Matson, Inc. current report, Q3 FY2016

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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.