NMM

Business Context and Reporting Period

Company: Navios Maritime Partners L.P. (Navios Partners)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Three months ended March 31, 2009 (Q1 2009)
Business Overview: Navios Partners is an international owner and operator of Capesize and Panamax drybulk carriers. As of March 31, 2009, the fleet consisted of eight owned Panamax vessels, one owned Capesize vessel, and two chartered-in Panamax vessels. The company operates primarily under long-term time charters.

Key Financial Metrics

Key Performance Indicators:

• Fleet Utilization: 99.95% (Q1 2009) vs. 100.0% (Q1 2008).
• Time Charter Equivalent (per day): $26,120 (Q1 2009) vs. $22,565 (Q1 2008).
• Distributions: $0.40 per unit declared for Q1 2009 (payable May 6, 2009).

Material Changes vs. Prior Period

• Revenue Growth: Revenue increased 48.2% to $21.2 million, driven by the full quarter operation of the Navios Aldebaran (delivered March 2008) and Navios Hope (acquired July 2008).
• Net Income Surge: Net income rose 133% to $9.0 million. This was significantly aided by a lump-sum charter payment of approximately $29.6 million (net of expenses) received for the Navios Hope, representing an acceleration of a portion of the charter value.
• Debt Reduction: Total borrowings decreased from $235.0 million to $195.0 million following a $40.0 million repayment in February 2009 under an amended credit facility.
• Expense Increases: Management fees increased 44.4% and General & Administrative expenses increased 80% due to the larger fleet size and professional fees related to credit facility amendments.

Guidance, Outlook, and Risks

Management Commentary & Outlook:

• Market Conditions: Management notes the significant credit crisis and global recession have created unfavorable capital market conditions.
• Acquisition Strategy: On April 2, 2009, the company announced it would not exercise its option to acquire the newbuilding Capesize vessel Navios TBN II ($135 million) due to market conditions. However, it remains committed to purchasing the Navios TBN I ($130 million) upon delivery in late June 2009, though financing remains a contingency.
• Liquidity: The company amended its credit facility in January 2009 to include stricter cash reserve requirements (ranging from $2.5 million to $12.5 million through year-end 2009) and adjusted covenants (reduced minimum net worth to $100 million).

Risks and Contingencies:

• Financing Risk: Uncertainty regarding the ability to finance the $130 million purchase of Navios TBN I or refinance existing debt in a tight credit market.
• Market Volatility: The dry bulk shipping industry is highly cyclical; declines in charter rates or vessel values could impact distributions and covenant compliance.
• Counterparty Concentration: Four customers accounted for approximately 81% of total revenues in Q1 2009.
• Regulatory & Environmental: Exposure to changing environmental laws (e.g., OPA 90, Bunker Convention) and potential liabilities from pollution or piracy.

Investor Verification Checklist

• Financing for Navios TBN I: Verify the company's ability to secure the remaining funding for the $130 million vessel purchase scheduled for June 2009, given the recent decision to cancel the TBN II acquisition.
• Covenant Compliance: Monitor adherence to the amended credit facility covenants, specifically the escalating minimum cash reserve requirements and the Value Maintenance Covenant (VMC).
• Charter Renewals: Assess the risk of charter expirations (e.g., Navios Gemini S original charter expired Feb 2009, renewed at higher rate; others expire 2010-2014) and the ability to re-charter at profitable rates in a recessionary environment.
• Related Party Transactions: Review the ongoing management and administrative fees paid to Navios Holdings, which totaled $2.9 million in Q1 2009.
• Deferred Revenue Amortization: Confirm the impact of the $30.4 million lump-sum payment on future revenue recognition schedules.