Globus Maritime to add to fleet after raising significant capital

Globus

Globus Maritime Limited, a dry bulk shipping company, reported its unaudited consolidated operating and financial results for the six-month period ended June 30, 2020:

Current Fleet Deployment

All our vessels are currently operating on short-term time charters (“on spot”).

Management Commentary

The first half of 2020 was a challenging period because the Company experienced a weak spot market due to a mixture of seasonal weakness as well as the effects of the coronavirus pandemic that affected the shipping industry. The dry bulk market started improving in later part of the second quarter of 2020 from the lows we saw earlier in the year.

It was at this time that we successfully tapped the capital markets and completed offerings and private placements, raising significant capital. We also initiated discussions for debt financing to support potential vessel acquisitions, when and if we wanted to do so. As of today, we have enough cash and believe that we have debt financing support to be able to acquire additional vessels, if we choose. After completion of the capital markets activities, we inspected the technical and commercial capabilities of about half a dozen vessels in order to ascertain whether any of them would be appropriate to acquire but determined not to move forward with any of them. We are inspecting vessels, however, there can be no assurance that any of the acquisitions we have been considering or will consider will occur.

When deciding whether to purchase a vessel, we make a financial and commercial analysis of the potential acquisition; we do not just buy a vessel only to increase the number of vessels on the water we own and operate. If we believe a vessel has the right technical and commercial aspects and we expect that the market (in addition to a calculated residual value) can support certain returns we target, then we will consider such acquisition.

Additionally, the company also elected to lower and pay off some of our high-interest and convertible debt as we move forward with a stronger balance sheet.

We are pleased that the company today is financially strong, with cash on hand, and we look into the future with resolve to thrive and potentially expand.

We have been fortunate to have good onboard personnel. Our focus and concentrated operational efforts are towards them. Due to the coronavirus pandemic and the associated travel restrictions and quarantines, it is very difficult for seafarers to embark and disembark from vessels. This has kept a lot of them away from their families and loved ones. We realize that it is an industrywide problem, which we hope will be resolved soon with the intervention of governments and regulators. In the meantime, we are doing our best to support our onboard personnel and look after their wellbeing and safety with all means we have available.

Management Discussion and Analysis of the Results of Operations

Recent Developments

Convertible Note

On March 13, 2020, Company and the holder of the Convertible Note entered into a waiver regarding the Convertible Note (the “Waiver”). The Waiver waived the Company’s obligation to repay the Convertible Note on the existing maturity date of March 13, 2020 and did not require the Company to repay the Convertible Note until March 13, 2021. The Convertible Note was fully repaid in June 2020.

Firment Shipping Inc.

On May 8, 2020, the Company and Firment Shipping Inc. agreed to enter into an amended and restated agreement. The final maturity of the Firment Shipping Credit Facility was extended to October 31, 2021 and the available amount to be drawn under this Facility increased to $14.2 million. The outstanding amount under the Firment Shipping Credit Facility was fully repaid on July 27, 2020.

Receipt of Nasdaq Notice of Deficiency

On March 6, 2020, the Company received written notification from The Nasdaq Stock Market dated March 2, 2020, indicating that because the closing bid price of our common stock for the last 30 consecutive business days was below $1.00 per share, we no longer meet the minimum bid price continued listing requirement for the Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5450(a)(1). Pursuant to Nasdaq Listing Rules, the applicable grace period to regain compliance was 180 days, or until August 31, 2020, but citing extraordinary market conditions, Nasdaq filed an immediately effective rule change with the Securities and Exchange Commission which, with effect from April 16, 2020, tolled the listing process until July 1, 2020. Consequently, the Company’s compliance period has effectively been extended until November 12, 2020. The Company intends to monitor the closing bid price of its common stock between now and November 12, 2020 and is considering its options, including a potential reverse stock split, in order to regain compliance with the Nasdaq Capital Market minimum bid price requirement. The Company can cure this deficiency if the closing bid price of its common stock is $1.00 per share or higher for at least ten consecutive business days during the grace period. In the event the Company does not regain compliance within the 180-day grace period, and it meets all other listing standards and requirements it may be eligible for an additional 180-day grace period. The Company intends to cure the deficiency within the prescribed grace period. During this time, the Company’s common stock will continue to be listed and trade on the Nasdaq Capital Market.

Issuance of the Series B preferred shares

On June 12, 2020, the Company entered into a stock purchase agreement and issued 5,000 of our newly-designated Series B Preferred Shares, par value $0.001 per share, to Goldenmare Limited, a company controlled by our Chief Executive Officer, Athanasios Feidakis, in return for $150,000, which amount was settled by reducing, on a dollar-for-dollar basis, the amount payable as executive compensation by the Company to Goldenmare Limited pursuant to a consultancy agreement.

The issuance of the Series B preferred shares to Goldenmare Limited was approved by an independent committee of the Board of Directors of the Company, which received a fairness opinion from an independent financial advisor that the transaction was for a fair value.

Each Series B preferred share entitles the holder thereof to 25,000 votes per share on all matters submitted to a vote of the shareholders of the Company, provided however, that no holder of Series B preferred shares may exercise voting rights pursuant to Series B preferred shares that would result in the aggregate voting power of any beneficial owner of such shares and its affiliates(whether pursuant to ownership of Series B preferred shares, common shares or otherwise) to exceed 49.0% of the total number of votes eligible to be cast on any matter submitted to a vote of shareholders of the Company. To the fullest extent permitted by law, the holders of Series B preferred shares shall have no special voting or consent rights and shall vote together as one class with the holders of the common shares on all matters put before the shareholders. The Series B preferred shares are not convertible into common shares or any other security. They are not redeemable and have no dividend rights. Upon any liquidation, dissolution or winding up of the Company, the Series B preferred shares are entitled to receive a payment with priority over the common shareholders equal to the par value of $0.001 per share. The Series B preferred shareholder has no other rights to distributions upon any liquidation, dissolution or winding up of the Company. All issued and outstanding Series B preferred shares must be held of record by one holder, and the Series B preferred shares shall not be transferred without the prior approval of our Board of Directors. Finally, in the event the Company (i) declares any dividend on its common shares, payable in common shares, (ii) subdivides the outstanding common shares or (iii) combines the outstanding common shares into a smaller number of shares, there shall be a proportional adjustment to the number of outstanding Series B preferred shares.

In July 2020, we issued an additional 25,000 of our Series B preferred shares to Goldenmare Limited in return for $150,000. The $150,000 was paid by reducing, on a dollar for dollar basis, the amount payable as compensation by the Company to Goldenmare Limited pursuant to a consultancy agreement.

In addition, we increased the maximum voting rights under the Series B preferred shares from 49.0% to 49.99%. The issuance of the Series B preferred shares to Goldenmare Limited was approved by an independent committee of the Board of Directors of the Company, which received a fairness opinion from an independent financial advisor that the transaction was for a fair value.

Public Offerings

On June 22, 2020, the Company issued 34,285,714 units in an underwritten public offering at a price of $0.35 per unit. Each unit consisted of one common share and one Class A warrant to purchase one common share (a “Class A Warrant”) and immediately separated upon issuance. In addition, the Company granted to Maxim Group LLC a 45-day option to purchase up to an additional 5,142,857 common shares (or prefunded warrants in lieu thereof) and up to 5,142,857 Class A warrants. At the time of the closing, the underwriters exercised and closed on part of their overallotment option and purchased an additional 5,139,286 Common Shares and 5,139,286 Class A Warrants.

The prefunded warrants are exercisable at any time after their original issuance until exercised in full. The Class A Warrants are exercisable at any time after their original issuance up to the date that is (a) five years after their original issuance. Each of the prefunded warrants and the Class A Warrants will be exercisable, in whole or in part by delivering to us a duly executed exercise notice and, at any time a registration statement registering the issuance of the common shares underlying the warrants under the Securities Act is effective and available for the issuance of such shares, by payment in full in immediately available funds for the number of common shares purchased upon such exercise. If a registration statement registering the issuance of the common shares underlying the warrants under the Securities Act is not effective or available, the holder may, in its sole discretion, elect to exercise the warrant through a cashless exercise, in which case the holder would receive upon such exercise the net number of common shares determined according to the formula set forth in the warrant. The Company may be required to pay certain amounts as liquidated damages as specified in the warrants in the event it does not deliver common shares upon exercise of the warrants within the time periods specified in the warrants.

On June 30, 2020, the Company issued 45,850,000 of its common shares in a registered direct offering and 45,850,000 warrants (“PP Warrants”) in a concurrent private placement for a purchase price of $0.27 per common share and June PP Warrant. The exercise price of each June PP Warrant is $0.30 per share.

The PP Warrants are exercisable for a period of five and one-half years commencing on the date of issuance. The warrants will be exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise notice with payment in full in immediately available funds for the number of common shares purchased upon such exercise. If a registration statement registering the resale of the common shares underlying the private placement warrants under the Securities Act is not effective or available at any time after the six-month anniversary of the date of issuance of the private placement warrants, the holder may, in its sole discretion, elect to exercise the private placement warrant through a cashless exercise, in which case the holder would receive upon such exercise the net number of common shares determined according to the formula set forth in the warrant. If the Company does not issue the shares in a timely fashion, the warrant contains certain liquidated damages provisions.

On July 21, 2020, the Company issued 83,333,333 of its common shares in a registered direct offering and 83,333,333 of its July PP Warrants to purchase common shares in a concurrent private placement for a purchase price of $0.18 per common share and July PP Warrant. The exercise price of each July PP Warrant is $0.18 per share. Concurrently with this offering the exercise price of the June PP Warrants was reduced to $0.18 per share.

The PP Warrants are exercisable for a period of five and one-half years commencing on the date of issuance. The warrants will be exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise notice with payment in full in immediately available funds for the number of common shares purchased upon such exercise. If a registration statement registering the resale of the common shares underlying the private placement warrants under the Securities Act is not effective or available at any time after the six-month anniversary of the date of issuance of the private placement warrants, the holder may, in its sole discretion, elect to exercise the private placement warrant through a cashless exercise, in which case the holder would receive upon such exercise the net number of common shares determined according to the formula set forth in the warrant. If the Company does not issue the shares in a timely fashion, the warrant contains certain liquidated damages provisions.

From June 22, 2020 till today, the Company issued 555,000 common shares pursuant to exercises of outstanding Class A Warrants. As of September 25, 2020, no PP Warrants had been exercised.

LIBOR will be replaced as the reference rate under debt obligations

On July 27, 2017, the UK Financial Conduct Authority announced that it would phase out LIBOR by the end of 2021. As a result, lenders have insisted on provisions that entitle the lenders, in their discretion, to replace published LIBOR as the basis for the interest calculation with their cost-of-funds rate. Certain of the Company’s existing financing arrangements, provide for the use of replacement rates if LIBOR is discontinued. The Company is in the process of evaluating the impact of LIBOR discontinuation. While it cannot predict the effect of the potential changes to LIBOR or the establishment and use of alternative rates or benchmarks, the interest payable on debt could be subject to volatility and the lending costs could increase, which would have an adverse effect on the Company’s profitability, earnings and cash flow.

Results of Operations

Second quarter of the year 2020 compared to the second quarter of the year 2019

Total comprehensive loss for the second quarter of the year 2020 amounted to $4.2 million or $0.39 basic and diluted loss per share based on 10,861,371 weighted average number of shares, compared to total comprehensive loss of $3 million for the same period last year or $0.74 basic and diluted loss per share based on 4,070,153 weighted average number of shares.

First half of the year 2020 compared to the first half of the year 2019

Total comprehensive loss for the first half of the year 2020 amounted to $13.2 million or $1.58 basic and diluted loss per share based on 8,339,137 weighted average number of shares, compared to total comprehensive loss of $3.5 million for the same period last year or $0.95 basic and diluted loss per share based on 3,642,256 weighted average number of shares.

Voyage revenues

During the six-month period ended June 30, 2020 and 2019, our Voyage revenues reached $4.6 million and $6.9 million respectively. The 34% decrease in Voyage revenues was mainly attributed to the decrease in the average time charter rates achieved by our vessels during the first half of 2020 compared to the same period in 2019. Daily Time Charter Equivalent rate (TCE) for the first half of 2020 was $3,016 per vessel per day against $6,358 per vessel per day during the same period in 2019 corresponding to a decrease of 53%, which is attributed to the outbreak of COVID-19 virus.

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