12-10-2022 TMI relaxing investment rules to pursue more big takeover targets, By Gary Dixon, TradeWinds
Taylor Maritime Investments (TMI) is proposing relaxing financial restrictions to give it the power to make more acquisitions on the day it launched a takeover offer for Grindrod Shipping. The London-listed shipowner said the idea is to allow greater flexibility over the size and financing of investments it can make while not detracting from the company’s overall “objective, policy and investment philosophy”. Ed Buttery-led dry bulk player TMI is paying $26 per share for Nasdaq-listed Grindrod in a deal valuing the target at $494m. TMI already owns 26% of the bulker company.
Now it is asking shareholders to approve a policy that will allow management to invest up to 40% of gross assets in other shipping companies in “exceptional” cases. The aim then would be to bring this down to 30% within 18 months through a combination of vessel sales and group restructuring. The gearing limit will also be increased to facilitate other large deals like the Grindrod takeover. This will also have a new limit of 40% of gross assets, with a commitment to return this to within the current limit of 25% over the same period. TMI already has acceptances for the changes from investors controlling 37.6% of the stock.
The company also announced that it has agreed to sell a 2012-built supramax for net proceeds of $20.1m, generating additional cash to support the Grindrod deal. The vessel was part of the seed fleet when TMI carried out its initial public offering last year. The only supramax left at the company is the 59,000-dwt Pacific Hero (built 2012), valued at $21m by VesselsValue. The bulker was acquired from Tokyo Century Corp in May 2021 for $18m. The fleet will then consist of 26 ships, all handysizes.
Chief executive Buttery said: “We are pleased to be able to realize a significant gain on the sale of a vessel in what continues to be a liquid market for the dry bulk segment. Meanwhile, the softening of charter rates through the previous quarter owing to decongestion as ports reopened, a weaker-than-expected grain season and typical summer weakness has now abated, with time charter rates climbing steadily from lows in early September and vessel values expected to follow,” he added. The diversified chartering strategy meant the company was able to maintain healthy earnings through the softer period, Buttery said. The company has covered 56% of remaining fleet days for the financial year ending 31 March 2023, and 20% for the following 12 months. TMI said this provides strong earnings visibility and certainty, with the opportunity to secure more charters at attractive rates. In July, the owner reported strong profits consisting of net earnings of $253m for the year to 31 March.