Navios Maritime Holdings, Navios Maritime Acquisition Corporation and Navios Maritime Partners have through their new joint venture executed a binding letter of intent to acquire 14 vessels from debtors of the German HSH Nordbank AG.
The 14 vessels include seven dry bulkers and seven container vessels with an average age of approximately 4 years. The transaction is expected to close in Q2 2015.
The new joint venture, named Navios JV, will not be consolidated into any of the Navios public entities. The transaction is still subject to certain conditions, and no assurance can be provided that the transaction will be concluded as contemplated, if at all.
Navios plans to finance the purchase with cash and with a subordinated HSH participating loan (HSH Junior Loan). It is anticipated that the cash payment will be funded through senior bank financing of 60% of fair market value of the vessels at closing, secured by a first-priority mortgage on the vessels, and USD 14 million from an investment by Navios JV funded by Navios.
Navios will provide working capital to Navios JV which accrues preferred interest and will be repaid out of Navios JV’s cash balances and proceeds of vessel sales.
Comparable to the first transaction, Navios JV will receive an annual preferred return on its USD 14 million investment and a priority return of this investment upon the sale of vessels. Thereafter, cash flow from operations or sales will be shared between Navios JV and HSH until the amounts outstanding on the HSH Junior Loan have been repaid. Once the HSH Junior Loan has been satisfied, Navios JV will receive 100% of any excess proceeds.
Navios JV reserves the right to sell vessels after six years to recover principal investments and any accumulated returns.
Back in 2013, Navios bought five product tankers and five container ships from HSH Nordbank.