MPC Container Ships ASA and together with its subsidiaries, the “Group” is pleased to announce the following measures that will increase the Company’s balance sheet flexibility in order to execute on the Group’s plan to commence returning capital to investors. These changes are consistent with the Company’s guidance in previous quarters:
- New bank facility of USD 180 million with HCOB at LIBOR + 335 bps
- More than 30 unencumbered vessels post-closing
- Sale of six vessels between 1,000 and 1,500 TEU agreed for in total USD 135 million
- Seven additional multi-year charter fixtures concluded in historically strong charter market
- EBITDA backlog from 1 July 2021 onwards currently above USD 700 million
New credit facility
The Company has agreed a USD 180 million five-year senior secured credit facility (the “Facility”) with Hamburg Commercial Bank (“HCOB”) at attractive terms. The Facility consists of a USD 130 million term loan and a revolving credit facility of USD 50 million.
Constantin Baack, Chief Executive Officer of MPC Container Ships ASA commented: “We have executed on various measures in order to become a low leverage and high dividend paying stock. The new financing with HCOB constitutes another important step of optimizing the balance sheet structure, reducing our cost of debt and extending debt maturities into 2026. In addition, it creates high flexibility and optionality based on more than 30 unencumbered vessels following the refinancing. We appreciate the agility, professionalism and support by HCOB in arranging the Facility, which puts MPCC in a unique position to fulfil corporate goals.”
Sale of vessels
In order to optimize the fleet composition take advantage of historically high container ship asset prices, the Group has agreed to sell six smaller vessels with an average size of 1,200 TEU for a total of USD 135 million, which implies a significant premium to the current MPCC share price. MPCC’s total fleet will consist of 68 vessels once the six vessels have been handed over to their new owners.
During Q4 2021, the Company intends to use the Facility, together with parts of the proceeds from the agreed vessel sales to refinance the existing DNB acquisition financing, as well as the outstanding USD 204 million bond financing. As a consequence, the previous acquisition financing with DNB and the outstanding senior secured bonds will be repaid in full and a significant number of vessels owned by the Company will subsequently be unencumbered.
Well positioned to return capital to shareholders
“Following our strategy of prudent and rational capital allocation, these measures are important steps for MPCC to transition from a growth phase to a very strong value proposition of significant cash generation, good earnings visibility with strong dividend capacity and a low risk profile. We are very pleased that the Company is now well positioned to return capital to its shareholders”, CEO Constantin Baack added.
Subsequent to the Q2 reporting on 19 August, the Company has fixed an additional seven vessels with long periods and attractive rates. The EBITDA backlog has subsequently increased to above USD 700 million, demonstrating a continuously strong charter market.
Once executed, the new financing structure of the Group will allow for high flexibility in capital allocation and a solid foundation for implementing a sustainable dividend policy. Following the sequencing of repayment and successful handover of the sold vessels in Q4 2021, the Company expects to enter a new era of returning capital to shareholders as of Q1 2022 by distributing up to 75% of net profit by way of dividends and/or share buybacks.