==================================================================
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
GOLDEN STATE PETRO (IOM I-A) PLC
GOLDEN STATE PETRO (IOM I-B) PLC
THIRD QUARTER REPORT
1997
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<PAGE>
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1997 Commission File Number 333-26227
- - - - --------------------------------------------------------------------------------
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
GOLDEN STATE PETRO (IOM I-A) PLC
GOLDEN STATE PETRO (IOM I-B) PLC
(exact name of Registrant as specified in their charters)
Delaware N/A
Isle of Man N/A
Isle of Man N/A
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Nos.)
C/O CAMBRIDGE FUND MANAGEMENT LLC C/O 15-19 ATHOL STREET
535 MADISON AVENUE DOUGLAS, ISLE OF MAN IM1 1LB
NEW YORK, NY 10022 011-44-1-62-462-8575
(212) 508-6500 (Address, including zip code, and
(Address, including zip code, and telephone number, including area
telephone number, including area code of code of principal, executive offices
principal, executive offices of Golden of Golden State Petro (IOM I-A) PLC
State Petroleum Transport Corporation) and Golden State Petro (IOM I-B) PLC
CT CORPORATION SYSTEM
1623 BROADWAY
NEW YORK, NY 10019
(212) 246-5070
(Name, address, including zip code, and
telephone number, including area code
of agent for service of Golden State Petroleum
Transport Corporation, Golden State Petro (IOM I-A)
PLC and Golden State Petro (IOM I-B) PLC)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
Number of shares outstanding of each class of each Registrant's Common Stock as
of October 31, 1997.
Common, $1.00 per value..........................................2 shares
- 2 -
<PAGE>
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
GOLDEN STATE PETRO (IOM I-A) PLC
GOLDEN STATE PETRO (IOM I-B) PLC
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1997
INDEX
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<TABLE>
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PAGE
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS FOR GOLDEN STATE PETROLEUM TRANSPORT
CORPORATION
- Balance Sheet (September 30, 1997 and March 31, 1997) 5
- Income Statement - Date of Commencement to March 31, 1997
and Two Quarters Ended September 30, 1997 6
- Statement of Cash Flows - Date of Commencement to March 31, 1997
and Two Quarters Ended September 30, 1997 7
- Notes to Golden State Petroleum Transport Corporation 8
FINANCIAL STATEMENTS FOR GOLDEN STATE PETRO (IOM I-A) PLC
- Balance Sheet (September 30, 1997 and March 31, 1997) 9
- Income Statement - Date of Commencement to March 31, 1997
and Two Quarters Ended September 30, 1997 10
- Statement of Cash Flows - Date of Commencement to March 31, 1997
and Two Quarters Ended September 30, 1997 11
- Notes to Golden State Petro (IOM I-A) PLC 12
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
FINANCIAL STATEMENTS FOR GOLDEN STATE PETRO (IOM I-B) PLC
- Balance Sheet (September 30, 1997 and March 31, 1997) 20
- Income Statement - Date of Commencement to March 31, 1997
and Two Quarters Ended September 30, 1997 21
- Statement of Cash Flows - Date of Commencement to March 31, 1997
and Two Quarters Ended September 30, 1997 22
- Notes to Golden State Petro (IOM I-B) PLC 23
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 31
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 32
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 32
SIGNATURES
</TABLE>
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<PAGE>
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 MARCH 31, 1997
------------------ --------------
<S> <C> <C>
ASSETS:
Cash $ 2 $ 2
Accounts receivable 5,000 5,000
------ ------
Total assets $5,002 $5,002
====== ======
LIABILITIES AND STOCKHOLDER'S EQUITY:
Accounts payable $5,000 $5,000
------ ------
Total liabilities 5,000 5,000
------ ------
STOCKHOLDER'S EQUITY:
Common stock, no par value, 100 shares authorized,
2 shares issued and outstanding 2 2
Retained earnings -- --
------ ------
Total stockholder's equity 2 2
------ ------
Total liabilities and stockholder's equity $5,002 $5,002
====== ======
</TABLE>
SEE NOTES TO THE FINANCIAL STATEMENTS.
- 5 -
<PAGE>
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
STATEMENT OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
FOR THE PERIOD
DECEMBER 5, 1996
FOR THE PERIOD (DATE OF COMMENCE-
APRIL 1, 1997 TO MENT OF OPERATIONS)
SEPTEMBER 30, 1997 TO MARCH 31, 1997
------------------ --------------------
<S> <C> <C>
REVENUE:
Agency fees $ 0 $5,000
------ ------
EXPENSES:
Transaction expenses $ 0 5,000
------ ------
Net Income -- --
Retained earnings, beginning of period -- --
------ ------
Retained earnings, end of period $ -- $ --
====== ======
</TABLE>
SEE NOTES TO THE FINANCIAL STATEMENTS.
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<PAGE>
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE PERIOD
DECEMBER 5, 1996
(DATE OF
FOR THE PERIOD COMMENCEMENT
APRIL 1, 1997 TO OF OPERATIONS) TO
SEPTEMBER 30, 1997 MARCH 31, 1997
------------------ --------------------
<S> <C> <C>
Cash flows provided by operating activities
Net income $ -- $ --
Changes in assets and liabilities:
Increase in accounts receivable -- (5,000)
Increase in accounts payable -- 5,000
------ ------
Net cash provided by operating activities -- --
------ ------
Cash flows from financing activities:
Capital contribution -- 2
------ ------
Net cash provided by financing activities -- 2
------ ------
Cash at beginning of period 2 --
------ ------
Cash at end of period $ 2 $ 2
====== ======
</TABLE>
SEE NOTES TO THE FINANCIAL STATEMENTS.
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<PAGE>
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. GENERAL:
The accompanying unaudited interim financial statements include all
adjustments (consisting solely of normal recurring adjustments) which
are, in the opinion of management, necessary to fairly present the
financial position of the company as of September 30, 1997 and the result
of its operations, changes in retained earnings, and cash flows for the
periods then ended.
2. THE COMPANY:
Golden State Petroleum Transport Corporation (the "Company") was
incorporated under the laws of the State of Delaware on December 5, 1996.
The Company is a special purpose corporation that has been organized
solely for the purpose of issuing certain Mortgage Notes as agent for two
affiliated entities, Golden State Petro (IOM I-A) PLC and Golden State
Petro (IOM I-B) PLC (collectively, the "Owners"). The Mortgage Notes were
issued at face value on December 24, 1996 and January 6, 1997 and the
proceeds totaling $178,800,000 were used by the Owners to finance the
construction and acquisition of two very large crude carriers for charter
to an unaffiliated third party.
The Mortgage Notes are not obligations of and are not guaranteed by the
Company.
BASIS OF PRESENTATION
The financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America. The
preparation of financial statement in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets
and liabilities at the dates of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
3. ACCOUNTS RECEIVABLE/RELATED PARTY:
The Company earned $5,000 as aggregate compensation for services as agent
in the issuance of the Mortgage Notes and, correspondingly, owes
equivalent transaction fees to its ultimate parent, Cambridge Petroleum
Transport Corporation.
4. CAPITALIZATION:
The Company's capitalization is nominal and it has no source of income
other than fees earned as agent. The Company has no direct employees and
utilizes resources and premises provided by its ultimate parent for a
cost equivalent to transaction fees earned.
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<PAGE>
GOLDEN STATE PETRO (IOM I-A) PLC
BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 MARCH 31, 1997
------------------ --------------
<S> <C> <C>
ASSETS:
Restricted cash $50,146,532 $52,433,724
Vessel under construction 37,859,484 36,510,071
----------- -----------
Total assets 88,006,016 88,943,795
=========== ===========
LIABILITIES:
Mortgage notes, net of unamortized debt issue
costs of $1,137,753 at September 30, 1997
and $1,185,093 at March 31, 1997. 87,312,247 87,264,907
Interest payable and other liabilities 1,135,242 1,821,840
----------- -----------
Total liabilities 88,447,489 89,086,747
----------- -----------
STOCKHOLDER'S EQUITY:
Common stock, no par value, 2,000 shares authorized,
2 shares issued and outstanding 2 2
Retained deficit (441,475) (142,954)
----------- -----------
Total stockholder's equity (441,473) (142,952)
----------- -----------
Total liabilities and stockholder's equity $88,006,016 $88,943,795
=========== ===========
</TABLE>
SEE NOTES TO THE FINANCIAL STATEMENTS.
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<PAGE>
GOLDEN STATE PETRO (IOM I-A) PLC
STATEMENT OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
FOR THE PERIOD
DECEMBER 24, 1996
FOR THE PERIOD (DATE OF COMMENCE-
APRIL 1, 1997 TO MENT OF OPERATIONS)
SEPTEMBER 30, 1997 TO MARCH 31, 1997
------------------ -------------------
<S> <C> <C>
REVENUE:
Interest income $1,813,472 $1,005,020
---------- ---------
Total revenue 1,813,472 1,005,020
EXPENSES:
Interest 2,031,320 1,116,413
Administrative expenses 80,673 31,561
---------- ---------
Total expenses 2,111,993 1,147,974
Net loss (298,521) (142,954)
---------- ---------
Retained earnings (deficit), beginning
of period (142,954) --
Retained earnings (deficit), end of period $ (441,475) $(142,954)
========== =========
</TABLE>
SEE NOTES TO THE FINANCIAL STATEMENTS.
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<PAGE>
GOLDEN STATE PETRO (IOM I-A) PLC
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE PERIOD
DECEMBER 24,
1996 (DATE OF
FOR THE PERIOD COMMENCEMENT
APRIL 1, 1997 TO OF OPERATIONS) TO
SEPTEMBER 30, 1997 MARCH 31, 1997
------------------ ---------------------
<S> <C> <C>
Cash flows from operating activities:
Net Loss $ (298,521) $ (142,954)
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of debt issue costs 47,340 31,561
Changes in assets and liabilities:
Increase (decrease) in interest payable and
other liabilities (686,598) 1,821,840
----------- -----------
Net cash provided by (used in) operating
activities (937,779) 1,710,447
----------- -----------
Cash flows from investing activities:
Payments made under vessel construction contract -- (35,304,644)
Interest capitalized (1,349,413) (705,427)
Transaction costs capitalized -- (500,000)
(Increase) decrease in restricted cash 2,287,192 (52,433,724)
----------- -----------
Net cash (used in) provided by investing activities 937,779 (88,943,795)
----------- -----------
Cash flows from financing activities:
Proceeds from mortgage notes -- 88,450,000
Debt issue costs -- (1,216,654)
Contribution of capital -- 2
----------- -----------
Net cash provided by financing activities -- 87,233,348
----------- -----------
Net increase in cash -- --
=========== ===========
Supplemental data
Interest paid during the period $ 4,075,662 --
=========== ===========
</TABLE>
SEE NOTES TO THE FINANCIAL STATEMENTS.
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<PAGE>
GOLDEN STATE PETRO (IOM I-A) PLC
NOTES TO FINANCIAL STATEMENTS
1. GENERAL:
The accompanying unaudited interim financial statements include all
adjustments (consisting solely of normal recurring adjustments) which
are, in the opinion of management, necessary to fairly present the
financial position of the company as of September 30, 1997 and the result
of its operations, changes in retained earnings, and cash flows for the
periods then ended.
2. DESCRIPTION OF LEASE OPERATION:
Golden State Petro (IOM I-A) PLC (the "Company") was formed as an Isle of
Man public limited company for the purpose of acquiring and chartering a
very large crude oil carrier ("VLCC"). The proceeds from the offering and
sale of the Serial Notes, together with the proceeds of the sale of the
Term Notes (collectively the "Notes"), will be used by the Company to
fund the construction of a VLCC by Samsung Corporation and Samsung Heavy
Industries Co., Ltd. (collectively, the "Builders") under the technical
supervision of the Chevron Shipping Company as agent for Chevron
Transport Corporation (the "Initial Charterer") which is an indirect,
wholly-owned subsidiary of Chevron Corporation. The contracted delivery
date of the VLCC is February 1, 1999. The VLCC, once accepted by the
Company under the building contract, will be chartered to the Initial
Charterer pursuant to an initial charter for a term of eighteen years.
The Initial Charterer has an option to terminate the charter on the
eighth anniversary of the delivery date for the VLCC. The Initial
Charterer's obligations under the initial charter will be guaranteed by
Chevron corporation.
The Company is a wholly-owned subsidiary of Golden State Holdings I Ltd.,
an Isle of Man holding company, which is a wholly-owned subsidiary of
Cambridge Petroleum Transport Corporation ("CPTC"), a closely-held Cayman
Islands Corporation.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America.
ALLOCATION OF MORTGAGE NOTES
The Company is jointly and severally liable under the Notes with Golden
State Petro (IOM I-B) PLC for the issued amount of $178,800,000. In
preparing the separate company financial statements of the Company and
Golden State Petro (IOM I-B) PLC, the aggregate
- 12 -
<PAGE>
GOLDEN STATE PETRO (IOM I-A) PLC
NOTES TO FINANCIAL STATEMENTS, CONTINUED
amount of the Notes has been allocated so as to reflect the difference in
the contracted cost of the vessels.
OPERATING LEASE
The operating lease commences upon the delivery of the vessel to the
Initial Charterer. Income from the operating lease will be recognized
ratably over the term of the leases.
VESSEL UNDER CONSTRUCTION
Construction in progress is capitalized in accordance with contract
payments made and also includes the capitalization of interest charges
and certain transaction costs incurred during the period of the vessel's
construction. Contract payments capitalized as of September 30, 1997 and
March 31, 1997 were $35,304,644. Interest charges of $2,054,840 and
transaction costs of $500,000 were capitalized as of September 30, 1997.
Interest charges of $705,428 and transaction costs of $500,000 were
capitalized as of March 31, 1997.
DEBT ISSUE COSTS
Debt issue costs comprise expenses incurred in connection with the
issuance of the Notes (see Note 3). Such expenses are being amortized
over the weighted average life of the serial notes, and the life of the
term notes, respectively.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The methods and assumptions used in estimating the fair values of
financial instruments are as follows:
RESTRICTED CASH: The Restricted cash balance represents an investment
in a guaranteed investment contract which is readily convertible into
cash. The carrying value of the guaranteed investment contract is
stated at contract value which approximates fair value. This contract
is with Pacific Mutual Life Insurance, a California Life Insurance
Company and is held in the name of the United States Trust Company on
behalf of the Company as the Indenture Trustee.
MORTGAGE NOTES: The carrying value of the Notes approximates fair
value as of September 30, 1997 and March 31, 1997 based upon the
current borrowing rates available for financing with similar terms
and maturities and the short elapsed time between the date of the
balance sheet and the date of issuance of the Notes.
INTEREST PAYABLE AND OTHER LIABILITIES: The carrying value
approximates fair value due to their relatively short maturities.
- 13 -
<PAGE>
GOLDEN STATE PETRO (IOM I-A) PLC
NOTES TO FINANCIAL STATEMENTS, CONTINUED
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles 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 dates of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from such
estimates. The most significant assumptions and estimates relate to the
vessel under construction held for lease.
INCOME TAXES
The Company is exempt from United States federal, state and local income
taxes and has been granted exemptions from the statutory 20% tax on
profits required to be assessed against Isle of Man companies.
Accordingly, no provision for taxes have been made in these financial
statements.
OTHER
Both interest income and interest expense are recognized on an accrual
basis.
4. MORTGAGE NOTES:
On December 24, 1996, Golden State Petroleum Transport Corporation, a
special purpose Delaware corporation which is an entity affiliated with
the Company, acted as agent on behalf of the Company and issued the
Notes, certain terms of which are set forth below. The Company was
allocated a share of the proceeds from the offering and sale of the
Notes, which totaled $88,450,000. These funds were used by the Company to
fund the construction and acquisition of a VLCC.
Interest is deemed to accrue for both the Serial and Term notes from
December 24, 1996 and is payable on February 1st and August 1st of each
year commencing August 1, 1997.
The Notes have priority of payment and are collateralized by (i) a
statutory first mortgage on the vessel; (ii) an assignment of the
building contract with the Builders and a technical supervision agreement
with Chevron; (iii) an assignment of the building contract performance
guarantee with the Korea Development Bank; (iv) an assignment of the
initial charter; (v) an assignment of the charter supplement (pursuant to
the issuance of Additional Notes); (vi) an assignment of the Chevron
Corporation guarantees; (vii) an assignment of the management agreement
with Cambridge Fund Management L.L.C.; (viii) an assignment of the
earnings and issuance proceeds related to the vessel and; (ix) certain
other collateral.
- 14 -
<PAGE>
GOLDEN STATE PETRO (IOM I-A) PLC
NOTES TO FINANCIAL STATEMENTS, CONTINUED
SERIAL NOTES
The Serial Notes were issued in the aggregate principal amount of
$51,700,000 of which $24,900,000 was allocated to the Company. Set forth
below are the allocated principal amount and the interest rates of Serial
Notes payable on each maturity date for the Company:
MATURITY DATE INTEREST RATE PRINCIPAL
---------------------------------------------------------------------
February 1, 2000 6.360% $ 2,550
February 1, 2001 6.465% 3,350
February 1, 2002 6.550% 3,600
February 1, 2003 6.610% 3,850
February 1, 2004 6.700% 4,100
February 1, 2005 6.800% 4,350
February 1, 2006 6.855% 3,100
--------
$24,900
========
Interest is deemed to accrue for the Serial notes from December 24, 1996
and is payable on February 1st and August 1st of each year commencing
August 1, 1997. At September 30, 1997 and March 31, 1997 the effective
interest rate for the Serial notes was 6.633%.
TERM NOTES
The Term Notes were issued by Golden State Petroleum Transportation
Corporation, acting as agent for the Company, in the aggregate principal
amount of $127,100,000. The allocated principal amount of Term Notes to
the Company is $63,550,000. Interest on the Term Notes will accrue from
the date of issuance thereof at a rate per annum equal to 8.04%, and will
be payable on each February 1st and August 1st (each, a "Payment Date"),
commencing August 1, 1997. Interest on the Term Notes will accrue from
the most recent date to which interest has been paid or, if no interest
has been paid, from December 24, 1996.
Term Notes will be subject to redemption through the operation of a
mandatory sinking fund on each payment date commencing August 1, 2007 to
and including August 1, 2018, according to the schedule of sinking fund
redemption payments set forth below. The sinking fund redemption price is
100% of the principal amount of Term Notes being redeemed, together with
accrued and unpaid interest to the date fixed for redemption. The Term
Notes will mature, and the final payment of principal and interest on the
Term Notes will be due, on February 1, 2019. The amortization schedule
will approximate level debt service through the maturity date with an
additional principal payment on the maturity date of $10,995,000. The
following table provides the scheduled sinking fund redemption amounts
and final principal payment on the Term Notes.
- 15 -
<PAGE>
GOLDEN STATE PETRO (IOM I-A) PLC
NOTES TO FINANCIAL STATEMENTS, CONTINUED
=================================================================
SINKING FUND REDEMPTION AMOUNTS
AND FINAL PRINCIPAL PAYMENT
(DOLLARS IN THOUSANDS)
---------------------------------------------------------
Scheduled Payment Date Amount
-----------------------------------------------------------------
August 1, 2007 $ 1,340
February 1, 2008 1,395
August 1, 2008 1,450
February 1, 2009 1,510
August 1, 2009 1,570
February 1, 2010 1,635
August 1, 2010 1,700
February 1, 2011 1,765
August 1, 2011 1,840
February 1, 2012 1,910
August 1, 2012 1,990
February 1, 2013 2,070
August 1, 2013 2,150
February 1, 2014 2,240
August 1, 2014 2,330
February 1, 2015 2,420
August 1, 2015 2,520
February 1, 2016 2,620
August 1, 2016 2,725
February 1, 2017 2,835
August 1, 2017 2,950
February 1, 2018 3,070
August 1, 2018 3,190
February 1, 2019 14,325
-------
$63,550
=======
-----------------------------------------------------------------
ADDITIONAL NOTES
The Company shall be entitled to issue an additional series of first
preferred mortgage notes upon the delivery date of the vessel. The
proceeds of the Additional Notes, will be used by the Company to fund any
additional construction costs of the vessel.
The term and maturity of any Additional Notes will be determined at the
discretion of management at the date of issue.
MANDATORY REDEMPTION
The Serial Notes, together with the Term Notes and the Additional Notes,
will be subject to mandatory redemption on a pro rata basis in an
aggregate principal amount equal to the allocated principal amount of the
Notes of the vessel where: (i) it is not delivered on or before 180 days
from the contractual delivery date for the vessel and the contractual
delivery date is not extended as provided in the building contract or;
(ii) if the Company rejects or cancels the related building contract
pursuant to the terms and conditions set forth therein or; (iii) if the
vessel is a total loss, at a redemption price equal to 100% of the
principal amount thereof, plus accrued and unpaid interest (including
default interest) to the date fixed for redemption.
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<PAGE>
GOLDEN STATE PETRO (IOM I-A) PLC
NOTES TO FINANCIAL STATEMENTS, CONTINUED
If a net reduction in construction cost occurs, the Company shall redeem
outstanding Serial Notes and Term Notes, on a pro rata basis, in an
aggregate principal amount equal to the net reduction in construction
costs, at a redemption price of 100% of the principal amount thereof,
together with accrued and unpaid interest on such Notes to be redeemed,
to the date fixed for redemption.
If the Initial Charterer exercises any of its termination options as
defined in the Initial Charter, and the Company does not enter into an
acceptable replacement charter for the vessel on or before the date which
is one week prior to the next sinking fund payment date for the Term
Notes following the effective date of such termination and the vessel is
sold, with the consent of all the holders of the Term Notes, then the
outstanding Term Notes will be redeemed in part, from the net proceeds of
the sale of the vessel and the allocable portion of the Restricted Cash -
Pre Funding account, in an aggregate principal amount of Term Notes equal
to the allocated principal amount of the Notes for the vessel, at an
aggregate redemption price equal to the sum of such net proceeds and the
allocable portion of the debt service reserve fund. If all the holders of
the Term Notes do not consent to such a sale, then Cambridge Fund
Management, L.L.C. will attempt to recharter the vessel.
OPTIONAL REDEMPTION
The Serial Notes will not be subject to optional redemption prior to the
respective maturity dates. The Term Notes may be redeemed in whole or in
part at the discretion of the Company on any Payment Date on or after the
later of (a) August 1, 1999 and (b) the delivery date of the last vessel
(whether the vessel of the Company or the vessel of Golden State Petro
(IOM I-B) PLC) to be delivered at a redemption price equal to 100% of the
principal amount thereof plus accrued and unpaid interest to the date
fixed for redemption, provided that if (i) such redemption occurs prior
to February 1, 2018 and (ii) a Vessel is then subject to the related
Initial Charter or to an Acceptable Replacement Charter pursuant to which
the charterer thereunder is required to pay charter hire equal to or
greater than the Charter Hire payable by the Initial Charterer during the
Fixed Period, then the Make-Whole Premium as defined, shall be payable
with respect to Mortgage Notes in an amount equal to Allocated Principal
Amount of the Mortgage Notes for such Vessel. The Company may not
exercise such optional redemption if such optional redemption would
adversely affect the then applicable ratings on the Serial Notes. In
addition, Term Notes may be redeemed in part in an aggregate principal
amount equal to the allocated principal amount of the Notes for the
vessel if the Initial Charter for the vessel is terminated and an
acceptable replacement charter is not entered into, at a redemption price
equal to 100% of the principal amount thereof plus accrued interest to
the date fixed for redemption.
- 17 -
<PAGE>
GOLDEN STATE PETRO (IOM I-A) PLC
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DEBT COVENANTS
The Indenture includes certain covenants that, among other things,
prohibit the Company and Golden State Petroleum Transport Corporation
from incurring additional indebtedness (other than Additional Notes or
subordinated loans) and impose limitations on the amount of investments,
on loans, advances, mergers, the payment of dividends and the making of
certain other payments, the creation of liens and certain transactions
with affiliates.
5. RESTRICTED CASH - PRE FUNDING ACCOUNT:
This account was established in the name and under the control of the
United States Trust Company as the Indenture Trustee. The proceeds of the
Notes issued on behalf of the Company were deposited into this account in
the form of a guaranteed investment contract. The funds in this account
can only be used to fund the installment construction payments and to pay
interest on the Notes. The funds on deposit in this Pre Funding account
at September 30, 1997 and March 31, 1997 were $50,146,532 and
$52,433,724, respectively.
6. CONTINGENCIES AND COMMITMENTS
The following is a schedule by years of minimum future rentals on the non
cancelable portion of the operating lease as of September 30, 1997 for
the fiscal years ending December 31:
1998................................ $ --
1999................................ 9,101,329
2000................................ 9,928,723
2001................................ 9,928,723
2002................................ 9,928,723
From 2003 to 2007................... 40,542,286
-----------
Total minimum future rentals........ $79,429,784
Future contractual payments to be made under the ship building contract
for each of the succeeding fiscal years ending December 31, until
completion are as follows:
1998................................ $ --
1999................................ 17,423,780
2000................................ 25,726,340
-----------
Total future contractual payments... $43,150,120
- 18 -
<PAGE>
GOLDEN STATE PETRO (IOM I-A) PLC
NOTES TO FINANCIAL STATEMENTS, CONTINUED
7. CONCENTRATION OF CREDIT RISK:
The Company has no sources for the payment of principal (including
sinking fund payments and mandatory redemption payments, and interest on
the Notes) except for the Restricted Cash - Pre Funding Account, the
monthly charter hire payments from the Initial Charterer and investment
income earned on the restricted cash. Accordingly, the Company's ability
to pay debt service on the Notes is wholly dependent upon the financial
condition, results of operations and cash flows from the initial charter
and any subsequent charters if Initial Charterer elects to terminate the
initial charter.
8. RELATED PARTIES:
The Company is liable for $2,500 to Golden State Petroleum Transport
Corporation as compensation for acting as agent in connection with the
issuance of the Notes.
9. MANAGEMENT AGREEMENT:
Pursuant to an agreement (the "Management Agreement") between the Company
and Cambridge Fund Management, L.L.C. (the "Manager") an affiliate of the
Company, the Manager has agreed to provide administrative management and
advisory services to the Company at an annual fee of $50,000. The charges
will be payable to the Manager semi-annually on February 1st and August
1st from amounts on deposit in the ship management reserve fund. The
Management Agreement is subordinate to the Notes.
10. REGISTRATION OF THE NOTES:
The Term Notes were sold by the Company and an affiliated entity, Golden
State Petro (IOM I-B) PLC (together, the "Owners") in a private placement
through their agent, Golden State Petroleum Transport Corporation. In
connection with such sale, the Owners and certain other parties (the
"Parties") entered into a Registration Rights Agreement for the benefit
of the purchasers. Pursuant thereto, the Parties agreed to use their best
efforts to effect an Exchange Offer to exchange up to $127,100,000 in
aggregate principal amount of the Notes issued by the Owners. The
registration of the Term Notes became effective on July 30, 1997.
11. AUDIT FEES:
Audit fees are paid for by Cambridge Fund Management, LLC.
12. DIRECTORS FEES:
Directors fees are paid for by Cambridge Fund Management.
- 19 -
<PAGE>
GOLDEN STATE PETRO (IOM I-B) PLC
BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 MARCH 31, 1997
------------------ --------------
<S> <C> <C>
ASSETS:
Restricted cash $48,220,286 $50,647,457
Vessel under construction 41,702,041 40,217,197
----------- -----------
Total assets 89,922,327 90,864,654
=========== ===========
LIABILITIES:
Mortgage notes, net of unamortized debt issue
costs of $1,153,302 at September 30, 1997
and $1,201,284 at March 31, 1997. 89,196,698 89,148,716
Interest payable and other liabilities 1,156,676 1,856,490
----------- -----------
Total liabilities 90,353,374 91,005,206
----------- -----------
STOCKHOLDER'S EQUITY:
Common stock, no par value, 2,000 shares authorized,
2 shares issued and outstanding 2 2
Retained deficit (431,049) (140,554)
----------- -----------
Total stockholder's equity (431,047) (140,552)
----------- -----------
Total liabilities and stockholder's equity $89,922,327 $90,864,654
=========== ===========
</TABLE>
SEE NOTES TO THE FINANCIAL STATEMENTS.
- 20 -
<PAGE>
GOLDEN STATE PETRO (IOM I-B) PLC
STATEMENT OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
FOR THE PERIOD
DECEMBER 24, 1996
FOR THE PERIOD (DATE OF COMMENCE-
APRIL 1, 1997 TO MENT OF OPERATIONS)
SEPTEMBER 30, 1997 TO MARCH 31, 1997
------------------ ------------------
<S> <C> <C>
REVENUE:
Interest income $1,751,008 $ 972,541
---------- ---------
Total revenue 1,751,008 972,541
EXPENSES:
Interest 1,960,190 1,081,107
Administrative expenses 81,313 31,988
---------- ---------
Total expenses 2,041,503 1,113,095
Net loss (290,495) (140,554)
---------- ---------
Retained earnings (deficit), beginning
of period (140,554) --
Retained earnings (deficit), end of period $ (431,049) $(140,554)
========== =========
</TABLE>
SEE NOTES TO THE FINANCIAL STATEMENTS.
- 21 -
<PAGE>
GOLDEN STATE PETRO (IOM I-B) PLC
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE PERIOD
DECEMBER 24,
1996 (DATE OF
FOR THE PERIOD COMMENCEMENT
APRIL 1, 1997 TO OF OPERATIONS) TO
SEPTEMBER 30, 1997 MARCH 31, 1997
------------------ ------------------
<S> <C> <C>
Cash flows from operating activities:
Net Loss $ (290,495) $ (140,554)
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of debt issue costs 47,982 31,988
Changes in assets and liabilities:
Increase (decrease) in interest payable and
other liabilities (699,814) 1,856,490
----------- -----------
Net cash provided by (used in) operating
activities (942,327) 1,747,924
----------- -----------
Cash flows from investing activities:
Payments made under vessel construction contract -- (38,941,814)
Interest capitalized (1,484,844) (775,383)
Transaction costs capitalized -- (500,000)
(Increase) decrease in restricted cash 2,427,171 (50,647,457)
----------- -----------
Net cash (used in) provided by investing activities 942,327 (90,864,654)
----------- -----------
Cash flows from financing activities:
Proceeds from mortgage notes -- 90,350,000
Debt issue costs -- (1,233,272)
Contribution of capital -- 2
----------- -----------
Net cash provided by financing activities -- 89,116,730
----------- -----------
Net increase in cash -- --
=========== ===========
Supplemental data
Interest paid during the period $ 4,153,180 $ --
=========== ===========
</TABLE>
SEE NOTES TO THE FINANCIAL STATEMENTS.
- 22 -
<PAGE>
GOLDEN STATE PETRO (IOM I-B) PLC
NOTES TO FINANCIAL STATEMENTS
1. GENERAL:
The accompanying unaudited interim financial statements include all
adjustments (consisting solely of normal recurring adjustments) which
are, in the opinion of management, necessary to fairly present the
financial position of the company as of September 30, 1997 and the result
of its operations, changes in retained earnings, and cash flows for the
periods then ended.
2. DESCRIPTION OF LEASE OPERATION:
Golden State Petro (IOM I-B) PLC (the "Company") was formed as an Isle of
Man public limited company for the purpose of acquiring and chartering a
very large crude oil carrier ("VLCC"). The proceeds from the offering and
sale of the Serial Notes, together with the proceeds of the sale of the
Term Notes (collectively the "Notes"), will be used by the Company to
fund the construction of a VLCC by Samsung Corporation and Samsung Heavy
Industries Co., Ltd. (collectively, the "Builders") under the technical
supervision of the Chevron Shipping Company as agent for Chevron
Transport Corporation (the "Initial Charterer") which is an indirect,
wholly-owned subsidiary of Chevron Corporation. The contracted delivery
date of the VLCC is July 1, 1999. The VLCC, once accepted by the Company
under the building contract, will be chartered to the Initial Charterer
pursuant to an initial charter for a term of eighteen years. The Initial
Charterer has an option to terminate the charter on the eighth
anniversary of the delivery date for the VLCC. The Initial Charterer's
obligations under the initial charter will be guaranteed by Chevron
corporation.
The Company is a wholly-owned subsidiary of Golden State Holdings I Ltd.,
an Isle of Man holding company, which is a wholly-owned subsidiary of
Cambridge Petroleum Transport Corporation ("CPTC"), a closely-held Cayman
Islands Corporation.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America.
ALLOCATION OF MORTGAGE NOTES
The Company is jointly and severally liable under the Notes with Golden
State Petro (IOM I-A) PLC for the issued amount of $178,800,000. In
preparing the separate company
- 23 -
<PAGE>
GOLDEN STATE PETRO (IOM I-B) PLC
NOTES TO FINANCIAL STATEMENTS, CONTINUED
financial statements of the Company and Golden State Petro (IOM I-A) PLC,
the aggregate amount of the Notes has been allocated so as to reflect the
difference in the contracted cost of the vessels.
OPERATING LEASE
The operating lease commences upon the delivery of the vessel to the
Initial Charterer. Income from the operating lease will be recognized
ratably over the term of the leases.
VESSEL UNDER CONSTRUCTION
Construction in progress is capitalized in accordance with contract
payments made and also includes the capitalization of interest charges
and certain transaction costs incurred during the period of the vessel's
construction. Contract payments capitalized as of September 30, 1997 and
March 31, 1997 were $38,941,814. Interest charges of $2,260,227 and
transaction costs of $500,000 were capitalized as of September 30, 1997.
Interest charges of $775,383 and transaction costs of $500,000 were
capitalized as of March 31, 1997.
DEBT ISSUE COSTS
Debt issue costs comprise expenses incurred in connection with the
issuance of the Notes (see Note 3). Such expenses are being amortized
over the weighted average life of the serial notes, and the life of the
term notes, respectively.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The methods and assumptions used in estimating the fair values of
financial instruments are as follows:
RESTRICTED CASH: The Restricted cash balance represents an investment
in a guaranteed investment contract which is readily convertible to
cash. The carrying value of the guaranteed investment contract is
stated at contract value which approximates fair value. This contract
is with Pacific Mutual Life Insurance, a California Life Insurance
Company and is held in the name of the United States Trust Company on
behalf of the Company as the Indenture Trustee.
MORTGAGE NOTES: The carrying value of the Notes approximates fair
value as of September 30, 1997 and March 31, 1997 based upon the
current borrowing rates available for financing with similar terms
and maturities and the short elapsed time between the date of the
balance sheet and the date of issuance of the Notes.
INTEREST PAYABLE AND OTHER LIABILITIES: The carrying value
approximates fair value due to their relatively short maturities.
- 24 -
<PAGE>
GOLDEN STATE PETRO (IOM I-B) PLC
NOTES TO FINANCIAL STATEMENTS, CONTINUED
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles 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
financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from such
estimates. The most significant assumptions and estimates relate to the
vessel under construction held for lease.
INCOME TAXES
The Company is exempt from United States federal, state and local income
taxes and has been granted exemptions from the statutory 20% tax on
profits required to be assessed against Isle of Man companies.
Accordingly, no provision for taxes have been made in these financial
statements.
OTHER
Both interest income and interest expense are recognized on an accrual
basis.
3. MORTGAGE NOTES:
On December 24, 1996, Golden State Petroleum Transport Corporation, a
special purpose Delaware corporation which is an entity affiliated with
the Company, acted as agent on behalf of the Company and issued the
Notes, certain terms of which are set forth below. The Company was
allocated a share of the proceeds from the offering and sale of the
Notes, which totaled $90,350,000. These funds were used by the Company to
fund the construction and acquisition of a VLCC.
The Notes have priority of payment and are collateralized by (i) a
statutory first mortgage on the vessel; (ii) an assignment of the
building contract with the Builders and a technical supervision
agreement; (iii) an assignment of the building contract performance
guarantee with the Korea Development Bank; (iv) an assignment of the
initial charter; (v) an assignment of the charter supplement (pursuant to
the issuance of Additional Notes); (vi) an assignment of the Chevron
Corporation guarantee; (vii) an assignment of the management agreement
with Cambridge Fund Management L.L.C.; (viii) an assignment of the
earnings and issuance proceeds related to the vessel and (ix) certain
other collateral.
SERIAL NOTES
The Serial Notes were issued in the aggregate principal amount of
$51,700,000 of which $26,800,000 was allocated to the Company. Set forth
below are the allocated principal amount and the interest rates of Serial
Notes payable on each maturity date for the Company:
- 25 -
<PAGE>
GOLDEN STATE PETRO (IOM I-B) PLC
NOTES TO FINANCIAL STATEMENTS, CONTINUED
MATURITY DATE INTEREST RATE PRINCIPAL
---------------------------------------------------------------------
February 1, 2000 6.360% $ 2,650
February 1, 2001 6.465% 3,450
February 1, 2002 6.550% 3,700
February 1, 2003 6.610% 3,950
February 1, 2004 6.700% 4,200
February 1, 2005 6.800% 4,450
February 1, 2006 6.855% 4,400
-------
$26,800
=======
Interest is deemed to accrue for the Serial notes from December 24, 1996
and is payable on February 1st and August 1st of each year commencing
August 1, 1997. At September 30, 1997 and March 31, 1997 the effective
interest rate for the Serial notes was 6.643%.
TERM NOTES
The Term Notes were issued by Golden State Petroleum Transportation
Corporation, acting as agent for the Company, in the aggregate principal
amount of $127,100,000. The allocated principal amount of Term Notes to
the Company is $63,550,000. Interest on the Term Notes will accrue from
the date of issuance thereof at a rate per annum equal to 8.04%, and will
be payable on each February 1st and August 1st (each, a "Payment Date"),
commencing August 1, 1997. Interest on the Term Notes will accrue from
the most recent date to which interest has been paid or, if no interest
has been paid, from December 24, 1996.
Term Notes will be subject to redemption through the operation of a
mandatory sinking fund on each payment date commencing February 1, 2008
to and including August 1, 2018, according to the schedule of sinking
fund redemption payments set forth below. The sinking fund redemption
price is 100% of the principal amount of Term Notes being redeemed,
together with accrued and unpaid interest to the date fixed for
redemption. The Term Notes will mature, and the final payment of
principal and interest on the Term Notes will be due, on February 1,
2019. The amortization schedule will approximate level debt service
through the maturity date with an additional principal payment on the
maturity date of $10,995,000. The following table provides the scheduled
sinking fund redemption amounts and final principal payment on the Term
Notes.
- 26 -
<PAGE>
GOLDEN STATE PETRO (IOM I-B) PLC
NOTES TO FINANCIAL STATEMENTS, CONTINUED
=================================================================
SINKING FUND REDEMPTION AMOUNTS
AND FINAL PRINCIPAL PAYMENT
(DOLLARS IN THOUSANDS)
---------------------------------------------------------
Scheduled Payment Date Amount
-----------------------------------------------------------------
February 1, 2008 $ 1,430
August 1, 2008 1,490
February 1, 2009 1,550
August 1, 2009 1,610
February 1, 2010 1,675
August 1, 2010 1,745
February 1, 2011 1,815
August 1, 2011 1,885
February 1, 2012 1,960
August 1, 2012 2,040
February 1, 2013 2,125
August 1, 2013 2,210
February 1, 2014 2,295
August 1, 2014 2,390
February 1, 2015 2,485
August 1, 2015 2,585
February 1, 2016 2,690
August 1, 2016 2,800
February 1, 2017 2,910
August 1, 2017 3,025
February 1, 2018 3,150
August 1, 2018 3,275
February 1, 2019 14,410
-------
$63,550
=======
-----------------------------------------------------------------
ADDITIONAL NOTES
The Company shall be entitled to issue an additional series of first
preferred mortgage notes upon the delivery date of the vessel. The
proceeds of the Additional Notes, will be used by the Company to fund any
additional construction costs of the vessel.
The term and maturity of any Additional Notes will be determined at the
discretion of management at the date of issue
MANDATORY REDEMPTION
The Serial Notes, together with the Term Notes and the Additional Notes,
will be subject to mandatory redemption on a pro rata basis in an
aggregate principal amount equal to the allocated principal amount of the
Notes of the vessel where; (i) it is not delivered on or before 180 days
from the contractual delivery date for the vessel and the contractual
delivery date is not extended as provided in the building contract or;
(ii) if the Company rejects or cancels the related building contract
pursuant to the terms and conditions set forth therein, or; (iii) if the
vessel is a total loss, at a redemption price equal to 100% of the
principal amount thereof, plus accrued and unpaid interest (including
default interest) to the date fixed for redemption.
- 27 -
<PAGE>
GOLDEN STATE PETRO (IOM I-B) PLC
NOTES TO FINANCIAL STATEMENTS, CONTINUED
If a net reduction in construction cost occurs, the Company shall redeem
outstanding Serial Notes and Term Notes, on a pro rata basis, in an
aggregate principal amount equal to the net reduction in construction
costs, at a redemption price of 100% of the principal amount thereof,
together with accrued and unpaid interest on such Notes to be redeemed,
to the date fixed for redemption.
If the Initial Charterer exercises any of its termination options as
defined in the Initial Charter, and the Company does not enter into an
acceptable replacement charter for the vessel on or before the date which
is one week prior to the next sinking fund payment date for the Term
Notes following the effective date of such termination and the vessel is
sold, with the consent of all the holders of the Term Notes, then the
outstanding Term Notes will be redeemed in part, from the net proceeds of
the sale of the vessel and the allocable portion of the Restricted Cash -
Pre Funding account, in an aggregate principal amount of Term Notes equal
to the allocated principal amount of the Notes for the vessel, at an
aggregate redemption price equal to the sum of such net proceeds and the
allocable portion of the debt service reserve fund. If all the holders of
the Term Notes do not consent to such a sale, then Cambridge Fund
Management, L.L.C. will attempt to recharter the vessel.
OPTIONAL REDEMPTION
The Serial Notes will not be subject to optional redemption prior to the
respective maturity dates.
The Term Notes may be redeemed in whole or in part at the discretion of
the Company on any Payment Date on or after the later of (a) August 1,
1999 and (b) the delivery date of the last vessel (whether the vessel of
the Company or the vessel of Golden State Petro (IOM I-A) PLC) to be
delivered at a redemption price equal to 100% of the principal amount
thereof plus accrued and unpaid interest to the date fixed for
redemption, provided that if (i) such redemption occurs prior to February
1, 2018 and (ii) a Vessel is then subject to the related Initial Charter
or to an Acceptable Replacement Charter pursuant to which the charterer
thereunder is required to pay charter hire equal to or greater than the
Charter Hire payable by the Initial Charterer during the Fixed Period,
then the Make-Whole Premium as defined, shall be payable with respect to
Mortgage Notes in an amount equal to Allocated Principal Amount of the
Mortgage Notes for such Vessel. The Company may not exercise such
optional redemption if such optional redemption would adversely affect
the then applicable ratings on the Serial Notes. In addition, Term Notes
may be redeemed in part in an aggregate principal amount equal to the
allocated principal amount of the Notes for the vessel if the Initial
Charter for the vessel is terminated and an acceptable replacement
charter is not entered into, at a redemption price equal to 100% of the
principal amount thereof plus accrued interest to the date fixed for
redemption.
- 28 -
<PAGE>
GOLDEN STATE PETRO (IOM I-B) PLC
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DEBT COVENANTS
The Indenture includes certain covenants that, among other things,
prohibit the Company and Golden State Petroleum Transport Corporation
from incurring additional indebtedness (other than Additional Notes or
subordinated loans) and impose limitations on the amount of investments,
on loans, advances, mergers, the payment of dividends and the making of
certain other payments, the creation of liens and certain transactions
with affiliates.
5. RESTRICTED CASH - PRE FUNDING ACCOUNT:
This account was established in the name and under the control of the
United States Trust Company as the Indenture Trustee. The proceeds of the
Notes issued on behalf of the Company were deposited into this account in
the form of a guaranteed investment contract. The funds in this account
can only be used to fund the installment construction payments and to pay
interest. The funds on deposit in this Pre Funding account at September
30, 1997 and March 31, 1997 were $48,220,286 and $50,647,457,
respectively.
6. CONTINGENCIES AND COMMITMENTS
The following is a schedule by years of minimum future rentals on the non
cancelable portion of the operating lease as of September 30, 1997 for
the fiscal years ending December 31:
1998................................ $ --
1999................................ 4,964,361
2000................................ 9,928,723
2001................................ 9,928,723
2002................................ 9,928,723
From 2003 to 2008................... 44,679,254
-----------
Total minimum future rentals........ $79,429,784
Future contractual payments to be made under the ship building contract
for each of the succeeding fiscal years ending December 31, until
completion are as follows:
1998................................ $11,251,224
1999................................ 27,690,590
-----------
Total future contractual payments... $38,941,814
- 29 -
<PAGE>
GOLDEN STATE PETRO (IOM I-B) PLC
NOTES TO FINANCIAL STATEMENTS, CONTINUED
7. CONCENTRATION OF CREDIT RISK:
The Company has no sources for the payment of principal (including
sinking fund payments and mandatory redemption payments, and interest on
the Notes) except for the Restricted Cash - Pre Funding account, the
monthly charter hire payments from the Initial Charterer and investment
income earned on the restricted cash (See Note 2). Accordingly, the
Company's ability to pay debt service on the Notes is wholly dependent
upon the financial condition, results of operations and cash flows from
the initial charter and any subsequent charters if Initial Charterer
elects to terminate the initial charter.
8. RELATED PARTIES:
The Company is liable for $2,500 by Golden State Petroleum Transport
Corporation as compensation for acting as agent in connection with the
issuance of the Notes.
9. MANAGEMENT AGREEMENT:
Pursuant to an agreement (the "Management Agreement") between the Company
and Cambridge Fund Management, L.L.C. (the "Manager") an affiliate of the
Company, the Manager has agreed to provide administrative management and
advisory services to the Company at an annual fee of $50,000. The charges
will be payable to the Manager semi-annually on February 1st and August
1st from amounts on deposit in the ship management reserve fund after
delivery of the vessel. The Management Agreement is subordinate to the
Notes.
10. REGISTRATION OF THE NOTES:
The Term Notes were sold by the Company and an affiliated entity, Golden
State Petro (IOM I-A) PLC (together, the "Owners") in a private placement
through their agent, Golden State Petroleum Transport Corporation. In
connection with such sale, the Owners and certain other parties (the
"Parties") entered into a Registration Rights Agreement for the benefit
of the purchasers. Pursuant thereto, the Parties agreed to use their best
efforts to effect an Exchange Offer to exchange up to $127,100,000 in
aggregate principal amount of the Notes issued by the Owners. The
registration of the Term Notes became effective on July 30, 1997.
11. AUDIT FEES:
Audit fees are paid for by Cambridge Fund Management, LLC.
12. DIRECTORS FEES:
Directors fees are paid for by Cambridge Fund Management.
- 30 -
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
N/A
- 31 -
<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The companies are not party to any legal proceedings the results of
which could, in the opinion of management, would have a material
adverse effect upon the companies.
ITEM 2. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits and reports to be filed: none
(b) The companies did not file a Form 8-K during the third
quarter of the fiscal year ending December 31, 1997.
- 32 -
<PAGE>
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.
GOLDEN STATE PETROLEUM
TRANSPORT CORPORATION
GOLDEN STATE PETRO (IOM I-A) PLC
GOLDEN STATE PETRO (IOM I-B) PLC
By: /s/ Joseph R. Avantario
------------------------------
Joseph R. Avantario
Treasurer
- 33 -
