MPC Container Ships to acquire Songa Container
MPC Container Ships ASA (MPCC) announced that it has entered into an agreement to acquire Norwegian container shipping company Songa Container AS for $ 210.25 million, with no debt or cash. The transaction is expected to be finalized by the end of July 2021.
Upon closing, MPCC will acquire Songa’s fleet of 11 container ships, with an average size of 2,250 TEUs and an average age of 11.9 years, creating a combined fleet of 75 vessels and a total capacity of approximately 158,000 TEUs. Nine of the ships acquired are equipped with scrubbers while three are equipped with the highest ice class.
Constantin Baack, CEO of MPC Container Ships, said: “This transaction is supported by our strong belief in the fundamentals of the sustainable container market and the desire to take advantage of the large mismatch between asset values and rates. The structure of the transaction creates an immediate and accretive impact on our profits in a container market that continues to strengthen day by day. “
“This is a landmark transaction for MPCC and we are particularly excited about the combined fleet cash flow prospects that will benefit our existing and new shareholders in the years to come,” said Baack.
Songa’s fleet has an estimated EBITDA order book of $ 22.5 million with an average charter period of around nine months. On a pro forma basis, MPCC is currently forecasting combined fleet revenue in the range of $ 290-315 million and EBITDA in the range of $ 170-180 million for fiscal 2021.
Based on the combined charter portfolio and assuming charter renewals at roughly current market rates and periods, the MPCC fleet is able to potentially generate EBITDA in excess of $ 350 million for 2022, of which 70 to $ 75 million generated by the Songa fleet. Based on the same assumptions for 2023, this year’s EBITDA could exceed $ 450 million with $ 80-90 million generated by the Songa fleet.
It is agreed that approximately $ 115 million of the purchase price (taking into account Songa’s cash and net working capital) will be settled in cash. This amount includes the refinancing of outstanding debt. The remaining part will be settled through the issuance of approximately 48-50 million new MPCC shares (based on an economic effective date of the transaction of May 31, 2021, at which time a mutual agreement on the main terms of the transaction was reached between the parties and a closing price of the MPCC share of NOK 17.34). These counterpart shares in MPCC will be of the same class as the ordinary shares of MPCC and will be listed on the Oslo Stock Exchange, and subject to a customary lock-up agreement for a period of three months from the completion of the Transaction.
With respect to the cash consideration, DNB Bank ASA has committed to provide an acquisition facility of $ 127.5 million with a term of two years and an effective interest rate of 500 basis points plus the Libor.
Arne Blystad, President of Songa Container, said, “The container market continues to be strong and MPCC has become a compelling reflection of the underlying fundamentals of the container market. We are happy to help consolidate the container market and build a leader in the regional container segment. Before this transaction, we were already a shareholder of MPCC and we will become a larger shareholder after this transaction. “
DNB Markets acted as lead advisor to MPC Container Ships ASA and Songa Container AS in connection with the transaction, while Clarksons Platou Securities AS and Fearnley Securities AS acted as joint M&A advisers for MPC Container Ships ASA. Advokatfirmaet Thommessen AS acted as legal advisor in connection with the Transaction.