Box Ships buys two OOCL post-Panamax containsershipsWritten by Nick Blenkey
JUNE 13, 2012 — Athens-headquartered Box Ships Inc. (NYSE: TEU) reports that it has entered into agreements with subsidiaries of Orient Overseas Container Line Ltd. (OOCL) to acquire two 5,344 TEU post-Panamax container vessels, the 1995-build OOCL Hong Kong and the 1996-build OOCL China. The purchase price per vessel is $31.155 million, inclusive of fees, and delivery of both vessels to the company is to take place no later than July 14, 2012. Both vessels will be chartered to OOCL for a period of thirty-six months plus or minus thirty days at a net daily rate of $26,465. The employment of the two vessels is anticipated to generate approximately $57.0 million of net revenues for the agreed period of the charters.
To finance the acquisition, Box Ships issued $40.0 million of 9.75 percent Series B Cumulative Redeemable Perpetual Preferred Shares to its Chairman, President and Chief Executive Officer, Michael Bodouroglou.
The company will fund the balance of the purchase price by drawing down a $25.0 million senior secured credit facility under a firm commitment letter it has received from a major European bank. The credit facility has a tenor of three years with a balloon of $10.0 million, and will accrue interest at a rate of LIBOR plus 3.75 percent
The Series B preferred shares have a dividend rate of 9.75 per cent per annum per $30.00 of liquidation preference per share. Each of the 1,333,333 Series B preferred shares is to receive a five year warrant to purchase one share of the company’s common stock at $7.74, the closing price on June 11, 2012. The Series B preferred shares are redeemable at the company’s option at the liquidation preference price until September 1, 2012, and thereafter for a premium. In the event the company has not redeemed the Series B preferred shares by June 30, 2015, any holder of then outstanding Series B preferred shares shall receive, on a pro-rata basis, common stock representing, in the aggregate at the time, 5 percent of the company’s common shares.
Mr. Bodouroglou commented:
“We are pleased to announce the acquisition of the OOCL vessels that is consistent with our stated strategy to grow the size of our fleet and our cash flow and provides evidence of the emergence of Box Ships as a reputable and reliable containership operator. The vessels are in a size segment that we believe will continue to be critical in the global container seaborne transportation logistical chain and facilitate the commencement of our working relationship with OOCL, a major global container liner company. The three year charters extend the average term of our charter portfolio (from 23 months to 26 months), further stagger the maturities of our contracts and further diversify our sources of revenue. In addition, the cash flow generated from the OOCL charters after servicing both the $25 million credit facility and paying dividends to the Series B preferred shares will provide additional funds available to support our stated dividends to our common shareholders.
“My investment in the Series B preferred shares was necessitated by the very challenging capital markets conditions and the need to consummate the acquisition within a certain period of time. It is also a testament of my belief in this acquisition, the prospects of Box Ships and the containership sector in general. The Series B preferred shares including the warrants are redeemable at the option of the company at the liquidation preference until September 1, 2012 and the company intends to offer up to $21.0 million of these same Series B preferred shares to investors, the proceeds of which will be used to retire an amount of the Series B preferred shares I invested in.”
Box Ships also announced today that it is commencing a public offering of 700,000 Series B preferred shares, together with warrants to purchase 700,000 of its common shares at anytime between July 1, 2012 and June 30, 2017 at a purchase price of $7.74 per share. The Series B preferred shares and warrants are being offered pursuant to the company’s effective shelf registration statement as units, each consisting of one Series B preferred share and one warrant to purchase a common share, and will have identical terms to those of the Series B preferred shares and warrants issued to our Chairman, President and Chief Executive Officer. The net proceeds of the offering are expected to be used to redeem a portion of the Series B preferred shares and related warrants sold to Mr. Bodouroglou
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