AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 16, 1996
REGISTRATION NO. 33-90862
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 4
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SHIPHOLDING INTERNATIONAL, INC.
(EXACT NAME OF COMPANY AS SPECIFIED IN ITS CHARTER)
4412
(PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER)
DELAWARE 76-0468195
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
4550 POST OAK PLACE, SUITE 140
HOUSTON, TEXAS 77027
(713) 963-9889
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
MR. DAVID E. HARRINGTON, JR.
SHIPHOLDING INTERNATIONAL, INC.
4550 POST OAK PLACE, SUITE 140
HOUSTON, TEXAS 77027
(713) 963-9889
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
LESTER MORSE, ESQ.
JACK H. HALPERIN, ESQ. LESTER MORSE, P.C.
711 THIRD AVENUE, SUITE 1505 111 GREAT NECK ROAD
NEW YORK, NEW YORK 10017 GREAT NECK, NEW YORK 11021
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE PRICE REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units, each consisting of one share
of Common Stock, par value .001 per
share, one Series A Common Stock,
Purchase Warrant and one Series B
Common Stock Purchase Warrant....... 1,180,000 $8.50 $10,030,000 $3,458.34
- ---------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.001 per
share............................... 1,180,000
- ---------------------------------------------------------------------------------------------------------------------
Series A, Common Stock Purchase
Warrants(1)......................... 1,180,000
- ---------------------------------------------------------------------------------------------------------------------
Series B, Common Stock Purchase
Warrants(2)......................... 1,180,000
- ---------------------------------------------------------------------------------------------------------------------
Common Stock, par value .001 per
share............................... 590,000(3) $10.00 $5,900,000 $2,034.32
- ---------------------------------------------------------------------------------------------------------------------
Shares of Common Stock, par value
.001 per share...................... 295,000(4) $12.00 $3,540,000 $1,220.59
- ---------------------------------------------------------------------------------------------------------------------
Unit Purchase Warrants............... 118,000 $14.025 $14.025 $0.00
- ---------------------------------------------------------------------------------------------------------------------
Unit Purchase Warrant Units(5);
consisting of one share of Common
Stock, one Series A Warrant and one
Series B Warrant.................... 118,000 $14.025 $1,654,950 $570.62
- ---------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.001 per
share............................... 59,000(6) $10.00 $590,000 $203.42
- ---------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.001 per
share............................... 29,500(7) $12.00 $354,000 $122.05
- ---------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.001 per
share............................... 96,000(8) $8.50 $816,000 $281.35
------------------
$7,890.69
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- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Two of these warrants entitle the holder to purchase one share of Common
Stock for $10.00.
(2) Four of these warrants entitle the holder to purchase one share of Common
Stock for $12.00.
(3) These shares are issuable upon the exercise of the Series A Warrants
included in the Units, including those issuable from the Underwriters
over-allotment option.
(4) These shares are issuable upon the exercise of the Series B Warrants
included in the Units, including those issuable from the Underwriters
over-allotment option.
(5) These Units will be issued to the Underwriter upon completion of the
offering.
(6) These shares are issuable upon the exercise of the Series A Warrants
included in the Units described in note (5).
(7) These shares are issuable upon the exercise of the Series B Warrants
included in the Units described in note (5).
(8) These shares are held by Chemitank, S.A. and may be sold at the rate of
11,000 per month, cumulative, commencing three months after the effective
date of this registration statement.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
SHIPHOLDING INTERNATIONAL, INC.
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
REFERENCING ITEMS IN PART I OF FORM S-1 TO THE PROSPECTUS
ITEM NUMBER AND CAPTION PROSPECTUS CAPTION OR PAGE
- ---------------------------------------------- --------------------------------
1. Forepart of the Registration
Statement and Outside Front Cover
Page of Prospectus................... Facing Page of Registration
Statement; Outside Front Cover
Page of Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus.................. Inside Front
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges... Prospectus Summary; Risk Factors
4. Use of Proceeds...................... Prospectus Summary; Use of
Proceeds
5. Determination of Offering Price...... Outside Front Cover Page of
Prospectus; Risk Factors;
Underwriting
6. Dilution............................. Dilution; Risk Factors
7. Selling Security Holders............. N/A
8. Plan of Distribution................. Outside Front Cover Page of
Prospectus;
9. Description of Securities to be
Registered........................... Outside Front Cover Page of
Prospectus; Prospectus Summary;
Description of Capital Stock;
Underwriting
10. Interests of Named Experts and
Counsel.............................. Legal Matters; Experts
11. Information with respect to the
Registrant........................... Outside Front Cover Page of
Prospectus; Inside Front Cover
Page of Prospectus; Prospectus
Summary; Risk Factors; Use of
Proceeds; Dividend Policy;
Capitalization; Selected
Financial Data; Business;
Management; Principal
Stockholders; Description of
Capital Stock; Financial
Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.......................... N/A
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED SEPTEMBER 16, 1996
1,180,000 UNITS
EACH UNIT CONSISTS OF ONE SHARE OF COMMON STOCK, ONE SERIES A COMMON STOCK
PURCHASE WARRANT
AND ONE SERIES B COMMON STOCK PURCHASE WARRANT.
[LOGO SHIPHOLDING INTERNATIONAL, INC.]
[GRAPHIC OF MULTI-PURPOSE BULK CARRIER WITH DERRICKS]
COMMON STOCK
------------------------
Shipholding International, Inc. ("SII") is offering a maximum of
1,180,000 Units (the "Units") on a "best efforts, all or none" basis as to
the first 706,000 Units and on a "best efforts" basis as to the remaining
474,000 Units.
This prospectus also relates to 96,000 shares of SII Common Stock (the
"Shares") owned by Chemitank, S.A. (the "Selling Stockholder"). The Shares
may be sold in market transactions or in negotiated sales by the Selling
Stockholder at the rate of 11,000 shares per month, cumulative, commencing three
months after the date of this prospectus. The proceeds of such sales will go to
the Selling Stockholder.
For each two Series A Common Stock Purchase Warrants the holder may
purchase one share of the Company's Common Stock for $10.00. For each four
Series B Common Stock Purchase Warrants the holder may purchase one share of the
Company's Common Stock for $12.00. Series A Warrants expire three years from the
date of the prospectus. Series B Warrants expire five years from the date of the
prospectus. There are no provisions for extending the exercise period of the
Warrants.
The initial public offering price of the Units will be $8.50 per Unit.
Prior to this Offering, there has been no public market for the Company's
securities and the Company was not subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The offering
price of the Units has been determined by negotiation between the Company and R
M Stark & Co. Inc., (the "Underwriter") and will not necessarily be related to
the Company's asset value, net worth, earnings potential or other established
criteria of value. See "UNDERWRITING" AND "RISK FACTORS" for information
relating to the factors considered in determining the initial public offering
price.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- --------------------------------------------------------------------------------
Per Unit.............. $8.50 $0.85 $7.65
- --------------------------------------------------------------------------------
Total (Minimum)....... $ 6,001,000 $601,000 $5,400,900
- --------------------------------------------------------------------------------
Total (Maximum)....... $10,030,000 $1,003,000 $9,027,000
================================================================================
(1) Footnote on page 3.
(2) Footnote on page 3.
------------------------
R.M. STARK & CO., INC.
The date of this Prospectus is , 1996
<PAGE>
[GRAPHICS DEPICTING: DAVID HARRINGTON, JR., PRESIDENT;
CONTAINER VESSEL; SHIPBROKER NEGOTIATING CHARTER; 3 PHOTOS DEPICTING
VARIOUS CARGO LOADED ON OR LOADING ONTO VESSEL]
<PAGE>
- ------------
(1) Does not include additional compensation to be received by the Underwriter
in the form of (i) a non-accountable expense allowance of $180,030 if the
minimum offering is completed and $300,900 if the maximum offering is
completed; and (ii) a warrant to purchase up to 118,000 Units at $14.02 per
Unit, exercisable over a period of five years commencing from the date of
this Prospectus (the "Underwriter's Warrant"). In addition, the Company
has agreed to indemnify the Underwriter against certain civil liabilities,
including liabilities under the Securities Act of 1933. See
"UNDERWRITING."
(2) Before deducting estimated expenses of the Offering of approximately
$480,000 (approximately $0.68 per Unit) if the minimum Offering is completed
and (ii) approximately $601,000 (approximately $0.51 per Unit) if the
maximum Offering is completed, including legal and accounting fees, printing
expenses and the Underwriter's non-accountable expense allowance, all of
which will be payable by the Company.
----------------------------
The Units are offered on a "best efforts, 706,000 Units or none basis" by
the Underwriter when, as and if delivered to and accepted by the Underwriter,
subject to prior sale, withdrawal or cancellation of the offer without notice,
and subject to the right of the Underwriter to reject any order in whole or in
part. Payments for the Units should be made to Continental Stock Transfer &
Trust Company, Escrow Agent for Shipholding International, Inc. The offering
period is 60 days from the effective date, subject to extension for an
additional period of sixty days.
THE COMPANY WILL BECOME SUBJECT TO THE REPORTING REQUIREMENTS OF THE
EXCHANGE ACT WITH THE EFFECTIVENESS OF THE REGISTRATION STATEMENT ON FORM S-1 OF
WHICH THIS PROSPECTUS IS A PART. PURSUANT TO SUCH REQUIREMENTS, THE COMPANY
INTENDS TO DISTRIBUTE TO ITS SHAREHOLDERS ANNUAL REPORTS CONTAINING FINANCIAL
STATEMENTS AUDITED BY AN INDEPENDENT PUBLIC ACCOUNTING FIRM AND QUARTERLY
REPORTS FOR THE FIRST THREE QUARTERS OF EACH FISCAL YEAR CONTAINING UNAUDITED
FINANCIAL INFORMATION.
3
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY AND SHOULD BE READ IN
CONJUNCTION WITH THE MORE DETAILED INFORMATION AND THE CONSOLIDATED FINANCIAL
STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS THE
CONTEXT OTHERWISE REQUIRES, "COMPANY" REFERS TO SHIPHOLDING INTERNATIONAL,
INC. SHARE NUMBERS HAVE BEEN ADJUSTED TO REFLECT A 1,275 FOR 1 STOCK SPLIT
AUTHORIZED IN FEBRUARY 1996. AN INVESTMENT IN THE UNITS OFFERED HEREBY INVOLVES
A HIGH DEGREE OF RISK. SEE "RISK FACTORS."
THE COMPANY
Shipholding International, Inc. ("SII" or the "Company"), a Delaware
corporation headquartered in Houston, Texas, intends to engage in the ownership
and charter of ocean-going vessels. SII will acquire various type vessels
through direct purchase and subsequently charter these vessels. Alternatively,
SII may charter vessels with the proceeds of the Offering in order to commence
operations.
Management forecasts an initial fleet investment of up to 2 vessels within
the first year of operations. The preferred schedule of purchase is expected to
commence with an "en-bloc" acquisition of two ships complemented by a
mid-operating year addition of a single vessel. Management considers the type of
vessel most suitable to accommodate this schedule to be the medium or
"handysize" (16,000 up to 50,000 Dead Weight Tonnage ("DWT")) "Dry Bulk
Carrier". Dry Bulk Carrier is an industry term referring to a general cargo
type vessel. This versatile class of carrier possesses the capability of
handling, transporting and discharging a wide assortment of general cargo. That
cargo may include dry bulk and bagged cargo, refrigerated or "reefer" cargo,
containers, autos, equipment or machinery.
For initial market entry purposes, Management has targeted the "handy
size" Dry Bulk class of carrier built between 1975 and 1985. This type and age
vessel is considered to provide the most stable earnings potential and related
asset value over the next three to five years based on current market activity
and vessel flexibility for the market conditions (which dictate earning
capability, value and potential future asset appreciation) as forecast by
Management. Other type vessels, including Liquid Bulk Carriers, may be targeted
by Management if market conditions support such a purchase and the scenario for
investment reflects that of the present "handy size" dry bulk market.
The Company has not targeted any specific vessel for acquisition and no
letters of commitment have been executed. No financing arrangements have been
made by the Company for vessel acquisitions. No contracts have been entered into
by the Company for chartering, crew management, or maintenance of vessels.
4
<PAGE>
THE OFFERING
Securities Offered..............................706,000 Units on a best efforts,
all or none basis, consisting of
706,000 shares of Common Stock,
706,000 Series A Common Stock
Purchase Warrants and 706,000
Series B Common Stock Purchase
Warrants. An additional 474,000
Units, on a best efforts basis
consisting of 474,000 shares of
Common Stock, 474,000 Series A
Common Stock Purchase Warrants
and 474,000 Series B Common
Stock Purchase Warrants
Common Stock Outstanding Prior to the
Offering......................................1,400,000 shares
Common Stock to be Outstanding After the Minimum
Offering......................................2,106,000 shares(1)(2)
Common Stock to be Outstanding After the Maximum
Offering......................................2,580,000 shares(1)(2)
Net Proceeds of the Minimum Offering............$4,945,000(3)
Net Proceeds of the Maximum Offering............$8,451,000(3)
Use of Proceeds.................................To fund acquisition of vessels
and working capital. See "USE OF
PROCEEDS."
Proposed NASDAQ Trading Symbols of Common
Stock......................................... (4)
- ------------
(1) Does not include 200,000 shares of Common Stock reserved for issuance upon
the exercise of employee stock options which may be granted. See "Executive
Compensation."
(2) Does not give effect to (i) 653,050 shares of common stock issuable upon
exercise of the Series A and Series B Warrants, Underwriter's Warrant, and
the underlying Warrants if the minimum offering is completed and (ii)
1,091,500 shares of common stock issuable upon exercise of the Series A and
Series B Warrants, Underwriter's Warrant, and the underlying Warrants if the
maximum offering is completed. See "Underwriting."
(3) Assumes an initial public offering price of $8.50 per Unit and an
underwriting discount and other estimated Offering expenses of approximately
$1,056,000 assuming the minimum offering is completed and $1,579,000 if the
maximum offering is completed, including the Underwriter's non-accountable
expense allowance.
(4) The use of a trading symbol does not imply that an active market will exist
or develop for the Company's securities subsequent to this Offering. The
Company intends to file an application for listing on NASDAQ prior to the
effective date of the registration statement of which this prospectus is
part.
RISK FACTORS
Investment in the units involves a high degree of risk and immediate
substantial dilution. Investors should carefully consider the information
presented under the captions "risk factors" and "dilution" in this
prospectus, including among others, risk related to the company's lack of
operating history, the type of business in which the company is involved,
competition, dependence on key personnel and the underwriter's influence on the
market.
5
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The following sets forth summary consolidated financial data as of the date
indicated. The following summary consolidated financial data were derived from
and should be read in conjunction with the Company's consolidated financial
statements, including the notes thereto, included elsewhere in this Prospectus.
AS OF JUNE 30, 1996
----------------------------------------
AS ADJUSTED AS ADJUSTED
ACTUAL MINIMUM(1) MAXIMUM(2)
------------ ------------ ------------
BALANCE SHEET DATA:
Total Assets......................... $ 308,779 $ 5,403,986 $ 8,909,216
------------ ------------ ------------
Working Capital...................... ($ 132,827) $ 4,498,043 $ 8,003,273
------------ ------------ ------------
Current liabilities, including
current portion of long term
debt............................... $ 278,949 $ 743,949 $ 743,949
------------ ------------ ------------
Long-term debt, less current
portion............................ -- -- --
------------ ------------ ------------
Shareholders' equity................. $ 29,830 $ 4,660,037 $ 8,165,267
============ ============ ============
- ------------
(1) Adjusted to reflect the net proceeds of 706,000 shares offered hereby at a
price of $8.50 per share. See "Use of Proceeds".
(2) Adjusted to reflect the net proceeds from the sale of 1,180,000 shares
offered hereby at a price of $8.50 per share. See "Use of Proceeds".
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
During the period from inception, March 6, 1995 to June 30, 1996, the
activities of the Company consisted of general and administrative type
activities related to the anticipated offering of the Company's securities to
the public. The loss from operations and deficit accumulated during the
development stage for this period of $857,372 relates to the management
expenses, interest on borowed funds and depreciation expense on office furniture
and equipment during this period. Since the Company has yet to commence
operations, there were no operating revenues generated to offset these
administrative costs.
Since the Company's inception, its capital requirements have been advanced
by related entities. As of June 30, 1996, a substantial portion of the amounts
so advanced, approximately $837,200, have been converted to equity by such
related parties. It is anticipated that any additional funds required by the
Company until the time it successfully completes its public offering, will be
provided by such related parties and will be repayable out of offering proceeds
or future revenues to be generated.
6
<PAGE>
RISK FACTORS
An investment in the securities offered in this prospectus involves a high
degree of risk and should not be made by persons who cannot afford the loss of
their entire investment. Accordingly, prospective investors should consider
carefully the following factors, in addition to the other information concerning
the company and its business contained in this prospectus, before purchasing the
securities offered hereby.
START-UP COMPANY
The Company is a start-up enterprise which has experienced losses. As a new
company the Company is more susceptible to all the risks discussed below. While
management of the Company does have experience in the business to be conducted,
there is no assurance that the Company will be successful or profitable. There
may be a delay in finalizing the purchase of the vessels that the Company
intends to purchase.
HIGHLY CYCLICAL NATURE OF THE SHIPPING INDUSTRY
The Company intends to be an independent shipping company specializing in
the acquisition, operation, employment and sale of ocean going vessels. The
shipping industry has been highly cyclical, experiencing volatility in
profitability and vessel values resulting from changes in the supply of and
demand for shipping capacity. The demand for ships is influenced by global and
regional economic conditions, developments in international trade, changes in
seaborne and other transportation patterns, weather patterns, crop yields, armed
conflicts, port congestion, canal closures, embargoes and strikes, among other
factors. Demand for dry bulk commodities, crude oil and oil products is affected
by, among other things, general economic conditions, commodity prices,
environmental concerns, weather and competition from alternatives to coal and
oil. The supply of shipping capacity is a function of the delivery of new
vessels and the number of older vessels scrapped, in lay-up, converted to other
uses, reactivated or lost. Such supply may be affected by regulation of maritime
transportation practices by governmental and international authorities. Many of
the factors influencing the supply of and demand for vessel capacity are outside
the control of the Company, and the nature, timing and degree of changes in
industry conditions are unpredictable.
POSSIBLE UNAVAILABILITY OF PERIOD TIME CHARTERS AT ATTRACTIVE RATES
The Company intends to book two to five year time period charters for the
vessels that it acquires. There can be no assurance that the Company will be
able to enter into period time charters for periods and at rates of hire that
are advantageous. In the event that period time charters on terms acceptable to
the Company are not available for the Company's vessels, the Company may employ
the vessels on the spot market. Charter rates on the spot market are subject to
greater fluctuation than period time charter rates.
FLUCTUTATIONS IN VESSEL VALUES
The market value of the Company's vessels can be expected to fluctuate
largely in relation to existing and anticipated charter rates as well as general
economic and market conditions. See "Business -- The Dry Bulk Shipping
Market." Furthermore, as vessels grow older they can generally be expected to
suffer significant declines in value. If the value of the Company's vessels were
to decline, it might be more costly for the Company to refinance debt relating
to such vessels, which could have an adverse effect on the Company's liquidity.
RISKS ASSOCIATED WITH THE PURCHASE OF VESSELS
Sellers of secondhand vessels typically provide limited warranties with
respect to the condition of the vessel in comparison to the warranties available
for a newly built vessel. In addition, the Company's inspections of secondhand
vessels prior to purchase would not normally provide the Company with the same
knowledge about the condition of the vessel that the Company would have if the
vessel had been built for or operated by the Company. There can be no assurance
that the purchase of secondhand vessels will not result in higher than
anticipated operating expenditures, including repair costs.
7
<PAGE>
The Company's initial business strategy is based primarily upon the
acquisition of a handysize dry bulk carrier fleet. There can be no assurance
that vessels meeting the Company's size and quality requirements will be
available at prices acceptable to the Company.
POSSIBLE UNAVAILABILITY OF FINANCING
Implementation of the Company's business plan requires that the Company be
able to obtain debt financing for a portion of the purchase price of the vessels
that it intends to acquire. If that financing is unavailable the Company will
have to seek other sources of financing. There is no assurance that any such
financing will be available to the Company. The unavailability of such financing
would have a material adverse effect upon the Company and prevent implementation
of the Company's Business Plan.
SUBSTANTIAL DEBT SERVICE REQUIREMENTS
The Company will have substantial debt service requirements arising from
the ship's mortgages that will provide a portion of the financing for its
vessels. During the first year of operations, assuming the completion of the
minimum Offering and the application of the proceeds therefrom, the Company
expects to have outstanding debt obligations in the amount of approximately $9.4
million, due over an expected period of 5 years. This assumes the acquisition of
two vessels for a total purchase price of $14.4 million. If the Company does not
generate sufficient cash flow to make payments of interest and principal on its
indebtedness, it will be required to refinance all or a portion of its
indebtedness, dispose of assets or seek additional financing. Since
substantially all of the Company's assets will be pledged to secure its
indebtedness, the Company's ability to refinance or seek additional financing
could be impaired, and there can be no assurance that the Company will be able
to obtain such financing at all or on terms acceptable to the Company. Such
financing may result in additional dilution to investors in this offering.
RISKS ASSOCIATED WITH DEBT FINANCING
The Company intends to use a substantial portion of the net proceeds of the
Offering to fund initial down payments on the purchase of secondhand vessels.
The purchase of secondhand vessels and the Company's other capital requirements
will require funds substantially exceeding the net proceeds of the Offering. The
Company intends to satisfy such requirements with bank financing; however, there
can be no assurance that the Company will be successful in obtaining such
financing. The Company estimates that a total of $23.4 million in debt financing
will be incurred by the Company in the period ending five years after the
effective date of the registration statement of which this prospectus is part if
the minimum offering is completed.
As a result of its reliance on debt financing, the Company is subject to
the risks normally associated with debt financing, including the risks that the
Company's cash flow from operations will be insufficient to meet required
payments of principal and interest, that such debt will not be able to be
refinanced or that the terms of such refinancing will not be as favorable as the
initial terms and that the Company's capital requirements, principally for
vessel acquisitions, will not be able to be financed on favorable terms or at
all. In recent years, lending institutions generally have tightened credit
requirements for ship financing. In addition, since some or all of the new debt
to be incurred by the Company may bear interest at floating rates, the Company
is subject to the risk that its interest expense may increase if interest rates
rise, which could adversely affect its results of operations.
ENVIRONMENTAL AND OTHER REGULATIONS
The operations of the Company are affected by extensive and changing
environmental protection laws and other regulations, compliance with which may
entail significant expenses, including expenses for ship modifications and
changes in operating procedures. The United States and certain other
jurisdictions have adopted or proposed new regulatory requirements that could
have an adverse effect on the Company. In particular, various legislation has
been proposed that would, among other things, impose minimum wage requirements
for foreign crew, impose restrictions on the use of foreign flagged vessels
(such as those intended to be used by the Company) in United States trade and
impose additional costs on operators of
8
<PAGE>
foreign-built vessels. The Company cannot predict whether any of such
legislation will be enacted into law or the ultimate cost of complying with any
legislation that is enacted. The United States Oil Pollution Act of 1990, as
amended ("OPA 90"), provides for virtually unlimited liability for owners,
operators and charterers of any vessel for certain oil pollution accidents in
the United States.
RISK OF LOSS AND LIABILITY; INSURANCE
The operation of any ocean-going vessel has an inherent risk of marine
disaster, environmental mishaps, cargo and property losses or damage and
business interruptions caused by mechanical failure, human error, political
action in various countries, labor strikes, adverse weather conditions, loss of
revenue during vessel off-hire periods and other circumstances or events. Any
such circumstance or event could result in loss of revenues or increased costs.
The Company expects to arrange for customary insurance against certain of
these risks. However, there can be no assurance that all risks are adequately
insured against, that any particular claim will be paid or that the Company will
be able to procure adequate insurance coverage at commercially reasonable rates
in the future. In particular, stricter environmental regulations may result in
increased costs for, or the lack of availability of, insurance against the risks
of environmental damage or pollution. See "Business -- Environmental Regulation
and Liability." Recently, insurance companies have increased premiums for most
participants in the shipping industry. The Company's insurance will contain
certain standard deductibles, limitations and exclusions, including limitations
and exclusions with respect to certain losses arising from acts of war,
terrorism, malicious acts, nuclear forces and willful misconduct or fraud. In
addition, in the event that claims were asserted against the Company, its
vessels could be subjected to arrest or other judicial process.
OPERATIONS OUTSIDE THE UNITED STATES; FOREIGN CURRENCY FLUCTUATION
The Company's operations will be conducted worldwide, and may be affected
by changing economic, political and social conditions in the countries where the
Company is engaged in business or where the Company's vessels are registered or
flagged. The Company's operations may be affected by war, expropriation of
vessels, the imposition of taxes, increased regulation or other circumstances,
and as a consequence of the Company's assets may be impaired or its operations
may be curtailed.
Although the Company's activities will be conducted worldwide, the
international shipping industry's functional currency is the United States
Dollar and virtually all of the Company's revenues and most of its operating
expenses are expected to continue to be denominated in United States Dollars.
However, a portion of the Company's total expenditures will be denominated in
other currencies. In addition, demand for shipping services may be affected by
the ability of shippers to pay United States Dollar denominated freight rates.
Accordingly, the Company's operating results could be adversely affected by
movements in currency exchange rates or the imposition of currency controls in
the jurisdictions in which its vessels operate.
FUTURE CAPITAL NEEDS
The Company expects that the net proceeds of this Offering and funds
available to the Company from anticipated credit facilities, will be adequate to
satisfy its currently projected capital requirements for at least 12 months
after the Offering. The Company's future capital requirements will depend on
many factors, including cash flow from operations, competing market developments
and future expansion plans. To the extent that the funds generated by this
Offering are insufficient to fund the Company's proposed activities, it may be
necessary to raise additional funds through equity or debt financings. Any
equity financings could result in dilution to the Company's then existing
shareholders, and any financing, if available at all, may be on terms
unfavorable to the Company. If adequate funds are not available, the Company may
be required to curtail its activities significantly. See "Use of Proceeds",
"Business".
DISPUTE RESOLUTION
Under the terms of the Hague Convention, many disputes between signatories
to the Convention in the maritime industry are subject to international
arbitration. Arbitration generally tends to reduce the cost of
9
<PAGE>
determining certain liabilities particularly between multiple international
parties. Whenever feasible, Management intends to use arbitration for the
settlement of disputes. Because precedent plays a less significant role in
arbitration than in litigation, the outcome of arbitration is less predictable
than in litigation or some other means of dispute settlement.
COMPETITION
The business of owning and chartering vessels is highly competitive. The
Company is in competition with local, regional, national and international
firms. The Company will compete primarily on the basis of price. Many of the
Company's competitors are larger and have greater financial, marketing and human
resources and geographic coverage than the Company. There can be no assurance
that the Company will be able to compete successfully against existing companies
or new entrants to the marketplace. See "Business -- Competition."
DEPENDENCE ON DAVID E. HARRINGTON, JR.
The success of the Company is largely dependent on the skills, experience
and efforts of its founder and Chief Executive Officer, David E. Harrington, Jr.
The loss of the services of Mr. Harrington could have a material adverse effect
on the Company's business and prospects. The Company will seek to obtain a key
man life insurance policy on Mr. Harrington in which the Company will be named
the beneficiary in the amount of $5,000,000. See "Management."
IMMEDIATE AND SUBSTANTIAL DILUTION
The purchasers of the Units offered hereby will incur an immediate and
substantial dilution in the value of their Common Stock. If the minimum Offering
is completed the net tangible book value of the Common Stock after the Offering
will be $ 2.21 per share as compared to the initial public offering price of
$8.50. This dilution of $6.29 per share represents a percentage dilution of 74%.
If the maximum Offering is completed the net tangible book value of the Common
Stock after the Offering will be $3.16 per share compared to the initial public
offering price of $8.50. This dilution of $5.34 per share represents a
percentage dilution of 63%.
Additional dilution to public investors may result to the extent that
outstanding options, and the Underwriter's Warrant are exercised at a time when
the net tangible book value per share of Common Stock exceeds the exercise price
of such warrants and options or when the Company could receive a higher price
for the sale of its Common Stock than the exercise price of such warrants and
options. For a description of the number and exercise price of such warrants and
options, see "Dilution" and "Description of Securities."
CONTROL OF THE COMPANY
Following this Offering, the Company's Chief Executive Officer will
beneficially own approximately 66% of the outstanding shares of Common Stock if
the minimum Offering is completed and 54% if the maximum offering is completed.
Since there are no cumulative voting rights provided for in the Company's
Certificate of Incorporation, this person will likely be in a position to
effectively control the election of the members of the Board of Directors and
control most corporate actions, including the merger or sale of the Company,
without the approval of the other shareholders. See "Principal Shareholders."
DETERMINATION OF OFFERING PRICE AND EXERCISE PRICES
The initial public offering price of the Units and the exercise prices of
the Series A Warrants and the Series B Warrants have been determined by
negotiations between the Company and the Underwriter and are not necessarily
related to the Company's asset value, net worth, earnings potential or other
established criteria of value. The initial public offering price should not,
therefore, be considered to be an indication of the actual value of the Company.
See "Underwriting."
10
<PAGE>
BEST EFFORTS OFFERING
This Offering is being made on a best efforts, 706,000 Units all or none
basis by the Underwriter. The Underwriter has no obligation to purchase any
Units and there is no assurance that the minimum Offering will be completed.
Also, investor's funds may be in escrow for an extended period before the
Offering either expires or a closing is held.
LACK OF EXPERIENCE OF UNDERWRITER
This is the first public offering in which the Underwriter is serving as
Underwriter. The Underwriter's lack of experience may be detrimental to the
Offering.
NO PRIOR MARKET; POSSIBLE VOLATILITY OF SHARE PRICE
Prior to this Offering, there has been no public market for the Company's
securities. Although the Company intends to apply to have the Common Stock
approved for listing on the NASDAQ and the Underwriter has indicated that it
intends to make a market in the Company's securities following this Offering
after seeking approval from the NASD to do so, the Underwriter is not required
to make such a market and there can be no assurance that an active public
trading market for such securities will be developed or sustained. Accordingly,
purchasers of the Units may experience substantial difficulty selling such
securities and the price of such securities may be subject to volatility.
Additionally, if the Underwriter should exercise its registration rights to
effect the distribution of the Underwriter's Warrant or securities underlying
the Underwriter's Warrant, the Underwriter, prior to and during such
distribution, will be unable to make a market in the Company's securities. If
the Underwriter ceases making a market, the market and market prices for such
securities may be adversely affected and holders thereof may be unable to sell
such securities. See "Underwriting."
SALES PURSUANT TO RULE 144
Upon the closing of this Offering, all of the shares of Common Stock
outstanding prior to this Offering will be "restricted securities" within the
meaning of Rule 144 promulgated under the Securities Act of 1933, as amended
(the "Act"). The holder of 1,275,000 of the shares of Common Stock now
outstanding has agreed not to sell any of his shares of Common Stock for a
period of two years after the date of this Prospectus without the prior written
consent of the Underwriter. Chemitank, S.A., the holder of 125,000 shares, is
registering 96,000 shares which may be sold at the rate of 11,000 shares per
month, cumulative, commencing three months after the date of this Prospectus. At
the end of that two-year period (or prior thereto with the consent of the
Underwriter), these shares will be eligible for sale, subject to the holding
period, volume limitations and other conditions imposed by Rule 144. Ordinarily,
under Rule 144, a person holding restricted securities may sell in the market or
directly with a market maker an amount equal to the greater of one percent of
the Company's then outstanding Common Stock or the average weekly trading volume
during the four calendar weeks prior to such sale. Future sales of such shares
and sales of shares underlying outstanding options could have an adverse effect
on the market price of the Common Stock. See "Description of Securities,"
"Shares Eligible for Future Sale," and "Underwriting."
NO ANTICIPATED DIVIDENDS
The Company has not paid any dividends on its Common Stock and for the
foreseeable future intends to continue its policy of retaining any earnings to
finance the development and expansion of its business.
UNDERWRITER'S INFLUENCE ON THE MARKET
A significant amount of securities offered hereby may be sold to customers
of the Underwriter. Such customers subsequently may engage in transactions for
the sale or purchase of such securities through or with the Underwriter.
Although it has no obligation to do so, the Underwriter intends to make a market
in the Company's securities and may otherwise effect transactions in such
securities. If it participates in the market, the Underwriter may exert a
dominating influence on the market, if one develops for the securities described
in this Prospectus. Such market-making activity may be discontinued at any time.
The price and
11
<PAGE>
liquidity of the Common Stock and the Company's Series A Warrants and Series B
Warrants may be significantly affected by the degree, if any, of the
Underwriter's participation in such market. Such restrictions may adversely
affect the price and liquidity of the Units, the Common Stock and the Warrants.
Additionally, if the Underwriter should exercise its registration rights to
effect the distribution of the securities underlying the Underwriter's Warrant,
the Underwriter, prior to and during such distribution, will be unable to make a
market in the Company's securities. If the Underwriter ceases making a market,
the market and market prices for such securities may be adversely affected and
holders thereof may be unable to sell such securities. See "Underwriting."
USE OF PROCEEDS
The net proceeds of the minimum Offering (after deducting underwriting
discounts and related expenses to be paid from the proceeds) are estimated to be
approximately $4.9 million and the net proceeds of the maximum Offering are
estimated to be approximately $8.4 million.
The Company intends to use a substantial portion of the net proceeds to
acquire ocean going vessels in the manner described below. If the minimum
Offering is completed, it is anticipated that approximately 51% ($2.5 million)
of the net proceeds will be used as required down payments on the vessels. It is
Management's intent, however, to acquire one additional vessel during the first
year of operations. If the maximum Offering is completed, it is anticipated that
approximately 90% ($7.6 million) of the net proceeds will be used as required
down payments on the vessels. The remaining net proceeds will be retained as
cash reserves in support of future project financing and to defray initial
operating costs until vessel revenues are earned.
The net proceeds of the offering are expected to be expended substantially
as follows:
MINIMUM OFFERING MAXIMUM OFFERING
---------------------- -----------------
$ % $ %
----------- --- ----------- ---
Purchase of Initial Vessels.......... 2,520,000 51% 7,560,000 90%
Reserve for Officers' Salaries and
Benefits for One Year.............. 375,000 8% 375,000 4%
Working Capital...................... 2,050,870 41% 516,100 6%
----------- --- ----------- ---
TOTAL........................... 4,945,870 100% 8,451,100 100%
=========== === =========== ===
The Company believes, based on its current plans, that the net proceeds of
this Offering, combined with anticipated revenues from operations and funds
available to the Company from ship's mortgages to be obtained, will be
sufficient to enable the Company to continue to pursue its proposed business
activities for at least the 12-month period following the date of this
Prospectus. Any additional proceeds received upon the exercise of the
Underwriter's OverAllotment Option, or the Underwriter's Warrants, as well as
income from investments, will be added to working capital.
Pending application of the proceeds of this Offering, the Company may make
temporary investments in interest-bearing savings accounts, certificates of
deposits, United States government obligations, money market accounts,
interest-bearing securities or other insured short-term, interest-bearing
investments.
DIVIDEND POLICY
The Company has not declared or paid any dividends on its capital stock.
The Company currently anticipates that all of its earnings will be retained for
development of the Company's business, and does not anticipate paying any cash
dividends in the foreseeable future. Future cash dividends, if any, will be at
the discretion of the Company's Board of Directors and will depend upon, among
other things, the Company's future earnings, operations, capital requirements
and surplus, general financial condition, contractual restrictions, and such
other factors as the Board of Directors may deem relevant.
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<PAGE>
CAPITALIZATION
The following tables sets forth the short-term debt, long-term debt and the
shareholders' equity of the Company (i) as of June 30, 1996 and (ii) as adjusted
to give effect to the sale by the Company of the Units offered hereby at an
initial public offering price of $8.50 per Unit and after deduction of
underwriting discounts and estimated expenses payable by the Company and the
application of the estimated net proceeds therefrom as set forth under "Use of
Proceeds." The following table should be read in conjunction with the Balance
Sheet and notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AS ADJUSTED
------------------------------
ACTUAL MINIMUM MAXIMUM
------------ -------------- --------------
<S> <C> <C> <C>
Short-term debt...................... $ 278,949(1) $ 743,949 743,949
Long-term debt
(less current portion)............. 0 0 0
------------ -------------- --------------
Total...................... 278,949 743,949 743,949
============ ============== ==============
SHAREHOLDERS' EQUITY:
Common stock: 10,000,000 shares
authorized,
$.001 par value; 1,400,000 shares
issued and outstanding; 2,106,000
shares issued and outstanding, as
adjusted minimum and 2,580,000
shares issued and outstanding, as
adjusted maximum................... 1,400 2,106 2,580
Additional paid-in capital........... 885,802 5,980,966 9,485,722
Deficit accumulated during
development stage.................. (857,372) (1,323,035) (1,323,035)
------------ -------------- --------------
Total shareholder's
equity.................. $ 29,830 $ 4,660,037 $ 8,165,267
============ ============== ==============
</TABLE>
- ------------
(1) Represents amounts payable to original shareholder for deferred offering and
organizational costs and for management services provided prior to the
closing of the offering.
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<PAGE>
DILUTION
As of June 30, 1996, the net tangible book value of the Company (tangible
assets less liabilities) was $29,830 or $0.02 per share of Common Stock. After
giving effect to the sale by the Company of 706,000 Units offered hereby,
assuming the minimum Offering is completed at an initial public offering price
of $8.50 per Unit and the application of the net proceeds as set forth under
"Use of Proceeds," the net tangible book value at June 30, 1996 would have
been approximately $4,660,000 or $2.21 per share of Common Stock. This
represents an immediate increase in net tangible book value of $2.19 per share
to existing shareholders and an immediate dilution in net tangible book value of
$6.29 per share to purchasers of Units in this Offering. The following table
illustrates this per share dilution:
Initial public offering price per share............ $ 8.50
Net tangible book value per share
prior to the Offering............. $ 0.02
Increase in net tangible book value
per share attributable to this
Offering.......................... $ 2.19
Pro forma net tangible book value per share after
the Offering..................................... $ 2.21
Dilution per share to new investors................ $ 6.29
Assuming the maximum offering is completed, as of June 30, 1996 the pro
forma net tangible book value upon completion of the Offering would be $3.16 per
share, the immediate increase in net tangible book value of shares owned by the
existing shareholders would be $3.14 per share and the immediate dilution to new
investors would be $5.34 per share.
The following table summarizes the number of shares of Common Stock
purchased from the Company, the total consideration paid, and the average price
per share paid by the existing shareholders (based on assumed total shares to be
outstanding immediately prior to the offering) and to be paid by new
shareholders for the shares of Common Stock offered by the Company hereby before
deduction of the underwriting discount, the Underwriter's non-accountable
expense allowance and estimated expenses of this Offering:
<TABLE>
<CAPTION>
AVERAGE
SHARES PURCHASED TOTAL CONSIDERATION PRICE
---------------------- ------------------------- ---------
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- -------- -------------- -------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders................... 1,400,000 66% $ 887,202 13% $0.63
New investors -- minimum................ 706,000 34% $ 6,001,000 87% $8.50
----------- --- -------------- ---
Total.............................. 2,106,000 100% $ 6,888,202 100% $3.27
=========== === ============== ===
Existing shareholders................... 1,400,000 54% $ 887,202 8% $0.63
New investors -- maximum................ 1,180,000 46% 10,030,000 92% $8.50
----------- --- -------------- ---
Total.............................. 2,580,000 100% $ 10,917,202 100% $4.23
=========== === ============== ===
</TABLE>
- ------------
(1) Does not give effect to possible further dilution resulting from the
issuance of (i) 200,000 shares of Common Stock reserved for issuance upon
exercise of employee stock options which may be granted; (ii) shares of
Common Stock included in the Units issuable upon exercise of the
Underwriter's Warrant and the underlying Warrants (iii) shares of Common
Stock issuable upon exercise of the Series A Common Stock Purchase Warrants,
and (iv) shares of Common Stock issuable upon exercise of the Series B
Common Stock Purchase Warrants. See "Executive Compensation",
"Description of Securities" and "Underwriting".
14
<PAGE>
BUSINESS
OVERVIEW
Shipholding International, Inc., a Delaware corporation, incorporated in
March, 1995, headquartered in Houston, Texas, intends to engage in the ownership
and charter of ocean-going vessels. Alternatively, the Company may charter
vessels with the proceeds of the Offering in order to commence operations
immediately. Management believes that ships of this size are readily available.
Management forecasts an initial fleet investment of from two to four
vessels during the first year of operations. Management considers the type of
vessel most suitable to accommodate this schedule to be the medium or
"handy-size" (16,000 up to 50,000 DWT) "Dry Bulk Carrier". Dry Bulk Carrier
is an industry term referring to a general cargo type vessel. This versatile
class of carrier possesses the capability of handling, transporting and
discharging a wide assortment of general cargo. That cargo may include dry bulk
and bagged cargo, refrigerated or "reefer" cargo, containers, autos, equipment
or machinery.
For initial market entry purposes, Management has targeted the "handy
size" Dry Bulk class of carrier built between 1975 and 1985. This type and age
vessel is considered suitable for the market conditions (which dictate earning
capability, value and future asset appreciation) as forecast by Management.
Other type vessels, including Liquid Bulk Carriers may be targeted by Management
if market conditions support such a purchase and the scenario for investment
reflects that of the present "handy size" drybulk market.
VESSEL OWNERSHIP AND CHARTERS
Within the maritime shipping industry, frequent vessel sales, purchases and
chartering for the transport of cargo is commonplace. Depending on the general
condition and type of vessel, the average commercial life for a vessel is in
excess of twenty-two years. Within this period, a single vessel may be sold and
purchased numerous times. It is not uncommon for a shipowner to purchase or
charter the same vessel more than once. This activity in vessel sales and
purchases creates a market that allows a vessel owner to recoup equity in older
vessels with the option to retain the use of that vessel by charter for an
additional period of time. This sale and lease back arrangement permits the
acquisition of an older vessel with a significant remaining life with the
guarantee of income from term employment of the vessel over one to three years.
Upon completion of the lease-back period, a renewal charter may be obtainable or
the vessel may be chartered out to an unrelated party. It is probable that the
Company will engage in such transactions.
SII in the capacity of "Shipowner" shall look to realize equity and
generate income from the vessels. Income will result from vessel employment or
"charter". There are two types of general charters of interest to SII. These
charters (or leases) are generally referred to as a "Bareboat Charter" and a
"Time Charter". While these contracts provide term employment and generate
income for the owner, they also determine the obligations, participation, risk
and liabilities between the vessel owner and the charterer.
A Bareboat Charter obligates the owner to produce the vessel unencumbered
to the charterer. The owner in return receives a hire rate for the vessel with
no obligation or direct participation in the employment of the vessel or any
trading.
A Time Charter shall obligate the owner to produce the vessel to the
charterer ready to sail. The owner is required to maintain the operation of the
vessel in all respects as to maintenance, crew and insurance. In return the
owner receives a hire or rate for the vessel. The hire or rate will depend upon
the type of contract. Generally an owner will receive a lesser amount of hire
for his vessel under a Bareboat Charter than a Time Charter. The actual amount
of hire is determined by many factors which include the owner's obligations as
required by the type of charter and the specific charter terms.
THE GLOBAL MARKET PLACE
The shipping industry supports a global market for water borne freight and
transportation. The need to import and export various goods or general freight
exists for every country in the world. An increasing developing world market is
serviced by the shipping industry.
15
<PAGE>
Within the industry itself, there exists two markets that are affected by
the values and rates in respect to the world market economy. These are known as
the Term and Spot markets. In general, the Term market refers to the
availability for a shipowner to employ his vessel for a period of time. This
term may vary from a minimum of one year to a period equal to the life of the
vessel. The Spot market usually refers to single voyage charters and successful
trading in this market depends on an owner's ability to employ his ship on a
regular basis by competing for freight opportunities available on a recurring
frequency in the world freight market.
Short and long term charters are available on a daily basis and present
numerous and changing opportunities for parties that maintain a presence or
interest in the various markets.
Much like large scale commercial real estate, the maritime industry uses a
worldwide ship broker network. This network maintains up-to-date reviews, sales
and purchase reports. The types of vessels identified and acquired by SII will
most likely be obtained through various brokers which offer the desired revenue
and price meeting SII's return on equity and income criteria at that time.
MARKET STRUCTURE AND COMPETITION
Much of the dry bulk or non-petroleum freight transported by ocean going
vessels is handled by relatively small fleet owners (independents) who rarely
have a financial interest in the cargo. Historically, competition is relatively
constant and charter rates are fairly stable over time with cycles usually
spanning a ten year period between high and low rates.
The ideal market entry condition is when ship purchases or sales prices are
depressed as a result of supply and demand being out of balance. Usually the
Term and Spot market, guided by demand, determine the value of any ship at any
given time, especially during weak or depressed market conditions.
When demand increases by an international event or as a result of a market
required adjustment in the worldwide vessel supply, Spot rates rise, ship prices
appreciate rapidly and values usually begin to exceed then present market
revenue. This results from the market's anticipation of higher future revenues
of the delays and expense of vessel replacement. Delay and expense associated
with the procurement of new vessels is the result of the time required for new
building and construction of these vessels during periods of high demand.
Management believes that the dry cargo freight market has been severely
depressed and is presently ideal for entry with regard to cost, revenue,
competition and need. During weak market conditions, competition for the
purchase and employment of vessels is minimal due to the increased volume in
ship sales. The need becomes greater for existing owners to recoup equity and
maintain market presence with a restructured operating cost relative to existing
or current freight market conditions. These periods create competition between
the sellers in the same manner that higher or increased asset values enhance
competition among the buyers when vessel values have improved.
Entry into the dry bulk shipping market during weak conditions required
significantly less capital than other shipping markets such as tankers due to
the lower purchase price of the smaller and less environmentally sensitive
vessels required by the non-petroleum freight market.
Competition is usually governed by supply and demand factors, not size,
strength or capitalization of companies, however, SII may be initially excluded
during its infancy state from some business opportunities that may be otherwise
profitable and historically secure. These market opportunities may become
available in the future if the company maintains growth and presence, both in
the size of its fleet and the spectrum of tonnage offered to the market.
The market consists primarily of over 100 small independent ship owners.
In order to avoid undue risk and market exposure to its revenue stream, SII
intends to fully employ all initial acquisitions as soon as practicable after
purchase. Employment is intended under Bareboat terms of three to five years.
This type of employment appears to be available in current market conditions as
supplied to SII by brokers.
16
<PAGE>
In general, SII's formula for income is not necessarily governed by daily
fluctuations in supply and demand market factors such as occur in the Spot
market, rather income generation will concentrate on the more conservative fixed
return on investment through contractual term employment. At the time of the
offering, the Company has no charter contracts and no vessels on charter.
USE OF OFFERING PROCEEDS
The net proceeds of the offering will be used primarily to fund the
acquisition of a vessel. It is estimated that the initial acquisition will cost
approximately $7,200,000 per vessel. It is possible that the actual cost will
vary materially from this estimate. It is expected that offering proceeds of
approximately $2,520,000 ($7,560,000 if the maximum Offering is completed) will
be used as a down payment and mortgages of $4,680,000 ($14,040,000 if the
maximum Offering is completed) obtained through maritime lending banks. No
commitments have been received for the financing of these vessels and there is
no assurance that financing on similar terms can be achieved.
The balance of net offering proceeds, estimated at about $2.0 million ($0.5
million if the maximum Offering is completed) are expected to pay initial
salaries and to be used as working capital.
It is anticipated that all vessels acquired will ultimately be employed
under charter contracts for a period of not less than one year and not more than
five years.
The revenue generated by the term charter contracts is estimated to be
sufficient to produce positive cash flow after deducting ship mortgage payments,
overhead, and various operating expenses. However, there is no assurance that
such positive cash flow will be realized.
Depending on the then-existing market conditions, sale of the vessels may
not be exercised, rather some or all of the vessel mortgages may be refinanced,
and the vessel charters renewed. The proceeds from the sale or refinance of
vessels will be used in part for additional vessel acquisition with similar term
employment conditions equivalent to those of the initial vessels acquired.
OPERATIONS
Historically, based upon management's experience in the industry, vessels
have been purchased with approximately 30% - 40% down payment of the purchase
price and the procurement of first mortgage financing of the balance. Mortgage
terms have historically been determined by the vessel's age and its remaining
commercial trading life. Financing of this nature will be pursued by the Company
but there is no assurance that it will be obtained.
It is estimated that the initial vessels purchased will cost approximately
$7,200,000 per vessel. The Company intends to maintain a cash reserve floor of
$500,000. Therefore, if the minimum Offering is completed, it is forecast that
the offering proceeds will be sufficient to initially purchase one vessel at a
cost of $7,200,000 and that the proceeds of operations together with debt
financing will enable the Company to purchase a second vessel by mid year of the
first year's operations. If the maximum Offering is completed three vessels will
be purchased at a total cost of $21,600,000. Management anticipates the purchase
of a fourth vessel by mid year of the first year's operations. The first
mortgage financing is expected to be approximately $4,680,000 per vessel,
repayable over a period of five years with market related interest rates.
The Company expects to enter into term employment charter contracts, being
either Bareboat or Time charters, though Bareboat charters will be preferred.
For the purpose of forecasting charter revenue it is estimated that each vessel
charter will earn between $2,000,000 per year (Bareboat charter) and $3,285,000
per year (Time charter). These estimated revenues are based on current market
levels of charter or lease rates. Management intends to purchase and either
quickly or simultaneously employ each vessel at the time of delivery. Based on
this assumption, no delays in earning charter revenues are anticipated once the
vessels are acquired.
Vessels will be depreciated over a ten year life expectancy, even though it
is assumed that the mortgages will be for five years (or 1/2 the useful
commercial life of the ships acquired). The major guideline
17
<PAGE>
for evaluating vessel investment is the targeted return on equity of about 20%
per year resulting from and secured by Bareboat or Time Charter revenues.
Management believes its plan can be implemented repeatedly using this
calculation.
Management intends to pursue similar scenarios for investment and believes
these scenarios to be available based on the return on investment equity secured
by revenues and believes that such return is not necessarily market related or
market sensitive. Market revenues are anticipated to escalate and vessel values
appreciate as the general conditions in world economics improve. There have been
no calculations based on this improvement. Management assumes that the vessels
acquired and employed can and will be sold in their fifth year of operation at
no more than their original purchase price.
Further acquisitions may cost more than the initial acquisitions, however
management believes that the revenue base through charter employment will also
increase to support the higher vessel prices and maintain the forecasted rate of
return on investment.
TECHNICAL SUPPORT
SII intends to enter into one or more contracts for the technical
maintenance and support of its acquisitions and ongoing operations. These
contracts ("Technical Management Contracts") will be with reputable management
companies that specialize in the operation of the types of vessels to be
acquired. The contracts will encompass such items as initial inspection of the
vessel prior to purchase, ongoing survey inspections during ownership,
maintenance and repairs to the vessels, crewing, communications and various
international compliance, all of which govern the operation and safety of the
vessel, its cargo and crew, in port and at sea.
The technical managers will assist SII in procuring insurance, ensuring
safety and the maintenance of vessel value by means of safe and consistent
operations.
SII does not desire to maintain the extensive overhead cost of in-house
technical management, and it is customary in the business for this type of
technical expertise to be under contract, versus maintaining in-house personnel
and the relative support functions required. No contracts or commitments have
been entered into for such services to date. Such arrangements will be pursued
after the closing of the public offering. No affiliated entities currently
provide these services and it is expected that these services will be provided
by unaffiliated third parties although management retains the right to retain
affiliated entities to provide such services.
FACILITIES, EQUIPMENT AND STAFFING
The business of SII will be conducted from an office of approximately 3000
square feet in the Houston, Texas area. The Company's initial executive offices
are located at 4550 Post Oak Place, Suite 140, Houston, Texas 77027 in space
leased from Chemitank, S.A., an affiliate of David E. Harrington, Jr. and its
telephone number is (713) 963-9889. It is estimated that the annual lease cost
of such space will be approximately $13-15/sq. ft., inclusive of buildout and
utilities, and that the term of the lease will be between three and five years
with various renewal and expansion options. If the fleet expands significantly
in the fifth year it is anticipated that additional space will be required.
Initial staffing will include management and a secretary/receptionist with
future additions to support personnel to be made as needed. General office
equipment such as computers, facsimile, telex, telephones, copiers and the like
have been acquired at a cost of approximately $24,000. Custom software for
vessel activities may be required but the anticipated cost is less than $30,000.
THE DRY BULK SHIPPING MARKET
OVERVIEW
The dry bulk carrier industry is highly fragmented with many owners and
operators of shipping tonnage. International dry bulk cargo transportation
services are provided by proprietary owners (large shippers of dry bulk cargo),
state controlled shipping companies and various types of independent operators.
The majority of dry bulk carrier tonnage (including the handysize segment) is
owned by independent
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operators, while state-controlled shipping companies own approximately 20% of
the available tonnage. The Company believes that, with the exception of
state-controlled shipping groups, no single owner group controls more than 5% of
the world dry bulk carrier fleet.
Dry bulk cargo consists of the major bulks, which are iron ore, coal and
grain, and a wide variety of minor bulks, such as forest products, iron and
steel products, agricultural products, ores, minerals and petcoke, fertilizers,
bauxite and alumina, cement and other construction materials and salt. Dry bulk
carriers are generally single deck ships which transport unpacked cargo which is
poured, tipped or placed through hatchways into the holds of the ship.
The dry bulk cargo fleet is generally divided into three major vessel types
based on carrying capacity. Handysize dry bulk carriers have a carrying capacity
of approximately 10,000 to 50,000 dwt, while Panamax dry bulk carriers have a
carrying capacity of approximately 50,000 to 80,000 dwt and Capesize dry bulk
carriers have a carrying capacity of over 80,000 dwt. The total world dry bulk
shipping capacity is approximately 216.5 million dwt. Handysize dry bulk
carriers comprise approximately 47% of such tonnage and vessels in the 15,000 to
35,000 dwt segment comprise approximately 27% of such tonnage.
Charter rates are determined by a highly competitive global shipping
market. Historically, charter rates have been influenced by shifts in the supply
of, and demand for, vessel tonnage. The demand for vessel tonnage is largely a
function of the level of worldwide economic activity, and follows a similar
cyclical pattern. Charter rates for handysize vessels, however, tend to be
relatively more stable than Panamax and Capesize charter rates. This is because
handysize vessels carry a wider range of cargo, including cargo for which demand
is generally more stable, while the larger ships have been more dependent on the
transportation of iron ore and coal for steel mills in Japan and Germany.
During the period from 1974 to 1978, demand for tonnage decreased due to a
global recession. The rate of building of new tonnage also slowed during the
same period. When the global economy improved, the combination of high demand
for, and low supply of, tonnage led to high charter rates in the period
following 1978. Large numbers of new ships were then ordered based on
expectations of continued growth in demand. Such vessels were delivered in the
depressed transport market following 1982, resulting in significant overcapacity
during the following five years. In 1987, economic conditions improved and
declines in supply due principally to scrapping resulted in substantially
improved charter rates until mid-1990 when charter rates fell sharply due to
adverse economic and political conditions. Charter rates then recovered
temporarily but declined again in early 1992. Charter rates again recovered in
the first half of 1993 but weakened in the second half of the year due to slow
economic growth in North America, Europe and Japan. Charter rates gradually
improved in 1994.
VESSEL TYPES
HANDYSIZE. The total world handysize fleet represents approximately 47% of
the total world dry bulk carrier tonnage of 216.5 million dwt at June 30, 1994;
within this class, the 15,000 to 35,000 dwt segment represents about 27% of the
world dry bulk carrier tonnage. Handysize vessels, which are the most versatile
of the dry bulk carriers, carry almost all types of bulk commodities and operate
in almost all ports throughout the world. Typically, handysize dry bulk
carriers, unlike most larger dry bulk carriers, are equipped with cargo loading
gear such as cranes and derricks on deck. These vessels are particularly well-
suited for transporting the minor bulks which often are not traded in cargo
sizes that are big enough to justify the use of larger ships. Use of larger
ships may also be limited by the size of storage and cargo facilities in the
loading and discharging ports, limited access to many ports due to the depth of
water (draft), width of channels and rivers, length of berthing facilities,
height of bridges and the operating height of shore cranes. For example, the
typical working maximum draft for berths in ports in many developing countries
in Asia is 9 to 10 meters, compared to drafts of 12.5 meters and 16 meters,
respectively, for typical Panamax and Capesize vessels.
PANAMAX. The total world Panamax fleet represents approximately 24% of the
total world dry bulk carrier tonnage in dwt. A Panamax vessel has a maximum
length, breadth and draft capable of permitting it to pass fully loaded through
the Panama Canal. The larger size of these vessels is better suited for the
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transportation of the major bulk commodities as well as certain minor bulk
commodities such as bauxite and phosphate. These vessels are the most frequently
used cargo vessel for grain.
CAPESIZE. The total Capesize fleet represents approximately 29% of the
total world dry bulk carrier tonnage in dwt. Capesize vessels are typically used
for long voyages and in the coal and iron ore trades.
In addition to the dry bulk carriers referred to above, the world fleet
also includes a small number of combination carriers. These ships can carry
either crude oil or dry bulk cargoes. Combination carriers are typically large
in size and compete principally against Capesize and Panamax vessels. With very
few vessels worldwide under 45,000 dwt, combination carriers represent an
insignificant part of the handysize fleet.
CARGO TYPES
Many different types of primary and finished goods are transported
worldwide as cargo. Seaborne transport consists of bulk carriers and container
ships. Bulk cargo in turn may be either wet or dry. Dry bulk cargo consists of
the major bulks, which are iron ore, coal and grain, and a wide variety of minor
bulk cargoes such as fresh products, iron and steel products, agricultural
products, ores, minerals and petcoke, fertilizers, bauxite and alumina, cement
and other construction materials and salt. Dry bulk carriers are generally
single deck ships which transport unpacked cargo which is poured, tipped or
placed into the holds of the ship.
The major bulk cargoes together accounted for approximately 57% of the bulk
carrier trade by volume in 1992. Capesize and Panamax bulk carriers accounted
for most of the iron ore and coal trade, while handysize and Panamax bulk
carriers accounted for approximately 48% and 48% of the grain trade,
respectively. The minor bulk cargoes accounted for approximately 43% of the dry
bulk carrier trade by volume in 1992 and approximately 78% of this trade was
handled by handysize dry bulk carriers in such period. Set forth below are some
of the characteristics of the principal cargoes carried by bulk carriers.
MAJOR BULKS
IRON ORE. Iron ore shipments were estimated at approximately 340 million
tons in 1993. The principal exporters are located in Brazil and Australia while
the principal importers are located in the European Union and Japan. Over 75% of
iron ore shipments is carried by Capesize vessels.
COAL. The two categories comprising this segment are steam (or thermal)
coal, which is used by power utilities, and coking (or metallurgical) coal,
which is used by steelmakers. The volume of steam coal was estimated at
approximately 200 million tons in 1993, while the volume of coking coal was
approximately 160 million tons in the same period. The principal exporters of
steam coal are Australia, South Africa and the United States while the principal
exporters of coking coal are Australia and the United States. The principal
importers of both steam coal and coking coal are located in the European Union
and Japan. Capesize vessels account for over 45% of combined coal shipments
while Panamaxes account for approximately 35%.
GRAIN. The grain trade includes wheat, flour, coarse grains (corn and
barley), soybeans and soybean meal. Although the annual volume of the grain
trade is subject to political factors and weather conditions, shipments have
averaged 200 million tons per year in the past two years. The principal
exporters are located in the United States. Canada, the European Union and
Australia while the principal importers are located in the Far East and the
former Soviet Union. Although there are many ports capable of handling large dry
bulk shipments of grain, almost half the international seaborne trade is carried
by vessels of less than 50,000 dwt. Panamax and Capesize vessels carry the
remainder.
MINOR BULK
There are also minor bulk cargoes which may be transported by the vessels
that the Company intends to acquire. These include forest products, iron and
steel products, agricultural products, fertilizers, ores, minerals and petcoke,
bauxite and alumina, cement and salt.
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DEMAND FOR AND SUPPLY OF DRY BULK CARRIERS.
DEMAND FACTORS. Due to the variety of cargo carried by dry bulk carriers,
demand for the services of dry bulk carriers is dependent on a number of
factors. Demand is affected by world and regional economic and political
conditions, developments in international trade, changes in seaborne and other
transportation patterns, weather patterns, crop yields, armed conflicts, port
congestion, canal closures and other diversions of trade. Generally, demand for
larger vessels is affected by trade patterns, crop yields, armed conflicts, port
congestion, canal closures and other diversions of trade. Generally, demand for
larger vessels is affected by trade patterns in a small number of commodities
while demand for smaller vessels is more diversified and is determined by trade
in a larger number of commodities, since larger ships carry fewer types of
cargoes, follow more clearly defined routes and are prevented by draft
restrictions from entering many ports.
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<PAGE>
MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND PROSPECTIVE DIRECTORS
The following table sets forth information regarding directors, executive
officers and prospective directors of the Company:
NAME AGE POSITION WITH THE COMPANY
- --------------------------- ---- --------------------------------------------
David E. Harrington, Jr.... 38 Chairman of the Board, President and Chief
Executive Officer
David R. Wheeler........... 43 Chief Financial Officer and Secretary and
Director
DAVID E. HARRINGTON, JR., has almost 20 years of experience in the shipping
industry with primary focus on the marketing of vessels, the identification and
securing of favorable terms for trade routes, vessel charters and the sale and
purchase of vessels.
In the 1980's, Mr. Harrington, then affiliated with Gulf Oil Corporation,
managed a fleet of 9 million deadweight tons and created the chartering
department of the subsidiary company Gulf Oil Trading Company (GOTCO). To
service this company's needs, he developed a fleet of 17 ships and chartered
vessels voyage-to-voyage.
Mr. Harrington continued with the GOTCO organization, managing their
shipping business until 1987 when he, together with a joint venture partner, a
predecessor company of Norex America, Inc., formed Norgulf Shipping, Limited
("Norgulf").
As a minority owner and Chief Executive Officer of Norgulf, Mr. Harrington
directed the company's growth from its inception of 4 vessels and as many
employees, to its peak in 1991 when it boasted 13 vessels and over 30 employees.
During only a 3 year period under Mr. Harrington's direction, Norgulf's revenues
rose from its first year level of just over $4 million to almost $60 million
while shareholders' equity rose from $800,000 to $10,500,000.
During the three year period since the hostile takeover of Norgulf, Mr.
Harrington has devoted substantially all of his time to the direction of the
activities of two Liberian shipping companies, Chemibulk, S.A. and Chemitank,
S.A. In this role, Mr. Harrington purchased two modern, highly sophisticated
chemical carriers which are presently trading on a profitable basis in the
chemical tanker market.
At the closing of this offering Mr. Harrington will enter into a five-year
employment agreement with the Company providing for his full-time services to
the Company for a salary of $150,000 per year.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
In 1992 Norex America, Inc. ("Norex") brought suit against Mr. Harrington
seeking recovery under guarantees executed by Mr. Harrington guaranteeing
certain indebtedness of Norgulf to Norex. Norex also caused Norgulf to file for
bankruptcy petition under Chapter 11 of the United States Bankruptcy Code in
1992.
Mr. Harrington filed affirmative defenses and counter-claims against Norex
alleging, among other things, usury, illegality of the notes, and wrongful
foreclosure. Norex was granted summary judgment on the Harrington guarantees on
August 25, 1993. An appellate decision was issued on October 6, 1994 reversing
the grant of summary judgment. A second decision on January 19, 1995 reinstated
the grant of summary judgment. Norex currently has a judgment against Mr.
Harrington in the amount of $2,500,000 plus interest, which Mr. Harrington has
not satisfied. The Company does not believe that Mr. Harrington's ability to
satisfy the judgment or lack thereof will have a detrimental effect on the
Company's operations or financial situation.
DAVID R. WHEELER graduated from Texas A&M University in 1975 with a B.A.
degree in Economics and a minor in Accounting. He began his professional career
with Haskins & Sells (now Deloitte & Touche)
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<PAGE>
in Houston, Texas. He became a Certified Public Accountant in 1977. During his
eleven years in public accounting, Mr. Wheeler was involved with various public
companies and gained experience in initial registrations and periodic reporting
to the Securities and Exchange Commission including multiple program
registrations under Form S-1 and auditing and reporting of registered
broker/dealer entities.
During the past five years, Mr. Wheeler has been involved in the crude
oil/refined products trading, international shipping and lubricants marketing
industries. During 1990 and 1991, he served as the Chief Financial Officer of
Norgulf Shipping Limited. During 1990, he simultaneously served as Chief
Financial Officer of Norex America, Inc. which, at that time, was the majority
shareholder of Norgulf Shipping Limited. During 1992, Mr. Wheeler was an
independent financial consultant working primarily on projects in South America,
Russia and Europe. During 1993 and 1994, Mr. Wheeler was employed by Gulf Oil
International, initially as Internal Auditor and subsequently as Regional
Manager in charge of that enterprises activities in Central America and the
Caribbean. His experiences have included such areas as recruitment of executive
and non-executive personnel, preparing business plans and budgets, performing
economic evaluations of international business opportunities and developing
overall corporate strategies. Mr. Wheeler has also been involved in arranging
international financing, negotiating company purchases and restructuring
corporate organizations.
EXECUTIVE COMPENSATION
The Company has not paid any executive compensation to date. Following the
offering Mr. Harrington will be paid a salary of $150,000 per year and Mr.
Wheeler a salary of $125,000 per year. In addition to their salaries, Messrs.
Harrington and Wheeler may be granted options to purchase common stock of the
Company under its stock option plan as determined by the Board of Directors.
Directors are elected annually and hold office until their successors are
elected and qualified. Officers serve at the pleasure of the Board of Directors.
The Company's Certificate of Incorporation and By-laws provide for the
elimination of certain liabilities of directors and for the indemnification of
officers and directors under certain circumstances. See "Description of
Securities -- Certain Provisions of Articles of Certificate and By-laws."
DIRECTORS FEES
The Company does not presently pay any directors fees.
CERTAIN TRANSACTIONS
In March 1995 a trust of which David E. Harrington, Jr. is the beneficiary
subscribed to 1,275,000 shares of the Company's common stock for the
consideration of $50,000.
On May 1, 1995, the Company entered into a management services compensation
agreement with Chemitank, S.A., a company controlled by David E. Harrington, Jr.
The agreement provides for the payment of $365,000 for resources and efforts in
the development of the Company's public offering through May 1, 1995. On May 1,
1995, the Company entered into a management services agreement with Chemitank,
S.A. to provide office space and administrative services, as needed and at cost,
from May 1, 1995 until such time as the Company's public offering is completed.
The latter agreement may be terminated by either party with five days written
notice.
Effective September 30, 1995, the Company issued 60,000 shares of its stock
to Chemitank, S.A. for the total consideration of $401,702. This amount
represents the Company's indebtedness to Chemitank, S.A., as recorded on its
balance sheet, as of September 30, 1995 in the total amount of $275,810 and a
stock subscription receivable of $125,892. The stock subscription receivable was
liquidated by Chemitank, S.A. paying for additional offering costs and by
providing management services for the Company during the three months ended
December 31, 1995.
On January 15, 1996, the Company issued 65,000 shares of Common Stock to
Chemitank, S.A. pursuant to a technical services agreement. In return,
Chemitank, S.A. agrees to provide technical market information from January 1,
1996 through the date of the public stock offering.
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<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of the Common Stock as of the date of this Prospectus, and as adjusted
to reflect the sale of the shares of Common Stock offered in connection with the
Prospectus, by each person known by the Company to beneficially own more than 5%
of the outstanding shares of Common Stock, each of the Company's directors, each
of the Named Officers and all directors as a group. The address for each person
named below is the Company's address.
The Shipholding International Management Trust (the "Trust"), a trust for
the benefit of David E. Harrington, Jr. owns 1,275,000 shares of the Company's
Common Stock.
Chemitank, S.A., an entity controlled by David E. Harrington, Jr., owns
125,000 shares of the Company's Common Stock. Chemitank, S.A., is registering in
the registration statement of which this prospectus is a part 96,000 shares of
the Company's Common Stock. The shares may be sold commencing three months after
the date of this prospectus at the rate of 11,000 shares per month, cumulative.
Such sales may be made in market transactions or in negotiated sales.
<TABLE>
<CAPTION>
PERCENT OF TOTAL AFTER
OFFERING
--------------------------
NAME NUMBER OF SHARES BEFORE OFFERING MINIMUM(1) MAXIMUM(2)
- ------------------------------------- ---------------- --------------- ----------- -----------
<S> <C> <C> <C> <C>
Trust for David E. Harrington, Jr.... 1,275,000 91% 60% 49%
Chemitank, S.A....................... 125,000 9% 6% 5%
All directors and executive officers
as a group (2 persons)............. 1,400,000 100% 66% 54%
</TABLE>
- ------------
(1) The number of shares deemed outstanding for purposes of determining the
percentages includes 706,000 shares of Common Stock included in the Units
which are being offered for sale by the Company in this Offering but does
not include an aggregate of up to 853,050 shares of Common Stock issuable
upon the exercise of: (i) the Series A and Series B Warrants included in the
Units; (ii) the options to be granted under the Company's 1995 Stock Option
Plan; (iii) the Underwriter's Warrant, and (iv) the Warrants included in the
Units issuable upon exercise of the Underwriter's Warrant. See "DILUTION."
(2) The number of shares deemed outstanding for purposes of determining the
percentages includes 1,180,000 shares of Common Stock included in the Units
which are being offered for sale by the Company in this Offering but does
not include an aggregate of up to 1,291,500 shares of Common Stock issuable
upon the exercise of: (i) the Series A and Series B Warrants included in the
Units; (ii) the options to be granted under the Company's 1995 Stock Option
Plan; (iii) the Underwriter's Warrant, and (iv) the Warrants included in the
Units issuable upon exercise of the Underwriter's Warrant. See "DILUTION."
DESCRIPTION OF SECURITIES
The following statements with respect to the Company's securities are
subject to the detailed provisions of the Company's Certificate of Incorporation
and By-laws which are filed as exhibits to the Registration Statement of which
this Prospectus is a part. See "Additional Information."
UNITS
Each Unit consists of (i) one share of Common Stock (ii) one Series A
Common Stock Purchase Warrant and (iii) one Series B Common Stock Purchase
Warrant.
COMMON STOCK
The Company is authorized to issue up to 10,000,000 shares of Common Stock,
par value $.001 per share. As of the date of the offering, 1,400,000 shares of
Common Stock are expected to be issued and outstanding, held by two shareholders
of record. Each holder of Common Stock is entitled to one vote per share for the
election of directors as well as on other matters, to dividends as and when
declared by the Company's Board of Directors, and upon liquidation to share in
the net assets of the Company pro rata in
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<PAGE>
accordance with his holdings. The Common Stock has no preemptive, redemption,
conversion or subscription rights, and all outstanding shares of Common Stock
are, and the shares of Common Stock offered by the Company hereby will be, fully
paid and nonassessable. For a period of one year following the completion of
this Offering, the prior consent of the Underwriter is required for any
issuances of Common Stock other than pursuant to exercises of warrants or
options.
REDEEMABLE WARRANTS
GENERAL
The Series A Warrants and Series B Warrants are to be issued in fully
registrable form under a Warrant Agreement (the "Warrant Agreement"). These
Warrants may be exercised upon surrender of the Warrant certificate on or prior
to the respective expiration dates (or earlier redemption dates) of such
Warrants at the offices of the Warrant Agent, with the Subscription Form on the
reverse side of the Warrant certificate completed and executed as indicated,
accompanied by payment of the full exercise price (by certified or bank check
payable to the order of the Company) for the number of shares with respect to
which the Warrants are being exercised. Shares issued upon exercise of these
Warrants and payment in accordance with the terms thereof will be fully paid and
nonassessable.
The Series A Warrants and Series B Warrants do not confer upon the
Warrantholders any voting or other rights of a shareholder of the Company. Upon
notice to the Warrantholders, the Company has the right to unilaterally reduce
the exercise price or extend the expiration date of the Warrants. Although this
right is intended to benefit Warrantholders, to the extent that the Company
exercises this right when the Warrants would otherwise be exercisable at a price
higher than the prevailing market price of the Common Stock, the likelihood of
exercise, and the resultant increase in the number of shares outstanding, may
impede or make more costly a change of control of the Company.
SERIES A WARRANTS
The Series A Warrants entitle the registered holder to purchase one share
of Common Stock for each two warrants held for $10.00 per share at any time
prior to 5:00 p.m. New York City time on the third anniversary of the date of
the closing of the Offering pursuant to this Prospectus.
The Company has a right to redeem all of the Series A Warrants at a price
of $.05 per Series A Warrant upon not less than 30 days' prior written notice at
any time after eighteen months from the date of this Prospectus, provided that
before any such redemption can take place, the closing bid price of the
Company's Common Stock in the over-the-counter market (or the last sale price
should the Common Stock be listed in an exchange) shall have averaged in excess
of $12 per share for 30 consecutive business days ending within 15 days of the
date of the notice of redemption. During the 30-day notice period, a holder
shall have the right to exercise his Series A Warrants.
The Series A Warrants provide for adjustment of the exercise price and for
a change in the number of shares issuable upon exercise to protect holders
against dilution in the event of a stock dividend, stock split, combination or
reclassification of the Common Stock or upon issuance of shares of Common Stock
at prices lower than the market price then in effect other than issuances upon
exercise of options granted to employees, directors and consultants to the
Company, or options to be granted under any Company stock option plan.
The Company has authorized the issuance of Series A Warrants. The Company
has reserved sufficient shares of Common Stock for issuance upon exercise of
such Series A Warrants. When delivered, such shares of stock will be fully paid
and nonassessable.
SERIES B WARRANTS
The Series B Warrants entitle the registered holder to purchase one share
of Common Stock for every four Warrants held at an exercise price of $12.00 per
share at any time after the date hereof and prior to 5:00 p.m. New York City
time on the fifth anniversary of the date of this Prospectus.
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<PAGE>
The Company has a right to redeem all of the Series B Warrants at a price
of $.05 per Class B Warrant upon not less than 30 days' prior written notice at
any time after eighteen months from the date of this Prospectus, provided that
before any such redemption can take place, the closing bid price of the
Company's Common Stock in the over-the-counter market (or the last sale price
should the Common Stock be listed on an exchange) shall have averaged in excess
of $14.40 per share for 30 consecutive business days ending within 15 days prior
to the date of the notice of redemption. During the 30-day notice period, a
holder shall have the right to exercise his Series B Warrants.
The Series B Warrants provide for adjustment of the exercise price and for
a change in the number of shares issuable upon exercise to protect holders
against dilution in the event of a stock dividend, stock split, combination or
reclassification of the Common Stock or upon issuance of shares of Common Stock
at prices lower than the market price then in effect other than issuances upon
exercise of options granted to employees, directors and consultants to the
Company, or option to be granted under any Company stock option plan.
The Company has authorized the issuance of Series B Warrants. The Company
has reserved sufficient shares of Common Stock for issuance upon exercise of
such Series B Warrants. When delivered, such shares of stock will be fully paid
and nonassessable.
CERTAIN MARKET INFORMATION
The Company intends to apply for listing of the Common Stock and Warrants
on the NASDAQ (the Automated Quotation System of the National Association of
Security Dealers, Inc.). There can be no assurance that such application will be
accepted.
The Offering is the initial public offering of the Company's securities,
and, accordingly, there is no public trading market for its securities at the
present time. There can be no assurance that a public trading market will ever
develop or, if one develops, that it will be maintained. Although it has no
legal obligation to do so, the Underwriter from time to time may become a market
maker and otherwise effect transactions in the Company's securities (and the
Underwriter has indicated to the Company that it intends to do so). The
Underwriter, if it participates in the market, may be a dominating influence in
any market that might develop for any of the Company's securities. The price and
liquidity of the Company's securities may be significantly affected by the
degree, if any, of the Underwriter's participation in the market. Such
activities, if commenced, may be discontinued at any time or from time to time.
For further information with respect to the Underwriter, see "Risk
Factors -- Underwriter's Influence on the Market."
UNDERWRITING
THE OFFERING
R.M. Stark & Co., Inc. (the "Underwriter") has agreed to offer the Units
on a "best efforts, all or none basis" as to the first 706,000 Units and on a
"best efforts" basis as to the remaining 474,000 Units.
The Underwriter has advised the Company that it proposes to offer the Units
to the public at an offering price of $8.50 per Unit, and at such price less a
concession not in excess of $0.85 per Unit to certain dealers who are members of
the National Association of Securities Dealers, Inc., of which the Underwriter
may allow and such dealers may reallow concessions not in excess of $ per
Unit to certain other dealers. The public offering price and concession and
discount may be changed by the Underwriter after the initial public offering.
No Units are reserved for sale to specific individuals designated by the
Company and neither the Underwriter nor the Company intends to enter into such
an arrangement at this time. The Company, however, may provide the names of
persons who may be interested in purchasing shares and the Underwriter will, in
all likelihood, contact those persons in the course of its normal sales
activities.
The Company has agreed to pay to the Underwriter a nonaccountable expense
allowance equal to 3% of the total proceeds of this Offering, or $180,030 if the
minimum offering is completed and $300,900 if the maximum offering is completed,
of which $25,000 has already been paid.
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<PAGE>
The Company has agreed with the Underwriter that for a period of one year
after the effective date the Company will not issue any shares of Common Stock
not contemplated by the registration statement of which this prospectus is part
without the consent of the Representative.
The Underwriting Agreement provides for indemnification between the Company
and the Underwriter against certain liabilities in connection with the
Registration Statement, including liabilities under the Act.
Prior to this Offering, there has been no public market for the Company's
Common Stock, Series A Warrants, or Series B Warrants. The Offering or exercise
prices of such securities being offered hereby was determined by negotiation
between the Company and the Underwriter. Factors considered in determining such
prices include the history of and the prospects for the industry in which the
Company competes, the future prospects of the Company, the ability of the
Company's management, the projected earnings, net worth and financial condition
of the Company, the general condition of the securities market at the time of
this Offering, and the prices of similar securities of comparable companies.
CERTAIN ARRANGEMENTS WITH THE UNDERWRITER
At the closing of this Offering, the Company will issue to or as directed
by the Underwriter, for nominal consideration, a warrant (the "Underwriter's
Warrant") to purchase a number of Units equal to 10% of the number of Units
sold in the Offering. The Underwriter's Warrant will be exercisable for a five-
year period commencing from the date of this Prospectus, at an exercise price of
165% of the initial public offering price per Unit or $14.02. The Underwriter's
Warrant will not be transferable prior to one year after its issuance except
that they may be transfered to the Underwriters, selling group members, and
their officers and/or partners.
The Underwriter's Warrant will contain anti-dilution provision providing
for appropriate adjustment in the event of any recapitalization,
reclassification, stock dividend, stock split or similar transaction. The
Underwriter's Warrant does not entitle the Underwriter to any rights as a
shareholder of the Company until the Underwriter's Warrant is exercised and
shares of Common Stock are purchased thereunder.
The Underwriter's Warrant and the securities issuable thereunder may not be
offered for sale to the public except in compliance with the applicable
provisions of the Act. The Company has agreed that, if it shall cause a
post-effective amendment to the Registration Statement of which this Prospectus
is a part, or a new registration statement or offering statement under
Regulation A, to be filed with the Commission, the holder(s) of the
Underwriter's Warrant shall have the right during the life of the Underwriter's
Warrant and for an additional two years to include therein for registration the
securities issuable upon exercise of the Underwriter's Warrant at no expense to
the holder(s). Additionally, the Company has agreed that, upon demand by the
holder(s) of at least 50% of the Underwriter's Warrant, made on no more than two
separate occasions during the exercise period of the Underwriter's Warrant, the
Company shall register the Underwriter's Warrant and any of the securities
issuable upon exercise thereof, the first such registration to be at the
Company's expense and the second at the expense of the holder(s).
For the period during which the Underwriter's Warrant is exercisable, the
holder or holders will have the opportunity to profit from a rise in the market
value of the Company's Common Stock, with a resulting dilution in the interests
of the other shareholders of the Company. The holder or holders of the
Underwriter's Warrant can be expected to exercise it at a time when the Company
would, in all likelihood, be able to obtain any needed capital from an offering
of its unissued Common Stock on terms more favorable to the Company than those
provided for in the Underwriter's Warrant. Such facts may adversely affect the
terms on which the Company can obtain additional financing. To the extent that
the Underwriter realizes any gain from the resale of the Underwriter's Warrant
or the securities issuable thereunder, such gain may be deemed additional
underwriting compensation under the Act.
The Company and the Underwriter will enter into a consulting agreement on
or about the date of this Prospectus pursuant to which the Underwriter will
agree to perform consulting services relating to managerial, financial service
and shareholder relations matters upon the request of the Company's President
for a period of one year for a fee equal to 1% of the gross proceeds of the
offering.
27
<PAGE>
For a period of 36 months after the date of this Prospectus, the Company
will allow an observer designated by the Underwriter to attend all meetings of
the Company's Board of Directors. The observer will be paid the same annual
retainer and meeting fees as the Company's non-employee directors and will be
entitled to indemnification against any claims arising out of his or her
participation in such meetings.
The Company and the holders of all of the Common Stock currently
outstanding have agreed that for a period of 24 months from the date of this
Prospectus each such holder will not sell, assign, hypothecate or pledge any
shares of Common Stock owned by him or purchasable under any option, warrant or
convertible debt owned by it without the prior written consent of the
Representative, except that Chemitank, S.A. is registering 96,000 shares which,
commencing 3 months after the date of this prospectus, may be sold at the rate
of 11,000 shares per month, cumulative.
LEGAL MATTERS
Certain legal matters with respect to the shares of Common Stock included
in the Units offered hereby will be passed upon for the Company by Jack H.
Halperin, Esq., New York, New York. The firm of Lester Morse, P.C. has served as
counsel to the Underwriters in this offering.
EXPERTS
The Company's financial statements as of December 31, 1995 included in this
Prospectus has been audited by Jack Sisk & Co., independent auditors, as stated
in their report appearing herein and elsewhere in the Registration Statement,
and have been so included in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing. The June 30, 1996
financial statements included in this Prospectus are unaudited.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (the "Registration
Statement") under the Securities Act with respect to the securities offered
hereby. This Prospectus, which is part of the Registration Statement, does not
contain all the information set forth in the Registration Statement and the
exhibits and schedules thereto, certain items of which are omitted in accordance
with the rules and regulations of the Commission. For further information with
respect to the Company and the securities, reference is hereby made to the
Registration Statement and such exhibits and schedules filed as a part thereof,
which may be inspected, without charge, at the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the regional offices of the Commission located at 7 World
Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of all or any portion of the
Registration Statement may be obtained from the Public Reference Section of the
Commission, upon payment of prescribed fees.
Statements made in this Prospectus as to the contents of any contract,
agreement or other document referred to are not necessarily complete. With
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference.
28
<PAGE>
SHIPHOLDING INTERNATIONAL, INC.
INDEX TO FINANCIAL STATEMENTS
PAGE
----
Audited Financial Statements -- December
31, 1995
Report of Independent Certified
Public Accountants ................................... F-2
Balance Sheet ......................................... F-3
Statement of Operations and
Accumulated Deficit .................................. F-4
Statement of Stockholder's
Equity ............................................... F-5
Statement of Cash Flows ............................... F-6
Notes to Financial Statements ......................... F-7 - F-10
Unaudited Financial Statements -- June
30, 1996
Report of Independent Certified
Public Accountants ................................... F-11
Balance Sheet ......................................... F-12
Statement of Operations and
Accumulated Deficit .................................. F-13
Statement of Stockholder's
Equity ............................................... F-14
Statement of Cash Flows ............................... F-15
Notes to Financial Statements ......................... F-16 - F-19
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Shipholding International, Inc.
We have audited the balance sheet of Shipholding International, Inc. as of
December 31, 1995, and the related statements of operations and accumulated
deficit, stockholders' equity, and cash flows for the period then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Shipholding International,
Inc. at December 31, 1995, and the results of its operations and its cash flows
for the period then ended, in conformity with generally accepted accounting
principles.
JACK SISK & CO.
Houston, Texas
February 29, 1996
F-2
<PAGE>
SHIPHOLDING INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1995
ASSETS
Current Assets:
Cash............................ $ 994
Furniture and Equipment, at Cost
(Notes 1 and 3):
Office Furniture and
Equipment...................... $ 23,828
Less accumulated depreciation... 2,120 21,708
----------- -----------
Other Assets:
Deferred Offering Costs (Notes 1
and 3)......................... $ 103,782
Organizational Costs (Notes 1
and 3)......................... 531 104,313
----------- -----------
Total assets............... $ 127,015
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Commitments and Contingencies (Note
5)
Stockholders' Equity (Notes 3, 4, and 8):
Common stock -- $.001 par, 10,000,000 shares authorized; 1,335,000 shares
issued and outstanding consideration received March 30 and September
30, 1995)...................... $ 1,335
Capital in excess of par
value.......................... 450,367
Deficit accumulated during the
development stage.............. (324,687) $ 127,015
----------- -----------
Total Liabilities and
Stockholders' Equity......... $ 127,015
===========
See accompanying notes and accountant's report.
F-3
<PAGE>
SHIPHOLDING INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
FOR THE PERIOD FROM INCEPTION (MARCH 6, 1995)
THROUGH DECEMBER 31, 1995
Expenses:
Management expenses................ $ 318,317
Interest expense................... 4,250
Depreciation....................... 2,120
------------
Loss from operations and deficit
accumulated during the development
stage................................. $ (324,687)
Per share (note 1):
Loss from operations during the
development stage................. $ (0.24)
============
See accompanying notes and accountant's report.
F-4
<PAGE>
SHIPHOLDING INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDER'S EQUITY
FOR THE PERIOD FROM INCEPTION (MARCH 6, 1995)
THROUGH DECEMBER 31, 1995
<TABLE>
<CAPTION>
COMMON STOCK
------------------- CAPITAL
NUMBER IN EXCESS
OF PAR OF PAR ACCUMULATED
SHARES VALUE VALUE DEFICIT
--------- ------ --------- -----------
<S> <C> <C> <C> <C>
Issuance of 1,000 shares of $.001 par
common stock in exchange for $50,000
of organizational and deferred
offering costs (Notes 3 and 4)........ 1,000 $ 1 $ 49,999 $ 0
Deficit accumulated during the
development stage..................... 0 0 0 (324,687)
Issuance of 47 shares of $.001 par
common stock in exchange for a related
entity account payable, note payable,
and stock subscription as of September
30, 1995 (Notes 3 and 8).............. 47 0 401,702 0
Stock split of 1,333,953 shares of $.001
par common stock on February 29, 1996
after increase in authorized shares to
10,000,000 (Note 8)................... 1,333,953 1,334 (1,334) 0
--------- ------ --------- -----------
Totals.................................. 1,335,000 $1,335 $ 450,367 $(324,687)
========= ====== ========= ===========
</TABLE>
See accompanying notes and accountant's report.
F-5
<PAGE>
SHIPHOLDING INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (MARCH 6, 1995)
THROUGH DECEMBER 31, 1995
Cash flows from operating activities:
Loss from operations............ $ (324,687)
Adjustments to reconcile loss
from operations to net cash:
Depreciation............... 2,120
Increase in paid in capital
attributable to
operations................ 322,561
Net cash used by operating
activities..................... $ (6)
Cash flows from financing activities:
Cash advance from stockholder... 1,000
------------
Net increase in cash and ending cash
balance............................ $ 994
============
See accompanying notes and accountant's report.
F-6
<PAGE>
SHIPHOLDING INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
LINE OF BUSINESS
The Company intends to engage in the ownership and charter of ocean-going
vessels for the transport of dry cargo freight. The proceeds of the pending
public offering will be used primarily to fund the acquisition of an initial
fleet of two to three vessels.
FURNITURE AND EQUIPMENT
Office furniture and equipment are recorded at cost to the Company which
was determined by independent appraisal of furniture and equipment previously
purchased by a related company. Assets are depreciated on a straight-line basis
over their estimated useful lives of 5 to 10 years.
DEFERRED OFFERING COSTS
These costs are carried as an asset until the closing of the related
initial public stock offering. At that time these, and subsequent costs of the
offering, will be deducted from the offering proceeds. The composition of these
costs as of December 31, 1995 are as follows:
Underwriting costs................... $ 25,000
Legal and accounting fees............ 65,146
Filing fees and related expense...... 13,636
----------
$103,782...
==========
AMORTIZATION
Organizational costs will be amortized over sixty months beginning at the
end of development stage activities. Annual amortization will be $106.
NET INCOME PER SHARE
Net income per share is computed by dividing (a) the net loss from
operations by (b) the number of common shares outstanding.
2 -- DEVELOPMENT STAGE OPERATIONS
The Company was incorporated on March 6, 1995. Its activities through
December 31, 1995 have consisted primarily of raising capital, obtaining
financing for preliminary expenditures, and administrative activities.
F-7
<PAGE>
SHIPHOLDING INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
3 -- CONVERSION OF DEBT TO EQUITY
ACCOUNT PAYABLE -- RELATED ENTITY. As of September 30, 1995, the Company
had accumulated an open account payable to a related entity. This payable was
converted to equity as described in the last paragraph of Note 3. The
composition of the converted account payable is summarized as follows:
Deferred offering costs.............. $ 103,137
Organization costs................... 531
Management fees...................... 193,064
Interest on management fees.......... 3,258
Cash advanced to the company......... 1,000
----------
Balance of advances to date.......... $ 300,990
Less portion allocated to stock and
capital as of March 30, 1995....... 50,000
----------
Total account payable before
sale of stock and conversion of
debt
described below............... $ 250,990
==========
NOTE PAYABLE -- RELATED ENTITY. On May 1, 1995, the Company entered into an
asset purchase agreement with a related company. It provides for the acquisition
of $ 23,828 of furniture and office equipment. The amount bears interest at the
rate of ten (10%) percent per annum and is payable upon the completion of the
public offering or the expiration of six months, whichever occurs first. The
note balance and accrued interest totaled $24,820 as of September 30, 1995.
On January 15, 1996 and effective as of September 30, 1995, the Company
issued 47 (60,000 after stock split) shares of common stock for the following
consideration:
Account payable -- related entity.... $ 250,990
Note payable -- related entity....... 24,820
Stock subscription receivable........ 125,892
----------
Total consideration............. $ 401,702
==========
The stock subscription receivable was liquidated by the subscriber paying
for additional offering costs and by providing management services for the
Company during the three months ended December 31, 1995.
4 -- STOCKHOLDERS' EQUITY
On January 1, 1995, a related company transferred and delivered its right
and title to certain deferred offering costs, in the total amount of $50,000, to
a trust, of which the Company's President is the beneficiary. The trustee was
directed to invest the corpus of the trust in the purchase of 1,000 shares of
common stock of Shipholding International, Inc. and for no other purpose. Upon
incorporation and ratification by the board of directors on March 30, 1995, the
trust acquired 1,000 (1,275,000 after stock split) shares of the Company's
common stock.
On January 15, 1996, the Company issued an additional 47 (60,000 after
stock split) shares of stock to a related entity in exchange for consideration
described in Note 3.
5 -- CONTINGENCIES AND COMMITMENTS
On July 23, 1994, a related company entered into an agreement with a
registered broker-dealer to undertake a public offering of securities for the
Company. Among other things, the agreement provides for
F-8
<PAGE>
SHIPHOLDING INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
payments in the event the offering does not occur. In the event the underwriter
elects not to proceed with the offering, the underwriter is to be reimbursed for
its out-of-pocket expenses up to an aggregate of $75,000, less amounts
previously paid. If the Company elects not to proceed with the offering, the
underwriter shall be paid $150,000, less amounts previously paid. As of December
31, 1995, $25,000 of the deferred offering costs paid by the related company
would apply to either of these events. This agreement is to be superseded by a
subsequent underwriting agreement described more fully in Note 8.
On September 13, 1994, the Company's President engaged an attorney to
provide certain legal services incident to the public offering of the Company's
securities. The engagement provided for the payment of an initial retainer of
$22,500, a fee of $15,000 upon registration, and a fee of $50,000 upon closing
of the offering. An expense advance of $3,000 was provided for at the onset of
the engagement. As of December 31, 1995, payments totaling $40,500 have been
made and are included in the total of deferred offering costs. Upon closing of
the offering, the Company will be obligated to pay the remaining fee of $50,000.
On May 1, 1995, the Company entered into a management services compensation
agreement with a related company. The agreement provides for the payment of
$365,000 for resources and efforts in the development of the Company's public
offering through May 1, 1995. This amount is payable only if the public offering
of the Company's shares is successful. Advances are to bear interest at the rate
of ten (10%) percent per annum from May 1, 1995. All principal and interest to
be paid under this agreement are to be paid from operating revenues and not from
the proceeds of any present or future offering or paid in capital. The amount of
contingent accrued interest as of December 31, 1995 is $24,333.
On May 1, 1995, the Company entered into a management services agreement
with a related company to provide office space and administrative services, as
needed and at cost, from May 1, 1995 until such time as the Company's public
offering is completed. The agreement may be terminated by either party with five
days written notice. Amounts payable under this agreement bear interest at the
rate of ten (10%) percent per annum and are to be paid from operating revenues.
Amounts payable under this contract through the period ending December 31, 1995,
have been converted to consideration in exchange for stock as described in Note
3.
6 -- RELATED PARTY TRANSACTIONS
The related company referred to in the preceding notes to financial
statements is a company which is controlled by the Company's President. As
indicated in Notes 3, 4, 5, and 8, the related entity has advanced cash, paid
expenses, provided management and technical services for the benefit of the
Company and converted this debt to equity.
In addition, the Company is contingently liable, as described in Note 5,
paragraph 3, to the related entity in the amount of $389,333 as of December 31,
1995.
7 -- NONCASH INVESTING AND FINANCING TRANSACTIONS
Noncash investing and financing transactions consist of the acquisition of
all the assets of the Company in the amount of $128,141 and the total cost of
management services in the amount of $322,561.
8 -- SUBSEQUENT EVENTS
On January 15, 1996, and effective as of September 30, 1995, the Company
issued 47 (60,000 after stock split) shares of common stock incident to the sale
of stock and conversion of debt described more fully in Note 3.
F-9
<PAGE>
SHIPHOLDING INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
On January 15, 1996, the Company issued 51 (65,000 after stock split)
shares of common stock to a related entity pursuant to a technical services
agreement. In return, the related entity agreed to provide technical market
information from January 1, 1996 through the date of the public stock offering.
On February 29, 1996, by amending its articles of incorporation, the
Company authorized a 1,275 for one stock split and increased the number of its
authorized shares to 10 million. The stock split has been given retroactive
treatment in the accompanying financial statements and all amounts disclosed
have taken this stock split into consideration.
During February, 1996, the Company and the underwriter verbally agreed to a
draft of a new underwriting agreement. The agreement is to become effective upon
closing or the initial offering of stock to the public, whichever occurs first.
The major financial tenets of the agreement, excluding the offering itself, are
summarized as follows:
The Company is to pay all expenses incident to the offering.
At closing, the Company will pay the underwriter 3% of the gross
proceeds of the offering, $25,000 of which has been paid in advance, for
general expenses of the underwriter related to the offering.
On the effective date, the Company is to retain the underwriter as a
management and financial consultant for a one-year period. The fee for
these services is $150,000 payable in advance on the closing date.
The underwriter may terminate the agreement before the effective date.
Upon such termination, the Company would be liable for the payment of
expenses incurred to date by the underwriter, after giving credit for the
$25,000 paid.
The Company has granted a 10% discount to the underwriter from the public
offering price. In addition, the underwriter has been granted warrants to
purchase 100,000 units. Each unit is comprised of one share of common stock and
two common stock purchase warrants.
F-10
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Shipholding International, Inc.
We have compiled the accompanying balance sheet of Shipholding
International, Inc. as of June 30, 1996, and the related statements of
operations and accumulated deficit, stockholders' equity, and cash flows for the
period then ended and for the period from March 6, 1995 (inception), to June 30,
1996, in accordance with Statements on Standards for Accounting and Review
Services issued by the American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
JACK SISK & CO.
Houston, Texas
August 7, 1996
F-11
<PAGE>
SHIPHOLDING INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
JUNE 30, 1996
ASSETS
Current assets:
Cash............................ $ 956
Prepaid expenses (Note 4)....... 145,166
-----------
Total current assets....... $ 146,122
Furniture and equipment, at cost
(Notes 1 and 3):
Office furniture and
equipment...................... 23,828
Less accumulated depreciation... 3,710 20,118
----------- -----------
Other assets:
Deferred offering costs (Notes 1
and 3)......................... $ 142,008
Organizational costs (Notes 1
and 3)......................... 531 142,539
----------- -----------
Total assets............... $ 308,779
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable -- related
party (Notes 5 and 6).......... 273,067
Accrued interest (Note 5)....... 5,882
-----------
Total current
liabilities.................. $ 278,949
Contingencies and Commitments (Note
5)
Stockholders' equity (Notes 3 and 4):
Common stock -- $.001 par,
10,000,000 shares authorized;
1,400,000 shares issued and
outstanding.................... 1,400
Capital in excess of par
value.......................... 885,802
Deficit accumulated during the
development stage.............. (857,372) 29,830
----------- -----------
Total liabilities and
stockholders' equity.... $ 308,779
===========
See accompanying notes and accountant's report.
F-12
<PAGE>
SHIPHOLDING INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
FOR THE SIX MONTHS ENDING JUNE 30, 1996 AND
FOR THE PERIOD FROM INCEPTION (MARCH 6, 1995)
THROUGH JUNE 30, 1996
YEAR INCEPTION
TO DATE TO DATE
------------ ------------
Expenses:
Management expenses............. $ 525,213 $ 843,530
Interest expense................ 5,882 10,132
Depreciation.................... 1,590 3,710
Loss from operations and deficit
accumulated during the development
stage.............................. $ (532,685) $ (857,372)
------------ ------------
Per share (Note 1):
Loss from operations during the
development stage.............. $ (0.38) $ (0.61)
============ ============
See accompanying notes and accountant's report.
F-13
<PAGE>
SHIPHOLDING INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION (MARCH 6, 1995)
THROUGH JUNE 30, 1996
<TABLE>
<CAPTION>
COMMON STOCK
--------------------- CAPITAL
NUMBER IN EXCESS
OF PAR OF PAR ACCUMULATED
SHARES VALUE VALUE DEFICIT
---------- --------- --------- -----------
<S> <C> <C> <C> <C>
Issuance of 1,000 shares of $ .001
par common stock (Notes 3 and 4)... 1,000 $ 1 $ 49,999 $ 0
Issuance of 47 shares of $ .001 par
common stock (Notes 3 and 4)....... 47 0 401,702 0
Stock split (Note 4)................. 1,333,953 1,334 (1,334) 0
Deficit for the period ending
December 31, 1995.................. 0 0 0 (324,687)
---------- --------- --------- -----------
Balance at December 31, 1995......... 1,335,000 $ 1,335 $ 450,367 $(324,687)
Issuance of 65,000 shares of $.001
par common stock (Note 4).......... 65,000 65 435,435 0
Deficit for the period ending June
30, 1996........................... 0 0 0 (532,685)
---------- --------- --------- -----------
Balance at June 30, 1996............. 1,400,000 $ 1,400 $ 885,802 $(857,372)
========== ========= ========= ===========
</TABLE>
See accompanying notes and accountant's report.
F-14
<PAGE>
SHIPHOLDING INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDING JUNE 30, 1996 AND
FOR THE PERIOD FROM INCEPTION (MARCH 6, 1995)
THROUGH JUNE 30, 1996
YEAR INCEPTION
TO DATE TO DATE
------------ ------------
Cash flows from operating activities:
Loss from operations............... $ (532,685) $ (857,372)
Adjustments to reconcile loss from
operations to net cash:
Depreciation.................. 1,590 3,710
Increase in accounts
payable................... 273,067 273,067
Increase in accrued
interest.................. 5,882 5,882
Increase in paid in capital
attributable to
operations................ 252,108 574,669
------------ ------------
Net cash used by operating
activities........................ (38) (44)
Cash flows from financing activities:
Cash advance from stockholder...... 1,000
------------ ------------
Net increase (decrease) in cash......... (38) 956
Beginning cash balance.................. 994 0
------------ ------------
Ending cash balance..................... $ 956 $ 956
============ ============
See accompanying notes and accountant's report.
F-15
<PAGE>
SHIPHOLDING INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
LINE OF BUSINESS
The Company intends to engage in the ownership and charter of ocean-going
vessels for the transport of dry cargo freight. The proceeds of the pending
public offering will be used primarily to fund the acquisition of an initial
fleet of two to four vessels.
FURNITURE AND EQUIPMENT
Office furniture and equipment are recorded at cost to the Company which
was determined by independent appraisal of furniture and equipment previously
purchased by a related company. Assets are depreciated on a straight-line basis
over their estimated useful lives of 5 to 10 years.
DEFERRED OFFERING COSTS
These costs are carried as an asset until the closing of the related
initial public stock offering. At that time these, and subsequent costs of the
offering, will be deducted from the offering proceeds. The composition of these
costs as of June 30, 1996 is as follows:
Underwriting costs...................... $ 25,000
Legal and accounting fees............... 94,125
Filing fees and related expense......... 22,883
----------
Total deferred offering costs...... $ 142,008
==========
AMORTIZATION
Organizational costs will be amortized over sixty months beginning at the
end of development stage activities. Annual amortization will be $106.
NET INCOME PER SHARE
Net income per share is computed by dividing (a) the net loss from
operations by (b) the number of common shares outstanding.
2 -- DEVELOPMENT STAGE OPERATIONS
The Company was incorporated on March 6, 1995. Its activities through June
30, 1996 have consisted primarily of raising capital, obtaining financing for
preliminary expenditures, and administrative activities.
F-16
<PAGE>
SHIPHOLDING INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1996
3 -- CONVERSION OF DEBT TO EQUITY
ACCOUNT PAYABLE -- RELATED ENTITY. As of September 30, 1995, the Company
had accumulated an open account payable to a related entity. This payable was
converted to equity as described in the last paragraph of Note 3. The
composition of the converted account payable is summarized as follows:
Deferred offering costs................. $ 103,137
Organization costs...................... 531
Management fees......................... 193,064
Interest on management fees............. 3,258
Cash advanced to the company............ 1,000
----------
Balance of advances to date............. 300,990
Less portion allocated to stock and
capital as of March 30, 1995.......... 50,000
----------
Total account payable before sale
of stock and conversion of debt
described below.................. $ 250,990
==========
NOTE PAYABLE -- RELATED ENTITY. On May 1, 1995, the Company entered into an
asset purchase agreement with a related company. It provides for the acquisition
of $23,828 of furniture and office equipment. The amount bears interest at the
rate of ten (10%) percent per annum and is payable upon the completion of the
public offering or the expiration of six months, whichever occurs first. The
note balance and accrued interest totaled $24,820 as of September 30, 1995. This
note, together with interest, was converted to equity as described in the last
paragraph of Note 3.
On January 15, 1996 and effective as of September 30, 1995, the Company
issued 47 (60,000 after subsequent stock split) shares of common stock for the
following consideration:
Account payable -- related entity....... $ 250,990
Note payable -- related entity.......... 24,820
Stock subscription receivable........... 125,892
----------
Total consideration................ $ 401,702
==========
The stock subscription receivable was liquidated by the subscriber paying
for additional offering costs and by providing management services for the
Company during the three months ended December 31, 1995.
4 -- STOCKHOLDERS' EQUITY
On January 1, 1995, a related company transferred and delivered its right
and title to certain deferred offering costs, in the total amount of $50,000, to
a trust, of which the Company's President is the beneficiary. The trustee was
directed to invest the corpus of the trust in the purchase of 1,000 shares of
common stock of Shipholding International, Inc. and for no other purpose. Upon
incorporation and ratification by the board of directors on March 30, 1995, the
trust acquired 1,000 (1,275,000 after stock split) shares of the Company's
common stock.
On January 15, 1996, and effective as of September 30, 1995, the Company
issued 47 (60,000 after subsequent stock split) shares of common stock incident
to the sale of stock and conversion of debt described more fully in Note 3. The
total consideration received was $401,702.
On January 15, 1996, the Company issued 51 (65,000 after subsequent stock
split) shares of common stock to a related entity pursuant to a technical
services agreement. In return, the related entity agreed to
F-17
<PAGE>
SHIPHOLDING INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1996
provide technical market information from January 1, 1996 through the date of
the public stock offering. The valuation of the shares issued was based on the
value per share of the debt conversion in the preceding paragraph. Total
consideration for the stock was calculated to be $435,500. The unamortized
prepaid technical services at June 30, 1996 totalled $145,166.
On February 29, 1996, by amending its articles of incorporation, the
Company authorized a 1,275 for one stock split and increased the number of its
authorized shares to 10 million.
5 -- CONTINGENCIES AND COMMITMENTS
On September 13, 1994, the Company's President engaged an attorney to
provide certain legal services incident to the public offering of the Company's
securities. The engagement provided for the payment of an initial retainer of
$22,500, a fee of $15,000 upon registration, and a fee of $50,000 upon closing
of the offering. As of June 30, 1996, payments totaling $37,500 have been made
in accordance with this agreement and that amount is included in the total of
deferred offering costs.
On May 1, 1995, the Company entered into a management services compensation
agreement with a related company. The agreement provides for the payment of
$365,000 for resources and efforts in the development of the Company's public
offering through May 1, 1995. This amount is payable only if the public offering
of the Company's shares is successful. Advances are to bear interest at the rate
of ten (10%) percent per annum from May 1, 1995. All principal and interest to
be paid under this agreement are to be paid from operating revenues and not from
the proceeds of any present or future offering or paid in capital. The amount of
contingent accrued interest as of June 30, 1996 is $42,583.
On May 1, 1995, the Company entered into a management services agreement
with a related company to provide office space and administrative services, as
needed and at cost, from May 1, 1995 until such time as the Company's public
offering is completed. The agreement may be terminated by either party with five
days written notice. Amounts payable under this agreement bear interest at the
rate of ten (10%) percent per annum and are to be paid from operating revenues.
Amounts payable under this contract through the period ending December 31, 1995,
have been converted to consideration in exchange for stock as described in Note
3. Amounts payable under this contract for the six months ending June 30, 1996
include $234,841 in accounts payable and $4,958 in accrued interest.
On June 24, 1996, the Company entered into an agreement with a related
company to repay additional deferred offering costs and related expenses paid on
its behalf. Amounts payable under this agreement bear interest at the rate of
ten (10%) percent per annum and are to be paid upon the consummation of the
offering. Amounts payable under this contract for the six months ending June 30,
1996 include $38,226 in accounts payable and $924 in accrued interest.
On June 24, 1996, the Company and the underwriter executed an amended
letter of intent which superseded all previous agreements between the Company,
the underwriter, and a related company regarding the public offering of
securities for the Company. The major financial tenets of the agreement,
excluding the offering itself, are summarized as follows:
At closing, the Company will pay the underwriter 3% of the gross
proceeds of the offering, $25,000 of which has been paid in advance, for
general expenses of the underwriter related to the offering. On the
effective date, the Company is to retain the underwriter as a management
and financial consultant for a one-year period. The fee for these services
is $150,000 payable in advance on the closing date.
Each party releases the other, and the party related to the Company,
from all claims of any prior agreements, whether written or oral.
F-18
<PAGE>
SHIPHOLDING INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1996
In the event that the offering is not completed, the Company shall
reimburse the underwriter's expenses on an accountable basis.
6 -- RELATED PARTY TRANSACTIONS
The related company referred to in the preceding notes to financial
statements is a company which is controlled by the Company's President. As
indicated in Notes 3, 4, and 5, the related entity has advanced cash, paid
expenses, provided management and technical services for the benefit of the
Company and converted most of the debt related to these transactions to equity.
In addition, the Company is contingently liable, as described in Note 5,
paragraph 2, to the related entity in the amount of $407,583 as of June 30,
1996.
7 -- NONCASH INVESTING AND FINANCING TRANSACTIONS
Noncash investing and financing transactions from date of inception to June
30, 1996 are summarized as follows:
Acquisition of furniture and
fixtures............................. $ 23,828
Payment of deferred offering costs
through December 31, 1995.......... 103,782
Payment of organization costs........ 531
Management services provided for the
period May 1, 1995 through December
31, 1995........................... 322,561
Technical services to be provided
from January 1, 1996 through the
date of the public stock
offering........................... 435,500
----------
Total noncash acquisitions and
transactions......................... $ 886,202
==========
Total value of common stock issued... $ 1,400
Total capital in excess of par
value................................ 885,802
----------
887,202
Less cash received................... 1,000
----------
Net financing of noncash
transactions......................... $ 886,202
==========
F-19
<PAGE>
[GRAPHICS DEPICTING: BULK CARRIER AT ANCHOR
AWAITING DISCHARGE; MULTI-PURPOSE BULK CARRIER WITH
CONTAINERS ON DECK; GENERAL CARGO VESSELS AT ANCHOR IN HONG KONG HARBOR]
<PAGE>
================================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY TO ANY PERSON IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
PAGE
----
Prospectus Summary ........................................................ 4
The Company ............................................................... 4
The Offering .............................................................. 5
Risk Factors .............................................................. 7
Use of Proceeds ........................................................... 12
Dividend Policy ........................................................... 12
Capitalization ............................................................ 13
Dilution .................................................................. 14
Business .................................................................. 15
Management ................................................................ 22
Certain Transactions ...................................................... 23
Principal Stockholders .................................................... 24
Underwriting .............................................................. 26
Legal Matters ............................................................. 28
Experts ................................................................... 28
Additional Information .................................................... 28
Index to Consolidated Financial Statements ................................ F-1
1,180,000 UNITS
[SHIPHOLDING INTERNATIONAL, INC. LOGO]
COMMON STOCK
================================================================================
-------------------
PROSPECTUS
-------------------
R. M. STARK & CO., INC.
, 1996
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
The following exhibits are filed as a part of this Amendment No. 2 to
Registration Statement:
EXHIBIT NUMBER DESCRIPTION
- ------------------------ ------------------------------------------------------
1.1 -- Revised Form of Underwriting Agreement
1.2 -- Revised Form of Agreement Among Underwriters
1.3 -- Revised Form of Selected Dealer Agreement
1.7 -- Form of Escrow Agreement with Continental Stock
Transfer & Trust Company
II-1
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 3 TO REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
HOUSTON, STATE OF TEXAS, ON THE 16TH DAY SEPTEMBER, 1996.
SHIPHOLDING INTERNATIONAL, INC.
By: DAVID E. HARRINGTON, JR.
CHAIRMAN AND CHIEF EXECUTIVE
OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ------------------------------------ ------------------------------- --------------------
<C> <S> <C>
DAVID E. HARRINGTON, JR. Chairman of the Board of September 16, 1996
DAVID E. HARRINGTON, JR. Directors and Chief Executive
Officer
DAVID R. WHEELER Chief Financial Officer, September 16, 1996
DAVID R. WHEELER Secretary and Director
</TABLE>
II-2
<PAGE>
CONSENT AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Shipholding International, Inc.
We hereby consent to the use in this Registration Statement of Shipholding
International, Inc. on Form S-1 of our reports dated February 29 and August 7,
1996, relating to the financial statements of Shipholding International, Inc.
and to the reference to our firm under the caption "EXPERTS" in the Prospectus.
/s/ JACK SISK
JACK SISK & CO.
Houston, Texas
August 7, 1996
II-3
