MPC Container Ships in $210 million acquisition of Songa ContainerWritten by Nick Blenkey
In a deal that puts together two Oslo, Norway, headquartered containership operators, MPC Container Ships ASA has agreed to acquire Arne Blystad led Songa Container AS for an aggregate purchase price of $ 210.25 million on a debt and cash free basis. On closing, MPC will acquire a Songa’s fleet consisting of 11 container vessels with an average size of 2,250 TEU and an average age of 11.9 years (on the assumption that Songa will have completed the sale of three other ships). Nine of the acquired vessels are fitted with scrubbers while three have the highest ice-class and are thus well suited for Baltic trades.
Constantin Baack, CEO of MPC Container Ships ASA commented: “This transaction is backed by our strong belief in the sustainable container market fundamentals and the desire to take advantage of the significant lag between asset values and rates. The structure of the transaction creates an immediate and accretive impact to our earnings in a container market that continues to strengthen by the day.”
MPCC says that, with the deal, it aims to reinforce its position as a leading intra-regional container tonnage-provider with a combined fleet of 75 ships and a total capacity of ~158,000 TEU.
“We are pleased to welcome renowned shareholders like Arne Blystad, Canomaro Shipping and Klaveness Marine to MPCC,” said MPCC CEO Constantin Baack. “This is a milestone transaction for MPCC and we are particularly excited about the cash flow prospects of the combined fleet which will come to the benefit of our existing and new shareholders in the coming years.”
For further details on the transaction and for an operational update on the Company please refer to the presentation. An investor call will be hosted on Wednesday 23 June at 10:00 CEST. Please see below for call-in details.
Under the agreement, approximately $115 million of the purchase price (taking into account Songa’s cash and net working capital) will be settled in cash. This amount includes the refinancing of the outstanding debt. The remaining portion will be settled by way of issuing approximately 48-50 million new shares in MPCC, of the same class as MPCC’s ordinary shares and shall be listed on the Oslo Stock Exchange, and subject to a customary lock-up agreement for a period of three months from completion of the Transaction.
In relation to the cash consideration DNB Bank ASA has committed to provide a USD 127.5 million acquisition facility with a two-year tenor and effective interest rate of 500 bps plus Libor.
Arne Blystad, Chairman of Songa Container AS commented: “The container market continues to be strong and MPCC has become a compelling reflection of the underlying container market fundamentals. We are happy to contribute to the consolidation in the container market and build a leader in the regional container segment. Prior to this transaction we were already a shareholder in MPCC and we will become a more significant one post this transaction.”