Business Context and Reporting Period
Company: Matson, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: August 25, 2016
Event: Entry into a Material Definitive Agreement for the construction of two new vessels.
Key Financial Metrics and Transaction Details
This filing reports a specific capital expenditure agreement rather than periodic financial performance metrics (revenue, profit, cash flow, or margins).
- Total Contract Value: $511 million for two Kanaloa Class dual-fuel capable combination container and roll-on/roll-off vessels.
- Contractor: National Steel and Shipbuilding Company (NASSCO).
- Vessel Specifications: 3,500 TEU platform.
- Expected Delivery: End of 2019 and mid-2020.
- Payment Schedule:
- 5.0% due upon execution (August 2016).
- 8.2% due in 2017.
- 39.0% due in 2018.
- 36.4% due in 2019.
- 11.4% due in 2020.
Material Changes and Funding Strategy
The filing does not report changes to prior period financial results. The material change is the commitment to a $511 million capital project.
Funding Sources:
- Cash flows from operations.
- Borrowing under the Company's unsecured revolving credit facility.
- Additional debt financings, potentially including U.S. Government guaranteed vessel finance bonds (Title XI).
Guidance, Outlook, and Risks
Management Commentary: The Company issued a news release and a series of questions and answers regarding the vessel construction, which are attached as exhibits but are not deemed "filed" for Section 18 liability purposes.
Risks and Contingencies:
- The summary of terms is subject to the full text of the Ship Construction Contract.
- Execution of the project relies on the availability of debt financing and operational cash flows.
Investor Verification Checklist
- Verify the full text of the Ship Construction Contract when filed as an exhibit to the next periodic report.
- Confirm the Company's current capacity under its unsecured revolving credit facility to support the 2017-2018 payment obligations.
- Monitor the status of potential U.S. Government Title XI bond financing.
- Review the attached news release (Exhibit 99.1) and Q&A (Exhibit 99.2) for operational details not included in the 8-K summary.