UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 OF THE SECURITIES EXCHANGE EXCHANGE ACT OF 1934

 For the month of August 2021

Commission File Number:  001-34153

Global Ship Lease, Inc.

(Translation of registrant's name into English)

--12-31

c/o 25 Wilton Road,

London SW1V 1LW,

United Kingdom

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F [X] Form 40-F [ ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ].

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ].

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

INFORMATION CONTAINED IN THIS REPORT ON FORM 6-K

Attached as Exhibit 99.1 to this Report on Form 6-K (this “Report”) is the Management’s Discussion and Analysis of Financial Condition and Results of Operations, the unaudited interim consolidated financial statements, and the accompanying notes thereto, for the six months ended June 30, 2021, of Global Ship Lease, Inc. (the “Company”).

The information contained in this Report is hereby incorporated by reference into the Company's registration statements on Form F-3 (File Nos. 333-231509, 333-234343 and 333-235305).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GLOBAL SHIP LEASE, INC.

(registrant)

Dated: August 6, 2021

By:

/s/ Ian J. Webber

Ian J. Webber

Chief Executive Officer

Exhibit 99.1 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is management’s discussion and analysis of financial condition and results of operations of Global Ship Lease, Inc. for the six month periods ended June 30, 2021 and 2020. The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and the related notes thereto, included in this report, the discussion and analysis included in our Annual Report on Form 20-F for the year ended December 31, 2020, filed with the U.S. Securities and Exchange Commission, or the SEC, on March 19, 2021 (the “Annual Report”), and other financial information appearing elsewhere in this report. We prepare our financial statements in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. The following discussion and analysis contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, such as those set forth in the section entitled “Risk Factors” included in our Annual Report.

Unless the context otherwise requires, references to the “Company,” “we,” “us,” “our” or “Global Ship Lease” refer to Global Ship Lease, Inc., “CMA CGM” refers to CMA CGM S.A., currently our principal charterer, “Poseidon Containers” refers to Poseidon Containers Holdings LLC and K&T Marine LLC, collectively, with whom we completed a strategic combination on November 15, 2018 (the “Poseidon Transaction”) pursuant to which we acquired 19 containerships from Poseidon Containers, excluding the Argos (the “Poseidon Containers Fleet”), “GSL Fleet” refers to the 19 vessels that were owned by us prior to the consummation of the Poseidon Transaction, Technomar Shipping Inc. (“Technomar”) refers to our ship technical manager and ConChart Commercial Inc. (“Conchart”) refers to our commercial ship manager. Unless otherwise indicated, all references to “$” and “dollars” in this report are to U.S. dollars. We use the term “TEU”, meaning twenty-foot equivalent unit, the international standard measure of container size, in describing volumes in world container trade and other measures, including the capacity of our containerships, which we also refer to as ships. Unless otherwise indicated, we calculate the average age of our ships on a weighted average basis, based on TEU capacity. All share and per share amounts disclosed in this report give retroactive effect, for all periods presented, to the one-for-eight reverse stock split of our Class A common shares effected on March 25, 2019.

Cautionary Statement Regarding Forward-Looking Statements

This report contains forward-looking statements. Forward-looking statements provide our current expectations or forecasts of future events. Forward-looking statements include statements about our 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. Examples of forward-looking statements in this report include, but are not limited to, statements regarding our disclosure concerning our operations, cash flows, financial position, dividend policy, the anticipated benefits of our strategic transaction with Poseidon Containers, and the likelihood of success in acquiring additional ships to expand our business.

Forward-looking statements appear in a number of places in this report and in our Annual Report, as updated by annual, quarterly and other reports and documents we file with the SEC after the date of this prospectus and that are incorporated by reference herein.

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. Our actual results could differ materially from those anticipated in forward-looking statements for many reasons, including the factors described in “Risk Factors” in this report. The risks described under “Risk Factors” are not exhaustive. Other sections of this report describe additional factors that could adversely affect our results of operations, financial condition, liquidity and the development of the industries in which we operate. New risks can emerge from time to time, and it is not possible for us to predict all such risks, nor can we assess the impact of all such risks on our business or the extent to which any risks, or combination of risks and other factors, may cause actual results to differ materially from those contained in any forward-looking statements. Accordingly, you should not unduly rely on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly update or revise any forward-looking statement to reflect circumstances or events after the date of this report or to reflect the occurrence of unanticipated events. You should, however, review the factors and risks we describe in the reports we will file from time to time with the SEC after the date of this report.

 Overview

We are a containership owner, incorporated in the Republic of the Marshall Islands. We commenced operations in December 2007 with a business of owning and chartering out containerships under fixed rate charters to container liner companies.

As of June 30, 2021, we owned 48 vessels, with a total capacity of 279,056 TEU with an average age, weighted by TEU capacity, of 14.9 years and had contracted to purchase (i) one further 6,000 TEU Post-Panamax containership (ii) 12 containerships from Borealis Finance LLC (the “Twelve Vessels”), approximately 11 years old and representing a total of 35,434 TEU, and (iii) four 5,470 TEU Panamax containerships (the “Four vessels”) approximately 11 years old and representing a total of 21,880 TEU, for a total fleet, when delivered, of 65 ships and aggregate capacity of 342,378 TEU.

We are responsible for the operation and technical management of each ship, which includes crewing, providing lubricating oils, maintaining the ship, arranging and supervising periodic drydocking and performing work required by regulations.

All of the vessels owned by us as at June 30, 2021 are technically managed by Technomar, a company of which George Giouroukos, our Executive Chairman, is a significant shareholder, under ship management contracts whereby, for an annual management fee, Technomar provides all day-to-day ship technical management, including crewing, purchasing stores, lubricating oils and spare parts, paying wages, pensions and insurance for the crew, and organizing other vessel operating necessities, including the arrangement and management of drydocking. We pay Technomar a daily management fee of Euro 700 per ship from January 1^st, 2021, compared to Euro 685 for 2018 to 2020, payable in U.S. dollars, which, in addition to the technical ship management services noted above, includes administrative support services provided to us, including accounting and financial reporting, treasury management services and legal services.

Conchart Commercial Inc. (“Conchart”) provides commercial management services to us and is presented as a related party, as our Executive Chairman is the sole beneficial owner. Under the management agreements, Conchart, is responsible for (i) marketing of our vessels, (ii) seeking and negotiating employment of our vessels, (iii) advise us on market developments, developments of new rules and regulations, (iv) assisting in calculation of hires, freights, demurrage and/or dispatch monies and collection any sums related to the operation of vessels, (v) communicating with agents, and (vi) negotiating sale and purchase transactions.

See “Item 4. Information on the Company—B. Business Overview—Management of Our Fleet” in our Annual Report for a more detailed description of our ship management agreements.

Our financial results are largely driven by the following factors:

 Adjusted to include all charters agreed, and ships contracted to be purchased, up to August 4, 2021, the average remaining term of the Company’s charters as at June 30, 2021, to the mid-point of redelivery, including options under the Company’s control and other than if a redelivery notice has been received, was 2.5 years on a TEU-weighted basis. The charter rate that we will be achieved on renewal will be affected by market conditions at that time. As discussed further below, operational matters such as off-hire days for planned maintenance or for unexpected accidents and incidents also affect the actual amount of revenues we receive.

As of June 30, 2021, CMA CGM was our largest customer representing 42% of our gross revenues in six months then ended reduced from 51% and 59% in full years 2020 and 2019, respectively. CMA CGM, as of June 30, 2021, owned 8.4% of our Class A common shares. Charter payments from CMA CGM are a major source of operating cash flow. At any given time in the future, the cash resources of CMA CGM may be diminished or exhausted, and we cannot assure you that CMA CGM will be able to make charter payments to us.

The container shipping industry is cyclical. It suffered a downturn as a result of the Global Financial Crisis in 2008 – 2009, and many container shipping companies reported substantial losses. Financial performance of container shipping companies subsequently improved, but periodically came under pressure due to oversupply of containership capacity. During the first half of 2020 the industry came under significant pressure as a result of the global COVID-19 pandemic. However, starting in the second half of 2020, and continuing through the first half of 2021, supply has become increasingly tight against an improving macro-economic backdrop and growing containerized cargo volumes. The financial performance of container shipping companies has been positively affected accordingly. Charter payments were received on a timely basis in 2020 and year-to-date 2021 and, as of June 30, 2021, charterhire was up-to-date. However, if our charterers were to be unable to make charter payments to us, our results of operations and financial condition would be materially adversely affected. If our existing charters with our charterers were terminated and we were required to recharter at lower rates, or if we were unable to find new charters due to market conditions, our results of operations and financial condition would be materially adversely affected.

Operating Fleet

Our fleet comprises 65 containerships, of which - as at August 4, 2021 – four have been contracted to be purchased but have yet to be delivered. The first table below presents the fleet prior to the vessel acquisitions announced year to date (the “Status Quo Fleet”); the second shows the 23 ships purchased and contracted to be purchased year to date (the “Purchased Fleet”).

Status Quo Fleet

(1) Modern design, high reefer capacity, fuel-efficient vessel.

(2) MSC Tianjin. Chartered at $23,000 per day through dry-docking in 2Q2021; thereafter at $19,000 per day, due to cancellation of scrubber installation. MSC Qingdao has a scrubber installed and will continue to trade at a rate of $23,000 per day.

(3) GSL Eleni delivered 2Q2019 and is chartered for five years; GSL Kalliopi (delivered 4Q2019) and GSL Grania (delivered 3Q2019) are chartered for three years plus two successive periods of one year at the option of the charterer. During the option periods the charter rates for GSL Kalliopi and GSL Grania are $18,900 per day and $17,750 per day respectively.

(4) GSL Christen. Chartered at $15,000 per day through May 2021, at which time the rate increased to $35,000 per day.

(5) GSL Nicoletta. Chartered to MSC at $13,500 per day to 3Q21; thereafter to be chartered to Maersk at $35,750 per day.

(6) CMA CGM Berlioz. Chartered at $34,000 per day through December 2021, at which time the rate will increase to $37,750 per day.

(7) Tasman. 12-month extension at charterer’s option callable in 2Q2022, at an increased rate of $20,000 per day.

(8) A package agreement with ZIM, for direct charter extensions on two 5,900 TEU ships: Ian H, at a rate of $32,500 per day from May 2021, and ZIM Europe (formerly Dimitris Y), at a rate of $24,250 per day, from May 2022.

(9) Orca I. Chartered at $10,000 per day through April 2021, at which time the rate increased to $21,000 per day through to the median expiry of the charter in 2Q2024; thereafter the charterer has the option to charter the vessel for a further 12-14 months at the same rate.

(10) CMA CGM Alcazar and GSL Chateau d’If. Both ships have been forward fixed to CMA CGM for five years at $35,500 per day, with the new charters due to commence in 4Q2021;

(11) Athena. Chartered to MSC at a rate of $9,000 per day through April 2021, at which time the vessel was drydocked. Thereafter chartered to Hapag-Lloyd at $21,500 per day.;

(12) Newyorker. Drydocked in 2Q2021; thereafter chartered to CMA CGM at $20,700 per day;

(13) Keta. Chartered to OOCL at $9,400 per day through 3Q2021. Thereafter forward fixed to CMA CGM at $25,000 per day;

(14) Julie. Chartered to Sea Consortium at a rate of $9,250 per day through May 2021; thereafter extended at $20,000 per day.

Purchased Fleet

(1) On February 9, 2021 we announced that we had contracted to purchase seven ships of approximately 6,000 TEU each, which have now been delivered. Contract cover for each vessel is for a firm period of at least three years from the date each vessel is delivered, with charterers holding a one-year extension option on each charter, followed by a second option with the period determined by (and terminating prior to) each vessel’s 25th year dry-docking & special survey. Five ships are chartered to Maersk from delivery; the remaining two (GSL Maria & GSL Violetta) will be chartered to Maersk upon completion of short charters to Wan Hai and ONE, respectively. The charter rates are confidential.

(2) On June 16, 2021 we announced that we had contracted to purchase four ultra-high reefer ships of 5,470 TEU each. These ships are scheduled to deliver in 3/4Q21. Contract cover is for a firm period of three years, with a period of an additional three years at charterers’ option. The charter rates are confidential.

(3) GSL Eleftheria. Chartered to Maersk at $12,000 per day through September 2021; thereafter extended at $37,975 per day.

Recent and Other Developments

On June 16, 2021, we announced an agreement to purchase four 5,470 TEU Panamax containerships with an average age of approximately 11 years for an aggregate purchase price of $148.0 million. The ships are scheduled for delivery during the third and fourth quarter of 2021. The purchase price is expected to be covered by cash on hand and new senior secured debt.

On June 8, 2021, we announced an agreement to purchase from Borealis Finance LLC, 12 containerships with an average size of approximately 3,000 TEU and a weighted average age of 11 years for an aggregate purchase price of $233.9 million. All Twelve Vessels were delivered between July 15, 2021 and July 29, 2021. In July 2021, we entered into a new syndicated credit facility with HCOB and Credit Agricole for a total of $140.0 million. The remaining purchase price was financed by cash on hand and the issuance of $35.0 million of our existing 8.00% Senior Unsecured Notes due to 2024 (“2024 Notes”) to the sellers of the ships.

During the period from April 1, 2021 through August 4, 2021, we took delivery of seven 6,000 TEU Post-Panamax containerships (the “Seven Vessels”) purchased for an aggregate price of $116.0 million, and chartered back to Maersk Line. In April 2021, we entered into a new credit facility with HCOB for six of these seven ships and have drawn down all tranches of $10.7 million each, amounting to a total of $64.2 million with the last drawdown on July 22, 2021. The seventh vessel was financed by a sale and leaseback agreement with Neptune for $14.7 million.

We declared a dividend of $0.25 per Class A common share from the earnings of the second quarter 2021 to be paid on September 3, 2021 to common shareholders of record as of August 23, 2021.

During the second quarter of 2021, raised $23.6 million net proceeds under the ATM program for the 8.75% Series B Preferred Shares (“Series B Preferred Shares”). During the period from July 1, 2021 through August 4, 2021, a further $6.4 million net proceeds was raised under this ATM program. Since the inception of this ATM program a total of $60.8 million net proceeds has been raised.

During the second quarter 2021, raised a further $7.6 million net proceeds under the ATM program for the 2024 Notes. The total outstanding 2024 Notes as at June 30, 2021 was $117.5 million, which includes the issuance of $35.0 million of the 2024 Notes to the sellers of Twelve Vessels, as part of the consideration. Since the inception of this ATM program a total of $50.9 million net proceeds has been raised.

Critical Accounting Policies

The interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates in the application of our accounting policies based on the best assumptions, judgments and opinions of management. Critical accounting policies are those that reflect significant judgments or uncertainties, and potentially result in materially different results under different assumptions and conditions. All significant accounting policies are as described in our Annual Report.

For a further description of our material accounting policies, please see note 2 to the interim unaudited condensed consolidated financial statements included elsewhere in this report.

The preparation of interim unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates under different assumptions and/or conditions.

Vessels are generally recorded at their historical cost, which consists of the acquisition price and any material expenses incurred upon acquisition. Vessels acquired in a corporate transaction accounted for as an asset acquisition are stated at the acquisition price, which consists of consideration paid, plus transaction costs less any negative goodwill, if applicable. Vessels acquired in a corporate transaction accounted for as a business combination are recorded at fair value. Vessels acquired as part of the Marathon Merger in 2008 were accounted for under ASC 805, which required that the vessels be recorded at fair value, less the negative goodwill arising as a result of the accounting for the merger.

Subsequent expenditures for major improvements and upgrades are capitalized, provided they appreciably extend the life, increase the earnings capacity or improve the efficiency or safety of the vessels.

Borrowing costs incurred during the construction of vessels or as part of the prefinancing of the acquisition of vessels are capitalized. There was no capitalized interest for the six months ended June 30, 2021 and for the year ended December 31, 2020.

Vessels are stated less accumulated depreciation and impairment, if applicable. Vessels are depreciated to their estimated residual value using the straight-line method over their estimated useful lives which are reviewed on an ongoing basis to ensure they reflect current technology, service potential and vessel structure. The useful lives are estimated to be 30 years from original delivery by the shipyard.

Management estimates the residual values of our container vessels based on a scrap value cost of steel times the weight of the vessel noted in lightweight tons (LWT). Residual values are periodically reviewed and revised to recognize changes in conditions, new regulations or other reasons. Revision of residual values affect the depreciable amount of the vessels and affects depreciation expense in the period of the revision and future periods. Management estimated the residual values of our vessels based on scrap rate of $400 per LWT.

For any vessel group which is impaired, the impairment charge is recorded against the cost of the vessel and the accumulated depreciation as at the date of impairment is removed from the accounts. 

The cost and related accumulated depreciation of assets retired or sold are removed from the accounts at the time of sale or retirement and any gain or loss is included in the interim unaudited condensed Consolidated Statements of Operations.

We classify assets and disposal groups as being held for sale when the following criteria are met: management has committed to a plan to sell the asset (disposal group); the asset (disposal group) is available for immediate sale in its present condition; an active program to locate a buyer and other actions required to complete the plan to sell the asset (disposal group) have been initiated; the sale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale within one year; the asset (disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Long-lived assets or disposal groups classified as held for sale are measured at the lower of their carrying amount or fair value less cost to sell. These assets are not depreciated once they meet the criteria to be held for sale. As of June 30, 2021, and December 31, 2020, there were no assets classified as held for sale.

Tangible fixed assets, such as vessels, that are held and used or to be disposed of by us are reviewed for impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable. In these circumstances, we perform step one of the impairment test by comparing the undiscounted projected net operating cash flows for each vessel group to its carrying value. A vessel group comprises the vessel, the unamortized portion of deferred drydocking related to the vessel and the related carrying value of the intangible asset or liability (if any) with respect to the time charter attached to the vessel at its purchase. If the undiscounted projected net operating cash flows of the vessel group are less than its carrying amount, management proceeds to step two of the impairment assessment by comparing the vessel group’s carrying amount to its fair value, including any applicable charter, and an impairment loss is recorded equal to the difference between the vessel group’s carrying value and fair value. Fair value is determined with the assistance from valuations obtained from third party independent ship brokers.

We use a number of assumptions in projecting our undiscounted net operating cash flows analysis including, among others, (i) revenue assumptions for charter rates on expiry of existing charters, which are based on forecast charter rates, where relevant, in the four years from the date of the impairment test and a reversion to the historical mean of time charter rates for each vessel thereafter (ii) off-hire days, which are based on actual off-hire statistics for our fleet (iii) operating costs, based on current levels escalated over time based on long term trends (iv) dry docking frequency, duration and cost  (v) estimated useful life, which is assessed as a total of 30 years from original delivery by the shipyard and (vi) scrap values.

Revenue assumptions are based on contracted charter rates up to the end of the existing contract of each vessel, and thereafter, estimated time charter rates for the remaining life of the vessel. The estimated time charter rate used for non-contracted revenue days of each vessel is considered a significant assumption. Recognizing that the container shipping industry is cyclical and subject to significant volatility based on factors beyond our control, management believes that using forecast charter rates in the four years from the date of the impairment assessment and a reversion to the historical mean of time charter rates thereafter, represents a reasonable benchmark for the estimated time charter rates for the non-contracted revenue days, and takes into account the volatility and cyclicality of the market.

Two 1999-built, 2,200 TEU feeder ships, GSL Matisse and Utrillo, were sold on July 3, 2020 and July 20, 2020, respectively.  As of June 30, 2020, the vessels were immediately available for sale and qualified as assets held for sale. As of March 31, 2020, we had an expectation that the vessels would be sold before the end of their previously estimated useful life, and as a result performed an impairment test of the specific asset group. An impairment charge of $7.6 million was recognized for the three months ended March 31, 2020 and an additional impairment charge of $0.9 million had been recognized in the three months ended June 30, 2020.

During the six months ended June 30, 2021, there were no events or changes in circumstances which indicated that the carrying amounts of our other vessels may not be recoverable. Accordingly, no impairment test was performed.

We charter out our vessels on time charters which involves placing a vessel at a charterer’s disposal for a specified period of time during which the charterer uses the vessel in return for the payment of a specified daily hire rate. Such charters are accounted for as operating leases and therefore revenue is recognized on a straight-line basis as the average revenues over the rental periods of such charter agreements, as service is performed. Cash received in excess of earned revenue is recorded as deferred revenue. If a time charter contains one or more consecutive option periods, then subject to the options being exercisable solely by us, the time charter revenue will be recognized on a straight-line basis over the total remaining life of the time charter, including any options which are more likely than not to be exercised. Any difference between the charter rate invoiced and the time charter revenue recognized is classified as, or released from, deferred revenue within the interim unaudited condensed Consolidated Balance Sheets.

Revenues are recorded net of address commissions, which represent a discount provided directly to the charterer based on a fixed percentage of the agreed upon charter rate.

Charter revenue received in advance which relates to the period after a balance sheet date is recorded as deferred revenue within current liabilities until the respective charter services are rendered. 

Under time charter arrangements we, as owner, are responsible for all the operating expenses of the vessels, such as crew costs, insurance, repairs and maintenance, and such costs are expensed as incurred and are included in vessel operating expenses.

Commission paid to brokers to facilitate the agreement of a new charter are included in time charter and voyage expenses as are certain expenses related to a voyage, such as the costs of bunker fuel consumed when a vessel is off-hire or idle.

 Leases: In cases of lease agreements where we act as the lessee, we recognize an operating lease asset and a corresponding lease liability on the consolidated balance sheets. Following initial recognition and with regards to subsequent measurement we remeasure lease liability and right of use asset at each reporting date.

Leases where we act as the lessor are classified as either operating or sales-type / direct financing leases.

In cases of lease agreements where we act as the lessor under an operating lease, we keep the underlying asset on the consolidated balance sheets and continues to depreciate the assets over its useful life. In cases of lease agreements where we act as the lessor under a sales-type / direct financing lease, we derecognize the underlying asset and records a net investment in the lease. We act as a lessor under operating leases in connection with all of its charter out – bareboat-out arrangements.

In cases of sale and leaseback transactions, if the transfer of the asset to the lessor does not qualify as a sale, then the transaction constitutes a failed sale and leaseback and is accounted for as a financial liability. For a sale to have occurred, the control of the asset would need to be transferred to the lessor, and the lessor would need to obtain substantially all the benefits from the use of the asset. We have entered into two agreements which qualify as failed sale and leaseback transactions as we are required to repurchase the vessels at the end of the lease term and we have accounted for the two agreements as financing transactions.

We elected the practical expedient which allows us to treat the lease and non-lease components as a single lease component for the leases where the timing and pattern of transfer for the nonlease component and the associated lease component to the lessees are the same and the lease component, if accounted for separately, would be classified as an operating lease. The combined component is therefore accounted for as an operating lease under ASC 842, as the lease components are the predominant characteristics, in 2020 and 2019.

We adopted the new “Leases” standard (Topic 842) on January 1, 2019 using the modified retrospective method. We elected the practical expedient to use the effective date of adoption as the date of initial application. Furthermore, we elected practical expedients, which allow entities (i) to not reassess whether any expired or existing contracts are considered or contain leases; (ii) to not reassess the lease classification for any expired or existing leases (iii) to not reassess initial direct costs for any existing leases and (iv) which allows to treat the lease and non-lease components as a single lease component due to its predominant characteristic. The adoption of this standard did not have a material effect on the interim unaudited condensed consolidated financial statements since we are primarily a lessor and the accounting for lessors is largely unchanged under this standard.

Financial instruments carried on the balance sheet include cash and cash equivalents, restricted cash, trade receivables and payables, other receivables and other liabilities and long-term debt. The particular recognition methods applicable to each class of financial instrument are disclosed in the applicable significant policy description of each item or included below as applicable.

Fair value measurement: Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. the “exit price”) in an orderly transaction between market participants at the measurement date. The hierarchy is broken down into three levels based on the observability of inputs as follows:

Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

 As at March 31, 2020, two of our vessel groups that were held and used with a total aggregate carrying amount of $15.6 million were written down to their fair value of $8.0 million resulting in a non-cash impairment aggregate charge of $7.6 million which was allocated to the respective vessels’ carrying values. As at June 30, 2020, the two above mentioned vessels with a total aggregate carrying amount of $8.0 million were written down to their value of $7.1 million resulting in a non-cash impairment charge of $0.9 million which was allocated to their respective carrying values. Total impairment charge of $8.5 million was included in the Unaudited Condensed Consolidated Statements of Operations for the six months ended June 30, 2020. The estimated fair value, measured on a non-recurring basis, of our relevant three vessel groups that are held and used is calculated with the assistance of valuation obtained by third party independent ship brokers. Therefore, we have categorized the fair value of these vessels as Level II in the fair value hierarchy.

Financial Risk Management: Our activities expose it to a variety of financial risks including fluctuations in, time charter rates, credit and interest rates risk. Risk management is carried out under policies approved by executive management. Guidelines are established for overall risk management, as well as specific areas of operations.

Credit risk: We closely monitor our credit exposure to customers and counter-parties for credit risk. We have entered into commercial management agreement with Conchart Commercial Inc. (“Conchart”), pursuant to which Conchart has agreed to provide commercial management services to us, including the negotiation, on behalf of us, vessel employment contracts. Conchart has policies in place to ensure that it trades with customers and counterparties with an appropriate credit history.

Financial instruments that potentially subject us to concentrations of credit risk are accounts receivable and cash and cash equivalents. We do not believe our exposure to credit risk is likely to have a material adverse effect on our financial position, results of operations or cash flows.

Liquidity Risk: Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. We monitor cash balances appropriately to meet working capital needs.

We do not believe that any recently issued, but not yet effective, accounting pronouncements would have a material impact on our interim unaudited condensed consolidated financial statements.

 Results of Operations

Financial Results for the Six Months Ended June 30, 2021 Compared to the Six Months Ended June 30, 2020

The following table presents interim unaudited consolidated revenue and expense for the six month periods ended June 30, 2021 and 2020. This information was derived from the interim unaudited condensed consolidated financial statements of operations of Global Ship Lease for the respective periods.

(Expressed in millions of U.S. dollars except share data)

Revenue and Utilization

Revenue from fixed-rate, mainly long-term, time-charters was $155.9 million in the six months ended June 30, 2021, up $13.6 million (or 9.6%) on revenue of $142.3 million for the prior year period. The increase in revenue is principally due to (i) a reduction in planned offhire days from 434 in the six months ended June 30, 2020 to 195 in the six months ended June 30, 2021, (ii) increased revenue on renewals at higher rates from Maira, Nikolas, Dolphin II, GSL Valerie, Athena, Orca I, Ian H, GSL Ningbo and Julie, partially offset by decreases in revenue on renewals at lower rates from Maira XL, CMA CGM Alcazar, GSL Chateau d’If and MSC Tianjin, (iii) full contribution from GSL Christen and GSL Nicoletta which were delivered during the first quarter 2020, (iv) less idle time, down to 27 days in the six months ended June 30, 2021 from 250 in the comparative period in 2020 mainly due to GSL Matisse and Utrillo which were held for sale as at June 30, 2020 and were sold in July 2020. The 195 days of offhire for dry dockings in six months ended June 30, 2021 were mainly attributable to three regulatory dry-docking which have been completed and another three dry-dockings in progress as of June 30, 2021. With 27 days idle time and 61 days of unplanned offhire, utilization for the six months ended June 30, 2021 was 96.5%. In the comparative period of 2020, the 434 days of offhire for dry-dockings were mainly attributable to five dry-dockings in progress as of June 30, 2020, three for regulatory reasons and two for scrubber installation on Agios Dimitrios and MSC Qingdao. With 217 days idle time for GSL Matisse and Utrillo, 33 idle days for Julie and GSL Christen between charters and 59 days of unplanned offhire days, utilization was 90.8%.

The table below shows fleet utilization for the six month periods ended June 30, 2021 and 2020.

Vessel Operating Expenses

Vessel operating expenses, which primarily include costs of crew, lubricating oil, repairs, maintenance, insurance and technical management fees, were up 5.4% to $52.4 million in the six months ended June 30, 2021, compared to $49.7 million in the comparative period. The increase of $2.7 million was mainly due to the acquisition and delivery of six vessels since April 1, 2021, all of which are Post-Panamax with, on average, higher daily operating expenses, offset by the disposal of GSL Matisse and Utrillo in July 2020 and due to crew replacement and delivery of spares which were significantly reduced in prior year periods as a result of COVID-19 restrictions and delays. The average cost per ownership day was $6,450 per day compared to $6,125 for the prior year period, up $325 per day, or 5.3%.

Time Charter and Voyage Expenses

Time charter and voyage expenses comprise mainly commission paid to ship brokers, the cost of bunker fuel for owner’s account when a ship is off-hire or idle and miscellaneous owner’s costs associated with a ship’s voyage. For the six months ended June 30, 2021, time charter and voyage expenses were $3.9 million, or an average of $479 per day, compared to $6.2 million in the comparative period, or $762 per day, a decrease of $283 per ownership day, or 37.1%. The decrease is mainly due to the decrease in idle days and unplanned off hire days resulting in lower costs for bunker fuel for owner’s account.

Depreciation and Amortization

Depreciation for the six months ended June 30, 2021, was $25.5 million, compared to $23.1 million in the comparative period, with the increase being due to the addition of six vessels since July 1, 2020.

Gain on sale of vessel and impairment of vessels

The 2001-built, 2,272 TEU ship, La Tour, was sold on June 30, 2021 for net proceeds of $16.5 million resulting in a gain of $7.8 million. As of March 31, 2020, we had an expectation that the 1999-built, 2,200 TEU feeder ships, GSL Matisse and Utrillo, would be sold before the end of their previously estimated useful life, and as a result performed an impairment test of these two asset groups and an impairment charge of $7.6 million was recognized. An additional impairment charge of $0.9 million was recognized on these two vessels in the three months ended June 30, 2020 for a total of $8.5 million in the six month period ended June 30, 2020. The two vessels were sold in July 2020. 

General and Administrative Expenses

For the six months ended June 30, 2021, general and administrative expenses were $6.1 million, compared to $4.8 million in the comparative period- mainly due to the non-cash effect for accelerated stock based compensation expense recognized in the first quarter of 2021. The average general and administrative expense per ownership day for the six-month period ended June 30, 2021 was $755, compared to $587 in the comparative period, an increase of $168 or 28.6% mainly due to the non-cash effect of accelerated stock based compensation expense recognized in the first quarter of 2021.

Adjusted EBITDA

Adjusted EBITDA (a non-GAAP financial measure) for the six months ended June 30, 2021 was $96.2 million, compared to $82.6 million for the comparative period, with the increase being due mainly to the addition of six vessels since July 1, 2020.

Interest Expense and Interest Income

Debt as at June 30, 2021 totaled $835.4 million, comprising $684.2 million secured debt collateralized by our vessels, $68.7 million from sale and leaseback financing transactions and $82.5 million of unsecured indebtedness on our 2024 Notes. As of June 30, 2021, none of our vessels were unencumbered.

Debt as at June 30, 2020 totaled $845.0 million, comprising $267.0 million of indebtedness on our 2022 Notes and $4.7 million of indebtedness under a secured term loan, both cross collateralized by 18 vessels in the legacy GSL fleet, $59.0 million of unsecured indebtedness on our 2024 Notes, and $514.3 million other secured debt collateralized by our other vessels. As of June 30, 2020, five of our vessels were unencumbered.

Interest and other finance expenses for the six months ended June 30, 2021 were $39.3 million, an increase of $3.8 million, or 10.7%, on the interest and other finance expenses for the comparative period, of $35.5 million. The increase is mainly due to $5.8 million premium paid on the redemption in full of our 2022 Notes in January 2021 compared to $2.3 million premium paid on the redemption $46.0 million of the 2022 Notes in March 2020 plus the acceleration of deferred financing charges of $3.7 million, and the acceleration of amortization of original issue discount associated with the redemption of the 2022 Notes of $1.1 million plus the prepayment fee of $1.6 million paid on the partial repayment of our Blue Ocean Junior Credit Facility, plus the prepayment fee of $1.4 million paid on the repayment and completion of the refinancing of our Deutsche, CIT, HCOB, Entrust, Blue Ocean Credit Facility and the interest on a new loan with HCOB and a new sale and leaseback agreement with Neptune, offset by decrease in LIBOR. The weighted average cost of debt has been reduced from 6.4% for the six months period ended June 30, 2020 to 5.2% for the six months period ended June 30, 2021. 

Interest income for the six months period ended June 30, 2021 was $0.3 million, compared to $0.8 million for the comparative period.

 Other Income/(Expenses), Net

Other income, net was $0.9 million in the six months period ended June 30, 2021, compared to an other expense, net of $0.4 million in the comparative period.

Taxation

Taxation for the six months ended June 30, 2021 was $nil compared to a credit of $3,000, in the comparative period in 2020.

Earnings Allocated to Preferred Shares

The Series B Preferred Shares, carry a coupon of 8.75%, the cost of which for the six months ended June 30, 2021 was $3.5 million, compared to $1.8 million for the comparative period. The increase is due to additional Series B Preferred Shares issued under our Depositary Shares ATM program since June 2020.

Net Income Available to Common Shareholders

Net income available to common shareholders for the six months ended June 30, 2021 was $34.2 million, after the $7.8 million net gain on the sale of La Tour, the prepayment fee of $1.6 million on the partial repayment of the Blue Ocean Junior Credit Facility, the prepayment fee of $1.4 million on the completion of the refinancing of the Deutsche, CIT, HCOB, Entrust, Blue Ocean Credit Facility, the non-cash effect of $1.3 million for accelerated stock based compensation expense due to vesting and new awards of fully vested incentive shares, $5.8 million premium paid on the redemption in full of our 2022 Notes in January 2021, and associated accelerated amortization of $3.7 million deferred financing charges and $1.1 million original issue discount. Net income available to common shareholders for the prior period was $13.2 million after $8.5 million non-cash impairment charges associated with the decision to dispose of GSL Matisse and Utrillo, the non-cash effect of $0.4 million for accelerated stock based compensation expense due to vesting, and $2.3 million premium paid on the redemption of $46.0 million of our 2022 Notes in February 2020.

Non-U.S. GAAP Financial Measures

To supplement our financial information presented in accordance with U.S. GAAP, management uses certain “non-GAAP financial measures” as such term is defined in Regulation G promulgated by the SEC. Generally, a non-GAAP financial measure is a numerical measure of our operating performance, financial position or cash flows that excludes or includes amounts that are included in, or excluded from, the most directly comparable measure calculated and presented in accordance with U.S. GAAP. Management believes the presentation of these measures provides investors with greater transparency and supplemental data relating to our financial condition and results of operations, and therefore a more complete understanding of factors affecting our business than U.S. GAAP measures alone. In addition, management believes the presentation of these matters is useful to investors for period-to-period comparison of results as the items may reflect certain unique and/or non-operating items such as asset sales, write-offs, contract termination costs or items outside of management’s control.

Adjusted EBITDA

Adjusted EBITDA represents net income available to common shareholders before interest income and expense, earnings allocated to preferred shares, income taxes, depreciation and amortization of drydocking net costs, gains or losses on the sale of vessels, charges for share based compensation and impairment losses. Adjusted EBITDA is a non-U.S. GAAP quantitative measure used to assist in the assessment of our ability to generate cash from our operations. We believe that the presentation of Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Adjusted EBITDA is not defined in U.S. GAAP and should not be considered to be an alternative to net income or any other financial metric required by such accounting principles. Our use of Adjusted EBITDA may vary from the use of similarly titled measures by others in our industry.

Adjusted EBITDA is presented herein on a forward-looking basis in certain instances. We have not provided a reconciliation of forward looking Adjusted EBITDA to the most directly comparable US GAAP measure because such US GAAP financial measure on a forward-looking basis is not available to us without unreasonable effort.

Adjusted EBITDA (Unaudited)

(Expressed in millions of U.S. dollars)

Liquidity and Capital Resources

Our net cash flow from operating activities derives from revenue received under our charter contracts, which varies directly with the number of vessels under charter, days on-hire and charter rates, less operating expenses including crew costs, lubricating oil costs, costs of repairs and maintenance, insurance premiums, general and administrative expenses, interest and other financing costs. In addition, each of our vessels is subject to a drydock approximately every five years. Three drydockings were completed during the six months ended June 30, 2021 and three were in progress as of June 30, 2021.

The main factor affecting operating cash flow in a period is the timing of the receipt of charterhire, which is due to be paid two weeks or one month in advance and, other than from any asset sales and purchases, are the payments for costs of drydockings and vessel upgrades, the timing of the payment of interest, which is mainly quarterly, including on our 2024 Notes, and amortization of our debt.

On January 19, 2021, we fully drew down a new $236.2 million senior secured loan facility with Hayfin Capital Management, LLP (the “New Hayfin Credit Facility”). The proceeds, together with cash on hand, were used to complete on January 20, 2021 the full optional redemption of our outstanding 2022 Notes.

On January 26, 2021, closed our fully underwritten public offering of 5,400,000 Class A common shares, at a public offering price of $13.00 per share. The underwriters exercised, in part, their 30-day option to purchase on February 17, 2021, an additional 141,959 Class A common shares. The aggregate net proceeds, after underwriting discounts and commissions and expenses, were approximately $67.6 million.

During the period from April 1, 2021 through August 4, 2021, took delivery of seven 6,000 TEU Post-Panamax containerships purchased for an aggregate price of $116.0 million, and chartered them back to Maersk Line. In April 2021, we entered into a new credit facility with HCOB for six of these seven ships and have drawn down all tranches of $10.7 million each, amounting to a total of $64.2 million. The seventh vessel was financed by a sale and leaseback agreement with Neptune for $14.7 million. 

 On April 16, 2021, we drew down in full on a new $51.7 million secured credit facility to refinance one of the three existing tranches of the $180.5 million Deutsche, CIT, HCOB, Entrust, Blue Ocean Credit Facility that had a maturity date on June 30, 2022. The second tranche was refinanced on May 7, 2021 with a new $51.7 million secured credit facility. The third tranche was refinanced on May 27, 2021, with a new $54.0 million sale and leaseback agreement with CMBFL.

 Our liquidity requirements are significant, primarily due to drydocking costs and debt service requirements. As indicated in the Tabular Disclosure of Contractual Obligations below, minimum amortization of debt for the 12 months ending June 30, 2022 is $95.3 million and interest is $42.2 million, for the 24 months ending June 30, 2024 minimum amortization of debt is $194.9 million and interest is $70.7 million, for the 24 months ending June 30, 2026 minimum amortization of debt is $518.1 million and interest is $27.8 million and for the 24 months ending June 30, 2028 minimum amortization of debt is $27.1 million and interest is $1.7 million

Our credit facilities require that we maintain $20.0 million minimum liquidity at each quarter end on group basis. In addition, we intend to declare and make quarterly dividend payments amounting to approximately $2.0 million per quarter on our Series B Preferred Shares on a perpetual basis and in accordance with the Certificate of Designation governing the terms of our Series B Preferred Shares, based on the amount outstanding as of June 30, 2021. Finally, we may, in the discretion of our Board of Directors, declare and pay dividends on our common shares, subject to, among other things, any applicable restrictions contained in our current and future agreements governing our indebtedness, including our credit facilities, and available cash flow. On May 10, 2021 we declared a dividend of $0.25 per Class A common share from the earnings of the first quarter 2021, paid on June 3, 2021 to common shareholders of record as of May 24, 2021, amounting to $9.3 million. We declared a dividend of $0.25 per Class A common share from the earnings of the second quarter 2021 to be paid on September 3, 2021 to common shareholders of record as of August 23, 2021.

Other than costs for drydockings and compliance with environmental regulations, there are no other current material commitments for capital expenditures or other known and reasonably likely material cash requirements other than in respect of our growth strategy.

All our revenues are denominated in U.S. dollars and a portion of our expenses are denominated in currencies other than U.S. dollars. As of June 30, 2021, we had $165.5 million in cash and cash equivalents, including restricted cash. Our cash and cash equivalents are mainly held in U.S. dollars, with relatively small amounts of UK pounds sterling and Euros. We regularly review the amount of cash and cash equivalents held in different jurisdictions to determine the amounts necessary to fund our operations and their growth initiatives and amounts needed to service our indebtedness and related obligations. If these amounts are moved out of their original jurisdictions, we may be subject to taxation.

Due to our charter coverage and nature of our operating and financial costs, our cashflows are predictable and visible, at least in the near to medium term. We have policies in place to control treasury activities within the group. For example, all new funding must be approved by our Board of Directors, and cash deposits can only be made with institutions meeting certain credit metrics and up to predetermined limits by institution.

Our floating rate debt is represented by drawings under a number of secured credit facilities. We have in the past, and may in the future, enter into hedging instruments, including interest rate swap agreements, to hedge our cash flows. We would not enter into derivatives for trading or speculative purposes.

The following table presents cash flow information derived from the unaudited consolidated statements of cash flows of Global Ship Lease for the six month periods ended June 30, 2021 and 2020. 

Net Cash provided by operating activities for the six months ended June 30, 2021 compared to the six months ended June 30, 2020

Net cash provided by operating activities was $58.6 million for the six months ended June 30, 2021 reflecting mainly net income of $37.7 million, adjusted for depreciation and amortization of $25.5 million, gain on sale of vessel of $7.8 million, amortization of deferred financing costs and original issue discount of $12.5 million, amortization of intangible liabilities of $2.5 million, share-based compensation of $1.9 million, plus decrease in working capital, including deferred revenue, of $8.7 million.

The adjustments to reconcile net income to net cash provided by operating activities for the six months ended June 30, 2020 were $23.1 million of depreciation and amortization, $1.9 million of amortization of deferred financing costs, $2.3 million of amortization of original issue discount/premium on repurchase of notes, $0.4 million of amortization of intangible asset-charter agreements, $8.5 million of impairment losses, $1.3 million share based compensation offset by changes in operating assets and liabilities totaling $14.0 million.

Cash used in investing activities for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020

Cash used in investing activities was $114.3 million for the six months ended June 30, 2021, as compared to $28.8 million for the same period in 2020. The principal reason for the increase is additional investment in new vessels, additional spending on vessel improvements and additional advances for vessel acquisitions.

Cash used in investing activities for the six months ended June 30, 2021 was the result of (i) $98.4 million for the acquisition of the six out of the Seven Vessels, (ii) $28.2 million for improvements on all vessels and deposits for the GSL MYNY and the Twelve Vessels, (iii) $4.2 million for regulatory drydockings and (iv) $16.5 million proceeds from sale of vessel La Tour.

Cash provided by financing activities for the six months ended June 30, 2021 as compared to cash used in financing activities for the six months ended June 30, 2020:

Cash provided by financing activities was $128.9 million for the six months ended June 30, 2021, compared to $67.8 million cash used in financing activities in the same period of 2020.

Cash provided by financing activities for the six months ended June 30, 2021 was the result of (i) $197.6 million amortization of debt; (ii) $7.9 million costs incurred in connection with new credit facilities; iii) $239.2 million of repurchases of our 2022 Notes; iv) $3.5 million and $9.3 million in dividends related to the Series B Preferred Shares and Class A common shares, respectively, net of (i) $461.8 million from drawdowns under new credit facilities (a) for the refinance of existing loans of Maira XL amounting to $51.7 million, Anthea Y amounting to $54.0 million, UASC Al Khor amounting to $51.7 million and the New Hayfin Credit Facility amounting to $236.2 million and (b) for new credit facility in relation to the purchase of the six out of the Seven Vessels amounting to $64.2 million in total and the new sale and leaseback finance amounting to $14.7 million ; (ii) $34.3 million of net proceeds from offerings of our Depositary Shares (representing interests in our Series B Preferred Shares); (iii) $67.6 million of proceeds from offering of Class A common shares, net of offering costs; and (iv) $22.7 million net proceeds from issuance of our 2024 Notes.

Indebtedness

Our indebtedness as of June 30, 2021 comprised:

New Credit Facilities in 2021

$51.7 Million Deutsche Bank AG Credit Facility

On May 6, 2021, we entered into a secured facility for an amount of $51.7 million with Deutsche Bank AG in order to refinance one of the three previous tranches of the $180.5 million Deutsche, CIT, HCOB, Entrust, Blue Ocean Credit Facility, that had a maturity date on June 30, 2022, of an amount $48.5 million.

The new Facility is repayable in 20 equal consecutive quarterly instalments of $1.2 million with a final balloon of $28.4 million payable together with the final instalment.

This facility bears interest at LIBOR plus a margin of 3.25% per annum payable quarterly in arrears.

As of June 30, 2021, the outstanding balance of the Deutsche Bank AG Credit Facility was $51.7 million.

$64.2 Million Hamburg Commercial Bank AG Credit Facility

On April 15, 2021, we entered into a Senior Secured term loan facility with Hamburg Commercial Bank AG “the HCOB facility” for an amount of up to $64.2 million in order to finance the acquisition of the Seven Vessels. As at June 30, 2021, we had drawdown five tranches of $10.7 million each, amounting to a total of $53.5 million.

Each Tranche of the Facility is repayable in 16 equal consecutive quarterly instalments of $0.7 million.

This facility bears interest at LIBOR plus a margin of 3.50% per annum payable quarterly in arrears.

As of June 30, 2021, the outstanding balance of the HCOB facility was $53.5 million. 

$51.7 Million CACIB, Bank Sinopac, CTBC Credit Facility

On April 13, 2021, we entered into a secured facility for an amount of $51.7 million in order to refinance one of the three previous tranches of the $180.5 million Deutsche, CIT, HCOB, Entrust, Blue Ocean Credit Facility, that had a maturity date on June 30, 2022, of an amount $48.7 million.

The Lenders are Credit Agricole Corporate and Investment Bank (“CACIB”), Bank Sinopac Ltd. (“Bank Sinopac”) and CTBC Bank Co. Ltd. (“CTBC”).

The Facility is repayable in 20 equal consecutive quarterly instalments of $1.3 million with a final balloon of $26.2 million payable together with the final instalment.

This facility bears interest at LIBOR plus a margin of 2.75% per annum payable quarterly in arrears.

As of June 30, 2021, the outstanding balance of the CACIB, Bank Sinopac, CTBC Credit Facility was $51.7 million.

$236.2 Million Senior secured loan facility with Hayfin Capital Management, LLP

On January 7, 2021, we entered into the New Hayfin Credit Facility amounting to $236.2 million, and on January 19, 2021, we drew down the full amount under this facility. The proceeds from the New Hayfin Credit Facility, along with cash on hand, were used to optionally redeem in full the outstanding 2022 Notes on January 20, 2021. The New Hayfin Credit Facility matures in January 2026 and bears interest at a rate of LIBOR plus a margin of 7.00% per annum. It is repayable in twenty quarterly instalments of $6.6 million, along with a balloon payment at maturity. The New Hayfin Credit Facility is secured by, among other things, first priority ship mortgages over 21 of our vessels, assignments of earnings and insurances of the mortgaged vessels, pledges over certain bank accounts, as well as share pledges over the equity interests of each mortgaged vessel-owning subsidiary. On June 30, 2021, due to the sale of La Tour, we additionally repaid $5.8 million, and the vessel was released as collateral under our New Hayfin Credit Facility.

As of June 30, 2021, the outstanding balance of New Hayfin Credit Facility was $217.3 million.

 Sale and Leaseback agreements in 2021

$54.0 Million Sale and Leaseback agreement – CMBFL

On May 20, 2021, we entered into a $54.0 million sale and leaseback agreement with CMB Financial Leasing Co. Ltd. (“CMBFL”) to refinance one of the three previous tranches of the $180.5 million Deutsche, CIT, HCOB, Entrust, Blue Ocean Credit Facility, that had a maturity date on June 30, 2022, of an amount $46.6 million. We have a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transaction was accounted for as a failed sale. In accordance with ASC 842-40 the transaction has been accounted as a financial liability.

The sale and leaseback agreement will be repayable in eight equal consecutive quarterly instalments of $2.0 million each and 20 equal consecutive quarterly instalments of $0.9 million with a repurchase obligation of $19.98 million on the final repayment date.

 The sale and leaseback agreement matures in May 2028 and bears interest at LIBOR plus a margin of 3.25% per annum payable quarterly in arrears.

In May 2021, on the actual delivery date of the vessel, we drew $54.0 million, which represented vessel purchase price $75.0 million less advanced hire of $21.0 million, which advanced hire neither bore any interest nor was refundable and was set off against payment of the purchase price payable to us by the unrelated third party under this agreement. As of June 30, 2021, the outstanding balance of CMBFL sale and leaseback agreement was $54.0 million.

$14.7 Million Sale and Leaseback agreement – Neptune Maritime Leasing

On May 12, 2021, we entered into a $14.7 million sale and leaseback agreement with Neptune Maritime Leasing (“Neptune”) to finance the acquisition of GSL Violetta delivered in April 2021. We have a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transaction has been accounted as a financial liability.

The sale and leaseback agreement will be repayable in 15 equal consecutive quarterly instalments of $0.8 million each and four equal consecutive quarterly instalments of $0.5 million with a repurchase obligation of $0.95 million on the last repayment date.

The sale and leaseback agreement matures in February 2026 and bears interest at LIBOR plus a margin of 4.64% per annum payable quarterly in arrears.

In May 2021, we drew $14.7 million under this agreement.

As of June 30, 2021, the outstanding balance of Neptune sale and leaseback agreement was $14.7 million.

Notes and Credit Facilities

$9.0 Million Chailease Credit Facility

On February 26, 2020, we entered into a secured term facility agreement with Chailease International Financial Services Pte., Ltd. for an amount of $9.0 million. The Chailease Bank Facility was used for the refinance of DVB Credit Facility.

The Facility is repayable in 36 consecutive monthly instalments $0.2 million and 24 monthly instalments of $0.1 million with a final balloon of $1.3 million payable together with the final instalment.

This facility bears interest at LIBOR plus a margin of 4.20% per annum.

As of June 30, 2021, the outstanding balance of Chailease Credit Facility was $6.7 million.

8.00% Senior Unsecured Notes due 2024

On November 19, 2019, we issued $27.5 million aggregate principal amount of our 8.00% Senior Unsecured Notes (the “2024 Notes”) in an underwriting public offering, which mature on December 31, 2024. On November 27, 2019, we sold an additional $4.1 million of 2024 Notes, pursuant the underwriter’s option to purchase such additional 2024 Notes. Interest on the 2024 Notes is payable on the last day of February, May, August and November of each year commencing on February 29, 2020.

We have the option to redeem the 2024 Notes for cash, in whole or in part, at any time (i) on or after December 31, 2021 and prior to December 31, 2022, at a price equal to 102% of the principal amount, (ii) on or after December 31, 2022 and prior to December 31, 2023, at a price equal to 101% of the principal amount and (iii) on or after December 31, 2023 and prior to maturity, at a price equal to 100% of the principal amount.

On November 27, 2019, we entered into an “At Market Issuance Sales Agreement” with B. Riley FBR, Inc. (the “Agent”) pursuant to which we may sell, from time to time, up to an additional $68.0 million of 2024 Notes (the “2024 Notes ATM Program”).

Interest on the 2024 Notes is payable on the last day of February, May, August and November of each year commencing on February 29, 2020 and the 2024 Notes have a maturity date of December 31, 2024.

As of June 30, 2021, the outstanding aggregate principal amount of the 2024 notes was $82.5 million including an amount of $50.9 million that comprise of newly issued 2024 notes under the At Market Issuance Sales Agreement. The outstanding balance, net of the outstanding balance of the original issue premium/(discount), was $82.6 million. In July 2021, we agreed to purchase the Twelve Vessels for an aggregate purchase price of $233.9 million, part of which was financed by the issuance of $35.0 million of existing 2024 Notes to the sellers.

$268.0 Million Syndicated Senior Secured Credit Facility (CACIB, ABN, CIT, Siemens, CTBC, Bank Sinopac, Palatine)

On September 19, 2019, we entered into a Syndicated Senior Secured Credit Facility in order to refinance existing credit facilities that had a maturity date in December 2020, of an amount $224.3 million.

The Senior Syndicated Secured Credit Facility was agreed to be borrowed in two tranches. The Lenders are Credit Agricole Corporate and Investment Bank (“CACIB”), ABN Amro Bank N.V. (“ABN”), CIT Bank, N.A. (“CIT”), Siemens Financial Services, Inc (“Siemens”), CTBC Bank Co. Ltd. (“CTBC”), Bank Sinopac Ltd. (“Bank Sinopac”) and Banque Palatine (“Palatine”).

Tranche A amounting to $230.0 million was drawn down in full on September 24, 2019 and is scheduled to be repaid in 20 consecutive quarterly instalments of $5.2 million starting from December 12, 2019 and a balloon payment of $126.0 million payable on September 24, 2024.

Tranche B amounts to $38.0 million was drawn down in full on February 10, 2020 and is scheduled to be repaid in 20 consecutive quarterly instalments of $1.0 million and a balloon payment of $18.0 million payable in the termination date on the fifth anniversary from the utilization date of Tranche A, which falls in September 24, 2024.

The interest rate is LIBOR plus a margin of 3.00% and is payable at each quarter end date.

As of June 30, 2021, the outstanding balance of the Syndicated Senior Secured Credit Facility was $225.6 million.

 $38.5 Million Blue Ocean Junior Credit Facility

On September 19, 2019, we entered into a refinancing agreement with Blue Ocean Income Fund LP, Blue Ocean Onshore Fund LP, and Blue Ocean Investments SPC Blue, holders of the outstanding debt of $38.5 million relevant to the previous Blue Ocean Credit Facility in order to refinance that existing facility with the only substantive change being to extend maturity at the same date with the Syndicated Senior Secured Credit Facility.

We fully drew down the facility on September 23, 2019 and it is scheduled to be repaid in a single instalment on the termination date which falls on September 24, 2024.

This facility bears interest at 10.00% per annum.

During the six month period ended June 30, 2021, we used a portion of the net proceeds from the at-the-market issuance programs to prepay an amount of $12.3 million plus a prepayment fee of $1.6 million. Following this prepayment, as of June 30, 2021, the outstanding balance of the Blue Ocean Junior Credit Facility was $26.2 million.

$59.0 Million Hellenic Bank Credit Facility

On May 23, 2019, we entered into a facility agreement with Hellenic Bank for an amount up to $37.0 million. The Hellenic Bank Facility is to be borrowed in tranches and is to be used in connection with the acquisition of the vessels GSL Eleni, GSL Grania and GSL Kalliopi.

An initial tranche of $13.0 million was drawn on May 24, 2019, in connection with the acquisition of the GSL Eleni. The Facility is repayable in 20 equal quarterly instalments of $0.5 million each with a final balloon of $4.0 million payable together with the final instalment.

A second tranche of $12.0 million was drawn on September 4, 2019, in connection with the acquisition of GSL Grania. The Facility is repayable in 20 equal quarterly instalments of $0.4 million each with a final balloon of $4.0 million payable together with the final instalment.

The third tranche of $12.0 million was drawn on October 3, 2019, in connection with the acquisition of GSL Kalliopi. The Facility is repayable in 20 equal quarterly instalments of $0.4 million each with a final balloon of $4.0 million payable together with the final instalment.

On December 10, 2019, we via our subsidiaries Global Ship Lease 33 and 34 entered into an amended and restated loan agreement with Hellenic Bank for an additional facility of amount $22.0 million that is to be borrowed in two tranches and to be used in connection with the acquisition of the vessels GSL Vinia and GSL Christel Elisabeth.

Both tranches were drawn on December 10, 2019 and are each repayable in 20 equal quarterly instalments of $0.4 million each with a final balloon of $3.5 million payable together with the final instalment.

This facility bears interest at LIBOR plus a margin of 3.90% per annum.

As of June 30, 2021, the outstanding balance of the Hellenic Bank Credit Facility was $45.7 million.

$65.0 Million Hayfin Credit Facility

On September 7, 2018, we entered into a facility agreement with Hayfin Services LLP (the “Lenders”) which provided for a secured term loan facility of up to $65.0 million. The Hayfin Credit Facility was to be borrowed in tranches and was to be used in connection with the acquisition of vessels as specified in the Hayfin Credit Facility or as otherwise agreed with the Lenders. Hayfin Credit Facility, which is non-amortizing, was available for drawing until May 10, 2019 and has a final maturity date of July 16, 2022. The interest rate is LIBOR plus a margin of 5.5% and is payable at each quarter end date. A commitment fee of 2.0% per annum was due on the undrawn commitments until May 10, 2019 when the availability period was terminated. Any debt drawn under the Hayfin Credit Facility will be secured by first priority vessel mortgage on the acquired vessel (the “Facility Mortgaged Vessel”) and by assignments of earnings and insurances, pledges over certain bank accounts, as well as share pledges over each subsidiary owning a Facility Mortgaged Vessel. In addition, the Hayfin Credit Facility is fully and unconditionally guaranteed, jointly and severally, by us, GSL Holdings, Inc. and Facility Mortgaged vessel owning subsidiaries. An initial tranche of $8.1 million was drawn on September 10, 2018 in connection with the acquisition of the GSL Valerie.

As of June 30, 2021, the outstanding balance on this facility was $5.8 million.

Covenants

Certain of our credit facilities have financial covenants, which require us to maintain, on borrowers or subholding level, among other things:

On group level, we have a minimum consolidated liquidity of not less than $20.0 million.

The agreements governing our indebtedness also contain undertakings limiting or restricting us from, among other things:

Our secured credit facilities are generally secured by, among other things:

Debt repaid in 2021

$180.5 Million Deutsche, CIT, HCOB, Entrust, Blue Ocean Credit Facility

In connection with the Poseidon Transaction, we assumed debt from the three vessel owning companies of UASC Al Khor, Maira XL and Anthea Y on the date of completion of the transaction of $180.5 million with Deutsche Bank AG. The agreement was dated November 9, 2018, with initial drawdown amount of $180.5 million and final maturity of June 30, 2022.

On December 31, 2018, we entered a deed of amendment and restatement with the bank. Based on this restatement there was a re-tranche of the existing facility such that it was split into a senior facility in an amount of $141.9 million (“Senior Facility”) and a junior facility in an amount of $38.6 million (“Junior Facility”). The Lenders of the Senior Facility are Hamburg Commercial Bank AG (“HCOB”), Deutsche Bank AG and CIT Bank N.A and the Lenders of the Junior Facility are Blue Ocean GP LLC, Blue Ocean Income Fund LP, Blue Ocean Onshore Fund LP, Entrustpermal ICAV, Blue Ocean Investments SPC one and Blue Ocean Investments SPC for three. The final maturity of both Facilities (Senior and Junior) was June 30, 2022. In addition to the repayment schedule a cash sweep mechanism based on a DSCR ratio of 1.10:1 (DSCR ratio is the ratio of Cash Flow to the Cash Flow Debt Service) applied pro rata against the Senior Facility and the Junior Facility.

Senior Facility

The Senior Facility was comprised of three Tranches. Tranche A relates to Al Khor and was repayable in 14 instalments of $0.9 million, and a final instalment of $35.1 million. Tranche B related to Anthea Y and was repayable in 14 instalments of $0.9 million and a final instalment of $35.2 million. Tranche C related to Maira XL and was repayable in 14 instalments of $0.9 million and a final instalment of $35.3 million.

The Senior Facility bore interest at LIBOR plus 3.00% payable quarterly in arrears.

On April 13, 2021, and May 6, 2021, we entered into two new secured credit facilities amounting to $51.7 million and $51.7 million, respectively, to refinance two of the three existing tranches of the $180.5 million Deutsche, CIT, HCOB, Entrust, Blue Ocean Credit Facility, that had a maturity date on June 30, 2022. On May 20, 2021, we entered into a $54.0 million sale and leaseback agreement with unrelated third party to refinance the outstanding balance of the third tranche of the $180.5 million Deutsche, CIT, HCOB, Entrust, Blue Ocean Credit Facility, that had a maturity date on June 30, 2022.

As of June 30, 2021, the outstanding balance of the Senior Facility had been fully repaid.

Junior Facility

The Junior Facility was comprised of three Tranches. Tranche A related to Al Khor and was repayable in 14 instalments of $0.2 million and a final instalment of $9.6 million. Tranche B related to Anthea Y and was repayable in 14 instalments of $0.2 million and a final instalment of $9.6 million. Tranche C related to Maira XL and was repayable in 14 instalments of $0.2 million and a final instalment of $9.6 million.

The Junior Facility bore interest at LIBOR plus 10.00% payable quarterly in arrears.

Following the refinancing that took place in April and May 2021, as described above, as of June 30, 2021, the outstanding balance on the Junior Facility had been fully repaid.

9.875% First Priority Secured Notes due 2022

On October 31, 2017, we completed the sale of $360.0 million in aggregate principal amount of our 9.875% First Priority Secured Notes (the “2022 Notes”) which mature on November 15, 2022. Proceeds after the deduction of the original issue discount, but before expenses, amounted to $356.4 million. The original issue discount was being amortized on an effective interest rate basis over the life of the 2022 Notes. The 2022 Notes were fully redeemed in January 2021.

Interest on the 2022 Notes was payable semi-annually on May 15 and November 15 of each year, commencing on May 15, 2018. As at December 31, 2020 the 2022 Notes were secured by first priority vessel mortgages on the 16 vessels in the GSL Fleet and by assignments of earnings and insurances, pledges over certain bank accounts, as well as share pledges over each subsidiary owning a vessel securing the 2022 Notes. In addition, the 2022 Notes were fully and unconditionally guaranteed, jointly and severally, by our 16 vessel owning subsidiaries as of December 31, 2020 and Global Ship Lease Services Limited.

On February 10, 2020, we completed an optional redemption of $46.0 million aggregate principal amount of our 2022 Notes at a redemption price of $48.3 million (representing 104.938% of the aggregate principal amount) plus accrued and unpaid interest. During the year ended December 31, 2020, we purchased $15.3 million of aggregate principal amount of 2022 Notes in the open market at a weighted average price of 98.98% of the aggregate principal amount.

On January 20, 2021, we optionally redeemed, in full, $233.4 million aggregate principal amount of 2022 Notes, representing the entire outstanding amount under the 2022 Notes, using the proceeds we received from the New Hayfin Credit Facility, and cash on hand, at a redemption price of $239.2 million (representing 102.469% of the aggregate principal amount of notes redeemed) plus accrued and unpaid interest. Total loss on extinguishment of the bonds totaled $10.6 million and is recorded within the Consolidated Statement of Operations as interest expense.

 Leverage

Debt as at June 30, 2021 totaled $835.4 million, comprising $684.2 million secured debt collateralized by our vessels, $68.7 million from sale and leaseback financing transactions and $82.5 million of unsecured indebtedness on our 2024 Notes. As of June 30, 2021, none of our vessels were unencumbered.

We believe that funds generated by the business and retained will be sufficient to meet our operating needs for the next twelve months, including working capital requirements, drydocking costs, interest and debt repayment obligations.

As market conditions warrant, we may from time to time, depending upon market conditions and the provisions on our facilities/notes, seek to repay loans or repurchase debt securities, in privately-negotiated or open market transactions.

Tabular Disclosure of Contractual Obligations

The contractual obligations presented below represent our estimates of future payments under fixed contractual obligations and commitments as of June 30, 2021. These amounts do not include dividends on the Series B Preferred Shares which amount to $8.0 million annually based on the principal outstanding as at June 30, 2021. Changes in our business needs or in interest rates, as well as actions by third parties and other factors, may cause these estimates to change. These estimates are necessarily subjective and our actual payments in future periods are likely to vary from those presented in the table.

Quantitative and Qualitative Disclosures about Market Risks

Interest Rate Risk

We are exposed to the impact of interest rate changes primarily through our floating-rate borrowings. Significant increases in interest rates could adversely affect our results of operations and our ability to service our own debt. Details of the expected maturity of our borrowings are presented in Tabular Disclosure of Contractual Obligations above.

Sensitivity Analysis

Our analysis of the potential effects of variations in market interest rates is based on a sensitivity analysis, which models the effects of potential market interest rate changes on our financial condition and results of operations. The following sensitivity analysis may have limited use as a benchmark and should not be viewed as a forecast as it does not include a variety of other potential factors that could affect our business as a result of changes in interest rates.

Based on the outstanding balance at June 30, 2021 of our floating rate credit facilities of $726.6 million and ignoring amortization thereon and cash on hand, a hypothetical 1.00% increase in LIBOR would have the impact of reducing our annual net income, before income taxes, by approximately $7.3 million.

Foreign Currency Exchange Risk

The shipping industry’s functional currency is the U.S. dollar. All of our revenues and the majority of our operating costs are in U.S. dollars. In the future, we do not expect to be exposed to any significant extent to the impact of changes in foreign currency exchange rates. Consequently, we do not presently intend to enter into derivative instruments to hedge the foreign currency translation of assets or liabilities or foreign currency transactions or to use financial instruments for trading or other speculative purposes.

Inflation

With the exception of rising costs associated with the employment of international crews for our ships and the impact of global oil prices on the cost of lubricating oil, we do not believe that inflation has had, or is likely in the foreseeable future to have, a significant impact on ship operating expenses, drydocking expenses and general and administrative expenses. For the duration of the global expense agreement, under certain predefined circumstances, we will be able to recover a portion of our ship operating costs above a pre-determined threshold.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

GLOBAL SHIP LEASE, INC.