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(Alliance News) - Taylor Maritime Investment Ltd said on Friday it intended to trim its debt after acquiring a controlling stake in Grindrod Shipping Holdings, in a move that could result in vessel sales.
In December, Taylor Maritime raised its interest in the Singapore-based shipping firm to 83%. It said the Grindrod delisting from Nasdaq in New York and the Johannesburg Stock Exchange was likely.
In its quarterly update, the Guernsey-based vessel investment company said it was committed to reducing its debt-to-gross-assets ratio from 31% as at December 31, to around 25% over the coming two quarters.
For the three months to December 31, Taylor Maritime's revolving credit facility and acquisition facility, linked to the Grindrod deal, were USD140 million and USD119 million drawn, respectively.
Taking into account USD227 million of debt outstanding at Grindrod, Taylor Maritime's "look through" debt to gross assets ratio was 42%. The company expected to reduce this to around 36% over the coming two quarters.
"The company plans to continue to reduce debt from future vessel sales and operating cashflow in line with its commitment to de-lever its balance sheet," it said.
During the fourth quarter, Grindrod agreed to sell Ultramax vessel. The transaction is expected to complete in fourth quarter, proceeds of which will be applied to repay Grindrod debt as required, said Taylor Maritime.
Over the same period, Taylor Maritime similarly completed a vessel sale for USD20.1 million. It has also agreed a further two vessel sales, which are expected to complete by March 31.
The vessel investment firm declared an interim dividend of 2 US cents for the period to December 31.
As at December 31, net asset value per share was USD1.67, 1.8% lower than USD1.70 as at September 30.
Grindrod is held as an investment at fair value, contributing USD352 million to Taylor Maritime's NAV of USD552 million.
As part of its offer, Taylor Maritime received a USD24.6 million special interim dividend from Grindrod.
Taylor Maritime said it and Grindrod had been making good progress in jointly evaluating next steps to capitalise on available synergies from the combined fleet across insurance, commercial management, technical management and corporate activities.
"We're pleased that we secured a controlling stake in Grindrod which presents a transformational opportunity for TMI," Taylor Maritime Chief Executive Edward Buttery said.
In London, Taylor Maritime was up 2.3% at 91.00 pence on Friday. Grindrod Shipping shares rose 8.0% to ZAR280.99 in Johannesburg.
By Artwell Dlamini, Alliance News reporter
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