Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16]

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2024

Commission File Number:  001-34153

GLOBAL SHIP LEASE, INC.

(Translation of registrant's name into English)

c/o GSL Enterprises Ltd.

9 Irodou Attikou Street

Kifisia, Athens

Greece, 14561

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒ Form 40-F ☐

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INFORMATION CONTAINED IN THIS FORM 6-K REPORT

 

Attached to this Report on Form 6-K as Exhibit 99.1 is a copy of the press release of Global Ship Lease, Inc. (the “Company”), dated November 11, 2024, reporting the Company’s financial results for the three and nine months ended September 30, 2024.

 

Attached to this Report as Exhibit 99.2 are the Company’s interim unaudited condensed consolidated financial results for the nine months ended September 30, 2024.

 

The information contained in this Report, except for the commentary of George Youroukos and Thomas Lister contained in Exhibit 99.1, is hereby incorporated by reference into the Company's registration statements on Form F-3 (File Nos. 333-231509, 333-258800 and 333-267468) and Form S-8 (File Nos. 333-258992 and 333-264113).

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	GLOBAL SHIP LEASE, INC.
	(Registrant)
Dated: November 12, 2024	By:	/s/ Thomas Lister
		Thomas Lister
		Chief Executive Officer

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Exhibit 99.1

 

Investor and Media Contacts:

The IGB Group

Bryan Degnan

646-673-9701

or

Leon Berman

212-477-8438

Global Ship Lease Reports Results for the Third Quarter of 2024

Forward contract cover locked in for 76% of 2025 days and 49% of 2026 days, and breakevens reduced to enhance through-cycle profitability and cashflow generation, supporting annualized dividend of $1.80 while also positioning for selective fleet renewal and growth

ATHENS, GREECE – November 11, 2024 - Global Ship Lease, Inc. (NYSE: GSL) (the “Company”, “Global Ship Lease” or “GSL”), an owner of containerships, announced today its unaudited results for the three and nine months ended September 30, 2024.

Third Quarter of 2024 and Year to Date Highlights

 

- Reported operating revenue of $174.1 million for the third quarter of 2024, a decrease of 0.2% on operating revenue of $174.5 million for the prior year period. For the nine months ended September 30, 2024, operating revenue was $528.6 million, up 6.6% from $495.9 million in the prior year period.

 

- Reported net income available to common shareholders of $78.8 million for the third quarter of 2024, a decrease of 4.7% on net income of $82.7 million for the prior year period. Normalized net income (a non-U.S. GAAP financial measure, described below) for the same period was $86.6 million, up 5.1% on Normalized net income of $82.4 million for the prior year period. For the nine months ended September 30, 2024, net income available to common shareholders was $253.9 million, an increase of 10.2% on net income of $230.3 million for the prior year period. Normalized net income for the same period was $262.3 million, up 13.1% on Normalized net income for the prior year period of $231.9 million.

 

- Generated $123.3 million of Adjusted EBITDA (a non-U.S. GAAP financial measure, described below) for the third quarter of 2024, up 1.1% on Adjusted EBITDA of $121.9 million for the prior year period. Adjusted EBITDA for the nine months ended September 30, 2024 was $371.1 million, up 10.8% on Adjusted EBITDA of $334.9 million for the prior year period.

 

- Earnings per share for the third quarter of 2024 was $2.22, down 5.1% on the earnings per share of $2.34 for the prior year period. Normalized earnings per share (a non-U.S. GAAP financial measure, described below) for the third quarter of 2024 was $2.45, up 5.2% on the Normalized earnings per share of $2.33 for the prior year period. Earnings per share for the nine months ended September 30, 2024 was $7.20, up 10.9% on the earnings per share of $6.49 for the prior year period. Normalized earnings per share for the nine months ended September 30, 2024 was $7.44, up 13.8% on the Normalized earnings per share of $6.54 for the prior year period.

 

- Declared a dividend of $0.45 per Class A common share for the third quarter of 2024, to be paid on or about December 4, 2024 to common shareholders of record as of November 22, 2024. Paid a dividend of $0.45 per Class A common share for the second quarter of 2024 on September 4, 2024.

 

- On August 7, 2024, entered into a new $300.0 million senior secured term loan facility with Credit Agricole Corporate and Investment Bank, ABN AMRO Bank N.V. and Bank of America N.A. to refinance or prepay, in full or in part, a total of 10 existing debt facilities to (i) decrease the Company’s weighted average cost of debt from 4.57% to 3.95% as of September 30, 2024, (ii) extend the Company’s weighted average maturity of debt from 2.6 years to 4.0 years and (iii) increase the Company’s unencumbered vessels from 5 to 16. The new facility is scheduled to mature in the third quarter of 2030 and bears interest of Term SOFR + 1.85%.

 

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- On June 26, 2024, announced upgrades by three leading credit rating agencies. The Corporate Family Rating for Global Ship Lease was upgraded to Ba2 from Ba3, with a stable outlook, by Moody’s Investor Service, S&P Global Ratings upgraded the long-term issuer credit rating to BB+ from BB, with a stable outlook and the Kroll Bond Rating Agency (“KBRA”) upgraded the corporate rating to BB+ from BB, with a stable outlook. KBRA also affirmed the BBB/stable investment grade rating and outlook for the 5.69% Senior Secured Notes due July 15, 2027 (the “2027 Secured Notes”).

 

- Between January 1, 2024 and September 30, 2024, added $596.6 million of contracted revenue to forward charter cover, calculated on the basis of the median firm periods of the respective charters, on a total of 32 new charters or extensions: 10 for ships between 2,200 and 3,500 TEU; 17 for ships between 5,000 TEU and 6,100 TEU; and, five for ships between 6,500 TEU and 8,000 TEU. Durations of these new charters and extensions for the median firm periods range between nine months and 40 months. A number of the vessels were forward fixed several months ahead of their expected availability in the market.

 

- During the first quarter of 2024, repurchased an aggregate of 251,772 Class A common shares for a total consideration of approximately $5.0 million. Repurchase prices ranged between $18.98 and $20.83 per share, with an average price of $19.84 per share. There were no such repurchases in the second and third quarter of 2024. Approximately $33.0 million of capacity remains under the Company’s opportunistic share buy-back authorization.

 

- On August 16, 2024, entered into a new equity distribution agreement with Evercore Group L.L.C. to opportunistically offer and sell Class A common shares having an aggregate offering price of up to $100.0 million. As of the date of this press release, 27,106 Class A common shares have been issued at an average price of $27.02 (compared to an average price of $18.52 for the repurchase of a total of $57.0 million Class A common shares since the inception of the opportunistic share repurchase program in 3Q2021). We expect to be highly disciplined in the issuance of shares under this agreement going forward.

 

George Youroukos, our Executive Chairman, stated: “Despite an uncertain macro environment, the factors that have driven significant containership charter market strength throughout 2024 remain firmly intact. Growth in container volumes has been healthy, and materially extended average voyage lengths due to re-routings around the Cape of Good Hope continue to stretch the global fleet to its limits, with idle capacity close to zero - forcing the liner operators to speed up their fleets to offset capacity constraints. With supply limited, and high-quality tonnage at a premium, we are continuing to lock in the current market strength with attractive multi-year charters for even some of the oldest vessels in our fleet, adding almost $600 million of contracted revenues year-to-date – including just under $200 million during the third quarter. Looking forward, the limited orderbook for mid-sized and smaller containerships like those in the GSL fleet is further counterbalanced by relatively lower quality, less efficient vessels that will increasingly struggle to compete and will likely be scrapped out over time. Our fleet of highly efficient mid-size and smaller containerships purpose-built or retrofitted to meet the needs of our liner customers positions us to generate attractive returns on our existing assets, while we also position ourselves for selective growth and fleet renewal, with the goal of continuing to power strong cashflows for our shareholders in the future.”

Thomas Lister, our Chief Executive Officer, stated: “Container shipping is a cyclical market which can generate exceptional returns, but also requires prudent risk management and patience. Our goal at GSL is to provide a stable platform from which investors can access those returns. The combination of supportive market conditions, our longstanding focus on building and maintaining a mid-sized and smaller fleet oriented towards the evolving needs of the liner industry, and our consistent financial discipline have put us in a position to return material capital to our shareholders and generate a Total Shareholder Return¹ of more than 350% over the last five year period through September 30, 2024, approximately 3x that of a historically strong S&P 500. We have simultaneously built crucial optionality in a cyclical market, and we are ready to act quickly if an acquisition opportunity emerges that meets our strict criteria, consistent with our disciplined track record.  We nevertheless appreciate that the greatest opportunities often become available on a countercyclical basis, when capital available to the industry is far harder to come by, and where those with strong balance sheets and financial flexibility can achieve outsized returns. With this in mind, we are very pleased to have opportunistically re-financed $300 million of debt during the quarter, bringing our weighted average cost of debt down to 3.95%, and extending the weighted average maturity to four years. Our commitment to building long term shareholder value through the cycle is well-established, and we will continue to balance patience and discipline with the ability and capacity to act decisively at the right time.”

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¹ Source, FactSet. Total Shareholder Returns (TSR) for the five year period through September 30, 2024. TSR is the sum of share price appreciation for the period (ending share price minus starting share price) and dividends paid during the period (assuming re-investment of those dividends), with that sum divided by the starting share price; expressed as a percentage.

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SELECTED FINANCIAL DATA – UNAUDITED

 

(thousands of U.S. dollars)

 

		Three				Three				Nine				Nine
		months ended				months ended				months ended				months ended
		September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
Operating Revenues (1)			174,064				174,530				528,622				495,901
Operating Income			92,189				94,157				283,130				264,364
Net Income (2)			78,763				82,687				253,912				230,299
Adjusted EBITDA (3)			123,349				121,850				371,061				334,922
Normalized Net Income (3)			86,583				82,356				262,295				231,895

(1) Operating Revenues are net of address commissions which represent a discount provided directly to a charterer based on a fixed percentage of the agreed upon charter rate and also includes the amortization of intangible liabilities, the effect of the straight lining of time charter modifications and the compensation from charterers for drydock and for other capitalized expenses installation. Brokerage commissions are included in “Time charter and voyage expenses” (see below).

 

(2) Net Income available to common shareholders.

 

(3) Adjusted EBITDA and Normalized Net Income are non-U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) financial measures, as explained further in this press release, and are considered by Global Ship Lease to be useful measures of its performance. For reconciliations of these non-U.S. GAAP financial measures to net income, the most directly comparable U.S. GAAP financial measure, please see “Reconciliation of Non-U.S. GAAP Financial Measures” below.

 

Operating Revenues and Utilization

 

Operating revenues derived from fixed-rate, mainly long-term, time-charters were $174.1 million in the third quarter of 2024, down $0.4 million (or 0.2%) on operating revenues of $174.5 million in the prior year period. The period-on-period decrease in operating revenues was principally due to an increase in off hire days plus a non-cash $1.6 million decrease in the effect from straight lining time charter modifications offset, almost entirely, by charter renewals at higher rates on a number of vessels. There were 362 days of offhire in the third quarter of 2024 of which 333 were for scheduled drydockings, compared to 246 days of offhire and idle time in the prior year period of which 191 were for scheduled drydockings. Utilization for the third quarter of 2024 was 94.2% compared to utilization of 96.1% in the prior year period.

 

For the nine months ended September 30, 2024, operating revenues were $528.6 million, up $32.7 million (or 6.6%) on operating revenues of $495.9 million in the comparative period, mainly due to our acquisition of four vessels which were delivered to us in the second quarter of 2023 (the “Four Vessels”) and a decrease in off hire days and idle time, partially offset by a non-cash $7.6 million decrease in the effect from straight lining time charter modifications. There were 619 days of offhire and idle time in the nine months ended September 30, 2024 of which 519 were for scheduled drydockings, compared to 876 days of offhire and idle time in the prior year period of which 627 were for scheduled drydockings. Utilization for the nine months ended September 30, 2024 was 96.7% compared to utilization of 95.1% in the prior year period.

 

The table below shows fleet utilization for the three and nine months ended September 30, 2024 and 2023, and for the years ended December 31, 2023, 2022, 2021 and 2020.

 

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		Three months ended								Nine months ended								Year ended
		Sep 30,				Sep 30,				Sep 30,				Sep 30,				Dec 31,				Dec 31,				Dec 31,				Dec 31,
Days		2024				2023				2024				2023				2023				2022				2021				2020
Ownership days			6,256				6,256				18,632				18,029				24,285				23,725				19,427				16,044
Planned offhire - scheduled drydock			(333	)			(191	)			(519	)			(627	)			(701	)			(581	)			(752	)			(687	)
Unplanned offhire			(29	)			(33	)			(98	)			(207	)			(233	)			(460	)			(260	)			(95	)
Idle time		(nil)					(22	)			(2	)			(42	)			(62	)			(30	)			(88	)			(338	)
Operating days			5,894				6,010				18,014				17,153				23,289				22,654				18,327				14,924
Utilization			94.2	%			96.1	%			96.7	%			95.1	%			95.9	%			95.5	%			94.3	%			93.0	%

As of September 30, 2024, one regulatory drydocking was in progress. During the fourth quarter of 2024, six further regulatory drydockings are anticipated.

 

Vessel Operating Expenses

 

Vessel operating expenses, which are primarily the costs of crew, lubricating oil, repairs, maintenance, insurance and technical management fees, were up 1.1% to $46.6 million for the third quarter of 2024, compared to $46.1 million in the prior year period. The increase of $0.5 million was mainly due to (i) an increase in repairs, spares and maintenance expenses for planned main engine maintenance and overhaul of diesel generators as well as main engine annual spares delivery due to timing of planned schedule and (ii) the impact of inflation on fees and expenses, including management fees. The average cost per ownership day in the quarter was $7,447, compared to $7,369 for the prior year period, up $78 per day, or 1.1%.

For the nine months ended September 30, 2024, vessel operating expenses were $141.6 million, or an average of $7,601 per day, compared to $132.3 million in the comparative period, or $7,337 per day, an increase of $264 per ownership day, or 3.6%. The increase of $9.3 million was mainly due to (i) the acquisition of the Four Vessels in the second quarter of 2023, (ii) an increase in repairs, spares and maintenance expenses for planned main engine maintenance and overhaul of diesel generators as well as main engine annual spares delivery due to timing of planned schedule, (iii) increased cost of insurance due to increased premiums as asset values rose over the period, and (iv) impact of inflation on fees and expenses, including management fees.

Time Charter and Voyage Expenses

 

Time charter and voyage expenses comprise mainly commission paid to ship brokers, the cost of bunker fuel for owner’s account when a ship is off-hire or idle and miscellaneous owner’s costs associated with a ship’s voyage. Time charter and voyage expenses were $6.4 million for the third quarter of 2024, compared to $6.0 million in the prior year period. The increase was mainly due to an increase in bunkering expenses due to higher off hire days partially offset by a decrease in other voyage expenses.

 

For the nine months ended September 30, 2024, time charter and voyage expenses were $17.1 million, or an average of $915 per day, compared to $18.2 million in the comparative period, or $1,009 per day, a decrease of $94 per ownership day, or 9.3% mainly to (i) a decrease in bunkering expenses due to fewer off hire days, and (ii) a decrease in voyage administration costs and operational requests from charterers offset by increased commissions on charter renewals at higher rates.

 

Depreciation and Amortization

 

Depreciation and amortization for the third quarter of 2024 was $25.0 million, compared to $24.0 million in the prior year period. The increase was mainly due to the 10 drydockings completed after September 30, 2023.

 

Depreciation and amortization for the nine months ended September 30, 2024 was $73.8 million, compared to $67.3 million in the comparative period, mainly due to the factor noted above plus the acquisition of the Four Vessels in the second quarter of 2023.

 

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General and Administrative Expenses

 

General and administrative expenses were $3.9 million in the third quarter of 2024, compared to $4.2 million in the prior year period. The movement was mainly due to the decrease in payroll expenses following the retirement of our former CEO effective March 31, 2024 plus a reduction in the non-cash charge for stock-based compensation expense. The average general and administrative expenses per ownership day for the third quarter of 2024 was $623, compared to $679 in the prior year period, a decrease of $56 or 8.2%.

 

For the nine months ended September 30, 2024, general and administrative expenses were $13.0 million, compared to $13.7 million in the comparative period. The movement was mainly due to the decrease in the non-cash charge for stock-based compensation expense offset by an increase in bonuses paid to our employees. The average general and administrative expense per ownership day for the nine-month period ended September 30, 2024 was $700, compared to $763 in the comparative period, a decrease of $63 or 8.3%.

 

Adjusted EBITDA

 

Adjusted EBITDA (a non-GAAP financial measure) was $123.3 million for the third quarter of 2024, up from $121.9 million for the prior year period, with the net increase being mainly due to charter renewals at higher rates on a number of vessels.

 

Adjusted EBITDA for the nine months ended September 30, 2024 was $371.1 million, compared to $334.9 million for the comparative period, an increase of $36.2 million or 10.8% mainly due to our acquisition of the Four Vessels which were delivered to us in the second quarter of 2023 and a decrease in off hire days and idle time.

 

Interest Expense and Interest Income

 

Debt as at September 30, 2024 totaled $688.0 million, comprising $397.6 million of secured bank debt collateralized by vessels, $245.0 million of 2027 Secured Notes collateralized by vessels, and $45.4 million under sale and leaseback financing transactions. As of September 30, 2024, 16 vessels were unencumbered.

 

Debt as at September 30, 2023 totaled $874.3 million, comprising $461.5 million of secured bank debt collateralized by vessels, $297.5 million of 2027 Secured Notes collateralized by vessels, and $115.3 million under sale and leaseback financing transactions. As of September 30, 2023, five vessels were unencumbered.

 

Interest and other finance expenses for the third quarter of 2024 was $12.6 million, up from $11.6 million for the prior year period. The increase was mainly due to (i) the non-cash write off of deferred financing costs of $2.7 million on the full repayments of six of our credit facilities and two of our sale and leaseback agreements, (ii) a prepayment fee of $0.7 million on the full repayment of the sale and leaseback agreement with CMBFL and (iii) a prepayment fee of $0.2 million on the partial repayment of the Macquarie Credit Facility. The blended cost of debt, taking into account our interest rate caps, has significantly decreased from approximately 4.55% for the third quarter of 2023 to 3.95% for the third quarter of 2024 mainly due to our recent refinancing activity.

Interest and other finance expenses for the nine months ended September 30, 2024 was $32.9 million, down from $33.6 million for the comparative period mainly due to the factors noted above.

 

Interest income for the third quarter of 2024 was $4.7 million, up from $2.5 million for the prior year period mainly due to higher invested amounts.

 

Interest income for the nine months period ended September 30, 2024 was $12.5 million, compared to $6.9 million for the comparative period.

 

Other income/(expenses), net

 

Other income, net was $1.0 million in the third quarter of 2024, compared to other expenses, net of $0.3 million in the prior year period.

 

Other income, net was $3.2 million for the nine month period ended September 30, 2024, compared to $0.9 million for the comparative period.

 

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Fair value adjustment on derivatives

 

In December 2021, we entered into a USD 1 month LIBOR interest rate cap of 0.75% through the fourth quarter of 2026 on $484.1 million of floating rate debt, which reduces over time in line with anticipated debt amortization and represented approximately half of the outstanding floating rate debt. In February 2022, we entered into two additional USD 1-month LIBOR interest rate caps of 0.75% through the fourth quarter of 2026 on the remaining balance of $507.9 million of floating rate debt. As a result of the discontinuation of LIBOR, on July 1, 2023, our interest rate caps have automatically transited to 1 month Compounded SOFR at a net rate of 0.64%. A negative fair value adjustment of $4.2 million for the third quarter of 2024 was recorded through the statement of income. The negative fair value adjustment for the nine month period ended September 30, 2024 was $5.0 million.

 

Earnings Allocated to Preferred Shares

 

The Series B Preferred Shares carry a coupon of 8.75%, the cost of which for the third quarter of 2024 was $2.4 million, the same as in the prior year period.

 

The cost for the nine months ended September 2024 was $7.2 million, the same as for the nine months ended September 30, 2023.

 

Net Income Available to Common Shareholders

 

Net income available to common shareholders for the third quarter of 2024 was $78.8 million. Net income available to common shareholders for the prior year period was $82.7 million.

 

Earnings per share for the third quarter of 2024 was $2.22, a decrease of 5.1% from the earnings per share for the prior year period, which was $2.34.

 

For the nine months ended September 30, 2024, net income available to common shareholders was $253.9 million. Net income available to common shareholders for the nine months ended September 30, 2023 was $230.3 million.

 

Earnings per share for the nine months ended September 30, 2024 was $7.20, an increase of 10.9% from the earnings per share for the comparative period, which was $6.49.

 

Normalized net income (a non-GAAP financial measure) for the third quarter of 2024, was $86.6 million. Normalized net income for the prior year period was $82.4 million.

 

Normalized net income for the nine months ended September 30, 2024 was $262.3 million, as compared to $231.9 for the comparative period.

 

Normalized earnings per share (a non-GAAP financial measure) for the third quarter of 2024 was $2.45, an increase of 5.2% from Normalized earnings per share for the prior year period, which was $2.33.

 

Normalized earnings per share for the nine months ended September 30, 2024 was $7.44, an increase of 13.8% from Normalized earnings per share for the comparative period, which was $6.54.

 

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Fleet

 

As of September 30, 2024, there were 68 containerships in the fleet.

 

Vessel Name	Capacity in TEUs	Lightweight (tons)	Year Built	Charterer	Earliest Charter Expiry Date	Latest Charter Expiry Date (2)	Daily Charter Rate $
CMA CGM Thalassa	11,040	38,577	2008	CMA CGM	4Q25	2Q26	47,200
ZIM Norfolk (1)	9,115	31,764	2015	ZIM	2Q27	4Q27	65,000
Anthea Y (1)	9,115	31,890	2015	MSC	3Q25	4Q25	Footnote (3)
ZIM Xiamen (1)	9,115	31,820	2015	ZIM	3Q27	4Q27	65,000
MSC Tianjin	8,603	34,243	2005	MSC (4)	3Q27	4Q27	Footnote (4)
MSC Qingdao	8,603	34,609	2004	MSC (4)	3Q27	4Q27	Footnote (4)
GSL Ningbo	8,603	34,340	2004	MSC	3Q27	1Q28	Footnote (5)
GSL Alexandra	8,544	37,809	2004	Maersk	3Q25	3Q26	Footnote (6)
GSL Sofia	8,544	37,777	2003	Maersk	3Q25	3Q26	Footnote (6)
GSL Effie	8,544	37,777	2003	Maersk	3Q25	3Q26	Footnote (6)
GSL Lydia	8,544	37,777	2003	Maersk	2Q25	3Q26	Footnote (6)
GSL Eleni	7,847	29,261	2004	Maersk	4Q27	2Q29	16,500 (7)
GSL Kalliopi	7,847	29,261	2004	Maersk	4Q27	2Q29	18,900 (7)
GSL Grania	7,847	29,261	2004	Maersk	4Q27	2Q29	17,750 (7)
Colombia Express (1) (18)	7,072	23,424	2013	Hapag-Lloyd (8)	4Q28	1Q31	Footnote (8)
Kristina (1)	7,072	23,421	2013	CMA CGM (8)	4Q29	4Q31	25,910 (8)
Costa Rica Express (ex Katherine) (1) (18)	7,072	23,403	2013	Hapag-Lloyd (8)	2Q29	3Q31	Footnote (8)
Alexandra (1)	7,072	23,348	2013	Hapag-Lloyd (8)	2Q29	3Q31	Footnote (8)
Mexico Express (ex Alexis) (1)(18)	6,910	23,919	2015	Footnote (8)	3Q29	4Q31	Footnote (8)
Jamaica Express (ex Olivia I) (1)(18)	6,910	23,864	2015	Hapag-Lloyd (8)	3Q29	4Q31	Footnote (8)
GSL Christen	6,840	27,954	2002	OOCL(9)	4Q27	1Q28	20,500 (9)
GSL Nicoletta	6,840	28,070	2002	Maersk	1Q28	2Q28	35,750 (9)
CMA CGM Berlioz	7,023	26,776	2001	CMA CGM	4Q25	2Q26	37,750
Agios Dimitrios	6,572	24,931	2011	MSC (4)	2Q27	3Q27	Footnote (4)
GSL Vinia	6,080	23,737	2004	Maersk	1Q28	4Q29	13,250 (10)
GSL Christel Elisabeth	6,080	23,745	2004	Maersk	1Q28	3Q29	13,250 (10)
GSL Dorothea	5,992	24,243	2001	Maersk	2Q25	3Q26	12,900 (11)
GSL Arcadia	6,008	24,858	2000	Maersk	1Q25	1Q26	12,900 (11)
GSL Violetta	6,008	24,873	2000	Maersk	2Q25	4Q25	18,600 (11)
GSL Maria	6,008	24,414	2001	Maersk	4Q25	1Q27	18,600 (11)
GSL MYNY	6,008	24,876	2000	Maersk	2Q25	1Q26	12,900 (11)
GSL Melita	6,008	24,848	2001	Maersk	3Q25	3Q26	12,900 (11)
GSL Tegea	5,994	24,308	2001	Maersk	3Q25	3Q26	12,900 (11)
Tasman	5,936	25,010	2000	Maersk	1Q25	1Q25	21,500
Dimitris Y (18)	5,936	25,010	2000	ONE	2Q25	3Q25	33,900
Ian H	5,936	25,128	2000	Footnote (12)	4Q27	4Q27	Footnote (12)
GSL Tripoli	5,470	22,109	2009	Maersk	3Q27	4Q27	36,500 (13)
GSL Kithira	5,470	22,259	2009	Maersk	4Q27	1Q28	36,500 (13)
GSL Tinos	5,470	22,068	2010	Maersk	3Q27	4Q27	36,500 (13)
GSL Syros	5,470	22,099	2010	Maersk	4Q27	4Q27	36,500 (13)
Dolphin II	5,095	20,596	2007	OOCL	1Q25	3Q25	53,500
Orca I	5,095	20,633	2006	Maersk	2Q25	4Q25	21,000
CMA CGM Alcazar	5,089	20,087	2007	CMA CGM	3Q26	1Q27	35,500
GSL Château d’If	5,089	19,994	2007	CMA CGM	4Q26	1Q27	35,500
GSL Susan	4,363	17,309	2008	CMA CGM	3Q27	1Q28	Footnote (14)
CMA CGM Jamaica	4,298	17,272	2006	CMA CGM	1Q28	2Q28	Footnote (14)
CMA CGM Sambhar	4,045	17,355	2006	CMA CGM	1Q28	2Q28	Footnote (14)
CMA CGM America	4,045	17,355	2006	CMA CGM	1Q28	2Q28	Footnote (14)
GSL Rossi	3,421	16,420	2012	ZIM	1Q26	3Q26	35,681 (15)
GSL Alice	3,421	16,543	2014	CMA CGM	2Q25	2Q25	20,500
GSL Eleftheria	3,421	16,642	2013	Maersk	3Q25	4Q25	37,975
GSL Melina	3,404	16,703	2013	Maersk	4Q26	4Q26	29,900
GSL Valerie	2,824	11,971	2005	ZIM	1Q25	3Q25	32,000
Matson Molokai	2,824	11,949	2007	Matson	2Q25	3Q25	36,600
GSL Lalo	2,824	11,950	2006	MSC	2Q25	3Q25	18,000
GSL Mercer	2,824	11,970	2007	ONE	1Q27	2Q27	35,750 (16)
Athena	2,980	13,538	2003	MSC	2Q25	3Q25	17,500
GSL Elizabeth	2,741	11,530	2006	Maersk	2Q26	2Q26	20,360
GSL Chloe (18)	2,546	12,212	2012	ONE	1Q27	2Q27	33,000 (16)

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GSL Maren	2,546	12,243	2014	OOCL	1Q26	2Q26	16,500
Maira	2,506	11,453	2000	Hapag-Lloyd	4Q24	4Q24	16,000
Nikolas	2,506	11,370	2000	Maersk	4Q24	4Q24	14,250
Newyorker	2,506	11,463	2001	Maersk	1Q25	2Q25	17,250
Manet	2,288	11,534	2001	OOCL	4Q24	2Q25	32,000
Kumasi	2,220	11,652	2002	Wan Hai	1Q25	2Q25	38,000
Akiteta	2,220	11,592	2002	OOCL	4Q24	1Q25	32,000
Keta	2,207	11,731	2003	CMA CGM	1Q25	1Q25	25,000
Julie	2,207	11,731	2002	MSC	2Q25	3Q25	Footnote (17)

(1)	Modern design, high reefer capacity, fuel-efficient “ECO” vessel.

(2)

In many instances charterers have the option to extend a charter beyond the nominal latest expiry date by the amount of time that the vessel was off hire during the course of that charter. This additional charter time (“Offhire Extension”) is computed at the end of the initially contracted charter period. The Latest Charter Expiry Dates shown in this table have been adjusted to reflect offhire accrued up to September 30, 2024, plus estimated offhire scheduled to occur during the remaining lifetimes of the respective charters. However, as actual offhire can only be calculated at the end of each charter, in some cases actual Offhire Extensions – if invoked by charterers – may exceed the Latest Charter Expiry Dates indicated.

(3)	Anthea Y.  The charter is expected to generate annualized Adjusted EBITDA of approximately $11.8 million.

(4)

MSC Tianjin, MSC Qingdao and Agios Dimitrios were each fixed for minimum 36 months – maximum 38 months. The new charters commenced after the vessels were drydocked. Agios Dimitrios new charter commenced in 2Q 2024. MSC Tianjin. and MSC Qingdao new charters commenced in 3Q 2024. MSC Tianjin, MSC Qingdao and Agios Dimitrios new charters are expected to generate annualized Adjusted EBITDA of approximately $6.9 million, $8.1 million, and $5.9 million, respectively. MSC Qingdao & Agios Dimitrios are fitted with Exhaust Gas Cleaning Systems (“scrubbers”).

(5)	GSL Ningbo is chartered at a rate expected to generate annualized Adjusted EBITDA of approximately $16.5 million.

(6)

GSL Alexandra, GSL Sofia, GSL Effie and GSL Lydia delivered in 2Q 2023. Contract cover for each vessel is for a minimum firm period of 24 months from the date each vessel was delivered, with charterers holding one year extension options. The vessels are expected to generate aggregate Adjusted EBITDA of approximately $76.6 million over the minimum firm period, increasing to $95.3 million if all options are exercised.

(7)

GSL Eleni, GSL Kalliopi and GSL Grania, were forward fixed for 35 – 38 months to commence after drydocking, after which the charterer has the option to extend each charter for a further 12 – 16 months. Each charter is expected to generate annualized Adjusted EBITDA of approximately $9.7 million for the firm period.

(8)

Colombia Express (ex Mary), Kristina, Costa Rica Express (ex Katherine), Alexandra, Mexico Express (ex Alexis), Jamaica Express (ex Olivia I) were forward fixed to Hapag-Lloyd for 60 months +/-45 days, followed by two periods of 12 months each at the option of the charterer. The new charter for Colombia Express commenced in early 2024 and the new charters for Costa Rica Express, Alexandra and Jamaica Express commenced in 3Q 2024.  The new charters for Kristina and Mexico Express are scheduled to commence in 4Q 2024 upon completion of drydocking. The charters are expected to generate average annualized Adjusted EBITDA of approximately $13.1 million per ship.

(9)	GSL Nicoletta and GSL Christen were forward fixed for 39 - 42 months and 37 - 40 months, respectively, expected to commence in 4Q 2024. The charters are expected to generate average annualized Adjusted EBITDA of approximately $11.4 million per ship.

(10)

GSL Vinia and GSL Christel Elizabeth were both forward fixed for 36 – 40 months to commence after drydocking, after which the charterer has the option to extend each charter for a further 12 – 15 months. The new charters are both scheduled to commence in 1Q 2025. The charters are expected to generate average annualized Adjusted EBITDA of approximately $11.3 million per ship.

(11)

GSL Maria, GSL Violetta, GSL Arcadia, GSL MYNY, GSL Melita, GSL Tegea and GSL Dorothea. Contract cover for each ship is for a firm period of at least three years from the date each vessel was delivered in 2021, with charterers holding a one-year extension option on each charter (at a rate of $12,900 per day), followed by a second option (at a rate of $12,700 per day) with the period determined by – and terminating prior to – each vessel’s 25th year drydocking & special survey. GSL Arcadia, GSL Dorothea, GSL Tegea, GSL Melita charterer’s first options were exercised in 1Q 2024, and GSL MYNY charterer’s first options were exercised in 1H 2024, GSL Maria and GSL Violetta charterer’s first options were exercised in 3Q 2024.

(12)	Ian H was forward fixed for 35 – 36 months. The new charter is scheduled to commence in 4Q 2024, following the completion of its scheduled drydocking. The charter is expected to generate average annualized Adjusted EBITDA of approximately $10.4 million.

(13)

GSL Tripoli, GSL Kithira, GSL Tinos, and GSL Syros. Ultra-high reefer ships of 5,470 TEU each. Contract cover on each ship is for a firm period of three years, from their delivery dates in 2021, at a rate of $36,500 per day, with a period of an additional three years (at $17,250 per day) at charterers’ option. GSL Tripoli, GSL Syros, and GSL Tinos charterer’s options were exercised in 2Q 2024. GSL Kithira charterer’s option was exercised in 3Q 2024. New rates to commence in 4Q 2024.

(14)	GSL Susan, CMA CGM Jamaica, CMA CGM Sambhar and CMA CGM America are chartered at rates expected to generate average annualized Adjusted EBITDA of approximately $11.2 million per vessel.

(15)	GSL Rossi. Chartered at an average rate of $35,681 per day, $38,000 to 1Q 2025 and $35,000 for the remaining period.

(16)	GSL Mercer and GSL Chloe were both forward fixed for 23.5 – 26 months. The new charters are both expected to commence in 1Q 2025.  The charter is expected to generate average annualized Adjusted EBITDA of approximately $5.8 million per vessel.

(17)	Julie. Chartered at a rate expected to generate average annualized Adjusted EBITDA of approximately $2.0 million.

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(18)

On January 3, 2024, Mary was renamed to Colombia Express. On January 26, 2024, Beethoven was renamed to GSL Chloe. On April 19, 2024, Zim Europe was renamed to Dimitris Y. On July 9, 2024, Katherine was renamed to Costa Rica Express. On August 20, 2024, Olivia I was renamed to Jamaica Express. On September 20, 2024, Alexis was renamed to Mexico Express.

Conference Call and Webcast

 

Global Ship Lease will hold a conference call to discuss the Company's results for the three and nine months ended September 30, 2024 today, Monday November 11, 2024 at 10:30 a.m. Eastern Time. There are two ways to access the conference call:

 

 (1)  Dial-in: [phone] or [phone]; Event ID: 2474206

Please dial in at least 10 minutes prior to 10:30 a.m. Eastern Time to ensure a prompt start to the call.

(2) Live Internet webcast and slide presentation: http://www.globalshiplease.com

The webcast will also be archived on the Company’s website: http://www.globalshiplease.com.

Annual Report on Form 20-F

The Company’s Annual Report for 2023 was filed with the Securities and Exchange Commission (the “Commission”) on March 20, 2024. A copy of the report can be found under the Investor Relations section (Annual Reports) of the Company’s website at http://www.globalshiplease.com or on the Commission’s website at www.sec.gov. Shareholders may request a hard copy of the audited financial statements free of charge by contacting the Company at [e-mail] or by writing to Global Ship Lease, Inc, c/o GSL Enterprises Ltd., 9 Irodou Attikou Street, Kifisia, Athens, 14561.

About Global Ship Lease

Global Ship Lease is a leading independent owner of containerships with a diversified fleet of mid-sized and smaller containerships. Incorporated in the Marshall Islands, Global Ship Lease commenced operations in December 2007 with a business of owning and chartering out containerships under fixed-rate charters to top tier container liner companies. It was listed on the New York stock Exchange in August 2008.

As of September 30, 2024, Global Ship Lease owned 68 containerships ranging from 2,207 to 11,040 TEU, with an aggregate capacity of 376,723 TEU. 36 ships are wide-beam Post-Panamax.

As of September 30, 2024, the average remaining term of the Company’s charters, to the mid-point of redelivery, including options under the Company’s control and other than if a redelivery notice has been received, was 2.3 years on a TEU-weighted basis. Contracted revenue on the same basis was $1.78 billion. Contracted revenue was $2.15 billion, including options under charterers’ control and with latest redelivery date, representing a weighted average remaining term of 2.8 years.

Reconciliation of Non-U.S. GAAP Financial Measures

To supplement our financial information presented in accordance with U.S. GAAP, we use certain “non-GAAP financial measures” as such term is defined in Regulation G promulgated by the SEC. Generally, a non-GAAP financial measure is a numerical measure of a company’s operating performance, financial position or cash flows that excludes or includes amounts that are included in, or excluded from, the most directly comparable measure calculated and presented in accordance with U.S. GAAP. We believe that the presentation of these measures provides investors with greater transparency and supplemental data relating to our financial condition and results of operations, and therefore a more complete understanding of factors affecting our business and financial performance than U.S. GAAP measures alone. In addition, we believe that the presentation of these matters is useful to investors for period-to-period comparison of results as the items may reflect certain unique and/or non-operating items such as impairment charges, contract termination costs or items outside of our control.

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We believe that the presentation of the following non-U.S. GAAP financial measures is useful to investors because they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.

A.	Adjusted EBITDA

Adjusted EBITDA represents net income available to common shareholders before interest income and expense, earnings allocated to preferred shares, income taxes, depreciation and amortization of drydocking net costs, gains or losses on the sale of vessels, amortization of intangible liabilities, charges for share based compensation, fair value adjustment on derivatives, the effect of the straight lining of time charter modifications, and impairment losses. Adjusted EBITDA is a non-U.S. GAAP quantitative measure used to assist in the assessment of our ability to generate cash from our operations. We believe that the presentation of Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Adjusted EBITDA is not defined in U.S. GAAP and should not be considered to be an alternative to net income or any other financial metric required by such accounting principles. Our use of Adjusted EBITDA may vary from the use of similarly titled measures by others in our industry.

 

Adjusted EBITDA is presented herein both on a historic basis and on a forward-looking basis in certain instances. We do not provide a reconciliation of such forward looking non-U.S. GAAP financial measure to the most directly comparable U.S. GAAP measure due to the inherent difficulty in accurately forecasting and quantifying certain amounts necessary for such reconciliation, and we are not able to provide such reconciliation of such forward-looking non-U.S. GAAP financial measure without unreasonable effort and expense.

ADJUSTED EBITDA - UNAUDITED

(thousands of U.S. dollars)

			Three				Three				Nine				Nine
			months				months				months				months
			ended				ended				ended				ended
			September 30,				September 30,				September 30,				September 30,
			2024				2023				2024				2023
Net income available to Common Shareholders				78,763				82,687				253,912				230,299
Adjust:	Depreciation and amortization			24,965				23,980				73,775				67,336
	Amortization of intangible liabilities			(1,518	)			(1,518	)			(4,523	)			(6,563	)
	Fair value adjustment on derivative asset			4,193				(331	)			4,957				1,037
	Interest income			(4,705	)			(2,501	)			(12,532	)			(6,895	)
	Interest expense			12,540				11,615				32,883				33,623
	Share based compensation			2,122				2,505				6,582				7,684
	Earnings allocated to preferred shares			2,384				2,384				7,152				7,152
	Income tax			-				-				1				5
	Effect from straight lining time charter modifications			4,605				3,029				8,854				1,244
Adjusted EBITDA				123,349				121,850				371,061				334,922

B.	Normalized net income

Normalized net income represents net income available to common shareholders after adjusting for certain non-recurring items. Normalized net income is a non-U.S. GAAP quantitative measure which we believe will assist investors and analysts who often adjust reported net income for items that do not affect operating performance or operating cash generated. Normalized net income is not defined in U.S. GAAP and should not be considered to be an alternate to net income or any other financial metric required by such accounting principles. Our use of Normalized net income may vary from the use of similarly titled measures by others in our industry.

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NORMALIZED NET INCOME – UNAUDITED

(thousands of U.S. dollars)

			Three				Three				Nine				Nine
			months				months				months				months
			ended				ended				ended				ended
			September 30,				September 30,				September 30,				September 30,
			2024				2023				2024				2023
	Net income available to Common Shareholders			78,763				82,687				253,912				230,299
Adjust:	Fair value adjustment on derivative assets			4,193				(331	)			4,957				1,037
	Acceleration of deferred financing costs on full repayment of Credit Facilities/Sale and Leaseback agreements			2,757				-				2,757				-
	Prepayment fee on full repayment of Sale and Leaseback Agreement-CMBFL-$54,000			685				-				685				-
	Prepayment fee on partial repayment of Macquarie Credit Facility			185				-				185				-
	Accelerated write off of deferred financing costs related to partial repayment of HCOB-CACIB Credit Facility			-				-				-				108
	Forfeit of certain stock-based compensation awards			-				-				-				451
	Effect from new share-based compensation awards plus acceleration and forfeit of certain share-based compensation awards			-				-				(201	)			-
Normalized net income				86,583				82,356				262,295				231,895

C.	Normalized Earnings per Share

Normalized Earnings per Share represents Earnings per Share after adjusting for certain non-recurring items. Normalized Earnings per Share is a non-U.S. GAAP quantitative measure which we believe will assist investors and analysts who often adjust reported Earnings per Share for items that do not affect operating performance or operating cash generated. Normalized Earnings per Share is not defined in U.S. GAAP and should not be considered to be an alternate to Earnings per Share as reported or any other financial metric required by such accounting principles. Our use of Normalized Earnings per Share may vary from the use of similarly titled measures by others in our industry.

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NORMALIZED EARNINGS PER SHARE – UNAUDITED

		Three				Three				Nine				Nine
		months				months				months				months
		ended				ended				ended				ended
		September 30,				September 30,				September 30,				September 30,
		2024				2023				2024				2023
EPS as reported (USD)			2.22				2.34				7.20				6.49
Normalized net income adjustments-Class A common shares (in thousands USD)			7,820				(331	)			8,383				1,596
Weighted average number of Class A Common shares			35,411,553				35,355,554				35,272,574				35,473,382
Adjustment on EPS (USD)			0.23				(0.01	)			0.24				0.05
Normalized EPS (USD)			2.45				2.33				7.44				6.54

Dividend Policy

The declaration and payment of dividends will be subject at all times to the discretion of the Company’s Board of Directors. The timing and amount of dividends, if any, will depend on the Company’s earnings, financial condition, cash flow, capital requirements, growth opportunities, restrictions in its loan agreements and financing arrangements, the provisions of Marshall Islands law affecting the payment of dividends, and other factors. For further information on the Company’s dividend policy, please see its most recent Annual Report on Form 20-F.

Safe Harbor Statement

This communication contains forward-looking statements. Forward-looking statements provide Global Ship Lease's current expectations or forecasts of future events. Forward-looking statements include statements about Global Ship Lease's expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as "anticipate", "believe", "continue", "estimate", "expect", "intend", "may", "ongoing", "plan", "potential", "predict", “should”, "project", "will" or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. These forward-looking statements are based on assumptions that may be incorrect, and Global Ship Lease cannot assure you that these projections included in these forward-looking statements will come to pass. Actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors.

The risks and uncertainties include, but are not limited to:

•

future operating or financial results;

 

•

expectations regarding the strength of future growth of the container shipping industry, including the rates of annual demand and supply growth;

 

•

geo-political events such as the conflict in Ukraine and the escalation of the Israel-Gaza conflict;

•

the potential disruption of shipping routes, including due to lower water levels in the Panama Canal and the ongoing attacks by Houthis in the Red Sea;

 

•

the length and severity of the ongoing outbreak of the novel coronavirus (COVID-19) around the world and governmental responses thereto;

 

•

the financial condition of our charterers and their ability and willingness to pay charterhire to us in accordance with the charters and our expectations regarding the same;

 

•

the overall health and condition of the U.S. and global financial markets;

 

•

our financial condition and liquidity, including our ability to obtain additional financing to fund capital expenditures, vessel acquisitions and for other general corporate purposes and our ability to meet our financial covenants and repay our borrowings;

 

•

our expectations relating to dividend payments and expectations of our ability to make such payments including the availability of cash and the impact of constraints under our loan agreements;

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•

future acquisitions, business strategy and expected capital spending;

 

•

operating expenses, availability of key employees, crew, number of off-hire days, drydocking and survey requirements, costs of regulatory compliance, insurance costs and general and administrative costs;

 

•

general market conditions and shipping industry trends, including charter rates and factors affecting supply and demand;

 

•

assumptions regarding interest rates and inflation;

 

•

changes in the rate of growth of global and various regional economies;

 

•

risks incidental to vessel operation, including piracy, discharge of pollutants and vessel accidents and damage including total or constructive total loss;

 

•

estimated future capital expenditures needed to preserve our capital base;

 

•

our expectations about the availability of vessels to purchase, the time that it may take to construct new vessels, or the useful lives of our vessels;

 

•

our continued ability to enter into or renew charters including the re-chartering of vessels on the expiry of existing charters, or to secure profitable employment for our vessels in the spot market;

 

•

our ability to realize expected benefits from our acquisition of secondhand vessels;

 

•

our ability to capitalize on our management’s and directors’ relationships and reputations in the containership industry to its advantage;

 

•

changes in governmental and classification societies’ rules and regulations or actions taken by regulatory authorities;

 

•

expectations about the availability of insurance on commercially reasonable terms;

 

•

changes in laws and regulations (including environmental rules and regulations);

 

•

potential liability from future litigation; and

 

•

other important factors described from time to time in the reports we file with the U.S. Securities and Exchange Commission (the “SEC”).

 

Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Global Ship Lease's actual results could differ materially from those anticipated in forward-looking statements for many reasons specifically as described in Global Ship Lease's filings with the SEC. Accordingly, you should not unduly rely on these forward-looking statements, which speak only as of the date of this communication. Global Ship Lease undertakes no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this communication or to reflect the occurrence of unanticipated events. You should, however, review the factors and risks Global Ship Lease describes in the reports it will file from time to time with the SEC after the date of this communication.

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Global Ship Lease, Inc.

Interim Unaudited Condensed Consolidated Balance Sheets

(Expressed in thousands of U.S. dollars except share data)

		As of,
		September 30, 2024				December 31, 2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	260,456				138,640
Time deposits			26,450				14,000
Restricted cash			59,209				56,803
Accounts receivable, net			12,847				4,741
Inventories			15,757				15,764
Prepaid expenses and other current assets			28,861				40,464
Derivative assets			15,178				24,639
Due from related parties			495				626
Total current assets		$	419,253				295,677
NON - CURRENT ASSETS
Vessels in operation		$	1,633,329				1,664,101
Advances for vessels' acquisitions and other additions			12,447				12,210
Deferred charges, net			82,907				73,720
Other non - current assets			24,595				23,935
Derivative assets, net of current portion			6,520				16,867
Restricted cash, net of current portion			58,954				85,270
Total non - current assets			1,818,752				1,876,103
TOTAL ASSETS		$	2,238,005				2,171,780
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable		$	22,853				17,601
Accrued liabilities			38,556				28,538
Current portion of long-term debt and deferred financing costs			152,522				193,253
Current portion of deferred revenue			40,870				40,331
Due to related parties			707				717
Total current liabilities		$	255,508				280,440
LONG-TERM LIABILITIES
Long - term debt, net of current portion and deferred financing costs		$	528,015				619,175
Intangible liabilities-charter agreements			1,139				5,662
Deferred revenue, net of current portion			65,963				82,115
Total non - current liabilities			595,117				706,952
Total liabilities		$	850,625				987,392
Commitments and Contingencies			-				-
SHAREHOLDERS' EQUITY
Class A common shares - authorized 214,000,000 shares with a $0.01 par value 35,440,224 shares issued and outstanding (2023 – 35,188,323 shares)		$	355				351
Series B Preferred Shares - authorized 104,000 shares with a $0.01 par value 43,592 shares issued and outstanding (2023 – 43,592 shares)			-				-
Additional paid in capital			678,713				676,592
Retained earnings			699,583				488,105
Accumulated other comprehensive income			8,729				19,340
Total shareholders' equity			1,387,380				1,184,388
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	2,238,005				2,171,780

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 Global Ship Lease, Inc.

Interim Unaudited Condensed Consolidated Statements of Income

(Expressed in thousands of U.S. dollars)

		Three months ended September 30,								Nine months ended September 30,
		2024				2023				2024				2023
OPERATING REVENUES
Time charter revenues		$	172,546			$	173,012			$	524,099			$	489,338
Amortization of intangible liabilities-charter agreements			1,518				1,518				4,523				6,563
Total Operating Revenues			174,064				174,530				528,622				495,901
OPERATING EXPENSES:
Vessel operating expenses (include related party vessel operating expenses of $5,481 and $5,171 for each of the three month periods ended September 30, 2024 and 2023, respectively, and $16,289 and $14,072 for each of the nine month periods ended September 30, 2024 and 2023, respectively)			46,590				46,099				141,628				132,268
Time charter and voyage expenses (include related party time charter and voyage expenses of $2,170 and $2,139 for each of the three month periods ended September 30, 2024 and 2023, respectively, and $6,487 and $5,801 for each of the nine month periods ended September 30, 2024 and 2023, respectively)			6,420				6,046				17,051				18,185
Depreciation and amortization			24,965				23,980				73,775				67,336
General and administrative expenses			3,900				4,248				13,038				13,748
Operating Income			92,189				94,157				283,130				264,364
NON-OPERATING INCOME/(EXPENSES)
Interest income			4,705				2,501				12,532				6,895
Interest and other finance expenses			(12,540	)			(11,615	)			(32,883	)			(33,623	)
Other income/(expenses), net			986				(303	)			3,243				857
Fair value adjustment on derivative asset			(4,193	)			331				(4,957	)			(1,037	)
Total non-operating expenses			(11,042	)			(9,086	)			(22,065	)			(26,908	)
Income before income taxes			81,147				85,071				261,065				237,456
Income taxes			-				-				(1	)			(5	)
Net Income			81,147				85,071				261,064				237,451
Earnings allocated to Series B Preferred Shares			(2,384	)			(2,384	)			(7,152	)			(7,152	)
Net Income available to Common Shareholders		$	78,763			$	82,687			$	253,912			$	230,299

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Global Ship Lease, Inc.

Interim Unaudited Condensed Consolidated Statements of Cash Flows

(Expressed in thousands of U.S. dollars)

		Three months ended September 30,								Nine months ended September 30,
		2024				2023				2024				2023
Cash flows from operating activities:
Net income		$	81,147			$	85,071			$	261,064			$	237,451
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		$	24,965			$	23,980			$	73,775			$	67,336
Amounts reclassified to/(from) other comprehensive income			326				96				877				(80	)
Amortization of derivative assets' premium			1,178				1,149				3,473				3,085
Amortization of deferred financing costs			3,598				1,279				5,920				4,115
Amortization of intangible liabilities-charter agreements			(1,518	)			(1,518	)			(4,523	)			(6,563	)
Fair value adjustment on derivative asset			4,193				(331	)			4,957				1,037
Prepayment fees on debt repayment			870				-				870				-
Stock-based compensation expense			2,122				2,505				6,582				7,684
Changes in operating assets and liabilities:
Decrease/(increase) in accounts receivable and other assets		$	7,326			$	(1,049	)		$	2,837			$	(3,511	)
(Increase)/decrease in inventories			(186	)			(715	)			7				(1,877	)
(Increase) in derivative asset			(81	)			-				(109	)			-
Increase/(decrease) in accounts payable and other liabilities			11,088				(183	)			10,949				(6,098	)
Decrease/(increase) in related parties' balances, net			477				(745	)			121				-
(Decrease) in deferred revenue			(1,159	)			(12,708	)			(15,613	)			(468	)
Payments for drydocking and special survey costs (1)			(16,137	)			(9,509	)			(26,879	)			(32,562	)
Unrealized foreign exchange loss/(gain)			3				(1	)			(1	)			-
Net cash provided by operating activities		$	118,212			$	87,321			$	324,307			$	269,549
Cash flows from investing activities:
Acquisition of vessels		$	-			$	-			$	-			$	(123,300	)
Cash paid for vessel expenditures			(4,647	)			(8,018	)			(9,350	)			(12,569	)
Advances for vessel acquisitions and other additions			(4,466	)			(841	)			(11,993	)			(6,786	)
Net proceeds from sale of vessel			-				-				-				5,940
Time deposits withdrawn (placed)			26,550				(1,400	)			(12,450	)			(5,450	)
Net cash provided by/(used in) investing activities		$	17,437			$	(10,259	)		$	(33,793	)		$	(142,165	)
Cash flows from financing activities:
Proceeds from drawdown of credit facilities			300,000				-				300,000				76,000
Repayment of credit facilities/sale and leaseback			(41,982	)			(50,996	)			(144,045	)			(151,267	)
Repayment of refinanced debt, including prepayment fees			(292,010	)			-				(292,010	)			-
Deferred financing costs paid			(2,625	)			-				(2,625	)			(1,140	)
Net proceeds from offering of Class A common shares, net of offering costs			652				-				652				-
Cancellation of Class A common shares			-				(3,441	)			(4,994	)			(20,421	)
Class A common shares-dividend paid			(15,965	)			(13,300	)			(42,434	)			(39,991	)
Series B preferred shares-dividend paid			(2,384	)			(2,384	)			(7,152	)			(7,152	)
Net cash used in financing activities		$	(54,314	)		$	(70,121	)		$	(192,608	)		$	(143,971	)
Net increase/(decrease) in cash and cash equivalents and restricted cash			81,335				6,941				97,906				(16,587	)
Cash and cash equivalents and restricted cash at beginning of the period			297,284				246,402				280,713				269,930
Cash and cash equivalents and restricted cash at end of the period		$	378,619			$	253,343			$	378,619			$	253,343
Supplementary Cash Flow Information:
Cash paid for interest			12,654				17,683				43,280				51,012
Cash received from interest rate caps			6,832				8,464				21,198				24,380
Non-cash financing activities:
Unpaid offering costs			115				-				115				-
Unrealized loss on derivative assets			(10,637	)			(380	)			(14,961	)			(5,611	)

 

(1)

The Company has made reclassifications to the prior year statement of cash flows to correct and reclassify payments for drydocking and special survey costs from investing outflows to operating outflows which resulted in a decrease in investing outflows and increase in operating outflows of $15,086 and $33,386 for the three months and nine months ended September 30, 2023, respectively. The Company evaluated the reclassifications from both a quantitative and qualitative perspective and determined the impacts were immaterial to the previously issued interim financial statements.

Page 16

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Exhibit 99.2

GLOBAL SHIP LEASE, INC.

INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PERIOD ENDED SEPTEMBER 30, 2024

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GLOBAL SHIP LEASE, INC.

Index		Page
INTERIM UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS AS AT SEPTEMBER 30, 2024 AND DECEMBER 31, 2023		F-1
INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER  30, 2024 AND 2023		F-2
INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE NINE MONTHS ENDED SEPTEMBER  30, 2024 AND 2023		F-3
INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023		F-4
INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023		F-5
NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS		F-7

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Global Ship Lease, Inc.

Interim Unaudited Condensed Consolidated Balance Sheets

(Expressed in thousands of U.S. dollars except share data)

						As of
		Note				September 30, 2024				December 31, 2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents						$	260,456			$	138,640
Time deposits							26,450				14,000
Restricted cash							59,209				56,803
Accounts receivable, net							12,847				4,741
Inventories							15,757				15,764
Prepaid expenses and other current assets							28,861				40,464
Derivative assets			5				15,178				24,639
Due from related parties			7				495				626
Total current assets						$	419,253			$	295,677
NON - CURRENT ASSETS
Vessels in operation			3			$	1,633,329			$	1,664,101
Advances for vessels acquisitions and other additions			3				12,447				12,210
Deferred charges, net							82,907				73,720
Other non-current assets			2g				24,595				23,935
Derivative assets, net of current portion			5				6,520				16,867
Restricted cash, net of current portion							58,954				85,270
Total non - current assets							1,818,752				1,876,103
TOTAL ASSETS						$	2,238,005			$	2,171,780
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable						$	22,853			$	17,601
Accrued liabilities							38,556				28,538
Current portion of long - term debt			6				152,522				193,253
Current portion of deferred revenue							40,870				40,331
Due to related parties			7				707				717
Total current liabilities						$	255,508			$	280,440
LONG - TERM LIABILITIES
Long - term debt, net of current portion and deferred financing costs			6			$	528,015			$	619,175
Intangible liabilities - charter agreements			4				1,139				5,662
Deferred revenue, net of current portion							65,963				82,115
Total non - current liabilities							595,117				706,952
Total liabilities						$	850,625			$	987,392
Commitments and Contingencies			8				-				-
SHAREHOLDERS' EQUITY
Class A common shares - authorized 214,000,000 shares with a $0.01 par value 35,440,224 shares issued and outstanding (2023 – 35,188,323 shares)			9			$	355			$	351
Series B Preferred Shares - authorized 104,000 shares with a $0.01 par value 43,592 shares issued and outstanding (2023 - 43,592 shares)			9				-				-
Additional paid in capital							678,713				676,592
Retained Earnings							699,583				488,105
Accumulated other comprehensive income							8,729				19,340
Total shareholders' equity							1,387,380				1,184,388
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY						$	2,238,005			$	2,171,780

See accompanying notes to interim unaudited condensed consolidated financial statements

F-1

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Global Ship Lease, Inc.

Interim Unaudited Condensed Consolidated Statements of Income

(Expressed in thousands of U.S. dollars except share and per share data)

						Nine months ended September 30,
		Note				2024				2023
OPERATING REVENUES
Time charter revenues						$	524,099			$	489,338
Amortization of intangible liabilities-charter agreements			4				4,523				6,563
Total Operating Revenues							528,622				495,901
OPERATING EXPENSES
Vessel operating expenses (include related party vessel operating expenses of $16,289 and $14,072 for each of the periods ended September 30, 2024, and 2023, respectively)			7				141,628				132,268
Time charter and voyage expenses (include related party time charter and voyage expenses of $6,487 and $5,801 for each of the periods ended September 30, 2024, and 2023, respectively)			7				17,051				18,185
Depreciation and amortization			3				73,775				67,336
General and administrative expenses							13,038				13,748
Operating Income							283,130				264,364
NON-OPERATING INCOME/(EXPENSES)
Interest income							12,532				6,895
Interest and other finance expenses							(32,883	)			(33,623	)
Other income, net							3,243				857
Fair value adjustment on derivative asset			5				(4,957	)			(1,037	)
Total non-operating expenses							(22,065	)			(26,908	)
Income before income taxes							261,065				237,456
Income taxes							(1	)			(5	)
Net Income							261,064				237,451
Earnings allocated to Series B Preferred Shares			9				(7,152	)			(7,152	)
Net Income available to Common Shareholders						$	253,912			$	230,299
Earnings per Share
Weighted average number of Class A common shares outstanding
Basic			11				35,272,574				35,473,382
Diluted			11				35,621,199				36,071,632
Net Earnings per Class A common share
Basic			11			$	7.20			$	6.49
Diluted			11			$	7.13			$	6.38

See accompanying notes to interim unaudited condensed consolidated financial statements

F-2

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Global Ship Lease, Inc.

Interim Unaudited Condensed Consolidated Statements of Comprehensive Income

(Expressed in thousands of U.S. dollars)

						Nine months ended September 30,
		Note				2024				2023
Net Income available to Common Shareholders						$	253,912			$	230,299
Other comprehensive income:
Cash Flow Hedge:
Unrealized loss on derivative assets			5				(14,961	)			(5,611	)
Amortization of interest rate cap premium							3,473				3,085
Amounts reclassified to/(from) earnings							877				(80	)
Total Other Comprehensive Loss							(10,611	)			(2,606	)
Total Comprehensive Income						$	243,301			$	227,693

See accompanying notes to interim unaudited condensed consolidated financial statements

F-3

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Global Ship Lease, Inc.

Interim Unaudited Condensed Consolidated Statements of Cash Flows

(Expressed in thousands of U.S. dollars)

						Nine months ended September 30,
		Note				2024				2023
Cash flows from operating activities:
Net Income							261,064				237,451
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			3				73,775				67,336
Amounts reclassified to/(from) other comprehensive income							877				(80	)
Amortization of derivative assets’ premium							3,473				3,085
Amortization of deferred financing costs			6				5,920				4,115
Amortization of intangible liabilities - charter agreements			4				(4,523	)			(6,563	)
Fair value adjustment on derivative asset			5				4,957				1,037
Prepayment fees on debt repayment							870				-
Stock-based compensation expense			10				6,582				7,684
Changes in operating assets and liabilities:
Decrease/(increase) in accounts receivable and other assets							2,837				(3,511	)
Decrease/(increase) in inventories							7				(1,877	)
Increase in derivative asset			5				(109	)			-
Increase/(decrease) in accounts payable and other liabilities							10,949				(6,098	)
Decrease in related parties' balances, net			7				121				-
Decrease in deferred revenue							(15,613	)			(468	)
Payments for drydocking and special survey costs							(26,879	)			(32,562	)
Unrealized foreign exchange gain							(1	)			-
Net cash provided by operating activities						$	324,307			$	269,549
Cash flows from investing activities:
Acquisition of vessels							-				(123,300	)
Cash paid for vessel expenditures							(9,350	)			(12,569	)
Advances for vessels acquisitions and other additions							(11,993	)			(6,786	)
Net proceeds from sale of vessel							-				5,940
Time deposits acquired							(12,450	)			(5,450	)
Net cash used in investing activities						$	(33,793	)		$	(142,165	)
Cash flows from financing activities:
Proceeds from drawdown of credit facilities			6				300,000				76,000
Repayment of credit facilities and sale and leaseback			6				(144,045	)			(151,267	)
Repayment of refinanced debt, including prepayment fees			6				(292,010	)			-
Deferred financing costs paid			6				(2,625	)			(1,140	)
Net proceeds from offering of Class A common shares, net of offering costs			9				652				-
Cancellation of Class A common shares			9				(4,994	)			(20,421	)
Class A common shares - dividend paid			9				(42,434	)			(39,991	)
Series B Preferred Shares - dividend paid			9				(7,152	)			(7,152	)
Net cash used in financing activities						$	(192,608	)		$	(143,971	)
Net increase/(decrease) in cash and cash equivalents and restricted cash							97,906				(16,587	)
Cash and cash equivalents and restricted cash at beginning of the period							280,713				269,930
Cash and cash equivalents and restricted cash at end of the period						$	378,619			$	253,343
Supplementary Cash Flow Information:
Cash paid for interest						$	43,280			$	51,012
Cash received from interest rate caps							21,198				24,380
Non-cash financing activities:
Unpaid offering costs							115				-
Unrealized loss on derivative assets							(14,961	)			(5,611	)

See accompanying notes to interim unaudited condensed consolidated financial statements

 

F-4

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Global Ship Lease, Inc.

Interim Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity

(Expressed in thousands of U.S. dollars except share data)

		Number of Common Shares at par value $0.01				Number of Series B Preferred Shares at par value $0.01				Common Shares				Series B Preferred Shares				Additional paid-in capital				Retained Earnings				Accumulated Other Comprehensive Income				Total Shareholders' Equity
Balance at December 31, 2022			35,990,288				43,592			$	359			$	-			$	688,262			$	246,390			$	31,480			$	966,491
Stock-based compensation expense (Note 10)			82,944				-				1				-				2,673				-				-				2,674
Cancellation of Class A common shares (Note 9)			(582,178	)			-				(6	)			-				(9,982	)			-				-				(9,988	)
Issuance of Series B Preferred shares, net of offering costs (Note 9)			-				-				-				-				102				-				-				102
Other comprehensive loss			-				-				-				-				-				-				(7,182	)			(7,182	)
Net Income for the period			-				-				-				-				-				74,604				-				74,604
Series B Preferred Shares dividend (Note 9)			-				-				-				-				-				(2,384	)			-				(2,384	)
Class A common shares dividend (Note 9)			-				-				-				-				-				(13,351	)			-				(13,351	)
Balance at March 31, 2023			35,491,054				43,592			$	354			$	-			$	681,055			$	305,259			$	24,298			$	1,010,966
Stock-based compensation expense (Note 10)			59,924				-				1				-				2,504				-				-				2,505
Cancellation of Class A common shares (Note 9)			(385,064	)			-				(4	)			-				(6,988	)			-				-				(6,992	)
Other comprehensive income			-				-				-				-				-				-				3,711				3,711
Net Income for the period			-				-				-				-				-				77,776				-				77,776
Series B Preferred Shares dividend (Note 9)			-				-				-				-				-				(2,384	)			-				(2,384	)
Class A common shares dividend (Note 9)			-				-				-				-				-				(13,340	)			-				(13,340	)
Balance at June 30, 2023			35,165,914				43,592			$	351			$	-			$	676,571			$	367,311			$	28,009			$	1,072,242

Stock-based compensation expense (Note 10)			213,594				-				2				-				2,503				-				-				2,505
Cancellation of Class A common shares (Note 9)			(187,479	)			-				(2	)			-				(3,439	)			-				-				(3,441	)
Other comprehensive income			-				-				-				-				-				-				865				865
Net Income for the period			-				-				-				-				-				85,071				-				85,071
Series B Preferred Shares dividend (Note 9)			-				-				-				-				-				(2,384	)			-				(2,384	)
Class A common shares dividend (Note 9)			-				-				-				-				-				(13,300	)			-				(13,300	)
Balance at September 30, 2023			35,192,029				43,592			$	351			$	-			$	675,635			$	436,698			$	28,874			$	1,141,558

F-5

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Global Ship Lease, Inc.

Interim Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity

(Expressed in thousands of U.S. dollars except share data)

		Number of Common Shares at par value $0.01				Number of Series B Preferred Shares at par value $0.01				Common Shares				Series B Preferred Shares				Additional paid-in capital				Retained Earnings				Accumulated Other Comprehensive Income				Total Shareholders' Equity
Balance at December 31, 2023			35,188,323				43,592			$	351			$	-			$	676,592			$	488,105			$	19,340			$	1,184,388
Stock-based compensation expense (Note 10)			141,356				-				2				-				2,302				-				-				2,304
Cancellation of Class A common shares (Note 9)			(251,772	)			-				(2	)			-				(4,992	)			-				-				(4,994	)
Other comprehensive income			-				-				-				-				-				-				241				241
Net Income for the period			-				-				-				-				-				91,890				-				91,890
Series B Preferred Shares dividend (Note 9)			-				-				-				-				-				(2,384	)			-				(2,384	)
Class A common shares dividend (Note 9)			-				-				-				-				-				(13,214	)			-				(13,214	)
Balance at March 31, 2024			35,077,907				43,592			$	351			$	-			$	673,902			$	564,397			$	19,581			$	1,258,231
Stock-based compensation expense (Note 10)			182,122				-				2				-				2,154				-				-				2,156
Other comprehensive loss			-				-				-				-				-				-				(1,719	)			(1,719	)
Net Income for the period			-				-				-				-				-				88,027				-				88,027
Series B Preferred Shares dividend (Note 9)			-				-				-				-				-				(2,384	)			-				(2,384	)
Class A common shares dividend (Note 9)			-				-				-				-				-				(13,255	)			-				(13,255	)
Balance at June 30, 2024			35,260,029				43,592			$	353			$	-			$	676,056			$	636,785			$	17,862			$	1,331,056
Stock-based compensation expense (Note 10)			153,089				-				2				-				2,120				-				-				2,122
Issuance of Class A common shares, net of offering costs			27,106				-				-				-				537				-				-				537
Other comprehensive loss			-				-				-				-				-				-				(9,133	)			(9,133	)
Net Income for the period			-				-				-				-				-				81,147				-				81,147
Series B Preferred Shares dividend (Note 9)			-				-				-				-				-				(2,384	)			-				(2,384	)
Class A common shares dividend (Note 9)			-				-				-				-				-				(15,965	)			-				(15,965	)
Balance at September 30, 2024			35,440,224				43,592			$	355			$	-			$	678,713			$	699,583			$	8,729			$	1,387,380

See accompanying notes to interim unaudited condensed consolidated financial statements

 

F-6

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Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

(Expressed in thousands of U.S. dollars except share data)

1.          Description of Business

 

The Company’s business is to own and charter out containerships to leading liner companies.

On August 14, 2008, Global Ship Lease, Inc. (the “Company”) merged indirectly with Marathon Acquisition Corp., a company then listed on The American Stock Exchange, and with the pre-existing Global Ship Lease, Inc. GSL Holdings, Inc. was the surviving entity (the “Marathon Merger”), changed its name to Global Ship Lease, Inc. and became listed on The New York Stock Exchange (the “NYSE”).

On November 15, 2018, the Company completed a transformative transaction and acquired Poseidon Containers’ 20 containerships, one of which, the Argos, was contracted to be sold, which sale was completed in December 2018, (the “Poseidon Transaction”).

In 2021, the Company purchased 23 vessels. The Company purchased seven containerships of approximately 6,000 TEU each (the “Seven Vessels”), 12 containerships from Borealis Finance LLC (the “Twelve Vessels”) and four 5,470 TEU Panamax containerships (the “Four Vessels”). Also on June 30, 2021, vessel La Tour was sold.

During the second quarter of 2023, the Company purchased four 8,544 TEU vessels for an aggregate purchase price of $123,300, which were delivered in various dates in May and June 2023.

With these transactions and following the sale of GSL Amstel on March 23, 2023, the Company’s fleet comprises 68 containerships with average age weighted by TEU capacity of 18.0 years.

 

The following table provides information about the 68 vessels owned as at September 30, 2024.

Company Name (1)	Country of Incorporation	Vessel Name	Capacity in TEUs (2)	Year Built	Earliest Charter Expiry Date
Global Ship Lease 54 LLC	Liberia	CMA CGM Thalassa	11,040	2008	4Q25
Laertis Marine LLC	Marshall Islands	Zim Norfolk	9,115	2015	2Q27
Penelope Marine LLC	Marshall Islands	Zim Xiamen	9,115	2015	3Q27
Telemachus Marine LLC	Marshall Islands	Anthea Y	9,115	2015	3Q25
Global Ship Lease 53 LLC	Liberia	MSC Tianjin	8,603	2005	3Q27(4)
Global Ship Lease 52 LLC	Liberia	MSC Qingdao	8,603	2004	3Q27(4)
Global Ship Lease 43 LLC	Liberia	GSL Ningbo	8,603	2004	3Q27
Global Ship Lease 72 LLC	Liberia	GSL Alexandra	8,544	2004	3Q25(5)
Global Ship Lease 73 LLC	Liberia	GSL Sofia	8,544	2003	3Q25(5)
Global Ship Lease 74 LLC	Liberia	GSL Effie	8,544	2003	3Q25(5)
Global Ship Lease 75 LLC	Liberia	GSL Lydia	8,544	2003	2Q25(5)
Global Ship Lease 30 Limited	Marshall Islands	GSL Eleni	7,847	2004	4Q27(6)
Global Ship Lease 31 Limited	Marshall Islands	GSL Kalliopi	7,847	2004	4Q27(6)
Global Ship Lease 32 Limited	Marshall Islands	GSL Grania	7,847	2004	4Q27(6)
Alexander Marine LLC	Marshall Islands	Colombia Express	7,072	2013	4Q28(7)
Hector Marine LLC	Marshall Islands	Kristina	7,072	2013	4Q29(7)
Ikaros Marine LLC	Marshall Islands	Costa Rica Express (ex Katherine) (14)	7,072	2013	2Q29(7)
Philippos Marine LLC	Marshall Islands	Alexandra	7,072	2013	2Q29(7)
Aristoteles Marine LLC	Marshall Islands	Mexico Express (ex Alexis) (14)	6,910	2015	3Q29(7)
Menelaos Marine LLC	Marshall Islands	Jamaica Express (ex Olivia I) (14)	6,910	2015	3Q29(7)
Global Ship Lease 35 LLC	Liberia	GSL Nicoletta	6,840	2002	1Q28(8)
Global Ship Lease 36 LLC	Liberia	GSL Christen	6,840	2002	4Q27(8)
Global Ship Lease 48 LLC	Liberia	CMA CGM Berlioz	7,023	2001	4Q25
Leonidas Marine LLC	Marshall Islands	Agios Dimitrios	6,572	2011	2Q27(4)
Global Ship Lease 33 LLC	Liberia	GSL Vinia	6,080	2004	1Q28(9)
Global Ship Lease 34 LLC	Liberia	GSL Christel Elisabeth	6,080	2004	1Q28(9)

F-7

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Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

(Expressed in thousands of U.S. dollars except share data)

1.          Description of Business (continued)

Company Name (1)	Country of Incorporation	Vessel Name	Capacity in TEUs (2)	Year Built	Earliest Charter Expiry Date
GSL Arcadia LLC	Liberia	GSL Arcadia	6,008	2000	1Q25(10)
GSL Melita LLC	Liberia	GSL Melita	6,008	2001	3Q25(10)
GSL Maria LLC	Liberia	GSL Maria	6,008	2001	4Q25(10)
GSL Violetta LLC	Liberia	GSL Violetta	6,008	2000	2Q25(10)
GSL Tegea LLC	Liberia	GSL Tegea	5,994	2001	3Q25(10)
GSL Dorothea LLC	Liberia	GSL Dorothea	5,992	2001	2Q25(10)
GSL MYNY LLC	Liberia	GSL MYNY	6,008	2000	2Q25(10)
Tasman Marine LLC	Marshall Islands	Tasman	5,936	2000	1Q25
Hudson Marine LLC	Marshall Islands	Dimitris Y	5,936	2000	2Q25
Drake Marine LLC	Marshall Islands	Ian H	5,936	2000	4Q27(11)
Global Ship Lease 68 LLC (3)	Liberia	GSL Kithira	5,470	2009	4Q27(12)
Global Ship Lease 69 LLC (3)	Liberia	GSL Tripoli	5,470	2009	3Q27(12)
Global Ship Lease 70 LLC (3)	Liberia	GSL Syros	5,470	2010	4Q27(12)
Global Ship Lease 71 LLC (3)	Liberia	GSL Tinos	5,470	2010	3Q27(12)
Hephaestus Marine LLC	Marshall Islands	Dolphin II	5,095	2007	1Q25
Zeus One Marine LLC	Marshall Islands	Orca I	5,095	2006	2Q25
Global Ship Lease 47 LLC	Liberia	GSL Château d’If	5,089	2007	4Q26
GSL Alcazar Inc.	Marshall Islands	CMA CGM Alcazar	5,089	2007	3Q26
Global Ship Lease 55 LLC	Liberia	GSL Susan	4,363	2008	3Q27
Global Ship Lease 50 LLC	Liberia	CMA CGM Jamaica	4,298	2006	1Q28
Global Ship Lease 49 LLC	Liberia	CMA CGM Sambhar	4,045	2006	1Q28
Global Ship Lease 51 LLC	Liberia	CMA CGM America	4,045	2006	1Q28
Global Ship Lease 57 LLC	Liberia	GSL Rossi	3,421	2012	1Q26
Global Ship Lease 58 LLC	Liberia	GSL Alice	3,421	2014	2Q25
Global Ship Lease 59 LLC	Liberia	GSL Melina	3,404	2013	4Q26
Global Ship Lease 60 LLC	Liberia	GSL Eleftheria	3,421	2013	3Q25
Global Ship Lease 61 LLC	Liberia	GSL Mercer	2,824	2007	1Q27(13)
Global Ship Lease 62 LLC	Liberia	Matson Molokai	2,824	2007	2Q25
Global Ship Lease 63 LLC	Liberia	GSL Lalo	2,824	2006	2Q25
Global Ship Lease 42 LLC	Liberia	GSL Valerie	2,824	2005	1Q25
Pericles Marine LLC	Marshall Islands	Athena	2,980	2003	2Q25
Global Ship Lease 64 LLC	Liberia	GSL Elizabeth	2,741	2006	2Q26
Global Ship Lease 65 LLC	Liberia	GSL Chloe	2,546	2012	1Q27(13)
Global Ship Lease 66 LLC	Liberia	GSL Maren	2,546	2014	1Q26
Aris Marine LLC	Marshall Islands	Maira	2,506	2000	4Q24
Aphrodite Marine LLC	Marshall Islands	Nikolas	2,506	2000	4Q24
Athena Marine LLC	Marshall Islands	Newyorker	2,506	2001	1Q25
Global Ship Lease 38 LLC	Liberia	Manet	2,288	2001	4Q24
Global Ship Lease 40 LLC	Liberia	Keta	2,207	2003	1Q25
Global Ship Lease 41 LLC	Liberia	Julie	2,207	2002	2Q25
Global Ship Lease 45 LLC	Liberia	Kumasi	2,220	2002	1Q25
Global Ship Lease 44 LLC	Liberia	Akiteta	2,220	2002	4Q24

F-8

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Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

(Expressed in thousands of U.S. dollars except share data)

1.          Description of Business (continued)

(1) All subsidiaries are 100% owned, either directly or indirectly;

(2) Twenty-foot Equivalent Units;

(3) Currently, under a sale and leaseback transaction (see note 2g);

(4) MSC Tianjin, MSC Qingdao and Agios Dimitrios were fixed for minimum 36 months – maximum 38 months. The new charters commenced after the vessels were drydocked. Agios Dimitrios new charter commenced in 2Q 2024. MSC Tianjin and MSC Qingdao new charters commenced in 3Q 2024. MSC Qingdao & Agios Dimitrios are fitted with Exhaust Gas Cleaning Systems (“scrubbers”);

(5) GSL Alexandra, GSL Sofia, GSL Lydia and GSL Effie delivered in 2Q 2023. Contract cover for each vessel is for a minimum firm period of 24 months from the date each vessel was delivered, with charterers holding one year extension options;

(6) GSL Eleni, GSL Kalliopi and GSL Grania were forward fixed for 35 – 38 months to commence after drydocking, after which the charterer has the option to extend each charter for a further 12 – 16 months;

(7) Colombia Express (ex Mary), Kristina, Costa Rica Express (ex Katherine), Alexandra, Mexico Express (ex Alexis), Jamaica Express (ex Olivia I) were forward fixed for 60 months +/- 45 days, after which the charterer has the option to extend each charter for a further two years. The new charter for Colombia Express commenced in early 2024 and the new charters for Costa Rica Express, Alexandra and Jamaica Express commenced in 3Q 2024. The new charters for Kristina and Mexico Express are scheduled to commence in 4Q 2024 upon completion of drydocking;

(8) GSL Nicoletta and GSL Christen were forward fixed for 39 – 42 months and 37 – 40 months, respectively, expected to commence in 4Q 2024;

(9) GSL Vinia and GSL Christel Elizabeth were both forward fixed for 36 – 40 months to commence after drydocking, after which the charterer has the option to extend each charter for a further 12 – 15 months. The new charters are both scheduled to commence in 1Q 2025;

(10) GSL Maria, GSL Violetta, GSL Arcadia, GSL MYNY, GSL Melita, GSL Tegea and GSL Dorothea. Contract cover for each vessel is for a firm period of at least three years from the date each vessel was delivered in 2021. Thereafter, the charterer has the option to extend each charter for a further 12 months, after which they have the option to extend each charter for a second time – for a period concluding immediately prior to each respective vessel’s 25^th year drydocking and special survey. GSL Arcadia, GSL Dorothea, GSL Tegea, GSL Melita and GSL MYNY charterer’s first options were exercised in 1H 2024, GSL Maria and GSL Violetta charterer’s first options were exercised in 3Q 2024;

(11) Ian H was forward fixed for 35 – 36 months. The new charter is scheduled to commence in 4Q 2024, following the completion of its scheduled drydocking;

(12) GSL Kithira, GSL Tripoli, GSL Syros, GSL Tinos were chartered for a period of three years from their delivery dates in 2021, after which the charterer had the option to extend each charter for a further three years. GSL Tripoli, GSL Syros, GSL Tinos charterer’s options were exercised in 2Q 2024. GSL Kithira charterer’s option was exercised in 3Q 2024;

(13) GSL Mercer and GSL Chloe were both forward fixed for 23.5 – 26 months. The new charters are both expected to commence in 1Q 2025;

(14) On July 9, 2024, Katherine was renamed to Costa Rica Express. On August 20, 2024, Olivia I was renamed to Jamaica Express. On September 20, 2024, Alexis was renamed to Mexico Express.

2.          Summary of Significant Accounting Policies and Disclosures

(a)	Basis of Presentation

 

The accompanying financial information is unaudited and reflects all adjustments, consisting solely of normal recurring adjustments, which, in the opinion of management, are necessary for a fair statement of financial position and results of operations for the periods presented. The financial information does not include all disclosures required under United States Generally Accepted Accounting Principles (“US GAAP”) for annual financial statements. These interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements as of December 31, 2023 filed with the Securities and Exchange Commission on March 20, 2024 in the Company’s Annual Report on Form 20-F.

 

The Company has made reclassifications to the prior year statement of cash flows to correct and reclassify payments for drydocking and special survey costs from investing outflows to operating outflows which resulted in a decrease in investing outflows and increase in operating outflows of $6,305, $18,300, and $33,386 for the three months ended March 31, 2023, six months ended June 30, 2023, and nine months ended September 30, 2023, respectively. The Company evaluated the reclassifications from both a quantitative and qualitative perspective and determined the impacts were immaterial to the previously issued interim financial statements.

F-9

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Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

(Expressed in thousands of U.S. dollars except share data)

2.          Summary of Significant Accounting Policies and Disclosures (continued)

 

Adoption of new accounting standards

In March 2020, the FASB issued ASU 2020-4, “Reference Rate Reform (Topic 848)” (“ASU 2020-4”), which provides optional guidance intended to ease the potential burden in accounting for the expected discontinuation of LIBOR as a reference rate in the financial markets. The guidance can be applied to modifications made to certain contracts to replace LIBOR with a new reference rate. The guidance, if elected, will permit entities to treat such modifications as the continuation of the original contract, without any required accounting reassessments or remeasurements. ASU 2020-4 was effective for the Company beginning on March 12, 2020, and the Company applied the amendments prospectively through December 31, 2022. Because the current relief in Topic 848 may not cover a period of time during which a significant number of modifications may take place, in December 2022 the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848)”. The amendments of this update defer the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. During 2023, all Company’s loan agreements have been amended and restated to take into effect the transition from LIBOR to the Secured Overnight Financing Rate (“SOFR”) and the relevant provisions on a replacement rate. In addition, the Company’s interest rate caps automatically transited to 1-month Compounded SOFR on July 1, 2023, at a level of 0.64%. There was no impact to the Company’s interim unaudited condensed consolidated financial statements for the period ended September 30, 2024, as a result of adopting this standard.

(b)	Principles of Consolidation

The accompanying interim unaudited condensed consolidated financial information include the financial statements of the Company and its wholly owned subsidiaries; the Company has no other interests. All significant intercompany balances and transactions have been eliminated in the Company’s interim unaudited condensed consolidated financial statements.

(c)	Use of estimates

The preparation of interim unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates under different assumptions and/or conditions.

(d)	Vessels in operation

 

Vessels are generally recorded at their historical cost, which consists of the acquisition price and any material expenses incurred upon acquisition, adjusted for the fair value of intangible assets or liabilities associated with above or below market charters attached to the vessels at acquisition. See Intangible Assets and Liabilities at note 2(e) below. Vessels acquired in a corporate transaction accounted for as an asset acquisition are stated at the acquisition price, which consists of consideration paid, plus transaction costs, considering pro rata allocation based on vessels fair value at the acquisition date. Vessels acquired in a corporate transaction accounted for as a business combination are recorded at fair value. Vessels acquired as part of the Marathon Merger in 2008 were accounted for under ASC 805, which required that the vessels be recorded at fair value, less the negative goodwill arising as a result of the accounting for the merger.

 

Subsequent expenditures for major improvements and upgrades are capitalized, provided they appreciably extend the life, increase the earnings capacity or improve the efficiency or safety of the vessels.

 

Borrowing costs incurred during the construction of vessels or as part of the prefinancing of the acquisition of vessels are capitalized. There was no capitalized interest for the nine months ended September 30, 2024, and 2023.

 

Vessels are stated less accumulated depreciation and impairment, if applicable. Vessels are depreciated to their estimated residual value using the straight-line method over their estimated useful lives which are reviewed on an ongoing basis to ensure they reflect current technology, service potential and vessel structure. The useful lives are estimated to be 30 years from original delivery by the shipyard.

 

Management estimates the residual values of the Company’s container vessels based on a scrap value cost of steel times the weight of the vessel noted in lightweight tons (LWT). Residual values are periodically reviewed and revised to recognize changes in conditions, new regulations or other reasons. Revision of residual values affect the depreciable amount of the vessels and affects depreciation expense in the period of the revision and future periods. Management estimated the residual values of its vessels based on scrap rate of $400 per LWT.

 

F-10

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Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

(Expressed in thousands of U.S. dollars except share data)

2.          Summary of Significant Accounting Policies and Disclosures (continued)

(d)	Vessels in operation (continued)

 

For any vessel group which is impaired, the impairment charge is recorded against the cost of the vessel and the accumulated depreciation as at the date of impairment is removed from the accounts.

 

The cost and related accumulated depreciation of assets retired or sold are removed from the accounts at the time of sale or retirement and any gain or loss is included in the interim unaudited condensed Consolidated Statements of Income.

(e)	Intangible assets and liabilities – charter agreements

The Company’s intangible assets and liabilities consist of unfavorable lease terms on charter agreements acquired in assets acquisitions. When intangible assets or liabilities associated with the acquisition of a vessel are identified, they are recorded at fair value. Fair value is determined by reference to market data and the discounted amount of expected future cash flows. Where charter rates are higher than market charter rates, an intangible asset is recorded, based on the difference between the acquired charter rate and the market charter rate for an equivalent vessel and equivalent duration of charter party at the date the vessel is delivered. Where charter rates are less than market charter rates, an intangible liability is recorded, based on the difference between the acquired charter rate and the market charter rate for an equivalent vessel. The determination of the fair value of acquired assets and liabilities requires the Company to make significant assumptions and estimates of many variables including market charter rates (including duration), the level of utilization of its vessels and its weighted average cost-of capital (“WACC”). The estimated market charter rate (including duration) is considered a significant assumption. The use of different assumptions could result in a material change in the fair value of these items, which could have a material impact on the Company’s financial position and results of operations. The amortizable value of favorable and unfavorable leases is amortized over the remaining life of the relevant lease term and the amortization expense or income respectively is included under the caption “Amortization of intangible liabilities-charter agreements” in the interim unaudited condensed Consolidated Statements of Income. For any vessel group which is impaired, the impairment charge is recorded against the cost of the vessel and the accumulated depreciation as at the date of impairment is removed from the accounts.

(f)	Impairment of Long-lived assets

Tangible fixed assets, such as vessels, that are held and used or to be disposed of by the Company are reviewed for impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable. In these circumstances, the Company performs step one of the impairment test by comparing the undiscounted projected net operating cash flows for each vessel group to its carrying value. A vessel group comprises the vessel, the unamortized portion of deferred drydocking related to the vessel and the related carrying value of the intangible asset or liability (if any) with respect to the time charter attached to the vessel at its purchase. If the undiscounted projected net operating cash flows of the vessel group are less than its carrying amount, management proceeds to step two of the impairment assessment by comparing the vessel group’s carrying amount to its fair value, including any applicable charter, and an impairment loss is recorded equal to the difference between the vessel group’s carrying value and fair value. Fair value is determined with the assistance from valuations obtained from third party independent ship brokers.

The Company uses a number of assumptions in projecting its undiscounted net operating cash flows analysis including, among others, (i) revenue assumptions for charter rates on expiry of existing charters, which are based on forecast charter rates, where relevant, in the four years from the date of the impairment test and a reversion to the historical mean of time charter rates for each vessel thereafter (ii) off-hire days, which are based on actual off-hire statistics for the Company’s fleet (iii) operating costs, based on current levels escalated over time based on long term trends (iv) dry docking frequency, duration and cost (v) estimated useful life, which is assessed as a total of 30 years from original delivery by the shipyard and (vi) scrap values.

Revenue assumptions are based on contracted charter rates up to the end of the existing contract of each vessel, and thereafter, estimated time charter rates for the remaining life of the vessel. The estimated time charter rate used for non-contracted revenue days of each vessel is considered a significant assumption. Recognizing that the container shipping industry is cyclical and subject to significant volatility based on factors beyond the Company’s control, management believes that using forecast charter rates in the four years from the date of the impairment assessment and a reversion to the historical mean of time charter rates thereafter, represents a reasonable benchmark for the estimated time charter rates for the non-contracted revenue days, and takes into account the volatility and cyclicality of the market.

F-11

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Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

(Expressed in thousands of U.S. dollars except share data)

2.          Summary of Significant Accounting Policies and Disclosures (continued)

(f)	Impairment of Long-lived assets

During the nine months ended September 30, 2024, and 2023, the Company evaluated the impact of the current economic situation on the recoverability of all its vessel groups and has determined that there were no events or changes in circumstances which indicated that their carrying amounts may not be recoverable. Accordingly, there were no triggering events and no impairment test was performed for the nine months ended September 30, 2024 and 2023.

Through the latter part of 2023, the Company noted that events and circumstances triggered the existence of potential impairment for some of the Company’s vessel groups. These indicators included volatility in the charter market and the vessels’ market values, as well as the potential impact of the current container sector on management’s expectation for future revenues. As a result, the Company performed step one of the impairment assessment of each of the Company’s vessel groups by comparing the undiscounted projected net operating cash flows for each vessel group to their carrying value and step two of the impairment analysis was required for two vessel groups, as their undiscounted projected net operating cash flows did not exceed their carrying value. As a result, as of December 31, 2023, the Company recorded an impairment loss of $18,830 for two vessel groups with a total aggregate carrying amount of $43,830 which was written down to their fair value of $25,000 (see note 3).

(g)	Revenue recognition and related expense

The Company charters out its vessels on time charters which involves placing a vessel at a charterer’s disposal for a specified period of time during which the charterer uses the vessel in return for the payment of a specified daily hire rate. Such charters are accounted for as operating leases and therefore revenue is recognized on a straight-line basis as the average revenues over the rental periods of such charter agreements, as service is performed. Cash received in excess of earned revenue is recorded as deferred revenue. If a time charter contains one or more consecutive option periods, then subject to the options being exercisable solely by the Company, the time charter revenue will be recognized on a straight-line basis over the total remaining life of the time charter, including any options which are more likely than not to be exercised. If a time charter is modified, including the agreement of a direct continuation at a different rate, the time charter revenue will be recognized on a straight-line basis over the total remaining life of the time charter from the date of modification. During the nine month periods ended September 30, 2024, and 2023, an amount of $8,854 and $1,244 loss, respectively, has been recorded in time charter-revenues for such modifications and revenues recognized on a straight-line basis. Any difference between the charter rate invoiced and the time charter revenue recognized is classified as, or released from, deferred revenue. As of September 30, 2024, current and non-current portion from implementing the straight-line basis, amounting to $8,654 ($9,027 as for December 31, 2023) and $17,093 ($15,139 as for December 31, 2023), respectively, are presented in the interim condensed unaudited Consolidated Balance Sheets in the line item “Prepaid expenses and other current assets” and “Other non-current assets”, respectively.

 

Revenues are recorded net of address commissions, which represent a discount provided directly to the charterer based on a fixed percentage of the agreed upon charter rate. Charter revenue received in advance which relates to the period after a balance sheet date is recorded as deferred revenue within current liabilities until the respective charter services are rendered.

 

Under time charter arrangements the Company, as owner, is responsible for all the operating expenses of the vessels, such as crew costs, insurance, repairs and maintenance, and such costs are expensed as incurred and are included in vessel operating expenses. Commission paid to brokers to facilitate the agreement of a new charter are included in time charter and voyage expenses as are certain expenses related to a voyage, such as the costs of bunker fuel consumed when a vessel is off-hire or idle.

 

Leases: In cases of lease agreements where the Company acts as the lessee, the Company recognizes an operating lease asset and a corresponding lease liability on the interim unaudited condensed Consolidated Balance Sheets. Following initial recognition and with regards to subsequent measurement the Company remeasures lease liability and right of use asset at each reporting date.

 

Leases where the Company acts as the lessor are classified as either operating or sales-type / direct financing leases.

 

In cases of lease agreements where the Company acts as the lessor under an operating lease, the Company keeps the underlying asset on the interim unaudited condensed Consolidated Balance Sheets and continues to depreciate the assets over its useful life. In cases of lease agreements where the Company acts as the lessor under a sales-type / direct financing lease, the Company derecognizes the underlying asset and records a net investment in the lease. The Company acts as a lessor under operating leases in connection with all of its charter out – bareboat-out arrangements.

F-12

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Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

(Expressed in thousands of U.S. dollars except share data)

2.          Summary of Significant Accounting Policies and Disclosures (continued)

(g)	Revenue recognition and related expense (continued)

In cases of sale and leaseback transactions, if the transfer of the asset to the lessor does not qualify as a sale, then the transaction constitutes a failed sale and leaseback and is accounted for as a financial liability. For a sale to have occurred, the control of the asset would need to be transferred to the lessor, and the lessor would need to obtain substantially all the benefits from the use of the asset. During 2021, the Company entered into six agreements which qualified as failed sale and leaseback transactions as the Company was required to repurchase the vessels at the end of the lease term and the Company had accounted for the six agreements as financing transactions. Following the full prepayment of (i) the $54,000 sale and leaseback agreement with CMBFL on August 27, 2024, and (ii) the $14,735 sale and leaseback agreement with Neptune on September 12, 2024, the Company as of September 30, 2024, has accounted for four agreements as financing transactions.

The Company elected the practical expedient which allows the Company to treat the lease and non-lease components as a single lease component for the leases where the timing and pattern of transfer for the non-lease component and the associated lease component to the lessees are the same and the lease component, if accounted for separately, would be classified as an operating lease. The combined component is therefore accounted for as an operating lease under ASC 842, as the lease components are the predominant characteristics.

(h)	Fair Value Measurement and Financial Instruments

 

Financial instruments carried on the interim unaudited condensed Consolidated Balance Sheets include cash and cash equivalents, time deposits, restricted cash, trade receivables and payables, other receivables and other liabilities and long-term debt. The particular recognition methods applicable to each class of financial instrument are disclosed in the applicable significant policy description of each item or included below as applicable.

Fair Value Measurement: Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. the “exit price”) in an orderly transaction between market participants at the measurement date. The hierarchy is broken down into three levels based on the observability of inputs as follows:

Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgement.

Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

In December 2021, the Company purchased interest rate caps with an aggregate notional amount of $484,106, which amortizes over time as the Company’s outstanding debt balances decline. In February 2022, the Company further hedged its exposure by putting in place two USD one-month LIBOR interest rate caps of 0.75% through fourth quarter 2026, on $507,891 of its floating rate debt. The second interest rate cap was not designated as a cash flow hedge and therefore the negative fair value adjustment of $4,957 for nine months ended September 30, 2024 was recorded through interim unaudited condensed Consolidated Statements of Income ($1,037 negative fair value adjustment for nine months ended September 30, 2023). ASC 815-20-25-13a stipulates that an entity may designate either all or certain future interest payments on variable-rate debt as the hedged exposure in a cash flow hedge relationship. The Company is designating certain future interest payments on its outstanding variable-rate debt as the hedged item in this relationship. Under ASC 815-20-25-106e, “for cash flow hedges of the interest payments on only a portion of the principal amount of the interest-bearing asset or liability, the notional amount of the interest rate cap designated as the hedging instrument matches the principal amount of the portion of the asset or liability on which the hedged interest payments are based”. In this case, the Company has designated only a portion of its outstanding debt (initially, $253,946) as the hedged item, and any interest payments beyond the notional amount of the interest rate cap in any given period are not designated as being hedged. During 2023, all Company’s loan agreements have been amended and restated to take into effect the transition from LIBOR to the Secured Overnight Financing Rate (“SOFR”) and the relevant provisions on a replacement rate. In addition, the Company’s interest rate caps automatically transited to 1-month Compounded SOFR on July 1, 2023, at a level of 0.64%.

F-13

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Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

(Expressed in thousands of U.S. dollars except share data)

2.          Summary of Significant Accounting Policies and Disclosures (continued)

(h)	Fair Value Measurement and Financial Instruments (continued)

 

Fair value measurement (continued)

The Company assesses the effectiveness of the hedges on an ongoing basis. The amounts included in accumulated other comprehensive income will be reclassified to interest expense should the hedge no longer be considered effective.

The objective of the hedges is to reduce the variability of cash flows associated with the interest rates relating to the Company’s variable rate borrowings. When derivatives are used, the Company is exposed to credit loss in the event of non-performance by the counterparties; however, non-performance is not anticipated. ASC 815, Derivatives and Hedging, requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the balance sheet. The fair values of the interest rate derivatives are based on quoted market prices for similar instruments from commercial banks (based on significant observable inputs - Level 2 inputs).

On April 4, 2024, the Company entered into a foreign exchange option strip (“FX option”) to purchase €3,000, with monthly settlements, starting April 11, 2024, and ending March 13, 2025. The strike price is EURUSD 1.10.  The Company entered to this option to hedge the downside foreign exchange risk associated with expenses denominated in EUR against fluctuations between the US Dollar and Euro. This FX option is designated as a cash flow hedge of anticipated expenses totalling €3,000, expected to occur each month. Changes in the fair value of the option other than “intrinsic value” are excluded from the assessment of effectiveness. The effectiveness of the hedging relationship will be periodically assessed during the life of the hedge by comparing the terms of the option and the forecasted expenses to ensure that they continue to coincide. Should the critical terms no longer match exactly, hedge effectiveness (both prospective and retrospective) will be assessed by evaluating the dollar-offset ratio of the spot intrinsic value of the actual option contract and a hypothetically perfect option contract.

Financial Risk Management: The Company activities expose it to a variety of financial risks including fluctuations in, time charter rates, credit and interest rates risk. Risk management is carried out under policies approved by executive management. Guidelines are established for overall risk management, as well as specific areas of operations.

 

Credit Risk: The Company closely monitors its credit exposure to customers and counter-parties for credit risk. The Company has entered into commercial management agreement with Conchart Commercial Inc. (“Conchart”), pursuant to which Conchart has agreed to provide commercial management services to the Company, including the negotiation, on behalf of the Company, vessel employment contracts (see note 7). Conchart has policies in place to ensure that it trades with customers and counterparties with an appropriate credit history. Financial instruments that potentially subject the Company to concentrations of credit risk are accounts receivable, cash and cash equivalents and time deposits. The Company does not believe its exposure to credit risk is likely to have a material adverse effect on its financial position, results of operations or cash flows.

 

Liquidity Risk: Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Company monitors cash balances appropriately to meet working capital needs.

 

Foreign Exchange Risk: Foreign currency transactions are translated into the measurement currency rates prevailing at the dates of transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the interim unaudited condensed Consolidated Statements of Income. The Company, on April 4, 2024, entered into a FX option to purchase €3,000, with monthly settlements, starting April 11, 2024, and ending March 13, 2025, in order to mitigate foreign exchange risk.

 

(i)	Derivative instruments

The Company is exposed to interest rate risk relating to its variable rate borrowings. In December 2021, the Company purchased interest rate caps with an aggregate notional amount of $484,106 (“December 2021 hedging"), which amount reduces over time as the Company’s outstanding debt balances amortize. The objective of the hedges is to reduce the variability of cash flows associated with the interest relating to its variable rate borrowings.

At the inception of the transaction, the Company documented the relationship between hedging instruments and hedged items, as well as its risk management objective and the strategy for undertaking various hedging transactions. The Company also documented its assessment, both at the hedge inception and on an ongoing basis, of whether the derivative financial instruments that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

F-14

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Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

(Expressed in thousands of U.S. dollars except share data)

2.          Summary of Significant Accounting Policies and Disclosures (continued)

 

(i)	Derivative instruments (continued)

This transaction is designated as a cash flow hedge, and under ASU 2017-12, cash flow hedge accounting allows all changes in fair value to be recorded through Other Comprehensive Income once hedge effectiveness has been established. Under ASC 815-30-35-38, amounts in accumulated other comprehensive income shall be reclassified into earnings in the same period or periods during which the hedged forecasted transaction affects earnings (i.e., each quarter) and shall be presented in the same income statement line item as the earnings effect of the hedged item in accordance with paragraph 815-20-45-1A.

The premium paid related to this derivative was classified in the interim unaudited condensed Consolidated Statements of Cash Flows as operating activities in the line item “Derivative asset”. The premium shall be amortized into earnings “on a systematic and rational basis over the period in which the hedged transaction affects earnings” (ASC 815-30-35-41A); that is, the Company will expense the premium over the life of the interest rate cap in accordance with the “caplet method,” as described in Derivatives Implementation Group (DIG) Issue G20. DIG Issue G20 dictates that the cost of the interest rate cap is recognized on earnings over time, based on the value of each periodic caplet. The cost per period will change as the caplet for that period changes in value. Given that the interest rate cap is forward-starting, expensing of the premium will not begin until the effective start date of the interest rate cap, in order to match potential cap revenue with the cap expenses in the period in which they are incurred.

In February 2022, the Company further purchased two interest rate caps with an aggregate notional amount of $507,891. The first interest rate cap of $253,946 which has been designated as a cash flow hedge, has the same accounting treatment as described above for the December 2021 hedging. The second interest rate cap was not designated as a cash flow hedge and therefore the negative fair value adjustment of $4,957 as at September 30, 2024 ($1,037 negative fair value adjustment as at September 30, 2023) was recorded through interim unaudited condensed Consolidated Statements of Income. ASC 815-20-25-13a stipulates that an entity may designate either all or certain future interest payments on variable-rate debt as the hedged exposure in a cash flow hedge relationship. In this case, the Company has designated only a portion of its outstanding debt (initially $253,946) as the hedged item, and any interest payments beyond the notional amount of the interest rate cap in any given period are not designated as being hedged (see note 5). As of September 30, 2024, all Company’s loan agreements have been amended and restated to take into effect the transition from LIBOR to the Secured Overnight Financing Rate (“SOFR”) and the relevant provisions on a replacement rate. In addition, the Company’s interest rate caps automatically transited to 1-month Compounded SOFR on July 1, 2023, at a level of 0.64%.

The amounts included in accumulated other comprehensive income will be reclassified to interest expense should the hedge no longer be considered effective. The Company assesses the effectiveness of the hedges on an ongoing basis. As of September 30, 2024, and September 30, 2023, following a quantitative assessment, part of the hedge was no longer considered effective and an amount of $877 and $(80) was reclassified to/(from) other comprehensive income to the interim unaudited condensed Consolidated Statements of Income.

On April 4, 2024, the Company entered into a FX option to purchase €3,000, with monthly settlements, starting April 11, 2024, and ending March 13, 2025. The initial value of the excluded component is equal to the option premium of €417 and are recognized in earnings using the amortization approach as per ASC 815-20-25-83A. As of September 30, 2024, following a quantitative assessment, no amount has been reclassified to other comprehensive income to the interim unaudited condensed Consolidated Statements of Income.

(j)	Recent accounting pronouncements

On November 27, 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This standard improves reportable segment disclosures by adding and enhancing interim disclosure requirements, clarifying circumstances in which entities can disclose multiple segment measures of profit or loss, providing new segment disclosure requirements for entities with a single reportable segment, and adding other disclosure requirements. This standard is effective for all entities that are subject to Topic 280, Segment Reporting for annual periods beginning after December 15, 2023, but early adoption is permitted. The Company is currently evaluating the impacts of this guidance on its interim unaudited condensed consolidated financial statement presentation or results.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Taxes Disclosures, which requires greater disaggregation of income tax disclosures. The new standard requires additional information to be disclosed with respect to the income tax rate reconciliation and income taxes paid disaggregated by jurisdiction. This ASU should be applied prospectively for fiscal years beginning after December 15, 2024, with retrospective application permitted. The Company is evaluating currently the impacts of this guidance on its interim unaudited condensed consolidated financial statement presentation or results.

F-15

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Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

(Expressed in thousands of U.S. dollars except share data)

3.          Vessels in Operation

		Vessel Cost, as adjusted for Impairment charges				Accumulated Depreciation				Net Book Value
As of January 1, 2023		$	1,886,158			$	(262,851	)		$	1,623,307
Additions			138,802				-				138,802
Depreciation			-				(72,443	)			(72,443	)
Impairment loss			(25,544	)			6,714				(18,830	)
Disposals			(6,803	)			68				(6,735	)
As of December 31, 2023		$	1,992,613			$	(328,512	)		$	1,664,101
Additions			25,310				-				25,310
Depreciation			-				(56,082	)			(56,082	)
As of September 30, 2024		$	2,017,923			$	(384,594	)		$	1,633,329

As of September 30, 2024, and December 31, 2023, the Company had made additions for vessel expenditures, reefers, emissions management and ERP modules. As of September 30, 2024, and September 30, 2023, unpaid capitalized expenses were $6,883 and $5,298, respectively.

2023 Vessels acquisitions

In May and June 2023, the Company took delivery of the four 8,544 TEU Vessels as per below:

Name	Capacity in TEUs	Year Built	Purchase Price	Delivery date
GSL Alexandra	8,544	2004	$30,000	June 2, 2023
GSL Sofia	8,544	2003	$30,000	May 22, 2023
GSL Effie	8,544	2003	$30,000	May 30, 2023
GSL Lydia	8,544	2003	$33,300	June 26, 2023

2023 Sale of Vessel

 

On March 23, 2023, the Company sold GSL Amstel for net proceeds of $5,940, and the vessel was released as collateral under the Company’s $140,000 loan facility with Credit Agricole Corporate and Investment Bank, Hamburg Commercial Bank AG, E.Sun Commercial Bank, Ltd, CTBC Bank Co. Ltd. and Taishin International Bank.

 

Impairment

The Company has evaluated the impact of current economic situation on the recoverability of all its vessel groups and has determined that there were no events or changes in circumstances which indicated that their carrying amounts may not be recoverable. Accordingly, there was no triggering event and no impairment test was performed during the nine months ended September 30, 2024.

Through the latter part of 2023, the Company noted that events and circumstances triggered the existence of potential impairment for some of the Company’s vessel groups. These indicators included volatility in the charter market and the vessels’ market values, as well as the potential impact of the current container sector on management’s expectation for future revenues. As a result, the Company performed step one of the impairment assessment of each of the Company’s vessel groups by comparing the undiscounted projected net operating cash flows for each vessel group to their carrying value and step two of the impairment analysis was required for two vessel groups, as their undiscounted projected net operating cash flows did not exceed their carrying value. As a result, as of December 31, 2023, the Company recorded an impairment loss of $18,830 for two vessel groups with a total aggregate carrying amount of $43,830 which was written down to their fair value of $25,000.

Collateral

As of September 30, 2024, 20 vessels were pledged as collateral under the 5.69% Senior Secured Notes due 2027 and 32 vessels under the Company’s loan facilities. Sixteen vessels were unencumbered as of September 30, 2024.

F-16

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Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

(Expressed in thousands of U.S. dollars except share data)

3.          Vessels in Operation (continued)

Advances for vessels acquisitions and other additions

As of September 30, 2024, and December 31, 2023, there were no advances for vessel acquisitions, as all vessels had been delivered as at these dates. As of September 30, 2024, and December 31, 2023, the Company had advances for other vessel additions totalling $12,447 and $12,210, respectively.

4.          Intangible Liabilities – Charter Agreements

Intangible Liabilities – Charter Agreements as of September 30, 2024, and December 31, 2023, consisted of the following:

		September 30, 2024				December 31, 2023
Opening balance		$	5,662			$	14,218
Disposals (*)			-				(476	)
Amortization			(4,523	)			(8,080	)
Total		$	1,139			$	5,662

 

(*) The acceleration of the unamortized portion of GSL Amstel intangible liability-charter agreement when the vessel was sold on March 23, 2023.

 

Intangible liabilities are related to (i) acquisition of the Seven, the Twelve and the Four Vessels, and (ii) management’s estimate of the fair value of below-market charters on August 14, 2008, the date of the Marathon Merger (see note 1). These intangible liabilities are being amortized over the remaining life of the relevant lease terms and the amortization income is included under the caption “Amortization of intangible liabilities-charter agreements” in the interim unaudited condensed Consolidated Statements of Income.

 

Amortization income of intangible liabilities-charter agreements for each of the nine months ended September 30, 2024, and 2023 was $4,523 and $6,563, respectively. The aggregate amortization of the intangible liabilities in each of the 12-month periods up to September 30, 2026, is estimated to be as follows:

		Amount
September 30, 2025		$	1,003
September 30, 2026			136
		$	1,139

The weighted average useful lives are 0.21 years for the remaining intangible liabilities-charter agreements terms.

5.          Derivative Assets

 

In December 2021, the Company purchased interest rate caps with an aggregate notional amount of $484,106, which amount reduces over time as the Company’s outstanding debt balances amortize. The objective of the hedges is to reduce the variability of cash flows associated with the interest relating to its variable rate borrowings. The Company receives payments on the caps for any period that the one-month USD LIBOR rate is above beyond the strike rate, which is 0.75%. The termination date of the interest rate cap agreements is November 30, 2026. The premium paid to purchase the interest caps was $7,000, which was paid out of cash on December 22, 2021. The premium is being amortized over the life of the interest rate cap by using the caplet method.

 

In February 2022, the Company further hedged its exposure to a potential rising interest rate environment by putting in place two USD one-month LIBOR interest rate caps of 0.75% through fourth quarter 2026, on $507,891 of its floating rate debt. The second interest rate cap was not designated as a cash flow hedge and therefore the negative fair value adjustment of $4,957 as at September 30, 2024 ($1,037 negative fair value adjustment as at September 30, 2023) was recorded through Interim Unaudited Condensed Consolidated Statements of Income. The premium paid by the Company to purchase the interest rate caps was $15,370, which was paid out of cash on the settlement date. ASC 815-20-25-13a stipulates that an entity may designate either all or certain future interest payments on variable-rate debt as the hedged exposure in a cash flow hedge relationship. In this case, the Company has designated only a portion of its outstanding debt (initially, $253,946) as the hedged item, and any interest payments beyond the notional amount of the interest rate cap in any given period are not designated as being hedged. Amount received from interest rate caps for each of the nine month periods ended September 30, 2024, and 2023, was $21,198 and $24,380, respectively.

F-17

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Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

(Expressed in thousands of U.S. dollars except share data)

5.          Derivative Assets (continued)

 

On April 4, 2024, the Company entered into a foreign exchange option strip (“FX option”) to buy €3,000, with monthly settlements on the 11th calendar day of each month, starting April 11, 2024, and ending March 13, 2025. The initial value of the excluded component is equal to the option premium of €417 and is recognized in earnings using the amortization approach as per ASC 815-20-25-83A. As of September 30, 2024, and September 30, 2023, following a quantitative assessment, no amount has been reclassified to other comprehensive income to the interim unaudited condensed Consolidated Statements of Income.

 

		September 30, 2024				December 31, 2023
Opening balance		$	41,506			$	63,503
FX option premium			109				-
Unrealized loss on derivative assets (interest rate caps)			(15,280	)			(16,625	)
Unrealized gain on FX option			320				-
Fair value adjustment on derivative asset			(4,957	)			(5,372	)
Closing balance		$	21,698			$	41,506
Less: Current portion of derivative assets (interest rate caps)			(14,749	)			(24,639	)
Less: Current portion of FX option			(429	)			-
Non-current portion of derivative assets (interest rate caps)		$	6,520			$	16,867

The amounts included in accumulated other comprehensive income will be reclassified to interest expense should the hedge no longer be considered effective. The Company assesses the effectiveness of the hedges on an ongoing basis. As of September 30, 2024, and September 30, 2023, following a quantitative assessment, part of the hedge was no longer considered effective and an amount of $877 and $(80) was reclassified to/(from) other comprehensive income to the interim unaudited condensed Consolidated Statements of Income.

6.          Long-Term Debt

Long-term debt as of September 30, 2024, and December 31, 2023, consisted of the following:

Facilities		September 30, 2024				December 31, 2023
2024 Senior Secured Term Loan Facility (a)		$	300,000			$	-
Macquarie loan (b)			29,500				66,000
2027 Secured Notes (c)			245,000				284,375
E.SUN, MICB, Cathay, Taishin Credit Facility (d)			10,700				28,500
Sinopac Credit Facility (e)			-				8,220
HCOB, CACIB, ESUN, CTBC, Taishin Credit Facility (f)			57,404				73,283
Deutsche Credit Facility (g)			-				40,046
HCOB Credit Facility (h)			-				24,744
CACIB, Bank Sinopac, CTBC Credit Facility (i)			-				38,950
Chailease Credit Facility (j)			-				2,608
Syndicated Senior Secured Credit Facility (CACIB, ABN, First-Citizens & Trust Company, Siemens, CTBC, Bank Sinopac, Palatine) (k)			-				149,200
Total credit facilities		$	642,604			$	715,926
Sale and Leaseback Agreement CMBFL - $120,000 (l)			45,388				64,438
Sale and Leaseback Agreement CMBFL - $54,000 (m)			-				36,018
Sale and Leaseback Agreement - Neptune $14,735 (n)			-				6,796
Total Sale and Leaseback Agreements		$	45,388			$	107,252
Total borrowings		$	687,992			$	823,178
Less: Current portion of long-term debt			(145,997	)			(164,888	)
Less: Current portion of Sale and Leaseback Agreements (l,m,n)			(6,525	)			(28,365	)
Less: Deferred financing costs (p)			(7,455	)			(10,750	)
Non-current portion of Long-Term Debt		$	528,015			$	619,175

F-18

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Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

(Expressed in thousands of U.S. dollars except share data)

6.          Long-Term Debt (continued)

 

a)	$300.0 Million Senior Secured Term Loan Facility CACIB, ABN, Bank of America, First Citizens Bank

On August 7, 2024, the Company entered into a $300.0 million senior secured term loan facility (the “2024 Senior Secured Term Loan Facility”) with Credit Agricole Corporate and Investment Bank (“CACIB”), ABN AMRO Bank N.V. (“ABN”), Bank of America N.A. (“BofA”) and First Citizens Bank & Trust Company (“First Citizens”) to refinance, or prepay, in full or in part, certain of its outstanding debt facilities.

All three tranches were drawdown in the third quarter of 2024 and the term loan facility has a maturity in the third quarter of 2030.

The term loan facility is repayable in 12 equal consecutive quarterly instalments of $12,000, four equal consecutive quarterly instalments of $10,000, four equal consecutive quarterly instalments of $8,000 and four equal consecutive quarterly instalments of $6,000 together with a final balloon payment of $60,000 on the term loan facility termination date.

 

This facility’s interest rate is SOFR plus a margin of 1.85% per annum payable quarterly in arrears.

The Company used the net proceeds from the 2024 Senior Secured Term Loan Facility to refinance or prepay, in full or in part, the following (a) existing debt facilities (i) Sinopac Credit Facility, (ii) Deutsche Credit Facility, (iii) HCOB Credit Facility, (iv) CACIB, Bank Sinopac, CTBC Credit Facility, (v) Chailease Credit Facility, (v) Syndicated Senior Secured Credit Facility (CACIB, ABN, First-Citizens & Trust Company, Siemens, CTBC, Bank Sinopac, Palatine), (vi) Macquarie loan and (vii) E.SUN, MICB, Cathay, Taishin Credit Facility and (b) existing sale and lease back agreements (i) $54.0 Million Sale and Leaseback agreement – CMBFL and (ii) $14.7 Million Sale and Leaseback agreement - Neptune Maritime Leasing.

As of September 30, 2024, the aggregate principal amount outstanding under the 2024 Senior Secured Term Loan Facility was $300,000.

 

b)	Macquarie Credit Facility

On May 18, 2023, the Company via its subsidiaries Global Ship Lease 72 LLC, Global Ship Lease 73 LLC, Global Ship Lease 74 LLC and Global Ship Lease 75 LLC entered into a new credit facility agreement with Macquarie Bank Limited (“Macquarie”) for an amount of $76,000 to finance part of the acquisition cost of four containership, each with carrying capacity of, 8,544 TEU vessels, for an aggregate purchase price of $123,300. The vessels were delivered during the second quarter of 2023.

All four tranches were drawdown in the second quarter of 2023 and the credit facility has a maturity in May 2026.

 

The facility is repayable in two equal consecutive quarterly instalments of $5,000, six equal consecutive quarterly instalments of $6,000 and one quarterly instalments of $3,000 and two equal consecutive quarterly instalments of $1,000 with a final balloon payment of $25,000 payable three years after the first utilisation date.

 

This facility’s interest rate is SOFR plus a margin of 3.50% per annum payable quarterly in arrears.

 

On September 10, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August 7, 2024, to partially prepay the amount of $18,500 under this facility (prepayment was deducted from the final ballon payment).

 

As of September 30, 2024, the outstanding balance of this facility was $29,500.

c)	5.69% Senior Secured Notes due 2027

On June 16, 2022, Knausen Holding LLC (the "Issuer"), an indirect wholly-owned subsidiary of the Company, closed on the private placement of $350,000 of publicly rated/investment grade 5.69% Senior Secured Notes due 2027 (the “2027 Secured Notes”) to a limited number of accredited investors. The fixed interest rate was determined on June 1, 2022, based on the interpolated interest rate of 2.84% plus a margin 2.85%.

The Company used the net proceeds from the private placement for the repayment of the remaining outstanding balances on its New Hayfin Credit Facility and the Hellenic Bank Credit Facility (releasing five unencumbered vessels), and our 2024 Notes. The remaining amount of net proceeds were allocated for general corporate purposes.

F-19

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Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

(Expressed in thousands of U.S. dollars except share data)

6.          Long-Term Debt (continued)

 

c)	5.69% Senior Secured Notes due 2027 (continued)

An amount equal to 15% per annum of the original principal balance of each Note is payable in equal quarterly instalments on the 15th day of each of January, April, July, and October starting October 15, 2022, and the remaining unpaid principal balance shall be due and payable on the maturity date of July 15, 2027. Interest accrues on the unpaid balance of the Notes, payable quarterly on the 15th day of January, April, July, and October in each year, such interest commencing and accruing on and from June 14, 2022.

The 2027 Secured Notes are senior obligations of the Issuer, secured by first priority mortgages on 20 identified vessels owned by subsidiaries of the Issuer (the “Subsidiary Guarantors”) and certain other associated assets and contract rights, as well as share pledges over the Subsidiary Guarantors. In addition, the 2027 Secured Notes are fully and unconditionally guaranteed by the Company.

As of September 30, 2024, the aggregate principal amount outstanding under the 2027 Secured Notes was $245,000.

 

d)	$60.0 Million E.SUN, MICB, Cathay, Taishin Credit Facility

 

On December 30, 2021, the Company via its subsidiaries Zeus One Marine LLC, Hephaestus Marine LLC and Pericles Marine LLC, entered into a new syndicated senior secured debt facility with E.SUN Commercial Bank Ltd (“E.SUN”), Cathay United Bank (“Cathay”), Mega International Commercial Bank Co. Ltd (“MICB”) and Taishin International Bank (“Taishin”). The Company used a portion of the net proceeds from this credit facility to fully prepay the outstanding balance of the Blue Ocean Junior Credit Facility at that time, amounting to $26,205 plus a prepayment fee of $3,968. All three tranches were drawn down in January 2022.

 

The facility was repayable in eight equal consecutive quarterly instalments of $4,500 and ten equal consecutive quarterly instalments of $2,400.

This facility’s interest is SOFR plus a margin of 2.75% per annum plus Credit Adjustment Spread (“CAS”) payable quarterly in arrears.

 

On September 11, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August 7, 2024, to partially prepay the amount of $8,500 under this facility. Following the prepayment, the outstanding balance of the facility is repayable in four equal consecutive quarterly instalments of $2,400 and one quarterly instalment of $1,100 and new maturity will be in October 2025.

As of September 30, 2024, the outstanding balance of this facility was $10,700.

 

e)	$12.0 Million Sinopac Capital International Credit Facility

 

On August 27, 2021, the Company via its subsidiary Global Ship Lease 42 LLC entered into a secured credit facility for an amount of $12,000 with Sinopac Capital International (HK) Limited (“Sinopac Credit Facility”), which was partially used to fully refinance the Hayfin Credit Facility. The full amount was drawn down in September 2021 and the credit facility has a maturity in September 2026.

 

The facility was repayable in 20 equal consecutive quarterly instalments of $420 with a final balloon of $3,600 payable together with the final instalment.

 

This facility bore interest at SOFR plus a margin of 3.25% per annum payable quarterly in arrears.

 

On September 11, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August 7, 2024, to fully prepay the amount of $6,960 under this facility.

 

As of September 30, 2024, the outstanding balance of this facility was $nil.

 

F-20

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Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

(Expressed in thousands of U.S. dollars except share data)

6.          Long-Term Debt (continued)

 

f)	$140.0 Million HCOB, CACIB, ESUN, CTBC, Taishin Credit Facility

On July 6, 2021, the Company entered into a facility with Credit Agricole Corporate and Investment Bank (“CACIB”), Hamburg Commercial Bank AG (“HCOB”), E.Sun Commercial Bank, Ltd (“ESUN”), CTBC Bank Co. Ltd. (“CTBC”) and Taishin International Bank (“Taishin”) for a total of $140,000 to finance the acquisition of the Twelve Vessels. The full amount was drawdown in July 2021 and the credit facility has a maturity in July 2026.

 

The facility is repayable in six equal consecutive quarterly instalments of $8,000, eight equal consecutive quarterly instalments of $5,400 and six equal consecutive quarterly instalments of $2,200 with a final balloon payment of $35,600 payable together with the final instalment. On March 23, 2023, due to the sale of GSL Amstel, the Company repaid $2,838 on this facility of which $1,000 was deducted from the final balloon payment, and the vessel was released as collateral.

 

This facility’s interest rate is SOFR plus a margin of 3.25% per annum plus CAS payable quarterly in arrears.

 

As of September 30, 2024, the outstanding balance of this facility was $57,404.

 

g)	$51.7 Million Deutsche Bank AG Credit Facility

 

On May 6, 2021, the Company via its subsidiary Laertis Marine LLC entered into a secured facility for an amount of $51,670 with Deutsche Bank AG in order to refinance one of the three previous tranches of the $180,500 Deutsche, CIT, HCOB, Entrust, Blue Ocean Credit Facility, that had a maturity date on June 30, 2022, of an amount $48,527.

 

The facility was repayable in 20 equal consecutive quarterly instalments of $1,162.45 with a final balloon of $28,421 payable together with the final instalment.

 

This facility bore interest at SOFR plus a margin of 3.25% per annum payable quarterly in arrears.

 

On August 12, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August 7, 2024, to fully prepay the amount of $36,558 under this facility.

 

As of September 30, 2024, the outstanding balance of this facility was $nil.

 

h)	$64.2 Million Hamburg Commercial Bank AG Credit Facility

On April 15, 2021, the Company entered into a Senior Secured term loan facility with Hamburg Commercial Bank AG “the HCOB Credit Facility” for an amount of up to $64,200 in order to finance the acquisition of six out of the Seven Vessels.

 

Tranche A, E and F amounting to $32,100 were drawn down in April 2021 and have a maturity date in April 2025, Tranche B and D amounting to $21,400 were drawn down in May 2021 and have a maturity date in May 2025, and Tranche C amounting to $10,700 was drawn down in July 2021 and has a maturity date in July 2025.

 

Each Tranche of the facility was repayable in 16 equal consecutive quarterly instalments of $668.75.

 

This facility bore interest at SOFR plus a margin of 3.50% per annum payable quarterly in arrears.

 

On September 5, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August 7, 2024, to fully prepay the amount of $12,706 under this facility.

 

As of September 30, 2024, the outstanding balance of this facility was $nil.

 

i)	$51.7 Million CACIB, Bank Sinopac, CTBC Credit Facility

 

On April 13, 2021, the Company via its subsidiary Penelope Marine LLC entered into a secured facility for an amount of $51,700 in order to refinance one of the three previous tranches of the $180,500 Deutsche, CIT, HCOB, Entrust, Blue Ocean Credit Facility, that had a maturity date on June 30, 2022, of an outstanding amount of $48,648. The secured credit facility has a maturity in April 2026.

 

F-21

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Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

(Expressed in thousands of U.S. dollars except share data)

6.          Long-Term Debt (continued)

 

i)	$51.7 Million CACIB, Bank Sinopac, CTBC Credit Facility (continued)

 

The lenders are Credit Agricole Corporate and Investment Bank (“CACIB”), Bank Sinopac Co. Ltd. (“Bank Sinopac”) and CTBC Bank Co. Ltd. (“CTBC”). The facility is repayable in 20 equal consecutive quarterly instalments of $1,275 with a final balloon of $26,200 payable together with the final instalment.

 

This facility bore interest at SOFR plus a margin of 2.75% per annum plus CAS payable quarterly in arrears.

 

On August 9, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August 7, 2024, to fully prepay the amount of $35,125 under this facility.

 

As of September 30, 2024, the outstanding balance of this facility was $nil.

j)	$9.0 Million Chailease Credit Facility

 

On February 26, 2020, the Company via its subsidiaries, Athena Marine LLC, Aphrodite Marine LLC and Aris Marine LLC entered into a secured term facility agreement with Chailease International Financial Services Pte., Ltd. for an amount of $9,000. The Chailease Credit Facility was used to refinance the DVB Credit Facility.

 

The facility was repayable in 36 consecutive monthly instalments of $156 and 24 monthly instalments of $86 with a final balloon of $1,314 payable together with the final instalment.

 

This facility bore interest at SOFR plus a margin of 4.20% per annum.

 

On September 12, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August 7, 2024, to fully prepay the amount of $1,831 under this facility.

 

As of September 30, 2024, the outstanding balance of this facility was $nil.

 

k)	$268.0 Million Syndicated Senior Secured Credit Facility (CACIB, ABN, First-Citizens & Trust Company, Siemens, CTBC, Bank Sinopac, Palatine)

 

On September 19, 2019, the Company entered into a Syndicated Senior Secured Credit Facility in order to refinance existing credit facilities that had a maturity date in December 2020, of an outstanding amount of $224,310.

 

The Senior Syndicated Secured Credit Facility was agreed to be borrowed in two tranches. The Lenders are Credit Agricole Corporate and Investment Bank (“CACIB”), ABN Amro Bank N.V. (“ABN”), First-Citizens & Trust Company, Siemens Financial Services Inc (“Siemens”), CTBC Bank Co. Ltd. (“CTBC”), Bank Sinopac Ltd. (“Bank Sinopac”) and Banque Palatine (“Palatine”).

 

Tranche A amounting to $230,000 was drawn down in full on September 24, 2019 and is scheduled to be repaid in 20 consecutive quarterly instalments of $5,200 starting from December 12, 2019 and a balloon payment of $126,000 payable on September 24, 2024.

 

Tranche B amounts to $38,000 was drawn down in full on February 10, 2020 and was scheduled to be repaid in 20 consecutive quarterly instalments of $1,000 and a balloon payment of $18,000 payable in the termination date on the fifth anniversary from the utilization date of Tranche A, which falls in September 24, 2024. In January 2022, the Company agreed a new senior secured debt facility to refinance its outstanding Syndicated Senior Secured Credit Facility, which extended the maturity date from September 2024 to December 2026, amended certain covenants in the Company’s favor at an unchanged rate of LIBOR + 3.00%. On July 1, 2022, the interest rate was SOFR plus a margin of 3.00% plus CAS and was payable at each quarter end date.

 

On August 9, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August 7, 2024, to fully prepay the amount of $133,200 under this facility.

 

As of September 30, 2024, the outstanding balance of this facility was $nil.

 

F-22

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Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

(Expressed in thousands of U.S. dollars except share data)

6.          Long-Term Debt (continued)

l)	$120.0 Million Sale and Leaseback agreements - CMBFL Four Vessels

On August 26, 2021, the Company via its subsidiaries Global Ship Lease 68 LLC, Global Ship Lease 69 LLC, Global Ship Lease 70 LLC and Global Ship Lease 71 LLC, entered into four $30,000 sale and leaseback agreements with CMB Financial Leasing Co. Ltd. (“CMBFL”) to finance the acquisition of the Four Vessels. As at September 30, 2021, the Company had drawdown a total of $90,000. The drawdown for the fourth vessel, amounting to $30,000, took place on October 13, 2021 together with the delivery of this vessel. The Company has a purchase obligation to acquire the Four Vessels at the end of their lease terms and under ASC 842-40, the transaction has been accounted for as a failed sale. In accordance with ASC 842-40, the Company did not derecognize the respective vessels from its balance sheet and accounted for the amounts received under the sale and leaseback agreement as financial liabilities.

 

Each sale and leaseback agreement is repayable in 12 equal consecutive quarterly instalments of $1,587.5 and 12 equal consecutive quarterly instalments of $329.2 with a repurchase obligation of $7,000 on the final repayment date.

 

The sale and leaseback agreements for the three vessels mature in September 2027 and for the fourth vessel in October 2027 and bear interest at SOFR plus a margin of 3.25% per annum plus CAS payable quarterly in arrears.

 

As of September 30, 2024, the outstanding balance of these sale and lease back agreements was $45,388.

m)	$54.0 Million Sale and Leaseback agreement - CMBFL

 

On May 20, 2021, the Company via its subsidiary Telemachus Marine LLC entered into a $54,000 sale and leaseback agreement with CMB Financial Leasing Co. Ltd. (“CMBFL”) to refinance one of the three previous tranches of the $180,500 Deutsche, CIT, HCOB, Entrust, Blue Ocean Credit Facility, that had a maturity date on June 30, 2022, of an amount $46,624. The Company had a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transaction had been accounted for as a failed sale. In accordance with ASC 842-40, the Company did not derecognize the respective vessel from its balance sheet and accounted for the amount received under the sale and leaseback agreement as a financial liability.

 

The sale and leaseback agreement was repayable in eight equal consecutive quarterly instalments of $2,025 each and 20 equal consecutive quarterly instalments of $891 with a repurchase obligation of $19,980 on the final repayment date.

 

The sale and leaseback agreement matured in May 2028 and bore interest at SOFR plus a margin of 3.25% per annum plus CAS payable quarterly in arrears.

 

In May 2021, on the actual delivery date of the vessel, the Company drew $54,000, which represented vessel purchase price $75,000 less advanced hire of $21,000, which advanced hire neither bore any interest nor was refundable and was set off against payment of the purchase price payable to the Company by the unrelated third party under this agreement.

 

On August 27, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August 7, 2024, to fully prepay the amount of $33,345 under this facility.

 

As of September 30, 2024, the outstanding balance of this sale and leaseback agreement was $nil.

 

n)	$14.7 Million Sale and Leaseback agreement - Neptune Maritime Leasing

 

On May 12, 2021, the Company via its subsidiary GSL Violetta LLC entered into a $14,735 sale and leaseback agreement with Neptune Maritime Leasing (“Neptune”) to finance the acquisition of GSL Violetta delivered in April 2021. The Company has a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transaction has been accounted for as a failed sale. In accordance with ASC 842-40, the Company did not derecognize the respective vessel from its balance sheet and accounted for the amount received under the sale and leaseback agreement as a financial liability. In May 2021, the Company drew $14,735 under this agreement.

 

The sale and leaseback agreement was repayable in 15 equal consecutive quarterly instalments of $793.87 each and four equal consecutive quarterly instalments of $469.12 with a repurchase obligation of $950 on the last repayment date.

F-23

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Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

(Expressed in thousands of U.S. dollars except share data)

6.          Long-Term Debt (continued)

 

n)	$14.7 Million Sale and Leaseback agreement - Neptune Maritime Leasing (continued)

 

The sale and leaseback agreement matured in February 2026 and bore interest at SOFR plus a margin of 4.64% per annum payable quarterly in arrears.

 

On September 12, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August 7, 2024, to fully prepay the amount of $4,414 under this facility.

 

As of September 30, 2024, the outstanding balance of this sale and leaseback agreement was $nil.

 

o)	Repayment Schedule

 

Maturities of long-term debt for the periods subsequent to September 30, 2024, are as follows:

Payment due by period ended		Amount
September 30, 2025			152,522
September 30, 2026			157,874
September 30, 2027			214,267
September 30, 2028			47,329
September 30, 2029			116,000
		$	687,992

p)	Deferred Financing Costs

		September 30, 2024				December 31, 2023
Opening balance		$	10,750			$	15,136
Expenditure in the period			2,625				1,140
Amortization included within interest expense			(5,920	)			(5,526	)
Closing balance		$	7,455			$	10,750

 

For the nine-month period ended September 30, 2024, total costs amounting to $2,625 were incurred in connection with 2024 Senior Secured Term Loan Facility (CACIB, ABN, BofA) (see note 6a).

 

During 2023, total costs amounting to $1,140 were incurred in connection with the Macquarie Credit Facility (see note 6b).

 

For the nine-month periods ended September 30, 2024, and 2023, the Company recognized a total of $5,920 and $4,115, respectively, in respect of amortization of deferred financing costs.

 

q)	Debt covenants-securities

Amounts drawn under the facilities listed above are secured by first priority mortgages on certain of the Company’s vessels and other collateral. The credit facilities contain a number of restrictive covenants that limit the Company from, among other things: incurring or guaranteeing indebtedness; charging, pledging or encumbering the vessels; and changing the flag, class, management or ownership of the vessel owning entities. The credit facilities also require the vessels to comply with the ISM Code and ISPS Code and to maintain valid safety management certificates and documents of compliance at all times. Additionally, specific credit facilities require compliance with a number of financial covenants including asset cover ratios and minimum liquidity and corporate guarantor requirements. Among other events, it will be an event of default under the credit facilities if the financial covenants are not complied with or remedied.

As of September 30, 2024, and December 31, 2023, the Company was in compliance with its debt covenants.

F-24

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Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

(Expressed in thousands of U.S. dollars except share data)

7.          Related Party Transactions

 

Ship Management Agreements

Technomar Shipping Inc. (“Technomar”) is presented as a related party, as the Company’s Executive Chairman is a significant shareholder. The Company has currently a number of ship management agreements with Technomar under which the ship manager is responsible for all day-to-day ship management, including crewing, purchasing stores, lubricating oils and spare parts, paying wages, pensions and insurance for the crew, and organizing other ship operating necessities, including EU Allowances (“EUAs”) monitoring and reporting and the arrangement and management of dry-docking. During 2022, Technomar provided all day-to-day technical ship management services for all but five (excluding GSL Amstel which was sold in March 23, 2023) of the Twelve Vessels. Management agreements of another third-party ship manager of these five vessels were terminated between May and July 2023. From those dates and onwards Technomar manages the five vessels. The management fees charged to the Company by third party managers for the nine months ended September 30, 2024, and 2023, amounted to $nil and $981, respectively, and are shown in “Vessel operating expenses” in the interim unaudited condensed Consolidated Statements of Income. Technomar continued to supervise management for the five outsourced vessels up to the termination of the underlying management agreements between May and July 2023.

 

The management fees charged to the Company by Technomar for the nine months ended September 30, 2024, amounted to $16,289 (nine months ended September 30, 2023 - $14,072) and are shown under “Vessel operating expenses-related parties” in the interim unaudited condensed Consolidated Statements of Income. Additionally, as of September 30, 2024, outstanding receivables due from Technomar totaling $495 are presented under “Due from related parties” (December 31, 2023 - $626).

 

Conchart Commercial Inc. (“Conchart”) provides commercial management services to the Company for all its vessels pursuant to commercial management agreements. The Company’s Executive Chairman is the sole beneficial owner of Conchart. Under the management agreements, Conchart is responsible for (i) marketing of the Company’s vessels, (ii) seeking and negotiating employment of the Company’s vessels, (iii) advise the Company on market developments and developments of new rules and regulations, (iv) assisting in calculation of hires, freights, demurrage and/or dispatch monies and collection any sums related to the operation of vessels, (v) communicating with agents, and (vi) negotiating sale and purchase transactions.

 

The fees charged to the Company by Conchart for the nine months ended September 30, 2024, amounted to $6,487 (nine months ended September 30, 2023: $5,801) and are disclosed within “Time charter and voyage expenses-related parties” in the interim unaudited condensed Consolidated Statements of Income. Any outstanding fees due to Conchart are presented in the interim unaudited condensed Consolidated Balance Sheets under "Due to related parties" totaling to $707, and $717 as of September 30, 2024, and December 31, 2023, respectively.

 

The Company as per commercial management agreements has agreed to pay to the commercial manager who shall be named broker in each memorandum of agreement (or equivalent agreement) providing for the sale of all vessels and purchase of some vessels, a commission of 1.00% based on the sale and purchase price for any sale and purchase of a vessel, which shall be payable upon request of the commercial manager.

8.          Commitments and Contingencies

 

Charter Hire Receivable

 

The Company has entered into time charters for its vessels. The charter hire is fixed for the duration of the charter. The minimum contracted future charter hire receivable, net of address commissions, not allowing for any unscheduled off-hire, assuming expiry at earliest possible dates and assuming options callable by the Company included in the charters are not exercised, for the 68 vessels as at September 30, 2024 is as follows:

Period ending		Amount
September 30, 2025		$	638,865
September 30, 2026			450,954
September 30, 2027			368,130
September 30, 2028			140,510
September 30, 2029			67,938
September 30, 2030			488
Total minimum lease revenue, net of address commissions		$	1,666,885

F-25

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Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

(Expressed in thousands of U.S. dollars except share data)

9.          Share Capital

 

Common shares

 

As of September 30, 2024, the Company has one class of Class A common shares.

 

Restricted stock units or incentive stock units have been granted periodically to the Directors and management, under the Company’s Equity Incentive Plans, as part of their compensation arrangements (see note 10). In April 2020, 184,270 shares were issued under grants made under the 2019 Omnibus Incentive Plan (the “2019 Plan”). In 2023, 2022 and 2021, 440,698, 586,819 and 747,604 Class A common shares were issued under the 2019 Plan, respectively.

 

During the nine months ended September 30, 2024, and 2023, a further 476,567 and 356,462 Class A common shares were issued under the 2019 Plan, respectively.

On January 26, 2021, the Company completed its underwritten public offering of 5,400,000 Class A common shares, at a public offering price of $13.00 per share, for gross proceeds to the Company of approximately $70,200, prior to deducting underwriting discounts, commissions and other offering expenses. The Company intended to use the net proceeds of the offering for funding the expansion of the Company’s fleet, general corporate purposes, and working capital. On February 17, 2021, the Company issued an additional 141,959 Class A common shares in connection with the underwriters’ partial exercise of their option to purchase additional shares (together, the “January 2021 Equity Offering”). The net proceeds the Company received in the January 2021 Equity Offering, after underwriting discounts and commissions and expenses, were approximately $67,758.

On September 1, 2021, the Company purchased 521,650 shares and retired them, reducing the issued and outstanding shares. In April 2022, September 2022 and October 2022, the Company repurchased 184,684, 568,835 and 307,121 Class A common shares, respectively, reducing the issued and outstanding shares. During the nine-month period ended September 30, 2024, and 2023, the Company repurchased 251,772 and 1,154,721 Class A common shares, reducing the issued and outstanding shares. During 2023, the Company repurchased 1,242,663 Class A common shares, reducing the issued and outstanding shares. As at September 30, 2024, the Company had 35,440,224 Class A common shares outstanding.

On August 16, 2024, the Company entered into a new equity distribution agreement (the “Sales Agreement”) with Evercore Group L.L.C. (the “Agent”) under which the Company may offer and sell its Class A common shares having an aggregate offering price of up to $100,000. As of September 30, 2024, the Company has issued 27,106 Class A common shares at an average price of $27.02.

On May 10, August 3, and November 9, 2023, the Company announced a dividend of $0.375 per Class A common share from the earnings of the first, second and third quarter of 2023, respectively, each paid on June 2, September 4, 2023, and December 4, 2023, to common shareholders of record as of May 24, August 23, and November 24, 2023, respectively, each amounting to $13,340, $13,300 and $13,258.

 

On February 12, 2024, the Company announced a dividend of $0.375 per Class A common share from the earnings of the fourth quarter of 2023 paid on March 6, 2024, to common shareholders of record as of February 22, 2024, amounting to $13,214.

On May 10, 2024, the Company announced a dividend of $0.375 per Class A common share from the earnings of the first quarter of 2024 paid on June 3, 2024, to common shareholders of record as of May 24, 2024, amounting to $13,255.

On August 5, 2024, the Company announced a dividend of $0.45 per Class A common share from the earnings of the second quarter of 2024 paid on September 4, 2024, to common shareholders of record as of August 23, 2024, amounting to $15,965.

 

Preferred shares

 

On August 20, 2014, the Company issued 1,400,000 Depositary Shares (the "Depositary Shares"), each of which represents 1/100th of one share of the Company's 8.75% Series B Cumulative Perpetual Preferred Shares ("Series B Preferred Shares") representing an interest in 14,000 Series B Preferred Shares, par value $0.01 per share, with a liquidation preference of $2,500.00 per share (equivalent to $25.00 per Depositary Share) (NYSE:GSL-B), priced at $25.00 per Depositary Share. The net proceeds from the offering were $33,497. Dividends are payable at 8.75% per annum in arrears on a quarterly basis. At any time after August 20, 2019 (or within 180 days after the occurrence of a fundamental change), the Series B Preferred Shares may be redeemed, at the discretion of the Company, in whole or in part, at a redemption price of $2,500.00 per share (equivalent to $25.00 per depositary share).

 

F-26

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Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

(Expressed in thousands of U.S. dollars except share data)

9.          Share Capital (continued)

 

Preferred shares (continued)

 

These shares are classified as Equity in the interim unaudited condensed Consolidated Balance Sheets. The dividends payable on the Series B Preferred Shares are presented as a reduction of Retained Earnings in the interim unaudited condensed Consolidated Statements of Changes in Shareholders’ Equity, when and if declared by the Board of Directors. An initial dividend was declared on September 22, 2014, for the third quarter 2014. Dividends have been declared for all subsequent quarters.

 

On December 29, 2022, the Company entered into a new At Market Issuance Sales Agreement with B. Riley Securities, Inc. (the “Agent”), pursuant to which the Company may offer and sell, from time to time, up to $150,000,000 of its Depositary Shares. This new ATM Agreement terminated and replaced, in its entirety, the former at-the-market program that the Company had in place with the Agent for the Depositary Shares. Up to September 30, 2024, no sales had occurred under the new ATM Agreement.

 

As of September 30, 2024, there were 4,359,190 Depositary Shares outstanding, representing an interest in 43,592 Series B Preferred Shares.

10.        Share-Based Compensation

On February 4, 2019, the Board of Directors adopted the 2019 Plan.

The purpose of the 2019 Plan is to provide directors, officers and employees, whose initiative and efforts are deemed to be important to the successful conduct of our business, with incentives to (a) enter into and remain in the service of our company or our subsidiaries and affiliates, (b) acquire a proprietary interest in the success of the Company, (c) maximize their performance and (d) enhance the long-term performance of our company. The 2019 Plan is administered by the Compensation Committee of the Board of Directors, or such other committee of the Board of Directors as may be designated by them. Unless terminated earlier by the Board of Directors, the 2019 Plan will expire 10 years from the date on which it was adopted by the Board of Directors.

Following the adoption of the 2019 Plan, previous plans adopted in 2015 and 2008 were terminated.

In 2019, the Board of Directors approved awards to the Company’s executive officers under the 2019 Plan, providing those executive officers with the opportunity to receive up to 1,359,375 Class A common shares in aggregate. The Board of Directors approved additional awards of 61,625 of Class A common shares to two other employees resulting in a total amount of awards of up to 1,421,000 shares. In July 2021, the Board of Directors approved the issuance of 17,720 shares to one member of senior management as a special bonus.

The 1,421,000 shares of incentive stock may be issued pursuant to the awards, in four tranches. The first tranche was to vest conditioned only on continued service over the three-year period which commenced January 1, 2019. Tranches two, three and four would vest when the Company’s stock price exceeded $8.00, $11.00 and $14.00, respectively, over a 60-day period. The $8.00 threshold was achieved in January 2020, the $11.00 threshold was achieved in January 2021 and the $14.00 threshold was achieved in March 2021. Accordingly, 113,279 incentive shares vested in the year ended December 31, 2019, 317,188 incentive shares vested in the year ended December 31, 2020, and 1,008,253 incentive shares vested in the year ended December 31, 2021. Of the total of 430,467 incentive shares which vested up to December 31, 2020, 184,270 were settled and issued as Class A common shares in April 2020. A further 747,604 Class A common shares were settled and issued during the year ended December 31, 2021. A total of 1,438,720 incentive shares had vested as at December 31, 2021, of which 931,874 and 408,096 had been issued in 2021 and 2022, respectively.

On September 29, 2021, the Compensation Committee and the Board of Directors approved an increase in the aggregate number of Class A common shares available for issuance as awards under the 2019 Plan by 1,600,000 to 3,412,500, and approved new awards to senior management, totaling 1,500,000 shares of incentive stock, in three tranches, with a grant date October 1, 2021. The first tranche, representing 55% of the total, is to vest quarterly conditioned only on continued service over the four-year period which commenced October 1, 2021. Tranches two and three, each representing 22.5% of the total, were to vest quarterly up to September 30, 2025, once the Company’s stock price exceeded $27.00 and $30.00, respectively, over a 60-day period. The Compensation Committee and Board of Directors also approved an increase the maximum number of Class A common shares that each non-employee director may be granted in any one year to 25,000 and subsequently approved stock-based awards to the then seven non-executive directors totaling 105,000 shares of incentive stock, or 15,000 each, to vest in a similar manner to those awarded to senior management.

F-27

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Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

(Expressed in thousands of U.S. dollars except share data)

10.        Share-Based Compensation (continued)

During the year ended December 31, 2022, 28,528 unvested share awards were cancelled or withdrawn on the resignations of two directors and an award of 13,780 was made to one new director to vest in a similar manner to the other awards, with the first tranche adjusted for the date of appointment of the director.

As at December 31, 2022, 3,028,972 incentive Class A common shares had been awarded under the 2019 Plan leaving 383,528 Class A common shares available to be awarded under the 2019 Plan.

In March 2023, the Compensation Committee and the Board of Directors approved an amendment to the awards agreed in September 2021 for senior management and non-employee directors such that 10% of the second tranche would be forfeit with the remaining 90% vesting from April 2023 and quarterly thereafter with the last such vesting to be October 2025.  The price at which the third tranche was to vest was amended to $21.00. All other terms of the awards remain unchanged. The threshold for the third tranche was met in second quarter 2024.

 

During the years ended December 31, 2023, 2022 and 2021, 399,727, 218,366 and 55,175 incentive shares vested, respectively, under the amended September 2021 awards. A total of 2,111,988 incentive shares under both plans had vested as at December 31, 2023. Of the total incentive shares which vested under both plans up to December 31, 2023, 152,598 had not been issued.

On January 2, 2024, the Company approved awards to a non-employee director amounting to 4,884 shares of incentive stock which vested and were issued immediately, and 8,311 shares, to vest in a similar manner to the awards to other non-employee directors, adjusted for the date of appointment of the director, up to September 30, 2025.

As a result of the Chief Executive Officer (“CEO”) transition in March 2024, the Board of Directors approved a new award of 6,465 shares of incentive stock to the new non-employee director and 51,750 a new award to the new CEO, both structured in the same way as existing equivalent awards, adjusted for the dates of appointment. 155,250 shares were forfeited, due to retirement of the then CEO.

On October 9, 2024, the Company filed an amendment to original registration statement of the Company’s 2019 Plan to supplement the list of selling securityholders and to update the amounts of Class A common shares available to be resold by them. The file amended prospectus may be used for reoffers and resales of up to an aggregate of 1,669,533 Class A common shares on a continuous or delayed basis that were issued, or are issuable, to certain employees, directors and/or officers of the Company.

 

Share based awards since January 1, 2023, are summarized as follows:

		Restricted Stock Units
		Number of Units
		Number				Weighted Average Fair Value on Grant Date				Actual Fair Value on Vesting Date
Unvested as at January 1, 2023			1,316,711			$	22.35				n/a
Vested in year ended December 31, 2023			(399,727	)			n/a				18.87
Forfeit in March 2023			(35,771	)			n/a				n/a
Unvested as at December 31, 2023			881,213			$	22.35				n/a
Vested in nine months ended September 30, 2024			(448,748	)			n/a				26.78
Granted in January 2024			13,195				18.82				n/a
Granted in March 2024			58,215				17.80				n/a
Forfeit in March 2024			(155,250	)			n/a				n/a
Unvested as at September 30, 2024			348,625			$	21.92				n/a

F-28

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Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

(Expressed in thousands of U.S. dollars except share data)

10.        Share-Based Compensation (continued)

 

Using the graded vesting method of expensing the restricted stock unit grants, the weighted average fair value of the stock units is recognized as compensation costs in the interim unaudited condensed Consolidated Statements of Income over the vesting period. The fair value of the restricted stock units for this purpose is calculated by multiplying the number of stock units by the fair value of the shares at the grant date. The Company has not factored any anticipated forfeiture into these calculations based on the limited number of participants.

 

For the nine months ended September 30, 2024, and 2023, the Company recognized a total of $6,582 (includes $345 positive net effect from the amendment to the stock-based awards consequent on the CEO transition) and $7,684 (includes $451 effect from the amendment to the stock-based awards), respectively, in respect of stock-based compensation.

11.        Earnings per Share

 

Under the two-class method, net income, if any, is first reduced by the amount of dividends declared in respect of common shares for the current period, if any, and the remaining earnings are allocated to common shares and participating securities to the extent that each security can share the earnings assuming all earnings for the period are distributed.

 

Earnings are only allocated to participating securities in a period of net income if, based on the contractual terms, the relevant common shareholders have an obligation to participate in such earnings. As a result, earnings are only be allocated to the Class A common shareholders.

At September 30, 2024 and December 31, 2023, there were 348,625 and 881,213, respectively, shares of incentive share grants unvested as part of senior management’s and non-executive directors incentive awards approved on September 29, 2021.

		Nine months ended September 30,
		2024				2023
Numerator:
Net income available to common shareholders:		$	253,912			$	230,299
Denominator:
Class A Common shares
Basic weighted average number of common shares outstanding			35,272,574				35,473,382
Plus weighted average number of RSUs with service conditions			348,625				598,250
Common share and common share equivalents, dilutive			35,621,199				36,071,632
Basic earnings per share:
Class A			7.20				6.49
Diluted earnings per share:
Class A			7.13				6.38

 

12.        Subsequent events

On November 11, 2024, the Company announced a dividend of $0.45 per Class A common share for the third quarter of 2024, to be paid on or about December 4, 2024, to common shareholders of record as of November 22, 2024.

F-29

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