Capital Product Partners L.P., the Greek shipping company controlled by Vangelis Marinakis, on Wednesday announced that it will transfer its tankers to a new company that will be floated on the NYSE, a deal worth 1.65 billion USD.
By L. Karageorgos
Capital Product Partners L.P., the Greek shipping company controlled by Vangelis Marinakis, on Wednesday announced that it will transfer its tankers to a new company that will be floated on the NYSE, a deal worth 1.65 billion USD.
CPP, which is currently listed on the Nasdaq exchange, will merge its fleet with Diamond S Shipping, which is controlled by a fund established by Wilbur Ross, the current US Secretary of the Treasury.
Ross left the company's management after accepting a post on the Trump Cabinet.
The agreement creates one of the largest listed companies of tanker operators in the world.
An announcement by Capital read:
Capital Product Partners L.P. (NASDAQ: CPLP) (“CPLP”) and DSS Holdings L.P. (“DSS”), a privately held company and one of the world’s largest owners and operators of medium-range product and Suezmax crude tankers, have entered into a definitive transaction agreement pursuant to which CPLP has agreed to spin off its crude and product tanker business into a separate publicly listed company, which will merge with DSS’ businesses and operations in a share-for-share transaction.
The new company, to be called Diamond S Shipping Inc., will be a market leader in the crude and product tanker markets, benefitting from a balanced and large-scale portfolio of vessels, strong management leadership and a cost-efficient commercial platform. The transaction reflects DSS’ strategic initiatives to access public markets with enhanced scale at a cyclically opportune time to create one of the world’s largest shipping companies well positioned for future industry consolidation. The new company is expected to be listed on the New York Stock Exchange and will be headquartered in Greenwich, Connecticut.
This transaction represents a strategic step for CPLP to unlock unitholder value by combining its tanker business with a highly regarded pure-play tanker company. CPLP intends to continue as a master limited partnership (“MLP”), with a modern fleet under medium- to long-term charters producing stable cash flows in the container sector complemented by one drybulk vessel. CPLP expects to be well positioned going forward to engage in asset acquisitions across different shipping segments with the aim of growing its per unit distributable cash flow.
The transaction is valued on an NAV-to-NAV basis with CPLP receiving $23 million in consideration in the form of approximately 3% incremental ownership in Diamond S Shipping Inc. related to certain transaction benefits including access to public markets and enhanced scale. The transaction results in CPLP unitholders initially owning approximately 33% and DSS equity owners initially owning approximately 67% of the new company (all ownership percentages are subject to closing adjustments). CPLP unitholders also will continue to own their CPLP units. CPLP