Capital Product Partners grows fleet with Panamax trio
Greece-based shipowner Capital Product Partners L.P. (CPLP) has decided to acquire three 5,100 TEU sister container vessels from Capital Maritime & Trading Corp.
The vessels, M/V Seattle Express, M/V Long Beach Express and M/V Fos Express, were all built at Hanjin Heavy Industries shipyard in South Korea in 2008.
They are employed under five-year charters to Hapag-Lloyd at a gross charter rate of $12,300 per day and will be delivered to CPLP with their special surveys passed and fitted with ballast water treatment and alternative maritime power (AMP) systems.
The transaction has been valued at $40.5 million.
As explained, CPLP will partly fund the acquisition of the three vessels by entering into a sale and lease back transaction with CMB Financial Leasing Co., Ltd, (CMBFL) for an amount of $30 million. The lease has a duration of five years.
Furthermore, CPLP entered into a sellers’ credit agreement with Capital Maritime to defer $6 million of the purchase price for up to five years from the delivery of the vessels.
“We are pleased to announce the addition of three Panamax container vessels to our fleet, as we continue to execute our business plan of growing the Partnership through accretive acquisitions with long term cash flow visibility,” Jerry Kalogiratos, Chief Executive Officer of CPLP’s General Partner, commented.
“This transaction will be completed with a minimal cash outlay from the Partnership in view of the advantageous debt and Sellers’ Credit arrangements we have obtained. The low acquisition price, the five year charter in place to a reputable charterer, as well as the high residual value of these vessels imply very favorable returns on equity deployed.”
CPLP reports profitable Q4 2020, announces $30M unit repurchase program
The latest acquisition was unveiled in the company’s Q4 2020 financial report showing that CPLP recorded a 26 per cent increase in net income from continuing operations. Specifically, net income from continuing operations for the quarter ended 31 December 2020, was $7.3 million, compared with net income from continuing operations of $5.8 million for the fourth quarter of 2019.
What is more, total revenue was $35.1 million for Q4, compared to $27.7 million during Q4 2019. According to the company, the increase in revenue was primarily attributable to the increase in the size of the fleet following the acquisition of three 10,000 TEU containerships in January 2020.
The above result was also partly offset by the decrease in the average daily charter rate earned by the vessels in the company’s fleet as well as the off-hire associated with passing special survey for the M/V Cape Agamemnon and with one of CPLP’s 5,000 TEU vessels that had to remain off-hire for an extended period due to a COVID-19 incident and the associated quarantine rules.
“In view of the positive market developments in the container charter market, we are focused on increasing cash flow visibility and charter coverage for the Partnership’s vessels that come off charter, while we pursue further accretive acquisitions on the back of our increasing liquidity position,” Kalogiratos continued.
On 25 January 2021, CPLP’s Board of Directors approved a unit repurchase program, providing the company with authorization to repurchase up to $30 million of units of the CPLP common unit, effective for a period of two years. The partnership may repurchase these units in the open market or in privately negotiated transactions.
“The unit repurchase program we have announced … in addition to our common unit distribution policy will allow us to balance growth going forward with returning capital to our unitholders.”
CPLP currently owns 14 vessels, including 13 Neo-Panamax container vessels and one Capesize bulk carrier.