Pangaea Logistics Solutions and M.T. Maritime Management Announce Agreement to Combine Fleets of Dry Bulk Vessels in All-Stock Transaction
PR Newswire
NEWPORT, R.I., Sept. 23, 2024
NEWPORT, R.I., Sept. 23, 2024 /PRNewswire/ -- Pangaea Logistics Solutions Ltd. ("Pangaea" or the "Company") (Nasdaq: PANL), a global provider of comprehensive maritime logistics solutions, and M.T. Maritime Management $(USA)$ LLC ("MTM"), managers of a diversified fleet of tankers and dry bulk vessels, today announced a definitive agreement to merge fifteen handy-size dry bulk vessels into Pangaea's 26 vessel supramax, ultramax, panamax and post-panamax fleet. The handy vessels are currently owned by Strategic Shipping Inc. ("SSI"), a privately held company managed by MTM located in Southport, Connecticut. The fifteen handy-size vessels are valued at approximately $295 million, inclusive of vessel related financing agreements of approximately $102 million, resulting in a total net asset value of $193 million.
As consideration, Pangaea will issue approximately 19.0 million shares of its common stock to SSI equal to approximately 29% of the Company's outstanding common stock upon completion of the proposed transaction, which represents the relative net asset value of SSI's vessels compared to the estimated net asset value of Pangaea of approximately $478 million, or about $10.20 per share. The transaction is expected to close in the fourth quarter 2024, subject to customary closing conditions and shareholder approval.
MANAGEMENT COMMENTARY
"This transaction represents a transformational strategic milestone for our business, one that expands our owned fleet by nearly 60%, to 41 vessels, and provides us opportunities to drive incremental growth and improve our efficiency and profitability," stated Richard du Moulin, Chairman of the Board of Pangaea Logistics Solutions. "The addition of the SSI vessels to our existing fleet is consistent with our strategic focus on upgrading our owned vessel fleet to meet the evolving cargo needs of our customers."
"We have always operated in the handy segment, but the addition of these vessels will allow us to offer expanded services and will help us to better leverage our integrated shipping and port logistics models, improving overall fleet utilization, and maximizing our profitability," said Mark Filanowski, Pangaea's Chief Executive Officer. "Importantly, MTM's highly experienced dry bulk chartering and operations teams will be joining Pangaea, along with certain members of the MTM executive team. We are excited to welcome the experienced and talented group from MTM, who will help ensure a seamless integration of our business plans and position us for continued future growth."
"We expect the transaction will be accretive to our earnings going forward, as dry bulk markets respond to a tight supply environment" added Gianni DelSignore, Chief Financial Officer of Pangaea Logistics Solutions. "This represents a significant advancement in our growth strategy, adding vessels with approximately 34.6% leverage, enabling us to maintain our financial flexibility and providing us ample capacity to pursue our strategic growth initiatives."
Filanowski added: "We believe the transaction is extremely attractive from both a financial and strategic perspective and will allow us to further take advantage of the favorable macro backdrop in the dry bulk market. Together with the MTM team, we are excited for this next chapter of growth and believe that our partnership will serve to continue the development of our leading dry bulk logistics and transportation service offering, while delivering sustainable above-market returns for our shareholders."
Doug MacShane, Executive Chairman of M.T. Maritime Group, which manages SSI, said "We believe that Pangaea's unique business model and long track-record of excellence in dry bulk shipping and logistics make them an ideal partner as we seek to take advantage of the evolving shipping landscape. By combining our fleet and operations with Pangaea, we will provide the scale and capabilities to better serve the needs of both Pangaea and MTM's existing customers, while creating a strong platform to pursue commercial and operating synergies. We are excited for the long-term growth opportunities that this partnership presents."
TRANSACTION OVERVIEW
The transaction will consist of Pangaea's acquisition of 100% ownership in fifteen handy-size vessels ranging in size from 33,000 dwt to 40,000 dwt, with an average age of approximately ten and a half years. As consideration, Pangaea will issue approximately 19.0 million of new common shares to SSI's owners. The exact number of common shares to be issued in the transaction will be determined at close, based on the relative fair net asset values of the acquired fleet and Pangaea's balance sheet, as adjusted to reflect current fair values of its fleet. Cash consideration will be limited to net working capital contributions, if any, at the time of closing, The Company will assume responsibility for performance of all current charter commitments associated with the SSI fleet.
Below are the details of the vessels to be acquired in the proposed transaction:
Vessel Name DWT Year Built Flag ------------------- ------ ---- --------------------- --------- Strategic Fortitude 37,829 2016 Imabari Singapore ------------------- ------ ---- --------------------- --------- Strategic Resolve 38,853 2015 CSIC: Shanhaiguan Singapore ------------------- ------ ---- --------------------- --------- Strategic Entity 39,856 2015 CSIC: Tianjin Xingang Singapore ------------------- ------ ---- --------------------- --------- Strategic Explorer 39,865 2015 CSIC: Tianjin Xingang Singapore ------------------- ------ ---- --------------------- --------- Strategic Venture 39,850 2014 CSIC: Tianjin Xingang Singapore ------------------- ------ ---- --------------------- --------- Strategic Equity 39,850 2014 CSIC: Tianjin Xingang Singapore ------------------- ------ ---- --------------------- --------- Strategic Harmony 39,879 2014 CSIC: Tianjin Xingang Singapore ------------------- ------ ---- --------------------- --------- Strategic Alliance 39,850 2014 CSIC: Tianjin Xingang Singapore ------------------- ------ ---- --------------------- --------- Strategic Unity 39,850 2014 CSIC: Tianjin Xingang Singapore ------------------- ------ ---- --------------------- --------- Strategic Synergy 39,865 2014 CSIC: Tianjin Xingang Singapore ------------------- ------ ---- --------------------- --------- Strategic Savannah 35,542 2013 Taizhou Maple Leaf Singapore ------------------- ------ ---- --------------------- --------- Strategic Tenacity 36,851 2012 Hyundai Vinashin Singapore ------------------- ------ ---- --------------------- --------- Strategic Spirit 37,137 2012 Hyundai Mipo Singapore ------------------- ------ ---- --------------------- --------- Strategic Vision 37,137 2012 Hyundai Mipo Singapore ------------------- ------ ---- --------------------- --------- Strategic Endeavor 33,013 2010 Zhejiang Zhenghe Singapore ------------------- ------ ---- --------------------- ---------
In addition, seven employees on MTM's dry bulk chartering and operations teams will join the Company. Dan Schildt, MTM's Senior Vice President of Dry Cargo and Strategic Planning, will also join the executive management team of Pangaea as Chief Strategy Officer. Pangaea will maintain an office near Stamford, Connecticut after closing.
As part of the transaction, SSI will receive the right to designate two members for appointment to the Board of Directors of the Company. SSI intends to designate the following individuals for appointment to the Company's Board of Directors upon the consummation of the transaction:
-- Christina Tan: Ms. Tan has been the Chief Executive Officer of M.T.
Maritime Management $(USA.UK)$ LLC since the beginning of 2020. Ms. Tan has
been an officer with the M.T. Maritime Management Group ("MTM Group") for
over 30 years, performing in a variety of capacities, including finance
and chartering. Ms. Tan has been a director of Dorian LPG since May 1,
2015, and is currently a member of the Audit and Nominating and Corporate
Governance Committees and was also a board member of Northern Shipping
Funds from 2008 to 2015, at which point she remained as a member of the
Limited Partnership Advisory Committee (LPAC) until 2023. For eight years
prior to joining MTM Group, Ms. Tan was Vice President of Finance &
Trading for Socoil Corporation, a major Malaysian palm oil refiner and
trading company. Ms. Tan earned a BA in Economics and Mathematics from
Western State College of Colorado.
-- Gary Vogel: Gary Vogel has over 36 years of experience in the
international shipping industry. He currently serves as a Director of SFL
Corp, $(SFL)$, a position he has held since 2016. From 2015 to 2024
he served as Chief Executive Officer and a Director of Eagle Bulk
Shipping Inc. $(EGLE)$, a U.S. listed owner and operator of geared
dry bulk vessels. From 2000 to 2015, Mr. Vogel held various positions in
Clipper Group Ltd., lastly as Chief Executive Officer. Mr. Vogel
graduated from the U.S. Merchant Marine Academy in 1988 with a Bachelor
of Science degree in Marine Transportation as well as a U.S. Coast Guard
Unlimited Tonnage 3rd Officers License. Subsequently, he served as an
officer in the U.S. Naval Reserve. Mr. Vogel is currently on the Lloyd's
Register North America Advisory Committee.
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