Navios Maritime Acquisition has provided a $70m secured loan to its sister company Navios Maritime Holdings, which will be used as working capital and to repurchase of debt and equity securities.
The facility is Navios Acquisition’s second attempt to loan money to its ailing affiliate after a previous facility was met with fury from shareholders and was subsequently abandoned.
The reworked loan facility has higher collateral and a higher interest rate. It is secured against all of Navios Holdings’ interest in Navios Acquisition, composed of 65,301,220 shares of common stock and 1,000 preferred shares that are convertible into 7,676,000 shares of common stock.
It is also secured against 78.5% of Navios Holdings’ majority interest in Navios South America Logistics, which comprises 10,021 shares.
The facility will bear interest at 8.75%, compounded semi-annually, and is repayable at any time before November 15, 2018.
Navios Acquisitions said a special committee comprised of the company’s independent directors negotiated and approved the terms of the loan with the help of external financial and legal advisors.
“In approving the loan facility, the special committee determined that the loan facility was fair to Navios Acquisition and in the best interest of Navios Acquisition and its shareholders,” the company said today.
Shareholders raised hell when Navios Acquisition announced plans in March to lend the company $50m via a revolving credit facility, which bore interest based on LIBOR plus 3% per annum – which investors complained was too low.
A lawsuit was brought against Navios Acquisition by two shareholders in April, which claimed the loan was agreed “on terms that no rational person, much less a corporate director or controlling stockholder showing respect to their fiduciaries, would ever permit”.
“The terms of the loan, including its miniscule interest rate, are wildly below the market rate an independent third party would charge Navios Holding,” the plaintiffs stated in their complaint.
“Navios Holdings’ equity owners, including Frangou [pictured], ought to have invested or raised new equity. However, that would have required making further personal investments or conducting a dilutive offering that would have reduced the equity interests of insiders in Navios Holdings. Thus, Navios Holdings turned to Navios Acquisition,” the complaint said.
NYSE-listed Navios Maritime Holdings posted a $104m adjusted net loss in its results for the financial year 2015, published in late February.