Greek ship owner and operator Euroseas has decided to acquire four container vessels as it refinanced two other ships and completed the redemption of the preferred equity.
The company signed memoranda of agreement to acquire four feeder containerships for a consideration that includes a cash payment of USD 15 million and issuance of approximately 22.5 million shares of common stock to the sellers.
The ships in question are the 2005-built M/V EM Hydra, the 2007-built EM Spetses, the 2007-built EM Kea and the 1998-built M/V Diamantis P.
Owned by affiliates of the Pittas family, which is controlled by the CEO of Euroseas, the ship quartet is scheduled for delivery within the next two months.
As informed, the transaction is subject to regulatory approval, including the one from Nasdaq.
Euroseas intends to finance the cash portion of the acquisition price with bank debt which will be used to repay the existing indebtedness of the vessels with the sellers receiving only payment in Euroseas common shares. The common shares to be issued to the sellers will represent approximately 64.3% of Euroseas’ outstanding common shares.
What is more, Euroseas agreed to refinance two of its vessels with simultaneous interest rate reduction for all other existing loans.
In addition, the company entered into a transaction to redeem approximately 60% of its outstanding Series B Preferred Shares with simultaneous reduction of the dividend rate for the preferred shares remaining outstanding.
“At first, the acquisition of the four vessels not only did it expand our fleet but also reduced its average age by 1.5 years. At the same time, this acquisition transaction underscores the belief of the main shareholders of Euroseas … in the prospects of the sector, in general, and in Euroseas, in particular,” Aristides Pittas, Chairman and CEO of Euroseas, commented.
“Thus, we were happy to contribute the vessels in exchange only for shares and replacement of existing debt of the vessels by debt arranged by Euroseas.”
Pittas added that the vessel refinancing and preferred stock redemption transactions achieve considerable cost reductions for Euroseas.
“Following these transactions, Euroseas becomes a larger, better capitalized company with a younger fleet… we remain optimistic about the prospects of the feeder containership markets due to favorable supply developments that would allow trade demand growth to get translated to better market rates, especially, when trade uncertainties related to the US-China trade tensions are resolved,” Pittas continued.
Following the addition of the four feeders, Euroseas will have a fleet of fifteen vessels, including fourteen feeder containerships and one intermediate container carrier with a cargo capacity of 34,071 TEU.