SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________________ to ______________________
COMMISSION FILE NUMBER 0-25821
--------------------
STATIA TERMINALS GROUP N.V.
(Exact name of registrant as specified in its charter)
NETHERLANDS ANTILLES 52-2003016
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
TUMBLEDOWN DICK BAY
ST. EUSTATIUS, NETHERLANDS ANTILLES
(011) 5993-82300
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date. As of August 12,
1999, 7,600,000 common shares of the issuer were outstanding.
<PAGE>
STATIA TERMINALS GROUP N.V.
QUARTERLY REPORT ON FORM 10-Q
JUNE 30, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets 1
Consolidated Condensed Statements of Income (Loss) 2
Consolidated Condensed Statements of Cash Flows 3
Notes to Consolidated Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk 19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 2. Changes in Securities 20
Item 3. Defaults Upon Senior Securities 20
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 20
</TABLE>
THIS QUARTERLY REPORT ON FORM 10-Q (THIS "REPORT") CONTAINS
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF 27A OF THE SECURITIES ACT OF
1933. DISCUSSIONS CONTAINING SUCH FORWARD-LOOKING STATEMENTS MAY BE FOUND IN
ITEMS 1, 2 AND 3 OF PART I HEREOF, AS WELL AS WITHIN THIS REPORT GENERALLY. IN
ADDITION, WHEN USED IN THIS REPORT, THE WORDS "MAY", "WILL", "BELIEVE,"
"ANTICIPATE," "EXPECT", "ESTIMATE" AND SIMILAR EXPRESSIONS ARE INTENDED TO
IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS ARE SUBJECT TO A NUMBER OF
RISKS AND UNCERTAINTIES. ACTUAL RESULTS IN THE FUTURE COULD DIFFER MATERIALLY
FROM THOSE DESCRIBED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF
FLUCTUATIONS IN THE SUPPLY OF AND DEMAND FOR CRUDE OIL AND OTHER PETROLEUM
PRODUCTS, CHANGES IN THE PETROLEUM TERMINALING INDUSTRY, ADDED COSTS DUE TO
CHANGES IN GOVERNMENT REGULATIONS AFFECTING THE PETROLEUM INDUSTRY, THE LOSS OF
A MAJOR CUSTOMER, THE FINANCIAL CONDITION OF THE COMPANY'S CUSTOMERS,
INTERRUPTION OF OUR OPERATIONS CAUSED BY ADVERSE WEATHER CONDITIONS, THE
CONDITION OF THE UNITED STATES ECONOMY, RISKS ASSOCIATED WITH OUR EFFORTS TO
COMPLY WITH THE Y2K REQUIREMENT, AND OTHER FACTORS INCLUDED IN THIS REPORT AND
THE COMPANY'S REGISTRATION STATEMENT ON FORM S-1 (FILE NO. 333-72317). THE
COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO PUBLICLY RELEASE THE RESULTS OF ANY
REVISIONS TO THESE FORWARD-LOOKING STATEMENTS THAT MAY BE MADE TO REFLECT ANY
FUTURE EVENTS OR CIRCUMSTANCES.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1998 1999
---------------- ----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 14,061 $ 17,493
Accounts receivable-
Trade, net 7,562 7,418
Other 2,328 2,723
Inventory, net 4,528 1,882
Prepaid expenses 1,417 1,059
---------------- ----------------
Total current assets 29,896 30,575
PROPERTY AND EQUIPMENT, net 209,970 208,482
OTHER NONCURRENT ASSETS, net 5,744 3,299
---------------- ----------------
Total assets $ 245,610 $ 242,356
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 9,306 $ 10,496
Accrued interest payable 2,027 1,508
Dividends payable 7,440 -
Other accrued expenses 8,506 9,687
---------------- ----------------
Total current liabilities 27,279 21,691
LONG-TERM DEBT 135,000 101,000
---------------- ----------------
Total liabilities 162,279 122,691
REDEEMABLE PREFERRED STOCK - SERIES A, B and C 40,000 -
STOCKHOLDERS' EQUITY:
Preferred stock - Series D and E 54,824 -
Common stock 4 -
Common shares
- 76
Subordinated shares
- 38
Incentive rights
- -
Additional paid-in-capital 363 138,572
Notes receivable from stockholders (1,474) (1,474)
Accumulated deficit (10,386) (17,547)
---------------- ----------------
Total stockholders' equity 43,331 119,665
---------------- ----------------
Total liabilities and stockholders' equity $ 245,610 $ 242,356
================ ================
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
Page 1
<PAGE>
STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------------- ------------------------------------
1998 1999 1998 1999
---------------- -------------- ---------------- ----------------
<S> <C> <C> <C> <C>
REVENUES $ 36,472 $ 42,267 $ 66,836 $ 79,682
COSTS OF SERVICES AND PRODUCTS SOLD 28,812 33,799 53,932 62,399
---------------- -------------- ---------------- ----------------
Gross profit 7,660 8,468 12,904 17,283
ADMINISTRATIVE EXPENSES 2,429 1,947 4,674 4,482
SPECIAL COMPENSATION EXPENSE - 2,152 - 4,099
---------------- -------------- ---------------- ----------------
Operating income 5,231 4,369 8,230 8,702
LOSS ON DISPOSITION OF PROPERTY
AND EQUIPMENT 4,000 - 4,000 -
INTEREST EXPENSE 4,218 3,735 8,445 7,937
INTEREST INCOME 136 378 262 567
---------------- -------------- ---------------- ----------------
Income (loss) before provision for income
taxes, preferred stock dividends and
extraordinary charge (2,851) 1,012 (3,953) 1,332
PROVISION FOR INCOME TAXES 14 239 219 493
---------------- -------------- ---------------- ----------------
Income (loss) before preferred stock
dividends and extraordinary charge (2,865) 773 (4,172) 839
PREFERRED STOCK DIVIDENDS 911 536 1,836 2,257
---------------- -------------- ---------------- ----------------
Income (loss) before extraordinary charge (3,776) 237 (6,008) (1,418)
EXTRAORDINARY CHARGE RELATED TO
EARLY EXTINGUISHMENT OF DEBT - 4,743 - 4,743
---------------- -------------- ---------------- ----------------
Net loss available to common stockholders $ (3,776) $ (4,506) $ (6,008) $ (6,161)
================ ============== ================ ================
BASIC EARNINGS PER COMMON SHARE:
Income before extraordinary charge $ - $ 0.45 $ - $ 0.89
Extraordinary charge - (0.89) - (1.76)
---------------- -------------- ---------------- ----------------
Net loss available to common stockholders $ - $ (0.44) $ - $ (0.87)
================ ============== ================ ================
DILUTED EARNINGS PER COMMON SHARE:
Income before extraordinary charge $ - $ 0.30 $ - $ 0.59
Extraordinary charge - (0.59) - (1.18)
---------------- -------------- ---------------- ----------------
Net loss available to common stockholders $ - $ (0.29) $ - $ (0.59)
================ ============== ================ ================
BASIC AND DILUTED EARNINGS PER
SUBORDINATED SHARE:
Loss before extraordinary charge $ (1.14) $ (0.59) $ (1.81) $ (1.09)
Extraordinary charge - - - -
---------------- -------------- ---------------- ----------------
Net loss available to common stockholders $ (1.14) $ (0.59) $ (1.81) $ (1.09)
================ ============== ================ ================
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
Page 2
<PAGE>
STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30,
----------------------------------
1998 1999
-------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss available to common stockholders $ (6,008) $ (6,161)
Adjustments to reconcile net loss available to common stockholders
to net cash provided by operating activities:
Extraordinary charge related to early extinguishment of debt - 4,743
Non-cash special compensation expense - 2,152
Depreciation, amortization and non-cash charges 6,202 6,101
Loss on disposition of property and equipment 4,000 -
Preferred stock dividends accrued 1,836 2,257
Decrease in accounts receivable-trade 2,295 144
(Increase) decrease in other receivables 249 (395)
Decrease in inventory 84 2,646
Increase in prepaid expenses (1,192) (420)
Increase in other non-current assets (96) (34)
Increase (decrease) in accounts payable (521) 1,190
Increase in accrued expenses 845 662
-------------- ---------------
Net cash provided by operating activities 7,694 12,885
-------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (5,169) (4,057)
Proceeds from sale of property and equipment - 15
-------------- ---------------
Net cash used in investing activities (5,169) (4,042)
-------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from initial public offering of common shares - 136,757
Redemption of preferred stock - (94,824)
Repurchase of First Mortgage Notes - (37,681)
Payment of preferred stock dividends - (9,697)
Additional issuance of subordinated shares and incentive rights - 34
-------------- ---------------
Net cash used in financing activities - (5,411)
-------------- ---------------
INCREASE IN CASH AND CASH EQUIVALENTS 2,525 3,432
CASH AND CASH EQUIVALENTS, beginning of period 6,112 14,061
-------------- ---------------
CASH AND CASH EQUIVALENTS, end of period $ 8,637 $ 17,493
============== ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes $ 224 $ 359
============== ===============
Cash paid for interest $ 7,989 $ 8,030
============== ===============
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
Page 3
<PAGE>
STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1999
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The unaudited consolidated condensed financial statements of Statia
Terminals Group N.V. ("Group") and its subsidiaries (together with Group, the
"Company") have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements. Significant accounting policies followed by
the Company were disclosed in the Notes to the Consolidated Financial Statements
for the year ended December 31, 1998 included in the Company's Registration
Statement on Form S-1 (File No. 333-72317) related to its initial public
offering of equity (the "Registration Statement"). In the opinion of the
Company's management, the accompanying consolidated condensed financial
statements contain adjustments, consisting of normal recurring accruals,
necessary to present fairly the financial position of the Company at June 30,
1999 and the results of operations and cash flows for the six months ended June
30, 1998 and 1999. Operating results for the six months ended June 30, 1999 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1999. Additionally, the Company's initial public offering of
equity which closed on April 28, 1999 will impact the Company's results of
operations and financial condition. These financial statements should be read in
conjunction with the Registration Statement.
For all periods presented herein, there were no differences between net
income and comprehesive income.
2. SEGMENT INFORMATION
The Company is organized around several different factors, the two most
significant of which are products and services, and geographic location. The
Company's primary products and services are bunker and bulk product sales, and
terminaling services (consisting of storage, throughput, dock charges, emergency
response fees and other terminal charges).
The primary measures of profit and loss utilized by the Company's
management to make decisions about resources to be allocated to each segment are
earnings before interest expense, interest income, income taxes, depreciation,
amortization and certain unallocated income and expenses ("Internal EBITDA") and
earnings before interest expense, interest income, income taxes and certain
unallocated income and expenses ("Internal EBIT").
Page 4
<PAGE>
STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1999
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
2. SEGMENT INFORMATION- (CONTINUED)
The following information is provided for the Company's terminaling
services and bunker and bulk products sales segments:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------------ ------------------------------------
1998 1999 1998 1999
--------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
REVENUES:
Terminaling services $ 16,974 $ 17,408 $ 31,156 $ 34,036
Bunker and bulk product sales 19,498 24,859 35,680 45,646
--------------- ---------------- --------------- ----------------
Total $ 36,472 $ 42,267 $ 66,836 $ 79,682
=============== ================ =============== ================
INTERNAL EBITDA:
Terminaling services $ 7,605 $ 7,821 $ 12,888 $ 15,926
Bunker and bulk product sales 753 1,258 1,666 2,532
--------------- ---------------- --------------- ----------------
Total $ 8,358 $ 9,079 $ 14,554 $ 18,458
=============== ================ =============== ================
DEPRECIATION AND AMORTIZATION
EXPENSE:
Terminaling services $ 2,816 $ 2,751 $ 5,597 $ 5,574
Bunker and bulk product sales 127 156 252 289
--------------- ---------------- --------------- ----------------
Total $ 2,943 $ 2,907 $ 5,849 $ 5,863
=============== ================ =============== ================
INTERNAL EBIT:
Terminaling services $ 4,790 5,070 $ 7,292 $ 10,352
Bunker and bulk product sales 626 1,102 1,414 2,242
--------------- ---------------- --------------- ----------------
Total $ 5,416 6,172 $ 8,706 $ 12,594
=============== ================ =============== ================
</TABLE>
A reconciliation of Internal EBIT to the Company's income (loss) before
provision for income taxes, preferred stock dividends and extraordinary charge
is as follows:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------------ ------------------------------------
1998 1999 1998 1999
--------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Internal EBIT $ 5,416 $ 6,172 $ 8,706 $ 12,594
Unallocated operating and administrative
income (expenses) (413) 150 (932) (219)
Special compensation expense - (2,152) - (4,099)
Interest expense excluding debt
amortization expense (3,990) (3,536) (7,989) (7,511)
Interest income 136 378 262 567
Loss on sale of Statia Terminals
Southwest, Inc. (4,000) - (4,000) -
--------------- ---------------- ---------------- ---------------
Income (loss) before provision for income
taxes, preferred stock dividends, and
extraordinary charge $ (2,851) $ 1,012 $ (3,953) $ 1,332
=============== ================ ================ ===============
</TABLE>
Page 5
<PAGE>
STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1999
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
3. EARNINGS PER SHARE
In connection with its initial public offering of equity discussed
below, the Company adopted Statement of Financial Accounting Standards No. 128
"Earnings per Share" ("SFAS No. 128"). Earnings per share are computed based
upon the "Participating Securities and Two-Class Common Stock" methodology as
required by SFAS No. 128. Earnings and losses have been allocated to each class
of common stock based upon changes in the historical basis liquidation values of
the classes of common stock during the periods presented as determined in
accordance with the Company's Articles of Incorporation. Under this methodology,
all of the earnings and losses prior to the closing of the Company's initial
public offering of equity on April 28, 1999 have been allocated to the
subordinated shareholders. All of the earnings and losses subsequent to April
28, 1999 have been allocated to the common shareholders.
Basic earnings (loss) per share is computed by dividing the earnings
and losses allocated to each class of common stock by the weighted average
number of shares outstanding for each class during the period. Diluted earnings
(loss) per share is computed the same as basic earnings (loss) per share except
the denominator is adjusted for the effect of common share and subordinated
share equivalents outstanding. For periods prior to April 28, 1999, subordinated
share equivalents include, where appropriate, the assumed exercise of previously
outstanding stock options and the conversion of the Company's Series B preferred
stock.
All earnings per share amounts presented have been adjusted to give
retroactive effect, as of the beginning of each period presented, to the
reclassification and additional issuance of subordinated shares and incentive
rights that occurred in connection with the initial public offering of equity.
The Company's previously outstanding stock options and preferred stock with
conversion features were antidilutive for all periods presented.
The following additional information is presented with respect to the
Company's earnings per share amounts:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------------- ------------------------------------
1998 1999 1998 1999
-------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
EARNINGS PER COMMON SHARE
Earnings and losses allocated to common shares:
Income before extraordinary charge $ - $ 2,385 $ - $ 2,385
Extraordinary charge - (4,743) - (4,743)
-------------- ----------------- ---------------- ----------------
Net loss available to common stockholders $ - $ (2,358) $ - $ (2,358)
============== ================= ================ ================
Weighted average common shares outstanding - 5,345 - 2,687
Dilutive effect of weighted average subordinated
shares outstanding - 2,673 - 1,344
-------------- ----------------- ---------------- ----------------
Diluted common shares outstanding - 8,018 - 4,031
============== ================= ================ ================
EARNINGS PER SUBORDINATED SHARE
Earnings and losses allocated to subordinated shares:
Loss before extraordinary charge $ (3,776) $ (2,148) $ (6,008) $ (3,803)
Extraordinary charge - - - -
-------------- ----------------- ---------------- ----------------
Net loss available to common stockholders $ (3,776) $ (2,148) $ (6,008) $ (3,803)
============== ================= ================ ================
Weighted average subordinated shares outstanding 3,305 3,653 3,312 3,480
Dilutive effect of stock options and preferred
stock with conversion features - - - -
-------------- ----------------- ---------------- ----------------
Diluted subordinated shares outstanding 3,305 3,653 3,312 3,480
============== ================= ================ ================
</TABLE>
Page 6
<PAGE>
STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1999
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
4. INITIAL PUBLIC OFFERING OF EQUITY
On April 28, 1999, Group completed its initial public equity offering
of 7.6 million common shares. The offering price was $20 per share raising gross
proceeds of $152,000. The gross proceeds of the offering were used primarily to
redeem all of Group's outstanding Series A-E preferred stock and pay accrued
dividends, pay underwriters' discounts and fees, and pay certain other costs
directly associated with the offering. The remaining proceeds were invested and
used during May 1999, along with existing cash, to repurchase in the open market
a principal amount of $34,000 of the Company's 11 3/4% First Mortgage Notes (the
"Notes") for $39,522, including acquisition costs and accrued interest of $3,681
and $1,841, respectively. During the second quarter of 1999, the acquisition
costs and the unamortized deferred financing costs related to the repurchased
Notes ($1,062) were recorded as an extraordinary charge. There was no income tax
effect associated with this extraordinary charge.
During the three months ended March 31, 1999, the Company recorded as
special compensation expense a bonus in the amount of $1,947 for particular
members of the Company's management. The purpose of this special management
bonus was to partially reimburse these individuals with respect to adverse tax
consequences that resulted from the offering and other past compensation
arrangements.
As more fully discussed in the Registration Statement, in connection
with the offering, certain previously granted stock options became fully vested,
were exercised and became subordinated shares. In accordance with APB 25, the
Company was amortizing as compensation expense the difference between the
estimated fair value of the options at the date of grant and the exercise price
over the vesting period of five years. During the period from January 1, 1999 to
April 28, 1999, $154 was amortized as compensation expense and credited to
additional paid in capital. On April 28, 1999, the remaining unamortized
compensation expense associated with these options of $2,152 was recorded as a
non-cash special compensation expense and credited to additional paid-in
capital.
The following additional information for the six months ended June 30,
1999 is presented with respect to the Company's equity accounts.
<TABLE>
<CAPTION>
PREFERRED STOCK - NOTES
SERIES D AND E RECEIVABLE COMMON STOCK ADDITIONAL
------------------ FROM ---------------- PAID-IN ACCUMULATED
SHARES AMOUNT STOCKHOLDERS SHARES AMOUNT CAPITAL DEFICIT TOTAL
------ -------- ------------ ------ ------ ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1998 55 $ 54,824 $ (1,474) 41 $ 4 $ 363 $ (10,386) $ 43,331
Net proceeds from initial public
offering of common shares - - - 7,600 76 136,681 - 136,757
Exercise of stock options,
reclassification of subordinated
shares and additional issuance of
subordinated shares and
incentive rights - - - 3,797 34 - - 34
Vesting of stock options - - - - - 2,152 - 2,152
Amortization expense related
to issuance of options - - - - - 154 - 154
Write-off of prepaid Castle Harlan
management fee - - - - - (778) - (778)
Redemption of preferred stock (55) (54,824) - - - - - (54,824)
Dividend of Petroterminal de
Panama shares - - - - - - (1,000) (1,000)
Net loss available to
common stockholders - - - - - - (6,161) (6,161)
------ -------- ------------ ------ ------ ---------- ----------- ----------
BALANCE, June 30, 1999 - - $ (1,474) 11,438 $ 114 $ 138,572 $ (17,547) $ 119,665
====== ======== ============ ====== ====== ========== =========== ==========
</TABLE>
Page 7
<PAGE>
STATIA TERMINALS GROUP N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1999
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
4. INITIAL PUBLIC OFFERING OF EQUITY- (CONTINUED)
The following unaudited pro forma consolidated results of operations for
the three-month and six-month periods ended June 30, 1998 and 1999 were prepared
to illustrate the estimated effects of:
o the disposition of Statia Terminals Southwest,
o the elimination of the Castle Harlan management fee, and
o the use of the net proceeds from the initial public offering of equity
and the restructuring as described in the Registration Statement,
(collectively, the "pro forma transactions") as if the pro forma transactions
had occurred at the beginning of each of these respective periods. The unaudited
pro forma consolidated condensed results of operations should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," the Company's financial statements and the notes
thereto, and the other financial information included in the Registration
Statement. This pro forma financial information is provided for informational
purposes only and does not purport to be indicative of the results of operations
which would have been obtained had the pro forma transactions been completed on
the dates indicated or results of operations for any future date or period.
<TABLE>
<CAPTION>
UNAUDITED SELECTED PRO FORMA CONSOLIDATED RESULTS
--------------------------------------------------------------------------
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------------- -----------------------------------
1998 1999 1998 1999
--------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
REVENUES $ 35,596 $ 42,267 $ 65,223 $ 79,682
--------------- --------------- ---------------- ---------------
OPERATING INCOME $ 5,508 $ 6,626 $ 8,966 $ 13,244
--------------- --------------- ---------------- ---------------
NET INCOME AVAILABLE
TO COMMON STOCKHOLDERS $ 2,469 $ 3,441 $ 2,682 $ 6,848
--------------- --------------- ---------------- ---------------
DEPRECIATION $ 2,566 $ 2,708 $ 5,097 $ 5,437
--------------- --------------- ---------------- ---------------
EBITDA $ 8,210 $ 9,617 $ 14,325 $ 19,153
--------------- --------------- ---------------- ---------------
BASIC EARNINGS PER COMMON SHARE $ 0.32 $ 0.45 $ 0.35 $ 0.90
--------------- --------------- ---------------- ---------------
DILUTED EARNINGS PER COMMON SHARE
$ 0.22 $ 0.30 $ 0.24 $ 0.60
--------------- --------------- ---------------- ---------------
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING: 7,600 7,600 7,600 7,600
--------------- --------------- ---------------- ---------------
DILUTED COMMON SHARES OUTSTANDING: 11,400 11,400 11,400 11,400
--------------- --------------- ---------------- ---------------
</TABLE>
Page 8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For purposes of the discussion below, reference is made to the
unaudited Consolidated Condensed Financial Statements and Notes thereto of
Statia Terminals Group N.V. and Subsidiaries as of June 30, 1999 and the three
and six month periods ended June 30, 1999 and 1998 included herein. Reference
should also be made to the Company's Registration Statement on Form S-1 that
includes the Company's Consolidated Financial Statements as of and for the year
ended December 31, 1998. You should note that we sold our Brownsville, Texas,
facility on July 29, 1998, and the figures below and our consolidated condensed
financial statements for the three and six months ended June 30, 1998 include
the Brownsville facility.
RESULTS OF OPERATIONS
The following tables set forth, for the periods indicated, the
percentage of revenues represented by certain items in our consolidated
condensed income statements.
RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED JUNE 30,
------------------------------------------
1998 1999
------------------- --------------------
% OF % OF
REVENUES DOLLARS REVENUES DOLLARS
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Revenues:
Terminaling services $ 16,974 46.5% $ 17,408 41.2%
Bunker and bulk product sales 19,498 53.5% 24,859 58.8%
--------- -------- --------- --------
Total revenues 36,472 100.0% 42,267 100.0%
Cost of services and products sold 28,812 79.0% 33,799 80.0%
--------- -------- --------- --------
Gross profit 7,660 21.0% 8,468 20.0%
Administrative expenses 2,429 6.7% 1,947 4.6%
Special compensation expense - - 2,152 5.1%
--------- -------- --------- --------
Operating income 5,231 14.3% 4,369 10.3%
Loss on disposition of property and equipment 4,000 11.0% - -
Interest expense 4,218 11.5% 3,735 8.8%
Interest income 136 0.4% 378 0.9%
--------- -------- --------- --------
Income (loss) before income taxes, preferred stock dividends
and extraordinary charge (2,851) (7.8)% 1,012 2.4%
Provision for income taxes 14 0.1% 239 0.6%
Preferred stock dividends 911 2.5% 536 1.3%
Extraordinary charge related to early extinguishment of debt - - 4,743 11.2%
--------- -------- --------- --------
Net loss available to common stockholders $ (3,776) (10.4)% $(4,506) (10.7)%
========== ======= ========= =========
</TABLE>
Page 9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30,
------------------------------------------
1998 1999
------------------- --------------------
% OF % OF
REVENUES DOLLARS REVENUES DOLLARS
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Revenues:
Terminaling services $ 31,156 46.6% $ 34,036 42.7%
Bunker and bulk product sales 35,680 53.4% 45,646 57.3%
--------- -------- --------- --------
Total revenues 66,836 100.0% 79,682 100.0%
Cost of services and products sold 53,932 80.7% 62,399 78.3%
--------- -------- --------- --------
Gross profit 12,904 19.3% 17,283 21.7%
Administrative expenses 4,674 7.0% 4,482 5.6%
Special compensation expense - - 4,099 5.2%
--------- -------- --------- --------
Operating income 8,230 12.3% 8,702 10.9%
Loss on disposition of property and equipment 4,000 6.0% - -
Interest expense 8,445 12.6% 7,937 10.0%
Interest income 262 0.4% 567 0.7%
--------- -------- --------- --------
Income (loss) before income taxes, preferred stock dividends
and extraordinary charge (3,953) (5.9)% 1,332 1.6%
Provision for income taxes 219 0.3% 493 0.6%
Preferred stock dividends 1,836 2.8% 2,257 2.8%
Extraordinary charge related to early extinguishment of debt - - 4,743 6.0%
--------- -------- --------- --------
Net loss available to common stockholders $ (6,008) (9.0)% $ (6,161) (7.8)%
========== ======= ========== =========
</TABLE>
The following tables set forth, for the periods indicated (a) the total
revenues and total operating income (loss), after allocation of administrative
expenses, at each of our operating locations and (b) the percentage such revenue
and operating income (loss) relate to our total revenue and operating income.
REVENUES BY LOCATION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED JUNE 30,
------------------------------------------
1998 1999
------------------- --------------------
% OF % OF
DOLLARS TOTAL DOLLARS TOTAL
-------- ------- --------- -------
<S> <C> <C> <C> <C>
Netherlands Antilles and the Caribbean $ 30,552 83.8% $ 36,186 85.6%
Canada 5,044 13.8% 6,081 14.4%
Brownsville, Texas facility 876 2.4% - -
-------- ------- --------- -------
Total $ 36,472 100.0% $ 42,267 100.0%
======== ======= ========== =======
</TABLE>
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30,
------------------------------------------
1998 1999
------------------- --------------------
% OF % OF
DOLLARS TOTAL DOLLARS TOTAL
-------- ------- --------- -------
<S> <C> <C> <C> <C>
Netherlands Antilles and the Caribbean $ 55,821 83.5% $ 68,482 85.9%
Canada 9,402 14.1% 11,200 14.1%
Brownsville, Texas facility 1,613 2.4% - -
-------- ------- --------- -------
Total $ 66,836 100.0% $ 79,682 100.0%
========= ======= ========= =======
</TABLE>
Page 10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
OPERATING INCOME (LOSS) BY LOCATION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED JUNE 30,
------------------------------------------
1998 1999
------------------- --------------------
% OF % OF
DOLLARS TOTAL DOLLARS TOTAL
------- ------ ------- -----
<S> <C> <C> <C> <C>
Netherlands Antilles and the Caribbean $ 3,756 71.8% $ 3,016 69.0%
Canada 1,634 31.2% 1,353 31.0%
Brownsville, Texas facility (159) (3.0)% - -
-------- ------- ------- ------
Total $ 5,231 100.0% $ 4,369 100.0%
======== ======= ======= ======
</TABLE>
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30,
------------------------------------------
1998 1999
------------------- --------------------
% OF % OF
DOLLARS TOTAL DOLLARS TOTAL
------- ------ ------- ------
<S> <C> <C> <C> <C>
Netherlands Antilles and the Caribbean $ 6,322 76.9% $ 6,575 75.6%
Canada 2,390 29.0% 2,127 24.4%
Brownsville, Texas facility (482) (5.9)% - -
------- ------- ------- -------
Total $ 8,230 100.0% $ 8,702 100.0%
======= ======= ======= =======
</TABLE>
The following table sets forth for the periods indicated total
capacity, capacity leased, throughput and vessel calls for each of our operating
locations. "Total capacity" represents the average storage capacity available
for lease for a period. "Capacity leased" represents the storage capacity leased
to third parties weighted for the number of days leased in the month divided by
the capacity available for lease. "Throughput" volume is the total number of
inbound barrels discharged from a vessel, tank, rail car or tanker truck, not
including across-the-dock or tank-to-tank transfers. A "vessel call" occurs when
a vessel docks or anchors at one of our terminal locations in order to load
and/or discharge cargo and/or to take on bunker fuel. Such dockage or anchorage
is counted as one vessel call regardless of the number of activities carried on
by the vessel. A vessel call also occurs when we sell and deliver bunker fuel to
a vessel not calling at our terminals for the above purposes. Each of these
statistics is a measure of the utilization of our facilities.
Page 11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
CAPACITY, CAPACITY LEASED, THROUGHPUT AND VESSEL CALLS BY LOCATION
(CAPACITY AND THROUGHPUT IN THOUSANDS OF BARRELS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------------- ---------------------------------
1998 1999 1998 1999
--------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Netherlands Antilles and
the Caribbean
Total capacity 11,334 11,334 11,334 11,334
Capacity leased 93% 91% 89% 93%
Throughput 16,231 17,468 31,527 33,676
Vessel calls 225 258 420 520
Canada
Total capacity 7,404 7,404 7,404 7,404
Capacity leased 89% 94% 88% 95%
Throughput 11,613 15,410 27,198 22,334
Vessel calls 32 42 63 59
Texas (1)
Total capacity 1,649 N/A 1,649 N/A
Capacity leased 58% N/A 50% N/A
Throughput 1,013 N/A 1,876 N/A
Vessel calls 32 N/A 59 N/A
All locations (1)
Total capacity 20,387 18,738 20,387 18,738
Capacity leased 89% 92% 85% 94%
Throughput 28,857 32,878 60,601 56,010
Vessel calls 289 300 542 579
</TABLE>
(1) The Brownsville, Texas facility was sold on July 29, 1998. The
statistics above for the three and six months ended June 30, 1998
include the operations of the Brownsville facility.
N/A Not applicable due to the sale of the Brownsville facility.
COMPARABILITY
On July 29, 1998, we sold Statia Terminals Southwest to an unrelated
third-party. Our consolidated condensed financial statements for the three and
six months ended June 30, 1998 include the operations of Statia Terminals
Southwest. The operating results of Statia Terminals Southwest for the three and
six months ended June 30, 1998 were not significant. Additionally, our initial
public offering of equity which closed on April 28, 1999 impacted our results of
operations and financial condition.
REVENUES
Total revenues for the three and six months ended June 30, 1999 were
$42.3 million and $79.7 million, compared to $36.5 million and $66.8 million for
the same periods of 1998, representing increases of $5.8 million, or 15.9% and
$12.9 million, or 19.2%, respectively.
Page 12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
Revenues from terminaling services, which consist of storage,
throughput, dock charges, emergency response fees and other terminal charges,
for the three and six months ended June 30, 1999 were $17.4 million and $34.0
million, compared to $17.0 million and $31.2 million for the same periods of
1998, representing increases of $0.4 million, or 2.6% and $2.9 million, or 9.2%,
respectively. The improvement in terminaling services revenue for the three and
six months ended June 30, 1999 compared to the same periods in 1998 was
principally due to:
o our ability to attract additional customers who use our facilities as
part of their strategic distribution networks;
o additional vessel calls at St. Eustatius resulting in higher dock charges
and emergency response fees; and
o higher lease rates per barrel of capacity leased due to contractual price
escalations and favorable petroleum market storage conditions.
For the six months ended June 30, 1999, approximately 48.3% of our tank
capacity and approximately 61.3% of our storage and throughput revenues,
excluding related ancillary services, were from long term contracts.
Revenues from terminaling services at St. Eustatius increased
approximately $0.1 million, or 0.7%, and $2.6 million, or 11.4%, during the
three and six months ended June 30, 1999, as compared to the same periods of
1998, due to additional throughput and more vessel calls during the three and
six months ended June 30, 1999 and due to higher capacity leased during the six
months ended June 30, 1999. Total throughput increased from 16.2 million and
31.5 million barrels during the three and six months ended June 30, 1998 to 17.5
million and 33.7 million barrels during the same periods of 1999 due primarily
to higher throughput of crude oil and petroleum products which was partially
offset by reduced throughput of fuel oil.
For the six months ended June 30, 1999, the overall percentage of
capacity leased at this facility was 93% compared to 89% for the same period of
1998, reflecting increases in the percentage of capacity leased for fuel oil
tankage and petroleum products. The percentage of capacity leased for fuel oil
tankage and petroleum products decreased during the three months ended June 30,
1999 as compared to the same period of 1998 primarily as a result of certain
tanks being removed from service due to routine maintenance. Thirty-three and
one hundred more vessels called at the St. Eustatius facility during the three
and six months ended June 30, 1999 than during the same periods of 1998,
resulting in higher revenues from dock charges and stand-by emergency response
fees.
Revenues from terminaling services at Point Tupper increased $1.0
million, or 20.0% and $1.7 million, or 18.5% during the three and six months
ended June 30, 1999 as compared to the same periods of 1998 due to higher
capacity leased partially offset by reduced throughput and vessel calls. The
percentage of tank capacity leased at Point Tupper increased from 89% and 88%
for the three and six months ended June 30, 1998 to 94% and 95% for the same
periods of 1999. These increases were primarily the result of additional crude
oil and clean petroleum products tankage leased during the three and six months
ended June 30, 1999 as compared to the same periods of 1998. Fewer vessel calls
during the six months ended June 30, 1999 as compared to the same period of 1998
led to lower revenues from port charges, which consist of dock charges,
emergency response fees and other terminal charges, at this facility during the
six months ended June 30, 1999. Revenues from port charges increased during the
three months ended June 30, 1999 as compared to the same period of 1998 as a
result of more vessel calls during the second quarter of 1999.
Page 13
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
Revenues from bunker and bulk product sales were $24.9 million and
$45.6 million for the three and six months ended June 30, 1999 compared to $19.5
million and $35.7 million for the same periods of 1998, an increase of $5.4
million, or 27.5% and $10.0 million, or 27.9%. These increases were primarily
due to an increase in the volume of bunkers and bulk product sold. Metric tons
of bunkers and bulk product sold increased 12.8% and 32.4% during the three and
six months ended June 30, 1999 as compared to the same periods of 1998. Average
selling prices increased 13.0% and decreased 3.4% when comparing the three and
six months ended June 30, 1999 with the same periods of 1998. These changes in
average selling prices were primarily the result of changes in the world oil
market.
GROSS PROFIT
Gross profit for the three and six months ended June 30, 1999 was $8.5
million and $17.3 million compared to $7.7 million and $12.9 million for the
same periods of 1998, representing increases of $0.8 million, or 10.5% and $4.4
million, or 33.9%. These increases in gross profit are primarily the result of
the increased terminaling services revenue produced at a small incremental cost.
Additionally, we realized higher gross margins on bunker sales during the three
and six months ended June 30, 1999 as compared to the same periods of 1998 due
to higher volumes of bunker fuels delivered.
Gross profits from terminaling services are generally higher than gross
profits from bunker and bulk product sales. Our operating costs for terminaling
services are relatively fixed and generally do not change significantly with
changes in capacity leased. Additions or reductions in storage, throughput and
ancillary revenues directly impact our gross profit. Costs for the procurement
of bunker fuels and bulk petroleum products are variable and linked to global
oil prices. Our bunker and bulk product costs are also impacted by market supply
conditions, types of products sold and volumes delivered.
ADMINISTRATIVE EXPENSES
Administrative expenses were $1.9 million and $4.5 million for the
three and six months ended June 30, 1999 as compared to $2.4 million and $4.7
million for the same periods of 1998, representing decreases of $0.5 million, or
19.8% and $0.2 million, or 4.1%. The decreases during the three and six months
ended June 30, 1999, as compared to the same periods of 1998, are primarily the
result of the termination of the Castle Harlan management fee subsequent to our
initial public offering of equity which was partly offset by higher personnel
costs.
SPECIAL COMPENSATION EXPENSE
As more fully discussed in note 4 of notes to the consolidated
condensed financial statements included in Part I, Item 1 of this Report, we
recorded special compensation expense during the three and six months ended June
30, 1999 of $2.2 million and $4.1 million, respectively.
INTEREST EXPENSE
During the three and six months ended June 30, 1999, we incurred $3.7
million and $7.9 million of interest expense compared to $4.2 million and $8.4
million for the same periods of 1998. Interest expense includes interest accrued
on our mortgage notes due in 2003, amortization expense related to deferred
financing costs, other interest expenses and certain bank charges. In May 1999,
we repurchased $34 million of the mortgage notes which resulted in lower
interest expense on this debt.
Page 14
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
PROVISION FOR INCOME TAXES
Provision for income taxes was $0.2 million and $0.5 million for the
three and six months ended June 30, 1999 as compared to $0.01 million and $0.2
million for the same periods of 1998. The provision for income taxes has been
increased in 1999 in contemplation of a new tax agreement with the governments
of the Netherlands Antilles and island of St. Eustatius (see further discussions
regarding the tax agreement and taxation matters in the Registration Statement).
PREFERRED STOCK DIVIDENDS
Preferred stock dividends were $0.5 million and $2.3 million for the
three and six months ended June 30, 1999 as compared to $0.9 million and $1.8
million for the same periods of 1998, representing a decrease of $0.4 million
and an increase of $0.4 million. The decrease during the three months ended June
30, 1999 as compared to the same period of 1998 is the result of the redemption
of all outstanding preferred stock in connection with our initial public
offering of equity. The increase during the six months ended June 30, 1999 is
the result of the increasing balance of dividends payable and a rate increase.
EXTRAORDINARY CHARGE RELATED TO EARLY EXTINGUISHMENT OF DEBT
As more fully discussed in note 4 of notes to the consolidated
condensed financial statements included in Part I, Item 1 of this Report, we
recognized an extraordinary charge of $4.7 million during the three months ended
June 30, 1999 in connection with the repurchase of $34 million of our 11 3/4%
mortgage notes. There was no income tax effect associated with this
extraordinary charge.
NET LOSS
Net loss available to common stockholders was $4.5 million and $6.2
million for the three and six months ended June 30, 1999, as compared to a net
loss of $3.8 million and $6.0 million for the same periods of 1998, an increase
of $0.7 million and $0.2 million. The increases in the net loss are attributable
to the net effect of the factors discussed above.
LIQUIDITY AND CAPITAL RESOURCEs
As more fully discussed in note 4 of notes to the consolidated
condensed financial statements included in Part I, Item 1 of this Report, and
Changes in Securities and Use of Proceeds in Part II, Item 2 of this Report, our
initial public offering of equity closed on April 28, 1999. The net proceeds of
the offering were used primarily to redeem all of our outstanding preferred
stock and pay accrued dividends, and repurchase in the open market a principal
amount of $34 million of our mortgage notes, leaving $101 million of mortgage
notes outstanding. It is anticipated that the repurchase of the mortgage notes
will result in annual reductions in interest payments of $5.0 million.
No draws have occurred on the $17.5 million revolving credit facility
secured by our accounts receivable and oil inventory. The revolving credit
facility is available for working capital needs and letter of credit financing,
and it permits us to borrow in accordance with our available borrowing base,
which was estimated at $6.1 million at June 30, 1999. The revolving credit
facility bears interest at the prime rate plus 0.50% per annum (8.5% at August
12, 1999) and will expire on November 27, 1999.
Page 15
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
At June 30, 1999, we had cash and cash equivalents on hand of $17.5
million compared to $14.1 million at December 31, 1998. We currently believe
that cash on hand, cash flow generated by operations, and amounts available
under the revolving credit facility will be sufficient to fund working capital
needs, to service debt, to make capital expenditures and to meet other operating
requirements, including any expenditures required by applicable environmental
laws and regulations. Our operating performance and ability to service or
refinance the mortgage notes and to extend or refinance the revolving credit
facility will be subject to future economic conditions and to financial,
business and other factors, many of which are beyond our control. We can give no
assurances that our future operating performance will be sufficient to service
our indebtedness or that we will be able to repay at maturity or refinance our
indebtedness in whole or in part.
As more fully discussed in the Registration Statement, under our
Articles of Incorporation we are required to distribute all of our "available
cash" (as defined therein) generated from operations to our shareholders.
"Available cash" as defined generally includes cash from various sources after
deducting such reserves as our Board of Directors may deem necessary or
appropriate to provide for the proper conduct of our business, including future
capital expenditures and anticipated credit needs, and to comply with debt
obligations.
On July 29, 1999, our Board of Directors declared a distribution of
$0.3165 per share to common and subordinated shareholders. The distribution is
payable to shareholders of record as of the close of business on August 4, 1999
and will be paid on August 13, 1999 only to common shareholders. We will retain
the distribution on subordinated shares until the end of the deferral period
which lasts until at least June 30, 2001. The distribution represents our target
quarterly distribution of $0.45 per share prorated for the period from the date
of closing of our initial public offering of equity on April 28, 1999 through
June 30, 1999.
CASH FLOW FROM OPERATING ACTIVITIES
Net cash provided by operating activities was $7.7 million and $12.9
million for the six months ended June 30, 1998 and 1999, respectively. Cash flow
from operations has been our primary source of liquidity during these periods.
Differences between net losses and positive operating cash flow have resulted
primarily from depreciation and amortization burdens, non-cash charges and
changes in various asset and liability accounts.
CASH FLOW FROM INVESTING ACTIVITIES
Net cash used in investing activities was $5.2 million and $4.0 million
for the six months ended June 30, 1998 and 1999, respectively. Investing
activities during the six months ended June 30, 1998 and 1999 included purchases
of property and equipment of $5.2 million and $4.1 million, respectively.
CASH FLOW FROM FINANCING ACTIVITIES
Our cash flows from financing activities for the six months ended June
30, 1999 are more fully discussed in note 4 of notes to the consolidated
condensed financial statements included in Part I, Item 1 of this Report, and
Changes in Securities and Use of Proceeds in Part II, Item 2 of this Report.
Page 16
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
CAPITAL EXPENDITURES
Our capital expenditure budget for 1999 is $7.3 million for maintenance
capital expenditures and $1.8 million for producing incremental revenues.
Additional spending is contingent upon the addition of incremental terminaling
business.
The following table sets forth capital expenditures and separates such
expenditures into those which produce, or have the potential to produce,
incremental revenue, and those which represent maintenance capital expenditures.
SUMMARY OF CAPITAL EXPENDITURES BY TYPE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED JUNE 30,
-----------------------------------
1998 1999
--------------- ---------------
% OF % OF
DOLLARS TOTAL DOLLARS TOTAL
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Produce incremental revenues $ 68 3.0% $ 175 8.6%
Maintenance capital expenditures 2,507 97.0% 1,859 91.4%
-------- ------- --------- -------
Total $ 2,575 100.0% $ 2,034 100.0%
======== ======= ========= =======
</TABLE>
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30,
-----------------------------------
1998 1999
--------------- ---------------
% OF % OF
DOLLARS TOTAL DOLLARS TOTAL
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Produce incremental revenues $ 219 4.0% $ 296 7.3%
Maintenance capital expenditures 4,950 96.0% 3,761 92.7%
-------- ------- -------- -------
Total $ 5,169 100.0% $ 4,057 100.0%
======= ======= ========= =======
</TABLE>
INFORMATION TECHNOLOGY AND THE YEAR 2000
Some computer software and hardware applications and embedded
microprocessor, microcontroller or other processing technology applications and
systems use only two digits to refer to a year rather than four digits. As a
result, these applications could fail or create erroneous results in dealing
with certain dates and especially if the applications recognize "00" as the year
1900 rather than the year 2000. During 1997, we developed a Year 2000 plan to
upgrade our key information systems and simultaneously address the potential
disruption to both operating and accounting systems that might be caused by the
Year 2000 problem. The Year 2000 plan also provides for evaluations of the
systems of customers, vendors, and other third-party service providers and
evaluations of our non-information technology systems, which include embedded
technologies such as microcontrollers and is also referred to as non-traditional
information technology.
Page 17
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
We have substantially completed the assessment phase of the Year 2000
plan as it relates to both traditional and non-traditional technology
applications and systems. We are currently in the process of testing new Year
2000 compliant terminal operations software at our facilities. We anticipate
that the Year 2000 compliant terminal operations systems will be fully
implemented in the third quarter of 1999. We are implementing a fully integrated
Year 2000 compliant finance, accounting, and human resources system and expect
to have the key components of the new system operational by the third quarter of
1999. In addition to being Year 2000 compliant, it is anticipated that this
system and the terminal operations software will significantly enhance systems
functionality.
We have identified some components of our control systems at our two
terminals as not being Year 2000 compliant. These systems measure, regulate,
control, and maintain crude oil and petroleum product flow and fire protection
equipment at the terminals. We are currently evaluating the best means to
mitigate the possible adverse effects resulting from the potential failure of
these systems including repair or replacement and, in most cases, have already
installed and successfully tested replacements of non-compliant components.
However, we believe that in a worst case scenario, existing manual overrides
would prevent the failure of these systems from having a material adverse effect
on our operations.
In accordance with our Year 2000 plan, we have initiated a formal
communications process with other companies with which our systems interface or
rely on to determine the extent to which those companies are addressing their
Year 2000 compliance. In connection with this process, we have sent numerous
letters and questionnaires to third parties and are evaluating those responses
as they are received. Based upon information we have received and our review of
existing relationships with third parties, we do not currently anticipate that
any third-party non-compliance would have a material adverse effect on our
business, results of operations, or financial condition.
Through June 30, 1999, we have spent $1.6 million in connection with
our Year 2000 remediation efforts and related enhancements of systems
functionality. Of this total, we have capitalized $1.5 million and expensed $0.1
million. During the remainder of 1999, we anticipate spending an additional $0.4
million to complete these efforts of which we anticipate capitalizing $0.3
million and expensing $0.1 million. However, we cannot guarantee that these
estimates will be met and actual expenditures could differ materially from these
estimates.
Based upon information currently available to us, we believe our
efforts will succeed in preventing the Year 2000 issue from having a material
adverse effect on us. However, the pervasive nature of the Year 2000 issue may
prevent us from fully assessing and rectifying all systems that could have an
effect on our business, results of operations, or financial condition.
Page 18
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We periodically purchase refined petroleum products from our customers
and others for resale as bunker fuel, for small volume sales to commercial
interests and to maintain an inventory of blend stocks for our customers.
Petroleum product inventories are held for short periods, generally not
exceeding ninety days. We do not presently have any derivative positions to
hedge our inventory of petroleum products. The following table indicates the
aggregate carrying value of our petroleum products, which are sensitive to
changes in commodity prices, on hand at June 30, 1999 computed at average costs,
net of any lower of cost or market valuation provisions, and the estimated fair
value of such products.
ON BALANCE SHEET COMMODITY POSITION
(Dollars in thousands)
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
---------------------------------
CARRYING AMOUNT FAIR VALUE
--------------- ----------
<S> <C> <C>
Petroleum Inventory:
Statia Terminals N.V. $ 1,613 $ 1,662
Statia Terminals Canada, Inc. 269 269
--------- --------
Total $ 1,882 $ 1,931
========= ========
</TABLE>
Except for certain local operating expenses in Canadian dollars and
Netherlands Antilles guilders, all of our transactions are in U.S. dollars.
Therefore, we believe we are not significantly exposed to exchange rate
fluctuations. As all of our present debt obligations carry a fixed rate of
interest, except for the undrawn revolving credit facility which varies with
changes in the lender's prime lending rate, we believe our exposure to interest
rate fluctuations is minimal.
Page 19
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Reference is made to the Legal Proceedings section of Management's
Discussion and Analysis of Financial Condition and Results of Operations
included in the Company's amended Registration Statement on Form S-1 (File No.
333-72317). There have been no material developments in the Company's legal
proceedings since the amended Registration Statement was filed.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
Reference is made to the Company's amended Registration Statement for
such changes occurring as a result of the Company's initial public offering of
equity which was completed on April 28, 1999.
On April 22, 1999, the U.S. Securities and Exchange Commission declared
the Registration Statement of Group effective for an initial public offering of
equity of 7.6 million common shares. The common shares began trading on the
NASDAQ National Market system under the symbol "STNV" on April 23, 1999. The
offering, for which Bear Stearns & Co. Inc. and Morgan Stanley Dean Witter,
among others, acted as the underwriters, closed on April 28, 1999 at $20.00 per
share yielding gross proceeds of $152 million.
The gross proceeds of the offering were used primarily to redeem all of
Group's outstanding Series A-E preferred stock and pay accrued dividends, pay
underwriters' discounts and fees, and pay certain other costs directly
associated with the offering. The remaining proceeds were invested and used
during May 1999, along with existing cash, to repurchase in the open market a
principal amount of $34,000 of the Company's 11-3/4% First Mortgage Notes for
$39,522, including acquisition costs and accrued interest of $3,681 and $1,841,
respectively.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter has been submitted to a vote of security holders subsequent
to the Company's initial public offering of equity which was completed on April
28, 1999.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
4.1 Share Pledge Agreement, dated as of June 28, 1999, by and among Statia
Terminals Antilles N.V., Statia Terminals Delaware, Inc. and HSBC Bank
USA (formerly known as Marine Midland Bank).
4.2 Amendment to Share Pledge Agreement, dated as of June 28, 1999, by and
between Statia Terminals International N.V. and HSBC Bank USA (formerly
known as Marine Midland Bank).
4.3 Guarantee issued pursuant to the Indenture, dated as of June 28, 1999,
made by Statia Terminals Antilles N.V.
27.1 Financial Data Schedule for Statia Terminals Group N.V. (for electronic
filing only)
(b) Reports on Form 8-K.
None.
Page 20
<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.
STATIA TERMINALS GROUP N.V.
(Registrant)
Date: August 12, 1999
By: /S/ JAMES G. CAMERON
----------------------------
James G.Cameron
Director
(As Authorized Officer)
By: /S/ JAMES F. BRENNER
----------------------------
James F. Brenner
Vice President and Treasurer
(As Authorized Officer and Principal
Finance and Accounting Officer)
Page S-1
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
4.1 Share Pledge Agreement, dated as of June 28, 1999,
by and among Statia Terminals Antilles N.V., Statia
Terminals Delaware, Inc. and HSBC Bank USA
(formerly known as Marine Midland Bank).
4.2 Amendment to Share Pledge Agreement, dated as of
June 28, 1999, by and between Statia Terminals
International N.V. and HSBC Bank USA (formerly
known as Marine Midland Bank).
4.3 Guarantee issued pursuant to the Identure, dated as
of June 28, 1999, made by Statia Terminals Antilles
N.V.
27.1 Finacial Data Schedule for Statia Terminals Group
N.V. (for electronic filing only)
EXHIBIT 4.1
SHARE PLEDGE AGREEMENT
SHARE PLEDGE AGREEMENT (this "Pledge Agreement"), dated as of
June 28, 1999, by and among Statia Terminals Antilles N.V., a company
incorporated under the laws of the Netherlands Antilles having its corporate
seat in Curacao ("Statia Antilles"), Statia Terminals Delaware, Inc. ("STDI",
and collectively with Statia Antilles, the "Pledgors") and HSBC Bank USA
(formerly known as Marine Midland Bank), a New York banking corporation and
trust company having its registered office at 140 Broadway, 12th Floor, New
York, NY 10005-1180, as Trustee (in such capacity and together with any
successors and assigns in such capacity, "Pledgee") pursuant to the Indenture
(as hereinafter defined) and the Additional Lender Intercreditor Agreement as
defined in the Indenture, if any.
W I T N E S S E T H :
WHEREAS, Statia Terminals International N.V. ("Statia
International"), a company incorporated under the laws of the Netherlands
Antilles, Statia Terminals Canada Incorporated (together with Statia
International hereafter collectively referred to as the "Issuers"), STDI, as
Subsidiary Guarantor, the other Subsidiary Guarantors parties thereto and
Pledgee have entered into a certain indenture, dated as of November 27, 1996 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Indenture") pursuant to which the Issuers issued 11 3/4% first mortgage notes
due 2003 (the "Notes"), in the aggregate principal amount of US$135,000,000;
WHEREAS, Statia Antilles has executed a Guarantee, dated as of
June 28, 1999, pursuant to which it has guaranteed payment of the Notes;
WHEREAS, it is contemplated that the Issuers may, after the
date thereof, incur certain additional indebtedness ("Additional Secured
Indebtedness") in accordance with the provisions of Section 4.04 and Section
4.14 of the Indenture which shall be equally and ratably secured by the Pledged
Collateral (as hereinafter defined);
WHEREAS, the Issuers, STDI, as Subsidiary Guarantor, the other
Subsidiary Guarantors and Pledgee have entered into that certain Fourth
Amendment to Indenture and Consent Under Securities Pledge Agreements, dated as
of April 26, 1999, in connection with the transfer of all of the shares of
capital stock held by Statia Terminals Corporation N.V. of Saba Trust Company
N.V., Bicen Development Corporation N.V. and Statia Terminals N.V. by Statia
Terminals Corporation N.V. to Statia International and thereafter to Statia
Antilles, and such shares were thereafter so transferred;
<PAGE>
WHEREAS, the Pledgors are entering into this Pledge Agreement
with Pledgee acting for the benefit of itself, the holders of the Notes and the
holders of Additional Secured Indebtedness (collectively the "Secured Parties")
for the purpose, among other things, of securing and providing for the payment
of all amounts of principal, premium, if any, interest, costs, charges, fees,
expenses, commissions, reimbursements, indemnities and all other amounts from
time to time due and payable by the Pledgors to the Secured Parties (whether at
stated maturity, by acceleration or otherwise, including, without limitation,
the payments of interest and other amounts which would accrue and become due but
for the filing of a petition in bankruptcy or the operation of any stay under
any Bankruptcy Law (as defined in the Indenture)) under the Indenture, the
Notes, this Pledge Agreement, and any other instrument governing the obligations
of the Pledgors with respect to the Additional Secured Indebtedness (the
"Additional Indebtedness Instrument", together with the Indenture, the Notes,
and this Pledge Agreement collectively the "Secured Instruments"), as well as
the performance and payment of all other obligations and liabilities, now
existing or hereafter arising whatsoever which are now or at any time hereafter
may be or become due, owing or payable under any of the Secured Instruments, in
any form or currency, to the Secured Parties by the Pledgors, actually or
contingently, solely or jointly and/or severally with another or others, as
principal or surety, or by virtue of any current or other account in connection
with any advance, loan, credit, instrument, guarantee or indemnity made or
issued to, for or at the request of the Pledgors pursuant to any Secured
Instrument and costs, for the purpose hereof including, but not limited to,
costs of collection of any amount due to the Secured Parties (collectively, the
"Secured Obligations");
WHEREAS, the Indenture is governed by the laws of the State of
New York;
WHEREAS, each Pledgor is of the opinion that the execution and
delivery of this Agreement and the performance of its obligations hereunder is
in its corporate interest and does not prejudice the rights of its creditors;
NOW, THEREFORE, in consideration of the foregoing premises
each Pledgor agrees with Pledgee as follows:
Section 1. DEFINITIONS. Capitalized terms used herein and not
defined shall have the meanings assigned to them in the Indenture.
Section 2. OBLIGATIONS OWED TO PLEDGEE AS TRUSTEE.
2.1 In order to ensure that a valid pledge is created pursuant
to this Pledge Agreement, each Pledgor hereby agrees and covenants with Pledgee
that it shall (i) pay to Pledgee (as and when due by such Pledgor in accordance
with the provisions of the applicable Secured Instruments) all amounts of money
due and payable to the holders of the Notes and to the holders of the Additional
Secured Indebtedness under their respective Secured Instruments, in order to
permit Pledgee to make the payments required under the applicable Secured
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<PAGE>
Instrument, as and when due, to the holders of the Notes and to the holders of
Additional Secured Indebtedness, and (ii) perform all of its other obligations
to the holders of the Notes and the holders of the Additional Secured
Indebtedness in accordance with their respective Secured Instruments. The
agreements, covenants and obligations of the Pledgors set forth in the
immediately preceding sentence shall hereinafter be referred to as the
"Debtholder Obligations". It is the intention of the parties that the Debtholder
Obligations shall be identical and equal, but alternative to the obligations of
the Pledgors to the holders of the Notes and to the holders of Additional
Secured Indebtedness under their respective Secured Instruments.
2.2 Each of the Pledgors and the Pledgee agree and acknowledge
that the Debtholder Obligations are obligations and liabilities of each such
Pledgor to the Pledgee, as trustee and paying agent, separate and independent
from and without prejudice to the liabilities which each such Pledgor has or may
have to the holders of the Notes and to the holders of the Additional Secured
Indebtedness, PROVIDED that the total amount due and payable under the
Debtholder Obligations shall be decreased to the extent that such Pledgor shall
have paid any amounts to the Pledgee, which are due, payable and owing to any
holder of the Notes and any holder of Additional Secured Indebtedness in
accordance with their respective Secured Instruments.
2.3 In connection with the performance of the provisions of
this Pledge Agreement, the Pledgee (in its capacity as Trustee) shall have the
duties, and shall be entitled to the benefits, set forth in the Indenture and/or
the Additional Lender Intercreditor Agreement, if any, all to the extent
permitted by applicable law.
2.4 The relationship of the holders of the Notes, the holders
of Additional Secured Indebtedness and the Pledgee are or will be, as the case
may be, governed by the Indenture and the applicable Intercreditor Agreements,
which are or will be, as the case may be, governed by and construed in
accordance with the laws of the State of New York.
Section 3. PLEDGE.
3.1 In order to secure and to provide for the payment and
performance when due of all Secured Obligations, each Pledgor hereby grants and,
in the case of Pledged Collateral hereafter acquired or obtained, agrees to
grant to Pledgee for the benefit of the Secured Parties and Pledgee hereby
accepts from each such Pledgor a first right of pledge ("eerste pandrecht") (the
"Pledge"), to all of the right, title and interest of each such Pledgor in, to
and over the following whether now existing or hereafter acquired (collectively,
the "Pledged Collateral"):
(i) all issued and outstanding common shares (Common B-shares)
of Statia Terminals N.V. ("Terminals"), a company incorporated under
the laws of the Netherlands Antilles, all issued and outstanding shares
of Saba Trust Company N.V. ("Saba"), a company incorporated under the
laws of the Netherlands Antilles, and all issued and outstanding shares
of Bicen Development Companies N.V. ("Bicen"), a company incorporated
under the laws of the Netherlands Antilles (together with Terminals and
Saba, hereinafter referred to as the "Companies"), all as listed in
Schedule I hereto (the "Pledged Shares");
-3-
<PAGE>
(ii) all additional shares of capital stock of the Companies
from time to time acquired by such Pledgors in any manner (including,
without limitation) all stock dividends, bonus shares, rights of issue,
options and warrants at any time and from time to time received,
receivable or otherwise distributed with respect to the Pledged Shares
and all issued and outstanding shares of capital stock or other equity
interests of each other Netherlands Antilles Person which, after the
date hereof, is or becomes, as a result of any occurrence, a Restricted
Subsidiary of either Pledgor (collectively the "Additional Shares");
(iii) dividends, cash, distributions from retained earnings,
returns of paid up nominal share capital, return of paid in capital
surplus income, profits and other property, interests or proceeds at
any time and from time to time received, receivable or otherwise
distributed with respect to the Pledged Shares and Additional Shares
(the "Distributions");
(iv) all interest of such Pledgors in the entries on the books
of any financial intermediary pertaining to the Pledged Collateral; and
(v) (a) any and all proceeds of any insurance (except payments
made to a Person which is not a party to this Pledge Agreement),
indemnity, warranty or guarantee payable to Pledgee or to such Pledgors
from time to time with respect to any of the Pledged Collateral, (b)
payments (in any form whatsoever) made or due and payable to such
Pledgors from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of
the Pledged Collateral by any governmental authority (or any Person
acting under color of governmental authority), (c) instruments
representing obligations to pay amounts in respect of Pledged Shares,
(d) products of the Pledged Collateral, and (e) other amounts from time
to time paid or payable under or in connection with any of the Pledged
Collateral.
Section 4. NOTIFICATION; DELIVERY OF PLEDGED COLLATERAL.
4.1 The Pledge granted hereunder has been notified to and
acknowledged by the Companies as set forth in Schedule II. Upon acquisition by
either Pledgor of any and all Additional Shares, such Pledgor shall cause the
Pledge granted hereunder to be notified to and acknowledged by the Companies or
the issuer of such Additional Shares, as the case may be, and with due
observance to the provisions of this Section 4.
4.2 Immediately upon this Pledge Agreement becoming effective
with respect to the Pledged Shares and promptly upon each receipt or acquisition
thereof with respect to Additional Shares, the Pledgors will deliver or cause to
be delivered to the Pledgee a duly authenticated extract from the register of
shareholders of the Companies and any issuer of Additional Shares evidencing the
entry in such register of the Pledge granted hereunder, and if in respect of any
one or more of the Pledged Shares or Additional Shares, as the case may be,
share certificates have been issued, the Pledgors shall in addition deliver to
the Pledgee the originals of such share certificates, duly endorsed to evidence
the Pledge granted hereunder. All Pledged Shares and Additional Shares shall be
in suitable form for transfer by delivery or shall be
-4-
<PAGE>
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance necessary or appropriate to complete the Pledge and give
the Pledgee the right to transfer the Pledged Shares and Additional Shares under
the terms hereof.
4.3 Each Pledgor shall, upon obtaining any Additional Shares
of any Person, promptly (and in any event within five Business Days) deliver to
Pledgee a pledge amendment, duly executed by such Pledgor, in substantially the
form of Schedule III hereto (each, a "Pledge Amendment"), in respect of the
additional Pledged Shares which are to be pledged pursuant to this Pledge
Agreement, and an acknowledgment of such Pledge Amendment by the Companies or
the issuer of such Additional Shares, as the case may be, confirming the Pledge
hereby created on and in respect of such Additional Shares. The Pledgors hereby
authorize Pledgee to attach each Pledge Amendment to this Pledge Agreement and
agree that all Additional Shares listed on any Pledge Amendment delivered to
Pledgee shall for all purposes hereunder be considered Pledged Collateral from
and after the date of such Pledge Amendment.
4.4 Each Pledgor shall further promptly (and in any event
within five Business Days) upon obtaining any Additional Shares, deliver to
Pledgee written notice that such Pledgor is delivering all documents evidencing
or representing the Pledged Collateral, if any, to the Pledgee, at its offices
or in deposit with another institution at such place or places as the Pledgee
may from time to time elect, and all such documents shall be held subject to the
terms, covenants and conditions herein set forth. Neither the Pledgee nor any
director, officer or employee of the Pledgee, shall be liable for any action
taken or omitted to be taken by it or them relative to any of such documents
except for its or their own gross negligence, willful misconduct, or bad faith
and the Pledgee shall not be liable for any action or omission to act on the
part of any agent appointed and selected by the Pledgee with reasonable care to
act with respect to such documents (or any part thereof).
Section 5. VOTING RIGHTS; DISTRIBUTIONS.
5.1 Pledgee shall have the voting rights and other consensual
rights and powers pertaining to the Pledged Collateral or any part thereof,
except that Pledgee hereby authorizes, and grants power of attorney to the
Pledgors to exercise, so long as no Event of Default shall have occurred and be
continuing, any and all of such voting and/or consensual rights and powers
relating or pertaining to the Pledged Collateral or any part thereof, for any
purpose not inconsistent with the terms or purpose of this Pledge Agreement, the
Indenture and the applicable Secured Instrument, PROVIDED, HOWEVER, that the
Pledgors shall not (i) exercise such rights which may have an adverse effect on
the value of the Pledged Collateral or the pledge granted by this Pledge
Agreement and (ii) without the prior written approval of the Pledgee, vote in
respect of any one or more of the Pledged Shares or Additional Shares in favor
of a proposal (x) to amend the Articles of Association of the Companies or any
other issues of Additional Shares or (y) to dissolve and liquidate the Companies
or any other issuer of Additional Shares or (z) to issue any shares in addition
to or in substitution for the Pledged Shares or any Additional Shares or to
re-issue shares that have been repurchased, except in accordance with the
provisions of section 6.2 hereof.
-5-
<PAGE>
5.2 So long as no Event of Default shall have occurred and
subject to and in accordance with the provisions of the Indenture, the Pledgors
shall be entitled to receive, retain and utilize the Distributions, free from
the Pledge hereby created; PROVIDED, HOWEVER, that (i) such Distributions are
made in accordance with the provisions of this Pledge Agreement and the
Indenture and (ii) any and all such Distributions consisting of rights or
interests in the form of securities shall be, and shall be forthwith delivered
to Pledgee to hold as Pledged Collateral and shall, if received by either
Pledgor, be received for the benefit of Pledgee, be segregated from the other
property or funds of such Pledgor, and be forthwith delivered to Pledgee as
Pledged Collateral in the same form as so received (with any necessary or
appropriate endorsement).
5.3 Upon the occurrence and during the continuance of an Event
of Default, all rights of the Pledgors to exercise the voting and/or consensual
rights and powers which they are entitled to exercise pursuant to Section 5.1
shall cease, and all such rights shall thereupon be exercised by the Pledgee in
accordance with Section 5.5, which shall have the sole and exclusive right and
authority to exercise the voting and/or consensual rights and powers relating or
pertaining to the Pledged Collateral or any part thereof.
5.4 Upon or at any time after the occurrence of an Event of
Default, the Pledgors' rights to receive Distributions in accordance with
Section 5.2, shall automatically cease and the Pledgee shall be entitled to, and
shall have the right to collect, any and all Distributions, provided that the
Pledgee shall at its option apply any and all cash amounts so collected to
satisfy the Secured Obligations, to the fullest extent permitted by Netherlands
Antilles law or hold such Distributions as Pledged Collateral. Any Distributions
in the form of non-cash assets shall be received subject to the Pledge hereby
created to the fullest extent permitted by or possible under Netherlands
Antilles law or any other law governing such assets or the creation of an
encumbrance thereover. Without limiting the generality of the immediately
preceding sentence, each Pledgor shall, at its sole cost and expense, from time
to time execute and deliver to Pledgee any and all documents necessary or
appropriate to confirm and protect the Pledge granted or purported to be granted
in the Distributions as contemplated in this Section 5.4 and to enable Pledgee
to exercise and enforce its rights and remedies with respect thereto.
5.5 Pledgee shall have no responsibility to the Pledgors or
any other Person for its exercise or failure to exercise such voting or
consensual rights and powers.
5.6 A notice from the Pledgee to the Companies or other issuer
of Additional Shares with a copy to each Pledgor stating that an Event of
Default has occurred shall be sufficient for the Companies or other issuer of
Additional Shares to accept the Pledgee as being exclusively entitled to (i) the
voting and/or consensual rights and powers which it is entitled to exercise
pursuant to Section 5.1 and (ii) receive and collect the Distributions. The
Pledgee shall remain entitled to exercise such powers and rights and receive
such Distributions and the Companies or other issuer of Additional Shares shall
accept the Pledgee as being exclusively entitled to such powers and rights and
receive such Distributions until the earlier of (i) a notice of termination of
the Event of Default from the Pledgee to the Companies or other issuer of
Additional Shares or (ii) a decision by a competent court that no Event of
Default exists.
-6-
<PAGE>
Notwithstanding the provisions of this Section 5.6, each
Pledgor shall (at its sole cost and expense) from time to time execute and
deliver to Pledgee appropriate instruments as Pledgee may reasonably request in
order to permit Pledgee to exercise its voting and consensual and other rights
which it may be entitled to exercise and to receive all Distributions which it
may be entitled to receive under this Section 5.
Section 6. TRANSFERS AND OTHER LIENS.
6.1 The Pledgors shall not (i) sell, pledge, convey, assign or
otherwise dispose of, or grant any option, right or warrant with respect to, any
of the Pledged Collateral except as permitted by the Indenture, (ii) create or
permit to exist any Lien upon or with respect to any Pledged Collateral other
than the Pledge granted to Pledgee under this Pledge Agreement, or (iii) permit
the Companies or any other issuer of Additional Shares to merge, consolidate or
change its legal form, unless all of the outstanding capital stock or
partnership interests of the surviving or resulting corporation or partnership
as the case may be is, upon such merger or consolidation, pledged hereunder and
no cash, securities or other property is distributed in respect of outstanding
shares or partnership interests of any other constituent corporation or
partnership.
6.2 Each Pledgor shall (i) cause each issuer of the Pledged
Collateral not to issue any shares in its capital stock or other securities in
addition to or in substitution for the Pledged Shares and Additional Shares
issued by such issuer, except to such Pledgor and (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and all
additional shares of capital stock or other equity securities of the issuer of
the Pledged Collateral which are required to be pledged hereunder.
Section 7. REPRESENTATIONS, WARRANTIES AND COVENANTS.
7.1 Each Pledgor represents, warrants and covenants to the
Pledgee as follows:
(a) ENFORCEABILITY; NO FILINGS. This Pledge Agreement has been
duly executed and delivered by such Pledgor and constitutes the valid
and legally binding obligation of such Pledgor, enforceable against
such Pledgor in accordance with its terms. This Pledge Agreement
creates a valid first priority pledge ("EERSTE PANDRECHT") on the
Pledged Collateral. No filings, registrations or recordings are
necessary or appropriate to create, preserve and protect the Pledge
granted by such Pledgor to Pledgee pursuant to this Pledge Agreement,
other than the registration of the Pledge in the register of
shareholders of the Companies or of the issuer of Additional Shares
pursuant to Section 4.2 hereof.
(b) AUTHORITY; NO CONFLICT. Each Pledgor has the requisite
corporate power, authority and legal right to pledge and grant the
Pledge hereunder in all the Pledged Collateral and there is no law,
regulation, provision having the force of law on such Pledgor, judicial
order, security right, contract, agreement or other instrument binding
on such Pledgor or affecting such Pledgor'S properties, or any
impediment or disability
-7-
<PAGE>
which would conflict with or in any way prevent the execution, delivery
or performance by such Pledgor or the enforcement against such Pledgor
of this Pledge Agreement.
(c) NO CONSENTS. All authorizations, approvals, consents,
permissions of, or other action by or notice or filings with, any
governmental authorities (including exchange controls) or any other
Persons which are required to be obtained, taken, or made (i) in
connection with the execution and delivery by such Pledgor of this
Pledge Agreement and the performance by such Pledgor of the Secured
Obligations or (ii) for the exercise by Pledgee of its rights and
remedies hereunder have been duly obtained, taken, or made and are in
full force and effect.
(d) NO LIEN. Each Pledgor holds and, in the case of Pledged
Collateral acquired or obtained hereafter to the extent applicable,
shall at all times hold title to the Pledged Collateral subject to no
Lien other than the Pledge created hereby. Each Pledgor is, and at the
time of delivery of the Pledged Collateral to Pledgee in accordance
with Sections 4 and 14 of this Pledge Agreement will be, the sole legal
and beneficial owner of the Pledged Collateral. All Pledged Collateral
is on the date hereof, and, in the case of Pledged Collateral acquired
or obtained hereafter, will be, so owned by such Pledgor free and clear
of any Lien except for the Lien granted to Pledgee pursuant to this
Agreement.
(e) DUE AUTHORIZATION AND ISSUANCE. All of the Pledged Shares
have been and the Additional Shares will be duly authorized and validly
issued and fully paid and nonassessable.
(f) PRINCIPAL PLACE OF BUSINESS. The principal place of
business of Statia Antilles is located at c/o Covenant Managers N.V.,
LB Smithplein 5, Curacao, Netherlands Antilles. The principal
place of business of STDI is 306 South State Street, Dover, Delaware.
Neither Pledgor shall move its principal place of business except to
such new location as such Pledgor may establish in accordance with the
last sentence of this subsection. Neither Pledgor shall establish a new
location for its chief executive office nor shall it change its name
until (i) it shall have given Pledgee not less than forty-five (45)
days prior written notice of its intention so to do, clearly describing
such new location or name and providing such other information in
connection therewith as Pledgee may request, and (ii) with respect to
such new location or name, such Pledgor shall have taken all action
necessary or required by any and all existing or future laws, or as
Pledgee shall from time to time reasonably request, to maintain the
validity and priority of the Pledge granted hereby.
(g) PLEDGED COLLATERAL. Schedule I sets forth an accurate and
complete description of all of the outstanding capital stock of each
Restricted Subsidiary of the Issuers owned by the Pledgors as of the
date hereof and all information set forth herein and on such Schedule
relating to the Pledged Collateral is accurate and complete in all
respects.
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<PAGE>
(h) NO OPTIONS, WARRANTS, ETC. There are no options, warrants,
calls, rights, commitments or agreements of any character to which the
Pledgors are party or by which they are bound obligating the Pledgors
to issue, deliver or sell or cause to be issued, delivered or sold,
additional Pledged Shares or obligating such Pledgors to grant, extend
or enter into any such option, warrant, call, right, commitment or
agreement. There are no voting trusts or other agreements or
understandings to which the Pledgors are party with respect to the
voting of the capital stock of any issuer of the Pledged Shares.
(i) GENERAL. To the extent not represented and warranted
above:
(1) Each Pledgor has the full legal capacity ("IS
VOLLEDIG BESCHIKKINGSBEVOEGD") to pledge the Pledged
Collateral in favor of Pledgee.
(2) Neither Pledgor has created in advance ("BIJ
VOORBAAT") a pledge which is still in existence on any of the
Pledged Collateral in favor of any party, under the laws of
the Netherlands Antilles or under the laws of any other
jurisdiction.
(3) Neither Pledgor has created in advance ("BIJ
VOORBAAT") any other security interest, regardless of its
form, which is still in existence, in the Pledged Collateral
under the laws of the Netherlands Antilles or under the laws
of any other jurisdiction.
(4) No right or charge, including but not limited to
any "limited right" ("BEPERKT RECHT") exists on or with
respect to the Assets, except for the rights ("RECHTEN") of
the Pledgors.
(5) The Pledged Collateral have not been attached
("VRIJ VAN BESLAG").
(6) The Pledgors have not been dissolved and the
Companies have not been dissolved and no resolution to
dissolve the Pledgors or the Companies has been adopted by its
general meeting of shareholders.
(7) No depository receipts ("CERTIFICATEN") have been
issued for the Pledged Shares.
(8) Except as permitted or contemplated under the
Indenture, neither the Companies nor any Pledgor has entered
into any agreement pursuant to which it is obliged to do
anything which would cause the foregoing to be untrue and
incorrect, nor has any agreement or other instrument been
entered into or signed by the Pledgors or the Companies
pursuant to which any of them has transferred or is obliged to
transfer any rights attached to the Pledged Shares or any
Additional Shares or pursuant to which any of them has granted
options, warrants or similar rights with respect to the
Pledged or Additional Shares.
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(9) Except as otherwise set forth in Schedule 7.1(h)
hereto, no resolution or other action has been adopted or
taken by the Companies or its general meeting of shareholders
to amend the articles of association of the Companies as at
the date hereof.
(10) The Companies (other than the holder of Shares A
in the share capital of Terminals) have no shareholder(s)
other than the Pledgors.
(11) At the date hereof the Pledgors are not entitled
to any rights to subscribe for shares in the share capital of
the Companies, nor to any options, warrants, claim rights or
similar rights.
(12) The attached copy of the shareholder register of
the Companies is complete and correct as at the date hereof.
Section 8. REMEDIES.
8.1 Upon the occurrence of an Event of Default, Pledgee may,
but shall not be obliged to, in addition to any other action permitted by law
(and not limited in any manner to the remedies contained in the Notes, the
Indenture or any other Secured Instrument), take one or more of the following
actions, in accordance with the terms of and at the times specified in the
Indenture and the Additional Lender Intercreditor Agreement, if any, whether or
not it shall have resorted to any other property securing the Secured
Obligations or shall have proceeded against any party liable for any of the
Secured Obligations.
8.2 Upon the occurrence of an Event of Default, Pledgee may,
to the fullest extent permitted by applicable law, (i) without notice (except as
herein set forth), advertisement, hearing or process of law of any kind, sell
any or all of the Pledged Collateral, at any public or private sale wherever
held, without prejudice to the provisions of Sections 1180, 1181 and 1182 of the
Civil Code of the Netherlands Antilles and (ii) retain and apply the
Distributions received pursuant to Section 5.4 hereof to the Secured Obligations
in accordance with Section 9 hereof. Each Pledgor agrees that, to the extent
notice of sale shall be required by law, five (5) days notice to such Pledgor of
the time and place of any public sale or the time after which any private sale
or other intended disposition is to take place shall be commercially reasonable
notification of such matters. No notification need be given to such Pledgor if
it has signed, after the occurrence of an Event of Default, an agreement
renouncing or modifying any right to notification of sale or other intended
disposition. Pledgee shall not be obligated to make any sale of the Pledged
Collateral regardless of notice of sale having been given. Pledgee may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned. In connection with any sale,
Pledgee shall have the right to impose such limitations and restrictions on the
sale of the Pledged Collateral as Pledgee may deem to be necessary or
appropriate to comply with any applicable law, rule or regulation having
applicability to the sale, including, without limitation, restrictions on the
number and qualifications of the offerees and purchasers and requirements for
any necessary governmental approvals, and the Pledgee shall be authorized at any
such sale (if it seems advisable to do so) to restrict the respective offerees
and purchasers
-10-
<PAGE>
to persons who will represent and agree that they are purchasing securities
included in the Pledged Collateral for their own account for investment and not
with a view to the distribution or sale thereof in violation of applicable
securities laws. Each Pledgor shall cooperate with the Pledgee in obtaining any
necessary consents of any competent banking authority and agrees to cooperate
with the Pledgee so that the sale of the Pledged Collateral does not violate any
applicable securities laws. Without limiting the generality of the foregoing,
each Pledgor will cause the Companies or any other issuer of Pledged Collateral
to (a) register the offer and sale of any securities constituting the Pledged
Collateral under such securities laws or (b) should Pledgee so request, provide
Pledgee with such available material and financial and other information which
counsel to Pledgee shall require in order to be able to give an opinion to the
effect that the offer and sale of such Pledged Collateral does not require an
effective registration statement under such securities laws whichever is
requested by the Pledgee. Each Pledgor hereby expressly waives, to the fullest
extent permitted by applicable law, (i) any and all notices (except as herein
set forth), advertisements, hearings or process of law in connection with the
exercise by the Pledgee of any of its rights and remedies hereunder and (ii) any
claims against Pledgee arising by reason of the fact that the price at which any
Pledged Collateral may have been sold at any private sale was less than the
price which might have been obtained at a public sale, even if Pledgee accepts
the first offer received and does not offer such Pledged Collateral to more than
one offeree. Pledgee may be the purchaser of any or all of the Pledged
Collateral at any such sale and shall be entitled, for the purpose of bidding
and making settlement or payment of any purchase price for all or any portion of
the Pledged Collateral sold at such sale, to use and apply any of the Secured
Obligations owed to Pledgee as a credit on account of the purchase price of any
Pledged Collateral payable by Pledgee at such sale. Each purchaser at any such
sale shall acquire the property sold absolutely free from any claim or right on
the part of the Pledgors, and each Pledgor hereby waives, to the fullest extent
permitted by law, all rights of redemption, stay and/or appraisal which it now
has or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted.
Pledgee shall have the right, at any time upon the occurrence
of an Event of Default and without notice to the Pledgors, to endorse, assign or
otherwise transfer to or to register in the name of the Pledgee or any of its
nominees any or all of the Pledged Collateral. In addition, Pledgee shall have
the right at any time to exchange certificates representing or evidencing
Pledged Collateral for certificates of smaller or larger denominations.
Section 9. APPLICATION OF PROCEEDS. The proceeds received by
Pledgee in respect of any sale of, collection from or other realization upon all
or any part of the Pledged Collateral pursuant to the exercise by Pledgee of its
remedies as a secured creditor as provided in Section 8 hereof shall be applied,
together with any other sums then held by Pledgee pursuant to this Agreement,
promptly by Pledgee in the manner set forth in the Indenture and/or the
Additional Lender Intercreditor Agreement, if any.
Section 10. REASONABLE CARE. Pledgee shall be deemed to have
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession, if any, if such Pledged Collateral is accorded
treatment substantially equivalent to that which Pledgee, in its individual
capacity, accords its own property consisting of similar instruments or
interests,
-11-
<PAGE>
it being understood that Pledgee shall have any responsibility for (i)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Pledged Collateral, whether
or not Pledgee has or is deemed to have knowledge of such matters, or (ii)
taking any necessary steps to preserve rights against any Person with respect to
any Pledged Collateral.
Section 11. EXPENSES. The Pledgors will immediately upon
demand pay to Pledgee, without duplication, the amount of any and all expenses,
including the fees and expenses of its counsel (including, without limitation,
any local or foreign counsel) and the allocated costs of Pledgee's internal
counsel and the fees and expenses of any experts and agents which Pledgee may
incur in connection with (i) the collection of the Secured Obligations, (ii) the
enforcement and administration of this Pledge Agreement, (iii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Pledged Collateral, (iv) the exercise or enforcement of any of the rights
of Pledgee or (v) the failure by the Pledgors to perform or observe any of the
provisions hereof. All amounts payable by the Pledgors under this Section 11
shall be due upon immediate demand, shall bear interest from the date advanced
to the date of repayment thereof at a rate of 2% in excess of the highest rate
payable under the Notes ("Default Rate"), and shall be part of the Secured
Obligations. The Pledgors' obligations under this Section 11 shall survive the
termination of this Agreement and the discharge of the Pledgors' other
obligations hereunder.
In addition to any of the other rights and remedies hereunder,
Pledgee shall have the right to institute a proceeding seeking specific
performance in connection with any of the agreements or obligations hereunder.
Section 12. NO WAIVER; CUMULATIVE REMEDIES.
12.1 No failure on the part of the Pledgee to exercise, no
course of dealing with respect to, and no delay on the part of the Pledgee in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy hereunder preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies herein provided are cumulative
and are not exclusive of any other remedies provided by law.
12.2 In the event Pledgee shall have instituted any proceeding
to enforce any right, power or remedy under this Pledge Agreement by
foreclosure, sale, entry or otherwise, and such proceeding shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to Pledgee, then and in every such case, each of the Pledgors and the Pledgee
shall be restored to their respective former positions and rights hereunder with
respect to the Pledged Collateral, and all rights, remedies and power of Pledgee
shall continue as if no such proceeding had been instituted.
Section 13. NO RELEASE. Nothing set forth in this Pledge
Agreement shall relieve the Pledgors from the performance of any term, covenant,
condition or agreement on Pledgors' part to be performed or observed under or in
respect of any of the Pledged Collateral or from any liability to any Person
under or in respect of any of the Pledged Collateral or shall impose any
-12-
<PAGE>
obligation on Pledgee to perform or observe any such term, covenant, condition
or agreement on Pledgors' part to be so performed or observed shall impose any
liability on Pledgee for any act or omission on the part of either Pledgor
relating thereto or for any breach of any representation or warranty on the part
of either Pledgor contained in this Pledge Agreement, or under or in respect of
the Pledged Collateral or made in connection herewith or therewith.
Section 14. SUPPLEMENTS, FURTHER ASSURANCES. Each Pledgor
agrees that at any time and from time to time (including, without limitation, in
connection with (i) any amendment, amendment and restatement, supplement or
modification of the Indenture or (ii) any acquisition by such Pledgor of
Additional Shares), at the sole cost and expenses of each such Pledgor, each
such Pledgor shall promptly execute and deliver all further instruments and
documents, including, without limitation, supplemental or additional pledge
agreements, and take all further actions that may be necessary or required by
any and all existing and future laws or that Pledgee may from time to time
reasonably request, in order to protect the validity and priority of the Pledge
granted or purported to be granted hereby or to enable Pledgee to exercise and
enforce its rights and remedies hereunder with respect to any Pledged
Collateral.
Section 15. NOTICES. Unless otherwise provided herein any
notice or other communication herein required or permitted to be given shall be
given in the manner and at the address set forth in the Indenture, or as to any
party at such other address as shall be designated by such party in a written
notice to the other party complying as to delivery with the terms of this
Section 15. All such notices and other communications shall be deemed to have
been given when delivered in person, or received by telecopy or telex; or one
(1) Business Day after delivery to the office of such overnight courier service;
or five (5) Business Days after deposit in the United States mail, registered or
certified, with postage prepaid and properly addressed; PROVIDED, HOWEVER, that
notice to Pledgee shall not be effective until received by Pledgee.
Section 16. CONTINUING SECURITY INTEREST; ASSIGNMENT. This
Pledge Agreement shall create a continuing security interest in the Pledged
Collateral and shall (i) be binding upon each of the Pledgors, its successors
and assigns, and (ii) inure, together with the rights and remedies of Pledgee
hereunder, to the benefit of Pledgee and each of their respective successors,
transferees and assigns; no other Persons (including, without limitation, any
other creditor of each of such Pledgor) shall have any interest herein or any
right or benefit with respect hereto.
Section 17. SEVERABILITY OF PROVISIONS. Any provision of this
Pledge Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 18. PLEDGEE. Pledgee has been appointed as trustee
hereunder pursuant to the Indenture and the Additional Lender Intercreditor
Agreement, if any. The actions of Pledgee hereunder are subject to the
provisions of the Indenture and/or the Additional Lender Intercreditor
Agreement, if any. Pledgee shall have the right hereunder to make demands, to
give notice, to exercise or refrain from exercising any rights, and to take or
refrain from taking action
-13-
<PAGE>
(including, without limitation the release or substitution of Pledged
Collateral), in accordance with this Pledge Agreement, the Indenture and the
Additional Lender Intercreditor Agreement, if any. Pledgee may resign its
position as Trustee and a successor Pledgee may be appointed in the manner
provided in the Indenture and the Additional Lender Intercreditor Agreement, if
any. Upon the acceptance of any appointment as Pledgee by a successor Pledgee,
that successor Pledgee shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Pledgee under this Pledge
Agreement, and the retiring Pledgee shall thereupon be discharged from its
duties and obligations under this Pledge Agreement. After any retiring Pledgee's
resignation, the provisions of this Pledge Agreement shall inure to its benefit
as to any actions taken or omitted to be taken by it under this Pledge Agreement
while it was Pledgee.
Section 19. PLEDGEE MAY PERFORM. If either Pledgor shall fail
to do any act or things which it has covenanted to do hereunder, the Pledgee may
(but shall not be obligated to) do the same or cause it to be done or remedy any
such breach, and may expend its funds for such purpose. Any and all amounts so
expended by the Pledgee shall be repayable to it by such Pledgor immediately
upon the Pledgee's demand therefor, with interest at a per annum rate equal to
the Default Rate. Each Pledgor'S obligations under this Section 19 shall survive
the termination of this Pledge Agreement and the discharge of such Pledgor'S
obligations under this Pledge Agreement.
Section 20. PLEDGEE APPOINTED ATTORNEY-IN-FACT. Each of the
Pledgors hereby appoints the Pledgee its attorney-in-fact with an interest, with
full power of substitution, for the purpose of taking such action and executing
agreements, instruments and other documents, in the name of such Pledgor or
otherwise as the Pledgee may deem necessary or advisable to accomplish the
purposes hereof, which appointment is coupled with an interest and is
irrevocable. Pledgee will notify the Pledgors of such action and provide the
Pledgors with copies of such documents prior to or substantially
contemporaneously with the taking or filing thereof.
Section 21. TERMINATION. This Pledge Agreement and the Pledge
created hereby shall automatically terminate when all Secured Obligations shall
have been fully paid and satisfied in accordance with the provisions of the
Indenture. At that time, the Pledgee shall (without recourse upon, or any
warranty whatsoever by, Pledgee) deliver to the Pledgors all Pledged Collateral
and related documents then in the custody or possession of the Pledgee, if any,
all without recourse upon, or warranty whatsoever by the Pledgee and at the cost
and expense of the Pledgors. The Pledgee, at the cost and expense of the
Pledgors, shall do such further acts and things, and execute and deliver to the
Pledgors such additional releases, assignments and instruments, as the Pledgors
may reasonably require or reasonably deem advisable to carry into effect the
purpose of this Section 21.
Section 22. LIMITATION ON INTEREST PAYABLE. It is the
intention of the parties to conform strictly to the usury laws, whether state or
federal, that are applicable to the transaction of which this Pledge Agreement
is a part. All agreements between each Pledgor and Pledgee, whether now existing
or hereafter arising and whether oral or written, are hereby expressly limited
so that in no contingency or event whatsoever shall the amount paid or agreed to
be paid
-14-
<PAGE>
by such Pledgor for the use, forbearance or detention of the money to be loaned
or advanced under the Indenture or any related document, or for the payment or
performance of any covenant or obligation contained herein or in the Indenture,
exceed the maximum amount permissible under applicable usury laws. If under any
circumstances whatsoever fulfillment of any such provision, at the time
performance of such provision shall be due, shall involve exceeding the limit of
validity prescribed by law, then the obligation to be fulfilled shall be reduced
to the limit of such validity. If under any circumstances either Pledgor shall
have paid an amount deemed interest by applicable law, which would exceed the
highest lawful rate, such amount that would be excessive interest under
applicable usury laws shall be applied to the reduction of the principal amount
owing in respect of the Secured Obligations and not to the payment of interest,
or if such excessive interest exceeds the unpaid balance of principal and any
other amounts due hereunder, the excess shall be refunded to such Pledgor by the
holders of the Notes. All sums paid or agreed to be paid for the use,
forbearance or detention of the principal under any extension of credit or
advancement of funds by HSBC Bank USA (formerly known as Marine Midland Bank),
as trustee, shall, to the extent permitted by applicable law, and to the extent
necessary to preclude exceeding the limit of validity prescribed by law, be
amortized, prorated, allocated and spread from the date of this Pledge Agreement
until payment in full of the Secured Obligations so that the actual rate of
interest on account of such principal amounts is uniform throughout the term
hereof.
Section 23. HEADINGS. Section headings used in this Pledge
Agreement are for convenience of reference only and shall not affect the
construction of this Pledge Agreement.
Section 24. AMENDMENTS. No amendment, modification,
supplement, termination or waiver of or to any provision of this Pledge
Agreement, nor any consent to any departure by the Pledgors from any provision
of this Pledge Agreement, shall be effective unless the same shall be in writing
and signed by the Pledgee. Any amendment, modification or supplement of or to
any provision of this Pledge Agreement, any waiver of any provision of this
Pledge Agreement, and any consent to any departure by the Pledgors from the
terms of any provision of this Pledge Agreement shall be effective only in the
specific instance and for the specific purpose for which made or given. No
notice to or demand upon the Pledgors in any instance hereunder shall entitle
the Pledgors to any other or further notice or demand in similar or other
circumstance.
Section 25. INDEMNIFICATION. Each and every obligation of the
Issuers to indemnify and hold harmless the Trustee in the Indenture contained in
Section 7.07 thereof is incorporated herein MUTATIS MUTANDIS as an obligation of
the Pledgors hereunder to indemnify Pledgee, and HSBC Bank USA (formerly known
as Marine Midland Bank), in its individual capacity, and the officers,
directors, employees, agents and applicants thereof.
Section 26. GOVERNING LAW; CONSENT TO JURISDICTION. This
Pledge Agreement shall be governed by and construed in accordance with the laws
of the Netherlands Antilles. The competent courts of the Netherlands Antilles in
Curacao shall have non-exclusive jurisdiction.
-15-
<PAGE>
Section 27. EXECUTION IN COUNTERPARTS. This Pledge Agreement
may be executed in any number of counterparts, each of which counterparts, when
so executed and delivered, shall be deemed to be an original and all of which
counterparts, taken together, shall constitute one and the same agreement.
-16-
<PAGE>
IN WITNESS WHEREOF, the parties hereto executed or have caused
this Pledge Agreement to be executed by their respective managing directors or
officers thereunto duly authorized, as the case may be, as of the day and year
first above written.
STATIA TERMINALS ANTILLES N.V.,
as Pledgor
By: /S/ JAMES G. CAMERON
----------------------------------
Title: Managing Director
By: /S/ JACK R. PINE
----------------------------------
Title: Secretary
STATIA TERMINALS DELAWARE,
INC., as Pledgor
By: /S/ JAMES G. CAMERON
----------------------------------
Title: President
HSBC BANK USA, in its capacity as
Trustee, as Pledgee
By: /S/ FRANK J. GODINO
----------------------------------
Title: Vice President
-17-
<PAGE>
SCHEDULE 7.1(h)
The articles of incorporation of Statia Terminals N.V. was amended by
shareholders resolution dated April 27, 1999 and shareholders resolution dated
June 2, 1999.
<PAGE>
SCHEDULE I
SHARES PLEDGED
<TABLE>
<CAPTION>
PLEDGED BY STATIA TERMINALS ANTILLES N.V.
DESCRIPTION OF SHARE NOS./ PERCENTAGE OF ALL ISSUED
ISSUER SHARES CERTIFICATE NOS. PAR VALUE NO. OF SHARES CAPITAL OF ISSUER
- ------ -------------- ---------------- --------- ------------- ------------------------
<S> <C> <C> <C> <C> <C>
Statia Terminals N.V. Common B1 to B19,395,001 US$ 1 19,395,001 90%
B-shares
Saba Trust Company N.V. Common Shares 1 to 12 US$ 1,000 12 100%
Bicen Development Corporation N.V. Common Shares 1 to 12 US$ 1,000 12 100%
</TABLE>
<TABLE>
<CAPTION>
PLEDGED BY STATIA TERMINALS DELAWARE, INC.
DESCRIPTION OF SHARE NOS./ PERCENTAGE OF ALL ISSUED
ISSUER SHARES CERTIFICATE NOS. PAR VALUE NO. OF SHARES CAPITAL OF ISSUER
- ------ -------------- ---------------- --------- ------------- ------------------------
<S> <C> <C> <C> <C> <C>
Statia Terminals N.V. Preferred 1 to 2,155,000 US$ 1 2,155,000 10%
D-Shares
</TABLE>
<PAGE>
SCHEDULE II
STATIA TERMINALS N.V.
ACKNOWLEDGMENT
Statia Terminals N.V. (the "Company"), hereby represented by
(two of) its managing director(s), accepts notice of and acknowledges the pledge
created by the attached share pledge agreement among Statia Terminals Antilles
N.V. and Statia Terminals Delaware, Inc. (collectively, the "Pledgors") and HSBC
Bank USA (formerly known as Marine Midland Bank), as Trustee (the "Pledgee")
(the "Share Pledge Agreement"), agrees to and acknowledges the contents of the
Share Pledge Agreement, undertakes to register the pledge of Shares in the
shareholder register of the Company, including the transfer of voting rights to
the Pledgee in accordance with Section 5 and to maintain such registration until
the Pledgee has instructed in writing otherwise, and undertakes to Pledgee
during the existence of the pledge created thereby to comply with the provisions
of the Share Pledge Agreement so long as the pledge is in effect.
Dated:
STATIA TERMINALS N.V.
- -------------------------------- ----------------------------------
By: By:
Managing Director Managing Director
<PAGE>
SCHEDULE II
Page 2
SABA TRUST COMPANY N.V.
ACKNOWLEDGMENT
SABA TRUST COMPANY N.V. (the "Company"), hereby represented by
(two of) its managing director(s), accepts notice of and acknowledges the pledge
created by the attached share pledge agreement among Statia Terminals Antilles
N.V. and Statia Terminals Delaware, Inc. (collectively, the "Pledgors") and HSBC
Bank USA (formerly known as Marine Midland Bank), as Trustee (the "Pledgee")
(the "Share Pledge Agreement"), agrees to and acknowledges the contents of the
Share Pledge Agreement, undertakes to register the pledge of Shares in the
shareholder register of the Company, including the transfer of voting rights to
the Pledgee in accordance with Section 5 and to maintain such registration until
the Pledgee has instructed in writing otherwise, and undertakes to Pledgee
during the existence of the pledge created thereby to comply with the provisions
of the Share Pledge Agreement so long as the pledge is in effect.
Dated:
SABA TRUST COMPANY N.V.
- -------------------------------- ----------------------------------
By: By:
Managing Director Managing Director
<PAGE>
SCHEDULE II
Page 3
BICEN DEVELOPMENT COMPANY
ACKNOWLEDGMENT
Bicen Development Company N.V. (the "Company"), hereby
represented by (two of) its managing director(s), accepts notice of and
acknowledges the pledge created by the attached share pledge agreement among
Statia Terminals Antilles N.V. and Statia Terminals Delaware, Inc.
(collectively, the "Pledgors") and HSBC Bank USA (formerly known as Marine
Midland Bank), as Trustee (the "Pledgee") (the "Share Pledge Agreement"), agrees
to and acknowledges the contents of the Share Pledge Agreement, undertakes to
register the pledge of Shares in the shareholder register of the Company,
including the transfer of voting rights to the Pledgee in accordance with
Section 5 and to maintain such registration until the Pledgee has instructed in
writing otherwise, and undertakes to Pledgee during the existence of the pledge
created thereby to comply with the provisions of the Share Pledge Agreement so
long as the pledge is in effect.
Dated:
BICEN DEVELOPMENT COMPANY N.V.
- -------------------------------- ----------------------------------
By: By:
Managing Director Managing Director
<PAGE>
SCHEDULE III
[FORM OF PLEDGE AMENDMENT]
To: the Pledgee
This is to inform you that we have acquired or obtained the following Additional
Shares as defined in the Share Pledge Agreement dated as of June __, 1999, among
Statia Terminals Antilles N.V., Statia Terminals Delaware, Inc. and yourselves:
SHARES PLEDGED
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
DESCRIPTION SHARE NOS./ PERCENTAGE OF ALL
ISSUER OF SHARES CERTIFICATE NOS. PAR VALUE NO. OF SHARES CAPITAL OF ISSUER
- ------ ----------- ----------------- --------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
</TABLE>
and that these Additional Shares are, and to the extent required, are hereby
made, subject to the Pledge as defined in said Share Pledge Agreement. This
Pledge Amendment forms an integral part of the Share Pledge Agreement.
-----------------------------------
[Name of Pledgor]
<PAGE>
ACKNOWLEDGMENT
Statia Terminals N.V./Saba Trustcompany N.V./Bicen Development Corporation N.V.
([each)] the "Company")/[ ] (the "Issuer") hereby represented by [two of] its
managing director[s], accepts notice of and acknowledges the pledge created by
the attached Pledge Amendment among Statia Terminals Antilles N.V. and Statia
Terminals Delaware, Inc. (collectively, the "Pledgors") and HSBC Bank USA
(formerly known as Marine Midland Bank), as Trustee (the "Pledgee") pursuant to
the Share Pledge Agreement (as defined therein), agrees to and acknowledges the
contents of the Share Pledge Agreement (including the Pledge Amendment),
undertakes to register the pledge of Additional Shares in the shareholder
register of the Company/Issuer, including the transfer of voting rights to the
Pledgee in accordance with Section 5 and to maintain such registration until the
Pledgee has instructed in writing otherwise, and undertakes to Pledgee during
the existence of the pledge created thereby to comply with the provisions of the
Share Pledge Agreement so long as the pledge is in effect.
Dated:
TERMINALS/SABA/BICEN/ISSUER
- -------------------------------- ----------------------------------
By: By:
Managing Director Managing Director
EXHIBIT 4.2
AMENDMENT TO SHARE PLEDGE AGREEMENT
AMENDMENT (this "Amendment"), dated as of June 28, 1999, to
the Share Pledge Agreement (as amended to date, the "Share Pledge Agreement"),
dated as of November 27, 1996, originally by and between Statia Terminals
International N.V., a company incorporated under the laws of the Netherlands
Antilles having its corporate seat in Curacao (the "Original Pledgor"), and HSBC
Bank USA (formerly known as Marine Midland Bank), a New York banking corporation
and trust company having its registered office at 140 Broadway, 12th Floor, New
York, NY 10005-1180, as Trustee (the "Pledgee"), as amended by that certain
Amendment to Share Pledge Agreement (the "STDI Amendment"), dated as of December
18, 1998, by and among the Original Pledgor, the Pledgee and Statia Terminals
Delaware, Inc., a company incorporated under the laws of Delaware having its
registered office at 306 South State Street, Dover, Delaware ("STDI") and, as
amended by this Amendment, by and among the Original Pledgor, the Pledgee, STDI
and Statia Terminals, Inc., a company incorporated under the laws of Delaware
having its registered office at 800 Fairway Drive, Deerfield Beach, Florida
("STI"). All capitalized terms used herein and not otherwise defined shall have
the respective meanings provided such terms in the Share Pledge Agreement.
W I T N E S S E T H :
WHEREAS, all of the outstanding common shares of Statia
Terminals Corporation N.V. (the "Company") have been pledged by the Original
Pledgor to the Pledgee pursuant to the Share Pledge Agreement to secure the
obligations of the Original Pledgor under the Notes, the Indenture and certain
other documents;
WHEREAS, the Company has issued certain non-voting preferred
shares described on Schedule I attached hereto (the "Preferred Shares") to STI
in order to obtain certain United States social security benefits for the
employees of certain of its subsidiaries and the Pledgee has consented to the
issuance of such Pledged Shares;
WHEREAS, STDI holds certain non-voting preferred shares of the
Company (the "STDI Shares");
WHEREAS, Section 6.2 of the Share Pledge Agreement effectively
prohibits the issuance of any additional shares by the Company except to the
Original Pledgor;
WHEREAS, Section 9.01 of the Indenture permits amendment of
the Share Pledge Agreement without the consent of any holder of the Notes in
order to make any change that does not adversely affect the rights of any
holders of Notes;
WHEREAS, pursuant to that certain Fourth Amendment to
Indenture and Consent Under Securities Pledge Agreements, dated as of April 26,
1999, among the Original Pledgor,
<PAGE>
Statia Terminals Canada, Incorporated, the Subsidiary Guarantors named therein
and the Pledgee, the Trustee, as Pledgee under the Securities Pledge Agreements,
has consented to the transactions contemplated herein;
WHEREAS, STI and STDI are Subsidiary Guarantors of the Notes;
and
WHEREAS, the Preferred Shares and STDI Shares are to be
pledged by STI and STDI, respectively, to the Pledgee pursuant to this
Amendment, thereby continuing the pledge of all outstanding shares of the
Company under the Share Pledge Agreement;
NOW, THEREFORE, the parties hereto agree as follows for the
benefit of each other party and for the equal and ratable benefit of the holders
of the Notes:
1. AMENDMENT. The Share Pledge Agreement is hereby amended as
follows:
(a) Section 6.2 of the Share Pledge Agreement is hereby
amended as of April 27, 1999 by adding the following words in clause (i) after
the phrase "this Pledge Agreement":
"and, provided, further, that the Company may issue non-voting
preferred shares of the Company to Statia Terminals, Inc.
("STI") and issue non-voting preferred shares to STDI in
exchange for the voting preferred shares of the Company held
by STDI if such preferred shares are, upon issuance, pledged
to Pledgee under this Pledge Agreement,"
(b) As of the date of issuance of the Preferred Shares to STI,
STI shall be deemed added as a party to the Share Pledge Agreement, and all
references in the Share Pledge Agreement to "the Pledgors" shall mean all of the
Original Pledgor, STDI and STI.
(c) Each of STI and STDI hereby agrees to pledge all of the
newly issued Preferred Shares and STDI Shares, respectively, when issued, to the
Pledgee, and the Pledgee agrees to accept the pledge over such shares, and each
of STI and STDI agrees to take all necessary action to effect the foregoing. For
such purpose (i) each of STI and STDI hereby grants a power of attorney to the
Company to sign any documents or agreements and take such other action as may be
necessary to effectuate the pledge over the newly issued Preferred Shares and
STDI Shares, respectively, and (ii) the Pledgee hereby grants a power of
attorney to the Company to sign such documents as may be necessary to effectuate
the acceptance by the Pledgee of the pledge over the newly issued Preferred
Shares and STDI Shares.
2. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the Netherlands Antilles.
3. EXECUTION IN COUNTERPARTS. This Amendment may be executed
in any number of counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to
<PAGE>
be an original and all of which counterparts, taken together, shall constitute
one and the same agreement.
4. SHARE PLEDGE AGREEMENT NOT OTHERWISE AMENDED. The terms and
provisions of the Share Pledge Agreement not amended hereby shall continue to
remain in full force and effect.
5. REFERENCES. From and after the date hereof, all references
in the Share Pledge Agreement shall be deemed to be references to the Share
Pledge Agreement as amended hereby.
6. THE PLEDGEE. The Pledgee shall not be responsible in any
manner whatsoever for or in respect of the validity or sufficiency of this
Amendment or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Pledgors.
* * *
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of this 28th day of June, 1999.
STATIA TERMINALS INTERNATIONAL N.V.
By: /S/ JAMES BRENNER
----------------------------------
Title: Vice President & Treasurer
By: /S/ JACK R. PINE
----------------------------------
Title: Secretary
HSBC BANK USA, in its capacity as
Trustee, as Pledgee
By: /S/ FRANK J. GODINO
----------------------------------
Title: Vice President
STATIA TERMINALS DELAWARE, INC.
By: /S/ JAMES G. CAMERON
----------------------------------
Title: President
STATIA TERMINALS, INC.
By: /S/ JAMES G. CAMERON
----------------------------------
Title: President
<PAGE>
SCHEDULE I TO AMENDMENT
Shares to be Pledged
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Issuer Description Share Nos./ Par Value No. of Shares Percentage of all
of Shares Certificate Nos. Issued Capital of
Issuer
- -----------------------------------------------------------------------------------------------------------------------
PLEDGED BY STATIA TERMINALS DELAWARE, INC.
<S> <C> <C> <C> <C> <C>
Statia Terminals Preferred P1 - P670 US$ 1 670 0.003%
Corporation N.V.
PLEDGED BY STATIA TERMINALS INC.
Statia Terminals Preferred P671 - P1340 US$ 1 670 0.003%
Corporation N.V.
PLEDGED BY STATIA TERMINALS INTERNATIONAL N.V.
Statia Terminals Common 1 - 24,439,999 US$ 1 24,439,999 99.994%
Corporation N.V.
</TABLE>
EXHIBIT 4.3
GUARANTEE
GUARANTEE (this "Guarantee"), dated as of June 28, 1999 made
by Statia Terminals Antilles N.V. is delivered pursuant to Section 4.21 of that
certain Indenture (as amended to date, the "Indenture") dated as of November 27,
1996 among Statia Terminals International N.V., Statia Terminals Canada,
Incorporated, as Issuers, Statia Terminals Corporation N.V., Statia Terminals
Delaware, Inc., Statia Terminals, Inc., Statia Terminals N.V., Statia Delaware
Holdco II, Inc., Saba Trustcompany N.V., Bicen Development Corporation N.V.,
Statia Terminals Southwest, Inc., W.P. Company, Inc., Seven Seas Steamship
Company, Inc., Seven Seas Steamship Company (Sint Eustatius) N.V., Point Tupper
Marine Services Limited, Statia Laboratory Services N.V., Statia Tugs N.V., as
Subsidiary Guarantors and HSBC Bank USA (formerly known as Marine Midland Bank),
as Trustee. Capitalized terms used herein and not otherwise defined herein shall
have the meaning assigned thereto in the Indenture.
Statia Terminals Antilles N.V. (hereinafter referred to as
"Statia Antilles", which term includes any successor Person under the Indenture)
hereby unconditionally guarantees on a senior basis (such guarantee by Statia
Antilles being referred to herein as the "Guarantee") (i) the due and punctual
payment of the principal amount of, premium and interest on the Securities,
whether at maturity, by acceleration or otherwise, the due and punctual payment
of interest on the overdue principal amount and interest, if any, on the
Securities, to the extent lawful, and the due and punctual performance of all
other obligations of the Issuers to the Holders or the Trustee all in accordance
with the terms set forth in Article Ten of the Indenture and (ii) in case of any
extension of time of payment or renewal of any Securities or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise.
No director, officer, employee, direct or indirect stockholder
or incorporator, as such, of Statia Antilles, including but not limited to
Parent and its stockholders, shall have any liability for any obligations of
Statia Antilles under this Guarantee or for any claim based on, in respect of or
by the reason of such obligations or the creation.
<PAGE>
THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICT OF LAWS THEREOF.
STATIA TERMINALS ANTILLES N.V.
By: /S/ JAMES G. CAMERON
-----------------------------
Name: James G. Cameron
Title: Managing Director
By: /S/ JACK R. PINE
-----------------------------
Name: Jack R. Pine
Title:Secretary
-2-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STATIA
TERMINALS GROUP N.V.'S FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1999, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 17,493
<SECURITIES> 0
<RECEIVABLES> 10,945
<ALLOWANCES> (804)
<INVENTORY> 1,882
<CURRENT-ASSETS> 30,575
<PP&E> 233,736
<DEPRECIATION> (25,254)
<TOTAL-ASSETS> 242,356
<CURRENT-LIABILITIES> 21,691
<BONDS> 101,000
0
0
<COMMON> 114
<OTHER-SE> 119,551
<TOTAL-LIABILITY-AND-EQUITY> 242,356
<SALES> 45,599
<TOTAL-REVENUES> 79,682
<CGS> 39,927
<TOTAL-COSTS> 62,399
<OTHER-EXPENSES> 8,581
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,937
<INCOME-PRETAX> 1,332
<INCOME-TAX> 493
<INCOME-CONTINUING> (1,418)
<DISCONTINUED> 0
<EXTRAORDINARY> (4,743)
<CHANGES> 0
<NET-INCOME> (6,161)
<EPS-BASIC> (0.87)
<EPS-DILUTED> (0.59)
</TABLE>
