Navios Maritime Acquisition Corp.

Press Release

Printer Friendly Version View printer-friendly version << Back
April 8, 2010 at 4:24 AM EDT

Navios Maritime Acquisition Corporation to Acquire 13 Tankers for $457.7 Million

Transaction Highlights Include:

·

11 product tankers and two chemical tankers

·

Options to purchase two additional product tankers for $40.5

million per vessel (15 vessels in total)

·

Vessel prices near inflation-adjusted historical low

·

Excellent market opportunity and focused business strategy

·

Attractive debt financing

o

73% debt financing ($334.3 million)

o

Favorable interest margin, amortization and covenants

o

No significant near term maturities

·

Significant cash available for future acquisitions

o

Platform for consolidating fragmented tanker sector

·

Benefits from relationship with Navios Holdings include:

o

Transaction backstop

o

Right of first refusal for tanker vessels

o

Network of relationships and proprietary deal flow

·

$60 million share purchase program to be funded by Navios

Holdings and an affiliate of Angeliki Frangou

PIRAEUS, Greece, April 8, 2010 — Navios Maritime Acquisition Corporation ("Navios

Acquisition") (NYSE: NNA) announced today that it has signed a definitive agreement

pursuant to which it will acquire a 13-vessel fleet, comprised of 11 product tankers and

two chemical tankers. The aggregate purchase price is $457.7 million, of which $123.4

million will be paid from existing cash and $334.3 million from debt financing. Navios

Acquisition will also have options to purchase two additional product tankers for $40.5

million per vessel.

Angeliki Frangou, Chairman and Chief Executive Officer of Navios Acquisition, stated,

“We are pleased to announce this transaction; Navios Acquisition will be a platform for

building a world-leading operator of modern, high-quality product and chemical tankers.

We are excited about building another company in the shipping sector and believe that

the attractive market dynamics make this an ideal opportunity for leveraging our global

network of relationships and world-class skills developed in building Navios Holdings

into one of the preeminent dry bulk shipping companies.”

Ms. Frangou continued, “We have successfully built shipping companies before. Since

taking control of Navios Holdings in August of 2005, we grew the fleet from six owned

and 22 chartered-in vessels, representing 1.8 million dwt, to 32 owned and 27 charteredin

vessels, representing 6.4 million dwt. We thus grew Navios Holding’s fleet by 256%,

in dwt. In addition, in 2007 Navios Holdings launched Navios Partners on the New York

Stock Exchange, and Navios Partners currently has a fleet of 13 vessels. In total, the

Navios group now controls 72 dry bulk vessels, with an aggregate of 7.5 million dwt,

representing 317% fleet growth by dwt. Today, the Navios group has a combined current

enterprise value of $3.0 billion as compared to Navios Holdings’ enterprise value in

August 2005 of $0.6 billion, representing 414% growth. We aim to replicate these

achievements in the tanker sector through Navios Acquisition.”

Transaction Overview

The purchase price for the 13 vessels is payable in multiple installments. The initial

installment of $191.8 million will be paid on or about the closing of the transaction, of

which $30.1 million will be paid from Navios Acquisition’s existing cash and $161.7

million from debt financing. The $265.9 million balance will be paid using $93.3 million

of available cash and $172.6 million of debt financing. These amounts will be paid in

installments as vessels are constructed and delivered. The $334.4 million of acquisition

debt financing consists of three term loans aggregating to $277.0 million and a $57.3

million revolving credit facility.

After payment of the initial installment, deferred underwriter’s fees of approximately

$8.9 million and estimated transaction expenses of approximately $1.6 million, Navios

Acquisition will have approximately $208.3 million of cash, if no investors exercise

conversion rights, and $108.0 million of cash, if approximately 39.99% of investors

exercise conversion rights, leaving Navios Acquisition with significant available cash for

future acquisitions.

This transaction was structured as a sale by Navios Holdings to Navios Acquisition solely

to accommodate Navios Acquisition. Navios Holdings is providing certainty to the

transaction while Navios Acquisition seeks consent of its stockholders. Navios Holdings

is not receiving any extra benefits by virtue of being the seller in the transaction.

NAVIOS HOLDINGS BELIEVES THAT THE VESSEL ACQUISITION IS A

VALUABLE OPPORTUNITY; IF NAVIOS ACQUISITION’S STOCKHOLDERS DO

NOT APPROVE THE VESSEL ACQUISITION, NAVIOS HOLDINGS WILL

CONSUMMATE THE ACQUISITION FOR ITS OWN ACCOUNT.

Attractive Debt Financing

Navios Acquisition believes that its relationship with Navios Holdings will enable it to

access favorable debt financing, as evidenced by the contemplated debt financing, which

contain the following features:

Advance Rate:

73% financing of the aggregate purchase price.

Interest Rate:

For $334.3 million of term and revolving loans, interest margin ranging

from 2.50% to 2.75% over the applicable base rate.

Term:

Six years for $277.0 million of term loans; two years for the $57.3 million

revolving credit facility.

Favorable Amortization:

·

For $225.0 million term loan, approximately 17-year amortization profile ($16.0

million balloon payment per vessel vs. $25.0 million loan per vessel); and

·

For $52.0 million term loan, approximately 14.5-year amortization profile ($15.24

million balloon payment per vessel vs. $26.0 million loan per vessel);

Favorable Covenants:

·

Loan to value ratio covenants (post-delivery of vessel) initially of 125% for

$225.0 million of term loans.

·

Financial covenants generally inapplicable until after delivery of the vessels.

·

Ability to distribute up to 50% of net profits.

·

No negative covenants restricting the incurrence of additional debt or preventing

Navios Acquisition from acquiring additional vessels.

$60 Million Share Purchase Program

Navios Holdings and an affiliate of Angeliki Frangou have agreed to acquire, through J.P.

Morgan Securities Inc. or a third party, $60.0 million of Navios Acquisition’s common

stock in open market or privately negotiated purchases. Of this amount, Navios Holdings

has agreed to purchase up to $45.0 million of common stock, and an affiliate of Angeliki

Frangou has agreed to purchase up to $15.0 million of common stock. Navios Holdings

and Angeliki Frangou, or their respective affiliates, may make purchases in excess of

such amounts. Share purchases may commence two business days after Navios

Acquisition files a preliminary proxy statement with the Securities Exchange

Commission and will end on the date of the special stockholders meeting. If less than

$30.0 million is spent by Navios Holdings in making such purchases, Navios Holdings

will invest the difference in Navios Acquisition immediately before consummating the

vessel acquisition.

Continued Relationship with Navios Holdings

One of Navios Acquisition’s key competitive advantages is its relationship with Navios

Holdings, its sponsor and principal shareholder. Navios Holdings has an established

record of using its relationships with shipbuilders, banks and other key players in the

shipping industry to acquire vessels. These acquisitions have been executed at favorable

prices, using creative financing structures such as mandatorily convertible preferred

stock, and with superior access to favorable debt financing. Navios Acquisition believes

that its relationship with Navios Holdings will continue to allow favorable debt financing,

charter arrangements, and access to charter party insurance. In addition, Navios

Acquisition believes that Navios Holdings will continue to provide proprietary deal flow.

To facilitate Navios Acquisition’s growth, Navios Holdings has provided Navios

Acquisition a right of first refusal for the purchase of all tanker vessels, including product

and chemical tankers. In addition, Navios Acquisition will enter into a five-year

Management Agreement with a subsidiary of Navios Holdings, pursuant to which such

subsidiary will provide commercial and technical ship management services to Navios

Acquisition.

Board / Management

Ms. Angeliki Frangou stated, “To help execute our growth strategy, we are assembling a

Board of Directors and senior management team that has extensive experience in

shipping and tanker sector. I will continue to serve as Chairman and Chief Executive

Officer, and Ted Petrone will continue to serve as President and board member. We have

also appointed Leonidas Korres, previously our SVP for Business Development, as Chief

Financial Officer. I am also pleased to announce that Rex Harrington, who formerly

served on the boards of Navios Holdings, Dampskibsselskabet TORM, Clarksons PLC

and Lloyd’s Register, will join our board of directors. We look forward to leveraging our

combined operating and transaction experience to grow Navios Acquisition into a worldleading

operator of modern, high-quality product and chemical tankers.”

Market Opportunity and Business Strategy

Reasons for Entering Product and Chemical Tanker Sectors

Navios Acquisition believes that the product and chemical tanker sectors are both

fundamentally attractive because of the current opportunity to acquire tankers near their

inflation adjusted historical low prices. According to industry sources, product tanker

values have declined significantly from the recent peak in 2008, with new build tankers

(50,000 dwt vessels) declining from an average of $52.1 million in 2008 to $34.5 million

in 2010. Chemical tanker prices are also near their inflation adjusted historical low, with

new build tankers (25,000 dwt vessels) declining to an average of $42.0 million in 2010.

The recent decade’s growth in demand and macroeconomic drivers suggest continued

increase in demand as the global recession eases. During the period 2000-2009, demand

for transporting refined petroleum products increased by approximately 8.6% annually.

Demand for transporting bulk liquid chemicals increased during this same period by

approximately 5.7% annually. Emerging markets were significant demand drivers and are

expected to continue as emerging markets, particularly Asia and the Middle East, build

additional refinery capacity. Moreover, as the global economies exit the recession,

countries of the Organization for Economic Co-operation and Development will likely

create significant additional demand for tanker services.

Ms. Frangou stated, “We believe that the market opportunity, which stresses

environmental safety and quality of operations, highlights our operating strengths.

Furthermore, the recent financial crisis and related developments in the product and

chemical tanker sectors have continued to affect adversely the availability of credit to

shipping industry participants, creating opportunities for well-capitalized companies with

committed available financing such as ours.”

Focused Business Strategy

Navios Acquisition’s business strategy is to develop a world-leading operator and

charterer of modern, high-quality product and chemical tankers. Navios Acquisition’s

principal focus is the transportation of refined petroleum products (clean and dirty) and

bulk liquid chemicals. Navios Acquisition will seek to establish a leadership position by

leveraging the established reputation of Navios Holdings for maintaining high standards

of performance, risk management, reliability and safety of crews, vessels and

environment. Navios Acquisition is committed to creating long-term shareholder value

by executing on a growth strategy designed to maximize returns in all economic cycles.

Navios Acquisition believes the 13 vessel fleet acquisition will be the first step to it

becoming a leader in the product and chemical tanker sectors.

Navios Acquisition’s business strategy will be to:

·

Capitalize on near-historic low inflation-adjusted vessel prices in building a fleet

of high quality, modern, double-hulled vessels;

·

Strategically manage sector exposure in product and chemical tankers;

·

Maintain an optimum charter mix;

·

Maintain a strong balance sheet and flexible capital structure;

·

Implement and sustain a competitive cost structure; and

·

Leverage deal flow, operating experience, brand name, global network of

relationships and risk management expertise of Navios Holdings.

Fleet Information

Information concerning the 15 vessels that are part of the vessel acquisition (including

the vessels subject to the two options) is presented below:

Type DWT Delivery

Date(1)

Purchase Price

LR1 Product Tanker 74,671 May 2010 $43.5 million

LR1 Product Tanker 74,671 May 2010 $43.5 million

Chemical Tanker 25,000 9/30/2010 $28.7 million

Chemical Tanker 25,000 11/30/2010 $28.7 million

LR1 Product Tanker 75,000 Q4 2011 $40.0 million

LR1 Product Tanker 75,000 Q4 2011 $40.0 million

MR2 Product Tanker 50,000 Q1 2012 $33.6 million

MR2 Product Tanker 50,000 Q2 2012 $33.6 million

MR2 Product Tanker 50,000 Q3 2012 $33.6 million

MR2 Product Tanker 50,000 Q3 2012 $33.6 million

MR2 Product Tanker 50,000 Q4 2012 $32.9 million

MR2 Product Tanker 50,000 Q4 2012 $32.9 million

MR2 Product Tanker 50,000 Q4 2012 $32.9 million

Options

LR1 Product Tanker 75,000 Q4 2012

(1)(2) $40.5 million(2)

LR1 Product Tanker 75,000 Q4 2012

(1)(2) $40.5 million(2)

(1)

Estimated.

(2)

Subject to the exercise by Navios Acquisition of an

option to acquire the vessel which expires in November

2010.

Record Date and Date, Time and Place of Special Meeting

The board of directors of Navios Acquisition has fixed April 26, 2010 as the record date

for determining stockholders entitled to receive notice of, and, to vote at, the special

meeting. Only the holders of record of Navios Acquisition’s common stock as of such

date are entitled to have their votes counted at the special meeting.

It is anticipated that the special meeting will be held in late May 2010. Navios

Acquisition will provide notice of the special meeting to the holders of record.

Additional Information

This press release is not a solicitation to vote and further information about the

transaction and related information can be found in the Company's filings with the

Securities and Exchange Commission, including a Preliminary Proxy regarding the

transaction under cover of a Report on Form 6-K to be filed.

About Navios Acquisition Corporation

Navios Maritime Acquisition Corporation is a publicly traded Special Purpose

Acquisition Corporation (SPAC) formed under the laws of the Marshall Islands. Navios

Acquisition serves as a vehicle for acquisition through a merger, capital stock exchange,

asset acquisition, stock purchase or other similar business combination, one or more

assets or operating businesses in the marine transportation and logistics industries.

If the vessel acquisition is approved and completed, Navios Acquisition will have a fleet

of 13 tankers, consisting of 11 product tankers and two chemical tankers, plus options to

purchase two additional product tankers. Following the vessel acquisition, Navios

Acquisition’s business strategy is to become a world-leading operator and charterer of

modern, high-quality product and chemical tankers. Navios Acquisition’s principal focus

going forward is the transportation of refined petroleum products (clean and dirty) and

bulk liquid chemicals.

Passive Foreign Investment Company Status

Navios Acquisition was treated as a passive foreign investment company (“PFIC”) for its

2008 and 2009 taxable years. Based upon its expected income, assets and activities,

Navios Acquisition believes that it will be treated for United States federal income tax

purposes as a PFIC for the 2010 taxable year. For more information on PFIC issues,

please see Navios Acquisition’s website at http://navios.com/AcquisitionCorporation.asp.

Investor Relations Contact:

Public & Investor Relations Contact:

Navios Maritime Acquisition Corporation

Investor Relations

+1.212.279.8820

investors@navios.com

Risks and Uncertainties; Forward-Looking Statements

This press release may contain forward-looking statements within the meaning of the

federal securities laws. These forward-looking statements inherently involve risks and

uncertainties that are detailed in Navios Acquisition’s prospectus and other filings with

the Securities and Exchange Commission and, therefore, actual results could differ

materially from those projected in the forward-looking statements. Navios Acquisition

assumes no obligation to update publicly or revise any forward-looking statements,

whether as a result of new information, future events or otherwise