Navios Partners, HMM Shake Hands on Charter Rate Cuts

Greek owner and operator of container and dry bulk vessels Navios Maritime Partners has reached an agreement with South Korean shipping company Hyundai Merchant Marine to cut the hire rate of five container vessels chartered out to HMM by 20%.

The deal was reached pursuant to the charter restructuring documentation executed on July 15, 2016.

The parties agreed that the rate, which was reduced to USD 24,400 per day pro rata, would be valid starting from July 18, 2016 until December 31, 2019, and, starting from January 1, 2020, it would be restored to USD 30,500 per day pro rata until redelivery.

In exchange under the charter restructuring agreement, Navios Partners received USD 7.7 million principal amount of senior, unsecured notes, amortizing subject to available cash flows, accruing interest at 3% per annum payable on maturity in July 2024, as well as 3.7 million freely tradable shares of HMM, which the company sold in August generating net cash proceeds of some USD 21.3 million.

Furthermore, the company agreed to sell its 13,100 TEU containership MSC Cristina to an unrelated third party for a total net sale price of USD 125 million, with delivery expected by the first quarter of 2017, subject to signing of definitive documentation.

During the second quarter of 2016, Navios Partners’ net loss reached USD 16.8 million, against a net income of USD 11.3 million seen in the same period a year earlier. The company’s net loss for the first half of the year stood at USD 16.5 million, compared to a net income of USD 22.2 million recorded in the first half of 2015.

Navios Partners said that its net income was negatively affected by the accounting effect of a USD 17.2 million impairment loss on one of its vessels.

“Since the beginning of 2016, we have fortified our balance sheet, having reduced our debt by USD 44.6 million. As a result, our net debt to book capitalization is 42.5% and interest coverage is 4.3x. In addition, we have no significant debt maturities until 2018 and expect to generate USD 45 million in free cash flow for the remainder of 2016,” Angeliki Frangou, Chairman and Chief Executive Officer of Navios Partners, said.

Time charter and voyage revenues for the three month period ended June 30, 2016 decreased by 20.5% to USD 44.9 million, mainly due to the decline in the freight market during 2016, as compared to the same period in 2015.

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