Issuer Free Writing Prospectus
Filed Pursuant to Rule 433
File No. 333-234343
Supplementing the Preliminary Prospectus
Supplement dated November 13, 2019
(To Prospectus dated November 7, 2019)
Free Writing Prospectus
Global Ship Lease, Inc. Investor Presentation
This free writing prospectus relates to the public offering of Senior Unsecured Notes due 2024 (the Offering) of Global Ship Lease, Inc. (the Company) and should be read together with the preliminary prospectus supplement dated November 13, 2019, relating to the Offering and the base prospectus, dated November 7, 2019 (collectively, the Preliminary Prospectus), including the documents incorporated by reference therein, relating to the Companys Registration Statement on Form F-3 (File No. 333-234343). A copy of the Preliminary Prospectus can be accessed through the following link: https://www.sec.gov/Archives/edgar/data/1430725/000119312519290593/0001193125-19-290593-index.htm .
Before you invest, you should read the Preliminary Prospectus and other documents the Company has filed with the U.S. Securities and Exchange Commission (the SEC) for more complete information about the Company and the Offering. You may obtain these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Copies of the Preliminary Prospectus related to this Offering may be obtained from B. Riley FBR, Inc. at 1300 North 17th Street, Suite 1400, Arlington, VA 22209, by calling (703) 312-9580 or by emailing email@example.com. The final terms of the Offering will be disclosed in a final prospectus supplement to be filed with the SEC.
Senior Unsecured Notes Offering November 2019
Safe Harbor Statement This communication contains forward-looking statements. Forward-looking statements provide Global Ship Leases current expectations or forecasts of future events. Forward-looking statements include statements about Global Ship Leases expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as anticipate, believe, continue, estimate, expect, intend, may, ongoing, plan, potential, predict, project, will or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. These forward-looking statements are based on assumptions that may be incorrect, and Global Ship Lease cannot assure you that these projections included in these forward-looking statements will come to pass. Actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors The risks and uncertainties include, but are not limited to: Risks relating to the acquisition of Poseidon Containers and Global Ship Leases ability to realize the anticipated benefits of the acquisition; future operating or financial results; expectations regarding the strength of future growth of the container shipping industry, including the rates of annual demand and supply growth; the financial condition of CMA CGM (the companys principal charterer and main source of operating revenue) and other charterers and their ability to pay charterhire in accordance with the charters; the overall health and condition of the U.S. and global financial markets; Global Ship Leases financial condition and liquidity, including its ability to obtain additional financing to fund capital expenditures, vessel acquisitions and for other general corporate purposes and its ability to meet its financial covenants and repay its borrowings; Global Ship Leases expectations relating to dividend payments and forecasts of its ability to make such payments including the availability of cash and the impact of constraints under its first priority secured notes; future acquisitions, business strategy and expected capital spending; operating expenses, availability of key employees, crew, number of off-hire days, drydocking and survey requirements, costs of regulatory compliance, insurance costs and general and administrative costs; general market conditions and shipping industry trends, including charter rates and factors affecting supply and demand; assumptions regarding interest rates and inflation; change in the rate of growth of global and various regional economies; risks incidental to vessel operation, including piracy, discharge of pollutants and vessel accidents and damage including total or constructive total loss; estimated future capital expenditures needed to preserve Global Ship Leases capital base; Global Ship Leases expectations about the availability of vessels to purchase, the time that it may take to construct new vessels, or the useful lives of its vessels; Global Ship Leases continued ability to enter into or renew charters including the re-chartering of vessels on the expiry of existing charters, or to secure profitable employment for its vessels in the spot market; the continued performance of existing charters; Global Ship Leases ability to capitalize on managements and directors relationships and reputations in the containership industry to its advantage; changes in governmental and classification societies rules and regulations or actions taken by regulatory authorities; expectations about the availability of insurance on commercially reasonable terms; unanticipated changes in laws and regulations; and potential liability from future litigation. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Global Ship Leases actual results could differ materially from those anticipated in forward-looking statements for many reasons specifically as described in Global Ship Leases filings with the SEC. Accordingly, you should not unduly rely on these forward-looking statements, which speak only as of the date of this communication. Global Ship Lease undertakes no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this communication or to reflect the occurrence of unanticipated events. You should, however, review the factors and risks Global Ship Lease describes in the reports it will file from time to time with the SEC after the date of this communication.
Disclaimer Global Ship Lease has filed a registration statement (including a prospectus) and a preliminary prospectus supplement with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement, the preliminary prospectus supplement and other documents Global Ship Lease has filed with the SEC for more complete information about Global Ship Lease and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. The financial information and data contained in this communication is unaudited and does not conform to the U.S. Securities and Exchange Commission (SEC) Regulation S-X. Accordingly, such information and data may not be included in, may be adjusted in or may be presented differently in, Global Ship Leases filings with the SEC. This communication includes certain estimated financial information and forecasts presented as pro-forma financial measures that are not derived in accordance with generally accepted accounting principles (GAAP), and which may be deemed to be non-GAAP financial measures within the meaning of Regulation G promulgated by the SEC. Global Ship Lease believes that the presentation of these non-GAAP financial measures serves to enhance the understanding of the financial performance of Global Ship Lease. However, these non-GAAP financial measures should be considered in addition to and not as substitutes for, or superior to, financial measures of financial performance prepared in accordance with GAAP. Please refer to the last quarters earnings press release for a discussion of these non-GAAP financial measures and a reconciliation of these measures to the most comparable GAAP measures. No representations or warranties, express or implied are given in, or in respect of the accuracy or completeness of any information included in, this presentation. Recipients of this presentation are not to construe its contents, or any prior or subsequent communications from or with Global Ship Lease or its representatives as financial, investment, legal, tax, business or other professional advice. In addition, this presentation does not purport to be all-inclusive or to contain all of the information that may be required to make a full analysis of Global Ship Lease. Recipients of this presentation should consult with their own advisers and should each make their own evaluation of Global Ship Lease and of the relevance and adequacy of the information. Furthermore, this presentation contains certain tables and other statistical analyses (the Statistical Information). Numerous assumptions were used in preparing the Statistical Information, which may not be reflected herein. Certain Statistical Information is derived from estimates and subjective judgments made by third parties. As such, no assurance can be given as to the accuracy, appropriateness or completeness of the Statistical Information as used in any particular context; nor as to whether the Statistical Information and/or the judgments and assumptions upon which they are based reflect present market conditions or future market performance. Unless otherwise specified, all information in this presentation is as of the date of this presentation. Neither the delivery of this presentation nor any other communication with you shall, under any circumstances, create any implication that there has been no change in Global Ship Leases affairs since such date. Except as otherwise noted herein, Global Ship Lease does not intend to, nor will it assume any obligation to, update this presentation or any of the information included herein.
Transaction Summary Issuer Global Ship Lease, Inc. (the Company) Security Senior Unsecured Notes Proposed Ticker / Exchange GSLD / NYSE Proposed Offering Size $25,000,000 (1) Notes Offered 1,000,000 (1) Overallotment Option 15% Principal Amount Per Note $25.00 Coupon 8.00% area (1) Maturity The Notes will mature December 31, 2024, unless redeemed prior to maturity. The Notes may be redeemed for cash in whole or in part at any time at the Companys option (i) on or after December 31, 2021 and prior to December 31, 2022, at a price equal to $25.50 per note (102% of principal amount), plus accrued and unpaid interest to, but excluding, the date of redemption, (ii) on or after December 31, 2022 and prior to December 31, 2023, at a price equal to $25.25 per note (101% of Optional Redemption principal amount), plus accrued and unpaid interest to, but excluding, the date of redemption, and (iii) on or after December 31, 2023 and prior to maturity, at a price equal to 100% of their principal amount, plus accrued and unpaid interest to, but excluding, the date of redemption. In each case, redemption shall be upon notice not fewer than 30 days and not more than 60 days prior to the date fixed for redemption. In the event a Change of Control occurs, the Company has the right to redeem the Notes at any time on or before December 31, 2021, in Optional Redemption Upon whole but not in part, within 90 days of such Change of Control, at a redemption price equal to 104% of its principal amount, plus accrued Change of Control and unpaid interest to, but excluding, the date of redemption. Net proceeds from this offering will be used towards refinancing the Companys existing 9.875% First Priority Senior Secured Notes due Use of Proceeds 2022 Expected Pricing Date November 14, 2019 Bookrunning Managers B. Riley FBR, Ladenburg Thalmann (QIU), Clarksons Platou Securities, Janney Montgomery Scott, William Blair, Fearnley Securities Co-Managers National Securities, Wedbush Securities, Incapital, and Boenning & Scattergood, Inc. (1) Actual offering size and pricing may differ materially from the figures shown; offering size and pricing to be determined by negotiations between the Company and the underwriters. 3
Credit Metrics Pro Forma Credit Statistics GSL Pro Forma Equity Pro Forma Notes Pro Forma ($ in millions) As of 9/30/19 Adjustments(2) Adjustments(3) Total (2)(3) Total Cash(1) $ 97.8 50.7$ 148.5 Bank debt $ 517.2 $ 517.2 Secured term loan 24.8 24.8 9.875% notes due 2022 340.0(22.5) 317.5 New senior unsecured notes 25.0 25.0 Total Debt $ 882.0 $ 884.5 Net Debt $ 784.2 $ 736.0 Series B Preferred Stock $ 35.0 $ 35.0 Book Value of Equity $ 345.6 50.7$ 396.3 Annualized 9M 9/30/2019 Adjusted EBITDA(4) $ 159.0 $ 159.0 Annualized 9M 9/30/2019 Interest Expense(4)(5) 75.3(0.2) 75.1 4 Charter-Free Appraised Value (9/30/2019) 1,134.0 1,134.0 Charter-Attached Appraised Value (9/30/2019) 1,289.0 1,289.0 Net debt(6) / Annualized Adjusted EBITDA 4.9x 4.6x Annualized Adjusted EBITDA / Annualized Interest Expense 2.1x 2.1x Net debt(6) / Book Equity 2.3x 1.9x Net debt(6) / Charter-free Appraised Value 70% 65% Net debt(6) / Charter-attached appraised value 62% 57% (1) Total cash balance includes cash & cash equivalents and short-term and long-term restricted cash (2) Includes impact of public offering of 7,613,788 Class A common shares, at a public offering price of $7.25 per share, for gross proceeds of approximately $55.2 million, which closed on October 1, 2019. This includes the exercise in full by the underwriter of its option to purchase additional shares. The net proceeds, after underwriting discounts and commissions and expenses, are estimated to be $50.7 million and are to be used for general corporate purposes, including the acquisition of containerships or the prepayment of debt (3) Includes impact of proposed $25.0 million senior unsecured note offering and paydown of GSLs outstanding 9.875% Notes due 2022 at the call price. Actual offering size, pricing, and fees incurred may differ materially from the figures shown; offering size and pricing to be determined by negotiations between the Company and the underwriters (4) As a result of GSLs November 2018 merger with Poseidon, LTM numbers are calculated by annualizing nine months ended 9/30/19 (see slide 23) (5) Pro forma adjustment to interest expense related to proposed note offering is calculated using an assumed coupon rate of 8.00% (6) Net debt has been increased by $15.0 million to reflect the GSL Kalliopi which is included in the fleet valuations but was only purchased in October 2019 4
Leading Containership Lessor, Transformed in Last 12 Months NYSE-Listed Containership Owner & Lessor 43 containerships of 2,207 11,040 TEU, Fleet Focused on which can service majority of global Mid-Size & tradelanes Smaller Tonnage Well-specified ships, including latest generation, high-reefer, eco-vessels Strong downside cover: $778 million¹ contracted revenues, with 2.6 years¹ TEU- Contract Mix weighted average forward charter cover Providing Locking in upside potential from exposure Downside Cover to recovering market fundamentals & Diversified counterparty portfolio of Upside Potential leading global liner operators and niche players GSL merger with Poseidon Containers in Q4 2018 doubled size of company, Business materially improved asset base, expanded contract cover, and de- Transformed in levered business Last 12 Months 9.875% Senior Secured Notes issued Q4 2017 (pre-merger) no longer appropriate part of capital structure Strong Sponsorship² & Growing Liquidity 4 Capital StructureSeptember 30, 2019 ($ million)4 Listed on NYSE since 2008 CommonIssued $129.2 CommonOn conversion Series C Pref. $ 95.3 Implied Market Capitalization $224.5 Listed Series B Perpetual Pref. $ 35.0 Listed Senior Secured Notes $340.0 Bank Debt $542.0 Cash $148.5 (1) As at September 30, 2019 but adjusted for new charters and acquisitions as at November 6, 2019; including options under GSL control, and assuming mid-point of charter redelivery windows; revenues are net of address commission (2) Economic ownership on a fully-converted basis for the Series C Convertible Perpetual Preferred Shares (3) CMA CGM is a leading global container shipping line; Kelso is a well-established private equity firm (4) Debt balances, as at September 30, 2019; Market Cap includes equity issue of Oct. 1, 2019 and assumes a fully converted share count of 30.512 million (17.557 million shares + 12.955 million on conversion of Series C Pref) and based on the share price of November 5, 2019 ($7.36 per share); Cash includes $50.7 mm net proceeds from equity issue of October 1, 2019 6
Our Strengths Leasing model with strong contract cover, providing forward visibility on cash flows $778 million of contracted revenues, with average 2.6 years forward cover 88% proforma Adjusted EBITDA cover for 2020; 68% for 2021 High-quality asset base, focused on liquid segments with compelling supply / demand dynamics High-specification, fuel-efficient, and high-reefer-capacity fleet commanding premium terms in charter market Flexible ships, focused on under-supplied size classes, serving 70%+ of global containerized trade 12.4 years average age v. 30 years economic life Imminent, industry-wide regulatory change (IMO 2020) expected to boost earnings Prudent commercial strategy, with diversified client base of container shipping lines Lock in contracted earnings during up-cycles, with staggered lease terms to maximize downside cover Conservative growth, focused on liquid assets with immediately accretive contract cover and scrap-value downside protection Conservative balance sheet management and focus on de-levering acknowledged by recent S&P rating upgrade $80+ million of debt to be paid down in FY2019; further $80+ million scheduled to be paid down in 2020¹ $51 million cash added to balance sheet through October equity issue Proceeds from Senior Unsecured Notes issue expected to be used to partially redeem existing Senior Secured Notes Established issuer in the public markets Listed on NYSE since 2008 Publicly traded High Yield Notes since 2014; publicly traded Perpetual Preferred Shares since 2014 Strong and supportive sponsors, and management team with skin in the game Sponsors include leading US financial institutions Management with significant equity at risk in GSL, also indicated an interest to purchase up to $300,000 of Senior Unsecured Notes (1) Basis scheduled amortization of debt as disclosed in GSL Q3 2019 Earnings Release & Public Financials as at September 30, 2019 7 7
Our Business ModelLeasing v. Shipping Role of Containership Lessors Own and manage vessels which are leased to liner companies under long-term and short-term charters Responsible for maintenance, crewing, lubricants, insurance and daily technical operations No fuel cost or direct exposure to freight market Cash flows backed by charters Role of Container Shipping Lines Source and aggregate cargo from shippers Load and discharge containers Ocean carriage Land-based logistics Responsible for fuel costs Profitable over time, but volatile cash flows; substantial capital needs Over half of global containership fleet is owned by containership lessors1 (1) Maritime Strategies International Limited (MSI): global cellular containership fleet as of September 30, 2019 was 5,182 ships / 22.7 mm TEU; 53.0% of capacity is provided by containership owners like GSL 8
Strong Contract Cover: Locking in Upside, Protecting Downside; More Upside Potential Contracted revenue of $778 million and 2.6 Years TEU-Weighted Forward Cover 2019 2020 2021 2022 Vessel TEU Built Charter Agreed Charterer (Lessee) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q GSL Keta 2,207 2003 4Q18/3-4Q19 CMA CGM / OOCL $8,450 $8,700 $9,400 GSL Julie 2,207 2002 3Q18/1-3Q19 CMA CGM $7,800 $7,200 $8,500 Kumasi 2,207 2002 3Q16 CMA CGM $9,800 $9,800 Marie Delmas 2,207 2002 3Q16 CMA CGM $9,800 $9,800 CMA CGM Matisse* 2,262 1999 1Q14 CMA CGM $15,300 CMA CGM Utrillo 2,262 1999 1Q14/3Q19 CMA CGM $15,300 $8,500 CMA CGM La Tour* 2,272 2001 1Q14 CMA CGM $15,300 CMA CGM Manet* 2,272 2001 1Q14 CMA CGM $15,300 Maira 2,506 2000 1Q18/3Q19 MSC $9,000 $8,500 $8,250 Nikolas 2,506 2000 1Q18/1Q19 MSC $9,000 $9,000 Newyorker 2,506 2001 1Q18/1Q19 MSC $9,000 $9,000 Athena 2,762 2003 1Q18/1Q19 MSC $9,000 $9,000 GSL Valerie 2,824 2005 1Q18/2Q19 CMA CGM / MSC $9,000 $9,000 CMA CGM Sambhar 4,045 2006 4Q07 CMA CGM $25,350 CMA CGM America 4,045 2006 1Q08 CMA CGM $25,350 CMA CGM Jamaica 4,298 2006 2Q08 CMA CGM $25,350 CMA CGM Alcazar 5,089 2007 3Q08 CMA CGM $33,750 CMA CGM Chateau dIf 5,089 2007 4Q08 CMA CGM $33,750 Dolphin II 5,095 2007 4Q18/4Q19 HMM / Feedertech $7,700 $11,500 $12,500 Orca I 5,095 2006 2Q18/2Q19 ZIM / Maersk $11,750 $9,000 $10,000 charterer option Tasman 5,936 2000 2Q18/1Q19/2Q19 ZIM / Maersk $16,350 $11,500 3038 months firm + 12 months charterer option; $5 million expected adjusted EBITDA + $4 million for option period Dimitris Y 5,936 2000 2Q18/2Q19 ZIM $16,750 $14,500 Ian H 5,936 2000 2Q18/2Q19 ZIM $17,000 $14,500 New Purchase 1** 6,650 2002 New Purchase Confidential NDA Aggregate expected Adjusted EBITDA of $2.8 million New Purchase 2** 6,650 2002 New Purchase Confidential NDA Agios Dimitrios 6,572 2011 4Q16 MSC $12,500 $20,000 (4 years) CMA CGM Berlioz 6,621 2001 4Q07 CMA CGM $34,000 Alexis 6,877 2015 4Q18 Hapag / CMA CGM $20,000 $25,910 (5 years) Olivia I 6,877 2015 4Q18 CMA CGM $20,000 $25,910 (5 years) Mary 6,927 2013 4Q18 CMA CGM $25,910 (to 4Q 2023) Kristina 6,927 2013 4Q18 WHL / CMA CGM $19,500 $25,910 (5 years) Katherine 6,927 2013 4Q18 CMA CGM $13,500 $25,910 (5 years) Alexandra 6,927 2013 4Q18 ONE / CMA CGM $20,750 $$25,910 (5 years) GSL Kalliopi*** 7,849 2004 2Q19 Maersk 3 years firm + 2 x 1 year charterer options Aggregate expected Adjusted GSL Grania*** 7,849 2004 2Q19 Maersk 3 years firm + 2 x 1 year charterer options EBITDA of $32 for firm period; $47 GSL Eleni*** 7,849 2004 2Q19 Maersk 5 years firm million if options are exercised MSC Tianjin 8,667 2005 4Q18/2Q19 CMA CGM / MSC $11,900$13,000 5 years: $25 million expected Adjusted EBITDA MSC Qingdao 8,667 2004 4Q18/2Q19 OOCL / MSC $14,000 5 years: $25 million expected Adjusted EBITDA GSL Ningbo 8,667 2004 3Q18 Maersk $12,100$12,400 $18,000 UASC Al Khor 9,115 2015 4Q14/1Q19 Hapag-Lloyd $40,000 $34,000 Anthea Y 9,115 2015 1Q15 COSCO $39,200 Maira XL 9,115 2015 1Q15 COSCO $39,200 CMA CGM Thalassa 11,040 2008 4Q07 CMA CGM $47,200 (to 4Q2025) % of Fleet Annualized Adjusted EBITDA Covered by Contracts 99% 88% 68% 57% New charters agreed YTD2019 Table shows charters updated as of September 30, 2019, assumes the mid-point of charter expiration windows (unless redelivery notices have otherwise been received), and that the options controlled by GSL for the charters of Kumasi, Marie Delmas and Agios Dimitrios are exercised. Contracted revenue is net of address commission and as at September 30, 2019 (adjusted to include charters and acquisitions announced up to November 6, 2019). The chart shows the quarter within which the mid-point expiry of any given charter falls, unless a specific redelivery notice has otherwise been tendered, in which case the chart reflects the quarter for that redelivery notice. Percentage of Fleet Adjusted EBITDA Covered by Contracts for a given year assumes open vessels are employed at 10 year historic average charter rates net of 5% commissions and pro-rating operating costs and management fees. * CMA CGM Matisse, CMA CGM La Tour, and CMA CGM Manet are expected to be redelivered from their existing charters in November, 2019 ** New Purchase 1 & New Purchase 2 are expected to deliver in December 2019 and January 2020 *** GSL Eleni commenced her charter mid-July 2019; GSL Grania commenced her charter mid-September 2019; GSL Kalliopi commenced her charter mid-October 2019 9
Strengthening Credit Profile & Flexibility: Successful Refinancing and Equity Capital Raise Opportunistically refinanced $268.0 million of debt Maturities extended from 2020 to 2024 Costs reduced from L + 3.24% to L + 3.00% Released three 5,900 TEU ships which are now unencumbered, increasing financing flexibility going forward Successfully completed equity capital raise on October 1, 2019 for net proceeds of $50.7 mm Deal was fully back-stopped, demonstrating underwriters confidence in the deal Affiliate of underwriters retained $15.0 million in GSL, highlighting their conviction in the GSL value proposition GSL management invested $1.225 million in the offering Offering was oversubscribed Upsizing capacity and Green Shoe fully utilized Stock price has consistently traded above the offering price Use of proceeds from equity raise De-levering, with re-financing of our 9.875% Senior Secured Notes (maturing 2022) a clear strategic priority Accretive acquisitions, as long as additive to Notes re-financing strategy General corporate purposes Expansion of free float enhances liquidity of stock Public float more than trebled to 7.9 million shares post-raise ~4x increase in average daily trading volumes Credit Rating upgraded by S&P to B+; Outlook Stable 10 10
Industry Fundamentals Containerized trade has grown every year (except 2009) since the industrys inception in the mid-1950s Supply is tightening: 5.7x reduction in orderbook-to-fleet ratio, 2007 through 9M2019 Near-term negative sentiment (trade tensions) helpful to longer-term fundamentals: more scrapping, less new orders Regulatory change (IMO 2020¹) expected to reduce effective supply: scrubber retro-fits; slower steaming from 2020² World Container Trade 20002020³ Intra-Regional North-South Non-mainlane East-West 250 20.0% Mainlane Trades World GDP Growth (RH Axis) Containerised Trade Growth (RH Axis) 15.0% 200 Lines) millions) Black TEU Demand growth: 10.0%& ( 150 2019F: 2.5%³ (Red 2020F: 3.7%³ Volumes 5.0% Growth 100 Year 0.0% on -Containerized Year50 -5.0% 0 -10.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F 2020F Development of Containership Fleet & Orderbook³ 10,000+ TEU 7,500-9,999 TEU 5,100-7,499 TEU 25 80% 4,000-5,099 TEU 3,000-3,999 TEU 2,000-2,999 TEU 70% Sub-2,000 TEU 60%+ Line) millions) 60% (Red 50% TEU 15 Ratio ( Size Lowest orderbook-to-fleet 40% Fleet toFleet ratio since 1980s - 10 30% Orderbook 20% 5 10.6% 0 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9M 2019 (1) Ruling that maritime sector must reduce Sulphur emissions from January 1, 2020: compliance alternatives are to switch to more expensive low-Sulphur fuel, clean exhaust gases with scrubbers, or switch to alternate fuel (eg. LNG) (2) Slower steaming reduces fuel burn and thus reduces fuel costs an established strategy employed by liner operators (who pay for fuel) when fuel prices increase (3) Maritime Strategies International Limited (MSI) data and forecasts 12
Non-Mainlane & Intra-Regional Trades Driving Demand Growth Composition of Global Containerized Trade in 2018¹ Intra-Regional (excl. Intra-Asia) Total: 208 million TEU 7.3% Intra-Asia Non-Mainlane East-West 31.6% 18.7% North-South 15.4% Asia-Europe 11.0% Transatlantic 3.5% Transpacific 12.5% (6.7% China-US) Key Points â¼ Non-mainlane² and intra-regional trades represent over 70% of global containerized volumes These trades are primarily served by mid-sized and smaller ships and continue to show good growth Cargo substitution stimulating additional demand â¼ Supply / demand balance improving Supply growth slowing in 2019 and 2020; demand growth forecast to exceed supply growth in 2020¹ IMO 2020 expected to reduce effective supply of ships: withdrawals for scrubber retro-fits, slower steaming³ due to increased fuel costs, and increased scrapping Overall Industry Demand Growth v. Supply Growth¹ Demand Growth Cellular Capacity Growth 6.0% 5.8% Supply growth slowing; 5.1% demand growth firming 5.0% 4.2% 4.2% Growth 4.0% 3.7% 3.2% Year 2.8% - 3.0% 2.5% 2.5% - on 2.0% Year 1.3% 1.0% 0.0% 2016 2017 2018E 2019F 2020F Cargo Volume Growth by Tradelane¹ 7.0% 2016 2017 2018 2019(F) 2020(F) 6.0% Growth 5.0% 4.0% Year 3.0% on2.0% -Year 1.0% 0.0% -1.0% Mainlanes Non-mainlane North-South Intra-Regional Intra-Asia East-West (excl. intra-Asia) (1) Maritime Strategies International Limited (MSI) data and forecasts (2) Mainlane trades are Asia Europe, Trans-Pacific, Trans-Atlantic; Non-mainlane trades are all other trades 13 (3) As at September 30, 2019 Maritime Strategies International Limited (MSI) estimates that slowing the global fleet by one knot would reduce effective supply by 6.7%
Mid-Size & Smaller Ships (Sub-10,000 TEU) Core to Most Tradelanes Global Fleet Composition¹ >10,000 TEU 7,500 9,999 TEU Sub-2,000 TEU 5,100 7,499 TEU 4,000 5,099 TEU 2,000 2,999 TEU 3,000 3,999 TEU GSL Focus â¼ Mid-size and smaller vessels â¼ Core to most trade lanes â¼ Flexible deployment â¼ Liquid charter market â¼ Larger mid-size vessels offer lower slot costs: 87% of GSL fleet >4,000 TEU³ Smallest GSL ships are 2,200 TEU (42% of global fleet is smaller than 2,000 TEU¹) #Ships Tradelane Ship Size (TEU thousands) 0 5 10 15 20 25 114 Europe-Africa 137 Europe-Latam 80 Eur-M.East/ISC 187 F East-Africa 282 F East-Europe 151 F East-Latam 273 F East-M.East/ISC 126 F East-Oceania 44 Intra-Africa Containership 1690 Intra-Asia Average 620 Intra-Europe Ship 157 Intra-Latam Size Deployment 150 Intra-M.East/ISC by 16 Intra-N America 26 Intra-Oceania Maximum Trade² 9 N America-Africa Ship 131 N America-Latam Size 20 N America-M.East/ISC 11 NAM-Oceania 184 Transatlantic 403 Transpacific 89 Pendulum (1) Maritime Strategies International Limited (MSI) as at September 30, 2019 by # Ships (2) Maritime Strategies International Limited (MSI)as at September 30, 2019 14 (3) Includes newly announced 6,650 TEU ships
Supply-Side Dynamics Compelling for Mid-Size & Smaller Ships Idle Fleet Capacity Limited¹ 12,000 + TEU Idle fleet end- 1.8 7,600-11,999 TEU 9M2019: 3.2%² 16.0% 5,200-7,599 TEU 3,900-5,200 TEU 14.0% 1.5 Line) 2,900-3,899 TEU millions) 12.0% 1,300-2,899 TEU 1.2 (Red TEU sub-1,300 TEU 10.0% ( 0.9 8.0% Ratio Idle 6.0% 0.6 Fleet 4.0% 0.3 Capacity 2.0% Idle 0.0 0.0% 09 1Q 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 15 3Q 1Q16 3Q16 1Q17 3Q17 1Q18 3Q18 1Q19 3Q19 Minimal to Negative Net Fleet Growth 2016 9M2019¹ 4.0 Delivered Scrapped Net Growth 3.0 Negative or negligible net fleet growth in mid-size & smaller fleet millions) 2.0 segments focused on by GSL (TEU 1.0 Capacity 0 (1.0) Sub-2,000 2,000-2,999 3,000-3,999 4,000-5,099 5,100-7,499 7,500-9,999 10,000+ TEU TEU TEU TEU TEU TEU TEU CAGR -0.3% 0.9% -1.8% -4.0% -2.7% 1.5% 16.2% Scrapping Activity Increasing¹ 700 5,100+ TEU 3.5% Line) 600 4,000-5,099 TEU 3.0% 3,000-3,999 TEU (Red thousands) 500 2.5% 2,000-2,999 TEU TEU 400 2.0% Ratio ( Sub-2,000 TEU 300 1.5% Fleet to200 1.0% Scrapped -Capacity 100 0.5% 0 0.0% Scrapping 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9M 2019 Orderbook Pipeline Minimal to Zero¹ 2.0 1.8 Overall orderbook-to-fleet: 10.6%; 2,000 9,999 TEU: 2.6%; 1.6 4,000 9,999 TEU: Zero millions) 1.4 >80% of GSL capacity is 4,000 1.2 (TEU 9,999 TEU³ 1.0 Order 0.8 on 0.6 0.4 Capacity 0.2 0.0 Sub-2,000 2,000- 3,000- 4,000- 5,100- 7,500- 10,000+ TEU 2,999 TEU 3,999 TEU 5,099 TEU 7,499 TEU 9,999 TEU TEU (1) Maritime Strategies International Limited (MSI) as at September 30, 2019 15 (2) Idle Capacity includes ships being retro-fitted for scrubbers (3) Includes newly announced 6,650 TEU ships
Favorable Fundamentals are Pushing Up Earnings; IMO 2020 Another Boost Asset Values & Spot Market Charter Rates Since 2000¹ 300 Newbuild Price Index 2000) TC Rate Index250 Jan Second Hand Price Index Since 200 Average Since Jan-2000 Average 150 = (100 100 Index 50 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9M2019 â¼ Headwinds to sentiment, but fundamentals still supportive IMO 2020 expected to be a further positive catalyst One knot of incremental slow steaming would reduce effective supply by 6.7% Mid-size and smaller vessels remain well-positioned: limited supply, flexible deployment, core to most tradelanes â¼ Charter rates firming significantly YTD2019 v. 4Q2018 Rate recovery led by larger mid-size vessels, with rates more than doubling for some Post-Panamax segments 70%+ of GSL capacity is Post-Panamax Rate Index (100 = 4Q18 Average) Index (100 = Sep-2016) 0 50 100 150 200 250 300 80 100 120 140 160 180 200 Average Q4 18 Sep-16 Week 2 Post Nov-16 Week 4 Rate - Jan-17 remain Week 6 with negative Mar-17 Industry Week 8 earnings recovery May-17 Recovery Week 10 Panamax charter macro (Panamax) led Jul-17 -Week 12 by - favourable, Sep-17 trending Week 14 ships Led up market Nov-17 fundamentals Week 16 larger sentiment, despite rising 8,500 Week 18 Rate Jan-18 Underway as (Post Week 20TEU Mar-18 Week 22 larger May-18 Since Week 24 sizes Panamax) Jul-18 Week 26 4,250 Recovery Sep-18 Week 28 Late vessels; Nov-18 - Week 30 become TEU Jan-19 Week 32 sold rates 2016¹ 6,500 Mar-19 Week 34 for out Week 36 TEU YTD2019¹ May-19 Trendline Week 38 smaller Jul-19 Week 40 Sep-19 (1) Maritime Strategies International Limited (MSI) 16
Why Invest? Strong contract cover with diversified client base of leading container shipping lines $778 million of contracted revenues, with average 2.6 years forward cover 88% proforma Adjusted EBITDA cover for 2020; 68% for 2021 High-quality, in-demand assets in under-supplied fleet segments High-specification, fuel-efficient, and high-reefer-capacity fleet commanding premium terms in charter market Flexible ships, focused on under-supplied size classes, serving 70%+ of global containerized trade Supportive industry fundamentals further strengthen earnings potential Limited supply, increasing scrapping, tiny orderbook Imminent, industry-wide regulatory change (IMO 2020) expected to further tighten supply Conservative balance sheet management and focus on de-levering $160+ million of scheduled debt pay-down in 2019 / 2020¹ $51 million cash added to balance sheet through October equity issue Upgrade from S&P Proceeds from Senior Unsecured Notes issue to be used to partially redeem existing Senior Secured Notes Strong and supportive sponsors, and management team with skin in the game Sponsors include leading US financial institutions Management with significant equity at risk in GSL, also with interest to purchase up to $300,000 of Senior Unsecured Notes Established platform with track record in the public equity and credit markets Listed on NYSE since 2008 Publicly traded High Yield Notes since 2014; publicly traded Perpetual Preferred Shares since 2014 (1) Basis scheduled amortization of debt as disclosed in GSL Q3 2019 Earnings Release & Public Financials as at September 30, 2019 17 17
Appendix: Consolidated Balance Sheet as at September 30, 2019 (unaudited) GSL Consolidated Balance Sheets (expressed in thousands of U.S dollars except share data) As of September 30, 2019 December 31, 2018 ASSETS CURRENT ASSETS Cash and cash equivalents $ 86,697 $ 82,059 Restricted cash 5,355 2,186 Accounts receivable, net 2,460 1,927 Inventories 5,313 5,769 Prepaid expenses and other current assets 6,755 6,214 Due from related parties 4,440 817 Total current assets $ 111,020 $ 98,972 NON-CURRENT ASSETS Vessels in operation $ 1,129,808 $ 1,112,766 Advances for vessel acquisitions 1,500 -Other fixed assets 2 5 Intangible assets-charter agreements 2,458 5,400 Deferred charges, net 12,014 9,569 Other non-current assets948 Restricted cash, net of current portion 5,702 5,827 Total non-current assets 1,151,484 1,134,515 TOTAL ASSETS $ 1,262,504 $ 1,233,487 LIABILITIES AND SHAREHOLDERS EQUITY CURRENT LIABILITIES Accounts payable $ 7,925 $ 9,586 Accrued liabilities 26,396 15,407 Current portion of long-term debt 86,004 64,088 Deferred revenue 6,835 3,118 Due to related parties 63 3,317 Total current liabilities $ 127,223 $ 95,516 LONG-TERM LIABILITIES Long-term debt, net of current portion and deferred financing costs $ 782,725 $ 813,130 Intangible liability-charter agreements 6,964 8,470 Deferred tax liability9 Total non-current liabilities 789,689 821,609 TOTAL LIABILITIES $ 916,912 $ 917,125 Commitments and Contingencies SHAREHOLDERS EQUITY Class A common shares-authorized 214,000,000 shares with a $0.01 par value 9,942,950 shares issued and outstanding (2018-9,017,205 shares) $ 99 $ 90 Class B common shares-authorized 20,000,000 shares with a $0.01 par value nil issued and outstanding (2018-925,745 shares)9 Series B Preferred shares-authorized 16,100 shares with a $0.01 par value 14,000 shares issued and outstanding (2018-14,000 shares) Series C Preferred shares-authorized 250,000 shares with a $0.01 par value 250,000 shares issued and outstanding (2018-250,000 shares) 3 3 Additional paid in capital 512,811 512,379 Accumulated deficit (167,321) (196,119) Total shareholders equity 345,592 316,362 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $ 1,262,504 $ 1,233,487 19
Appendix: Consolidated Statement of Income Q3 & 9M2019 (unaudited) GSL Consolidated Statements of Income (expressed in thousands of U.S dollars except share data) Three months ended Nine months ended September 30, September 30, 2019 2018 2019 2018 OPERATING REVENUES Time charter revenue $ 25,538 $ 4,114 $ 80,661 $ 14,222 Time charter revenue-related parties 40,409 31,775 112,887 92,853 65,947 35,889 193,548 107,075 OPERATING EXPENSES: Vessel operating expenses 18,764 10,543 56,296 30,424 Vessel operating expenses-related parties 2,773 215 7,006 751 Time charter and voyage expenses 1,942 236 4,727 613 Time charter and voyage expenses-related parties 4781,328 -Depreciation and amortization 11,174 8,374 32,884 24,703 General and administrative expenses 2,973 1,248 7,083 4,641 Operating Income 27,843 15,273 84,224 45,943 Interest income 414 364 1,198 984 Interest and other financial expense (18,424) (10,996) (56,484) (32,512) Other income, net 881 1 2,117 16 Total non-operating expense (17,129) (10,631) (53,169) (31,512) Income before income taxes 10,714 4,642 31,055 14,431 Income taxes(13) 40 (59) Net Income $ 10,714 $ 4,629 $ 31,095 $ 14,372 Earnings allocated to Series B Preferred Shares (765) (766) (2,297) (2,297) Net Income available to Common Shareholders $ 9,949 $ 3,863 $ 28,798 $ 12,075 Earnings per Share Weighted average number of Class A common shares outstanding Basic 9,942,950 6,048,425 9,939,559 6,044,821 Diluted 10,082,806 6,048,425 10,058,321 6,044,821 Net Gain per Class A common share $ Basic 0.43 0.64 1.26 2.00 Diluted 0.43 0.64 1.24 2.00 Weighted average number of Class B common shares outstanding Basic and diluted $ nil 925,745 nil 925,745 Net Gain per Class B common share Basic and diluted nil nil nil nil 20
Appendix: Consolidated Cash Flow Statement Q3 & 9M2019 (unaudited) Three months ended Nine months ended September 30, September 30, 2019 2018 2019 2018 Cash flows from operating activities: Net Income $ 10,714 $ 4,630 $ 31,095 $ 14,372 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 11,174 8,375 32,884 24,704 Amortization of deferred financing costs 755 1,115 2,244 3,131 Amortization of original issue discount / premium on repurchase of notes 202 201 607 602 Amortization of intangible asset/liability-charter agreements 490 (443) 1,436 (1,329) Share based compensation 1,288 45 1,288 136 Changes in operating assets and liabilities: Decrease/(increase) in accounts receivable and other assets 1,660 (1,005) (86) (2,342) Decrease/(increase) in inventories 650 (715) 456 (2,581) Increase in accounts payable and other liabilities 6,023 8,361 6,812 6,135 (Decrease)/increase in related parties balances (510) 496 (6,877) (603) Increase/(decrease) in deferred revenue 4,506 (248) 3,717 (758) Unrealized foreign exchange loss (gain) (30) 7 (16) 5 Net cash provided by operating activities $ 36,922 $ 20,819 $ 73,560 $ 41,472 Cash flows from investing activities: Acquisition of vessels (15,001)(33,497) (11,436) Cash paid for vessel improvements (7,286) (24) (14,062) (150) Cash paid for dry-dockings (2,485) (877) (3,182) (2,104) Advances for vessel acquisitions (1,500)(1,500) Net cash used in investing activities $ (26,272) $ (901) $ (52,241) $ (13,690) Cash flows from financing activities: Proceeds from drawdown of credit facilities 280,500 8,125 293,500 8,125 Repayment of credit facilities (11,272)(37,819) (10,000) Repayment of credit facilities (262,809)(262,809) -Deferred financing costs paid (3,890) (1,812) (4,212) (1,812) Series B Preferred Shares-dividends paid (765) (766) (2,297) (2,297) Net cash used in financing activities $ 1,764 $ 5,547 $ (13,637) $ (5,984) Net decrease in cash and cash equivalents and restricted cash 12,414 25,465 7,682 21,798 Cash and cash equivalents and restricted cash at beginning of the period 85,340 69,599 90,072 73,266 Cash and cash equivalents and restricted cash at end of the period $ 97,754 $ 95,064 $ 97,754 $ 95,064 Supplementary Cash Flow Information: Cash paid for interest 10,307 740 45,094 20,677 Cash paid for income taxes3058 Non-cash financing activities: Unpaid offering costs 85685621
Appendix: Overview of GSL Debt as at September 30, 2019 Outstanding Balance as Balloon Installment Collateralized Vessel of 30 September Interest Repayment 1 Maturity (excl. cash sweep) ($m) 2019($m) Combined annual amortization of $40m Citi Super Senior loan $24.80 3.25%+L31-10-20 in 2019 and 2020; $35m 18 of GSL vessels thereafter. Facilities Some optionality for GSL 1st Priority 2022 Notes $340.00 9.88% Noteholders $259.80 15-11-22 Hayfin loan GSL Valerie $7.77 5.50%+L Bullet $7.77 16-07-22 GSL Eleni, GSL Kalliopi, Hellenic loan $24.55 3.90%+L $0.45m per quarter (20 quarters) $4.00 24-05-24 GSL Grania Senior Debt (DB-CIT) $133.12 3.00%+L $2.6m per quarter + cash sweep $105.70 30-06-22 Uasc Al Khor, Anthea Y, Odyssia Maira XL Junior Debt (Entrust) $36.21 10.00%+L $0.7m per quarter + cash sweep $28.70 30-06-22 Maira, Nikolas, Cash Sweep and from 31 Mar DVB loan $47.09 2.85%+L $45.09 31-12-20 PCON Newyorker, Mary 2020 $1.88m per quarter New Loans (2) . New Senior Loan Orca I, Katherine, $230.00 3.00%+L $5.2m per quarter $126.00 24-09-24 Loan (Tranche A) Dolphin II, Athena, Kristina, Agios Dimitrios, New New Junior Loan Alexandra, Alexis, Olivia I $38.50 10.00% Bullet $38.50 24-09-24 $882.04 1) Fixed semi-annual amortization of Citi Super Senior loan of $10m due October 2019 followed by two instalments of $7.4m in 2020. $20m annual amortization to be offered to Noteholders in 4Q 2019. If offer not taken up, Citi Super Senior loan amortized instead. Once Citi Super Senior loan has been repaid, amortization of Notes is mandatory 2) Senior Lenders CACIB, ABN, CIT Hellenic and Siemens Financial. Junior Lender Entrust. Tranche B of up to $38 million is available under New Loan till May 2020 on the same terms as Tranche A 22
Appendix: Adjusted EBITDA Reconciliation Nine Annualized months nine months ended ended September 30, September 30, 2019 2019 Net income available to Common Shareholders 28.8 38.4 Adjust: Depreciation and amortization 32.9 43.8 Interest income (1.2) (1.6) Interest expense 56.5 75.3 Income tax (0) (0.1) Earnings allocated to preferred shares 2.3 3.1 Adjusted EBITDA 119.2 159.0 Annualized nine months ended September 30, 2019 is calculated by applying the factor 1.333 to the results for the nine months ended September 30, 2019. 23 23
Appendix: Complementary Leadership with Extensive Shipping and Capital Markets Experience George Youroukos Founded Technomar in 1994 and ConChart in 2010 Executive Chairman Established Poseidon Containers in 2010 Over 200 secondhand and newbuild transactions Highly reputable technical and commercial manager among liner companies Established track record with banks and other financial institutions Ian Webber Chief Executive GSL CEO since 2008 Officer CFO and Director of CP Ships from 1996 to 2006 Previously Audit Partner at PwC Thomas Lister Chief Commercial GSL CCO & CFO 20172018 Officer GSL CCO since 2008 Previously Asset Finance Banker at DVB, and Liner Shipping Executive Tassos Psaropoulos Chief Financial Poseidon Containers CFO since 2011 Officer Previously Controller of AIM-listed Dolphin Capital Investors, PwC Auditor and Project Manager 24
Appendix: Diverse Ownership Structure, Expert Board of Directors and Strong Sponsorship Board of Directors George Youroukos Executive Chairman Poseidon Containers, Technomar, ConChart Henry Mannix III Director Kelso & Co. Philippe Lemonnier Director since 2017 CMA CGM Michael Gross Director since 2008 Solar Capital Independent Alain Wils Director since 2014 Consultant Independent Michael Chalkias Director PrimeMarine Independent Alain Pitner Director Ex Credit Agricole Independent Menno Van Lacum Director Transportation Capital Group Independent 25