For quite awhile, Navios Logistics has been an important topic of discussion, with an emphasis on logistics in the rivers and coastal regions of South America. The NYSE luncheon included a lengthy presentation from Mario Bergara, Uruguay’s Minister for Economics and Finance, who described logistics as a strategic sector, and enumerated the country’s development of bulk cargo exports.
Bergara’s remarks dovetailed with the Frangou’s presentation; the slides devoted to Navios Logistics, 68.3% owned by Navios Maritime Holdings (NM) presented a story of growth in net income across its Port Terminal, Barge, and Cabotage businesses. Navios Logistics, still a private company but contributing to NM earnings is strategically positioned to handle soybeans exports- “the virtual water trade” in the words of Frangou, and iron ore production from the Carumba region of Brazil- a small, but rapidly growing source of ore moving to China.
The events came at a propitious time for the Navios companies, with Navios Maritime Partners (NMM) having raised $109m, in a sale of partnership units, and tanker company Navios Maritime Acquisition (NMA) in the process of a secondary shares offering that will raise as much as $57m if underwriters kick in and exercise their over-allotment option. On the same morning, NM announced its Q4 and year-end 2013 earnings- a loss of $0.18 per share. Because the results were below a consensus of analysts’ estimates, shares in NM were down on the day.
But the bigger picture presented by Frangou points to a group of companies which provide a recognised and respectable shipping brand. One eye-catching statistic was the $2.5bn raised by the group in the capital markets during 2013 and through late February. In her remarks, Frangou specifically mentioned $440m raised by NMM through a “Term Loan B” issuance; this technique allows companies to market their debt to a wide range of institutional buyers- a consideration in a world with reduced availability of bank finance.
Navios has also tapped a market that’s been very popular for shipping- Perpetual Preferred Stock - which allows financing to be raised without clogging up debt ratios, while at the same time not diluting equity. NM raised $50m of these securities, at 8.75%, in January 2014. All the money has been put to good use; the presentation showed that the vessel count of the three group companies grew by 50% from 98 at end 2012 to 147 ships as of mid-February.
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