DATE: May 9, 2023
SUBJECT:
Title
CONTINENTAL MARITIME OF SAN DIEGO, LLC LOCATED AT 1995 BAYFRONT STREET, SAN DIEGO:
A. RESOLUTION CONSENTING TO THE TRANSFER OF OWNERSHIP INTERESTS IN CONTINENTAL MARITIME OF SAN DIEGO, LLC, TO LSF 11TRINITY BIDCO, INC; AND
B. ORDINANCE GRANTING A SECOND AMENDED AND RESTATED LEASE TO CONTINENTAL MARITIME OF SAN DIEGO, LLC, TO UPDATE LEASE TO CURRENT TERMS.
Body
EXECUTIVE SUMMARY:
Continental Maritime of San Diego, LLC ("CMSD") operates a shipyard facility at their existing leasehold premises located at 1995 Bayfront Street, San Diego (Attachment A - Location Map) pursuant to that certain Amended and Restated Lease dated February 1, 2021 and on file with the District Clerk as Document No. 72255 (the "Current Lease"). The Current Lease covers approximately 12 acres of landside area as well as 18 acres of water area ("Premises"), and is due to expire on December 31, 2032.
LSF11 Trinity Bidco, Inc. ("Trinity Bidco"), itself owned by Lone Star Fund XI, L.P. ("Lone Star"), has entered into an agreement to acquire CMSD's existing parent company, Titan Acquisition Holdings, L.P. ("Titan") from its current ownership group, comprised of The Carlyle Group, Stellex Capital Management, and Huntington Ingalls Industries ("Ownership Group"). Trinity Bidco's acquisition of Titan (and thus an indirect transfer of CMSD's ownership), constitutes a "Change in Entity" under the Current Lease and requires the District's consent.
As a condition of the District's consent to the proposed transfer of ownership interests of Titan from the Ownership Group to Trinity Bidco ("Transfer"), the District has the right under the Current Lease to require a lease amendment to increase the rent to fair market rent and to reflect updated or additional lease conditions. As such, staff has negotiated a Second Amended and Restated Lease ("Second Amended and Restated Lease") with CMSD in the form of Attachment B - Second Amended and Restated Lease. In compa...
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