Norwegian containership owner MPC Container Ships ASA has entered into a share purchase agreement to acquire compatriot Songa Container AS for $210.25 million on a debt and cash-free basis.
Upon closing of the deal, Songa’s fleet will comprise 11 container vessels with an average size of 2,250 TEU and an average age of 11.9 years. The company is currently in the process of selling its vessels Songa Haydn, City of Hong Kong and FS Ipanema.
Nine of the acquired vessels are fitted with scrubbers while three are ice-class vessels and hence well suited for Baltic trades.
The consolidation move comes at a time of extremely favorable market conditions in the container shipping sector, with rates, charter durations and asset values strengthening.
The deal is expected to add significant scale and operating leverage to MPCC, with a combined fleet of 75 ships and a total capacity of ~158,000 TEU.
“This transaction is backed by our strong belief in the sustainable container market fundamentals and the desire to take advantage of the significant lag between asset values and rates. The structure of the transaction creates an immediate and accretive impact to our earnings in a container market that continues to strengthen by the day,” Constantin Baack , Chief Executive Officer of MPC Container Ships ASA said.
“We are pleased to welcome renowned shareholders like Arne Blystad, Canomaro Shipping and Klaveness Marine to MPCC. This is a milestone transaction for MPCC and we are particularly excited about the cash flow prospects of the combined fleet which will come to the benefit of our existing and new shareholders in the coming years.”
Approximately $115 million of the purchase price will be settled in cash, while the remaining portion will be settled by issuing approximately 48-50 million new shares in MPCC.
The Songa fleet has an estimated EBITDA backlog of $ 22.5 million with an average charter length of about 9 months. On a proforma basis MPCC currently expects revenues for the combined fleet in the range of $ 290-315 million and an EBITDA in the range of $ 170-180 million for FY 2021.
Based on the combined charter portfolio and assuming charter renewals at around current market rates and periods, the MPCC fleet is positioned to potentially generate an EBITDA of above $350 million for 2022, with $70-75 million of this generated by the Songa fleet. On the basis of the same assumptions for 2023 EBITDA could exceed $450 million.
In relation to the cash consideration, DNB Bank ASA has committed to provide a $ 127.5 million acquisition facility with a 2-year tenor and effective interest rate of 500 bps plus Libor.
The deal is expected to be completed by the end of July 2021.