Pangaea Logistics Solutions Ltd. · NASDAQ:PANL

Pangaea Logistics Solutions — SPAC Merger (July 2014)

38 slides from Pangaea Logistics Solutions's SPAC merger presentation, Jul 3, 2014

  1. Slide 1: Merger of Quartet Merger Corp. & Pangaea Logistics Solutions Ltd.

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Merger of Quartet Merger Corp. (QTET) & Pangaea Logistics Solutions Ltd. Introductory Presentation July 2014

  2. Slide 2: Important Disclosures

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 The attached presentation was filed with the Securities and Exchange Commission on July 3 , 2014 as part of the Current Report on Form 8 - K filed by Quartet Merger Corp . (“Quartet”) . Quartet is holding presentations for certain o

  3. Slide 3: Safe Harbor

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Safe Harbor This presentation includes certain forward - looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 , including statements regarding future financial performance, future growth and

  4. Slide 4: Investment Highlights: Pangaea Logistics Solutions Ltd.

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Investment Highlights: Pangaea Logistics Solutions Ltd. (“Pangaea”) Strong & Profitable Growth Proven Industry Leader Aligned Interests Attractive Valuation Defensible Pillars of Profitability Value - added backhaul specialization D

  5. Slide 5: Diversified, Blue-Chip Client Base

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Diversified, Blue - Chip Client Base  Our clients are world - class, diversified, & loyal ─ Repeat clients ( 3 or more years in the past 4 years) are 59% of our shipping days ─ Our top 10 clients represent 42% of our revenue during

  6. Slide 6: Pangaea's Team

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Pangaea’s Team  5 offices with 69 professionals, including 11 nationalities  18 years of operations: origins in grain fronthaul & pig iron backhaul  Management team (10 members) possesses combined 250+ years of experience  Opera

  7. Slide 7: Defensible Pillars of Profitability

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Defensible Pillars of Profitability  Execution specialization :  Material cost savings & enhanced profit through granular operating knowledge  Secured & defended by 250+ years of expertise & embedded relationships  Backhaul spec

  8. Slide 8: Backhaul Specialization: Generating Profit from a Cost Center

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Backhaul Specialization: Generating Profit from a Cost Center 5 Europe Brazil Canada Fronthaul Trip Revenue ($17/t) Positioning Revenue 870,000 430,000 Bunkers & Port Costs Vessel Hire (35 days) (340,000) (350,000) Voyage Result 610

  9. Slide 9: Backhaul Specialization: Generating Profit from a Cost Center

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Backhaul Specialization: Generating Profit from a Cost Center The Profitability of Backhaul: Schematic Illustration 6 China Brazil Fronthaul Trip Revenue ($28/t) Positioning Revenue 2,000,000 500,000 Bunkers & Port Costs Vessel Hire

  10. Slide 10: Backhaul Specialization: A Source of Profitability & Stability

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Backhaul Specialization: A Source of Profitability & Stability  Deep client relationships & proven reputation drive our backhaul practice:  Majority of backhaul days for repeat, longstanding customers  Majority of backhaul days d

  11. Slide 11: Defensible Pillars of Profitability

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Defensible Pillars of Profitability  World - class execution :  Material cost savings & enhanced profit through granular operating knowledge  Secured & defended by 250+ years of expertise & embedded relationships  Backhaul speci

  12. Slide 12: Ice-Class Specialization: Premium Rates Generate Superior Profits

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217  A very attractive, low - competition, premium - rate trade  Northern routes in winter: minimal choices for service at ice - bound ports  Polar routes in summer: far more efficient routes improve profits significantly ─ Dramatica

  13. Slide 13: Ice-Class Specialization: Premium Rates Generate Superior Profits

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Ice - Class Specialization: Premium Rates Generate Superior Profits 10

  14. Slide 14: Ice-Class Specialization: Premium Rates Generate Superior Profits

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 Panamax 1-Yr Timecharter Rate Pangaea Ice Class Average Panamax Average Ice - Class Specialization: Premium Rates Generate Superior Profits Our Ice - Class Average TCE = $16,632

  15. Slide 15: Ice-Class Specialization: The View from the Bridge

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Ice - Class Specialization: The View from the Bridge NSR to FE Via Suez to FE Murmansk Kirkenes 12

  16. Slide 16: A Global Leader in Maritime Logistics

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 A Global Leader in Maritime Logistics  A preferred partner :  Selected by customers to transport mission - critical cargos  Favored counterparty for banks & stressed owners  Adviser to the European Commission on Arctic maritime

  17. Slide 17: Selected Consolidated Financial Data

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Selected Consolidated Financial Data 14 (U.S dollars in thousands) 2014 2013 2013 2012 2011 Income Statement Data: Revenue 114,212$ 95,135$ 392,471$ 387,058$ 409,644$ Direct operating expenses 99,024 83,126 349,873 349,206 389,621 G

  18. Slide 18: Conclusion: Long-term Competitive Advantages

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Conclusion: Long - term Competitive Advantages  Enhanced utilization & profitability through strategic backhaul & triangulation  Expertise in niche markets & less commoditized routes (particularly ice routes )  Consistent, acycli

  19. Slide 19: Appendices

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Appendices  Appendix I: Introduction to Pangaea  Appendix II: Carrying Commodities is N ot a Commodity Business  Appendix III: Business Strategy  Appendix IV: Competition & Environment  Appendix V: Comparable Companies Analysis

  20. Slide 20: Appendix I: Introduction to Pangaea

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217  An established, growth - oriented global logistics company focused on providing seaborne dry bulk transportation services  Headquartered in Newport, Rhode Island with offices in Copenhagen, Athens, Rio de Janeiro, & Singapore  S

  21. Slide 21: Leading Provider of Comprehensive Maritime Transportation Solutions

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Leading Provider of Comprehensive Maritime Transportation Solutions  Our services are broad & deep . For our clients :  We improve transportation operations  We design loading & discharge systems in critical ports  We optimize t

  22. Slide 22: Market Opportunity Created by Deep Relationships

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 In 2013, Pangaea carried more than 19.5 million DWT of cargo, serving more than 190 ports around the globe Market Opportunity Created by Deep Relationships 19 Appendix I: Introduction to Pangaea

  23. Slide 23: Cargo Diversification by Days, 2013

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217  Diversified: No cargo accounts for more than 14% of Pangaea’s traffic Cargo by Days, 2013 Iron Ore 14% Bauxite 11% Coal 9% Clinker 8% Limestone 8% Pig Iron 7% HBI 7% Alumina 6% Manganese Ore 4% Other 26% 20 Appendix I: Introductio

  24. Slide 24: Appendix II: Carrying Commodities is Not a Commodity Business

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Appendix II: Carrying Commodities is Not a Commodity Business  Our clients recognize service & quality  Load & discharge our cargos on schedule  Deploy high quality vessels to avoid delays & damage  We solve specialized problems

  25. Slide 25: Appendix II: Carrying Commodities is Not a Commodity Business

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Appendix II: Carrying Commodities is Not a Commodity Business  Efficient execution maximizes our revenues & minimizes expenses  Loading & discharge of vessels ─ Good vessel preparation ─ Specialized techniques ─ Parceling  Effici

  26. Slide 26: Appendix III: Business Strategy

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Appendix III: Business Strategy  Focus on increasing strategic COAs  Expand market leadership in niche ice routes by increasing owned fleet of ice - class vessels  Plan to increase owned fleet from 14 to 20 vessels by the end of

  27. Slide 27: Growth Drivers

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Growth Drivers  Routes beget routes :  Customer - led route expansions lead to new backhaul opportunities  Special services increase volumes :  Creating value for our clients embeds us in their businesses processes  Helping our

  28. Slide 28: Appendix IV: Competition & Environment

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Appendix IV: Competition & Environment 25  Limited Competition :  Market has centered on a small set of reliable, established operators  Entry requires: ─ Trust of vessel owners ─ Trust of customers ─ Proven skills & reliability

  29. Slide 29: Appendix V: Comparable Companies Analysis

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Appendix V: Comparable Companies Analysis 26 (1) Data as of June 17, 2014. Revenue and EPS Estimates from CapitalIQ. (2) P/E multiples adjusted for excess cash. Comparable Companies ($ in Millions Except for Per Share Data) Company

  30. Slide 30: Appendix V: Comparable Companies Analysis

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Appendix V: Comparable Companies Analysis (1) See footnotes on page 29 with regard to the calculation of Pangaea’s P/E multiples for 2014 & 2015 and footnotes on page 26 for the calculation of comparable company P/E multiples. P/E C

  31. Slide 31: Appendix VI: Transaction Summary - Transaction Structure

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217  At Closing, (i) Quartet will merge with and into a newly formed entity (“Holdco”), with Holdco surviving and becoming the new pu blic company and (ii) a newly formed subsidiary of Holdco (“Merger Sub”) will merge with and into Pan

  32. Slide 32: Pangaea Implied Valuation

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Pangaea Implied Valuation (1)(2) Transaction Structure Appendix VI: Transaction Summary 29  Implies a Fully Diluted Equity Value to 2014 Net Income multiple of 14.0x  Implies a Fully Diluted Equity Value to 2015 Net Income multipl

  33. Slide 33: Appendix VII: Senior Management

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Years Experience 36 + Edward Coll Chief Executive Officer • Co - founded Bulk Partners Ltd . , the predecessor company to Pangaea, in 1996 • President of Commodity Ocean Transport Corp (1989 - 1996) • Continental Grain Company (1979

  34. Slide 34: Appendix VIII: Unaudited Historical Combined Financial Information

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Appendix VIII: Unaudited Historical Combined Financial Information 31 As of and for the years ended December 31, 2013 2012 2011 2010 2009 Income Statement Data: Total revenue $ 392,471 $ 387,058 $ 409,644 $ 446,225 $ 132,086 Histori

  35. Slide 35: Notes on Unaudited Historical Combined Financial Information

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Upon the request of potential investors, Quartet is providing the selected unaudited historical combined financial information . Additional information is available upon request from Quartet . The information contained in the Unaudi

  36. Slide 36: Historic Adjusted EBITDA Definition

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 ( 1 ) Historic Adjusted EBITDA represents operating earnings before interest expense, income taxes, depreciation and amortization, and other non - operating income and/or expense, if any, and after net gain from cargo cancellation s

  37. Slide 37: Appendix IX: A World-Class, Purpose-Driven Fleet

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Appendix IX: A World - Class, Purpose - Driven Fleet  “ Our business is growing, so we expand our fleet ”  Not “we expand our fleet in an effort to grow our business”  Typically we operate 45 - 60 vessels  35 - 45 chartered in o

  38. Slide 38: Vessels Acquired at Historically Low Prices

    157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217  We acquired high quality Japanese & Korean built vessels at historically low prices  Opportunistic investment program  Our low ownership costs create long - term cost advantages Historic Prices vs. Vessel Acquisitions 35 Source:

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