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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13A-16 OR 15D-16

OF THE SECURITIES EXCHANGE ACT OF 1934

DATED: August 3, 2020

Commission File No. 001-33811

 

NAVIOS MARITIME PARTNERS L.P.

 

7 Avenue de Grande Bretagne, Office 11B2

Monte Carlo, MC 98000 Monaco

(Address of Principal Executive Offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F                   Form 40-F  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes                  No  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes                   No  

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes                   No  

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

 

 

 

 
 

 

 NAVIOS MARITIME PARTNERS L.P.

FORM 6-K

TABLE OF CONTENTS

 

           
    Page  
Operating and Financial Review and Prospects     2  
Financial Statements Index     F-1  

 

 

This Report on Form 6-K is hereby incorporated by reference into the Navios Maritime Partners L.P. Registration Statement on Form F-3, File No. 333-237934.

Operating and Financial Review and Prospects

The following is a discussion of the financial condition and results of operations for the three and six month periods ended June 30, 2020 and 2019 of Navios Maritime Partners L.P. (referred to herein as “we”, “us”, “Company” or “Navios Partners”). All of the financial statements have been stated in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). You should read this section together with the consolidated financial statements and the accompanying notes included in Navios Partners’ 2019 Annual Report filed on Form 20-F with the U.S. Securities and Exchange Commission (the “SEC”) on April 1, 2020.

This Report contains forward-looking statements (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events including Navios Partners’ 2020 cash flow generation, future contracted revenues, future distributions and its ability to have any distributions going forward, opportunities to reinvest cash accretively in a fleet renewal program or otherwise, potential capital gains, our ability to take advantage of dislocation in the market and Navios Partners’ growth strategy and measures to implement such strategy; including expected vessel acquisitions and entering into further time charters. Words such as “may,” “expects,” “intends,” “plans,” “believes,” “anticipates,” “hopes,” “estimates,” and variations of such words and similar expressions are intended to identify forward-looking statements. Such statements include comments regarding expected revenue and time charters. These forward-looking statements are based on the information available to, and the expectations and assumptions deemed reasonable by Navios Partners at the time these statements were made. Although Navios Partners believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve risks and are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of Navios Partners. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, global and regional economic and political conditions including the impact of the COVID-19 pandemic and efforts throughout the world to contain its spread, including effects on global economic activity, demand for seaborne transportation of the products we ship, the ability and willingness of charterers to fulfill their obligations to us and prevailing charter rates, shipyards performing scrubber installations, drydocking and repairs, changing vessel crews and availability of financing, potential disruption of shipping routes due to accidents, diseases, pandemics, political events, piracy or acts by terrorists, including the impact of the COVID-19 pandemic and the ongoing efforts throughout the world to contain it, the creditworthiness of our charterers and the ability of our contract counterparties to fulfill their obligations to us, tanker industry trends, including charter rates and vessel values and factors affecting vessel supply and demand, the aging of our vessels and resultant increases in operation and dry docking costs, the loss of any customer or charter or vessel, our ability to repay outstanding indebtedness, to obtain additional financing and to obtain replacement charters for our vessels, in each case, at commercially acceptable rates or at all, increases in costs and expenses, including but not limited to: crew wages, insurance, provisions, port expenses, lube oil, bunkers, repairs, maintenance and general and administrative expenses, the expected cost of, and our ability to comply with, governmental regulations and maritime self-regulatory organization standards, as well as standard regulations imposed by our charterers applicable to our business, potential liability from litigation and our vessel operations, including discharge of pollutants, general domestic and international political conditions, competitive factors in the market in which Navios Partners operates; risks associated with operations outside the United States; and other factors listed from time to time in Navios Partners’ filings with the U.S. Securities and Exchange Commission, including its reports on Form 20-F and reports on Form 6-K. Navios Partners expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Navios Partners’ expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based. Navios Partners makes no prediction or statement about the performance of its common units.

Recent Developments

Liquidation of Navios Europe II Inc.

On June 29, 2020, the liquidation of Navios Europe II was completed and Navios Partners purchased two Ultra-Handymax and three Panamax dry bulk vessels with a fair value of $56.1 million from Navios Europe II. The purchase was funded through a new financing agreement and cash on hand for total of $36.1 million and the assumption of working capital liability of $2.7 million.

Financing Arrangements

In June 2020, Navios Partners entered into a new credit facility with a commercial bank in the amount of $29.5 million in order to finance the purchase of five drybulk vessels that were acquired upon the liquidation of Navios Europe II. The credit facility has an amortization profile of 6.2 years, matures in June 2021 and bears interest at LIBOR plus 400 bps per annum up to December 2020 and 425 bps per annum subsequently.

In June 2020, Navios Partners entered into a new credit facility with a commercial bank in the amount of $17.0 million for the refinancing of four containerships. The credit facility has an amortization profile of 8.0 years, matures in December 2023 and bears interest at LIBOR plus 350 bps per annum.

 

Cash Distribution

In July 2020, the Board of Directors of Navios Partners declared a cash distribution for the second quarter of 2020 of $0.05 per unit. The cash distribution is payable on August 13, 2020 to all unitholders of common units and general partner units of record as of August 10, 2020. The declaration and payment of any further dividends remain subject to the discretion of the Board of Directors and will depend on, among other things, Navios Partners’ cash requirements as measured by market opportunities and restrictions under its credit agreements and other debt obligations and such other factors as the Board of Directors may deem advisable.

Overview

Navios Partners is an international owner and operator of dry cargo vessels, formed on August 7, 2007 under the laws of the Republic of the Marshall Islands by Navios Maritime Holdings Inc. (“Navios Holdings”), a global seaborne shipping and logistics company. Navios GP L.L.C., a wholly owned subsidiary of Navios Holdings, was also formed on that date to act as the general partner of Navios Partners. Currently, our general partner is Olympos Maritime Ltd. (the “General Partner”) and holds a 2.1% general partner interest in Navios Partners.

As of July 28, 2020, there were 10,987,679 outstanding common units and 230,524 general partnership units. Navios Holdings currently owns an approximately 18.8% common unit interest in Navios Partners and the General Partner currently owns a 2.1% general partner interest in Navios Partners.

Fleet

Navios Partners’ fleet consists of 23 Panamax vessels, 14 Capesize vessels, six Ultra-Handymax vessels and ten Containerships, including two Panamax bareboat charter-in vessels, that are expected to be delivered by the first half of 2021.

We generate revenues by charging our customers for the use of our vessels to transport their dry cargos. In general, the vessels in our fleet are chartered-out under time charters, which range in length up to twelve years at inception. From time to time, we operate vessels in the spot market until the vessels have been chartered under longer-term charters.

The following table provides summary information about our fleet as of July 30, 2020:

 

Owned Drybulk Vessels

 

Type

 

Built

Capacity

(DWT)

Charter-Out

Rate

 

Index

 

Expiration Date

Navios Soleil Ultra-Handymax 2009 57,337 $ 7,600 No November 2020
Navios La Paix Ultra-Handymax 2014 61,485 $ — 111% average BSI 58 10TC November 2020
Navios Christine B Ultra-Handymax 2009 58,058 $ — 100% average BSI 58 10TC January 2021
Navios Amaryllis Ultra-Handymax 2009 58,735 $ 8,835 No August 2021
Serenitas N Ultra-Handymax 2011 56,644 $ — 82% average BSI 58 10TC January 2021
Joie N Ultra-Handymax 2011 56,557 $ 8,455 No January 2021
Navios Hyperion Panamax 2004 75,707 $ 10,780 No September 2020
        $ 9,625 No December 2020
        $ — 100% average BPI 4TC August 2021
Navios Alegria Panamax 2004 76,466 $ — 99.5% average BPI 4TC March 2022
Navios Orbiter Panamax 2004 76,602 $ 10,106 No December 2020
        $ — 100% average BPI 4TC December 2021
Navios Helios Panamax 2005 77,075 $ 9,914 No December 2020
        $ — 100% average BPI 4TC September 2021
Navios Sun Panamax 2005 76,619 $ 9,818 No December 2020
        $ — 100% average BPI 4TC December 2021
Navios Hope Panamax 2005 75,397 $ 10,010 No December 2020
        $ 9,625 No December 2021
        $ — 100% average BPI 4TC January 2022
Navios Sagittarius Panamax 2006 75,756 $ 9,500 No December 2020
Navios Harmony Panamax 2006 82,790 $ 8,740 No April 2021
Navios Prosperity I Panamax 2007 75,527 $ 9,500 No January 2021
Navios Libertas Panamax 2007 75,511 $ 8,550 No February 2021
Navios Altair I Panamax 2006 74,475 $ 8,075 No February 2021
Navios Symmetry Panamax 2006 74,381 $ 7,030 No October 2020
Navios Apollon I Panamax 2005 87,052 $ — 113% average BPI 4TC August 2020
Navios Sphera Panamax 2016 84,872 $ 11,954 March 2021
        $ — 120% average BPI 4TC March 2022
Navios Camelia Panamax 2009 75,162 $ 9,500 No January 2021
Navios Anthos Panamax 2004 75,798 $ 9,500 No January 2021
Navios Azalea Panamax 2005 74,759 $ 11,400 No March 2021
Copernicus N Panamax 2010 93,062 $ 11,056 No December 2020
        $ — 95.75% average BPI 4TC February 2021
Unity N Panamax 2011 79,642 $ — 90% average BPI 4TC April 2021
Odysseus N Panamax 2011 79,642 $ 9,390 March 2021
        $ — 95.5% average BPI 4TC June 2021
Navios Beaufiks

Capesize

 

2004 180,310 $ — 100% average BCI 5TC March 2021
Navios Symphony

Capesize

 

2010 178,132 $ 18,900 No September 2020
Navios Fantastiks

Capesize

 

2005 180,265 $ 21,650 No March 2023
Navios Aurora II

Capesize

 

2009 169,031 $ — 95.25% average BCI 5TC February 2021
Navios Pollux

Capesize

 

2009 180,727 $ — 100% of pool earnings August 2020
Navios Sol

Capesize

 

2009 180,274 $ — 110% average BCI 5TC March 2021
Navios Fulvia

Capesize

 

2010 179,263 $ — 100% average BCI 5TC June 2021
Navios Buena Ventura

Capesize

 

2010 179,259 $ — 101% average BCI 5TC March 2021
Navios Melodia

Capesize

 

2010   179,132 $ 29,356

Profit sharing 50% above

$37,500/day based on

Baltic Exchange Capesize

TC Average

    September 2022
Navios Luz

Capesize

 

2010 179,144 $ — 100% average BCI 5TC February 2021
Navios Ace

Capesize

 

2011 179,016 $ — 109% average BCI 5TC March 2021
Navios Aster

Capesize

 

2010 179,314 $ 21,945 No December 2020
        $ — 105% average BCI 5TC March 2021
Navios Joy

Capesize

 

2013 181,389 $ — 113% average BCI 5TC March 2021
Navios Mars

Capesize

 

2016 181,259 $ 22,610 No February 2022
             

Bareboat Chartered-in vessel

  Type   Built     Capacity
(DWT)
    Charter-Out
Rate
(1)
    Index(2)   Expiration Date(3)
Navios Libra   Panamax     2019       82,011     $ —       125% average BPI 4TC   September 2021
             

Bareboat Chartered-in vessels to be
delivered

  Type   Built     Capacity
(DWT)
    Charter-Out
Rate
(1)
    Index(2)   Expiration Date(3)(4)
Navios TBN1   Panamax     2021       81,000     $ —       110% average BPI 4TC   May 2024
Navios TBN2   Panamax     2021       81,000     $ —       110% average BPI 4TC   June 2024
             

Owned Containerships

  Type   Built     TEU     Charter-Out
Rate
(1)
    Index(2)   Expiration Date(3)
Hyundai Hongkong(5)   Containership     2006       6,800     $ 30,119     No   December 2023
                        $ 21,083     No   December 2028
Hyundai Singapore(5)   Containership     2006       6,800     $ 30,119     No   December 2023
                        $ 21,083     No   December 2028
Hyundai Tokyo(5)   Containership     2006       6,800     $ 30,119     No   December 2023
                        $ 21,083     No   December 2028
Hyundai Shanghai(5)   Containership     2006       6,800     $ 30,119     No   December 2023
                        $ 21,083     No   December 2028
Hyundai Busan(5)   Containership     2006       6,800     $ 30,119     No   December 2023
                        $ 21,083     No   December 2028
Esperanza N   Containership     2008       2,007     $ 6,172     No   November 2020
Protostar N   Containership     2007       2,741     $ 7,011     No   December 2020
Harmony N   Containership     2006       2,824     $ 8,181     No   July 2021
Castor N   Containership     2007       3,091     $ 6,891     No   November 2020
Solar N   Containership     2006       3,398     $ 8,531     No   September 2020

 

(1) Daily charter-out rate per day, net of commissions.

 

(2) Index rates exclude commissions.

 

(3) Charter expiration dates shown reflect expected redelivery date based on the midpoint of the full redelivery period in the charter agreement, unless otherwise noted and including Navios Partners’ extension options, not declared yet.

 

(4) Expected to be delivered by the first half of 2021.

 

(5) Upon acquisition, the vessels are fixed on ten/twelve year charters with Navios Partners’ option to terminate after year seven.

 

(6) The vessel is subject to a sale and leaseback transaction for a period of up to three years, at which time Navios Partners has an obligation to purchase the vessel.

 

(7) The vessel is subject to a sale and leaseback transaction for a period of up to five years, at which time Navios Partners has an obligation to purchase the vessel.

 

(8) The vessel is subject to a sale and leaseback transaction for a period of up to six years, at which time Navios Partners has an obligation to purchase the vessel.

 

(9) The vessel is subject to a sale and leaseback transaction for a period of up to ten years, at which time Navios Partners has an obligation to purchase the vessel.

 

(10) The vessel is subject to a sale and leaseback transaction for a period of up to eleven years, at which time Navios Partners has an obligation to purchase the vessel.

 

 

Our Charters

We provide or will provide seaborne shipping services under long-term time charters with customers that we believe are creditworthy. For the six month period ended June 30, 2020, Hyundai Merchant Marine Co., Ltd. (“HMM”) represented approximately 29.0% of total revenues. For the six month period ended June 30, 2019, HMM, Cargill International S.A. (“Cargill”) and Swissmarine Asia Pte. Ltd. (“Swissmarine”) represented approximately 29.9%, 10.8% and 10.3%, respectively, of total revenues. No other customers accounted for 10% or more of total revenues for any of the periods presented.

Our revenues are driven by the number of vessels in the fleet, the number of days during which vessels operate and our charter hire rates, which, in turn, are affected by a number of factors, including:

 

    the duration of the charters;

 

    the level of spot and long-term market rates at the time of charters;

 

    decisions relating to vessel acquisitions and disposals;

 

    the amount of time spent positioning vessels;

 

    the amount of time that vessels spend in dry dock undergoing repairs and upgrades;

 

    the age, condition and specifications of the vessels; and

 

    the aggregate level of supply and demand in the dry cargo shipping industry.

Time charters are available for varying periods, ranging from a single trip (spot charter) to long-term which may be many years. In general, a long-term time charter assures the vessel owner of a consistent stream of revenue. Operating the vessel in the spot market affords the owner greater spot market opportunity, which may result in high rates when vessels are in high demand or low rates when vessel availability exceeds demand. We intend to operate our vessels in the long-term charter market. Vessel charter rates are affected by world economics, international events, weather conditions, strikes, governmental policies, supply and demand and many other factors that might be beyond our control. Please read “Risk Factors” in our 2019 Annual Report on Form 20-F for a discussion of certain risks inherent in our business.

We could lose a customer or the benefits of a charter if:

 

    the customer fails to make charter payments because of its financial inability, disagreements with us or otherwise;

 

    the customer exercises certain rights to terminate the charter of the vessel;

 

    the customer terminates the charter because we fail to deliver the vessel within a fixed period of time, the vessel is lost or damaged beyond repair, there are serious deficiencies in the vessel or prolonged periods of off-hire, or we default under the charter; or

 

    a prolonged force majeure event affecting the customer, including damage to or destruction of relevant production facilities, war or political unrest prevents us from performing services for that customer.

Under some of our time charters, either party may terminate the charter contract in the event of war in specified countries or in locations that would significantly disrupt the free trade of the vessel. Some of the time charters covering our vessels require us to return to the charterer, upon the loss of the vessel, all advances paid by the charterer but not earned by us.

Trends and Factors Affecting Our Future Results of Operations

We believe the principal factors that will affect our future results of operations are the economic, regulatory, political and governmental conditions that affect the shipping industry generally and that affect conditions in countries and markets in which our vessels engage in business. Please read “Risk Factors” in our 2019 Annual Report on Form 20-F for a discussion of certain risks inherent in our business.

Impact of COVID-19 on the Company’s Business

 

The spread of the COVID-19 virus, which has been declared a pandemic by the World Health Organization, in 2020 has caused substantial disruptions in the global economy and the shipping industry, as well as significant volatility in the financial markets, the severity and duration of which remains uncertain.

 

The impact of the COVID-19 pandemic continues to unfold and may continue to have negative effect on our business, financial performance and the results of our operations, including due to decreased demand for global seaborne dry bulk and container trade and dry bulk and containership charter rates, the extent of which will depend largely on future developments. As a result, many of our estimates and assumptions required increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, our estimates may change in future periods.

We have evaluated the impact of current economic situation on the recoverability of the carrying amount of our vessels. As of June 30, 2020, we concluded that events and circumstances triggered the existence of potential impairment of our vessels. These indicators included volatility in the charter market as well as the potential impact the current marketplace may have on our future operations.

As a result, we performed step one of the impairment assessment of our vessels by comparing the undiscounted projected net operating cash flows for each vessel to its carrying value. As of June 30, 2020, our assessment concluded that step two of the impairment analysis was required for three containerships held and used, as the undiscounted projected net operating cash flows did not exceed the carrying value. As a result, the Company recorded an impairment loss of $6.8 million for these vessels, being the difference between the fair value and the vessel’s carrying value together with the carrying value of deferred drydock and special survey costs related to the vessel presented under the caption “Vessels impairment loss” in the condensed Consolidated Statements of Operations (see Note 4 – Vessels, net).

 

Results of Operations

Overview

The financial condition and the results of operations presented for the three and six month periods ended June 30, 2020 and 2019 of Navios Partners presented and discussed below include the following entities:

 

                             

Company name

  Vessel name   Country of
incorporation
    2020     2019  
Libra Shipping Enterprises Corporation(1)   Navios Libra II     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Alegria Shipping Corporation   Navios Alegria     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Felicity Shipping Corporation(2)   Navios Felicity     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Gemini Shipping Corporation(3)   Navios Gemini S     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Galaxy Shipping Corporation(4)   Navios Galaxy I     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Aurora Shipping Enterprises Ltd.   Navios Hope     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Palermo Shipping S.A.(5)   Navios Apollon     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Fantastiks Shipping Corporation(12)   Navios Fantastiks     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Sagittarius Shipping Corporation(12)   Navios Sagittarius     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Hyperion Enterprises Inc.   Navios Hyperion     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Chilali Corp.   Navios Aurora II     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Surf Maritime Co.   Navios Pollux     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Pandora Marine Inc.   Navios Melodia     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Customized Development S.A.   Navios Fulvia     Liberia       1/01 – 06/30       1/01 – 06/30  
Kohylia Shipmanagement S.A.   Navios Luz     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Orbiter Shipping Corp.   Navios Orbiter     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Floral Marine Ltd.   Navios Buena Ventura     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Golem Navigation Limited   Navios Soleil     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Kymata Shipping Co.   Navios Helios     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Joy Shipping Corporation   Navios Joy     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Micaela Shipping Corporation   Navios Harmony     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Pearl Shipping Corporation   Navios Sun     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Velvet Shipping Corporation   Navios La Paix     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Perigiali Navigation Limited(12)   Navios Beaufiks     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Finian Navigation Co.(12)   Navios Ace     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Ammos Shipping Corp.   Navios Prosperity I     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Wave Shipping Corp.   Navios Libertas     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Casual Shipholding Co.(12)   Navios Sol     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Avery Shipping Company   Navios Symphony     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Coasters Ventures Ltd.   Navios Christine B     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Ianthe Maritime S.A.   Navios Aster     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Rubina Shipping Corporation   Hyundai Hongkong     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Topaz Shipping Corporation   Hyundai Singapore     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Beryl Shipping Corporation   Hyundai Tokyo     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Cheryl Shipping Corporation   Hyundai Shanghai     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Christal Shipping Corporation   Hyundai Busan     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Dune Shipping Corp.(6)   MSC Cristina     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Citrine Shipping Corporation       Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Cavalli Navigation Inc.       Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Seymour Trading Limited   Navios Altair I     Marshall Is.       1/01 – 06/30       1/01 – 06/30  

 

Goldie Services Company   Navios Symmetry     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Andromeda Shiptrade Limited   Navios Apollon I     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Esmeralda Shipping Corporation   Navios Sphera     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Triangle Shipping Corporation   Navios Mars     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Oceanus Shipping Corporation(7)   Castor N     Marshall Is.       1/01 – 06/30       —    
Cronus Shipping Corporation(7)   Protostar N     Marshall Is.       1/01 – 06/30       —    
Leto Shipping Corporation(7)   Esperanza N     Marshall Is.       1/01 – 06/30       —    
Dionysus Shipping Corporation(7)   Harmony N     Marshall Is.       1/01 – 06/30       —    
Prometheus Shipping Corporation(7)   Solar N     Marshall Is.       1/01 – 06/30       —    
Camelia Shipping Inc.(8)   Navios Camelia     Marshall Is.       1/01 – 06/30       —    
Anthos Shipping Inc.(8)   Navios Anthos     Marshall Is.       1/01 – 06/30       —    
Azalea Shipping Inc.(8)   Navios Azalea     Marshall Is.       1/01 – 06/30       —    
Amaryllis Shipping Inc.(8)   Navios Amaryllis     Marshall Is.       1/01 – 06/30       —    
Zaffre Shipping Corporation(13)   Serenitas N     Marshall Is.       06/29– 06/30       —    
Wenge Shipping Corporation(13)   Joie N     Marshall Is.       06/29– 06/30       —    
Sunstone Shipping Corporation(13)   Copernicus N     Marshall Is.       06/29– 06/30       —    
Fandango Shipping Corporation(13)   Unity N     Marshall Is.       06/29– 06/30       —    
Flavescent Shipping Corporation(13)   Odysseus N     Marshall Is.       06/29– 06/30       —    
                             
Bareboat Chartered-in vessels                            
Cavos Navigation Co.(9)   Navios Libra     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Perivoia Shipmanagement Co.(10)   Navios TBN1     Marshall Is.       1/01 – 06/30       —    
Pleione Management Limited(10)   Navios TBN2     Marshall Is.       1/01 – 06/30       —    
Other                            
Prosperity Shipping Corporation       Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Aldebaran Shipping Corporation       Marshall Is.       1/01 – 06/30       1/01 – 06/30  
JTC Shipping and Trading Ltd.(11)   Holding Company     Malta       1/01 – 06/30       1/01 – 06/30  
Navios Maritime Partners L.P.   N/A     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Navios Maritime Operating LLC.   N/A     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Navios Partners Finance (US) Inc.   Co-Borrower     Delaware       1/01 – 06/30       1/01 – 06/30  
Navios Partners Europe Finance Inc.   Sub-Holding Company     Marshall Is.       1/01 – 06/30       1/01 – 06/30  

 

 

(1) The vessel was sold on December 14, 2018.

 

(2) The vessel was sold on December 4, 2018.

 

(3) The vessel was sold on December 21, 2017.

 

(4) The vessel was sold on April 23, 2019 (see Note 4 - Vessels, net).

 

(5) The vessel was sold on April 21, 2017.

 

(6) The vessel was sold on January 12, 2017.

 

(7) The vessels were acquired on December 13, 2019, following the liquidation of Navios Europe I (see Note 4 - Vessels, net).

 

(8) The vessels were acquired on December 16, 2019 (see Note 4 - Vessels, net).

 

(9) The vessel was delivered on July 24, 2019 (see Note 18 - Leases).

 

(10) The vessels are expected to be delivered by first half of 2021 (see Note 11 - Commitments and Contingencies).

 

(11) Not a vessel-owning subsidiary and only holds right to charter-in contracts.

 

(12) Vessels under the sale and leaseback transaction (see Note 18 – Leases).
(13) The vessels were acquired on June 29, 2020, following the liquidation of Navios Europe II (see Note 4 – Vessels, net).

The accompanying interim condensed consolidated financial statements of Navios Partners are unaudited, but, in the opinion of management, contain all adjustments necessary to present a fair statement of results, in all material respects, of Navios Partners’ condensed consolidated financial position as of June 30, 2020 and the condensed Consolidated Results of Operations for the three and six month periods ended June 30, 2020 and 2019. The footnotes are condensed as permitted by the requirements for interim financial statements and, accordingly, do not include information and disclosures required under U.S. GAAP for complete financial statements. All such adjustments are deemed to be of a normal, recurring nature. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in Navios Partners’ Annual Report on Form 20-F for the year ended December 31, 2019.

Fleet Employment Profile

The following table reflects certain key indicators of Navios Partners’ core fleet performance for the three and six month periods ended June 30, 2020 and 2019.

 

                                 
    Three Month
Period Ended
June 30, 2020
(unaudited)
    Three Month
Period Ended
June 30, 2019
(unaudited)
    Six Month
Period Ended
June 30, 2020
(unaudited)
    Six Month
Period Ended
June 30, 2019
(unaudited)
 
Available Days(1)     4,029       3,203       8,126       6,480  
Operating Days(2)     3,998       3,184       7,993       6,397  
Fleet Utilization(3)     99.25     99.40     98,37     98.71
Time Charter Equivalent Combined (per day)(4)   $ 11,202     $  14,130     $ 10,957     $  13,664  
Time Charter Equivalent Drybulk (per day)(4)   $ 9,421     $ 11,389     $ 8,826     $ 10,917  
Time Charter Equivalent Containers (per day)(4)   $ 17,306     $ 30,684     $ 18,342     $ 30,593  
Vessels operating at end of periods     51       36       51       36  

 

(1) Available days: Available days for the fleet represent total calendar days the vessels were in Navios Partners’ possession for the relevant period after subtracting off-hire days associated with scheduled repairs, dry dockings or special surveys. The shipping industry uses available days to measure the number of days in a relevant period during which a vessel is capable of generating revenues.

 

(2) Operating days: Operating days are the number of available days in the relevant period less the aggregate number of days that the vessels are off-hire. Operating days include ballast days between voyages. The shipping industry uses operating days to measure the aggregate number of days in a relevant period during which vessels actually generate revenues.

 

(3) Fleet utilization: Fleet utilization is the percentage of time that Navios Partners’ vessels were available for revenue generating available days, and is determined by dividing the number of operating days during a relevant period by the number of available days during that period. The shipping industry uses fleet utilization to measure efficiency in finding employment for vessels and minimizing the amount of days that its vessels are off-hire for reasons other than scheduled repairs, dry dockings or special surveys.
(4) TCE rate: Time Charter Equivalent rate per day (“TCE”) is defined as voyage and time charter revenues less voyage expenses during a period divided by the number of available days during the period. The TCE rate per day is a standard shipping industry performance measure used primarily to present the actual daily earnings generated by vessels on various types of charter contracts for the number of available days of the fleet.

FINANCIAL HIGHLIGHTS

The following table presents consolidated revenue and expense information for the three and six month periods ended June 30, 2020 and 2019.

 

                                 
    Three Month
Period Ended
June 30, 2020
($ ‘000)
(unaudited)
    Three Month
Period Ended
June 30, 2019
($ ‘000)
(unaudited)
    Six Month
Period Ended
June 30, 2020
($ ‘000)
(unaudited)
    Six Month
Period Ended
June 30, 2019
($ ‘000)
(unaudited)
 
Time charter and voyage revenues   $ 46,549     $ 47,745     $ 93,039     $ 94,563  
Time charter and voyage expenses     (1,940 )     (2,484     (5,038 )     (6,013
Direct vessel expenses     (2,385 )     (1,530     (4,934 )     (3,113
Vessel operating expenses (management fees)     (21,930 )     (16,496     (44,135 )     (33,106
General and administrative expenses     (6,983 )     (6,515     (11,128 )     (10,528
Depreciation and amortization     (13,663 )     (13,240     (27,300 )     (26,732
Vessels impairment loss     (6,800 )           (6,800 )     (7,345
Impairment of receivable in affiliated company                 (6,900 )      
Interest expense and finance cost, net     (6,275 )     (12,246     (13,219 )     (23,760
Interest income     176       1,791       371       3,534  
Other income     1,279       374       2,183       591  
Other expense     (1,959 )     (4,090     (2,472 )     (4,322
Equity in net (loss)/ earnings of affiliated companies     (710 )     168       968       185  
                                 
Net loss   $ (14,641 )   $ (6,523   $ (25,365 )   $ (16,046
                                 
EBITDA(1)   $ 7,490     $ 18,699     $ 19,671     $ 34,012  
                                 
Adjusted EBITDA(1)   $ 14,290     $ 22,337     $ 33,371     $ 44,995  
                                 
Operating (Deficit)/Surplus(1)   $ (1,128   $ 6,207     $ 3,303     $ 11,909  
                                 

 

(1) EBITDA, Adjusted EBITDA and Operating (Deficit)/Surplus are non-GAAP financial measures. See “Reconciliation of EBITDA and Adjusted EBITDA to Net Cash from Operating Activities, EBITDA, Operating (Deficit)/Surplus and Available Cash for Distribution” for a description of EBITDA, Adjusted EBITDA and Operating Surplus and a reconciliation of EBITDA, Adjusted EBITDA and Operating Surplus to the most comparable measure under U.S. GAAP.

Period over Period Comparisons

For the Three Month Period ended June 30, 2020 compared to the Three Month Period ended June 30, 2019 Time charter and voyage revenues: Time charter and voyage revenues for the three month period ended June 30, 2020 decreased by $1.2 million, or 2.5%, to $46.5 million, as compared to $47.7 million for the same period in 2019. The decrease in time charter and voyage revenues was mainly attributable to the decrease in the time charter equivalent rate, or TCE rate, to $11,202 per day for the three month period ended June 30, 2020, from $14,130 per day for the three month period ended June 30, 2019. The available days of the fleet increased to 4,029 days for the three month period ended June 30, 2020, as compared to 3,203 days for the three month period ended June 30, 2019.

Time charter and voyage expenses: Time charter and voyage expenses for the three month period ended June 30, 2020 amounted to $1.9 million, as compared to $2.5 million for the three month period ended June 30, 2019. The decrease was mainly attributable to a: (i) $0.5 million decrease in port expenses related to the freight voyages; and (ii) $0.8 million net decrease in other voyage expenses. The above decrease was partially mitigated by a: (i) $0.5 million bareboat charter-in hire expense; and (ii) $0.2 million increase in bunkers expenses.

 

Direct vessel expenses: Direct vessel expenses for the three month periods ended June 30, 2020 and 2019 amounted to $2.4 million and $1.5 million, respectively. The increase of $0.9 million was attributable to the increase in amortization of drydock and special survey costs of certain vessels in our fleet.

 

Vessel operating expenses (management fees): Vessel operating expenses for the three month period ended June 30, 2020, increased by $5.4 million, or 32.9%, to $21.9 million, as compared to $16.5 million for the same period in 2019. The increase was mainly attributable to a: (i) $4.9 million increase in management fees paid to our manager, Navios Shipmanagement Inc. (the “Manager”) due to the increased number of owned and bareboat chartered-in vessels in Navios Partners’ fleet; and (ii) $0.7 million increase in management fees due to the increase in daily rate pursuant to the management agreement (as defined herein). The increase was partially mitigated by a $0.1 million decrease in management fees due to the sale of the Navios Galaxy I in April 2019.

 

General and administrative expenses: General and administrative expenses increased by $0.5 million to $7.0 million for the three month period ended June 30, 2020, as compared to $6.5 million for the three month period ended June 30, 2019. The increase was mainly due to a $0.7 million increase in administrative fees paid to the Manager due to the increased number of owned and bareboat chartered-in vessels in Navios Partners’ fleet. The above increase was partially mitigated by a $0.2 million net decrease in legal and professional fees, as well as audit fees and other administrative expenses.

Depreciation and amortization: Depreciation and amortization amounted to $13.7 million for the three month period ended June 30, 2020, as compared to $13.2 million for the three month period ended June 30, 2019. The increase of $0.4 million was mainly attributable to a $1.1 million increase in depreciation expense due to the delivery of nine vessels in December 2019. The above increase was partially mitigated by a: (i) $0.1 million decrease in depreciation expense due to the sale of the Navios Galaxy I in April 2019; and (ii) $0.6 million decrease in depreciation expense of one of our vessels as a result of the impairment test performed in the fourth quarter of the fiscal year 2019. Depreciation of vessels is calculated using an estimated useful life of 25 and 30 years for drybulk vessels and containerships, respectively, from the date the vessel was originally delivered from the shipyard. Intangible assets are amortized over the contract periods, which range from one to twelve years, at inception.

Vessels impairment loss: As of June 30, 2020, we concluded that events and circumstances triggered the existence of potential impairment of our vessels. These indicators included volatility in the charter market as well as the potential impact the current marketplace may have on our future operations. As a result, Navios Partners recognized an impairment loss of $6.8 million related to three containerships, as the undiscounted projected net operating cash flows did not exceed the vessels’ carrying value. There was no impairment for the corresponding interim period of the previous year.

Interest expense and finance cost, net: Interest expense and finance cost, net for the three month period ended June 30, 2020 decreased by $6.0 million or 48.8% to $6.3 million, as compared to $12.2 million for the three month period ended June 30, 2019. The decrease was mainly due to: (i) a decrease of the weighted average interest rate for the three month period ended June 30, 2020 to 4.80% from 7.13% for the same period in 2019; (ii) a $1.5 million write-off of the deferred finance fees and debt discount following the $73.5 million prepayments of the Term Loan B Facility in the second quarter of 2019; and (iii) the decrease in Navios Partners’ average loan balance to $471.3 million for the three month period ended June 30, 2020 as compared to $491.9 million for the same period of 2019.

Interest income: Interest income decreased by $1.6 million to $0.2 million for the three month period ended June 30, 2020, as compared to $1.8 million for the three month period ended June 30, 2019.

Other income: Other income for the three month period ended June 30, 2020 amounted to $1.3 million, as compared to $0.4 million for the three month period ended June 30, 2019.

Other expense: Other expense for the three month period ended June 30, 2020 amounted to $2.0 million, as compared to $4.1 million for the three month period ended June 30, 2019.

Equity in net (loss)/ earnings of affiliated companies: Equity in net loss of affiliated companies for the three month period ended June 30, 2020 amounted to $0.7 million as compared to $0.2 million earnings for the three month period ended June 30, 2019. The amounts consisted of the income/ (loss) related to the investment in Navios Maritime Containers L.P. (“Navios Containers”).

Net loss: Net loss for the three month period ended June 30, 2020 amounted to $14.6 million as compared to $6.5 million net loss for the three month period ended June 30, 2019. The increase in net loss of $8.1 million was due to the factors discussed above.

 

Operating (deficit)/surplus: Navios Partners generated Operating Deficit for the three month period ended June 30, 2020 of $(1.1) million, as compared to operating surplus $6.2 million for the three month period ended June 30, 2019. Operating Surplus is a non-GAAP financial measure used by certain investors to assist in evaluating a partnership’s ability to make quarterly cash distributions (See “Reconciliation of EBITDA and Adjusted EBITDA to Net Cash from Operating Activities, EBITDA, Operating Surplus and Available Cash for Distribution” contained herein).

 

For the Six Month Period ended June 30, 2020 compared to the Six Month Period ended June 30, 2019

 

Time charter and voyage revenues: Time charter and voyage revenues for the six month period ended June 30, 2020 decreased by $1.5 million, or 1.6%, to $93.0 million, as compared to $94.6 million for the same period in 2019. The decrease in time charter and voyage revenues was mainly attributable to the decrease in the TCE rate, to $10,957 per day for the six month period ended June 30, 2020, from $13,664 per day for the six month period ended June 30, 2019. The available days of the fleet increased to 8,126 days for the six month period ended June 30, 2020, as compared to 6,480 days for the six month period ended June 30, 2019, mainly due to the increase of the fleet.

Time charter and voyage expenses: Time charter and voyage expenses for the six month period ended June 30, 2020 amounted to $5.0 million, as compared to $6.0 million for the six month period ended June 30, 2019. The decrease was mainly attributable to a: (i) $1.4 million decrease in bunkers expenses; and (ii) $0.6 million decrease in port expenses related to the freight voyages. The above decrease was partially mitigated by a $1.1 million bareboat charter-in hire expense.

 

Direct vessel expenses: Direct vessel expenses for the six month periods ended June 30, 2020 and 2019 amounted to $4.9 million and $3.1 million, respectively. The increase in direct vessel expenses of $1.8 million was attributable to the increase in amortization of drydock and special survey costs of certain vessels in our fleet.

 

Vessel operating expenses (management fees): Vessel operating expenses for the six month period ended June 30, 2020, increased by $11.0 million, or 33.3%, to $44.1 million, as compared to $33.1 million for the same period in 2019. The increase was mainly attributable to a: (i) $9.8 million increase in management fees paid to the Manager due to the increased number of owned and bareboat chartered-in vessels in Navios Partners’ fleet; and (ii) $1.5 million increase in management fees due to the increase in daily rate pursuant to the management agreement (as defined herein). The increase was partially mitigated by a $0.5 million decrease in management fees due to the sale of the Navios Galaxy I in April 2019.

General and administrative expenses: General and administrative expenses increased by $0.6 million to $11.1 million for the six month period ended June 30, 2020, as compared to $10.5 million for the six month period ended June 30, 2019. The increase was mainly due to a $1.3 million increase in administrative fees paid to the Manager due to the increased number of owned and bareboat chartered-in vessels in Navios Partners’ fleet. The above increase was partially mitigated by a: (i) $0.2 million net decrease in in compensation to the directors and/ or officers of the Company and equity compensation expense; and (ii) $0.5 million net decrease in legal and professional fees, as well as audit fees and other administrative expenses.

Depreciation and amortization: Depreciation and amortization amounted to $27.3 million for the six month period ended June 30, 2020, as compared to $26.7 million for the six month period ended June 30, 2019. The increase of $0.6 million was mainly attributable to a $2.1 million increase in depreciation expense due to the delivery of nine vessels in December 2019. The above increase was partially mitigated by a: (i) $0.4 million decrease in depreciation expense due to the sale of the Navios Galaxy I in April 2019; and (ii) $1.2 million decrease in depreciation expense of one of our vessels as a result of the impairment test performed in the fourth quarter of the fiscal year 2019. Depreciation of vessels is calculated using an estimated useful life of 25 and 30 years for drybulk vessels and containerships, respectively, from the date the vessel was originally delivered from the shipyard. Intangible assets are amortized over the contract periods, which range from one to twelve years, at inception.

Vessels impairment loss: As of June 30, 2020, Navios Partners recognized an impairment loss of $6.8 million related to three containerships, as the undiscounted projected net operating cash flows did not exceed the vessels’ carrying value. As of March 31, 2019, the Company had a current expectation that, more likely than not, the Navios Galaxy I would be sold before the end of its previously estimated useful life, and as a result performed an impairment test of the specific asset group and recorded an impairment loss of $7.3 million. The vessel was sold on April 23, 2019.

Impairment of receivable in affiliated company: Impairment of receivable in affiliated company for the six month period ended June 30, 2020 amounted to $6.9 million, related to the other-than-temporary impairment recognized in the Navios Partners’ receivable from Navios Europe II. There was no impairment for the corresponding interim period of the previous year.

Interest expense and finance cost, net: Interest expense and finance cost, net for the six month period ended June 30, 2020 decreased by $10.5 million or 44.4% to $13.2 million, as compared to $23.8 million for the six month period ended June 30, 2019. The decrease was mainly due to: (i) a decrease of the weighted average interest rate for the six month period ended June 30, 2020 to 5.04% from 7.29% for the same period in 2019; (ii) a $1.5 million writte-off of the deferred finance fees and debt discount following the $73.5 million prepayments of the Term Loan B Facility in the second quarter of 2019; and (iii) the decrease in Navios Partners’ average loan balance to $477.8 million for the six month period ended June 30, 2020 as compared to $504.7 million for the same period of 2019.

Interest income: Interest income decreased by $3.2 million to $0.4 million for the six month period ended June 30, 2020, as compared to $3.5 million for the six month period ended June 30, 2019.

Other income: Other income for the six month period ended June 30, 2020 amounted to $2.2 million, as compared to $0.6 million for the six month period ended June 30, 2019.

Other expense: Other expense for the six month period ended June 30, 2020 amounted to $2.5 million, as compared to $4.3 million for the six month period ended June 30, 2019.

Equity in net (loss)/ earnings of affiliated companies: Equity in net earnings of affiliated companies for the six month period ended June 30, 2020 amounted to $1.0 million as compared to $0.2 million for the six month period ended June 30, 2019. The amounts consisted of the income related to the investment in Navios Containers.

Net loss: Net loss for the six month period ended June 30, 2020 amounted to $25.4 million as compared to $16.0 million net loss for the six month period ended June 30, 2019. The increase in net loss of $9.3 million was due to the factors discussed above.

 

Operating (deficit)/surplus: Navios Partners generated Operating Surplus for the six month period ended June 30, 2020 of $3.3 million, as compared to $11.9 million for the six month period ended June 30, 2019. Operating Surplus is a non-GAAP financial measure used by certain investors to assist in evaluating a partnership’s ability to make quarterly cash distributions (See “Reconciliation of EBITDA and Adjusted EBITDA to Net Cash from Operating Activities, EBITDA, Operating Surplus and Available Cash for Distribution” contained herein).

Liquidity and Capital Resources

In addition to distributions on our units, our primary short-term liquidity needs are to fund general working capital requirements, cash reserve requirements including those under our credit facilities and debt service, while our long-term liquidity needs primarily relate to expansion and investment capital expenditures and other maintenance capital expenditures and debt repayment. Expansion capital expenditures are primarily for the purchase or construction of vessels to the extent the expenditures increase the operating capacity of or revenue generated by our fleet, while maintenance capital expenditures primarily consist of drydocking expenditures and expenditures to replace vessels in order to maintain the operating capacity of or revenue generated by our fleet. Investment capital expenditures are those capital expenditures that are neither maintenance capital expenditures nor expansion capital expenditures. We anticipate that our primary sources of funds for our short-term liquidity needs will be cash flows from our equity offerings, operations, proceeds from asset sales, long-term bank borrowings and other debt raisings. As of June 30, 2020, Navios Partners’ current assets totaled $67.6 million, while current liabilities totaled $141.2 million, resulting in a negative working capital position of $73.6 million. Navios Partners’ cash forecast indicates that it will generate sufficient cash to make the required principal and interest payments on its indebtedness, provide for the normal working capital requirements of the business and be in a positive working capital position through twelve months from August 3, 2020. Generally, our long-term sources of funds derive from cash from operations, long-term bank borrowings and other debt or equity financings to fund acquisitions and expansion and investment capital expenditures, including opportunities we may pursue under the Omnibus Agreement. We cannot assure you that we will be able to secure adequate financing or to obtain additional funds on favorable terms, to meet our liquidity needs.

Cash deposits and cash equivalents in excess of amounts covered by government provided insurance are exposed to loss in the event of non-performance by financial institutions. Navios Partners does maintain cash deposits and equivalents in excess of government provided insurance limits. Navios Partners also minimizes exposure to credit risk by dealing with a diversified group of major financial institutions.

Navios Partners may use funds to repurchase its outstanding common units and/or indebtedness from time to time. Repurchases may be made in the open market, or through privately negotiated transactions or otherwise, in compliance with applicable laws, rules and regulations, at prices and on terms Navios Partners deems appropriate and subject to its cash requirements for other purposes, compliance with the covenants under Navios Partners’ credit facilities, and other factors management deems relevant.

In January 2019, the Board of Directors of Navios Partners authorized a common unit repurchase program for up to $50.0 million of the Company’s common units over a two year period. Common unit repurchases will be made from time to time for cash in open market transactions at prevailing market prices or in privately negotiated transactions. The timing and amount of repurchases under the program will be determined by Navios Partners’ management based upon market conditions and other factors. Repurchases may be made pursuant to a program adopted under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The program does not require any minimum repurchase or any specific number of common units and may be suspended or reinstated at any time in the Company’s discretion and without notice. The Board of Directors will review the program periodically. Repurchases will be subject to restrictions under the Company’s credit facilities. As of August 3, 2020, the Company had repurchased and cancelled 312,952 common units, on a split adjusted basis, at a total cost of approximately $4.5 million.

Long-Term Debt Obligations

Navios Partners’ long-term borrowings are presented under the captions “Long-term financial liabilities, net”, “Long-term debt, net”, “Current portion of financial liabilities, net” and “Current portion of long-term debt, net”. As of June 30, 2020 and December 31, 2019, total borrowings, net of deferred finance fees amounted to $488.2 million and $489.0 million, respectively. The current portion of long-term borrowings, net amounted to $93.5 million at June 30, 2020 and $59.8 million at December 31, 2019.

Credit Facilities

 

As of June 30, 2020, the Company had secured credit facilities with various banks with a total outstanding balance of $425.9 million. The purpose of the facilities was to finance the construction or acquisition of vessels or refinance existing indebtedness. All of the facilities are denominated in U.S. dollars and bear interest based on LIBOR plus spread ranging from 2.6% to 7.0% per annum. The facilities are repayable in either semi-annual or quarterly installments, followed by balloon payments with maturities, ranging from September 2020 to June 2025. See also the maturity table included below.

 

On June 26, 2020, the Company entered into a new credit facility with ABN Amro Bank N.V. of up to $32.2 million in order to finance the purchase of the five drybulk vessels acquired from Navios Europe II. The credit facility is repayable in four consecutive quarterly installments of $1.2 million, with a final balloon payment of $24.7 million to be repaid on the last repayment date. The facility matures in the second quarter of 2021 and bears interest at LIBOR plus 400 bps per annum up to December 31, 2020 and 425 bps per annum up to maturity date. As of June 30, 2020, the total outstanding balance was $29.5 million.

 

On June 25, 2020, the Company entered into a new credit facility with Hellenic Bank Public Company Limited for the refinancing of the existing ABN credit facility, relating to four of the containerships, of up to $17.0 million. The credit facility is repayable in four consecutive quarterly installments of $0.5 million and 10 consecutive quarterly installments of $0.7 million, with a final balloon payment of $8.3 million to be repaid on the last repayment date. The facility matures in the fourth quarter of 2023 and bears interest at LIBOR plus 350 bps per annum. As of June 30, 2020, the total outstanding balance was $17.0 million.

Amounts drawn under the credit facilities are secured by first preferred mortgages on certain Navios Partners’ vessels and other collateral and are guaranteed by the respective vessel-owning subsidiaries. The credit facilities contain a number of restrictive covenants that prohibit or limit Navios Partners from, among other things: incurring or guaranteeing indebtedness; entering into affiliate transactions; charging, pledging or encumbering the vessels; changing the flag, class, management or ownership of Navios Partners’ vessels; changing the commercial and technical management of Navios Partners’ vessels; selling or changing the beneficial ownership or control of Navios Partners’ vessels; not maintaining Navios Holdings’ (or its affiliates) ownership in Navios Partners of at least 15.0%; and subordinating the obligations under the credit facilities to any general and administrative costs relating to the vessels, including the fixed daily fee payable under the management agreement.

The credit facilities require compliance with a number of financial covenants, including: (i) maintain a required security amount ranging over 120% to 140%; (ii) minimum free consolidated liquidity in an amount equal to at least $0.5 million to $0.65 million per owned vessel; (iii) maintain a ratio of EBITDA to interest expense of at least 2.00:1.00; (iv) maintain a ratio of total liabilities or total debt to total assets (as defined in our credit facilities) of less than 0.75; and (v) maintain a minimum net worth to $135.0 million.

 

It is an event of default under the credit facilities if such covenants are not complied with in accordance with the terms and subject to the prepayments or cure provisions of the facilities.

As of June 30, 2020, Navios Partners was in compliance with the financial covenants and/or the prepayments and/or the cure provisions, as applicable, in each of its credit facilities.

Financial Liabilities

In December 2018, the Company entered into two sale and leaseback agreements of $25.0 million in total, with unrelated third parties for the Navios Fantastiks and the Navios Beaufiks. Navios Partners has a purchase obligation to acquire the vessels at the end of the lease term and under ASC 842-40, the transfer of the vessels was determined to be a failed sale. In accordance with ASC 842-40, the Company did not derecognize the respective vessels from its balance sheet and accounted for the amounts received under the sale and leaseback agreements as a financial liability. Navios Partners is obligated to make 69 and 60 consecutive monthly payments, respectively, of approximately $0.16 million each, commencing as of December 2018. As of June 30, 2020, the outstanding balance under the sale and leaseback agreements of the Navios Fantastiks and the Navios Beaufiks was $21.9 million in total. The agreements mature in the third quarter of 2024 and fourth quarter of 2023, respectively, with a purchase obligation of $6.3 million per vessel on the last repayment date.

On April 5, 2019, the Company entered into a new sale and leaseback agreement of $20.0 million, with unrelated third parties for the Navios Sol, a 2009-built Capesize vessel of 180,274 dwt. Navios Partners has a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transfer of the vessel was determined to be a failed sale. On April 11, 2019, the amount of $20.0 million was drawn. Navios Partners is obligated to make 120 consecutive monthly payments of approximately $0.19 million each, commencing as of April 2019. As of June 30, 2020, the outstanding balance under the sale and leaseback agreement of the Navios Sol was $18.6 million. The agreement matures in the second quarter of 2029, with a purchase obligation of $6.3 million on the last repayment date.

On June 7, 2019, the Company entered into a new sale and leaseback agreement of $7.5 million, with unrelated third parties for the Navios Sagittarius, a 2006-built Panamax vessel of 75,756 dwt. Navios Partners has a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transfer of the vessel was determined to be a failed sale. On June 28, 2019, the amount of $7.5 million was drawn. Navios Partners is obligated to make 36 consecutive monthly payments of approximately $0.18 million each, commencing as of June 2019. As of June 30, 2020, the outstanding balance under the sale and leaseback agreement of the Navios Sagittarius was $5.6 million. The agreement matures in the second quarter of 2022, with a purchase obligation of $2.0 million on the last repayment date.

On July 2, 2019, the Company entered into a new sale and leaseback agreement of $22.0 million, with unrelated third parties for the Navios Ace, a 2011-built Capesize vessel of 179,016 dwt. Navios Partners has a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transfer of the vessel was determined to be a failed sale. The vessel was not derecognized and continues to be depreciated over its useful life and tested for impairment as per the Company’s policy. On July 24, 2019, the amount of $22.0 million was drawn. Navios Partners is obligated to make 132 consecutive monthly payments of approximately $0.2 million each, commencing as of July 2019. As of June 30, 2020, the outstanding balance under the sale and leaseback agreement of the Navios Ace was $20.9 million. The agreement matures in the third quarter of 2030, with a purchase obligation of $6.3 million on the last repayment date.

 

The maturity table below reflects the principal payments for the next five years and thereafter of all borrowings of Navios Partners outstanding as of June 30, 2020 based on the repayment schedules of the respective credit facilities and financial liabilities (as described above).

 

         

Year

  Amount  
2021   $ 95.6  
2022     155.0  
2023     63.5  
2024     121.5  
2025 and thereafter     57.3  
         
Total   $ 492.9  
         

The following table presents cash flow information derived from the unaudited condensed Consolidated Statements of Cash Flows of Navios Partners for the six month periods ended June 30, 2020 and 2019.

 

                 
    Six Month
Period Ended
June 30,
2020
($ ‘000)
(unaudited)
    Six Month
Period Ended
June 30, 
2019
($‘000)

(unaudited)
 
Net cash provided by operating activities   $ 47,675     $ 14,426  
Net cash used in investing activities     (39,664 )     (1,636
Net cash used in financing activities     (8,598 )     (39,025
                 
Decrease in cash, cash equivalents and restricted cash   $ (587 )   $ (26,235
                 

 

Cash provided by operating activities for the six month period ended June 30, 2020 as compared to the cash provided by operating activities for the six month period ended June 30, 2019

Net cash provided by operating activities increased by $33.2 million to $47.7 million for the six month period ended June 30, 2020, as compared to $14.4 million for the same period in 2019. In determining net cash provided by operating activities, net loss is adjusted for the effects of certain non-cash items as discussed below.

The aggregate adjustments to reconcile net loss to net cash provided by operating activities was a $46.1 million non-cash gain for the six month period ended June 30, 2020, which consisted mainly of the following adjustments: $27.3 million depreciation and amortization, $6.9 million loss related to the other-than-temporary impairment recognized in the Navios Partners’ receivable from Navios Europe II, $6.8 million impairment loss related to three containerships, $0.8 million non-cash accrued interest income and amortization of deferred revenue, $0.5 million amortization of operating lease right-of-use asset, $1.0 million amortization and write-off of deferred finance costs and discount, $4.9 million amortization of deferred dry dock and special survey costs, $1.0 million equity in net earnings of affiliated companies and $0.5 million equity compensation expense. The net cash inflow resulting from the change in operating assets and liabilities of $26.9 million for the six month period ended June 30, 2020 resulted from a $2.0 million increase in accrued expenses, a $1.6 million increase in deferred revenue, a $14.9 million decrease in amounts due from related parties and a $22.1 million increase in amounts due to related parties. These were partially mitigated by a $2.6 million decrease in accounts payable, a $0.5 million decrease in operating lease liabilities short and long term, a $1.2 million increase in prepaid expenses and other current assets and a $9.3 million in payments for dry dock and special survey costs.

 

The aggregate adjustments to reconcile net loss to net cash provided by operating activities was a $36.2 million non-cash gain for the six month period ended June 30, 2019, which consisted mainly of the following adjustments: $26.7 million depreciation and amortization, $7.3 million impairment loss in relation to the sale of the Navios Galaxy I, $6.3 million non-cash accrued interest income and amortization of deferred revenue, $0.1 million non-cash accrued interest income from receivable from affiliates, $4.6 million amortization and write-off of deferred finance costs and discount, $3.1 million amortization of deferred dry dock and special survey costs, $0.2 million equity in net earnings of affiliated companies and $1.0 million equity compensation expense. The net cash outflow resulting from the change in operating assets and liabilities of $5.7 million for the six month period ended June 30, 2019 resulted from a $5.8 million increase in prepaid expenses and other assets, a $0.8 million decrease in accounts payable and $5.4 million in payments for dry dock and special survey costs. This was partially mitigated by a $4.0 million decrease in accounts receivable, a $0.6 million increase in accrued expenses, a $0.3 million increase in deferred revenue and a $1.2 million decrease in amounts due from related parties, consisting of management fees and drydocking expenses including amounts needed for compliance with IMO regulations prepaid to Navios Holdings in accordance with the Management and Administrative Service agreements and the Navios Holdings Guarantee.

Cash used in investing activities for the six month period ended June 30, 2020 as compared to the cash used in investing activities for the six month period ended June 30, 2019

Net cash used in investing activities increased by $38.0 million to $39.7 million for the six month period ended June 30, 2020, as compared to $1.6 million for the same period in 2019.

Cash used in investing activities of $39.7 million for the six month period ended June 30, 2020 was mainly due to a: (i) $37.6 million relating to vessels acquisitions and additions; and (ii) $4.4 million relating to deposits for the option to acquire two bareboat charter-in vessels and capitalized expenses. This was partially mitigated by a $2.3 million of proceeds from the note receivable related to the sale of the MSC Cristina.

Cash used in investing activities of $1.6 million for the six month period ended June 30, 2019 was mainly due to a: (i) $6.0 million payments relating to capitalized expenses of our fleet; and (ii) $4.0 million loan granted to Navios Europe I. This was partially mitigated by a $6.0 million of proceeds from the sale of the Navios Galaxy I and $2.3 million of proceeds from the note receivable related to the sale of the MSC Cristina.

Cash used in financing activities for the six month period ended June 30, 2020 as compared to cash used in financing activities for the six month period ended June 30, 2019

Net cash used in financing activities decreased by $30.4 million to $8.6 million for the six month period ended June 30, 2020, as compared to $39.0 million for the same period in 2019.

Cash used in financing activities of $8.6 million for the six month period ended June 30, 2020 was mainly due to: (i) a payment of a total cash distribution of $6.7 million; (ii) loans and financial liabilities repayments of $47.9 million; and (iii) a payment of $0.4 million of deferred finance fees relating to the new credit facilities. This was partially offset by $46.5 million of proceeds from the new credit facilities.

Cash used in financing activities of $39.0 million for the six month period ended June 30, 2019 was due to: (i) payment of a total cash distribution of $6.8 million; (ii) loans and financial liabilities repayments of $96.7 million; (iii) a payment of $1.7 million of deferred finance fees relating to the new credit facilities and sale and leaseback agreements; and (iv) a payment of $4.5 million for acquisition of treasury stock. This was partially offset by $70.8 million of proceeds from the December 2018 Credit Facility, the February 2019 Credit Facility and the financial liabilities of the Navios Sol and the Navios Sagittarius.

 

Reconciliation of EBITDA and Adjusted EBITDA to Net Cash from Operating Activities, EBITDA, Operating Surplus and Available Cash for Distribution

 

                                   
   

Three Month

Period Ended

June 30, 2020

($ ‘000)

(unaudited)

   

Three Month

Period Ended

June 30, 2019

($ ‘000)

(unaudited)

   

Six Month

Period Ended

June 30, 2020

($ ‘000)

(unaudited)

   

Six Month

Period Ended

June 30, 2019

($ ‘000)

(unaudited)

 
Net cash provided by operating activities   $ 26,738     $ 3,943       $ 47,675     $ 14,426  
Net (increase)/ decrease in operating assets     4,479       7,538         (3,767)       5,902  
Net increase in operating liabilities     (21,739)       (3,119)         (23,181)       (180)  
Net interest cost     6,099       10,455         12,848       20,226  
Amortization and write-off of deferred financing cost     (499)       (2,970)         (1,018)       (4,633)  
Amortization of operating lease right-of-use asset     (234)               (459)        
Non cash accrued interest income and amortization of deferred revenue     394       3,132         788       6,303  
Equity compensation expense     (238)       (519)         (483)       (1,013)  
Vessels impairment loss     (6,800)               (6,800)       (7,345)  
Impairment of receivable in affiliated company                   (6,900)        
Non cash accrued interest income from receivable from affiliates           71                  141  
Equity in earnings of affiliates, net of dividends received     (710)       168         968       185  
EBITDA(1)   $ 7,490     $ 18,699       $ 19,671     $ 34,012  
Change in estimated guarantee claim receivable           3,638                     3,638     
Impairment of receivable in affiliated company                   6,900        
Vessels impairment loss     6,800               6,800       7,345  
Adjusted EBITDA(1)   $ 14,290     $ 22,337       $ 33,371     $ 44,995  
Cash interest income     71       156         164       372  
Cash interest paid     (6,900)       (9,026)         (13,053)       (18,724)  
Maintenance and replacement capital expenditures     (8,589)       (7,260)         (17,179)       (14,734)  
Operating (Deficit)/Surplus(2)   $ (1,128)     $ 6,207       $ 3,303     $ 11,909  
Cash distribution paid relating to the first quarter                   (3,365)       (3,364)  
Cash reserves     1,689       (2,843)         623       (5,181)  
Available cash for distribution(3)   $ 561     $ 3,364       $ 561     $ 3,364  
                                   
                       
  (1)        
                                   
                                                                                                             

 

     

Three Month

Period Ended

June 30, 2020

($ ‘000)

(unaudited)

   

Three Month

Period Ended

June 30, 2019

($ ‘000)

(unaudited)

     

Six Month

Period Ended

June 30, 2020

($ ‘000)

(unaudited)

   

Six Month

Period Ended

June 30, 2019

($ ‘000)

(unaudited)

   
Net cash provided by operating activities     $ 26,738   $ 3,943       $ 47,675     $ 14,426      
Net cash provided by/ (used in) investing activities    $ 36,327     $ 3,739       $ (39,664)     $ (1,636)      
Net cash provided by/ (used in) financing activities    $ 8,257     $ (22,814)       $ (8,598)     $ (39,025)      
                                                                 

(1) EBITDA and Adjusted EBITDA

EBITDA represents net loss attributable to Navios Partners’ unitholders before interest and finance costs, before depreciation and amortization (including intangible accelerated amortization) and income taxes. Adjusted EBITDA represents EBITDA before impairment losses and change in estimated guarantee claim receivable. Navios Partners uses Adjusted EBITDA as a liquidity measure and reconcile EBITDA and Adjusted EBITDA to net cash provided by operating activities, the most comparable U.S. GAAP liquidity measure. EBITDA in this document is calculated as follows: net cash provided by operating activities adding back, when applicable and as the case may be, the effect of: (i) net decrease/ (increase) in operating assets; (ii) net increase in operating liabilities; (iii) net interest cost; (iv) amortization and write-off of deferred financing cost; (v) equity in net earnings of affiliates, net of dividends received; (vi) impairment charges; (vii) non-cash accrued interest income and amortization of deferred revenue; (viii) equity compensation expense; (ix) non-cash accrued interest income from receivable from affiliates; and (x) amortization of operating lease right-of-use asset. Navios Partners believes that EBITDA and Adjusted EBITDA are each the basis upon which liquidity can be assessed and presents useful information to investors regarding Navios Partners’ ability to service and/or incur indebtedness, pay capital expenditures, meet working capital requirements and make cash distributions. Navios Partners also believes that EBITDA and Adjusted EBITDA are used: (i) by potential lenders to evaluate potential transactions; (ii) to evaluate and price potential acquisition candidates; and (iii) by securities analysts, investors and other interested parties in the evaluation of companies in our industry.

 

EBITDA and Adjusted EBITDA have limitations as an analytical tool, and should not be considered in isolation or as a substitute for the analysis of Navios Partners’ results as reported under U.S. GAAP. Some of these limitations are: (i) EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, working capital needs; and (ii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future. EBITDA and Adjusted EBITDA do not reflect any cash requirements for such capital expenditures. Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as a principal indicator of Navios Partners’ performance. Furthermore, our calculation of EBITDA and Adjusted EBITDA may not be comparable to that reported by other companies due to differences in methods of calculation.

 

EBITDA for the three month period ended June 30, 2020 was negatively affected by the accounting effect of a $6.8 million impairment loss related to three containerships. EBITDA for the three month period ended June 30, 2019 was negatively affected by the accounting effect of a $3.6 million change in estimated guarantee claim receivable. Excluding these items, Adjusted EBITDA decreased by $8.0 million to $14.3 million for the three month period ended June 30, 2020, as compared to $22.3 million for the same period in 2019. The decrease in Adjusted EBITDA was primarily due to: (i) a $1.2 million decrease in revenue; (ii) a $5.4 million increase in vessel operating expenses, mainly due to the increased fleet; (iii) a $0.5 million increase in general and administrative fees; (iv) a $1.5 million increase in other expense; and (v) a $0.9 million decrease in equity in net earnings of affiliated companies. The above decrease was partially mitigated by a: (i) $0.5 million decrease in time charter and voyage expenses; and (ii) $0.9 million increase in other income.

 

EBITDA for the six month period ended June 30, 2020 was negatively affected by the accounting effect of a $6.9 million loss related to the other-than-temporary impairment recognized in the Navios Partners’ receivable from Navios Europe II and a $6.8 million impairment loss related to three containerships. EBITDA for the six month period ended June 30, 2019 was negatively affected by the accounting effect of a: (i) $7.3 million impairment loss on the sale of the Navios Galaxy I; and (ii) $3.6 million change in estimated guarantee claim receivable. Excluding these items, Adjusted EBITDA decreased by $11.6 million to $33.4 million for the six month period ended June 30, 2020, as compared to $45.0 million for the same period in 2019. The decrease in Adjusted EBITDA was primarily due to: (i) a $1.5 million decrease in revenue; (ii) an $11.0 million increase in vessel operating expenses, mainly due to the increased fleet; (iii) a $0.6 million increase in general and administrative expenses; and (iv) a $1.8 million increase in other expense. The above decrease was partially mitigated by a: (i) $1.0 million decrease in time charter and voyage expenses; (ii) $1.6 million increase in other income; and (iii) $0.8 million increase in equity in net earnings of affiliated companies.

 

(2) Operating Surplus

Operating Surplus represents net income adjusted for depreciation and amortization expense, non-cash interest expense, non-cash interest income, equity compensation expense, estimated maintenance and replacement capital expenditures and one-off items. Maintenance and replacement capital expenditures are those capital expenditures required to maintain over the long term the operating capacity of, or the revenue generated by, Navios Partners’ capital assets.

Operating Surplus is a quantitative measure used in the publicly-traded partnership investment community to assist in evaluating a partnership’s ability to make quarterly cash distributions. Operating Surplus is not required by accounting principles generally accepted in the United States and should not be considered a substitute for net income, cash flow from operating activities and other operations or cash flow statement data prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity.

(3) Available Cash

Available Cash generally means, for each fiscal quarter, all cash on hand at the end of the quarter:

 

    less the amount of cash reserves established by the Board of Directors to:

 

    •  provide for the proper conduct of Navios Partners’ business (including reserve for maintenance and replacement capital expenditures);

 

    comply with applicable law, any of Navios Partners’ debt instruments, or other agreements; or

 

    provide funds for distributions to the unitholders and to the general partner for any one or more of the next four quarters;

 

    plus all cash on hand on the date of determination of available cash for the quarter resulting from working capital borrowings made after the end of the quarter. Working capital borrowings are generally borrowings that are made under any revolving credit or similar agreement used solely for working capital purposes or to pay distributions to partners.

 

Available Cash is a quantitative measure used in the publicly-traded partnership investment community to assist in evaluating a partnership’s ability to make quarterly cash distributions. Available Cash is not required by U.S. GAAP and should not be considered a substitute for net income, cash flow from operating activities and other operations or cash flow statement data prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity.

Borrowings

Navios Partners’ long-term borrowings are presented under the captions “Long-term financial liabilities, net”, “Long-term debt, net”, “Current portion of financial liabilities, net” and “Current portion of long-term debt, net”. As of June 30, 2020 and December 31, 2019, total borrowings, net of deferred finance fees and discount amounted to $488.2 million and $489.0 million, respectively. The current portion of long-term borrowings, net amounted to $93.5 million at June 30, 2020 and $59.8 million at December 31, 2019.  

 

Capital Expenditures

Navios Partners finances its capital expenditures with cash flow from operations, equity raisings, long-term bank borrowings and other debt raisings. Capital expenditures for each of the six month periods ended June 30, 2020 and 2019 amounted to $42.0 million and $6.0 million, respectively. The reserves for estimated maintenance and replacement capital expenditures for the three and six month periods ended June 30, 2020 were $8.6 million and $17.2 million, respectively. The reserves for estimated maintenance and replacement capital expenditures for the three and six month periods ended June 30, 2019 were $7.3 million and $14.7 million, respectively.

Maintenance for our vessels and expenses related to drydocking expenses are reimbursed at cost by Navios Partners to our Manager under the Management Agreement (as defined herein). In each of October 2013, August 2014, February 2015, February 2016 and November 2017, Navios Partners amended its existing management agreement (the “Management Agreement”) with the Manager to fix the fees for ship management services of its owned fleet, excluding drydocking expenses, which are reimbursed at cost by Navios Partners at: (a) $4,225 daily rate per Ultra-Handymax vessel; (b) $4,325 daily rate per Panamax vessel; (c) $5,250 daily rate per Capesize vessel; (d) $6,700 daily rate per Container vessel of TEU 6,800; (e) $7,400 daily rate per Container vessel of more than TEU 8,000; and (f) $8,750 daily rate per very large Containers vessel of more than TEU 13,000 through December 31, 2019.

In August 2019, Navios Partners extended the duration of its existing management agreement with the Manager until January 1, 2025. Management fees are fixed for two years commencing from January 1, 2020 at: (a) $4,350 daily per Ultra-Handymax Vessel; (b) $4,450 daily per Panamax Vessel; (c) $5,410 daily per Capesize Vessel; and (d) $6,900 daily per 6,800 TEU Containership. The agreement also provides for a technical and commercial management fee of $50 per day per vessel and an annual increase of 3% after January 1, 2022 unless agreed otherwise.

Following the liquidation of Navios Europe I, Navios Partners acquired three Sub-Panamax and two Panamax Containerships. As per the Management Agreement, as amended in December 2019, management fees are fixed for two years commencing from January 1, 2020 at $6,100 daily per Sub-Panamax/Panamax Containership. The agreement also provides for a technical and commercial management fee of $50 per day per vessel and an annual increase of 3% after January 1, 2022 for the remaining period unless agreed otherwise. Drydocking expenses are reimbursed at cost for all vessels.

Maintenance and Replacement Capital Expenditures Reserve

We estimate that our annual replacement reserve for the year ending December 31, 2020 will be approximately $38.0 million, for replacing our vessels at the end of their useful lives.

The amount for estimated replacement capital expenditures attributable to future vessel replacement was based on the following assumptions: (i) current market price to purchase a five year old vessel of similar size and specifications; (ii) a 25-year useful life for drybulk vessels and a 30-year useful life for containerships; and (iii) a relative net investment rate.

The amount for estimated maintenance capital expenditures attributable to future vessel drydocking and special survey was based on certain assumptions including the remaining useful life of the owned vessels of our fleet, market costs of drydocking and special survey and a relative net investment rate.

Our Board of Directors, with the approval of the Conflicts Committee, may determine that one or more of our assumptions should be revised, which could cause our Board of Directors to increase or decrease the amount of estimated maintenance and replacement capital expenditures. The actual cost of replacing the vessels in our fleet will depend on a number of factors, including prevailing market conditions, charter hire rates and the availability and cost of financing at the time of replacement. We may elect to finance some or all of our maintenance and replacement capital expenditures through the issuance of additional common units, which could be dilutive to existing unitholders.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have, a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Contractual Obligations and Contingencies

The following table summarizes our long-term contractual obligations as of June 30, 2020.

 

 

 

 

                                         
    Payments due by period (Unaudited)  
    Less than
1 year
    1-3 years     3-5 years     More than
5 years
    Total  
    (In thousands of U.S. dollars)  
Loan obligations(1)   $ 89,224     $ 204,786     $ 131,870     $ —       $ 425,880  
Financial liabilities(2)   $ 6,363     $ 13,739     $ 20,261     $ 26,672     $ 67,035  
Operating Lease Obligations (Time Charters) for bareboat charter-in vessels(3) (4)   $ 2,258     $ 13,252     $ 12,980     $ 33,403     $ 61,893  
                                         
Total contractual obligations   $ 97,845     $ 231,777     $ 165,111     $ 60,075     $ 554,808  
                                         
                                           

 

(1) Represents principal payments and repayments on amounts drawn on our credit facilities that bear interest at applicable fixed interest rates ranging from 2.6% to 7.0% plus LIBOR per annum. The amounts in the table exclude expected interest payments of $16.8 million (less than 1 year), $15.7 million (1-3 years) and $3.2 million (3-5 years). Expected interest payments are based on outstanding principal amounts, applicable currently effective interest rates and margins as of June 30, 2020, timing of scheduled payments and the term of the debt obligations.

 

(2) Represents principal payments and repayments on amounts drawn under the financial liabilities and exclude interest payments of $4.4 million (less than 1 year), $7.4 million (1-3 years), $4.8 million (3-5 years) and $5.8 million (more than 5 years).

 

(3) In November 2017, Navios Partners agreed to charter-in, under a ten-year bareboat contract, from an unrelated third party, a newbuilding Panamax vessel of 82,011 dwt, delivered on July 24, 2019. Navios Partners has agreed to pay in total $5.54 million, representing a deposit for the option to acquire the vessel after the end of the fourth year, of which the first half of $2.77 million was paid during the year ended December 31, 2017 and the second half of $2.77 million was paid during the year ended December 31, 2018, both presented under the caption “Other long-term assets” in the condensed Consolidated Balance Sheets as of June 30, 2020.

 

(4) On October 18, 2019, Navios Partners agreed to charter-in, under a ten-year bareboat contract, from an unrelated third party, two newbuilding Panamax vessels of approximately 81,000 dwt each, expected to be delivered by the first half of 2021. Navios Partners has agreed to pay in total $12.3 million, representing a deposit for the option to acquire the vessels after the end of the fourth year, of which the $1.4 million was paid during the year ended December 31, 2019 and the $4.3 million was paid during the first quarter of 2020, both presented under the caption “Other long-term assets” in the condensed Consolidated Balance Sheets. The amount of $5.7 million will be paid in July 2020 and the remaining amount of $0.9 million will be paid upon the delivery of the vessels. The table above excludes the deposits payable of $5.7 million in 2020 and $0.9 million in 2021.

Navios Partners leases office space in Monaco pursuant to a five year lease agreement dated July 1, 2018 that expires in June 2023, for a monthly rent of approximately $0.01 million.

Limitations on Cash Distributions and Our Ability to Change Our Cash Distribution Policy

There is no guarantee that unitholders will receive quarterly distributions from us and beginning with the quarter ending December 31, 2015, our Board of Directors elected to suspend distributions on our common units in order to preserve cash and improve our liquidity. In March 2018, the Company’s Board of Directors announced a new distribution policy under which it paid quarterly cash distribution in the amount of $0.30 per unit, or $1.20 annually. In July 2020, the Company amended its distribution and announced a quarterly distribution of $0.05 per unit for the second quarter of 2020. The cash distribution is payable on August 13, 2020 to all unitholders of common and general partner units of record as of August 10, 2020.

Our distribution policy is subject to certain restrictions and may be changed at any time, including:

 

    Our unitholders have no contractual or other legal right to receive distributions other than the obligation under our partnership agreement to distribute available cash on a quarterly basis, which is subject to the broad discretion of our Board of Directors to establish reserves and other limitations.

 

    While our partnership agreement requires us to distribute all of our available cash, our partnership agreement, including provisions requiring us to make cash distributions contained therein, may be amended. Although during the subordination period, with certain exceptions, our partnership agreement could not have been amended without the approval of non-affiliated common unitholders, however, our partnership agreement can be amended with the approval of a majority of the outstanding common units now that the subordination period has ended. Upon the closing of the initial public offering of our common units (the “IPO”), Navios Holdings did not own any of our outstanding common units and owned 100.0% of our outstanding subordinated units.

  

    Even if our cash distribution policy is not modified or revoked, the amount of distributions we pay under our cash distribution policy and the decision to make any distribution is determined by our Board of Directors, taking into consideration the terms of our partnership agreement.

 

    Under Section 51 of the Marshall Islands Limited Partnership Act, we may not make a distribution to our unitholders if the distribution would cause our liabilities to exceed the fair value of our assets.

 

    We may lack sufficient cash to pay distributions to our unitholders due to decreases in net revenues or increases in operating expenses, principal and interest payments on outstanding debt, tax expenses, working capital requirements, maintenance and replacement capital expenditures or anticipated cash needs.

 

    Our distribution policy is affected by restrictions on distributions under our credit facilities. Specifically, our credit facilities contain material financial tests that must be satisfied and we will not pay any distributions that will cause us to violate our credit facilities or other debt instruments. Should we be unable to satisfy these restrictions included in our credit facilities or if we are otherwise in default under our credit facilities, our ability to make cash distributions to unitholders, notwithstanding our cash distribution policy, would be materially adversely affected.

 

    If we make distributions out of capital surplus, as opposed to Operating Surplus, such distributions will constitute a return of capital and will result in a reduction in the minimum quarterly distribution and the target distribution levels

Our ability to make distributions to our unitholders depends on the performance of our subsidiaries and their ability to distribute funds to us. The ability of our subsidiaries to make distributions to us may be restricted by, among other things, the provisions of existing and future indebtedness, applicable partnership and limited liability company laws and other laws and regulations.

Quarterly Distribution

There is no guarantee that we will pay the quarterly distribution on the common units in any quarter. The amount of distributions paid under our policy and the decision to make any distribution is determined by our board of directors, taking into consideration the terms of our partnership agreement. We are prohibited from making any distributions to unitholders if it would cause an event of default, or an event of default exists, under our existing credit facilities.

Quarterly distributions were paid by the Company through September 2015. For the quarter ended December 31, 2015, the Company’s board of directors determined to suspend payment of the Company’s quarterly distributions in order to preserve cash and improve our liquidity. In March 2018, the Company’s board of directors announced a new distribution policy under which it paid quarterly cash distributions in the amount of $0.30 per unit, or $1.20 annually.

In July 2020, the Board of Directors of Navios Partners amended its distribution and authorized a quarterly cash distribution for the three month period ended June 30, 2020 of $0.05 per unit. The distribution is payable on August 13, 2020 to all unitholders of common and general partner units of record as of August 10, 2020. The aggregate amount of the declared distribution to be paid is expected to be $0.6 million.

Incentive Distribution Rights

The following description of our incentive distribution rights reflects such rights and the indicated levels are achieved, of which there can be no assurance. Incentive distribution rights represent the right to receive an increasing percentage of quarterly distributions of available cash from Operating Surplus after the minimum quarterly distribution and the target distribution levels have been achieved. Navios GP L.L.C. currently holds the incentive distribution rights, but may transfer these rights, provided the transferee agrees to be bound by the terms of the partnership agreement.

The following table illustrates the percentage allocations of the additional available cash from Operating Surplus among the unitholders, our general partner and the holder of our incentive distribution rights up to the various target distribution levels. The amounts set forth under “Marginal Percentage Interest in Distributions” are the percentage interests of the unitholders in any available cash from Operating Surplus we distribute up to and including the corresponding amount in the column “Total Quarterly Distribution Target Amount”, until available cash from Operating Surplus we distribute reaches the next target distribution level, if any. The percentage interests shown for the unitholders for the minimum quarterly distribution are also applicable to quarterly distribution amounts that are less than the minimum quarterly distribution. The percentage interests shown for our general partner assume that our general partner maintains its 2.0% general partner interest.

 

                             
        Marginal Percentage Interest
in Distributions
 
    Total Quarterly Distribution
Target Amount
  Common
Unitholders
    Incentive
Distribution
Right Holder
    General
Partner
 
Minimum Quarterly Distribution   up to $5.25     98 %           2 %
First Target Distribution   up to $6.0375     98 %           2 %
Second Target Distribution   above $ 6.0375 up to $6.5625     85 %     13 %     2 %
Third Target Distribution   above $6.5625 up to $7.875     75 %     23 %     2 %
Thereafter   above $7.875     50 %     48 %     2 %

In August 2019, Navios Holdings sold the general partnership interests in the Company to N Shipmanagement Acquisition Corp., and related entities, an entity affiliated with the Company’s Chairman and Chief Executive Officer. The incentive distribution rights remained with Navios GP L.L.C.

Related Party Transactions

Vessel operating expenses (management fees): Pursuant to the amended Management Agreement in each of October 2013, August 2014, February 2015, February 2016 and November 2017, the Manager provided commercial and technical management services to Navios Partners’ vessels for a daily fee (excluding drydocking expenses, which were reimbursed at cost by Navios Partners) of: (a) $4,225 daily rate per Ultra-Handymax vessel; (b) $4,325 daily rate per Panamax vessel; (c) $5,250 daily rate per Capesize vessel; (d) $6,700 daily rate per Containership of TEU 6,800; (e) $7,400 daily rate per Containership of more than TEU 8,000; and (f) $8,750 daily rate per very large Containership of more than TEU 13,000 through December 2019. These fixed daily fees cover our vessels’ operating expenses, other than certain extraordinary fees and costs.

In August 2019, Navios Partners extended the duration of its Management Agreement with the Manager until January 1, 2025. In addition, management fees are fixed for two years commencing from January 1, 2020 at: (a) $4,450 daily per Panamax Vessel; (b) $4,350 daily per Ultra-Handymax Vessel; (c) $5,410 daily per Capesize Vessel; and (d) $6,900 daily per 6,800 TEU Containership. The agreement also provides for a technical and commercial management fee of $50 per day per vessel and an annual increase of 3% after January 1, 2022 unless agreed otherwise.

Following the liquidation of Navios Europe I, Navios Partners acquired three Sub-Panamax and two Panamax Containerships. As per the Management Agreement, as amended in December 2019, management fees are fixed for two years commencing from January 1, 2020 at $6,100 daily per Sub-Panamax/Panamax Containership. The agreement also provides for a technical and commercial management fee of $50 per day per vessel and an annual increase of 3% after January 1, 2022 for the remaining period unless agreed otherwise.

Drydocking expenses are reimbursed at cost for all vessels.

For the three and six month periods ended June 30, 2020 certain extraordinary fees and costs related to vessels’ regulatory requirements including ballast water treatment system installation and exhaust gas cleaning system installation, under the Company’s management agreement amounted to $1.3 million and $1.5 million, respectively, and are presented under “Acquisition of/additions to vessels” in the condensed Consolidated Statements of Cash Flow. For the three and six month periods ended June 30, 2019 certain extraordinary fees and costs related to vessels’ regulatory requirements including ballast water treatment system installation and exhaust gas cleaning system installation, under the Company’s management agreement amounted to $3.3 million and $5.8 million, respectively.

Total vessel operating expenses for each of the three and six month periods ended June 30, 2020 amounted to $21.9 million and $44.1 million, respectively. Total vessel operating expenses for each of the three and six month periods ended June 30, 2019 amounted to $16.5 million and $33.1 million, respectively.

General and administrative expenses: Pursuant to the Administrative Services Agreement, the Manager also provides administrative services to Navios Partners, which include bookkeeping, audit and accounting services, legal and insurance services, administrative and clerical services, banking and financial services, advisory services, client and investor relations and other. The Manager is reimbursed for reasonable costs and expenses incurred in connection with the provision of these services. Navios Partners extended the duration of its existing Administrative Services Agreement with the Manager, until December 31, 2022. In August 2019, Navios Partners extended the duration of its existing administrative services agreement with the Manager until January 1, 2025, which provide for allocable general and administrative costs.

Total general and administrative expenses charged by the Manager for each of the three and six month periods ended June 30, 2020 amounted to $3.2 million and $6.4 million, respectively. Total general and administrative expenses charged by the Manager for each of the three and six month periods ended June 30, 2019 amounted to $2.5 million and $5.1 million, respectively.

Balance due from related parties (excluding Navios Europe II): Balance due from related parties as of June 30, 2020 and December 31, 2019 amounted to $10.7 million and $25.6 million, respectively of which for the year ended December 31, 2019, the current receivable was $11.8 million and the long-term receivable was $13.8 million. The balance mainly consisted of the guarantee claim receivable from the Navios Holdings Guarantee of $10.0 million.

Balance due to related parties: Balance due to related parties, short-term as of June 30, 2020 and December 31, 2019 amounted to $26.0 million and $0, respectively, and mainly consisted of payables to the Manager.

Balance due from Navios Europe II: Navios Holdings, Navios Maritime Acquisition Corporation (“Navios Acquisition”) and Navios Partners have made available to Navios Europe II revolving loans of up to $43.5 million to fund working capital requirements (collectively, the “Navios Revolving Loans II”). In March 2017, the availability under the Navios Revolving Loans II was increased by $14.0 million (see Note 14 - Investment in Affiliates).

On April 21, 2020, Navios Europe II agreed with the lender to fully release the liabilities under the junior participating loan facility for $5.0 million. Navios Europe II owned seven container vessels and seven dry bulk vessels. Navios Partners had a net receivable of approximately $17.3 million from Navios Europe II.

 

As of March 31, 2020, the decline in the fair value of the investment was considered as other-than-temporary and, therefore, an aggregate loss of $6.9 million was recognized and included in the accompanying condensed Consolidated Statements of Income for the six month period ended June 30, 2020, as “Impairment of receivable in affiliated company”. The fair value of the Company’s investment was determined based on the liquidation value of Navios Europe II, including the individual fair values assigned to the assets and liabilities of Navios Europe II.

 

On May 14, 2020, an agreement was reached to liquidate Navios Europe II before its original expiring date. The transaction was completed on June 29, 2020.

 

As a result of the Europe II liquidation Navios Partners acquired 100% of the stock of the five vessels owning Companies owning the dry bulk vessels of Navios Europe II with a fair value of $56.1 million and working capital balances of $(2.7) million. The purchase was funded through a new financing agreement (Note 6—Borrowings) and cash on hand for total of $36.1 million and the satisfaction of its receivable balances in the amount of approximately $17.3 million representing the Revolving Loan, Term Loan and accrued interest thereof directly owned to Navios Partners, previously presented under the captions “Amounts due/to from related parties” and “Loans receivable from affiliates”.

Following the Liquidation of Navios Europe II, there was no balance due from Navios Europe II as of June 30, 2020. As of December 31, 2019, Navios Partners' portion of the outstanding amount relating to the portion of the investment in Navios Europe II (5.0% of the $14.0 million) was $0.7 million, under the caption "Investment in affiliates" and the outstanding amount relating to the Navios Revolving Loans II capital was $15.4 million, under the caption "Loans receivable from affiliates". The accrued interest income earned under the Navios Revolving Loans II was $7.3 million under the caption "Balance due from related parties" and the accrued interest income earned under the Navios Term Loans II was $0.8 million under the caption "Loans receivable from affiliates".

 

Note receivable from affiliates: On March 17, 2017, Navios Holdings transferred to Navios Partners its rights to the fixed 12.7% interest on the Navios Europe I Navios Term Loans I and Navios Revolving Loans I (including the respective accrued receivable interest) in the amount of $33.5 million, which included a cash consideration of $4.1 million and 871,795 newly issued common units of Navios Partners, on a split adjusted basis. At the date of this transaction, the Company recognized a receivable at the fair value of its newly issued common units totaling $29.4 million based on the closing price of $33.75 per unit as of March 16, 2017 given as consideration. The receivable relating to the consideration settled with the issuance of 871,795 Navios Partners’ common units in the amount of $29.4 million has been classified contra equity. The receivable from Navios Holdings was payable on maturity in December 2023. Interest would accrue through maturity and would be recognized within “Interest income” for the receivable relating to the cash consideration of $4.1 million. On October 23, 2019, Navios Partners’ Conflicts Committee agreed to cancel an amortizing penalty from Navios Holdings of approximately $3.2 million as of December 2019, due to early liquidation of the structure. Following the liquidation of Navios Europe I, the long-term note receivable from Navios Holdings amounted to $0.

Others: Navios Partners has entered into an omnibus agreement with Navios Holdings (the “Partners Omnibus Agreement”) in connection with the closing of Navios Partners’ IPO governing, among other things, when Navios Holdings and Navios Partners may compete against each other as well as rights of first offer on certain drybulk carriers. Pursuant to the Partners Omnibus Agreement, Navios Partners generally agreed not to acquire or own Panamax or Capesize drybulk carriers under time charters of three or more years without the consent of an independent committee of Navios Partners. In addition, Navios Holdings has agreed to offer to Navios Partners the opportunity to purchase vessels from Navios Holdings when such vessels are fixed under time charters of three or more years.

Navios Partners entered into an omnibus agreement with Navios Acquisition and Navios Holdings (the “Acquisition Omnibus Agreement”) in connection with the closing of Navios Acquisition’s initial vessel acquisition, pursuant to which, among other things, Navios Holdings and Navios Partners agreed not to acquire, charter-in or own liquid shipment vessels, except for containerships and vessels that are primarily employed in operations in South America, without the consent of an independent committee of Navios Acquisition. In addition, Navios Acquisition, under the Acquisition Omnibus Agreement, agreed to cause its subsidiaries not to acquire, own, operate or charter drybulk carriers subject to specific exceptions. Under the Acquisition Omnibus Agreement, Navios Acquisition and its subsidiaries granted to Navios Holdings and Navios Partners, a right of first offer on any proposed sale, transfer or other disposition of any of its drybulk carriers and related charters owned or acquired by Navios Acquisition. Likewise, Navios Holdings and Navios Partners agreed to grant a similar right of first offer to Navios Acquisition for any liquid shipment vessels it might own. These rights of first offer will not apply to a (i) sale, transfer or other disposition of vessels between any affiliated subsidiaries, or pursuant to the terms of any charter or other agreement with a counterparty, or (ii) merger with or into, or sale of substantially all of the assets to, an unaffiliated third party.

In connection with the Navios Maritime Midstream Partners L.P. (“Navios Midstream”) initial public offering effective November 18, 2014, Navios Partners entered into an omnibus agreement with Navios Midstream, Navios Acquisition and Navios Holdings pursuant to which Navios Acquisition, Navios Holdings and Navios Partners have agreed not to acquire or own any VLCCs, crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers under time charters of five or more years and also providing rights of first offer on certain tanker vessels.

In connection with the Navios Containers private placement and listing on the Norwegian over-the-counter market effective June 8, 2017, Navios Partners entered into an omnibus agreement with Navios Containers, Navios Holdings, Navios Acquisition and Navios Midstream (the “Navios Containers Omnibus Agreement”), pursuant to which Navios Partners, Navios Holdings, Navios Acquisition and Navios Midstream have granted to Navios Containers a right of first refusal over any containerships to be sold or acquired in the future. The omnibus agreement contains significant exceptions that will allow Navios Partners, Navios Holdings, Navios Acquisition and Navios Midstream to compete with Navios Containers under specified circumstances.

 

Navios Holdings Guarantee: On November 15, 2012 (as amended and supplemented in March 2014, December 2017 and July 2019), Navios Holdings and Navios Partners entered into an agreement (the “Navios Holdings Guarantee”) by which Navios Holdings would provide supplemental credit default insurance with a maximum cash payment of $20.0 million. As of June 30, 2020, the outstanding claim receivable amounted to $10.0 million. The final settlement of the amount from Navios Holdings will take place at specific dates, in accordance with a signed letter of agreement between the parties. The guarantee claim receivable is presented under the caption “Amounts due from related parties-short term” in the condensed Consolidated Balance Sheets as of June 30, 2020.

General partner: In August 2019, Navios Holdings announced that it sold certain assets, including its ship management division and the general partnership interest in Navios Partners to N Shipmanagement Acquisition Corp. and related entities, affiliated with Navios Holdings’ Chairman and Chief Executive Officer, Angeliki Frangou.

Acquisition of vessels: On November 25, 2019, Navios Partners entered into a share purchase agreement for the acquisition of three Panamax and one Ultra-handymax drybulk vessels from an entity affiliated with its Chairman and CEO for $37.0 million (plus working capital adjustment) in a transaction approved by the Conflicts Committee of the Board of Directors of Navios Partners. The vessels were acquired on December 13, 2019 (see Note 4 - Vessels, net).

As of June 30, 2020, Navios Holdings held an 18.8% common unit interest in Navios Partners, represented by 2,070,216 common units. The General Partner held a general partner interest of 2.1% represented by 230,524 general partner units.

Quantitative and Qualitative Disclosures about Market Risks

Foreign Exchange Risk

Our functional and reporting currency is the U.S. dollar. We engage in worldwide commerce with a variety of entities. Although our operations may expose us to certain levels of foreign currency risk, our transactions are predominantly U.S. dollar denominated. Transactions in currencies other than U.S. dollars are translated at the exchange rate in effect at the date of each transaction. Differences in exchange rates during the period between the date a transaction denominated in a foreign currency is consummated and the date on which it is either settled or translated, are recognized.

Interest Rate Risk

Borrowings under our credit facilities bear interest at rate based on a premium over U.S. $ LIBOR. Therefore, we are exposed to the risk that our interest expense may increase if interest rates rise. For the six month period ended June 30, 2020 and 2019, we paid interest on our outstanding debt at a weighted average interest rate of 5.04% and 7.29%, respectively. A 1% increase in LIBOR would have increased our interest expense for each of the six month periods ended June 30, 2020 and 2019 by $2.1 million and $2.5 million, respectively.

Concentration of Credit Risk

Financial instruments, which potentially subject us to significant concentrations of credit risk, consist principally of trade accounts receivable. We closely monitor our exposure to customers for credit risk. We have policies in place to ensure that we trade with customers with an appropriate credit history.

For the six month period ended June 30, 2020, one customer, HMM represented approximately 29.0% of total revenues. For the six month period ended June 30, 2019, HMM, Cargill and Swissmarine represented approximately 29.9%, 10.8% and 10.3%, respectively, of total revenues. No other customers accounted for 10% or more of total revenues for any of the periods presented.

On November 15, 2012 (as amended and supplemented in March 2014, December 2017 and July 2019), Navios Holdings and Navios Partners entered into the Navios Holdings Guarantee by which Navios Holdings would provide supplemental credit default insurance with a maximum cash payment of $20.0 million. As of June 30, 2020, the outstanding claim receivable amounted to $10.0 million. The final settlement of the amount from Navios Holdings will take place at specific dates, in accordance with a signed letter of agreement between the parties. The guarantee claim receivable is presented under the caption “Amounts due from related parties-short term” in the condensed Consolidated Balance Sheets as of June 30, 2020.

If we lose a charter, we may be unable to re-deploy the related vessel on terms as favorable to us due to the long-term nature of most charters and the cyclical nature of the industry or we may be forced to charter the vessel on the spot market at then market rates which may be less favorable than the charter that has been terminated. If we are unable to re-deploy a vessel for which the charter has been terminated, we will not receive any revenues from that vessel, but we may be required to pay expenses necessary to maintain the vessel in proper operating condition. If we lose a vessel, any replacement or newbuilding would not generate revenues during its construction acquisition period, and we may be unable to charter any replacement vessel on terms as favorable to us as those of the terminated charter.

Even if we successfully charter our vessels in the future, our charterers may go bankrupt or fail to perform their obligations under the charter agreements, they may delay payments or suspend payments altogether, they may terminate the charter agreements prior to the agreed-upon expiration date or they may attempt to renegotiate the terms of the charters. The permanent loss of a customer, time charter or vessel, or a decline in payments under our charters, could have a material adverse effect on our business, results of operations and financial condition and our ability to make cash distributions in the event we are unable to replace such customer, time charter or vessel. For further details, please read “Risk Factors” in our 2019 Annual Report on Form 20-F.

 

 

Inflation

Inflation has had a minimal impact on vessel operating expenses, drydocking expenses and general and administrative expenses. Our management does not consider inflation to be a significant risk to direct expenses in the current and foreseeable economic environment.

Recent Accounting Pronouncements

The Company’s recent accounting pronouncements are included in the accompanying notes to the unaudited condensed consolidated financial statements included elsewhere in this report.

Critical Accounting Policies

Our financial statements have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates in the application of our accounting policies based on the best assumptions, judgments and opinions of management. Following is a discussion of the accounting policies that involve a higher degree of judgment and the methods of their application that affect the reported amount of assets and liabilities, revenues and expenses and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions.

Critical accounting policies are those that reflect significant judgments or uncertainties, and potentially result in materially different results under different assumptions and conditions. Other than as described below, all significant accounting policies are as described in Note 2 to the Notes to the consolidated financial statements included in the Company’s Annual Report on Form 20-F for the year ended December 31, 2019 filed with the SEC on April 1, 2020.

 

 

 

INDEX

 

         
    Page  
NAVIOS MARITIME PARTNERS L.P.        
   
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS AT JUNE 30, 2020 AND DECEMBER 31, 2019     F-2  
   
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2020 AND 2019     F-3  
   
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2020 AND 2019     F-4  
   
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2020 AND 2019     F-6  
   
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)     F-7  

   

 
 

 

 

NAVIOS MARITIME PARTNERS L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of U.S. Dollars except unit data)

 

    Notes     June 30,
2020
(unaudited)
    December 31,
2019
(unaudited)
 
ASSETS                        
Current assets                        
Cash and cash equivalents     3     $ 23,183     $ 23,354  
Restricted cash     3       6,632       7,048  
Accounts receivable, net             11,960       11,291  
Amounts due from related parties     12       10,722       19,108  
Prepaid expenses and other current assets             12,766       10,463  
Notes receivable     13       2,363       4,726  
           
 
 
   
 
 
 
Total current assets             67,626       75,990  
           
 
 
   
 
 
 
Vessels, net     4       1,086,310       1,062,258  
Other long-term assets     11       12,600       8,165  
Deferred dry dock and special survey costs, net             30,922       26,469  
Investment in affiliates     14       25,993       25,725  
Loans receivable from affiliates     14               16,192  
Intangible assets     5       2,583       3,166  
Amounts due from related parties     12               13,757  
Notes receivable, net of current portion     13       7,781       7,554  
Operating lease assets     17       13,782       14,241  
           
 
 
   
 
 
 
Total non-current assets             1,179,971       1,177,527  
           
 
 
   
 
 
 
Total assets           $ 1,247,597     $ 1,253,517  
           
 
 
   
 
 
 
LIABILITIES AND PARTNERS’ CAPITAL                        
Current liabilities                        
Accounts payable           $ 5,992     $ 8,473  
Accrued expenses             8,475       5,987  
Deferred revenue     13       6,059       4,497  
Operating lease liabilities, current portion     17       1,109       1,047  
Current portion of financial liabilities, net     6       6,032       5,814  
Current portion of long-term debt, net     6       87,507       53,966  
Amounts due to related parties             26,036           
           
 
 
   
 
 
 
Total current liabilities             141,210       79,784  
           
 
 
   
 
 
 
Operating lease liabilities, net     17       12,588       13,154  
Long-term financial liabilities, net     6       59,707       82,794  
Long-term debt, net     6       334,933       346,454  
Deferred revenue     13       2,753       3,312  
           
 
 
   
 
 
 
Total non-current liabilities             409,981       445,714  
           
 
 
   
 
 
 
Total liabilities           $ 551,191     $ 525,498  
           
 
 
   
 
 
 
Commitments and contingencies     11                    
Partners’ capital:                        
Common Unitholders (10,987,679 units issued and outstanding at June 30, 2020 and December 31, 2019, respectively)     8       692,751       723,720  
General Partner (230,524 units issued and outstanding at June 30, 2020 and December 31, 2019, respectively)     8       3,655       4,299  
Total partners’ capital             696,406       728,019  
           
 
 
   
 
 
 
Total liabilities and partners’ capital           $ 1,247,597     $ 1,253,517  
           
 
 
   
 
 
 
 
 

See unaudited condensed notes to the condensed consolidated financial statements

 

NAVIOS MARITIME PARTNERS L.P.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Expressed in thousands of U.S. Dollars except unit and per unit data)

 

 

    Notes     Three Month
Period Ended
June 30, 2020
(unaudited)
    Three Month
Period Ended
June 30, 2019
(unaudited)
    Six Month
Period Ended
June 30, 2020
(unaudited)
    Six Month
Period Ended
June 30, 2019
(unaudited)
 
Time charter and voyage revenues     9,13     $ 46,549     $ 47,745     $ 93,039     $ 94,563  
Time charter and voyage expenses             (1,940)       (2,484)       (5,038)       (6,013)  
Direct vessel expenses             (2,385)       (1,530)       (4,934)       (3,113)  
Vessel operating expenses (management fees entirely through related parties transactions)     12       (21,930)       (16,496)       (44,135)       (33,106)  
General and administrative expenses     12       (6,983)       (6,515)       (11,128)       (10,528)  
Depreciation and amortization     4,5       (13,663)       (13,240)       (27,300)       (26,732)  
Vessels impairment loss     4       (6,800)       (6,800) (7,345)  
Impairment of receivable in affiliated company     12       (6,900)  
Interest expense and finance cost, net             (6,275)       (12,246)       (13,219)       (23,760)  
Interest income             176       1,791       371       3,534  
Other income     16       1,279       374       2,183       591  
Other expense             (1,959)       (4,090)       (2,472)       (4,322)  
Equity in net earnings of affiliated companies     14       (710)       168       968       185  
           
 
 
   
 
 
   
 
 
   
 
 
 
Net loss           $ (14,641)     $ (6,523)     $ (25,365)     $ (16,046)  
           
 
 
   
 
 
   
 
 
   
 
 
 
           
Loss per unit (see note 15):                                        
           
          Three Month
Period Ended
June 30, 2020
(unaudited)
    Three Month
Period Ended
June 30, 2019
(unaudited)
    Six Month
Period Ended
June 30, 2020
(unaudited)
    Six Month
Period Ended
June 30, 2019
(unaudited)
 
Loss per unit:                                        
Common unit (basic and diluted)           $ (1.32)     $ (0.59)     $ (2.29)     $ (1.44)  

See unaudited condensed notes to the condensed consolidated financial statements

  

 
 

 

 

NAVIOS MARITIME PARTNERS L.P.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of U.S. Dollars)

 

    Notes     Six Month
Period Ended
June 30, 2020
(unaudited)
    Six Month
Period Ended
June 30, 2019
(unaudited)
 
OPERATING ACTIVITIES:                        
Net loss            $ (25,365)   $ (16,046)  
Adjustments to reconcile net loss to net cash provided by operating activities:                        
Depreciation and amortization     4,5       27,300       26,732  
Vessels impairment loss     4       6,800        7,345  
Impairment of receivable in affiliated company     12       6,900       —   
Non cash accrued interest income and amortization of deferred revenue     13       (788)     (6,303)  
Non cash accrued interest income from receivable from affiliates     12       —        (141)  
Amortization of operating lease right-of-use asset     17       459        
Amortization and write-off of deferred financing cost and discount             1,018       4,633  
Amortization of deferred dry dock and special survey costs             4,888       3,100  
Equity in net earnings of affiliated companies     14       (968)     (185)  
Equity compensation expense     8       483       1,013  
Changes in operating assets and liabilities:                        
(Increase)/ decrease in accounts receivable             (18)       4,011  
Net increase in prepaid expenses and other current assets             (1,230)     (5,784)  
Net decrease in accounts payable             (2,567)     (762)  
Net increase in accrued expenses             2,035       613  
Net increase in deferred revenue             1,564       329  
Decrease in amounts due from related parties     12       14,860       1,237  
Net increase in amounts due to related parties     12       22,149       —   
Payments for dry dock and special survey costs             (9,341)     (5,366)  
Operating lease liabilities short and long-term     18       (504)     —   
           
 
 
   
 
 
 
Net cash provided by operating activities             47,675       14,426  
INVESTING ACTIVITIES:                        
Net cash proceeds from sale of vessels             —        5,978  
Deposit for option to acquire vessel      11       (4,435)     (126)  
Acquisition of/ additions to vessels, net of cash acquired     4       (37,573)     (5,832)  
Repayments of notes receivable     13       2,344       2,344  
Loans receivable from affiliates     14       —        (4,000)  
           
 
 
   
 
 
 
Net cash used in investing activities             (39,664)     (1,636)  
FINANCING ACTIVITIES:                        
Cash distributions paid     15       (6,731)       (6,822)  
Net proceeds from issuance of general partner units     8       —        8  
Proceeds from long-term debt     6       46,475       70,765  
Repayment of long-term debt and financial liabilities     6       (47,927)       (96,733)  
Deferred financing fees             (415)     (1,744)  
Acquisition of treasury stock     8       —        (4,499)  
           
 
 
   
 
 
 
Net cash used in financing activities             (8,598)       (39,025)   
           
 
 
   
 
 
 
Decrease in cash, cash equivalents and restricted cash             (587)     (26,235)  
Cash, cash equivalents and restricted cash, beginning of period             30,402       61,455  
           
 
 
   
 
 
 
Cash, cash equivalents and restricted cash, end of period           $ 29,815     $ 35,220  
           
 
 
   
 
 
 
 
 

See unaudited condensed notes to the condensed consolidated financial statements

 

 

 

            Six Month
Period Ended
June 30,
2020
(unaudited)
    Six Month
Period Ended
June 30,
2019
(unaudited)
 
Supplemental disclosures of cash flow information                        
Cash interest paid           $ 13,053     $ 18,724  
Non cash financing activities                    
Equity compensation expense           $ 483     $ 1,013  
Accrued deferred financing costs           $     $ 206  
Non cash investing activities                        
Accrued interest on loan receivable from affiliates           $ —      $ 183  
Loans receivable from affiliates           $ (9,992)     -  
Acquisition of vessels           $ 19,997     $  

 

  

 
 

 

 

 

 

NAVIOS MARITIME PARTNERS L.P.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL

(Expressed in thousands of U.S. Dollars except unit data)

  

 

 

                                                 
    Limited Partners              
    General Partner     Common Unitholders              
    Units     Amount     Units     Amount     Note
Receivable
    Total
Navios
Partners’
Capital
 
Balance, December 31, 2018     230,006     $  5,802       11,270,283     $  800,374     $ (29,423)      $  776,753  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Cash distribution paid ($0.30 per unit—see Note 15)     —         (69)       —         (3,389)       —         (3,458)  
Acquisition of treasury stock (see Note 8)     —         —         (227,140)       (3,373)       —         (3,373)  
Issuance of restricted common units (see Note 8)     518       8       25,396       33       —         41  
Stock based compensation (see Note 8)     —         —         —         461       —         461  
Net loss     —         (188)       —         (9,335)                (9,523)  
Balance, March 31, 2019     230,524     $ 5,553       11,068,539     $ 784,771     $ (29,423)      $ 760,901  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Cash distribution paid ($0.30 per unit—see Note 15)     —         (69)       —         (3,295)       —         (3,364)  
Acquisition of treasury stock (see Note 8)     —         —         (85,812)       (1,126)       —         (1,126)  
Stock based compensation (see Note 8)     —         —         —         519       —         519  
Issuance of capital surplus     —         —         1,058       —         —         —    
Net loss     —         (129)       —         (6,394)                (6,523)  
Balance, June 30, 2019     230,524     $ 5,355       10,983,785     $ 774,475     $ (29,423)      $ 750,407  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 

 

                                         
    Limited Partners        
    General Partner     Common Unitholders        
    Units     Amount     Units     Amount     Total
Navios

Partners’
Capital
 
Balance, December 31, 2019     230,524     $ 4,299       10,987,679     $ 723,720     $ 728,019  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Cash distribution paid ($0.30 per unit—see Note 15)     —         (69     —         (3,296     (3,365
Stock based compensation (see Note 8)     —         —         —         245       245  
Net loss     —         (213     —         (10,511     (10,724
Balance, March 31, 2020     230,524     $ 4,017       10,987,679     $ 710,158     $ 714,175  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Cash distribution paid ($0.30 per unit—see Note 15)     —         (69     —         (3,297     (3,366
Stock based compensation (see Note 8)     —         —         —         238       238  
Net loss     —         (293     —         (14,348     (14,641
Balance, June 30, 2020     230,524       3,655       10,987,679     $ 692,751     $ 696,406  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 

 

 

See unaudited condensed notes to the condensed consolidated financial statements

 

  

 
 

NOTE 1 – DESCRIPTION OF BUSINESS

Navios Maritime Partners L.P. (“Navios Partners” or the “Company”), is an international owner and operator of dry cargo vessels, formed on August 7, 2007 under the laws of the Republic of the Marshall Islands. Navios GP L.L.C., a wholly owned subsidiary of Navios Maritime Holdings Inc. (“Navios Holdings”), was also formed on that date to act as the general partner of Navios Partners. Currently, our general partner is Olympos Maritime Ltd. (the “General Partner”) and holds a 2.1% general partner interest in Navios Partners.

Navios Partners is engaged in the seaborne transportation services of a wide range of dry cargo commodities including iron ore, coal, grain, fertilizer and also containers, chartering its vessels under medium to longer-term charters. The operations of Navios Partners are managed by Navios Shipmanagement Inc., (the “Manager”), from its offices in Piraeus, Greece, Singapore and Monaco.

Pursuant to the initial public offering (“IPO”) on November 16, 2007, Navios Partners entered into the following agreements:

(a) a management agreement with the Manager (the “Management Agreement”), pursuant to which the Manager provides Navios Partners commercial and technical management services;

(b) an administrative services agreement with the Manager (the “Administrative Services Agreement”), pursuant to which the Manager provides Navios Partners administrative services; and

(c) an omnibus agreement with Navios Holdings (the “Omnibus Agreement”), governing, among other things, when Navios Partners and Navios Holdings may compete against each other as well as rights of first offer on certain drybulk carriers.

In August 2019, Navios Holdings announced that it sold certain assets, including its ship management division and the general partnership interest in Navios Partners to N Shipmanagement Acquisition Corp. and related entities, affiliated with our Chairman and Chief Executive Officer.

As of August 3, 2020, there were 10,987,679 outstanding common units and 230,524 general partnership units. Navios Holdings currently owns an 18.8% common unit interest in Navios Partners and the General Partner holds the general partner interest of 2.1%.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation: The accompanying interim condensed consolidated financial statements are unaudited, but, in the opinion of management, reflect all adjustments for a fair statement of Navios Partners’ consolidated balance sheets, statement of partner’s capital, statements of operations and cash flows for the periods presented. The results of operations for the interim periods are not necessarily indicative of results for the full year. The footnotes are condensed as permitted by the requirements for interim financial statements and accordingly, do not include information and disclosures required under United States generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. All such adjustments are deemed to be of a normal recurring nature. These interim financial statements should be read in conjunction with the Company’s consolidated financial statements and notes included in Navios Partners’ Annual Report for the year ended December 31, 2019 filed on Form 20-F with the U.S. Securities and Exchange Commission (“SEC”).

Reverse Stock Split:

On April 25, 2019, the Company’s unitholders approved a 1-for-15 reverse stock split of the Company’s outstanding common and general partner units, which was effected on May 21, 2019. The effect of the reverse stock split was to combine each 15 shares of outstanding units into one new share, with no change in authorized shares or per value per share, and to reduce the number of common units outstanding from approximately 164.7 million units to approximately 11.0 million units. 983 common units were issued in connection with the reverse stock split. All issued and outstanding common units contained in the financial statements, in accordance with Staff Accounting Bulletin Topic 4C, have been retroactively adjusted to reflect the reverse split for all periods presented.

Principles of consolidation: The accompanying interim condensed consolidated financial statements include Navios Partners’ wholly owned subsidiaries incorporated under the laws of Marshall Islands, Malta, and Liberia from their dates of incorporation or, for chartered-in vessels, from the dates charter-in agreements were in effect. All significant inter-company balances and transactions have been eliminated in Navios Partners’ interim condensed consolidated financial statements.

 

Navios Partners also consolidates entities that are determined to be variable interest entities (“VIE”) as defined in the accounting guidance, if it determines that it is the primary beneficiary. A VIE is defined as a legal entity where either (i) equity interest holders as a group lack the characteristics of a controlling financial interest, including decision making ability and an interest in the entity’s residual risks and rewards, (ii) the equity holders have not provided sufficient equity investment to permit the entity to finance its activities without additional subordinated financial support, or (iii) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected residual returns of the entity, or both and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights.

Based on internal forecasts and projections that take into account reasonably possible changes in our trading performance, management believes that the Company has adequate financial resources to continue in operation and meet its financial commitments, including but not limited to capital expenditures and debt service obligations, for a period of at least twelve months from the date of issuance of these consolidated financial statements. Accordingly, the Company continues to adopt the going concern basis in preparing its financial statements.

Subsidiaries: Subsidiaries are those entities in which Navios Partners has an interest of more than one half of the voting rights or otherwise has power to govern the financial and operating policies of the entity.

The accompanying interim condensed consolidated financial statements include the following entities:

 

                             

Company name

  Vessel name   Country of
incorporation
    2020     2019  
Libra Shipping Enterprises Corporation(1)   Navios Libra II     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Alegria Shipping Corporation   Navios Felicity     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Felicity Shipping Corporation(2)   Navios Gemini S     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Gemini Shipping Corporation(3)   Navios Gemini S     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Galaxy Shipping Corporation(4)   Navios Galaxy I     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Aurora Shipping Enterprises Ltd.   Navios Hope     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Palermo Shipping S.A.(5)   Navios Apollon     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Fantastiks Shipping Corporation(12)   Navios Fantastiks     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Sagittarius Shipping Corporation(12)   Navios Sagittarius     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Hyperion Enterprises Inc.   Navios Hyperion     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Chilali Corp.   Navios Aurora II     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Surf Maritime Co.   Navios Pollux     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Pandora Marine Inc.   Navios Melodia     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Customized Development S.A.   Navios Fulvia     Liberia       1/01 – 06/30       1/01 – 06/30  
Kohylia Shipmanagement S.A.   Navios Luz     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Orbiter Shipping Corp.   Navios Orbiter     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Floral Marine Ltd.   Navios Buena Ventura     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Golem Navigation Limited   Navios Soleil     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Kymata Shipping Co.   Navios Helios     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Joy Shipping Corporation   Navios Joy     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Micaela Shipping Corporation   Navios Harmony     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Pearl Shipping Corporation   Navios Sun     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Velvet Shipping Corporation   Navios La Paix     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Perigiali Navigation Limited(12)   Navios Beaufiks     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Finian Navigation Co.(12)   Navios Ace     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Ammos Shipping Corp.   Navios Prosperity I     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Wave Shipping Corp.   Navios Libertas     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Casual Shipholding Co.(12)   Navios Sol     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Avery Shipping Company   Navios Symphony     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Coasters Ventures Ltd.   Navios Christine B     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Ianthe Maritime S.A.   Navios Aster     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Rubina Shipping Corporation   Hyundai Hongkong     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Topaz Shipping Corporation   Hyundai Singapore     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Beryl Shipping Corporation   Hyundai Tokyo     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Cheryl Shipping Corporation   Hyundai Shanghai     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Christal Shipping Corporation   Hyundai Busan     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Dune Shipping Corp.(6)   MSC Cristina     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Citrine Shipping Corporation       Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Cavalli Navigation Inc.       Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Seymour Trading Limited   Navios Altair I     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Goldie Services Company   Navios Symmetry     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Andromeda Shiptrade Limited   Navios Apollon I     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Esmeralda Shipping Corporation   Navios Sphera     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Triangle Shipping Corporation   Navios Mars     Marshall Is.       1/01 – 06/30       1/01 – 06/30  
Oceanus Shipping Corporation(7)   Castor N     Marshall Is.       1/01 – 06/30       —    
Cronus Shipping Corporation(7)   Protostar N     Marshall Is.       1/01 – 06/30       —    
Leto Shipping Corporation(7)   Esperanza N     Marshall Is.       1/01 – 06/30       —    
Dionysus Shipping Corporation(7)   Harmony N     Marshall Is.       1/01 – 06/30       —    
Prometheus Shipping Corporation(7)   Solar N     Marshall Is.       1/01 – 06/30       —    
Camelia Shipping Inc.(8)   Navios Camelia     Marshall Is.       1/01 – 06/30       —    
Anthos Shipping Inc.(8)   Navios Anthos     Marshall Is.       1/01 – 06/30       —    
Azalea Shipping Inc.(8)   Navios Azalea     Marshall Is.       1/01 – 06/30       —