Euroseas Buys Four Feeder Containerships

Maritime Activity Reports, Inc.

June 3, 2019

Pic: Euroseas

Pic: Euroseas

The provider of seaborne transportation for containerized cargoes, Euroseas also announced that it signed memoranda of agreement to acquire four feeder containerships for a consideration that includes a cash payment of $15 million and issuance of approximately 22.5 million shares of common stock to the sellers.

Euroseas intends to finance the cash portion of the acquisition price with bank debt which will be used to repay the existing indebtedness of the vessels with the sellers receiving only payment in Euroseas common shares. This is subject to regulatory approval, including approval from NASDAQ, said a press release from the Greek ship owner.

The four vessels, M/V EM Hydra and EM Spetses, both 1,700 teu feeder containership built in 2005 and 2007, respectively, EM Kea, a 3,100 teu feeder containership built in 2007, and the M/V Diamantis P, a 2,008 teu feeder vessel built in 1998, represent a significant expansion of Euroseas’ fleet both in terms of units and value.

After the acquisition of these four vessels which are currently chartered, Euroseas fleet will consist of 15 container vessels with all the vessels except for one being feeder containerships.

Aristides Pittas, Chairman and CEO of Euroseas said: “At first, the acquisition of the four vessels not only did it expand our fleet but also reduced its average age by 1.5 years. At the same time, this acquisition transaction underscores the belief of the main shareholders of Euroseas (including myself and the broader Pittas family) in the prospects of the sector, in general, and in Euroseas, in particular, as the main publicly listed consolidation platform for other feeder containership fleets as well. Thus, we were happy to contribute the vessels in exchange only for shares and replacement of existing debt of the vessels by debt arranged by Euroseas.”

“Secondly, the vessel refinancing and preferred stock redemption transactions achieve significant cost reductions for Euroseas. These two developments alone are expected to reduce our interest and preferred dividend expense by more than $1.4 million per year. We believe these latter two transactions highlight the support Euroseas enjoys with our banks and preferred shareholders.”

“Following these transactions, Euroseas becomes a larger, better capitalized company with a younger fleet. As mentioned in our earnings release last week, we remain optimistic about the prospects of the feeder containership markets due to favorable supply developments that would allow trade demand growth to get translated to better market rates, especially, when trade uncertainties related to the US-China trade tensions are resolved.”

Euroseas also agreed to refinance two of its vessels in a transaction that freed up about $8 million of cash which together with approximately $3.7 million of its available cash will be used to redeem approximately $11.7 million of its series B Preferred Shares as described below.

Following this refinancing, all of Euroseas’ existing vessels are financed by the same bank, which as part of the arrangement agreed to reduce the loan margin of the overall loan facility by 0.5%.

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