Euroseas is scaling back capacity and resetting its finances amid bleak world-wide demand for hard commodities and collapsing dry bulk freight rates.
Sale of two vessels, the M/V Despina P and the M/V Aristidis NP
The Company announced today the sale of M/V Despina P, a 1,932 TEU Container vessel, built in 1990, and of M/V Aristides NP, a 69,268 dwt drybulk carrier built in 1993, to unaffiliated third parties for recycling. M/V Despina P was delivered to its buyers on December 28, 2015. M/V Aristides NP is expected to be delivered to its buyers around January 15, 2016.
Agreement for Debt Financing of the Upcoming Kamsarmax Newbuilding Delivery
The Company also announced that it has signed a binding termsheet to finance 69% of the fair market value at delivery of the Company’s newbuilding, M/V Xenia, an 82,300 dwt drybulk vessel, expected to be delivered around February 25, 2016. Upon delivery, M/V Xenia will enter in a four year time charter at $14,100/day with an option for the charterer to extend it for a fifth year at $14,350/day. The Company which has already made payments for 30% of the contracted price of the vessel will finance the remaining payment from existing funds.
New Delivery Schedules for the Remaining Three Newbuilding Vessels
In addition, the Company announced new delivery schedules for its remaining three newbuildings. Delivery of its two Ultramax vessels is now expected to be in April and July 2016, respectively, a delay of five month each from the original schedule. Delivery of its second Kamsarmax vessel will be delayed by approximately fifteen months and it is now expected to be delivered between January and March 2018.
Refinancing of the Debt of Six Vessels
Furthermore, the Company announced that it has signed a binding termsheet to draw a loan with a three year tenor and balloon of about 65% of the loan amount to refinance existing debt on its vessels M/V Ninos, Kuo Hsiung, Cpt. Costas, Manolis P and Monica P which along with, the currently unencumbered, M/V Aggeliki P, will serve as collateral to the new loan.
Aristides Pittas, Chairman and CEO of Euroseas commented: “We are very pleased to have concluded agreements to finance our first Kamsarmax newbuilding and to refinance existing debt on six of our elder vessels. Both of these agreements along with the previously arranged debt financing for our two Ultramax newbuildings and proceeds from the sale of two of our elder vessels significantly increase our near term liquidity and will enable us to take delivery of all our three newbuildings scheduled to be delivered in 2016.
“With the drybulk market at 30-plus year lows and containership markets also very close to the lowest levels, we believe we have managed to position the Company to take advantage of any cyclical market recovery over the next couple of years.”
Euroseas Ltd. was formed on May 5, 2005 under the laws of the Republic of the Marshall Islands to consolidate the ship owning interests of the Pittas family of Athens, Greece, which has been in the shipping business over the past 136 years. Euroseas trades on the Nasdaq Capital Market under the ticker symbol ESEA.
Euroseas operates in the dry cargo, drybulk and container shipping markets. Euroseas’ operations are managed by Eurobulk Ltd., an ISO 9001:2008 certified affiliated ship management company, which is responsible for the day-to-day commercial and technical management and operations of the vessels. Euroseas employs its vessels on spot and period charters and through pool arrangements.