Costamare Enters $500 Million Joint Venture to Expand Fleet of Boxships

costamareAthens-based containership owner/charterer, Costamare Inc. (NYSE:CMRE) announced today a new joint venture with investment advisor firm, York Capital Management Global Advisors to invest up to a half-billion dollars in the acquisition of container vessels.

Gregory Zikos, Costamare’s Chief Financial Officer commented on the new agreement:

“The structure of the agreement is designed to avoid any conflict between the public company and private investors; on the contrary, Costamare Inc. will be co-investing alongside York and will have the opportunity to earn incremental returns.”

“With this agreement we complement our own purchasing power with that of our partner, allowing us to pursue opportunities of larger scale and cater to the increased needs of our clients.”

Specifics of the agreement:

  • Costamare Inc. will hold up to a 49% interest in the joint venture and will have the option to increase its percentage participation from a minimum of 25% to a maximum of 49% within a pre-determined time period after each acquisition commitment has been agreed upon.
  • Decisions regarding vessel acquisitions will be taken jointly.
  • The joint venture is expected to be each party’s exclusive vehicle for the acquisition of vessels in the container industry during the two-year investment period and it will have a right of first refusal on any container vessel acquisitions proposed by either party.
  • The term of the joint venture is six years unless earlier terminated by the parties upon the occurrence of certain extraordinary events or disagreements.  Upon any termination of the joint venture, Costamare Inc. will have the right to require a split of the vessel fleet between the parties.
  • Costamare Shipping Company S.A., an affiliate of Costamare Inc. controlled by one of its principal shareholders, will provide shipmanagement services, with the right to subcontract to V.Ships Greece Ltd. and/or Shanghai Costamare Ship Management Co., Ltd. Costamare Shipping currently provides shipmanagement services to Costamare Inc. on an exclusive basis.

8 more newbuilds on their way

Costamare Inc. owns a fleet of 56 containerships with a total capacity of approximately 328,000 TEU, including eight newbuild containerships on order.  Five 8,827 TEU containerships are being built for Costamare by Sungdong Shipbuilding, and three 9,403 TEU ships are being built at Jiangnan Changxing.   All new vessels are scheduled for delivery by February 2014 and have long term charters signed with Evergreen and MSC respectively.    So far this year, Costamare has accepted delivery of the 8,827 TEU newbuild containership vessels MSC Athens and MSC Athos, which were both built by Sungdong in South Korea.  Both ships have since commenced 10-year charters with Mediterranean Shipping Company, S.A..   

In Costamare’s 1st quarter earnings report, Zikos commented on the containership market which has come under an extraordinary amount of pressure in recent years.  He notes that “a containership market under pressure provides us with the opportunity to expand opportunistically in a low rate and asset values environment.”