Pangaea Logistics Solutions Ltd. · NASDAQ:PANL
Pangaea Logistics Solutions — SPAC Merger (June 2014)
35 slides from Pangaea Logistics Solutions's SPAC merger presentation, Jun 18, 2014
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 June 2014
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 June 18 , 2014 as part of the Current Report on Form 8 - K filed by Quartet Merger Corp . (“Quartet”) . Quartet is holding presentations for certain
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
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
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
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
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
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
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
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
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
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
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
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 = $16,632
Slide 15: Ice-Class Specialization: The View from the Bridge
157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Ice - Class Specialization: The View from the Bridge NSR to FE Via Suez to FE Murmansk Kirkenes 12
Slide 16: A Global Leader in Maritime Logistics
157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 A Global Leader in Maritime Logistics ; A preferred partner : ; Selected by customers to transport mission - critical cargos ; Favored counterparty for banks & stressed owners ; Adviser to the European Commission on Arctic maritime
Slide 17: Selected Consolidated Financial Data
157 27 26 110 162 210 4 112 173 177 175 174 191 214 235 217 217 217 Selected Consolidated Financial Data 14 (U.S dollars in thousands) 2011 2012 2013 Income Statement Data: Revenue 409,644$ 387,058$ 392,471$ Direct operating expenses 389,621 349,206 349,873 Gross profit 20,023 37,852 42,598 Selling,
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
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
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
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
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
Slide 23: Diversified: Cargo 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
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
Slide 25: Efficient Execution Maximizes Revenues & Minimizes Expenses
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
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
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
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
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 April 28, 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
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 3 with regard to the calculation of Pangaea’s P/E multiples for 2014 & 2015 and footnotes on page 2 9 f or the calculation of comparable company P/E multiples. P/E
Slide 31: Appendix VI: Transaction Summary
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
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
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
Slide 34: Appendix VIII: 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 VIII: 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
Slide 35: Vessel Acquisitions 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 32 Source:
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