02 Project Summary
- 1. 1 Highland GroupHighland Group Polemis Cape Project Summary Conservative Scenario Long-term 8-year plan with 80/20 leverage and 6.50% financing. This doesn’t include IPO. Name DWT Year Built Charterer Return Arethousa 171,779 1999 Kline 39% Cape Sun 171,778 1999 Cargill 45% Cape Island 171,516 2004 Cargill 34% Successor 174,000 2007 Korea Line 14% Cape Veni 174,000 2007 BHP Billiton 6% Average Cumulative Return 27% Opportunistic Scenario (IPO) Short term 1- 2 year plan with an exit strategy for IPO, shortly after acquisition. Based on current and expected economic factors, we anticipate ’08, early ’09 to be the most opportunistic to capitalize on Cape sector market timing and the highest premium in the capital markets over NAV. Name DWT Year Built Charterer Return 2008 Return 2009 Arethousa 171,779 1999 Kline 148% 65% Cape Sun 171,778 1999 Cargill 228% 101% Cape Island 171,516 2004 Cargill 113% 45% Successor 174,000 2007 Korea Line 58% 11% Cape Veni 174,000 2007 BHP Billiton 47% -3% Average Cumulative Return 119%* 44%* Growth Scenario Options for 4 New Builds, 180,000 dwt each. Two deliveries are scheduled for ’09 and and additonal two deliveries in ’10. Based on the Capesize market expectations over the next two years we anticipate asset values to increase during this time. Resulting in potential asset play opportunities and/ or increasing the the company’s valuation in the IPO scenario. Highland GroupHighland Group 47 W. 57th St. Suite- 603 New York, N.Y. 10019 T. 212.838.0150 F. 212.838.4729 * Doesn’t include the premium for IPO (1.2 - 1.4 premium trading multiple of their NAV for dry bulk firms over the last 3 years)
- 2. Purchase Price = $100,000,000 Built= 1999 10yr avg t/c= $20,000 10 yr Avg Newbuilding Price= $80,000,000 Loan = $80,000,000 L/V= 80.0% Operating Exp. = $6,000 Lightship = 40,000 LT Downpayment = $20,000,000 Op. Exp. incr./yr= 3.00% Scrap rate = 300 $/LT Interest = 6.50% Int. incr/yr = 0.00% Scrap value= $12,000,000 Years = 8 Years to scrap= 27 Payments/yr = 1 % of EBTDA (Prepayment)= 0% Installments = 8 Minimum req'd ROI (Prepayment)= 5% Balloon = $20,000,000 25.00% Invest Inc.ROI= 0.00% Market Book Value @8yrs old= $59,265,348 Yr Loan L/V Avg Daily Income Revenue Operating Expenses EBITDA Interest EBTDA Amorti-zation Pre-payment Free Cash Flow Cash Balance Estimated Ship Value Estimated NAV ROI Break Even Market Avg Daily Income 1 $80,000,000 80% $95,000 $33,250,000 $2,190,000 $31,060,000 $5,200,000 $25,860,000 $8,571,429 $0 $17,288,571 $17,288,571 $119,746,829 $65,606,829 228% $43,730 $140,000 IPO 2 $71,428,571 70% $57,000 $19,950,000 $2,255,700 $17,694,300 $4,642,857 $13,051,443 $8,571,429 $0 $4,480,014 $21,768,586 $101,478,311 $60,389,753 101% $42,384 $110,000 IPO 3 $62,857,143 83% $57,000 $19,950,000 $2,323,371 $17,626,629 $4,085,714 $13,540,915 $8,571,429 $0 $4,969,486 $26,738,072 $75,334,792 $47,787,150 46% $41,043 $65,000 4 $54,285,714 77% $57,000 $19,950,000 $2,393,072 $17,556,928 $3,528,571 $14,028,356 $8,571,429 $0 $5,456,928 $32,195,000 $70,191,273 $56,671,987 46% $39,707 $60,000 5 $45,714,286 80% $57,000 $19,950,000 $2,464,864 $17,485,136 $2,971,429 $14,513,707 $8,571,429 $0 $5,942,279 $38,137,278 $57,172,755 $58,167,176 38% $38,377 $40,000 6 $37,142,857 68% $57,000 $19,950,000 $2,538,810 $17,411,190 $2,414,286 $14,996,904 $8,571,429 $0 $6,425,475 $44,562,754 $54,654,236 $70,645,562 42% $37,053 $40,000 7 $28,571,429 55% $50,000 $17,500,000 $2,614,975 $14,885,025 $1,857,143 $13,027,883 $8,571,429 $0 $4,456,454 $49,019,208 $52,135,718 $81,154,926 44% $35,736 $40,000 8 $20,000,000 40% $50,000 $17,500,000 $2,693,424 $14,806,576 $1,300,000 $13,506,576 $20,000,000 $0 -$6,493,424 $42,525,784 $49,617,199 $92,142,983 45% $65,735 $40,000 $60,000 $168,000,000 $19,474,216 $148,525,784 $26,000,000 $122,525,784 $80,000,000 $0 $42,525,784 $66,875 Estimated Avg Daily Income= $60,000 Investment = $20,000,000 NPV(EBTDA)= $85,556,502 Average Break Even Daily Income= $44,812 Unit Resale value= $49,617,199 @19yrs old NPV(Free Cash Flow)= $34,497,050 (Including ESV) Safety Margin= 25.31% Total Income = $92,142,983 At Discount Rate= 10.0% Return = 45% abt 177,000 CAPE SUN Loan Period 12 years
- 3. Purchase Price = $100,000,000 Built= 1999 10yr avg t/c= $20,000 10 yr Avg Newbuilding Price= $80,000,000 Loan = $80,000,000 L/V= 80.0% Operating Exp. = $6,000 Lightship = 40,000 LT Downpayment = $20,000,000 Op. Exp. incr./yr= 3.00% Scrap rate = 300 $/LT Interest = 6.50% Int. incr/yr = 0.00% Scrap value= $12,000,000 Years = 8 Years to scrap= 27 Payments/yr = 1 % of EBTDA (Prepayment)= 0% Installments = 8 Minimum req'd ROI (Prepayment)= 5% Balloon = $20,000,000 25.00% Invest Inc.ROI= 0.00% Market Book Value @8yrs old= $59,265,348 Yr Loan L/V Avg Daily Income Revenue Operating Expenses EBITDA Interest EBTDA Amorti-zation Pre-payment Free Cash Flow Cash Balance Estimated Ship Value Estimated NAV ROI Break Even Market Avg Daily Income 1 $80,000,000 80% $49,281 $17,248,350 $2,190,000 $15,058,350 $5,200,000 $9,858,350 $8,571,429 $0 $1,286,921 $1,286,921 $119,746,829 $49,605,179 148% $43,730 $140,000 IPO 2 $71,428,571 70% $61,750 $21,612,500 $2,255,700 $19,356,800 $4,642,857 $14,713,943 $8,571,429 $0 $6,142,514 $7,429,436 $101,478,311 $46,050,603 65% $42,384 $110,000 IPO 3 $62,857,143 71% $61,750 $21,612,500 $2,323,371 $19,289,129 $4,085,714 $15,203,415 $8,571,429 $0 $6,631,986 $14,061,422 $88,459,792 $48,235,500 47% $41,043 $90,000 4 $54,285,714 67% $61,750 $21,612,500 $2,393,072 $19,219,428 $3,528,571 $15,690,856 $8,571,429 $0 $7,119,428 $21,180,850 $80,691,273 $56,157,837 45% $39,707 $80,000 5 $45,714,286 63% $61,750 $21,612,500 $2,464,864 $19,147,636 $2,971,429 $16,176,207 $8,571,429 $0 $7,604,779 $28,785,628 $72,922,755 $64,565,526 45% $38,377 $70,000 6 $37,142,857 57% $50,000 $17,500,000 $2,538,810 $14,961,190 $2,414,286 $12,546,904 $8,571,429 $0 $3,975,475 $32,761,104 $65,154,236 $69,343,912 41% $37,053 $60,000 7 $28,571,429 50% $50,000 $17,500,000 $2,614,975 $14,885,025 $1,857,143 $13,027,883 $8,571,429 $0 $4,456,454 $37,217,558 $57,385,718 $74,603,276 39% $35,736 $50,000 8 $20,000,000 38% $50,000 $17,500,000 $2,693,424 $14,806,576 $1,300,000 $13,506,576 $20,000,000 $0 -$6,493,424 $30,724,134 $52,242,199 $82,966,333 39% $65,735 $45,000 $55,785 $156,198,350 $19,474,216 $136,724,134 $26,000,000 $110,724,134 $80,000,000 $0 $30,724,134 $80,625 Estimated Avg Daily Income= $55,785 Investment = $20,000,000 NPV(EBTDA)= $75,530,662 Average Break Even Daily Income= $44,812 Unit Resale value= $52,242,199 @19yrs old NPV(Free Cash Flow)= $24,471,210 (Including ESV) Safety Margin= 19.67% Total Income = $82,966,333 At Discount Rate= 10.0% Return = 39% abt 177,000 ARETHOUSA Loan Period 12 years
- 4. Purchase Price = $100,000,000 Built= 2004 10yr avg t/c= $20,000 10 yr Avg Newbuilding Price= $60,000,000 Loan = $80,000,000 L/V= 80.0% Operating Exp. = $5,500 Lightship = 25,000 LT Downpayment = $20,000,000 Op. Exp. incr./yr= 3.00% Scrap rate = 300 $/LT Interest = 6.50% Int. incr/yr = 0.00% Scrap value= $7,500,000 Years = 10 Years to scrap= 27 Payments/yr = 1 % of EBTDA (Prepayment)= 0% Installments = 10 Minimum req'd ROI (Prepayment)= 5% Balloon = $24,000,000 30.00% Invest Inc.ROI= 0.00% Market Book Value @3yrs old= $53,580,670 Yr Loan L/V Avg Daily Income Revenue Operating Expenses EBITDA Interest EBTDA Amortization Pre-payment Free Cash Flow Cash Balance Estimated Ship Value Estimated NAV ROI Break Even Market Avg Daily Income 1 $80,000,000 80% $28,500 $9,975,000 $2,007,500 $7,967,500 $5,200,000 $2,767,500 $6,222,222 $0 -$3,454,722 -$3,454,722 $119,886,225 $42,653,725 113% $36,794 $150,000 IPO 2 $73,777,778 72% $57,000 $19,950,000 $2,067,725 $17,882,275 $4,795,556 $13,086,719 $6,222,222 $0 $6,864,497 $3,409,775 $102,191,781 $38,046,000 45% $35,851 $120,000 IPO 3 $67,555,556 95% $57,000 $19,950,000 $2,129,757 $17,820,243 $4,391,111 $13,429,132 $6,222,222 $0 $7,206,910 $10,616,685 $71,372,336 $20,655,688 1% $34,913 $65,000 4 $61,333,333 92% $57,000 $19,950,000 $2,193,649 $17,756,351 $3,986,667 $13,769,684 $6,222,222 $0 $7,547,462 $18,164,147 $66,802,892 $29,855,927 12% $33,980 $60,000 5 $55,111,111 85% $57,000 $19,950,000 $2,259,459 $17,690,541 $3,582,222 $14,108,319 $6,222,222 $0 $7,886,097 $26,050,243 $64,858,447 $42,019,802 22% $33,052 $60,000 6 $48,888,889 78% $57,000 $19,950,000 $2,327,243 $17,622,757 $3,177,778 $14,444,980 $6,222,222 $0 $8,222,757 $34,273,000 $62,914,003 $54,520,337 29% $32,129 $60,000 7 $42,666,667 70% $50,000 $17,500,000 $2,397,060 $15,102,940 $2,773,333 $12,329,607 $6,222,222 $0 $6,107,384 $40,380,385 $60,969,559 $64,905,499 32% $31,213 $60,000 8 $36,444,444 62% $40,000 $14,000,000 $2,468,972 $11,531,028 $2,368,889 $9,162,139 $6,222,222 $0 $2,939,917 $43,320,302 $59,025,114 $72,123,194 33% $30,302 $60,000 9 $30,222,222 53% $40,000 $14,000,000 $2,543,041 $11,456,959 $1,964,444 $9,492,515 $6,222,222 $0 $3,270,292 $46,590,594 $57,080,670 $79,671,264 33% $29,396 $60,000 10 $24,000,000 44% $40,000 $14,000,000 $2,619,332 $11,380,668 $1,560,000 $9,820,668 $24,000,000 $0 -$14,179,332 $32,411,262 $55,136,225 $87,547,488 34% $77,204 $60,000 $48,350 $169,225,000 $23,013,738 $146,211,262 $33,800,000 $112,411,262 $80,000,000 $0 $32,411,262 $75,500 Estimated Avg Daily Income= $48,350 Investment = $20,000,000 NPV(EBTDA)= $67,477,935 Average Break Even Daily Income= $39,090 Unit Resale value= $55,136,225 @16yrs old NPV(Free Cash Flow)= $22,390,970 (Including ESV) Safety Margin= 19.15% Total Income = $87,547,488 At Discount Rate= 10.0% Return = 34% CAPE ISLAND
- 5. Purchase Price = $120,000,000 Built= 2007 10yr avg t/c= $20,000 5 yr Avg Newbuilding Price= $60,000,000 Loan = $96,000,000 L/V= 80.0% Operating Exp. = $5,500 Lightship = 25,000 LT Downpayment = $24,000,000 Op. Exp. incr./yr= 3.00% Scrap rate = 300 $/LT Interest = 6.50% Int. incr/yr = 0.00% Scrap value= $7,500,000 Years = 10 Years to scrap= 27 Payments/yr = 1 % of EBTDA (Prepayment)= 0% Installments = 10 Minimum req'd ROI (Prepayment)= 5% Balloon = $28,800,000 30.00% Invest Inc.ROI= 0.00% Market Book Value @0yrs old= $59,334,094 Yr Loan L/V Avg Daily Income Revenue Operating Expenses EBITDA Interest EBTDA Amorti-zation Pre-payment Free Cash Flow Cash Balance Estimated Ship Value Estimated NAV ROI Break Even Market Avg Daily Income 1 $96,000,000 80% $47,500 $16,625,000 $2,007,500 $14,617,500 $6,240,000 $8,377,500 $7,466,667 $2,000,000 -$1,089,167 -$1,089,167 $125,639,650 $38,017,150 58% $48,532 $150,000 IPO 2 $86,533,333 80% $47,500 $16,625,000 $2,067,725 $14,557,275 $5,624,667 $8,932,608 $7,216,667 $2,000,000 -$284,058 -$1,373,225 $107,945,205 $29,255,314 11% $46,326 $120,000 IPO 3 $77,316,667 100% $47,500 $16,625,000 $2,129,757 $14,495,243 $5,025,583 $9,469,660 $6,930,952 $2,000,000 $538,708 -$834,517 $77,125,761 $7,905,529 -22% $44,072 $65,000 4 $68,385,714 94% $47,500 $16,625,000 $2,193,649 $14,431,351 $4,445,071 $9,986,279 $6,597,619 $2,000,000 $1,388,660 $554,143 $72,556,317 $13,322,364 -11% $41,743 $60,000 5 $59,788,095 85% $47,500 $16,625,000 $2,259,459 $14,365,541 $3,886,226 $10,479,315 $6,197,619 $2,000,000 $2,281,696 $2,835,838 $70,611,872 $21,857,234 -2% $39,297 $60,000 6 $51,590,476 75% $40,000 $14,000,000 $2,327,243 $11,672,757 $3,353,381 $8,319,376 $5,697,619 $0 $2,621,757 $5,457,596 $68,667,428 $28,232,166 3% $31,173 $60,000 7 $45,892,857 69% $40,000 $14,000,000 $2,397,060 $11,602,940 $2,983,036 $8,619,904 $5,697,619 $0 $2,922,285 $8,379,881 $66,722,983 $34,907,626 6% $30,350 $60,000 8 $40,195,238 62% $40,000 $14,000,000 $2,468,972 $11,531,028 $2,612,690 $8,918,338 $5,697,619 $0 $3,220,719 $11,600,600 $64,778,539 $41,881,519 9% $29,532 $60,000 9 $34,497,619 55% $40,000 $14,000,000 $2,543,041 $11,456,959 $2,242,345 $9,214,614 $5,697,619 $0 $3,516,995 $15,117,594 $62,834,094 $49,151,689 12% $28,721 $60,000 10 $28,800,000 47% $40,000 $14,000,000 $2,619,332 $11,380,668 $1,872,000 $9,508,668 $28,800,000 $0 -$19,291,332 -$4,173,738 $60,889,650 $56,715,912 14% $91,209 $60,000 $43,750 $153,125,000 $23,013,738 $130,111,262 $38,285,000 $91,826,262 $86,000,000 $10,000,000 -$4,173,738 $75,500 Estimated Avg Daily Income= $43,750 Investment = $24,000,000 NPV(EBTDA)= $53,635,784 Average Break Even Daily Income= $44,942 Unit Resale value= $60,889,650 @13yrs old NPV(Free Cash Flow)= -$2,577,591 (Including ESV) Safety Margin= -2.73% Total Income = $56,715,912 At Discount Rate= 10.0% Return = 14% SUCCESSOR
- 6. Purchase Price = $120,000,000 Built= 2007 10yr avg t/c= $20,000 5yr Avg Newbuilding Price= $60,000,000 Loan = $96,000,000 L/V= 80.0% Operating Exp. = $5,500 Lightship = 25,000 LT Downpayment = $24,000,000 Op. Exp. incr./yr= 3.00% Scrap rate = 300 $/LT Interest = 6.50% Int. incr/yr = 0.00% Scrap value= $7,500,000 Years = 10 Years to scrap= 27 Payments/yr = 1 % of EBTDA (Prepayment)= 0% Installments = 10 Minimum req'd ROI (Prepayment)= 5% Balloon = $28,800,000 30.00% Invest Inc.ROI= 0.00% Market Book Value @0yrs old= $59,334,094 Yr Loan L/V Avg Daily Income Revenue Operating Expenses EBITDA Interest EBTDA Amorti-zation Pre-payment Free Cash Flow Cash Balance Estimated Ship Value Estimated NAV ROI Break Even Market Avg Daily Income 1 $96,000,000 80% $39,662 $13,881,700 $2,007,500 $11,874,200 $6,240,000 $5,634,200 $7,466,667 $0 -$1,832,467 -$1,832,467 $125,639,650 $35,273,850 47% $43,053 $150,000 IPO 2 $88,533,333 82% $37,050 $12,967,500 $2,067,725 $10,899,775 $5,754,667 $5,145,108 $7,466,667 $0 -$2,321,558 -$4,154,025 $107,945,205 $22,724,514 -3% $41,888 $120,000 IPO 3 $81,066,667 105% $34,437 $12,052,950 $2,129,757 $9,923,193 $5,269,333 $4,653,860 $7,466,667 $0 -$2,812,807 -$6,966,832 $77,125,761 -$3,441,071 -38% $40,728 $65,000 4 $73,600,000 101% $35,000 $12,250,000 $2,193,649 $10,056,351 $4,784,000 $5,272,351 $7,466,667 $0 -$2,194,316 -$9,161,148 $72,556,317 -$2,738,165 -28% $39,573 $60,000 5 $66,133,333 94% $48,000 $16,800,000 $2,259,459 $14,540,541 $4,298,667 $10,241,874 $7,466,667 $0 $2,775,208 -$6,385,940 $70,611,872 $5,559,265 -15% $38,424 $60,000 6 $58,666,667 85% $40,000 $14,000,000 $2,327,243 $11,672,757 $3,813,333 $7,859,424 $7,466,667 $0 $392,757 -$5,993,183 $68,667,428 $11,474,245 -9% $37,280 $60,000 7 $51,200,000 77% $40,000 $14,000,000 $2,397,060 $11,602,940 $3,328,000 $8,274,940 $7,466,667 $0 $808,273 -$5,184,909 $66,722,983 $17,804,740 -4% $36,142 $60,000 8 $43,733,333 68% $40,000 $14,000,000 $2,468,972 $11,531,028 $2,842,667 $8,688,362 $7,466,667 $0 $1,221,695 -$3,963,215 $64,778,539 $24,548,658 0% $35,009 $60,000 9 $36,266,667 58% $40,000 $14,000,000 $2,543,041 $11,456,959 $2,357,333 $9,099,626 $7,466,667 $0 $1,632,959 -$2,330,256 $62,834,094 $31,703,839 4% $33,882 $60,000 10 $28,800,000 47% $40,000 $14,000,000 $2,619,332 $11,380,668 $1,872,000 $9,508,668 $28,800,000 $0 -$19,291,332 -$21,621,588 $60,889,650 $39,268,062 6% $91,209 $60,000 $39,415 $137,952,150 $23,013,738 $114,938,412 $40,560,000 $74,378,412 $96,000,000 $0 -$21,621,588 $75,500 Estimated Avg Daily Income= $39,415 Investment = $24,000,000 NPV(EBTDA)= $40,433,715 Average Break Even Daily Income= $45,592 Unit Resale value= $60,889,650 @13yrs old NPV(Free Cash Flow)= -$13,670,643 (Including ESV) Safety Margin= -15.67% Total Income = $39,268,062 At Discount Rate= 10.0% Return = 6% CAPE VENI