NewLead Holdings Ltd. Announces Completion of First Phase of Turnaround
PIRAEUS, Greece, April 28 /PRNewswire-FirstCall/ — NewLead Holdings Ltd. (Nasdaq: NEWL) (“NewLead”) announced today that it has completed the first phase of its turnaround with the sale of three additional non-core vessels and the agreement to purchase one newbuild Post-Panamax vessel.
Since the recapitalization of NewLead in October 2009, management has focused on a new strategy including the disposition of inefficient vessels, exit from the container industry, acquisition of vessels with quality time charters and creation of a newbuilding program. As a result of these actions, NewLead’s fleet has expanded by over 50%. In addition, management focused on improving profitability by bringing in-house commercial and technical expertise.
As a result of the transactions announced today, NewLead will have a diversified fleet of 17 vessels, of which seven are product tankers and ten are drybulk vessels (including newbuildings) with an average age of 9.4 years and total dwt of 408,606 for product tankers and 1,141,308 for drybulk vessels (including newbuildings).
Michael S. Zolotas, President and Chief Executive Officer of NewLead Holdings Ltd., stated, “Our ability to secure the Post-Panamax contract at a competitive price is a testament to our relationship with the leading shipyards. With the two newbuild Kamsarmaxes announced earlier this year and the addition of this Post-Panamax, we are renewing our fleet in order to maintain a competitive position in the industry.”
Purchase of One Newbuild Post-Panamax Vessel
NewLead reached an agreement to purchase a 92,000 dwt Post-Panamax vessel, being constructed at a first-class shipyard in Korea. Delivery is expected in the second quarter of 2011. NewLead anticipates financing the vessel with a combination of debt and cash from the balance sheet. Once delivered, the vessel will immediately be chartered-out for approximately seven years at a floor rate of $15,000 per day plus 50/50 profit sharing from a first class European charterer.
Newbuild Post-Panamax Details:
Type/DWT Anticipated Annualized Aggregate Charter Rate Charter
Delivery Date EBITDA(1) EBITDA(2) (daily, net) Duration
(millions) (millions)
Bulker Q2 2011 $3.2(3) $21.0(3) $14,438 Seven
Post + 50/50 years
Panamax/ Profit
92,000 Sharing(4)
(1) EBITDA calculation assumes daily operating expenses of $5,500 per
day and 360 revenue days.
(2) Aggregate EBITDA over the life of the contract; daily operating
expenses of $5,500 per day (growing at 3% annually).
(3) Assuming zero profit sharing. Using current (April 22, 2010)
rates, the annualized EBITDA would be $6.2 million and aggregate
EBITDA would be $42.1 million.
(4) 50/50 profit sharing takes effect when 110% of the BPI route
index exceeds $17,000.
Sale of Non-Core Vessels
NewLead concluded the sale of the High Rider and entered into an agreement to sell the Ostria and the Nordanvind for anticipated aggregate gross proceeds of $21.7 million. The High Rider is a 1991 Japanese-built, 41,502 dwt, MR tanker. The Ostria and the Nordanvind are 2000 and 2001, respectively, Romanian-built, 38,615 dwt, MR tankers. The sale of Ostria and Nordanvind is expected to be concluded during the second quarter of 2010. NewLead also intends to sell the High Land, its last non-core vessel, a 1992 Japanese-built, 41,450 dwt, MR tanker during the third quarter of 2010.
The four vessels had been operating at sub-par rates on the spot market for an extended period. Divesting these inefficient vessels is expected to favorably impact EBITDA by approximately $6.6 million annually. NewLead plans to use the proceeds from the sales to renew its fleet or reduce its outstanding indebtedness.
NewLead’s Fleet:
Name Size Vessel Year Charter Rate Charter
(dwt) Type Built (daily, net) Expiration
Product Tanker Vessels
Stena Bareboat December
Compass 72,750 Panamax 2006 charter 2010
rate of
$18,466.25
+ 30% of
profits
above $26,000
Stena Bareboat
Compassion 72,750 Panamax 2006 charter June 2010
rate of
$18,466.25
+ 30% of
profits
above $26,000
Newlead
Avra 73,495 Panamax 2004 Spot
Newlead
Fortune 73,495 Panamax 2004 Spot
Hiotissa 37,329 Handymax 2004 $19,012.50 min:
+ profit April 2011
sharing max:
June 2011
Hiona 37,337 Handymax 2003 $19,012.50 min:
+ profit March 2011
sharing max:
May 2011
Nordanvind(1) 38,615 Handymax 2001 Spot
Ostria(1) 38,615 Handymax 2000 Spot
High Land 41,450 Handymax 1992 $8,181.25 min:
June 2010
max:
July 2010
Drybulk Vessels
Grand min: October
Victoria 75,966 Panamax 2002 $16,875 2010
max: January
2011
Brazil(2) 151,738 Capesize 1995 $29,062.50 min: October
for 1st/2nd 2014
year, max: February
$26,250 2015
balance years,
all plus profit
sharing above
$26,600
Australia 172,972 Capesize 1993 $20,662.50 min: November
2011
max: January
2012
China 135,364 Capesize 1992 $12,753 min: November
2015
max: October
2016
Grand Ocean 149,498 Capesize 1990 15,360, one min: December
additional 2010
year max: April 2011
charterer's max (if option
option at exercised):
$15,360 April 2012
Grand
Venetico 134,982 Capesize 1990 $17,760 min: June 2011
Additional max: October 2011
six month max (if option
charterer's exercised):
option at April 2012
$17,760
Grand
Rodosi(3) 68,788 Panamax 1990 $10,174.50 min: June 2012
+ 50/50 max: September
profit 2012
sharing
Newbuildings
Name Size Vessel Type Expected Charter Rate Charter term
(dwt) Delivery (daily, net)
Date
TBN 92,000 Post- Q2 2011 $14,438 Seven years
Panamax + 50/50 Profit time charter
Sharing when
110% of BPI
route index
exceeds $17,000
TBN 80,000 Kamsarmax Q4 2010 $28,710 for Seven years
first five time charter
years; owner's
option for
additional
two years at
$20,000-
$28,000 (less 1%)
TBN 80,000 Kamsarmax Q4 2011 $27,300 Seven years
time charter
(1) MOAs for the sale of these vessels have been executed and the
sales are expected to close during the second quarter of 2010.
(2) $29,062.50 for the first and second years, $26,250 all years
thereafter, plus profit sharing (85% of the Cape Spot 4 TCE Avg.
Minus $26,600)
(3) Profit calculation: 86% of Cape Spot 4 TCE Avg. minus $10,200
About NewLead Holdings Ltd.
NewLead Holdings Ltd. is an international shipping company that owns and operates product tankers and dry bulk vessels. NewLead’s common stock is listed on the NASDAQ Global Select Market where it trades under the symbol “NEWL”.
To learn more about the Company, please visit the Company’s new website at www.newleadholdings.com.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995
This press release includes assumptions, expectations, projections, intentions and beliefs about future events. These statements, as well as words such as “anticipate,” “estimate,” “project,” “plan,” and “expect,” are intended to be ”forward-looking” statements. We caution that assumptions, expectations, projections, intentions and beliefs about future events may vary from actual results and the differences can be material. Forward-looking statements include, but are not limited to, such matters as future operating or financial results; statements about planned, pending or recent acquisitions and business strategy. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in our records and other data available from third parties. Although NewLead believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, NewLead cannot assure you that it will achieve or accomplish these expectations, beliefs or projections described in the forward looking statements. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charter rates and vessel values, failure of a seller to deliver one or more vessels, and other factors discussed in NewLead’s filings with the U.S. Securities and Exchange Commission from time to time. NewLead expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in NewLead’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.
Investor and Media Contact:
Laura A. Kowalcyk
CJP Communications
+1 (212) 279 3115 x 209
SOURCE NewLead Holdings Ltd.
