of insurance premiums may also increase significantly, particularly in times of heightened geopolitical risk, which would increase our operating expenses. In addition, sanctions-related restrictions may limit the availability of insurance coverage for vessels trading in certain jurisdictions.

Pandemics, epidemics, and health emergencies may disrupt our operations.

Our operations are subject to the risk of disruption from pandemics, epidemics, and public health emergencies, as demonstrated by the global COVID-19 pandemic, which caused significant disruptions to the shipping industry, including restrictions on crew changes, quarantine requirements, port closures, and delays in vessel surveys and maintenance. A recurrence of pandemic conditions or the emergence of a new public health emergency could adversely affect our ability to operate our vessels, access ports, rotate crew, and perform necessary maintenance, any of which could result in reduced fleet utilization, increased operating costs, and decreased revenue.

Risks Related to Our Structure and Indebtedness

Our substantial indebtedness could adversely affect our financial condition.

Following the completion of this offering and the application of the net proceeds as described herein, we will have approximately $400.0 million of funded indebtedness, consisting entirely of the Notes, and annual interest expense of approximately $35.0 million. While our pro forma net leverage is 1.59x based on LTM Adjusted EBITDA of $214.6 million, this ratio is susceptible to significant deterioration if our EBITDA declines, as could occur in a downturn in charter rates. For illustrative purposes, if our Adjusted EBITDA were to decline to $150 million, our net leverage ratio would increase to approximately 2.28x, and if Adjusted EBITDA were to decline to $114.3 million, net leverage would rise to approximately 2.99x. Moreover, the incurrence-based leverage covenant in the Indenture would permit us to incur additional indebtedness up to a pro forma Total Net Leverage Ratio of 3.50x, which would further increase our debt burden and interest obligations. Our substantial indebtedness could have important consequences, including limiting our financial and operational flexibility, increasing our vulnerability to adverse economic conditions, limiting our ability to fund capital expenditures and fleet renewal, and requiring a substantial portion of our operating cash flow to be dedicated to debt service.

The Notes will be structurally subordinated to liabilities of non-guarantor subsidiaries.

Not all of our 50 vessels are held by Guarantor Subsidiaries. Certain operating subsidiaries of TSL are not guarantors of the Notes and are not subject to the restrictions of the Indenture except to the extent of the intercompany loan receivables assigned as collateral. The Notes will be structurally subordinated to all liabilities (including trade payables, contractual obligations, and other indebtedness) of our non-guarantor subsidiaries, meaning that noteholders would have no direct claim against the assets of such subsidiaries in the event of a default. In a liquidation, dissolution, or bankruptcy of any non-guarantor subsidiary, creditors of that subsidiary would generally be entitled to payment in full from the assets of that subsidiary before any of those assets would be available for distribution to TSL as the shareholder (and thus ultimately to noteholders through the issuer structure).

Kallistratos Maritime Holdings Ltd.'s limited parent guarantee is capped at $50,000,000.

The limited parent guarantee provided by Kallistratos Maritime Holdings Ltd. ("KMH") in respect of the Notes is capped at a maximum aggregate amount of $50,000,000, representing only 12.5% of the aggregate principal amount of the Notes. In a downside scenario where the Co-Issuers and Guarantor Subsidiaries are unable to satisfy their obligations under the Notes, the recourse available against KMH would be limited to $50,000,000, regardless of the outstanding principal amount or accrued interest owing at such time. Prospective investors should not place undue reliance on the KMH limited parent guarantee as a source of recovery.

We are a holding company and depend on cash flow from subsidiaries.

TSL is a holding company with no significant operations of its own. TSL's ability to service the Notes depends on the ability of its subsidiaries to generate sufficient cash flow and to distribute such cash flow to TSL in the form of dividends, intercompany loans, or other upstream payments. The ability of TSL's subsidiaries to make such payments may be restricted by applicable law in their respective jurisdictions of organization (including Greece, Malta, the marshall Islands, Singapore, Dubai, and the British Virgin Islands), by contractual restrictions, by the need to maintain adequate capital and reserves, or by other legal requirements. Any limitation on the flow of funds from subsidiaries to TSL could materially impair TSL's ability to meet its payment obligations under the Notes.

Pelagos Capital Partners Fund III LP holds significant minority rights.

Pelagos Capital Partners Fund III LP ("Pelagos Fund III") holds 18.0% of the equity interests in TSL and has the right to designate 2 of the 7 members of TSL's Board of Directors. In addition, Pelagos Fund III has been granted observer rights with respect to the documentation governing the Notes. While Pelagos Fund III's interests may be generally aligned with those of noteholders in promoting the financial health of the Group, there can be no assurance that the interests of Pelagos Fund III (as an equity investor with a finite investment horizon and a return-focused mandate) will not diverge from the interests of noteholders. In particular, Pelagos Fund III may favor strategies that maximize equity returns, such as aggressive distributions, leveraged acquisitions, or an exit event, which could have the effect of increasing risk to noteholders.

Risks Related to the Security Package and Collateral

The Collateral Vessels represent only 28 of our 50 vessels.

The security package supporting the Notes includes first-priority ship mortgages over only 28 of the Group's 50 vessels (the "Collateral Vessels"). The remaining 22 vessels are not subject to first-priority mortgages securing the Notes. The Collateral Vessels have been appraised at approximately $1,175,000,000 in aggregate, out of a total fleet appraised value of approximately $1,820,000,000. In a scenario where the Co-Issuers default on the Notes and the Security Agent seeks to enforce the ship mortgages, the proceeds of enforcement would be limited to the value realized from the sale or arrest of the 28 Collateral Vessels (together with any earnings, insurance proceeds, and other collateral). The 22 non-collateral vessels would not be available to satisfy claims of noteholders (except indirectly through general unsecured claims against the Co-Issuers or Guarantors).

Ship values are volatile and may decline below levels necessary to maintain the collateral coverage ratio.

As described above under "—Vessel values may fluctuate significantly," the appraised values of the Collateral Vessels are subject to significant downward revision in response to changes in market conditions. The Indenture requires the Co-Issuers to maintain a collateral coverage ratio (fair market value of Collateral Vessels divided by outstanding principal amount of Notes) of at least 2.00x, tested semi-annually based on independent desktop appraisals. If the collateral coverage ratio falls below 2.00x, the Co-Issuers would be required to take remedial action, which may include pledging additional vessels, offering to prepay the Notes at par, or depositing cash collateral. There can be no assurance that the Co-Issuers would have the financial resources to take such remedial action, or that additional vessels or cash would be available for pledge. A failure to cure a collateral coverage deficiency could constitute an Event of Default under the Indenture if the ratio were to fall below 1.50x for two consecutive test periods.

Enforcement of ship mortgages involves complex multi-jurisdictional proceedings.

The Collateral Vessels are registered under various flag states and trade in waters around the world. Enforcement of ship mortgages — including arrest and judicial sale of vessels — is governed by the laws of the flag state and the jurisdiction in which enforcement is sought, each of which may have different procedural requirements, priority rules, and practical considerations. The cost and timing of enforcement proceedings can vary significantly between jurisdictions, and the proceeds realized from a judicial sale may be substantially less than the appraised value of the vessel, particularly in distressed market conditions. In addition, admiralty law variations may create uncertainties regarding the priority of the Security Agent's mortgage relative to maritime liens, statutory liens, and other claimants. The practical difficulties of arresting and selling a fleet of 28 vessels in potentially multiple jurisdictions simultaneously should not be underestimated.

The intercompany loan receivables pledged as collateral are subject to set-off and subordination risks.

The Collateral includes the assignment of $365,000,000 in intercompany loan receivables owed by fleet-owning subsidiaries to TFPL. These receivables are intercompany in nature and arise from loans extended by TFPL to the Group's vessel-owning subsidiaries. The value of these receivables as collateral is dependent on the ability of the fleet-owning subsidiaries to repay such loans, which is itself contingent on the financial condition of those subsidiaries. In an insolvency scenario, intercompany receivables may be subject to set-off against amounts owed by TFPL to the relevant subsidiaries, or may be subordinated to external creditors of the fleet-owning subsidiaries under applicable insolvency law. In addition, the enforcement of intercompany receivables in a cross-border insolvency involving entities in multiple jurisdictions (Singapore, Malta, the marshall Islands, and Dubai) may be subject to complex procedural and substantive legal challenges.

Risks Related to Our Controlling Shareholder

Dimitrios Kallistratos controls 72.5% of our equity through Kallistratos Maritime Holdings Ltd.

Dimitrios Kallistratos, the Chairman of TSL, beneficially owns 100% of KMH, which in turn holds 72.5% of the equity of TSL. As a result, Mr. Kallistratos has the ability to control the composition of the Board of Directors of TSL (subject to Pelagos Fund III's right to designate 2 of 7 directors), to approve or disapprove significant corporate actions (including mergers, acquisitions, dispositions, and capital-raising activities), and to determine the level and timing of dividend distributions and related-party transactions. There is no formal shareholders' agreement between KMH and other shareholders that limits Mr. Kallistratos's exercise of his controlling stake. The interests of Mr. Kallistratos as controlling shareholder may diverge from the interests of the noteholders in material respects, including with respect to the pursuit of growth versus deleveraging, the payment of dividends versus the retention of cash for debt service, and the conduct of transactions with related parties on terms that may not be arm's-length.

Risks Related to the Jurisdictions in Which We Operate

Greek law and regulatory environment.

TSL is organized and has its headquarters in the Hellenic Republic. Greek law governs the corporate existence, governance, and certain tax obligations of TSL. The Greek tax environment includes potential exposure to corporate income tax, withholding taxes on cross-border payments, and the tonnage tax regime applicable to Greek-flagged and Greek-owned shipping companies. While TSL currently benefits from the Greek tonnage tax regime, which provides a preferential tax treatment for qualifying shipping income, there can be no assurance that the Greek government will not amend or repeal this regime, which could materially increase TSL's tax burden. In addition, Greek insolvency proceedings, including rehabilitation and liquidation proceedings under Greek law, may affect the rights and remedies of noteholders in the event of TSL's insolvency, and may differ from the insolvency frameworks with which U.S. and other international investors are familiar. GEMI registration requirements impose ongoing compliance obligations on TSL.

Singapore law governs the Indenture and Security Documents.

The Indenture, the Security Documents, and certain other transaction documents are governed by the laws of Singapore. While Singapore has a well-developed and internationally recognized legal framework, investors who are accustomed to indentures governed by New York law should be aware that certain provisions of the Indenture and the Security Documents may be interpreted and enforced differently under Singapore law. Disputes relating to the Notes and the Indenture will be subject to the jurisdiction of the courts of Singapore, and judgments obtained in Singapore courts may need to be separately recognized and enforced in other jurisdictions where the Co-Issuers and Guarantors have assets. The process for recognition and enforcement of Singapore court judgments in the Hellenic Republic, the British Virgin Islands, the Republic of Malta, the Republic of the marshall Islands, and the United Arab Emirates may be uncertain, time-consuming, and expensive.

Risks associated with BVI, Cayman Islands, Malta, marshall Islands, and Dubai legal frameworks.

Our corporate structure includes entities organized in the British Virgin Islands (KMH), the Cayman Islands (Pelagos Fund III), Malta (Thalassa Dry Bulk Operations Ltd.), the marshall Islands (Thalassa Container Feeder Ltd.), and Dubai (Thalassa Port Services FZCO). Each of these jurisdictions has its own legal framework, insolvency regime, and enforcement mechanisms, which may limit the recourse available to noteholders in the event of a default. In particular, the ability of noteholders (or the Security Agent on their behalf) to pierce the corporate veil of entities in certain of these jurisdictions may be limited, and the protection afforded to creditors may differ materially from that available under U.S. or Western European insolvency laws. In the case of Thalassa Port Services FZCO, a free zone company organized in Dubai, compliance with UAE regulatory requirements introduces additional complexity.

Risks Related to the Notes and the Offering

There is no established trading market for the Notes.

The Notes are a new issue of securities for which there is currently no established trading market. Although the Co-Issuers intend to apply for listing of the Notes on SGX-ST, there can be no assurance that such listing will be obtained or, if obtained, will be maintained. Even if the Notes are listed, the development and maintenance of an active and liquid trading market for the Notes is dependent on market conditions and other factors beyond the control of the Co-Issuers. The Notes may trade at prices that are higher or lower than their initial offering price, depending upon many factors, including prevailing interest rates, the market for similar securities, general economic conditions, and the financial condition and prospects of the Co-Issuers and the Group. Any reduction in the liquidity of the trading market for the Notes would adversely affect the ability of holders to sell their Notes at a fair price or at all.

The Initial Purchasers may affect the market price of the Notes.

In connection with the offering, the Initial Purchasers may engage in stabilization transactions, over-allotments, and syndicate covering transactions. Stabilization transactions permit bids to purchase the Notes so long as the stabilization bids do not exceed a specified maximum. Over-allotment transactions involve sales of Notes in excess of the principal amount of Notes to be issued in the offering, which create a short position. Syndicate covering transactions involve purchases of the Notes in the open market after the distribution has been completed in order to cover short positions. These activities may have the effect of raising or maintaining the market price of the Notes or preventing or retarding a decline in the market price of the Notes, and, as a result, the price of the Notes may be higher than the price that otherwise might exist in the open market. If commenced, these activities may be discontinued at any time.

Exchange rate fluctuations may adversely affect the value of the Notes and our ability to service our debt.

The Notes are denominated and payable in U.S. dollars. TSL's functional currencies include the euro and the U.S. dollar, and a portion of our revenue is earned in currencies other than the U.S. dollar, including the euro, the Singapore dollar, and various local currencies in the markets where we operate. Our vessel operating expenses, general and administrative expenses, and certain capital expenditures are also incurred in multiple currencies. Fluctuations in exchange rates — particularly EUR/USD and SGD/USD — could adversely affect our operating results when translated into U.S. dollars, which is the reporting currency used for purposes of the covenant calculations under the Indenture. A material depreciation of the euro or the Singapore dollar against the U.S. dollar would reduce our reported revenue and EBITDA, potentially worsening our leverage and coverage ratios.

Rating agency downgrades or withdrawal could adversely affect the market value of the Notes.

The preliminary credit ratings assigned to the Notes by Polaris Ratings Group Ltd. (B+, stable outlook) and Oceanic Credit Assessments Inc. (B1, stable outlook) are based on current expectations and assumptions, and are subject to revision, suspension, reduction, or withdrawal at any time by the assigning rating agency. A downgrade or withdrawal of either rating would likely adversely affect the market value and liquidity of the Notes. Moreover, the preliminary ratings assigned to the Notes may not reflect the potential impact of all risks related to the structure, market, and additional factors discussed herein and in the rating agencies' respective reports.

USE OF PROCEEDS

The total aggregate principal amount of the Notes being offered is $400,000,000. At the issue price of 98.00% of par, the gross proceeds to the Co-Issuers from the sale of the Notes will be approximately $392,000,000, before deduction of the Initial Purchaser discount and other offering expenses.

The Co-Issuers intend to apply the gross proceeds from the sale of the Notes, together with approximately $10,000,000 of cash contributed by TSL from its balance sheet (to bridge the difference between the gross proceeds and the total uses of funds), as set forth in the table below:

Meridian Maritime Bank AG. The Co-Issuers will use $190,000,000 of the proceeds to fully repay and discharge all amounts outstanding under TSL's existing bilateral secured ship-finance facility with Meridian Maritime Bank AG (Talstrasse 18, 8001 Zürich, Switzerland; key contact: Hans-Peter Gerber, Senior Director, Shipping Finance). The Meridian facility is secured by ship mortgages over certain of TSL's vessels. Upon repayment, all security interests granted in connection with the Meridian facility will be released and discharged, thereby clearing the way for the grant of new first-priority ship mortgages in favor of the Security Agent for the benefit of noteholders over the Collateral Vessels.

Clearwater Shipping Finance Ltd. The Co-Issuers will use $120,000,000 of the proceeds to fully repay and discharge all amounts outstanding under TSL's existing bilateral secured ship-finance facility with Clearwater Shipping Finance Ltd. (1 Fleet Place, London EC4M 7RA, United Kingdom; key contact: Emma Blackwood, Director, Structured Ship Finance). The Clearwater facility is secured by ship mortgages over certain of TSL's vessels. Upon repayment, all security interests granted in connection with the Clearwater facility will be released and discharged.

The total existing funded indebtedness of TSL to be refinanced with the proceeds of this offering is $310,000,000, consisting of the $190,000,000 Meridian facility and the $120,000,000 Clearwater facility. Upon completion of this offering and the application of proceeds as described herein, TSL's only outstanding funded indebtedness will be the $400,000,000 Notes.

General Corporate Purposes and Fleet Capital Expenditures. The Co-Issuers intend to use approximately $72,000,000 of the proceeds for general corporate purposes, including working capital requirements, and for selective fleet renewal and capital expenditure. The Group may apply a portion of these funds to scheduled dry-docking and maintenance capital expenditure, as well as to opportunistic vessel acquisitions or other capital investments, subject to compliance with the covenants of the Indenture.

Estimated Fees, Expenses, and OID. The Co-Issuers estimate that fees, expenses, and the original issue discount in connection with the offering will aggregate approximately $18,000,000, consisting of (i) original issue discount of $8,000,000 (representing the difference between the $400,000,000 aggregate principal amount and the $392,000,000 gross proceeds at the 98.00% issue price), (ii) the Initial Purchaser discount of $8,000,000 (representing 2.00% of the aggregate principal amount), and (iii) legal fees, rating agency fees, printing costs, and other transaction-related expenses estimated at approximately $5,700,000. An itemized breakdown of the estimated transaction costs is set forth under "Listing and General Information — Expenses."

TSL Cash Contribution. Because the gross proceeds of the offering (approximately $392,000,000) are less than the total uses of funds ($400,000,000) by approximately $8,000,000, and because not all fees and expenses are deductible from gross proceeds at closing, TSL will contribute approximately $10,000,000 from its existing cash balances to fund the shortfall. Following this contribution, TSL's remaining cash on hand will be approximately $48,300,000.

Pending Application of Proceeds. Pending the application of the net proceeds as described above, the Co-Issuers will hold such proceeds in short-term, investment-grade, interest-bearing deposit accounts or money market instruments.

CAPITALIZATION

The following table sets forth the consolidated capitalization of TSL as of March 31, 2022, on (i) an actual basis and (ii) a pro forma basis after giving effect to the issuance of the Notes and the application of the net proceeds as described under "Use of Proceeds."

This table should be read in conjunction with "Use of Proceeds," "Selected Financial Data," and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and related notes included elsewhere in this Offering Memorandum.

Notes to Capitalization Table:

(1) Reflects TSL's cash contribution of approximately $10,000,000 from the balance sheet to fund the shortfall between gross offering proceeds and total uses, as described under "Use of Proceeds." The pro forma cash balance is subject to final closing adjustments and does not give effect to any changes in working capital since March 31, 2022.

(2) Both the Meridian Maritime Bank AG facility and the Clearwater Shipping Finance Ltd. facility will be fully repaid and discharged from the proceeds of this offering at closing.

(3) Total equity is presented as reported in TSL's audited consolidated financial statements as of March 31, 2022.

(4) Pro forma total equity does not give effect to the original issue discount of $8,000,000, which will be amortized over the life of the Notes, or to transaction costs expensed at closing. Adjustments for OID amortization and transaction costs would reduce pro forma equity by approximately $5,700,000 (reflecting expensed transaction costs).

(5) For purposes of calculating pro forma net leverage, net debt of $341,700,000 is based on total pro forma debt of $400,000,000 less cash and cash equivalents of $58,300,000 (using the pre-contribution cash figure, consistent with the methodology applied in the Summary and Key Credit Metrics sections of this Offering Memorandum). Adjusted EBITDA of $214,600,000 represents LTM Q1 2022 annualized figures.

SELECTED FINANCIAL DATA

Summary Selected Consolidated Financial Data

The following tables set forth summary selected consolidated financial data for TSL for the fiscal years ended December 31, 2019, December 31, 2020, and December 31, 2021, derived from TSL's audited consolidated financial statements, and for the three-month period ended March 31, 2022, derived from TSL's unaudited condensed consolidated financial statements. The LTM figures presented below are calculated by annualizing the Q1 2022 quarterly results, which the Group believes provides a reasonable approximation of trailing twelve-month performance given the relative stability of the Group's operations during the periods presented.

This financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the audited consolidated financial statements and the unaudited condensed consolidated financial statements included elsewhere in this Offering Memorandum.

Consolidated Statement of Operations Data

Consolidated Balance Sheet Data (as of period end)

Non-GAAP Financial Measures

Adjusted EBITDA is defined as net income plus (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization, and (iv) certain non-recurring or non-cash items, including vessel impairment charges, gains or losses on the sale of vessels, restructuring charges, and non-cash stock-based compensation expense. Management believes that Adjusted EBITDA is a useful measure for investors because it provides a consistent basis for comparing the Group's operating performance across periods by eliminating the effects of financing decisions, tax structures, depreciation policies, and non-recurring items. Adjusted EBITDA is not a recognized measure under International Financial Reporting Standards ("IFRS") and should not be considered as an alternative to net income, operating income, or any other financial measure derived in accordance with IFRS.

Reconciliation of Adjusted EBITDA to Net Income

Key Credit Metrics (Pro Forma)

The following table presents certain key credit metrics

OFFERING MEMORANDUM — CONFIDENTIAL
Near-Final — 4th Draft — Dated September 12, 2022
CONFIDENTIAL — FOR DISTRIBUTION ONLY TO QUALIFIED INSTITUTIONAL BUYERS UNDER RULE 144A AND NON-U.S. PERSONS UNDER REGULATION S
$400,000,000
8.750% Senior Secured Notes due 2029
Co-Issuers:
Thalassa Shipping & Logistics SA (a société anonyme organized under the laws of the Hellenic Republic, GEMI No. 148276201000, registered office at 42 Akti Miaouli, Piraeus 185 35, Greece)
and
Thalassa Finance Pte. Ltd. (a Singapore private company limited by shares, UEN 202209345K, registered office at 8 Marina Boulevard, #36-02, Marina Bay Financial Centre Tower 1, Singapore 018981)
The Notes will bear interest at a rate of 8.750% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, commencing April 15, 2023. The Notes will mature on October 15, 2029.
Issue Price: 98.00% of par (yield to maturity approximately 9.12%)
Minimum Denomination: $200,000 and integral multiples of $1,000 in excess thereof
Form: The Notes are being offered and sold (i) in the United States only to qualified institutional buyers in reliance on Rule 144A under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and (ii) outside the United States to non-U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act. The Notes will be issued in registered, book-entry form only. Rule 144A Notes will be represented by one or more global notes deposited with, or on behalf of, The Depository Trust Company ("DTC"). Regulation S Notes will be represented by one or more global notes deposited with a common depositary for Stonefield Industries ("Thackeray Partners LLC") and Harborview Industries ("Ashgrove Enterprises").
Security: The Notes will be secured on a first-priority basis by (i) ship mortgages over 28 Collateral Vessels (appraised at approximately $1,175,000,000 in aggregate by Compass Marine Valuations Ltd. as of June 2022, representing a collateral coverage ratio of approximately 2.94x), (ii) assignment of earnings and insurances in respect of the Collateral Vessels, (iii) pledges of 100% of the equity interests in the Co-Issuer and each Guarantor Subsidiary, and (iv) assignment of $365,000,000 in intercompany loan receivables.
Guarantees: The Notes will be guaranteed on a joint and several basis by Thalassa Dry Bulk Operations Ltd. (Malta), Thalassa Container Feeder Ltd. (Marshall Islands), Thalassa Port Services FZCO (Dubai), and Thalassa Freight Solutions Pte. Ltd. (Singapore). Kallistratos Maritime Holdings Ltd. (BVI) will provide a limited parent guarantee, capped at $50,000,000.
Ratings: Preliminary B+ (stable outlook) from Polaris Ratings Group Ltd.; Preliminary B1 (stable outlook) from Oceanic Credit Assessments Inc. A credit rating is not a recommendation to buy, sell, or hold securities and may be subject to revision, suspension, or withdrawal at any time by the assigning rating agency.
Listing: Application will be made for the Notes to be listed on the Singapore Exchange Securities Trading Limited ("SGX-ST"). No assurance can be given that such listing will be obtained or maintained.
Governing Law: Singapore
Trustee: Marlowe Asset Management Trust Company of Singapore Pte. Ltd.
Security Agent: Atlas Collateral Agency Pte. Ltd.
THE NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION. THE NOTES ARE BEING OFFERED AND SOLD ONLY (I) IN THE UNITED STATES TO QUALIFIED INSTITUTIONAL BUYERS IN RELIANCE ON RULE 144A UNDER THE SECURITIES ACT AND (II) OUTSIDE THE UNITED STATES TO NON-U.S. PERSONS IN OFFSHORE TRANSACTIONS IN RELIANCE ON REGULATION S UNDER THE SECURITIES ACT.
SEE "RISK FACTORS" BEGINNING ON PAGE [●] FOR A DISCUSSION OF CERTAIN RISKS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NOTES.
Lead Bookrunner and Initial Purchaser
Anchor Bay Securities LLC
Co-Manager and Initial Purchaser
Halcyon Partners International Ltd.
This Offering Memorandum contains forward-looking statements that involve risks and uncertainties. The Co-Issuers' actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under "Risk Factors" and elsewhere in this Offering Memorandum. Prospective investors should carefully consider the risk factors described herein before making an investment decision. This Offering Memorandum does not constitute an offer to sell or a solicitation of an offer to buy the Notes in any jurisdiction in which such offer or solicitation would be unlawful.
IMPORTANT NOTICES
Responsibility Statement. Each of the directors of Thalassa Shipping & Logistics SA ("TSL") and Thalassa Finance Pte. Ltd. ("TFPL" and, together with TSL, the "Co-Issuers") accepts responsibility for the information contained in this Offering Memorandum. To the best of the knowledge and belief of each such director, having taken all reasonable care to ensure that such is the case, the information contained in this Offering Memorandum is in accordance with the facts and does not omit anything likely to affect the import of such information. Each of the directors of TSL and TFPL accepts responsibility accordingly.
No person has been authorized by the Co-Issuers, the Guarantors, the Initial Purchasers, the Trustee, or the Security Agent to give any information or to make any representation other than those contained in this Offering Memorandum in connection with the offering of the Notes, and, if given or made, such information or representation must not be relied upon as having been authorized by the Co-Issuers, the Guarantors, the Initial Purchasers, the Trustee, or the Security Agent. This Offering Memorandum does not constitute an offer to sell or a solicitation of an offer to buy any Notes in any jurisdiction in which such offer or solicitation is unlawful. Neither the delivery of this Offering Memorandum nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Co-Issuers or the Guarantors since the date hereof or that the information contained herein is correct as of any time subsequent to the date of this Offering Memorandum.
Restriction Legends. The Notes have not been and will not be registered under the Securities Act or any state securities laws and may not be offered or sold within the United States except to qualified institutional buyers ("QIBs") as defined in Rule 144A under the Securities Act. The Notes are also being offered and sold outside the United States to non-U.S. persons in offshore transactions in compliance with Regulation S under the Securities Act. Prospective purchasers are hereby notified that sellers of the Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A thereunder.
Singapore Securities and Futures Act. This Offering Memorandum has not been and will not be registered as a prospectus with the Monetary Authority of Singapore. Accordingly, the Notes may not be offered or sold or made the subject of an invitation for subscription or purchase, and this Offering Memorandum or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Notes may not be circulated or distributed, whether directly or indirectly, to any person in Singapore other than (a) to an institutional investor (as defined in Section 4A of the Securities and Futures Act 2001 of Singapore, as amended (the "SFA")) pursuant to Section 274 of the SFA, (b) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA, or (c) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
European Economic Area and United Kingdom Selling Restrictions. The Notes are not intended to be offered, sold, or otherwise made available to, and should not be offered, sold, or otherwise made available to, any retail investor in the European Economic Area ("EEA") or the United Kingdom. For the purposes of this provision, a "retail investor" means a person who is one (or more) of the following: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, "MiFID II"); or (ii) a customer within the meaning of the Insurance Distribution Directive (EU) 2016/97, where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in the Prospectus Regulation (EU) 2017/1129. No key information document required by Regulation (EU) No 1286/2014 (as amended, the "PRIIPs Regulation") for offering or selling the Notes or otherwise making them available to retail investors in the EEA or the United Kingdom has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA or the United Kingdom may be unlawful under the PRIIPs Regulation. The United Kingdom equivalent provisions apply mutatis mutandis.
Greek Regulatory Disclaimers. The Notes are not being publicly offered in the Hellenic Republic. This Offering Memorandum has not been submitted to or approved by the Hellenic Capital Markets Commission. The Notes may only be acquired by investors in the Hellenic Republic falling within the categories set out in applicable Greek law.
Notice Regarding Stabilization. In connection with the offering of the Notes, Anchor Bay Securities LLC (as Stabilization Manager) or any person acting on behalf of the Stabilization Manager may over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail. However, stabilization may not necessarily occur. Any stabilization action may begin on or after the date on which adequate public disclosure of the terms of the offer of the Notes is made and, if begun, may cease at any time, but it must end no later than the earlier of 30 days after the issue date and 60 days after the date of the allotment of the Notes. Any stabilization action or over-allotment must be conducted by the Stabilization Manager (or any person acting on behalf of the Stabilization Manager) in accordance with all applicable laws and rules.
Forward-Looking Statements. This Offering Memorandum contains certain "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and similar legislation in other jurisdictions. These forward-looking statements include, but are not limited to, statements about the Co-Issuers' plans, objectives, expectations, and intentions and other statements contained in this Offering Memorandum that are not historical facts. When used in this Offering Memorandum, the words "expect," "anticipate," "intend," "plan," "believe," "seek," "estimate," "will," "should," "could," "may," "project," and similar expressions are generally intended to identify forward-looking statements. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results, events, or developments to differ materially from those expressed or implied by these forward-looking statements, including the risks described under "Risk Factors." These forward-looking statements are based on current expectations and projections about future events. The Co-Issuers undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Service of Process. TSL has irrevocably appointed Rajendra & Osman LLP, 6 Battery Road, #28-01, Singapore 049909, as its authorized agent for the purpose of accepting service of process in any proceedings in Singapore arising out of or in connection with the Notes and the Indenture.
Industry and Market Data. This Offering Memorandum includes industry and market data obtained from third-party sources, including publicly available industry publications, reports by market research firms, and certain data provided by charterers, brokers, and industry participants. Neither the Co-Issuers nor the Initial Purchasers have independently verified the accuracy or completeness of any such third-party information. While the Co-Issuers believe such data to be reliable, prospective investors should not place undue reliance on such information.
Exchange Rate Conventions. Unless otherwise indicated, conversions of euros into U.S. dollars in this Offering Memorandum have been made at an exchange rate of EUR 1.00 = USD 1.05, and conversions of Singapore dollars into U.S. dollars have been made at an exchange rate of SGD 1.00 = USD 0.73 (or equivalently, USD 1.00 = SGD 1.37). These exchange rates are provided for convenience only and do not represent rates at which euros or Singapore dollars could have been, or may in the future be, exchanged for U.S. dollars.
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SUMMARY
The following summary highlights certain information contained elsewhere in this Offering Memorandum. This summary does not contain all the information that prospective investors should consider before investing in the Notes. Prospective investors should read the entire Offering Memorandum carefully, including the sections entitled "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and the financial statements and related notes included elsewhere herein, before making an investment decision. In this Offering Memorandum, unless the context otherwise requires, references to "we," "us," "our," the "Group," or similar terms refer to Thalassa Shipping & Logistics SA together with its consolidated subsidiaries.
The Offering
The following is a summary of the principal terms of the offering:
The Security Package
The Notes will be secured on a first-priority basis by the following collateral (collectively, the "Collateral"):
• First-priority ship mortgages over 28 Collateral Vessels, which have been independently appraised at approximately $1,175,000,000 in aggregate by Compass Marine Valuations Ltd. as of June 2022, representing a collateral coverage ratio of approximately 2.94x relative to the $400,000,000 aggregate principal amount of the Notes;
• First-priority assignment of all earnings, insurances, and requisition compensation attributable to the Collateral Vessels;
• First-priority pledge of 100% of the equity interests of Thalassa Finance Pte. Ltd. and each fleet-owning Guarantor Subsidiary;
• First-priority assignment of intercompany loan receivables, in an aggregate amount of $365,000,000, owed by the fleet-owning subsidiaries to TFPL.
Atlas Collateral Agency Pte. Ltd. (UEN 200115678R), with its office at 80 Robinson Road, #02-00, Singapore 068898, will act as Security Agent under the Security Documents.
The Guarantees
The Notes will be guaranteed on a joint and several, senior secured basis by the following Guarantor Subsidiaries:
• Thalassa Dry Bulk Operations Ltd. (Malta);
• Thalassa Container Feeder Ltd. (Marshall Islands);
• Thalassa Port Services FZCO (Dubai); and
• Thalassa Freight Solutions Pte. Ltd. (Singapore).
In addition, Kallistratos Maritime Holdings Ltd. (BVI) will provide a limited parent guarantee in respect of the Notes, capped at a maximum aggregate amount of $50,000,000.
The Issuer
TSL is a société anonyme organized under the laws of the Hellenic Republic, with its headquarters located at 42 Akti Miaouli, Piraeus 185 35, Greece, registered with the General Electronic Commercial Registry (GEMI) under number 148276201000. TSL was founded in 1997 by the Kallistratos family and has since grown to become a diversified shipping and logistics company.
TSL owns and operates a fleet of 50 vessels, comprising 38 dry-bulk carriers (across the Supramax, Ultramax, and Kamsarmax vessel classes) and 12 container feeder vessels. The Group also maintains integrated port logistics operations, conducted through Thalassa Port Services FZCO in Dubai, and freight-forwarding operations, conducted through Thalassa Freight Solutions Pte. Ltd. in Singapore. The Group's core trade lanes span the Eastern Mediterranean, the Black Sea, and Southeast Asia.
As of June 2022, the Group's fleet was independently appraised at approximately $1.82 billion by Compass Marine Valuations Ltd. The fleet has an aggregate deadweight tonnage ("DWT") of approximately 2,850,000 and an average vessel age of 9.2 years.
For the last twelve months ended Q1 2022 (annualized), TSL generated revenue of approximately $687.4 million and Adjusted EBITDA of approximately $214.6 million, representing an EBITDA margin of 31.2%.
The Co-Issuer
TFPL is a private company limited by shares incorporated in Singapore under UEN 202209345K. TFPL is a wholly-owned subsidiary of TSL and functions as the Group's financing vehicle, holding intercompany loans to the Group's fleet-owning subsidiaries. Marina Demetriou, TSL's Chief Financial Officer, serves as sole director of TFPL.
Ownership Structure
The equity interests in TSL are held as follows:
Use of Proceeds
The total offering size is $400,000,000. At the issue price of 98.00% of par, gross proceeds to the Co-Issuers will be approximately $392,000,000. The Co-Issuers intend to apply the proceeds of the offering, together with approximately $10,000,000 of cash contributed from TSL's balance sheet, as follows:
Upon completion of the offering and application of proceeds, TSL's only funded indebtedness will consist of the $400,000,000 Notes.
Summary Selected Financial Data
The following table sets forth selected financial data for TSL on a consolidated basis:
Summary Key Credit Metrics (Pro Forma)
TSL's existing funded indebtedness consists of $190,000,000 outstanding under the Meridian Maritime Bank AG bilateral ship-finance facility and $120,000,000 outstanding under the Clearwater Shipping Finance Ltd. bilateral ship-finance facility, both of which will be fully refinanced with the proceeds of this offering.
Summary of Key Covenant Terms
The Indenture governing the Notes will contain, among others, the following covenants:
• Incurrence-Based Leverage Test: Additional indebtedness may only be incurred if the pro forma Total Net Leverage Ratio does not exceed 3.50x.
• Restricted Payments Basket: Restricted payments (including dividends, distributions, equity repurchases, and certain investments) are limited to the greater of $30,000,000 and 10% of Consolidated Net Tangible Assets, plus customary builder baskets and other permitted exceptions.
• Collateral Coverage Ratio (Maintenance): The fair market value of the Collateral Vessels (based on independent appraisal) divided by the outstanding principal amount of the Notes must not fall below 2.00x, tested semi-annually.
• Asset Sale Proceeds: 100% of Net Proceeds from asset sales in excess of $15,000,000 per transaction must be applied to an offer to repurchase Notes at 100% of par within 365 days, unless such proceeds are reinvested in replacement assets during such period.
• Change of Control Put: Upon a Change of Control, each holder may require the Co-Issuers to repurchase its Notes at 101% of par, plus accrued and unpaid interest.
• Optional Redemption: The Notes will be redeemable at the option of the Co-Issuers (i) at any time during the first three years after issuance, at par plus a make-whole premium calculated at the applicable Treasury Rate plus 50 basis points, (ii) in Year 4 at 104.375% of par, (iii) in Year 5 at 102.188% of par, and (iv) in Year 6 and thereafter at 100.000% of par.
• Equity Clawback: Up to 40% of the original aggregate principal amount of the Notes may be redeemed at 108.750% of par within 180 days of an equity offering (including an initial public offering), subject to a requirement that at least 60% of the original aggregate principal amount remain outstanding after such redemption.
Ratings
A credit rating is not a recommendation to buy, sell, or hold securities. Each rating should be evaluated independently of any other rating. The preliminary ratings set forth above are subject to revision, suspension, or withdrawal at any time by the assigning rating organization.
Initial Purchasers
Trustee and Security Agent
RISK FACTORS
Prospective investors should carefully consider the following risk factors, as well as the other information contained in this Offering Memorandum, before making a decision to invest in the Notes. The risks described below are not the only risks facing the Co-Issuers, the Guarantors, and the Group. Additional risks and uncertainties not currently known to us, or that we currently consider immaterial, may also adversely affect our business, results of operations, financial condition, and prospects, and the value and liquidity of the Notes. In such cases, the trading price of the Notes could decline, and investors may lose all or part of their investment. The order in which the following risk factors are presented does not necessarily reflect the likelihood of their occurrence or the magnitude of their potential impact.
Risks Related to Our Business and Industry
We operate in the highly cyclical and volatile dry-bulk and container shipping markets.
The shipping industry is fundamentally cyclical. Our revenue and profitability are highly sensitive to fluctuations in charter rates, freight rates, and vessel values, all of which are subject to significant volatility driven by changes in the supply of and demand for shipping capacity and the commodities transported by our vessels. The Baltic Dry Index ("BDI"), a widely followed composite index of dry-bulk freight rates, exemplifies this volatility. The BDI reached approximately 3,400 in May 2022 but has experienced significant declines from that level, and there can be no assurance that the index will not deteriorate further. Historical BDI data demonstrates that dry-bulk freight rates can decline rapidly and substantially — as occurred during the global financial crisis of 2008–2009 and again during the commodity downturn of 2015–2016 — in response to global macroeconomic conditions, changes in commodity trade flows, fluctuations in the supply of vessel capacity, and other factors beyond our control.
Charter rate compression has the potential to affect all vessel classes in which we operate, including Supramax, Ultramax, and Kamsarmax segments. A sustained decline in charter rates would directly reduce our revenue, gross profit, and Adjusted EBITDA, which in turn would adversely affect our forward-looking financial performance and our ability to comply with the incurrence-based covenants under the Indenture. For example, if our Adjusted EBITDA were to decline to approximately $114.3 million, the pro forma Total Net Leverage Ratio would rise to approximately 3.00x, approaching the 3.50x incurrence limit. Such deterioration could limit our ability to incur additional indebtedness, make capital investments, or pursue strategic opportunities, and could result in a breach of the maintenance collateral coverage ratio if accompanied by declines in vessel values.
Similarly, the container feeder market in which we operate with our 12-vessel feeder fleet is influenced by global containerized trade volumes, transshipment hub dynamics, and the ordering and delivery of new feeder vessels. A downturn in global trade or a shift in transshipment patterns could reduce demand for our container feeder services and adversely affect our results.
Our revenue is concentrated in certain trade lanes.
A significant portion of our revenue is generated from operations in the Eastern Mediterranean, Black Sea, and Southeast Asian trade lanes. This geographic concentration exposes us to risks associated with the economies, trade patterns, and geopolitical environments of these specific regions. The Black Sea region, in particular, presents heightened geopolitical risk. Ongoing geopolitical tensions and conflicts in and around the Black Sea have at times disrupted grain and steel product trade flows, created navigational hazards, and led to increased insurance costs for vessels trading in the region. Any escalation or continuation of such tensions could materially disrupt our Black Sea operations, which represent a meaningful component of our dry-bulk revenue. Trade pattern shifts, such as changes in the sourcing of grain and minor bulk commodities, could reduce ton-mile demand on our core routes. Regional economic slowdowns in Southeast Asia, which is a key market for our coal and nickel ore transport operations as well as our container feeder services, would similarly impact our revenue and profitability.
Vessel values may fluctuate significantly.
Our fleet of 50 vessels was independently appraised at approximately $1.82 billion in aggregate by Compass Marine Valuations Ltd. as of June 2022, and the 28 Collateral Vessels were appraised at approximately $1.175 billion. However, vessel values are inherently volatile and are influenced by many of the same factors that affect charter rates, including the supply of and demand for vessels, newbuilding prices, scrapping rates, and global economic conditions. A decline in vessel values could have several adverse consequences for holders of the Notes:
• The collateral coverage ratio, which currently stands at approximately 2.94x based on the appraised value of the 28 Collateral Vessels, could deteriorate toward or below the maintenance covenant minimum of 2.00x. If the collateral coverage ratio falls below 2.00x, the Co-Issuers would be obligated to pledge additional vessels, offer to prepay the Notes, or deposit cash collateral in order to restore compliance.
• In a scenario where vessel values decline by approximately 32% from the June 2022 appraised values, the collateral coverage ratio would approach the 2.00x minimum threshold. More severe declines in vessel values, as have occurred during prior cyclical downturns, could result in a persistent breach of the maintenance covenant.
• A decline in vessel values would reduce our net asset value and could trigger impairment charges in our financial statements, adversely affecting our reported financial condition.
Our fleet has an average age of 9.2 years and will require significant maintenance capital expenditure.
As of the date of this Offering Memorandum, the average age of our 50-vessel fleet is 9.2 years. While this represents a relatively modern fleet profile compared to industry averages, our vessels will require periodic dry-docking, special surveys, and other maintenance capital expenditure in order to maintain their class certification and continue to trade. Dry-docking costs vary depending on the class and condition of the vessel, but typically range from approximately $0.8 million to $2.5 million per vessel per dry-docking cycle. Special surveys, which are conducted approximately every five years, can be more costly, particularly for older vessels. Our fleet of 50 vessels will generate ongoing dry-docking and maintenance requirements that will represent a material recurring capital expenditure obligation. There can be no assurance that future maintenance costs will not exceed our estimates, or that unexpected repairs or regulatory requirements will not impose additional costs. Moreover, as our fleet ages, maintenance costs may increase, vessel reliability may decrease, and charterers may prefer to employ younger, more fuel-efficient tonnage.
We depend on key charter-party counterparties.
We derive a significant portion of our revenue from charter parties, including time charters, voyage charters, and contracts of affreightment, with a limited number of major charterers. The failure of one or more of our significant charterer counterparties to meet its payment obligations under its charter parties with us could materially adversely affect our revenue and cash flow. Charterer credit risk is heightened during periods of weak freight markets, when charterers may themselves be under financial stress and may seek to renegotiate or terminate their contractual obligations. In addition, our revenue is concentrated among our top charterers, and the loss of or material deterioration in our relationship with any such counterparty could be difficult to replace on comparable terms, particularly in a declining rate environment.
We are subject to environmental and regulatory requirements that may increase operating costs.
The international shipping industry is subject to extensive and evolving environmental and safety regulations imposed by international organizations (principally the International Maritime Organization, or "IMO"), national governments, and regional regulatory bodies. Compliance with these regulations imposes significant costs on our operations and may require substantial capital expenditure. Specifically:
• IMO 2020 Sulfur Cap. Since January 1, 2020, the IMO has imposed a global cap of 0.50% on the sulfur content of marine fuels, compared to the prior limit of 3.50%. We have addressed this requirement through a combination of scrubber installations on select vessels and the procurement of low-sulfur compliant fuels. Compliance with the sulfur cap has increased our operating costs, and any further tightening of emissions standards would impose additional expense.
• EU Emissions Trading System. The European Union has extended the scope of its Emissions Trading System ("EU ETS") to include maritime transport. This will require us to purchase emissions allowances for CO₂ emissions from our voyages to, from, and within the EEA, which will increase operating costs and may adversely affect our competitiveness relative to operators on non-EU trade routes.
• Ballast Water Management. The IMO's Ballast Water Management Convention requires vessels to install ballast water treatment systems. Retrofitting our fleet with compliant systems represents a meaningful capital expenditure obligation.
• Carbon Intensity Regulations. The IMO has introduced the Carbon Intensity Indicator ("CII") and the Energy Efficiency Existing Ship Index ("EEXI") as part of its framework to reduce greenhouse gas emissions from international shipping. Vessels that receive unfavorable CII ratings may face operational restrictions, and compliance with EEXI requirements may necessitate engine power limitation or other technical modifications, potentially reducing vessel speed and earning capacity.
We may not be able to retain key management personnel.
Our success depends in significant part on the continued service of our senior management team, including Dimitrios Kallistratos (Chairman), Spyros Andreou (Chief Executive Officer), and Marina Demetriou (Chief Financial Officer). The Kallistratos family has been central to the Group's operations since its founding in 1997, and Mr. Kallistratos's extensive network of industry relationships, commercial contacts, and strategic vision has been instrumental in the Group's growth and development. The loss of Mr. Kallistratos or any other key member of management could disrupt our operations, impair our ability to execute our business strategy, and adversely affect our relationships with charterers, financial counterparties, and regulatory authorities. Furthermore, the Group's founding-family character introduces succession-planning considerations that may create uncertainty in the longer term.
Competition in the shipping industry is intense.
The global shipping industry is highly fragmented and intensely competitive. We compete with a large number of other vessel owners and operators, many of which may have greater financial resources, larger and more diversified fleets, or lower cost structures than ours. New vessel ordering by competitors may contribute to oversupply conditions in the dry-bulk and container feeder segments in which we operate. Competitive pressures can reduce charter rates, making it more difficult for us to maintain or improve our revenue and profitability. In addition, charterers and shippers are increasingly focused on vessel age, fuel efficiency, and environmental credentials, and our ability to compete effectively may depend on our willingness and ability to invest in fleet renewal and environmental upgrades.
Insurance coverage may not be adequate.
We maintain insurance coverage for our fleet, including hull and machinery insurance, protection and indemnity ("P&I") insurance (through our P&I club membership), war risk insurance, and loss of hire insurance. However, there can be no assurance that our insurance coverage will be adequate to cover all losses and liabilities that we may incur as a result of vessel damage, cargo claims, environmental incidents, or other insurable events. Insurance claims may be disputed, coverage limits may be insufficient, and certain risks (such as losses arising from sanctions violations or acts of war in sanctioned regions) may not be insurable at all or may be subject to exclusions. The cost of insurance premiums may also increase significantly, particularly in times of heightened geopolitical risk, which would increase our operating expenses. In addition, sanctions-related restrictions may limit the availability of insurance coverage for vessels trading in certain jurisdictions.
Pandemics, epidemics, and health emergencies may disrupt our operations.
Our operations are subject to the risk of disruption from pandemics, epidemics, and public health emergencies, as demonstrated by the global COVID-19 pandemic, which caused significant disruptions to the shipping industry, including restrictions on crew changes, quarantine requirements, port closures, and delays in vessel surveys and maintenance. A recurrence of pandemic conditions or the emergence of a new public health emergency could adversely affect our ability to operate our vessels, access ports, rotate crew, and perform necessary maintenance, any of which could result in reduced fleet utilization, increased operating costs, and decreased revenue.
Risks Related to Our Structure and Indebtedness
Our substantial indebtedness could adversely affect our financial condition.
Following the completion of this offering and the application of the net proceeds as described herein, we will have approximately $400.0 million of funded indebtedness, consisting entirely of the Notes, and annual interest expense of approximately $35.0 million. While our pro forma net leverage is 1.59x based on LTM Adjusted EBITDA of $214.6 million, this ratio is susceptible to significant deterioration if our EBITDA declines, as could occur in a downturn in charter rates. For illustrative purposes, if our Adjusted EBITDA were to decline to $150 million, our net leverage ratio would increase to approximately 2.28x, and if Adjusted EBITDA were to decline to $114.3 million, net leverage would rise to approximately 2.99x. Moreover, the incurrence-based leverage covenant in the Indenture would permit us to incur additional indebtedness up to a pro forma Total Net Leverage Ratio of 3.50x, which would further increase our debt burden and interest obligations. Our substantial indebtedness could have important consequences, including limiting our financial and operational flexibility, increasing our vulnerability to adverse economic conditions, limiting our ability to fund capital expenditures and fleet renewal, and requiring a substantial portion of our operating cash flow to be dedicated to debt service.
The Notes will be structurally subordinated to liabilities of non-guarantor subsidiaries.
Not all of our 50 vessels are held by Guarantor Subsidiaries. Certain operating subsidiaries of TSL are not guarantors of the Notes and are not subject to the restrictions of the Indenture except to the extent of the intercompany loan receivables assigned as collateral. The Notes will be structurally subordinated to all liabilities (including trade payables, contractual obligations, and other indebtedness) of our non-guarantor subsidiaries, meaning that noteholders would have no direct claim against the assets of such subsidiaries in the event of a default. In a liquidation, dissolution, or bankruptcy of any non-guarantor subsidiary, creditors of that subsidiary would generally be entitled to payment in full from the assets of that subsidiary before any of those assets would be available for distribution to TSL as the shareholder (and thus ultimately to noteholders through the issuer structure).
Kallistratos Maritime Holdings Ltd.'s limited parent guarantee is capped at $50,000,000.
The limited parent guarantee provided by Kallistratos Maritime Holdings Ltd. ("KMH") in respect of the Notes is capped at a maximum aggregate amount of $50,000,000, representing only 12.5% of the aggregate principal amount of the Notes. In a downside scenario where the Co-Issuers and Guarantor Subsidiaries are unable to satisfy their obligations under the Notes, the recourse available against KMH would be limited to $50,000,000, regardless of the outstanding principal amount or accrued interest owing at such time. Prospective investors should not place undue reliance on the KMH limited parent guarantee as a source of recovery.
We are a holding company and depend on cash flow from subsidiaries.
TSL is a holding company with no significant operations of its own. TSL's ability to service the Notes depends on the ability of its subsidiaries to generate sufficient cash flow and to distribute such cash flow to TSL in the form of dividends, intercompany loans, or other upstream payments. The ability of TSL's subsidiaries to make such payments may be restricted by applicable law in their respective jurisdictions of organization (including Greece, Malta, the marshall Islands, Singapore, Dubai, and the British Virgin Islands), by contractual restrictions, by the need to maintain adequate capital and reserves, or by other legal requirements. Any limitation on the flow of funds from subsidiaries to TSL could materially impair TSL's ability to meet its payment obligations under the Notes.
Pelagos Capital Partners Fund III LP holds significant minority rights.
Pelagos Capital Partners Fund III LP ("Pelagos Fund III") holds 18.0% of the equity interests in TSL and has the right to designate 2 of the 7 members of TSL's Board of Directors. In addition, Pelagos Fund III has been granted observer rights with respect to the documentation governing the Notes. While Pelagos Fund III's interests may be generally aligned with those of noteholders in promoting the financial health of the Group, there can be no assurance that the interests of Pelagos Fund III (as an equity investor with a finite investment horizon and a return-focused mandate) will not diverge from the interests of noteholders. In particular, Pelagos Fund III may favor strategies that maximize equity returns, such as aggressive distributions, leveraged acquisitions, or an exit event, which could have the effect of increasing risk to noteholders.
Risks Related to the Security Package and Collateral
The Collateral Vessels represent only 28 of our 50 vessels.
The security package supporting the Notes includes first-priority ship mortgages over only 28 of the Group's 50 vessels (the "Collateral Vessels"). The remaining 22 vessels are not subject to first-priority mortgages securing the Notes. The Collateral Vessels have been appraised at approximately $1,175,000,000 in aggregate, out of a total fleet appraised value of approximately $1,820,000,000. In a scenario where the Co-Issuers default on the Notes and the Security Agent seeks to enforce the ship mortgages, the proceeds of enforcement would be limited to the value realized from the sale or arrest of the 28 Collateral Vessels (together with any earnings, insurance proceeds, and other collateral). The 22 non-collateral vessels would not be available to satisfy claims of noteholders (except indirectly through general unsecured claims against the Co-Issuers or Guarantors).
Ship values are volatile and may decline below levels necessary to maintain the collateral coverage ratio.
As described above under "—Vessel values may fluctuate significantly," the appraised values of the Collateral Vessels are subject to significant downward revision in response to changes in market conditions. The Indenture requires the Co-Issuers to maintain a collateral coverage ratio (fair market value of Collateral Vessels divided by outstanding principal amount of Notes) of at least 2.00x, tested semi-annually based on independent desktop appraisals. If the collateral coverage ratio falls below 2.00x, the Co-Issuers would be required to take remedial action, which may include pledging additional vessels, offering to prepay the Notes at par, or depositing cash collateral. There can be no assurance that the Co-Issuers would have the financial resources to take such remedial action, or that additional vessels or cash would be available for pledge. A failure to cure a collateral coverage deficiency could constitute an Event of Default under the Indenture if the ratio were to fall below 1.50x for two consecutive test periods.
Enforcement of ship mortgages involves complex multi-jurisdictional proceedings.
The Collateral Vessels are registered under various flag states and trade in waters around the world. Enforcement of ship mortgages — including arrest and judicial sale of vessels — is governed by the laws of the flag state and the jurisdiction in which enforcement is sought, each of which may have different procedural requirements, priority rules, and practical considerations. The cost and timing of enforcement proceedings can vary significantly between jurisdictions, and the proceeds realized from a judicial sale may be substantially less than the appraised value of the vessel, particularly in distressed market conditions. In addition, admiralty law variations may create uncertainties regarding the priority of the Security Agent's mortgage relative to maritime liens, statutory liens, and other claimants. The practical difficulties of arresting and selling a fleet of 28 vessels in potentially multiple jurisdictions simultaneously should not be underestimated.
The intercompany loan receivables pledged as collateral are subject to set-off and subordination risks.
The Collateral includes the assignment of $365,000,000 in intercompany loan receivables owed by fleet-owning subsidiaries to TFPL. These receivables are intercompany in nature and arise from loans extended by TFPL to the Group's vessel-owning subsidiaries. The value of these receivables as collateral is dependent on the ability of the fleet-owning subsidiaries to repay such loans, which is itself contingent on the financial condition of those subsidiaries. In an insolvency scenario, intercompany receivables may be subject to set-off against amounts owed by TFPL to the relevant subsidiaries, or may be subordinated to external creditors of the fleet-owning subsidiaries under applicable insolvency law. In addition, the enforcement of intercompany receivables in a cross-border insolvency involving entities in multiple jurisdictions (Singapore, Malta, the marshall Islands, and Dubai) may be subject to complex procedural and substantive legal challenges.
Risks Related to Our Controlling Shareholder
Dimitrios Kallistratos controls 72.5% of our equity through Kallistratos Maritime Holdings Ltd.
Dimitrios Kallistratos, the Chairman of TSL, beneficially owns 100% of KMH, which in turn holds 72.5% of the equity of TSL. As a result, Mr. Kallistratos has the ability to control the composition of the Board of Directors of TSL (subject to Pelagos Fund III's right to designate 2 of 7 directors), to approve or disapprove significant corporate actions (including mergers, acquisitions, dispositions, and capital-raising activities), and to determine the level and timing of dividend distributions and related-party transactions. There is no formal shareholders' agreement between KMH and other shareholders that limits Mr. Kallistratos's exercise of his controlling stake. The interests of Mr. Kallistratos as controlling shareholder may diverge from the interests of the noteholders in material respects, including with respect to the pursuit of growth versus deleveraging, the payment of dividends versus the retention of cash for debt service, and the conduct of transactions with related parties on terms that may not be arm's-length.
Risks Related to the Jurisdictions in Which We Operate
Greek law and regulatory environment.
TSL is organized and has its headquarters in the Hellenic Republic. Greek law governs the corporate existence, governance, and certain tax obligations of TSL. The Greek tax environment includes potential exposure to corporate income tax, withholding taxes on cross-border payments, and the tonnage tax regime applicable to Greek-flagged and Greek-owned shipping companies. While TSL currently benefits from the Greek tonnage tax regime, which provides a preferential tax treatment for qualifying shipping income, there can be no assurance that the Greek government will not amend or repeal this regime, which could materially increase TSL's tax burden. In addition, Greek insolvency proceedings, including rehabilitation and liquidation proceedings under Greek law, may affect the rights and remedies of noteholders in the event of TSL's insolvency, and may differ from the insolvency frameworks with which U.S. and other international investors are familiar. GEMI registration requirements impose ongoing compliance obligations on TSL.
Singapore law governs the Indenture and Security Documents.
The Indenture, the Security Documents, and certain other transaction documents are governed by the laws of Singapore. While Singapore has a well-developed and internationally recognized legal framework, investors who are accustomed to indentures governed by New York law should be aware that certain provisions of the Indenture and the Security Documents may be interpreted and enforced differently under Singapore law. Disputes relating to the Notes and the Indenture will be subject to the jurisdiction of the courts of Singapore, and judgments obtained in Singapore courts may need to be separately recognized and enforced in other jurisdictions where the Co-Issuers and Guarantors have assets. The process for recognition and enforcement of Singapore court judgments in the Hellenic Republic, the British Virgin Islands, the Republic of Malta, the Republic of the marshall Islands, and the United Arab Emirates may be uncertain, time-consuming, and expensive.
Risks associated with BVI, Cayman Islands, Malta, marshall Islands, and Dubai legal frameworks.
Our corporate structure includes entities organized in the British Virgin Islands (KMH), the Cayman Islands (Pelagos Fund III), Malta (Thalassa Dry Bulk Operations Ltd.), the marshall Islands (Thalassa Container Feeder Ltd.), and Dubai (Thalassa Port Services FZCO). Each of these jurisdictions has its own legal framework, insolvency regime, and enforcement mechanisms, which may limit the recourse available to noteholders in the event of a default. In particular, the ability of noteholders (or the Security Agent on their behalf) to pierce the corporate veil of entities in certain of these jurisdictions may be limited, and the protection afforded to creditors may differ materially from that available under U.S. or Western European insolvency laws. In the case of Thalassa Port Services FZCO, a free zone company organized in Dubai, compliance with UAE regulatory requirements introduces additional complexity.
Risks Related to the Notes and the Offering
There is no established trading market for the Notes.
The Notes are a new issue of securities for which there is currently no established trading market. Although the Co-Issuers intend to apply for listing of the Notes on SGX-ST, there can be no assurance that such listing will be obtained or, if obtained, will be maintained. Even if the Notes are listed, the development and maintenance of an active and liquid trading market for the Notes is dependent on market conditions and other factors beyond the control of the Co-Issuers. The Notes may trade at prices that are higher or lower than their initial offering price, depending upon many factors, including prevailing interest rates, the market for similar securities, general economic conditions, and the financial condition and prospects of the Co-Issuers and the Group. Any reduction in the liquidity of the trading market for the Notes would adversely affect the ability of holders to sell their Notes at a fair price or at all.
The Initial Purchasers may affect the market price of the Notes.
In connection with the offering, the Initial Purchasers may engage in stabilization transactions, over-allotments, and syndicate covering transactions. Stabilization transactions permit bids to purchase the Notes so long as the stabilization bids do not exceed a specified maximum. Over-allotment transactions involve sales of Notes in excess of the principal amount of Notes to be issued in the offering, which create a short position. Syndicate covering transactions involve purchases of the Notes in the open market after the distribution has been completed in order to cover short positions. These activities may have the effect of raising or maintaining the market price of the Notes or preventing or retarding a decline in the market price of the Notes, and, as a result, the price of the Notes may be higher than the price that otherwise might exist in the open market. If commenced, these activities may be discontinued at any time.
Exchange rate fluctuations may adversely affect the value of the Notes and our ability to service our debt.
The Notes are denominated and payable in U.S. dollars. TSL's functional currencies include the euro and the U.S. dollar, and a portion of our revenue is earned in currencies other than the U.S. dollar, including the euro, the Singapore dollar, and various local currencies in the markets where we operate. Our vessel operating expenses, general and administrative expenses, and certain capital expenditures are also incurred in multiple currencies. Fluctuations in exchange rates — particularly EUR/USD and SGD/USD — could adversely affect our operating results when translated into U.S. dollars, which is the reporting currency used for purposes of the covenant calculations under the Indenture. A material depreciation of the euro or the Singapore dollar against the U.S. dollar would reduce our reported revenue and EBITDA, potentially worsening our leverage and coverage ratios.
Rating agency downgrades or withdrawal could adversely affect the market value of the Notes.
The preliminary credit ratings assigned to the Notes by Polaris Ratings Group Ltd. (B+, stable outlook) and Oceanic Credit Assessments Inc. (B1, stable outlook) are based on current expectations and assumptions, and are subject to revision, suspension, reduction, or withdrawal at any time by the assigning rating agency. A downgrade or withdrawal of either rating would likely adversely affect the market value and liquidity of the Notes. Moreover, the preliminary ratings assigned to the Notes may not reflect the potential impact of all risks related to the structure, market, and additional factors discussed herein and in the rating agencies' respective reports.
USE OF PROCEEDS
The total aggregate principal amount of the Notes being offered is $400,000,000. At the issue price of 98.00% of par, the gross proceeds to the Co-Issuers from the sale of the Notes will be approximately $392,000,000, before deduction of the Initial Purchaser discount and other offering expenses.
The Co-Issuers intend to apply the gross proceeds from the sale of the Notes, together with approximately $10,000,000 of cash contributed by TSL from its balance sheet (to bridge the difference between the gross proceeds and the total uses of funds), as set forth in the table below:
Meridian Maritime Bank AG. The Co-Issuers will use $190,000,000 of the proceeds to fully repay and discharge all amounts outstanding under TSL's existing bilateral secured ship-finance facility with Meridian Maritime Bank AG (Talstrasse 18, 8001 Zürich, Switzerland; key contact: Hans-Peter Gerber, Senior Director, Shipping Finance). The Meridian facility is secured by ship mortgages over certain of TSL's vessels. Upon repayment, all security interests granted in connection with the Meridian facility will be released and discharged, thereby clearing the way for the grant of new first-priority ship mortgages in favor of the Security Agent for the benefit of noteholders over the Collateral Vessels.
Clearwater Shipping Finance Ltd. The Co-Issuers will use $120,000,000 of the proceeds to fully repay and discharge all amounts outstanding under TSL's existing bilateral secured ship-finance facility with Clearwater Shipping Finance Ltd. (1 Fleet Place, London EC4M 7RA, United Kingdom; key contact: Emma Blackwood, Director, Structured Ship Finance). The Clearwater facility is secured by ship mortgages over certain of TSL's vessels. Upon repayment, all security interests granted in connection with the Clearwater facility will be released and discharged.
The total existing funded indebtedness of TSL to be refinanced with the proceeds of this offering is $310,000,000, consisting of the $190,000,000 Meridian facility and the $120,000,000 Clearwater facility. Upon completion of this offering and the application of proceeds as described herein, TSL's only outstanding funded indebtedness will be the $400,000,000 Notes.
General Corporate Purposes and Fleet Capital Expenditures. The Co-Issuers intend to use approximately $72,000,000 of the proceeds for general corporate purposes, including working capital requirements, and for selective fleet renewal and capital expenditure. The Group may apply a portion of these funds to scheduled dry-docking and maintenance capital expenditure, as well as to opportunistic vessel acquisitions or other capital investments, subject to compliance with the covenants of the Indenture.
Estimated Fees, Expenses, and OID. The Co-Issuers estimate that fees, expenses, and the original issue discount in connection with the offering will aggregate approximately $18,000,000, consisting of (i) original issue discount of $8,000,000 (representing the difference between the $400,000,000 aggregate principal amount and the $392,000,000 gross proceeds at the 98.00% issue price), (ii) the Initial Purchaser discount of $8,000,000 (representing 2.00% of the aggregate principal amount), and (iii) legal fees, rating agency fees, printing costs, and other transaction-related expenses estimated at approximately $5,700,000. An itemized breakdown of the estimated transaction costs is set forth under "Listing and General Information — Expenses."
TSL Cash Contribution. Because the gross proceeds of the offering (approximately $392,000,000) are less than the total uses of funds ($400,000,000) by approximately $8,000,000, and because not all fees and expenses are deductible from gross proceeds at closing, TSL will contribute approximately $10,000,000 from its existing cash balances to fund the shortfall. Following this contribution, TSL's remaining cash on hand will be approximately $48,300,000.
Pending Application of Proceeds. Pending the application of the net proceeds as described above, the Co-Issuers will hold such proceeds in short-term, investment-grade, interest-bearing deposit accounts or money market instruments.
CAPITALIZATION
The following table sets forth the consolidated capitalization of TSL as of March 31, 2022, on (i) an actual basis and (ii) a pro forma basis after giving effect to the issuance of the Notes and the application of the net proceeds as described under "Use of Proceeds."
This table should be read in conjunction with "Use of Proceeds," "Selected Financial Data," and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and related notes included elsewhere in this Offering Memorandum.
Notes to Capitalization Table:
(1) Reflects TSL's cash contribution of approximately $10,000,000 from the balance sheet to fund the shortfall between gross offering proceeds and total uses, as described under "Use of Proceeds." The pro forma cash balance is subject to final closing adjustments and does not give effect to any changes in working capital since March 31, 2022.
(2) Both the Meridian Maritime Bank AG facility and the Clearwater Shipping Finance Ltd. facility will be fully repaid and discharged from the proceeds of this offering at closing.
(3) Total equity is presented as reported in TSL's audited consolidated financial statements as of March 31, 2022.
(4) Pro forma total equity does not give effect to the original issue discount of $8,000,000, which will be amortized over the life of the Notes, or to transaction costs expensed at closing. Adjustments for OID amortization and transaction costs would reduce pro forma equity by approximately $5,700,000 (reflecting expensed transaction costs).
(5) For purposes of calculating pro forma net leverage, net debt of $341,700,000 is based on total pro forma debt of $400,000,000 less cash and cash equivalents of $58,300,000 (using the pre-contribution cash figure, consistent with the methodology applied in the Summary and Key Credit Metrics sections of this Offering Memorandum). Adjusted EBITDA of $214,600,000 represents LTM Q1 2022 annualized figures.
SELECTED FINANCIAL DATA
Summary Selected Consolidated Financial Data
The following tables set forth summary selected consolidated financial data for TSL for the fiscal years ended December 31, 2019, December 31, 2020, and December 31, 2021, derived from TSL's audited consolidated financial statements, and for the three-month period ended March 31, 2022, derived from TSL's unaudited condensed consolidated financial statements. The LTM figures presented below are calculated by annualizing the Q1 2022 quarterly results, which the Group believes provides a reasonable approximation of trailing twelve-month performance given the relative stability of the Group's operations during the periods presented.
This financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the audited consolidated financial statements and the unaudited condensed consolidated financial statements included elsewhere in this Offering Memorandum.
Consolidated Statement of Operations Data
Consolidated Balance Sheet Data (as of period end)
Non-GAAP Financial Measures
Adjusted EBITDA is defined as net income plus (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization, and (iv) certain non-recurring or non-cash items, including vessel impairment charges, gains or losses on the sale of vessels, restructuring charges, and non-cash stock-based compensation expense. Management believes that Adjusted EBITDA is a useful measure for investors because it provides a consistent basis for comparing the Group's operating performance across periods by eliminating the effects of financing decisions, tax structures, depreciation policies, and non-recurring items. Adjusted EBITDA is not a recognized measure under International Financial Reporting Standards ("IFRS") and should not be considered as an alternative to net income, operating income, or any other financial measure derived in accordance with IFRS.
Reconciliation of Adjusted EBITDA to Net Income
Key Credit Metrics (Pro Forma)
The following table presents certain key credit metrics

OFFERING MEMORANDUM — CONFIDENTIAL

IMPORTANT NOTICES

SUMMARY

RISK FACTORS

USE OF PROCEEDS

CAPITALIZATION

SELECTED FINANCIAL DATA

Record

Parties

Dates

Amounts