Business Context and Reporting Period
This Form 6-K filing by Costamare Inc. (NYSE: CMRE) is dated April 26, 2012. The report details a strategic fleet renewal transaction involving the sale of two older vessels and the acquisition of two newer vessels to replace them in existing charter agreements.
Key Financial Metrics and Transaction Details
- Acquisition Cost: Approximately US $24.9 million for two 1998-built vessels (3,842 TEU each).
- Sale Proceeds: Approximately US $12.3 million for two 1984-built vessels (2,922 TEU each).
- Net Incremental Cost: Approximately US $6.3 million per vessel.
- Expected Book Gain: Approximately US $4.4 million in aggregate from the disposal of the older vessels.
- Funding: Partially funded by debt drawn from a currently committed and undrawn credit facility.
- Charter Extension: Two charters extended for approximately 18 months starting November 2012 at an average daily rate of US $11,150.
Material Changes and Fleet Strategy
The Company is executing a fleet renewal program by substituting 1984-built assets with vessels that are 14 years younger, larger, and have better specifications. The transaction replaces the Gifted and Genius I with the Bunga Raya Dua (renamed Koroni) and Bunga Raya Satu (renamed Kyparissia). The new vessels are expected to be delivered in May 2012.
Management Commentary and Outlook
Gregory Zikos, Chief Financial Officer, stated that the Company is leveraging attractive steel prices and second-hand ship values to enhance earnings potential and re-chartering upside. The transaction is designed to extend the useful life of the Company's assets while improving fleet efficiency. The filing includes standard forward-looking statements regarding future results, noting inherent uncertainties and risks detailed in the Company's Form 20-F.
Investor Verification Checklist
- Verify the delivery dates of the Koroni and Kyparissia to ensure they align with the May 2012 target.
- Confirm the utilization of the committed credit facility for the net acquisition cost.
- Monitor the realization of the projected US $4.4 million book gain upon closing of the sales.
- Review the specific terms of the 18-month charter extensions commencing in November 2012.
- Assess the impact of the fleet renewal on the Company's overall debt-to-equity ratio and liquidity position.