Navios Acquisition owns a large fleet of modern crude oil, refined petroleum
product and chemical tankers providing worldwide marine transportation services.
Our strategy is to charter our vessels to international oil companies, refiners
and large vessel operators under long, medium and short-term charters. We are
committed to providing quality transportation services and developing and maintaining
long-term relationships with our customers. We believe that the Navios brand
will allow us to take advantage of increasing global environmental concerns
that have created a demand in the petroleum products/crude oil seaborne transportation
industry for vessels and operators that are able to conform to the stringent
environmental standards currently being imposed throughout the world.
We believe that the following strengths will allow us to maintain a competitive
advantage within the international shipping market:
Modern, High–Quality Fleet. We own a large fleet of modern, high–quality
double–hull tankers that are designed for enhanced safety and low operating
costs. We believe that the increased enforcement of stringent environmental
standards currently being imposed throughout the world has resulted in a shift
in major charterers’ preference towards greater use of modern double–hull
vessels. We also have a large proportion of young product and chemical tankers
in our fleet. Since our inception, we have committed to and have fully financed
investments of over $1.9 billion, including investments of approximately $0.9
billion in newbuilding constructions. As of March 24, 2015, our fleet had an
average age of approximately 4.4 years. We believe that owning and maintaining
a modern, high–quality fleet reduces off–hire time and operating
costs, improves safety and environmental performance and provides us with a
competitive advantage in securing employment for our vessels.
Diversified Fleet. Our diversified fleet, which includes VLCC, product
and chemical tankers, allows us to serve our customers’ international
crude oil, petroleum product and liquid bulk chemical transportation needs.
VLCC tankers transport crude oil and operate on primarily long–haul trades
from the Arabian Gulf to the Far East, North America and Europe. Product tankers
transport a large number of different refined oil products, such as naphtha,
gasoline, kerosene, jetfuel and gasoil, and principally operate on short–
to medium–haul routes. Chemical tankers transport primarily organic and
inorganic chemicals, vegetable oils and animal fats. We believe that our fleet
of vessels servicing the crude oil, product and chemical tanker transportation
sectors provides us with more balanced exposure to oil and commodities and more
diverse opportunities to generate revenues than would a focus on any single
shipping sector.
High Quality Counterparties. Our strategy is to charter our vessels to international
oil companies, refiners and large vessel operators under long, medium and short–term
charters. We are committed to providing safe and quality transportation services
and developing and maintaining long–term relationships with our customers,
and we believe that our modern fleet will allow us to charter–out our
vessels to what management views as high–quality counterparties and for
long periods of time. Our current charterers include: Shell, one of the largest
global groups of energy and petrochemical companies, operating in over 90 countries;
DOSCO, a wholly owned subsidiary of COSCO, one of China’s largest state–owned
enterprises specializing in global shipping, logistics and ship building and
repairing; Sinochem, a Fortune Global 500 company; Navig8, a company that controls
a substantial fleet of product tankers; and SK Shipping Company Limited, a leading
Korean shipowner and transportation company and part of the Korean multinational
business conglomerate, the SK Group and their respective affiliates.
An Experienced Management Team and a Strong Brand. We have an experienced management
team that we believe is well regarded in the shipping industry. The members
of our management team have considerable experience in the shipping and financial
industries. We also believe that we will be able to leverage the management
structure at our affiliate, Navios Holdings, which benefits from a reputation
for reliability and performance and operational experience in both the tanker
and drybulk markets. Our management team is led by Angeliki Frangou, our Chairman
and Chief Executive Officer, who has over 20 years of experience in the shipping
industry. Ms. Frangou is also the Chairman & Chief Executive Officer of
Navios Holdings, Navios Partners and Navios Midstream and has been a Chief Executive
Officer of various shipping and finance companies in the past. Ms. Frangou is
a member of a number of recognized shipping committees. We believe that our
well respected management team and strong brand may present us with market opportunities
not afforded to other industry participants.
Strategically Manage Sector Exposure. We operate a fleet of crude
carriers and product and chemical tankers, which we believe provides us with
diverse opportunities with a range of producers and consumers. As we grow our
fleet, we expect to adjust our relative emphasis among the crude oil, product
and chemical tanker sectors according to our view of the relative opportunities
in these sectors. We believe that having a mixed fleet of tankers provides the
flexibility to adapt to changing market conditions and will allow us to capitalize
on sector–specific opportunities through varying economic cycles.
Enhance Operating Visibility With Charter–Out Strategy. We believe
that we are a safe, cost–efficient operator of modern and well–maintained
tankers. We also believe that these attributes, together with our strategy of
proactively working towards meeting our customers’ chartering needs, will
contribute to our ability to attract leading charterers as customers and to
our success in obtaining attractive long–term charters. We will also seek
profit sharing arrangements in our long–term time charters, to provide
us with potential incremental revenue above the contracted minimum charter rates.
Depending on then applicable market conditions, we intend to deploy our vessels
to leading charterers on a mix of long, medium and short–term time charters,
with a greater emphasis on long–term charters and profit sharing. We believe
that this chartering strategy will afford us opportunities to capture increased
profits during strong charter markets, while benefiting from the relatively
stable cash flows and high utilization rates associated with longer-term time
charters.
Capitalize on Low Vessel Prices. We intend to grow our fleet using Navios Holdings’
global network of relationships and extensive experience in the marine transportation
industry, coupled with our financial resources and financing capability, to
make selective acquisitions of young, high quality, modern, double–hulled
vessels in the product, crude oil, and chemical tanker sectors. We are focused
on purchasing tanker assets at favorable prices. We believe that developments
in the marine transportation industry, particularly in the product tanker, crude
oil transportation, and chemical tanker sectors, as well as the recent financial
crisis which continues to adversely affect the availability of credit to shipping
industry participants, have created significant opportunities to acquire vessels
near historically low (inflation-adjusted) prices and employ them in a manner
that will provide attractive returns on capital. Developments in the banking
industry continue to limit the availability of credit to shipping industry participants,
creating opportunities for well–capitalized companies with access to additional
available financing. Although there has been a trend towards consolidation over
the past 15 years, the tanker market remains fragmented. In the ordinary course
of our business, we engage in the evaluation of potential candidates for acquisitions
and strategic transactions.
Leverage the Experience, Brand, Network and Relationships of Navios
Holdings. We intend to capitalize on the global network of relationships that
Navios Holdings has developed during its long history of investing and operating
in the marine transportation industry. This includes decades–long relationships
with leading charterers, financing sources and key shipping industry players.
When charter markets and vessel prices are depressed and vessel financing is
difficult to obtain, as is currently the case, we believe the relationships
and experience of Navios Holdings and its management enhances our ability to
acquire young, technically advanced vessels at cyclically low prices and employ
them under attractive charters with leading charterers. Navios Holdings’
long involvement and reputation for reliability in the Asia Pacific region have
also allowed it to develop privileged relationships with many of the largest
institutions in Asia. Through its established reputation and relationships,
Navios Holdings has had access to opportunities not readily available to most
other industry participants that lack Navios Holdings’ brand recognition,
credibility and track record.
Benefit from Navios Holdings’ Leading Risk Management Practices
and Corporate Managerial Support. Risk management requires the balancing of
a number of factors in a cyclical and potentially volatile environment. Fundamentally,
the challenge is to appropriately allocate capital to competing opportunities
of owning or chartering vessels. In part, this requires a view of the overall
health of the market, as well as an understanding of capital costs and returns.
Navios Holdings actively engages in assessing financial and other risks associated
with fluctuating market rates, fuel prices, credit risks, interest rates and
foreign exchange rates.
Navios Holdings closely monitors credit exposure to charterers and other
counterparties and has established policies designed to ensure that contracts
are entered into with counterparties that have appropriate credit history. Counterparties
and cash transactions are limited to high–credit, quality–collateralized
corporations and financial institutions. Navios Holdings has strict guidelines
and policies that are designed to limit the amount of credit exposure. We believe
that Navios Acquisition will benefit from these established policies.
Implement and Sustain a Competitive Cost Structure. Pursuant to our
management agreement with the Manager, a wholly owned subsidiary of Navios Holdings,
the Manager coordinates and oversees the commercial, technical and administrative
management of our fleet. The current technical managers of the VLCC vessels,
affiliates of the seller of the vessels acquired as part of the VLCC Acquisition
are technical ship management companies that have provided technical management
to the VLCC vessels acquired during the VLCC Acquisition prior to the consummation
of the acquisition thereof. These technical managers will continue to provide
such services for an interim period, after which the technical management of
our fleet is expected to be provided solely by the Manager. We believe that
the Manager will be able to do so at rates competitive with those that would
be available to us through independent vessel management companies. We believe
this external management arrangement will enhance the scalability of our business
by allowing us to grow our fleet without incurring significant additional overhead
costs. We believe that we will be able to leverage the economies of scale of
Navios Holdings and manage operating, maintenance and corporate costs. At the
same time, we believe the young age and high–quality of the vessels in
our fleet, coupled with Navios Holdings’ safety and environmental record,
will position us favorably within the crude oil, product and chemical tanker
transportation sectors with our customers and for future business opportunities.
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