DORIAN LPG LTD., 10-K/A filed on 5/31/2016
Amended Annual Report
Document and Entity Information (USD $)
12 Months Ended
Mar. 31, 2016
May 26, 2016
Sep. 30, 2015
Document and Entity Information
 
 
 
Entity Registrant Name
DORIAN LPG LTD. 
 
 
Entity Central Index Key
0001596993 
 
 
Document Type
10-K/A 
 
 
Document Period End Date
Mar. 31, 2016 
 
 
Amendment Flag
false 
 
 
Current Fiscal Year End Date
--03-31 
 
 
Entity Well-known Seasoned Issuer
No 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Filer Category
Accelerated Filer 
 
 
Entity Public Float
 
 
$ 398,012,472 
Entity Common Stock, Shares Outstanding
 
55,627,128 
 
Document Fiscal Year Focus
2016 
 
 
Document Fiscal Period Focus
FY 
 
 
Condensed Consolidated Balance Sheets (USD $)
Mar. 31, 2016
Mar. 31, 2015
Current assets
 
 
Cash and cash equivalents
$ 46,411,962 
$ 204,821,183 
Trade receivables, net and accrued revenues
107,317 
22,847,224 
Prepaid expenses and other receivables
2,247,706 
1,780,548 
Due from related parties
54,504,359 
386,743 
Inventories
2,288,073 
3,375,759 
Total current assets
105,559,417 
233,211,457 
Fixed assets
 
 
Vessels, net
1,667,224,476 
419,976,053 
Vessels under construction
 
398,175,504 
Other fixed assets, net
591,288 
464,889 
Total fixed assets
1,667,815,764 
818,616,446 
Other non-current assets
 
 
Deferred charges, net
24,043,051 
13,965,921 
Due from related parties—non-current
17,600,000 
 
Restricted cash
50,812,789 
33,210,000 
Other non-current assets
95,271 
97,446 
Total assets
1,865,926,292 
1,099,101,270 
Current liabilities
 
 
Trade accounts payable
6,826,503 
5,224,349 
Accrued expenses
9,721,477 
5,647,702 
Due to related parties
708,210 
525,170 
Deferred income
4,606,540 
1,122,239 
Current portion of long-term debt
66,265,643 
15,677,553 
Total current liabilities
88,128,373 
28,197,013 
Long-term liabilities
 
 
Long-term debt-net of current portion
770,102,729 
184,665,874 
Derivative instruments
21,647,965 
12,730,462 
Other long-term liabilities
447,988 
293,662 
Total long-term liabilities
792,198,682 
197,689,998 
Total liabilities
880,327,055 
225,887,011 
Commitments and contingencies
   
   
Shareholders' equity
 
 
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued nor outstanding
   
   
Common stock, $0.01 par value, 450,000,000 shares authorized, 58,057,493 and 58,057,493 shares issued, 56,125,028 and 58,057,493 shares outstanding (net of treasury stock), as of March 31, 2016 and March 31, 2015, respectively
580,575 
580,575 
Additional paid-in-capital
848,179,471 
844,539,059 
Treasury stock, at cost; 1,932,465 and zero shares as of March 31, 2016 and March 31, 2015, respectively
(20,943,816)
 
Retained earnings
157,783,007 
28,094,625 
Total shareholders' equity
985,599,237 
873,214,259 
Total liabilities and shareholders' equity
$ 1,865,926,292 
$ 1,099,101,270 
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
Mar. 31, 2016
Mar. 31, 2015
Condensed Consolidated Balance Sheets
 
 
Preferred stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
50,000,000 
50,000,000 
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Common stock, shares authorized
450,000,000 
450,000,000 
Common stock, shares issued
58,057,493 
58,057,493 
Common stock, shares outstanding
56,125,028 
58,057,493 
Treasury stock, shares at cost
1,932,465 
Condensed Consolidated Statements of Operations (USD $)
3 Months Ended 9 Months Ended 12 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Mar. 31, 2014
Mar. 31, 2016
Mar. 31, 2015
Revenues.
 
 
 
 
 
 
 
 
 
 
 
 
Net pool revenues—related party
 
 
 
 
 
 
 
 
 
 
$ 202,918,232 
 
Voyage charter revenues
 
 
 
 
 
 
 
 
 
11,210,785 
46,194,134 
77,331,934 
Time charter revenues
 
 
 
 
 
 
 
 
 
17,602,137 
38,737,172 
26,098,290 
Other revenues
 
 
 
 
 
 
 
 
 
820,778 
1,358,291 
698,925 
Total revenues
85,335,229 
93,283,708 
74,946,432 
35,642,460 
35,333,108 
32,583,990 
20,358,211 
15,853,840 
 
29,633,700 
289,207,829 
104,129,149 
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Voyage expenses
 
 
 
 
 
 
 
 
 
6,670,971 
12,064,682 
22,081,856 
Vessel operating expenses
 
 
 
 
 
 
 
 
 
8,394,959 
47,119,990 
21,256,165 
Management fees-related party
 
 
 
 
 
 
 
 
 
3,122,356 
 
1,125,000 
Impairment
 
 
 
 
 
 
 
 
 
 
 
1,431,818 
Depreciation and amortization
 
 
 
 
 
 
 
 
 
6,620,372 
42,591,942 
14,093,744 
General and administrative expenses
 
 
 
 
 
 
 
 
 
433,674 
29,836,029 
14,145,086 
Loss on disposal of assets
 
 
 
 
 
 
 
 
 
 
1,125,395 
 
Total expenses
 
 
 
 
 
 
 
 
 
25,242,332 
132,738,038 
74,133,669 
Other income—related party
 
 
 
 
 
 
 
 
 
 
1,945,396 
93,929 
Operating income
42,088,645 
54,011,305 
48,743,550 
13,571,687 
10,587,098 
10,825,590 
3,476,450 
5,200,271 
 
4,391,368 
158,415,187 
30,089,409 
Other income/(expenses)
 
 
 
 
 
 
 
 
 
 
 
 
Interest and finance costs
 
 
 
 
 
 
 
 
 
(1,579,206)
(12,757,013)
(289,090)
Interest income
 
 
 
 
 
 
 
 
 
428,201 
148,360 
418,597 
Loss on derivatives, net
 
 
 
 
 
 
 
 
 
(1,104,001)
(15,775,629)
(3,959,203)
Foreign currency gain/(loss), net
 
 
 
 
 
 
 
 
 
697,481 
(342,523)
(998,931)
Total other income/(expenses), net
 
 
 
 
 
 
 
 
 
(1,557,525)
(28,726,805)
(4,828,627)
Net income
$ 20,160,912 
$ 54,661,323 
$ 41,213,264 
$ 13,652,883 
$ 8,828,251 
$ 8,996,605 
$ 3,768,677 
$ 3,667,249 
$ 2,833,843 
$ 2,833,843 
$ 129,688,382 
$ 25,260,782 
Earnings per common share – basic (in dollars per share)
 
 
 
 
 
 
 
 
 
$ 0.09 
$ 2.29 
$ 0.45 
Earnings per common share – diluted (in dollars per share)
 
 
 
 
 
 
 
 
 
$ 0.09 
$ 2.29 
$ 0.45 
Condensed Consolidated Statements of Shareholders Equity (USD $)
Common stock
Treasury stock
Additional paid-in capital
Retained earnings/(Accumulated deficit)
Due from shareholder
Total
Balance at Jun. 30, 2013
$ 1 
 
 
 
 
 
Balance (in shares) at Jun. 30, 2013
100 
 
 
 
 
 
Increase (Decrease) in Shareholders' Equity
 
 
 
 
 
 
Fractional shares cancelled (in shares)
(19)
 
 
 
 
 
Net income
 
 
 
 
 
2,833,843 
Balance at Mar. 31, 2014
483,650 
 
 
 
 
692,199,432 
Balance (in shares) at Mar. 31, 2014
48,365,011 
 
 
 
 
 
Balance at Jul. 01, 2013
 
99 
 
(100)
 
Balance (in shares) at Jul. 01, 2013
100 
 
 
 
 
 
Increase (Decrease) in Shareholders' Equity
 
 
 
 
 
 
Cancellation - July 29, 2013
(1)
 
(99)
 
100 
 
Cancellation - July 29, 2013 (shares)
(100)
 
 
 
 
 
Fractional shares cancelled (in shares)
(19)
 
 
 
 
 
Net income
 
 
 
2,833,843 
 
2,833,843 
Balance at Mar. 31, 2014
483,650 
 
688,881,939 
2,833,843 
 
692,199,432 
Balance (in shares) at Mar. 31, 2014
48,365,011 
 
 
 
 
 
Increase (Decrease) in Shareholders' Equity
 
 
 
 
 
 
Restricted share award issuances
9,290 
 
(9,290)
 
 
 
Restricted share award issuances (in shares)
929,000 
 
 
 
 
 
Net income
 
 
 
25,260,782 
 
25,260,782 
Stock-based compensation
 
 
2,311,565 
 
 
2,311,565 
Balance at Mar. 31, 2015
580,575 
 
844,539,059 
28,094,625 
 
873,214,259 
Balance (in shares) at Mar. 31, 2015
58,057,493 
 
 
 
 
 
Increase (Decrease) in Shareholders' Equity
 
 
 
 
 
 
Net income
 
 
 
129,688,382 
 
129,688,382 
Stock-based compensation
   
   
3,640,412 
   
   
3,640,412 
Purchase of treasury stock
 
(20,943,816)
 
 
 
(20,943,816)
Balance at Mar. 31, 2016
$ 580,575 
$ (20,943,816)
$ 848,179,471 
$ 157,783,007 
 
$ 985,599,237 
Balance (in shares) at Mar. 31, 2016
58,057,493 
 
 
 
 
 
Condensed Consolidated Statements of Cash Flows (USD $)
9 Months Ended 12 Months Ended
Mar. 31, 2014
Mar. 31, 2016
Mar. 31, 2015
Cash flows from operating activities:
 
 
 
Net income
$ 2,833,843 
$ 129,688,382 
$ 25,260,782 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Impairment
 
 
1,431,818 
Depreciation and amortization
6,620,372 
42,591,942 
14,093,744 
Amortization of financing costs
800,806 
2,499,185 
830,899 
Unrealized loss/(gain) on derivatives
(2,623,456)
8,917,503 
(1,331,954)
Stock-based compensation expense
 
4,052,249 
2,311,565 
Loss on disposal of assets
 
1,125,395 
 
Unrealized exchange differences
(8,004)
96,550 
1,244,394 
Other non-cash items
 
138,588 
489,039 
Changes in operating assets and liabilities
 
 
 
Trade receivables, net and accrued revenue
(1,966,746)
22,739,907 
(21,018,670)
Prepaid expenses and other receivables
(343,047)
(467,158)
(1,437,501)
Due from related parties
(1,639,497)
(71,717,616)
1,252,754 
Inventories
396,776 
1,087,686 
(2,317,430)
Other non-current assets
 
2,175 
(97,446)
Trade accounts payable
1,799,616 
1,044,595 
2,731,828 
Accrued expenses and other liabilities
2,043,523 
9,045,077 
2,306,631 
Due to related parties
(292,687)
183,040 
411,705 
Payments for drydocking costs
(385,077)
 
(538,938)
Net cash provided by operating activities
7,236,422 
151,027,500 
25,623,220 
Cash flows from investing activities:
 
 
 
Payments for vessels and vessels under construction
(172,237,529)
(895,063,383)
(314,173,298)
Net payments to acquire predecessor businesses
(13,732,896)
 
 
Restricted cash deposits
(35,448,702)
(17,602,789)
(28,700,000)
Restricted cash released
 
 
30,938,702 
Proceeds from disposal of assets
 
2,713,660 
 
Payments to acquire other fixed assets
(15,597)
(462,329)
(392,248)
Net cash used in investing activities
(221,434,724)
(910,414,841)
(312,326,844)
Cash flows from financing activities:
 
 
 
Proceeds from long-term debt borrowings
 
676,819,873 
80,086,143 
Repayment of long-term debt borrowings
(6,506,000)
(40,794,928)
(9,612,000)
Purchase of treasury stock
 
(20,943,816)
 
Financing costs paid
(1,516,847)
(13,990,720)
(11,220,812)
Cash proceeds from common share issuances
510,496,990 
 
155,830,178 
Payments relating to issuance costs
(9,152,050)
 
(1,388,918)
Net cash provided by/(used in) financing activities
493,322,093 
601,090,409 
213,694,591 
Effects of exchange rates on cash and cash equivalents
8,004 
(112,289)
(1,301,579)
Net increase/(decrease) in cash and cash equivalents
279,131,795 
(158,409,221)
(74,310,612)
Cash and cash equivalents at the beginning of the period
 
204,821,183 
279,131,795 
Cash and cash equivalents at the end of the period
279,131,795 
46,411,962 
204,821,183 
Supplemental disclosure of cash flow information
 
 
 
Cash paid during the period for interest excluding interest capitalized to vessels
517,646 
8,354,474 
69,323 
Predelivery costs for vessels and vessels under construction included in liabilities
653,159 
1,040,189 
1,211,534 
Non cash consideration of shares issued to acquire Predecessor businesses and acquisitions of assets
187,495,680 
 
 
Financing costs included in liabilities
 
 
1,039,479 
Issuance costs included in liabilities
$ 549,966 
 
$ 244,414 
Basis of Presentation and General Information
Basis of Presentation and General Information

Dorian LPG Ltd.

Notes to Consolidated Financial Statements 

(Expressed in United States Dollars)

 

1.

Basis of Presentation and General Information

 

Dorian LPG Ltd. (“Dorian”) was incorporated on July 1, 2013, under the laws of the Republic of the Marshall Islands and is headquartered in the United States and is engaged in the transportation of liquefied petroleum gas (“LPG”) worldwide through the ownership and operation of LPG tankers. Dorian LPG Ltd. and its subsidiaries (together “we,” “us,” “our,” or the “Company”) is focused on owning and operating very large gas carriers (“VLGCs”), each with a cargo carrying capacity of greater than 80,000 cbm. Our fleet currently consists of twenty-two VLGCs, including nineteen fuel-efficient 84,000 cbm ECO-design VLGCs (“ECO VLGCs”) and three 82,000 cbm VLGCs.

 

The Company remained dormant until July 29, 2013 when the following transactions were completed concurrently:

 

·

The Company completed a private placement of 9,310,054 shares of its common stock with institutional investors and other investors in Norway (“NPP”). The shares were issued at NOK 75.00 per share, equivalent to USD 12.66 per share and realized gross proceeds of $117.9 million based on the exchange rate on July 29, 2013.

 

·

The Company acquired from Dorian Holdings LLC (“Dorian Holdings”) the following in exchange for 4,667,135 shares of its common stock and $9.7 million in cash:

 

(a)

100% interest in three ship owning entities, CNML LPG Transport LLC (“CNML”), CJNP LPG Transport LLC (“CJNP”) and CMNL LPG Transport LLC (“CMNL”), which each owned a VLGC (the Captain Nicholas ML, the Captain John NP and the Captain Markos NL respectively), the related bank debt, interest rate swaps, and the inventory on board each vessel. The Captain Nicholas ML,  Captain John NP and Captain Markos NL were previously owned by Cepheus Transport Ltd, Lyra Gas Transport Ltd and Cetus Transport Ltd., all owned by principals of Dorian Holdings until July 29, 2013 on which date they were sold to CNML, CJNP and CMNL, respectively. The sale of the vessels required approval from the bank that had provided the related financing that was assumed by the Company in connection with the transaction and resulted in a modification of the financing terms in connection with the acquisition. A further description of the loan arrangements is provided in Note 11.

 

(b)

100% interest in two entities, each a party to a contract for the construction of one VLGC, option rights to construct an additional 1.5 VLGCs and $2.67 million in cash.

 

The Company acquired from an affiliate of Dorian Holdings a 100% interest in an LPG pressurized gas carrier (“PGC”), the LPG Grendon, and the inventory onboard the vessel for $6.672 million in cash.

 

The abovementioned acquisitions from Dorian Holdings and its affiliate were accounted as a business combination (refer to Note 4) and the operations of LPG Grendon along with that of the three VLGCs referred to above are herein referred to as the Predecessor.

 

·

The Company issued 4,667,135 shares of its common stock to SEACOR Holdings Inc., through its subsidiary, SeaDor Holdings LLC (“SeaDor”) as consideration for the following:

 

(a)

100% interest in a subsidiary company, SEACOR LPGI LLC, a party to a contract for the construction of one VLGC;

 

(b)

$49.9 million in cash; and

 

(c)

the assignment to the Company of option rights to purchase 1.5 VLGC vessels.

 

The above mentioned acquisitions from SeaDor were accounted for as an asset acquisition. The allocation of the purchase price between the assets acquired is described in Note 3(b).

 

At the closing of the NPP, Dorian Holdings (the “Original Shareholders”) surrendered the 100 shares of capital stock of the Company, which were then cancelled. Following the completion of the above transactions on July 29, 2013, Dorian Holdings, whose chairman is Mr. John Hadjipateras, our Chairman, President and Chief Executive Officer, and SeaDor, each owned approximately 25.0% of the Company’s outstanding common stock with the remaining 50% held by institutional investors and high net worth investors.

 

We successfully closed our initial public offering ("IPO") on May 13, 2014 and our shares are listed on the NYSE and trade under the symbol “LPG”.

 

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of Dorian LPG Ltd. and its subsidiaries.

 

On April 1, 2015, Dorian and Phoenix Tankers Pte. Ltd. (“Phoenix”) began operations of Helios LPG Pool LLC (the “Helios Pool”) and entered into pool participation agreements for the purpose of establishing and operating, as charterer, under a variable rate time charter to be entered into with owners or disponent owners of VLGCs, a commercial pool of VLGCs whereby revenues and expenses are shared. See Note 3 below for further description of the Helios Pool relationship. 

 

Our subsidiaries, which are all wholly-owned and all are incorporated in Republic of the Marshall Islands (unless otherwise indicated below), as of March 31, 2016 are listed below.

 

Vessel Owning Subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

    

Type of

    

 

    

 

    

 

 

Subsidiary

 

vessel

 

Vessel’s name

 

Built

 

CBM(1)

 

CNML LPG Transport LLC

 

VLGC

 

Captain Nicholas ML

 

2008

 

82,000

 

CJNP LPG Transport LLC

 

VLGC

 

Captain John NP

 

2007

 

82,000

 

CMNL LPG Transport LLC

 

VLGC

 

Captain Markos NL

 

2006

 

82,000

 

Comet LPG Transport LLC

 

VLGC

 

Comet

 

2014

 

84,000

 

Corsair LPG Transport LLC

 

VLGC

 

Corsair

 

2014

 

84,000

 

Corvette LPG Transport LLC

 

VLGC

 

Corvette

 

2015

 

84,000

 

Dorian Shanghai LPG Transport LLC

 

VLGC

 

Cougar

 

2015

 

84,000

 

Concorde LPG Transport LLC

 

VLGC

 

Concorde

 

2015

 

84,000

 

Dorian Houston LPG Transport LLC

 

VLGC

 

Cobra

 

2015

 

84,000

 

Dorian Sao Paulo LPG Transport LLC

 

VLGC

 

Continental

 

2015

 

84,000

 

Dorian Ulsan LPG Transport LLC

 

VLGC

 

Constitution

 

2015

 

84,000

 

Dorian Amsterdam LPG Transport LLC

 

VLGC

 

Commodore

 

2015

 

84,000

 

Dorian Dubai LPG Transport LLC

 

VLGC

 

Cresques

 

2015

 

84,000

 

Constellation LPG Transport LLC

 

VLGC

 

Constellation

 

2015

 

84,000

 

Dorian Monaco LPG Transport LLC

 

VLGC

 

Cheyenne

 

2015

 

84,000

 

Dorian Barcelona LPG Transport LLC

 

VLGC

 

Clermont

 

2015

 

84,000

 

Dorian Geneva LPG Transport LLC

 

VLGC

 

Cratis

 

2015

 

84,000

 

Dorian Cape Town LPG Transport LLC

 

VLGC

 

Chaparral

 

2015

 

84,000

 

Dorian Tokyo LPG Transport LLC

 

VLGC

 

Copernicus

 

2015

 

84,000

 

Commander LPG Transport LLC

 

VLGC

 

Commander

 

2015

 

84,000

 

Dorian Explorer LPG Transport LLC

 

VLGC

 

Challenger

 

2015

 

84,000

 

Dorian Exporter LPG Transport LLC

 

VLGC

 

Caravelle

 

2016

 

84,000

 

 

Management Subsidiaries

 

 

 

 

Subsidiary

 

Dorian LPG Management Corp

 

Dorian LPG (USA) LLC (incorporated in USA)

 

Dorian LPG (UK) Ltd. (incorporated in UK)

 

Dorian LPG Finance LLC

 

Occident River Trading Limited (incorporated in UK)

 

 

Dormant Subsidiaries

 

 

 

 

Subsidiary

 

SeaCor LPG I LLC

 

SeaCor LPG II LLC

 

Capricorn LPG Transport LLC

 

Constitution LPG Transport LLC

 

Grendon Tanker LLC(2)

 


(1)

CBM: Cubic meters, a standard measure for LPG tanker capacity

(2)

Owner of the Pressurized Gas Carrier (“PGC”) Grendon until it was sold in February 2016

 

Customers

 

For the year ended March 31, 2016, the Helios Pool and one other individual charterer accounted for 70% and 12% of our total revenues, respectively. For the year ended March 31, 2015,  five charterers represented 27%,  19%,  14%,  12% and 11% of total revenues, respectively. For the period ended March 31, 2014,  three charterers represented 51%,  13% and 10% of total revenues, respectively.

Significant Accounting Policies
Significant Accounting Policies

2. Significant Accounting Policies

 

(a)Principles of consolidation:  The consolidated financial statements incorporate the financial statements of the Company and its wholly‑owned subsidiaries. Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statements of operations from the effective date of acquisition and up to the effective date of disposal, as appropriate. All intercompany balances and transactions have been eliminated.

 

(b)Use of estimates:  The preparation of the 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

(c)Other comprehensive income/(loss):  The Company follows the accounting guidance relating to Comprehensive Income, which requires separate presentation of certain transactions that are recorded directly as components of stockholders’ equity. The Company has no other comprehensive income/(loss) and accordingly, comprehensive income/(loss) equals net income/(loss) for the periods presented and thus has not presented this in the statement of operations or in a separate statement.

 

(d)Foreign currency translation:  The functional currency of the Company is the U.S. Dollar. Foreign currency transactions are measured and recorded in the functional currency using the exchange rate in effect at the date of the transaction. As of balance sheet date, monetary assets and liabilities that are denominated in a currency other than the functional currency are adjusted to reflect the exchange rate at the balance sheet date and any gains or losses are included in the statement of operations. For the periods presented, the Company had no foreign currency derivative instruments.

 

(e)Cash and cash equivalents:  The Company considers highly liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents.

 

(f)Trade receivables, net and accrued revenues:  Trade receivables, net and accrued revenues, reflect receivables from vessel charters, net of an allowance for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. Provision for doubtful accounts for the periods presented was zero.

 

(g)Due from related parties:  Due from related parties reflect receivables from Helios Pool, and other related parties. Distributions of earnings due from the Helios Pool are classified as current and working capital contributed to the Helios Pool is classified as non-current.

 

(h)Inventories:  Inventories consist of bunkers on board the vessels when vessels are unemployed or are operating under voyage charters and lubricants and stores on board the vessels. Inventories are stated at the lower of cost or market. Cost is determined by the first in, first out method.

 

(i)Vessels, net:  Vessels, net are stated at cost net of accumulated depreciation and impairment charges. The costs of the vessels acquired as part of a business acquisition are recorded at their fair value on the date of acquisition. The cost of vessels purchased consists of the contract price, less discounts, plus any direct expenses incurred upon acquisition, including improvements, commission paid, delivery expenses and other expenditures to prepare the vessel for her initial voyage. The initial purchase of LPG coolant for the refrigeration of cargo is also capitalized. Allocated interest costs incurred during construction are capitalized. Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels. Repairs and maintenance are expensed as incurred.

 

(j)Impairment of long‑lived assets:  The Company reviews their vessels “held and used” for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When the estimate of future undiscounted cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount, the asset is evaluated for an impairment loss. Measurement of the impairment loss is based on the fair value of the asset.

 

(k)Vessel depreciation:  Depreciation is computed using the straight‑line method over the estimated useful life of the vessels, after considering the estimated salvage value. Each vessel’s salvage value is equal to the product of its lightweight tonnage and estimated scrap rate. Management estimates the useful life of its vessels to be 25 years from the date of initial delivery from the shipyard. Second hand vessels are depreciated from the date of their acquisition through their remaining estimated useful life.

 

(l)Drydocking and special survey costs:  Drydocking and special survey costs are accounted under the deferral method whereby the actual costs incurred are deferred and are amortized on a straight‑line basis over the period through the date the next survey is scheduled to become due. We are required to drydock each of our vessels every five years until it reaches 15 years of age, after which we are required to drydock the applicable vessel every 2.5 years. Costs deferred are limited to actual costs incurred at the yard and parts used in the drydocking or special survey. Costs deferred include expenditures incurred relating to shipyard costs, hull preparation and painting, inspection of hull structure and mechanical components, steelworks, machinery works, and electrical works. If a survey is performed prior to the scheduled date, the remaining unamortized balances are immediately written off. Unamortized balances of vessels that are sold are written‑off and included in the calculation of the resulting gain or loss in the period of the vessel’s sale. The amortization charge is presented within Depreciation and amortization in the consolidated statement of operations.

 

(m)Financing costs:  Financing costs incurred for obtaining new loans and credit facilities are deferred and amortized to interest expense over the respective term of the loan or credit facility using the effective interest rate method. Any unamortized balance of costs relating to loans repaid or refinanced is expensed in the period the repayment or refinancing is made, subject to the accounting guidance regarding Debt—Modifications and Extinguishments. Any unamortized balance of costs related to credit facilities repaid is expensed in the period. Any unamortized balance of costs relating to credit facilities refinanced are deferred and amortized over the term of the respective credit facility in the period the refinancing occurs, subject to the provisions of the accounting guidance relating to Debt—Modifications and Extinguishments. The unamortized financing costs are reflected in Deferred charges in the accompanying consolidated balance sheet.

 

(n)Restricted cash:  Restricted cash represents minimum liquidity to be maintained with certain banks under our borrowing arrangements and a pledged cash deposit. The restricted cash is classified as non-current in the event that its obligation is not expected to be terminated within the next twelve months as they are long-term in nature.

 

(o)Revenues and expenses:  Revenue is recognized when an agreement exists, the vessel is made available to the charterer or services are provided, the charter hire is determinable and collection of the related revenue is reasonably assured.

 

Net pool revenue: As from April 1, 2015, we began operation of a pool. Net pool revenues—related party for each vessel in the pool is determined in accordance with the profit sharing terms specified within the pool agreement. In particular, the pool manager calculates the net pool revenues using gross revenues less voyage expenses of all the pool vessels and less the general and administrative expenses of the pool and distributes the net pool revenues as time charter hire to participants based on:

 

·

pool points (vessel attributes such as cargo carrying capacity, fuel consumption, and speed are taken into consideration); and

 

·

number of days the vessel participated in the pool in the period.

 

We recognize net pool revenues—related party on a monthly basis, when the vessel has participated in the pool during the period and the amount of net pool revenues for the month can be estimated reliably. 

 

Voyage charter revenue:    Under a voyage charter, the revenues are recognized on a pro‑rata basis over the duration of the voyage determined on a discharge—to discharge port basis but the Company does not begin recognizing revenue until a charter has been agreed to by the customer and the Company, even if the vessel has discharged its cargo and is sailing to the anticipated load port for its next voyage. In the event a vessel is acquired or sold while a voyage is in progress, the revenue recognized is based on an allocation formula agreed between the buyer and the seller. Demurrage income represents payments by the charterer to the vessel owner when loading or discharging time exceeds the stipulated time in the voyage charter and is recognized when earned and collection is reasonably assured. Despatch expense represents payments by the Company to the charterer when loading or discharging time is less than the stipulated time in the voyage charter and is recognized as incurred. Voyage charter revenue relating to voyages in progress as of the balance sheet date are accrued and presented in Trade receivables and accrued revenue in the accompanying consolidated balance sheet.

 

Time charter revenue:    Time charter revenues are recorded ratably over the term of the charter as service is provided. Time charter revenues received in advance of the provision of charter service are recorded as deferred income and recognized when the charter service is rendered. Deferred income or accrued revenue also may result from straight‑line revenue recognition in respect of charter agreements that provide for varying charter rates. Deferred income and accrued revenue amounts that will be recognized within the next twelve months are presented as current, with amounts to be recognized thereafter presented as non‑current. Revenues earned through the profit sharing arrangements in the time charters represent contingent rental revenues that are recognized when earned and amounts are reasonably assured based on estimates provided by the charterer.

 

Commissions:    Charter hire commissions to brokers or managers, if any, are deferred and amortized over the related charter period and are included in Voyage expenses.

 

Vessel operating expenses:  Vessel operating expenses are accounted for as incurred on the accrual basis. Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance, the cost of spares and consumable stores and other miscellaneous expenses.

 

(p)Repairs and maintenance:  All repair and maintenance expenses, including underwater inspection costs are expensed in the period incurred. Such costs are included in Vessel operating expenses.

 

(q)Stock-based compensation: Stock-based payments to employees and directors are determined based on their grant date fair values and are amortized against income over the vesting period. The fair value is considered to be the closing price recorded on the grant date. We account for restricted stock award forfeitures upon occurrence.

 

(r)Stock repurchases:  We record the repurchase of our shares of common stock at cost based on the settlement date of the transaction. These shares are classified as treasury stock, which is a reduction to stockholders’ equity. Treasury shares are included in authorized and issued shares but excluded from outstanding shares.

 

(s)Segment reporting:  Each of the Company’s vessels serve the same type of customer, have similar operations and maintenance requirements, operate in the same regulatory environment, and are subject to similar economic characteristics. Based on this, the Company has determined that it operates in one reportable segment, the international transportation of liquid petroleum gas with its fleet of vessels. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable.

 

(t)Derivative instruments:  All derivatives are stated at their fair value, as either a derivative asset or a liability. The fair value of the interest rate derivatives is based on a discounted cash flow analysis and their fair value changes are recognized in current period earnings. When the derivatives do qualify for hedge accounting, depending upon the nature of the hedge, changes in fair value of the derivatives are either recognized in current period earnings or in other comprehensive income/(loss) (effective portion) until the hedged item is recognized in the consolidated statements of operations. For the periods presented, no derivatives were accounted for as accounting hedges.

 

(u)Fair value of financial instruments:  In accordance with the requirements of accounting guidance relating to Fair Value Measurements, the Company classifies and discloses its assets and liabilities carried at fair value in one of the following three categories:

 

Level 1:

Quoted market prices in active markets for identical assets or liabilities.

Level 2:

Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3:

Unobservable inputs that are not corroborated by market data.

 

(v)Recent accounting pronouncements:  In May 2014, the Financial Accounting Standards Board (“FASB”) amended its accounting guidance for revenue recognition. The fundamental principles of the new guidance are that companies should recognize revenue in a manner that reflects the timing of the transfer of services to customers and consideration that a company expects to receive for the services provided. It also requires additional disclosures necessary for the financial statement users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein, and shall be applied either retrospectively to each period presented or as a cumulative effect adjustment as of the date of adoption, early adoption is permitted, but not before the beginning of 2017. We are currently assessing the impact the amended guidance will have on our financial statements.

 

In February 2015, the FASB issued accounting guidance amending consolidation analysis which focuses on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. This new standard simplifies consolidation accounting by reducing the number of consolidation models and providing incremental benefits to stakeholders. In addition, the new standard places more emphasis on risk of loss when determining a controlling financial interest, reduces the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity (a “VIE”), and changes consolidation conclusion for public and private companies in several industries that typically make use of limited partnerships or VIEs. The pronouncement is effective prospectively for annual periods beginning after December 15, 2015, and interim periods within that reporting period. The amended guidance will have no impact on our financial statements.

 

In April 2015, an accounting pronouncement was issued by the FASB to update the guidance related to the presentation of debt issuance costs. This guidance requires debt issuance costs, related to a recognized debt liability, be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability rather than being presented as an asset. This pronouncement is effective retrospectively for fiscal years beginning after December 15, 2015 and interim periods within that reporting period, with early adoption permitted. We will adopt this pronouncement on April 1, 2016 and the amount of debt issuance costs that would be classified on our balance sheet as a reduction of debt was $23.7 million as of March 31, 2016 and $13.3 million as of March 31, 2015.

 

In July 2015, the FASB issued accounting guidance requiring entities to measure most inventory at the lower of cost and net realizable value. The pronouncement is effective prospectively for annual periods beginning after December 15, 2016, and interim periods within that reporting period. We are currently assessing the impact the amended guidance will have on our financial statements.

 

In February 2016, the FASB issued accounting guidance to update the requirements of financial accounting and reporting for lessees and lessors. The updated guidance, for lease terms of more than 12 months, will require a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize a straight-line total lease expense. Lessor accounting remains largely unchanged. The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The pronouncement is effective prospectively for public business entities for annual periods beginning after December 15, 2018, and interim periods within that reporting period. Early adoption is permitted for all entities. We are currently assessing the impact the amended guidance will have on our financial statements.

 

In March 2016, the FASB issued accounting guidance to simplify the requirements of accounting for share-based payment transactions. The guidance simplifies the accounting for taxes related to stock-based compensation, including adjustments to how excess tax benefits and an entity’s payments for tax withholdings should be classified. Additionally, an entity may make an entity-wide policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The pronouncement is effective for annual periods beginning after December 15, 2016, and interim periods within that reporting period with early adoption permitted in any interim or annual period. We have early adopted this pronouncement for the year ended March 31, 2016 and have made the entity-wide policy election to account for forfeitures when they occur, which resulted in us recognizing an additional $0.1 million of stock-based compensation for the year ended March 31, 2016.

 

Acquisition of Business
Acquisition of Business

4. Acquisition of Business

 

On July 29, 2013, Dorian Holdings sold to Dorian in exchange for equity and $9.7 million in cash its 100% interest in CMNL, CJNP,  CNML owners of the Captain Markos NL, Captain John NP and Captain Nicholas ML, respectively and acquired the related inventory on board, and assumed the associated bank debt, and interest rate swap and 100% interest in two entities, each a party to a contract for the construction of one VLGC, and option rights to construct an additional 1.5 VLGCs and $2.67 million in cash. The $9.7 million cash related to the payment for inventories and LPG coolant on board of $2.3 million and to reimburse for an advance for vessels under construction of $7.4 million

 

In addition on July 29, 2013 Dorian acquired 100% interest of Grendon Tanker LLC, the owner of the Grendon (until its sale to a third party in February 2016), from an affiliate of Dorian Holdings for a cash consideration of $6,625,000 plus the value of inventory on board the vessel.

 

These acquisitions have been treated as business acquisitions and were initially recorded at fair value.

 

The following table summarizes the fair value of the consideration paid and assets/liabilities acquired.

 

Fair value of total consideration

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition

    

 

 

    

 

 

 

 

from Dorian

 

Grendon

 

 

 

 

 

Holdings

 

acquisition

 

Total

 

Cash

$

9,732,911

 

$

6,672,485

 

$

16,405,396

 

Equity instruments (4,667,135 common shares of the Company at NOK 75.00 per share)

 

59,092,499

 

 

 

 

59,092,499

 

Total consideration

 

68,825,410

 

 

6,672,485

 

 

75,497,895

 

Fair value of identifiable assets and liabilities acquired:

 

 

 

 

 

 

 

 

 

Cash

 

2,672,500

 

 

 

 

2,672,500

 

Vessels

 

194,457,529

 

 

6,625,000

 

 

201,082,529

 

Inventories on board the vessels

 

1,407,622

 

 

47,485

 

 

1,455,107

 

Newbuilding vessels contracted for construction

 

17,593,130

 

 

 

 

17,593,130

 

Other assets—Vessel purchase options

 

4,605,000

 

 

 

 

4,605,000

 

Long term bank debt

 

(135,224,500)

 

 

 

 

(135,224,500)

 

Interest rate swaps

 

(16,685,871)

 

 

 —

 

 

(16,685,871)

 

Net assets acquired—fair value

$

68,825,410

 

$

6,672,485

 

$

75,497,895

 

 

The fair value of the common stock was determined to be NOK75.00 per share (or $12.66 per share at the exchange rate on July 29, 2013) being the price the Company issued its common shares to private investors under its private placement which closed on the same date.

 

The vessels were acquired with attached charters. The attached charters for each vessel were evaluated by the Company based on market charter rates on the acquisition date and were found to be at market values, and thus none of the purchase consideration was allocated to the attached time charters or voyage charter.

 

The fair values of the vessels, excluding LPG coolant, on the date of acquisition were determined by the Company based on valuations from an independent broker. The appraised value was determined using recent transactions involving comparable vessels as adjusted for age and features. The appraisal was performed on “willing Seller and willing Buyer” basis and based on the sale and purchase market condition prevailing at the acquisition date subject to the vessel being in sound condition and made available for delivery charter free. The fair value of the LPG coolant at the date of acquisition was determined by the quantity purchased valued at the then current LPG rate. The fair value of the newbuilding contracts and vessel purchase options was computed as the excess of the purchase consideration for similar vessels with similar delivery dates based on valuation from an independent broker over the purchase consideration of the contracts acquired plus in respect of the newbuilding contracts any advance paid to the shipyard as of the acquisition date. The fair value of the interest rate swaps was determined using a discounted cash flow approach based on market‑based LIBOR swap yield rates. The fair value of the bank debt and cash was determined to be its face value.

 

In addition, on July 29, 2013 Dorian Holdings granted the Company a royalty‑free, non‑exclusive right and license to use the then newly created Dorian logo and “Dorian LPG”. The Company evaluated the license agreement and did not assign any value to the use of this logo and name based on the fact that it was a brand new logo, created shortly prior to the NPP and never used in the market place, and for which the Company does not have exclusive use.

 

The revenue and net income relating to the Predecessor operations acquired since their acquisition date to March 31, 2014 included in the consolidated statement of operations for the period ended March 31, 2014 amount to $29,633,700 and $3,152,335, respectively.

 

Pro forma Information (unaudited)

 

The following table summarizes total net revenues and net income of the Company, had the acquisition of the Predecessor operations occurred on April 1, 2013:

 

 

 

 

 

 

 

    

For the year ended

 

$ in 000’s

 

March 31, 2014

 

Net revenues

 

$

45,017

 

Net income

 

$

6,613

 

 

The combined results in the table above have been prepared for comparative purposes only and include acquisition related adjustments for depreciation, interest charges and management fees. The combined results do not purport to be indicative of the results of operations which would have resulted had the acquisition been effected at the beginning of the applicable period noted above, or the future results of operations of the combined entity.

Inventories
Inventories

5. Inventories

 

Our inventories by type were as follows:

 

 

 

 

 

 

 

 

 

March 31, 2016

 

March 31, 2015

 

Lubricants

$

1,612,354

 

$

737,502

 

Victualing

 

494,098

 

 

132,017

 

Bonded stores

 

103,446

 

 

35,399

 

Communication cards

 

78,175

 

 

24,417

 

Bunkers

 

 —

 

 

2,446,424

 

Total

$

2,288,073

 

$

3,375,759

 

 

Vessels, Net
Vessels, Net

6. Vessels, Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Accumulated

    

 

 

 

 

 

Cost

 

depreciation

 

Net book Value

 

Balance, April 1, 2015

 

$

201,390,135

 

$

(6,555,269)

 

$

194,834,866

 

Vessels delivered

 

 

240,415,534

 

 

 —

 

 

240,415,534

 

Impairment(1)

 

 

(2,625,000)

 

 

1,193,182

 

 

(1,431,818)

 

Depreciation

 

 

 —

 

 

(13,842,529)

 

 

(13,842,529)

 

Balance, March 31, 2015

 

 

439,180,669

 

 

(19,204,616)

 

 

419,976,053

 

Vessels delivered

 

 

1,292,872,267

 

 

 —

 

 

1,292,872,267

 

Other additions

 

 

195,272

 

 

 —

 

 

195,272

 

Disposals

 

 

(4,268,279)

 

 

429,214

 

 

(3,839,065)

 

Depreciation

 

 

 —

 

 

(41,980,051)

 

 

(41,980,051)

 

Balance, March 31, 2016

 

$

1,727,979,929

 

$

(60,755,453)

 

$

1,667,224,476

 


(1)

We recognized no impairment losses for the year ended March 31, 2016, and a non-cash impairment loss of $1.4 million for the year ended March 31, 2015. We prepared future undiscounted cash flows for the PGC vessel as there were indicators of impairment for this size vessel, which provided evidence that the book value was not recoverable.

 

Vessels delivered represent amounts transferred from Vessels under Construction relating to the cost of our ECO VLGCs delivered to us between July 2014 and February 2016.

 

Vessels with a total carrying value of $1,667.2 million as of March 31, 2016 are first‑priority mortgaged as collateral for our loan facilities (refer to Note 11 below). As of March 31, 2015, vessels with a total carrying value of $416.0 million were first priority mortgaged as collateral for our loan facilities.

Vessels Under Construction
Vessels Under Construction

7. Vessels Under Construction

 

 

 

 

 

 

Balance, April 1, 2015

 

$

323,206,206

 

Installment payments to shipyards

 

 

300,866,261

 

Other capitalized expenditures

 

 

11,016,951

 

Capitalized interest

 

 

3,501,620

 

Vessels delivered (transferred to Vessels)

 

 

(240,415,534)

 

Balance, March 31, 2015

    

 

398,175,504

 

Installment payments to shipyards

 

 

867,187,966

 

Other capitalized expenditures

 

 

22,699,783

 

Capitalized interest

 

 

4,809,014

 

Vessels delivered (transferred to Vessels)

 

 

(1,292,872,267)

 

Balance, March 31, 2016

 

$

 —

 

 

Other capitalized expenditures for the year ended March 31, 2016 represent LPG coolant of $5.0 million, fees paid to third party vendors of $17.3 million and $0.4 million of employee-related costs for supervision fees and other newbuilding pre-delivery costs including engineering and technical support, liaising with the shipyard, and ensuring key suppliers are integrated into the production planning process. Other capitalized expenditures for the year ended March 31, 2015 represent LPG coolant of $1.4 million, fees paid to our Manager of $0.9 million and to third party vendors of $8.6 million and $0.1 million of employee-related costs for supervision fees and other newbuilding pre‑delivery costs including engineering and technical support, liaising with the shipyard, and ensuring key suppliers are integrated into the production planning process.

Other Fixed Assets, Net
Other Fixed Assets, Net

8. Other Fixed Assets, Net

 

Other fixed assets of $591,288 and $464,889 as of March 31, 2016 and March 31, 2015, respectively, represent leasehold improvements, software and furniture and fixtures at cost. Accumulated depreciation on other fixed assets net was $279,651 as of March 31, 2016 and $46,402 as of March 31, 2015.

Deferred Charges, Net
Deferred Charges, Net

9. Deferred Charges, Net

 

The analysis and movement of deferred charges is presented in the table below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Financing

    

Drydocking

    

Equity

    

Total deferred

 

 

 

costs

 

costs

 

offering costs

 

charges, net

 

Balance, April 1, 2014

 

$

716,040

 

$

535,291

 

$

1,304,343

 

$

2,555,674

 

Additions

 

 

13,411,075

 

 

323,623

 

 

760,680

 

 

14,495,378

 

Amortization

 

 

(830,899)

 

 

(189,209)

 

 

 —

 

 

(1,020,108)

 

Transferred to APIC

 

 

 —

 

 

 —

 

 

(2,065,023)

 

 

(2,065,023)

 

Balance, March 31, 2015

 

 

13,296,216

 

 

669,705

 

 

 —

 

 

13,965,921

 

Additions

 

 

12,951,085

 

 

 —

 

 

 —

 

 

12,951,085

 

Amortization

 

 

(2,499,185)

 

 

(374,770)

 

 

 —

 

 

(2,873,955)

 

Balance, March 31, 2016

 

$

23,748,116

 

$

294,935

 

$

 —

 

$

24,043,051

 

 

The drydocking costs incurred during the year ended March 31, 2015 relate to the drydocking for Grendon.

 

Financing costs incurred during the year ended March 31, 2016 and 2015 relate to the 2015 Debt Facility as further described in Note 11.

 

Offering costs related to our IPO were transferred to additional paid in capital (“APIC”) on completion of our IPO on May 13, 2014.

Accrued Expenses
Accrued Expenses

10. Accrued Expenses

 

Accrued expenses comprised of the following:

 

 

 

 

 

 

 

 

 

March 31, 2016

    

March 31, 2015

 

Accrued employee-related costs

$

4,231,542

 

$

546,095

 

Accrued professional services

 

1,676,880

 

 

1,282,639

 

Accrued loan and swap interest

 

1,664,002

 

 

1,619,897

 

Accrued voyage and vessel operating expenses

 

1,644,557

 

 

1,406,023

 

Accrued board of directors' stock-based compensation and fees

 

492,652

 

 

 —

 

Other

 

11,844

 

 

88,048

 

Accrued financing costs

 

 —

 

 

705,000

 

Total

$

9,721,477

 

$

5,647,702

 

 

Long-Term Debt
Long-Term Debt

11. Long‑Term Debt

 

Description of our Debt Obligations

 

2015 Debt Facility

 

In March 2015, we entered into a $758 million debt financing facility (the “2015 Debt Facility”) with four separate tranches. Commercial debt financing (“Commercial Financing”) of $249 million is being provided by ABN AMRO Capital USA LLC (“ABN”); ING Bank N.V., London Branch, ("ING"); DVB Bank S.E. ("DVB"); Citibank (“Citi”); and Commonwealth Bank of Australia, New York Branch, ("CBA"), (collectively the "Commercial Lenders"), while the Export Import Bank of Korea ("KEXIM") is directly providing $204 million of financing (“KEXIM Direct Financing”). The remaining $305 million of financing is being provided under tranches guaranteed by KEXIM of $202 million (“KEXIM Guaranteed”) and insured by the Korea Trade Insurance Corporation ("K-sure") of $103 million (“K-sure Insured”). Financing under the KEXIM guaranteed and K-sure insured tranches are provided by certain Commercial Lenders; Deutsche Bank AG; and Santander Bank, N.A. The debt financing is secured by, among other things, eighteen of the Company's ECO VLGCs, and represents a loan-to-contract cost ratio before fees of approximately 55%.

 

The 2015 Debt Facility contains various covenants providing for, among other things, maintenance of certain financial ratios and certain limitations on payment of dividends, investments, acquisitions and indebtedness. A commitment fee was payable on the average daily unused amount under the 2015 Debt Facility of 40% of the margin on each tranche. Additionally, we incurred approximately $13.0 million and $13.4 million of debt issuance costs associated with the 2015 Debt Facility for the years ended March 31, 2016 and 2015, respectively, which have been deferred and are amortized over the life of the agreement and are included as part of interest expense. Certain terms of the borrowings under each tranche of the 2015 Debt Facility are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Rate at 

 

 

    

 

    

Term

 

Interest Rate Description(1)

 

March 31, 2016(2)

 

Tranche 1

 

Commercial Financing

 

7

years

 

London InterBank Offered Rate (“LIBOR”) plus a margin(4)

 

3.38

%

Tranche 2

 

KEXIM Direct Financing

 

12

years(3)

 

LIBOR 

plus a margin of 

2.45

%  

3.08

%

Tranche 3

 

KEXIM Guaranteed

 

12

years(3)

 

LIBOR 

plus a margin of 

1.40

%  

2.03

%

Tranche 4

 

K-sure Insured

 

12

years(3)

 

LIBOR 

plus a margin of 

1.50

%  

2.13

%

 


(1)

The interest rate of the 2015 Debt Facility on Tranche 1 is determined in accordance with the agreement as three or six month LIBOR plus the applicable margin and the interest rate on Tranches 2, 3 and 4 is determined in accordance with the agreement as three month LIBOR plus the applicable margin for the respective tranches.

 

(2)

The set LIBOR rate in effect as of March 31, 2016 was 0.63%.

 

(3)

The KEXIM Direct Financing, KEXIM Guaranteed, and K-Sure tranches have put options to call for the prepayment on the final payment date of the Commercial Financing tranche subject to specific notifications and commitments for refinancing/renewal of the Commercial Financing tranche.

 

(4)

The Commercial Financing tranche margin over LIBOR is 2.75% and is reduced to 2.50% if 50% or more but less than 75% of the vessels financed in the 2015 Debt Facility are employed under time charters as defined in the agreement and to 2.25% if 75% or more of the vessels financed in the 2015 Debt Facility are employed under time charters as defined in the agreement. As of March 31, 2016, the set margin was 2.75%.

 

The 2015 Debt Facility is secured by, among other things, (i) first priority Bahamian mortgages on the vessels financed; (ii) first priority assignments of all of the financed vessels’ insurances, earnings, requisition compensation, and management agreements; (iii) first priority security interests in respect of all issued shares or limited liability company interests of the borrowers and vessel-owning guarantors; (iv) first priority charter assignments of all of the financed vessels’ long term charters; (v) assignments of the interests of any ship manager in the insurances of the financed vessels; (vi) an assignment by the borrower of any bank, deposit or certificate of deposit opened in accordance with the facility; and (vii) a guaranty by the Company guaranteeing the obligations of the borrower and other guarantors under the facility agreement. The 2015 Debt Facility further provides that the facility is to be secured by assignments of the borrower’s rights under any hedging contracts in connection with the facility but such assignments have not been entered into at this time.

 

During the year ended March 31, 2016, we made drawdowns of $676.8 million, including $9.6 million to pay guarantee and insurance fees, under the 2015 Debt Facility, which was secured by eighteen ECO VLGCs delivered during that period and was comprised of four separate tranches. As of March 31, 2016, the 2015 Debt Facility was fully drawn.

 

Royal Bank of Scotland plc. (“RBS”) secured bank debt

As discussed in Note 1 to the consolidated financial statements, the Company assumed the debt obligations associated with the financing of the vessels that were acquired through the acquisition of CMNL, CJNP and CNML. The prior loan arrangements associated with those vessels required approval from the lenders to sell the vessels and agreement from the lenders to transfer the borrowings to another party. As a consequence, the Company and the lender negotiated new borrowing terms in connection with this transaction. The new terms are described below. The total borrowings outstanding immediately prior to the debt modification and immediately after remained the same.

 

CMNL, CJNP, CNML and Corsair as joint and several borrowers (Borrowers), and Dorian LPG Ltd. as parent guarantor entered into a loan facility of $135,224,500 (the “RBS Loan Facility”), which replaced the prior borrowing arrangements of the Predecessor. The RBS Loan Facility is divided into three tranches. Tranche A of $47.6 million, Tranche B of $34.5 million and Tranche C of up to $53.1 million and is associated with each of the Captain John NP,  Captain Markos NL and the Captain Nicholas ML, respectively.

 

Tranche A is payable in twelve equal semi‑annual installments each in the amount of $1,700,000 that commenced on September 24, 2013 plus a balloon of $27,200,000 payable concurrently with the last installment on March 24, 2019.

 

Tranche B is payable in eleven equal semi‑annual installments each in the amount of $1,278,500 that commenced on November 17, 2013 plus a balloon of $20,456,000 payable concurrently with the last installment on November 17, 2018.

 

Tranche C is payable in fourteen equal semi‑annual installments each in the amount of $1,827,500 that commenced on January 21, 2014 plus a balloon of $27,520,000 payable concurrently with the last installment July 21, 2020.

 

The interest rate on the RBS Loan Facility increased in accordance with the loan agreement from LIBOR plus a margin of 1.5% per annum to LIBOR plus a margin of 2.0% per annum on September 26, 2014, concurrent with the delivery of the Corsair and to 2.5% on September 26, 2015 until maturity. In the event of noncompliance the Borrowers will be required within one month of being notified in writing by the lender to make such prepayment. In the event the lender agrees to release Corsair or another borrower approved by the lender from joint and several liabilities under the agreement, the minimum market adjusted security cover is adjusted to 175% and the margin will be increased to 2.75%.

 

The RBS Loan Facility provides that it be secured by, among other things, (i) first priority mortgages on the vessels financed; (ii) first assignments of all freights, earnings and insurances; (iii) first assignment of any borrowers’ rights and interests in any hedging agreement in connection with the facility; and (iv) assignment of any approved charter in respect of any financed vessel.

 

The 2015 Debt Facility and RBS Loan Facility also contain customary covenants that require us to maintain adequate insurance coverage, properly maintain the vessels and to obtain the lender’s prior consent before changes are made to the flag, class or management of the vessels, or enter into a new line of business. The loan facilities include customary events of default, including those relating to a failure to pay principal or interest, a breach of covenant, representation and warranty, a cross-default to other indebtedness and non-compliance with security documents, and customary restrictions from paying dividends if an event of default has occurred and is continuing, or if an event of default would result therefrom.

 

Debt Covenants: The following financial covenants are the most restrictive from the 2015 Debt Facility and the RBS Loan Facility with which the Company is required to comply, calculated on a consolidated basis, determined and defined according to the provisions of the loan agreement:

 

2015 Debt Facility Covenants

 

·

The ratio of current assets divided by current liabilities shall always be greater than 1.00;

 

·

Maintain minimum stockholder’s equity at all times equal to the aggregate of (i) $400,000,000, (ii) 50% of any new equity raised after loan agreement date and (iii) 25% of the positive net income for the immediately preceding financial year;

 

·

Minimum interest coverage ratio of consolidated EBITDA to consolidated net interest expense must be maintained (i) greater than or equal to: 1.00 for the 12-month period starting in the calendar quarter following the one in which delivery of the first ship occurs, (ii) 1.50 in the subsequent year, (iii) 2.00 in the third year following the initial period, and (iv) 2.50 thereafter;

 

·

The ratio of consolidated net debt to consolidated total capitalization shall not exceed 0.60 to 1.00;

 

·

Liquidity reserve minimum must be the higher of (a) the aggregate of (i) $25 million and (ii) $1,100,000 for every vessel delivered and financed by the 2015 Debt Facility and (b) 5% of the consolidated interest bearing debt outstanding of the Company;

 

·

Fair market value of the mortgaged ships plus any additional security shall be at least 135% of the outstanding loan balance;

 

RBS Loan Facility Covenants

 

·

The ratio of cash flow from operations before interest and finance costs to cash debt service costs shall not be less than 1:1;

 

·

Minimum shareholders' equity, as adjusted for any reduction in vessel fair market value, shall not be less than $85 million;

 

·

Minimum cash balance of $10 million at the end of each quarter and minimum cash balances of $1.5 million per mortgaged vessel in a pledged account with the lender at all times;

 

·

The ratio of Total Debt to Shareholders Funds shall not exceed 150% at all times;

 

·

The ratio of the aggregate market value of the vessels securing the loan to the principal amount outstanding under such loan, plus 100% of the related swap exposure, at all times shall be in excess of 125%; and

 

·

No dividends shall be paid in excess of free cash flow if an event of default is occurring.

 

The RBS Loan Facility further (i) requires that the existing shareholders at the date of the agreement maintain their ownership of our common shares at a minimum level of 15% of our issued share capital, subject to downward adjustment for any future equity issuances by us, (ii) provides that the ownership of more than onethird of our common shares by any shareholder other than the existing shareholders at the date of the agreement is an event of default and/or permits the lender to accelerate the indebtedness, (iii) permits the lender to accelerate the indebtedness if at any time the existing shareholders at the date of the agreement do not maintain a representative on our board of directors or any other of our management committees; (iv) requires the lender's approval prior to chartering for a period of greater than one year any of the vessels securing the loan, subject to certain conditions; and (v) restricts our subsidiaries, which own the vessels securing the loan, from paying any dividends, however, the loan facility permits the borrowers to make expenditures to fund our administration and operations.

 

Similarly, the 2015 Debt Facility permits the lenders to accelerate the indebtedness if, without the prior written consent of the lenders, (i) one-third of our common shares are owned by any shareholder other than certain entities, directors or officers listed in the agreement; (ii) there are certain changes to our board of directors; or (iii) Mr. John Hadjipateras ceases to serve on our board of directors.

 

We were in compliance with the financial covenants as of March 31, 2016.

 

Debt Obligations

 

The table below presents our debt obligations:

 

 

 

 

 

 

 

 

 

RBS secured bank debt

    

March 31, 2016

    

March 31, 2015

 

Tranche A

 

$

37,400,000

 

$

40,800,000

 

Tranche B

 

 

28,127,000

 

 

30,684,000

 

Tranche C

 

 

43,967,500

 

 

47,622,500

 

Total

 

$

109,494,500

 

$

119,106,500

 

 

 

 

 

 

 

 

 

2015 Debt Facility

 

 

 

 

 

 

 

Commercial Financing

 

$

241,442,384

 

$

26,695,381

 

KEXIM Direct Financing

 

 

194,827,596

 

 

21,890,212

 

KEXIM Guaranteed

 

 

192,736,763

 

 

21,655,293

 

K-sure Insured

 

 

97,867,129

 

 

10,996,041

 

Total

 

 

726,873,872

 

 

81,236,927

 

Total debt obligations

 

$

836,368,372

 

$

200,343,427

 

 

 

 

 

 

 

 

 

Presented as follows:

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

66,265,643

 

$

15,677,553

 

Long-term debt—net of current portion

 

 

770,102,729

 

 

184,665,874

 

Total

 

$

836,368,372

 

$

200,343,427

 

 

Future Cash Payments for Debt

 

The minimum annual principal payments, in accordance with the loan agreements, required to be made after March 31, 2016 are as follows:

 

 

 

 

 

Year ending March 31:

    

    

 

2017

$

66,265,643

 

2018

 

65,978,785

 

2019

 

113,634,786

 

2020

 

60,021,785

 

2021

 

85,714,286

 

Thereafter

 

444,753,087

 

Total

$

836,368,372

 

 

Common Stock
Common Stock

12. Common Stock

 

Under the articles of incorporation effective July 1, 2013, the Company’s authorized capital stock consists of 500,000,000 registered shares, par value $.01 per share, of which 450,000,000 are designated as common share and 50,000,000 shares are designated as preferred shares.

 

On July 29, 2013, the Company issued the following shares:

 

·

9,310,054 common shares on completion of its NPP, at NOK75.00 per share, equivalent to USD12.66 per share based on the exchange rate on July 29, 2013

 

·

4,667,135 common shares to Dorian Holdings (refer to Note 4)

 

·

4,667,135 common shares to SeaDor Holdings LLC (refer to Note 3)

 

The fair value of the shares issued to Dorian and SeaDor was determined by the Company to be NOK75 (or USD12.66) per share based on the issue price of the NPP.

 

On November 26, 2013, the Company issued the following shares:

 

·

16,081,081 common shares on completion of a second Private Placement in Norway (“NPP2”), at NOK92.50 per share, equivalent to USD15.16 per share based on the exchange rate on November 26, 2013

 

·

7,990,425 common shares to Scorpio Tankers Inc. (refer to Note 3)

 

On February 12, 2014, the Company issued the following shares:

 

·

5,649,200 common shares on completion of a third Private Placement in Norway (“NPP3”), at NOK110.00 per share, equivalent to USD17.92 per share based on the exchange rate on February 12, 2014

 

Each holder of common shares is entitled to one vote on all matters submitted to a vote of shareholders. Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of common shares are entitled to share equally in any dividends, which the Company’s board of directors may declare from time to time, out of funds legally available for dividends. Upon dissolution, liquidation or winding‑up, the holders of common shares will be entitled to share equally in all assets remaining after the payment of any liabilities and the liquidation preferences on any outstanding preferred stock. Holders of common shares do not have conversion, redemption or pre‑emptive rights.

 

On April 25, 2014 the Company completed a one-for-five reverse stock split and reduced the number of the Company’s issued and outstanding common shares and affected all issued and outstanding common shares, outstanding immediately prior to the effectiveness of the reverse stock split. The number of the Company’s authorized common shares was not affected by the reverse split and the par value of our common shares remained unchanged at $0.01 per share. The reverse stock split reduced the number of the Company’s common shares outstanding at March 31, 2014 from 241,825,149 to 48,365,011 after the cancellation of 19 fractional shares. No fractional shares were issued in connection with the reverse stock split. Shareholders who otherwise held a fractional share of the Company’s common stock as a result of the reverse stock split received a cash payment in lieu of such fractional share. All amounts related to number of shares and per share amounts have been retroactively restated.

 

On April 25, 2014, we completed a private placement of 1,412,698 common shares with a strategic investor at a price of NOK 110.00 or USD 18.40 based upon the exchange rate on April 24, 2014, which represents approximately $26.0 million in gross proceeds not including closing fees.

 

On May 13, 2014, we completed an initial public offering of 7,105,263 common shares on the New York Stock Exchange at a price of $19.00 per share, or $135.0 million in gross proceeds not including underwriting fees or closing costs. The shares began trading on the New York Stock Exchange on May 8, 2014 under the ticker symbol “LPG”.

 

On May 22, 2014, we completed the issuance of 245,521 common shares related to the overallotment exercise by the underwriters of our initial public offering at a price of $19.00 per share, or $4.7 million in gross proceeds not including underwriting fees or closing costs.

 

On June 25, 2014, we completed the exchange offer of unregistered common shares that we previously issued in our prior equity private placements, other than the common shares owned by our affiliates, for 15,528,507 common shares that have been registered under the Securities Act of 1933, as amended, the complete terms and conditions of which were set forth in a prospectus dated May 8, 2014 and the related letter of transmittal.

 

In June 2014, we granted 655,000 shares of restricted stock to certain of our officers and, in March 2015, we granted 274,000 shares of restricted stock to certain of our employees and non-employee consultants (see Note 13 for further discussion regarding stock-based compensation).

 

In August 2015, we established a stock repurchase program authorizing the repurchase of up to $100.0 million of our common stock. As of March 31, 2016, we repurchased a total of 1,932,465 shares of our common stock for approximately $20.9 million under this program, resulting in $79.1 million of available authorization remaining. Purchases may be made at our discretion in the form of open market repurchase programs, privately negotiated transactions, accelerated share repurchase programs or a combination of these methods. The actual timing and amount of our repurchases will depend on Company and market conditions.

Stock-Based Compensation Plans
Stock-Based Compensation Plans

13. Stock-Based Compensation Plans

 

In April 2014, we adopted an equity incentive plan, which we refer to as the Equity Incentive Plan, under which we expect that directors, officers, and employees (including any prospective officer or employee) of the Company and its subsidiaries and affiliates, and consultants and service providers to (including persons who are employed by or provide services to any entity that is itself a consultant or service provider to) the Company and its subsidiaries and affiliates, as well as entities whollyowned or generally exclusively controlled by such persons, may be eligible to receive nonqualified stock options, stock appreciation rights, stock awards, restricted stock units and performance compensation awards that the plan administrator determines are consistent with the purposes of the plan and the interests of the Company. We have reserved 2,850,000 of our common shares for issuance under the Equity Incentive Plan, subject to adjustment for changes in capitalization as provided in the Equity Incentive Plan in April 2014. The plan is administered by our compensation committee.

 

In June 2014, we granted 655,000 shares of restricted stock to certain of our officers and, in March 2015, we granted 274,000 shares of restricted stock to certain of our employees and non-employee consultants. One-third of these restricted shares vest three years after grant date, one-third vest four years after grant date, and one-third vest five years after grant date. The restricted shares were valued at their fair market value on their grant date and are expensed on a straight-line basis over five years. Our stock-based compensation expense was $4.1 million (including accrued stock-based compensation of $0.5 million for our board of directors) and $2.3 million for the years ended March 31, 2016 and 2015, respectively, and is included within general and administrative expenses in our accompanying consolidated statements of operations. There was no stock-based compensation expense for the period of July 1, 2013 through March 31, 2014. Unrecognized compensation cost as of March 31, 2016 was $12.2 million and will be recognized over the remaining weighted average life of 3.45 years.

 

A summary of the activity of our restricted shares as of March 31, 2016 and 2015 changes during the year ended March 31, 2016 and 2015, are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

Weighted-Average

 

 

 

 

 

Grant-Date

 

Restricted Share Awards

 

Numbers of Shares

 

Fair Value

 

Unvested as of April 1, 2014

 

 —

 

$

 —

 

Granted

 

929,000

 

 

19.70

 

Unvested as of March 31, 2015

 

929,000

 

 

19.70

 

Granted

 

 —

 

 

 —

 

Unvested as of March 31, 2016

 

929,000

 

$

19.70

 

 

Revenues
Revenues

14. Revenues

 

Revenues comprise the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

Year ended

 

Year ended

    

July 1, 2013 (inception)

 

 

 

March 31, 2016

 

March 31, 2015

 

to March 31, 2014

Net pool revenues—related party

 

 

$

202,918,232

 

$

 —

 

$

 —

Voyage charter revenues

 

 

 

46,194,134

 

 

77,331,934

 

 

11,210,785

Time charter revenues

 

 

 

38,737,172

 

 

26,098,290

 

 

17,602,137

Other revenues

 

 

 

1,358,291

 

 

698,925

 

 

820,778

Total

 

 

$

289,207,829

 

$

104,129,149

 

$

29,633,700

 

Time charter revenue included a profit-sharing element of the time charter agreements of $7.8 million and $6.1 million for the year ended March 31, 2015 and the period ended March 31, 2014, respectively. There was no profit-sharing element of the time charter agreements for the year ended March 31, 2016. Other revenue represents income from charterers relating to reimbursement of expenses such as costs for security guards and war risk insurance.

Voyage Expenses
Voyage Expenses

15. Voyage Expenses

 

Voyage expenses comprise the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Year ended

 

Year ended

    

July 1, 2013 (inception)

 

 

 

March 31, 2016

 

March 31, 2015

 

to March 31, 2014

 

Bunkers

 

$

7,240,544

 

$

15,678,905

 

$

5,271,126

 

Port charges and other related expenses

 

 

2,558,697

 

 

3,603,707

 

 

552,634

 

Broker