Global Ship Lease to launch consent solicitation for 9 7/8% notes

By Sarah Lizee

Olympia, Wash., Dec. 6 – Global Ship Lease, Inc. intends to solicit consents from holders of its 9 7/8% first priority secured notes due 2022 to approve amendments to the indenture governing the notes immediately following the company’s annual mandatory offer to purchase up to $20 million of the notes expected to occur on Dec. 12.

The proposed amendments would bring forward the date beginning on which the company is permitted to pay dividends to common shareholders in a total amount per year equal to 50% of the consolidated net profit after taxes of the company for the preceding financial year to Jan. 1, 2020, rather than Jan. 1, 2021.

The amendments would also include an acknowledgement by holders of the notes that the transactions contemplated by the agreement and plan of merger dated Oct. 29 by and among the company, Poseidon Containers Holdings LLC, K&T Marine LLC and the other parties do not constitute a change of control under the indenture.

In addition, the company said the proposed amendments amend some other provisions of the indenture for the benefit of the holders. These include, among other things:

• To provide that only equity issuances for cash will increase the company’s capacity to make distributions to shareholders, and not in-kind contributions to equity;

• To reduce the increases in the amount of permitted transfers of assets or cash from the company and the guarantors of the notes to non-guarantor subsidiaries generated by in-kind contributions to equity to 15% from 100% of the fair market value of these contributions, other than cash which will increase the permitted transfer basket by 100%, and to set the increase in the permitted transfer basket created by the Poseidon transactions at $50 million;

• To regulate in more detail certain intercompany transactions that may take place between the company and the guarantors on the one hand and non-guarantor subsidiaries on the other hand, including with respect to intercompany loans, vessel transfers and vessel management arrangements;

• To extend the company’s annual and quarterly financial reporting to include certain stand-alone financial information of the company and the guarantors on one hand and the non-guarantor subsidiaries on the other; and

• To modify the treatment of beneficial ownership by some permitted holders pursuant to the change of control definition.

Global Ship said the proposed amendments contribute to the integration of the legacy Global Ship Lease entities and the new Poseidon entities and facilitate the unlocking of the growth potential of the Poseidon transactions for the benefit of all of the company’s stakeholders while at the same time reinforcing its support of, and active engagement with, holders of the notes.

The consent solicitation will expire at 11:59 p.m. ET on Dec. 18.

Subject to the terms and conditions, the company intends to offer a cash payment of $7.50 per $1,000 in total principal amount of notes held by each holder as of the record date set forth in the consent solicitation statement who validly delivers and does not validly revoke a duly executed consent at or prior to the expiration time.

Adoption of the proposed amendments will require the consent of the holders of at least a majority of the total principal amount of all outstanding notes.

As of Dec. 6, the total outstanding principal amount of the notes was $360 million, which amount may be reduced following the annual mandatory offer.

So far, beneficial owners of about $164.2 million of the principal amount of the notes, representing about 46% of the outstanding notes, have agreed to consent to the amendments.

Citibank, NA, London Branch is the trustee and security agent.

Global Ship Lease is a containership charter owner based in London.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.