Navios Maritime Holdings equity weakens on new debt financing

Navios Maritime Holdings’ stock fell this morning after the shipping and logistics company announced a new debt financing in which proceeds will be used to address a stack of near-term bond maturities.  

Navios Maritime Holdings (Navios Holdings) is a publicly traded holding company that has relied on intercompany loans to support its balance sheet. As part of the latest financing, the borrower entered into PIK loan facilities with an entity affiliated with its chairwoman and CEO Angeliki Frangou, according to the press release.  

Under the deal, the company expects to net a total of USD 550m, with proceeds being used to repay the 7.375% first priority ship mortgage notes due January 2022 upon maturity and redeem USD 50m of the 11.25% senior secured notes due August 2022.   

Pro forma the transaction, around USD 105m of the 11.25% notes will remain outstanding, according to the press release.  

The debt financing consists of two commercial bank facilities–four sale-leaseback agreements and two PIK loan facilities.   

The bank facilities and sale leasebacks total USD 287m and are expected to close by the first half of January 2022. They will be secured by 18 drybulk vessels (17 of which are now collateral for the Ship mortgage notes) plus an additional collateral of seven drybulk vessels that are subject to bareboat charters and sale and leaseback agreements.  

Navios’ new PIK loans will total USD 262.6m and is provided by its CEO Frangou. After the initial 18-month period, the PIK loans carry a 13.5% cash interest rate, as well as 18% PIK interest until the senior secured notes are repaid in full and 16.5% thereafter.   

In October 2021, Navios Maritime Partners completed the acquisition of Navios Maritime Acquisition Corp, sparking rumors that the company would do the same with Navios Holdings To that end, the latest deal dispels market rumors that Navios Maritime Partners LP would purchase the entity to avoid a restructuring event, according to a buysider and a sellsider.    

At the time, Navios Acquisition’s outstanding 8.125% first priority ship mortgage notes, due 15 November 2021 were redeemed with the proceeds of a cash contribution from Navios Partners and newly arranged secured term loans. 

Earlier this year, an ad hoc group of Navios Maritime Acquisition Corp 8.125% first priority ship-mortgage noteholders fired off a letter to management, outlining a slew of grievances related to recent actions taken by the company’s board of directors, as reported.   

The letter comes on the heels of failed amend-and-extend talks with the company to address the 15 November maturity on the USD 602.6m notes.   

The equity traded at USD 4.01 per share and a market cap of USD 101.169m, down 16.18% from yesterday’s close.

Meanwhile, Navios’ USD 615m 7.375% first priority ship mortgage notes due January 2022 traded up in odd lots to 96.67 to yield 48.828%, compared to trades at 95 to yield 68.699% yesterday (13 December), according to MarketAxess.  

2021 Debtwire

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