Navios Maritime Acquisition Corporation, an owner and operator of tanker vessels, reported its financial results yesterday for the third quarter and the nine month period ended September 30, 2019.
Angeliki Frangou, Chairman and Chief Executive Officer of Navios Acquisition stated: “I am pleased with our results for the third quarter of 2019. Navios Acquisition recorded revenue of $59.0 million and Adjusted EBITDA of $23.9 million, reflecting increases of about 42% and 142%, respectively, over the third quarter of 2018. We declared a quarterly distribution of $0.30 cents per share for the third quarter of 2019, for a current yield of about 16%.”
Angeliki Frangou continued: “In a robust tanker rate market, we have a good mix of fixed revenue and market exposure. We have cash flow visibility from $430.0 million in long-term contracted revenue. About 43% of available days in 2020 are fixed, almost half of which with profit sharing. At the same time, we are positioned to capture upside, as 61.7% of available days in 2020 are open or on floating rates. All of our delivered tankers are on the water generating revenue, as we have no tankers now being fit with scrubbers.“
HIGHLIGHTS - RECENT DEVELOPMENTS
Quarterly dividend: $0.30 per share
On November 5, 2019, the Board of Directors declared a quarterly cash dividend in respect of the third quarter of 2019 of $0.30 per share of common stock, which will be paid on January 9, 2020, to stockholders of record as of December 17, 2019. The declaration and payment of any further dividends remain subject to the discretion of the Board of Directors and will depend on, among other things, Navios Acquisition’s cash requirements as measured by market opportunities and restrictions under its credit agreements and other debt obligations and such other factors as the Board of Directors may deem advisable.
On October 20, 2019, Navios Acquisition completed a registered direct offering of 1,875,000 shares of its common stock at $8.00 per share, raising gross proceeds of $15.0 million. Total net proceeds of the above transaction, net of agents’ costs of $0.7 million and estimated offering costs $0.3 million, amounted to $14.0 million.
Term Loan B Refinancing and other debt developments
In October 2019, Navios Acquisition fully prepaid its Term Loan B facility due in June 2020. The outstanding balance of the Term Loan B as of June 30, 2019 was $196.8 million. Navios Acquisition funded the repayment as follows:
$153.0 million financing through sale-and-leaseback transactions. The sale and leaseback transactions have (a) an average amortization profile of approximately 17 years on an age-adjusted basis, (b) annual interest of LIBOR plus a margin ranging from 335 bps to 360 bps and (c) an average maturity of 7 years;
$31.8 million facility from a commercial bank in order to finance one VLCC. The facility bears an annual interest of LIBOR plus 280 bps, and matures in one year; and
$12.0 million from cash on balance sheet.
Following the completion of the repayment of the Term Loan B, Navios Acquisition has no debt maturities until the third quarter of 2020. In the fourth quarter 2019 Navios Acquisition repurchased $7.0 million of Ship Mortgage Notes for a cost of $5.8 million. Year to date, Navios Acquisition reduced its debt by 4% or $45.3 million, compared to the outstanding balance as of December 31, 2018.
Amendment of the Management Agreement and the Administrative Services Agreement
In August 2019, Navios Acquisition extended the duration of its existing management agreement (the “Management Agreement”) with Navios Tankers Management Inc. (the “Manager”) until January 1, 2025. In addition management fees are fixed for two years commencing from January 1, 2020 at: (a) $6,825 per day per MR2 product tanker and chemical tanker vessel; (b) $7,225 per day per LR1 product tanker vessel; and (c) $9,650 per day per VLCC. The agreement also provides for a technical and commercial management fee of $50 per day per vessel and an annual increase of 3% after January 1, 2022 for the remaining period unless agreed otherwise. Drydocking expenses are reimbursed at cost for all vessels.
In August 2019, Navios Acquisition extended the duration of its existing administrative services agreement (the “Administrative Services Agreement”) with the Manager until January 1, 2025, which provides for allocable general and administrative costs.
On October 8, 2019, Navios Acquisition sold the Nave Electron, a 2002-built VLCC vessel of 305,178 dwt to an unaffiliated third party for a sale price of $25.3 million.
On October 17, 2019 the Nave Synergy, a 2010-built VLCC was chartered to a major charterer for 62 – 74 months at charterers’ option at a net base rate of $48,153 per day with profit sharing arrangements. The Nave Buena Suerte a 2011-built VLCC will take over the contract when released from existing commitment. The Nave Photon, a 2008-built VLCC was chartered to a major charterer for 74 – 86 months at charterers’ option with delivery between December 2019 and February 2020 at a net base rate of $48,153 per day with profit sharing arrangements. The TBN III bareboat chartered-in VLCC will take over the contract upon delivery in the third quarter 2021.
As of November 7, 2019, Navios Acquisition’s fleet consisted of a total of 41 vessels, of which 13 are VLCCs (including three bareboat chartered-in VLCCs expected to be delivered in the third and fourth quarters of 2020 and the third quarter of 2021), 26 are product tankers, two are chemical tankers.
Currently, Navios Acquisition has contracted 42.7% of its available days on a charter-out basis for 2020, which are expected to generate revenues of approximately $112.1 million. The average base contractual net daily charter-out rate for the 38.3% of available days that are contracted on base rate and/or base rate with profit sharing arrangements is expected to be $20,917.