Analysts believe Navios Maritime Acquisition — Angeliki Frangou's US-listed tanker arm— may have to sell more vessels to refinance a $670m bond falling due in November.
Fearnley Securities had previously believed increasingly strong tanker supply fundamentals would help the VLCC owner meet the outstanding $600m maturity.
But this has not yet been enough to drive consistently high rates levels due to the current demand crunch, the investment bank said.
"Now the notes mature in less than seven months," analysts led by Henrik Prosch Selnes said.
'Challenging' refinancing
"While we model NNA [Navios Acquisition] to be able to release significant liquidity without tapping into its core fleet, we still find refinancing challenging without a haircut to the notes or new equity," the analysts said.
Fearnleys believes most equity value outside the bond is now tied up in a new $100m related-party loan from a private company affiliated to chief executive Frangou.
The investment bank said the shipowner could amass $230m of cash from asset sales and the $100m loan.
"We struggle, however, to see the collateral package supporting a new bond above $210m and thus model a funding gap of at least $150m," the analysts said.
Fearnleys believes that if the owner sold off all assets except for the ones pledged to the related-party loan, and assuming a new bond of $250m, there would be enough cash to pay 99 cents on the bond.
Unsustainable debt?
But the investment bank added that this would leave an "unsustainable" loan-to-value ratio of 88%.
Navios Acquisition said in April that it was suspending dividend payments to its shareholders after several years of uninterrupted payouts.
"The board believes such a decision is in the best long-term interests of the company and its stockholders," Navios Acquisition added in a statement.
The company has been consistently paying dividends since 2010.
However, in the third quarter of 2020, it slashed its payout to $0.05 per share, down from the $0.30 per share it had been paying between the fourth quarter of 2018 and the second quarter of 2020.
TradeWinds has reported the decision to suspend the dividend seems motivated by the company's efforts to cope with its debt rather than by a loss-making business quarter.
Talks with bondholders
The tanker owner said last month that it has engaged in discussions with the bondholders, but there could be no assurance that a refinancing or asset sales will be successful.
Rolling over the bond debt has been the company's top concern going forward, Frangou told analysts in a conference call last year.
Navios Acquisition has already been taking several initiatives in this direction, not least the Frangou loan.
This secured debt will be used for general corporate purposes over two years with interest fixed at 11% per year.
Other initiatives taken throughout 2020 helped cut outstanding debt by $96.5m, or 9% of the total. Indebtedness was reduced by a further $63.4m so far in 2021, through debt amortisation payments and repayment of debt maturities.
The company also confirmed having sold four containerships and one VLCC so far this year, raising $66m in total.
