Business Context and Reporting Period
This Form 6-K filing by Costamare Inc. (NYSE: CMRE) covers the period of February 1, 2011. The Company is a leading owner and provider of containerships for charter, operating a fleet of 53 vessels with a total capacity of 275,728 TEU. The filing primarily announces a fleet renewal and expansion program involving new shipbuilding contracts and the acquisition and disposal of secondhand vessels.
Key Financial Metrics and Transactions
- Newbuild Contracts: Signed contracts for two new 9,000 TEU containerships with Sungdong Shipbuilding & Marine Engineering Co., Ltd., expected for delivery by the end of 2012.
- Charter Agreements: Entered into 10-year time charter agreements with MSC for the two newbuilds immediately upon delivery.
- Secondhand Acquisitions: Agreed to purchase three vessels (two 2,023 TEU and one 2,024 TEU) for a total cost of US $30 million, funded by own funds.
- Asset Disposals: Agreed to sell three older vessels (MSC Namibia, MSC Sierra, MSC Sudan) for a total price of approximately US $21 million.
- Projected Gains: Management expects to realize book gains of approximately US $11 million from the disposals.
- Financing: Newbuilds will be financed by own funds and a new credit facility, without utilizing currently available credit lines.
Material Changes and Strategic Moves
The Company is executing a strategy to substitute older assets with newer, larger vessels. The three acquired secondhand vessels are 14 to 15 years younger than the vessels being sold and feature better specifications. The incremental cost for this substitution is approximately US $3 million per vessel. The new secondhand vessels are expected to be delivered before the end of March 2011 to replace the sold vessels in their respective charter agreements.
Guidance, Outlook, and Management Commentary
Gregory Zikos, Chief Financial Officer, highlighted the strengthening of the relationship with MSC. The two newbuildings are projected to contribute in excess of $300 million in contracted revenues over their charter terms. Management believes this fleet renewal enhances earnings potential and rechartering upside. The filing includes standard forward-looking statements noting that actual results may differ materially from anticipated results due to inherent uncertainties.
Investor Verification Checklist
- Verify the terms and delivery schedule of the new credit facility required for the newbuilds.
- Confirm the exact delivery dates for the three secondhand vessels to ensure they align with the March 2011 target.
- Review the specific charter rates for the newbuilds to validate the $300 million revenue projection.
- Monitor the closing of the asset disposals to confirm the realization of the projected $11 million book gain.
- Assess the impact of the new credit facility on the Company's overall debt-to-equity ratio and liquidity position.