Navios Partners reported its financial results for the third quarter and nine months ended September 30, 2017.
Angeliki Frangou, Chairman and Chief Executive Officer of Navios Partners stated, “I am pleased with our results for the third quarter of 2017, for which Navios Partners reported revenue of $60.0 million, EBITDA of $41.0 million and net income of $9.2 million.”
Angeliki Frangou continued, “Navios Partners is expected to generate significant cash flow, as it has no material near term debt maturities and low leverage. Consequently, we were able to renew our drybulk fleet, acquiring seven vessels and selling one vessel. This increased our fleet by 33%, on a deadweight ton basis, and reduced the average age of our vessels by 9%.”
Add-on to the Term Loan B
On August 10, 2017, Navios Partners completed the issuance of a $53.0 million add-on to its existing Term Loan B facility. The add-on to the Term Loan B bears an interest rate of LIBOR plus 500 basis points and has a three year term, with a 5.0% amortization profile. Navios Partners used the net proceeds to partially finance the acquisition of three vessels, which were contributed to the collateral package.
Acquisition of Vessels
On September 20, 2017, Navios Partners acquired from an unrelated third party the Navios Symphony, a 2010- built Capesize vessel of approximately 178,132 dwt, for an acquisition cost of approximately $28.0 million.
On August 21, 2017, Navios Partners acquired from an unrelated third party the Navios Aster, a 2010 Hyundaibuilt Capesize vessel of approximately 179,314 dwt, for an acquisition cost of approximately $28.9 million.
On August 11, 2017, Navios Partners acquired from a related third party the Navios Christine B, a 2009 Tsuneishi Zhoushan-built Ultra-Handymax vessel of approximately 58,058 dwt, for an acquisition cost of approximately $14.0 million.
Renewal of Management Agreement
Navios Partners agreed to extend the duration of its existing Management Agreement with Navios
Shipmanagement Inc. (the “Manager”), a subsidiary of Navios Maritime Holdings Inc. (“Navios Holdings”), until December 31, 2022 and to fix the rate for shipmanagement services of its owned fleet through December 31, 2019.
The new management fees, excluding drydocking expenses which are reimbursed at cost by Navios Partners, will be: (a) $4,225 daily rate per Ultra-Handymax vessel; (b) $4,325 daily rate per Panamax vessel; (c) $5,250 daily rate per Capesize vessel; (d) $6,700 daily rate per Container vessel of TEU 6,800; and (e) $7,400 daily rate per Container vessel of more than TEU 8,000.
Deconsolidation of Navios Maritime Containers Inc. (“Navios Containers”)
On August 29, 2017, Navios Containers closed a private placement of 10,000,000 shares at a subscription price of $5.00 per share, resulting in gross proceeds of $50.0 million. Navios Partners invested $10.0 million and received 2,000,000 shares. Navios Partners and Navios Holdings also received warrants, with a five-year term, for 6.8% and 1.7% of the newly issued equity, respectively. Following this transaction, Navios Partners had 39.9% of Navios Container’s equity. As a result, from August 29, 2017, Navios Containers is considered an affiliate entity and the investment in Navios Containers is accounted for under the equity method due to the Company’s significant influence over Navios Containers.
As of September 30, 2017, Navios Partners held 8,000,000 common shares and received 39.9% of the equity, and Navios Holdings held 1,000,000 common shares and received 5.0% of the equity of Navios Containers.
On November 9, 2017, Navios Containers closed a private placement of 9,090,909 shares at a subscription price of $5.50 per share, resulting in gross proceeds of approximately $50.0 million. The net proceeds will be used partially to finance the acquisition of four 2008-built baby Panamax containerships for an agreed price of $96.8 million and for general working capital purposes. Navios Partners invested $10.0 million and received 1,818,182 shares. Navios Partners also received warrants, with a five-year term, for 6.8% of the newly issued equity. Following this transaction, Navios Partners will own approximately 33.7% of Navios Container’s equity.
Long-Term Cash Flow
Navios Partners has entered into medium to long-term time charter-out agreements for its vessels with a remaining average term of approximately 2.0 years. Navios Partners has currently contracted out 98.0% of its available days for 2017, 36.1% for 2018 and 16.2% for 2019, including index-linked charters, respectively, expecting to generate revenues of approximately $168.8 million, $89.3 million and $54.7 million, respectively. The average expected daily charter-out rate for the fleet is $14,948, $21,769 and $24,972 for 2017, 2018 and 2019, respectively.