Navios Maritime Buys 4 Ships

Texalope Here- A good example of survival of the fittest. Dry Bulk shipping is struggling at the moment. Overcapacity of ships and new builing in the works seem to preclude recovery. Yet, cancellations of new ship contracts and scrapping of older vessels is part of the continuing business process. Capesize vessels are not as abundant. This story is about Navios capitalizing on competitors cancellations of contracts for new ships in process of being built. They have managed to arrange financing and buy new ships at favorable prices with commitments from customers to book their time. They provide forward forecasts for additional income from a growth in their capacity.
Disclosure- I own this stock.





Navios Maritime Holdings Inc. Announces Agreement to Acquire Four New Build Capesize Vessels with Secured Long-Term Employment Generating Approximately $43.33 million of EBITDA Annually

- Issuance of $165.22 million of Mandatorily Convertible Preferred Stock


- $52.82 Million Reduction in Cash Requirements for Three Existing New Build Capesize Vessels


- Conference Call and Webcast: Tuesday, June 23, 2009 at 08:00 am EDT


PIRAEUS, Greece, June 22 /PRNewswire-FirstCall/ -- Navios Maritime Holdings Inc. ("Navios Holdings") (NYSE: NM) a global, vertically integrated seaborne shipping and logistics company, announced today that it has reached an agreement to acquire four Capesize vessels, three of which are from companies controlled by Commerzbank A.G. All vessels are currently under construction at the same South Korean Shipyard.


Navios Holdings also announced that it amended the terms of existing agreements for three new build Capesize vessels. Navios Holdings will fund a portion of the purchase price for all seven vessels by issuing $165.22 million in mandatorily convertible preferred stock. A more detailed description of the vessels and an overview of certain material terms of the preferred stock are set forth below.


Angeliki Frangou, Chairman and CEO of Navios Holdings stated, "The new acquisitions demonstrate our ability to grow our fleet and cash flow by taking advantage of market dislocations. Today's agreement to acquire four vessels will generate approximately $43.33 million of EBITDA annually. These acquisitions also demonstrate the vitality of Navios' business as various industry participants have found our equity attractive."


Ms. Frangou continued, "Using mandatorily convertible preferred stock to fund cash requirements strengthens our balance sheet, as we conserve more than $165.22 million of cash. Moreover, issuing such stock protects shareholders from undue dilution, as the mandatorily convertible preferred stock is convertible into common stock at a multiple of the current market price of the common stock."


New Capesize Vessels


The aggregate purchase price for the four new vessels will be approximately $324.50 million payable with a combination of cash and mandatorily convertible preferred stock. The vessels will be employed under existing long-term charter-out contracts with an average length of 9.75 years and will generate approximately $43.33 million in annual EBITDA (assuming operating expense of $5,000 per day and 360 revenue days per year).


The details of the four new Capesize vessels and their related charters are set forth in the below table:



Name Type DWT Delivery Annual Charter-out Charter Profit
Date EBITDA rate per Term Share
(millions) day (net)

NB1 Capesize 180,000 8/2010 $17.11 $52,584 5 years n/a

NB2 Capesize 180,000 8/2010 $8.74 $29,356 12 years 50/50 in
excess of
$37,500

NB3 Capesize 180,000 9/2010 $8.74 $29,356 10 years 50/50 in
excess of
$38,500

NB4 Capesize 180,000 2/2011 $8.74 $29,356 12 years 50/50 in
excess of
$37,500


New Financing


Commerzbank A.G. has agreed to provide financing for four vessels as follows:



Amount: $240.0 million
Margin: 2.25%
Term: 10 years
Amortization: 17 years
Other terms and conditions to be in line with existing credit facilities



Amendment to Acquisition Terms of Existing Three Capesize Vessels under Construction


Navios Holdings announced that it amended the terms of existing agreements for three new build Capesize vessels. These vessels are scheduled for delivery in the fourth quarter of 2009. These vessels will be employed under existing long-term charter-out contracts that will generate a total annual EBITDA of approximately $44.29 million(assuming operating expense of $5,000 per day and 360 revenue days per year).


Vessel Type/DWT Anticipated Annual Convertible Charter-out Charter
Delivery Date EBITDA Preferred rate per Term
(millions) (millions) day (net)

Navios Capesize/ 10/2009 $13.05 - $41,325 10 years
Aurora II 172,000

Navios Capesize/ 11/2009 $18.70 - $57,000 5 years
Antares 172,000

Navios Capesize/ 12/2009 $12.54 - $39,900 10 years
Stellar 172,000
------ ------
Total $44.29 $52.82


Terms of Mandatorily Convertible Preferred Stock


In general, the holders of the mandatorily convertible preferred stock will receive an annual dividend equal to 2%, or $3.30 million, payable quarterly, until such time as the preferred stock converts into common stock.


The preferred stock will mandatorily convert into common stock as follows: (1) following the third anniversary of such preferred stock's issuance, if the common stock closing price is at least $20.00 per share for 10 consecutive business days, then the outstanding preferred stock automatically converts at a conversion price of $14.00 per share of common stock; and (2) 30% of the then-outstanding mandatorily convertible preferred stock will mandatorily convert into common stock five years from the date of such issuance and any remaining then-outstanding mandatorily convertible preferred stock will mandatorily convert into common stock ten years from the date of such issuance, all at a $10.00 price per share of common stock.


The holder shall have the right to convert the outstanding shares of such preferred stock into common stock prior to the scheduled maturity date at a price of $14.00 per share of common stock.


The number of shares of common stock that may be issued upon conversion ranges from 11.8 million, if all preferred shares are converted at $14.00 per share of common stock, to 16.5 million, if all preferred shares are converted at $10.00 per share of common stock.


Time Charter Coverage

Including the new Capesize vessels, Navios Holdings has extended the coverage of its core fleet (excluding vessels acquired through the Kleimar N.V. transaction) to 98.2% for 2009, 78.3% for 2010, 58.9% for 2011 and 53.0% for 2012.