EXHIBIT 99.1
Forward-Looking Statements
This report contains certain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include,
but are not limited to, statements regarding our or our management’s expectations, hopes, beliefs, intentions or strategies regarding the future and other statements that are other than statements of historical fact. In addition, any statements
that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”,
“intend”, “may”, “might”, “plan”, “possible”, “potential”, “predict”, “project”, “should”, “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not
forward-looking.
The forward-looking statements in this report are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s
examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to
significant uncertainties and contingencies that are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. As a result, you are cautioned
not to rely on any forward-looking statements.
Many of these statements are based on our assumptions about factors that are beyond our ability to control or predict. Any of these factors or a combination of these factors could materially
affect our future results of operations and the ultimate accuracy of the forward-looking statements. In addition to these important factors and matters discussed elsewhere herein and in the documents incorporated by reference herein, important
factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include, among other things:
|
• |
changes in shipping industry trends, including charter rates, vessel values and factors affecting vessel supply and demand;
|
|
• |
changes in seaborne and other transportation patterns;
|
|
• |
changes in the supply of or demand for dry bulk commodities, including dry bulk commodities carried by sea, generally or in particular regions;
|
|
• |
changes in the number of newbuildings under construction in the dry bulk industry;
|
|
• |
changes in the useful lives and the value of our vessels and other vessels we may acquire and the related impact on our compliance with loan covenants;
|
|
• |
the aging of our fleet and increases in operating costs;
|
|
• |
changes in our ability to complete future, pending or recent acquisitions or dispositions;
|
|
• |
our ability to achieve successful utilization of our expanded fleet;
|
|
• |
changes to our financial condition and liquidity, including our ability to pay amounts that we owe and obtain additional financing to fund capital expenditures, acquisitions and other
general corporate activities;
|
|
• |
risks related to our business strategy, areas of possible expansion or expected capital spending or operating expenses;
|
|
• |
our dependence on Seanergy Maritime Holdings Corp., its subsidiaries and our third-party managers to operate our business;
|
|
• |
changes in the availability of crew, number of off-hire days, classification survey requirements and insurance costs for our vessels and other vessels we may acquire;
|
|
• |
changes in our relationships with our contract counterparties, including the failure of any of our contract counterparties to comply with their agreements with us;
|
|
• |
loss of our customers, charters or vessels and other vessels we may acquire;
|
|
• |
damage to our vessels and other vessels we may acquire;
|
|
• |
potential liability from future litigation and incidents involving our vessels and other vessels we may acquire;
|
|
• |
our future operating or financial results;
|
|
• |
acts of terrorism and other hostilities, pandemics or other calamities;
|
|
• |
risks associated with the worldwide coronavirus, or COVID-19 pandemic, including its effects on demand for dry bulk products, crew changes and the transportation thereof;
|
|
• |
changes in global and regional economic and political conditions, including without limitation, increased inflationary pressures and increases in the interest rates set by central
banks;
|
|
• |
general domestic and international political conditions or events, including “trade wars” and the ongoing war between Russia and Ukraine and related sanctions;
|
|
• |
changes in governmental rules and regulations or actions taken by regulatory authorities, particularly with respect to the marine transportation industry; and
|
|
• |
other factors listed from time to time in registration statements, reports or other materials that we have filed with or furnished to the U.S. Securities and Exchange Commission, including our most recent
annual report on Form 20-F.
|
Should one or more of the foregoing risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in
these forward-looking statements. Consequently, there can be no assurance that actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on,
us. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements.
We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under
applicable laws. If one or more forward-looking statements are updated, no inference should be drawn that additional updates will be made with respect to those or other forward-looking statements.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following management’s discussion and analysis should be read in conjunction with our unaudited interim consolidated financial statements of United Maritime Corporation and the unaudited
interim carve-out financial statements of United Maritime Predecessor and related notes included herein. Unless the context indicates otherwise, references to the “Company”, “we” or “our” refer to United Maritime Corporation and its subsidiaries.
This discussion contains forward-looking statements that reflect our current views with respect to future events and financial performance. Our actual results may differ materially from those anticipated in these forward-looking statements.
We undertake no obligation to publicly update or revise any forward-looking statement contained in this prospectus, whether as a result of new information, future events or otherwise, except as
required by law.
Operating Results of United Maritime Corporation
Factors Affecting our Results of Operations Overview
We are an international shipping company specializing in the worldwide seaborne transportation services. As of the day of this report, the company operates a fleet of seven
dry bulk vessels, comprising two Panamax, three Capesize and two Kamsarmax vessels with a cargo-carrying capacity of approximately 845,693 dwt and an age of 14.5 years. Upon the delivery of one additional Panamax dry bulk vessel (expected between
August and October 2023), our operating fleet will consist of eight dry bulk vessels with an aggregate cargo-carrying capacity of approximately 922,054 dwt.
Important Measures for Analyzing Results of Operations
We use a variety of financial and operational terms and concepts. These include the following:
Ownership days. Ownership days are the total number of calendar days in a period during which we owned or chartered in
on a bareboat basis the vessels in our fleet. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses recorded during that period.
Available days. Available days are the number of ownership days less the aggregate number of days that our vessels are
off-hire due to major repairs, dry-dockings, lay-up or special or intermediate surveys. The shipping industry uses available days to measure the aggregate number of days in a period during which vessels are available to generate revenues.
Operating days. Operating days are the number of available days in a period less the aggregate number of days that our
vessels are off-hire due to unforeseen circumstances. Operating days include the days that our vessels are in ballast voyages without having fixed their next employment. The shipping industry uses operating days to measure the aggregate number of
days in a period during which vessels could actually generate revenues.
Fleet utilization. Fleet utilization is the percentage of time that our vessels were generating revenues and is
determined by dividing operating days by ownership days for the relevant period.
Off-hire. The period a vessel is not being chartered or is unable to perform the services for which it is required
under a charter.
Dry-docking. We periodically dry-dock each of our vessels for inspection, repairs and maintenance and any
modifications to comply with industry certification or governmental requirements.
Time charter. A time charter is a contract for the use of a vessel for a specific period of time (period time charter)
or for a specific voyage (trip time charter) during which the charterer pays substantially all of the voyage expenses, including port charges, bunker expenses, canal charges and other commissions. The vessel owner pays the vessel operating
expenses, which include crew costs, provisions, deck and engine stores and spares, lubricants, insurance, maintenance and repairs. The vessel owner is also responsible for each vessel’s dry-docking and intermediate and special survey costs. Time
charter rates are usually fixed during the term of the charter. Prevailing time charter rates do fluctuate on a seasonal and year-to-year basis and may be substantially higher or lower from a prior time charter agreement when the subject vessel
is seeking to renew the time charter agreement with the existing charterer or enter into a new time charter agreement with another charterer. Fluctuations in time charter rates are influenced by changes in spot charter rates.
Voyage charter. A voyage charter is generally a contract to carry a specific cargo from a load port to a discharge
port for an agreed-upon total amount. Under voyage charters, voyage expenses, such as port charges, bunker expenses, canal charges and other commissions, are paid by the vessel owner, who also pays vessel operating expenses.
TCE. Time charter equivalent, or TCE, rate is defined as our net revenue less voyage expenses during a period divided
by the number of our operating days during the period. Voyage expenses include port charges, bunker expenses, canal charges and other commissions.
Daily Vessel Operating Expenses. Daily Vessel Operating Expenses are calculated by dividing vessel operating expenses
less pre-delivery expenses by ownership days for the relevant time periods. Vessel operating expenses include crew costs, provisions, deck and engine stores, lubricants, insurance, maintenance and repairs. Vessel operating expenses before
pre-delivery expenses exclude one-time pre-delivery and pre-joining expenses associated with initial crew manning and supply of stores of Company’s vessels upon delivery.
Principal Factors Affecting Our Business
The principal factors that affect our financial position, results of operations and cash flows include the following:
|
• |
number of vessels owned and operated; |
|
• |
time charter trip rates;
|
|
• |
period time charter rates;
|
|
• |
the nature and duration of our voyage charters;
|
|
• |
vessel operating expenses and direct voyage costs;
|
|
• |
maintenance and upgrade work;
|
|
• |
the age, condition and specifications of our vessels and other vessels we may acquire;
|
|
• |
issuance of our common shares and other securities;
|
|
• |
amount of debt obligations; and
|
|
• |
financing costs related to debt obligations.
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We are also affected by the types of charters we enter into. Vessels operating on period time charters and bareboat time charters provide more predictable cash flows, but can
yield lower profit margins than vessels operating in the spot charter market, either on trip time charters or voyage charters, during periods characterized by favorable market conditions.
Vessels operating in the spot charter market generate revenues that are less predictable but can yield increased profit margins during periods of improvements in dry bulk
rates. Spot charters also expose vessel owners to the risk of declining dry bulk rates and rising fuel costs in case of voyage charters.
If economic conditions throughout the world decline, it will negatively impact our results of operations, financial condition and cash flows, and could
cause the market price of our common shares to decline.
The world economy is facing a number of actual and potential challenges, including the war between Ukraine and Russia, current trade tension between the United States and
China, political instability in the Middle East and the South China Sea region and other geographic countries and areas, terrorist or other attacks, war (or threatened war) or international hostilities, such as those between the United States and
North Korea or Iran, and epidemics or pandemics, such as COVID-19. For example, the continuing war in Ukraine led to increased economic uncertainty amidst fears of a more generalized military conflict or significant inflationary pressures, due to
the increases in fuel and grain prices following the sanctions imposed on Russia. Whether the present dislocation in the markets and resultant inflationary pressures will transition to a long-term inflationary environment remain uncertain, and
the effects of such a development on charter rates, vessel demand and operating expenses in the sector in which we operate cannot be defined precisely. The initial effect of the invasion in Ukraine on the dry bulk freight market ranged from
neutral to positive, despite the short-term volatility in charter rates and increases on specific items of operating costs, mainly in the context of increased crew costs. If these conditions are sustained, the longer-term net impact on the dry
bulk market and our business would be difficult to predict with any degree of accuracy. Such events may have unpredictable consequences, and contribute to instability in the global economy, a decrease in supply or cause a decrease in worldwide
demand for certain goods and, thus, shipping. We cannot predict how long current market conditions will last.
In Europe, concerns regarding the possibility of sovereign debt defaults by European Union member countries, including Greece, although generally alleviated, have in the past
disrupted financial markets throughout the world, and may lead to weaker consumer demand in the European Union, the U.S. and other parts of the world. The withdrawal of the U.K. from the European Union, or Brexit, further increases the risk of
additional trade protectionism. Brexit, or similar events in other jurisdictions, could continue to impact global markets, including foreign exchange and securities markets; any resulting changes in currency exchange rates, tariffs, treaties and
other regulatory matters could in turn adversely impact our business, cash flows and operations.
In addition, the recent economic slowdown in the Asia Pacific region, particularly in China, may exacerbate the effect of the weak economic trends in the rest of the world.
Before the global economic financial crisis that began in 2008, China had one of the world’s fastest growing economies in terms of gross domestic product, or GDP, which had a significant impact on shipping demand. China’s GDP growth rate for the
year ended December 31, 2022 was approximately 3.0%, one of its lowest rates in 50 years, thought to be mainly caused by the country’s zero-COVID policy and strict lockdowns, which was a marked decline from 8.4% growth recorded for the year ended
December 31, 2021. It is possible that China and other countries in the Asia Pacific region will continue to experience volatile, slowed or even negative economic growth in the near future. Changes in the economic conditions of China, and changes
in laws or policies adopted by its government or the implementation of these laws and policies by local authorities, including with regards to tax matters and environmental concerns (such as achieving carbon neutrality), could affect our vessels
that are either chartered to Chinese customers or that call to Chinese ports, our vessels that undergo dry docking at Chinese shipyards and the financial institutions with whom we have entered into financing agreements, and could have a material
adverse effect on our business, results of operations and financial condition.
Furthermore, governments may turn to trade barriers to protect their domestic industries against foreign imports, thereby depressing shipping demand. In particular, as
indicated, the United States has sought to implement more protective trade measures. There is significant uncertainty about the future relationship between the United States, China, and other exporting countries, including with respect to trade
policies, treaties, government regulations, and tariffs. Protectionist developments, or the perception that they may occur, may have a material adverse effect on global economic conditions, and may significantly reduce global trade. Moreover,
increasing trade protectionism may cause an increase in (i) the cost of goods exported from regions globally, particularly from the Asia-Pacific region, (ii) the length of time required to transport goods and (iii) the risks associated with
exporting goods. Such increases may further reduce the quantity of goods to be shipped, shipping time schedules, voyage costs and other associated costs, which could have an adverse impact on our charterers’ business, operating results and
financial condition and could thereby affect their ability to make timely charter hire payments to us and to renew and increase the number of their time charters with us. This could have a material adverse effect on our business, results of
operations, financial condition and cash flows.
We face risks attendant to the trends in the global economy, such as changes in interest rates, instability in the banking and securities markets around the world, the risk
of sovereign defaults, reduced levels of growth, and trade protectionism, among other factors. Major market disruptions and the current adverse changes in market conditions and regulatory climate worldwide may adversely affect our business or
impair our ability to borrow under our loan agreements or any future financial arrangements. We cannot predict how long the current market conditions will last. However, these recent and developing economic and governmental factors, together with
depressed charter rates and vessel values, may have a material adverse effect on our results of operations, financial condition or cash flows and the trading price of our common shares. In the absence of available financing, we may also be unable
to complete vessel acquisitions, take advantage of business opportunities or respond to competitive pressures.
Results of Operations of United Maritime Corporation
|
(In thousands of U.S. Dollars, except for share and per share data)
|
|
Six-month
period ended
June 30, 2023
|
|
|
From the date
of inception
(January 20, 2022)
to June 30, 2022
|
|
|
Revenues:
|
|
|
|
|
|
|
|
Vessel revenue, net
|
|
|
12,832
|
|
|
|
-
|
|
| |
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Voyage expenses
|
|
|
(1,149
|
)
|
|
|
-
|
|
|
Vessel operating expenses
|
|
|
(9,137
|
)
|
|
|
-
|
|
|
Management fees
|
|
|
(263
|
)
|
|
|
-
|
|
|
Management fees-related party
|
|
|
(563
|
)
|
|
|
-
|
|
|
General and administrative expenses
|
|
|
(3,325
|
)
|
|
|
-
|
|
|
Depreciation and amortization
|
|
|
(3,569
|
)
|
|
|
-
|
|
|
Operating loss
|
|
|
(5,174
|
)
|
|
|
-
|
|
|
Other expenses:
|
|
|
|
|
|
|
|
|
|
Interest and finance costs, net
|
|
|
(2,692
|
)
|
|
|
-
|
|
|
Other, net
|
|
|
(48
|
)
|
|
|
-
|
|
|
Total other expenses, net:
|
|
|
(2,740
|
)
|
|
|
-
|
|
|
Net loss
|
|
|
(7,914
|
)
|
|
|
-
|
|
|
Net loss attributable to common shareholders
|
|
|
(7,991
|
)
|
|
|
-
|
|
| |
|
|
|
|
|
|
|
|
|
Net loss per common share, basic & diluted
|
|
|
(0.99
|
)
|
|
|
-
|
|
| |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, basic and diluted
|
|
|
8,030,666
|
|
|
|
500
|
|
Results of Operations of United Maritime Predecessor
|
(In thousands of U.S. Dollars)
|
|
Six-month
period ended
June 30, 2022
|
|
|
Revenues:
|
|
|
|
|
Vessel revenue, net
|
|
|
2,192
|
|
| |
|
|
|
|
|
Expenses:
|
|
|
|
|
|
Voyage expenses
|
|
|
(429
|
)
|
|
Vessel operating expenses
|
|
|
(1,030
|
)
|
|
Management fees
|
|
|
(65
|
)
|
|
Management fees-related party
|
|
|
(131
|
)
|
|
General and administrative expenses
|
|
|
(332
|
)
|
|
Depreciation and amortization
|
|
|
(628
|
)
|
|
Operating loss
|
|
|
(423
|
)
|
|
Other expenses:
|
|
|
|
|
|
Interest and finance costs
|
|
|
(315
|
)
|
|
Other, net
|
|
|
12
|
|
|
Total other expenses, net:
|
|
|
(303
|
)
|
|
Net loss
|
|
|
(726
|
)
|
Six-month period ended June 30, 2023 (the “2023 Company period”) as compared to the six-month period ended June 30, 2022 (the “2022 Predecessor Period”)
Vessel Revenue, Net – Vessel revenue, net increased by $10.6 million or 485% and is mainly attributable to the increase in the size of
our fleet resulting to an increase of operating days from 111 days in 2022 to 815 days in 2023 and is partially offset by a decrease in the TCE rate in 2023 compared to that of 2022. Please see the reconciliation below of TCE rate to net revenues
from vessels, the most directly comparable U.S. GAAP measure.
Voyage Expenses – Voyage expenses amounted to $1.1 million for the six-month period ended June 30, 2023 and to $0.4 million for the
respective period in 2022. The increase was attributable to the bunkers consumption during the ballast period until the delivery of the vessels to the charterers and the increased brokerage commission as a result of the increase in the size of
our fleet.
Vessel Operating Expenses – Operating expenses for the six-month period ended June 30, 2023 amounted to $9.1 million and to $1.0 million
for the respective period in 2022. The vessel operating expenses increased by 787% mainly due to the increase in ownership days from 181 days in 2022 to 916 days in 2023.
Management Fees – Management fees amounted to $0.3 million for the six-month period ended June
30, 2023 and $0.07 million for the respective period in 2022. The increase in 2023 is attributable to the increase in ownership days.
Management Fees-related party – Management fees to related party amounted to $0.6 million for the six-month period ended June 30, 2023 and
$0.1 million for the respective period in 2022 related to increase in ownership days from 181 days in 2022 to 916 days in 2023.
General and Administrative Expenses – General and administrative expenses amounted to $3.3 million for the six-month period ended June
30, 2023 and $0.3 million for the respective period in 2022. The 2023 Company period expenses were mainly attributable to stock-based compensation of $2.2 million, executive officers and directors compensation of $0.5 million, and other
professional fees of $0.3 million. General and administrative expenses of United Maritime Predecessor for 2022 Predecessor Period represent the allocation of the expenses incurred by Seanergy based on the number of ownership days of the fleet
vessel.
Depreciation and Amortization – Depreciation and amortization amounted to $3.6 million for the six-month period ended June 30, 2023 and
$0.6 million for the respective period in 2022. The increase is attributable to the increase in ownership days from 181 days in 2022 to 916 days in 2023.
Interest and Finance Costs – Interest and finance cost amounted to $3.0 million for the six-month period ended June 30, 2023 and $0.3
million for the respective period in 2022. The increase is attributable to the financing obtained for the acquisition of Company’s vessels and an increase of the weighted average interest rate on our outstanding debt from approximately 7.9% to
8.5% for six-month periods ended June 30, 2022 and 2023, respectively.
Performance Indicators
The figures shown below are non-GAAP statistical ratios used by management to measure performance of our vessels. For the “Fleet Data” figures, there are no comparable U.S.
GAAP measures.
| |
|
United Maritime Corporation
|
|
|
Fleet Data:
|
|
Six-month
period ended
June 30, 2023
|
|
|
From the date
of inception
(January 20, 2022)
to June 30, 2022
|
|
| |
|
|
|
|
|
|
Ownership days
|
|
|
916
|
|
|
|
-
|
|
|
Available days(1)
|
|
|
839
|
|
|
|
-
|
|
|
Operating days(2)
|
|
|
815
|
|
|
|
-
|
|
|
Fleet utilization
|
|
|
89.0
|
%
|
|
|
-
|
|
| |
|
|
|
|
|
|
|
|
|
Average Daily Results:
|
|
|
|
|
|
|
|
|
|
TCE rate(3)
|
|
$
|
14,335
|
|
|
$
|
-
|
|
|
Daily Vessel Operating Expenses(4)
|
|
$
|
7,063
|
|
|
$
|
-
|
|
| |
|
United Maritime
Predecessor
|
|
| |
|
Six-month
period ended
June 30, 2022
|
|
|
Fleet Data:
|
|
|
|
|
Ownership days
|
|
|
181
|
|
|
Available days(1)
|
|
|
121
|
|
|
Operating days(2)
|
|
|
111
|
|
|
Fleet utilization
|
|
|
61.3
|
%
|
| |
|
|
|
|
|
Average Daily Results:
|
|
|
|
|
|
TCE rate(3)
|
|
$
|
15,882
|
|
|
Daily Vessel Operating Expenses(4)
|
|
$
|
5,689
|
|
| (1) |
During the six-month period ended June 30, 2023, we incurred 77 off-hire days for scheduled dry-dockings. During the six-month period ended June 30, 2022, we incurred 60 off-hire days for scheduled
dry-dockings.
|
| (2) |
During the six-month period ended June 30, 2023, we incurred 24 off-hire days due to other unforeseen circumstances. During the six-month period ended June 30, 2022, we incurred 10 off-hire days due to
other unforeseen circumstances.
|
| (3) |
We include TCE rate, a non-GAAP measure, as we believe it provides additional meaningful information in conjunction with net revenues from vessels, the most directly comparable U.S. GAAP measure, because it
assists our management in making decisions regarding the deployment and use of our vessels and assists investors and our management in evaluating our financial performance. Our calculation of TCE rate may not be comparable to that
reported by other companies. The following table reconciles our net revenues from vessels to TCE rate.
|
|
(In thousands of US Dollars, except operating days and TCE rate)
|
|
United Maritime Corporation
|
|
| |
|
Six-month
period ended
June 30, 2023
|
|
|
From the date
of inception
(January 20, 2022)
to June 30, 2022
|
|
| |
|
|
|
|
|
|
|
Vessel revenue, net
|
|
$
|
12,832
|
|
|
$
|
-
|
|
|
Voyage expenses
|
|
$
|
(1,149
|
)
|
|
$
|
-
|
|
|
Time charter equivalent revenues
|
|
$
|
11,683
|
|
|
$
|
-
|
|
|
Operating days
|
|
|
815
|
|
|
|
-
|
|
|
TCE rate
|
|
$
|
14,335
|
|
|
$
|
-
|
|
|
(In thousands of US Dollars, except operating days and TCE rate)
|
|
United Maritime
Predecessor
|
|
| |
|
For the
six-month
period ended
June 30, 2022
|
|
| |
|
|
|
|
Vessel revenue, net
|
|
$
|
2,192
|
|
|
Voyage expenses
|
|
$
|
(429
|
)
|
|
Time charter equivalent revenues
|
|
$
|
1,763
|
|
|
Operating days
|
|
|
111
|
|
|
TCE rate
|
|
$
|
15,882
|
|
| (4) |
We include Daily Vessel Operating Expenses, a non-GAAP measure, as we believe it provides additional meaningful information in conjunction with vessel operating expenses, the most directly comparable U.S.
GAAP measure, because it assists our management in making decisions regarding the deployment and use of our vessels and in evaluating their financial performance. Our calculation of Daily Vessel Operating Expenses may not be comparable to
that reported by other companies. The following table reconciles our vessel operating expenses to Daily Vessel Operating Expenses.
|
|
(In thousands of US Dollars, except ownership days and Daily Vessel Operating Expenses)
|
|
United Maritime Corporation
|
|
| |
|
Six-month
period ended
June 30, 2023
|
|
|
From the date
of inception
(January 20, 2022)
to June 30, 2022
|
|
| |
|
|
|
|
|
|
|
Vessel operating expenses
|
|
$
|
9,137
|
|
|
$
|
-
|
|
|
Less: Pre-delivery expenses
|
|
|
2,667
|
|
|
|
-
|
|
|
Vessel operating expenses before pre-delivery expenses
|
|
$
|
6,470
|
|
|
$
|
-
|
|
|
Ownership days
|
|
|
916
|
|
|
|
-
|
|
|
Daily Vessel operating expenses
|
|
$
|
7,063
|
|
|
$
|
-
|
|
|
(In thousands of US Dollars, except ownership days and Daily Vessel Operating Expenses)
|
|
United Maritime
Predecessor
|
|
| |
|
For the
six-month
period ended
June 30, 2022
|
|
| |
|
|
|
|
Vessel operating expenses
|
|
$
|
1,030
|
|
|
Ownership days
|
|
|
181
|
|
|
Daily Vessel operating expenses
|
|
$
|
5,689
|
|
EBITDA and Adjusted EBITDA
| |
|
United Maritime Corporation
|
|
|
(In thousands of U.S. Dollars)
|
|
Six-month
period ended
June 30, 2023
|
|
|
From the date
of inception
(January 20, 2022)
to June 30, 2022
|
|
| |
|
|
|
|
|
|
|
EBITDA and Adjusted EBITDA reconciliation:
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(7,914
|
)
|
|
$
|
-
|
|
|
Add: Interest and finance costs, net
|
|
|
2,692
|
|
|
|
-
|
|
|
Add: Depreciation and amortization
|
|
|
3,569
|
|
|
$
|
-
|
|
|
EBITDA(1)
|
|
$
|
(1,653
|
)
|
|
$
|
-
|
|
|
Add: Stock based compensation
|
|
|
2,175
|
|
|
|
-
|
|
|
Adjusted EBIDTA(1)
|
|
$
|
522
|
|
|
$
|
-
|
|
| |
|
United Maritime
Predecessor
|
|
|
(In thousands of U.S. Dollars)
|
|
For the
six-month
period ended
June 30, 2022
|
|
| |
|
|
|
|
EBITDA and Adjusted EBITDA reconciliation:
|
|
|
|
|
Net loss
|
|
$
|
(726
|
)
|
|
Add: Interest and finance costs
|
|
|
315
|
|
|
Add: Depreciation and amortization
|
|
$
|
628
|
|
|
EBITDA(1)
|
|
$
|
217
|
|
(1) Earnings before interest, taxes, depreciation and amortization (“EBITDA”) represents the sum of net income/(loss), net interest and finance costs, depreciation and amortization and,
if any, income taxes during a period. EBITDA is not a recognized measurement under U.S. GAAP. Adjusted EBITDA represents EBITDA adjusted to exclude stock based compensation and loss on extinguishment of debt, if any, which is not indicative of
the Company’s ongoing performance of its core operations. EBITDA and Adjusted EBITDA are presented as we believe that these measures are useful to investors as a widely used means of evaluating operating profitability. EBITDA and Adjusted EBITDA
as presented here may not be comparable to similarly titled measures presented by other companies. These non-GAAP measure should not be considered in isolation from, as a substitute for, or superior to, financial measures prepared in accordance
with U.S. GAAP.
Liquidity and Capital Resources
Our principal source of funds have been our operating cash inflows, long-term borrowings from banks, sale and leaseback transactions, bareboat charter
agreements, vessels sales and equity provided by the capital markets. Our principal use of funds has primarily been capital expenditures to establish our fleet, maintain the quality of our vessels, comply with international shipping standards
and environmental laws and regulations, fund working capital requirements, dividend payments and make principal repayments and interest payments on our outstanding debt obligations, finance leases and other financial liabilities.
Our funding and treasury activities are conducted in accordance with corporate policies to maximize investment returns while maintaining appropriate liquidity
for both our short- and long-term needs. This includes arranging borrowing facilities on a cost-effective basis. Cash and cash equivalents are held primarily in U.S. dollars, with minimal amounts held in Euros.
As of June 30, 2023, we did not have any contractual obligations other than the loan agreements, finance leases, other financial liabilities and capital expenditures for
vessels acquisitions described below. In July 2023, we paid $0.7 million regular dividend to all our common shareholders of record as of June 22, 2023. On August 3, 2023, we announced a regular quarterly dividend of $0.075 per share for the
second quarter of 2023, payable on or about October 6, 2023 to all shareholders of record as of September 22, 2023.
Working capital is equal to current assets minus current liabilities, including the current portion of long-term debt. As at June 30, 2023, working capital
deficit amounted to $26.2 million. The deficit is primarily due to our Entrust Facilities which mature in the first quarter of 2024, with a total outstanding balance of $40.7 million as of June 30,
2023, including balloon payments of $35.2 million. The tranche secured by the Epanastasea shall remain blocked in favor of the security
agent for the period from the vessel’s delivery to her new owners until the acquisition of the Exelixsea as per the August 9, 2023 deed of
accession, amendment and restatement of the August 2022 Entrust Facility, pursuant to which Exelixsea Maritime Co. acceded thereto as borrowers. Thereby, the balloon installment for the Epanastasea tranche is not payable upon the sale of the Epanastasea.
In April 2023, we entered into a bareboat charter agreement for a Panamax bulk carrier built in 2015, which was renamed Synthesea. Based on the
agreement, we made a downpayment of $3.5 million at signing of the bareboat charter agreement and an additional downpayment of $3.5 million upon the delivery of the vessel, on August 1, 2023. In May 2023, we entered into a memorandum of agreement for the sale of the Epanastasea, for a gross price of $37.5
million; the vessel was delivered to her new owners on August 10, 2023. In June 2023, we entered into a memorandum of agreement to acquire one Panamax vessel built in 2011, which will be renamed Exelixsea, for an aggregate purchase price of $17.8 million. The deposit paid in connection with the entry into the memorandum of agreement amounted to an aggregate of $1.8 million, with
the balance of the purchase price payable upon delivery of the vessel which is expected by October 2023. The additional downpayment for the Synthesea was funded through cash on hand, while the balance for the acquisition of the Exelixsea is expected to be funded through
cash on hand and a loan amount of $15.0 million reallocated from the August 2022 Entrust Facility following the sale of the Epanastasea
which previously secured the respective tranche of the facility.
The Company’s cash flow projections indicate that projected cash on hand and cash provided by operating activities, financing activities and investing activities or a
combination of any of those (i.e. debt agreements, vessels’ sales, sales and leaseback activities and finance leases), will be sufficient to cover the liquidity needs that become due in the twelve-month period ending one year after the financial
statements’ issuance, including obligations arising from purchase options in finance lease agreements and for vessel acquisitions.
Cash Flows of United Maritime Corporation
Cash and cash equivalents and restricted cash, non-current as of June 30, 2023 were $7.3 million. We consider highly
liquid investments such as time deposits and certificates of deposit with an original maturity of around three months or less to be cash equivalents. Cash and cash equivalents are held in U.S. dollars.
Net Cash from Operating Activities
Net cash used in operating activities in the six-month period ended June 30, 2023 amounted to $0.8 million.
Net Cash from Investing Activities
Net cash used in investing activities in the six-month period ended June 30, 2023 amounted to $75.8 million. The 2023 cash outflow is related to a $63.3 million payments for
the acquisition of three vessels, $10.7 million related to lease prepayments and $1.8 million payments related to advance for vessel acquisition.
Net Cash from Financing Activities
Net cash provided by financing activities in the six-month period ended June 30, 2023 amounted to $14.0 million. The 2023 cash inflow resulted from proceeds of $24.5 million
from secured long-term debt and $1.9 million proceeds from Class A warrant exercises. The 2023 cash inflow was partly offset by dividend payments of $8.0 million, debt repayments of $3.0 million, lease liabilities payments of $0.8 million, $0.4
million of loan finance fees payments in respect with the loan amendments and $0.2 million payments for repurchase of common stock.
Cash Flows of United Maritime Predecessor
Cash and cash equivalents as of June 30, 2022 were $0.25 million. We consider highly liquid investments such as time
deposits and certificates of deposit with an original maturity of around three months or less to be cash equivalents. Cash and cash equivalents are held in U.S. dollars.
Operating Activities: Net cash used in operating activities amounted to $0.6 million for the six-month period ended June 30, 2022. Net
cash used in operating activities in 2022 consisted of non-cash items of $0.7 million plus a decrease in working capital of $0.6 million.
Investing Activities: The 2022 cash outflow is related to vessel improvements consisting of payments for the installation of a ballast
water treatment system.
Financing Activities: The 2022 cash inflow resulted from parent investment of $1.1 million and was offset by debt repayments of $0.55
million.
Description of Indebtedness
Senior Facilities
July 2022 EnTrust Facility
On July 28, 2022, the previous loan facility entered into in July 2020 with Kroll agency Services Limited and Kroll Trustee Services Limited, as facility agent and security agent,
respectively, and certain nominees of EnTrust Global, as lenders was amended and restated with the purpose to (i) increase the facility from the total amount outstanding of $4.6 million to $14.0 million, (ii) change the maturity to February 2024,
(iii) alter the guarantor of the facility to the Company and (iv) cancel all applicable financial covenants with no material changes in the other terms of the loan facility. On August 1, 2022, the drawdown was completed resulting to a new balance
outstanding of $14.0 million. In connection with the sale of Parosea and Bluesea, the Company prepaid $2.0 million against the July 2022 EnTrust Facility, as
agreed with the lenders in November 2022 pursuant to a side letter. The facility bears a fixed interest of 7.90% and is repayable through two quarterly installments of $0.5 million and one of $1.0 million falling nine, twelve and fifteen months
after the drawdown and a final balloon of $10.0 million payable at maturity. The July 2022 EnTrust Facility is secured by a first priority mortgage over the Gloriuship, a general assignment covering
earnings, insurances and requisition compensation of the vessel, account pledge agreements concerning the earnings account of the vessel, a share pledge agreement concerning the vessel-owning subsidiary’s shares and relevant technical and
commercial managers’ undertakings. The facility agreement includes certain restrictions on dividends from the borrower’s accounts and other distributions. The facility does not include any financial covenants or security value maintenance
provisions.
As of June 30, 2023, $11.5 million was outstanding under the facility.
August 2022 EnTrust Facility
In August 2022, we entered into a secured loan new facility of $63.6 million with Kroll Agency Services Limited and Kroll Trustee Services Limited, as facility agent and security
agent, respectively, and certain nominees of EnTrust Global as lenders, to partially finance the acquisition of the Parosea, Bluesea, Minoansea and Epanastasea at a fixed rate of 7.90% per annum. The facility has a term of 18 months after the drawdown of the last tranche and would amortize through three quarterly
installments averaging $4.0 million commencing nine months from the drawdown date, followed by a $51.6 million balloon payable at maturity. Following the sale of the Parosea and Bluesea, we repaid their respective tranches for an aggregate amount of $32.4 million. The facility agreement includes certain restrictions on dividends from the borrower’s accounts and other distributions. The facility does not
include any financial covenants or security value maintenance provisions.
In December 2022, the Company reached an agreement with the lenders to replace the collateral under the August 2022 EnTrust Facility secured by the Minoansea with the Goodship and Tradership. Under the terms of the amended agreement, the $15.2
million tranche secured by the Minoansea remained blocked in favor of the security agent until the acquisition of the new vessels and the fixed interest rate was amended to 9.00% per annum. The $15.2
million tranche was replaced by two tranches of $7.0 and $8.2 million, secured by the Goodship and Tradership, respectively, upon their delivery pursuant to an
amendment and restatement of the subject facility which was entered into on January 30, 2023. On August 9, 2023, the Company entered into a deed of accession, amendment and restatement of the facility pursuant to which Exelixsea Maritime Co.
acceded thereto as borrower. Under the terms of the amended agreement, the $15.0 million tranche secured by the Epanastasea shall remain blocked in favor of the security agent for the period from the
vessel’s delivery to her new owners, on August 10, 2023, until the acquisition of the Santa Barbara tbr Exelixsea. In addition, the fixed interest rate of the Epanastasea tranche was amended to 9.00% per annum as of August 10, 2023.
Following the prepayment of the tranches secured by the Parosea and Bluesea, the facility
amortizes through three quarterly installments averaging $2.0 million commencing nine months after the original drawdown date, followed by a $25.2 million balloon payable at maturity. The facility is secured by first priority mortgages, general
assignments covering earnings, insurances and requisition compensation over each of the relevant vessels, account pledge agreements concerning the earnings accounts of the vessels, shares’ security agreements concerning the vessel-owning
subsidiaries’ shares and relevant technical and commercial managers’ undertakings. The facility agreement includes certain restrictions on dividends from the borrowers’ accounts and other distributions.
As of June 30, 2023, $29.2 million was outstanding under the facility.
New sale and leaseback transactions during the six-month period ended June 30, 2023
March 2023 Neptune Sale and Leaseback
On March 31, 2023, following the delivery of the Oasea,
we entered into a sale-and-leaseback agreement with a subsidiary of Neptune Maritime Leasing Ltd. (“Neptune”) for the purpose of partly financing the acquisition cost of the Oasea. The Company sold and chartered back the vessel from Neptune on a bareboat basis for a five-year period. The applicable interest rate is 3-month Term SOFR plus 4.25% per annum. The Company has continuous options to
repurchase the vessel throughout the duration of the charter, while at the end of the five-year bareboat period, the Company has the obligation to repurchase the vessel for $6.4 million. The Company is required to maintain a security cover
ratio (as defined therein) of at least 120% for the first twelve months and at least 130% thereafter. In addition, the Company is required to maintain minimum liquidity of approximately $0.4 million in
its operating account. The charterhire principal amortizes in sixty consecutive monthly installments of approximately $0.1 million along with a balloon payment of $6.4 million in March 2028.
As of June 30, 2023, $12.0 million was outstanding under the facility.
April 2023 Neptune Sale and Leaseback
On April 26, 2023, following the delivery of the Cretansea, we entered into a sale-and-leaseback agreement with a subsidiary of Neptune for the purpose of partly financing the acquisition cost of the Cretansea. The Company sold and chartered back the vessel from Neptune on a bareboat basis for a five-year period. The applicable interest rate is 3-month Term SOFR plus 4.25% per annum. The Company has continuous options to
repurchase the vessel throughout the duration of the charter, while at the end of the five-year bareboat period, the Company has the obligation to repurchase the vessel for $6.4 million. The Company is required to maintain a security cover
ratio (as defined therein) of at least 120% for the first twelve months and at least 130% thereafter. In addition, the Company is required to maintain minimum liquidity of approximately $0.4 million in
its operating account. The charterhire principal amortizes in sixty consecutive monthly installments of approximately $0.1 million along with a balloon payment of $6.4 million in April 2028.
As of June 30, 2023, $12.1 million was outstanding under the facility.
Bareboat Lease Agreements
New Bareboat Lease agreements during the six-month period ended June 30, 2023
Chrisea Bareboat Agreement
On February 9, 2023, the Company entered into a bareboat charter agreement for the 2013 Japanese-built Panamax bulk carrier, which was renamed Chrisea.
The vessel is chartered by the Company under an 18-month bareboat charter agreement, with a down payment of $3.5 million paid on signing of the agreement and a further down payment of $3.5 million paid at the vessel’s delivery on February 21,
2023, a daily charter rate of $7,300 over the period of the bareboat charter and a purchase option of $12.4 million at the end of the bareboat charter. In aggregate, the acquisition cost for the vessel, following exercise of the purchase option,
will be approximately $23.4 million.
Synthesea Bareboat Agreement
On April 19, 2023, the Company entered into a bareboat charter agreement for the 78,020 dwt Panamax bulk carrier built in 2015 in Japan, which was renamed Synthesea.
The vessel is chartered by the Company under a 12-month bareboat charter agreement, with a down payment of $3.5 million paid on signing of the agreement and a further down payment of $3.5 million which was paid at the vessel’s delivery, on August
1, 2023, a daily charter rate of $8,000 over the period of the bareboat charter and a purchase option of $17.1 million at the end of the bareboat charter. The bareboat charter commenced on August 1, 2023. In aggregate, the acquisition cost for
the vessel, following exercise of the purchase option, will be approximately $27.0 million.