DIAMOND S SHIPPING INC. Item 1.01 Entry Into a Material Definitive Agreement
Merger Agreement
On
The board of directors of each of Diamond S and INSW have unanimously approved the Merger Agreement and the transactions contemplated thereby.
Merger Consideration
Subject to the terms and conditions set forth in the Merger Agreement, at the
effective time of the Merger (the "Effective Time"), each common share of
Diamond S (the "Diamond S Common Shares") issued and outstanding immediately
prior to the Effective Time (excluding Diamond S Common Shares owned by Diamond
S, INSW, Merger Sub or any of their respective direct or indirect wholly owned
subsidiaries) will be converted into the right to receive 0.55375 of a share of
common stock of INSW ("INSW Common Stock"). The aforementioned 0.55375 exchange
ratio set forth in the Merger Agreement will result in INSW shareholders owning
approximately 55.75% of the outstanding shares of INSW Common Stock following
the Effective Time and Diamond S shareholders owning approximately 44.25% of the
outstanding shares of INSW Common Stock following the Effective Time. Prior to
the Effective Time, INSW is permitted to pay a special dividend to its
shareholders in an aggregate amount equal to
Governance
The Merger Agreement provides that INSW will have a board of directors (the "INSW Board") consisting initially of ten (10) directors comprised of (i) a chairman, designated by INSW, (ii) six (6) additional directors, designated by INSW that are reasonably acceptable to Diamond S and (iii) three (3) additional directors, designated by Diamond S that are reasonably acceptable to INSW. In connection with the Merger, the Capital Shareholders (as defined below) and the WL Ross Shareholders (as defined below) agreed to terminate their existing director designation agreements with Diamond S.
INSW and Diamond S will establish an integration planning committee (the "Integration Committee"), consisting of three (3) individuals designated by INSW that are reasonably acceptable to Diamond S and two (2) individuals designated by Diamond S that are reasonably acceptable to INSW. INSW and Diamond S will each appoint one (1) of its designees to serve as co-chairman of the Integration Committee.
Debt
In connection with the Merger, lenders under Diamond S' existing credit facilities agreed, among other things, to consent to the Merger and waive any event of default that would arise as a result of the Merger. Lenders under Diamond S' two existing facilities entered into in 2019 have also agreed to enter into amended and restated credit agreements (the "A&R Debt Agreements") to amend the terms of such credit facilities to more closely mirror the terms of INSW's credit facilities.
Conditions to the Merger
The completion of the Merger is subject to the satisfaction or waiver of certain
conditions, including (i) the authorization of the Merger Agreement by the
affirmative vote of the holders of a majority of all outstanding shares of
Diamond S Common Shares entitled to vote thereon? (ii) the authorization of the
INSW shares to be issued as merger consideration in the Merger by the
affirmative vote of the holders of a majority of the shares of INSW Common Stock
present and entitled to vote thereon? (iii) the expiration or termination of the
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act? (iv) the
absence of any law or order preventing the consummation of the Merger? (v) the
effectiveness of a registration statement on Form S-4 in connection with the
issuance of INSW Common Stock as merger consideration, which will include a
prospectus and a joint proxy statement relating to the INSW special shareholder
meeting to approve the issuance of INSW Common Stock as merger consideration and
the Diamond S special shareholder meeting to approve the Merger (the "Form S-4")
and absence of any stop order or proceedings by the
Certain Other Terms of the Merger Agreement
The Merger Agreement contains customary representations and warranties made by each of Diamond S and INSW that are generally mutual, and also contains customary pre-closing covenants, including covenants, among others, (i) to operate its businesses in the ordinary course consistent with past practice and to refrain from taking certain actions without the other party's consent, (ii) not to solicit, initiate or knowingly encourage or knowingly facilitate any inquiry, proposal or offer, and, subject to certain exceptions, not to participate or engage in any discussions or negotiations regarding, any inquiries or the making of, any proposal of an alternative transaction, (iii) subject to certain exceptions, not to withdraw, change, amend, qualify or modify the support of its board of directors for the Merger Agreement and the Merger , including by changing its recommendation to shareholders to vote in favor of the transaction or by entering into an alternative transaction, and (iv) to use their respective reasonable best efforts to obtain governmental, regulatory and third party consents and approvals. In addition, the Merger Agreement contains covenants that require each of INSW and Diamond S to call and hold a special shareholder meeting and, subject to certain exceptions, require each of the board of directors of INSW and Diamond S to recommend to its shareholders to approve the Merger and adopt the Merger Agreement. The Merger Agreement also includes a covenant requiring Diamond S to use reasonable best efforts to enter into the A&R Debt Agreements.
The Merger Agreement provides for certain termination rights for both Diamond S
and INSW and further provides that a termination fee equal to
The foregoing description of the Merger Agreement is qualified in its entirety by the full text of the Merger Agreement, which is attached hereto as Exhibit 2.1 and incorporated herein by reference. The Merger Agreement has been attached to provide investors with information regarding its terms. The representations, warranties and covenants of each party set forth in the Merger Agreement have been made only for the purposes of, and were and are solely for the benefit of the parties to, the Merger Agreement. The Merger Agreements is not intended to provide any other factual information about INSW or Diamond S. In particular, the assertions embodied in the representations and warranties contained in the Merger Agreement are qualified by information in confidential disclosure letters provided by each of INSW and Diamond S in connection with the signing of the Merger Agreement. These confidential disclosure letters contain information that modifies, qualifies and creates exceptions to the representations and warranties and certain covenants set forth in the Merger Agreement. Moreover, certain representations and warranties in the Merger Agreement were used for the purpose of allocating risk between INSW and Diamond S rather than establishing matters as facts and were made only as of the date of the Merger Agreement (or such other date or dates as may be specified in the Merger Agreement). Accordingly, the representations and warranties in the Merger Agreement should not be relied upon as characterizations of the actual state of facts about INSW or Diamond S. In addition, such representations and warranties will not survive consummation of the Merger. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the parties' public disclosures.
Voting and Support Agreements
Capital and
Concurrently with the execution and delivery of the Merger Agreement,
Cyrus Shareholders
Concurrently with the execution and delivery of the Merger Agreement, certain
funds managed by
The foregoing description of the Voting and Support Agreements is qualified in its entirety by the full text of the Voting and Support Agreements, which are attached hereto as Exhibits 10.1, 10.2 and 10.3, and are incorporated herein by reference.
Termination Agreement
Concurrently with the execution and delivery of the Merger Agreement, Diamond S
entered into a Termination Agreement with
Pursuant to the Termination Agreement, at the Effective Time, Diamond S will (i)
pay, or cause to be paid to CSM, an amount equal to
The Termination Agreement provides that, with respect to each vessel managed by CSM that is on a time charter, the parties will jointly approach the time charterers to agree to a change in technical management as soon as reasonably practicable following the Effective Time. However, if an earlier transition . . .
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. Exhibit No. Description 2.1 Agreement and Plan of Merger, dated as ofMarch 30, 2021 , by and among Diamond S, INSW and Merger Sub. 10.1 Voting and Support Agreement, dated as ofMarch 30, 2021 , by and between INSW and the Capital Shareholders. 10.2 Voting and Support Agreement, dated as ofMarch 30, 2021 , by and between INSW and the WL Ross Shareholders. 10.3 Voting and Support Agreement, dated as ofMarch 30, 2021 , by and between Diamond S and the Cyrus Shareholders. 10.4 Termination Agreement, dated as ofMarch 30, 2021 , by and between Diamond S and CSM.
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