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| 8-K - FORM 8K - ICON LEASING FUND TWELVE, LLC | body.htm |
Exhibit 99.1
LEASING
FUND
TWELVE,
LLC
PORTFOLIO
OVERVIEW
FIRST
QUARTER
2010
Letter from the
CEOs As of May 21,
2010
Dear
investor in ICON Leasing Fund Twelve, LLC:
We write
to briefly summarize our activity for the first quarter of 2010. A
more detailed analysis, which we encourage you to read, is contained in our Form
10-Q. Our Form 10-Q and our other quarterly, annual and current
reports are available in the Investor Relations section of our website,
www.iconcapital.com.
As of
March 31, 2010, Fund Twelve was in its operating period. As of March
31st, we
had invested $290,763,9411 of capital, or 94.80% of capital available for
investment, in approximately $599,117,1932 worth of business-essential equipment and
corporate infrastructure. We invested $1.6 million in total equity in
the first quarter of 20103. Further, our distribution coverage
ratio4 for the first quarter was 141.91%. As of
March 31st,
Fund Twelve held $25,419,818 of capital available for future investments and
maintained a leverage ratio of .86:15. Fund Twelve collected 98.07%6 of all scheduled rent and loan receivables due
for the first quarter, with the uncollected receivables primarily relating to
the semiconductor manufacturing equipment on lease to Equipment Acquisition
Resources, Inc. (“EAR”), which, during the fourth quarter of 2009, filed for
reorganization under Chapter 11 of the U.S. Bankruptcy Code. You can
read about EAR in further detail in the portfolio overview section that follows
this letter.
During
the first quarter of 2010, we entered into an agreement to finance significant
upgrades to the accommodation and work barge, the Leighton Mynx. The
upgrades include the addition of a helicopter deck, as well as a new crane and
accommodation unit.
We
believe our portfolio is performing well and that there will be many excellent
opportunities to deploy equity in well structured deals secured by
business-essential equipment and corporate infrastructure, as traditional
lenders are still fairly reluctant to lend in the current economic
climate.
We invite
you to read through our portfolio overview on the pages that follow for a more
detailed explanation of the above described investments. As always,
thank you for entrusting ICON with your investment assets.
Sincerely,
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Michael
A. Reisner
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Mark
Gatto
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Co-President
and Co-Chief Executive Officer
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Co-President
and Co-Chief Executive Officer
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5 Pursuant to Fund Twelve’s
financials, prepared in accordance with US GAAP. Leverage ratio is
defined as total liabilities divided by total equity.
6 Collections as of May 14,
2010.
1
ICON
LEASING FUND TWELVE, LLC
First
Quarter 2010 Portfolio Overview
We are
pleased to present ICON Leasing Fund Twelve, LLC’s (the “Fund”) Portfolio
Overview for the first quarter of 2010. References to “we,” “us” and
“our” are references to the Fund, and references to the “Manager” are references
to the manager of the Fund, ICON Capital Corp.
The
Fund
We raised
$347,686,947 commencing with our offering on May 7, 2007 through the closing of
our offering on April 30, 2009.
Our
operating period commenced on May 1, 2009, during which time we will continue to
seek to finance equipment subject to lease or to structure financings secured
primarily by equipment. Cash generated from these investments is used
to make distributions to our members. Availability of cash to be used
for reinvestment depends on the requirements for expenses, reserves and
distributions to members.
Our
operating period is anticipated to continue for a period of five years from the
closing of the offering, unless extended at our Manager’s sole
discretion. Following our operating period, we will enter our
liquidation period, during which time the leases and loans we own will mature or
be sold in the ordinary course of business.
Recent
Transactions
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On
April 1, 2010, we sold to an unaffiliated party, Hardwood Partners, LLC
(“Hardwood Partners”), (i) a 5.873% interest in ICON Quattro, LLC (“ICON
Quattro”) for the purchase price of $550,000, (ii) a 5.1% interest in ICON
Appleton, LLC (“ICON Appleton”) for the purchase price of $1,000,000,
(iii) a 5.460% interest in ICON Atlas, LLC (“ICON Atlas”) for the purchase
price of $550,000 and (iv) a 2.913% interest in ICON ION, LLC (“ICON ION”)
for the purchase price of $550,000.
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Portfolio
Overview
Our
portfolio consists of investments that we have made directly, as well as those
that we have made with our affiliates. As of March 31, 2010, our
portfolio consisted primarily of the following investments.
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We,
through our wholly-owned subsidiary, ICON Global Crossing IV, LLC, own
telecommunications equipment that is subject to various leases with Global
Crossing Telecommunications, Inc. We paid purchase prices in
the amounts of approximately $21,294,000, $5,939,000 and $3,859,000 for
the equipment and their respective leases are set to expire on November
30, 2011, March 31, 2011 and March 31,
2012.
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We,
through our wholly-owned subsidiary, ICON Ionian, LLC (“ICON Ionian”),
purchased a product tanker vessel, the Ocean Princess, from Lily Shipping
Ltd. (“Lily Shipping”), a wholly-owned subsidiary of the Ionian Group
(“Ionian”), for the purchase price of
$10,750,000. Simultaneously with the purchase, the Ocean
Princess was bareboat chartered back to Lily Shipping for sixty
months. The purchase price consisted of (i) a non-recourse loan
in the amount of $5,500,000, (ii) $950,000 in cash and (iii) a
subordinated, interest-free $4,300,000 payable to Lily Shipping, which is
due upon the sale of the Ocean Princess in accordance with the terms of
the bareboat charter. If an event of default occurs, ICON
Ionian’s obligation to repay the payable is terminated. The
obligations of Lily Shipping are guaranteed by Delta Petroleum Ltd., a
wholly-owned subsidiary of Ionian.
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We,
through ICON Quattro, a joint venture owned 49.12% by us, 40.20% by ICON
Equipment and Corporate Infrastructure Fund Fourteen, L.P., an affiliate
of our Manager (“Fund Fourteen”), and 10.68% by Hardwood Partners,
participated in a £24,800,000 loan facility by making a second priority
secured term loan to Quattro Plant Limited (“Quattro Plant”), a
wholly-owned subsidiary of Quattro Group Limited (“Quattro Group”), in the
amount of £5,800,000. The loan is secured by (i) all of Quattro
Plant’s rail support construction equipment, which consists of railcars,
attachments to railcars, bulldozers, excavators, tractors, lowboy
trailers, street sweepers, service trucks, forklifts and any other
existing or future asset owned by Quattro Plant, (ii) all of Quattro
Plant’s accounts receivable, and (iii) a mortgage over certain real estate
in London, England owned by the majority shareholder of Quattro
Plant. In addition, ICON Quattro received a key man insurance
policy insuring the life of the majority shareholder of Quattro Plant in
the amount of £5,500,000. All of Quattro Plant’s obligations under
the loan are guaranteed by Quattro Group and its subsidiaries, Quattro
Hire Limited and Quattro Occupational Academy Limited. Interest
on the secured term loan accrues at a rate of 20% per year and the loan
will be amortized to a balloon payment of 15% at the end of the
term. The loan is payable monthly in arrears for a period of 33
months, which began on January 1, 2010. Quattro Plant has the option
to prepay the entire outstanding amount of the loan beginning January 1,
2012 in consideration for a fee of 5% of the amount being
prepaid.
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We,
through our wholly-owned subsidiary, ICON Faulkner, LLC (“ICON Faulkner”),
entered into a Memorandum of Agreement (the “Faulkner MOA”) to purchase
the pipelay barge, the Leighton Faulkner, from Leighton Contractors (Asia)
Limited (“Leighton Contractors”) for
$20,000,000. Simultaneously with the execution of the Faulkner
MOA, ICON Faulkner entered into a bareboat charter with Leighton
Contractors for a period of ninety-six months commencing on January 5,
2010. The purchase price for the Leighton Faulkner consisted of
$1,000,000 in cash and $19,000,000 in a non-recourse loan, which included
$12,000,000 of senior debt pursuant to a senior facility agreement with
Standard Chartered Bank, Singapore Branch (“SCB”) and $7,000,000 of
subordinated seller’s credit. The loan has a term of five
years, with an option to extend for another three years. The interest rate
has been fixed pursuant to a swap agreement. All of Leighton
Contractors’ obligations are guaranteed by its ultimate parent company,
Leighton Holdings Limited (“Leighton Holdings”), a publicly traded company
on the Australian Stock Exchange.
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We,
through ICON Atlas, a joint venture owned 49.54% by us, 40.53% by Fund
Fourteen and 9.93% by Hardwood Partners, purchased four Ariel natural gas
driven gas compressors and four Ariel electric driven gas compressors from
AG Equipment Co. for the aggregate purchase price of approximately
$11,298,000. Simultaneously with the purchases, ICON Atlas
entered into a forty-eight month lease with Atlas Pipeline Mid-Continent,
LLC (“Atlas”) that expires on August 31, 2013. The obligations
of Atlas are guaranteed by its parent company, Atlas Pipeline Partners,
L.P.
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We
own a saturation diving system that we acquired from Swiber Engineering
Ltd. (“Swiber”) through our wholly-owned subsidiary, ICON Diving Marshall
Islands, LLC, for $10,000,000, comprised of $8,000,000 in cash and a
$2,000,000 subordinated seller’s credit. Simultaneously with
the purchase, we entered into a lease with our wholly-owned subsidiary,
ICON Diving Netherlands B.V. (“ICON Diving”). ICON Diving then
entered into a sixty month lease with Swiber Offshore Construction Pte.
Ltd. (“Swiber Construction”) that is scheduled to expire on June 30,
2014. All of the obligations of Swiber Construction are
guaranteed by its parent company, Swiber Holdings Limited
(“Holdings”).
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A
300-man accommodation and work barge, the Swiber Victorious (the “Barge”),
equipped with a 300-ton pedestal mounted offshore crane that is subject to
a ninety-six month bareboat charter with Swiber Offshore Marine Pte. Ltd.
(“Swiber Marine”). The Barge was purchased by Victorious, LLC
(“Victorious”), a Marshall Islands limited liability company that is
controlled by us through our wholly-owned subsidiary, ICON Victorious, LLC
(“ICON Victorious”), from Swiber for $42,500,000. The purchase
price was comprised of (i) a $19,125,000 equity investment from ICON
Victorious, (ii) an $18,375,000 contribution-in-kind by Swiber and
(iii) a subordinated, non-recourse and unsecured $5,000,000 payable.
The payable bears interest at 3.5% per year, accrues interest quarterly
and is only required to be repaid after we achieve our minimum targeted
return. At the end of the charter, Swiber Marine has the option
to purchase the Barge for $21,000,000 plus 50% of the difference between
the then fair market value less $21,000,000. ICON Victorious is the sole
manager of Victorious and holds a senior, controlling equity interest and
all management rights with respect to Victorious. Swiber holds
a subordinate, non-controlling equity interest in Victorious and the
obligations of the various Swiber entities that are parties to the
transaction are guaranteed by Holdings. In addition, Victorious
granted a first priority mortgage in the Barge as security for Swiber
Construction’s obligations under its lease with ICON
Diving. The obligations of Swiber Construction, Swiber, and
Holdings are subordinate only to ICON Victorious’ rights in the
Barge.
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ICON
ION, a joint venture owned 52.09% by us, 42.61% by Fund Fourteen and 5.30%
by Hardwood Partners, was formed for the purpose of making secured term
loans to ARAM Rentals Corporation (“ARC”) and ARAM Seismic Rentals,
Inc. (“ASR,” together with ARC, collectively referred to as the “ARAM
Borrowers”) in the aggregate amount of $20,000,000. The ARAM Borrowers are
wholly-owned subsidiaries of ION Geophysical Corporation (“ION”).
The loans are secured by (i) a first priority security interest in all of
the ARAM analog seismic system equipment owned by the ARAM Borrowers and
(ii) a pledge of all equity interests in the ARAM Borrowers. In
addition, ION guaranteed all of the obligations of the ARAM Borrowers
under the loans. The loans are payable monthly for a period of
sixty months, beginning on August 1,
2009.
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We
own two Aframax product tankers that we acquired from Aframax Tanker
I AS through our wholly-owned subsidiary, ICON Eagle Holdings, LLC (“ICON
Eagle Holdings”). ICON Eagle Auriga Pte. Ltd., a wholly-owned
subsidiary of ICON Eagle Holdings, purchased the M/V Eagle Auriga
(the “Eagle Auriga”) for $42,000,000, comprised of $14,000,000 in cash and
$28,000,000 in a non-recourse loan. ICON Eagle Centaurus Pte.
Ltd., also a wholly-owned subsidiary of ICON Eagle Holdings, purchased the
M/V Eagle Centaurus (the “Eagle Centaurus”) for $40,500,000, comprised of
$13,500,000 in cash and $27,000,000 in a non-recourse loan. The Eagle
Auriga and the Eagle Centaurus are subject to eighty-four month bareboat
charters with AET, Inc. Limited (“AET”) that expire on November 14, 2013
and November 13, 2013,
respectively.
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A
95,639 DWT (deadweight tonnage) Aframax product tanker, the M/V Eagle
Carina (“Eagle Carina”), was purchased from Aframax Tanker II AS by ICON
Eagle Carina Pte. Ltd., a Singapore corporation wholly-owned by ICON Eagle
Carina Holdings, LLC, a joint venture owned 64.30% by us and 35.70% by
ICON Income Fund Ten, LLC (“Fund Ten”), an affiliate of our
Manager. The Eagle Carina was acquired for $39,010,000,
comprised of $12,010,000 in cash and $27,000,000 in a non-recourse
loan. The Eagle Carina is subject to an eighty-four month
bareboat charter with AET that expires on November 14,
2013.
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A
95,634 DWT (deadweight tonnage) Aframax product tanker, the M/V Eagle
Corona (“Eagle Corona”), was purchased from Aframax Tanker II AS by ICON
Eagle Corona Pte. Ltd., a Singapore corporation wholly-owned by ICON Eagle
Corona Holdings, LLC, a joint venture owned 64.30% by us and 35.70% by
Fund Ten. The Eagle Corona was acquired for $41,270,000,
comprised of $13,270,000 in cash and $28,000,000 in a non-recourse
loan. The Eagle Corona is subject to an eighty-four month
bareboat charter with AET that expires on November 14,
2013.
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ICON
Pliant, LLC (“ICON Pliant”) acquired from Pliant Corporation (“Pliant”)
and simultaneously leased back equipment that manufactures plastic films
and flexible packaging for consumer products for a purchase price of
$12,115,000. We and ICON Leasing Fund Eleven, LLC (“Fund
Eleven”), an affiliate of our Manager, have ownership interests of 45% and
55% in ICON Pliant, respectively. The lease expires on
September 30, 2013. On February 11, 2009, Pliant commenced a
voluntary Chapter 11 proceeding in U.S. Bankruptcy Court to eliminate all
of its high-yield debt. In connection with this action, Pliant
submitted a financial restructuring plan to eliminate its debt as part of
a pre-negotiated package with its high-yield creditors. On
September 22, 2009, Pliant assumed its lease with ICON Pliant in full as
part of its financial restructuring and on December 3, 2009, Pliant
emerged from bankruptcy. As of March 31, 2010, Pliant has made
all of its lease payments.
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ICON
Northern Leasing, LLC (“ICON Northern Leasing”), a joint venture among us,
Fund Ten and Fund Eleven, purchased four promissory notes (the “Notes”) at
a significant discount and received an assignment of the underlying Master
Loan and Security Agreement, dated July 28, 2006. We, Fund Ten and Fund
Eleven have ownership interests of 52.75%, 12.25% and 35%,
respectively. The aggregate purchase price for the Notes was
approximately $31,573,000 and the Notes are secured by an underlying pool
of leases for credit card machines. The Notes accrue interest at rates
ranging from 7.97% to 8.40% per year and require monthly payments ranging
from approximately $183,000 to $422,000. The Notes mature between October
15, 2010 and August 14, 2011 and require balloon payments at the end of
each note ranging from approximately $594,000 to $1,255,000. Our share of
the purchase price was approximately
$16,655,000.
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ICON
Northern Leasing II, LLC, our wholly-owned subsidiary, provided a senior
secured loan in the amount of approximately $7,870,000 to Northern Capital
Associates XV, L.P. (“NCA XV”) and Northern Capital Associates XIV, L.P.
(“NCA XIV”), affiliates of Northern Leasing Systems, Inc., pursuant to a
Master Loan and Security Agreement, dated March 31, 2009. The loan accrues
interest at a rate of 18% per year and is secured by a first priority
security interest in an underlying pool of leases for credit card machines
of NCA XV, a second priority security interest in an underlying pool of
leases for credit card machines of NCA XIV (subject only to the first
priority security interest of ICON Northern Leasing) and a limited
guaranty from Northern Leasing Systems, Inc. of up to 10% of the loan
amount.
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Our
wholly-owned entities, ICON Mynx Pte. Ltd. (“ICON Mynx”), ICON Stealth
Pte. Ltd. (“ICON Stealth”), and ICON Eclipse Pte. Ltd., purchased an
accommodation and work barge, the Leighton Mynx, and the pipelay barges,
the Leighton Stealth and the Leighton Eclipse, from Leighton Offshore Pte.
Ltd. (“Leighton”) (previously known as Leighton Contractors (Singapore)
Pte. Ltd.) for the aggregate amount of
$133,000,000. Simultaneously with the purchases, each of ICON
Mynx and ICON Stealth entered into a bareboat charter to charter its
respective vessel to Leighton for a period of ninety-six
months. The Leighton Mynx was purchased for $10,000,000,
consisting of $450,000 in cash and $9,550,000 in a non-recourse loan,
which included $6,000,000 of senior debt pursuant to an amended senior
facility agreement with SCB (the “Amended Facility Agreement”) and
$3,550,000 of subordinated seller’s credit. The Leighton Stealth was
purchased for $48,000,000, consisting of $2,250,000 in cash and
$45,750,000 in a non-recourse loan, which included $28,800,000 of senior
debt pursuant to the Amended Facility Agreement and $16,950,000 of
subordinated seller’s credit. Subsequently, the Leighton
Eclipse was purchased for $75,000,000, consisting of $3,500,000 in cash
and $71,500,000 in a non-recourse loan, which included $45,000,000 of
senior debt pursuant to the Amended Facility Agreement and $26,500,000 of
subordinated seller’s credit. The Leighton Eclipse was also
bareboat chartered back to Leighton for a period of ninety-six
months. The Amended Facility Agreement will be repaid in
quarterly installments beginning on March 31, 2011 and interest will be
fixed pursuant to a swap agreement with SCB. All of Leighton’s
obligations are guaranteed by Leighton Holdings. We, through
ICON Mynx, entered into an agreement with Leighton to significantly
upgrade the accommodation and work barge, the Leighton Mynx, for
$20,000,000. The upgrades include the addition of a helicopter
deck, as well as a new crane and accommodation unit. The
purchase price for the upgrades consists of $2,000,000 in cash and
$18,000,000 in a non-recourse loan, which included $4,000,000 of
subordinated contractor’s credit and $14,000,000 of senior debt pursuant
to the Amended Facility Agreement. In consideration for
financing the upgrades, ICON Mynx and Leighton agreed to amend the
bareboat charter for the Leighton Mynx to, among other things, increase
the amount of monthly charter hire payable by Leighton and increase the
value of the purchase option price at the expiry of the bareboat
charter. All of Leighton’s obligations are guaranteed by
Leighton Holdings.
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A
Bucyrus Erie model 1570 Dragline (the “Dragline”) subject to a sixty month
lease with Magnum Coal Company and its subsidiaries that commenced on June
1, 2008. We, through our wholly-owned subsidiary, ICON Magnum,
LLC, acquired title to the Dragline for a purchase price of approximately
$12,461,000.
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Mining
equipment consisting of three 100-ton haul trucks and one 14-cubic yard
wheel loader that was purchased through our wholly-owned subsidiary, ICON
Murray, LLC, for approximately $3,348,000. The equipment is
subject to a lease with American Energy Corporation (“American Energy”)
and Ohio American Energy, Incorporated that is set to expire on March 31,
2011. We also own pan line and hauling equipment used in
underground long wall mining that was purchased through our wholly-owned
subsidiary, ICON Murray II, LLC, for approximately
$3,196,000. That equipment is subject to a lease with American
Energy and The Ohio Valley Coal Company that is set to expire on
December 31, 2011. The obligations under the leases are
guaranteed by Murray Energy
Corporation.
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A
one-off machine paper coating manufacturing line through ICON Appleton, a
joint venture owned 94.90% by us and 5.10% by Hardwood
Partners. ICON Appleton made a secured term loan to Appleton
Papers, Inc. (“Appleton”) in the amount of $22,000,000 commencing on
November 7, 2008 for a period of sixty months. On March 26,
2009, the Loan and Security Agreement and the Secured Term Loan Note
issued by Appleton were amended due to a default on one of the covenants
in Appleton’s credit facility. As a result of the cross-default
provisions of the loan, the interest on the term note was adjusted to
accrue interest at 14.25% per year. Additionally, on February
26, 2010, we amended certain financial covenants in the loan agreement
with Appleton. In consideration for amending the loan, we
received an amendment fee in the amount of approximately $117,000 from
Appleton.
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Fourteen
2009 MCI D4505 passenger buses that were purchased through ICON Coach, LLC
(“ICON Coach”) for approximately $5,314,000 from CUSA PRTS, LLC (“CUSA”),
an affiliate of Coach America Holdings, Inc. (“Coach”). The
equipment is subject to a lease with CUSA that is set to expire on March
31, 2014 and the obligations of CUSA are guaranteed by
Coach. On December 11, 2009, ICON Coach borrowed approximately
$3,207,000 from Wells Fargo Equipment Finance, Inc. (“Wells Fargo”)
pursuant to a non-recourse loan agreement. The loan is secured
by, among other things, a first priority security interest in the fourteen
2009 MCI Model D4505 passenger buses owned by ICON Coach. The
loan is payable monthly for a period of thirty-eight months, beginning on
January 1, 2010. Interest is computed at a rate of 7.5% per
year throughout the term of the
loan.
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Machining
and metal working equipment subject to lease with LC Manufacturing, LLC
(“LC”) and MW Crow, Inc. (“Crow”), both wholly-owned subsidiaries of MW
Universal, Inc. (“MWU”). We acquired the equipment for a
purchase price of $18,990,000 and it is subject to a sixty month lease
with LC and Crow that commenced on January 1, 2008. The
equipment is comprised of all of LC’s and Crow’s capital assets including,
but not limited to, hydraulic presses, stamping equipment, welders, drop
hammers, forgers, and other related metal working and plastic injection
molding equipment. On February 27, 2009, we, Fund Ten, Fund
Eleven and IEMC Corp., a subsidiary of our Manager, entered into an
Amended Forbearance Agreement with MWU, LC, Crow and seven other
subsidiaries of MWU with respect to certain lease defaults. In
consideration for restructuring LC’s lease payment schedule, we received,
among other things, a warrant to purchase 10% of the fully diluted
membership interests of LC at an aggregate exercise price of $1,000
exercisable until March 31, 2015. On June 1, 2009, we amended
and restructured the lease with LC to reduce the assets under lease from
$14,890,000 to approximately $12,420,000. Contemporaneously, we entered
into a new lease with Metavation, LLC (“Metavation”), an affiliate of LC,
for the assets previously on lease to LC. The equipment is
subject to a forty-three month lease with Metavation that expires on
December 31, 2012. Metavation’s obligations under the lease are
guaranteed by its parent company, Cerion, LLC. In consideration
for restructuring LC’s lease payment schedule, we received a warrant to
purchase an additional 65% of the fully diluted membership interests of LC
at an aggregate exercise price of $1,000 exercisable until March 31,
2015. On January 13, 2010, we further amended the lease with LC
to reduce LC’s payment obligations under the lease and to provide us with
an excess cash flow sweep in the event that excess cash flow is available
in the future.
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ICON
EAR, LLC (“ICON EAR”) acquired and simultaneously leased back
semiconductor manufacturing equipment to Equipment Acquisition Resources,
Inc. (“EAR”). We paid approximately $3,814,000 for our interest
in the equipment. ICON EAR also acquired and simultaneously leased back to
EAR semiconductor manufacturing equipment for a total purchase price of
approximately $8,795,000. The equipment consists of silicone
wafer slicers, dicers, backgrinders, lappers, and polishers that are
designed to size microchips from embryo wafers. EAR’s
obligations under the lease are secured by the owner’s real estate located
in Jackson Hole, Wyoming, as well as personal guarantees from the owners
of EAR. We and Fund Eleven have ownership interests of 55% and
45%, respectively, in ICON EAR. The leases commenced on July 1,
2008 and will continue for a period of sixty months. In October 2009,
certain facts came to light that led our Manager to believe that EAR was
perpetrating a fraud against EAR’s lenders, including ICON
EAR. On October 23, 2009, EAR filed a petition for
reorganization under Chapter 11 of the U.S. Bankruptcy
Code. Due to the bankruptcy filing and ongoing investigation
regarding the alleged fraud, at this time it is not possible to determine
our ability to collect the amounts due to us in accordance with the leases
or the security we received.
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A
51% interest in one 98,507 DWT (deadweight tonnage) Aframax product tanker
– the M/T Mayon Spirit (the “Mayon Spirit”). We acquired our
interest in the vessel through a joint venture with Fund
Ten. The purchase price of the Mayon Spirit was approximately
$40,250,000, comprised of approximately $15,312,000 in cash, paid in the
form of a capital contribution to the joint venture, and a non-recourse
loan in the amount of approximately $24,938,000. Simultaneously
with the purchase of the Mayon Spirit, the vessel was bareboat chartered
back to an affiliate of Teekay Corporation for a term of forty-eight
months, which is scheduled to expire in July 2011. We acquired
our interest in the Mayon Spirit for approximately $8,472,000 in
cash.
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Auto
parts manufacturing equipment purchased from Sealynx Automotive Transieres
SAS (“Sealynx”) that was simultaneously leased back to
Sealynx. We paid approximately $11,626,000 for the
equipment. The lease commenced on March 3, 2008 and is for a
period of sixty months. The equipment consists of all of
Sealynx’s machinery in its operating facility, including its mixing,
extrusion and pressing machinery. As additional security, we
received a first lien on Sealynx’s real property located in Transieres,
France. Subsequently, due to the global downturn in the
automotive industry, Sealynx requested a restructuring of its lease
payments and on January 4, 2010, we restructured the payment obligations
of Sealynx under the lease to provide them with cash flow flexibility
while at the same time attempting to preserve our projected economic
return on this investment. As additional security for
restructuring the payment obligations, we received an additional mortgage
over certain real property owned by Sealynx located in Charleval,
France.
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Two
handy-size vessels that hold 1,500 TEU (twenty-foot equivalent unit)
containers (each a “Vessel” and, collectively, referred to as the
“Vessels”) from the Vroon Group B.V. (“Vroon”), through our wholly-owned
subsidiaries, ICON Arabian Express, LLC and ICON Aegean Express,
LLC. We acquired the Vessels by making a cash payment of
approximately $6,150,000 per Vessel and a non-recourse loan in the amount
of approximately $19,350,000 per Vessel. The total aggregate
purchase price of the Vessels was $51,000,000. We have
seventy-two month bareboat charters for the Vessels with subsidiaries of
Vroon that commenced on April 24, 2008. All obligations of the
charterer under each respective bareboat charter are guaranteed by
Vroon.
|
Revolving
Line of Credit
We and
certain entities managed by our Manager, ICON Income Fund Eight B L.P., ICON
Income Fund Nine, LLC, Fund Ten, Fund Eleven and Fund Fourteen (collectively,
the “ICON Borrowers”), are parties to a Commercial Loan Agreement, as amended
(the “Loan Agreement”), with California Bank & Trust. The Loan
Agreement provides for a revolving line of credit of up to $30,000,000 pursuant
to a senior secured revolving loan facility (the “Facility”), which is secured
by all assets of the ICON Borrowers not subject to a first priority
lien. The Facility expires on June 30, 2011. The interest
rate at March 31, 2010 was 4.0%. Aggregate borrowings by all ICON
Borrowers under the Facility amounted to $700,000 at March 31, 2010, none of
which was attributable to the Fund.
6
Transactions
with Related Parties
We
entered into certain agreements with our Manager and with ICON Securities Corp.
(“ICON Securities”), a wholly-owned subsidiary of our Manager, whereby we paid
certain fees and reimbursements to those parties. Our Manager was
entitled to receive an organizational and offering expense allowance of 3.5% of
capital raised up to $50,000,000, 2.5% of capital raised between $50,000,001 and
$100,000,000, 1.5% of capital raised between $100,000,001 and $200,000,000, 1.0%
of capital raised between $200,000,001 and $250,000,000 and 0.5% of capital
raised over $250,000,000. ICON Securities was entitled to receive a
2% underwriting fee from the gross proceeds from sales of shares to additional
members.
In
accordance with the terms of our limited liability company agreement, we pay or
paid our Manager (i) management fees ranging from 1% to 7% based on the type of
transaction and (ii) acquisition fees, through the end of the operating period,
of 3% of the purchase price of our investments. The purchase price includes the
cash paid, indebtedness incurred, assumed or to which our gross revenues from
the investment are subject, or the value of the equipment secured by or subject
to such investment, and the amount of the related acquisition fees on such
investment, plus that portion of the expenses incurred by our Manager or any of
its affiliates in making investments on an arm’s length basis with a view to
transferring such investments to us, which is allocated to the investments in
question in accordance with allocation procedures employed by our Manager or
such affiliate from time to time and within generally accepted accounting
principles. In addition, our Manager will be reimbursed for
administrative expenses incurred in connection with our operations.
Our
Manager performs certain services relating to the management of our equipment
leasing and other financing activities. Such services include, but
are not limited to, the collection of lease payments from the lessees of the
equipment or loan payments from borrowers, re-leasing services in connection
with equipment which is off-lease, inspections of the equipment, liaising with
and general supervision of lessees and borrowers to ensure that the equipment is
being properly operated and maintained, monitoring performance by the lessees
and borrowers of their obligations under the leases and loans and the payment of
operating expenses.
Administrative
expense reimbursements are costs incurred by our Manager or its affiliates that
are necessary to our operations. These costs include our Manager’s
and its affiliates’ legal, accounting, investor relations and operations
personnel, as well as professional fees and other costs, that are charged to us
based upon the percentage of time such personnel dedicate to
us. Excluded are salaries and related costs, office rent, travel
expenses and other administrative costs incurred by individuals with a
controlling interest in our Manager.
Our
Manager also has a 1% interest in our profits, losses, cash distributions and
liquidation proceeds. We paid distributions to our Manager in the
amount of $84,976 for the three months ended March 31,
2010. Additionally, our Manager's interest in our net income for the
three months ended March 31, 2010 was $45,537.
Fees and
other expenses paid or accrued by the LLC to the Manager or its affiliates were
as follows:
|
Three Months Ended March
31,
|
||||||||||||
|
Entity
|
Capacity
|
Description
|
2010
|
2009
|
||||||||
|
ICON
Capital Corp.
|
Manager
|
Organizational
and
|
||||||||||
|
offering
expenses (1)
|
$ | - | $ | 221,989 | ||||||||
|
ICON
Securities Corp.
|
Managing
broker-dealer
|
Underwriting
fees (1)
|
- | 838,283 | ||||||||
|
ICON
Capital Corp.
|
Manager
|
Acquisition
fees (2)
|
600,000 | 1,805,574 | ||||||||
|
ICON
Capital Corp.
|
Manager
|
Administrative
expense
|
||||||||||
|
reimbursements
(3)
|
685,443 | 850,069 | ||||||||||
|
ICON
Capital Corp.
|
Manager
|
Management
fees (3)
|
1,072,882 | 700,029 | ||||||||
|
|
$ | 2,358,325 | $ | 4,415,944 | ||||||||
|
(1)
Amount charged directly to members' equity.
|
||||||||||||
|
(2)
Amount capitalized and amortized to operations over the estimated service
period in accordance with the Fund's accounting policies.
|
||||||||||||
|
(3)
Amount charged directly to operations.
|
||||||||||||
At March
31, 2010, we had a net payable of $331,245 primarily related to administrative
expenses due to our Manager and its affiliates. Members may obtain a
summary of administrative expense reimbursements upon request.
Your
participation in the Fund is greatly appreciated.
We
are committed to protecting the privacy of our investors in compliance with all
applicable laws. Please be advised that, unless required by a regulatory
authority such as FINRA or ordered by a court of competent jurisdiction, we will
not share any of your personally identifiable information with any third
party.
7
|
ICON
Leasing Fund Twelve, LLC
|
||||||||
|
(A
Delaware Limited Liability Company)
|
||||||||
|
Consolidated
Balance Sheets
|
||||||||
|
Assets
|
||||||||
|
March
31,
|
||||||||
|
2010
|
December
31,
|
|||||||
|
(unaudited)
|
2009
|
|||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 27,158,253 | $ | 27,075,059 | ||||
|
Current
portion of net investment in finance leases
|
19,329,588 | 17,565,862 | ||||||
|
Current
portion of notes receivable
|
23,444,019 | 22,786,334 | ||||||
|
Other
current assets
|
2,027,616 | 1,740,046 | ||||||
|
Assets
held for sale, net
|
8,982,354 | 8,982,354 | ||||||
|
Total
current assets
|
80,941,830 | 78,149,655 | ||||||
|
Non-current
assets:
|
||||||||
|
Net
investment in finance leases, less current portion
|
150,976,194 | 139,014,358 | ||||||
|
Leased
equipment at cost (less accumulated depreciation of
|
||||||||
|
$52,056,908
and $43,506,562, respectively)
|
326,929,807 | 335,480,153 | ||||||
|
Notes
receivable, less current portion
|
45,642,883 | 51,122,271 | ||||||
|
Investment
in joint venture
|
4,424,028 | 4,609,644 | ||||||
|
Other
non-current assets, net
|
11,654,313 | 12,602,305 | ||||||
|
Total
non-current assets
|
539,627,225 | 542,828,731 | ||||||
|
Total
Assets
|
$ | 620,569,055 | $ | 620,978,386 | ||||
|
Liabilities
and Equity
|
||||||||
|
Current
liabilities:
|
||||||||
|
Current
portion of non-recourse long-term debt
|
$ | 43,793,829 | $ | 43,305,938 | ||||
|
Derivative
instruments
|
6,272,358 | 4,779,552 | ||||||
|
Deferred
revenue
|
5,848,929 | 6,576,971 | ||||||
|
Due
to Manager and affiliates
|
331,245 | 482,301 | ||||||
|
Accrued
expenses and other current liabilities
|
2,671,353 | 3,154,453 | ||||||
|
Total
current liabilities
|
58,917,714 | 58,299,215 | ||||||
|
Non-current
liabilities:
|
||||||||
|
Non-recourse
long-term debt, less current portion
|
177,976,465 | 176,961,900 | ||||||
|
Other
non-current liabilities
|
49,259,299 | 44,082,046 | ||||||
|
Total
non-current liabilities
|
227,235,764 | 221,043,946 | ||||||
|
Total
Liabilities
|
286,153,478 | 279,343,161 | ||||||
|
Commitments
and contingencies
|
||||||||
|
Equity:
|
||||||||
|
Members'
Equity:
|
||||||||
|
Additional
Members
|
274,500,881 | 278,405,366 | ||||||
|
Manager
|
(340,981 | ) | (301,542 | ) | ||||
|
Accumulated
other comprehensive loss
|
(6,688,715 | ) | (5,024,109 | ) | ||||
|
Total
Members' Equity
|
267,471,185 | 273,079,715 | ||||||
|
Noncontrolling
Interests
|
66,944,392 | 68,555,510 | ||||||
|
|
||||||||
|
Total
Equity
|
334,415,577 | 341,635,225 | ||||||
|
Total
Liabilities and Equity
|
$ | 620,569,055 | $ | 620,978,386 | ||||
8
|
ICON
Leasing Fund Twelve, LLC
|
||||||||
|
(A
Delaware Limited Liability Company)
|
||||||||
|
Consolidated
Statements of Operations
|
||||||||
|
(unaudited)
|
||||||||
|
Three Months Ended March
31,
|
||||||||
|
2010
|
2009
|
|||||||
|
Revenue:
|
||||||||
|
Rental
income
|
$ | 15,657,262 | $ | 12,830,390 | ||||
|
Finance
income
|
3,965,767 | 880,910 | ||||||
|
Income
from investment in joint venture
|
148,958 | 161,904 | ||||||
|
Interest
and other income
|
3,223,752 | 2,415,816 | ||||||
|
Total
revenue
|
22,995,739 | 16,289,020 | ||||||
|
Expenses:
|
||||||||
|
Management
fees - Manager
|
1,072,882 | 700,029 | ||||||
|
Administrative
expense reimbursements - Manager
|
685,443 | 850,069 | ||||||
|
General
and administrative
|
633,487 | 438,090 | ||||||
|
Interest
|
4,533,199 | 2,241,378 | ||||||
|
Depreciation
and amortization
|
9,172,742 | 7,599,589 | ||||||
|
Loss
on financial instruments
|
230,451 | 21,842 | ||||||
|
Total
expenses
|
16,328,204 | 11,850,997 | ||||||
|
Net
income
|
6,667,535 | 4,438,023 | ||||||
|
Less:
Net income attributable to noncontrolling interests
|
(2,113,869 | ) | (1,366,345 | ) | ||||
|
Net
income attributable to Fund Twelve
|
$ | 4,553,666 | $ | 3,071,678 | ||||
|
Net
income attributable to Fund Twelve allocable to:
|
||||||||
|
Additional
Members
|
$ | 4,508,129 | $ | 3,040,961 | ||||
|
Manager
|
45,537 | 30,717 | ||||||
| $ | 4,553,666 | $ | 3,071,678 | |||||
|
Weighted
average number of additional shares of
|
||||||||
|
limited
liability company interests outstanding
|
348,709 | 295,095 | ||||||
|
Net
income attributable to Fund Twelve per weighted
|
||||||||
|
average
additional share of limited liability company
|
||||||||
|
interests
outstanding
|
$ | 12.93 | $ | 10.31 | ||||
9
|
ICON
Leasing Fund Twelve, LLC
|
||||||||||||||||||||||||||||
|
(A
Delaware Limited Liability Company)
|
||||||||||||||||||||||||||||
|
Consolidated
Statement of Changes in Equity
|
||||||||||||||||||||||||||||
|
Members'
Equity
|
||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||
|
Additional
Shares of
|
|
Accumulated Other |
|
|
|
|||||||||||||||||||||||
|
Limited
Liability Company Interests |
Additional Members |
Manager
|
Comprehensive Loss |
Total Members'
Equity |
Noncontrolling Interests |
Total Equity |
||||||||||||||||||||||
|
Balance,
December 31, 2009
|
348,709 | $ | 278,405,366 | $ | (301,542 | ) | $ | (5,024,109 | ) | $ | 273,079,715 | $ | 68,555,510 | $ | 341,635,225 | |||||||||||||
|
Comprehensive
income:
|
||||||||||||||||||||||||||||
|
Net
income
|
- | 4,508,129 | 45,537 | - | 4,553,666 | 2,113,869 | 6,667,535 | |||||||||||||||||||||
|
Change
in valuation of
|
||||||||||||||||||||||||||||
|
derivative
instruments
|
- | - | - | (1,043,025 | ) | (1,043,025 | ) | (36,768 | ) | (1,079,793 | ) | |||||||||||||||||
|
Currency
translation adjustment
|
- | - | - | (621,581 | ) | (621,581 | ) | - | (621,581 | ) | ||||||||||||||||||
|
Total
comprehensive income
|
2,889,060 | 2,077,101 | 4,966,161 | |||||||||||||||||||||||||
|
Cash
distributions
|
- | (8,412,614 | ) | (84,976 | ) | - | (8,497,590 | ) | (3,800,206 | ) | (12,297,796 | ) | ||||||||||||||||
|
Investment
in joint venture by
|
||||||||||||||||||||||||||||
|
noncontrolling
interest
|
- | - | - | - | - | 111,987 | 111,987 | |||||||||||||||||||||
|
Balance,
March 31, 2010 (unaudited)
|
348,709 | $ | 274,500,881 | $ | (340,981 | ) | $ | (6,688,715 | ) | $ | 267,471,185 | $ | 66,944,392 | $ | 334,415,577 | |||||||||||||
10
|
ICON
Leasing Fund Twelve, LLC
|
||||||||
|
(A
Delaware Limited Liability Company)
|
||||||||
|
Consolidated
Statements of Cash Flows
|
||||||||
|
(unaudited)
|
||||||||
|
Three Months Ended March
31,
|
||||||||
|
2010
|
2009
|
|||||||
|
Cash
flows from operating activities:
|
||||||||
|
Net
income
|
$ | 6,667,535 | $ | 4,438,023 | ||||
|
Adjustments
to reconcile net income to net cash provided by
|
||||||||
|
operating
activities:
|
||||||||
|
Rental
income paid directly to lenders by lessees
|
(8,175,408 | ) | (7,890,805 | ) | ||||
|
Finance
income
|
(3,965,767 | ) | (880,910 | ) | ||||
|
Income
from investment in joint venture
|
(148,958 | ) | (161,904 | ) | ||||
|
Depreciation
and amortization
|
9,172,742 | 7,599,589 | ||||||
|
Interest
expense on non-recourse financing paid directly
|
||||||||
|
to
lenders by lessees
|
1,846,092 | 2,005,737 | ||||||
|
Interest
expense from amortization of debt financing costs
|
309,849 | 235,641 | ||||||
|
Accretion
of seller's credit and other
|
554,588 | - | ||||||
|
Loss
on financial instruments
|
230,451 | 21,842 | ||||||
|
Changes
in operating assets and liabilities:
|
||||||||
|
Collection
of finance leases
|
7,783,177 | 2,213,439 | ||||||
|
Other
assets, net
|
(246,556 | ) | (2,116,143 | ) | ||||
|
Accrued
expenses and other current liabilities
|
(744,538 | ) | (524,189 | ) | ||||
|
Deferred
revenue
|
(728,042 | ) | (1,167,118 | ) | ||||
|
Due
to/from Manager and affiliates, net
|
(151,056 | ) | 35,555 | |||||
|
Distributions
from joint venture
|
148,958 | 161,904 | ||||||
|
Net
cash provided by operating activities
|
12,553,067 | 3,970,661 | ||||||
|
Cash
flows from investing activities:
|
||||||||
|
Purchase
of equipment
|
(1,783,302 | ) | (27,906,940 | ) | ||||
|
Distributions
received from joint venture in excess of profits
|
185,616 | 172,670 | ||||||
|
Restricted
cash
|
(225,683 | ) | (186,804 | ) | ||||
|
Investment
in notes receivable
|
- | (8,106,476 | ) | |||||
|
Repayment
of notes receivable
|
5,324,010 | 4,243,800 | ||||||
|
Net
cash provided by (used in) investing activities
|
3,500,641 | (31,783,750 | ) | |||||
|
Cash
flows from financing activities:
|
||||||||
|
Repayments
of non-recourse long-term debt
|
(3,784,375 | ) | - | |||||
|
Issuance
of additional shares of limited liability company
interests,
|
||||||||
|
net
of sales and offering expenses
|
- | 39,984,402 | ||||||
|
Investment
in joint venture by noncontrolling interest
|
111,987 | - | ||||||
|
Distributions
to noncontrolling interests
|
(3,800,206 | ) | (2,476,304 | ) | ||||
|
Cash
distributions to members
|
(8,497,590 | ) | (6,848,333 | ) | ||||
|
Net
cash (used in) provided by financing activities
|
(15,970,184 | ) | 30,659,765 | |||||
|
Effects
of exchange rates on cash and cash equivalents
|
(330 | ) | 5,476 | |||||
|
Net
increase in cash and cash equivalents
|
83,194 | 2,852,152 | ||||||
|
Cash
and cash equivalents, beginning of period
|
27,075,059 | 45,408,378 | ||||||
|
Cash
and cash equivalents, end of period
|
$ | 27,158,253 | $ | 48,260,530 | ||||
11
|
ICON
Leasing Fund Twelve, LLC
|
||||||||
|
(A
Delaware Limited Liability Company)
|
||||||||
|
Consolidated
Statements of Cash Flows
|
||||||||
|
(unaudited)
|
||||||||
|
Three Months Ended March
31,
|
||||||||
|
2010
|
2009
|
|||||||
|
Supplemental
disclosure of cash flow information:
|
||||||||
|
Cash
paid during the period for interest
|
$ | 2,262,000 | $ | - | ||||
|
Supplemental
disclosure of non-cash investing and financing activities:
|
||||||||
|
Principal
and interest on non-recourse long-term debt
|
||||||||
|
paid
directly to lenders by lessees
|
$ | 8,175,408 | $ | 7,890,805 | ||||
|
Equipment
purchased with non-recourse long-term debt paid directly by
lender
|
$ | 12,000,000 | $ | - | ||||
|
Equipment
purchased with subordinated financing provided by seller
|
$ | 7,000,000 | $ | - | ||||
|
Investment
in joint venture by noncontrolling interest
|
$ | - | $ | 18,381,998 | ||||
12
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 (“PSLRA”). These statements are being made pursuant to the
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,”
“continue,” “further,” “plan,” “seek,” “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 our control
that may cause actual results to differ materially from those
projected. We undertake no obligation to update publicly or review
any forward-looking statement, whether as a result of new information, future
developments or otherwise.
Additional
Required Disclosure
To
fulfill our promises to you we are required to make the following disclosures
when applicable:
A
detailed financial report on SEC Form 10-Q or 10-K (whichever is applicable) is
available to you. It is typically filed either 45 or 90 days after
the end of a quarter or year, respectively. Usually this means a
filing will occur on or around March 31, May 15, August 15, and November 15 of
each year. It contains financial statements and detailed sources and
uses of cash plus explanatory notes. You are always entitled to these
reports. Please access them by:
|
·
|
Visiting
www.iconcapital.com
|
or
|
·
|
Visiting
www.sec.gov
|
or
|
·
|
Writing
us at: Angie Seenauth c/o ICON Capital Corp., 120 Fifth Avenue,
8th
Floor, New York, NY 10011
|
We do not
distribute these reports to you directly in order to keep our expenses down as
the cost of mailing this report to all investors is
significant. Nevertheless, the reports are immediately available upon
your request.
| 13 |