Capital Product Partners Moves from Boxships to LNG Carriers in $3B Deal
In the latest example of the changing fortunes in segments of the shipping industry, Capital Product Partners led by Greek shipowner Evangelos Marinakis will transform into one of the largest pure play U.S. listed shipping companies focusing on the gas transportation segment. The company plans to sell off a modern fleet of container vessels operating under charters and spend $3.13 billion to acquire 11 new LNG carriers.
The company cites the “strong fundamentals of the LNG,” industry in explaining the decision to reconfigure the company and rename it by year’s end to Capital New Energy Carriers. They will acquire the vessels that are still under construction with some of the first charter agreements, along with acquiring rights for what they are calling a “unique fleet” of LCO2 and ammonia carriers. They will divest 15 containerships which will be treated as non-core assets after the closing of the transaction.
“The acquisition of the 11 LNG carriers is expected to be transformative across all financial and qualitative metrics for the partnership,” said Jerry Kalogiratos, Chief Executive Officer of Capital Product Partners. “We expect our contracted revenues to increase by 87 percent to $3.1 billion, our revenue weighted charter duration to 7.2 years as of the closing date, and the average age of our LNG fleet to decrease to 3.2 years by the time all LNGCs have been delivered in 2027.”
The 11 ships will be acquired from Capital Maritime in a transaction valued at $3.13 billion. The first of the vessels was delivered last month to the group with the additional ships scheduled for delivery through March 2027. To finance the deal, they will conduct a $500 million right offering to the existing investors, obtain $220 million in seller’s credit, and a $196.3 million sale-leaseback agreement for the one vessel previously delivered. As part of the transaction, they also acquire lease agreements with Qatar Energy Trading, Bonny Gas Transport, Tokyo Gas, and JERA. They highlight that six of the vessels will provide opportunities as the market continues to strengthen.
The vessels they are acquiring are in addition to seven LNG carriers already in the company’s fleet. They will also obtain rights of first refusal on two liquid CO2 carriers and two ammonia carriers ordered by Capital Maritime. They are also getting rights to opportunities to order newbuild LNG carrier vessels from Capital Maritime.
After closing the transaction, they report that they will explore the disposal of the current fleet of containerships, which includes 12 Neo-Panamax and three Panamax vessels. The current fleet has ships with a capacity between 5,000 and 13,000 TEU. The containerships were built between 2008 and 2023 and operate under charter to major carriers till 2025 and 2026 as well as the new ships till 2032.
They believe the deal will create a new investment vehicle that will draw strong interest. They note that the company will be one of the largest U.S. listed shipping companies in terms of enterprise value and the largest owner of two-stroke, latest-generation LNG carriers when compared to the current fleet of other U.S. listed companies.
It is the latest step for Capital Product Partners which has been public since 2008. The company at the beginning of November concluded the sale of Cape Agamemnon, the company’s only dry bulk carrier. The Capesize bulk carrier (179,000 dwt) generated gross proceeds from the sale of approximately $22.4 million. They had begun taking delivery of the new fleet of LNG carriers in late 2020 with the most recent delivered earlier this year. The LNG fleet is under long-term charters stretching out to between 2027 and 2031 with companies including BP.