Final repayment earlier this month of a $418.5m loan pile due this year allows US-listed Navios Maritime Partners (NMM) to consider growing its fleet or returning more money to shareholders, its chief Angeliki Frangou said.
“As we look towards 2020, we have more choices,” Frangou told analysts in a conference call after releasing the company's third-quarter results.
Foremost in the company's sights are three sub-panamax and two panamax containerships currently in Navios Europe 1 - a special purpose vehicle in which NMM owns a 5% stake and which could be dissolved by the end of the year.
“Our first focus is the dissolution of Navios Europe 1,” Frangou said. The special purpose vehicle owes NMM about $48.2m and Frangou said she expects NMM to convert those receivables into ownership of the five boxships, plus cash.
“Conversations are ongoing and we’ll update you as they develop,” she said. Navios Europe 1 also has five product tankers in its fleet.
NMM currently owns 32 dry bulk carriers and five containerships.
Dry bulk expansion is also on the agenda. The company is considering taking a pair of kamsarmax vessels on ten-year bareboat charter-ins, with purchase options attached.
If concluded, the deals would be worth $29.1m per ship, 80% covered by financing. The agreement for one of the vessels, which Frangou didn't identify, is subject to completion of documentation. The second is still on subjects, NMM said in a presentation.
NMM's new freedom to move results from the repayment earlier this month of its so-called Term Loan B, the outstanding amount of which stood at $418.5 million at the end of 2018. NMM paid down about $300m of that amount through new bank loans with an average maturity of seven years, at 2.9 percentage points above the benchmark LIBOR rate.
The rest was paid down in cash, either from the balance sheet or raised through the sale-and-leaseback transactions of some of NMM's ships. The company has now no debt maturities pending until the third quarter of next year.
Shareholders may also get some more cash. For the second consecutive quarter, NMM paid 30 cents per unit to its investors, up from the 2 cents it had been paying quarterly throughout 2018 and in the beginning of 2019. The company also spent so far about $5m under a two-year programme that began in January to repurchase up to $50m worth of units.
Profits, management fees on the rise
At the same time, however, NMM is increasing the shipmanagement fees it pays to private affiliate Navios Shipmanagement Inc.
The US-listed company announced on Thursday a 3% increase for the commercial and technical management Navios Shipmanagement provides.
The new rates, which will be fixed for two years and take effect from January, were set at $4,350 per day for NMM's three ultra-handymaxes, $4,450 per day for its 15 panamaxes, $5,410 per day for its 14 capesizes and $6,900 per day for its five 6,800-teu containerships.
The rates were last renewed in January 2018. They are changed now as part of a general management agreement renewal valid through to January 2025.
As part of that agreement, another management fee of $50 per day for NMM's owned ships applies. On the other hand, NMM is not charged any fees for additional services, such as sale-and-purchase or financial transactions.
A similar management fee increase was announced on 30 October by Navios Containers, another listed Navios group company in which NMM holds a 33.5% stake.
NMM announced the new fee structure after reporting robust financial results for the third quarter. Reported net income climbed to $16.9m, up from $10.5m in the same period last year.
Profit and revenues were underpinned by a 6.7% year-on-year increase on timecharter equivalent earnings to $18,778 per day.
The company “is competitively positioned in a healthy charter market,” Frangou said in the earnings release. NMM has only one vessel out of service due to scrubber retrofitting. “Virtually all of our 37 vessels are on the water generating revenue,” she added.
