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Dorian LPG Ltd.
Notes to 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 through the ownership and operation of LPG tankers. Dorian LPG Ltd. and its subsidiaries (together “we,” “us,” “our,” or the “Company”) is focused on owning and operating very large gas carriers (“VLGCs”), each with a cargo carrying capacity of greater than 80,000 cbm. 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.
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of Dorian LPG Ltd. and its subsidiaries.
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. See Note 3 below for further description of the Helios Pool relationship.
Our subsidiaries, which are all wholly-owned and all are incorporated in Republic of the Marshall Islands (unless otherwise indicated below), as of March 31, 2017 are listed below.
Vessel Owning Subsidiaries
|
|
Type of |
|
|
|
|
|
|
|
Subsidiary |
|
vessel |
|
Vessel’s name |
|
Built |
|
CBM(1) |
|
CMNL LPG Transport LLC |
|
VLGC |
|
Captain Markos NL |
|
2006 |
|
82,000 |
|
CJNP LPG Transport LLC |
|
VLGC |
|
Captain John NP |
|
2007 |
|
82,000 |
|
CNML LPG Transport LLC |
|
VLGC |
|
Captain Nicholas ML |
|
2008 |
|
82,000 |
|
Comet LPG Transport LLC |
|
VLGC |
|
Comet |
|
2014 |
|
84,000 |
|
Corsair LPG Transport LLC |
|
VLGC |
|
Corsair |
|
2014 |
|
84,000 |
|
Corvette LPG Transport LLC |
|
VLGC |
|
Corvette |
|
2015 |
|
84,000 |
|
Dorian Shanghai LPG Transport LLC |
|
VLGC |
|
Cougar |
|
2015 |
|
84,000 |
|
Concorde LPG Transport LLC |
|
VLGC |
|
Concorde |
|
2015 |
|
84,000 |
|
Dorian Houston LPG Transport LLC |
|
VLGC |
|
Cobra |
|
2015 |
|
84,000 |
|
Dorian Sao Paulo LPG Transport LLC |
|
VLGC |
|
Continental |
|
2015 |
|
84,000 |
|
Dorian Ulsan LPG Transport LLC |
|
VLGC |
|
Constitution |
|
2015 |
|
84,000 |
|
Dorian Amsterdam LPG Transport LLC |
|
VLGC |
|
Commodore |
|
2015 |
|
84,000 |
|
Dorian Dubai LPG Transport LLC |
|
VLGC |
|
Cresques |
|
2015 |
|
84,000 |
|
Constellation LPG Transport LLC |
|
VLGC |
|
Constellation |
|
2015 |
|
84,000 |
|
Dorian Monaco LPG Transport LLC |
|
VLGC |
|
Cheyenne |
|
2015 |
|
84,000 |
|
Dorian Barcelona LPG Transport LLC |
|
VLGC |
|
Clermont |
|
2015 |
|
84,000 |
|
Dorian Geneva LPG Transport LLC |
|
VLGC |
|
Cratis |
|
2015 |
|
84,000 |
|
Dorian Cape Town LPG Transport LLC |
|
VLGC |
|
Chaparral |
|
2015 |
|
84,000 |
|
Dorian Tokyo LPG Transport LLC |
|
VLGC |
|
Copernicus |
|
2015 |
|
84,000 |
|
Commander LPG Transport LLC |
|
VLGC |
|
Commander |
|
2015 |
|
84,000 |
|
Dorian Explorer LPG Transport LLC |
|
VLGC |
|
Challenger |
|
2015 |
|
84,000 |
|
Dorian Exporter LPG Transport LLC |
|
VLGC |
|
Caravelle |
|
2016 |
|
84,000 |
|
Management Subsidiaries
|
|
Subsidiary |
|
Dorian LPG Management Corp |
|
Dorian LPG (USA) LLC (incorporated in USA) |
|
Dorian LPG (UK) Ltd. (incorporated in UK) |
|
Dorian LPG Finance LLC |
|
Occident River Trading Limited (incorporated in UK) |
|
Dormant Subsidiaries
|
|
Subsidiary |
|
SeaCor LPG I LLC |
|
SeaCor LPG II LLC |
|
Capricorn LPG Transport LLC |
|
Constitution LPG Transport LLC |
|
Grendon Tanker LLC(2) |
|
(1) |
CBM: Cubic meters, a standard measure for LPG tanker capacity |
(2) |
Owner of the Pressurized Gas Carrier (“PGC”) Grendon until it was sold in February 2016 |
Customers
For the year ended March 31, 2017, the Helios Pool and two other individual charterers accounted for 69%, 13% and 10% of our total revenues, respectively. For the year ended March 31, 2016, the Helios Pool and one other individual charterer represented 70% and 12% of total revenues, respectively. For the year ended March 31, 2015, five charterers represented 27%, 19%, 14%, 12% and 11% of total revenues, respectively.
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2. Significant Accounting Policies
(a)Principles of consolidation: The consolidated financial statements incorporate the financial statements of the Company and its wholly‑owned subsidiaries. Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statements of operations from the effective date of acquisition and up to the effective date of disposal, as appropriate. All intercompany balances and transactions have been eliminated.
(b)Use of estimates: The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
(c)Other comprehensive income/(loss): We follow the accounting guidance relating to comprehensive income, which requires separate presentation of certain transactions that are recorded directly as components of shareholders’ equity. We have no other comprehensive income/(loss) items and, accordingly, comprehensive income/(loss) equals net income/(loss) for the periods presented and thus we have not presented this in the consolidated statement of operations or in a separate statement.
(d)Foreign currency translation: Our functional currency is the U.S. Dollar. Foreign currency transactions are measured and recorded in the functional currency using the exchange rate in effect at the date of the transaction. As of balance sheet date, monetary assets and liabilities that are denominated in a currency other than the functional currency are adjusted to reflect the exchange rate at the balance sheet date and any gains or losses are included in the statement of operations. For the periods presented, we had no foreign currency derivative instruments.
(e)Cash and cash equivalents: We consider highly liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents.
(f)Trade receivables, net and accrued revenues: Trade receivables, net and accrued revenues, reflect receivables from vessel charters, net of an allowance for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. Provision for doubtful accounts for the periods presented was zero.
(g)Due from related parties: Due from related parties reflect receivables from the Helios Pool and other related parties. Distributions of earnings due from the Helios Pool are classified as current and working capital contributed to the Helios Pool is classified as non-current.
(h)Inventories: Inventories consist of bunkers on board the vessels when vessels are unemployed or are operating under voyage charters and lubricants and stores on board the vessels. Inventories are stated at the lower of cost or market. Cost is determined by the first in, first out method.
(i)Vessels, net: Vessels, net are stated at cost net of accumulated depreciation and impairment charges. The costs of the vessels acquired as part of a business acquisition are recorded at their fair value on the date of acquisition. The cost of vessels purchased consists of the contract price, less discounts, plus any direct expenses incurred upon acquisition, including improvements, commission paid, delivery expenses and other expenditures to prepare the vessel for her initial voyage. The initial purchase of LPG coolant for the refrigeration of cargo is also capitalized. Allocated interest costs incurred during construction are capitalized. Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels. Repairs and maintenance are expensed as incurred.
(j)Impairment of long‑lived assets: We review our vessels “held and used” for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When the estimate of future undiscounted cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount, the asset is evaluated for an impairment loss. Measurement of the impairment loss is based on the fair value of the asset.
(k)Vessel depreciation: Depreciation is computed using the straight‑line method over the estimated useful life of the vessels, after considering the estimated salvage value. Each vessel’s salvage value is equal to the product of its lightweight tonnage and estimated scrap rate. Management estimates the useful life of its vessels to be 25 years from the date of initial delivery from the shipyard. Second hand vessels are depreciated from the date of their acquisition through their remaining estimated useful life.
(l)Drydocking and special survey costs: Drydocking and special survey costs are accounted under the deferral method whereby the actual costs incurred are deferred and are amortized on a straight‑line basis over the period through the date the next survey is scheduled to become due. We are required to drydock each of our vessels every five years until it reaches 15 years of age, after which we are required to drydock the applicable vessel every 2.5 years. Costs deferred are limited to actual costs incurred at the yard and parts used in the drydocking or special survey. Costs deferred include expenditures incurred relating to shipyard costs, hull preparation and painting, inspection of hull structure and mechanical components, steelworks, machinery works, and electrical works. If a survey is performed prior to the scheduled date, the remaining unamortized balances are immediately written off. Unamortized balances of vessels that are sold are written‑off and included in the calculation of the resulting gain or loss in the period of the vessel’s sale. The amortization charge is presented within Depreciation and amortization in the consolidated statement of operations.
(m)Financing costs: Financing costs incurred for obtaining new loans and credit facilities are deferred and amortized to interest expense over the respective term of the loan or credit facility using the effective interest rate method. Any unamortized balance of costs relating to loans repaid or refinanced is expensed in the period the repayment or refinancing is made, subject to the accounting guidance regarding Debt—Modifications and Extinguishments. Any unamortized balance of costs related to credit facilities repaid is expensed in the period. Any unamortized balance of costs relating to credit facilities refinanced are deferred and amortized over the term of the respective credit facility in the period the refinancing occurs, subject to the provisions of the accounting guidance relating to Debt—Modifications and Extinguishments. The unamortized financing costs are reflected as a reduction of Long-term debt—net of current portion and deferred financing fees in the accompanying consolidated balance sheet.
(n)Restricted cash: Restricted cash represents minimum liquidity to be maintained with certain banks under our borrowing arrangements and pledged cash deposits. The restricted cash is classified as non-current in the event that its obligation is not expected to be terminated within the next twelve months as they are long-term in nature.
(o)Revenues and expenses: Revenue is recognized when an agreement exists, the vessel is made available to the charterer or services are provided, the charter hire is determinable and collection of the related revenue is reasonably assured.
Net pool revenue: As from April 1, 2015, we began operation of a pool. Net pool revenues—related party for each vessel in the pool is determined in accordance with the profit-sharing terms specified within the pool agreement. In particular, the pool manager calculates the net pool revenues using gross revenues less voyage expenses of all the pool vessels and less the general and administrative expenses of the pool and distributes the net pool revenues as time charter hire 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—related party on a monthly basis, when the vessel has participated in the pool during the period and the amount of net pool revenues for the month can be estimated reliably.
Voyage charter revenue: Under a voyage charter, the revenues are recognized on a pro‑rata basis over the duration of the voyage determined on a discharge—to discharge port basis but we do not begin recognizing revenue until a charter has been agreed to by the customer and us, even if the vessel has discharged its cargo and is sailing to the anticipated load port for its next voyage. In the event a vessel is acquired or sold while a voyage is in progress, the revenue recognized is based on an allocation formula agreed between the buyer and the seller. Demurrage income represents payments by the charterer to the vessel owner when loading or discharging time exceeds the stipulated time in the voyage charter and is recognized when earned and collection is reasonably assured. Despatch expense represents payments by us to the charterer when loading or discharging time is less than the stipulated time in the voyage charter and is recognized as incurred. Voyage charter revenue relating to voyages in progress as of the balance sheet date are accrued and presented in Trade receivables and accrued revenue in the accompanying consolidated balance sheet.
Time charter revenue: Time charter revenues are recorded ratably over the term of the charter as service is provided. Time charter revenues received in advance of the provision of charter service are recorded as deferred income and recognized when the charter service is rendered. Deferred income or accrued revenue also may result from straight‑line revenue recognition in respect of charter agreements that provide for varying charter rates. Deferred income and accrued revenue amounts that will be recognized within the next twelve months are presented as current, with amounts to be recognized thereafter presented as non‑current. Revenues earned through the profit-sharing arrangements in the time charters represent contingent rental revenues that are recognized when earned and amounts are reasonably assured based on estimates provided by the charterer.
Commissions: Charter hire commissions to brokers or managers, if any, are deferred and amortized over the related charter period and are included in Voyage expenses.
Vessel operating expenses: Vessel operating expenses are accounted for as incurred on the accrual basis. Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance, the cost of spares and consumable stores and other miscellaneous expenses.
(p)Repairs and maintenance: All repair and maintenance expenses, including underwater inspection costs are expensed in the period incurred. Such costs are included in Vessel operating expenses.
(q)Stock-based compensation: Stock-based payments to employees and directors are determined based on their grant date fair values and are amortized against income over the vesting period. The fair value is considered to be the closing price recorded on the grant date. We account for restricted stock award forfeitures upon occurrence.
(r)Stock repurchases: We record the repurchase of our shares of common stock at cost based on the settlement date of the transaction. These shares are classified as treasury stock, which is a reduction to shareholders’ equity. Treasury shares are included in authorized and issued shares but excluded from outstanding shares.
(s)Segment reporting: Each of our vessels serve the same type of customer, have similar operations and maintenance requirements, operate in the same regulatory environment, and are subject to similar economic characteristics. Based on this, we have determined that it operates in one reportable segment, the international transportation of liquid petroleum gas with its fleet of vessels. Furthermore, when we charter a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable.
(t)Derivative instruments: All derivatives are stated at their fair value, as either a derivative asset or a liability. The fair value of the interest rate derivatives is based on a discounted cash flow analysis and their fair value changes are recognized in current period earnings. When the derivatives do qualify for hedge accounting, depending upon the nature of the hedge, changes in fair value of the derivatives are either recognized in current period earnings or in other comprehensive income/(loss) (effective portion) until the hedged item is recognized in the consolidated statements of operations. For the periods presented, no derivatives were accounted for as accounting hedges.
(u)Fair value of financial instruments: In accordance with the requirements of accounting guidance relating to Fair Value Measurements, the Company classifies and discloses its assets and liabilities carried at fair value in one of the following three categories:
Level 1: |
Quoted market prices in active markets for identical assets or liabilities. |
Level 2: |
Observable market based inputs or unobservable inputs that are corroborated by market data. |
Level 3: |
Unobservable inputs that are not corroborated by market data. |
(v)Recent accounting pronouncements: 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. The implementation of this guidance is anticipated to result in restricted cash transfers not reported as cash flow activities in the consolidated statements of cash flows, and, upon adoption, is not anticipated to have an impact on our consolidated balance sheets and statements of operations.
In August 2016, the FASB issued accounting guidance addressing specific cash flow 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. We do not believe that the impact of the adoption of this amended guidance will have a material effect on our financial statements.
In March 2016, the FASB issued accounting guidance to simplify the requirements of accounting for share-based payment transactions. The guidance simplifies the accounting for taxes related to stock-based compensation, including adjustments to how excess tax benefits and an entity’s payments for tax withholdings should be classified. Additionally, an entity may make an entity-wide policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The pronouncement is effective for annual periods beginning after December 15, 2016, and interim periods within that reporting period with early adoption permitted in any interim or annual period. We have adopted this pronouncement and have made the entity-wide policy election to account for forfeitures when they occur. The amended guidance had no significant impact on our financial statements for the year ended March 31, 2017.
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. 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. 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 are currently assessing the impact the amended guidance will have on our financial statements.
In July 2015, the FASB issued accounting guidance requiring entities to measure most inventory at the lower of cost and net realizable value. The pronouncement is effective prospectively for annual periods beginning after December 15, 2016, and interim periods within that reporting period. We do not believe that the impact of the adoption of this amended guidance will have a material effect on our financial statements.
In April 2015, an accounting pronouncement was issued by the FASB to update the guidance related to the presentation of debt issuance costs, which we adopted in April 2016. This guidance requires debt issuance costs, related to a recognized debt liability, be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability rather than being presented as an asset. The reclassification does not impact net income/(loss) as previously reported or any prior amounts reported on the consolidated statements of comprehensive income, or the consolidated statements of cash flows. The effect of the retrospective application of this change in accounting principle on our consolidated balance sheets as of March 31, 2017 and March 31, 2016 resulted in a reduction of “Deferred charges, net” and “Total assets” in the amount of $20.1 million and $23.7 million, respectively, with a corresponding reduction of “Long-term debt—net of current portion” and “Total long-term liabilities.”
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. It also 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. We are currently assessing the impact the amended guidance will have on our financial statements.
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3. Transactions with Related Parties
Dorian (Hellas) S.A.
Ship‑Owning Companies Management Agreements: Pursuant to management agreements entered into by each vessel owning subsidiary on July 26, 2013, as amended, with Dorian (Hellas) S.A. (“DHSA” or the “Manager”), the technical, crew and commercial management as well as insurance and accounting services of its vessels was outsourced to DHSA. In addition, under these management agreements, strategic and financial services had also been outsourced to DHSA. DHSA had entered into agreements with each of Eagle Ocean Transport Inc. (“Eagle Ocean Transport”) and Highbury Shipping Services Limited (“HSSL”), to provide certain of these services on behalf of the vessel owning companies. Mr. John Hadjipateras, our Chairman, President and CEO, owns 100% of Eagle Ocean Transport, and our Vice President of Chartering, Insurance and Legal, Nigel Grey‑Turner, owns 100% of HSSL. The fees payable for the above services to DHSA amounted to $93,750 per month per vessel, payable one month in advance. These management agreements terminated on June 30, 2014. As of July 1, 2014, vessel management services and the associated agreements for our fleet were transferred from DHSA and are now provided through our wholly owned subsidiaries Dorian LPG (USA) LLC, Dorian LPG (UK) Ltd. and Dorian LPG Management Corp. Subsequent to the transition agreements, Eagle Ocean Transport continues to incur related travel costs for certain transitioned employees as well as office-related costs, for which we reimbursed Eagle Ocean Transport $0.4 million, $0.8 million and $0.7 million for the years ended March 31, 2017, 2016, and 2015, respectively. Such expenses are reimbursed based on their actual cost.
Management fees related to these agreements for the year ended March 31, 2015 amounted to $1.1 million and are presented in Management fees—related party in the consolidated statements of operations. There were no management fees incurred for the years ended March 31, 2017 and 2016.
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 $0.4 million, $0.5 million and $0.1 million for the years ended March 31, 2017, 2016 and 2015, respectively.
As of March 31, 2017, $0.8 million was due from DHSA and included in “Due from related parties.” As of March 31, 2016, $0.9 million was due from DHSA and included in “Due from related parties” and $0.5 million was due to DHSA and included in “Due to related parties.”
Pre‑Delivery Services: A fixed monthly fee of $15,000 per hull was payable to the Manager for pre‑delivery services provided during the period from July 29, 2013 until the date of delivery of each newbuilding. These management agreements terminated on June 30, 2014. As of July 1, 2014, vessel management services and the associated agreements for our fleet were transferred from the Manager and are now provided through our wholly owned subsidiaries. Management fees related to the pre‑delivery services provided by DHSA for the year ended March 31, 2015 amounted to $0.9 million.
Helios LPG Pool LLC (“Helios Pool”)
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. In March 2016, the Helios Pool reached an agreement with Oriental Energy Company Ltd. ("Oriental Energy") whereby Oriental Energy would contribute certain vessels to the Helios Pool, have certain of its vessels time chartered by the Helios Pool and simultaneously enter into a multi-year contract of affreightment covering Oriental Energy’s shipments from the United States Gulf. The agreement with Oriental Energy had no impact on the ownership structure or the power to direct significant activities of the Helios Pool. As of March 31, 2017, the Helios Pool operated twenty-seven VLGCs, including eighteen of our vessels, five Oriental Energy vessels and four Phoenix vessels.
As of March 31, 2017, we had receivables from the Helios Pool of $61.4 million, including $19.8 million of working capital contributed for the operation of our vessels in the pool. As of March 31, 2016, we had receivables from the Helios Pool of $71.0 million, including $17.6 million of working capital contributed for the operation of our vessels in the pool. Our maximum exposure to losses from the pool as of March 31, 2017 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 consolidated statement of operations and were $2.1 million and $1.4 million for the years ended March 31, 2017 and 2016, respectively. Additionally, we received a fixed reimbursement of expenses such as costs for security guards and war risk insurance for vessels operating high risk areas from the Helios Pool, for which we earned $0.9 million and $1.2 million for the years ended March 31, 2017 and 2016, respectively, and are included in “Other revenues” in the consolidated statement of operations.
Through our vessel owning subsidiaries, we have chartered vessels to the Helios Pool during the years ended March 31, 2017 and 2016. 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 the 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 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 the vessel has participated in the pool during the period and the amount of net pool revenues for the month can be estimated reliably and collectability is reasonably assured. Revenue earned is presented in Note 13.
Consulting
Since the formation of the Predecessor Companies, a member of our board of directors, who resigned effective May 1, 2015, provided certain chartering and commercial services to the Company, its subsidiaries, and the Predecessor Companies. This individual entered into a consulting agreement in May 2015 that provides for, among other things, an annual fee of $250,000, payable for services rendered commencing on May 8, 2014. The agreement was amended in June 2016, retroactive to January 1, 2016, to provide for, among other things, an annual fee for services rendered of $120,000. Related to this consulting agreement, we expensed $0.1 million, $0.2 million, and $0.2 million for the years ended March 31, 2017, 2016, and 2015, respectively.
Artwork
During the year ended March 31, 2016, we purchased $0.1 million of artwork for newbuilding vessels, which have been capitalized and presented in “Vessels, net” in the consolidated balance sheets, for our Athens, Greece office and for a shipyard, which are included in “General and administrative expenses” in the consolidated statement of operations. The artist is a relative of one of our executive officers. No artwork was purchased during the year ended March 31, 2017.
Commissions
Orient River Trading Ltd., a company 100% owned by a senior officer of our 100% owned subsidiary Dorian Management Corp., provided disponent owner services for certain charterers that do not recognize Marshall Islands vessel-owning subsidiary companies. Commission expenses on voyages utilizing these services, included in “Voyage expenses” in the consolidated statement of operations, amounted to $0.1 million for each of the years ended March 31, 2016 and 2015. There were no services rendered for us by Orient River Trading Ltd. for the year ended March 31, 2017.
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4. Inventories
Our inventories by type were as follows:
|
March 31, 2017 |
|
March 31, 2016 |
|
||
Lubricants |
$ |
1,807,617 |
|
$ |
1,612,354 |
|
Victualing |
|
457,787 |
|
|
494,098 |
|
Bonded stores |
|
124,985 |
|
|
103,446 |
|
Other |
|
190,353 |
|
|
78,175 |
|
Total |
$ |
2,580,742 |
|
$ |
2,288,073 |
|
|
5. Vessels, Net
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
Cost |
|
depreciation |
|
Net book Value |
|
|||
Balance, April 1, 2015 |
|
$ |
439,180,669 |
|
$ |
(19,204,616) |
|
$ |
419,976,053 |
|
Vessels delivered |
|
|
1,292,872,267 |
|
|
— |
|
|
1,292,872,267 |
|
Other additions |
|
|
195,272 |
|
|
— |
|
|
195,272 |
|
Disposals |
|
|
(4,268,279) |
|
|
429,214 |
|
|
(3,839,065) |
|
Depreciation |
|
|
— |
|
|
(41,980,051) |
|
|
(41,980,051) |
|
Balance, March 31, 2016 |
|
$ |
1,727,979,929 |
|
$ |
(60,755,453) |
|
$ |
1,667,224,476 |
|
Other additions |
|
|
984,639 |
|
|
— |
|
|
984,639 |
|
Transfers out |
|
|
(195,273) |
|
|
— |
|
|
(195,273) |
|
Depreciation |
|
|
— |
|
|
(64,544,595) |
|
|
(64,544,595) |
|
Balance, March 31, 2017 |
|
$ |
1,728,769,295 |
|
$ |
(125,300,048) |
|
$ |
1,603,469,247 |
|
Vessels delivered represent amounts transferred from Vessels under Construction relating to the cost of our ECO VLGCs delivered to us between July 2014 and February 2016. Other additions to vessels, net were largely due to capital improvements made to two of our VLGCs during the year ended March 31, 2017 and other capital improvements to our fleet during the year ended March 31, 2016. Disposals for the year ended March 31, 2016 were primarily attributable to the sale of the Grendon.
Vessels with a total carrying value of $1,603.5 million as of March 31, 2017 are first‑priority mortgaged as collateral for our loan facilities (refer to Note 10 below). As of March 31, 2016, vessels with a total carrying value of $1,667.2 million were first priority mortgaged as collateral for our loan facilities.
|
6. Vessels Under Construction
Balance, April 1, 2015 |
|
$ |
398,175,504 |
|
Installment payments to shipyards |
|
|
867,187,966 |
|
Other capitalized expenditures |
|
|
22,699,783 |
|
Capitalized interest |
|
|
4,809,014 |
|
Vessels delivered (transferred to Vessels) |
|
|
(1,292,872,267) |
|
Balance, March 31, 2016 |
|
|
— |
|
Balance, March 31, 2017 |
|
$ |
— |
|
Other capitalized expenditures for the year ended March 31, 2016 represent LPG coolant of $5.0 million, fees paid to third party vendors of $17.3 million and $0.4 million of employee-related costs for supervision fees and other newbuilding pre-delivery costs including engineering and technical support, liaising with the shipyard, and ensuring key suppliers are integrated into the production planning process.
|
7. Other Fixed Assets, Net
Other fixed assets, net were $317,348 and $591,288 as of March 31, 2017 and March 31, 2016, respectively, and represent leasehold improvements, software and furniture and fixtures at cost. Accumulated depreciation on other fixed assets, net was $561,311 as of March 31, 2017 and $279,651 as of March 31, 2016.
|
8. Deferred Charges, Net
The analysis and movement of deferred charges, net is presented in the table below:
|
|
Drydocking |
|
|
|
|
costs |
|
|
Balance, April 1, 2015 |
|
$ |
669,705 |
|
Amortization |
|
|
(374,770) |
|
Balance, March 31, 2016 |
|
$ |
294,935 |
|
Additions |
|
|
1,817,231 |
|
Amortization |
|
|
(227,992) |
|
Balance, March 31, 2017 |
|
$ |
1,884,174 |
|
The drydocking costs incurred during the year ended March 31, 2017 relate to the drydocking of two of our VLGCs.
|
9. Accrued Expenses
Accrued expenses comprised of the following:
|
March 31, 2017 |
|
March 31, 2016 |
|
||
Accrued voyage and vessel operating expenses |
$ |
2,029,598 |
|
$ |
1,644,557 |
|
Accrued professional services |
|
1,470,298 |
|
|
1,676,880 |
|
Accrued loan and swap interest |
|
999,733 |
|
|
1,664,002 |
|
Accrued employee-related costs |
|
786,467 |
|
|
4,231,542 |
|
Accrued board of directors' stock-based compensation and fees |
|
88,750 |
|
|
492,652 |
|
Other |
|
11,551 |
|
|
11,844 |
|
Total |
$ |
5,386,397 |
|
$ |
9,721,477 |
|
|
10. Long‑Term Debt
Description of our Debt Obligations
2015 Debt Facility
In March 2015, we entered into a $758 million debt financing facility (the “2015 Debt Facility”) with four separate tranches. Commercial debt financing (“Commercial Financing”) of $249 million was provided by ABN AMRO Capital USA LLC (“ABN”); ING Bank N.V., London Branch, ("ING"); DVB Bank SE ("DVB"); Citibank N.A., London Branch (“Citi”); and Commonwealth Bank of Australia, New York Branch, ("CBA"), (collectively the "Commercial Lenders"), while the Export Import Bank of Korea ("KEXIM") directly provided $204 million of financing (“KEXIM Direct Financing”). The remaining $305 million of financing was provided under tranches guaranteed by KEXIM of $202 million (“KEXIM Guaranteed”) and insured by the Korea Trade Insurance Corporation ("K-sure") of $103 million (“K-sure Insured”). Financing under the KEXIM guaranteed and K-sure insured tranches are provided by certain Commercial Lenders; Deutsche Bank AG; and Santander Bank, N.A. The debt financing is secured by, among other things, eighteen of our ECO VLGCs, and represents a loan-to-contract cost ratio before fees of approximately 55%.
The 2015 Debt Facility contains various covenants providing for, among other things, maintenance of certain financial ratios and certain limitations on payment of dividends, investments, acquisitions and indebtedness. A commitment fee was payable on the average daily unused amount under the 2015 Debt Facility of 40% of the margin on each tranche. Certain terms of the borrowings under each tranche of the 2015 Debt Facility are as follows:
|
|
|
|
|
|
|
|
|
|
|
Interest Rate at |
|
|
|
|
|
Term |
|
Interest Rate Description(1) |
|
March 31, 2017(2) |
|
|||
Tranche 1 |
|
Commercial Financing |
|
7 |
years |
|
London InterBank Offered Rate (“LIBOR”) plus a margin(4) |
|
3.73 |
% |
||
Tranche 2 |
|
KEXIM Direct Financing |
|
12 |
years(3) |
|
LIBOR |
plus a margin of |
2.45 |
% |
3.43 |
% |
Tranche 3 |
|
KEXIM Guaranteed |
|
12 |
years(3) |
|
LIBOR |
plus a margin of |
1.40 |
% |
2.38 |
% |
Tranche 4 |
|
K-sure Insured |
|
12 |
years(3) |
|
LIBOR |
plus a margin of |
1.50 |
% |
2.48 |
% |
(1) |
The interest rate of the 2015 Debt Facility on Tranche 1 is determined in accordance with the agreement as three or six month LIBOR plus the applicable margin and the interest rate on Tranches 2, 3 and 4 is determined in accordance with the agreement as three month LIBOR plus the applicable margin for the respective tranches. |
(2) |
The set LIBOR rate in effect as of March 31, 2017 was 0.98%. |
(3) |
The KEXIM Direct Financing, KEXIM Guaranteed, and K-Sure tranches have put options to call for the prepayment on the final payment date of the Commercial Financing tranche subject to specific notifications and commitments for refinancing/renewal of the Commercial Financing tranche. |
(4) |
The Commercial Financing tranche margin over LIBOR is 2.75% and is reduced to 2.50% if 50% or more but less than 75% of the vessels financed in the 2015 Debt Facility are employed under time charters as defined in the agreement and to 2.25% if 75% or more of the vessels financed in the 2015 Debt Facility are employed under time charters as defined in the agreement. As of March 31, 2017, the set margin was 2.75%. |
The 2015 Debt Facility is secured by, among other things, (i) first priority Bahamian mortgages on the vessels financed; (ii) first priority assignments of all of the financed vessels’ insurances, earnings, requisition compensation, and management agreements; (iii) first priority security interests in respect of all issued shares or limited liability company interests of the borrowers and vessel-owning guarantors; (iv) first priority charter assignments of all of the financed vessels’ long-term charters; (v) assignments of the interests of any ship manager in the insurances of the financed vessels; (vi) an assignment by the borrower of any bank, deposit or certificate of deposit opened in accordance with the facility; and (vii) a guaranty by the Company guaranteeing the obligations of the borrower and other guarantors under the facility agreement. The 2015 Debt Facility further provides that the facility is to be secured by assignments of the borrower’s rights under any hedging contracts in connection with the facility but such assignments have not been entered into at this time.
Royal Bank of Scotland plc. (“RBS”) secured bank debt
We assumed the debt obligations associated with the financing of the vessels that were acquired through the acquisition of CJNP LPG Transport LLC, CMNL LPG Transport LLC, and CNML LPG Transport LLC. The prior loan arrangements associated with those vessels required approval from the lenders to sell the vessels and agreement from the lenders to transfer the borrowings to another party. As a consequence, the Company and the lender negotiated new borrowing terms in connection with this transaction. The new terms are described below. The total borrowings outstanding immediately prior to the debt modification and immediately after remained the same.
CJNP LPG Transport LLC, CMNL LPG Transport LLC, CNML LPG Transport LLC, and Corsair LPG Transport LLC as joint and several borrowers (Borrowers), and Dorian LPG Ltd. as parent guarantor entered into a loan facility of $135,224,500 (the “RBS Loan Facility”), which replaced the prior borrowing arrangements of the Predecessor. The RBS Loan Facility is divided into three tranches. Tranche A of $47.6 million, Tranche B of $34.5 million and Tranche C of up to $53.1 million and is associated with each of the Captain John NP, Captain Markos NL and the Captain Nicholas ML, respectively.
Tranche A is payable in twelve equal semi‑annual installments each in the amount of $1,700,000 that commenced on September 24, 2013 plus a balloon of $27,200,000 payable concurrently with the last installment on March 24, 2019.
Tranche B is payable in eleven equal semi‑annual installments each in the amount of $1,278,500 that commenced on November 17, 2013 plus a balloon of $20,456,000 payable concurrently with the last installment on November 17, 2018.
Tranche C is payable in fourteen equal semi‑annual installments each in the amount of $1,827,500 that commenced on January 21, 2014 plus a balloon of $27,520,000 payable concurrently with the last installment July 21, 2020.
The interest rate on the RBS Loan Facility increased in accordance with the loan agreement from LIBOR plus a margin of 1.5% per annum to LIBOR plus a margin of 2.0% per annum on September 26, 2014, concurrent with the delivery of the Corsair and to 2.5% on September 26, 2015 until maturity. In the event of non‑compliance the Borrowers will be required within one month of being notified in writing by the lender to make such prepayment. In the event the lender agrees to release Corsair or another borrower approved by the lender from joint and several liabilities under the agreement, the minimum market adjusted security cover is adjusted to 175% and the margin will be increased to 2.75%.
The RBS Loan Facility provides that it be secured by, among other things, (i) first priority mortgages on the vessels financed; (ii) first assignments of all freights, earnings and insurances; (iii) first assignment of any borrowers’ rights and interests in any hedging agreement in connection with the facility; and (iv) assignment of any approved charter in respect of any financed vessel.
The 2015 Debt Facility and RBS Loan Facility also contain customary covenants that require us to maintain adequate insurance coverage, properly maintain the vessels and to obtain the lender’s prior consent before changes are made to the flag, class or management of the vessels, or entry into a new line of business. The loan facilities include customary events of default, including those relating to a failure to pay principal or interest, breaches of covenants, representations and warranties, a cross-default to other indebtedness and non-compliance with security documents, and customary restrictions from paying dividends if an event of default has occurred and is continuing, or if an event of default would result therefrom.
Debt Covenants: The following financial covenants are the most restrictive from the 2015 Debt Facility and the RBS Loan Facility with which the Company is required to comply, calculated on a consolidated basis, determined and defined according to the provisions of the loan agreement:
2015 Debt Facility Covenants
· |
The ratio of current assets and long-term restricted cash divided by current liabilities shall always be greater than 1.00; |
· |
Maintain minimum shareholders’ equity at all times equal to the aggregate of (i) $400,000,000, (ii) 50% of any new equity raised after loan agreement date and (iii) 25% of the positive net income for the immediately preceding financial year; |
· |
Minimum interest coverage ratio of consolidated EBITDA to consolidated net interest expense must be maintained greater than or equal to (i) 1.00 for the 12-month period starting in the calendar quarter following the one in which delivery of the first ship occurs, (ii) 1.50 in the subsequent year, (iii) 2.00 in the third year following the initial period, and (iv) 2.50 thereafter; |
· |
The ratio of consolidated net debt to consolidated total capitalization shall not exceed 0.60 to 1.00; |
· |
Liquidity reserve minimum must be the higher of (a) the aggregate of (i) $25 million and (ii) $1,100,000 for every vessel delivered and financed by the 2015 Debt Facility and (b) 5% of the consolidated interest bearing debt outstanding of the Company; |
· |
Fair market value of the mortgaged ships plus any additional security over outstanding loan balance shall be at least 135%; |
RBS Loan Facility Covenants
· |
The ratio of cash flow from operations before interest and finance costs to cash debt service costs shall not be less than 1:1; |
· |
Minimum shareholders' equity, as adjusted for any reduction in vessel fair market value, shall not be less than $85 million; |
· |
Minimum cash balance of $10 million at the end of each quarter and minimum cash balances of $1.5 million per mortgaged vessel in a pledged account with the lender at all times; |
· |
The ratio of Total Debt to Shareholders Funds shall not exceed 150% at all times; |
· |
The ratio of the aggregate market value of the vessels securing the loan to the principal amount outstanding under such loan, plus 100% of the related swap exposure, at all times shall be in excess of 125%; and |
· |
No dividends shall be paid in excess of free cash flow if an event of default is occurring. |
The RBS Loan Facility further (i) requires that the existing shareholders at the date of the agreement maintain their ownership of our common shares at a minimum level of 15% of our issued share capital, subject to downward adjustment for any future equity issuances by us, (ii) provides that the ownership of more than one‑third of our common shares by any shareholder other than the existing shareholders at the date of the agreement is an event of default and/or permits the lender to accelerate the indebtedness, (iii) permits the lender to accelerate the indebtedness if at any time the existing shareholders at the date of the agreement do not maintain a representative on our board of directors or any other of our management committees; (iv) requires the lender's approval prior to chartering for a period of greater than one year any of the vessels securing the loan, subject to certain conditions; and (v) restricts our subsidiaries, which own the vessels securing the loan, from paying any dividends, however, the loan facility permits the borrowers to make expenditures to fund our administration and operations.
Similarly, the 2015 Debt Facility permits the lenders to accelerate the indebtedness if, without the prior written consent of the lenders, (i) one-third of our common shares are owned by any shareholder other than certain entities, directors or officers listed in the agreement; (ii) there are certain changes to our board of directors; or (iii) Mr. John Hadjipateras ceases to serve on our board of directors.
We entered into a bridge loan agreement and repaid in full the RBS Loan Facility at 96% of the then outstanding principal amount in June 2017. See Note 24 for further details on the bridge loan agreement and the repayment of the RBS Loan Facility. We were in compliance with the financial covenants for the 2015 Debt Facility as of March 31, 2017, which was amended in May 2017. See Note 24 for further details on the amendment.
Debt Obligations
The table below presents our debt obligations:
RBS secured bank debt |
|
March 31, 2017 |
|
March 31, 2016 |
|
||
Tranche A |
|
$ |
34,000,000 |
|
$ |
37,400,000 |
|
Tranche B |
|
|
25,570,000 |
|
|
28,127,000 |
|
Tranche C |
|
|
40,312,500 |
|
|
43,967,500 |
|
Total RBS secured bank debt |
|
$ |
99,882,500 |
|
$ |
109,494,500 |
|
|
|
|
|
|
|
|
|
2015 Debt Facility |
|
|
|
|
|
|
|
Commercial Financing |
|
$ |
227,512,277 |
|
$ |
241,442,384 |
|
KEXIM Direct Financing |
|
|
177,680,534 |
|
|
194,827,596 |
|
KEXIM Guaranteed |
|
|
175,773,718 |
|
|
192,736,763 |
|
K-sure Insured |
|
|
89,253,699 |
|
|
97,867,129 |
|
Total 2015 Debt Facility |
|
$ |
670,220,228 |
|
$ |
726,873,872 |
|
|
|
|
|
|
|
|
|
Total debt obligations |
|
$ |
770,102,728 |
|
$ |
836,368,372 |
|
Less: deferred financing fees |
|
|
20,138,480 |
|
|
23,748,116 |
|
Debt obligations—net of deferred financing fees |
|
$ |
749,964,248 |
|
$ |
812,620,256 |
|
|
|
|
|
|
|
|
|
Presented as follows: |
|
|
|
|
|
|
|
Current portion of long-term debt |
|
$ |
65,978,785 |
|
$ |
66,265,643 |
|
Long-term debt—net of current portion and deferred financing fees |
|
|
683,985,463 |
|
|
746,354,613 |
|
Total |
|
$ |
749,964,248 |
|
$ |
812,620,256 |
|
Deferred Financing Fees
The analysis and movement of deferred financing fees is presented in the table below:
|
|
Financing |
|
|
|
|
costs |
|
|
Balance, April 1, 2015 |
|
$ |
13,296,216 |
|
Additions |
|
|
12,951,085 |
|
Amortization |
|
|
(2,499,185) |
|
Balance, March 31, 2016 |
|
$ |
23,748,116 |
|
Additions |
|
|
99,785 |
|
Amortization |
|
|
(3,709,421) |
|
Balance, March 31, 2017 |
|
$ |
20,138,480 |
|
Additions represent debt issuance costs associated with the 2015 Debt Facility for the years ended March 31, 2017 and 2016, respectively, which have been deferred and are amortized over the life of the agreement and are included as part of interest expense in the consolidated statements of operations.
Future Cash Payments for Debt
The minimum annual principal payments, in accordance with the loan agreements, required to be made after March 31, 2017 are as follows:
Year ending March 31: |
|
|
|
2018 |
$ |
65,978,785 |
|
2019 |
|
113,634,787 |
|
2020 |
|
60,021,786 |
|
2021 |
|
85,714,286 |
|
2022 |
|
214,581,395 |
|
Thereafter |
|
230,171,689 |
|
Total |
$ |
770,102,728 |
|
|
11. Common Stock
Under the articles of incorporation effective July 1, 2013, the Company’s authorized capital stock consists of 500,000,000 registered shares, par value $0.01 per share, of which 450,000,000 are designated as common share and 50,000,000 shares are designated as preferred shares.
On July 29, 2013, the Company issued the following shares:
· |
9,310,054 common shares on completion of its NPP, at NOK75.00 per share, equivalent to USD12.66 per share based on the exchange rate on July 29, 2013 |
· |
4,667,135 common shares to Dorian Holdings |
· |
4,667,135 common shares to SeaDor Holdings LLC |
The fair value of the shares issued to Dorian and SeaDor was determined by the Company to be NOK75 (or USD12.66) per share based on the issue price of the NPP.
On November 26, 2013, the Company issued the following shares:
· |
16,081,081 common shares on completion of a second Private Placement in Norway (“NPP2”), at NOK92.50 per share, equivalent to USD15.16 per share based on the exchange rate on November 26, 2013 |
· |
7,990,425 common shares to Scorpio Tankers Inc. |
On February 12, 2014, the Company issued the following shares:
· |
5,649,200 common shares on completion of a third Private Placement in Norway (“NPP3”), at NOK110.00 per share, equivalent to USD17.92 per share based on the exchange rate on February 12, 2014 |
Each holder of common shares is entitled to one vote on all matters submitted to a vote of shareholders. Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of common shares are entitled to share equally in any dividends, which the Company’s board of directors may declare from time to time, out of funds legally available for dividends. Upon dissolution, liquidation or winding‑up, the holders of common shares will be entitled to share equally in all assets remaining after the payment of any liabilities and the liquidation preferences on any outstanding preferred stock. Holders of common shares do not have conversion, redemption or pre‑emptive rights.
On April 25, 2014, the Company completed a one-for-five reverse stock split and reduced the number of the Company’s issued and outstanding common shares and affected all issued and outstanding common shares, outstanding immediately prior to the effectiveness of the reverse stock split. The number of the Company’s authorized common shares was not affected by the reverse split and the par value of our common shares remained unchanged at $0.01 per share. The reverse stock split reduced the number of the Company’s common shares outstanding at March 31, 2014 from 241,825,149 to 48,365,011 after the cancellation of 19 fractional shares. No fractional shares were issued in connection with the reverse stock split. Shareholders who otherwise held a fractional share of the Company’s common stock as a result of the reverse stock split received a cash payment in lieu of such fractional share. All amounts related to number of shares and per share amounts have been retroactively restated.
On April 25, 2014, we completed a private placement of 1,412,698 common shares with a strategic investor at a price of NOK 110.00 or USD 18.40 based upon the exchange rate on April 24, 2014, which represents approximately $26.0 million in gross proceeds not including closing fees.
On May 13, 2014, we completed an initial public offering of 7,105,263 common shares on the New York Stock Exchange at a price of $19.00 per share, or $135.0 million in gross proceeds not including underwriting fees or closing costs. The shares began trading on the New York Stock Exchange on May 8, 2014 under the ticker symbol “LPG”.
On May 22, 2014, we completed the issuance of 245,521 common shares related to the overallotment exercise by the underwriters of our initial public offering at a price of $19.00 per share, or $4.7 million in gross proceeds not including underwriting fees or closing costs.
On June 25, 2014, we completed the exchange offer of unregistered common shares that we previously issued in our prior equity private placements, other than the common shares owned by our affiliates, for 15,528,507 common shares that have been registered under the Securities Act of 1933, as amended, the complete terms and conditions of which were set forth in a prospectus dated May 8, 2014 and the related letter of transmittal.
In June 2014, we granted 655,000 shares of restricted stock to certain of our officers and, in March 2015, we granted 274,000 shares of restricted stock to certain of our employees and non-employee consultants (see Note 12 for further discussion regarding stock-based compensation).
In August 2015, we established a stock repurchase program authorizing the repurchase of up to $100.0 million of our common stock, which expired on December 31, 2016. We repurchased a total of 3,342,035 shares of our common stock for approximately $33.7 million under this program through its expiration. Purchases under the program were made at our discretion in the form of open market repurchase programs, privately negotiated transactions, accelerated share repurchase programs or a combination of these methods.
In June 2016, we granted 250,000 shares of restricted stock to certain of our officers and employees (see Note 12 for further discussion regarding stock-based compensation).
In June 2016, September 2016, December 2016 and March 2017, we granted 6,950, 10,130, 8,695 and 5,995 shares of stock, respectively, to our non-executive directors, which were valued and expensed at their grant date fair market value (see Note 12 for further discussion regarding stock-based compensation).
In December 2016 and March 2017, we granted 1,739 and 1,199 shares of stock, respectively, to a non-employee consultant, which were valued and expensed at their grant date fair market value (see Note 12 for further discussion regarding stock-based compensation).
|
12. Stock-Based Compensation Plans
In April 2014, we adopted an equity incentive plan, which we refer to as the Equity Incentive Plan, under which we expect that directors, officers, and employees (including any prospective officer or employee) of the Company and its subsidiaries and affiliates, and consultants and service providers to (including persons who are employed by or provide services to any entity that is itself a consultant or service provider to) the Company and its subsidiaries and affiliates, as well as entities wholly‑owned or generally exclusively controlled by such persons, may be eligible to receive non‑qualified stock options, stock appreciation rights, stock awards, restricted stock units and performance compensation awards that the plan administrator determines are consistent with the purposes of the plan and the interests of the Company. We have reserved 2,850,000 of our common shares for issuance under the Equity Incentive Plan, subject to adjustment for changes in capitalization as provided in the Equity Incentive Plan in April 2014. The plan is administered by our compensation committee.
In June 2014, we granted 655,000 shares of restricted stock to certain of our officers and, in March 2015, we granted 274,000 shares of restricted stock to certain of our employees and non-employee consultants. One-third of these restricted shares vest three years after grant date, one-third vest four years after grant date, and one-third vest five years after grant date. The restricted shares were valued at their fair market value on their grant date and are expensed on a straight-line basis over five years.
In June 2016, we granted 250,000 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 expensed on a straight-line basis over the vesting periods.
In June 2016, September 2016, December 2016 and March 2017, we granted 6,950, 10,130, 8,695 and 5,995 shares of stock, respectively, to our non-executive directors, which were valued and expensed at their grant date fair market value.
In December 2016 and March 2017, we granted 1,739 and 1,199 shares of stock, respectively, to a non-employee consultant, which were valued and expensed at their grant date fair market value.
Our stock-based compensation expense was $4.4 million, $4.1 million (including accrued stock-based compensation of $0.5 million for our board of directors) and $2.3 million for the years ended March 31, 2017, 2016, and 2015, respectively, and is included within general and administrative expenses in our accompanying consolidated statements of operations. Unrecognized compensation cost as of March 31, 2017 was $9.7 million and will be recognized over the remaining weighted average life of 1.41 years.
A summary of the activity of our restricted shares as of March 31, 2017 and 2016 and changes during the year ended March 31, 2017 and 2016, are as follows:
|
|
|
|
Weighted-Average |
|
|
|
|
|
|
Grant-Date |
|
|
Incentive Share Awards |
|
Numbers of Shares |
|
Fair Value |
|
|
Unvested as of April 1, 2015 |
|
929,000 |
|
$ |
19.70 |
|
Granted |
|
— |
|
|
— |
|
Unvested as of March 31, 2016 |
|
929,000 |
|
$ |
19.70 |
|
Granted |
|
284,708 |
|
|
7.82 |
|
Vested |
|
(97,208) |
|
|
7.82 |
|
Forfeited |
|
(1,875) |
|
|
7.82 |
|
Unvested as of March 31, 2017 |
|
1,114,625 |
|
$ |
17.72 |
|
|
13. Revenues
Revenues comprise the following:
|
|
Year ended |
|||||||
|
|
March 31, 2017 |
|
March 31, 2016 |
|
March 31, 2015 |
|||
Net pool revenues—related party |
|
$ |
115,753,153 |
|
$ |
202,918,232 |
|
$ |
— |
Time charter revenues |
|
|
49,474,510 |
|
|
38,737,172 |
|
|
26,098,290 |
Voyage charter revenues |
|
|
1,296,952 |
|
|
46,194,134 |
|
|
77,331,934 |
Other revenues |
|
|
922,556 |
|
|
1,358,291 |
|
|
698,925 |
Total revenues |
|
$ |
167,447,171 |
|
$ |
289,207,829 |
|
$ |
104,129,149 |
Time charter revenue included a profit-sharing element of the time charter agreements of $7.8 million for the year ended March 31, 2015. There was no profit-sharing element of the time charter agreements for the years ended March 31, 2017 and 2016. Other revenue represents income from charterers relating to reimbursement of expenses such as costs for security guards and war risk insurance.
|
14. Voyage Expenses
Voyage expenses comprise the following:
|
|
Year ended |
|
|||||||
|
|
March 31, 2017 |
|
March 31, 2016 |
|
March 31, 2015 |
|
|||
Bunkers |
|
$ |
804,371 |
|
$ |
7,240,544 |
|
$ |
15,678,905 |
|
Port charges and other related expenses |
|
|
886,651 |
|
|
2,558,697 |
|
|
3,603,707 |
|
Brokers’ commissions |
|
|
684,302 |
|
|
1,335,584 |
|
|
1,703,589 |
|
Security cost |
|
|
390,330 |
|
|
370,762 |
|
|
709,035 |
|
War risk insurances |
|
|
40,704 |
|
|
219,261 |
|
|
146,320 |
|
Other voyage expenses |
|
|
159,620 |
|
|
339,834 |
|
|
240,300 |
|
Total |
|
$ |
2,965,978 |
|
$ |
12,064,682 |
|
$ |
22,081,856 |
|
|
15. Vessel Operating Expenses
Vessel operating expenses comprise the following:
|
|
Year ended |
|
|||||||
|
|
March 31, 2017 |
|
March 31, 2016 |
|
March 31, 2015 |
|
|||
Crew wages and related costs |
|
$ |
43,724,030 |
|
$ |
31,449,090 |
|
$ |
14,529,018 |
|
Spares and stores |
|
|
9,432,845 |
|
|
6,403,785 |
|
|
2,666,100 |
|
Insurance |
|
|
4,668,838 |
|
|
3,527,386 |
|
|
1,343,071 |
|
Lubricants |
|
|
2,742,944 |
|
|
2,489,494 |
|
|
964,951 |
|
Repairs and maintenance costs |
|
|
3,867,993 |
|
|
2,076,576 |
|
|
1,315,028 |
|
Miscellaneous expenses |
|
|
1,671,412 |
|
|
1,173,659 |
|
|
437,997 |
|
Total |
|
$ |
66,108,062 |
|
$ |
47,119,990 |
|
$ |
21,256,165 |
|
|
16. Interest and Finance Costs
Interest and finance costs is comprised of the following:
|
|
Year ended |
|
|||||||
|
|
March 31, 2017 |
|
March 31, 2016 |
|
March 31, 2015 |
|
|||
Interest incurred |
|
$ |
24,695,674 |
|
$ |
14,350,900 |
|
$ |
2,657,943 |
|
Amortization of financing costs |
|
|
3,709,421 |
|
|
2,499,185 |
|
|
830,899 |
|
Other financing costs |
|
|
566,847 |
|
|
715,942 |
|
|
301,868 |
|
Capitalized interest |
|
|
— |
|
|
(4,809,014) |
|
|
(3,501,620) |
|
Total |
|
$ |
28,971,942 |
|
$ |
12,757,013 |
|
$ |
289,090 |
|
|
17. Income Taxes
Dorian LPG Ltd. and its vessel-owning subsidiaries are incorporated in the Marshall Islands and under the laws of the Marshall Islands, are not subject to tax on income or capital gains and no Marshall Islands withholding tax will be imposed on dividends paid by the Company to its shareholders. Dorian LPG Ltd. and its vessel-owning subsidiaries are also subject to United States federal income taxation in respect of income that is derived from the international operation of ships and the performance of services directly related thereto attributable to the transport of cargo to or from the United States (“Shipping Income”), unless exempt from United States federal income taxation.
If Dorian LPG Ltd. and its vessel-owning subsidiaries do not qualify for the exemption from tax under Section 883, of the Internal Revenue Code of 1986, as amended, Dorian LPG Ltd. and its subsidiaries will be subject to a 4% tax on its “United States source shipping income,” imposed without the allowance for any deductions. For these purposes, “United States source shipping income” means 50% of the Shipping Income derived by Dorian LPG Ltd. and its vessel-owning subsidiaries that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States.
For our fiscal years ended March 31, 2017, 2016 and 2015, we believe that we qualify, and we expect to qualify, for exemption under Section 883 and as a consequence, our gross United States source shipping income will not be subject to a 4% gross basis tax.
|
18. Commitments and Contingencies
Operating Leases
Operating lease rent expense was as follows:
|
|
Year ended |
|||||||
|
|
March 31, 2017 |
|
March 31, 2016 |
|
March 31, 2015 |
|||
Operating lease rent expense |
|
$ |
415,928 |
|
$ |
451,240 |
|
$ |
249,331 |
We had the following commitments as a lessee under operating leases relating to our United States, Greece and United Kingdom offices:
|
|
March 31, 2017 |
|
|
Less than one year |
|
$ |
378,679 |
|
One to three years |
|
|
154,629 |
|
Total |
|
$ |
533,308 |
|
Fixed Time Charter Commitments
We had the following future minimum fixed time charter hire receipts based on non-cancelable long-term fixed time charter contracts:
|
|
March 31, 2017 |
|
|
Less than one year |
|
$ |
48,598,113 |
|
One to three years |
|
|
56,311,227 |
|
Three to five years |
|
|
5,828,252 |
|
Total |
|
$ |
110,737,592 |
|
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, which is reasonably possible and should be disclosed or probable and for which a provision should be established in the accompanying consolidated financial statements.
|
19. Financial Instruments and Fair Value Disclosures
Our principal financial assets consist of cash and cash equivalents, amounts due from related parties, trade accounts receivable and derivative instruments. Our principal financial liabilities consist of long-term debt, derivative instruments, accounts payable, amounts due to related parties and accrued liabilities.
(a) |
Concentration of credit risk: Financial instruments, which may subject us to significant concentrations of credit risk, consist principally of amounts due from our charterers, including the receivables from Helios Pool, and cash and cash equivalents. We limit our credit risk with amounts due from our charterers, including those through the Helios Pool, by performing ongoing credit evaluations of our charterers’ financial condition and generally do not require collateral from our charterers. We limit our credit risk with our cash and cash equivalents by placing it with highly-rated financial institutions. |
(b) |
Interest rate risk: Our long-term bank loans are based on LIBOR and hence we are exposed to movements thereto. We entered into interest rate swap agreements in order to hedge a majority of our variable interest rate exposure related to the RBS Loan Facility and our 2015 Debt Facility. The interest rate swaps related to the RBS Loan Facility were terminated during the year ended March 31, 2017 for $8.1 million. |
The principal terms of our interest rate swaps are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction |
|
Termination |
|
Fixed |
|
|
Nominal value |
|
Nominal value |
|
Interest rate swap |
|
Date |
|
Date |
|
interest rate |
|
|
March 31, 2017 |
|
March 31, 2016 |
|
RBS - CMNL |
|
July 2013(7) |
|
November 2016(7) |
|
5.395 |
% |
|
— |
|
20,456,000 |
|
RBS - CMNL |
|
July 2013(7) |
|
November 2016(7) |
|
4.936 |
% |
|
— |
|
7,671,000 |
|
RBS - CJNP |
|
July 2013(7) |
|
November 2016(7) |
|
4.772 |
% |
|
— |
|
27,979,875 |
|
RBS - CJNP |
|
July 2013(7) |
|
November 2016(7) |
|
2.960 |
% |
|
— |
|
9,420,125 |
|
RBS - CNML |
|
July 2013(7) |
|
November 2016(7) |
|
4.350 |
% |
|
— |
|
43,000,000 |
|
2015 Debt Facility - Citibank(1) |
|
September 2015 |
|
March 2022 |
|
1.933 |
% |
|
200,000,000 |
|
200,000,000 |
|
2015 Debt Facility - ING(2) |
|
September 2015 |
|
March 2022 |
|
2.002 |
% |
|
50,000,000 |
|
50,000,000 |
|
2015 Debt Facility - CBA(3) |
|
October 2015 |
|
March 2022 |
|
1.428 |
% |
|
71,250,000 |
|
82,550,000 |
|
2015 Debt Facility - Citibank(4) |
|
October 2015 |
|
March 2022 |
|
1.380 |
% |
|
106,875,000 |
|
123,825,000 |
|
2015 Debt Facility - Citibank(5) |
|
June 2016 |
|
March 2022 |
|
1.213 |
% |
|
67,124,650 |
|
— |
|
2015 Debt Facility - Citibank(6) |
|
June 2016 |
|
March 2022 |
|
1.161 |
% |
|
27,583,142 |
|
— |
|
|
|
|
|
|
|
|
|
|
522,832,792 |
|
564,902,000 |
|
(1) |
Non-amortizing with a final settlement of $200 million in March 2022. |
(2) |
Non-amortizing with a final settlement of $50 million in March 2022. |
(3) |
Reduces quarterly by $2.8 million with a final settlement of $17.9 million due in March 2022. |
(4) |
Reduces quarterly by $4.2 million with a final settlement of $26.9 million due in March 2022. |
(5) |
Reduces quarterly by $2.0 million with a final settlement of $29.9 million due in March 2022. |
(6) |
Reduces quarterly by $0.8 million with a final settlement of $12.3 million due in March 2022. |
(7) |
RBS swaps assumed from Predecessor Businesses in July 2013 and terminated in November 2016. |
(c) Fair Value Measurements: |
Fair Value on a Recurring Basis: Interest rate swaps are stated at fair value, which is determined using a discounted cash flow approach based on market‑based LIBOR swap yield rates. LIBOR swap rates are observable at commonly quoted intervals for the full terms of the swaps and, therefore, are considered Level 2 items in accordance with the fair value hierarchy. The fair value of the interest rate swap agreements approximates the amount that we would have to pay for the early termination of the agreements. The following table summarizes the location on the balance sheet of the financial assets and liabilities that are carried at fair value on a recurring basis, which comprise our financial derivatives all of which are considered Level 2 items in accordance with the fair value hierarchy:
|
|
|
March 31, 2017 |
|
|
March 31, 2016 |
|
||||||
|
|
Other non-current assets |
|
Long-term liabilities |
|
Other non-current assets |
|
Long-term liabilities |
|
||||
Derivatives not designated as hedging instruments |
|
Derivative instruments |
|
Derivative instruments |
|
Derivative instruments |
|
Derivative instruments |
|
||||
Interest rate swap agreements |
|
$ |
5,843,368 |
|
$ |
— |
|
$ |
— |
|
$ |
21,647,965 |
|
The effect of derivative instruments within the consolidated statement of operations for the periods presented is as follows:
Derivatives not designated as hedging instruments |
|
Location of gain/(loss) recognized |
|
|
March 31, 2017 |
|
March 31, 2016 |
|
March 31, 2015 |
|
|||
Interest Rate Swap—Change in fair value |
|
Unrealized gain/(loss) on derivatives |
|
|
$ |
27,491,333 |
|
$ |
(8,917,503) |
|
$ |
1,331,954 |
|
Interest Rate Swap—Realized loss |
|
Realized loss on derivatives |
|
|
|
(13,797,478) |
|
|
(6,858,126) |
|
|
(5,291,157) |
|
Gain/(loss) on derivatives, net |
|
|
|
|
$ |
13,693,855 |
|
$ |
(15,775,629) |
|
$ |
(3,959,203) |
|
As of March 31, 2017 and March 31, 2016, no fair value measurements for assets or liabilities under Level 1 or Level 3 were recognized in the accompanying consolidated balance sheets.
Fair value on a non-recurring basis: For the years ended March 31, 2017, 2016 and 2015, we reviewed the carrying amount and the estimated recoverable amount for each of our vessels. The review for the year ended March 31, 2015 indicated that the carrying amount was not recoverable for our PGC vessel. We prepared future undiscounted cash flows for the PGC vessel as there were indicators of impairment for this size vessel, which provided evidence that the book value was not recoverable. The fair value is considered a Level 2 item in the fair value hierarchy and is based on our best estimate of the value of the vessel, which is supported by independent vessel appraisals. We recognized an impairment loss on this PGC vessel of $1.4 million during the year ended March 31, 2015. No impairment loss was incurred for the years ended March 31, 2017 and 2016.
We did not have any other assets or liabilities measured at fair value on a non-recurring basis during the years ended March 31, 2017, 2016 and 2015.
(d) |
Book values and fair values of financial instruments. In addition to the derivatives that we are required to record at fair value on our balance sheet (see (c) above), we have other financial instruments that are carried at historical cost. These financial instruments include trade accounts receivable, amounts due from related parties, cash and cash equivalents, accounts payable, amounts due to related parties and accrued liabilities for which the historical carrying value approximates the fair value due to the short-term nature of these financial instruments. We also have long-term bank debt for which we believe the historical carrying value approximates their fair value as the loans bear interest at variable interest rates, being LIBOR, which is observable at commonly quoted intervals for the full terms of the loans, and hence are considered as Level 2 items in accordance with the fair value hierarchy. Cash and cash equivalents and restricted cash are considered Level 1 items. |
|
20. Retirement Plans
Defined Contribution Plan
United States-based employees participate in our 401(k) retirement plan and may contribute a portion of their annual compensation to a 401(k) plan on a pre-tax basis, in accordance with Internal Revenue Service guidelines. On behalf of all participants in the plan, we provide a safe harbor contribution subject to certain limitations. Employee contributions and our safe harbor contributions are vested at all times. We recognized and paid compensation expense associated with the safe harbor contributions totaling $0.1 million for each of the years ended March 31, 2017, 2016, and 2015.
Defined Benefit Plan
Our Greece-based employees have a statutory required defined benefit pension plan according to provisions of Greek law 2112/20 covering all eligible employees (the “Greece Plan”). We recognized compensation expense and recorded a corresponding liability associated with our projected benefit obligation to the Greece Plan totaling $0.1 million, $0.2 million, and $0.3 million for the years ended March 31, 2017, 2016, and 2015, respectively.
Other
We contribute to retirement accounts for certain United Kingdom-based employees based on a percentage of their annual salaries. For each of the years ended March 31, 2017, 2016, and 2015, we recognized compensation expense of $0.1 million related to these contributions.
|
23. Selected Quarterly Financial Information (unaudited)
The following tables summarize the 2017 and 2016 quarterly results:
|
|
Three months ended |
|
Three months ended |
|
Three months ended |
|
Three months ended |
|
||||
|
|
June 30, 2016 |
|
September 30, 2016 |
|
December 31, 2016 |
|
March 31, 2017 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
50,515,776 |
|
$ |
33,611,233 |
|
$ |
35,734,988 |
|
$ |
47,585,174 |
|
Operating income/(loss) |
|
|
12,413,266 |
|
|
(4,210,840) |
|
|
(3,453,959) |
|
|
9,244,855 |
|
Net income/(loss) |
|
$ |
(1,291,121) |
|
$ |
(7,145,558) |
|
$ |
5,039,624 |
|
$ |
1,955,240 |
|
Earnings/(loss) per common share, basic and diluted |
|
$ |
(0.02) |
|
$ |
(0.13) |
|
$ |
0.09 |
|
$ |
0.04 |
|
|
|
Three months ended |
|
Three months ended |
|
Three months ended |
|
|
Three months ended |
||||
|
|
June 30, 2015 |
|
September 30, 2015 |
|
December 31, 2015 |
|
|
March 31, 2016 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
35,642,460 |
|
$ |
74,946,432 |
|
$ |
93,283,708 |
|
$ |
85,335,229 |
|
Operating income |
|
|
13,571,687 |
|
|
48,743,550 |
|
|
54,011,305 |
|
|
42,088,645 |
|
Net income |
|
$ |
13,652,883 |
|
$ |
41,213,264 |
|
$ |
54,661,323 |
|
$ |
20,160,912 |
|
Earnings per common share, basic and diluted |
|
$ |
0.24 |
|
$ |
0.72 |
|
$ |
0.97 |
|
$ |
0.36 |
|
|
24. Subsequent Events
Amendment to the 2015 Debt Facility
On May 31, 2017, we entered into an agreement to amend the 2015 Debt Facility (the “Amendment”). The Amendment includes the relaxation of certain covenants under the 2015 Debt Facility; the release of $26.8 million of restricted cash as of the date of the Amendment to be applied towards the next two debt principal payments, interest and certain fees; and certain other modifications, including an expanded definition of the components of consolidated liquidity.
The Amendment includes a provision for the reduction of the minimum balance held as restricted cash. The minimum balance of the restricted cash deposited under the Amendment is:
· |
the lesser of $18.0 million and $1.0 million per mortgaged vessel under the 2015 Debt Facility at all times from the date of the Amendment (“Amendment Date”) through six months from the Amendment Date; |
· |
the lesser of $29.0 million and $1.6 million per mortgaged vessel under the 2015 Debt Facility at all times from six months from the Amendment Date through the first anniversary of the Amendment Date; |
· |
the lesser of $40.0 million and $2.2 million per mortgaged vessel under the 2015 Debt Facility at all times thereafter; and |
· |
if we complete a common stock offering of at least $50 million, including fees (an “Approved Equity Offering”), the restricted cash shall be calculated as an amount at least equal to 5% of the total principal of the 2015 Debt Facility outstanding, but at no time less than the lesser of $20.0 million and $1.1 million per mortgaged vessel under the 2015 Debt Facility. |
The following covenants were relaxed under the Amendment:
· |
Minimum interest coverage ratio of consolidated EBITDA to consolidated net interest expense must be maintained greater than or equal to (i) 1.25 at all times prior to and through March 31, 2018, (ii) 1.50 at all times from April 1, 2018 through March 31, 2019, and (iii) 2.50 at all times thereafter; and |
· |
Fair market value of the mortgaged ships plus any additional security over the outstanding loan balance shall be at least (i) 125% at all times prior to and through March 31, 2018, (ii) 130% at all times from April 1, 2018 through March 31, 2019, (iii) 135% at all times thereafter. |
The following negative covenants were added under the Amendment:
· |
Restrictions on dividends and stock repurchases until the earlier of (i) an Approved Equity Offering and (ii) the second anniversary of the Amendment Date; and |
· |
Restrictions on voluntary payments of the RBS Loan Facility, excluding refinancing, until the earlier of (i) an Approved Equity Offering and (ii) the second anniversary of the Amendment Date. |
Fees related to the Amendment totaled approximately $1.1 million.
2017 Bridge Loan
On June 8, 2017, we entered into a $97.0 million bridge loan agreement (the “2017 Bridge Loan”) with DNB Capital LLC (“DNB”). The principal amount of the 2017 Bridge Loan is due on or before August 8, 2018 (the “Maturity Date”) and accrues interest on the outstanding principal amount at a rate of LIBOR plus 2.50% for the period ending December 7, 2017; LIBOR plus 4.50% for the period from December 8 until March 7, 2018; LIBOR plus 6.50% for the period March 8, 2018 until June 7, 2018, and 8.50% from June 8, 2018 until the Maturity Date.
The proceeds of the 2017 Bridge Loan were used to repay in full the RBS Loan Facility at 96% of the then outstanding principal amount. The remaining proceeds were used to pay accrued interest, legal, arrangement and advisory fees related to the 2017 Bridge Loan. As part of this transaction, $6.0 million of cash previously restricted under the RBS Loan Facility was released as unrestricted cash for use in operations.
The 2017 Bridge Loan provides that it be secured by, among other things, (i) first priority mortgages on the four VLGCs that were financed under the RBS Loan Facility, (ii) first assignments of all freights, earnings and insurances relating to these four VLGCs, and (iii) pledges of membership interests of the borrowers.
The 2017 Bridge Loan also contains customary covenants that require us to maintain adequate insurance coverage, properly maintain the vessels and to obtain the lender’s prior consent before changes are made to the flag, class or management of the vessels. The 2017 Bridge Loan includes customary events of default, including those relating to a failure to pay principal or interest, breaches of covenants, representations and warranties, a cross-default to other indebtedness and non-compliance with security documents, and customary restrictions on the borrowers from paying dividends if an event of default has occurred and is continuing, or if an event of default would result therefrom.
The following financial covenants are the most restrictive from the 2017 Bridge Loan with which the Company is required to comply, calculated on a consolidated basis, determined and defined according to the provisions of the loan agreement:
· |
Consolidated liquidity of at least $50.0 million, provided cash and cash equivalents, including restricted cash and all cash held in accounts by Helios LPG Pool LLC attributable to the vessels owned directly or indirectly by us, including no less than $10.0 million of which shall at all times be held on a freely available and unencumbered basis; |
· |
The ratio of consolidated net debt to consolidated total capitalization shall not exceed 0.60 to 1.00; |
· |
Minimum interest coverage ratio of consolidated EBITDA to consolidated net interest expense must be maintained greater than or equal to (i) 1.25 until and including the quarter ended March 31, 2018, and (ii) 1.50 thereafter; |
· |
Minimum shareholders' equity must be equal to the aggregate of (i) $400.0 million, (ii) 50% of new equity raised after June 8, 2017, and (iii) 25% of the positive net income for the immediately preceding fiscal year; |
· |
The ratio of current assets and long-term restricted cash divided by current liabilities less the current portion of long-term debt shall always be greater than 1.00; and |
· |
The ratio of the aggregate market value of the vessels securing the loan to the principal amount outstanding under such loan at all times shall be in excess of 150%. |
|
(a)Principles of consolidation: The consolidated financial statements incorporate the financial statements of the Company and its wholly‑owned subsidiaries. Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statements of operations from the effective date of acquisition and up to the effective date of disposal, as appropriate. All intercompany balances and transactions have been eliminated.
(b)Use of estimates: The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
(c)Other comprehensive income/(loss): We follow the accounting guidance relating to comprehensive income, which requires separate presentation of certain transactions that are recorded directly as components of shareholders’ equity. We have no other comprehensive income/(loss) items and, accordingly, comprehensive income/(loss) equals net income/(loss) for the periods presented and thus we have not presented this in the consolidated statement of operations or in a separate statement.
(d)Foreign currency translation: Our functional currency is the U.S. Dollar. Foreign currency transactions are measured and recorded in the functional currency using the exchange rate in effect at the date of the transaction. As of balance sheet date, monetary assets and liabilities that are denominated in a currency other than the functional currency are adjusted to reflect the exchange rate at the balance sheet date and any gains or losses are included in the statement of operations. For the periods presented, we had no foreign currency derivative instruments.
(e)Cash and cash equivalents: We consider highly liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents.
(f)Trade receivables, net and accrued revenues: Trade receivables, net and accrued revenues, reflect receivables from vessel charters, net of an allowance for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. Provision for doubtful accounts for the periods presented was zero.
(g)Due from related parties: Due from related parties reflect receivables from the Helios Pool and other related parties. Distributions of earnings due from the Helios Pool are classified as current and working capital contributed to the Helios Pool is classified as non-current.
(h)Inventories: Inventories consist of bunkers on board the vessels when vessels are unemployed or are operating under voyage charters and lubricants and stores on board the vessels. Inventories are stated at the lower of cost or market. Cost is determined by the first in, first out method.
(i)Vessels, net: Vessels, net are stated at cost net of accumulated depreciation and impairment charges. The costs of the vessels acquired as part of a business acquisition are recorded at their fair value on the date of acquisition. The cost of vessels purchased consists of the contract price, less discounts, plus any direct expenses incurred upon acquisition, including improvements, commission paid, delivery expenses and other expenditures to prepare the vessel for her initial voyage. The initial purchase of LPG coolant for the refrigeration of cargo is also capitalized. Allocated interest costs incurred during construction are capitalized. Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels. Repairs and maintenance are expensed as incurred.
(j)Impairment of long‑lived assets: We review our vessels “held and used” for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When the estimate of future undiscounted cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount, the asset is evaluated for an impairment loss. Measurement of the impairment loss is based on the fair value of the asset.
(k)Vessel depreciation: Depreciation is computed using the straight‑line method over the estimated useful life of the vessels, after considering the estimated salvage value. Each vessel’s salvage value is equal to the product of its lightweight tonnage and estimated scrap rate. Management estimates the useful life of its vessels to be 25 years from the date of initial delivery from the shipyard. Second hand vessels are depreciated from the date of their acquisition through their remaining estimated useful life.
(l)Drydocking and special survey costs: Drydocking and special survey costs are accounted under the deferral method whereby the actual costs incurred are deferred and are amortized on a straight‑line basis over the period through the date the next survey is scheduled to become due. We are required to drydock each of our vessels every five years until it reaches 15 years of age, after which we are required to drydock the applicable vessel every 2.5 years. Costs deferred are limited to actual costs incurred at the yard and parts used in the drydocking or special survey. Costs deferred include expenditures incurred relating to shipyard costs, hull preparation and painting, inspection of hull structure and mechanical components, steelworks, machinery works, and electrical works. If a survey is performed prior to the scheduled date, the remaining unamortized balances are immediately written off. Unamortized balances of vessels that are sold are written‑off and included in the calculation of the resulting gain or loss in the period of the vessel’s sale. The amortization charge is presented within Depreciation and amortization in the consolidated statement of operations.
(m)Financing costs: Financing costs incurred for obtaining new loans and credit facilities are deferred and amortized to interest expense over the respective term of the loan or credit facility using the effective interest rate method. Any unamortized balance of costs relating to loans repaid or refinanced is expensed in the period the repayment or refinancing is made, subject to the accounting guidance regarding Debt—Modifications and Extinguishments. Any unamortized balance of costs related to credit facilities repaid is expensed in the period. Any unamortized balance of costs relating to credit facilities refinanced are deferred and amortized over the term of the respective credit facility in the period the refinancing occurs, subject to the provisions of the accounting guidance relating to Debt—Modifications and Extinguishments. The unamortized financing costs are reflected as a reduction of Long-term debt—net of current portion and deferred financing fees in the accompanying consolidated balance sheet.
(n)Restricted cash: Restricted cash represents minimum liquidity to be maintained with certain banks under our borrowing arrangements and pledged cash deposits. The restricted cash is classified as non-current in the event that its obligation is not expected to be terminated within the next twelve months as they are long-term in nature.
(o)Revenues and expenses: Revenue is recognized when an agreement exists, the vessel is made available to the charterer or services are provided, the charter hire is determinable and collection of the related revenue is reasonably assured.
Net pool revenue: As from April 1, 2015, we began operation of a pool. Net pool revenues—related party for each vessel in the pool is determined in accordance with the profit-sharing terms specified within the pool agreement. In particular, the pool manager calculates the net pool revenues using gross revenues less voyage expenses of all the pool vessels and less the general and administrative expenses of the pool and distributes the net pool revenues as time charter hire 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—related party on a monthly basis, when the vessel has participated in the pool during the period and the amount of net pool revenues for the month can be estimated reliably.
Voyage charter revenue: Under a voyage charter, the revenues are recognized on a pro‑rata basis over the duration of the voyage determined on a discharge—to discharge port basis but we do not begin recognizing revenue until a charter has been agreed to by the customer and us, even if the vessel has discharged its cargo and is sailing to the anticipated load port for its next voyage. In the event a vessel is acquired or sold while a voyage is in progress, the revenue recognized is based on an allocation formula agreed between the buyer and the seller. Demurrage income represents payments by the charterer to the vessel owner when loading or discharging time exceeds the stipulated time in the voyage charter and is recognized when earned and collection is reasonably assured. Despatch expense represents payments by us to the charterer when loading or discharging time is less than the stipulated time in the voyage charter and is recognized as incurred. Voyage charter revenue relating to voyages in progress as of the balance sheet date are accrued and presented in Trade receivables and accrued revenue in the accompanying consolidated balance sheet.
Time charter revenue: Time charter revenues are recorded ratably over the term of the charter as service is provided. Time charter revenues received in advance of the provision of charter service are recorded as deferred income and recognized when the charter service is rendered. Deferred income or accrued revenue also may result from straight‑line revenue recognition in respect of charter agreements that provide for varying charter rates. Deferred income and accrued revenue amounts that will be recognized within the next twelve months are presented as current, with amounts to be recognized thereafter presented as non‑current. Revenues earned through the profit-sharing arrangements in the time charters represent contingent rental revenues that are recognized when earned and amounts are reasonably assured based on estimates provided by the charterer.
Commissions: Charter hire commissions to brokers or managers, if any, are deferred and amortized over the related charter period and are included in Voyage expenses.
Vessel operating expenses: Vessel operating expenses are accounted for as incurred on the accrual basis. Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance, the cost of spares and consumable stores and other miscellaneous expenses.
(p)Repairs and maintenance: All repair and maintenance expenses, including underwater inspection costs are expensed in the period incurred. Such costs are included in Vessel operating expenses.
(q)Stock-based compensation: Stock-based payments to employees and directors are determined based on their grant date fair values and are amortized against income over the vesting period. The fair value is considered to be the closing price recorded on the grant date. We account for restricted stock award forfeitures upon occurrence.
(r)Stock repurchases: We record the repurchase of our shares of common stock at cost based on the settlement date of the transaction. These shares are classified as treasury stock, which is a reduction to shareholders’ equity. Treasury shares are included in authorized and issued shares but excluded from outstanding shares.
(s)Segment reporting: Each of our vessels serve the same type of customer, have similar operations and maintenance requirements, operate in the same regulatory environment, and are subject to similar economic characteristics. Based on this, we have determined that it operates in one reportable segment, the international transportation of liquid petroleum gas with its fleet of vessels. Furthermore, when we charter a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable.
(t)Derivative instruments: All derivatives are stated at their fair value, as either a derivative asset or a liability. The fair value of the interest rate derivatives is based on a discounted cash flow analysis and their fair value changes are recognized in current period earnings. When the derivatives do qualify for hedge accounting, depending upon the nature of the hedge, changes in fair value of the derivatives are either recognized in current period earnings or in other comprehensive income/(loss) (effective portion) until the hedged item is recognized in the consolidated statements of operations. For the periods presented, no derivatives were accounted for as accounting hedges.
(u)Fair value of financial instruments: In accordance with the requirements of accounting guidance relating to Fair Value Measurements, the Company classifies and discloses its assets and liabilities carried at fair value in one of the following three categories:
Level 1: |
Quoted market prices in active markets for identical assets or liabilities. |
Level 2: |
Observable market based inputs or unobservable inputs that are corroborated by market data. |
Level 3: |
Unobservable inputs that are not corroborated by market data. |
(v)Recent accounting pronouncements: 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. The implementation of this guidance is anticipated to result in restricted cash transfers not reported as cash flow activities in the consolidated statements of cash flows, and, upon adoption, is not anticipated to have an impact on our consolidated balance sheets and statements of operations.
In August 2016, the FASB issued accounting guidance addressing specific cash flow 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. We do not believe that the impact of the adoption of this amended guidance will have a material effect on our financial statements.
In March 2016, the FASB issued accounting guidance to simplify the requirements of accounting for share-based payment transactions. The guidance simplifies the accounting for taxes related to stock-based compensation, including adjustments to how excess tax benefits and an entity’s payments for tax withholdings should be classified. Additionally, an entity may make an entity-wide policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The pronouncement is effective for annual periods beginning after December 15, 2016, and interim periods within that reporting period with early adoption permitted in any interim or annual period. We have adopted this pronouncement and have made the entity-wide policy election to account for forfeitures when they occur. The amended guidance had no significant impact on our financial statements for the year ended March 31, 2017.
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. 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. 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 are currently assessing the impact the amended guidance will have on our financial statements.
In July 2015, the FASB issued accounting guidance requiring entities to measure most inventory at the lower of cost and net realizable value. The pronouncement is effective prospectively for annual periods beginning after December 15, 2016, and interim periods within that reporting period. We do not believe that the impact of the adoption of this amended guidance will have a material effect on our financial statements.
In April 2015, an accounting pronouncement was issued by the FASB to update the guidance related to the presentation of debt issuance costs, which we adopted in April 2016. This guidance requires debt issuance costs, related to a recognized debt liability, be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability rather than being presented as an asset. The reclassification does not impact net income/(loss) as previously reported or any prior amounts reported on the consolidated statements of comprehensive income, or the consolidated statements of cash flows. The effect of the retrospective application of this change in accounting principle on our consolidated balance sheets as of March 31, 2017 and March 31, 2016 resulted in a reduction of “Deferred charges, net” and “Total assets” in the amount of $20.1 million and $23.7 million, respectively, with a corresponding reduction of “Long-term debt—net of current portion” and “Total long-term liabilities.”
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. It also 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. We are currently assessing the impact the amended guidance will have on our financial statements.
|
Our subsidiaries, which are all wholly-owned and all are incorporated in Republic of the Marshall Islands (unless otherwise indicated below), as of March 31, 2017 are listed below.
Vessel Owning Subsidiaries
|
|
Type of |
|
|
|
|
|
|
|
Subsidiary |
|
vessel |
|
Vessel’s name |
|
Built |
|
CBM(1) |
|
CMNL LPG Transport LLC |
|
VLGC |
|
Captain Markos NL |
|
2006 |
|
82,000 |
|
CJNP LPG Transport LLC |
|
VLGC |
|
Captain John NP |
|
2007 |
|
82,000 |
|
CNML LPG Transport LLC |
|
VLGC |
|
Captain Nicholas ML |
|
2008 |
|
82,000 |
|
Comet LPG Transport LLC |
|
VLGC |
|
Comet |
|
2014 |
|
84,000 |
|
Corsair LPG Transport LLC |
|
VLGC |
|
Corsair |
|
2014 |
|
84,000 |
|
Corvette LPG Transport LLC |
|
VLGC |
|
Corvette |
|
2015 |
|
84,000 |
|
Dorian Shanghai LPG Transport LLC |
|
VLGC |
|
Cougar |
|
2015 |
|
84,000 |
|
Concorde LPG Transport LLC |
|
VLGC |
|
Concorde |
|
2015 |
|
84,000 |
|
Dorian Houston LPG Transport LLC |
|
VLGC |
|
Cobra |
|
2015 |
|
84,000 |
|
Dorian Sao Paulo LPG Transport LLC |
|
VLGC |
|
Continental |
|
2015 |
|
84,000 |
|
Dorian Ulsan LPG Transport LLC |
|
VLGC |
|
Constitution |
|
2015 |
|
84,000 |
|
Dorian Amsterdam LPG Transport LLC |
|
VLGC |
|
Commodore |
|
2015 |
|
84,000 |
|
Dorian Dubai LPG Transport LLC |
|
VLGC |
|
Cresques |
|
2015 |
|
84,000 |
|
Constellation LPG Transport LLC |
|
VLGC |
|
Constellation |
|
2015 |
|
84,000 |
|
Dorian Monaco LPG Transport LLC |
|
VLGC |
|
Cheyenne |
|
2015 |
|
84,000 |
|
Dorian Barcelona LPG Transport LLC |
|
VLGC |
|
Clermont |
|
2015 |
|
84,000 |
|
Dorian Geneva LPG Transport LLC |
|
VLGC |
|
Cratis |
|
2015 |
|
84,000 |
|
Dorian Cape Town LPG Transport LLC |
|
VLGC |
|
Chaparral |
|
2015 |
|
84,000 |
|
Dorian Tokyo LPG Transport LLC |
|
VLGC |
|
Copernicus |
|
2015 |
|
84,000 |
|
Commander LPG Transport LLC |
|
VLGC |
|
Commander |
|
2015 |
|
84,000 |
|
Dorian Explorer LPG Transport LLC |
|
VLGC |
|
Challenger |
|
2015 |
|
84,000 |
|
Dorian Exporter LPG Transport LLC |
|
VLGC |
|
Caravelle |
|
2016 |
|
84,000 |
|
Management Subsidiaries
|
|
Subsidiary |
|
Dorian LPG Management Corp |
|
Dorian LPG (USA) LLC (incorporated in USA) |
|
Dorian LPG (UK) Ltd. (incorporated in UK) |
|
Dorian LPG Finance LLC |
|
Occident River Trading Limited (incorporated in UK) |
|
Dormant Subsidiaries
|
|
Subsidiary |
|
SeaCor LPG I LLC |
|
SeaCor LPG II LLC |
|
Capricorn LPG Transport LLC |
|
Constitution LPG Transport LLC |
|
Grendon Tanker LLC(2) |
|
(1) |
CBM: Cubic meters, a standard measure for LPG tanker capacity |
(2) |
Owner of the Pressurized Gas Carrier (“PGC”) Grendon until it was sold in February 2016 |
|
|
March 31, 2017 |
|
March 31, 2016 |
|
||
Lubricants |
$ |
1,807,617 |
|
$ |
1,612,354 |
|
Victualing |
|
457,787 |
|
|
494,098 |
|
Bonded stores |
|
124,985 |
|
|
103,446 |
|
Other |
|
190,353 |
|
|
78,175 |
|
Total |
$ |
2,580,742 |
|
$ |
2,288,073 |
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
Cost |
|
depreciation |
|
Net book Value |
|
|||
Balance, April 1, 2015 |
|
$ |
439,180,669 |
|
$ |
(19,204,616) |
|
$ |
419,976,053 |
|
Vessels delivered |
|
|
1,292,872,267 |
|
|
— |
|
|
1,292,872,267 |
|
Other additions |
|
|
195,272 |
|
|
— |
|
|
195,272 |
|
Disposals |
|
|
(4,268,279) |
|
|
429,214 |
|
|
(3,839,065) |
|
Depreciation |
|
|
— |
|
|
(41,980,051) |
|
|
(41,980,051) |
|
Balance, March 31, 2016 |
|
$ |
1,727,979,929 |
|
$ |
(60,755,453) |
|
$ |
1,667,224,476 |
|
Other additions |
|
|
984,639 |
|
|
— |
|
|
984,639 |
|
Transfers out |
|
|
(195,273) |
|
|
— |
|
|
(195,273) |
|
Depreciation |
|
|
— |
|
|
(64,544,595) |
|
|
(64,544,595) |
|
Balance, March 31, 2017 |
|
$ |
1,728,769,295 |
|
$ |
(125,300,048) |
|
$ |
1,603,469,247 |
|
|
Balance, April 1, 2015 |
|
$ |
398,175,504 |
|
Installment payments to shipyards |
|
|
867,187,966 |
|
Other capitalized expenditures |
|
|
22,699,783 |
|
Capitalized interest |
|
|
4,809,014 |
|
Vessels delivered (transferred to Vessels) |
|
|
(1,292,872,267) |
|
Balance, March 31, 2016 |
|
|
— |
|
Balance, March 31, 2017 |
|
$ |
— |
|
|
|
|
Drydocking |
|
|
|
|
costs |
|
|
Balance, April 1, 2015 |
|
$ |
669,705 |
|
Amortization |
|
|
(374,770) |
|
Balance, March 31, 2016 |
|
$ |
294,935 |
|
Additions |
|
|
1,817,231 |
|
Amortization |
|
|
(227,992) |
|
Balance, March 31, 2017 |
|
$ |
1,884,174 |
|
|
|
March 31, 2017 |
|
March 31, 2016 |
|
||
Accrued voyage and vessel operating expenses |
$ |
2,029,598 |
|
$ |
1,644,557 |
|
Accrued professional services |
|
1,470,298 |
|
|
1,676,880 |
|
Accrued loan and swap interest |
|
999,733 |
|
|
1,664,002 |
|
Accrued employee-related costs |
|
786,467 |
|
|
4,231,542 |
|
Accrued board of directors' stock-based compensation and fees |
|
88,750 |
|
|
492,652 |
|
Other |
|
11,551 |
|
|
11,844 |
|
Total |
$ |
5,386,397 |
|
$ |
9,721,477 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate at |
|
|
|
|
|
Term |
|
Interest Rate Description(1) |
|
March 31, 2017(2) |
|
|||
Tranche 1 |
|
Commercial Financing |
|
7 |
years |
|
London InterBank Offered Rate (“LIBOR”) plus a margin(4) |
|
3.73 |
% |
||
Tranche 2 |
|
KEXIM Direct Financing |
|
12 |
years(3) |
|
LIBOR |
plus a margin of |
2.45 |
% |
3.43 |
% |
Tranche 3 |
|
KEXIM Guaranteed |
|
12 |
years(3) |
|
LIBOR |
plus a margin of |
1.40 |
% |
2.38 |
% |
Tranche 4 |
|
K-sure Insured |
|
12 |
years(3) |
|
LIBOR |
plus a margin of |
1.50 |
% |
2.48 |
% |
(1) |
The interest rate of the 2015 Debt Facility on Tranche 1 is determined in accordance with the agreement as three or six month LIBOR plus the applicable margin and the interest rate on Tranches 2, 3 and 4 is determined in accordance with the agreement as three month LIBOR plus the applicable margin for the respective tranches. |
(2) |
The set LIBOR rate in effect as of March 31, 2017 was 0.98%. |
(3) |
The KEXIM Direct Financing, KEXIM Guaranteed, and K-Sure tranches have put options to call for the prepayment on the final payment date of the Commercial Financing tranche subject to specific notifications and commitments for refinancing/renewal of the Commercial Financing tranche. |
(4) |
The Commercial Financing tranche margin over LIBOR is 2.75% and is reduced to 2.50% if 50% or more but less than 75% of the vessels financed in the 2015 Debt Facility are employed under time charters as defined in the agreement and to 2.25% if 75% or more of the vessels financed in the 2015 Debt Facility are employed under time charters as defined in the agreement. As of March 31, 2017, the set margin was 2.75%. |
RBS secured bank debt |
|
March 31, 2017 |
|
March 31, 2016 |
|
||
Tranche A |
|
$ |
34,000,000 |
|
$ |
37,400,000 |
|
Tranche B |
|
|
25,570,000 |
|
|
28,127,000 |
|
Tranche C |
|
|
40,312,500 |
|
|
43,967,500 |
|
Total RBS secured bank debt |
|
$ |
99,882,500 |
|
$ |
109,494,500 |
|
|
|
|
|
|
|
|
|
2015 Debt Facility |
|
|
|
|
|
|
|
Commercial Financing |
|
$ |
227,512,277 |
|
$ |
241,442,384 |
|
KEXIM Direct Financing |
|
|
177,680,534 |
|
|
194,827,596 |
|
KEXIM Guaranteed |
|
|
175,773,718 |
|
|
192,736,763 |
|
K-sure Insured |
|
|
89,253,699 |
|
|
97,867,129 |
|
Total 2015 Debt Facility |
|
$ |
670,220,228 |
|
$ |
726,873,872 |
|
|
|
|
|
|
|
|
|
Total debt obligations |
|
$ |
770,102,728 |
|
$ |
836,368,372 |
|
Less: deferred financing fees |
|
|
20,138,480 |
|
|
23,748,116 |
|
Debt obligations—net of deferred financing fees |
|
$ |
749,964,248 |
|
$ |
812,620,256 |
|
|
|
|
|
|
|
|
|
Presented as follows: |
|
|
|
|
|
|
|
Current portion of long-term debt |
|
$ |
65,978,785 |
|
$ |
66,265,643 |
|
Long-term debt—net of current portion and deferred financing fees |
|
|
683,985,463 |
|
|
746,354,613 |
|
Total |
|
$ |
749,964,248 |
|
$ |
812,620,256 |
|
|
|
Financing |
|
|
|
|
costs |
|
|
Balance, April 1, 2015 |
|
$ |
13,296,216 |
|
Additions |
|
|
12,951,085 |
|
Amortization |
|
|
(2,499,185) |
|
Balance, March 31, 2016 |
|
$ |
23,748,116 |
|
Additions |
|
|
99,785 |
|
Amortization |
|
|
(3,709,421) |
|
Balance, March 31, 2017 |
|
$ |
20,138,480 |
|
Year ending March 31: |
|
|
|
2018 |
$ |
65,978,785 |
|
2019 |
|
113,634,787 |
|
2020 |
|
60,021,786 |
|
2021 |
|
85,714,286 |
|
2022 |
|
214,581,395 |
|
Thereafter |
|
230,171,689 |
|
Total |
$ |
770,102,728 |
|
|
|
|
|
|
Weighted-Average |
|
|
|
|
|
|
Grant-Date |
|
|
Incentive Share Awards |
|
Numbers of Shares |
|
Fair Value |
|
|
Unvested as of April 1, 2015 |
|
929,000 |
|
$ |
19.70 |
|
Granted |
|
— |
|
|
— |
|
Unvested as of March 31, 2016 |
|
929,000 |
|
$ |
19.70 |
|
Granted |
|
284,708 |
|
|
7.82 |
|
Vested |
|
(97,208) |
|
|
7.82 |
|
Forfeited |
|
(1,875) |
|
|
7.82 |
|
Unvested as of March 31, 2017 |
|
1,114,625 |
|
$ |
17.72 |
|
|
|
|
Year ended |
|||||||
|
|
March 31, 2017 |
|
March 31, 2016 |
|
March 31, 2015 |
|||
Net pool revenues—related party |
|
$ |
115,753,153 |
|
$ |
202,918,232 |
|
$ |
— |
Time charter revenues |
|
|
49,474,510 |
|
|
38,737,172 |
|
|
26,098,290 |
Voyage charter revenues |
|
|
1,296,952 |
|
|
46,194,134 |
|
|
77,331,934 |
Other revenues |
|
|
922,556 |
|
|
1,358,291 |
|
|
698,925 |
Total revenues |
|
$ |
167,447,171 |
|
$ |
289,207,829 |
|
$ |
104,129,149 |
|
|
|
Year ended |
|
|||||||
|
|
March 31, 2017 |
|
March 31, 2016 |
|
March 31, 2015 |
|
|||
Bunkers |
|
$ |
804,371 |
|
$ |
7,240,544 |
|
$ |
15,678,905 |
|
Port charges and other related expenses |
|
|
886,651 |
|
|
2,558,697 |
|
|
3,603,707 |
|
Brokers’ commissions |
|
|
684,302 |
|
|
1,335,584 |
|
|
1,703,589 |
|
Security cost |
|
|
390,330 |
|
|
370,762 |
|
|
709,035 |
|
War risk insurances |
|
|
40,704 |
|
|
219,261 |
|
|
146,320 |
|
Other voyage expenses |
|
|
159,620 |
|
|
339,834 |
|
|
240,300 |
|
Total |
|
$ |
2,965,978 |
|
$ |
12,064,682 |
|
$ |
22,081,856 |
|
|
|
|
Year ended |
|
|||||||
|
|
March 31, 2017 |
|
March 31, 2016 |
|
March 31, 2015 |
|
|||
Crew wages and related costs |
|
$ |
43,724,030 |
|
$ |
31,449,090 |
|
$ |
14,529,018 |
|
Spares and stores |
|
|
9,432,845 |
|
|
6,403,785 |
|
|
2,666,100 |
|
Insurance |
|
|
4,668,838 |
|
|
3,527,386 |
|
|
1,343,071 |
|
Lubricants |
|
|
2,742,944 |
|
|
2,489,494 |
|
|
964,951 |
|
Repairs and maintenance costs |
|
|
3,867,993 |
|
|
2,076,576 |
|
|
1,315,028 |
|
Miscellaneous expenses |
|
|
1,671,412 |
|
|
1,173,659 |
|
|
437,997 |
|
Total |
|
$ |
66,108,062 |
|
$ |
47,119,990 |
|
$ |
21,256,165 |
|
|
|
|
Year ended |
|
|||||||
|
|
March 31, 2017 |
|
March 31, 2016 |
|
March 31, 2015 |
|
|||
Interest incurred |
|
$ |
24,695,674 |
|
$ |
14,350,900 |
|
$ |
2,657,943 |
|
Amortization of financing costs |
|
|
3,709,421 |
|
|
2,499,185 |
|
|
830,899 |
|
Other financing costs |
|
|
566,847 |
|
|
715,942 |
|
|
301,868 |
|
Capitalized interest |
|
|
— |
|
|
(4,809,014) |
|
|
(3,501,620) |
|
Total |
|
$ |
28,971,942 |
|
$ |
12,757,013 |
|
$ |
289,090 |
|
|
|
|
Year ended |
|||||||
|
|
March 31, 2017 |
|
March 31, 2016 |
|
March 31, 2015 |
|||
Operating lease rent expense |
|
$ |
415,928 |
|
$ |
451,240 |
|
$ |
249,331 |
|
|
March 31, 2017 |
|
|
Less than one year |
|
$ |
378,679 |
|
One to three years |
|
|
154,629 |
|
Total |
|
$ |
533,308 |
|
|
|
March 31, 2017 |
|
|
Less than one year |
|
$ |
48,598,113 |
|
One to three years |
|
|
56,311,227 |
|
Three to five years |
|
|
5,828,252 |
|
Total |
|
$ |
110,737,592 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction |
|
Termination |
|
Fixed |
|
|
Nominal value |
|
Nominal value |
|
Interest rate swap |
|
Date |
|
Date |
|
interest rate |
|
|
March 31, 2017 |
|
March 31, 2016 |
|
RBS - CMNL |
|
July 2013(7) |
|
November 2016(7) |
|
5.395 |
% |
|
— |
|
20,456,000 |
|
RBS - CMNL |
|
July 2013(7) |
|
November 2016(7) |
|
4.936 |
% |
|
— |
|
7,671,000 |
|
RBS - CJNP |
|
July 2013(7) |
|
November 2016(7) |
|
4.772 |
% |
|
— |
|
27,979,875 |
|
RBS - CJNP |
|
July 2013(7) |
|
November 2016(7) |
|
2.960 |
% |
|
— |
|
9,420,125 |
|
RBS - CNML |
|
July 2013(7) |
|
November 2016(7) |
|
4.350 |
% |
|
— |
|
43,000,000 |
|
2015 Debt Facility - Citibank(1) |
|
September 2015 |
|
March 2022 |
|
1.933 |
% |
|
200,000,000 |
|
200,000,000 |
|
2015 Debt Facility - ING(2) |
|
September 2015 |
|
March 2022 |
|
2.002 |
% |
|
50,000,000 |
|
50,000,000 |
|
2015 Debt Facility - CBA(3) |
|
October 2015 |
|
March 2022 |
|
1.428 |
% |
|
71,250,000 |
|
82,550,000 |
|
2015 Debt Facility - Citibank(4) |
|
October 2015 |
|
March 2022 |
|
1.380 |
% |
|
106,875,000 |
|
123,825,000 |
|
2015 Debt Facility - Citibank(5) |
|
June 2016 |
|
March 2022 |
|
1.213 |
% |
|
67,124,650 |
|
— |
|
2015 Debt Facility - Citibank(6) |
|
June 2016 |
|
March 2022 |
|
1.161 |
% |
|
27,583,142 |
|
— |
|
|
|
|
|
|
|
|
|
|
522,832,792 |
|
564,902,000 |
|
(1) |
Non-amortizing with a final settlement of $200 million in March 2022. |
(2) |
Non-amortizing with a final settlement of $50 million in March 2022. |
(3) |
Reduces quarterly by $2.8 million with a final settlement of $17.9 million due in March 2022. |
(4) |
Reduces quarterly by $4.2 million with a final settlement of $26.9 million due in March 2022. |
(5) |
Reduces quarterly by $2.0 million with a final settlement of $29.9 million due in March 2022. |
(6) |
Reduces quarterly by $0.8 million with a final settlement of $12.3 million due in March 2022. |
(7) |
RBS swaps assumed from Predecessor Businesses in July 2013 and terminated in November 2016. |
|
|
|
March 31, 2017 |
|
|
March 31, 2016 |
|
||||||
|
|
Other non-current assets |
|
Long-term liabilities |
|
Other non-current assets |
|
Long-term liabilities |
|
||||
Derivatives not designated as hedging instruments |
|
Derivative instruments |
|
Derivative instruments |
|
Derivative instruments |
|
Derivative instruments |
|
||||
Interest rate swap agreements |
|
$ |
5,843,368 |
|
$ |
— |
|
$ |
— |
|
$ |
21,647,965 |
|
Derivatives not designated as hedging instruments |
|
Location of gain/(loss) recognized |
|
|
March 31, 2017 |
|
March 31, 2016 |
|
March 31, 2015 |
|
|||
Interest Rate Swap—Change in fair value |
|
Unrealized gain/(loss) on derivatives |
|
|
$ |
27,491,333 |
|
$ |
(8,917,503) |
|
$ |
1,331,954 |
|
Interest Rate Swap—Realized loss |
|
Realized loss on derivatives |
|
|
|
(13,797,478) |
|
|
(6,858,126) |
|
|
(5,291,157) |
|
Gain/(loss) on derivatives, net |
|
|
|
|
$ |
13,693,855 |
|
$ |
(15,775,629) |
|
$ |
(3,959,203) |
|
|
|
|
Three months ended |
|
Three months ended |
|
Three months ended |
|
Three months ended |
|
||||
|
|
June 30, 2016 |
|
September 30, 2016 |
|
December 31, 2016 |
|
March 31, 2017 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
50,515,776 |
|
$ |
33,611,233 |
|
$ |
35,734,988 |
|
$ |
47,585,174 |
|
Operating income/(loss) |
|
|
12,413,266 |
|
|
(4,210,840) |
|
|
(3,453,959) |
|
|
9,244,855 |
|
Net income/(loss) |
|
$ |
(1,291,121) |
|
$ |
(7,145,558) |
|
$ |
5,039,624 |
|
$ |
1,955,240 |
|
Earnings/(loss) per common share, basic and diluted |
|
$ |
(0.02) |
|
$ |
(0.13) |
|
$ |
0.09 |
|
$ |
0.04 |
|
|
|
Three months ended |
|
Three months ended |
|
Three months ended |
|
|
Three months ended |
||||
|
|
June 30, 2015 |
|
September 30, 2015 |
|
December 31, 2015 |
|
|
March 31, 2016 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
35,642,460 |
|
$ |
74,946,432 |
|
$ |
93,283,708 |
|
$ |
85,335,229 |
|
Operating income |
|
|
13,571,687 |
|
|
48,743,550 |
|
|
54,011,305 |
|
|
42,088,645 |
|
Net income |
|
$ |
13,652,883 |
|
$ |
41,213,264 |
|
$ |
54,661,323 |
|
$ |
20,160,912 |
|
Earnings per common share, basic and diluted |
|
$ |
0.24 |
|
$ |
0.72 |
|
$ |
0.97 |
|
$ |
0.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|