PURCHASE AGREEMENT
$400,000,000
8.750% Senior Secured Notes due 2029
among
THALASSA SHIPPING & LOGISTICS SA (as Company)
THALASSA FINANCE PTE. LTD. (as Co-Issuer)
THE GUARANTOR SUBSIDIARIES LISTED ON SCHEDULE I HERETO (as Guarantors)
KALLISTRATOS MARITIME HOLDINGS LTD. (as Parent Guarantor)
and
ANCHOR BAY SECURITIES LLC (as Lead Initial Purchaser)
HALCYON PARTNERS INTERNATIONAL LTD. (as Co-Manager)
Near-Final Draft — Subject to Completion; Not for Execution
Draft Date: September 12, 2022
Calderwood & Harkness LLP Matter No.: 1044-00004 Client No.: 80214-TSL Counsel: Robert Adeyemi (Responsible Partner); Jennifer Kwon (Billing Partner); Brendan Walsh (Lead Associate); Natasha Forbes (Working Associate)
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PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "Agreement") is dated as of September 12, 2022, among:
(1) Thalassa Shipping & Logistics SA, a Société Anonyme organized and existing under the laws of the Hellenic Republic, with its registered office at 42 Akti Miaouli, Piraeus 185 35, Greece, registered with the Greek General Commercial Registry (Geniko Emporiko Mitroo, or "GEMI") under registration number 148276201000 (the "Company");
(2) Thalassa Finance Pte. Ltd., a Singapore Private Company Limited by Shares, with its registered office at 8 Marina Boulevard, #36-02, Marina Bay Financial Centre Tower 1, Singapore 018981, Unique Entity Number 202209345K (the "Co-Issuer" and, together with the Company, the "Issuers");
(3) The Guarantor Subsidiaries listed on Schedule I hereto (each, a "Guarantor" and, collectively, the "Guarantors"), being:
(a) Thalassa Dry Bulk Operations Ltd., a Private Limited Company organized and existing under the laws of Malta, being the fleet-owning subsidiary for twenty-two (22) dry-bulk carriers;
(b) Thalassa Container Feeder Ltd., a Limited Liability Company organized and existing under the laws of the Republic of the marshall Islands, being the fleet-owning subsidiary for twelve (12) container feeder vessels;
(c) Thalassa Port Services FZCO, a Free Zone Company organized and existing under the laws of Dubai, United Arab Emirates, conducting port logistics operations; and
(d) Thalassa Freight Solutions Pte. Ltd., a Private Company Limited by Shares organized and existing under the laws of Singapore, conducting freight forwarding operations;
(4) Kallistratos Maritime Holdings Ltd., a BVI Business Company organized and existing under the laws of the British Virgin Islands, with its registered office at Craigmuir Chambers, Road Town, Tortola, British Virgin Islands (the "Parent Guarantor");
(5) Anchor Bay Securities LLC, a Delaware limited liability company and broker-dealer registered with the U.S. Securities and Exchange Commission (the "SEC"), with its principal office at 599 Lexington Avenue, 28th Floor, New York, NY 10022 (the "Lead Initial Purchaser" or "ABS"); and
(6) Halcyon Partners International Ltd., a company incorporated in England and Wales, authorized by the United Kingdom Financial Conduct Authority (the "FCA"), with its principal office at 25 Old Broad Street, London EC2N 1HQ, United Kingdom (the "Co-Manager" or "HPI" and, together with ABS, the "Initial Purchasers").
Each of the foregoing is individually referred to herein as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, the Issuers propose to issue and sell Four Hundred Million United States Dollars ($400,000,000) aggregate principal amount of 8.750% Senior Secured Notes due 2029 (the "Notes");
WHEREAS, the Notes will be issued pursuant to an indenture (the "Indenture"), to be dated as of the Closing Date (as defined below), among the Issuers, the Guarantors, Marlowe Asset Management Trust Company of Singapore Pte. Ltd. (UEN 199804782D), as trustee (the "Trustee"), and Atlas Collateral Agency Pte. Ltd. (UEN 200115678R), as security agent (the "Security Agent");
WHEREAS, the Indenture and the Notes will be governed by the laws of Singapore;
WHEREAS, the Notes will be offered and sold in transactions exempt from registration under the United States Securities Act of 1933, as amended (the "Securities Act"), pursuant to Rule 144A ("Rule 144A") and Regulation S ("Regulation S") thereunder;
WHEREAS, in connection with the offering and sale of the Notes, the Issuers have prepared a preliminary Offering Memorandum dated September 12, 2022, in near-final form (the "Offering Memorandum"), describing, among other things, the terms and conditions of the Notes, the business and operations of the Issuers and their subsidiaries, and the financial condition of the Company and its consolidated subsidiaries;
WHEREAS, each of the Guarantors will unconditionally and irrevocably guarantee all of the obligations of the Issuers under the Notes and the Indenture (each, a "Guarantee" and, collectively, the "Guarantees"), and the Parent Guarantor will provide a limited guarantee capped at Fifty Million United States Dollars ($50,000,000) (the "Parent Guarantee");
WHEREAS, the Notes will be secured by a first-priority security interest in the Collateral (as defined herein), which includes, among other things, first-priority ship mortgages over twenty-eight (28) vessels in the Issuers' fleet (the "Collateral Vessels"), appraised in the aggregate at One Billion One Hundred Seventy-Five Million United States Dollars ($1,175,000,000) by Compass Marine Valuations Ltd. as of June 2022;
WHEREAS, the Initial Purchasers propose to purchase the Notes from the Issuers for resale to qualified institutional buyers ("QIBs") within the meaning of Rule 144A under the Securities Act and to non-U.S. persons in offshore transactions pursuant to Regulation S under the Securities Act; and
WHEREAS, the Parties wish to set forth the terms and conditions upon which the Notes will be purchased and sold.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants, representations, warranties, and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Definitions. As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not defined in this Agreement shall have the meanings ascribed to them in the Indenture, unless the context otherwise requires.
"ACRA" means the Accounting and Corporate Regulatory Authority of Singapore.
"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" (including the terms "controlling," "controlled by," and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.
"Agreement" has the meaning set forth in the preamble.
"ABS" has the meaning set forth in the preamble.
"Atlas Collateral Agency" means Atlas Collateral Agency Pte. Ltd. (UEN 200115678R), with its principal office at 80 Robinson Road, #02-00, Singapore 068898, in its capacity as Security Agent under the Indenture and the Security Documents.
"Business Day" means any day other than a Saturday, Sunday, or a day on which banking institutions in New York, New York, Singapore, Athens, Greece, or London, United Kingdom are authorized or obligated by law or executive order to remain closed.
"Clearwater Facility" means the bilateral secured ship-finance facility in the aggregate principal amount of One Hundred Twenty Million United States Dollars ($120,000,000) between the Company and/or certain of its subsidiaries and Clearwater Shipping Finance Ltd. (Emma Blackwood, Director; 1 Fleet Place, London EC4M 7RA, United Kingdom), as more fully described in the Offering Memorandum.
"Closing" means the consummation of the purchase and sale of the Notes pursuant to this Agreement.
"Closing Date" means the date on which the Closing occurs, which is originally targeted to be October 15, 2022, or such other date as the Issuers and the Initial Purchasers may mutually agree in writing.
"Co-Issuer" has the meaning set forth in the preamble.
"Co-Manager" has the meaning set forth in the preamble.
"Collateral" means, collectively:
(a) twenty-eight (28) Collateral Vessels (out of fifty (50) total fleet vessels, comprising thirty-eight (38) dry-bulk carriers and twelve (12) container feeder vessels) appraised in the aggregate at One Billion One Hundred Seventy-Five Million United States Dollars ($1,175,000,000) by Compass Marine Valuations Ltd. in its desktop fleet valuation report dated June 2022;
(b) first-priority assignments of earnings, insurances, and requisition compensation in respect of the Collateral Vessels;
(c) one hundred percent (100%) pledges of the equity interests in Thalassa Finance Pte. Ltd. and in each Guarantor Subsidiary;
(d) the assignment of Three Hundred Sixty-Five Million United States Dollars ($365,000,000) in intercompany loan receivables from Thalassa Finance Pte. Ltd. to the fleet-owning subsidiaries of the Company; and
(e) all proceeds and products of the foregoing.
"Collateral Coverage Ratio" means, as of any date of determination, the ratio of (x) the aggregate appraised fair market value of the Collateral Vessels (as determined in the most recent appraisal delivered pursuant to the Indenture) to (y) the aggregate outstanding principal amount of the Notes. As of the date of this Agreement, the initial Collateral Coverage Ratio is 2.94x ($1,175,000,000 divided by $400,000,000).
"Collateral Vessels" means the twenty-eight (28) vessels listed on Schedule III hereto, which are subject to first-priority ship mortgages in favor of the Security Agent for the benefit of the holders of the Notes.
"Company" has the meaning set forth in the preamble.
"Compass Marine Valuations" means Compass Marine Valuations Ltd. (Robert Hargreaves, Managing Director; 3 Thomas More Square, London E1W 1WY, United Kingdom).
"DTC" means The Depository Trust Company.
"Thackeray Partners LLC" means Stonefield Industries.
"Ashgrove Enterprises" means Harborview Industries
"Exchange Act" means the United States Securities Exchange Act of 1934, as amended.
"GEMI" means the Greek General Commercial Registry (Geniko Emporiko Mitroo).
"Guarantee" and "Guarantees" have the meanings set forth in the recitals.
"Guarantor" and "Guarantors" have the meanings set forth in the preamble.
"HPI" has the meaning set forth in the preamble.
"Indenture" means the indenture, in near-final 5th draft form dated September 6, 2022, to be entered into as of the Closing Date, among the Issuers, the Guarantors, the Trustee, and the Security Agent, as the same may be amended, restated, supplemented, or otherwise modified from time to time, governing the terms and conditions of the Notes and providing for the security arrangements contemplated hereby.
"Initial Purchaser discount" means an amount equal to 2.00% of the aggregate principal amount of the Notes, being Eight Million United States Dollars ($8,000,000), allocated between the Initial Purchasers as set forth in Section 2.2.
"Initial Purchasers" has the meaning set forth in the preamble.
"Intercreditor Agreement" means the intercreditor agreement to be entered into as of the Closing Date, among the Issuers, the Guarantors, the Security Agent, and the Trustee, establishing the relative priorities and rights of the parties with respect to the Collateral.
"Investment Company Act" means the United States Investment Company Act of 1940, as amended.
"Issuers" has the meaning set forth in the preamble.
"Kestrel & White" means Kestrel & White Chartered Accountants (Georgios Papadimitriou, Audit Partner; 22 Kifisias Avenue, Marousi 151 25, Athens, Greece), the independent auditors of the Company.
"KMH" means Kallistratos Maritime Holdings Ltd., the Parent Guarantor.
"Lead Initial Purchaser" has the meaning set forth in the preamble.
"Meridian Facility" means the bilateral secured ship-finance facility in the aggregate principal amount of One Hundred Ninety Million United States Dollars ($190,000,000) between the Company and/or certain of its subsidiaries and Meridian Maritime Bank AG (Hans-Peter Gerber, Senior Director; Talstrasse 18, 8001 Zürich, Switzerland), as more fully described in the Offering Memorandum.
"Notes" means the $400,000,000 aggregate principal amount of 8.750% Senior Secured Notes due October 15, 2029, to be issued by the Issuers pursuant to the Indenture.
"Offering Memorandum" means the preliminary Offering Memorandum of the Issuers, in near-final 4th draft form, dated September 12, 2022, relating to the offering of the Notes, comprising approximately two hundred eighty (280) pages, and including all annexes, appendices, and supplements thereto.
"Parent Guarantee" has the meaning set forth in the recitals.
"Parent Guarantor" has the meaning set forth in the preamble.
"Paying Agent and Transfer Agent Agreement" means the paying agent and transfer agent agreement to be entered into as of the Closing Date between the Issuers and Marlowe Asset Management Trust Company of Singapore Pte. Ltd., in its capacity as paying agent and transfer agent for the Notes.
"Permitted Liens" has the meaning given to such term in the Indenture.
"Person" means any individual, corporation, partnership, limited liability company, joint venture, trust, unincorporated organization, government, or any agency or political subdivision thereof.
"Purchase Price" means 98.00% of the aggregate principal amount of the Notes, being Three Hundred Ninety-Two Million United States Dollars ($392,000,000).
"QIB" means a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act.
"Registration Rights Agreement" means the registration rights agreement to be entered into as of the Closing Date between the Issuers, the Guarantors, and the Initial Purchasers, providing for customary registration rights with respect to the Notes.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means the global note representing the Notes sold pursuant to Regulation S, bearing proposed ISIN XS2498731056 and Common Code 249873105, to be deposited with a common depositary for Thackeray Partners LLC and Ashgrove Enterprises.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 144A Global Note" means the global note representing the Notes sold pursuant to Rule 144A, bearing proposed CUSIP 87265T AA1 and ISIN US87265TAA10, to be deposited with DTC.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the United States Securities Act of 1933, as amended.
"Security Agent" means Atlas Collateral Agency Pte. Ltd. (UEN 200115678R), with its principal office at 80 Robinson Road, #02-00, Singapore 068898 (Karen Ng, Associate Director, Collateral Services), in its capacity as security agent under the Indenture and the Security Documents.
"Security Documents" means, collectively, the ship mortgages (deeds of ship mortgage) over the Collateral Vessels, the deeds of assignment of earnings, insurances, and requisition compensation, the share pledge agreements in respect of Thalassa Finance Pte. Ltd. and each Guarantor Subsidiary, the assignment of intercompany loan receivables, and all other documents and instruments executed and delivered to create, perfect, and evidence the security interests in the Collateral.
"Settlement System" means, as applicable, DTC (for Rule 144A Notes) and Thackeray Partners LLC and Ashgrove Enterprises (for Regulation S Notes).
"SGX-ST" means the Singapore Exchange Securities Trading Limited.
"TFPL" means Thalassa Finance Pte. Ltd., the Co-Issuer.
"Transaction Documents" means, collectively, this Agreement, the Indenture, the Notes, the Guarantees, the Parent Guarantee, the Security Documents, the Intercreditor Agreement, the Registration Rights Agreement, the Paying Agent and Transfer Agent Agreement, and each other agreement, document, and instrument executed and delivered in connection with the transactions contemplated hereby.
"Trustee" means Marlowe Asset Management Trust Company of Singapore Pte. Ltd. (UEN 199804782D), in its capacity as trustee under the Indenture.
"TSL" means Thalassa Shipping & Logistics SA, the Company.
"TSL Fleet" means the fleet of fifty (50) vessels owned and operated by the Company and its subsidiaries, consisting of thirty-eight (38) dry-bulk carriers (comprising Supramax, Ultramax, and Kamsarmax classes) and twelve (12) container feeder vessels. The total fleet has been appraised at One Billion Eight Hundred Twenty Million United States Dollars ($1,820,000,000) by Compass Marine Valuations Ltd. as of June 2022. The average vessel age across the TSL Fleet is approximately 9.2 years, and the total deadweight tonnage is approximately 2,850,000 DWT.
Section 1.2 — Cross-References. Unless otherwise specified herein, all capitalized terms used and not defined in this Agreement shall have the respective meanings assigned to them in the Indenture. References in this Agreement to specific sections, articles, schedules, or exhibits are references to sections, articles, schedules, or exhibits of this Agreement, unless the context otherwise requires. The words "herein," "hereof," "hereunder," and words of similar import refer to this Agreement as a whole and not to any particular section or provision.
Section 1.3 — Rules of Construction. In this Agreement, unless the context otherwise requires: (a) the singular includes the plural and vice versa; (b) reference to any Person includes such Person's successors and assigns, subject to Section 10.6; (c) the words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation"; (d) all references to currency are to United States Dollars unless otherwise specified; and (e) all references to times of day are to New York City time unless otherwise stated.
ARTICLE II — PURCHASE, SALE, AND DELIVERY OF THE NOTES
Section 2.1 — Agreement to Purchase and Sell. Subject to the terms and conditions set forth herein, the Issuers agree to issue and sell to the Initial Purchasers, and each Initial Purchaser severally (and not jointly) agrees to purchase from the Issuers, the aggregate principal amount of Notes set forth opposite such Initial Purchaser's name in Schedule II hereto, at the Purchase Price (being 98.00% of par value). The allocation of the Notes between the Initial Purchasers is as follows:
The obligation of each Initial Purchaser hereunder is several and not joint. No Initial Purchaser shall be responsible for the obligation of any other Initial Purchaser to purchase Notes hereunder. The failure or default of any Initial Purchaser in its obligation to purchase Notes hereunder shall not relieve any other Initial Purchaser of its obligation to purchase the principal amount of Notes that it has agreed to purchase pursuant to this Section 2.1, subject to the conditions precedent set forth in Article VII.
Section 2.2 — Initial Purchaser discount. In consideration of the agreement of the Initial Purchasers to purchase the Notes, the Issuers agree to allow the Initial Purchasers an aggregate discount (the "Initial Purchaser discount") equal to 2.00% of the aggregate principal amount of the Notes, which aggregate discount equals Eight Million United States Dollars ($8,000,000). The Initial Purchaser discount shall be allocated between the Initial Purchasers in proportion to their respective commitments as follows:
The Initial Purchaser discount shall be deducted from the Purchase Price at the Closing and shall not be separately invoiced. Accordingly, the aggregate net amount payable by the Initial Purchasers to the Issuers at the Closing shall be the Purchase Price less the Initial Purchaser discount, being Three Hundred Eighty-Four Million United States Dollars ($384,000,000), subject to the adjustments, if any, described in Section 2.4.
Section 2.3 — Denominations and Form. The Notes shall be issued in minimum denominations of Two Hundred Thousand United States Dollars ($200,000) and in integral multiples of One Thousand United States Dollars ($1,000) in excess thereof. The Notes shall be issued in the following forms:
(a) Rule 144A Global Note. Notes sold to QIBs pursuant to Rule 144A shall be represented by one or more permanent global notes in fully registered, book-entry form (the "Rule 144A Global Note"), bearing the proposed CUSIP number 87265T AA1 and ISIN US87265TAA10, which shall be deposited with, or on behalf of, DTC and registered in the name of Cede & Co., as nominee for DTC.
(b) Regulation S Global Note. Notes sold to non-U.S. persons in offshore transactions pursuant to Regulation S shall be represented by one or more permanent global notes in fully registered, book-entry form (the "Regulation S Global Note"), bearing the proposed ISIN XS2498731056 and Common Code 249873105, which shall be deposited with a common depositary for Thackeray Partners LLC and Ashgrove Enterprises and registered in the name of such common depositary or its nominee.
Beneficial interests in the Global Notes shall be represented through, and transfers thereof shall be effected only through, book-entry accounts maintained by participants in the respective Settlement Systems. No beneficial owner of a Global Note shall be entitled to receive physical delivery of certificated Notes except in the limited circumstances described in the Indenture.
Section 2.4 — Delivery and Payment.
(a) Closing Date. The Closing shall take place on the Closing Date, which is originally targeted to be October 15, 2022, or on such other Business Day as the Issuers and the Lead Initial Purchaser may mutually agree in writing.
(b) Delivery Against Payment. On the Closing Date, the Issuers shall deliver or cause to be delivered the Notes in book-entry form through the applicable Settlement Systems to or for the account of the Initial Purchasers, against payment by the Initial Purchasers of the net purchase amount in immediately available U.S. dollar funds by wire transfer to such account or accounts as the Issuers shall designate not later than two (2) Business Days prior to the Closing Date. The settlement of the Notes and the payment of the purchase amount shall occur on a delivery-versus-payment basis.
(c) Location. The Closing shall take place at the offices of Calderwood & Harkness LLP, 125 Broad Street, New York, NY 10004, or at such other location (or by means of electronic document exchange) as the Issuers and the Lead Initial Purchaser may mutually agree.
(d) Net Proceeds. For the avoidance of doubt, the net proceeds to the Issuers from the sale of the Notes shall be calculated as follows:
Section 2.5 — Use of Proceeds. The Issuers represent and warrant that the gross proceeds from the issuance and sale of the Notes (at par value of $400,000,000), together with the original issue discount, shall be applied as follows:
For purposes of reconciliation, the gross proceeds received by the Issuers at issuance shall equal the Purchase Price of $392,000,000 (reflecting the 2.00% OID), from which the $8,000,000 Initial Purchaser discount shall be deducted, resulting in net cash proceeds to the Issuers of $384,000,000. The $8,000,000 OID shortfall (the difference between $400,000,000 par and $392,000,000 Purchase Price) and the approximately $10,000,000 in additional fees and transaction expenses not covered by the net cash proceeds shall be funded from TSL's existing cash on balance sheet, which, as reported in the Offering Memorandum, totals approximately $58,300,000. The Issuers shall not use any proceeds of the Notes, directly or indirectly, in violation of any applicable law, regulation, or order, including applicable anti-corruption, anti-money laundering, and sanctions laws.
ARTICLE III — REPRESENTATIONS AND WARRANTIES OF THE ISSUERS AND GUARANTORS
Each of the Issuers and the Guarantors, jointly and severally, represents and warrants to each Initial Purchaser, as of the date hereof and as of the Closing Date (except where a representation or warranty is expressly made as of a specified date, in which case such representation or warranty is made as of such specified date), as follows:
Section 3.1 — Organization, Good Standing, and Qualification.
(a) TSL. The Company is duly organized and validly existing as a Société Anonyme (Anonimi Etairia) under the laws of the Hellenic Republic. The Company is registered with GEMI under registration number 148276201000. The Company has its principal registered office at 42 Akti Miaouli, Piraeus 185 35, Greece. The Company has all requisite corporate power and authority to own, lease, and operate its properties and assets and to conduct its business as presently conducted and as described in the Offering Memorandum. The Company is duly qualified, licensed, or authorized to transact business and is in good standing (or the equivalent thereof) in each jurisdiction in which the nature of its business or the ownership, leasing, or operation of its properties requires such qualification, licensing, or authorization, except where the failure to be so qualified, licensed, or authorized would not, individually or in the aggregate, have a material adverse effect on the business, financial condition, results of operations, or prospects of the Issuers and Guarantors, taken as a whole (a "Material Adverse Effect").
(b) TFPL. The Co-Issuer is duly incorporated and validly existing under the Companies Act 1967 of Singapore and is in good standing (or the equivalent thereof) with the ACRA. The Co-Issuer bears Unique Entity Number 202209345K and maintains its registered office at 8 Marina Boulevard, #36-02, Marina Bay Financial Centre Tower 1, Singapore 018981. The sole director of the Co-Issuer is Marina Demetriou, who serves as the Chief Financial Officer of TSL. The Co-Issuer is a wholly-owned subsidiary of TSL and was established as the co-issuer vehicle to facilitate the issuance of Singapore-law governed Notes and to hold intercompany loans to fleet-owning subsidiaries. The Co-Issuer has all requisite corporate power and authority to enter into and perform its obligations under each Transaction Document to which it is or will be a party.
(c) Guarantors. Each Guarantor is duly organized and validly existing under the laws of its respective jurisdiction of organization (Malta, the Republic of the marshall Islands, Dubai (United Arab Emirates), and Singapore, as applicable) and has all requisite corporate or organizational power and authority to own, lease, and operate its properties and assets and to conduct its business as presently conducted. The full legal names, jurisdictions of organization, entity types, and registered offices of each Guarantor are set forth on Schedule I hereto.
(d) Parent Guarantor. Kallistratos Maritime Holdings Ltd. is duly organized and validly existing as a BVI Business Company under the BVI Business Companies Act, 2004 (as amended) of the British Virgin Islands, with its registered office at Craigmuir Chambers, Road Town, Tortola, British Virgin Islands. KMH is beneficially owned one hundred percent (100%) by Dimitrios Kallistratos, who serves as Chairman of the Board of Directors of TSL. KMH has all requisite corporate power and authority to enter into and perform its obligations under the Parent Guarantee.
Section 3.2 — Capitalization and Ownership.
(a) The ownership structure of TSL is as follows:
(i) 72.5% of the outstanding equity interests of TSL are held by Kallistratos Maritime Holdings Ltd., a BVI Business Company beneficially owned one hundred percent (100%) by Dimitrios Kallistratos (Chairman of the Board of Directors of TSL);
(ii) 18.0% of the outstanding equity interests of TSL are held by Pelagos Capital Partners Fund III LP, a Cayman Islands Exempted Limited Partnership (the general partner of which is Pelagos Capital Management Ltd., an exempted company incorporated under the laws of the Cayman Islands; managing partner: Andreas Vournas; with a registered office at PO Box 309, Ugland House, George Town, Grand Cayman, Cayman Islands; assets under management of Fund III: approximately $1.4 billion, with an investment focus on transportation and maritime infrastructure). Pelagos Capital Partners Fund III LP is entitled to appoint two (2) of seven (7) directors to the Board of Directors of TSL and holds observer rights with respect to the Notes documentation; and
(iii) 9.5% of the outstanding equity interests of TSL are held by a management employee stock ownership plan trust (the "ESOP Trust").
(b) TFPL is a wholly-owned subsidiary of TSL, with one hundred percent (100%) of its issued and outstanding shares held by TSL.
(c) Each Guarantor Subsidiary is a direct or indirect wholly-owned subsidiary of TSL.
(d) All outstanding equity interests of TSL, TFPL, and each Guarantor have been duly authorized, validly issued, fully paid, and are non-assessable. There are no outstanding options, warrants, rights, or other agreements or commitments that obligate any Issuer or Guarantor to issue, sell, or otherwise transfer any additional equity interests, other than the ESOP Trust arrangements as described in the Offering Memorandum.
Section 3.3 — Authorization and Enforceability.
(a) The issuance and sale of the Notes, the execution, delivery, and performance by each Issuer, Guarantor, and the Parent Guarantor of this Agreement and each other Transaction Document to which it is or will be a party, and the consummation of the transactions contemplated hereby and thereby, have been duly authorized by all necessary corporate or organizational action on the part of each such entity, including:
(i) authorization by the Board of Directors of TSL, the members of which include Dimitrios Kallistratos (Chairman), Elena Kallistratos-Pavlou (Vice Chairwoman), Spyros Andreou (Chief Executive Officer), and such other directors as are duly serving;
(ii) authorization by Marina Demetriou, as sole director of TFPL;
(iii) due authorization by the boards of directors, managing members, or equivalent governing bodies of each Guarantor with respect to its respective Guarantee and the other Transaction Documents to which it is or will be a party; and
(iv) due authorization by the board of directors of KMH, including by Dimitrios Kallistratos as Director, with respect to the Parent Guarantee.
(b) Each Transaction Document to which any Issuer, Guarantor, or Parent Guarantor is or will be a party has been or will be, as of the Closing Date, duly executed and delivered by such entity and constitutes or, upon such execution and delivery, will constitute a legal, valid, and binding obligation of such entity, enforceable against such entity in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and other similar laws of general applicability relating to or affecting creditors' rights generally, (ii) general equitable principles (whether considered in a proceeding at law or in equity), and (iii) the discretion of any court in granting equitable remedies (collectively, the "Enforceability Exceptions").
Section 3.4 — No Conflicts. The execution, delivery, and performance by each Issuer, Guarantor, and Parent Guarantor of this Agreement and each other Transaction Document to which it is or will be a party, the issuance and sale of the Notes, and the consummation of the transactions contemplated hereby and thereby do not and will not:
(a) violate, conflict with, or result in a breach of any provision of the articles of incorporation, bylaws, articles of association, memorandum of association, deed of establishment, or other organizational documents of any Issuer, Guarantor, or Parent Guarantor;
(b) violate, conflict with, or result in a breach of, or constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under, or result in the termination or acceleration of, or result in the creation of any lien (other than Permitted Liens) upon any property or assets of any Issuer, Guarantor, or Parent Guarantor pursuant to, any material agreement, indenture, contract, lease, mortgage, deed of trust, note, instrument, or other obligation to which any Issuer, Guarantor, or Parent Guarantor is a party or by which any of them or any of their respective properties or assets is bound, including, without limitation, (i) the $190,000,000 bilateral secured ship-finance facility with Meridian Maritime Bank AG and (ii) the $120,000,000 bilateral secured ship-finance facility with Clearwater Shipping Finance Ltd., each of which will be fully refinanced and discharged on or prior to the Closing Date from the proceeds of the Notes; or
(c) violate any applicable law, statute, regulation, rule, judgment, order, writ, injunction, or decree of any governmental authority having jurisdiction over any Issuer, Guarantor, or Parent Guarantor or any of their respective properties, including, without limitation, the laws of the Hellenic Republic, the Republic of Singapore, the British Virgin Islands, the Republic of Malta, the Republic of the marshall Islands, the Emirate of Dubai (United Arab Emirates), and the Cayman Islands.
Section 3.5 — No Registration Required; Exemptions. Assuming the accuracy of the representations and warranties of the Initial Purchasers set forth in Article IV and compliance by the Initial Purchasers with the covenants set forth in Article VI:
(a) it is not necessary, in connection with the issuance and sale of the Notes to the Initial Purchasers in the manner contemplated by this Agreement, to register the Notes under the Securities Act or to qualify the Indenture under the Trust Indenture Act of 1939, as amended;
(b) it is not necessary to register or qualify the Notes or the Guarantees for offer or sale under the securities or "blue sky" laws of any state of the United States; and
(c) none of the Issuers, the Guarantors, the Parent Guarantor, or any of their respective Affiliates, or any Person acting on their behalf (other than the Initial Purchasers, as to whom no representation is made), has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) or has engaged in any directed selling efforts (within the meaning of Regulation S under the Securities Act) in connection with the offer and sale of the Notes.
Section 3.6 — Offering Memorandum.
(a) The Offering Memorandum (near-final, 4th draft, dated September 12, 2022), as of its date and as of the Closing Date, does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that no representation or warranty is made by the Issuers or Guarantors with respect to any statements or omissions made in reliance upon and in conformity with written information furnished to the Issuers by or on behalf of any Initial Purchaser through the Lead Initial Purchaser specifically for use in the Offering Memorandum.
(b) The financial data presented in the Offering Memorandum is accurate in all material respects and has been derived from and is consistent with the books and records of the Company and its consolidated subsidiaries. As of the date of this Agreement, such financial data includes the following:
(i) LTM Revenue (Q1 2022 annualized): $687,400,000;
(ii) LTM Adjusted EBITDA (Q1 2022 annualized): $214,600,000;
(iii) EBITDA margin: 31.2%;
(iv) Pro forma total debt (post-offering): $400,000,000;
(v) Cash on balance sheet: $58,300,000;
(vi) Pro forma net debt: $341,700,000;
(vii) Pro forma net leverage: 1.59x;
(viii) Pro forma interest coverage: 6.13x ($214,600,000 divided by $35,000,000 estimated annual interest expense).
(c) The description of the TSL Fleet set forth in the Offering Memorandum is accurate and complete in all material respects. The TSL Fleet consists of fifty (50) vessels: thirty-eight (38) dry-bulk carriers (including vessels of the Supramax, Ultramax, and Kamsarmax classes) and twelve (12) container feeder vessels. The total fleet has been appraised at $1,820,000,000 by Compass Marine Valuations Ltd. (Robert Hargreaves, Managing Director; 3 Thomas More Square, London E1W 1WY, United Kingdom). The average age of the vessels in the TSL Fleet is approximately 9.2 years. The total deadweight tonnage of the TSL Fleet is approximately 2,850,000 DWT.
(d) The description of the business of the Company and its subsidiaries set forth in the Offering Memorandum is accurate and complete in all material respects, including the description of integrated port logistics and freight-forwarding operations across the Eastern Mediterranean, Black Sea, and Southeast Asia trade lanes. The Company was founded in 1997 by the Kallistratos family and has operated continuously since that date.
Section 3.7 — Financial Statements. The financial statements (including the notes thereto) of the Company and its consolidated subsidiaries included in or incorporated by reference in the Offering Memorandum have been prepared in all material respects in accordance with applicable accounting standards (as described in the Offering Memorandum) applied on a consistent basis throughout the periods covered thereby (except as may be indicated in the notes thereto or in the Offering Memorandum) and present fairly, in all material respects, the consolidated financial position of the Company and its subsidiaries as of the dates indicated and the consolidated results of operations, changes in equity, and cash flows for the periods specified therein. Such financial statements have been audited by Kestrel & White Chartered Accountants (Georgios Papadimitriou, Audit Partner; 22 Kifisias Avenue, Marousi 151 25, Athens, Greece), an independent accounting firm as stated in its reports thereon. There has been no material adverse change in the financial condition or results of operations of the Company and its consolidated subsidiaries since the date of the most recent financial statements included in the Offering Memorandum.
Section 3.8 — No Material Adverse Change. Since the date of the most recent financial statements of the Company included in the Offering Memorandum, there has not occurred any change, event, occurrence, effect, or development that has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Since such date, the Company and its subsidiaries have conducted their respective businesses in the ordinary course of business consistent with past practice in all material respects.
Section 3.9 — Litigation. There is no action, suit, proceeding, inquiry, arbitration, or investigation (whether at law, in equity, or otherwise) by or before any court, governmental authority, arbitral tribunal, self-regulatory organization, or other body, pending or, to the knowledge of the Issuers and the Guarantors, threatened against or affecting the Issuers, the Guarantors, the Parent Guarantor, or any of their respective subsidiaries or any of their respective properties, rights, or assets, that (a) involves a claim for damages in excess of $5,000,000 individually or $15,000,000 in the aggregate, (b) challenges the validity or enforceability of any Transaction Document, or (c) if determined adversely, would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, in each case except as disclosed in the Offering Memorandum.
Section 3.10 — Compliance with Laws; Regulatory Matters. Each Issuer, Guarantor, and their respective subsidiaries is in compliance in all material respects with all applicable laws, regulations, rules, statutes, orders, and decrees of any governmental authority having jurisdiction over such entity or any of its properties or operations, including, without limitation:
(a) Greek corporate and tax law, including the provisions of Greek Law 4548/2018 on Sociétés Anonymes, applicable to TSL;
(b) the Singapore Companies Act 1967 and ACRA requirements, applicable to TFPL and Thalassa Freight Solutions Pte. Ltd.;
(c) the BVI Business Companies Act, 2004 (as amended), applicable to KMH;
(d) applicable maritime regulatory requirements, including those of the International Maritime Organization ("IMO") and the relevant flag-state regulations governing the vessels in the TSL Fleet;
(e) applicable environmental regulations, including compliance with the IMO 2020 sulfur cap (MARPOL Annex VI) and the European Union Emissions Trading System ("EU ETS"), to the extent applicable;
(f) applicable economic sanctions laws and regulations, including those administered by the Office of Foreign Assets Control ("OFAC") of the U.S. Department of the Treasury, the European Union, and the United Nations Security Council; and
(g) applicable anti-money laundering laws and regulations, including the U.S. Bank Secrecy Act and its implementing regulations, and equivalent laws in jurisdictions in which the Issuers and Guarantors operate.
Section 3.11 — Tax Matters. Each Issuer, Guarantor, and their respective subsidiaries has (a) timely filed (or has obtained extensions for the filing of) all material federal, state, local, and foreign tax returns that are required to be filed by or with respect to such entity and (b) timely paid all material taxes (whether or not shown on such returns) due and owing by or with respect to such entity, except for taxes being contested in good faith through appropriate proceedings and for which adequate reserves have been established in accordance with applicable accounting standards. There are no material tax deficiencies, claims, audits, assessments, or proposed adjustments that have been asserted or assessed against any Issuer, Guarantor, or any of their respective subsidiaries, except as disclosed in the Offering Memorandum.
Section 3.12 — Insurance. Each Issuer, Guarantor, and their respective subsidiaries maintains insurance policies (including hull and machinery, protection and indemnity, war risks, and loss-of-hire coverage) with respect to the TSL Fleet, operations, and business that are adequate and customary for companies of similar size and engaged in similar businesses, and all such insurance policies are in full force and effect and all premiums due and payable thereunder have been paid. Neither any Issuer nor any Guarantor has received any written notice from any insurer denying or disputing any material claim or indicating that any material claim is subject to reservation of rights.
Section 3.13 — Title to Collateral; Security Interests.
(a) TSL and/or its applicable subsidiaries have good and marketable title to each of the twenty-eight (28) Collateral Vessels, free and clear of all mortgages, pledges, liens, security interests, charges, encumbrances, claims, and restrictions of any kind, other than Permitted Liens. Each Collateral Vessel is duly and validly registered under the flag of its respective flag state, and all certificates, documents, and filings required for such registration are current and in good standing.
(b) Upon execution, delivery, and, where applicable, recording and filing of the Security Documents, the Security Agent (Atlas Collateral Agency Pte. Ltd.; Karen Ng, Associate Director, Collateral Services; 80 Robinson Road, #02-00, Singapore 068898) will hold valid and perfected first-priority security interests in the Collateral, subject only to Permitted Liens. Such security interests will secure all of the obligations of the Issuers under the Notes and the Indenture, and all of the obligations of the Guarantors under the Guarantees.
(c) As of June 2022, the aggregate appraised fair market value of the Collateral Vessels is $1,175,000,000, as determined by Compass Marine Valuations Ltd., resulting in an initial Collateral Coverage Ratio of 2.94x.
Section 3.14 — Intellectual Property; Material Contracts.
(a) Each Issuer and Guarantor owns, or is validly licensed to use, all trademarks, trade names, service marks, copyrights, patents, and other intellectual property rights that are material to the conduct of its business as currently conducted, without any known conflict with the rights of any other Person that would reasonably be expected to have a Material Adverse Effect.
(b) All material contracts to which any Issuer or Guarantor is a party, including, without limitation, charter party agreements, vessel management agreements, shipbuilding contracts, and commercial agency agreements, have been disclosed in the Offering Memorandum and are in full force and effect. Neither any Issuer nor any Guarantor, nor, to the knowledge of the Issuers, any counterparty thereto, is in default in any material respect under any such material contract.
Section 3.15 — Existing Indebtedness. As of the date of this Agreement, the existing indebtedness of the Issuers and Guarantors (other than ordinary course trade payables and intercompany obligations) consists of:
(a) the Meridian Facility — a bilateral secured ship-finance facility in the aggregate principal amount of $190,000,000, between certain subsidiaries of the Company and Meridian Maritime Bank AG (Hans-Peter Gerber, Senior Director; Talstrasse 18, 8001 Zürich, Switzerland); and
(b) the Clearwater Facility — a bilateral secured ship-finance facility in the aggregate principal amount of $120,000,000, between certain subsidiaries of the Company and Clearwater Shipping Finance Ltd. (Emma Blackwood, Director; 1 Fleet Place, London EC4M 7RA, United Kingdom).
Total existing indebtedness: $310,000,000.
Both the Meridian Facility and the Clearwater Facility will be fully repaid, retired, and discharged on or prior to the Closing Date from the proceeds of the Notes. All existing security interests granted in connection with the Meridian Facility and the Clearwater Facility, including existing ship mortgages, will be released and discharged simultaneously with such repayment.
Section 3.16 — Ratings. The Notes have received the following preliminary credit ratings:
(a) Polaris Ratings Group Ltd. (Carl Johansson, Lead Analyst; Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton HM 08, Bermuda): B+ (stable outlook), assigned on August 8, 2022; and
(b) Oceanic Credit Assessments Inc. (Linda Park, Senior Director; 120 Broadway, Suite 2200, New York, NY 10271): B1 (stable outlook), assigned on August 10, 2022.
Neither Issuer is aware of any fact or circumstance that would reasonably be expected to result in any downgrade, withdrawal, or placement on negative watch or credit review of any of the foregoing preliminary ratings.
Section 3.17 — No Investment Company. None of the Issuers, the Guarantors, or the Parent Guarantor is, and, immediately after giving effect to the offering and sale of the Notes and the application of the net proceeds thereof as described in Section 2.5, none of them will be, required to register as an "investment company" within the meaning of the Investment Company Act.
Section 3.18 — Employee Matters. There are no material labor disputes, work stoppages, strikes, or lockouts existing or, to the knowledge of the Issuers, threatened against or involving any Issuer, Guarantor, or any of their respective subsidiaries. The ESOP Trust (holding 9.5% of TSL equity) has been duly established, is properly administered, and is in compliance in all material respects with applicable law and its governing instruments. All employee benefit plans and arrangements maintained by the Issuers and Guarantors are in compliance in all material respects with applicable law.
Section 3.19 — Environmental Matters. Each Issuer, Guarantor, and their respective subsidiaries is in compliance in all material respects with all applicable environmental laws and regulations, including laws relating to air emissions, water discharges, hazardous substances, and waste disposal. No Issuer or Guarantor has received any written notice of any material claim, action, suit, or proceeding relating to any environmental liability or non-compliance, except as disclosed in the Offering Memorandum. No Issuer or Guarantor has any material environmental liability, contingent or otherwise, that is not adequately reserved for or disclosed in the Offering Memorandum.
Section 3.20 — Anti-Corruption; Sanctions.
(a) None of the Issuers, the Guarantors, the Parent Guarantor, any of their respective subsidiaries, or, to the knowledge of the Issuers, any director, officer, agent, employee, or Affiliate of any of the foregoing, has, directly or indirectly, (i) made or authorized the making of any unlawful payment or contribution to any government official, political party, or candidate for public office, (ii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, the United Kingdom Bribery Act 2010, or any other applicable anti-bribery or anti-corruption law, or (iii) taken any action in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, property, gifts, or anything else of value to any "government official" (as defined in the U.S. Foreign Corrupt Practices Act of 1977, as amended) or to any Person in violation of applicable anti-corruption laws.