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| 8-K - FUND 10 - 8K - ICON INCOME FUND TEN LLC | body.htm |
Exhibit 99.1
ICON
Income Fund Ten, LLC
Liquidation
Update
This
update is intended to give registered representatives and the investors in ICON
Income Fund Ten, LLC (“Fund Ten”) a description of Fund Ten’s activities and an
outlook for the future. As a fund manager, ICON Capital Corp.
actively and prudently manages Fund Ten’s portfolio to yield the best possible
return to investors. As a public program, Fund Ten has reported to
you regularly through quarterly, annual and current reports filed with the
Securities and Exchange Commission. These important disclosure
documents provide comprehensive required information; however, it is here that
we try to summarize the information contained in those documents to give you a
better overview of what is going on in Fund Ten.
As you
may already be aware, Fund Ten entered into its liquidation period on May 1,
2010 and distributions will begin to fluctuate monthly based on the proceeds
being generated by Fund Ten’s portfolio. During the liquidation
period, distributions that are generated from net loan and rental income and
proceeds from equipment sales generally fluctuate as remaining leases and loans
come to maturity or equipment coming off lease is sold. Accordingly,
in the future, distributions will no longer be paid at a constant distribution
rate on a regularly scheduled basis and, therefore, the amount of distributions
will fluctuate as Fund Ten’s portfolio continues to wind down. In
some months the distribution could be larger than the current distribution, in
some months the distribution may be smaller, and in some months there may not be
any distribution. We expect the liquidation period to continue for
several years as Fund Ten’s portfolio winds down.
Current
Portfolio
Fund Ten’s equipment portfolio is
comprised of the following material assets. Details on an
asset-by-asset basis are provided below.
$28,660,000
Joint Investment in Two Double Hulled Product Tankers Chartered to AET, Inc.
Limited
The
Charterer: AET, Inc. Limited
(“AET”) is a leading worldwide petroleum shipping company. AET
employs more than 3,000 highly skilled and dedicated people across the world to
operate a young and technically advanced fleet of 69 tankers. The business is
managed from regional centers in London, Houston, Kuala Lumpur and Singapore to
move crude oil and refined products for the world’s oil companies and trading
houses. (Source: AET website)
The
Equipment: One (1) 95,639
DWT (deadweight tonnage) Aframax product tanker, the M/V Eagle Carina (the
“Eagle Carina”), and one (1) 95,634 DWT (deadweight tonnage) Aframax product
tanker, the M/V Eagle Corona (the “Eagle Corona”).
Investment: In December 2008,
Fund Ten purchased a 35.70% interest in both the Eagle Carina and the Eagle
Corona. The Eagle Carina was purchased for $39,010,000, which
consisted of $12,010,000 in cash and $27,000,000 in non-recourse
indebtedness. The Eagle Corona was purchased for $41,270,000, which
consisted of $13,270,000 in cash and $28,000,000 in non-recourse
indebtedness. Fund Ten purchased its interest in the Eagle Carina and
the Eagle Corona for approximately $13,926,570 and approximately $14,733,390,
respectively. The Eagle Carina and the Eagle Corona are each subject
to bareboat charters with AET that expire on November 14, 2013.
1
Expected
Future Proceeds: $10,000,000 -
$20,000,000
Outlook: The eighty-four
month bareboat charters are scheduled to expire in November 2013 and it is
expected that, at that time, Fund Ten will either sell or re-charter the
vessels.
$3,868,000
Joint Investment in Promissory Notes Secured by a Pool of Leases for Credit Card
Machines
The
Borrower: Northern Leasing Systems, Inc., based in New York
City, is an equipment finance company specializing in the origination and
servicing of micro-ticket leases for point-of-sale terminals
nationwide.
Investment: In November 2008,
Fund Ten purchased a 12.25% interest in four promissory notes at a significant
discount and received an assignment of the underlying Master Loan and Security
Agreement. The notes were purchased for the aggregate amount of
approximately $31,573,000. Fund Ten purchased its interest in the
notes for approximately $3,868,000. The notes are secured by an
active portfolio of leases for credit card machines located throughout the
United States.
Expected
Future Proceeds: $1,900,000
Outlook: The notes accrue
interest at rates ranging from 7.97% to 8.40% per year and are set to mature
between October 2010 and August 2011. Each note requires balloon
payments at maturity ranging from approximately $594,000 to
$1,255,000.
$13,945,000
Investment in Equipment Leased to Premier Telecom Contracts Limited
The
Equipment: Hospital bedside
entertainment and communication terminals.
Investment: In June 2005,
Fund Ten purchased the equipment for approximately $13,945,000 and entered into
a lease with Premier Telecom Contracts Limited (“Premier”) that is scheduled to
expire on December 31, 2012.
Expected
Future Proceeds: $1,750,000 -
$7,500,000
Outlook: In January 2009,
Fund Ten restructured its lease financing with Premier in exchange for control
of the parent company of Premier, Pretel Group Limited, until such time as Fund
Ten receives its expected return on its investment. Fund Ten is
currently exploring strategic options to maximize the value of
Premier.
$70,700,000
Investment in Container Vessels Chartered to ZIM Integrated Shipping Services,
Ltd.
The
Charterer: ZIM Integrated
Shipping Services Ltd. (“ZIM”) provides shipping, multi-modal and logistics
services to ports of call in Europe, the United States, Canada, Central America,
South America, Africa and Asia. ZIM also offers inter-modal land,
rail, and air services on routes between the Far East and the Caribbean, as well
as the Mediterranean and China. The company was founded in 1945 and
is based in Haifa, Israel with offices in Asia, Australia, the Americas, Europe,
Africa, Israel and the Near East. (Source: Bloomberg
Businessweek)
2
The
Equipment: Two (2) 3,350 TEU
(twenty-foot equivalent unit) container vessels, the M/V ZIM Korea (the “ZIM
Korea”) and the M/V ZIM Canada (the “ZIM Canada”).
The
Investment: In March 2004,
Fund Ten purchased the ZIM Korea and the ZIM Canada for approximately
$70,700,000, which consisted of approximately $18,400,000 in cash and
approximately $52,300,000 in non-recourse
indebtedness. Simultaneously with the purchase of the ZIM Korea and
the ZIM Canada, Fund Ten entered into bareboat charters with ZIM that were each
scheduled to expire in June 2009, but were extended through June 30,
2014.
Expected
Future Proceeds: $58,000,000 -
$64,000,000
Outlook: In July 2009,
Fund Ten satisfied all of the non-recourse indebtedness obligations with respect
to the ZIM Korea and the ZIM Canada. As a result, all bareboat
charter hire payments are being paid directly to Fund Ten. In October
2009, Fund Ten amended the bareboat charters for the ZIM Korea and the ZIM
Canada to restructure each respective charterer’s payment
obligations. The charter for the ZIM Korea was extended until March
31, 2016 and the charter for the ZIM Canada was extended until March 31,
2017. The restructuring provides the charterers with cash flow
flexibility while at the same time attempting to preserve Fund Ten’s economic
return on this investment.
$19,722,500
Joint Investment in a Double Hulled Product Tanker Chartered to Teekay
Corporation
The
Charterer: Teekay
Corporation (“Teekay”) is a publicly traded Bahamian company that provides
international crude oil and petroleum product transportation services to oil
companies, oil traders and government agencies.
The
Equipment: One (1) 98,507
DWT (deadweight tonnage) Aframax product tanker, the Mayon Spirit (the “Mayon
Spirit”).
The
Investment: In July 2007,
Fund Ten purchased a 49% in the Mayon Spirit for approximately $40,250,000,
which consisted of approximately $15,312,000 in cash and approximately
$24,938,000 in non-recourse indebtedness. Fund Ten purchased its interest in the
Mayon Spirit for approximately $19,722,500. Simultaneously with the
purchase of the Mayon Spirit, Fund Ten entered into a bareboat charter with
Teekay that is scheduled to expire in July 2011.
Expected
Future Proceeds: $5,000,000 -
$15,000,000
Outlook: The forty-eight
month bareboat charter is scheduled to expire in July 2011 and it is expected
that, at that time, Fund Ten will either sell or re-charter the
vessel.
$15,886,000
of Joint Investments in Telecommunications Equipment Leased to Global Crossing
Telecommunications, Inc.
The
Lessee: Global Crossing
Telecommunications, Inc. (“Global Crossing”) provides telephone, Internet and
video conferencing services through its wholly-owned international Voice over
Internet Protocol (VoIP) Network. Global Crossing is one of the leading
providers of transcontinental and transoceanic communication
services. More than 40% of Fortune 500 Companies utilize Global
Crossing’s services including JP Morgan Chase, General Electric, Microsoft and
Sony. (Source: Global Crossing website and marketing materials).
3
The
Equipment: Various
innovative telecommunications voice transport systems and high capacity
conferencing servers, including equipment manufactured by Juniper Networks and
Sonus Networks. The equipment is installed in multiple domestic and
international hub locations on Global Crossing’s VoIP Network.
Investment: Fund Ten owns a
79.31% interest in a joint venture that purchased equipment subject to a
48-month lease with Global Crossing that is set to expire in March
2011. In September 2006, Fund Ten purchased a 72.34% interest in
another joint venture that purchased equipment subject to a 48-month lease with
Global Crossing. The lease is set to expire in October 2010. Further,
in December 2007, Fund Ten purchased a 45% interest in a third joint venture
that purchased equipment subject to a 48-month lease that is set to expire in
December 2010.
Expected
Future Proceeds: $6,690,000 -
$7,793,000
Outlook: The leases are
scheduled to expire at various times through March 31, 2011 and it is expected
that Global Crossing will purchase the equipment or extend the
leases.
$4,000,000
Investment in Equipment Leased to Subsidiaries of MW Universal,
Inc.
The
Lessees: MW Universal, Inc. and its affiliates (collectively, “MW
Universal”) are privately held businesses specializing in metals manufacturing
and assembly. MW Universal owns and operates 11 facilities for metals
forgings, castings, stampings and assembling throughout the U.S.
The
Equipment: Machining and
metal working equipment, including, but not limited to hydraulic presses,
stamping equipment, welders, drop hammers, forgers and other related
metalworking and plastic injection molding equipment, which represents each
lessee’s entire production capabilities.
The
Investment: In December 2007,
Fund Ten purchased equipment subject to leases with MW Texas Die Casting, Inc.
and MW Monroe Plastics, Inc. (“Monroe”), each a wholly-owned subsidiary of MW
Universal, for $4,000,000. The leases commenced in January 2008 and
were expected to continue for a period of sixty months. In July 2009,
Fund Ten agreed to terminate the lease with Monroe and transfer title to the
equipment to Cerion MPI, LLC (“MPI”), an affiliate of Monroe. In
consideration for terminating the lease, MPI transferred equipment of greater
fair market value to Fund Ten and in August 2009, Fund Ten entered into a lease
with MPI for such equipment for a period of forty-one months.
Expected
Future Proceeds: $3,100,000 -
$3,700,000
Outlook: The leases expire in 2013,
at which time it is anticipated that MW Universal will exercise its purchase
option.
4
The
following chart depicts the net position of Fund Ten’s material
assets
as
of June 1, 2010:
Expected
Future Proceeds From Investment
|
Lessee/Borrower/Charterer
|
Low
|
High
|
|
AET
|
$10,000,000
|
$20,000,000
|
|
Northern
Leasing
|
$1,900,000
|
$1,900,000
|
|
Premier
|
$1,750,000
|
$7,500,000
|
|
ZIM
|
$58,000,000
|
$64,000,000
|
|
Teekay
|
$5,000,000
|
$15,000,000
|
|
Global
Crossing
|
$6,690,000
|
$7,793,000
|
|
MW
Universal
|
$3,100,000
|
$3,700,000
|
|
Total
Proceeds Expected
|
$86,440,000
|
$119,893,000
|
|
Approximate
No. of Shares Outstanding at May 1, 2010
|
148,211
|
|
|
Estimated
Net Value Per Share
|
$583.22
|
$808.93
|
Conclusion
Fund Ten has performed admirably
considering the economic turbulence it has faced since it commenced its offering
on June 2, 2003. Many of Fund Ten’s completed investments have
performed quite well, including its investment in the ZIM Italia, which was sold
in 2008 for a substantial profit, as well as Fund Ten’s investments in P.W.
Supermarkets, Inc. and Anchor Tool & Die Co., to name a
few. However, the recession that commenced in 2007 and the resulting
impact on the shipping industry has caused us to moderate our expectations on
the shipping assets remaining in Fund Ten. In addition, Fund Ten’s
investment in Premier has not been able to completely navigate through the
economic turmoil and it has forced Fund Ten to take control of the
business. At this point, we are uncertain whether Fund Ten will
receive its economic return on this investment and we continue to work on a
favorable exit from this investment.
As of May 1, 2010, the investors that
invested in Fund Ten at its commencement have received cash distributions of
$5,809 for every $10,000 invested. Our hope and expectation is that
investors’ total cash return will be in excess of 116% of their original capital
invested. As discussed below, all estimates are subject to
uncertainties of the equipment finance marketplace and, therefore, actual
results may be higher or lower than estimates of future proceeds contained
therein.
As
always, we are happy to answer any additional questions that you may
have. Please contact us at the following
numbers: Investors: 800-343-3736; Registered
Representatives: 800-435-5697.
Neither
Fund Ten nor its Manager accepts any responsibility for, or assumes any
liability for, any duty to update or reliance upon the contents, accuracy,
completeness, usefulness or timeliness of any of the information contained under
the headings “The Lessee,” “The Borrower” or “The Charterer” contained within
this document. The estimates and projections contained in this update do not
take into account any fees or expenses (including, but not limited to,
remarketing fees and expenses and attorneys’ fees and expenses) that may be
necessary or advisable in connection with the realization of such estimates and
projections.
5
Forward-Looking
Information
|
Certain
statements within this document may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of
1995, or the PSLRA. These statements are being made pursuant to
PSLRA, with the intention of obtaining the benefits of the “safe harbor”
provisions of the PSLRA, and, other than as required by law, we assume no
obligation to update or supplement such
statements. Forward-looking statements are those that do not
relate solely to historical fact. They include, but are not
limited to, any statement that may predict, forecast, indicate or imply
future results, performance, achievements or events. You can
identify these statements by the use of words such as “may,” “will,”
“could,” “anticipate,” “believe,” “estimate,” “expect,” “intend,”
“predict” or “project” and variations of these words or comparable words
or phrases of similar meaning. These forward-looking
statements reflect our current beliefs and expectations with respect to
future events and are based on assumptions and are subject to risks and
uncertainties and other factors outside of our control that may cause
actual results to differ materially from those
projected.
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