The Norwegian shipping company, MPC Container Ships (MPCC) has entered into a share purchase agreement to acquire Songa Container for an aggregate purchase price of US$210.25 million on a debt and cash free basis.
With this move, MPCC will add Songa's 11 container vessels to its fleet, reaching a total of 75 ships and an overall capacity of approximately 158,000TEU. The average size of Songa's fleet is 2,250TEU and the average age is 11.9 years, while nine of them are fitted with scrubbers while three are equipped with the highest ice-class.
"This transaction is backed by our strong belief in the sustainable container market fundamentals and the desire to take advantage of the significant lag between asset values and rates," commented Constantin Baack, MPCC CEO. "The structure of the transaction creates an immediate and accretive impact to our earnings in a container market that continues to strengthen by the day.”
The transaction is subject to customary conditions for completion and is expected to be completed by the end of July 2021, according to a statement.
Based on the combined charter portfolio and assuming charter renewals at around current market rates and periods, the MPCC fleet is positioned to potentially generate earnings before interest, taxes, depreciation, and amortisation (EBITDA) of above US$350 million for 2022, with US$70-75 million of this generated by the Songa fleet. On the basis of the same assumptions for 2023 EBITDA for this year could exceed US$450 million with US$80-90 million generated by the Songa fleet.
"We are particularly excited about the cash flow prospects of the combined fleet which will come to the benefit of our existing and new shareholders in the coming years," said CEO Constantin Baack.
It is agreed that approximately US$115 million of the purchase price will be settled in cash, while this amount includes the refinancing of the outstanding debt. The remaining portion will be settled by way of issuing approximately 48-50 million new shares in MPCC.
DNB Markets acted as lead advisor for MPC Container Ships ASA and Songa Container AS on the transaction while Clarksons Platou Securities AS and Fearnley Securities AS acted as joint M&A advisors to MPC Container Ships ASA, while Advokatfirmaet Thommessen AS has acted as legal deal counsel in respect of the transaction.
