Pangaea Logistics Solutions Ltd. Reports Financial Results for the Third Quarter Ended September 30, 2014

NEWPORT, R.I.--(BUSINESS WIRE)--

Pangaea Logistics Solutions Ltd. (“Pangaea” or the “Company”) PANL, a global provider of comprehensive maritime logistics solutions, announced today the results for Bulk Partners (Bermuda) Ltd., (“Bulk Partners”) for the third quarter ended September 30, 2014. Future reporting will be from Pangaea, the 100% parent of Bulk Partners as of October 1, 2014.

Third Quarter 2014 Highlights & Recent Developments

• Revenue of $91.2 million for the third quarter of 2014
• 25% increase in voyage days, demonstrating increasing demand for services
• Completed public listing; began trading under NASDAQ: PANL
• Took delivery of m/v Nordic Oshima, a 76,180 dwt ice-class 1A panamax dry bulk carrier
• Signed two new long-term contracts of affreightment (“COAs”) to support its ice-class fleet

Edward Coll, Chairman and Chief Executive Officer of Pangaea Logistics Solutions, stated, “The third quarter of 2014 presented a challenging rate environment, continuing what we experienced during the second quarter. Despite these headwinds, we were able to effectively leverage our relationships in the industry and create revenue opportunities where others could not. Further, we are incredibly pleased to have begun publicly trading and look forward to building increased shareholder value.”

Third Quarter and Nine-Months 2014 Financial Results

For the quarter ended September 30, 2014, total revenue was $91.2 million. Total revenue was $295.2 million for the nine months ended September 30, 2014.

Bulk Partners reported a loss from operations of $1.9 million for the third quarter of 2014, and income from operations of $11.5 million for the nine months ended September 30, 2014.

Bulk Partners reported a net loss after non-controlling interests of $2.9 million for the third quarter, and net income after non-controlling interests of $4.9 million for the nine months ended September 30, 2014.

“Our voyage days increased 25% in the quarter over the same period last year, demonstrating strong demand for our services,” Coll added. “That said, operating margins were under significant pressure due to weakened market rates in the vast majority of the dry shipping segments.”

Assuming the merger had been consummated as of January 1, 2014, the Company's pro forma earnings per share for the nine months ended September 30, 2014 was $0.11 basic and diluted, which were calculated based on 34,696,997 shares.

Cash Flows

For the nine months ended September 30, 2014, Bulk Partners' net cash provided by operating activities was $16.4 million, compared to $18.9 million for the nine months ended September 30, 2013.

For the nine months ended September 30, 2014 and 2013, net cash used in investing activities was $30.1 million and $75.7 million, respectively. Net cash provided by financing activities was $14.9 million and $60.9 million for the nine months ended September 30, 2014 and 2013, respectively. This reflects increased borrowing to finance the purchase of additional vessels and take delivery of the m/v Nordic Oshima.

“We continue to invest operating cash flow in newbuilding vessels in the ice-class trade, a market that is well-protected from the newbuilding backlog and where we have distinct strategic advantages,” Coll said.

Recent Developments

The following events took place after the close of the third quarter:

• On October 1, 2014, Bulk Partners completed its merger with Quartet. The combined company is a wholly owned subsidiary of Pangaea Logistics Solutions. On October 3, 2014, the Company's common shares commenced trading on NASDAQ under the ticker symbol PANL.
• On October 8, 2014, Pangaea announced that ASO 2020 Maritime, an affiliate of the Alexander S. Onassis Public Benefit Foundation, executed a letter of intent to acquire a stake in Pangaea.

• On October 28, 2014, the Company announced the delivery of the m/v Nordic Oshima, a 76,180 dwt ice-class 1A panamax dry bulk carrier. Pangaea took delivery of the vessel on September 25, 2014 from Oshima Shipbuilding Co., Ltd.
• On November 14, 2014, the Company announced long-term COAs that will help support the activities of its specialized ice-class 1A panamax vessels.
  • The first contract is a new agreement with an existing client to carry cargo in the Baltic region through 2017. Beginning in 2015, the contract will provide an estimated 240 cargo days of coverage and will contribute revenue of approximately $10 million per year.
  • The second contract is with a new, blue-chip client to carry cargo from 2015 to 2018. Pangaea's ice-hardened fleet is contracted to transport cargo for an estimated 600 days each summer in the far northern latitudes, contributing revenue of approximately $22 million per year.

About Pangaea Logistics Solutions Ltd.

Pangaea Logistics Solutions Ltd. PANL provides logistics services to a broad base of industrial customers who require the transportation of a wide variety of dry bulk cargoes, including grains, pig iron, hot briquetted iron, bauxite, alumina, cement clinker, dolomite, and limestone. The Company addresses the transportation needs of its customers with a comprehensive set of services and activities, including cargo loading, cargo discharge, vessel chartering, and voyage planning. Learn more at www.pangaeals.com.

Forward-Looking Statements

Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Act of 1995. These forward-looking statements are based on our current expectations and beliefs and are subject to a number of risk factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Such risks and uncertainties include, without limitation, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for drybulk shipping capacity, changes in our operating expenses, including bunker prices, dry-docking and insurance costs, the market for our vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires and other factors, as well as other risks that have been included in filings with the Securities and Exchange Commission, all of which are available at www.sec.gov.

Bulk Partners (Bermuda) LTD.
Consolidated Statements of Income
			Three months ended September 30,				Nine months ended September 30,
			2014		2013		2014		2013
			(unaudited)		(unaudited)		(unaudited)		(unaudited)
Revenues:
Voyage revenue			$ 80,604,263		$ 80,371,836		$ 252,084,882		$ 246,642,009
Charter revenue			10,600,956		14,797,016		43,112,456		34,328,821
			91,205,219		95,168,852		295,197,338		280,970,830
Expenses:
Voyage expense			46,598,184		45,193,740		136,624,745		147,119,813
Charter hire expense			34,315,719		31,984,645		112,271,588		86,098,418
Vessel operating expense			7,935,565		6,148,253		22,587,314		15,710,044
General and administrative			2,790,350		2,747,691		7,719,226		8,592,008
Depreciation and amortization			3,118,973		2,518,726		8,415,174		7,060,351
Gain on sale of vessels			(1,661,368)		-		(3,947,600)		-
Total expenses			93,097,423		88,593,055		283,670,447		264,580,634
(Loss) income from operations			(1,892,204)		6,575,797		11,526,891		16,390,196
Other (expense) income:
Interest expense			(1,348,252)		(1,419,338)		(4,338,904)		(3,889,788)
Interest expense related party debt			(108,422)		(194,543)		(170,784)		(357,341)
Imputed interest on related party long-term debt			-		(317,942)		(322,947)		(793,222)
Unrealized (loss) gain on derivative instruments			(551,354)		1,854,930		(2,123,246)		183,287
Other income (expense)			83,803		(515,677)		8,030		(197,127)
Total other expense, net			(1,924,225)		(592,570)		(6,947,851)		(5,054,191)
Net (loss) income			(3,816,429)		5,983,227		4,579,040		11,336,005
Loss (income) attributable to noncontrolling interests			906,822		(113,827)		334,563		(820,323)
Net (loss) income attributable to Pangaea Logistics Solutions Ltd.			$ (2,909,607)		$ 5,869,400		$ 4,913,603		$ 10,515,682
Loss per common share:
Basic			$ (64.68)		$ (7.77)		$ (15.92)		$ (63.30)
Diluted			$ (64.68)		$ (7.77)		$ (15.92)		$ (63.30)
Weighted average shares used to compute loss
per common share, basic and diluted			87,329		87,329		87,329		87,329

Bulk Partners (Bermuda) LTD.
Consolidated Balance Sheets
			September 30,		December 31,
			2014		2013
			(unaudited)
Assets
Current assets
Cash and cash equivalents			$ 20,157,708		$ 18,927,927
Restricted cash			500,000		500,000
Accounts receivable (net of allowance of $2,047,603 at September 30, 2014 and $1,662,593 at December 31, 2013)			30,462,924		44,688,470
Other receivables			287,668		133,646
Bunker inventory			21,050,009		21,072,192
Advance hire, prepaid expenses and other current assets			10,916,092		12,744,125
Total current assets			83,374,401		98,066,360
Fixed assets, net			225,179,262		197,153,889
Investment in newbuildings in-process			25,576,943		31,900,000
Other noncurrent assets			1,495,078		3,253,022
Total assets			$ 335,625,684		$ 330,373,271
Liabilities, convertible redeemable preferred stock and stockholders' equity
Current liabilities
Accounts payable and accrued expenses			$ 40,623,223		$ 45,878,378
Related party debt			46,371,713		7,616,248
Deferred revenue			5,862,960		16,155,498
Current portion long-term debt			18,686,730		16,065,483
Line of credit			3,000,000		3,000,000
Dividend payable			29,381,125		23,177,503
Other current liablities			263,982		-
Total current liabilties			144,189,733		111,893,110
Secured long-term debt, net			91,719,946		83,302,421
Related party long-term debt, net			-		17,303,918
Commitments and contingencies
Convertible redeemable preferred stock, net of issuance costs ($1,000 par value, 112,500 shares authorized, 89,114 and 64,047 shares issued and outstanding at September 30, 2014 December 31, 2013, respectively)			103,236,399		103,236,399
Stockholders' equity (deficit):
Common stock ($1.00 par value, 199,829 shares authorized 87,329 shares issued and outstanding at September 30, 2014, December 31, 2013 and December 31, 2012 191,606 shares issued and outstanding on pro forma basis			87,329		87,329
Additional paid-in capital			-		-
Accumulated deficit			(7,324,015)		(5,933,870)
Total Pangaea Logistics Solutions Ltd. deficit			(7,236,686)		(5,846,541)
Non-controlling interest			3,716,292		20,483,964
Total stockholders' (deficit) equity			(3,520,394)		14,637,423
Total liabilities, convertible reemable preferred stock
and stockholders' (deficit) equity			$ 335,625,684	#	$ 330,373,271

Bulk Partners (Bermuda) LTD.
Consolidated Statements of Cash Flows
					Nine months ended September 30,
					2014		2013
					(unaudited)		(unaudited)
Operating activities
Net income					$ 4,579,040		$ 11,336,005
Adjustments to reconcile net income to net cash
provided by operations:
	Depreciation and amortization expense				8,415,174		7,060,351
	Amortization of deferred financing costs				627,961		658,089
	Unrealized loss (gain) on derivative instruments				2,123,246		(183,287)
	Provision for doubtful accounts				(385,010)		-
	Write off of unamortized financing costs				241,522		-
	Amortization of discount on related party long-term debt				322,947		-
	Imputed interest on related party long-term debt				-		793,222
	Change in operating assets and liabilities:
		Accounts receivable			14,610,555		1,018,218
		Other receivables			(154,022)		(56,781)
		Bunker inventory			22,183		(4,490,193)
		Advance hire, prepaid expenses and other current assets			1,770,164		687,302
		Other non-current assets			(236,223)		-
		Account payable, accrued expenses and other current liabilities			(4,570,546)		2,343,788
		Other current liabilities			(657,491)		(381,011)
		Deferred revenue			(10,292,538)		147,241
Net cash provided by operating activities					16,416,962		18,932,944
Investing activites
Purchase of vessels					(38,288,452)		(75,588,933)
Sale of vessels					19,331,787		-
Deposits on newbuildings in-process					(6,960,499)		-
Drydocking costs					(3,639,677)		-
Purchase of building and equipment					(558,376)		(92,388)
Net cash used in investing activities					(30,115,217)		(75,681,321)
Financing activities
Proceeds of related party debt					4,750,000		21,559,972
Payments on related party debt					(54,507)		(203,582)
Proceeds from long-term debt					35,500,000		32,205,000
Payments of financing and issuance costs					(366,800)		(1,595,450)
Payments on long-term debt					(24,800,657)		(9,713,178)
Proceeds from issuance of convertible redeemable preferred stock					-		18,199,180
Common stock dividends paid					(100,000)		(100,000)
Decrease (increase) in restricted cash					-		687,500
Distributions to non-controlling interest					-		(176,667)
Net cash provided by financing activities					14,928,036		60,862,775
Net increase in cash and cash equivalents					1,229,781		4,114,398
Cash and cash equivalents at beginning of period					18,927,927		19,695,675
Cash and cash equivalents at end of period					$ 20,157,708		$ 23,810,073

Bulk Partners (Bermuda) LTD.
Consolidated Statements of Cash Flows
					Nine months ended September 30,
					2014		2013
					(unaudited)		(unaudited)
Disclosure of noncash items
Dividends declared, not paid					$ 6,303,622		$ 5,769,050
Issuance of convertible redeemable preferred stock
as settlement of accrued dividends					$ -		$ 213,152
Issuance of convertible redeemable preferred stock
in settlement of notes payable					$ -		$ 1,385,503
Beneficial conversion feature of convertible redeemable
preferred stock at issuance date					$ -		$ 5,748,464
Modification of Shareholder loan to on Demand					$ 16,433,108
Imputed interest on related party long-term debt					$ 322,947		$ 793,222
Discount on related party long-term debt					$ -		$ 17,080,063
Cash paid for interest					$ 3,660,117		$ 4,366,007