Mpc Container Ships Asa · OSL:MPCC
Mpc Container Ships Asa — Investor Presentation (July 2020)
48 slides from Mpc Container Ships Asa's investor presentation, Jul 6, 2020
Slide 1: USD 27.5m Fully Underwritten Private Placement
USD 27.5m Fully Underwritten Private Placement 6 July 2020
Slide 2: Important Information
IMPORTANT INFORMATION THIS PRESENTATION AND ITS CONTENTS ARE CONFIDENTIAL AND ARE NOT FOR DISTRIBUTION OR RELEASE, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES OF AMERICA AND THE DISTRI
Slide 3: Important Information (cont.)
IMPORTANT INFORMATION (CONT.) THE CONTENTS OF THIS PRESENTATION ARE NOT TO BE CONSTRUED AS FINANCIAL, LEGAL, BUSINESS, INVESTMENT, TAX OR OTHER PROFESSIONAL ADVICE. EACH RECIPIENT SHOULD CONSULT WITH ITS OWN FINANCIAL, LEGAL, BUSINESS, INVESTMENT AND TAX ADVISERS TO RECEIVE FINANCIAL, LEGAL, BUSINES
Slide 4: Summary of Risk Factors
SUMMARY OF RISK FACTORS GENERAL RISKS BUSINESS AND VESSEL RELATED RISKS (CONT.) An investment in the Company may be lost in whole or in part The Company is subject to counterparty risks The Company is subject to risks relating to the completion of the proposed The Company is dependent on inf
Slide 5: Agenda
AGENDA Transaction Background Investment Opportunity Company Update Market Update Risk Factors Appendix 5
Slide 6: Transaction Background
TRANSACTION BACKGROUND COVID-19 causes significant, but temporary disruption in the container shipping industry Unprecedented development in the containership market following world-wide lockdowns and a looming global recession as a result of COVID-19 Charter market and asset values for feeder c
Slide 7: Summary Offering Details: USD 27.5m Fully Underwritten Private Placement
SUMMARY OFFERING DETAILS: USD 27.5M FULLY UNDERWRITTEN PRIVATE PLACEMENT SUMMARY OFFERING DETAILS KEY CONDITIONS • Fully underwritten Private Placement of new shares to raise gross • Start of application period: 6 July 2020 at 16:30 CEST Offering: proceeds of USD 27.5 million, equivalent to c. NOK 2
Slide 8: Agenda
AGENDA Transaction Background Investment Opportunity Company Update Market Update Risk Factors Appendix 8
Slide 9: Investment Highlights
INVESTMENT HIGHLIGHTS Owner and operator of one of the largest feeder containership fleets globally Leading feeder owner Diversified fleet with spot vs. charter flexibility that provides significant operational leverage and operator with strong industry network Leading corporate set-up, compet
Slide 10: Amended Credit Agreements and Equity Placement to Take the Company Through COVID-19
AMENDED CREDIT AGREEMENTS AND EQUITY PLACEMENT TO TAKE THE COMPANY THROUGH THE RAMIFICATIONS OF COVID-19 1 USDm USD 27.5m of new equity through this fully underwritten private placement 12 Bolstering liquidity Proceeds from a repair offering to further strengthen liquidity 28 position to 69 addr
Slide 11: New Equity Ensuring Liquidity Runway Throughout 2021
NEW EQUITY ENSURING LIQUIDITY RUNWAY THROUGHOUT 2021, EVEN AT TODAY’S DEPRESSED CHARTER RATES AND UTILIZATION LIQUIDITY RUNWAY | ILLUSTRATIVE ANALYSIS (1,2,3) # of quarters 0 1 2 3 4 5 6 7 8 9 10 Date Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Current charter rates(
Slide 12: Entry Point at a Large Discount to Current and Historical Asset Values
ENTRY POINT AT A LARGE DISCOUNT TO CURRENT AND HISTORICAL ASSET VALUES UNLEVERED UPSIDE POTENTIAL FROM TRANSACTION PRICE (IN USDM) (1) Implied value 15yr old (transaction price of NOK 1.0/share) 10 year avg. value for a 15yr old vessel Newbuilding parity 5 year avg. value for a 15yr old vessel Pre-C
Slide 13: Significant Leverage Towards a Feeder Market Recovery
SIGNIFICANT LEVERAGE TOWARDS A FEEDER MARKET RECOVERY PRO-FORMA LEVERED UPSIDE POTENTIAL FROM TRANSACTION PRICE (1) Close to 6x accretion from post money market cap at NOK 1/share if values revert to pre-COVID 19 levels Additional value accretion if values 590% revert to 5 year historical averages 4
Slide 14: Strong Cash Flow and De-leveraging Capacity When the Market Recovers
STRONG CASH FLOW AND DE-LEVERAGING CAPACITY WHEN THE MARKET RECOVERS NORMALIZED CASH BREAK-EVEN (“CBE”) (1) INDICATIVE ANNUALIZED FCF SENSITIVITIES(5) FCF Yield in (%) (6) -38% 32% 45% 95% 308% In USD per day per vessel 7,636 154 6,836 800 5,859 977 FCF to Equity 790 EBITDA 115 74 56 51 4,624 35 25
Slide 15: Summary
SUMMARY Robust liquidity position and covenant waivers to sustain a continued challenging market following COVID-19 Extension of maturity increasing re-financing flexibility and added cash-build potential from the anticipated up- cycle Highly attractive entry point with asset values close to h
Slide 16: Agenda
AGENDA Transaction Background Investment Opportunity Company Update Market Update Risk Factors Appendix 16
Slide 17: Key Figures Q1 2020
KEY FIGURES Q1 2020 FINANCIAL PERFORMANCE (Q1 2020) Operating Revenue: USD 46.0m (Q4 2019: USD 44.2m) EBITDA: USD 7.5m (Q4 2019: USD 4.8m) Operating Cash Flow: USD 12.8m (Q4 2019: USD 12.7m) Net Loss: USD 10.7m (Q4 2019: USD 14.2m) OPERATIONAL PERFORMANCE (Q1 2020) Fleet Utilization (1): 8
Slide 18: Key Developments YTD 2020
KEY DEVELOPMENTS YTD 2020 COVID-19 pandemic and preventative countermeasures dominate market sentiment • Encouraging start to the year: Time-charter rates at solid levels (HARPEX (1) +47% yoy) • Global recession in 2020 due to COVID-19 pandemic, regional lockdowns and tumbling demand Market • Severe
Slide 19: Short-Term Market Risks Increased Due to COVID-19
SHORT-TERM MARKET RISKS INCREASED DUE TO COVID-19 RATES: MPCC RATES VS. LAST DONE IDLE TIMES: MPCC OUTPERFORMS REST OF THE MARKET Better Same Worse Clarksons TC Rate Index Avg. idle statistics (LTM) No. of fixtures 30 65 20 -19% 18 10 60 18 7.30% 10 13 8 5 10 2 55 0 1 2 5.90% 9 10 11 -10 50 26 -20 4
Slide 20: MPCC Continues to Proactively Manage Risks & Opportunities for Stakeholders
MPCC CONTINUES TO PROACTIVELY MANAGE RISKS & OPPORTUNITIES FOR STAKEHOLDERS LEADING OPERATIONAL PERFORMANCE COMMITTED TO SOUND GOVERNANCE AND ESG Strong and highly competitive operational KPIs Dedicated to safe operations (e.g. industry-leading Lost Time Injury Ratio of 0.2 and Total Recordable
Slide 21: Market Outlook and MPCC Response
MARKET OUTLOOK AND MPCC RESPONSE 2020/21 2021/22 AND BEYOND COVID-19 DISRUPTING SHIPPING MARKETS MARKET REBOUND • Adversely impacted containerized freight volumes • Reduced supply of feeder vessels Fundamentals • Hurting charter rates and container fleet utilization INDUSTRY intact and • Intra-regio
Slide 22: Agenda
AGENDA Transaction Background Investment Opportunity Company Update Market Update Risk Factors Appendix 22
Slide 23: Demand Growth Expected to Outperform Supply Growth After Rebalancing in 2021
DEMAND GROWTH EXPECTED TO OUPERFORM SUPPLY GROWTH AFTER REBALANCING IN 2021 SUPPLY/DEMAND BALANCE (TOTAL MARKET) SUPPLY/DEMAND BALANCE (FEEDER SEGMENT 0.1-3K TEU) Percent Percent 12 12 10 Capacity Growth Demand Growth 10 Feeder Capacity Growth 8.5 7.8 Feeder Demand Growth 8 8 5.8 5.6 6 6 5.2 4.9 4.6
Slide 24: Global Recession in 2020, but Demand Recovery in 2021 a Likely Scenario
GLOBAL RECESSION IN 2020, BUT DEMAND RECOVERY IN 2021 A LIKELY SCENARIO WORLD SEABORNE CONTAINER TRADE (M TEU) +7% 200 +3.8% 150 +14% 100 193 180 50 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020e 2021e • World seaborne container trade historically grown at a steady pace of +3.8%
Slide 25: Similar Development Expected for Intra-Regional Trades
SIMILAR DEVELOPMENT EXPECTED FOR INTRA-REGIONAL TRADES DEVELOPMENT OF INTRA-REGIONAL AND GLOBAL CONTAINER TRADE COMMENTS CAGR 2001-2019 Share of TEU Intra-Regional (RHS) • Share of intra-regional trade has increased Intra-Regional Container Trade, million TEU from 32% in 2001 to 43% in 2019 Global T
Slide 26: Favorable Long-Term Supply Outlook for Feeders
FAVORABLE LONG-TERM SUPPLY OUTLOOK FOR FEEDERS TOTAL FLEET HISTORIC DEVELOPMENT FEEDER FLEET FORECASTS (0.1 – 3K TEU) m TEU Jun.-20 (% y/y): 0.2% 24 23,2 (3%) 4,050 -1.5% <1k 3k-6k 4,008 4,015 22 1k-3k >6k 4,000 -1.4% 20 3,956 18 3,950 -1.4% 14,2 -156 163 16 (5%) -207 3,900 14 13,1 3,900 148 -140 12
Slide 27: Historical Low Order Book and Limited New Feeder Contracting
HISTORICAL LOW ORDER BOOK AND LIMITED NEW FEEDER CONTRACTING… ORDER BOOK DEVELOPMENT FEEDER CONTRACTING IN % OF FLEET, 1,000-2,900 TEU m TEU Percent 5.0 1-3k TEU Orderbook-to-Fleet Ratio (RH) 40 8.0 % Total 7.0 % 4.0 30 6.0 % 5.0 % 3.0 20 4.0 % 2.316 2.0 3.0 % 10.0% 10 2.0 % 1.0 1.0 % 0.359 0.0 0 0.
Slide 28: And an Aging Fleet, Setting the Scene for Increased Scrapping
…AND AN AGING FLEET, SETTING THE SCENE FOR INCREASED SCRAPPING IN A WEAK MARKET FEEDER FLEET COMPOSITION (1,000 – 3,000 TEU) AVERAGE FLEET AGE (100 – 3,000 TEU) Aging feeder fleet – Roughly 25% of the feeder fleet older than 19 years and as such, are likely demolition candidates in a weak feeder mar
Slide 29: Demolition Activity YTD Hampered by Lockdown in India, Bangladesh and Pakistan
DEMOLITION ACTIVITY YTD HAMPERED BY LOCKDOWN IN INDIA, BANGLADESH AND PAKISTAN ON THE BACK OF COVID-19 DEMOLITION NEWS ALREADY DELETED k TEU • Containership demolition in Jan-May 2020 totaled 21 units of ~51,000 Demolitions Total (without 1-3k TEU) 120 TEU, down 52% y-o-y in TEU terms, with activity
Slide 30: COVID-19 Crisis Put Severe Downward Pressure on the Charter Market
COVID-19 CRISIS PUT SEVERE DOWNWARD PRESSURE ON THE CHARTER MARKET TIME-CHARTER RATE DEVELOP0MENT FEEDER SEGMENT IDLE STATISTICS k USD / day No. Vessels 18 600 1k TEU grd 2.5k grd TEU 17 1.7k TEU grd 2.75k TEU 16 2k TEU 500 15 453 14 400 115 13 12 11 300 59 10 76 9 200 Jun-20 (% 2020 ytd): 8 7,388 (
Slide 31: Agenda
AGENDA Transaction Background Investment Opportunity Company Update Market Update Risk Factors Appendix 31
Slide 32: Risk Factors
RISK FACTORS GENERAL An investment in the Company may be lost in whole or in part The Company will invest in and operate assets in the container shipping sector which are subject to significant risks. The risks and uncertainties described in this Presentation are risks of which the Company is aware
Slide 33: Risk Factors: Business and Vessel Related Risks
RISK FACTORS BUSINESS AND VESSEL RELATED RISKS The Company is dependent upon container transportation The Company is dependent on revenues generated from the business of transporting containers. Due to the lack of diversification in the Company's lines of business, an adverse development in the Comp
Slide 34: Risk Factors: Business and Vessel Related Risks (cont.)
RISK FACTORS BUSINESS AND VESSEL RELATED RISKS (CONT.) The Company's vessels may suffer operational downtime Any operational downtime of the Company's vessels or any failure to secure employment for any vessel, or failure to secure employment for vessels at satisfactory rates will affect the Company
Slide 35: Risk Factors: Business and Vessel Related Risks (cont.)
RISK FACTORS BUSINESS AND VESSEL RELATED RISKS (CONT.) Debt finance may be unavailable The Company may require additional capital in the future due to unforeseen liabilities, net cash flow shortfalls or in order to take advantage of business opportunities. There can be no assurance that the Company
Slide 36: Risk Factors: Business and Vessel Related Risks (cont.)
RISK FACTORS BUSINESS AND VESSEL RELATED RISKS (CONT.) The Company is dependent on information technology systems The Company uses information technology (“IT") systems to communicate with and monitor its vessels, and the vessels rely on it systems for their operations. The Company has firewalls, an
Slide 37: Risk Factors: Market Related Risks
RISK FACTORS MARKET RELATED RISKS The Company is subject to macroeconomic conditions Changes in national and international economic conditions, including, for example, interest rate levels, inflation and employment levels, may influence the valuation of real and financial assets. In turn, this may i
Slide 38: Risk Factors: Risks Related to the Shares
RISK FACTORS RISKS RELATED TO THE SHARES The Company may need additional capital which may have a dilutive effect The Company may in the future decide to offer additional shares or other securities in order to finance its operations, or in connection with unanticipated liabilities or expenses or for
Slide 39: Agenda
AGENDA Transaction Background Investment Opportunity Company Update Market Update Risk Factors Appendix 39
Slide 40: Appendix: Historical Asset Values
APPENDIX: HISTORICAL ASSET VALUES 1,000 TEU, 10YR OLD (USDM) 1,700 TEU, 10YR OLD (USDM) 2,800 TEU, 10YR OLD (USDM) 14.0 18.0 35.0 16.0 12.0 30.0 14.0 10.0 25.0 12.0 8.0 10.0 20.0 6.0 8.0 15.0 6.0 4.0 10.0 4.0 2.0 5.0 2.0 0.0 0.0 0.0 Jun-16 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-
Slide 41: Appendix: Historical Charter Rates
APPENDIX: HISTORICAL CHARTER RATES 1,000 TEU, TCE (USD/DAY) 1,700 TEU, TCE (USD/DAY) 2,750 TEU, TCE (USD/DAY) 10,000 14,000 20,000 9,000 18,000 12,000 8,000 16,000 7,000 10,000 14,000 6,000 12,000 8,000 5,000 10,000 6,000 4,000 8,000 3,000 4,000 6,000 2,000 4,000 2,000 1,000 2,000 0 0 0 Jun-10 Jun-1
Slide 42: Appendix: Financials – Overview Q1 2020
APPENDIX: FINANCIALS – OVERVIEW Q1 2020 (1) BALANCE SHEET AS PER 31 MARCH 2020 PROFIT & LOSS Q1 2020 31/03/2020 31/12/2019 Q1 2020 Q4 2019 Assets 716.4 718.1 Operating revenues 46.0 44.2 Non-current Assets 648.4 649.3 Gross Profit 9.4 7.7 Current Assets 68.1 68.8 EBITDA 7.5 4.8 thereof Cash & Cash E
Slide 43: Appendix: Financials – Development of Charter Rates and Utilization
APPENDIX: FINANCIALS – DEVELOPMENT OF CHARTER RATES AND UTILIZATION CONSOLIDATED FLEET No. of consolidated 52 58 61 61 61 61 60 60 60 60 60 vessels (end of period) Trading ratio 96% 92% 93% 89% 92% 90% 91% 90%(1) 94%(1) 91%(1) 89%(1) 10,230 9,841 9,991 9,911 9,352 9,240 9,071 8,885 8,969 8,718 8,505
Slide 44: Appendix: MPCC Fleet Employment as per 01/07/2020 (1/3)
APPENDIX: MPCC FLEET EMPLOYMENT AS PER 01/07/2020 (1/3) EMPLOYMENT STATUS & TC COVERAGE – BOND GROUP Period Period Rate No. Vessel Cluster Trade Charterer Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Min. Max. ($pd) 1 AS LAETITIA 1000 grd Caribs Spot Pos
Slide 45: Appendix: MPCC Fleet Employment as per 01/07/2020 (2/3)
APPENDIX: MPCC FLEET EMPLOYMENT AS PER 01/07/2020 (2/3) EMPLOYMENT STATUS & TC COVERAGE – BEAL BANK GROUP Period Period Rate No. Vessel Cluster Trade Charterer Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Min. Max. ($pd) 1 AS LEONA 1000 gls Intra Asia Ta
Slide 46: Appendix: MPCC Fleet Employment as per 01/07/2020 (3/3)
APPENDIX: MPCC FLEET EMPLOYMENT AS PER 01/07/2020 (3/3) EMPLOYMENT STATUS & TC COVERAGE – BLUEWATER JV Period Period Rate No. Vessel Cluster Trade Charterer Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Min. Max. ($pd) 1 AS PATRICIA 2500 grd ME/S.Asia Glo
Slide 47: Simplified Corporate / Financing Structure
SIMPLIFIED CORPORATE / FINANCING STRUCTURE DEBT FACILITIES WITH FOUR SEPARATE “SILOS” (1) MPC Container Ships ASA (“Parent”) Listed on Oslo Stock Exchange Cash in Parent as per 31.03.20: USD 7.6m 100% 100% 100% 50% MPC Container Ships Bluewater Holding MPCC Second Financing MPCC First Invest B.V. Sc
Slide 48: Appendix: ESG at MPC Container Ships
APPENDIX: ESG AT MPC CONTAINER SHIPS ENVIRONMENTAL COMMITMENT • Significant investments in exhaust gas cleaning and ballast water management systems • Continuously optimise vessel operations and minimise environmental impact of our business by exploring viable options for emission reductions and exc
MPC Container Ships — Investor Presentation (July 2020) on 6ix