UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2000
MILLENIUM SEACARRIERS, INC.
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant's Name into English)
Cayman Islands
(Jurisdiction of incorporation or organization)
c/o Ugland House
South Church Street
Grand Cayman, Cayman Islands
(Address of principal executive offices)
(Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.)
Form 20-F |X| Form 40-F |_|
(Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
Yes |_| No |X|
(If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b):82-_______ )
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MILLENIUM SEACARRIERS, INC.
REPORT ON FORM 6-K FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
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INDEX
PAGE
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PART I
Item 1. Financial Information....................................................................................1
Consolidated Balance Sheets as of June 30, 2000 (unaudited)
and December 31, 1999.........................................................1
Unaudited Consolidated Statements of Operations
for the three-month periods ended June 30, 2000 and 1999
and the six-month periods ended June 30, 2000 and 1999........................2
Unaudited Consolidated Statements of Cash Flows
for the six-month periods ended June 30, 2000 and 1999........................3
Consolidated Statement of Shareholders' Equity/(Deficiency)
for the year ended December 31, 1999 and the six-month
period ended June 30, 2000 (unaudited)........................................4
Notes to Consolidated Financial Statements.............................................5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations for the three and six-month periods
ended June 30, 2000..........................................................12
PART II Other Information..............................................................................19
Item 1. Legal Proceedings.......................................................................................19
Item 2. Changes in Securities...................................................................................19
Item 3. Defaults Upon Senior Securities.........................................................................19
Item 4. Submission of Matters to a Vote of Security Holders.....................................................20
Item 5. Other Information.......................................................................................20
Item 6. Exhibits and Reports on Form 6-K........................................................................20
Signature........................................................................................................20
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PART I
Item 1. Financial Information
------- ---------------------
MILLENIUM SEACARRIERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AS OF
JUNE 30, 2000 (UNAUDITED) AND DECEMBER 31, 1999
(Expressed in U.S. Dollars)
June 30,
2000 December 31,
(unaudited) 1999
------------------- --------------------
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ASSETS
------
Current Assets
Cash and cash equivalents $ 4,288,024 $ 6,903,645
Restricted cash 4,884,799 4,827,135
------------------- --------------------
9,172,823 11,730,780
Receivables :
Voyages 534,257 516,763
Claims and other 294,031 324,564
Inventories and prepaid expenses 1,724,144 1,479,206
------------------- --------------------
TOTAL CURRENT ASSETS 11,725,255 14,051,313
------------------- --------------------
FIXED ASSETS
Vessels, net of accumulated depreciation of $9,858,988 and $7,164,750 at
June 30, 2000 and December 31, 1999, respectively 90,790,712 93,484,950
Other, net of accumulated depreciation 144,562 138,337
------------------- --------------------
TOTAL FIXED ASSETS 90,935,274 93,623,287
Other assets 5,351,890 5,012,248
------------------- --------------------
TOTAL ASSETS $ 108,012,419 $ 112,686,848
=================== ====================
LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIENCY)
-------------------------------------------------
CURRENT LIABILITIES
Trade accounts payable $4,993,214 $5,705,471
Accrued liabilities 9,219,624 8,632,155
Charter revenue received in advance 604,157 504,290
------------------- --------------------
TOTAL CURRENT LIABILITIES 14,816,995 14,841,916
Notes 96,325,173 96,069,637
------------------- --------------------
TOTAL LIABILITIES 111,142,168 110,911,553
------------------- --------------------
Commitments and contingencies
SHAREHOLDERS' EQUITY
Common stock and paid in capital 22,900,000 22,900,000
Warrants 1,200,000 1,200,000
Accumulated deficit (27,229,749) (22,324,705)
------------------- --------------------
TOTAL SHAREHOLDERS' EQUITY (DEFICIENCY) (3,129,749) 1,775,295
------------------- --------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY) $ 108,012,419 $ 112,686,848
=================== ====================
The accompanying notes are an integral part of these financial statements
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MILLENIUM SEACARRIERS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX-MONTH PERIODS ENDED JUNE 30, 2000 AND
FOR THE THREE AND SIX-MONTH PERIODS ENDED JUNE 30, 1999
(Expressed in U.S. Dollars)
THREE-MONTH THREE-MONTH SIX-MONTH SIX-MONTH
PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED
JUNE 30, 2000 JUNE 30, 1999 JUNE 30, 2000 JUNE 30, 1999
<S> <C> <C> <C> <C>
REVENUE
Freight and hire from
voyages $ 10,065,617 $ 8,642,975 $ 20,587,426 $ 16,160,505
Voyage expenses (815,655) (309,096) (2,584,472) (611,714)
Commissions (364,684) (420,004) (751,056) (756,849)
------------------ ------------------ ----------------- -----------------
NET REVENUE 8,885,278 7,913,875 17,251,898 14,791,942
------------------ ------------------ ----------------- -----------------
EXPENSES
Vessel operating expenses 5,239,290 4,539,993 9,372,090 8,697,060
Management fees 1,331,768 765,400 2,674,597 1,437,942
General and administrative 236,541 137,266 584,631 298,188
Depreciation and
amortization 1,650,128 1,767,596 3,187,887 3,296,568
------------------ ------------------ ----------------- -----------------
8,457,727 7,210,255 15,819,205 13,729,758
------------------ ------------------ ----------------- -----------------
OPERATING INCOME 427,551 703,620 1,432,693 1,062,184
------------------ ------------------ ----------------- -----------------
OTHER INCOME/
(EXPENSE)
Interest expense (3,210,743) (3,185,188) (6,419,396) (6,281,676)
Other income/(expense) (940) 169,905 81,659 541,134
------------------ ------------------ ----------------- -----------------
(3,211,683) (3,015,283) (6,337,737) (5,740,542)
------------------ ------------------ ----------------- -----------------
LOSS BEFORE INCOME TAXES (2,784,132) (2,311,663) (4,905,044) (4,678,358)
INCOME TAX PROVISION - - - -
------------------ ------------------ ----------------- -----------------
NET LOSS $ (2,784,132) $ (2,311,663) $ (4,905,044) $ (4,678,358)
================== ================== ================= =================
LOSS PER SHARE, BASIC AND $ (0.29) $ $ (0.24) $ (0.52) $ (0.49)
DILUTED
================== ================== ================= =================
The accompanying notes are an integral part of these financial statements
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MILLENIUM SEACARRIERS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2000 AND JUNE 30, 1999
(Expressed in U.S. Dollars)
SIX-MONTH PERIOD SIX-MONTH PERIOD
ENDED ENDED
JUNE 30, 2000 JUNE 30, 1999
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (4,905,044) $ (4,678,358)
Adjustments to reconcile loss to net cash provided by operating
activities:
Depreciation and amortization 3,187,887 3,296,568
Amortization of bond discount and deferred financing costs 595,606 565,316
Changes in operating assets and liabilities
Decrease in Receivables 13,039 126,854
Increase in Inventories and prepaid expenses (244,938) (783,938)
Decrease in Trade accounts payable (712,257) (167,970)
Increase in Accrued liabilities 587,469 1,050,526
Deferred dry-docking and special survey (1,146,820) (855,091)
Increase in Charter revenue received in advance 99,867 336,317
---------------------- --------------------
NET CASH USED IN OPERATING ACTIVITIES (2,525,191) (1,109,776)
---------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of vessels - (23,615,000)
Additions to vessels - (596,555)
Purchase of other fixed assets (32,766) (122,137)
---------------------- --------------------
NET CASH USED IN INVESTING ACTIVITIES (32,766) (24,333,692)
---------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from working capital facility - 250,000
Repayment of Proceeds from working capital facility - (250,000)
Escrow account and restricted cash (57,664) 24,281,420
---------------------- --------------------
NET CASH (USED IN)/PROVIDED BY FINANCING ACTIVITIES (57,664) 24,281,420
---------------------- --------------------
DECREASE IN CASH AND CASH EQUIVALENTS (2,615,621) (1,162,048)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 6,903,645 5,736,645
---------------------- --------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,288,024 $ 4,574,597
====================== ====================
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid $ 5,815,200 $ 5,639,958
====================== ====================
The accompanying notes are an integral part of these financial statements
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MILLENIUM SEACARRIERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY/(DEFICIENCY)
FOR THE YEAR ENDED DECEMBER 31, 1999 AND FOR THE
SIX-MONTH PERIOD ENDED JUNE 30, 2000 (UNAUDITED)
(Expressed in U.S. Dollars)
COMMON STOCK
AND PAID-IN ACCUMULATED
CAPITAL WARRANTS DEFICIT TOTAL
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BALANCE JANUARY 1, 1999 $ 22,900,000 $ 1,200,000 $ (3,526,869) $ 20,573,131
Net Loss for the year ended
December 31, 1999 (18,797,836) (18,797,836)
------------------ ------------ ---------------- --------------
BALANCE DECEMBER 31,
1999 $ 22,900,000 $ 1,200,000 $ (22,324,705) $ 1,775,295
Net Loss for the six-month
period ended June 30, 2000
(unaudited) (4,905,044) (4,905,044)
------------------ ------------ ---------------- --------------
Balance June 30, 2000 $ 22,900,000 $ 1,200,000 $ (27,229,749) $ (3,129,749)
================== ============ ================ ==============
The accompanying notes are an integral part of these financial statements
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MILLENIUM SEACARRIERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
1. BUSINESS INFORMATION
On March 10, 1998, Millenium Seacarriers, Inc. ("Millenium") was formed (the
"Formation") to directly hold the capital stock of a group of subsidiaries
(collectively the "Company") each of which owns one of Millenium's vessels.
These consolidated financial statements give effect to the Formation pursuant to
which all of Millenium subsidiaries became wholly owned subsidiaries of
Millenium. Millenium owns and operates a fleet of dry-bulk carriers, primarily
of Handy-size type. As of June 30, 2000, the Company's fleet consisted of 20
vessels, with an aggregate tonnage of 555,666 dwt.
The Company is registered and incorporated in the Cayman Islands. Its principal
business is the acquiring, upgrading and operating of vessels. Millenium
conducts its operations through its subsidiaries whose principal activity is the
operation and ownership of dry-bulk vessels that will be under the exclusive
management of Millenium Management, Inc. ("MMI") and the sub-management of
Millenium Maritime Services Ltd. and Millenium Maritime Services, Inc.
2. BASIS OF FINANCIAL STATEMENT PRESENTATION AND ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements are prepared in accordance
with accounting principles generally accepted in the United States. All
inter-company balances and transactions have been eliminated upon consolidation.
For a description of significant accounting policies, see the Notes to the
consolidated financial statements in the 1999 Form 20-F annual report.
USE OF ESTIMATES
The preparation of the consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent liabilities at the date of
the consolidated financial statements, and the stated amount of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
REVENUE AND EXPENSE RECOGNITION
Revenue and expenses resulting from each voyage or time charter are accounted
for on the accrual basis and are recognized in the income statement on the
percentage of completed voyage basis. Chartered revenue received in advance is
recorded as a liability until charter services are rendered.
Operating expenses comprise all expenses relating to the operation of the
vessels, including crewing, repairs, and maintenance, insurance premiums, stores
and lubricants, and miscellaneous expenses, including communications. Voyage
expenses comprise all expenses relating to particular voyages, including
bunkers, port charges, canal tolls and agency fees.
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MILLENIUM SEACARRIERS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
COMPREHENSIVE INCOME
The Company has no components of comprehensive income, and as a result,
comprehensive income is equal to net income (loss) for all periods presented.
INCOME TAXES
The countries of the vessel-owning companies' incorporation do not impose taxes
on international shipping income. Minor registration and tonnage taxes must be
paid annually and have been included in the vessels' operating expenses in the
accompanying consolidated statements of operations. Pursuant to the Internal
Revenue Code of the United States (the Code), U.S. source income from the
international operations of ships is generally exempt from U.S. tax if the
company operating the ships meets certain requirements. Among other things, in
order to qualify for this exemption, the company operating the ships must be
incorporated in a country which grants an equivalent exemption from income taxes
to U.S. citizens and U.S. corporations and must be more than 50% owned by
individuals who are resident, as defined, in such country or another foreign
country that grants an equivalent exemption to U.S. citizens and U.S.
corporations. At June 30, 2000 the Company had met the requirement for exemption
from U.S. income tax.
FOREIGN CURRENCIES
The Company's functional currency is the U.S. dollar. Certain of the expenses
which are denominated in foreign currencies are remeasured into U.S. dollars at
exchange rates prevailing at the date of the transaction. Resulting exchange
gains and/or losses on settlement are included in operating expenses in the
accompanying consolidated statement of operations.
BASIC AND DILUTED LOSS PER ORDINARY SHARE
Basic and diluted loss per ordinary share have been computed by dividing net
loss by the average number of outstanding ordinary shares (9,500,000) following
the formation of the Company. There are also 500,000 warrants outstanding to
acquire 500,000 shares of common stock for $0.01 per share. Assumed exercise of
these warrants has been excluded from the calculation of loss per common share
as the effect of such exercise would be antidilutive.
CASH AND CASH EQUIVALENTS AND ESCROW ACCOUNTS
The Company considers time deposits or other certificates purchased with an
original maturity of three months or less to be cash equivalents. Restricted
cash includes deposits made towards contingencies and vessel upgrades, and also
includes proceeds from the sale of a vessel in 1999 which have been placed in a
restricted Escrow account under the governing rules of the Indenture.
RECEIVABLES
Voyage receivables include balance freights and demurrages, contested charterers
hire deductions, advances to agents and unsubstantiated charterers deductions in
respect of vessels' disbursements at the various ports of call. Claims and other
receivables principally represent claims arising from hull and machinery
damages,
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MILLENIUM SEACARRIERS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
or other insured risks, which have been submitted to insurance underwriters and
insurance adjusters or are currently being compiled.
INVENTORIES AND PREPAID EXPENSES
Inventories consist of bunkers, lubricants, spares and stores on board the
Company's vessels at the balance sheet date. Inventories are stated at the lower
of cost or market value. Cost is determined on a first-in, first-out method.
Inventories and prepaid expenses as of June 30, 2000 and December 31, 1999 were
$1,724,144 and $1,479,206 respectively.
FIXED ASSETS
Vessels, net is stated at cost less accumulated depreciation. Vessels are
depreciated on a straight-line basis over their estimated remaining useful
lives, based on cost less scrap value. The useful lives have been estimated to
be 30 years from completion of construction. Depreciation is calculated on a
straight-line basis by reference to the vessels' cost, age and scrap value as
estimated at the date of acquisition which is $150 per ton.
OTHER ASSETS
Other assets include dry-docking, special survey and debt issue costs.
Dry-docking and special survey costs are deferred and amortized over the
estimated period to the next scheduled dry-docking or survey, which are
generally, two and a half years and five years, respectively. The amortization
of dry-docking and special survey costs are included in amortization in the
accompanying consolidated statement of operations and amounted to $261,420 in
the quarter ended June 30, 2000 and $231,333 in the quarter ended June 30, 1999.
Debt issue costs also include costs associated with the issuance of Notes and
the acquisition of the Millenium subsidiaries. These deferred financing costs
are amortized over the life of the Notes and is included in interest expense in
the accompanying consolidated statement of operations (see Note 4).
ACCRUED LIABILITIES
Accrued liabilities primarily consists of accrued payroll, accrued interest and
other accrued expenses. These liabilities at June 30, 2000 were, $1,607,281,
$5,340,390 and $2,271,953 respectively, and at December 31, 1999 were
$1,393,366, $5,330,600 and $1,908,189, respectively.
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MILLENIUM SEACARRIERS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
3. FIXED ASSETS
Fixed assets consists of the Company's fleet of dry bulk carriers and other
assets. Vessels owned by the Company are stated at cost, which comprises the
vessels' contract price, capital improvements, direct delivery and acquisition
expenses, and finance charges relating to the acquisition of vessels.
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Balance at Balance at
June 30, 2000 December 31, 1999
---------------------- ------------------------
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Vessels, at cost $ 100,649,700 $ 100,649,700
Less: accumulated depreciation (9,858,988) (7,164,750)
---------------------- ------------------------
Vessels, net $ 90,790,712 $ 93,484,950
====================== ========================
Other assets, at cost $ 208,000 $ 175,234
Less: accumulated depreciation (63,438) (36,897)
---------------------- ------------------------
Other assets, net $ 144,562 $ 138,337
====================== ========================
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4. LONG-TERM DEBT
Long term debt is as follows:
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June 30, December 31,
2000 1999
------------------- -------------------
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12% First Priority Ship Mortgage Exchange Notes (the "Notes") due
2005. Interest on the Notes is payable semi- annually on January
15 and July 15 of each year, commencing January 15, 1999, at a
rate of 12% per annum on the accreted value. The Notes will mature
on July 15, 2005 and will be redeemable, in whole or part, at the
option of the Company at any time on or after July 15, 2003. $ 100,000,000 $ 100,000,000
Less: Unamortized portion of bond discount (3,674,827) (3,930,363)
------------------- -------------------
Notes $ 96,325,173 $ 96,069,637
=================== ===================
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The gross bond discount of $4,607,000 at date of issuance is amortized using the
effective interest method over the life of the Notes (7 years). Amortization
recorded in connection with this discount is included in interest expense and
amounted to $127,768 and $112,623 in the three-month periods ended June 30, 2000
and June 30, 1999, respectively, and $255,536 and $225,246 in the six-month
periods ended June 30, 2000 and June 30, 1999, respectively. The deferred
financing costs amortized in connection with the debt issue
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MILLENIUM SEACARRIERS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
is included in interest expense and amounted to $170,035 in each of the
three-month periods ended June 30, 2000 and 1999, and $340,070 in each of the
six-month periods ended June 30, 2000 and 1999.
Semiannual interest payments are made on the Notes on January 15 and July 15 of
each year commencing on January 15, 1999. Cash interest payments are made to
holders of the Notes based on the Accreted Value of the Notes as defined in the
Indenture.
The Notes are fully and unconditionally guaranteed (the "Subsidiary
Guarantees"), jointly and severally, on a senior basis by each of the
subsidiaries of Millenium (the "Subsidiary Guarantors"). The Notes are currently
collateralized by First Priority Ship Mortgages on the Company's vessels. The
Company's bonds are registered by the United States Securities & Exchange
Commission pursuant to the United States Securities Act of 1933.
The indebtedness evidenced by the Notes constitutes a general secured senior
obligation of the Company and is fully and unconditionally guaranteed by each of
the subsidiaries of the Company and will rank pari passu in right of payment
with all future senior indebtedness of the Company and its subsidiary
guarantors. The Indenture, pursuant to where the Notes were issued (the
"Indenture"), contains certain covenants that among other things, limit the type
and amount of additional indebtedness that may be incurred by the Company and
imposes certain limitations on investments, loans and advances, sales or
transfers of assets, dividends and other payments, the ability of the Company to
enter into sale-leaseback transactions, certain transactions with affiliates and
certain mergers, consolidations and purchases of assets, and amendments to
security agreements. The Company is currently in compliance with the terms of
the Indenture at June 30, 2000.
5. RELATED PARTY TRANSACTIONS
Each of the Company's vessels receives management services from its equity
shareholder MMI pursuant to a Management Agreement among the Company's vessel
owning subsidiaries and MMI. Under the Management Agreement, MMI acts as the
fleet's technical manager and performs all commercial management functions,
including arranging, chartering, advising the Company on the purchase and sale
of vessels and advising on obtaining insurance. As a technical manager, MMI (i)
provides qualified officers and crews on board vessels, (ii) manages day-to-day
vessel operations and maintains relationships with charterers, (iii) purchases
on behalf of the Company stores, spares, supplies and equipment for vessels,
(iv) performs general vessel maintenance, subcontracts for dry-dock facilities
for any major repairs and overhauls, (v) ensures regulatory and classification
society compliance, (vi) performs vessel operational budgeting and evaluations,
and (vii) provides accounting, treasury and finance functions (including cash
collections and disbursements on behalf of the Company). As remuneration for its
services, MMI receives a fixed management fee (payable monthly in advance)
ranging from $350 to $600 per day per vessel depending on the vessel type. In
addition, any visit to a vessel by a superintendent of MMI to evaluate and
supervise any repairs, dry-docking or other activities will entitle MMI to
expenses incurred and, from visits in excess of five days per annum per vessel,
its expenses incurred and an amount equal to $550 for each additional day. As
additional remuneration for its services, MMI receives commission of (i) 1.25%
on all gross time charter revenue, (ii) 1.75% on all gross freight revenue,
(iii) 1% on the gross sale or purchase price of a vessel and (iv) 2% of
insurance premiums for insurance placed, in each case as adjusted to reflect
fluctuations in market rates and practices.
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MILLENIUM SEACARRIERS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
MMI has sub-contracted certain of its technical and commercial management
services to Millenium Maritime Services Ltd. and Millenium Maritime Services,
Inc., both affiliates of MMI.
The Company records the management fee paid to MMI in operating expenses. As of
June 30, 2000, there is a payable to MMI which is reflected in Accrued
liabilities, amounting to $1,012,240. During the three- month periods ended June
30, 2000 and 1999, respectively, the Company incurred management fees of
$1,331,768 and $765,400 in connection with the aforementioned agreement.
6. CONTINGENCIES
From time to time the Company has been, and expects to continue to be, subject
to legal proceedings and claims in the ordinary course of its business,
principally personal injury and property claims. Such claims, even if lacking
merit, could result in the expenditure of significant financial and managerial
resources.
On March 28, 2000, an action was brought against the Company by Wayland
Investment Fund, LLC ("WIF") in the United States District Court, Southern
District of New York. In the First Amended Complaint filed on March 30, 2000,
WIF claimed that it is a beneficial holder of in excess of 25% of the 12% First
Priority Ship Mortgage Notes. The factual basis alleged to underlie the
proceeding concerns the calculation of interest due and owing on the 12% First
Priority Ship Mortgage Notes. WIF makes three claims in the First Amended
Complaint: the first is for mutual mistake; the second is for breach of
contract; and the third is for violations of Section 10(b) of the Exchange Act
and Rule 10b-5. WIF's first claim for relief is that the 12% First Priority Ship
Mortgage Notes be reformed to provide for interest on the principal amount at
maturity of the 12% First Priority Ship Mortgage Notes and that damages be paid
in the amount of $517,263.16. WIF's second claim for relief is damages in the
amount of $74,417,263.15. WIF's third claim for relief is that damages be paid
in the amount of $517,263.16. On April 19, 2000, the Company filed a Motion to
Dismiss WIF's second claim and answered WIF's first and third claims.
On or about July 13, 2000, WIF filed a Second Amended Complaint repeating the
claims in its First Amended Complaint and adding a fourth claim for common law
fraud and a fifth claim for negligent misrepresentation. The Second Amended
Complaint changes the allegation concerning WIF's beneficial ownership; the
lawsuit now alleges that WIF is a beneficial holder of in excess of 25% of the
12% First Priority Ship Mortgage Exchange Notes. WIF's first claim for relief is
that the 12% First Priority Ship Mortgage Exchange Notes be reformed to provide
for interest on the principal amount at maturity of the 12% First Priority Ship
Mortgage Exchange Notes and that damages be paid in the amount of $605,801.34.
WIF's second claim for relief is damages in the amount of $74,505,801.34. WIF's
third claim for relief is that damages be paid in the amount of $605,801.34.
WIF's fourth claim for relief is that damages be paid in the amount of
$605,801.34. WIF's fifth claim for relief is that damages be paid in the amount
of $605,801.34. On or about July 27, 2000, the Company made a Motion to Dismiss
WIF's third, fourth, and fifth claims for relief and answered WIF's first claim.
By agreement of the parties, the Company's Motion to Dismiss the second claim
for relief in the First Amended Complaint will be treated as a motion to dismiss
the second claim for relief in the Second Amended Complaint. The Company is
vigorously contesting this litigation.
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<PAGE>
MILLENIUM SEACARRIERS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
7. COMMITMENTS
On December 23, 1999, the Company accepted a commitment for a standby line of
credit in a principal amount up to $2.5 million available for its working
capital requirements from the Allfirst Bank. The facility, collateralized by the
Company's vessels and subject to various covenants, provided that interest would
accrue at the US Prime rate and was subject to a 1% commitment fee on the unused
portion. This commitment, which was valid until March 23, 2000, was subject to
consent from Note Holders due to the fact that the Allfirst Bank would be both
the Working Capital Facility provider as well as the Indenture Trustee and a
potential of conflict of interest could arise under certain conditions. Pending
such consent, the Allfirst Bank had extended the commitment until June 1, 2000,
when it expired, absent such consents.
8. SUBSEQUENT EVENT
One of the Company's vessels, the Millenium Yama sustained engine damage during
the second quarter ended June 30, 2000. On July 25, 2000, a total constructive
loss was declared by the vessel's insurers and the Company is expected to
receive the full insured value of the vessel.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-------------------------------------------------------------------------------
OF OPERATIONS FOR THE THREE AND SIX-MONTH PERIODS ENDED JUNE 30, 2000
---------------------------------------------------------------------
GENERAL
The Company is an international shipping company that owns and operates a fleet
of drybulk carriers, primarily Handysize (generally classified as being in the
20,000-49,000 deadweight-ton range) drybulk carriers. As of June 30, 2000, the
Company's fleet consisted of 20 vessels totalling 555,666 deadweight-tons.
The Company was incorporated on March 10, 1998 in the Cayman Islands. The
Company began operations on July 24, 1998, with five vessels and subsequently
expanded its fleet to 21 vessels as of June 30, 1999, all of which were acquired
from the net proceeds of an offering of Units ("Units") consisting of $100
million principal amount at maturity of Notes and $1.2 million of Warrants. The
Company also received an equity contribution of $24 million from Millenium
Management, Inc., MMI, the holder of 100% of the outstanding common stock of the
Company. In 1999, the Company sold a vessel, the Monica Marissa, thereby
reducing its fleet to 20 vessels.
The following benchmarks are used by the Company to measure revenues: (i)
utilization as an index that indicates vessel earning days (on the basis that
350 calendar days per year equals 100% utilization), and (ii) the average daily
time charter equivalent (TCE) rate to analyze net revenues after commissions on
the basis of 350-days utilization.
The following table sets forth certain statement of operations and other
operating data for the Company.
<TABLE>
<CAPTION>
Three-month Three-month Six-month Six-month
period ended period ended period ended period ended
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
--------------------- ------------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Net Revenue $ 8,885,278 $ 7,913,875 $ 17,251,898 $ 14,791,942
Vessel Operating Expenses (5,239,290) (4,539,993) (9,372,090) (8,697,060)
Management Fees (1,331,768) (765,400) (2,674,597) (1,437,942)
General and Administrative (236,541) (137,266) (584,631) (298,188)
--------------------- ------------------- ---------------- ------------------
Earnings Before Interest,
Tax, Depreciation and
Amortization (EBITDA) $ 2,077,679 $ 2,471,216 $ 4,620,580 $ 4,358,752
===================== =================== ================ ==================
Average Utilization (%) 93.7% 95.2% 95.3% 95.2%
===================== =================== ================ ==================
</TABLE>
EBITDA consists of net income prior to deductions for interest expense, income
taxes, other income or expense net, and depreciation. EBITDA is not required by
United States generally accepted accounting principles, and should not be
considered as an alternative to net income as an indicator of the Company's
operating performance or to cash flows from operations as a measure of
liquidity.
RESULTS OF OPERATIONS FOR THREE-MONTH PERIOD ENDED JUNE 30, 2000 VERSUS JUNE 30,
1999
NET REVENUE
Net revenue for the three-month period ended June 30, 2000 was $8.9 million
compared to $7.9 million in the 1999 period. This increase was primarily due to
larger fleet operating days of 1,820 days during the three- month period ended
June 30, 2000 compared to fleet operating days of 1,668 days during the
comparable 1999 period, as the Company's fleet was expanded during the second
quarter of 1999. During the three- month period ended June 30, 2000, 83% of the
Company's gross revenues were earned from period time
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<PAGE>
charters compared to 95% in the same 1999 period. The fleet averaged an
utilization rate of 93.7% during the period ended June 30, 2000. The loss of
revenue-earning days were primarily attributable to the Millenium Yama
sustaining a serious main engine damage which consequently decommissioned the
vessel for almost the entire quarter. Additional revenue-earning days were lost
due to dry-dockings of two of the older vessels in the fleet, the Clipper
Pacific and the Millenium Golden Hind. Contribution from freight income was
higher during the period ended June 30, 2000 compared to period ended June 30,
1999, due to an increase in spot voyages. However, net revenue was impacted due
to higher voyage expenses in the quarter ended June 30, 2000 resulting from the
costs associated with the current state of the bunker market.
During the quarter ended June 30, 2000, Fednav International ("Fednav") retook
delivery of the Millenium Osprey, Millenium Condor, Millenium Falcon, Millenium
Hawk and Millenium Eagle. As per terms of the long term charter contract, Fednav
redelivers these vessels, which ply in the Great Lakes trade (Laker-type
vessels), for three months during the Winter when the Great Lakes freeze, and
take delivery once again in the Spring. The Millenium Harmony, the Millenium
Aleksander, the Millenium Elmar, the Millenium Leader, the Millenium Raptor, the
Millenium Trader, the Millenium Dawn, the Millenium Express, and the Millenium
Amanda continue to be on their period charters which were contracted for in
1999. The charter for the Millenium Golden Hind ended in June 2000 following
which the vessel was drydocked. Period charters for the Millenium Amethyst and
the Millenium Majestic also ended during the quarter following which these
vessels performed spot voyages.The Clipper Atlantic and Clipper Pacific were
mostly in the spot market trades during the quarter ended June 30, 2000. As of
the end of the period, the charter for the Millenium Yama remained suspended
pending resolution of the vessel's damage claims.
VESSEL OPERATING EXPENSES
Vessel operating expenses, excluding management fees and depreciation and
amortization were $5.2 million for the three-month period ended June 30, 2000,
compared to $4.5 million in the three-month period ended June 30, 1999. The
quarter ended June 30, 2000 consisted of 1,820 ship-operating days compared to
1,668 ship-operating days during the corresponding period a year ago. The second
quarter average vessel running costs for crewing, insurance, lubricants, repairs
and maintenances, registry and survey costs, and vessel communications came to
$2,879 per day compared to $2,725 per day during the comparable period a year
ago.
MANAGEMENT FEES
Management fees incurred to MMI for contracted technical and commercial
management services for the three-month period ended June 30, 2000 were $1.3
million, compared to $0.8 million in the corresponding period ended June 30,
1999.
Each of the Company's vessels receives management services from its equity
shareholder MMI pursuant to a Management Agreement among the Company's vessel
owning subsidiaries (the "Vessel Owning Subsidiaries") and MMI. Under the
Management Agreement, MMI acts as the fleet's technical and commercial manager.
As a technical manager, MMI, on behalf of the Vessel Owning Subsidiaries, (i)
provides qualified officers and crews on board vessels, (ii) manages day-to-day
vessel operations and maintains relationships with charterers, (iii) purchases
on behalf of the Company stores, spares, supplies and equipment for vessels,
(iv) performs general vessel maintenance, subcontracts for drydock facilities
for any major repairs and overhauls, (v) ensures regulatory and classification
society compliance, (vi) performs vessel operational budgeting and evaluations,
and (vii) provides accounting, treasury and finance functions (including cash
collections and disbursements on behalf of the Company). As remuneration for its
services, MMI receives a fixed management fee (payable monthly in advance)
ranging from $350 to $600 per day per vessel. The Company treats the management
fee paid to MMI as an operating expense.
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<PAGE>
Under commercial management services, MMI, on behalf of the Vessel Owning
Subsidiaries, primarily maintains and negotiates vessel charters, vessel
sale-and-purchase brokering, and places insurance covers for vessels. As
remuneration for its services, MMI receives a commission of 1.25% on all gross
time charter revenue and 1.75% on all gross spot charter revenue earned by each
vessel managed, 1% on the gross sale or purchase price of a vessel for brokerage
services, and 2% of all insurance covers placed per vessel managed.
MMI sub-contracts certain of its technical and commercial management services to
Millenium Maritime Services Ltd. and Millenium Maritime Services, Inc.
GENERAL AND ADMINISTRATIVE
These expenses totalled $236,541 for the three-month period ended June 30, 2000
compared to $137,266 in the same period ended June 30, 1999. For the period
ended June 30, 2000, these expenses included, among other things, legal and
professional fees of $140,995, advisory fees of $75,000 paid to Millenium
Advisors, L.L.C., marketing expenses of $15,779 and other expenses of $4,767.
DEPRECIATION AND AMORTIZATION
Total depreciation for the three-month period ended June 30, 2000 was $1,388,708
compared to $1,419,841 for the same period ended June 30, 1999. Vessel
depreciation is calculated based on the remaining useful life of the vessel,
assuming a maximum life of 30 years, net of salvage value.
Deferred vessel costs, including deferred dry-docking expenses, are capitalized
and amortized over a period of two and a half years (30 months). During the
three-month period ended June 30, 2000, new deferred costs for dry-docking and
special surveys amounted to $481,313 which included $213,193 for the Clipper
Pacific and $268,120 for the Millenium Golden Hind. For the period ended June
30, 2000, total amortization of deferred vessel charges, including deferred
dry-docking expenses, were $261,420. For the comparable period ended June 30,
1999, total amortization of deferred vessel charges, including deferred
dry-docking expenses, were $231,333.
Included in amortization in the the statement of operations for the three-month
period ended June 30, 1999, is $116,422 of amortization of goodwill. In December
1999, the Company wrote off its entire goodwill balance, resulting in no
amortization in 2000.
INTEREST EXPENSE
For the three-month period ended June 30, 2000, the interest expense on the
Company's long-term debt was $2,912,940, compared to $2,902,530 in the
three-month period ended June 30, 1999. Interest expense in the statement of
operations for the quarter ended June 30, 2000 also includes amortization of
$127,768 recorded in connection with the bond discount relating to the debt
issue, and the amortization of $170,035 recorded in connection with the deferred
financing costs incurred relating to the debt issue. Comparable amortization
charges recorded in the quarter ended June 30, 1999 were $112,623 and $170,035
respectively. During the three-months ended June 30, 2000, interest earned on
cash balances was $38,581, compared to $211,021 in the quarter ended June 30,
1999.
NET LOSS
Net loss for the three-month period ended June 30, 2000 was $2.8 million
compared to $2.3 million in the same three-month period ended June 30, 1999.
Earnings in the period ended June 30, 2000, were impacted by loss of
revenue-earning days primarily due to damage to a vessel and escalating voyage
costs due to an
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<PAGE>
increase in spot market trading activity during the period as compared to the
previous period a year ago. Earnings before interest, taxes, depreciation and
amortization, and provision for impairment (EBITDA) for the quarter ended June
30, 2000 were $2.1 million compared to $2.5 million in the comparable quarter
ended June 30, 1999.
RESULTS OF OPERATIONS FOR SIX-MONTH PERIOD ENDED JUNE 30, 2000 VERSUS JUNE 30,
1999
NET REVENUE
Net revenue for the six-month period ended June 30, 2000 was $17.3 million
compared to $14.8 million in the 1999 period. This increase was primarily due to
larger fleet operating days of 3,640 days during the six- month period ended
June 30, 2000 compared to fleet operating days of 3,127 days during the
comparable 1999 period, as the Company's fleet was expanded during the
comparable 1999 period. During the six- month period ended June 30, 2000, 77% of
the Company's gross revenues were earned from period time charters compared to
95% in the same 1999 period . The increase in the number of spot voyages
performed by the Company's vessels during the six-month period ended June 30,
2000 resulted in a consequent increase in contribution from freight income.
However, due to the steep escalation in bunker fuel prices prevalent during the
period, the voyage expenses also increased commensurately.
The fleet averaged an utilization rate of 95.3% during the six-month period
ended June 30, 2000. The loss of revenue-earning days were primarily
attributable to the Millenium Yama sustaining a serious main engine damage which
consequently decommissioned the vessel for almost the entire quarter. Additional
revenue- earning days were lost due to dry-dockings of four vessels : the
Millenium Leader, the Millenium Dawn, the Clipper Pacific and the Millenium
Golden Hind.
During the six-months ended June 30, 2000, the number of the Company's vessels
in the spot market increased. This was mainly because of the annual redelivery
of the Laker-type vessels, which are vessels which ply in the Great Lakes trade,
from Fednav International ("Fednav"). As per terms of the charter contract,
Fednav redelivers the Laker-type vessels, the Millenium Osprey, Millenium
Condor, Millenium Falcon, Millenium Hawk and Millenium Eagle, for three months
during the Winter when the Great Lakes freeze. These vessels performed a
substantial number of spot market voyages during this period in 2000. Fednav
retook delivery of the Laker-type vessels once again in the Spring. The
Millenium Harmony, the Millenium Aleksander, the Millenium Elmar, the Millenium
Leader, the Millenium Raptor, the Millenium Trader, the Millenium Dawn, the
Millenium Express, and the Millenium Amanda continue to be on their period
charters which were contracted for in 1999. The Millenium Leader peformed a
positioning voyage before the vessel entered dry-dock following which the the
vessel reverted to its previously contracted period charter. The charter for the
Millenium Golden Hind ended in June 2000 following which the vessel was
drydocked. Period charters for the Millenium Amethyst and the Millenium Majestic
also ended during the second quarter following which these vessels performed
spot voyages. The Clipper Atlantic and Clipper Pacific were mostly in the spot
market trades during the entire six-month period ended June 30, 2000. The
charter for the Millenium Yama was suspended during the second half of the
six-month period ended June 30, 2000 due to engine damage and as of June 30,
2000 was pending resolution of this damage claim.
VESSEL OPERATING EXPENSES
Vessel operating expenses, excluding management fees and depreciation and
amortization were $9.4 million for the six-month period ended June 30, 2000,
compared to $8.7 million in the comparable six-month period ended June 30, 1999.
The six-month period ended June 30, 2000 consisted of 3,640 ship-operating days
compared to 3,127 ship-operating days during the corresponding period a year
ago. The average vessel running costs for crewing, insurance, lubricants,
repairs and maintenances, registry and survey costs, and
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<PAGE>
vessel communications came to $2,575 per day for the six-month period ended June
30, 2000 compared to $2,781 per day during the comparable period a year ago.
MANAGEMENT FEES
Management fees incurred to MMI for contracted technical and commercial
management services for the six-month peiod ended June 30, 2000 were $2.7
million, compared to $1.4 million in the corresponding period ended June 30,
1999. For a detailed description of the type of services provided under the
management agreement, see the previous discussion section for the three-month
period ended June 30, 2000.
GENERAL AND ADMINISTRATIVE
These expenses totalled $584,631 for the six-month period ended June 30, 2000
compared to $298,188 in the same period ended June 30, 1999. For the period
ended June 30, 2000, these expenses included, among other things, legal and
professional fees of $367,339, advisory fees of $150,000 paid to Millenium
Advisors, L.L.C., marketing expenses of $48,746 and other expenses of $18,546.
DEPRECIATION AND AMORTIZATION
Total depreciation for the six-month period ended June 30, 1999 was $2,720,779
compared to $2,671,197 for the same period ended June 30, 1999. Vessel
depreciation is calculated based on the remaining useful life of the vessel,
assuming a maximum life of 30 years, net of salvage value.
Deferred vessel costs, including deferred dry-docking expenses, are capitalized
and amortized over a period of two and a half years (30 months). During the
six-month period ended June 30, 2000, new deferred costs for dry-docking and
special surveys amounted to $1,146,820 which included $308,008 for the Millenium
Dawn, $357,499 for the Millenium Leader, $213,193 for the Clipper Pacific and
$268,120 for the Millenium Golden Hind. For the period ended June 30, 2000,
total amortization of deferred vessel charges, including deferred dry-docking
expenses, were $467,108. For the comparable period ended June 30, 1999, total
amortization of deferred vessel charges, including deferred dry-docking
expenses, were $392,528.
Included in amortization in the the statement of operations for the six-month
period ended June 30, 1999, is $232,842 of amortization of goodwill. In December
1999, the Company wrote off its entire goodwill balance, resulting in no
amortization in 2000.
INTEREST EXPENSE
For the six-month period ended June 30, 2000, the interest expense on the
Company's long-term debt was $5,823,790, compared to $5,716,360 in the six-month
period ended June 30, 1999. Interest expense in the statement of operations for
the six-month period ended June 30, 2000 also includes amortization of $255,536
recorded in connection with the bond discount relating to the debt issue, and
the amortization of $340,070 recorded in connection with the deferred financing
costs incurred relating to the debt issue. Comparable amortization charges
recorded in the period ended June 30, 1999 were $225,246 and $340,070
respectively. During the six-month ended June 30, 2000, interest earned on cash
balances was $110,185, compared to $552,077 in the period ended June 30, 1999.
NET LOSS
Net loss for the six-month period ended June 30, 2000 was $4.9 million compared
to $4.7 million in the same six-month period ended June 30, 1999. Earnings in
the period ended June 30, 2000, were impacted by loss of revenue-earning days
primarily due to damage to a vessel and escalating voyage costs due to an
increase
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<PAGE>
in spot market trading activity during the period as compared to the previous
period a year ago. Earnings before interest, taxes, depreciation and
amortization, and provision for impairment (EBITDA) for the six- months ended
June 30, 2000 were $4.6 million compared to $4.4 million in the same period
ended June 30, 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company is a holding company. As of June 30, 2000, it owns all of the issued
and outstanding shares of 20 Vessel Owning Subsidiaries.
As of June 30, 2000, the Company's cash position consisted of $4.3 million in
unrestricted cash and cash equivalents. Restricted cash includes $1.6 million of
proceeds from the sale of the Monica Marissa which are in escrow. Restricted
cash also includes other deposits made toward contingencies and vessel upgrades.
OPERATING ACTIVITIES
Net cash flows used in operations for the six-month period ended June 30, 2000
were $2.5 million. As is common in the shipping industry, the Company collects
its hire for all time charters 15 days in advance. The Company also continues to
have well established long-term relationships with many suppliers resulting in
the Company receiving favorable credit terms.
INVESTING ACTIVITIES
The six-month period ended June 30, 2000 saw negligible investing activities.
FINANCING ACTIVITIES
The six-month period ended June 30, 2000, saw negligible financing activity.
Such activity was limited to interest earnings on cash in escrow.
The Company believes that based upon the current level of operation, cash flow
from operations, together with other readily available sources of funds,
including the balance escrow cash, which was made available to the Company on
July 31, 1999, for use as working capital and other corporate purposes, it has
adequate liquidity to fund its working capital requirements, meet capital
expenditures for repairs and maintenance and make required payments of interest
on the Company's debt. The Company has completed its schedule of vessel
acquisitions, and any further expansion of its fleet is dependent on its ability
to raise capital through either borrowing activities or from cash generated from
operations, or from vessel sale and purchase activities.
WORKING CAPITAL
Pursuant to a Working Capital Facility Agreement between the Company and The
Bank of New York, the Company had a standby line of credit in a principal amount
up to $7.0 million available for its working capital requirements, which expired
on July 20, 1999. The Bank, however, extended the maturity of a $500,000 tranche
until August 5, 1999 which also expired unused. The facility was only used once
during its tenure for an amount of $250,000 which was repaid. The facility,
collateralized by the Company's vessels and subject to various covenants, bore
interest at LIBOR+1.5% and was subject to a 0.375% commitment fee on the unused
portion.
On December 23, 1999, the Company accepted a commitment for a standby line of
credit in a principal amount up to $2.5 million available for its working
capital requirements from the Allfirst Bank. The facility,
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<PAGE>
collateralized by the Company's vessels and subject to various covenants,
provided that interest would accrue at the US Prime rate and was subject to a 1%
commitment fee on the unused portion. This commitment, which was valid until
March 23, 2000, was subject to consent from Note Holders due to the fact that
the Allfirst Bank will be both the Working Capital Facility provider as well as
the Indenture Trustee and a potential of conflict of interest could arise under
certain conditions. Pending such consent, the Allfirst Bank had extended the
commitment until June 1, 2000, when it expired, absent such consents.
FOREIGN EXCHANGE RATE FLUCTUATIONS
All of the Company's revenue, and most of its expenses, are denominated in
United States dollars. For the period ended June 30, 2000, approximately 5% of
the Company's expenses were denominated in foreign currencies, primarily Greek
drachmae. The Company does not hedge its exposure to foreign currency
fluctuations.
INFLATION
The Company does not believe that inflation has had a material impact on its
operations during the periods presented, although certain of the Company's
operating expenses (e.g. crewing, insurance and drydocking costs) are subject to
fluctuations as a result of market forces. Inflationary pressures on bunker
costs are not expected to have a material effect on the Company's results from
operations and cash flows since such costs are paid by the charterers as the
majority of the Company's vessels are on period time charters.
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<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
------- -----------------
From time to time the Company has been, and expects to continue to be, subject
to legal proceedings and claims in the ordinary course of its business,
principally personal injury and property claims. Such claims, even if lacking
merit, could result in the expenditure of significant financial and managerial
resources.
On March 28, 2000, an action was brought against the Company by Wayland
Investment Fund, LLC ("WIF") in the United States District Court, Southern
District of New York. In the First Amended Complaint filed on March 30, 2000,
WIF claimed that it is a beneficial holder of in excess of 25% of the 12% First
Priority Ship Mortgage Notes. The factual basis alleged to underlie the
proceeding concerns the calculation of interest due and owing on the 12% First
Priority Ship Mortgage Notes. WIF makes three claims in the First Amended
Complaint: the first is for mutual mistake; the second is for breach of
contract; and the third is for violations of Section 10(b) of the Exchange Act
and Rule 10b-5. WIF's first claim for relief is that the 12% First Priority Ship
Mortgage Notes be reformed to provide for interest on the principal amount at
maturity of the 12% First Priority Ship Mortgage Notes and that damages be paid
in the amount of $517,263.16. WIF's second claim for relief is damages in the
amount of $74,417,263.15. WIF's third claim for relief is that damages be paid
in the amount of $517,263.16. On April 19, 2000, the Company filed a Motion to
Dismiss WIF's second claim and answered WIF's first and third claims.
On or about July 13, 2000, WIF filed a Second Amended Complaint repeating the
claims in its First Amended Complaint and adding a fourth claim for common law
fraud and a fifth claim for negligent misrepresentation. The Second Amended
Complaint changes the allegation concerning WIF's beneficial ownership; the
lawsuit now alleges that WIF is a beneficial holder of in excess of 25% of the
12% First Priority Ship Mortgage Exchange Notes. WIF's first claim for relief is
that the 12% First Priority Ship Mortgage Exchange Notes be reformed to provide
for interest on the principal amount at maturity of the 12% First Priority Ship
Mortgage Exchange Notes and that damages be paid in the amount of $605,801.34.
WIF's second claim for relief is damages in the amount of $74,505,801.34. WIF's
third claim for relief is that damages be paid in the amount of $605,801.34.
WIF's fourth claim for relief is that damages be paid in the amount of
$605,801.34. WIF's fifth claim for relief is that damages be paid in the amount
of $605,801.34. On or about July 27, 2000, the Company made a Motion to Dismiss
WIF's third, fourth, and fifth claims for relief and answered WIF's first claim.
By agreement of the parties, the Company's Motion to Dismiss the second claim
for relief in the First Amended Complaint will be treated as a motion to dismiss
the second claim for relief in the Second Amended Complaint. The Company is
vigorously contesting this litigation.
ITEM 2. CHANGES IN SECURITIES
------- ---------------------
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
------- -------------------------------
None.
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<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------- ---------------------------------------------------
None.
ITEM 5. OTHER INFORMATION
------- -----------------
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 6-K
------- --------------------------------
a. Exhibits
None
b. Reports on Form 6-K
None
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.
MILLENIUM SEACARRIERS, INC.
By: /s/ Vassilios M. Livanos
------------------------
Name: Vassilios M. Livanos
Title: Chairman
Dated: August 15, 2000
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