Navios Maritime Acquisition Corporation (NYSE: NNA), an owner and operator of tanker vessels, announced that the company has entered into an agreement to acquire two 75,000 DWT LR1 product tankers scheduled for delivery in Q4 2011 from a South Korean shipyard.
The nominal acquisition price of $87m will be financed with:
• Issuance of $5.4 million mandatorily convertible preferred stock ("preferred stock")
• New credit facility of $52.2m
• $29.4m cash on hand
The effective acquisition price for the two vessels is $82.8 million or $41.4 million per vessel, giving effect to the preferred stock.
Angeliki Frangou, Chairman and Chief Executive Officer of Navios Acquisition stated, "We purchased these vessels at attractive prices. This deal demonstrates the strength of our relationships and our belief in the product tanker sector. We are also pleased that, in connection with this deal, we were able to extend the maturity of the purchase options for two other LR1 tankers and defer delivery of two LR1 tankers to the second half of 2012."
Frangou continued, "We continue to look to grow the fleet. Our ability to use mandatorily convertible preferred stock to partially fund the acquisition of two LR1 product tankers suggests that our equity is attractive as an acquisition currency."
Details of Mandatorily Convertible Preferred Stock
In general, 30% of the outstanding preferred stock will mandatorily convert into common stock five years from the date of such issuance and any remaining preferred stock will mandatorily convert into common stock ten years from the date of such issuance, all at a $25.00 price per share of common stock. The holder shall have the right to convert the outstanding shares of such preferred stock into common stock before to the scheduled maturity date at a price of $35.00 per share of common stock. In addition, the preferred stock will mandatorily convert into common stock after the third anniversary of such issuance, if the common stock closing price is at least $20.00 per share for 10 consecutive business days, at a conversion price of $35 per share of common stock.
The number of shares of common stock that may be issued upon conversion ranges from 154,286, if all preferred shares are converted at $35.00 per share of common stock, to 216,000 million, if all preferred shares are converted at $25.00 per share of common stock.
Details of Credit Facility for Two New LR1s
The new credit facility that the Company has entered into has an amortization profile of approximately 19 years and bears an interest of (i) LIBOR plus 250 bps before to delivery of the vessels and (ii) 275 bps thereafter. The credit facility also requires compliance with certain financial covenants.
Details of Credit Facility for Two Existing LR1s
The Company is also in agreement with a commercial bank for an additional credit facility of $52.0 million with amortization profile of approximately 19 years and interest of LIBOR plus 300 bps to finance the construction and delivery of two LR1 Product tankers in the existing fleet.
Extension of Two Existing Purchase Options
The Company announced the extension of the two existing options on two LR1 product tankers. These options were to originally expire in January 2011 but have now been extended through March 2011.
Adjustment of Two LR1 Product Tanker Delivery Dates
The Company announced the adjusted delivery of two LR1 product tankers in the existing fleet. Delivery is now scheduled for H2 2012.