Pangaea Logistics Solutions Announces Agreement to Purchase Third Party Equity Ownership of Nordic Bulk Partners

Rhea-AI Summary

Pangaea Logistics Solutions (Nasdaq: PANL) has announced a definitive agreement to purchase the remaining 50% equity ownership of its consolidated subsidiary, Nordic Bulk Partners , from HS Nordic for $17.2 million in cash. The transaction is expected to be completed by November 1, 2024.

Nordic Bulk Partners was established in 2019 as a joint venture to construct four Ice Class 1A Post-Panamax dry bulk vessels. Upon completion of the transaction, Pangaea will own 100% of the equity in Nordic Bulk Partners. The purchase will extinguish a long-term liability of $16.6 million recorded on Pangaea's balance sheet as of June 30, 2024.

CEO Mark Filanowski stated that this strategic move consolidates Pangaea's fleet of niche Ice Class 1A vessels, improves the balance sheet, and enhances operating cash generation. The company aims to invest in its owned fleet while capitalizing on the favorable dry bulk market conditions.

Positive

• Acquisition of remaining 50% equity in Nordic Bulk Partners for $17.2 million
• Full ownership of four Ice Class 1A Post-Panamax dry bulk vessels
• Elimination of $16.6 million long-term liability from balance sheet
• Expected improvement in operating cash generation
• Consolidation of niche Ice Class 1A vessel fleet

Negative

• Cash outlay of $17.2 million for the acquisition

Insights

Financial Analyst

This acquisition marks a significant strategic move for Pangaea Logistics Solutions. By purchasing the remaining 50% equity in Nordic Bulk Partners for $17.2 million, PANL is consolidating its ownership of four Ice Class 1A Post-Panamax dry bulk vessels. This transaction has several positive implications:

• Full control over a specialized fleet segment, enhancing operational flexibility
• Improved balance sheet structure by eliminating a $16.6 million long-term liability
• Potential for increased cash flow generation from complete ownership
• Alignment with the company's strategy to invest in owned vessels

The timing of this move, executed a year earlier than stipulated, suggests management's confidence in the dry bulk market conditions. With a market cap of $322 million, this $17.2 million investment represents a significant but manageable capital allocation. Investors should view this positively as it strengthens PANL's position in the specialized ice-class vessel market, potentially leading to improved margins and competitive advantage in Arctic shipping routes.

Maritime Industry Expert

Pangaea's acquisition of full ownership in Nordic Bulk Partners is a strategic masterstroke in the current dry bulk market landscape. The four Ice Class 1A Post-Panamax vessels are highly specialized assets, important for operations in ice-prone regions like the Baltic Sea, Northern Sea Route and Arctic waters. This move solidifies Pangaea's position in a niche market with high barriers to entry.

The timing is particularly astute, considering the growing importance of Arctic shipping routes due to climate change and increasing resource exploration in the region. By taking full control now, Pangaea is positioning itself to capitalize on potential growth in these specialized shipping lanes. Moreover, owning 100% of these modern vessels enhances the company's fleet profile, potentially leading to better charter rates and operational efficiency.

This transaction also demonstrates Pangaea's commitment to fleet modernization and specialization, which are critical factors in maintaining competitiveness in the evolving maritime logistics sector. Investors should view this as a forward-thinking move that could yield significant long-term benefits for the company.

NEWPORT, R.I., Oct. 7, 2024 /PRNewswire/ -- Pangaea Logistics Solutions Ltd. ("Pangaea" or the "Company") (Nasdaq: PANL), a global provider of comprehensive maritime logistics solutions, today announced a definitive agreement to purchase the remaining 50% equity ownership of its consolidated subsidiary, Nordic Bulk Partners LLC, from HS Nordic LLC, for $17.2 million in cash. Nordic Bulk Partners LLC was established in 2019 as a joint venture to construct four Ice Class 1A Post-Panamax dry bulk vessels. The transaction is expected to be completed by November 1, 2024 subject to customary closing terms and conditions.

Upon the completion of the transaction, Pangea will own 100% of the equity in Nordic Bulk Partners. The terms of the Nordic Bulk Partners operating agreement include ownership put and call provisions, which have been negotiated and exercised a year earlier than originally stipulated. HS Nordic's 50% equity ownership was recorded on Pangaea's balance sheet as of June 30, 2024 as a long term liability of $16.6 million, which will be extinguished as a result of this purchase

"This strategic move to take full ownership of these four modern dry bulk vessels further consolidates our fleet of niche Ice Class 1A vessels, cleans up our balance sheet, and improves our operating cash generation" stated Mark Filanowski, Pangaea's Chief Executive Officer. "We continue to pursue our strategic initiative of investing in our fleet of owned vessels, while taking advantage of the favorable macro backdrop in the dry bulk market to unlock incremental net asset value and maximize future returns on our owned fleet. We thank Hudson Structured Capital Management for their partnership in the expansion of our ice class fleet, which has been instrumental since the delivery of the vessels in 2021."

ABOUT PANGAEA LOGISTICS SOLUTIONS LTD.

Pangaea Logistics Solutions Ltd. (Nasdaq: PANL) provides logistics services to a broad base of industrial customers who require the transportation of a wide variety of dry bulk cargoes, including grains, pig iron, hot briquetted iron, bauxite, alumina, cement clinker, dolomite, and limestone. The Company addresses the transportation needs of its customers with a comprehensive set of services and activities, including cargo loading, cargo discharge, vessel chartering, and voyage planning. Learn more at www.pangaeals.com.

FORWARD-LOOKING STATEMENTS

Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Act of 1995. These forward-looking statements are based on our current expectations and beliefs and are subject to a number of risk factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The Company disclaims any obligation to publicly update or revise these statements whether as a result of new information, future events or otherwise, except as required by law. Such risks and uncertainties include, without limitation, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for dry bulk shipping capacity, changes in our operating expenses, including bunker prices, dry-docking and insurance costs, the market for our vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires and other factors, as well as other risks that have been included in filings with the Securities and Exchange Commission, all of which are available at www.sec.gov.

INVESTOR RELATIONS CONTACTS

Gianni Del Signore
Chief Financial Officer
401-846-7790
Investors@pangaeals.com 

Noel Ryan or Stefan Neely
Vallum Advisors
PANL@val-adv.com 

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SOURCE Pangaea Logistics Solutions LTD

FAQ

What is the value of Pangaea Logistics Solutions' acquisition of Nordic Bulk Partners?

Pangaea Logistics Solutions (PANL) is acquiring the remaining 50% equity ownership of Nordic Bulk Partners for $17.2 million in cash.

When is the Nordic Bulk Partners acquisition expected to close?

The acquisition of Nordic Bulk Partners by Pangaea Logistics Solutions (PANL) is expected to be completed by November 1, 2024, subject to customary closing terms and conditions.

How many vessels will Pangaea Logistics Solutions (PANL) gain full ownership of through this acquisition?

Through this acquisition, Pangaea Logistics Solutions (PANL) will gain full ownership of four Ice Class 1A Post-Panamax dry bulk vessels that were constructed as part of the Nordic Bulk Partners joint venture.

What financial impact will the Nordic Bulk Partners acquisition have on Pangaea Logistics Solutions' (PANL) balance sheet?

The acquisition will extinguish a long-term liability of $16.6 million that was recorded on Pangaea Logistics Solutions' (PANL) balance sheet as of June 30, 2024, related to HS Nordic's 50% equity ownership.