TIDMTMIP TIDMTMI
RNS Number : 1732R
Taylor Maritime Investments Limited
25 October 2023
25 October 2023
Taylor Maritime Investments Limited (the "Company" or "TMI")
Quarterly NAV Announcement, Trading Update and Publication of
Factsheet
Reduction in fleet market value impacting NAV - benchmark values
back to end of June levels since quarter end
Significant progress with $42 million decrease in TMI debt
during the quarter
Positive momentum in charter rates since mid-August
Interim dividend of 2 cents per share declared
Taylor Maritime Investments Limited, the specialist dry bulk
shipping company, today announces that as at 30 September 2023 its
unaudited NAV was $1.31 per Ordinary Share compared to $1.56 per
Ordinary Share as at 30 June 2023. The Company is pleased to
declare an interim dividend in respect of the period to 30
September 2023 of 2 cents per Ordinary Share. The NAV total return
for the quarter was -13.5%.
The second quarterly factsheet of the current financial year is
also now available on the Company's website,
www.taylormaritimeinvestments.com .
Key Highlights (to 30 September 2023)
NAV development
-- The main driver of NAV performance, accounting for
approximately 87% of the decrease in NAV, was a decrease in Fair
Value of $72.7 million, resulting from softer asset values given a
weaker charter market. The Market Value of the fleet decreased by
approximately 8%, on a like for like basis, to $726.7 million (TMI
$288.4 million and Grindrod $438.3 million which excludes
chartered-in ships without purchase options and two vessels held
for sale during the period)
-- Clarksons' benchmark values for secondhand Handysize and
Supra/UItramax vessels have returned to their end of June levels
since quarter end
Taking opportunity to lock in higher charter rates against a
sharply rising index
-- During the period, TMI agreed one long-term charter of 20 to
24 months at a net time charter rate of $12,000 per day with a
blue-chip charterer, significantly above the prevailing index
rate
-- The average net time charter rate for the TMI fleet was
$10,299 per day at quarter end, slightly above the adjusted BHSI
(Baltic Handysize Index) Time Charter Average (net)[1] which
increased c.74% from its recent low point in early August to finish
the period at $10,214 per day
-- The average charter duration for the TMI fleet stood at three
months, with a large portion of the fleet poised to capture recent
improvements in market conditions as they roll off current
charters. The average annualised unlevered gross cash yield was
7.8% at quarter end
-- The blended time charter equivalent (TCE) across the TMI and
Grindrod fleet was $10,695 per day at quarter end (including
Handysize and Supra/Ultramax vessels)
Vessel sales
-- The Company agreed the sale of two ships to Grindrod on an
arms-length basis: a 2011 built 38k dwt Handysize vessel for net
proceeds of $15.0 million (completed during the quarter) and a 40k
dwt Handysize newbuild vessel due for delivery in Q1 of calendar
year 2024 for net proceeds of $33.75 million (as previously
announced)
-- Grindrod completed three ship sales: a 2011 built Handysize
bulk carrier for gross proceeds of $10.8 million, a 2015 built
Ultramax bulk carrier and a 2016 built Ultramax bulk carrier for
aggregate gross proceeds of $46.5 million (as previously
announced)
-- Grindrod further agreed the sale of two 2013 Chinese built
Handysize bulk carriers expected to complete in Q3 of the current
financial year for aggregate gross proceeds of $23.2 million
-- In total, across the Company and Grindrod, seven ship sales
were agreed or completed, of which two sales were from TMI to
Grindrod. As a result, the combined owned fleet comprised 42
vessels at quarter end (TMI 21[2] and Grindrod 21[3]). These
transactions achieve a balance of supporting the Company's
de-gearing plans together with strategic fleet management resulting
in an improved overall fleet profile. Once agreed vessel sales
complete, the combined fleet will comprise entirely of
Japanese-built vessels (after the disposal of all four
Chinese-built vessels) with an average age of 10.5 years and an
average carrying capacity of c.40k dwt. This compares favourably to
the pre-acquisition TMI fleet (average age of 13.0 years and
average carrying capacity of c.33k dwt) and provides evidence of
the increased attractiveness of the combined fleet
-- Overall, there have been fourteen asset disposals (agreed and
completed) across the Company and Grindrod since the acquisition in
December 2022 which have been achieved at an average discount to
carrying value of -3.9%
Progress with debt reduction
-- During the quarter, the Company's outstanding debt decreased
by $42.4 million to $167.6 million (versus $210.1 million at the
end of June). The Company's debt-to-gross assets ratio was 26.9%
based on Fair Market Value at the end of September (versus 28.5% as
at 30 June 2023) and was impacted by a decrease in asset values
-- Grindrod's debt including lease liabilities reduced by $7.7
million to $168.9 million at quarter end (versus $176.6 million at
the end of June. As a result, the estimated debt to gross assets
ratio on a 'look through'[4] basis at 30 September 2023 was 38.5%
(versus 38.7% as at 30 June 2023[5])
Grindrod developments - acquisition of TMI commercial and
technical managers and capital reduction
-- The acquisition of the commercial and technical managers by
Grindrod (previously announced), brings the ship management of the
TMI and Grindrod fleets together under one entity and, as a result,
benefits of scale should be more fully realisable. The fleet
management strategies will be aligned and fleet resources pooled
with a view to creating potential synergies across three key areas:
technical management, commercial management and accounting
-- Grindrod announced the effective date of the proposed capital
reduction which will result in a cash distribution in two tranches,
both payable in the third quarter of the current financial year. Of
the total $32.4 million cash distribution, US$26.7 million would be
payable to TMI in line with its 82.3% ownership and is expected to
be used to further reduce debt and for general corporate
purposes
Post-Period Trading Update (since 30 September 2023)
-- TMI has agreed a further asset sale: a 2007 built 33k dwt
Handysize vessel expected to complete this quarter for gross
proceeds of $9.0 million, generating an IRR of c.19% and MOIC of
c.1.4x, with part of the proceeds expected to be used to reduce
debt
-- The combined TMI and Grindrod fleet has covered 29% of
remaining fleet days for the Financial Year ending 31 March 2024 at
a blended time charter equivalent rate of c.$12,100 per day
Commenting on the trading update Edward Buttery, Chief Executive
Officer, said:
"Despite weaker-than-expected market conditions impacting asset
values, we have had a successful year to date in terms of
strengthening our balance sheet through debt reduction and
implementing operational efficiencies. Reducing debt remains a top
priority for TMI and our shareholders. We've repaid just over $90
million of debt at TMI alone this calendar year - and we've reduced
consolidated debt (including lease liabilities) by just under $150
million including Grindrod. We've sold 12 ships across the
companies (excluding two ships sold to Grindrod by TMI). This has
had the dual benefit of refocusing the fleet on an attractive core
of modern Japanese geared bulk carriers poised to capture the
upside of improving charter rates; now managed under one roof to
deliver synergies across the larger fleet. We are encouraged by the
recent market strengthening and favourable outlook, and we continue
to improve our position to deliver long term value to
shareholders."
Dry bulk market outlook
With China's economic recovery taking longer than initially
expected, charter market conditions remained soft at the start of
the period before firming significantly from early August with the
BHSI rising by c.74% and the BSI increasing by c.82%. Rates have
been driven by strong corn and soybean exports from Brazil meeting
firm seasonal demand from key importing regions. Congestion caused
by Panama Canal drought related transit restrictions also tied up
ships for longer durations, increasing fleet utilisation.
Strong grain exports from East Coast South America and improving
sentiment in China driven by encouraging consumption and industrial
output figures and new policy measures targeting construction and
infrastructure investment, should see charter rates remain stable
before the onset of the seasonally softer market over the holiday
period, including Chinese New Year.
The Clarksons' benchmarks for a 10-year-old 37k dwt Handysize
vessel and a 5-year-old Supra/Ultramax vessel each decreased by
c.3% quarter-on-quarter with values of Supra/Ultramax geared bulk
vessels recovering slightly in September as rates rose. Although
lagging the sharp recovery in rates since mid-August, secondhand
Handysize and Supra/UItramax values have improved and at the time
of writing Clarksons had increased its benchmark to end of June
levels.
Looking to 2024, deliveries of new Handysize and Supra/Ultramax
are scheduled to peak, with Clarksons forecasting the combined
fleet growing by 3.3% net, before fleet growth slows in 2025 and
2026, when 4.5% of the geared fleet will be 28 years or older[6],
following several years of limited ordering and construction
activity. High newbuilding costs, constrained shipyard capacity,
regulatory and technological uncertainty and higher costs of
capital will continue to discourage new orders of dry bulk vessels.
Meanwhile, pressure to comply with emissions regulations will
encourage slower operating speeds and increased demolition of
older, less efficient tonnage, particularly in the Handysize and
Supra/Ultramax segments where 9.5% and 4.8% of the respective
fleets are over 25 years old.
Given the above supply side pressures and forecasts of 3.2%
combined minor bulk and grain tonne-mile growth in 2024, according
to Clarksons, we maintain a positive outlook for valuations and
charter rates for the geared dry bulk segment.
Financing
TMI refinanced its debt during the quarter with the existing
Revolving Credit Facility ("RCF") and Acquisition Facility (in
connection with the Grindrod transaction) replaced by a new RCF
that bears a lower margin.
TMI will continue to reduce its debt from agreed and planned
vessel sales to achieve, and go beyond, 25% debt to gross assets as
well as continuing to reduce 'look through' leverage. This is
supported by a similar strategy at Grindrod.
ESG
The Company has just released its second annual ESG report
covering the financial year 1 April 2022 to 31 March 2023. TMI's
disclosure is in line with the Task Force on Climate-related
Disclosure, the Global Reporting Initiative, and the Sustainability
Accounting Standards Board. The report also includes key metrics on
Grindrod Shipping, representing a sizeable portion of TMI's overall
portfolio. The report can be viewed on TMI's website.
During the reporting period, measurable progress was made
towards the Group's decarbonisation targets - fleet carbon
intensity improved, as measured by EEOI ("Energy Efficiency
Operational Index") and AER ("Average Efficiency Ratio"), by 18%
and 1.4% respectively, remaining on track with the IMO's
decarbonisation trajectory.
TMI continues to work closely with Grindrod Shipping on ESG
strategy and alignment.
ENDS
For further information, please contact:
Taylor Maritime Investments IR@tminvestments.com
Limited
Edward Buttery
Camilla Pierrepont
Jefferies International
Limited
Stuart Klein
Gaudi Le Roux +44 20 7029 8000
Sanne Fund Services (Guernsey)
Limited
Matt Falla +44 1481 737600
Notes to Editors
About the Company
Taylor Maritime Investments Limited is an internally managed
investment company listed on the Premium Segment of the Official
List, its shares trading on the Main Market of the London Stock
Exchange since May 2021. The Company specializes in the acquisition
and chartering of vessels in the Handysize and Supra/Ultramax bulk
carrier segments of the global shipping sector. The Company invests
in a diversified portfolio of vessels which are primarily
second-hand. TMI's fleet portfolio currently numbers 20 vessels,
excluding one vessel held for sale post period, in the geared dry
bulk segment. The ships are employed utilising a variety of
employment/charter strategies.
On 20 December 2022, the Company announced it acquired a
controlling majority interest in Grindrod Shipping Holdings Ltd
("Grindrod") (NASDAQ:GRIN, JSE:GSH), a Singapore incorporated, dual
listed company on NASDAQ and the Johannesburg Stock Exchange.
Grindrod has an owned fleet of 18 dry bulk vessels complementary to
the Company's fleet excluding vessels held for sale. They are
Japanese built, including 11 Handysize vessels and 7 Supra/Ultramax
vessels. Grindrod has seven vessels in its chartered in fleet with
purchase options on three.
The combined TMI and Grindrod fleet numbers 42 vessels
(including chartered in vessels with purchase options and excluding
vessels held for sale during the period).
The Company's target dividend policy is 8 cents p.a. paid on a
quarterly basis, with a targeted total NAV return of 10-12% per
annum over the medium to long-term.
The Company has the benefit of an experienced Executive Team led
by Edward Buttery and who previously worked closely together at
Taylor Maritime. Taylor Maritime was established in 2014 as a
privately owned ship-owning and management business with a seasoned
team including the founders of dry bulk shipping company Pacific
Basin Shipping (listed in Hong Kong 2343.HK) and gas shipping
company BW Epic Kosan (formerly Epic Shipping) (listed in Oslo
BWEK:NO). The commercial and technical management arms of Taylor
Maritime were acquired by Grindrod in October 2023.
For more information, please visit
www.taylormaritimeinvestments.com .
About Geared Vessels
Geared vessels are characterised by their own loading equipment.
The Handysize and Supra/Ultramax market segments are particularly
attractive, given the flexibility, versatility and port
accessibility of these vessels which carry necessity goods -
principally food and products related to infrastructure building -
ensuring broad diversification of fleet activity and stability of
earnings through the cycle.
IMPORTANT NOTICE
The information in this announcement may include forward-looking
statements, which are based on the current expectations and
projections about future events and in certain cases can be
identified by the use of terms such as "may", "will", "should",
"expect", "anticipate", "project", "estimate", "intend",
"continue", "target", "believe" (or the negatives thereon) or other
variations thereon or comparable terminology. These forward-looking
statements are subject to risks, uncertainties and assumptions
about the Company, including, among other things, the development
of its business, trends in its operating industry, and future
capital expenditures and acquisitions. In light of these risks,
uncertainties and assumptions, the events in the forward-looking
statements may not occur.
References to target dividend yields and returns are targets
only and not profit forecasts and there can be no assurance that
these will be achieved.
[1] BHSI index is basis a 38k dwt type (since Jan 2020),
therefore the Company uses adjusted BHSI figures weighted according
to average dwt of the Company's fleet
[2] Including one vessel agreed and held for sale post
period
[3] Including 3 chartered in ships with purchase options but
excluding 2 ships held for sale, 4 chartered in ships without
purchase options and the newbuild vessel due to be delivered in the
first quarter of calendar year 2024
[4] Including Grindrod debt
[5] Debt to Gross Assets on a consolidated basis as at 30 June
2023 was previously misstated as 37.8%
[6] Including vessels scheduled for delivery but assuming no
demolitions between now and end of 2026
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END
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