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

Taylor MaritimeAnnouncement

26/07/2024 07:00

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RNS Number : 9261X  Taylor Maritime Investments Limited  26 July 2024

 

26 July 2024

 

Taylor Maritime Investments Limited (the "Company" or "TMI")

 

Quarterly NAV Announcement, Trading Update and Publication of Factsheet

 

TMI set to own 100% of Grindrod Shipping Holdings Limited ("Grindrod")
following approval of the Selective Capital Reduction

NAV total return for the quarter of 4.3% with charter rates and asset values
remaining firm

Interim dividend of 2 cents per share declared

 

Taylor Maritime Investments Limited, the specialist dry bulk shipping
investment company, today announces that as at 30 June 2024 its unaudited NAV
was $1.52 per Ordinary Share compared to $1.48 per Ordinary Share as at 31
March 2024.  The Company is pleased to declare an interim dividend in respect
of the period to 30 June 2024 of 2 cents per Ordinary Share.  The NAV total
return for the quarter was 4.3%.

The first quarterly factsheet of the current financial year is also now
available on the Company's website, www.taylormaritimeinvestments.com
(http://www.taylormaritimeinvestments.com) .

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

"We continue to take advantage of robust conditions in freight and asset
markets.  We fixed period charters at higher rates, including a one-year
period charter, and increased our coverage for the remainder of the calendar
year.  We also agreed the sale of two more Handysize vessels, generating
strong average returns.  TMI is set to gain 100% ownership of Grindrod which
will be a major milestone.  This effectively completes a fleet renewal
exercise that has delivered a larger, overall younger, more efficient fleet
(than pre-Grindrod acquisition) and unlocks a further set of corporate
synergies on top of those implemented already or which are in progress."

Key Highlights (to 30 June 2024)

Grindrod Selective Capital Reduction approved by shareholders

·      Grindrod participating shareholders approved the special
resolution to implement a Selective Capital Reduction ("SCR") at an EGM held
on 20 June 2024.  The SCR is expected to take effect on 16 August 2024.  As
a result, Grindrod will become a wholly owned subsidiary of TMI through its
subsidiary Good Falkirk (MI) Limited.  Once implemented, the SCR will be
accretive to TMI NAV per share with an estimated positive impact of 7 cents
resulting in a post-SCR TMI NAV per share of $1.60 based on 30 June Fair
Market Values

Strong chartering performance

·      The combined TMI and Grindrod fleet ("Combined Fleet") generated
average time charter equivalent ("TCE") earnings of $13,264 per day for the
quarter (versus $12,430 per day for the quarter ended 31 March 2024; an
increase of c.7%).  At quarter end, the combined average TCE was $14,707 per
day (versus $13,132 at 31 March 2024; an increase of c.12%)

·      The Combined Fleet, largely maintained on short period charters,
was well-positioned to take advantage of the improving market with a sizeable
portion fixed at higher market rates during the period.  Earnings improved
quarter-on-quarter and the fleet outperformed its benchmark indices by $835
per day (8%) for the combined Handysize fleet and $937 per day (6%) for the
Supra/Ultramax fleet

·      During the period, Grindrod agreed a period charter of 11 to 13
months at a net time charter rate of $17,100 per day on an Ultramax vessel
with a blue-chip counterparty, significantly above the prevailing index rate

Fleet development and market value

·      The Company completed the previously announced sale of a 2008
built 33k dwt Handysize vessel, the oldest in the Combined Fleet, for gross
proceeds of $12.3 million, a c.2.4% discount to Fair Market Value

·      The Company agreed the sale of a 2012 built 28k dwt Handysize
vessel, one of the two smallest vessels in the Combined Fleet, for gross
proceeds of $11.95 million, a c.1.3% discount to Fair Market Value

·      Grindrod completed the previously announced sale of a 2014-built
c.60k dwt Ultramax vessel for gross proceeds of $22.4 million, a c.2.0%
discount to Fair Market Value, with a charter-back and a purchase option 1 

·      The Market Value of the Combined Fleet increased by approximately
2.3%, on a like for like basis, to $798.7 million (TMI $282.3 million and
Grindrod $516.4 million excluding chartered-in ships without purchase options)
reflecting an active market for second-hand vessels underpinned by positive
sentiment in the quarter

·    Following these strategic fleet divestments, the combined owned fleet
comprised 38 2  Japanese-built vessels at quarter end (TMI 18 and Grindrod
20 3 ) with an attractive average age of 10.4 years and a larger average
carrying capacity of c.41k dwt, with commensurate increased earnings
capacity.  The age of the fleet has reduced by three years as a result of the
Grindrod acquisition (note the pre-acquisition fleet would now average 13.7
years with an average carrying capacity of c.34k dwt)

Progress with debt reduction

·      The Company's debt-to-gross assets ratio improved to 21.7% at 30
June 2024 (versus 23.5% at 31 March 2024) owing to stronger asset values and
ongoing debt reduction through repayments.  The Company's outstanding debt
was $140.3 million at the quarter end

·      TMI and Grindrod ("Combined Group" or "Group") look-through
debt-to-gross assets was 35.4% 4  at 30 June 2024 (versus 35.8% at 31 March
2024).  Outstanding debt was $338.3 million on a look-through basis(4)

·      The Group continues to focus on strengthening its balance sheet
consistent with a long-term commitment to be free of significant structural
leverage.  TMI will continue to reduce Company debt from planned vessel
sales, supported by a similar strategy at Grindrod, with a look-through Group
leverage target of 25-30% of gross assets(4)

Post-Period Trading Update (since 30 June 2024)

·      On 16 July 2024, the SCR was approved by the High Court of the
Republic of Singapore.  The SCR will take effect upon lodgement of the Court
Order with the Singapore Registrar expected on 16 August 2024.  There are no
other outstanding conditions to the SCR.  As a result, Grindrod will become a
wholly owned subsidiary of TMI through its subsidiary Good Falkirk (MI)
Limited "GF", (which will own 100% of the shares in Grindrod Shipping - up
from 82.33%).  Grindrod will subsequently be delisted from each of Nasdaq and
the JSE.  Further details can be found in the announcement released by
Grindrod on 19 July 2024

·      Two additional sales were agreed across the Combined Group; a
2009 built 32k dwt TMI Handysize vessel for gross proceeds of $13.0 million,
representing a c.0.6% discount to Fair Market Value, and a 2024 built 40k dwt
Grindrod Handysize vessel for gross proceeds of $35.35 million, a c.0.3%
premium to Fair Market Value

·    Overall, the 22 divestments since the Grindrod transaction, including
the two vessels agreed for sale post period, have averaged a 3.1% discount to
Fair Market Value 5 

·      The number of covered Combined Fleet ship days remaining for the
2024 calendar year stands at 42% with an average TCE rate of $14,010 per day

 

Dry bulk market review and outlook

Following the post-holiday strengthening of market conditions late last
quarter, charter rates remained at elevated levels through the period, with
the BSI TCA 6  and BHSI TCA 7  at levels c.43% and c.27% higher, on average,
when compared to the same period last year.  Red Sea and Panama Canal
disruptions continued to impact positively, with rerouting of vessels on
longer voyages reducing available supply while strong US East Coast and
Brazilian grain exports have supported long-haul geared bulker demand.

Despite transit volumes beginning to normalise in the Panama Canal, charter
rates for the geared bulker segment are expected to remain relatively healthy
for the remainder of 2024, excluding the summer holiday lull.  Bulk carrier
transits through the Suez Canal remain at 50% of their December 2023 levels
which, if sustained, will continue to support tonne-mile demand and coincide
with seasonal commodity demand strength that is typical of calendar Q4.
Slower bulk carrier operating speeds (down c.1% year-on-year in 2024 so far)
and a gradual rise in port congestion from last year's lows are also likely to
lend support according to Clarksons.

Although risks remain, the market remains buoyed by favourable supply-side
dynamics, as indicated by healthy S&P activity, firm secondhand values and
high newbuild prices.  Several years of limited ordering and newbuilding
activity have resulted in modest supply growth in the geared bulker segment; a
trend which is set to continue over the medium-term, despite a recent uptick
in contracting activity, with newbuild orders from top shipyards not available
for delivery until end 2027 and early 2028 due to limited capacity.
Tightening environmental regulations are expected to lead to increased
recycling of older, less efficient units, particularly for the aged, geared
bulker segment (10% of the Handysize fleet is over 25 years old), while lower
operating speeds and time taken to retrofit energy saving devices are expected
to restrict effective supply.

ESG

The Combined Group's ESG agenda and implementation are overseen by the ESG
Steering Group.

The Group has begun to trial a sustainable graphene-based propeller coating,
XGIT-PROP, across a number of vessels undergoing dry dockings during this
financial year, including one completed application on a Handysize vessel in
May.  This innovative coating has the potential to improve vessel efficiency
by 3-5% and to make a positive impact on CII (Carbon Intensity Indicator)
ratings.

The fleet efficiency programme continues to be rolled out with the fitting of
energy saving devices at scheduled maintenance events including boss-cap fins,
high performance paints, pre-swirl ducts and fuel efficiency monitoring
systems.

Crew wellbeing remains a key focus area.  A digital platform has recently
been introduced across all Group vessels acting as a preventative and
supportive tool for the wellbeing of seafarers, addressing diet, nutrition,
and lifestyle management, as well as direct access to mental health support.

 

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

 Apex Group                               +44 20 3530 3107

 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 18 vessels, including
two vessels held for sale, 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.  Following the approval of a Selective Capital
Reduction ("SCR") by Grindrod shareholders and the High Court of the Republic
of Singapore, due to take effect on 16 August 2024, Grindrod is set to become
a wholly owned subsidiary of the Company through its subsidiary Good Falkirk
(MI) Limited "GF".   Grindrod will subsequently be delisted from each of
Nasdaq and the JSE.  Grindrod has an owned fleet of 17 dry bulk vessels,
including one vessel held for sale, complementary to the Company's fleet.
They are Japanese built, including 10 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 38 vessels (including vessels held
for sale and chartered in vessels with purchase options).

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).  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 cargo 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.

 

LEI: 213800FELXGYTYJBBG50

 

 1  Grindrod has agreed to Time Charter-in the vessel for 11 to 13 months at
an attractive rate with the option to extend for two years.  There is a
Purchase Option available at the end of the second year

 2  Including vessels held for sale

 3  Including three chartered-in vessels with purchase options

 4  Excluding lease liabilities

 5  Includes completed and agreed sales but excludes two vessel sales within
the Group

 6  Average of the 10 T/C Routes for BSI-58 dwt vessel (gross)

 7  Average of the 7 T/C Routes for BHSI-38 dwt vessel (gross)

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