Matson Moves Boxship in $106m Sale and Leaseback Deal

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Highlights

  • MV Maunalei was sold for $106.0 million by a subsidiary of Matson and leashed back from the buyer.
  • The term of the lease has been for five years with an extension of two years.
  • The Company believes the transaction will provide additional financial flexibility for the new vessel build program.

Introduction

On November 26, 2018, a subsidiary of Matson, Inc. entered into an agreement whereby the MV Maunalei was sold for $106.0 million, and subsequently leased back from the buyer under an operating lease agreement.

Terms of the lease

The term of the lease has been for five years with an option to extend the term for an additional two years. The net proceeds from the sale were used to reduce borrowings under the Company’s revolving credit facility.

Increase in financial flexibility

As a result of the transaction, the Company expects the following financial effects on an annual basis:$12.0 million in higher operating cost as a result of the new lease expense, offset by approximately $8.8 million in lower costs as a result of a $4.8 million reduction in depreciation and amortization (including dry-dock amortization) and $4.0 million in interest savings based on the current interest rate on the Company’s revolving credit facility.

The Company believes the transaction will provide additional financial flexibility for Matson during the remainder of the new vessel build program and lower financing costs resulting from increasing leverage.

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Source: Market Exclusive

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