10 June 2015
Watson Farley & Williams (“WFW”) has again advised HSH Nordbank AG (“HSH”) on a highly innovative structured deal to transfer a fleet of distressed vessels out of HSH’s non-core portfolio to Navios Group (“Navios”). WFW previously advised HSH on the ground-breaking transfer of 10 distressed vessels to Navios in 2013. On this occasion, the fleet includes seven container vessels and seven dry bulk carriers, with an average overall age of four years and market value of US$225 million.
The 14 vessels have been acquired by a new joint venture called Navios Europe (II). Dry bulk owner Navios Maritime Holdings and tanker company Navios Maritime Acquisition will each have a 47.5% stake in the joint venture, while five percent will be held by Navios Maritime Partners. As consideration for the purchase, Navios Europe (II) assumes US$182.5m in debt from HSH as a junior participating loan, and will pay US$145.3m in cash. As per the arrangement in the previous deal in 2013, proceeds from operations or the sale of the vessels will be shared between Navios and HSH up until the point where the HSH loan to Navios has been repaid. After the sixth year of the arrangement, Navios has the right to sell the vessels to cover principal investments and any accumulated returns.
The cash portion of Navios Europe (II)’s investment includes a US$14m equity investment from the Navios Group and a US$135m new senior bank loan.
The seven dry bulk carriers in the portfolio range from supramaxes up to post-panamaxes, while the seven container vessels range from handymax to panama size. Three of the vessels have already been delivered, with 10 expected to be delivered in July and remaining vessel will be delivered in November.
Speaking regarding the deal, HSH Head of Restructuring Wolfgang Topp said: “The benefits of the transaction are self-evident. We are reducing our risks and Navios broadening its portfolio to include complementary ships. The ships in turn are given economic prospects as a result of becoming part of a new fleet.”
The cross-border WFW team was led by finance partner and Head of WFW Greece, George Paleokrassas. He was supported by WFW Hamburg partner Clemens Hillmer and WFW Athens senior associate Theocharis Almpanidis and associate Electra Stamatopoulos.
Partner George Paleokrassas said: “Having laid the groundwork for this transaction by advising HSH Nordbank on the previous transfer of distressed shipping assets to Navios, we’re very pleased to have been able to advise HSH on this mutually beneficial transaction. The structure in place provides a roadmap for banks to reduce their exposure to distressed assets while allowing other operators to acquire such assets at a good price.”