Navios Maritime Holdings Inc. (the “Company”), announced that it sold its ship management division and certain general partnership interests (the “Transaction”) to N Shipmanagement Acquisition Corp. and related entities (“NSAC”), affiliated with Company’s Chairman and Chief Executive Officer, Angeliki Frangou. The Company received aggregate consideration of $20.0 million (including the assumption of liabilities) and new five-year service agreements under which NSAC will provide technical and commercial management services at fixed rates (as described below) and administrative services, reimbursed at allocable cost.
As a result of the Transaction
- The Company is a holding company owning dry bulk vessels and various investments in entities owning maritime and infrastructure assets.
- NSAC owns all entities providing ship management services and employs all associated people.
- The Company will pay a fixed rate of $3,700 per day per vessel, which will cover all technical and commercial management services and operating costs, other than dry-docking and special surveys. This rate will be fixed for a two-year period and will increase thereafter by 3% annually.
- NSAC will provide all administrative services to the Company and will be reimbursed at allocable cost.
- NSAC will own the general partner interests in Navios Maritime Containers L.P. and Navios Maritime Partners L.P.
The Company simultaneously entered into a secured loan agreement with NSAC whereby the Company agreed to repay NSAC $125.0 million (subject to post-closing adjustment) over a five-year period.
In general, the amount owed reflects the excess of the (1) liabilities of the ship management business (including liabilities for advances previously made by affiliates to the Company for ongoing operating costs, including technical management services, supplies, dry-docking and related expenses) other than liabilities the assumption of which forms part of the consideration for the Transaction over (2) the short term assets of the ship management business.
Of the amount owed, $47.0 million will be repayable during the first 12 months in equal quarterly installments, with the remaining principal amount repayable in equal quarterly installments over the following 48 months. In certain cases, the amortization can be deferred. The loan agreement provides for interest at 5% annually, and 7% annually for deferred principal amounts.
The closing of the Transaction occurred simultaneously with the execution of the definitive transaction agreements.
The Company’s Board of Directors formed a Special Committee of independent and disinterested directors to consider the Transaction. The Special Committee, with the assistance of its independent financial and legal advisors, exclusively negotiated the terms of the transaction agreements and approved the transaction on behalf of the Board of Directors.
Pareto Securities AS acted as financial advisor and Debevoise & Plimpton LLP acted as legal counsel to the Special Committee. S. Goldman Advisors LLC acted as financial advisor and Fried, Frank, Harris, Shriver & Jacobson LLP acted as legal counsel to NSAC.