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

Taylor MaritimeAnnouncement

25/10/2023 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20231025:nRSY1732Ra&default-theme=true

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
(http://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 Limited      IR@tminvestments.com (mailto:IR@tminvestments.com)

 Edward Buttery

 Camilla Pierrepont

 Jefferies International Limited          +44 20 7029 8000

 Stuart Klein

 Gaudi Le Roux

 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
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
(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  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

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTBCBDGCXDDGXS