Business Context and Reporting Period
This Form 6-K filing by Capital Product Partners L.P. (CPLP), dated July 29, 2019, reports the execution of new long-term time charters for two Neo-panamax container vessels, the M/V 'Agamemnon' and M/V 'Archimidis', with Mediterranean Shipping Company Co. S.A. (MSC). The Partnership owns a fleet of 11 vessels, including ten container carriers and one bulk carrier.
Key Financial Metrics and Projections
The filing provides forward-looking estimates rather than historical financial results for the period. Key projected metrics for the new MSC charters include:
- Estimated EBITDA: Approximately $44.5 million over the median firm periods of the charters.
- Estimated Net Income: Approximately $10.5 million over the same periods.
- Assumed Expenses: Estimates assume vessel depreciation and amortization of approximately $29.0 million and interest expense of approximately $5.0 million.
- Charter Coverage: Updated coverage is 100% for the remainder of 2019 and 91% for 2020.
The filing does not provide current period revenue, profit, cash flow, debt, or liquidity figures.
Material Changes and Operational Updates
The primary material change is the securing of new employment for two vessels, which increases the Partnership's charter coverage significantly for the near term. Specific operational details include:
- M/V 'Agamemnon': Charter expected to commence in Q3 2019 following scrubber installation and special survey.
- M/V 'Archimidis': Charter expected to commence at the end of Q4 2019 following scrubber installation and special survey, continuing directly from its current MSC charter.
- Duration: Both charters are set to expire no earlier than February 2024.
Guidance, Risks, and Unusual Items
Management presents the EBITDA and net income figures as forward-looking statements based on specific assumptions, including vessel utilization, absence of drydocking, and operating expenses in line with historical averages. The filing explicitly states that these are non-GAAP measures and not prepared to comply with SEC guidelines for prospective information.
Key Risks and Uncertainties:
- Failure or inability of the charterer (MSC) to perform obligations.
- Higher vessel or operating expenses than assumed.
- Required drydocking not accounted for in the base estimate.
- Risk of damage, loss, arrest, or requisition of vessels.
- Uncertainty regarding the accuracy of depreciation, amortization, and interest expense assumptions.
Investor Verification Checklist
- Verify the actual commencement dates of the charters against the Q3/Q4 2019 estimates, contingent on scrubber installation and survey completion.
- Confirm the actual operating expenses and drydocking schedules to assess the accuracy of the $44.5 million EBITDA estimate.
- Monitor the financial health and performance of the charterer, MSC, to evaluate counterparty risk.
- Review the Partnership's Form 20-F for historical financial data and detailed risk factors not included in this 6-K.