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Navios Partners accepts 20% charter rate cuts with HMM

Navios Partners accepts 20% charter rate cuts with HMM
Navios Maritime Partners (Navios Partners) has accepted rate cuts of 20% on five boxships chartered out to Hyundai Merchant Marine (HMM), in exchange for getting senior unsecured notes and shares in the Korean shipowner.

Navios Partners revealed that the hire rate for the period of 18 July 2016 to 31 December 2019 has been reduced to $24,400 per day. And from 1 January 2020 the hire rate would be restored to $30,500 per day.

In exchange, Navios Partners received $7.7m principal amount of senior unsecured notes at 3% per annum payable on maturity in July 2024, and 3.7m freely tradable shares of HMM. In August, Navios Partners sold the 3.7m shares for a net cash proceed of approximately $21.3m.

South Korea’s HMM has been seeking reduction in hire rates with various shipowners as it battles to regain its financial stability. Greece’s Capital Product Partners has also agreed to take a 20% cut on five containerships chartered to HMM.

The success of securing rate cuts by HMM is an important step in overcoming the company’s mounting debts and in proceeding with restructuring.

HMM has also confirmed earlier that it will join the 2M container alliance currently comprising of Maersk Line and Mediterranean Shipping Company (MSC).

Meanwhile, Navios Partners in June this year agreed to sell the 2011-built, 13,100-teu boxship MSC Cristina to an unrelated third party at a price of $125m, with delivery expected by the first quarter of 2017.

In financial results, Navios Partners recorded a first half net loss of $16.6m as against the profit of $22.23m in the same period of last year, due mainly to an impairment charge of $17.2m on a vessel.

First half revenue dipped to $90.52m compared to $113.26m in the year-ago period.

Angeliki Frangou, chairman and ceo of Navios Partners, commented: “Since the beginning of 2016, we have fortified our balance sheet, having reduced our debt by $44.6m. In addition, we have no significant debt maturities until 2018 and expect to generate $45m in free cash flow for the remainder of 2016.”