Navios Maritime Holdings's move to sell an outstanding loan from its European unit to its partnership subsidiary was "surprising news," but a positive, says JP Morgan analyst Noah Parquette.
Earlier this morning, chief executive Angeliki Frangou revealed the deal on the company's earnings conference call. Navios Maritime Partners will buy the loan, which has a remaining balance of $21.4m, for some $27m in cash and common units.
Unlike a previous loan deal which drew scrutiny for its opaque disclosure, Frangou provided ample detail and says this was done at arm's length between the entities.
Navios Maritime Partners "did an independent process with independent advisors," Frangou said. "They were already involved with these assets and the increased their stake on that."
Parquette also sees an upside for Navios Holdings "as it effectively monetises an opaque asset, and the increased ownership in (Navios Partners) gives management more strategic opportunities."
Navios is also nearing completion of an iron ore terminal that was at the centre of a dispute with Vale over a throughput agreement. Navios won that arbitration, but it did not disclose any particular award as a result.
Parquette says Vale may actually end up fulfilling its throughput agreement on the terminal due to the strength in iron ore prices. That would provide Navios with some $35m in annual operating income over the next 20 years.
Parquette says Navios Holdings appears able to make it through the current dry bulk market, but he adds there is little "material upside in the stock."
