Capital Product Partners L.P. , as previously announced, HMM, the charterer of five of the Partnership's vessels, namely Hyundai Prestige, Hyundai Premium, Hyundai Paramount, Hyundai Privilege and Hyundai Platinum, each under time charter expiring in 2025, has experienced financial difficulties and has pursued a restructuring involving various creditors and vessel owners.
As part of the various agreements that HMM reached with its creditors and vessel owners under its voluntary debt restructuring, the owners of the HMM Vessels entered into a charter restructuring agreement on July 15, 2016. This agreement provides for the reduction of the charter rate payable under the respective charter parties by 20% to $23,480 per day (from $29,350 gross per day) for a three-year period starting in July 2016 and ending in December 2019 (the "Charter Reduction Period"). The total charter rate reduction for the Charter Reduction Period for the HMM Vessels aggregates to approximately $37.0 million (the "Charter Reduction Amount"). The charter restructuring agreement further provides that at the end of the Charter Reduction Period, the charter rate under the respective charter parties will be restored to the original daily rate of $29,350 until the expiry of each charter in 2025.
In exchange for the Charter Reduction, the Partnership will receive shares in HMM that are expected to be freely tradable on the Stock Market Division of the Korean Exchange (at a share price reflecting a discount subject to a floor under a pre-agreed formula) and/or an unsecured loan to HMM (accruing interest at 3% p.a.), in an aggregate amount initially equal to the Charter Reduction Amount and in proportions still to be determined (the "Charter Reduction Compensation"). The Charter Reduction Compensation is expected to be delivered by July 23, 2016.
About Capital Product Partners L.P.
Capital Product Partners L.P., a Marshall Islands master limited partnership, is an international owner of modern tanker, container and drybulk vessels. The Partnership currently owns 35 vessels, including twenty modern MR (Medium Range) product tankers, four Suezmax crude oil tankers, ten Post Panamax container vessels and one Capesize bulk carrier. All of its vessels are under period charters to BP Shipping Limited, Cargill International S.A., CMA-CGM S.A., Cosco Bulk Carrier Co. Ltd., CSSA S.A. (Total S.A.), Flota Petrolera Ecuatoriana ("Flopec"), Hyundai Merchant Marine Co. Ltd., Overseas Shipholding Group Inc., Pacific International Lines (Pte) Ltd, Petróleo Brasileiro S.A. ("Petrobras"), Repsol Trading S.A., Stena Bulk A.B., and Capital Maritime.