APRIL 23, 2015 — Navios Maritime Holdings Inc. (NYSE: NM), Navios Maritime Acquisition Corporation (NYSE: NNA) and Navios Maritime Partners L.P. (NYSE: NMM) have executed a binding letter of intent to acquire 14 vessels from debtors of HSH Nordbank AG through a new joint venture.
The 14 vessels include seven dry bulkers and seven container vessels with an average age of approximately 4 years. The transaction is expected to close in the second quarter of 2015.
"This is our second transaction with HSH and demonstrates our ability to source and execute exclusive proprietary deals in a very difficult market environment," said Navios Chairman and CEO Angeliki Frangou. "These transactions differentiate us from our peers as we are acquiring large fleets with low capital investment and no dilution to our shareholders. The transaction adds tremendous value for Navios and HSH as it provides relief to distressed assets from bankruptcy and places them into Navios' stable ownership, leveraging our economies of scale and superior technical and commercial management."
"This second transaction scales up on the existing mechanism with HSH to acquire distressed vessels at historically low values and economics that are more favorable when compared to the first transaction," Ms. Frangou added. "The fleet is larger and younger and Navios enjoys an attractive preferred return per annum on its investment."
The Navios JV will not be consolidated into any of the Navios public entities. The transaction is still subject to certain conditions, and no assurance can be provided that the transaction will be concluded as contemplated, if at all.
Fleet Purchase Price
Navios estimates the purchase price to be paid to HSH will consist of cash and the assumption of a Subordinated HSH Participating Loan described below. It is anticipated that the cash payment will be funded as follows:
Senior bank financing of 60% of Fair Market Value of the vessels at closing, secured by a first-priority mortgage on the vessels and
$14.0 million, from an investment by Navios JV funded by Navios.
Subordinated HSH Participating Loan: Navios JV will assume a subordinated participating loan provided by HSH. Principal and interest will only be repaid from net cash flow and net sale proceeds from the sale of vessels. The loan will be subordinated to any senior bank financing and will be secured by a second priority vessel mortgage. There will be no holding company guarantees from any of the Navios public entities.
Navios will provide working capital to Navios JV which accrues preferred interest and will be repaid out of Navios JV's cash balances and proceeds of vessel sales.
Navios JV will receive an annual preferred return on its $14 million investment and a priority return of this investment upon the sale of vessels. Thereafter, cash flow from operations or sales will be shared between Navios JV and HSH until the amounts outstanding on the HSH Junior Loan have been repaid. Once the HSH Junior Loan has been satisfied, Navios JV will receive 100% of any excess proceeds.
Navios JV reserves the right to sell vessels after Year 6 to recover principal investments and any accumulated returns.
The ships being acquired are
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