TMI Taylor Maritime Investments Limited

TIDMTMIP TIDMTMI

RNS Number : 0863E

Taylor Maritime Investments Limited

05 July 2021

5 July 2021

Taylor Maritime Investments Limited (the "Company")

Trading Update

Charter rates up 30% since IPO

Portfolio valuation up $33.3 million (10.5%) since IPO

Delivered fleet yielding annualised unlevered return of >20%

Market rates strengthening faster than ship prices giving rise to attractive investment opportunities

Taylor Maritime Investments Limited, the recently listed specialist dry bulk shipping investment company, is today providing a trading update for the period ended 30 June 2021 including an update on its portfolio valuation. The Company's first unaudited NAV, as at 30 June 2021, is expected to be published during the week beginning 19 July 2021. All figures disclosed in this announcement are unaudited.

Commenting on the trading update, Edward Buttery, Chief Executive Officer, said:

"As envisaged at the time of our IPO, we have been able to take full advantage of the improving market conditions in the Handysize and Supramax bulk carrier segment. The material upward movement in our valuation reflects the sustained improvement in charter rates and is proof of the strong investment rationale for acquiring high quality second-hand vessels at this point in the valuation cycle. We continue to be able to buy at our target prices and will seek further compelling opportunities to both purchase vessels and lock in future fleet earnings at attractive levels."

Dry bulk shipping market continues to strengthen

The period following the Company's IPO has seen our vessel values rise significantly, driven by constrained world fleet growth and strong demand for shipping capacity due to improving global economic conditions. Industrial activity continues to normalize as we emerge from the Covid pandemic further fueling demand for our vessel types.

As expected in this environment, charterers are seeking longer term employment contracts in anticipation of a sustained upward trend in time charter rates and the Company has taken full advantage of this trend with a range of longer and high yielding employment contracts. We expect our upcoming charter renewals to capture further upside from the current rate momentum.

New ship orders in the Handysize and Supramax segment are not being reported in any material numbers, space in existing shipyards remains very tight and notional newbuild price quotes are still rising, underpinning the current favourable supply and demand metrics which are expected to be supportive for the Company's portfolio over the next 2-3 years.

Significant increase in portfolio valuation since acquisition

The independent valuation of the Company's delivered fleet of 17 vessels as at 30 June 2021 indicates an increase in value from $208.7 million to $230.6 million, equivalent to an increase of 10.5% since 7 May 2021 when the Company's IPO prospectus (the "Prospectus") was published. The undelivered seed fleet of six vessels has increased in value from $81.3 million to $90.8 million, equivalent to an increase of 11.7%. The two additional vessels acquired (although not yet delivered) following the IPO, as announced on 16 June 2021, have increased in value from $26.5 million to $28.3 million, equivalent to an increase of 7.1%. The overall increase in the delivered and committed fleet value as at 30 June 2021 has therefore been $33.3 million, equivalent to an increase of 10.5% over the aggregate vessel purchase price.

The latest independent valuation has been prepared on a basis consistent with that prepared for the purposes of the Prospectus, taking the arithmetical mean of two independent valuation reports from Hartland Shipping Services and Braemar ACM Valuations.

The Company currently expects delivery of the eight committed vessels (being the remaining six seed vessels described in the Prospectus and the two further committed vessels announced on 16 June 2021) on the following schedule, which will take the Company's fleet to 25 vessels:

   --      July 2021 - 2 vessels 
   --      October 2021 - 2 vessels 
   --      November 2021 - 2 vessels 
   --      December 2021 - 1 vessel 
   --      January 2022 - 1 vessel 

Strong charter rate environment

Since 7 May 2021, net time charter rates have increased by over 30%. The average net time charter rate for the delivered fleet is approximately $15,400 per day with an average duration of 10 months, generating average annualized unlevered gross cash yields in excess of 20%. The strong earnings environment has continued to improve underlining the Company's significant cash generation potential. As a consequence, the implied dividend cover from the delivered fleet alone is approximately 2.7 times (based only on the earnings of the 17 delivered vessels). This is expected to rise materially once the remaining eight vessels are delivered.

Since IPO, eight of the delivered fleet have had their initial charter contracts renewed and been employed on new charters with an average remaining duration of 11 months. A further two vessels in the delivered fleet are due for charter renewal within the next two months. The fleet's earning power is expected to increase further as a consequence of the staged delivery of the eight committed vessels, six of which will be fixed on new charters in the run-up to their delivery and should benefit from the strong rate environment.

Financing

The Company remains committed to a financially prudent approach, maintaining an ungeared long term capital structure to support dividend yield and provide downside protection, and using borrowings on a temporary basis when acquiring new vessels. Hence, approximately $30 million of long-term debt associated with the acquisition of the seed fleet is being repaid: $5 million having been repaid in June 2021 with the balance of $25 million expected to be repaid before final delivery of the committed fleet. The Company expects to draw on its shorter term $60 million Revolving Credit Facility to partially finance the eight committed vessel acquisitions.

Pipeline

The Executive Team continues to conduct due diligence on a pipeline of Handysize and Supramax vessel acquisition opportunities at attractive prices and looks forward to providing more details in due course.

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation EU 596/2014 as it forms part of retained EU law (as defined in the European Union (Withdrawal) Act 2018).

For further information, please contact:

 
Taylor Maritime Investments Limited 
 Edward Buttery 
 Alexander Slee                       +852 2252 3882 
Jefferies International Limited       +44 20 7029 8000 
 Investment Banking 
 Stuart Klein 
 Gaudi Le Roux 
 
 Sector coverage 
 Doug Mavrinac 
 Hugh Eden 
 
 Montfort Communications 
 Nick Bastin                           TMI@montfort.london 
 Alison Allfrey 
 Miles McKechnie 
 
LEI: 213800FELXGYTYJBBG50 
 

NOTES:

About the Company

Taylor Maritime Investments Limited is a newly established, internally managed investment company listed on the Premium Segment of the Official List and traded on the Main Market of the London Stock Exchange. The Company invests in a diversified portfolio of vessels which are primarily second-hand and which, historically, have demonstrated average yields in excess of the Company's target dividend yield of 7% p.a. and can be acquired at valuations that are expected to be below long-term average prices.

The Company's initial investments comprise Geared Ships (Handysize and Supramax types) employed utilising a variety of employment/Charter strategies.

The Company intends to pay dividends on a quarterly basis with dividends declared in January, April, July and October. The Company expects to declare its first dividend of 1.75 cents per Ordinary Share for the initial period ended 30 September 2021 in October 2021. Once the Company is fully invested, the Company will target a Total NAV Return of 10 to 12% p.a. (net of expenses and fees but excluding any tax payable by Shareholders) over the medium to long term.

The Company has the benefit of an experienced Executive Team led by Edward Buttery. The Executive Team have to date worked closely together for the Commercial Manager, Taylor Maritime. Established in 2014, Taylor Maritime is a privately owned ship-owning and management business with a seasoned team that includes 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). Taylor Maritime's team of experienced industry professionals are based in Hong Kong and London.

This trading update contains certain forward looking statements with respect to Taylor Maritime Investments Limited. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Nothing in this announcement should be construed as a profit forecast.

For more information, please visit www.taylormaritimeinvestments.com .

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July 05, 2021 02:00 ET (06:00 GMT)