Global Ship Lease has signed a merger deal with Poseidon Containers to create a containership charter owner focused on mid-sized and smaller vessels.
The company signed the definitive agreement with Poseidon Containers Holdings LLC and K&T Marine LLC for a stock-for-stock transaction representing a total transaction value of over USD 780 million on an asset value basis.
Global Ship Lease said that the deal brings the latest generation of new-design high reefer eco-widebeam vessels into the fleet and reduces average fleet age by three years. The combined company will have a fleet of 38 vessels with a total capacity of 198,793 TEU, an average fleet age weighted by TEU of 10.7 years, and contracted revenue of USD 528 million as of September 30, 2018.
“We are delighted to announce this transformative strategic transaction creating a market leader with an asset base of more than USD 1.2 billion in the mid-sized and smaller containership segments,” Michael Gross, Chairman of Global Ship Lease, said.
“This is an exciting new chapter for Global Ship Lease, and we believe that this combination and the growth potential that it unlocks will create value for all GSL stakeholders.”
Under the terms of the merger agreement, Global Ship Lease will issue 24.045 million shares of Class A common stock and 0.250 million shares of Series C perpetual preferred stock, which are convertible into an aggregate of 103.642 million shares of Class A common stock.
Affiliates of Kelso & Company L.P. will be the sole holder of the convertible preferred stock, which is not entitled to any preferred dividend payments other than those payable to common shareholders and represents 49.2% of the voting power and 56.4% of the economic interest in the company.
In addition, the currently issued and outstanding shares of Class B common stock of the company will convert to shares of Class A common stock.
The transaction values Global Ship Lease at USD 100 million, or USD 1.7825 per Class A common share, which is 105% higher than the closing price of USD 0.87 for the Class A common shares on October 26, 2018.
Upon closing of the transaction, Poseidon Containers will contribute an additional USD 227 million in equity value, and as a result, members of Poseidon Containers are expected to own approximately 69.5% of the economic interest of the company.
The merger is expected to reduce the company’s overall financial leverage to approximately 67% on a loan, net of cash, to charter-adjusted value basis.