- January 21, 2025
- Posted by: Dimitris Touloumis
- Categories: News, Press
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Proceeds will contribute to fleet renewals, says owner Nikolas Pateras
21 January 2025
By Nigel Lowry
By Nigel Lowry
NIKOLAS Pateras-led Contships has engaged Arctic Securities and Fearnley
Securities for a run at the Norwegian high-yield bond market.
The Greece-based feeder company, which claims to be the largest independent
tonnage provider in the 900 teu to 1,500 teu segment, is looking to raise $100m
from issuing a senior unsecured sustainability-linked bond with a five-year tenor.
The roadshow of meetings with fixed income investors started on Tuesday and the
deal is likely to price as early as Friday, according to insiders.
Contships Logistics, Pateras’ holding company and the issuer for the bond, has
been selling some of its older vessels and the fleet, run by Contships Management,
stands at 41 containerships, out of 59 the Greek owner has acquired over the past
decade as he built up the company from scratch.
According to the prospectus, the fleet represents 16% of the global capacity
controlled by non-operating owners in that segment.
Meanwhile, with a current orderbook equal to only 7% of existing capacity in the
company’s size range, substantial fleet growth was “unlikely”, it said.
Pateras told Lloyd’s List that proceeds would be used for fleet renewal and general
corporate purposes.
“We intend to stay focused on the segment we are in and where we have gained the
trust of charterers,” he said.
“There are about 200 vessels in this segment that are over 25 years old and need
to be scrapped.
“Charterers are looking for younger vessels and we intend to acquire younger
vessels,” he added.
The current Contships fleet has an average age of about 14 to 15 years.
It has 61% charter coverage for 2025, the prospectus stated.
Clients include Mediterranean Shipping Co, CMA CGM, Cosco, Maersk, and Zim.
“Demand for container shipping is expected to continue to grow in the coming
years, and the positive outlook for feeders is supported by both average time
charter rates and contract tenors having increased in 2024,” it said.
The deal is being structured to include a small discount on the coupon if
sustainability targets are achieved.
Contships is aiming to reduce the fleet’s well-to-wake efficiency ratio by an average
2% over the term of the bond and is undertaking to repay an additional 0.5% of the
nominal amount if the target has not been met.
For this year, the company is estimating net revenue of $186m and earnings before
interest, taxes and depreciation of $98m.
In the past four years, dividends of $274m have been paid out to shareholders,
while the company’s net loan-to-value stands at 28% with $30m in current cash
holdings.
Contships is following John Fredriksen’s SFL Corp and Scorpio Tankers, which
have already tapped the Nordic bond market this month, although it differs from
these antecedents in being a privately-held company.
Two years ago, Contships explored a public listing in New York but stepped back,
citing market conditions and valuations of existing listed companies significantly
lagging asset values.
Among Greece-based owners, Diana Shipping has been a recent issuer in the
Norwegian market
Securities for a run at the Norwegian high-yield bond market.
The Greece-based feeder company, which claims to be the largest independent
tonnage provider in the 900 teu to 1,500 teu segment, is looking to raise $100m
from issuing a senior unsecured sustainability-linked bond with a five-year tenor.
The roadshow of meetings with fixed income investors started on Tuesday and the
deal is likely to price as early as Friday, according to insiders.
Contships Logistics, Pateras’ holding company and the issuer for the bond, has
been selling some of its older vessels and the fleet, run by Contships Management,
stands at 41 containerships, out of 59 the Greek owner has acquired over the past
decade as he built up the company from scratch.
According to the prospectus, the fleet represents 16% of the global capacity
controlled by non-operating owners in that segment.
Meanwhile, with a current orderbook equal to only 7% of existing capacity in the
company’s size range, substantial fleet growth was “unlikely”, it said.
Pateras told Lloyd’s List that proceeds would be used for fleet renewal and general
corporate purposes.
“We intend to stay focused on the segment we are in and where we have gained the
trust of charterers,” he said.
“There are about 200 vessels in this segment that are over 25 years old and need
to be scrapped.
“Charterers are looking for younger vessels and we intend to acquire younger
vessels,” he added.
The current Contships fleet has an average age of about 14 to 15 years.
It has 61% charter coverage for 2025, the prospectus stated.
Clients include Mediterranean Shipping Co, CMA CGM, Cosco, Maersk, and Zim.
“Demand for container shipping is expected to continue to grow in the coming
years, and the positive outlook for feeders is supported by both average time
charter rates and contract tenors having increased in 2024,” it said.
The deal is being structured to include a small discount on the coupon if
sustainability targets are achieved.
Contships is aiming to reduce the fleet’s well-to-wake efficiency ratio by an average
2% over the term of the bond and is undertaking to repay an additional 0.5% of the
nominal amount if the target has not been met.
For this year, the company is estimating net revenue of $186m and earnings before
interest, taxes and depreciation of $98m.
In the past four years, dividends of $274m have been paid out to shareholders,
while the company’s net loan-to-value stands at 28% with $30m in current cash
holdings.
Contships is following John Fredriksen’s SFL Corp and Scorpio Tankers, which
have already tapped the Nordic bond market this month, although it differs from
these antecedents in being a privately-held company.
Two years ago, Contships explored a public listing in New York but stepped back,
citing market conditions and valuations of existing listed companies significantly
lagging asset values.
Among Greece-based owners, Diana Shipping has been a recent issuer in the
Norwegian market
Source: Lloyd’s List
