HSH Nordbank and Navios develop new financing solution for vessels on the brink of insolvency

• Transaction structure serves as role model for the shipping industry

Hamburg/Kiel, April 22, 2013 - In cooperation with the Navios Group, an international shipping company, HSH Nordbank has developed an innovative financing solution for vessels, which are either in insolvency already or on the brink of filing for insolvency.

The new approach enables the Bank to reduce its balance sheet, as well as its risk exposure. Navios acquires, in its role as a new investor, the vessels and contributes fresh money to the capital structure. The remaining part of the credit amount will be converted into a participating loan that gives the financing bank the opportunity to participate in a market improvement and fully recover the original credit amount at a later point of time.

In an initial transaction, shipping companies of the Navios Group will acquire a portfolio of ten vessels that are financed by HSH Nordbank. The portfolio comprises five tankers in the size range of 30,000 and 80,000 dwt and five container vessels with a capacity of 2,000 to 3,400 containers (TEU). All vessels were built in 2006 or later. The vessels belonging to different owners are currently not employed, or operate well below cost coverage. Continued financial and operational support from existing owners is not expected.

The total HSH Nordbank loan exposure for this portfolio amounts to approximately USD 300 million. Upon transferring the vessels to Navios, the current owners will be released from their respective credit obligations. In return, Navios pays approximately USD 130 million to HSH Nordbank – around 40 percent of the outstanding loan amount – and secures continued operation of the vessels for at least six years. The remaining approximately USD 170 million of the loan amount will be converted into a participating loan held by HSH Nordbank. 80 percent of the free cash flows – post all operating expenses and capital costs – will be used to service the participating loan.

“With this innovative financing structure we react to the ongoing crisis in the international shipping industry. This approach, which we developed together with our partner Navios, serves as a role model for the entire maritime cluster. The insolvent vessels, or those on the brink of insolvency, are transferred to a highly professional operator that is able to secure an economically feasible operation of the vessels throughout the shipping crisis. In addition, there is a significant reduction of risk for the financing bank, while at the same time keeping the option to participate from a market recovery”, Wolfgang Topp, Generalbevollmächtigter of HSH Nordbank, summarized today in a meeting with shipping journalists in Hamburg. “The vessels where previous restructuring measures with the existing owners have been exhausted and failed, will, with the new operator, obtain a stable capital structure and thus a sustainable long-term perspective”, stated Topp.

Most of the prior concepts in the shipping industry, aimed to avoid firesales or foreclosures, only provided for an exchange of the vessel operator. The economic risk remained entirely with the financing bank. This new solution developed by HSH Nordbank represents an alternative to such previous approaches.

From the perspective of HSH Nordbank this structure provides a potential solution also for other shipping companies, portfolios and banks. It is an important step in response to the global shipping crisis, which also aligns the interests of the existing owners, the financing bank and the shipping industry. One requirement, however, is that the vessels are marketable and can be operated economically in the future. HSH Nordbank is currently preparing further transactions in-line with this approach. “We are currently discussing with representatives of the Hamburg ship owners regarding a comparable transaction“, said Wolfgang Topp. In total, the Bank plans future transactions of similar kind, with a total asset volume exceeding EUR 1 billion.

About Navios Group

Navios Group is a group of global vertically integrated seaborne shipping and logistics companies all operating under the core principles of the Navios brand and its global network of business relationships. The Group consists of four significant companies, Navios Maritime Holdings Inc. (NYSE:NM), Navios Maritime Partners L.P. (NYSE: NMM), Navios Maritime Acquisition Corporation (NYSE:NNA), and Navios South American Logistics Inc., each of which is a leading company in its respective business sector. The Group controls 109 vessels and provides transportation and storage services for drybulk commodities, petroleum products (clean and dirty) and bulk liquid chemicals.