REG - Taylor Maritime Taylor Maritime -TMI - Factsheet, Trading Update & Quarterly NAV

Taylor MaritimeAnnouncement

27/01/2023 07:00

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RNS Number : 0354O  Taylor Maritime Investments Limited  27 January 2023

27 January 2023

 

Taylor Maritime Investments Limited (the "Company")

 

Quarterly NAV Announcement, Trading Update and Publication of Factsheet

 

Grindrod Shipping offer closed with controlling stake secured

Deleveraging underway with the Company completing a vessel sale and agreeing
two more

Outperformance of market indices from balanced chartering with firmer outlook

 

·      Level of ownership of Grindrod Shipping now 83.23%

·      Good momentum with deleveraging, with completed and agreed vessel
sales achieving attractive IRRs and MOICs

·      Debt to gross assets ratio expected to reduce to around 25% in
the next two quarters

·      Firm charter rates and cash yields of c.22% 1  (#_ftn1) despite
muted Chinese economic performance

·      Potential for market improvement underpinned by China outlook,
tight supply and IMO regulations

·      Interim dividend of 2 cents per share declared with 4x dividend
cover

 

Taylor Maritime Investments Limited, the specialist dry bulk shipping company,
today announces that as at 31 December 2022 its unaudited NAV was $1.67 per
ordinary share compared to $1.70 per ordinary share as at 30 September 2022.
The Company is also pleased to declare an interim dividend in respect of the
period to 31 December 2022 of 2 cents per Ordinary Share.  The third
quarterly factsheet of the current financial year is also now available on the
Company's website, www.taylormaritimeinvestments.com
(http://www.taylormaritimeinvestments.com) .

 

Key Highlights (to 31 December 2022)

Grindrod Shipping Investment Update:

·      On 19 December, the Company closed its voluntary cash offer for
Grindrod Shipping taking TMI ownership of Grindrod to 83.23%

·      As part of the tender offer, TMI received a $24.6 million special
interim dividend from Grindrod, representing a yield of 28% on its initial
investment

·      Grindrod is held as an investment at fair value through profit
and loss contributing $352 million to TMI's NAV of $552 million based on the
Fair Market Value of the Grindrod fleet

·      The combined fleet comprised 57 vessels at quarter end, including
six charter-in vessels (four of which have purchase options), two Company
vessels contracted for sale and one Grindrod vessel contracted for sale.  The
combined fleet Market Value was $1.0 billion (excluding charter-in vessels
without purchase options)

·      During the quarter, Grindrod agreed the sale of a 2015 built 60k
dwt Ultramax vessel in line with its carrying value.  The sale is expected to
complete in Q4 of TMI's current financial year and proceeds will be applied to
repay Grindrod debt as required

·      Since the tender offer closed, the Company and Grindrod have been
making good progress in jointly evaluating next steps to capitalise on
available synergies from the combined fleet across insurance, commercial
management, technical management and corporate activities

TMI Portfolio Investment Update:

·      At quarter end, TMI's fleet comprised 26 vessels (including two
vessels contracted for sale).  The Market Value of the TMI vessel portfolio
at the quarter end was down 6% on a like-for-like basis

·      During the quarter, TMI completed a vessel sale for net proceeds
of $20.1 million (announced 9 December) generating an IRR of 25% and MOIC of
1.3x.  TMI agreed a further two vessel sales expected to complete by 31 March
2023, one 2010 built 33k dwt Handysize vessel and one 2012 built 28k dwt
Handysize vessel, for aggregate net proceeds of $24.4 million generating IRRs
of 35% and 68% and MOIC of 1.56x and 1.54x respectively

·      Net time charter equivalent rates averaged c.$15,830 during the
quarter, contributing to an operating profit of c.$29.5 million and covering
the interim dividend four times

·      At quarter end, TMI's average net time charter rate was $15,800
per day, with an average duration of six months and an average annualized
unlevered gross cash yield of c.22% 2  (#_ftn2)

·      The Company's average net time charter rate compared favourably
to the adjusted BHSI (Baltic Handysize Index) Time Charter Average (net) 3 
(#_ftn3) which stood at $9,983 at quarter end, as the Company's chartering
strategy mitigated the impact of market fluctuations and volatility relating
to weaker-than-expected demand from China and drought in the Mississippi River
Basin in the first half of the period

·      The Company has secured an average net time charter rate of
$17,161 per day for 62% of remaining fleet days for the Financial Year ending
31 March 2023 and an average rate of $17,384 per day for 20% of fleet days for
the Financial Year ending 31 March 2024

·      In addition, TMI contracted a 40k dwt Handysize newbuild in Japan
delivering in Q1 of calendar year 2024 - a rare early delivery window given
Japanese newbuild contracts are now only deliverable in 2H 2025.  This is
part of a limited renewal strategy and is in conjunction with disposals of
older vessels; as an ammonia-ready, eco-design, from a top tier Japanese yard,
the vessel will serve to lower the fleet's overall average age and enhance its
ESG credentials

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

"We're pleased that we secured a controlling stake in Grindrod which presents
a transformational opportunity for TMI. The combined fleet allows both
companies to achieve enhanced scale and synergies, increasing TMI's exposure
to the geared dry bulk segment which continues to demonstrate favourable
long-term fundamentals.  The secondary market is active and we've realised
solid returns with three sales agreed across the combined fleet and having
completed one previously announced sale in line with our commitment to
deleverage our balance sheet."

Dry bulk market outlook

Macro-economic headwinds, slower than expected recovery in China and continued
easing of port congestion through the quarter kept the charter market subdued
across all dry bulk segments relative to the outstanding 'post-Covid' earnings
environment of 2021 which carried into the first half of 2022.  Sentiment
improved as China started to relax zero-Covid policies and signalled its
intention to stimulate the economy with measures targeting the property and
construction sectors (drivers of dry bulk demand).

Chinese New Year fell two weeks earlier than on average over the last 15
years, contributing to especially soft rates for January.  In a 'normal'
year, the market can be expected to improve by early March - it could be
earlier in 2023 depending on how China adjusts to its new Covid policy.
There is also reason for cautious optimism if China reverts to a pro-growth
strategy.

Further support for charter rates is expected from increased grain exports in
2023 with diverted trades from the Black Sea generating an increase in
tonne-miles while Brazil's soybean season is forecast at a record high by the
International Grains Council. Combined minor bulk and grain demand (key
drivers for the geared dry bulk segment) is forecast by Clarksons to grow at
1.4% in 2023 and 3.0% in 2024 while the Handysize fleet contracts by -0.5% in
2023 and -2.0% in 2024, representing a compelling 5.0% supply-demand spread.

Following the charter market, 10 year old 32k dwt asset values decreased from
$18.0 million at 30 September 2022 to $16.0 million at quarter end. They have
since risen to $16.5 million.  We continue to anticipate support for earnings
and second-hand asset values given ongoing supply side constraints and with
recently-introduced IMO emissions targets expected to gradually lower
operating speeds, reducing effective supply and catalysing scrapping of older,
less efficient tonnage.  Overall, we maintain a positive outlook through to
the end of 2024 and possibly into 2025 as the orderbook remains near
historical lows, shipyards are full and demand growth looks set to improve.

 

Financing

At the quarter end, the RCF and Acquisition Facility (in relation to the
Grindrod transaction) were $140 million and $119 million drawn respectively,
representing a debt to gross assets ratio of 31.2% which the Company expects
to reduce to around 25% over the coming two quarters through agreed and
planned vessel sales and operating cashflow in line with the commitment made
in the Company's investment policy.

 

Taking into account $227 million of debt outstanding at Grindrod at the
quarter end, the Company's 'look through' debt to gross assets ratio was 41.8%
which is expected to reduce to around 36% over the coming two quarters 4 
(#_ftn4) .  The Company plans to continue to reduce debt from future vessel
sales and operating cashflow in line with its commitment to de-lever its
balance sheet.

 

Board Changes

Following the announcement on 5 January, the recruitment process for a new
Chairman is underway.

 

ESG

TMI has cooperated closely with its commercial and technical managers to ready
its fleet for new industry decarbonisation regulations coming into force from
January 2023, designed to meet the IMO's 2030 GHG reduction targets.  During
the period, a further two vessels were fitted with energy saving devices
including boss-cap fins, high performance paints, pre-swirl ducts and fuel
efficiency monitoring systems.  TMI recently contributed to various local
initiatives in Guernsey, providing support to emergency services and
organisations working to improve local welfare.  TMI aims to achieve a
long-term target of running a zero-emission fleet by 2050 and is a signatory
to the Getting to Zero Coalition's "Call to Action for Shipping
Decarbonisation".

 

ENDS

 

 For further information, please contact:

Taylor Maritime Investments Limited      IR@tminvestments.com (mailto:IR@tminvestments.com)

 Edward Buttery

 Camilla Pierrepont

 Jefferies International Limited          +44 20 7029 8000

 Stuart Klein

 Gaudi Le Roux

 Montfort Communications                  TMI@montfort.london (mailto:TMI@montfort.london)

 Alison Allfrey

 George Morris Seers

 Sanne Fund Services (Guernsey) Limited   +44 1481 737600

 Matt Falla

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 Supramax 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 numbers 26 vessels in the geared dry bulk
segment.  The ships are employed utilising a variety of employment/charter
strategies.

 

On 20 December, 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 owns 25 geared dry bulk vessels
complementary to the Company's fleet.  They are mostly Japanese built,
including 15 Handysize vessels and 10 Supramax and Ultramax vessels.
Grindrod has six vessels in its chartered in fleet with purchase options on
four.

 

The combined TMI and Grindrod fleet numbers 57 vessels (including chartered in
vessels).

 

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 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 industry
professionals are based in Hong Kong, Singapore and London.

 

For more information, please visit www.taylormaritimeinvestments.com
(http://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  (#_ftnref1) Excluding vessel in Ukraine and two vessels in scheduled
drydock

 

 2  (#_ftnref2) Excluding vessel in Ukraine and two vessels in scheduled
drydock

 3  (#_ftnref3) As the BHSI index has been based on a 38k dwt type since Jan
2020, the Company uses adjusted BHSI figures weighted on the average dwt of
the Company's fleet

 4  (#_ftnref4) Look through debt to gross assets includes the TMI and
Grindrod level debt over both companies' gross assets

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