Navios Holdings announced a definitive agreement providing for the sale of its 36-vessel drybulk fleet for an aggregate consideration of approximately $835.0 million consisting of cash and the assumption of bank debt and finance leases related to the vessels and subject to working capital adjustment at closing, to Navios Partners.
The aggregate transaction consideration is expected to reduce Navios Holdings’ liabilities by approximately $784.2 million, comprising of:
|Amount (in US$ millions)||Description of liability|
|$441.6||Debt and finance leases(1)|
|$80.0||11.25% Senior Secured Notes(3)|
(1) Assumed by Navios Partners, includes bank debt and finance lease liabilities as well as obligations from bareboat arrangements on a finance lease basis as of June 30, 2022, to be adjusted at the closing of the transaction
(2) Mandatory repayment of loans associated with the sale of the vessels due to N Shipmanagement Acquisition Corp. and its subsidiaries, an entity affiliated with the Chairwoman and Chief Executive Officer of Navios Holdings
(3) To be repaid at maturity on August 15, 2022
Any remaining proceeds will be used to cover transaction costs and for general corporate purposes.
Navios Holdings through this transaction believes it:
- Took advantage of a strong sale and purchase market in dry bulk
- Strengthened its balance sheet by repaying debt
- Eliminated all short-term debt maturities
- Created a solid liquidity position
- Will record an estimated net book gain of approximately $100 million in the third quarter of 2022
Following the closing of the transaction, Navios Holdings will have exited direct fleet ownership. Going forward, the Company plans to focus on growing Navios South American Logistics Inc. (“Navios Logistics”) business. Navios Holdings owns a 63.8% controlling equity stake which is consolidated into its financial statements. We believe, Navios Logistics is a leading infrastructure and logistics company in the Hidrovia region of South America having:
- A unique infrastructure comprising of port terminal facilities, barge and cabotage fleet
- Favorably located assets: Nueva Palmira terminal a critical infrastructure asset
- A long-term “take-or-pay” contract with Vale
- A favorable market backdrop to support growth
- Compelling growth opportunities
Navios Holdings also continues to hold a 10.3% interest in Navios Partners, a leading, US publicly listed shipping company, representing a compelling investment in a well-positioned diversified maritime company.
The transaction was negotiated by a special committee of the Board of Directors of Navios Holdings consisting of independent and disinterested directors (“Special Committee”) with the assistance of its independent financial and legal advisors. The transaction was unanimously approved by the Special Committee and Navios Holdings’ board of directors.
The closing of the transaction is subject to customary closing conditions, including receipt of certain consents required in connection with Navios Partners’ assumption of bank debt in connection with the transaction. The transaction is expected to close in two tranches. The first tranche, involving the transfer of 15 vessels, is scheduled to be completed on July 29, 2022. The second tranche, involving the remaining 21 vessels, is scheduled to be completed in the third quarter of 2022.
Latham & Watkins LLP acted as legal advisor and Arctic Securities AS acted as sole financial advisor to the Special Committee.