Seanergy Maritime Holdings Corp. announced its financial results for the fourth quarter and twelve months ended December 31, 2016.
For the fourth quarter and twelve months ended December 31, 2016, the Company generated net revenues of $10.9 and $34.7 million respectively. As of December 31, 2016 total stockholders’ equity was $30.8 million and cash and restricted cash was $15.9 million.
Stamatis Tsantanis, the Company’s Chairman & Chief Executive Officer, stated:
“During 2016, the dry bulk market went through the worst crisis of the last 25 years. The continuous oversupply of ships as well as the concerns over future demand for dry bulk transport led to the lowest freight rate levels since the end of the 1980’s. Despite this difficult environment, Seanergy emerged a bigger and stronger company as we managed to grow our fleet at historically favorable prices while significantly improving our financial flexibility and operational performance.
“The acquisition of two modern Capesize vessels in 2016, not only increased our dwt capacity by 30% to 1.5 million, but has also established a substantial presence for the Company in the Capesize segment. The price of $20.75 million per Capesize vessel was the lowest price paid by any of our public peers in the last five years.
“Consistent with our business plan to expand our fleet with quality tonnage, we recently agreed to acquire another modern Capesize vessel built in 2012 in Hyundai of South Korea. The agreed acquisition cost is $32.65 million and upon delivery of the vessel by the end of May 2017, our fleet dwt will expand to 1.7 million dwt. In our view, we are acquiring this additional Capesize vessel at an attractive price given the relevant historical values. Additionally, this purchase proves our ability to generate significant returns for our shareholders, which is evident with the two modern Capesize vessels that we bought in 2016.
“We strongly believe that the Capesize segment represents the best fundamentals in the dry bulk industry and our recent acquisitions will significantly improve our shareholder value. Seanergy will continue to actively pursue accretive acquisition opportunities of quality Capesize vessels.
“Seanergy also achieved a substantial improvement of its liquidity. From August 2016 to date we have raised $27.6 million gross proceeds from public offerings and we have used this capital for vessel acquisitions at historical low values and entered into agreements to reduce our debt which will create a material accretion in value for our shareholders. In March 2017, we reached an important agreement with one of our lenders for the early repayment of one of our loan facilities at a 30% discount that should generate a gain of $11.4 million. Finally, we have reached proactive agreements with our lenders to waive and defer certain major financial covenants in all of our existing banking facilities until the second quarter of 2018.
“We strongly believe that the successful implementation of our business plan along with the improving dry bulk market conditions will continue to enhance shareholder value.”
Fourth Quarter 2016 Developments:
Delivery of the Lordship and Knightship
During the fourth quarter of 2016 Seanergy took delivery of two Korean 2010-built Capesize from an unaffiliated third party pursuant to agreements it had entered into in September 2016. The Lordship was delivered on November 30, 2016 and the Knightship was delivered on December 13, 2016. The two deliveries marked the successful completion of the Company’s acquisition plan for 2016.
Completion of Public Share Offering
On December 13 and 21, 2016, the Company sold an aggregate of 11,300,000 of the Company’s common shares and Class A Warrants to purchase 11,500,000 of the Company’s common shares in a registered public offering for an aggregate amount of $17.0 million gross proceeds, which included the exercise of the over-allotment option by the underwriters. The net proceeds from the sale of the common shares and warrants, after deducting fees and expenses, were approximately $14.9 million. In connection with the sale of the securities, the Company issued to the representative of the underwriters Representative’s Warrants to purchase an aggregate of 565,000 of the Company’s common shares.
Loan Facility with Northern Shipping Fund
On November 28, 2016, the Company entered into a $32 million loan facility, with Northern Shipping Fund III LP, or NSF, to fund part of the acquisition cost of Lordship and Knightship. The facility has been fully drawn with the delivery of the two ships.
Completion of Registered Direct Offering
In a registered direct offering that was completed on November 23, 2016, the Company sold 1,305,000 shares of common stock to three unaffiliated institutional investors at a purchase price of $2.75 per share, for aggregate gross proceeds of $3.6 million. The net proceeds from the sale of the securities, after deducting placement agent fees and related offering expenses, are approximately $3.2 million. Of the net proceeds of this offering, $3 million were used to partially fund the acquisition of the Lordship.
Loan Facility with Jelco Delta
On October 4, 2016, the Company entered into the a loan facility with Jelco Delta Holding Corp., an entity affiliate with the Company’s principal shareholder, initially a $4.2 million loan facility to fund the initial deposit for Lordship and Knightship. Subsequent to amendments dated November 17, 2016 and November 28, 2016 the aggregate amount that could be borrowed under the facility was increased to $12.8 million. The Company has fully drawn down the facility, and following a repayment of $6.9 million on December 14, 2016, the amount outstanding as of the date of this press release is $5.9 million.
Acquisition of a 2012 built Capesize Vessel
On March 28, 2017, the Company entered into an agreement with an unaffiliated third party for the purchase of a secondhand Capesize vessel, at a gross purchase price of $32.65 million. The vessel is expected to be delivered until the end of May 2017, subject to the satisfaction of certain customary closing conditions.
Proactive Covenant Deferral and Waiver Agreements on Bank Facilities
On March 14, 2017, Seanergy agreed with four of its senior lenders for the proactive waiver and deferral of the application date of certain major financial covenants. Based on these agreements the Company expects to be in compliance with all major applicable covenants until the second quarter of 2018.
Agreement for early termination of credit facility resulting in a material gain
On March 7, 2017, Seanergy entered into a definitive agreement with one of the Company’s lenders for the early termination of a credit facility. Upon completion of the transaction, this will result in a gain and equity accretion to Seanergy, estimated to be approximately $11.4 million.
On February 3, 2017, the Company entered into an Equity Distribution Agreement with Maxim Group LLC (“Maxim”) as sales agent, under which the Company may offer and sell, from time to time through Maxim up to $20 million of its common shares. The Company will determine, at its sole discretion, the timing and number of shares to be sold pursuant to the Equity Distribution Agreement along with any minimum price below which sales may not be made. Maxim will make any sales pursuant to the Equity Distribution Agreement using its commercially reasonable efforts consistent with its normal trading and sales practices. Sales of common shares, if any, may be made by means of ordinary brokers’ transactions on the Nasdaq Capital Market, in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended, (“Securities Act”) including sales made to or through a market maker other than on an exchange, at prices related to the prevailing market prices or at negotiated prices. Up to the date of this press release, the Company has sold 2,019,675 common shares for an aggregate amount of $2.2 million of gross proceeds.