TOP Ships Inc. Announces Vessel Refinancings and Full Redemption of Series F Perpetual Preferred Shares Held by Related Party
- None.
- None.
Insights
The refinancing agreements entered by TOP Ships Inc. with major Chinese financiers represent a strategic financial maneuver that can significantly influence the company's balance sheet and liquidity. The immediate impact of these transactions is the release of capital, as indicated by the $47.9 million proceeds post-debt repayment. This capital was predominantly utilized to redeem the Series F perpetual preferred shares, which not only reduces the financial burden due to the high dividend rate of 13.5% but also simplifies the company's capital structure.
From an investor's standpoint, the redemption of high-cost equity is a positive move, as it can lead to improved earnings per share and potentially increase shareholder value. Moreover, the cost savings from the reduced dividend payouts can be substantial, improving the company's cash flow. However, the impact on the stock price would depend on the market's perception of the company's future growth prospects and its ability to manage the new debt structure effectively.
The sale and leaseback agreements for TOP Ships Inc.'s tanker vessels are indicative of the current trends in the maritime industry, where companies often leverage their assets to free up capital and optimize their fleet operations. The refinancing of the Suezmax and VLCC tankers, as well as the MR product tanker, demonstrates TOP Ships’ commitment to maintaining a modern and fuel-efficient fleet. This is particularly relevant as the shipping industry faces increasing pressure to reduce environmental impact and comply with stricter emission regulations.
The 'ECO' designation of the tankers involved in the financing agreements suggests that these vessels are designed to be more fuel-efficient than the industry average, which could offer a competitive advantage in terms of operational costs and regulatory compliance. However, the long-term success of this strategy will depend on the fluctuating dynamics of the global shipping market, including charter rates, fuel prices and evolving environmental policies.
The approval of the redemption of the Series F perpetual preferred shares by the independent members of the board of directors is a noteworthy aspect of corporate governance. Such a decision indicates a level of oversight and due diligence that aligns with shareholder interests, particularly given that the preferred shares were held by a related party. This action may enhance investor confidence in the company's governance practices.
However, it is important to monitor the concentration of voting power post-redemption, as the 36,596,274 votes associated with the redeemed shares could lead to a significant shift in shareholder dynamics. The redistribution of this voting power could affect future company decisions and the balance of control, especially since the CEO and President, Evangelos Pistiolis, is also a significant stakeholder in the company.
ATHENS, Greece, Feb. 07, 2024 (GLOBE NEWSWIRE) -- TOP Ships Inc. (the “Company” or “Top Ships”) (NASDAQ:TOPS), an international owner and operator of modern, fuel efficient “ECO” tanker vessels, announced today that it has entered into five sale and leaseback financing agreements (the “Financing Agreements”) with three major Chinese financiers for the refinancing of two 157,000 dwt Suezmax tankers, the M/Ts Eco West Coast and Eco Malibu (already concluded), two 300,000 dwt VLCC tankers, the M/Ts Julius Caesar and Legio X Equestris (already concluded) and one 50,000 dwt MR product tanker, the M/T Eco Marina Del Ray (expected to be concluded between March and May of 2024).
The proceeds after repayment of previous debt of the already-concluded financings amounted to
Evangelos Pistiolis, the President, Chief Executive Officer and Director of the Company, said:
“The amount of cash released from the concluded deals corresponds to about
Suezmaxes Refinancing
The duration of the Financing Agreements for the Suezmaxes (the “Suezmax Financing Agreements”) is for ten years and we have continuous options, after the first year for the M/T Eco Malibu and after the second year for M/T Eco West Coast, to buy back the vessels at purchase prices stipulated in the Suezmax Financing Agreements. At the end of the ten -year period we have an obligation to buy back the vessels for a consideration of
VLCCs Refinancing
The duration of the Financing Agreements for the VLCCs (the “VLCC Financing Agreements”) is for eight years and we have continuous options, after the first year, to buy back the vessels at purchase prices stipulated in the VLCCs Financing Agreements. At the end of the eight -year period we have an obligation to buy back the vessels for a consideration of
MR Product Tanker Refinancing
The duration of the Financing Agreement for the MR product tanker (the “MR Financing Agreement”) is for seven years and we have continuous options, after the first year, to buy back the vessel at purchase prices stipulated in the MR Financing Agreement. At the end of the seven-year period we have an option to buy back the vessel for a consideration of
The Financing Agreements contain customary covenants and event of default clauses, including cross-default provisions and restrictive covenants and performance requirements including (i) a ratio of total net debt to the aggregate market value of the Company’s fleet, current or future, of no more than
About TOP Ships Inc.
TOP Ships Inc. is an international owner and operator of modern, fuel efficient eco tanker vessels focusing on the transportation of crude oil, petroleum products (clean and dirty) and bulk liquid chemicals. For more information about TOP Ships Inc., visit its website: www.topships.org.
Forward-Looking Statements
Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts, including statements regarding the Company’s share repurchase program.
The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words “believe,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “plan,” “potential,” “may,” “should,” “expect” “pending” and similar expressions identify forward-looking statements. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.
For further information please contact:
Alexandros Tsirikos
Chief Financial Officer
TOP Ships Inc.
Tel: +30 210 812 8107
Email: atsirikos@topships.org
FAQ
What did TOP Ships announce?
How much cash was released from the concluded deals?
What was the cash used for?
Who approved the redemption of the Series F perpetual preferred shares?
