XML 54 R9.htm IDEA: XBRL DOCUMENT v2.4.0.6
Acquisitions
 12 Months Ended
Dec. 31, 2012
Acquisitions (Abstract)  
Acquistions
3.
Acquisitions
 
a.
Agamemnon Container Carrier Corp. (M/V Agamemnon)
 
On December 22, 2012, the Partnership acquired the shares of Agamemnon Container Carrier Corp., the vessel owning company of the M/V Agamemnon, (“Agamemnon”), from CMTC in exchange for the shares of the Partnership's wholly owned subsidiary Achilleas Carriers Corp., the vessel owning company of the M/T Achilleas (“Achilleas”) following the unanimous recommendation of the conflicts committee and the unanimous approval of the board of directors. The vessel at the time of her acquisition by the Partnership operated under a three year time charter, with A.P. Moller-Maersk A.S. (“Maersk”). The time charter commenced in June 2012 and the earliest expiry is in July 2015. Maersk has the option to extend the charter for an additional four years.  The acquisition of Agamemnon was deemed accretive to the Partnership's distributions.
The Partnership accounted for the acquisition of Agamemnon as an acquisition of a business. All assets and liabilities of Agamemnon except the vessel, necessary permits and time charter agreement, were retained by CMTC. Furthermore up to the date of the exchange of Achilleas Carriers Corp., all assets and liabilities of Achilleas, except the vessel, were retained by the Partnership. CMTC has also waived any compensation for the early termination of the charter of Achilleas. The purchase price of the acquisition has been allocated to the identifiable assets acquired.
 
•
 
Purchase Price
The total purchase consideration of $70,250 is comprised of:
a) $68,875 representing the fair value of Achilleas, and;
b) $1,375 representing the cash consideration paid to CMTC by the Partnership.   
 
•
 
Acquisition related costs
Acquisition-related costs of approximately $5.0 are included in general and administrative expenses in the consolidated statements of comprehensive (loss) / income for the year ended December 31, 2012.
 
•
 
Purchase price allocation
The allocation of the purchase price to acquired identifiable assets was based on their estimated fair values at the date of acquisition.
The fair value allocated to each class of identifiable assets of Agamemnon was calculated as follows: 
 
 
 
 
 
 
 
As of
December 22, 2012
 
Vessel
 
 $
68,000
 
Above market acquired time charter
 
 $
2,250
 
Identifiable assets
 
 $
70,250
 
Purchase price
 
 $
(70,250)
 
 
 
•
 
 
Identifiable intangible assets
 
The following table sets forth the component of the identifiable intangible asset acquired with the purchase of Agamemnon which is being amortized over its duration on a straight-line basis as a reduction of revenue:
 
 
 
 
 
 
 
 
 
Intangible assets
 
As of
December 22, 2012
 
 
Duration of time
charter acquired
 
Above market acquired time charter
 
$
2,250
 
 
 
2.6 years
 
The fair value of the above market time charter acquired was determined as the difference between the time charter rate and market rate for comparable charter on the business combination date discounted at the WACC of approximately 11%.
 
 
Total revenues and net income of Agamemnon since its acquisition by the Partnership were $318 and $185 respectively and included in the Partnership's consolidated statements of comprehensive (loss) / income for the year ended December 31, 2012.
 
•
 
Pro Forma Financial Information
 
The supplemental pro forma financial information was prepared using the acquisition method of accounting and is based on the following:
 
 
•
 
The Partnership's actual results of operations for the year ended December 31, 2012 excluding non recurring transactions such as Achilleas impairment charge of $21,614 (Note 5) as well as the actual results of operations of Achilleas for the period from January 1, 2012 to December 21, 2012 and actual acquisition related costs the Partnership incurred in connection with the acquisition of Agamemnon;
•
 
The Partnership's actual results of operations for the year ended December 31, 2011 adjusted for non recurring transactions such as Achilleas impairment charge of $21,614 and actual acquisition related costs the Partnership incurred in connection with the acquisition of Agamemnon. Achilleas actual results of operations for the period from October 1, 2011 to December 31, 2011 have been excluded from the Partnership's actual results of operations as the vessel owning company of Achilleas was a fully owned subsidiary of Crude Carriers which was merged with the Partnership on September 30, 2011 (Note 3d) and;
 
•
 
Pro forma results of operations of Agamemnon for the period from January 1, 2012 to December 21, 2012 and for the year ended December 31, 2011 as if Agamemnon was operating under post acquisition revenue and cost structure.
 
The combined results do not purport to be indicative of the results of the operations which would have resulted had the acquisition been effected at beginning of the applicable period noted above, or the future results of operations of the combined entity.
The following table summarizes total net revenues; net (loss) / income and net (loss) / income per common unit of the combined entity had the acquisition of Agamemnon occurred on January 1, 2011:
 
 
For the year ended December 31,
 
 
2012
 
2011
Total revenues
$
154,227
$
137,065
Partnership's net income
 
2,210
 
72,508
Partnership's net income available to preferred unit holders
 
10,809
 
-
General Partner's interest in Partnership's net (loss) / income
 
(172)
 
1,450
Common unit holders interest in Partnership's net (loss) / income
$
(8,427)
$
71,058
Pro-forma weighted average of Partnership's common units outstanding
 
68,256,072
 
47,138,336
Net (loss) / income per common unit (basic and diluted)
$
(0.12)
$
1.51
 
b.
Archimidis Container Carrier Corp. (M/V Archimidis)
 
On December 22, 2012, the Partnership acquired the shares of Archimidis Container Carrier Corp., the vessel owning company of the M/V Archimidis, (“Archimidis”), from CMTC in exchange for the shares of the Partnership's wholly owned subsidiary Alexander The Great Carriers Corp., the vessel owning company of the M/T Alexander The Great (“Alexander The Great”) following the unanimous recommendation of the conflicts committee and the unanimous approval of  the board of directors. The vessel at the time of her acquisition by the Partnership operated under a three year time charter, with Maersk. The time charter commenced in November 2012 and the earliest expiry is in October 2015. Maersk has the option to extend the charter for an additional four years. The acquisition of Archimidis was deemed accretive to the Partnership's distributions.
The Partnership accounted for the acquisition of Archimidis as an acquisition of a business. All assets and liabilities of Archimidis except the vessel, necessary permits and time charter agreement, were retained by CMTC. Furthermore up to the date of the exchange of Alexander the Great Carriers Corp., all assets and liabilities of Alexander the Great, except the vessel, were retained by the Partnership. CMTC has also waived any compensation for the early termination of the charter of Alexander the Great. The purchase price of the acquisition has been allocated to the identifiable assets acquired.
 
•
 
Purchase Price
The total purchase consideration of $67,250 is comprised of:
a) $68,875 representing the fair value of Alexander the Great and;  
b) $1,625 representing the cash consideration the Partnership received by CMTC.
 
•
 
Acquisition related costs
Acquisition-related costs of approximately $5.0 are included in general and administrative expenses in the consolidated statements of comprehensive (loss) / income for the year ended December 31, 2012.
 
•
 
Purchase price allocation
The allocation of the purchase price to acquired identifiable assets was based on their estimated fair values at the date of acquisition.
The fair value allocated to each class of identifiable assets of Archimidis was calculated as follows:
 
 
 
 
 
 
 
 
As of
December 22, 2012
 
Vessel
 
 $
65,000
 
Above market acquired time charter
 
 $
2,250
 
Identifiable assets
 
 $
67,250
 
Purchase price
 
 $
(67,250)
 
 
•
 
Identifiable intangible assets
The following table sets forth the component of the identifiable intangible asset acquired with the purchase of Archimidis which is being amortized over its duration on a straight-line basis as a reduction of revenue:
 
 
 
 
 
 
 
 
 
Intangible assets
 
As of
December 22, 2012
 
 
Duration of time
charter acquired
 
Above market acquired time charter
 
$
2,250
 
 
 
3.0 years
 
The fair value of the above market time charter acquired was determined as the difference between the time charter rate and market rate for comparable charter on the business combination date discounted at the WACC of approximately 11%.
 
Total revenues and net income of Archimidis since its acquisition by the Partnership were $321 and $178 respectively and included in the Partnership's consolidated statements of comprehensive (loss) / income for the year ended December 31, 2012.
      
•
 
Pro Forma Financial Information
The supplemental pro forma financial information was prepared using the acquisition method of accounting and is based on the following:
 
•
 
The Partnership's actual results of operations for the year ended December 31, 2012 excluding non recurring transactions such as Alexander the Great impairment charge of $21,564 (Note 5) as well as the actual results of operations of Alexander the Great for the period from January 1, 2012 to December 21, 2012 and actual acquisition related costs the Partnership incurred in connection with the acquisition of Archimidis;
•
The Partnership's actual results of operations for the year ended December 31, 2011 adjusted for non recurring transactions such as Alexander the Great impairment charge of $21,564 and actual acquisition related costs the Partnership incurred in connection with the acquisition of Archimidis. Alexander the Great actual results of operations for the period from October 1, 2011 to December 31, 2011 have been excluded from the Partnership's actual results of operations as the vessel owning company of Alexander the Great was a fully owned subsidiary of Crude Carriers which was merged with the Partnership on September 30, 2011 (Note 3d) and;  
•
 
Pro forma results of operations of Archimidis for the period from January 1, 2012 to December 21, 2012 and for the year ended December 31, 2011, as if Archimidis was operating under post acquisition revenue and cost structure.
 
The combined results do not purport to be indicative of the results of the operations which would have resulted had the acquisition been effected at beginning of the applicable period noted above, or the future results of operations of the combined entity.
The following table summarizes total net revenues; net (loss) / income and net (loss) / income per common unit of the combined entity had the acquisitions of Archimidis occurred on January 1, 2011:
 
 
For the year ended December 31,
 
 
2012
 
2011
Total revenues
$
155,011
$
139,890
Partnership's net income
 
2,746
 
72,813
Partnership's net income available to preferred unit holders
 
10,809
 
-
General Partner's interest in Partnership's net (loss) / income
 
(161)
 
1,456
Common unit holders interest in Partnership's net (loss)/income
$
(7,902)
$
71,357
Pro-forma weighted average of Partnership's common units outstanding
 
68,256,072
 
47,138,336
Net (loss)/income per common unit (basic and diluted)
$
(0.12)
$
1.51
 
c.
Patroklos (M/V Cape Agamemnon)
On June 9, 2011, the Partnership acquired the shares of Patroklos Marine Corp., the vessel owning company of the M/V Cape Agamemnon (“Patroklos”), from CMTC as it was deemed accretive to the Partnership's distributions by the board of directors. The vessel at the time of her acquisition by the Partnership operated under a ten year time charter, with Cosco Bulk Carrier Co. Ltd. (“COSCO Bulk”), an affiliate of the COSCO Group. The time charter commenced in July 2010 and the earliest expiry under the charter is in June 2020. The acquisition of Patroklos was unanimously approved by the Partnership's Board of Directors following the unanimous approval and recommendation of the Board's conflicts committee, which is comprised entirely of independent directors.
The Partnership accounted for the acquisition of Patroklos as an acquisition of a business. All assets and liabilities of Patroklos except the vessel, necessary permits and time charter agreement, were retained by CMTC. The purchase price of the acquisition has been allocated to the identifiable assets acquired, with the excess of the fair value of assets acquired over the purchase price recorded as a gain from bargain purchase.
 
•
 
Purchase Price
The total purchase consideration of $83,525 was funded by $1,470 from available cash, $25,000 through a draw down from the Partnership's credit facility with Credit Agricole Emporiki Bank (Note 7) and the remaining through the issuance of 6,958,000 Partnership's common units to CMTC at a price of $8.20 per unit as quoted on the Nasdaq Stock Exchange the date of the acquisition of Patroklos by the Partnership. Furthermore upon the acquisition of Patroklos, the Partnership issued another 142,000 of Partnership's common units. These units were converted into 142,000 of general partner units by the Partnership and delivered to Capital General Partner (“CGP”) in order for it to maintain its 2% interest in the Partnership. The Partnership received the amount of $1,470 in exchange for these general partner units.
 
•
 
Acquisition related costs
Acquisition-related costs of approximately $409 are included in general and administrative expenses in the consolidated statements of comprehensive (loss) / income for the year ended December 31, 2011.
 
•
 
Purchase price allocation
The allocation of the purchase price to acquired identifiable assets was based on their estimated fair values at the date of acquisition.
The fair value allocated to each class of identifiable assets of Patroklos and the gain from bargain purchase recorded as non operating income / (expense), net in the Partnership's consolidated statements of comprehensive (loss) / income for the year ended December 31, 2011 was calculated as follows:                                               
 
 
 
 
 
 
  
As of
June 9,  2011
 
Vessel
  
$
51,500
  
Above market acquired time charter
  
$
48,551
  
Identifiable assets
  
$
100,051
  
Purchase price
  
 $
(83,525)
 
Gain from bargain purchase
  
$
16,526
  
The gain from bargain purchase of $16,526 has resulted from the decline of the Partnership's common unit price as the 6,958,000 common units which were issued to CMTC were valued at $8.20 per unit as quoted on the Nasdaq Stock Exchange on the day of the acquisition of Patroklos, as compared to the Partnership's common unit price of $10.35 representing a value of Partnership's common unit on the day CMTC and the Partnership agreed on the purchase consideration, including the issuance of these common units.
  
After a subsequent review and reassessment of valuation methods and procedures of the $100,051 fair value amount for identifiable assets acquired, the Partnership concluded that its measurements for the assets acquired appropriately reflect consideration of all available information that existed as of the acquisition date. Therefore, the Partnership recorded a gain from bargain purchase of $16,526 in accordance with ASC Subtopic 805-30 as of the Patroklos acquisition date.
 
•
 
Identifiable intangible assets
The following table sets forth the component of the identifiable intangible asset acquired with the purchase of Patroklos which is being amortized over its duration on a straight-line basis as a reduction of revenue:
 
 
 
 
 
 
 
 
 
 
Intangible assets
  
As of
June 9, 2011
 
  
Duration of time
charter acquired
 
Above market acquired time charter
  
$
48,551
  
  
 
9.1 years
  
The fair value of the above market time charter acquired was determined as the difference between the time charter rate and market rate for comparable charter on the business combination date discounted at the WACC of approximately 11%.
 
Total revenues and net income of Patroklos since its acquisition by the Partnership were $5,305 and $2,899 respectively and included in the Partnership's consolidated statements of comprehensive (loss) / income for the year ended December 31, 2011.
 
•
 
Pro Forma Financial Information
The supplemental pro forma financial information was prepared using the acquisition method of accounting and is based on the following:
 
 
•
 
The Partnership's actual results of operations for the year ended December 31, 2011 excluding non recurring transactions such as gain from bargain purchase of $16,526 regarding the acquisition of Patroklos and actual acquisition related costs the Partnership incurred in connection with the acquisition of Patroklos;
 
•
 
The Partnership's actual results of operations for the year ended December 31, 2010 adjusted for non recurring transactions, such as gain from bargain purchase of $16,526 resulting from the acquisition of Patroklos and actual acquisition related costs the Partnership incurred in connection with the acquisition of Patroklos and;
 
•
 
Pro forma results of operations of Patroklos for the period from January 1, 2011 through June 9, 2011 and for the period from its vessel's delivery from the shipyard on July 28, 2010 to December 31, 2010 as if Patroklos was operating under post acquisition revenue and cost structure.
 
The combined results do not purport to be indicative of the results of the operations which would have resulted had the acquisition been effected at beginning of the applicable period noted above, or the future results of operations of the combined entity.
The following table summarizes total net revenues; net income and net income per common unit of the combined entity had the acquisitions of Patroklos occurred on July 28, 2010:
 
 
For the year ended
December 31
 
 
2011
2010
Total revenues
  $
 134,473
$
128,671
Partnership's net income
 
72,807
 
35,819
General Partner's interest in Partnership's net income
 
 1,456
 
716
Limited Partners' interest in Partnership's net income
  $
71,351
$
35,103
Pro-forma weighted average of Partnership's common units outstanding
 
 50,314,281
 
35,491,287
Net income per common unit (basic and diluted)
  $
1.39
$
0.98
 
d.
Crude
On September 30, 2011, the merger between the Partnership and Crude was successfully completed. The exchange ratio of this unit for share transaction was 1.56 Partnership's common units for each Crude share. The Partnership is the surviving entity in the merger and continues to be structured as a master limited partnership. This transaction was deemed accretive to the Partnership's distributions in the long term and it adds to the balance sheet strength and financial flexibility of the Partnership.
The Crude acquisition has been accounted for using the acquisition method of accounting. Under the acquisition method of accounting, the total purchase price has been allocated to the all identifiable assets acquired and liabilities assumed with the excess of the fair value of assets acquired and liabilities assumed over the purchase price recorded as a gain from bargain purchase.
 
•
 
Purchase Price
The total purchase consideration of $157,064 is comprised of:
a) $155,559 representing the value of 24,344,176 Partnership's common units that were issued to Crude's shareholders', based on the exchange ratio of 1.56 Partnership's common units for each Crude share, at a price of $6.39 per unit as quoted on the Nasdaq Stock Exchange on September 30, 2011 the day of the successful closing of the acquisition and;
b) $1,505 representing the fair value attributable to precombination services of Crude's Equity Incentive Plan awards at the closing of the merger on September 30, 2011. Crude's Equity Incentive Plan awards consisted of 399,400 of Crude's common shares which were also exchanged at a ratio of 1.56 into 623,064 Partnership's common units at the closing of the merger.
Furthermore at the closing of the acquisition of Crude the Partnership converted 499,346 of Partnership's common units held by CMTC into 499,346 general partner units and delivered to CGP in order for it to maintain its 2% interest in the Partnership. For these units there was no cash consideration paid to the Partnership.
 
•
 
Acquisition related costs
Acquisition-related costs of approximately $4,225 are included in general and administrative expenses in the consolidated statements of comprehensive (loss) / income for the year ended December 31, 2011.
 
•
 
Purchase price allocation
The allocation of the purchase price to all identifiable assets acquired and liabilities assumed was based on their estimated fair values at the date of acquisition.
The fair value allocated to each class of assets and liabilities of Crude and the gain from bargain purchase recorded as non operating income / (expense), net, in the Partnership's consolidated statements of comprehensive (loss) / income for the year ended December 31, 2011 was calculated as follows: 
 
 
 
 
 
 
  
As of
September 30, 2011
 
Current assets
  
$
30,300
  
Vessels
  
 
351,750
  
Total liabilities
  
 
(159,059
) 
Net assets acquired and liabilities assumed
  
$
222,991
  
Purchase price
  
$
(157,064
) 
Gain from bargain purchase
  
$
65,927
  
The gain from bargain purchase of $65,927 has mainly resulted from:
 
•
 
the decline of the Partnership's common unit price as the common units which were issued to Crude's shareholders were valued at $6.39 per unit as quoted on the Nasdaq Stock Exchange on the day of the acquisition of Crude as compared to the Partnership's common unit price of $11.27 used to determine the exchange ratio of the unit for share transaction;
 
•
 
the fair value adjustments for the five crude tanker vessels comprising Crude's fleet on the day of the acquisition and;
 
•
 
the fair value attributable to precombination services of Crude's Equity Incentive Plan awards included into the purchase consideration.
After a subsequent review and reassessment of valuation methods and procedures of the $222,991 fair value amount for identifiable assets acquired and liabilities assumed, the Partnership concluded that its measurements for the identifiable assets acquired and liabilities assumed appropriately reflect consideration of all available information that existed as of the acquisition date. As a result of the merger and based on ASC Subtopic 805-30 the Partnership recorded a gain from bargain purchase of $65,927 in its consolidated statements of comprehensive (loss) / income as of the acquisition date.
 
Total revenues and net loss of Crude since its acquisition by the Partnership were $13,327 and $1,399 respectively and included in the Partnership's consolidated statements of comprehensive (loss) / income for the year ended December 31, 2011.
 
•
 
Pro Forma Financial Information
The supplemental pro forma financial information was prepared using the acquisition method of accounting and is based on the historical financial information of the Partnership and Crude reflecting:
 
•
 
The Partnership's actual results of operations for the year ended December 31, 2011 excluding non recurring transactions such as gain from bargain purchase of $65,927 regarding the acquisition of Crude and actual acquisition related costs the Partnership incurred in connection with the acquisition of Crude;
•
 
The Partnership's actual results of operations for the year ended December 31, 2010 adjusted for non recurring transactions such as gain from bargain purchase of $65,927 resulting from the acquisition of Crude and actual acquisition related costs the Partnership incurred in connection with the acquisition of Crude and;
•
 
Crude's actual results of operations for the period from January 1, 2011 to September 30, 2011 and for the year ended December 31, 2010. The Crude historical financial information has been adjusted to give effect to the pro forma events that are (i) directly attributable to Crude acquisition, (ii) factually supportable and (iii) expected to have a continuing impact on the combined results. These adjustments include the depreciation charges as vessels' depreciation was adjusted by replacing the Crude's vessels carrying values used to calculate depreciation expense included in the historical financial information with their respective fair values as of acquisition date, adjustments to interest expense as well as adjustments to general and administrative expenses related to Crude's equity incentive plan.
 
The combined results do not purport to be indicative of the results of the operations which would have resulted had the acquisition been effected at beginning of the applicable period noted above, or the future results of operations of the combined entity.
 
The following table summarizes total net revenues, net income and net income per common unit of the combined entity had the acquisition of Crude occurred on January 1, 2010:
 
 
 
 
 
 
 
For the years ended
December 31,
 
2011
2010
 
Total revenues
$
167,897
$
180,474
 
Partnership's net income
 
18,274
 
89,613
 
General Partner's interest in Partnership's net income
 
365
 
1,792
 
Limited Partners' interest in Partnership's net income
$
17,909
$
87,821
 
Pro-forma weighted average of Partnership's common units outstanding
 
65,472,309
 
52,069,715
 
Net income per common unit (basic and diluted)
$
0.27
$
1.67