A healthy dry-bulk market should allow Navios Maritime Holdings to pay off its last remaining bond maturity in August after recent finance deals, according to chief executive Angeliki Frangou.
Her comments came two days after the New York-listed bulker owner locked in $550m of new finance, including loans from a private Frangou-affiliated company, that allowed it to pay off $614m bond maturity that was looming in January.
The package also allows Navios Holdings to make a $50m payment on another bond series due in August, leaving $105m left to pay on the senior secured notes.
"It provides us sufficient liquidity, sufficient runway to address the open maturity," Frangou said on Thursday.
Despite recent dips in the dry-bulk spot market, the executive expressed optimism about prospects for the sector after the Pireaus-headquartered shipowner posted what she described its best-ever quarterly results.
Frangou said Navios Holdings has a very low break-even rate on its fleet, equating to about $10,700 per day for ship and roughly 10,000 open vessel days available next year.
"It's a good, healthy market. We have restricted supply ... and the Covid inefficiencies still in place," she said.
Asked by Clarksons Platou Securities analyst Omar Nokta about the company's strategic options after clearing away most of the $769m in maturities that had been looming before the latest transactions, Frangou said the financing deals provide Navios Holdings with time to explore those options.
"What we got from this financing package was a very precious commodity: the commodity of time," Frangou said.
The company has reported a return to the black in the third quarter of the year.
| Q3 2021 | Q3 2020 | |
| Revenue | $168m | $126m |
| Ebitda | $116.1m | $48m |
| Adjusted Ebitda | $116.1m | $59.9m |
| Net income | $59.8m | -$10.1m |
| Adjusted net income | $59.8m | $1.78m |
| Earnings per share | $3.67 | -$0.88 |
| Adjusted EPS | $3.67 | $0.04 |
Navios Holdings said it is paying down nearly $456m of the notes coming due in January using $456m from the finance package and available cash.
Another $160m of the notes held by N Shipmanagement Acquisition (NSM), the Frangou-linked company in the finance deal, were cancelled.
As TradeWinds reported on Tuesday, NSM provided nearly $263m in payment-in-kind loans from NSM, with Navios Holdings paying a $24m fee and the first 18 months of payments through debt securities known as debentures.
Those deals paved the way for $287m in commercial bank loans and sale-and-leaseback agreements.
The use of convertible debentures in the deal has led analysts to flag concerns of dilution risks.
"Yes, there will be dilution," chief financial officer George Achniotis said.
"You have to consider what were the alternatives for the company. Regular financing was out of reach."
He said it was not possible to find financiers willing to put money into a company with a heavy debt overhang.
That left two options: go to distressed asset hedge funds or go into Chapter 11 bankruptcy restructuring.
"In either case, equity would be completely wiped out," he said.
Achniotis said NSM came in with terms that were "not unreasonable" by releasing collateral in a way that facilitated both the bank loans and paying off the maturities.
And the finance chief noted that NSM's conversion options are priced at $3.93, well above the $3.65 share price at Wednesday's market close.
"The option price is under water at the moment," Achniotis said.
