Document and Entity Information - shares |
9 Months Ended | |
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Dec. 31, 2018 |
Jan. 25, 2019 |
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Document and Entity Information | ||
Entity Registrant Name | DORIAN LPG LTD. | |
Entity Central Index Key | 0001596993 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --03-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 55,177,191 | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2018 |
Mar. 31, 2018 |
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Condensed Consolidated Balance Sheets | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 450,000,000 | 450,000,000 |
Common stock, shares issued | 58,869,711 | 58,640,161 |
Common stock, shares outstanding (net of treasury stock) | 55,177,191 | 55,090,165 |
Treasury stock, shares at cost | 3,692,520 | 3,549,996 |
Condensed Consolidated Statements of Operations - USD ($) |
3 Months Ended | 9 Months Ended | ||
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Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Revenues. | ||||
Revenues | $ 55,113,295 | $ 44,545,589 | $ 123,565,119 | $ 120,300,082 |
Expenses | ||||
Voyage expenses | 287,221 | 386,637 | 822,618 | 1,901,603 |
Vessel operating expenses | 16,773,634 | 15,794,381 | 50,834,364 | 48,420,108 |
Depreciation and amortization | 16,430,363 | 16,466,322 | 49,133,072 | 49,224,187 |
General and administrative expenses | 5,156,573 | 5,536,028 | 18,768,996 | 19,492,082 |
Professional and legal fees related to the BW Proposal | 7,766,847 | 10,020,436 | ||
Total expenses | 46,414,638 | 38,183,368 | 129,579,486 | 119,037,980 |
Other income—related parties | 614,633 | 633,883 | 1,843,782 | 1,905,836 |
Operating income (loss) | 9,313,290 | 6,996,104 | (4,170,585) | 3,167,938 |
Other income/(expenses) | ||||
Interest and finance costs | (10,000,018) | (8,683,257) | (30,526,971) | (24,763,421) |
Interest income | 413,546 | 103,446 | 1,326,442 | 147,488 |
Unrealized gain/(loss) on derivatives | (6,669,266) | 3,771,160 | (3,910,190) | 2,053,129 |
Realized gain/(loss) on derivatives | 881,276 | (369,941) | 2,494,832 | (1,418,724) |
Gain on early extinguishment of debt | 4,117,364 | |||
Other gain/(loss), net | (157,480) | (147,097) | (205,858) | (238,465) |
Total other income/(expenses), net | (15,531,942) | (5,325,689) | (30,821,745) | (20,102,629) |
Net income/(loss) | $ (6,218,652) | $ 1,670,415 | $ (34,992,330) | $ (16,934,691) |
Weighted average shares outstanding Basic (in shares) | 54,441,203 | 54,086,431 | 54,356,060 | 54,013,164 |
Weighted average shares outstanding Diluted (in shares) | 54,441,203 | 54,242,947 | 54,356,060 | 54,013,164 |
Earnings/(loss) per common share – basic (in dollars per share) | $ (0.11) | $ 0.03 | $ (0.64) | $ (0.31) |
Earnings/(loss) per common share – diluted (in dollars per share) | $ (0.11) | $ 0.03 | $ (0.64) | $ (0.31) |
Net pool revenue - related party | ||||
Revenues. | ||||
Revenues | $ 46,683,295 | $ 31,610,427 | $ 94,816,738 | $ 80,554,166 |
Time charter revenue | ||||
Revenues. | ||||
Revenues | 8,370,000 | 12,498,849 | 28,477,881 | 37,570,898 |
Voyage charter revenue | ||||
Revenues. | ||||
Revenues | 335,244 | 2,068,491 | ||
Other revenues, net | ||||
Revenues. | ||||
Revenues | $ 60,000 | $ 101,069 | $ 270,500 | $ 106,527 |
Basis of Presentation and General Information |
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Basis of Presentation and General Information | Dorian LPG Ltd. Notes to Unaudited Condensed Consolidated Financial Statements (Expressed in United States Dollars) 1. Basis of Presentation and General Information
Dorian LPG Ltd. (“Dorian”) was incorporated on July 1, 2013 under the laws of the Republic of the Marshall Islands, is headquartered in the United States and is engaged in the transportation of liquefied petroleum gas (“LPG”) worldwide. Specifically, Dorian and its subsidiaries (together “we”, “us”, “our”, or the “Company”) are focused on owning and operating very large gas carriers (“VLGCs”), each with a cargo carrying capacity of greater than 80,000 cbm, in the LPG shipping industry. Our fleet currently consists of twenty-two VLGCs, including nineteen fuel-efficient 84,000 cbm ECO-design VLGCs (“ECO VLGCs”) and three 82,000 cbm VLGCs. Two of our ECO VLGCs are fitted with exhaust gas cleaning systems (commonly referred to as “scrubbers”) to reduce sulfur emissions. We have entered into contracts for an additional ten of our VLGCs to be fitted with scrubbers.
On April 1, 2015, Dorian and Phoenix Tankers Pte. Ltd. (“Phoenix”) began operations of Helios LPG Pool LLC (the “Helios Pool”), which entered into pool participation agreements for the purpose of establishing and operating, as charterer, under variable rate time charters to be entered into with owners or disponent owners of VLGCs, a commercial pool of VLGCs whereby revenues and expenses are shared. Refer to Note 3 below for further description of the Helios Pool.
The accompanying unaudited interim condensed consolidated financial statements and related notes have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and related Securities and Exchange Commission (“SEC”) rules for interim financial reporting. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In our opinion, all adjustments, consisting of normal recurring items, necessary for a fair presentation of financial position, operating results and cash flows have been included in the accompanying unaudited interim condensed consolidated financial statements and related notes. The accompanying unaudited interim condensed consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements and related notes for the year ended March 31, 2018 included in our Annual Report on Form 10-K filed with the SEC on June 27, 2018.
Our interim results are subject to seasonal and other fluctuations, and the operating results for any quarter are therefore not necessarily indicative of results that may be otherwise expected for the entire year.
Our subsidiaries as of December 31, 2018, which are all wholly-owned and are incorporated in the Republic of the Marshall Islands (unless otherwise noted), are listed below.
Vessel Subsidiaries
Management Subsidiaries
Dormant Subsidiaries
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Significant Accounting Policies |
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Significant Accounting Policies | 2. Significant Accounting Policies
The same accounting policies have been followed in these unaudited interim condensed consolidated financial statements as were applied in the preparation of our audited financial statements for the year ended March 31, 2018 (refer to Note 2 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2018), except as discussed herein.
Accounting Pronouncements Adopted During the Nine Months Ended December 31, 2018
In November 2016, the Financial Accounting Standards Board (the “FASB”) issued accounting guidance to require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The pronouncement is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years and are applied using a retrospective transition method to each period presented. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the condensed consolidated statements of cash flows:
In August 2016, the FASB issued accounting guidance addressing specific cash flow statement issues with the objective of reducing the existing diversity in practice. The pronouncement is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The implementation of this guidance did not have a material effect on our condensed consolidated financial statements.
In May 2014, the FASB amended its accounting guidance for revenue recognition. The fundamental principles of the new guidance are that companies should recognize revenue in a manner that reflects the timing of the transfer of services to customers and consideration that a company expects to receive for the services provided. The amended guidance introduces a five-step process to achieve the fundamental principles and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. It also provides further guidance on applying collectability criterion to assess whether a contract is valid and represents a substantive transaction on the basis of whether a customer has the ability and intention to pay the promised consideration. The amended guidance requires additional disclosures necessary for the financial statement users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB voted to defer the effective date by one year for fiscal years beginning on or after December 15, 2017 and interim periods within that reporting period and permit early adoption of the standard, but not before the beginning of 2017. The amended guidance shall be applied either retrospectively to each period presented or as a cumulative effect adjustment as of the date of adoption. Under the amended guidance, voyage charter revenues are recognized based on load-to-discharge basis as compared to the previously used discharge-to-discharge basis, provided an agreed non-cancellable charter between the Company and the charterer is in existence, the charter rate is fixed and determinable, and collectability is reasonably assured. Additionally, voyage expenses related to voyage charters, including bunkers and port expenses, are deferred until load port and expensed on a load-to-discharge basis under the amended guidance. There is no modifications under the amended guidance for our method of recognizing net pool revenues—related party and time charter revenues. We adopted the amended guidance beginning April 1, 2018. The adoption of the amended guidance did not have any material impact on our condensed consolidated financial statements for the nine months ended December 31, 2018 or for prior periods, but may impact the timing with which voyage charter revenues will be recognized in future periods.
Accounting Pronouncements Not Yet Adopted
In February 2016, the FASB issued accounting guidance to update the requirements of financial accounting and reporting for lessees and lessors. The updated guidance, for lease terms of more than 12 months, will require a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize a straight-line total lease expense. Lessor accounting remains largely unchanged from current U.S. GAAP. The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. In July 2018, the FASB issued amended guidance to provide entities with relief from the cost of implementing certain aspects of the new leasing guidance. Entities may elect not to recast comparative periods presented when transitioning to the new leasing guidance and, furthermore, lessors may elect not to separate lease and nonlease components when certain conditions are met. The pronouncement is effective prospectively for public business entities for annual periods beginning after December 15, 2018, and interim periods within that reporting period. Early adoption is permitted for all entities. We intend to adopt the new guidance on its required effective date of April 1, 2019 and are currently assessing the impact the amended guidance will have on our condensed consolidated financial statements. We currently have operating leases for our offices in Stamford, Connecticut, USA; London, United Kingdom; Copenhagen, Denmark; and Athens, Greece. Refer to Note 11 for further description of our commitments under leasing arrangements. Additionally, we expect that our time charter arrangements will be subject to the requirements of the new lease guidance as we will be regarded as the lessor under these arrangements. Since lessor accounting remains largely unchanged from current U.S. GAAP and we do not believe that our office operating leases are material, we do not believe that the adoption of the amended guidance will have a material impact on our financial statements. |
Transactions with Related Parties |
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Transactions with Related Parties | |
Transactions with Related Parties | 3. Transactions with Related Parties
Dorian (Hellas), S.A.
Dorian (Hellas) S.A. (“DHSA”) formerly provided technical, crew, commercial management, insurance and accounting services to our vessels and had agreements to outsource certain of these services to Eagle Ocean Transport Inc. (“Eagle Ocean Transport”), which is 100% owned by Mr. John C. Hadjipateras, our Chairman, President and Chief Executive Officer.
Dorian LPG (USA) LLC and its subsidiaries entered into an agreement with DHSA, retroactive to July 2014 and superseding an agreement between Dorian LPG (UK) Ltd. and DHSA, for the provision by Dorian LPG (USA) LLC and its subsidiaries of certain chartering and marine operation services to DHSA, for which income was earned and included in “Other income-related parties” totaling $0.1 million for both the three months ended December 31, 2018 and 2017, respectively, $0.2 million for the nine months ended December 31, 2018 and $0.3 million for the nine months ended December 31, 2017.
As of December 31, 2018, $1.1 million was due from DHSA and included in “Due from related parties” in the unaudited interim condensed consolidated balance sheets included herein. As of March 31, 2018, $0.9 million was due from DHSA and included in “Due from related parties” in the audited consolidated balance sheets.
Eagle Ocean Transport incurs office-related costs on behalf of us, for which we reimbursed Eagle Ocean Transport less than $0.1 million for the three months ended December 31, 2018 and 2017, respectively, less than $0.1 million for the nine months ended December 31, 2018, and $0.1 million for the nine months ended December 31, 2017. Such expenses are reimbursed based on their actual cost.
Helios LPG Pool LLC
On April 1, 2015, Dorian and Phoenix began operations of the Helios Pool, which entered into pool participation agreements for the purpose of establishing and operating, as charterer, under variable rate time charters to be entered into with owners or disponent owners of VLGCs, a commercial pool of VLGCs whereby revenues and expenses are shared. We hold a 50% interest in the Helios Pool as a joint venture with Phoenix and all significant rights and obligations are equally shared by both parties. All profits of the Helios Pool are distributed to the pool participants based on pool points assigned to each vessel as variable charter hire and, as a result, there are no profits available to the equity investors as a share of equity. We have determined that the Helios Pool is a variable interest entity as it does not have sufficient equity at risk. We do not consolidate the Helios Pool because we are not the primary beneficiary and do not have a controlling financial interest. In consideration of Accounting Standards Codification (“ASC”) 810-10-50-4e, the significant factors considered and judgments made in determining that the power to direct the activities of the Helios Pool that most significantly impact the entity’s economic performance are shared, in that all significant performance activities which relate to approval of pool policies and strategies related to pool customers and the marketing of the pool for the procurement of customers for the pool vessels, addition of new pool vessels and the pool cost management, require unanimous board consent from a board consisting of two members from each joint venture investor. Further, in accordance with the guidance in ASC 810-10-25-38D, the Company and Phoenix are not related parties as defined in ASC 850 nor are they de facto agents pursuant to ASC 810-10, the power over the significant activities of the Helios Pool is shared, and no party is the primary beneficiary in the Helios Pool, or has a controlling financial interest. As of December 31, 2018, the Helios Pool operated twenty-nine VLGCs, including nineteen of our vessels, five Phoenix vessels, and five other vessels.
As of December 31, 2018, we had receivables from the Helios Pool of $76.6 million, including $20.9 million of working capital contributed for the operation of our vessels in the pool. As of March 31, 2018, we had receivables from the Helios Pool of $45.4 million (net of an amount due to Helios Pool of $0.3 million which is reflected under “Due to related Parties”), including $19.8 million of working capital contributed for the operation of our vessels in the pool. Our maximum exposure to losses from the pool as of December 31, 2018 is limited to the receivables from the pool. The Helios Pool does not have any third-party debt obligations. The Helios Pool has entered into commercial management agreements with each of Dorian LPG (UK) Ltd. and Phoenix as commercial managers and has appointed both commercial managers as the exclusive commercial managers of pool vessels. Fees for commercial management services provided by Dorian LPG (UK) Ltd. are included in “Other income-related parties” in the unaudited interim condensed consolidated statement of operations included herein and were $0.6 million and $0.5 million for the three months ended December 31, 2018 and 2017, respectively, and $1.7 million and $1.6 million for the nine months ended December 31, 2018 and 2017, respectively. Additionally, we receive a fixed reimbursement of expenses such as costs for security guards and war risk insurance for vessels operating in high risk areas from the Helios Pool, for which we earned $0.1 for both the three months ended December 31, 2018, and 2017, and $0.3 million and $0.1 million for the nine months ended December 31, 2018 and 2017, respectively, and are included in “Other revenues, net” in the unaudited interim condensed consolidated statement of operations included herein.
Through our vessel owning subsidiaries, we have chartered vessels to the Helios Pool during the nine months ended December 31, 2018 and 2017. The time charter revenue from the Helios Pool is variable depending upon the net results of the pool, operating days and pool points for each vessel. The Helios Pool enters into voyage and time charters with external parties and receives freight and related revenue and, where applicable, incurs voyage costs such as bunkers, port costs and commissions. At the end of each month, the Helios Pool calculates net pool revenues using gross revenues, less voyage expenses of all pool vessels, less fixed time charter hire for any chartered-in vessels, less the general and administrative expenses of the pool. Net pool revenues, less any amounts required for working capital of the Helios Pool, are distributed, to the extent they have been collected from third-party customers of the Helios Pool, as variable rate time charter hire for the relevant vessel to participants based on pool points (vessel attributes such as cargo carrying capacity, fuel consumption, and speed are taken into consideration) and number of days the vessel participated in the pool in the period. We recognize net pool revenues on a monthly basis, when each relevant vessel has participated in the pool during the period and the amount of net pool revenues for the month can be estimated reliably. Revenue earned from the Helios Pool is presented in Note 8. |
Deferred Charges, Net |
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Deferred Charges, Net | 4. Deferred Charges, Net
The analysis and movement of deferred charges is presented in the table below:
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Vessels, Net |
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Vessels, Net | 5. Vessels, Net
Additions to vessels, net mainly consisted of the first installment on the purchase of scrubbers for ten of our VLGCs during the nine months ended December 31, 2018. Our vessels, with a total carrying value of $1,493.2 million and $1,539.1 million as of December 31, 2018 and March 31, 2018, respectively, are first‑priority mortgaged as collateral for our long-term debt (refer to Note 6 below). No impairment loss was recorded for the periods presented. |
Long-Term Debt |
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Long-Term Debt | 6. Long-term Debt
2015 Debt Facility
Refer to Note 9 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2018 for information on our $758 million debt financing facility that we entered into in March 2015 with a group of banks and financial institutions (the “2015 Debt Facility”).
2017 Bridge Loan
Refer to Note 9 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2018 for information on our $97.0 million bridge loan agreement (the “2017 Bridge Loan”) with DNB Capital LLC that we entered into on June 8, 2017. On June 4, 2018, we prepaid $22.3 million of the 2017 Bridge Loan’s then outstanding principal using cash on hand prior to the closing of the CJNP Japanese Financing (defined below). On June 20, 2018, we prepaid the remaining 2017 Bridge Loan’s outstanding principal of $44.6 million ($23.4 million related to the Captain Nicholas ML and $21.2 million related to the Captain Markos NL) using cash on hand prior to the closing of the CMNL Japanese Financing (defined below) and the CNML Japanese Financing (defined below).
Corsair Japanese Financing
Refer to Note 9 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2018 for information on the refinancing of our 2014-built VLGC, the Corsair, pursuant to a memorandum of agreement and a bareboat charter agreement (the “Corsair Japanese Financing”). Concorde Japanese Financing
Refer to Note 9 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2018 for information on the refinancing of our 2015-built VLGC, the Concorde, pursuant to a memorandum of agreement and a bareboat charter agreement (the “Concorde Japanese Financing”). Corvette Japanese Financing
Refer to Note 9 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2018 for information on the refinancing of our 2015-built VLGC, the Corvette, pursuant to a memorandum of agreement and a bareboat charter agreement (the “Corvette Japanese Financing”). CJNP Japanese Financing
On June 11, 2018, we refinanced our 2007-built VLGC, the Captain John NP, pursuant to a memorandum of agreement and a bareboat charter agreement (the “CJNP Japanese Financing”). In connection therewith, we transferred the Captain John NP to the buyer for $48.3 million and, as part of the agreement, CJNP LPG Transport LLC, our wholly-owned subsidiary, bareboat chartered the vessel back for a period of 6 years, with purchase options from the end of year 2 through a mandatory buyout by 2024. We continue to technically manage, commercially charter, and operate the Captain John NP. We received $21.7 million, which increased our unrestricted cash, as part of the transaction with $26.6 million to be retained by the buyer as a deposit (the “CJNP Deposit”), which can be used by us towards the repurchase of the vessel either pursuant to an early buyout option or at the end of the 6-year bareboat charter term. This transaction is treated as a financing transaction and the Captain John NP continues to be recorded as an asset on our balance sheet. This debt financing has a fixed interest rate of 6.0%, not including financing costs of $0.1 million, monthly broker commission fees of 1.25% over the 6-year term on interest and principal payments made, broker commission fees of 0.5% paid upon the delivery of the Captain John NP to the buyer, broker commission fees of 0.5% payable on the repurchase of the Captain John NP, and a monthly fixed straight-line principal obligation of approximately $0.1 million over the 6-year term with a balloon payment of $13.0 million.
CMNL Japanese Financing
On June 25, 2018, we refinanced our 2006-built VLGC, the Captain Markos NL, pursuant to a memorandum of agreement and a bareboat charter agreement (the “CMNL Japanese Financing”). In connection therewith, we transferred the Captain Markos NL to the buyer for $45.8 million and, as part of the agreement, CMNL LPG Transport LLC, our wholly-owned subsidiary, bareboat chartered the vessel back for a period of 7 years, with purchase options from the end of year 2 through a mandatory buyout by 2025. We continue to technically manage, commercially charter, and operate the Captain Markos NL. We received $20.6 million, which increased our unrestricted cash, as part of the transaction with $25.2 million to be retained by the buyer as a deposit (the “CMNL Deposit”), which can be used by us towards the repurchase of the vessel either pursuant to an early buyout option or at the end of the 7-year bareboat charter term. This transaction is treated as a financing transaction and the Captain Markos NL continues to be recorded as an asset on our balance sheet. This debt financing has a fixed interest rate of 6.0%, not including financing costs of $0.1 million, monthly broker commission fees of 1.25% over the 7-year term on interest and principal payments made, broker commission fees of 0.5% paid upon the delivery of the Captain Markos NL to the buyer, broker commission fees of 0.5%. payable on the repurchase of the Captain Markos NL, and a monthly fixed straight-line principal obligation of approximately $0.1 million over the 7-year term with a balloon payment of $11.0 million.
CNML Japanese Financing
On June 26, 2018, we refinanced our 2008-built VLGC, the Captain Nicholas ML, pursuant to a memorandum of agreement and a bareboat charter agreement (the “CNML Japanese Financing”). In connection therewith, we transferred the Captain Nicholas ML to the buyer for $50.8 million and, as part of the agreement, CNML LPG Transport LLC, our wholly-owned subsidiary, bareboat chartered the vessel back for a period of 7 years, with purchase options from the end of year 2 through a mandatory buyout by 2025. We continue to technically manage, commercially charter, and operate the Captain Nicholas ML. We received $22.9 million, which increased our unrestricted cash, as part of the transaction with $27.9 million to be retained by the buyer as a deposit (the “CNML Deposit”), which can be used by us towards the repurchase of the vessel either pursuant to an early buyout option or at the end of the 7-year bareboat charter term. This transaction is treated as a financing transaction and the Captain Nicholas ML continues to be recorded as an asset on our balance sheet. This debt financing has a fixed interest rate of 6.0%, not including financing costs of $0.1 million, monthly broker commission fees of 1.25% over the 7-year term on interest and principal payments made, broker commission fees of 0.5%, paid upon the delivery of the Captain Nicholas ML to the buyer, broker commission fees of 0.5%, payable on the repurchase of the Captain Nicholas ML, and a monthly fixed straight-line principal obligation of approximately $0.1 million over the 7-year term with a balloon payment of $13.0 million.
Debt Obligations
The table below presents our debt obligations:
Deferred Financing Fees The analysis and movement of deferred financing fees is presented in the table below:
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Stock-Based Compensation Plans | 7. Stock-Based Compensation Plans
Our stock-based compensation expense is included within general and administrative expenses in the unaudited interim condensed consolidated statements of operations and was $1.2 million and $1.3 million for the three months ended December 31, 2018 and 2017, respectively and $4.2 million and $4.0 million for the nine months ended December 31, 2018 and 2017, respectively. Unrecognized compensation cost was $4.0 million as of December 31, 2018 and will be recognized over a remaining weighted average life of 1.26 years. For more information on our equity incentive plan, refer to Note 11 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2018.
In June 2018, we granted 200,000 shares of restricted stock to certain of our officers and employees. One-fourth of these restricted shares vested immediately on the grant date, one-fourth will vest one year after grant date, one-fourth will vest two years after grant date, and one-fourth will vest three years after grant date. The restricted shares were valued at their grant date fair market value and are expensed on a straight-line basis over the vesting periods.
In June 2018, September 2018 and December 2018, we granted 7,960, 7,985 and 8,680 shares of stock, respectively, to our non-executive directors, which were valued and expensed at their grant date fair market value.
In June 2018, September 2018 and December 2018, we granted 1,592, 1,597, and 1,736 shares of stock, respectively, to a non-employee consultant, which were valued and expensed at their grant date fair market value.
A summary of the activity of restricted shares awarded under our equity incentive plan as of December 31, 2018 and changes during the nine months ended December 31, 2018, is as follows:
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Revenues |
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Revenues | 8. Revenues
Revenues comprise the following:
Net pool revenues—related party depend upon the net results of the Helios Pool, and the operating days and pool points for each vessel. Refer to Note 2 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2018.
Other revenues, net represent income from charterers relating to reimbursement of voyage expenses such as costs for security guards and war risk insurance. |
Financial Instruments and Fair Value Disclosures |
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Financial Instruments and Fair Value Disclosures | 9. Financial Instruments and Fair Value Disclosures
Our principal financial assets consist of cash and cash equivalents, restricted cash amounts due from related parties, trade accounts receivable and derivative instruments. Our principal financial liabilities consist of long term debt, accounts payable, amounts due to related parties and accrued liabilities.
The effect of derivative instruments within the unaudited interim condensed consolidated statements of operations included herein for the periods presented is as follows:
As of December 31, 2018 and March 31, 2018, no fair value measurements for assets or liabilities under Level 1 or Level 3 were recognized in the accompanying consolidated balance sheets. We did not have any other assets or liabilities measured at fair value on a non-recurring basis during the three and nine months ended December 31, 2018 and 2017.
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Earnings/(Loss) Per Share (EPS) |
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Earnings/(Loss) Per Share ("EPS") | 10. Earnings/(Loss) Per Share (“EPS”)
Basic EPS represents net income/(loss) attributable to common shareholders divided by the weighted average number of common shares outstanding during the measurement period. Our restricted stock shares include rights to receive dividends that are subject to the risk of forfeiture if service requirements are not satisfied, and as a result, these shares are not considered participating securities and are excluded from the basic weighted-average shares outstanding calculation. Diluted EPS represent net income/(loss) attributable to common shareholders divided by the weighted average number of common shares outstanding during the measurement period while also giving effect to all potentially dilutive common shares that were outstanding during the period.
The calculations of basic and diluted EPS for the periods presented are as follows:
For the three and nine months ended December 31, 2018, there were 725,685 shares of unvested restricted stock and for the three and nine months ended December 31, 2017, there were 436,666 and 1,029,266 shares of unvested restricted stock, respectively, which were excluded from the calculation of diluted EPS because the effect of their inclusion would be anti-dilutive. |
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Commitments and Contingencies | 11. Commitments and Contingencies
Commitments under Contracts for Scrubber Purchases
During the nine months ended December 31, 2018, we entered into contracts to purchase scrubbers to reduce sulfur emissions on ten of our VLGCs. We had the following contractual commitments related to the scrubbers purchases:
Operating Leases
Operating lease rent expense was as follows:
We had the following commitments as a lessee under operating leases relating to our United States, Greece, United Kingdom, and Denmark offices:
Fixed Time Charter Contracts
We had the following future minimum fixed time charter hire receipts based on non-cancelable long-term fixed time charter contracts:
Other
From time to time we expect to be subject to legal proceedings and claims in the ordinary course of business, principally personal injury and property casualty claims. Such claims, even if lacking in merit, could result in the expenditure of significant financial and managerial resources. We are not aware of any claim that is reasonably possible and should be disclosed or probable and for which a provision should be established in the accompanying unaudited interim condensed consolidated financial statements. |
Professional and Legal Fees Related to the BW Proposal |
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Professional and Legal Fees Related to the BW Proposal | |
Professional and Legal Fees Related to the BW Proposal | 12. Professional and Legal Fees Related to the BW Proposal
BW made an unsolicited proposal to acquire all of our outstanding common stock and, along with its affiliates, commenced a proxy contest to replace three members of our board of directors with nominees proposed by BW. BW’s unsolicited proposal and proxy contest were subsequently withdrawn on October 8, 2018. During the three and nine months ended December 31, 2018, significant costs for professional (including investment banking fees) and legal services incurred in connection with BW’s unsolicited acquisition proposal and proxy contest totaled $7.8 million and $10.0 million, respectively. |
Significant Accounting Policies (Policies) |
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Recent accounting pronouncements | Accounting Pronouncements Adopted During the Nine Months Ended December 31, 2018
In November 2016, the Financial Accounting Standards Board (the “FASB”) issued accounting guidance to require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The pronouncement is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years and are applied using a retrospective transition method to each period presented. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the condensed consolidated statements of cash flows:
In August 2016, the FASB issued accounting guidance addressing specific cash flow statement issues with the objective of reducing the existing diversity in practice. The pronouncement is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The implementation of this guidance did not have a material effect on our condensed consolidated financial statements.
In May 2014, the FASB amended its accounting guidance for revenue recognition. The fundamental principles of the new guidance are that companies should recognize revenue in a manner that reflects the timing of the transfer of services to customers and consideration that a company expects to receive for the services provided. The amended guidance introduces a five-step process to achieve the fundamental principles and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. It also provides further guidance on applying collectability criterion to assess whether a contract is valid and represents a substantive transaction on the basis of whether a customer has the ability and intention to pay the promised consideration. The amended guidance requires additional disclosures necessary for the financial statement users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB voted to defer the effective date by one year for fiscal years beginning on or after December 15, 2017 and interim periods within that reporting period and permit early adoption of the standard, but not before the beginning of 2017. The amended guidance shall be applied either retrospectively to each period presented or as a cumulative effect adjustment as of the date of adoption. Under the amended guidance, voyage charter revenues are recognized based on load-to-discharge basis as compared to the previously used discharge-to-discharge basis, provided an agreed non-cancellable charter between the Company and the charterer is in existence, the charter rate is fixed and determinable, and collectability is reasonably assured. Additionally, voyage expenses related to voyage charters, including bunkers and port expenses, are deferred until load port and expensed on a load-to-discharge basis under the amended guidance. There is no modifications under the amended guidance for our method of recognizing net pool revenues—related party and time charter revenues. We adopted the amended guidance beginning April 1, 2018. The adoption of the amended guidance did not have any material impact on our condensed consolidated financial statements for the nine months ended December 31, 2018 or for prior periods, but may impact the timing with which voyage charter revenues will be recognized in future periods.
Accounting Pronouncements Not Yet Adopted
In February 2016, the FASB issued accounting guidance to update the requirements of financial accounting and reporting for lessees and lessors. The updated guidance, for lease terms of more than 12 months, will require a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize a straight-line total lease expense. Lessor accounting remains largely unchanged from current U.S. GAAP. The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. In July 2018, the FASB issued amended guidance to provide entities with relief from the cost of implementing certain aspects of the new leasing guidance. Entities may elect not to recast comparative periods presented when transitioning to the new leasing guidance and, furthermore, lessors may elect not to separate lease and nonlease components when certain conditions are met. The pronouncement is effective prospectively for public business entities for annual periods beginning after December 15, 2018, and interim periods within that reporting period. Early adoption is permitted for all entities. We intend to adopt the new guidance on its required effective date of April 1, 2019 and are currently assessing the impact the amended guidance will have on our condensed consolidated financial statements. We currently have operating leases for our offices in Stamford, Connecticut, USA; London, United Kingdom; Copenhagen, Denmark; and Athens, Greece. Refer to Note 11 for further description of our commitments under leasing arrangements. Additionally, we expect that our time charter arrangements will be subject to the requirements of the new lease guidance as we will be regarded as the lessor under these arrangements. Since lessor accounting remains largely unchanged from current U.S. GAAP and we do not believe that our office operating leases are material, we do not believe that the adoption of the amended guidance will have a material impact on our financial statements. |
Basis of Presentation and General Information (Tables) |
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Schedule of wholly-owned subsidiaries |
Our subsidiaries as of December 31, 2018, which are all wholly-owned and are incorporated in the Republic of the Marshall Islands (unless otherwise noted), are listed below.
Vessel Subsidiaries
Management Subsidiaries
Dormant Subsidiaries
Operated pursuant to a bareboat charter agreement. Refer to Note 6 below for further information. |
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Reconciliation of cash, cash equivalents, and restricted cash |
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Schedule of movement of deferred charges |
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Schedule of vessels, net |
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Long-Term Debt (Tables) |
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Long-Term Debt | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of loans outstanding |
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Schedule of deferred financing fees |
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Stock-Based Compensation Plans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation Plans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the activity of restricted shares |
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Revenues (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of revenues |
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Financial Instruments and Fair Value Disclosures (Tables) |
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Financial Instruments and Fair Value Disclosures | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of financial derivatives |
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Schedule of effect of derivative instruments on the consolidated statement of operations |
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Summary of carrying value and estimated fair value of Japanese Financings |
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Earnings/(Loss) Per Share (EPS) (Tables) |
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings/(Loss) Per Share ("EPS") | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of calculations of basic and diluted EPS |
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Commitments and Contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of future minimum scrubber purchases commitments |
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Schedule of operating lease rent expense |
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Schedule of operating leases |
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Schedule of future minimum fixed time charter contracts |
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Basis of Presentation and General Information (General) (Details) |
9 Months Ended |
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Dec. 31, 2018
item
| |
Basis of Presentation and General Information | |
Total number of vessels | 22 |
Number of fuel-efficient ECO-design VLGCs having 84,000 cbm | 19 |
Number of VLGCs having 82,000 cbm | 3 |
The number of vessels that have exhaust gas cleaning systems | 2 |
The number of vessels with contracts to purchase exhaust gas cleaning systems | 10 |
Significant Accounting Policies (AcctPro) (Details) - USD ($) |
Dec. 31, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Mar. 31, 2017 |
---|---|---|---|---|
New Accounting Pronouncements or Change in Accounting Principle | ||||
Cash and cash equivalents | $ 34,947,580 | $ 103,505,676 | ||
Restricted cash - non-current | 35,635,252 | 25,862,704 | ||
Total cash, cash equivalents, and restricted cash | 70,582,832 | 129,368,380 | $ 84,716,249 | $ 67,892,698 |
Accounting Standards Update 2016-18 | ||||
New Accounting Pronouncements or Change in Accounting Principle | ||||
Cash and cash equivalents | 34,947,580 | 103,505,676 | 55,633,291 | 17,018,552 |
Restricted cash - non-current | 35,635,252 | 25,862,704 | 29,082,958 | 50,874,146 |
Total cash, cash equivalents, and restricted cash | $ 70,582,832 | $ 129,368,380 | $ 84,716,249 | $ 67,892,698 |
Deferred Charges, Net (Details) |
9 Months Ended |
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Dec. 31, 2018
USD ($)
| |
Movement in deferred charges, net | |
Balance at the beginning of the period | $ 1,574,522 |
Additions | 578,537 |
Amortization | (402,212) |
Balance at the end of the period | $ 1,750,847 |
Vessels, Net (Details) |
9 Months Ended | |
---|---|---|
Dec. 31, 2018
USD ($)
item
|
Mar. 31, 2018
USD ($)
|
|
Accumulated depreciation | ||
Vessels, net | $ 1,493,150,911 | $ 1,539,111,833 |
The number of vessels with contracts to purchase exhaust gas cleaning systems | item | 10 | |
Vessels | ||
Cost | ||
Balance at the beginning of the period | $ 1,728,987,980 | |
Other additions | 2,706,699 | |
Balance at the end of the period | 1,731,694,679 | |
Accumulated depreciation | ||
Balance at the beginning of the period | (189,876,147) | |
Impairment | 0 | |
Depreciation | (48,667,621) | |
Balance at the end of the period | $ (238,543,768) | |
The number of vessels with contracts to purchase exhaust gas cleaning systems | item | 10 | |
Mortgaged VLGC vessels, carrying value | $ 1,493,200,000 | $ 1,539,100,000 |
Revenues (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Revenues | $ 55,113,295 | $ 123,565,119 | ||
Net pool revenue - related party | ||||
Revenues | 46,683,295 | 94,816,738 | ||
Time charter revenue | ||||
Revenues | 8,370,000 | 28,477,881 | ||
Other revenues, net | ||||
Revenues | $ 60,000 | $ 270,500 | ||
Revenue Guidance in Effect before Topic 606 | ||||
Revenues | $ 44,545,589 | $ 120,300,082 | ||
Revenue Guidance in Effect before Topic 606 | Net pool revenue - related party | ||||
Revenues | 31,610,427 | 80,554,166 | ||
Revenue Guidance in Effect before Topic 606 | Time charter revenue | ||||
Revenues | 12,498,849 | 37,570,898 | ||
Revenue Guidance in Effect before Topic 606 | Voyage charter revenue | ||||
Revenues | 335,244 | 2,068,491 | ||
Revenue Guidance in Effect before Topic 606 | Other revenues, net | ||||
Revenues | $ 101,069 | $ 106,527 |
Earnings/(Loss) Per Share (EPS) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Numerator: | ||||||||
Net income/(loss) | $ (6,218,652) | $ (8,177,120) | $ (20,596,558) | $ 1,670,415 | $ (11,915,136) | $ (6,689,970) | $ (34,992,330) | $ (16,934,691) |
Denominator: | ||||||||
Basic weighted average number of common shares outstanding (in shares) | 54,441,203 | 54,086,431 | 54,356,060 | 54,013,164 | ||||
Effect of dilutive restricted stock (in shares) | 156,516 | |||||||
Diluted weighted average number of common shares outstanding (in shares) | 54,441,203 | 54,242,947 | 54,356,060 | 54,013,164 | ||||
EPS: | ||||||||
Earnings/(loss) per common share – basic (in dollars per share) | $ (0.11) | $ 0.03 | $ (0.64) | $ (0.31) | ||||
Earnings/(loss) per common share – diluted (in dollars per share) | $ (0.11) | $ 0.03 | $ (0.64) | $ (0.31) | ||||
Restricted stock awards | ||||||||
EPS: | ||||||||
Number of shares excluded from the calculation of diluted EPS | 725,685 | 436,666 | 725,685 | 1,029,266 |
Commitments and Contingencies (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
Dec. 31, 2018
USD ($)
item
|
Dec. 31, 2017
USD ($)
|
|
Commitments under Contracts for Scrubber Purchases | ||||
Less than one year | $ 11,110,080 | $ 11,110,080 | ||
One to three years | 1,171,138 | 1,171,138 | ||
Total | 12,281,218 | 12,281,218 | ||
Operating Leases | ||||
Operating lease rent expense | 120,010 | $ 97,382 | 353,609 | $ 311,932 |
Commitments under Operating Leases | ||||
Less than one year | 354,133 | 354,133 | ||
One to three years | 471,912 | 471,912 | ||
Three to five years | 264,578 | 264,578 | ||
Total | 1,090,623 | 1,090,623 | ||
Fixed Time Charter Contracts | ||||
Less than one year | 25,593,113 | 25,593,113 | ||
One to three years | 8,213,252 | 8,213,252 | ||
Total | $ 33,806,365 | $ 33,806,365 | ||
Other | ||||
Number of VLGCs with scrubber purchase commitments | item | 10 |
Professional and Legal Fees Related to the BW Proposal (Details) |
3 Months Ended | 9 Months Ended |
---|---|---|
Dec. 31, 2018
USD ($)
|
Dec. 31, 2018
USD ($)
item
|
|
Professional and Legal Fees Related to the BW Proposal | ||
Costs for professional (including investment banking fees) and legal services incurred in connection with BW’s unsolicited acquisition proposal and proxy contest | $ 7,766,847 | $ 10,020,436 |
BW | ||
Professional and Legal Fees Related to the BW Proposal | ||
Number of directors proposed to be replaced in BW proposal | item | 3 | |
Costs for professional (including investment banking fees) and legal services incurred in connection with BW’s unsolicited acquisition proposal and proxy contest | $ 7,800,000 | $ 10,000,000 |