By Akanimo Sampson
A global seaborne shipping and logistics company, Navios Maritime Holdings Inc., has reported its financial results for the second quarter and six month period ending last June 30. Chairman and Chief Executive Officer, Angeliki Frangou, said “I am pleased with the results of the second quarter of 2019 for which we reported revenue of $147.2 million and Adjusted EBITDA of $62.6 million.”
According to him, “charter rates in the dry bulk sector have been robust lately. While NM earned a TCE rate of $10,500 per day for the second quarter of 2019, the capesize 5TC rate is currently over $35,000 per day.”
In August 2019, Navios Holdings sold its ship management division and certain general partnership interests to N Shipmanagement Acquisition Corp. and related entities (NSM), affiliated with company’s chairman.
The company received aggregate consideration of $20.0 million (including assumption of liabilities) and new five-year service agreements under which NSM will provide technical and commercial management services at fixed rates and administrative services, reimbursed at allocable cost.
NSM owns all entities providing ship management services and employs all associated people.
The Company will pay a fixed rate of $3,700 per day per vessel, which will cover all technical and commercial management services and operating costs, other than dry-docking and special surveys. This rate will be fixed for a two-year period and will increase thereafter by 3% annually.
NSM will provide all administrative services to the Company and will be reimbursed at allocable cost.
NSM will own the general partner interests in Navios Maritime Containers L.P. and Navios Maritime Partners L.P. The company simultaneously entered into a secured loan agreement with NSM whereby the Company agreed to repay NSM $125.0 million (subject to post-closing adjustment) over a five-year period. Principal amount generally reflects the net amount of liabilities to the entities acquired by NSM.
Of the amount owed, $47.0 million will be repayable during the first 12 months in equal quarterly installments, with the remaining principal amount repayable in equal quarterly installments over the following 48 months. In certain cases, amortization can be deferred. The loan agreement provides for interest at 5% annually, and 7% annually for deferred principal amounts.
The closing of the Transaction occurred simultaneously with the execution of the definitive transaction agreements.
The company’s Board of Directors formed a Special Committee of independent and disinterested directors to consider the Transaction. The Special Committee, with the assistance of its independent financial and legal advisors, exclusively negotiated the terms of the transaction agreements and approved the transaction on behalf of the Board of Directors.
Pareto Securities AS acted as financial advisor and Debevoise & Plimpton LLP acted as legal counsel to the Special Committee.
From the beginning of 2017 through 2019 YTD, Navios Holdings has decreased by 26% the average age of its owned fleet including long-term bareboat chartered-in vessels.
In August 2019, the company took delivery of the Navios Herakles I, a newbuilt bareboat chartered-in Kamsarmax of 81,600 dwt, and also acquired from an unrelated third party, a previously chartered-in vessel, the Navios Victory, a 2014-built, 77,095 dwt vessel, for a total acquisition price of $14.5 million, which was paid in cash.
In July 2019, the company agreed to sell to an unrelated third party the Navios Primavera, a 2007-built Ultra Handymax vessel of 53,464 dwt, for a sale price of $10.3 million.
Navios Holdings controls a fleet of 57 vessels (including one vessel agreed to be sold) totaling 6.0 million dwt, of which 31 are owned and 26 are chartered-in under long-term charters. The fleet consists of 18 Capesize, 28 Panamax, 9 Ultra-Handymax and two Handysize vessels, with an average age of 7.5 years, basis fully delivered fleet.
As of August 28, 2019, Navios Holdings has chartered-out 90.8% of available days for the remaining six months of 2019, out of which 62.7% are chartered-out on fixed rate and 28.1% on index. The average contracted daily charter-in rate for the long-term charter-in vessels for the remaining six months of 2019 is $13,841 per day.
The foregoing figures do not include the fleets of Navios South American Logistics Inc. and Navios Containers and vessels servicing contracts of affreightment.
Revenue from dry bulk vessel operations for the three month period ended June 30, 2019 was $52.9 million, as compared to $72.0 million for the same period during 2018. The decrease in dry bulk revenue was mainly attributable to the decrease in the time charter equivalent per day by 10.9% to $10,500 per day in the second quarter of 2019, as compared to $11,791 per day in the same period of 2018.
Revenue from the logistics business was $60.6 million for the three month period ended June 30, 2019 as compared to $60.1 million for the same period in 2018. The increase was mainly attributable to (i) a $4.5 million increase in revenue from the barge business mainly due to an increase in revenue from liquid cargo transportation, (ii) a $2.9 million increase in revenue from the cabotage business mainly due to an increase in operating days of the cabotage fleet and (iii) a $0.3 million increase in revenue from the port terminal business mainly due to an increase in the iron ore port terminal revenue. The overall increase was partially offset by a $7.2 million decrease in sales of products mainly due to a decrease in the Paraguayan liquid port’s volumes of products sold.
Revenue of Navios Containers for the three month period ended June 30, 2019 was $33.7 million. Navios Containers’ results of operations were not included in the Company’s consolidated results of operations for the three month period ended June 30, 2018.
Net Loss attributable to Navios Holdings’ common stockholders was $36.4 million for the three month period ended June 30, 2019, as compared to $25.3 million Net Loss attributable to Navios Holdings’ common stockholders for the same period in 2018. Net Loss attributable to Navios Holdings’ common stockholders was affected by items described in the table above. Excluding these items,
Navios however specialises in the worldwide carriage, trading, storage and related logistics of international bulk cargoes. For 60 years, raw materials producers, agricultural traders and exporters, industrial end users, ship owners, charterers, ship and derivative brokers, agents, and financial business partners have relied on Navios’ expertise and innovation.
As a carrier, Navios operates a diverse portfolio of Capesize, Panamax, Ultra-Handymax and Handy size bulk carriers, deploying owned, chartered and leased vessels. Navios has extensive experience performing complex freight movements and bulk cargo logistics around the world, and in providing innovative solutions for customers’ special requirements.
In addition, the company owns and operates the largest bulk terminal in Uruguay and one of the largest liquid ports in Paraguay – one of the most successful and prominent operations of its kind in South America. Navios’ worldwide technical ship management capacity is based on a team of industry professionals graduated from the world’s leading international schools of naval architecture and marine engineering.
Navios is a leader and innovator in seaborne risk management and shipping advisory services, and a strong financial partner with a secure asset base. Navios’ focus on risk management characterises the company’s commercial and operational decisions and enables business partners to reduce their vessel and cargo exposure, and to control shipping and fuel costs. Navios’ combination of technical and financial expertise and balance sheet strength make the company a preferred business advisor and counterparty for industry-related transactions.
Navios maintains offices in Monaco, Piraeus, Greece, New York, USA, Montevideo, Uruguay, Antwerp, Belgium, Buenos Aires, Argentina, Asuncion, Paraguay. As a public company, Navios is committed to executing on behalf of shareholders and providing best-in-class service to both customers and business partners.