Bulker owner Taylor Maritime Investments plans to keep selling vessels to pay down its debt and has revealed the sales of two bulk carriers to Grindrod Shipping, in which the firm is the majority shareholder.
The London-listed company said it agreed in July to sell the ships to Grindrod on an “arm’s-length” basis.
They are a 2011-built, 38,500-dwt handysize sold for net proceeds of $15m — which was not named but is likely to be the Japan-built Steady Sarah — and a 40,000-dwt handysize newbuilding that is due for delivery in early 2024 for a net price of $33.75m. The ammonia-ready vessel is being built at an unnamed yard in Japan.
“Together, these transactions achieve a balance of strategic fleet management, improving the overall attractiveness of the fleet profile of TMI and Grindrod and keeping an optimal number of ships operational ahead of the expected improvement in rates to come in the latter part of 2023, whilst also supporting TMI’s de-gearing plans,” TMI said in an update.
TMI has declared an interim dividend of 2 cents per share for the first six months of 2023.
Its unaudited net asset value was $1.56 per share at the end of the second quarter, compared with $1.71 per share three months earlier. Its NAV total return for the second quarter was -7.6%.
TMI said that as well as by selling vessels, it hopes to pay down its debt using proceeds from the proposed capital reduction by Grindrod, in which TMI owns 83.2%.
Grindrod shareholders will vote in mid-August on the proposed capital reduction plan, which would be funded by surplus cash generated from vessel sales.
If approved, the capital reduction would generate total cash distribution of up to a maximum of $45m, of which up to $37m would go to its major shareholder TMI.
TMI and Grindrod’s combined fleet of handysize, supramax and ultramax bulkers earned a net time charter equivalent of $12,735 per day on average during the second quarter.
Edward Buttery, chief executive of both TMI and Grindrod, said: “Despite current pressure on rates we continue to outperform our benchmark index thanks to our balanced chartering strategy. Asset values remain above historical averages and the building blocks of an improved earnings environment for the next two years are evident.”
TMI has used proceeds from vessel sales to reduce its total debt by $12m since the end of March to $210m, which is a 28.5% ratio of debt to gross assets.
Debt reduction
“We continue to prioritise debt reduction and delivering synergies by integrating management of the TMI and Grindrod fleets and making the most of opportunities given our enhanced scale so we’re in a strong position to capitalise on market improvements when they come,” Buttery said.
Grindrod sold a 33,000-dwt handysize vessel built in China in 2011 for gross proceeds of $10.8m during the second quarter.
This leaves Grindrod and TMI with a combined fleet of 47 owned vessels as of 30 June with an estimated market value of around $880m.
Looking ahead, TMI has covered 26% of its fleet days for the financial year to 31 March 2024 at a TCE rate of about $12,100 per day.
