SOURCE: Quintana Maritime Limited

May 12, 2006 08:56 ET

Quintana Maritime Acquires 17 Bulkers; Creates One of Largest and Most Modern Fleets Among Its U.S. Listed Peers

Company Has Time Charter Coverage on Acquired Vessels Through 2010

ATHENS, GREECE -- (MARKET WIRE) -- May 12, 2006 -- Quintana Maritime Limited ("Quintana") (NASDAQ: QMAR) announced today that it has agreed to acquire seventeen vessels from Metrobulk, a privately owned Greek shipowner for an aggregate purchase price of approximately $735 million. The acquisition will be funded with approximately $191 million of proceeds from a private placement, which was led by Dahlman Rose & Co. and closed on May 11, 2006, and the balance with a proposed new credit facility led by Fortis Bank. The vessel acquisition was mediated and advised by Fortis Bank.

Acquisition

The fleet includes three 76,000-dwt 2004-built Panamaxes and fourteen 83,000-dwt Kamsarmax bulkers, six of which were built between February 2005 and May 2006, and the remaining eight to be delivered between July 2006 and May 2007, making Quintana the youngest U.S.-listed fleet. All the vessels are sister ships built at Tsuneishi, a Japanese shipyard. Kamsarmaxes are a Panamax sub-class that have more carrying capacity than typical Panamax designs.

All the vessels are on long-term time charter to Bunge S.A., a wholly owned subsidiary of Bunge Limited (NYSE: BG), an integrated global agribusiness. Sixteen of the vessels are fixed until the end of 2010 under an agreement that provides for variable charter hire within floor and ceiling rates. The remaining vessel is on charter with Bunge until August 2009 at a fixed rate. After the acquisition, Quintana believes it will enjoy the highest and longest contract coverage amongst its public peers.

Stamatis Molaris, President and Chief Executive Officer, commented, "This transaction is transformational for Quintana as it positions us, post acquisition, as one of the largest U.S.-listed dry-bulk shipping companies by tonnage, with the youngest fleet, on a dwt-weighted-average basis, among its public peers. With the acquisition of all seventeen vessels, we will establish a significant position in the Kamsarmax niche by virtue of our controlling one-quarter of the actively trading Kamsarmax fleet. The acquisition will become accretive in terms of cash flow per share in 2007 upon delivery of all the ships in that year."

Pro forma for the acquisition, Quintana will have secured approximately 86%, 82% and 74% of its expected net operating days under time charters for 2006, 2007 and 2008, respectively. We also maintain time-charter coverage at comfortable levels in 2009 and 2010 of 70% and 66%, respectively.

Mr. Molaris also commented, "The significant growth of Quintana's fleet is matched with contract coverage that gives high cash flow visibility through the end of 2010, while at the same time maintaining some upside potential. Our ability to deliver long-term and consistent dividends to our shareholders is enhanced with this acquisition."

Private Placement

On May 11, 2006, Quintana completed a private placement of equity to institutional investors and certain other accredited investors. The sale of 2,036,653 units resulted in gross proceeds to Quintana of approximately $191 million. The Company's founders, including affiliates of Corbin J. Robertson, Jr., First Reserve Corporation and AMCI International Inc., and members of management invested an aggregate of $41.2 million in the private placement, or approximately 22% of the total gross proceeds to the Company. Dahlman Rose & Company, LLC and Fortis Securities LLC acted as placement agents in the equity offering.

Each unit consists of one share of 12% Mandatorily Convertible Preferred Stock and four Class A Warrants to purchase an equal number of shares of common stock. Each share of Preferred Stock is mandatorily convertible into 12.5 shares of common stock upon the approval of the existing common shareholders. The Warrants entitle holders to purchase an additional share of common stock at $8.00 per share at any time upon the approval of the shareholders and within three years. Quintana will be required to redeem the Warrants if the issuance of the common stock underlying the Preferred Stock and Warrants is not approved by the Company's common shareholders.

The Company will pay quarterly dividends at the per annum rate of 12% on the face value of the Preferred Stock, subject to adjustment in certain circumstances, in cash each February, May, August and November, when declared by the Company's Board of Directors. Dividends are cumulative on the Preferred Stock.

As required by the terms of the Preferred Stock, the Company plans to file a Registration Statement within 60 days for purposes of registering the resale of shares to be issued upon the conversion the Preferred Stock and upon exercise of the Warrants.

Quintana expects to fund the balance of the purchase price with a proposed new $735 million revolving credit facility, which will also be used to refinance the Company's existing debt. The Company expects to draw down on the facility to pay the balance of the purchase price of the vessels as the vessels are delivered over the next year.

The Preferred Stock sold has not been registered under the Securities Act of 1933, as amended, and may not be offered or sold absent registration or an applicable exemption from registration. This release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of those securities in any state where such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities law of such state. Any offering of Quintana Maritime shares under the resale registration statement will be made only by prospectus.

The Company will discuss the strategic and financial merits of the acquisition in its forthcoming first-quarter earnings call on May 15, 2006 at 11:00 a.m. Eastern time.

About Quintana Maritime Limited

Quintana Maritime Limited, based in Greece, is an international provider of dry bulk cargo marine transportation services. Prior to the acquisition, the company owned and operated a fleet of eight Panamax size vessels and two Capesize vessels with a total carrying capacity of 916,072 dwt and an average age of 7.0 years on a dwt weighted average.

Forward-Looking Statements

This press release contains forward-looking statements (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events and the Company's growth strategy and measures to implement such strategy; including expected vessel acquisitions and entering into further time charters. Words such as "expects," "intends," "plans," "believes," "anticipates," "hopes," "estimates," and variations of such words and similar expressions are intended to identify forward-looking statements. Such statements include comments regarding expected revenues and time charters. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to changes in the demand for dry bulk vessels, competitive factors in the market in which the Company operates; risks associated with operations outside the United States; and other factors listed from time to time in the Company's filings with the Securities and Exchange Commission. The Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.

Contact Information