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Euroseas to enter into J.V

Euroseas to enter into J.V
Euroseas Ltd., announced yesterday that the Company has executed definitive documentation and entered into a joint venture.

Euroseas Ltd. Announces Entrance Into Joint Venture

Euroseas Ltd., an owner and operator of container carrier and drybulk vessels, announced yesterday that the Company has executed definitive documentation and entered into a joint venture (the "Joint Venture") with companies managed by Eton Park Capital Management, L.P. ("Eton Park") and an affiliate of Rhone Capital III L.P. ("Rhone"), two recognized private investment firms, to form Euromar LLC, a Marshall Islands limited liability company ("Euromar"). Eton Park's investments are made through Paros Ltd., a Cayman Islands exempted company, and Rhone's investments through the Cayman Islands limited companies All Seas Investors I Ltd., All Seas Investors II Ltd., and the Cayman Islands exempted limited partnership All Seas Investors III LP. Euromar will acquire, maintain, manage, operate and dispose of shipping vessels.

Pursuant to the terms of the Joint Venture, Euroseas will invest up to $25 million, while Eton Park and Rhone will each invest up to $75 million for a total of $175 million, with each holding a proportionate ownership interest in Euromar. Euroseas will also receive options in Euromar which are triggered if certain performance milestones are achieved. Euromar will be managed by a board of six directors, composed of two directors appointed by each of Euroseas, Eton Park and Rhone. Management of the vessels and various administrative services pertaining to the vessels will be performed by Euroseas and its affiliates, Eurobulk Ltd. and Eurochart S.A.

The Joint Venture includes the option by Eton Park and Rhone, exercisable in certain instances and at any time after the two year anniversary of the Joint Venture, to convert all or part of their equity interests in Euromar into common shares of Euroseas at a price to be based on the comparable values of Euromar and Euroseas at the time of exercise, with such conversion happening at not less than the net asset value of each entity. Depending upon the share percentage of Euroseas owned by Eton Park and Rhone following any such conversion, the number of directors on Euroseas' Board of Directors may be increased from 7 up to a maximum of 11 directors for so long as the respective ownership thresholds are met. As part of the Joint Venture, Euroseas' largest shareholder, Friends Investment Company, Inc. ("Friends"), has entered into a shareholder voting agreement with Eton Park and Rhone whereby Friends has agreed to vote its shares in favor of any directors nominated by Eton Park and Rhone to fill such additional board seats. Under the same shareholder voting agreement, the parties have agreed that Eton Park and Rhone may vote a certain percentage of their shares in their sole discretion (based upon their percentage interest on the Euroseas Board of Directors and the number of shares outstanding), with the remainder of their shares being voted in accordance with the vote of all other Euroseas shareholders. The Joint Venture also permits Euroseas to redeem for fair market value its interest in the Joint Venture in certain instances and at any time following the three year anniversary of the Joint Venture. In addition, Euroseas and its affiliates have granted Euromar certain rights of first refusal in respect of vessel acquisitions, and made certain arrangements with respect to vessel dispositions and chartering opportunities presented to Euroseas and its affiliates.
Aristides Pittas, Chairman and CEO of Euroseas, commented: "We are excited to announce the official commencement of our joint venture agreement with Eton Park and Rhone and look forward to jointly pursuing investment opportunities in shipping. We believe that this arrangement is beneficial to our shareholders as it will give us access to a greater number and larger size of opportunities, allow our investments to be spread over a more diversified portfolio of vessels, and enable us to achieve overhead and operating costs savings. In addition, we will have the opportunity to earn incremental returns if our joint investments perform well. We are very proud to work with such well-reputed and successful partners and believe their decision to work with us is a vote of confidence for the management and strategy of our Company."

The Company was advised by the law firm of Seward & Kissel LLP. Rhone was advised by the law firms of Reed Smith LLP and Norton Rose LLP. Eton Park was advised by the law firms of Paul, Weiss, Rifkind, Wharton & Garrison LLP and Norton Rose LLP.

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