Business Context and Reporting Period
This Form 6-K filing by Capital Product Partners L.P. (CPLP) is dated August 20, 2008. The registrant is a Marshall Islands master limited partnership and foreign private issuer that owns and operates modern double-hull tankers. As of the report date, the company owns a fleet of 18 vessels, including 15 MR tankers, two small product tankers, and one Suezmax crude oil tanker.
Key Financial Metrics and Transaction Details
The filing details the acquisition and financing of the company's eighteenth vessel, the "Aris II."
- Vessel Specifications: 51,218 dwt MR chemical/product tanker.
- Acquisition Cost: $48 million.
- Financing Structure: Funded primarily through debt drawdowns on revolving credit facilities, supplemented by $2 million in cash.
- Charter Terms: Fixed under a 10-year bareboat charter to Overseas Shipholding Group Inc. (OSG) at a base rate of $13,000 per day.
- Interest Management: Interest costs on the drawn debt have been swapped until the end of the non-amortizing periods of the respective facilities.
The filing does not provide consolidated revenue, profit, cash flow, or margin figures for the reporting period.
Material Changes and Fleet Expansion
The primary material change is the addition of the "Aris II" to the fleet, bringing the total vessel count to 18. This vessel is the third of three 51,000 dwt MR sister vessels delivered in 2008, all of which are chartered to OSG. The company notes that this delivery represents the seventh contracted new building since its IPO.
Outlook, Management Commentary, and Risks
Management Commentary: Ioannis E. Lazaridis, CEO and CFO of the general partner, stated that the on-schedule delivery provides "accretive growth consistent with our strategy" and extends the partnership with OSG. Management highlighted the use of balance sheet strength and a new revolving facility signed earlier in the year to fund the acquisition primarily with debt.
Future Options: OSG holds an option to purchase the vessel at the end of the eighth, ninth, or tenth year of the charter, exercisable six months prior to the completion of the relevant year.
Risks and Contingencies: The filing includes standard forward-looking statements disclaiming obligations to update forecasts. It notes that risks and uncertainties could cause actual results to differ materially from anticipated results, specifically regarding expected charter commencements and expirations.
Investor Verification Checklist
- Verify the terms and availability of the revolving credit facilities used to fund the $46 million debt portion of the acquisition.
- Confirm the status of the interest rate swaps mentioned to manage debt costs.
- Review the creditworthiness of the charterer, Overseas Shipholding Group Inc. (OSG), given the 10-year bareboat commitment.
- Assess the impact of the $13,000 per day charter rate on the company's overall earnings per unit (accretive nature).
- Monitor the delivery schedule of the remaining sister vessels mentioned in the 2008 delivery plan.