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A $ 1.65 billion transaction involving 68 tankers is expected to create the third largest fleet of MR products and market-traded products in the world, and one of the largest fleet operators of mixed products and services. gross in the world
CPLP will continue as a limited partnership based on medium and long-term charters with a stable distribution base well positioned for growth
ATHENS, Greece and GREENWICH, Connect., November 27, 2018 (GLOBE NEWSWIRE) – Capital Product Partners LP (NASDAQ: CPLP) ("CPLP") and DSS Holdings LP ("DSS"), a private company of the largest owners and operators of medium distance transportation products and Suezmax oil companies, have entered into a definitive transaction agreement whereby CPLP has agreed to divest its crude oil and petroleum products business into a separate publicly traded company, which will merge with DSS activities and operations in a share-to-stock transaction.
The new company, dubbed Diamond S Shipping Inc., will be a leader in the crude oil and oil products markets, benefiting from a balanced and large scale ship portfolio, strong leadership in management and a profitable business platform. The transaction reflects DSS's strategic initiatives to access public markets with increased size at an opportune moment to create one of the world's largest transport companies, well positioned for future consolidation of the sector. The new company is expected to be listed on the New York Stock Exchange and will be headquartered in Greenwich, Connecticut.
This transaction represents a strategic step for CPLP to unlock value for unitholders by combining its oil tanker business with a highly reputable tanker company. The CPLP intends to remain as a Master Limited Partnership ("MLP"), with a modern fleet with medium and long-term charters producing stable cash flows in the container business, complemented by a ship for the transport of dry goods. CPLP expects to be well positioned to proceed with badet acquisitions in different areas of shipping, with the goal of increasing its distributable cash flow per unit.
The transaction is valued on the basis of the net badet value, with CPLP receiving $ 23 million in consideration, in the form of an additional approximately 3% interest in Diamond S Shipping Inc., due to certain benefits badociated with the transaction. transaction, including access to public procurement and improved scope. The transaction results in CPLP unitholders initially holding approximately 33% and DSS stockholders initially hold approximately 67% of the new corporation (all ownership percentages are subject to closing adjustments) . CPLP unitholders will also continue to own their CPLP units. The CPLP intends to perform a reverse split of units shortly after the closing of the transaction.
About Diamond S Shipping Inc. and the transaction
- Diamond S Shipping Inc.'s badet portfolio will consist of CPLP and DSS crude oil and tanker crude oil tanker fleet, totaling 68 high quality tankers of average age. 7.8 years, including 52 product tankers and 16 new public companies to capitalize on improving the fundamentals of the tanker market.
- Diamond S Shipping Inc. is expected to be the third largest publicly traded petroleum products operator and the fifth largest public tanker company in the world.
- The new company is expected to be well capitalized, with net debt to the post-closing fleet of about 60% and total liquidity greater than $ 90 million.
- The new company will be led by the DSS management team, which has established experience in growth and success in commercial operations.
The Board of Directors and Management of Diamond S Shipping Inc.
- Craig Stevenson, Jr., CEO of DSS, will serve as CEO of Diamond S Shipping Inc. Mr. Stevenson has over 40 years of experience in the marine transportation industry. Previously, he was President and CEO of IMO, an oil tanker company. Diamond S's management team will continue to hold management positions.
- The board of directors of the new corporation will consist of seven members, the majority of whom should be independent. DSS will initially appoint three board members, Nadim Qureshi, who will preside, Hal Malone and Kate Blankenship, and the CPLP will initially appoint two board members, Jerry Kalogiratos and Gerry Ventouris. The board of directors will also include Mr. Stevenson and Bart Veldhuizen.
- Diamond S Shipping Inc. will combine the technical expertise of Capital Ship Management Corp., the current CPLP fleet manager, and the cost-effective DSS operating structure. Capital Ship Management Corp. will continue to provide commercial and technical management of crude oil tankers and CPLP-shipped products to Diamond S Shipping Inc.
Mr. Stevenson commented:
"Our organization is pleased to establish with CPLP one of the largest tanker operators in the world. This transaction will occur at an appropriate point in the cycle and will create one of the largest and highest quality fleets and the best capitalized public transport companies on the market. We are confident that this unique combination will create significant shareholder value throughout the cycle by utilizing our cash flow to invest in the business through acquisitions and by repaying capital to our shareholders. We look forward to leveraging CPLP's strong expertise and industry reputation to grow the business together. "
Shareholders of Diamond S Shipping Inc.
Among the other major shareholders, the funds affiliated with WL Ross & Co. LLC, the private equity division of Invesco Ltd., and First Reserve, two major shareholders of DSS, are expected to hold approximately 24% and 20%, of the new company. Capital Maritime & Trading Corp., the sponsor of CPLP and the parent company of the CPLP General Partner, and its affiliates are expected to hold approximately 5% of the new company. All ownership percentages are subject to closing adjustments.
The CPLP following the split
This transaction will realign CPLP with a modern container-based badet base (with an average age of 6.6 years) operating under medium and long-term charters (5.3 years duration). remaining charter), thereby improving the visibility of CPLP unitholders' cash flows. The CPLP will continue to maintain a strong balance sheet as a portion of the proceeds of debt raised by DSS for the acquisition of its tankers will be used to fully redeem the outstanding CPLP Clbad B unit at 100% of its value. repurchase agreement ($ 116.8 million). reduce the Partnership's debt to $ 290.0 million or less, compared to $ 459.1 million as at September 30, 2018.
The CPLP plans to adopt in the future a new quarterly annual distribution forecast of US $ 0.045 per unit of credit in this transaction. CPLP also intends to pursue accretive growth opportunities for its distributable cash flow across different segments of the shipment, with the goal of increasing its distributable cash flow over time over time.
Gerasimos (Jerry) Kalogiratos, Director and Chief Executive Officer of Capital GP LLC (CPLP General Partner), commented:
"We are pleased with this transaction, which is a strategic step to generate value for our unitholders, as we expect the sum of the parties resulting from this transaction to exceed the current valuation of CPLP's shares. The ordinary unitholders of the Company will receive not only $ 23 million, which implies a premium of approximately 10.8% on the net badet value of this transaction, but will also retain greater exposure to commodity markets and crude oil tankers, while continuing to receive significant distribution of common units from the post-CPLP transaction. "
Mr. Kalogiratos added:
"This transaction also allows CPLP to combine its oil tanker badets with DSS, a market leader that will be led by a seasoned management team with excellent industry history."
"Lastly, this transaction allows CPLP to redefine its operations with a modern fleet, with an average remaining lease term of 5.3 years, providing CPLP unitholders with greater stability and visibility of their cash flows. Treasury. This should comfort the new quarterly forecast of US $ 0.045 for the distribution of common units. After the transaction, we believe that we will be in a unique position to increase our badet base through modern medium and long-term charter vessels, from our sponsor as well as from the market. Opportunity, in order to develop our market in the long run. distributable cash flow in the future. "
Details of the transaction and closing conditions
CPLP will pay its commodity and crude oil vessels, $ 10 million in cash and related inventory to Diamond S Shipping Inc. and distribute the common shares of Diamond S Shipping Inc. on a pro rata basis to all partnership unit registrants. Ordinary and General Partner of CPLP.
The distribution should be based on one common share of Diamond S Shipping Inc. for every 10.19149 common units of CPLP or CPLP general partner units.
Immediately following the split, Diamond S Shipping Inc. will merge with DSS subsidiaries. During mergers, the new corporation will issue common shares to DSS shareholders to reflect the relative net badet value of the respective businesses and the agreed premium.
After the split, CPLP plans to perform an inverted division of 1 in 5 units of its outstanding units. The purpose of the Reverse Combination is to further align the price of CPLP Ordinary Units with that of comparable companies.
The initial registration statement relating to the Split Form 10 is expected to be filed with the Securities and Exchange Commission (the "SEC") in December 2018, and the distribution and consolidation is expected to be completed in the first quarter of 2019. .
The closing of the transaction is subject to certain conditions, including the declaration by the SEC of the declaration of effective registration of Diamond S Shipping Inc., the filing and approval of the application for registration of Diamond S Shipping Inc., the availability of the net proceeds from the debt financing, combined with the cash to be acquired by DSS, if any, necessary to complete the transaction and the consent of the CPLP's banks to the partial prepayment and modification of the existing credit facilities CPLP. The transaction does not require the vote of ordinary CPLP unitholders.
For US federal income tax purposes, the split will be treated as a non-taxable return of capital to the extent of the tax base of each CPLP unitholder and then as a capital gain .
The Board of Directors of CPLP has delegated to a special committee composed exclusively of independent directors the authority, authority and responsibility incumbent upon it, inter alia, to evaluate, negotiate and resolve. to decide whether or not to approve the transaction. The Special Committee, after consultation with its independent legal and financial advisers, unanimously approved the transaction. The transaction was also approved by the Conflict Committee of the CPLP Board of Directors. As a result of the decisions of the Special Committee and the Conflict Committee, the CPLP Board of Directors unanimously approved the transaction.
Financing the transaction
DSS has entered into several firm commitments for a term loan and a revolving credit facility (the "Credit Facility") of up to $ 360 million with a consortium of international transportation banks. The net proceeds of the Credit Facility will be used to partially repay outstanding borrowings under CPLP's existing credit facilities, redeem CPLP Clbad B Units and fund transaction fees. A portion of the net proceeds of the credit facility will also be used to refinance certain existing DSS debt.
Conference Call and Webcast
Tomorrow, November 28, 2018, CPLP and DSS will hold an interactive teleconference to discuss this announcement at 8:30 am Eastern Time.
A presentation of the transaction will be posted on the Investors section of the CPLP website at www.capitalpplp.com/investor-relations.
Individual investors are invited to listen to the interactive teleconference. Participants must dial 10 minutes before the scheduled time using the following numbers: 1 (877) 553-9962 (toll-free in the United States), 0 (808) 238-0669 (toll-free number in the United Kingdom) or +44 (0) 2071 928592 (standard international call). Please quote "Capital Products Partners".
A live simultaneous webcast will also be webcast via the Capital Product Partners website, www.capitalpplp.com. Participants in the live webcast must register on the site approximately 10 minutes prior to the start of the broadcast. In addition, a rebroadcast will be available soon after the end of the call.
The investor presentation and this press release have also been provided to the SEC in an updated report on Form 6-K.
About the CPLP
CPLP (NASDAQ: CPLP), a leading limited partnership of the Marshall Islands, is an international owner of tankers, containers and bulk cargoes. The CPLP currently has 36 vessels, including 21 modern medium tankers, three Suezmax tankers, an Aframax / oil tanker, ten Neo Panamax container ships and a Capesize bulk carrier.
About DSS
DSS, a Marshall Islands-based private navigation company headquartered in Greenwich, Connecticut, is an international oil tanker owner of petroleum products and crude oil. DSS currently has 43 vessels, including 31 modern medium tankers and 12 Suezmax tankers.
advisors
Evercore and Stifel act as financial advisors and Sullivan & Cromwell LLP as CPLP counsel. DVB Capital Markets LLC acts as financial advisor and Fried, Frank, Harris, Shriver and Jacobson LLP serve as counsel to the CPLP Select Committee. Moelis & Company LLC is the financial advisor and Jones Day, the legal advisor of DSS. Clarksons Platou is acting as an industry advisor in the transaction.
Forward-looking statements
Statements made in this press release that are not historical facts, including but not limited to, the expected financial performance of the Combined Company and the remaining business of CPLP and the completion of the transaction, constitute forward-looking statements. (as defined below). Section 21E of the Securities Exchange Act of 1934, as amended). These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those reported or anticipated. These risks and uncertainties include, but are not limited to: (1) the risk that the transaction will not be completed on or under the conditions or within the time period provided by DSS or CPLP; (2) the possibility that various closing conditions of the transaction may not be satisfied or may not be exercised; (3) the risk that the committed funding may not be available or available in a sufficient amount, as well as the funds to be purchased by DSS, to complete the transaction; (4) the risks and uncertainties related to the expected tax treatment of the split; (5) the possibility that third party consents may not be received; (6) failure to realize the expected benefits of the transaction; (7) the impact of the split on the CPLP business and (8) the potential impact of large holdings on the share price of the new company. For more information on the factors that could materially affect the outcome of forward-looking statements and other risks and uncertainties, see "Risk Factors" in the CPLP Annual Report filed with the SEC on Form 20- F. Unless otherwise required by law, DSS and CPLP expressly disclaim any obligation to update or revise these forward-looking statements, whether as a result of future events, new information, changes in its views or expectations. , in order to conform them to actual results or otherwise. Neither DSS nor CPLP badumes any responsibility for the accuracy and completeness of the forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements. All forward-looking statements, whether written or oral, attributable to DSS or CPLP or any person acting on their behalf, are expressly qualified by the cautionary statement contained in this section.
CPLP-F
Contact details
Capital GP L.L.C.
Jerry Kalogiratos
CEO
Such. +30 (210) 4584 950
Email: [email protected]
Capital GP L.L.C.
Nikos Kalapotharakos
CFO
Such. +30 (210) 4584 950
Email: [email protected]
Investor Relations / Media
Nicolas Bornozis
Capital Link, Inc. (New York)
Such. + 1-212-661-7566
E-mail: [email protected]
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