Other income, net: Other income, net for the six month period ended June 30, 2020
amounted to $0.4 million relating to settlement of outstanding claims. Other expense, net for the six month period ended June 30, 2019 amounted to $0.4 million.
Net income: Net income for the six month period ended June 30, 2020 was $2.9 million, as compared to $0.5 million for
the six month period ended June 30, 2019. The $2.4 million increase in net income was due to the factors discussed above.
Liquidity and
Capital Resources
Navios Containers primary short-term liquidity needs are to fund general working capital requirements, cash reserve
requirements including those under its credit facilities and debt service, while our long-term liquidity needs primarily relate to capital expenditures, relating to vessel acquisitions, maintenance capital expenditures (relating primarily to
drydocking expenditures) and debt repayment.
Navios Containers anticipates that its primary sources of funds for its short-term liquidity
needs will be cash flows from operations and borrowings. On June 30, 2020, Navios Containers current assets totaled $25.6 million, while current liabilities totaled $37.6 million, resulting in a negative working capital position
of $12.0 million. As of June 30, 2020, Navios Containers current liabilities included $32.4 million, related to installments due under its credit facilities and the financial liabilities under the sale and leaseback
transactions. Navios Containers 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
through twelve months commencing from August 3, 2020. Navios Containers expects to be in a position to meet its loan obligations in part through its contracted revenue of $148.5 million as of August 3, 2020. Generally, Navios Containers
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 Navios Containers may pursue
under its Omnibus Agreement (as defined herein). Navios Containers cannot assure you that it will be able to obtain additional funds on favorable terms.
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 Containers maintain cash deposits and equivalents in excess of government provided insurance limits. Navios Containers also minimize exposure to credit risk by
dealing with a diversified group of major financial institutions.
Borrowings
Navios Containers long-term borrowings are reflected in our balance sheet as Long-term debt, net of current portion and net of
deferred finance costs, Long-term financial liabilities, net of current portion and net of deferred finance costs, Current portion of long-term debt, net of deferred finance costs and Financial liabilities short
term, net of deferred finance costs. As of June 30, 2020 and December 31, 2019, total borrowings, net of deferred finance costs amounted to $248.3 million and $245.7 million, respectively. The current portion of long-term
debt, net of deferred finance costs amounted to $10.6 million and $38.5 million as of June 30, 2020 and December 31, 2019, respectively. Long-term financial liabilities, net of current portion and net of deferred finance costs
amounted to $165.5 million and $69.9 million as of June 30, 2020 and December 31, 2019, respectively, and the short-term financial liabilities, net of deferred finance costs as of the same date was $21.8 million and
$8.2 million, respectively.
Secured credit facilities: As of June 30, 2020, the Company had secured credit facilities
with various banks with a total outstanding balance of $62.0 million. The purpose of the facilities was to finance the 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 3.00% to 3.50% per annum. The facilities are repayable in quarterly installments, followed by balloon payments with maturities, ranging from December 2022 to June 2024. See also the maturity
table included below.
Sellers Credit: In January 2019, the Company entered into a sellers credit agreement (the
Sellers Credit) in connection with the acquisition of two 10,000 TEU containerships, for an amount of up to $20.0 million at a rate of 5% per annum, divided in two tranches of $15.0 million and $5.0 million.
On April 23, 2019, following the acquisition of one 2011-built 10,000 TEU containership, the Company drew $15.0 million, net of discount of $0.2 million. In July 2019, following the conversion of the purchase obligation of the second
2011-built 10,000 TEU containership into an option, the second tranche expired. The Sellers Credit was repaid in full in January 2020.
Financial liabilities: On May 25, 2018, the Company entered into a $119.0 million sale and leaseback transaction with
Minsheng Financial Leasing Co. Ltd to refinance the outstanding balance of the existing facilities of 18 containerships. The Company 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 transaction as a financial liability. On June 29, 2018, the Company completed the sale and leaseback of the first six vessels for $37.5 million. On July 27,
2018 and on August 29, 2018, the Company completed the sale and leaseback of four additional vessels for $26.0 million. On November 9, 2018, the Company completed the sale and leaseback of four additional vessels for
$26.7 million. The Company did not proceed with the sale and leaseback transaction of the four remaining vessels. The Company is obligated to make 60 monthly payments in respect of all 14 vessels. The Company also has an obligation to purchase
the vessels at the end of the fifth year for $45.1 million. As of June 30, 2020, the outstanding balance under this sale and leaseback transaction was $75.1 million.
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