Navios to acquire ten vessels from HSH Nordbank AG
Navios Maritime Holdings Inc. (NYSE: NM) ("Navios Holdings") and Navios Maritime Acquisition Corporation (NYSE: NNA) ("Navios Acquisition") have executed a binding letter of intent to acquire ten vessels, composed of five product tankers and five container vessels with an average age of 5.5 years, from debtors of HSH Nordbank AG ("HSH") through a new joint venture ("Navios JV"), the Company press release said.
It is anticipated that the Navios JV will not be consolidated into Navios Holdings or Navios Acquisition. The transaction is subject to a number of conditions, and no assurance can be provided that the transaction will be concluded as contemplated, if at all. However, each party has agreed to reimburse a portion of the other's expenses if the party does not conclude the transaction under certain circumstances.
It is estimated that the purchase price to be paid to HSH will consist of $130 million in cash and the assumption of the Subordinated HSH Participating Loan described below.
The cash payment will be equal to 60% of the current fair market value of the vessels, plus $10.0 million. It is anticipated that the cash payment will be funded as follows:
- $10 million, from an investment by Navios JV funded by Navios Holdings and Navios Acquisition, and
- $120 million, from the proceeds of a senior bank financing ("senior bank financing") to be secured with a first-priority mortgage on the vessels.
Navios JV will assume subordinated participating loan provided by HSH ("HSH Loan") in an amount of approximately $170.0 million. Interest will accrue annually at 8%. Principal and interest only will be repaid from net cash flow and net sale proceeds from the sale of vessels. The HSH Participating Loan will be subordinated to any senior bank financing and will be secured by a second priority vessel mortgage. If cash flow from operations and net proceeds from the sale of vessels are insufficient to repay amounts outstanding on the HSH Loan, such unpaid amount will not constitute a liability of Navios JV.
Navios Holdings will provide up to $5.0 million of working capital ("Navios Working Capital Loans") to Navios JV. The Navios Working Capital Loans will accrue interest at 12.7% and will be repaid out of Navios JV's cash balances and proceeds of vessel sales.
Navios JV will receive a 12.7% annual preferred return on its $10 million investment and a preferred return of this $10 million investment upon the sale of vessels. Thereafter, 20% of cash flow from operations or sales will be paid to Navios JV and 80.0% will be paid to HSH until the amount outstanding on the HSH Participating Loan has been repaid. Once the HSH Participating Loan has been satisfied, Navios JV will receive 100% of any excess sale proceeds.
Beginning with year seven, vessels may be sold at the sole discretion of Navios JV. It is anticipated that the arrangement with HSH will be wound up by the tenth year.
About Navios Maritime Holdings Inc.
Navios Holdings (NYSE: NM) is a global, vertically integrated seaborne shipping and logistics company focused on the transport and transshipment of drybulk commodities including iron ore, coal and grain.
About Navios Maritime Acquisition Corporation
Navios Acquisition (NYSE: NNA) is an owner and operator of tanker vessels focusing in the transportation of petroleum products (clean and dirty) and bulk liquid chemicals.