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Published: 2023-11-09 16:14:53 ET
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EX-99.2 3 ef20014369_ex99-2.htm EXHIBIT 99.2
Exhibit 99.2

GLOBAL SHIP LEASE, INC.

INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PERIOD ENDED SEPTEMBER 30, 2023

GLOBAL SHIP LEASE, INC.

Index
Page
INTERIM UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS AS AT SEPTEMBER 30, 2023 AND DECEMBER 31, 2022
F-1
INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER  30, 2023 AND 2022
F-2
INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE NINE MONTHS ENDED SEPTEMBER  30, 2023 AND 2022
F-3
INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
F-4
INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
F-5
NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 F-7

Global Ship Lease, Inc.

Interim Unaudited Condensed Consolidated Balance Sheets

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

     
As of
  
   
Note
    
September 30,
2023
    
December 31,
2022
  
ASSETS
                  
CURRENT ASSETS
                  
Cash and cash equivalents
        
$
98,086
    
$
120,130
  
Time deposits
          
14,000
      
8,550
  
Restricted cash
          
62,208
      
28,363
  
Accounts receivable, net
          
3,737
      
3,684
  
Inventories
          
14,114
      
12,237
  
Prepaid expenses and other current assets
          
42,025
      
33,765
  
Derivative asset
    
5
      
29,580
      
29,645
  
Due from related parties
    
7
      
617
      
673
  
Total current assets
          
$
264,367
    
$
237,047
  
NON - CURRENT ASSETS
                        
Vessels in operation
    
3
    
$
1,700,935
    
$
1,623,307
  
Advances for vessels acquisitions and other additions
    
3
      
5,872
      
4,881
  
Deferred charges, net
            
73,468
      
54,663
  
Other non-current assets
    
2g

   
26,220
      
31,022
  
Derivative asset, net of current portion
    
5
      
27,275
      
33,858
  
Restricted cash, net of current portion
            
93,049
      
121,437
  
Total non - current assets
            
1,926,819
      
1,869,168
  
TOTAL ASSETS
          
$
2,191,186
    
$
2,106,215
  
LIABILITIES AND SHAREHOLDERS' EQUITY
                        
CURRENT LIABILITIES
                        
Accounts payable
          
$
19,304
    
$
22,755
  
Accrued liabilities
            
29,248
      
36,038
  
Current portion of long - term debt
    
6
      
200,626
      
189,832
  
Current portion of deferred revenue
            
41,106
      
12,569
  
Due to related parties
    
7
      
516
      
572
  
Total current liabilities
          
$
290,800
    
$
261,766
  
LONG - TERM LIABILITIES
                        
Long - term debt, net of current portion and deferred financing costs
    
6
    
$
661,471
    
$
744,557
  
Intangible liabilities - charter agreements
    
4
      
7,179
      
14,218
  
Deferred revenue, net of current portion
            
90,178
      
119,183
  
Total non - current liabilities
            
758,828
      
877,958
  
Total liabilities
          
$
1,049,628
    
$
1,139,724
  
Commitments and Contingencies
    
8
      
-
      
-
  
SHAREHOLDERS' EQUITY
                        
Class A common shares - authorized 214,000,000 shares with a $0.01 par value 35,192,029 shares issued and outstanding (2022 - 35,990,288 shares)
    
9
    
$
351
    
$
359
  
Series B Preferred Shares - authorized 104,000 shares with a $0.01 par value 43,592 shares issued and outstanding (2022 - 43,592 shares)
    
9
      
-
      
-
  
Additional paid in capital
            
675,635
      
688,262
  
Retained Earnings
            
436,698
      
246,390
  
Accumulated other comprehensive income
            
28,874
      
31,480
  
Total shareholders' equity
            
1,141,558
      
966,491
  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
          
$
2,191,186
    
$
2,106,215
  

See accompanying notes to interim unaudited condensed consolidated financial statements

F-1
Global Ship Lease, Inc.

Interim Unaudited Condensed Consolidated Statements of Income

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

         
Nine months ended
September 30,
  
   
Note
    
2023
    
2022
  
OPERATING REVENUES
                  
Time charter revenues (include related party revenues of $nil and $66,929 for each of the periods ended September 30, 2023 and 2022, respectively)
  
   
$
489,338
    
$
447,898
  
Amortization of intangible liabilities-charter agreements (includes related party amortization of intangible liabilities-charter agreements of $nil and $5,385 for each of the periods ended September 30, 2023 and 2022, respectively)
    
4
      
6,563
      
32,725
  
Total Operating Revenues
            
495,901
      
480,623
  
                         
OPERATING EXPENSES
                        
Vessel operating expenses (include related party vessel operating expenses of $14,072 and $12,686 for each of the periods ended September 30, 2023 and 2022, respectively)
    
7
      
132,268
      
121,883
  
Time charter and voyage expenses (include related party time charter and voyage expenses of $5,801 and $4,646 for each of the periods ended September 30, 2023 and 2022, respectively)
    
7
      
18,185
      
14,594
  
Depreciation and amortization
    
3
      
67,336
      
60,647
  
General and administrative expenses
            
13,748
      
14,448
  
Operating Income
            
264,364
      
269,051
  
                         
NON-OPERATING INCOME/(EXPENSES)
                        
Interest income
            
6,895
      
1,195
  
Interest and other finance expenses (include acceleration of deferred financing costs of $108 and prepayment fees, acceleration of deferred financing costs and premium of $22,938 for each of the periods ended September 30, 2023 and 2022, respectively)
            
(33,623
)
    
(64,884
)
Other income, net
            
857
      
1,200
  
Fair value adjustment on derivative asset
    
5
      
(1,037
)
    
11,308
  
Total non-operating expenses
            
(26,908
)
    
(51,181
)
Income before income taxes
            
237,456
      
217,870
  
Income taxes
            
(5
)
    
50
  
Net Income
            
237,451
      
217,920
  
Earnings allocated to Series B Preferred Shares
    
9
      
(7,152
)
    
(7,152
)
Net Income available to Common Shareholders
          
$
230,299
    
$
210,768
  
Earnings per Share
                        
                         
Weighted average number of Class A common shares outstanding
                        
Basic
    
11
      
35,473,382
      
36,649,874
  
Diluted
    
11
      
36,071,632
      
37,305,744
  
                         
Net Earnings per Class A common share
                        
Basic
    
11
    
$
6.49
    
$
5.75
  
Diluted
    
11
    
$
6.38
    
$
5.65
  

See accompanying notes to interim unaudited condensed consolidated financial statements

F-2
Global Ship Lease, Inc.

Interim Unaudited Condensed Consolidated Statements of Comprehensive Income

(Expressed in thousands of U.S. dollars)

         
Nine months ended
September 30,
  
   
Note
    
2023
    
2022
  
Net Income available to Common Shareholders
        
$
230,299
    
$
210,768
  
Other comprehensive income:
                      
Cash Flow Hedge:
                      
Unrealized (loss)/gain on derivative assets
    
5
      
(5,611
)
    
35,263
  
Amortization of interest rate cap premium
            
3,085
      
499
  
Amounts reclassified to earnings
            
(80
)
    
-
  
Total Other Comprehensive (Loss)/Income
            
(2,606
)
    
35,762
  
Total Comprehensive Income
          
$
227,693
    
$
246,530
  

See accompanying notes to interim unaudited condensed consolidated financial statements

F-3
Global Ship Lease, Inc.

Interim Unaudited Condensed Consolidated Statements of Cash Flows

(Expressed in thousands of U.S. dollars)

         
Nine months ended
September 30,
  
             
   
Note
    
2023
    
2022
  
Cash flows from operating activities:
                  
Net Income
          
237,451
      
217,920
  
Adjustments to reconcile net income to net cash provided by operating activities:
                      
Depreciation and amortization
    
3
      
67,336
      
60,647
  
Amounts reclassified from other comprehensive income
            
(80
)
    
-
  
Amortization of derivative asset’s premium
            
3,085
      
499
  
Amortization of deferred financing costs
    
6
      
4,115
      
9,751
  
Amortization of original issue premium on repurchase of notes
            
-
      
762
  
Amortization of intangible liabilities - charter agreements
    
4
      
(6,563
)
    
(32,725
)
Fair value adjustment on derivative asset
    
5
      
1,037
      
(11,308
)
Prepayment fees on debt repayment
    
6
      
-
      
15,197
  
Stock-based compensation expense
    
10
      
7,684
      
7,882
  
Changes in operating assets and liabilities:
                        
Increase in accounts receivable and other assets
            
(3,511
)
    
(14,005
)
Increase in inventories
            
(1,877
)
    
(145
)
Increase in derivative asset
    
5
      
-
      
(15,370
)
Decrease in accounts payable and other liabilities
            
(5,274
)
    
(2,060
)
Decrease in related parties' balances, net
    
7
      
-
      
2,547
  
(Decrease)/increase in deferred revenue
            
(468
)
    
19,038
  
Unrealized foreign exchange loss
            
-
      
3
  
Net cash provided by operating activities
          
$
302,935
    
$
258,633
  
Cash flows from investing activities:
                        
Acquisition of vessels
            
(123,300
)
    
-
  
Cash paid for vessel expenditures
            
(12,569
)
    
(4,429
)
Advances for vessels acquisitions and other additions
            
(6,786
)
    
(2,835
)
Cash paid for drydockings
            
(33,386
)
    
(19,716
)
Net proceeds from sale of vessel
            
5,940
      
-
  
Time deposits acquired
            
(5,450
)
    
(9,500
)
Net cash used in investing activities
          
$
(175,551
)
  
$
(36,480
)
Cash flows from financing activities:
                        
Repurchase of 2024 Notes, including premium
    
6
      
-
      
(119,871
)
Proceeds from drawdown of credit facilities
    
6
      
76,000
      
60,000
  
Proceeds from 2027 Secured Notes
    
6
      
-
      
350,000
  
Repayment of credit facilities/sale and leaseback
    
6
      
(151,267
)
    
(117,080
)
Repayment of refinanced debt, including prepayment fees
    
6
      
-
      
(276,671
)
Deferred financing costs paid
            
(1,140
)
    
(9,655
)
Cancellation of Class A common shares
    
9
      
(20,421
)
    
(14,910
)
Class A common shares - dividend paid
    
9
      
(39,991
)
    
(36,949
)
Series B Preferred Shares - dividend paid
    
9
      
(7,152
)
    
(7,152
)
Net cash used in financing activities
          
$
(143,971
)
  
$
(172,288
)
Net (decrease)/increase in cash and cash equivalents and restricted cash
            
(16,587
)
    
49,865
  
Cash and cash equivalents and restricted cash at beginning of the period
            
269,930
      
195,642
  
Cash and cash equivalents and restricted cash at end of the period
          
$
253,343
    
$
245,507
  
                         
Supplementary Cash Flow Information:
                        
Cash paid for interest
          
$
51,012
    
$
34,470
  
Cash received from interest rate caps
            
24,380
      
3,247
  
Non-cash investing activities:
                        
Unpaid capitalized expenses
            
5,298
      
7,334
  
Unpaid drydocking expenses
            
10,622
      
7,396
  
Non-cash financing activities:
                        
Unrealized (loss)/gain on derivative assets
            
(5,611
)
    
35,263
  

See accompanying notes to interim unaudited condensed consolidated financial statements

F-4
Global Ship Lease, Inc.

Interim Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity

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

   
Number of
Common Shares
at par value $0.01
    
Number of Series B
Preferred Shares
at par value $0.01
    
Common
Shares
    
Series B
Preferred
Shares
    
Series C
Preferred
Shares
    
Additional
paid-in
capital
    
Retained
Earnings
    
Accumulated
Other
Comprehensive
Income
    
Total
Shareholders'
Equity
  
Balance at December 31, 2021
    
36,464,109
      
43,592
    
$
365
    
$
-
    
$
-
    
$
698,463
    
$
13,498
    
$
227
    
$
712,553
  
Stock-based compensation expense (Note 10)
    
447,283
      
-
      
4
      
-
      
-
      
3,426
      
-
      
-
      
3,430
  
Other comprehensive income
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
17,283
      
17,283
  
Net Income for the period
    
-
      
-
      
-
      
-
      
-
      
-
      
70,190
      
-
      
70,190
  
Series B Preferred Shares dividend (Note 9)
    
-
      
-
      
-
      
-
      
-
      
-
      
(2,384
)
    
-
      
(2,384
)
Class A common shares dividend (Note 9)
    
-
      
-
      
-
      
-
      
-
      
-
      
(9,257
)
    
-
      
(9,257
)
Balance at March 31, 2022
    
36,911,392
      
43,592
    
$
369
    
$
-
    
$
-
    
$
701,889
    
$
72,047
    
$
17,510
    
$
791,815
  
                                                                         
Stock-based compensation expense (Note 10)
    
-
      
-
      
-
      
-
      
-
      
2,231
      
-
      
-
      
2,231
  
Cancellation of Class A common shares (Note 9)
    
(184,684
)
    
-
      
(2
)
    
-
      
-
      
(4,923
)
    
-
      
-
      
(4,925
)
Other comprehensive income
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
5,760
      
5,760
  
Net Income for the period
    
-
      
-
      
-
      
-
      
-
      
-
      
55,734
      
-
      
55,734
  
Series B Preferred Shares dividend (Note 9)
    
-
      
-
      
-
      
-
      
-
      
-
      
(2,384
)
    
-
      
(2,384
)
Class A common shares dividend (Note 9)
    
-
      
-
      
-
      
-
      
-
      
-
      
(13,836
)
    
-
      
(13,836
)
Balance at June 30, 2022
    
36,726,708
      
43,592
    
$
367
    
$
-
    
$
-
    
$
699,196
    
$
111,562
    
$
23,270
    
$
834,395
  
                                                                         
Stock-based compensation expense (Note 10)
    
134.892
      
-
      
1
      
-
      
-
      
2,221
      
-
      
-
      
2,222
  
Cancellation of Class A common shares (Note 9)
    
(568,835
)
    
-
      
(6
)
    
-
      
-
      
(9,979
)
    
-
      
-
      
(9,985
)
Other comprehensive income
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
12,719
      
12,719
  
Net Income for the period
    
-
      
-
      
-
      
-
      
-
      
-
      
91,995
      
-
      
91,995
  
Series B Preferred Shares dividend (Note 9)
    
-
      
-
      
-
      
-
      
-
      
-
      
(2,384
)
    
-
      
(2,384
)
Class A common shares dividend (Note 9)
    
-
      
-
      
-
      
-
      
-
      
-
      
(13.856
)
    
-
      
(13,856
)
Balance at September 30, 2022
    
36,292,765
      
43,592
    
$
362
    
$
-
    
$
-
      
691,438
    
$
187,317
    
$
35,989
    
$
915,106
  

See accompanying notes to interim unaudited condensed consolidated financial statements
F-5
Global Ship Lease, Inc.

Interim Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity

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

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

213,594


-


2


-


-


2,503


-


-


2,505
  
Cancellation of Class A common shares (Note 9)

(187,479
 )

-


(2
 )

-


-


(3,439
 )

-


-


(3,441
 )
Other comprehensive income

-


-


-


-


-


-


-


865


865
  
Net Income for the period

-


-


-


-


-


-


85,071


-


85,071
  
Series B Preferred Shares dividend (Note 9)

-


-


-


-


-


-


(2,384
 )

-


(2,384
 )
Class A common shares dividend (Note 9)

-


-


-


-


-


-


(13,300
 )

-


(13,300
 )
Balance at September  30, 2023

35,192,029


43,592

$
351

$
-

$ -

$
675,635

$
436,698

$
28,874

$
1,141,558
  

See accompanying notes to interim unaudited condensed consolidated financial statements

F-6
Global Ship Lease, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

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

1.
Description of Business
 
The Company’s business is to own and charter out containerships to leading liner companies.

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

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

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

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

With these transactions and following the sale of GSL Amstel on March 23, 2023, the Company’s fleet comprises 68 containerships with average age weighted by TEU capacity of 17.0 years.
 
The following table provides information about the 68 vessels owned as at September 30, 2023.

Company Name (1)
 
Country of
Incorporation
 
Vessel
Name
 
Capacity
in TEUs (2)
Year
Built
Earliest
Charter
Expiry Date
Global Ship Lease 54 LLC
Liberia
CMA CGM Thalassa
11,040
2008
4Q25
Laertis Marine LLC
Marshall Islands
Zim Norfolk
9,115
2015
2Q27
Penelope Marine LLC
Marshall Islands
Zim Xiamen
9,115
2015
3Q27
Telemachus Marine LLC (3)
Marshall Islands
Anthea Y
9,115
2015
3Q25(4)
Global Ship Lease 53 LLC
Liberia
MSC Tianjin
8,603
2005
2Q24
Global Ship Lease 52 LLC
Liberia
MSC Qingdao
8,603
2004
2Q24
Global Ship Lease 43 LLC
Liberia
GSL Ningbo
8,603
2004
3Q27(5)
Global Ship Lease 72 LLC
Liberia
GSL Alexandra
8,544
2004
3Q25(6)
Global Ship Lease 73 LLC
Liberia
GSL Sofia
8,544
2003
3Q25(6)
Global Ship Lease 74 LLC
Liberia
tbr GSL Effie(14)
8,544
2003
3Q25(6)
Global Ship Lease 75 LLC
Liberia
GSL Lydia
8,544
2003
2Q25(6)
Global Ship Lease 30 Limited
Marshall Islands
GSL Eleni
7,847
2004
3Q24(7)
Global Ship Lease 31 Limited
Marshall Islands
GSL Kalliopi
7,847
2004
3Q24(7)
Global Ship Lease 32 Limited
Marshall Islands
GSL Grania
7,847
2004
3Q24(7)
Alexander Marine LLC
Marshall Islands
Mary
6,927
2013
4Q28(8)
Hector Marine LLC
Marshall Islands
Kristina
6,927
2013
3Q29(8)
Ikaros Marine LLC
Marshall Islands
Katherine
6,927
2013
1Q29(8)
Philippos Marine LLC
Marshall Islands
Alexandra
6,927
2013
2Q29(8)
Aristoteles Marine LLC
Marshall Islands
Alexis
6,882
2015
2Q29(8)
Menelaos Marine LLC
Marshall Islands
Olivia I
6,882
2015
2Q29(8)
Global Ship Lease 35 LLC
Liberia
GSL Nicoletta
6,840
2002
3Q24
Global Ship Lease 36 LLC
Liberia
GSL Christen
6,840
2002
4Q23
Global Ship Lease 48 LLC
Liberia
CMA CGM Berlioz
6,621
2001
4Q25
Leonidas Marine LLC
Marshall Islands
Agios Dimitrios
6,572
2011
4Q23
Global Ship Lease 33 LLC
Liberia
GSL Vinia
6,080
2004
3Q24
Global Ship Lease 34 LLC
Liberia
GSL Christel Elisabeth
6,080
2004
2Q24
 
F-7
Global Ship Lease, Inc.

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

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

1.
Description of Business (continued)

Company Name (1)
 
Country of
Incorporation
 
Vessel
Name
 
Capacity
in TEUs (2)
Year
Built
Earliest
Charter
Expiry Date
GSL Arcadia LLC
Liberia
GSL Arcadia
6,008
2000
2Q24(9)
GSL Melita LLC
Liberia
GSL Melita
6,008
2001
3Q24(9)
GSL Maria LLC
Liberia
GSL Maria
6,008
2001
4Q24(9)
GSL Violetta LLC (3)
Liberia
GSL Violetta
6,008
2000
4Q24(9)
GSL Tegea LLC
Liberia
GSL Tegea
5,992
2001
3Q24(9)
GSL Dorothea LLC
Liberia
GSL Dorothea
5,992
2001
3Q24(9)
GSL MYNY LLC
Liberia
GSL MYNY
6,008
2000
3Q24(9)
Tasman Marine LLC
Marshall Islands
Tasman
5,936
2000
4Q23(10)
Hudson Marine LLC
Marshall Islands
Zim Europe
5,936
2000
1Q24
Drake Marine LLC
Marshall Islands
Ian H
5,936
2000
2Q24
Global Ship Lease 68 LLC (3)
Liberia
GSL Kithira
5,470
2009
4Q24(11)
Global Ship Lease 69 LLC (3)
Liberia
GSL Tripoli
5,470
2009
4Q24(11)
Global Ship Lease 70 LLC (3)
Liberia
GSL Syros
5,470
2010
4Q24(11)
Global Ship Lease 71 LLC (3)
Liberia
GSL Tinos
5,470
2010
4Q24(11)
Hephaestus Marine LLC
Marshall Islands
Dolphin II
5,095
2007
1Q25
Zeus One Marine LLC
Marshall Islands
Orca I
5,095
2006
2Q24(12)
Global Ship Lease 47 LLC
Liberia
GSL Château d’If
5,089
2007
4Q26
GSL Alcazar Inc.
Marshall Islands
CMA CGM Alcazar
5,089
2007
3Q26
Global Ship Lease 55 LLC
Liberia
GSL Susan
4,363
2008
3Q27(13)
Global Ship Lease 50 LLC
Liberia
CMA CGM Jamaica
4,298
2006
1Q28(13)
Global Ship Lease 49 LLC
Liberia
CMA CGM Sambhar
4,045
2006
1Q28(13)
Global Ship Lease 51 LLC
Liberia
CMA CGM America
4,045
2006
1Q28(13)
Global Ship Lease 57 LLC
Liberia
GSL Rossi
3,421
2012
1Q26
Global Ship Lease 58 LLC
Liberia
GSL Alice
3,421
2014
2Q25
Global Ship Lease 59 LLC
Liberia
GSL Melina
3,404
2013
2Q24
Global Ship Lease 60 LLC
Liberia
GSL Eleftheria
3,404
2013
3Q25
Global Ship Lease 61 LLC
Liberia
GSL Mercer
2,824
2007
4Q24
Global Ship Lease 62 LLC
Liberia
Matson Molokai
2,824
2007
2Q25
Global Ship Lease 63 LLC
Liberia
GSL Lalo
2,824
2006
1Q24
Global Ship Lease 42 LLC
Liberia
GSL Valerie
2,824
2005
1Q25
Pericles Marine LLC
Marshall Islands
Athena
2,762
2003
2Q24
Global Ship Lease 64 LLC
Liberia
GSL Elizabeth
2,741
2006
1Q24
Global Ship Lease 65 LLC
Liberia
tbr GSL Chloe(14)
2,546
2012
4Q24
Global Ship Lease 66 LLC
Liberia
GSL Maren
2,546
2014
1Q24(15)
Aris Marine LLC
Marshall Islands
Maira
2,506
2000
3Q24
Aphrodite Marine LLC
Marshall Islands
Nikolas
2,506
2000
1Q24
Athena Marine LLC
Marshall Islands
Newyorker
2,506
2001
1Q24
Global Ship Lease 38 LLC
Liberia
Manet
2,272
2001
4Q24
Global Ship Lease 40 LLC
Liberia
Keta
2,207
2003
1Q25
Global Ship Lease 41 LLC
Liberia
Julie
2,207
2002
2Q25(16)
Global Ship Lease 45 LLC
Liberia
Kumasi
2,207
2002
1Q25
Global Ship Lease 44 LLC
Liberia
Akiteta
2,207
2002
4Q24

F-8
Global Ship Lease, Inc.

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

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

1.
Description of Business (continued)

(1) All subsidiaries are 100% owned, either directly or indirectly;
(2) Twenty-foot Equivalent Units;
(3) Currently, under a sale and leaseback transaction (see note 2g);
(4) Anthea Y was forward fixed to a leading liner operator for a period of 24 months +/- 30 days, with the new charter scheduled to commence upon expiry of the existing charter in 4Q 2023;
(5) GSL Ningbo was forward fixed to a leading liner company for minimum 48 months - maximum 52 months. The new charter commenced in 3Q 2023;
(6) GSL Alexandra, GSL Sofia, GSL Lydia and tbr GSL Effie delivered in 2Q 2023 and were chartered for a period of minimum 24 months - maximum 28 months, plus additional added drydocking days plus 12 months in charterer’s option +/- 30 days;
(7) GSL Eleni delivered 2Q2019 and is chartered for five years; GSL Kalliopi (delivered 4Q2019) and GSL Grania (delivered 3Q 2019) are chartered for three years plus two successive periods of one year each at the option of the charterer. The first of these extension options was exercised for both vessels in 2Q 2022 and commenced for GSL Grania and for GSL Kalliopi in 3Q and in 4Q 2022, respectively. The second of these extension options was exercised for both vessels in 2Q 2023 and commenced for both vessels in 3Q23;
(8) Mary, Kristina, Katherine, Alexandra, Alexis, Olivia I were forward fixed to a leading liner company for 60 months +/- 45 days, after which the charterer has the option to extend each charter for a further two years. The new charters are scheduled to commence as each of the existing charters expire, between approximately late 2023 and late 2024;
(9) GSL Arcadia, GSL Melita, GSL Maria, GSL Violetta, GSL Tegea, GSL Dorothea, GSL MYNY. Contract cover for each ship is for a firm period of at least three years from the date each vessel was delivered. Thereafter, the charterer has the option to extend each charter for a further 12 months, after which they have the option to extend each charter for a second time - for a period concluding immediately prior to each respective vessel’s 25th year drydocking and special survey;
(10) Tasman. 12-month extension +/- 30 days at charterer’s option was exercised in 2Q 2022 and commenced in 3Q 2022;
(11) GSL Kithira, GSL Tripoli, GSL Syros, GSL Tinos were chartered for a period of three years from their delivery dates in 2021, after which the charterer has the option to extend each charter for a further three years;
(12) Orca I. After the initial firm period of the charter, the charterer has the option in 1Q 2024 to extend the charter for a further 12-14 months from 3Q 2024;
(13) GSL Susan, CMA CGM Jamaica, CMA CGM Sambhar and CMA CGM America were each forward fixed to a leading liner company for a period of five years with up to +/- 45 days in charterer’s option. The new charter for GSL Susan commenced in 4Q 2022, while the remaining charters commenced in 1Q 2023;
(14) “tbr” means “to be renamed”;
(15) GSL Maren. Charter extended for a period of 11 to 14 months and commenced at the end of 1Q 2023;
(16) Julie. Julie was forward fixed to a leading liner company for a period 24 months +/- 30 days in charterer’s option. The new charter commenced in 3Q 2023.

2.
Summary of Significant Accounting Policies and Disclosures

(a)
Basis of Presentation
 
The accompanying financial information is unaudited and reflects all adjustments, consisting solely of normal recurring adjustments, which, in the opinion of management, are necessary for a fair statement of financial position and results of operations for the periods presented. The financial information does not include all disclosures required under United States Generally Accepted Accounting Principles (“US GAAP”) for annual financial statements. These interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements as of December 31, 2022, filed with the Securities and Exchange Commission on March 23, 2023, in the Company’s Annual Report on Form 20-F.

During the three months ended September 30, 2022, the Company identified adjustments to the valuation of share-based compensation. The Company evaluated the adjustments from both a quantitative and qualitative perspective and determined the related impacts were not material to any previously issued annual or interim financial statements; however, the Company has determined to revise prior periods, as follows.
 
The Company corrected the valuation of share based compensation, which resulted in an increase in share based compensation expense under the caption of “General and administrative expenses” amounted to $2,375 for the three months ended March 31, 2022 and $3,556 for the six months ended June 30, 2022, a decrease in net income of $2,375 for the three months ended March 31, 2022, $1,181 for the three months ended June 30, 2022 and $3,556 for the six months ended June 30, 2022, an increase in “Additional paid-in capital” and a decrease in “Retained Earnings” of  $2,375 as of March 31, 2022 and $1,181 as of June 30, 2022, respectively.

F-9
Global Ship Lease, Inc.

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

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

2.
Summary of Significant Accounting Policies and Disclosures (continued)
 
Adoption of new accounting standards
 
In March 2020, the FASB issued ASU 2020-4, “Reference Rate Reform (Topic 848)” (“ASU 2020-4”), which provides optional guidance intended to ease the potential burden in accounting for the expected discontinuation of LIBOR as a reference rate in the financial markets. The guidance can be applied to modifications made to certain contracts to replace LIBOR with a new reference rate. The guidance, if elected, will permit entities to treat such modifications as the continuation of the original contract, without any required accounting reassessments or remeasurements. The ASU 2020-4 was effective for the Company beginning on March 12, 2020 and the Company applied the amendments prospectively through December 31, 2022. Because the current relief in Topic 848 may not cover a period of time during which a significant number of modifications may take place, in December 2022 the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848)”. The amendments of this update defer the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. As of September 30, 2023, all Company’s loan agreements have been amended and restated to take into effect the transition from LIBOR to the Secured Overnight Financing Rate (“SOFR”) and the relevant provisions on a replacement rate. In addition, the Company’s interest rate caps have automatically transited to 1-month Compounded SOFR on July 1, 2023 at a level of 0.64%. There was no impact to the Company’s interim unaudited condensed consolidated financial statements for the period ended September 30, 2023, as a result of adopting this standard.
 
Uncertainties regarding the Covid-19 Pandemic and Geopolitical Conflicts
 
There is uncertainty regarding the long-term impact of the COVID-19 pandemic (including efforts throughout the world to contain its spread) on container shipping and the macro-economic environment.  Similar uncertainty exists regarding the broader global economic impact of geopolitical conflicts, such as the ongoing war in Ukraine, including the effect of sanctions imposed against Russia, and the recent escalation of the Israel-Gaza conflict, and other geopolitical tensions, such as those surrounding Taiwan and China. Such uncertainty may adversely impact our business, and any escalation or spillover effects from these and similar conflicts may lead to further regional and international conflicts or armed action. It is possible that such conflict could disrupt supply chains and cause instability in the global economy.

While the Company cannot predict the long-term economic impact of these and other similar events, it will continue to actively monitor these situations and may take further actions to alter the Company’s business operations that it determines are in the best interests of its employees, customers, partners, suppliers, and stakeholders, or as required by authorities in the jurisdictions where the Company operates. As a result, many of the Company’s estimates and assumptions required increased judgement and carry a higher degree of variability and volatility. The ultimate effects that any such alterations or modifications may have on the Company’s business are not clear, including any potential negative effects on its business operations and financial results.

(b)
Principles of Consolidation

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

(c)
Use of estimates

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

F-10
Global Ship Lease, Inc.

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

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

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

(d)
Vessels in operation
 
Vessels are generally recorded at their historical cost, which consists of the acquisition price and any material expenses incurred upon acquisition, adjusted for the fair value of intangible assets or liabilities associated with above or below market charters attached to the vessels at acquisition. See Intangible Assets and Liabilities at note 2(e) below. Vessels acquired in a corporate transaction accounted for as an asset acquisition are stated at the acquisition price, which consists of consideration paid, plus transaction costs, considering pro rata allocation based on vessels fair value at the acquisition date. Vessels acquired in a corporate transaction accounted for as a business combination are recorded at fair value. Vessels acquired as part of the Marathon Merger in 2008 were accounted for under ASC 805, which required that the vessels be recorded at fair value, less the negative goodwill arising as a result of the accounting for the merger.
 
Subsequent expenditures for major improvements and upgrades are capitalized, provided they appreciably extend the life, increase the earnings capacity or improve the efficiency or safety of the vessels.
 
Borrowing costs incurred during the construction of vessels or as part of the prefinancing of the acquisition of vessels are capitalized. There was no capitalized interest for the nine months ended September 30, 2023, and 2022.
 
Vessels are stated less accumulated depreciation and impairment, if applicable. Vessels are depreciated to their estimated residual value using the straight-line method over their estimated useful lives which are reviewed on an ongoing basis to ensure they reflect current technology, service potential and vessel structure. The useful lives are estimated to be 30 years from original delivery by the shipyard.
 
Management estimates the residual values of the Company’s container vessels based on a scrap value cost of steel times the weight of the vessel noted in lightweight tons (LWT). Residual values are periodically reviewed and revised to recognize changes in conditions, new regulations or other reasons. Revision of residual values affect the depreciable amount of the vessels and affects depreciation expense in the period of the revision and future periods. Management estimated the residual values of its vessels based on scrap rate of $400 per LWT.
 
For any vessel group which is impaired, the impairment charge is recorded against the cost of the vessel and the accumulated depreciation as at the date of impairment is removed from the accounts.
 
The cost and related accumulated depreciation of assets retired or sold are removed from the accounts at the time of sale or retirement and any gain or loss is included in the interim unaudited condensed Consolidated Statements of Income.

(e)
Intangible assets and liabilities – charter agreements

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

F-11
Global Ship Lease, Inc.

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

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

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

(f)
Impairment of Long-lived assets

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

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

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

During the nine months ended September 30, 2023, and 2022, the Company evaluated the impact of the current economic situation on the recoverability of all its vessel groups and has determined that there were no events or changes in circumstances which indicated that their carrying amounts may not be recoverable. Accordingly, there were no triggering events and no impairment test was performed for the nine months ended September 30, 2023 and 2022.

(g)
Revenue recognition and related expense

The Company charters out its vessels on time charters which involves placing a vessel at a charterer’s disposal for a specified period of time during which the charterer uses the vessel in return for the payment of a specified daily hire rate. Such charters are accounted for as operating leases and therefore revenue is recognized on a straight-line basis as the average revenues over the rental periods of such charter agreements, as service is performed. Cash received in excess of earned revenue is recorded as deferred revenue. If a time charter contains one or more consecutive option periods, then subject to the options being exercisable solely by the Company, the time charter revenue will be recognized on a straight-line basis over the total remaining life of the time charter, including any options which are more likely than not to be exercised. If a time charter is modified, including the agreement of a direct continuation at a different rate, the time charter revenue will be recognized on a straight-line basis over the total remaining life of the time charter from the date of modification. During the periods ended September 30, 2023, and 2022, an amount of $(1,244) and $7,692, respectively, has been recorded in time charter-revenues for such modifications and revenues recognized on a straight-line basis. Any difference between the charter rate invoiced and the time charter revenue recognized is classified as, or released from, deferred revenue. As of September 30, 2023, current and non-current portion from implementing the straight-line basis, amounting to $9,611 ($6,487 as for December 31, 2022) and $17,031 ($21,144 as for December 31, 2022), respectively, are presented in the interim condensed unaudited Consolidated Balance Sheets in the line item “Prepaid expenses and other current assets” and “Other non-current assets”, respectively.

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

F-12
Global Ship Lease, Inc.

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

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

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

(g)
Revenue recognition and related expense (continued)
 
Under time charter arrangements the Company, as owner, is responsible for all the operating expenses of the vessels, such as crew costs, insurance, repairs and maintenance, and such costs are expensed as incurred and are included in vessel operating expenses.
 
Commission paid to brokers to facilitate the agreement of a new charter are included in time charter and voyage expenses as are certain expenses related to a voyage, such as the costs of bunker fuel consumed when a vessel is off-hire or idle.
 
Leases: In cases of lease agreements where the Company acts as the lessee, the Company recognizes an operating lease asset and a corresponding lease liability on the interim unaudited condensed Consolidated Balance Sheets. Following initial recognition and with regards to subsequent measurement the Company remeasures lease liability and right of use asset at each reporting date.
 
Leases where the Company acts as the lessor are classified as either operating or sales-type / direct financing leases.
 
In cases of lease agreements where the Company acts as the lessor under an operating lease, the Company keeps the underlying asset on the interim unaudited condensed Consolidated Balance Sheets and continues to depreciate the assets over its useful life. In cases of lease agreements where the Company acts as the lessor under a sales-type / direct financing lease, the Company derecognizes the underlying asset and records a net investment in the lease. The Company acts as a lessor under operating leases in connection with all of its charter out – bareboat-out arrangements.

In cases of sale and leaseback transactions, if the transfer of the asset to the lessor does not qualify as a sale, then the transaction constitutes a failed sale and leaseback and is accounted for as a financial liability. For a sale to have occurred, the control of the asset would need to be transferred to the lessor, and the lessor would need to obtain substantially all the benefits from the use of the asset. During 2021, the Company entered into six agreements which qualify as failed sale and leaseback transactions as the Company is required to repurchase the vessels at the end of the lease term and the Company has accounted for the six agreements as financing transactions.

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

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

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

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

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

F-13
Global Ship Lease, Inc.

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

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

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

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

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

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

Through the latter part of 2022, the Company noted that charter rates in the spot market had come under pressure and accordingly determined that events occurred, and circumstances had changed, which indicated that potential impairment of the Company’s long-lived assets could exist. These indicators included continued volatility in the spot market and the related impact of the current container sector on management’s expectation for future revenues. As a result, step one of the impairment assessment of each of the vessel groups was performed as at December 31, 2022 and step two of the impairment analysis was required for one vessel of the group, as its undiscounted projected net operating cash flows did not exceed its carrying value. As a result, the Company recorded an impairment loss of $3,033 for one vessel asset group with a total aggregate carrying amount of $9,033 which was written down to its fair value of $6,000.

In December 2021, the Company purchased interest rate caps with an aggregate notional amount of $484,106, which amortizes over time as the Company’s outstanding debt balances decline. In February 2022, the Company further hedged its exposure by putting in place two USD one-month LIBOR interest rate caps of 0.75% through fourth quarter 2026, on $507,891 of its floating rate debt. The second interest rate cap was not designated as a cash flow hedge and therefore the negative fair value adjustment of $1,037 for nine months ended September 30, 2023 was recorded through interim unaudited condensed Consolidated Statements of Income ($11,308 positive fair value adjustment for nine months ended September 30, 2022). ASC 815-20-25-13a stipulates that an entity may designate either all or certain future interest payments on variable-rate debt as the hedged exposure in a cash flow hedge relationship. The Company is designating certain future interest payments on its outstanding variable-rate debt as the hedged item in this relationship. Under ASC 815-20-25-106e, “for cash flow hedges of the interest payments on only a portion of the principal amount of the interest-bearing asset or liability, the notional amount of the interest rate cap designated as the hedging instrument matches the principal amount of the portion of the asset or liability on which the hedged interest payments are based”. In this case, the Company has designated only a portion of its outstanding debt (initially, $253,946) as the hedged item, and any interest payments beyond the notional amount of the interest rate cap in any given period are not designated as being hedged.

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

The objective of the hedges is to reduce the variability of cash flows associated with the interest rates relating to the Company’s variable rate borrowings. When derivatives are used, the Company is exposed to credit loss in the event of non-performance by the counterparties; however, non-performance is not anticipated. ASC 815, Derivatives and Hedging, requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the balance sheet. The fair values of the interest rate derivatives are based on quoted market prices for similar instruments from commercial banks (based on significant observable inputs - Level 2 inputs). As of September 30, 2023, and December 31, 2022, the Company recorded a derivative asset of $56,855 and $63,503, respectively.

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

Credit risk: The Company closely monitors its credit exposure to customers and counter-parties for credit risk. The Company has entered into commercial management agreement with Conchart Commercial Inc. (“Conchart”), pursuant to which Conchart has agreed to provide commercial management services to the Company, including the negotiation, on behalf of the Company, vessel employment contracts (see note 7). Conchart has policies in place to ensure that it trades with customers and counterparties with an appropriate credit history.

F-14
Global Ship Lease, Inc.

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

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

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

(h)
Fair Value Measurement and Financial Instruments (continued)
 
Credit risk (continued)
 
Financial instruments that potentially subject the Company to concentrations of credit risk are accounts receivable, cash and cash equivalents and time deposits. The Company does not believe its exposure to credit risk is likely to have a material adverse effect on its financial position, results of operations or cash flows.
 
Liquidity Risk: Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Company monitors cash balances appropriately to meet working capital needs.
 
Foreign Exchange Risk: Foreign currency transactions are translated into the measurement currency rates prevailing at the dates of transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the interim unaudited condensed Consolidated Statements of Income.
 
(i)
Derivative instruments

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

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

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

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

In February 2022, the Company further purchased two interest rate caps with an aggregate notional amount of $507,891. The first interest rate cap of $253,946 which has been designated as a cash flow hedge, has the same accounting treatment as described above for the December 2021 hedging. The second interest rate cap was not designated as a cash flow hedge and therefore the negative fair value adjustment of $1,037 as at September 30, 2023 ($11,308 positive fair value adjustment as at September 30, 2022) was recorded through interim unaudited condensed Consolidated Statements of Income. ASC 815-20-25-13a stipulates that an entity may designate either all or certain future interest payments on variable-rate debt as the hedged exposure in a cash flow hedge relationship. In this case, the Company has designated only a portion of its outstanding debt (initially, $253,946) as the hedged item, and any interest payments beyond the notional amount of the interest rate cap in any given period are not designated as being hedged (see note 5).

F-15
Global Ship Lease, Inc.

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

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

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

The amounts included in accumulated other comprehensive income will be reclassified to interest expense should the hedge no longer be considered effective. As of September 30, 2023, and December 31, 2022, following a quantitative assessment, part of the hedge was no longer considered effective and an amount of $80 and $1,091 was reclassified from other comprehensive income to the interim unaudited condensed Consolidated Statements of Income. No amount of ineffectiveness was included in net income for the nine months period ended September 30, 2022. The Company will continue to assess the effectiveness of the hedge on an ongoing basis.

(j)
Recent accounting pronouncements
 
The Company does not believe that any recently issued, but not yet effective, accounting pronouncements would have a material impact on its interim unaudited condensed consolidated financial statements.

3.
Vessels in Operation

     
Vessel Cost,
as adjusted for
Impairment charges
      
Accumulated
Depreciation
      
Net Book
Value
   
As of January 1, 2022
  
$
1,878,132
    
$
(195,316
)
  
$
1,682,816
  
                         
Additions
    
11,756
      
-
      
11,756
  
Depreciation
    
-
      
(68,232
)
    
(68,232
)
Impairment loss
    
(3,730
)
    
697
      
(3,033
)
As of December 31, 2022
  
$
1,886,158
    
$
(262,851
)
  
$
1,623,307
  
                         
Additions
    
137,942
      
-
      
137,942
  
Disposals
    
(6,803
)
    
68
      
(6,735
)
Depreciation
    
-
      
(53,579
)
    
(53,579
)
As of September 30, 2023
  
$
2,017,297
    
$
(316,362
)
  
$
1,700,935
  

As of September 30, 2023, and December 31, 2022, the Company had made additions for vessel expenditures and ballast water treatments.

2023 Vessels acquisitions

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


Name
  
Capacity in TEUs
    
Year Built
    
Purchase Price
  
Delivery date
GSL Alexandra
    
8,544
      
2004
    
$
30,000
  
June 2, 2023
GSL Sofia
    
8,544
      
2003
    
$
30,000
  
May 22, 2023
tbr GSL Effie
    
8,544
      
2003
    
$
30,000
  
May 30, 2023
GSL Lydia
    
8,544
      
2003
    
$
33,300
  
June 26, 2023
2023 Sale of Vessel
 
On March 23, 2023, the Company sold GSL Amstel for net proceeds of $5,940, and the vessel was released as collateral under the Company’s $140,000 loan facility with Credit Agricole Corporate and Investment Bank, Hamburg Commercial Bank AG, E.Sun Commercial Bank, Ltd, CTBC Bank Co. Ltd. and Taishin International Bank.

F-16
Global Ship Lease, Inc.
 
Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

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

3.
Vessels in Operation (continued)

Impairment

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

Through the latter part of 2022, the Company noted that charter rates in the spot market had come under pressure and accordingly determined that events occurred, and circumstances had changed, which indicated that potential impairment of the Company’s long-lived assets could exist. These indicators included continued volatility in the spot market and the related impact of the current container sector on management’s expectation for future revenues. As a result, step one of the impairment assessment of each of the vessel groups was performed as at December 31, 2022 and step two of the impairment analysis was required for one vessel group, as the undiscounted projected net operating cash flows did not exceed the carrying value. As a result, the Company recorded an impairment loss of $3,033 for one vessel group with a total aggregate carrying amount of $9,033 which was written down to its fair value of $6,000.

Collateral

As of September 30, 2023, 20 vessels were pledged as collateral under the 5.69% Senior Secured Notes due 2027 and 43 vessels under the Company’s loan facilities. Five vessels were unencumbered as of September 30, 2023.

Advances for vessels acquisitions and other additions

As of September 30, 2023, and December 31, 2022, there were no advances for vessel acquisitions, as all vessels had been delivered as at these dates. As of September 30, 2023, and December 31, 2022, the Company had advances for other vessel additions and ballast water treatment systems totalling $5,872 and $4,881, respectively.

4.
Intangible Liabilities – Charter Agreements

Intangible Liabilities – Charter Agreements as of September 30, 2023, and December 31, 2022, consisted of the following:

   
September 30,
2023
    
December 31,
2022
  
Opening balance
  
$
14,218
    
$
55,376
  
Disposals (*)
    
(476
)
    
-
  
Amortization
    
(6,563
)
    
(41,158
)
Total
  
$
7,179
    
$
14,218
  
 
(*) The unamortized portion of GSL Amstel intangible liability-charter agreement when vessel was sold on March 23, 2023.
 
Intangible liabilities are related to (i) acquisition of the Seven Vessels, the Twelve Vessels and the Four Vessels, and (ii) management’s estimate of the fair value of below-market charters on August 14, 2008, the date of the Marathon Merger (see note 1). These intangible liabilities are being amortized over the remaining life of the relevant lease terms and the amortization income is included under the caption “Amortization of intangible liabilities-charter agreements” in the interim unaudited condensed Consolidated Statements of Income.
 
Amortization income of intangible liabilities-charter agreements for each of the nine months ended September 30, 2023, and 2022 was $6,563 and $32,725 including related party amortization of intangible liabilities-charter agreements of $nil and $5,385 for each of the nine months ended September 30, 2023, and 2022, respectively.
 
F-17
Global Ship Lease, Inc.
 
Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

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

4.
Intangible Liabilities – Charter Agreements (continued)

The aggregate amortization of the intangible liabilities in each of the 12-month periods up to September 30, 2026, is estimated to be as follows:

   
Amount
  
September 30, 2024
  
$
6,041
  
September 30, 2025
    
1,003
  
September 30, 2026
    
135
  
   
$
7,179
  

The weighted average useful lives are 1.22 years for the remaining intangible liabilities-charter agreements terms.

5.
Derivative Asset
 
In December 2021, the Company purchased interest rate caps with an aggregate notional amount of $484,106, which amount reduces over time as the Company’s outstanding debt balances amortize. The objective of the hedges is to reduce the variability of cash flows associated with the interest relating to its variable rate borrowings. The Company receives payments on the caps for any period that the one-month USD LIBOR rate is above beyond the strike rate, which is 0.75%. The termination date of the interest rate cap agreements is November 30, 2026. The premium paid to purchase the interest caps was $7,000, which was paid out of cash on December 22, 2021. The premium is being amortized over the life of the interest rate cap by using the caplet method.
 
In February 2022, the Company further hedged its exposure to a potential rising interest rate environment by putting in place two USD one-month LIBOR interest rate caps of 0.75% through fourth quarter 2026, on $507,891 of its floating rate debt. The second interest rate cap was not designated as a cash flow hedge and therefore the negative fair value adjustment of $1,037 as at September 30, 2023 ($11,308 positive fair value adjustment as at September 30, 2022) was recorded through Interim Unaudited Condensed Consolidated Statements of Income. The premium paid by the Company to purchase the interest rate caps was $15,370, which was paid out of cash on the settlement date. ASC 815-20-25-13a stipulates that an entity may designate either all or certain future interest payments on variable-rate debt as the hedged exposure in a cash flow hedge relationship. In this case, the Company has designated only a portion of its outstanding debt (initially, $253,946) as the hedged item, and any interest payments beyond the notional amount of the interest rate cap in any given period are not designated as being hedged. Amount received from interest rate caps for each of the periods ended September 30, 2023, and 2022, was $24,380 and $3,247, respectively.

   
September 30,
2023
    
December 31,
2022
  
Opening balance
  
$
63,503
    
$
7,227
  
Derivative asset premium
    
-
      
15,370
  
Unrealized (loss)/gain on derivative assets
    
(5,611
)
    
31,221
  
Fair value adjustment on derivative asset
    
(1,037
)
    
9,685
  
Closing balance
  
$
56,855
    
$
63,503
  
Less: Current portion of derivative assets
    
(29,580
)
    
(29,645
)
Non-current portion of derivative assets
  
$
27,275
    
$
33,858
  

The amounts included in accumulated other comprehensive income will be reclassified to interest expense should the hedge no longer be considered effective. The Company assesses the effectiveness of the hedges on an ongoing basis. As of September 30, 2023, and December 31, 2022, following a quantitative assessment, part of the hedge was no longer considered effective and an amount of $80 and $1,091 was reclassified from other comprehensive income to the Consolidated Statements of Income. No amount of ineffectiveness was included in net income for the nine months ended September 30, 2022. The Company will continue to assess the effectiveness of the hedge on an ongoing basis.

F-18
Global Ship Lease, Inc.
 
Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

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

6.
Long-Term Debt

Long-term debt as of September 30, 2023 and December 31, 2022 consisted of the following:

Facilities
  
September 30,
2023
    
December 31, 2022
  
Macquarie loan (a)
  
$
71,000
    
$
-
  
2027 Secured Notes (b)
    
297,500
      
336,875
  
E.SUN, MICB, Cathay, Taishin Credit Facility (c)
    
33,000
      
46,500
  
Sinopac Credit Facility (d)
    
8,640
      
9,900
  
HCOB, CACIB, ESUN, CTBC, Taishin Credit Facility (e)
    
78,576
      
100,000
  
Deutsche Credit Facility (f)
    
41,208
      
44,695
  
HCOB Credit Facility (g)
    
28,756
      
40,794
  
CACIB, Bank Sinopac, CTBC Credit Facility (h)
    
40,225
      
44,050
  
Chailease Credit Facility (i)
    
2,866
      
3,852
  
Syndicated Senior Secured Credit Facility (CACIB, ABN, First-Citizens & Trust Company, Siemens, CTBC, Bank Sinopac, Palatine) (j)
    
157,200
      
181,200
  
Total credit facilities
  
$
758,971
    
$
807,866
  
Sale and Leaseback Agreement CMBFL - $120,000 (k)
    
70,788
      
89,838
  
Sale and Leaseback Agreement CMBFL - $54,000 (l)
    
36,909
      
41,850
  
Sale and Leaseback Agreement - Neptune $14,735 (m)
    
7,590
      
9,971
  
Total Sale and Leaseback Agreements
  
$
115,287
    
$
141,659
  
Total borrowings
  
$
874,258
    
$
949,525
  
Less: Current portion of long-term debt
    
(168,487
)
    
(155,424
)
Less: Current portion of Sale and Leaseback Agreements (k,l,m)
    
(32,139
)
    
(34,408
)
Less: Deferred financing costs (s)
    
(12,161
)
    
(15,136
)
Non-current portion of Long-Term Debt
  
$
661,471
    
$
744,557
  
 
a)
Macquarie Credit Facility

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

All four tranches were drawdown in the second quarter of 2023 and the credit facility has a maturity in May 2026.
 
The facility is repayable in two equal consecutive quarterly instalments of $5,000, six equal consecutive quarterly instalments of $6,000 and one quarterly instalments of $3,000 and two equal consecutive quarterly instalments of $1,000 with a final balloon of $25,000 payable three years after the first utilisation date.
 
This facility’s interest rate is SOFR plus a margin of 3.50% per annum payable quarterly in arrears.
 
As of September 30, 2023, the outstanding balance of this facility was $71,000.

b)
5.69% Senior Secured Notes due 2027

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

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

F-19
Global Ship Lease, Inc.
 
Notes to the Interim Unaudited Condensed Consolidated Financial Statements (continued)

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

6.
Long-Term Debt (continued)
 
b)
5.69% Senior Secured Notes due 2027 (continued)

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

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

As of September 30, 2023, the outstanding balance of this facility was $297,500.
 
c)
$60.0 Million E.SUN, MICB, Cathay, Taishin Credit Facility
 
On December 30, 2021, the Company via its subsidiaries Zeus One Marine LLC, Hephaestus Marine LLC and Pericles Marine LLC, entered into a new syndicated senior secured debt facility with E.SUN Commercial Bank Ltd (“E.SUN”), Cathay United Bank (“Cathay”), Mega International Commercial Bank Co. Ltd (“MICB”) and Taishin International Bank (“Taishin”). The Company using a portion of the net proceeds from this credit facility fully prepaid the outstanding amount of the Blue Ocean Junior Credit facility, amounting to $26,205 plus a prepayment fee of $3,968. All three tranches were drawn down in January 2022.
 
The facility is repayable in eight equal consecutive quarterly instalments of $4,500 and ten equal consecutive quarterly instalments of $2,400.
 
This facility’s interest rate is SOFR plus a margin of 2.75% per annum plus Credit Adjustment Spread (“CAS”) payable quarterly in arrears.

As of September 30, 2023, the outstanding balance of this facility was $33,000.

d) $12.0 Million Sinopac Capital International Credit Facility
 
On August 27, 2021, the Company via its subsidiary Global Ship Lease 42 LLC entered into a secured credit facility for an amount of $12,000 with Sinopac Capital International (HK) Limited (“Sinopac Credit Facility”), partially used to fully refinance the Hayfin Credit Facility. The full amount was drawn down in September 2021 and the credit facility has a maturity in September 2026.
 
The facility is repayable in 20 equal consecutive quarterly instalments of $420 with a final balloon of $3,600 payable together with the final instalment.
 
This facility’s interest rate is SOFR plus a margin of 3.25% per annum payable quarterly in arrears.
 
As of September 30, 2023, the outstanding balance of this facility was $8,640.

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

On July 6, 2021, the Company entered into a facility with Credit Agricole Corporate and Investment Bank (“CACIB”), Hamburg Commercial Bank AG (“HCOB”), E.Sun Commercial Bank, Ltd (“ESUN”), CTBC Bank Co. Ltd. (“CTBC”) and Taishin International Bank (“Taishin”) for a total of $140,000 to finance the acquisition of the Twelve Vessels. The full amount was drawdown in July 2021 and the credit facility has a maturity in July 2026.
 
The facility is repayable in six equal consecutive quarterly instalments of $8,000, eight equal consecutive quarterly instalments of $5,400 and six equal consecutive quarterly instalments of $2,200 with a final balloon of $35,600 payable together with the final instalment. On March 23, 2023, due to the sale of GSL Amstel, the Company additionally repaid $2,838 out of which $1,000 deducted from the balloon instalment, and the vessel was released as collateral under the Company’s $140,000 HCOB, CACIB, ESUN, CTBC, Taishin Credit Facility.

F-20
Global Ship Lease, Inc.

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

(Expressed in thousands of U.S. dollars except share data)
 
6.
Long-Term Debt (continued)
 
e)
$140.0 Million HCOB, CACIB, ESUN, CTBC, Taishin Credit Facility (continued)
 
This facility’s interest rate is SOFR plus a margin of 3.25% per annum plus Credit Adjustment Spread (“CAS”) payable quarterly in arrears.
 
As of September 30, 2023, the outstanding balance of this facility was $78,576.
 
f)
$51.7 Million Deutsche Bank AG Credit Facility
 
On May 6, 2021, the Company via its subsidiary Laertis Marine LLC entered into a secured facility for an amount of $51,670 with Deutsche Bank AG in order to refinance one of the three previous tranches of the $180,500 Deutsche, CIT, HCOB, Entrust, Blue Ocean Credit Facility, that had a maturity date on June 30, 2022, of an amount $48,527.
 
The facility is repayable in 20 equal consecutive quarterly instalments of $1,162.45 with a final balloon of $28,421 payable together with the final instalment.
 
This facility bears interest at SOFR plus a margin of 3.25% per annum payable quarterly in arrears.
 
As of September 30, 2023, the outstanding balance of this facility was $41,208.
 
g)
$64.2 Million Hamburg Commercial Bank AG Credit Facility

On April 15, 2021, the Company entered into a Senior Secured term loan facility with Hamburg Commercial Bank AG “the HCOB Credit Facility” for an amount of up to $64,200 in order to finance the acquisition of six out of the Seven Vessels.
 
Tranche A, E and F amounting to $32,100 were drawn down in April 2021 and have a maturity date in April 2025, Tranche B and D amounting to $21,400 were drawn down in May 2021 and have a maturity date in May 2025, and Tranche C amounting to $10,700 was drawn down in July 2021 and has a maturity date in July 2025.
 
Each Tranche of the facility is repayable in 16 equal consecutive quarterly instalments of $668.75.
 
This facility bears interest at SOFR plus a margin of 3.50% per annum payable quarterly in arrears.
 
As of September 30, 2023, the outstanding balance of this facility was $28,756.
 
h)
$51.7 Million CACIB, Bank Sinopac, CTBC Credit Facility
 
On April 13, 2021, the Company via its subsidiary Penelope Marine LLC entered into a secured facility for an amount of $51,700 in order to refinance one of the three previous tranches of the $180,500 Deutsche, CIT, HCOB, Entrust, Blue Ocean Credit Facility, that had a maturity date on June 30, 2022, of an amount $48,648. The secured credit facility has a maturity in April 2026.
 
The lenders are Credit Agricole Corporate and Investment Bank (“CACIB”), Bank Sinopac Co. Ltd. (“Bank Sinopac”) and CTBC Bank Co. Ltd. (“CTBC”).
 
The facility is repayable in 20 equal consecutive quarterly instalments of $1,275 with a final balloon of $26,200 payable together with the final instalment.

This facility bears interest at SOFR plus a margin of 2.75% per annum plus CAS payable quarterly in arrears.
 
As of September 30, 2023, the outstanding balance of this facility was $40,225.

F-21
Global Ship Lease, Inc.

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

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

6.
Long-Term Debt (continued)

i)
$9.0 Million Chailease Credit Facility
 
On February 26, 2020, the Company via its subsidiaries, Athena Marine LLC, Aphrodite Marine LLC and Aris Marine LLC entered into a secured term facility agreement with Chailease International Financial Services Pte., Ltd. for an amount of $9,000. The Chailease Bank Facility was used for the refinance of DVB Credit Facility.
 
The facility is repayable in 36 consecutive monthly instalments $156 and 24 monthly instalments of $86 with a final balloon of $1,314 payable together with the final instalment.
 
This facility bears interest at SOFR plus a margin of 4.20% per annum.
 
As of September 30, 2023, the outstanding balance of this facility was $2,866.
 
j)
$268.0 Million Syndicated Senior Secured Credit Facility (CACIB, ABN, First-Citizens & Trust Company, Siemens, CTBC, Bank Sinopac, Palatine)
 
On September 19, 2019, the Company entered into a Syndicated Senior Secured Credit Facility in order to refinance existing credit facilities that had a maturity date in December 2020, of an amount $224,310.
 
The Senior Syndicated Secured Credit Facility was agreed to be borrowed in two tranches. The Lenders are Credit Agricole Corporate and Investment Bank (“CACIB”), ABN Amro Bank N.V. (“ABN”), First-Citizens & Trust Company, Siemens Financial Services, Inc (“Siemens”), CTBC Bank Co. Ltd. (“CTBC”), Bank Sinopac Ltd. (“Bank Sinopac”) and Banque Palatine (“Palatine”).
 
Tranche A amounting to $230,000 was drawn down in full on September 24, 2019 and is scheduled to be repaid in 20 consecutive quarterly instalments of $5,200 starting from December 12, 2019 and a balloon payment of $126,000 payable on September 24, 2024.
 
Tranche B amounts to $38,000 was drawn down in full on February 10, 2020 and is scheduled to be repaid in 20 consecutive quarterly instalments of $1,000 and a balloon payment of $18,000 payable in the termination date on the fifth anniversary from the utilization date of Tranche A, which falls in September 24, 2024. In January 2022, the Company agreed a new senior secured debt facility to refinance its outstanding Syndicated Senior Secured Credit Facility, which extended the maturity date from September 2024 to December 2026, amended certain covenants in the Company’s favor at an unchanged rate of LIBOR + 3.00%. On July 1, 2022, the interest rate is SOFR plus a margin of 3.00% plus CAS and is payable at each quarter end date.
 
As of September 30, 2023, the outstanding balance of this facility was $157,200.

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

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

Each sale and leaseback agreement is repayable in 12 equal consecutive quarterly instalments of $1,587.5 and 12 equal consecutive quarterly instalments of $329.2 with a repurchase obligation of $7,000 on the final repayment date.
 
The sale and leaseback agreements for the three vessels mature in September 2027 and for the fourth vessel in October 2027 and bear interest at SOFR plus a margin of 3.25% per annum plus CAS payable quarterly in arrears.
 
As of September 30, 2023, the outstanding balance of these sale and lease back agreements was $70,788.

F-22
Global Ship Lease, Inc.

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

(Expressed in thousands of U.S. dollars except share data)
 
6.
Long-Term Debt (continued)

l)
$54.0 Million Sale and Leaseback agreement - CMBFL
 
On May 20, 2021, the Company via its subsidiary Telemachus Marine LLC entered into a $54,000 sale and leaseback agreement with CMB Financial Leasing Co. Ltd. (“CMBFL”) to refinance one of the three previous tranches of the $180,500 Deutsche, CIT, HCOB, Entrust, Blue Ocean Credit Facility, that had a maturity date on June 30, 2022, of an amount $46,624. The Company has a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transaction has been accounted for as a failed sale. In accordance with ASC 842-40, the Company did not derecognize the respective vessel from its balance sheet and accounted for the amount received under the sale and leaseback agreement as a financial liability.
 
The sale and leaseback agreement will be repayable in eight equal consecutive quarterly instalments of $2,025 each and 20 equal consecutive quarterly instalments of $891 with a repurchase obligation of $19,980 on the final repayment date.
 
The sale and leaseback agreement matures in May 2028 and bears interest at SOFR plus a margin of 3.25% per annum plus CAS payable quarterly in arrears.
 
In May 2021, on the actual delivery date of the vessel, the Company drew $54,000, which represented vessel purchase price $75,000 less advanced hire of $21,000, which advanced hire neither bore any interest nor was refundable and was set off against payment of the purchase price payable to the Company by the unrelated third party under this agreement.
 
As of September 30, 2023, the outstanding balance of this sale and leaseback agreement was $36,909.
 
m)
$14.7 Million Sale and Leaseback agreement - Neptune Maritime Leasing
 
On May 12, 2021, the Company via its subsidiary GSL Violetta LLC entered into a $14,735 sale and leaseback agreement with Neptune Maritime Leasing (“Neptune”) to finance the acquisition of GSL Violetta delivered in April 2021. The Company has a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transaction has been accounted for as a failed sale. In accordance with ASC 842-40, the Company did not derecognize the respective vessel from its balance sheet and accounted for the amount received under the sale and leaseback agreement as a financial liability. In May 2021, the Company drew $14,735 under this agreement.
 
The sale and leaseback agreement will be repayable in 15 equal consecutive quarterly instalments of $793.87 each and four equal consecutive quarterly instalments of $469.12 with a repurchase obligation of $950 on the last repayment date.
 
The sale and leaseback agreement matures in February 2026 and bears interest at SOFR plus a margin of 4.64% per annum payable quarterly in arrears.

As of September 30, 2023, the outstanding balance of this sale and leaseback agreement was $7,590.

n)
$236.2 Million Senior secured loan facility with Hayfin Capital Management, LLP

On January 7, 2021, the Company entered into the New Hayfin Credit Facility amounting to $236,200, and on January 19, 2021, the Company drew down the full amount under this facility. The proceeds from the New Hayfin Credit Facility, along with cash on hand, were used to optionally redeem in full the outstanding 2022 Notes on January 20, 2021. The New Hayfin Credit Facility matured in January 2026 and bore interest at a rate of LIBOR plus a margin of 7.00% per annum. It was repayable in twenty quarterly instalments of $6,560, along with a balloon payment at maturity. The New Hayfin Credit Facility was secured by, among other things, first priority ship mortgages over 21 of the Company’s vessels, assignments of earnings and insurances of the mortgaged vessels, pledges over certain bank accounts, as well as share pledges over the equity interests of each mortgaged vessel-owning subsidiary. On June 30, 2021, due to the sale of La Tour, the Company additionally repaid $5,831, and the vessel was released as collateral under the Company’s New Hayfin Credit Facility. On June 16, 2022, the Company used a portion of the proceeds from the private placement for the full prepayment of the remaining outstanding balance $197,569 plus a prepayment fee of $11,229.

As of September 30, 2023, the outstanding balance of this facility was $nil.

F-23
Global Ship Lease, Inc.

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

(Expressed in thousands of U.S. dollars except share data)
 
6.
Long-Term Debt (continued)

o)
Redemption of 8.00% Senior Unsecured Notes due 2024

On November 19, 2019, the Company completed the sale of $27,500 aggregate principal amount of its 8.00% Senior Unsecured Notes (the “2024 Notes”) which matured on December 31, 2024. On November 27, 2019, the Company sold an additional $4,125 of 2024 Notes, pursuant the underwriter’s option to purchase such additional 2024 Notes. Interest on the 2024 Notes was payable on the last day of February, May, August and November of each year commencing on February 29, 2020.

The Company had the option to redeem the 2024 Notes for cash, in whole or in part, at any time (i) on or after December 31, 2021 and prior to December 31, 2022, at a price equal to 102% of the principal amount, (ii) on or after December 31, 2022 and prior to December 31, 2023, at a price equal to 101% of the principal amount and (iii) on or after December 31, 2023 and prior to maturity, at a price equal to 100% of the principal amount.

On November 27, 2019, the Company entered into an “At Market Issuance Sales Agreement” with B. Riley FBR, Inc. (the “Agent”) under which and in accordance with the Company’s instructions, the Agent could offer and sell from time to time newly issued 2024 Notes.

In July 2021, the Company agreed to purchase the Twelve Vessels for an aggregate purchase price of $233,890, part of which was financed by the issuance of $35,000 2024 Notes to the sellers. The remaining purchase price was financed by cash on hand and a new syndicated credit facility for a total of $140,000 (see note 6e).

On April 5, 2022, the Company completed the partial redemption of $28,500 aggregate principal amount of the Notes (the “Redeemed Notes”) at a redemption price equal to 102.00% of the principal amount thereof plus accrued and unpaid interest. Upon completion of the redemption the outstanding aggregate principal amount of the 2024 Notes was $89,020. On July 15, 2022, the 2024 Notes were fully repaid by the Company using a portion of the net proceeds from the private placement of $350,000 aggregate principal amount of its 2027 Secured Notes, pursuant to a note purchase agreement, dated June 14, 2022. Total loss on redemption was $2,350 and was recorded within the Consolidated Statements of Income for the year ended December 31, 2022, in line “Interest and other finance expenses”.

As of September 30, 2023, the outstanding aggregate principal amount of the 2024 notes was $nil.

p)
$38.5 Million Blue Ocean Junior Credit Facility
 
On September 19, 2019, the Company entered into a refinancing agreement with Blue Ocean Income Fund LP, Blue Ocean Onshore Fund LP, and Blue Ocean Investments SPC Blue, holders of the outstanding debt of $38,500 relevant to the previous Blue Ocean Credit Facility in order to refinance that existing facility with the only substantive change being to extend maturity at the same date with the Syndicated Senior Secured Credit Facility.

The Company fully drew down the facility on September 23, 2019, and it was scheduled to be repaid in a single instalment on the termination date which fell on September 24, 2024. This facility bore interest at 10.00% per annum.

During the year ended December 31, 2021, the Company used a portion of the net proceeds from the at-the-market issuance programs to prepay an amount of $12,295 under this facility plus a prepayment fee of $1,618.

On January 19, 2022, the Company used a portion of the net proceeds from the new facility agreement entered on December 30, 2021, with E.SUN, MICB, Cathay, Taishin, to fully prepay the amount of $26,205 under this facility, plus a prepayment fee of $3,968.

As of September 30, 2023, the outstanding balance of this facility was $nil.

F-24
Global Ship Lease, Inc.

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

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

6.
Long-Term Debt (continued)

q)
$59.0 Million Hellenic Bank Credit Facility
 
On May 23, 2019, the Company via its subsidiaries, Global Ship Lease 30, 31 and 32 entered into a facility agreement with Hellenic Bank for an amount up to $37,000. Borrowings under the Hellenic Bank Facility were available in tranches and were used in connection with the acquisition of the vessels GSL Eleni, GSL Grania and GSL Kalliopi.
 
An initial tranche of $13,000 was drawn on May 24, 2019, in connection with the acquisition of the GSL Eleni. The Facility was repayable in 20 equal quarterly instalments of $450 each with a final balloon of $4,000 payable together with the final instalment.
 
A second tranche of $12,000 was drawn on September 4, 2019, in connection with the acquisition of GSL Grania. The Facility was repayable in 20 equal quarterly instalments of $400 each with a final balloon of $4,000 payable together with the final instalment.
 
The third tranche of $12,000 was drawn on October 3, 2019, in connection with the acquisition of GSL Kalliopi. The Facility was repayable in 20 equal quarterly instalments of $400 each with a final balloon of $4,000 payable together with the final instalment.
 
On December 10, 2019, the Company via its subsidiaries Global Ship Lease 33 and 34 entered into an amended and restated loan agreement with Hellenic Bank for an additional facility of amount $22,000 that was to be borrowed in two tranches and to be used in connection with the acquisition of the vessels GSL Vinia and GSL Christel Elisabeth. Both tranches were drawn on December 10, 2019, and were each repayable in 20 equal quarterly instalments of $375 each with a final balloon of $3,500 payable together with the final instalment.
 
This facility bore interest at LIBOR plus a margin of 3.90% per annum.
 
On June 24, 2022, the Hellenic Bank credit Facility was fully prepaid by the Company using a portion of the net proceeds from the private placement of $350,000 aggregate principal amount of its 2027 Secured Notes, pursuant to a note purchase agreement, dated June 14, 2022.
 
As of September 30, 2023, the outstanding balance of this facility was $nil.
 
r)
Repayment Schedule
 
Maturities of long-term debt for the periods subsequent to September 30, 2023, are as follows:

Payment due by period ended
  
Amount
  
September 30, 2024
    
200,626
  
September 30, 2025
    
158,579
  
September 30, 2026
    
231,540
  
September 30, 2027
    
253,531
  
September 30, 2028 and thereafter
    
29,982
  
   
$
874,258
  

s)
Deferred Financing Costs

   
September 30,
2023
    
December 31,
2022
  
Opening balance
  
$
15,136
    
$
16,714
  
Expenditure in the period
    
1,140
      
9,655
  
Amortization included within interest expense
    
(4,115
)
    
(11,233
)
Closing balance
  
$
12,161
    
$
15,136
  
 
During 2023, total costs amounting to $1,140 were incurred in connection with the Macquarie Credit Facility (see note 6a).

F-25
Global Ship Lease, Inc.

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

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

6.
Long-Term Debt (continued)
 
s)
Deferred Financing Costs (continued)

During 2022, total costs amounting to $1,066 were incurred in connection with the Syndicated Senior Secured Credit facility (see note 6j), $1,180 in connection with E.SUN, MICB, Cathay, Taishin credit facility (see note 6c) and $7,409 in connection with the 2027 Secured Notes (see note 6b).

For the periods ended September 30, 2023, and 2022, the Company recognized a total of $4,115 and $9,751, respectively, in respect of amortization of deferred financing costs.

t)
Debt covenants-securities

Amounts owned under the credit facilities and 2027 Secured Notes listed above are secured by first priority mortgages on certain of the Company’s vessels and other collateral. The agreements governing our indebtedness contain a number of restrictive covenants that limit the Company from, among other things: incurring or guaranteeing indebtedness; charging, pledging or encumbering the applicable collateral vessels; and changing the flag, class, management or ownership of the vessel owning entities. The agreements governing our indebtedness also require the applicable collateral vessels to comply with the ISM Code and ISPS Code and to maintain valid safety management certificates and documents of compliance at all times. Additionally, specific agreements governing our indebtedness require compliance with a number of financial covenants including asset cover ratios and minimum liquidity and corporate guarantor requirements. Among other events, it will be an event of default under such agreement if the financial covenants are not complied with or remedied.

As of September 30, 2023, and December 31, 2022, the Company was in compliance with its debt covenants.

7.
Related Party Transactions
 
CMA CGM was presented as a related party as it was a shareholder, owning Class A common shares of the Company. As of May 27, 2022, CMA CGM following the sale of its shares, is not anymore Company’s shareholder. Related party revenue and expenses recorded on Interim Unaudited Condensed Consolidated Statements of Income for CMA CGM are up to May 27, 2022.
 
Time Charter Agreements
 
A number of the Company’s time charter arrangements were with CMA CGM, representing 14.94% of gross revenues for the nine months period ended September 30, 2022. Under these time charters, hire was payable in advance and the daily rate is fixed for the duration of the charter. Revenues generated from charters to CMA CGM are disclosed separately in the interim unaudited condensed Consolidated Statements of Income.
 
Ship Management Agreements

Technomar Shipping Inc. (“Technomar”) is presented as a related party, as the Company’s Executive Chairman is a significant shareholder. The Company has currently a number of ship management agreements with Technomar under which the ship manager is responsible for all day-to-day ship management, including crewing, purchasing stores, lubricating oils and spare parts, paying wages, pensions and insurance for the crew, and organizing other ship operating necessities, including the arrangement and management of dry-docking. As of December 31, 2022, Technomar provided all day-to-day technical ship management services for all but five (excluding GSL Amstel which was sold in March 23, 2023) of the Twelve Vessels. Management agreements of another third-party ship manager of these five vessels were terminated between May and July 2023. From that dates and onwards Technomar manages the five vessels. The management fees charged to the Company by third party managers for the nine months ended September 30, 2023, and 2022, amounted to $981 and $1,114, respectively, and are shown in “Vessels operating expenses” in the interim unaudited condensed Consolidated Statements of Income. Technomar continued to supervise management for the five outsourced vessels up to the termination of the underlying management agreements between May and July 2023.

The management fees charged to the Company by Technomar for the nine months ended September 30, 2023, amounted to $14,072 (nine months ended September 30, 2022 - $12,686) and are shown under “Vessels operating expenses-related parties” in the interim unaudited condensed Consolidated Statements of Income. Additionally, as of September 30, 2023, outstanding receivables due from Technomar totaling $617 are presented under “Due from related parties” (December 31, 2022 - $673).

F-26
Global Ship Lease, Inc.

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

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

7.
Related Party Transactions (continued)
 
Ship Management Agreements (continued)
 
Conchart Commercial Inc. (“Conchart”) provides commercial management services to the Company pursuant to commercial management agreements. The Company’s Executive Chairman is the sole beneficial owner of Conchart. Under the management agreements, Conchart, is responsible for (i) marketing of the Company’s vessels, (ii) seeking and negotiating employment of the Company’s vessels, (iii) advise the Company on market developments, developments of new rules and regulations, (iv) assisting in calculation of hires, freights, demurrage and/or dispatch monies and collection any sums related to the operation of vessels, (v) communicating with agents, and (vi) negotiating sale and purchase transactions. For the 19 vessels that the Company acquired as a result of the Poseidon Transaction, excluding the Argos, the agreements were effective from the date of the completion of the Poseidon Transaction; for the 19 vessels that were owned by the Company prior to the consummation of the Poseidon Transaction until the refinancing of 2022 Notes which took place on January 2021, an EBSA agreement was in place that was terminated and replaced with commercial management agreements also same agreements applied to all vessels that have been delivered; for all new acquired vessels during 2019 and going forward, the agreements were effective upon acquisition.
 
The fees charged to the Company by Conchart for the nine months ended September 30, 2023, amounted to $5,801 (nine months ended September 30, 2022: $4,646) and are disclosed within “Time charter and voyage expenses-related parties” in the interim unaudited condensed Consolidated Statements of Income. Any outstanding fees due to Conchart are presented in the interim unaudited condensed Consolidated Balance Sheets under "Due to related parties" totaling to $516, and $572 as of September 30, 2023, and December 31, 2022, respectively.
 
The Company as per commercial management agreements has agreed to pay to the commercial manager who shall be named broker in each memorandum of agreement (or equivalent agreement) providing for the sale of all vessels and purchase of some vessels, a commission of 1.00% based on the sale and purchase price for any sale and purchase of a vessel, which shall be payable upon request of the commercial manager.

8.
Commitments and Contingencies
 
Charter Hire Receivable
 
The Company has entered into time charters for its vessels. The charter hire is fixed for the duration of the charter. The minimum contracted future charter hire receivable, net of address commissions, not allowing for any unscheduled off-hire, assuming expiry at earliest possible dates and assuming options callable by the Company included in the charters are not exercised, for the 68 vessels as at September 30, 2023 is as follows:

Period ending
  
Amount
  
September 30, 2024
  
$
640,926
  
September 30, 2025
    
412,244
  
September 30, 2026
    
253,415
  
September 30, 2027
    
200,500
  
Thereafter
    
163,626
  
Total minimum lease revenue, net of address commissions
  
$
1,670,711
  

9.
Share Capital
 
Common shares
 
As of September 30, 2023, the Company has one class of Class A common shares and 35,192,029 such shares were outstanding.

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

F-27
Global Ship Lease, Inc.

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

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

9.
Share Capital (continued)
 
Common shares (continued)
 
During the nine months ended September 30, 2023, 356,462 Class A common shares were issued under the 2019 Plan.
 
In April 2022, September 2022 and October 2022, the Company repurchased 184,684, 568,835 and 307,121 Class A common shares, respectively, reducing the issued and outstanding shares. During nine-months ended September 30, 2023, the Company repurchased 1,154,721 Class A common shares. As at September 30, 2023, the Company had 35,192,029 Class A common shares outstanding.
 
Preferred shares
 
On August 20, 2014, the Company issued 1,400,000 Depositary Shares (the “Depositary Shares”), each of which represents 1/100th of one share of the Company’s 8.75% Series B Cumulative Perpetual Preferred Shares (“Series B Preferred Shares”) representing an interest in 14,000 Series B Preferred Shares, par value $0.01 per share, with a liquidation preference of $2,500.00 per share (equivalent to $25.00 per Depositary Share) (NYSE:GSL-B), priced at $25.00 per Depositary Share. The net proceeds from the offering were $33,497. Dividends are payable at 8.75% per annum in arrears on a quarterly basis. At any time after August 20, 2019 (or within 180 days after the occurrence of a fundamental change), the Series B Preferred Shares may be redeemed, at the discretion of the Company, in whole or in part, at a redemption price of $2,500.00 per share (equivalent to $25.00 per depositary share).
 
These shares are classified as Equity in the interim unaudited condensed Consolidated Balance Sheets. The dividends payable on the Series B Preferred Shares are presented as a reduction of Retained Earnings in the interim unaudited condensed Consolidated Statements of Changes in Shareholders’ Equity, when and if declared by the Board of Directors. An initial dividend was declared on September 22, 2014, for the third quarter 2014. Dividends have been declared for all subsequent quarters.
 
On December 10, 2019, the Company entered into At Market Issuance Sales Agreement with B. Riley FBR under which the Company may, from time to time, issue additional Depositary Shares. Pursuant to the Depositary Share ATM Program, in 2019, the Company issued 42,756 Depositary Shares (representing an interest in 428 Series B Preferred Shares) for net proceeds net of offering costs of $856. During year ended December 31, 2020, the Company issued 839,442 Depositary Shares (representing an interest in 8,394 Series B Preferred Shares) for net proceeds net of offering costs of $18,847. During the year ended December 31, 2021, the Company issued 2,076,992 Depositary Shares for net proceeds net of offering costs of $51,234.
 
On December 29, 2022, the Company entered into a new At Market Issuance Sales Agreement with B. Riley Securities, Inc. (the “Agent”), pursuant to which the Company may offer and sell, from time to time, up to $150,000,000 of its Depositary Shares. This new ATM Agreement terminated and replaced, in its entirety, the former at-the-market program that the Company had in place with the Agent for the Depositary Shares. Up to September 30, 2023, no sales had occurred under the new ATM Agreement.
As of September 30, 2023, there were 4,359,190 Depositary Shares outstanding, representing an interest in 43,592 Series B Preferred Shares.

10.
Share-Based Compensation

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

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

F-28
Global Ship Lease, Inc.

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

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

10.
Share-Based Compensation (continued)

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

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

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

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

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

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

In March 2023, the Compensation Committee and the Board of Directors, approved an amendment to the stock-based awards agreed in September 2021 for senior management and non-employee directors such that 10% of the second tranche would be forfeit with the remaining 90% vesting from April 2023 and quarterly thereafter with the last such vesting to be October 2025.  The price at which the third tranche is to vest was amended to $21.00, over a 60-day period. All other terms of the awards remain unchanged.
 
In the nine months ended September 30, 2023, and, in the years ended December 31, 2022, and 2021, 324,941, 218,366 and 55,175 incentive shares vested, respectively, under the amended September 2021 awards.
 
A total of 2,037,202 incentive shares under both plans had vested as at September 30, 2023. Of the total incentive shares which vested under both plans up to September 30, 2023, 162,048 had not been issued.
 
F-29
Global Ship Lease, Inc.

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

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

10.
Share-Based Compensation (continued)
 
Share based awards since January 1, 2022, are summarized as follows:

   
Restricted Stock Units
  
   
Number of Units
  
   
Number
    
Weighted Average
Fair Value
on Grant Date
    
Actual Fair
Value on
Vesting Date
  
Unvested as at January 1, 2022
    
1,549,825
    
$
22.35
      
n/a
  
Vested in year ended December 31, 2022
    
(218,366
)
    
n/a
      
19.36
  
Cancelled in May 2022
    
(14,748
)
    
n/a
      
n/a
  
Unvested as at December 31, 2022
    
1,316,711
    
$
22.35
      
n/a
  
Vested in nine months ended September 30, 2023
    
(324,941
)
    
n/a
      
18.65
  
Forfeit in March 2023
    
(35,771
)
    
n/a
      
n/a
  
Unvested as at September 30, 2023
    
955,999
    
$
22.35
      
n/a
  

Using the graded vesting method of expensing the restricted stock unit grants, the weighted average fair value of the stock units is recognized as compensation costs in the interim unaudited condensed Consolidated Statements of Income over the vesting period. The fair value of the restricted stock units for this purpose is calculated by multiplying the number of stock units by the fair value of the shares at the grant date. The Company has not factored any anticipated forfeiture into these calculations based on the limited number of participants. For the nine months ended September 30, 2023, and 2022, the Company recognized a total of $7,684 (includes $451 effect from the amendment to the stock-based awards) and $7,882, respectively, in respect of stock-based compensation.

11.
Earnings per Share
 
Under the two-class method, net income, if any, is first reduced by the amount of dividends declared in respect of common shares for the current period, if any, and the remaining earnings are allocated to common shares and participating securities to the extent that each security can share the earnings assuming all earnings for the period are distributed.
 
Earnings are only allocated to participating securities in a period of net income if, based on the contractual terms, the relevant common shareholders have an obligation to participate in such earnings. As a result, earnings are only be allocated to the Class A common shareholders.

At September 30, 2023 and December 31, 2022, there were 955,999 and 1,316,711, respectively, shares of incentive share grants unvested as part of senior management’s and non-executive directors incentive awards approved on September 29, 2021.

   
Nine months ended
September 30,
  
   
2023
    
2022
  
Numerator:
            
Net income available to common shareholders:
  
$
230,299
    
$
210,768
  
Class A, basic and diluted
                
                 
Denominator:
                
Class A Common shares
                
Basic weighted average number of common shares outstanding
    
35,473,382
      
36,649,874
  
Plus weighted average number of RSUs with service conditions
    
598,250
      
655,870
  
Common share and common share equivalents, dilutive
    
36,071,632
      
37,305,744
  
                 
Basic earnings per share:
                
Class A
    
6.49
      
5.75
  
                 
Diluted earnings per share:
                
Class A
    
6.38
      
5.65
  
 
F-30
Global Ship Lease, Inc.

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

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

12.
Subsequent events

From October 1, 2023 and up to November 9, 2023, the Company repurchased a total of 87,942 Class A common shares for a total purchase price of $1,550.
 
On November 9, 2023, the Company announced a dividend of $0.375 per Class A common share from the earnings of the third quarter of 2023 to be paid on December 4, 2023, to common shareholders of record as of November 24, 2023.
 

F-31