By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
IndebtaIndebta
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Notification Show More
Aa
IndebtaIndebta
Aa
  • Banking
  • Credit Cards
  • Loans
  • Dept Management
  • Mortgage
  • Markets
  • Investing
  • Small Business
  • Videos
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Follow US
Indebta > News > Navios Maritime Holdings: Sell On Lack Of Catalysts And Tangible Value (NYSE:NM)
News

Navios Maritime Holdings: Sell On Lack Of Catalysts And Tangible Value (NYSE:NM)

News Room
Last updated: 2023/05/25 at 12:30 AM
By News Room
Share
6 Min Read
SHARE

Note:

I have covered Navios Maritime Holdings (NYSE:NM, NYSE:NM.PG, NYSE:NM.PH) previously, so investors should view this as an update to my earlier articles on the company.

Following the sale of its dry bulk carrier fleet to former subsidiary Navios Maritime Partners (NMM) or “Navios Partners” as part of a massive bailout package last year, Navios Maritime Holdings or “Navios Holdings” has been left with two major assets:

  1. A 10.3% equity stake in Navios Partners that is accounted for under the equity method with a current value of approximately $69 million.
  2. A 63.8% equity stake in consolidated entity Navios South American Logistics or “Navios Logistics”.

Equity Stakes

Company Presentation

The company also holds some incentive distribution rights (“IDRs”) related to Navios Partners which remain far out of the money:

IDRs

Navios Maritime Partners Annual Report

On Wednesday, Navios Holdings reported profitable Q1/2023 results which benefited from sequential top- and bottom line improvements at Navios Logistics and the contribution from Navios Partners:

Q1 Earnings

Company Presentation

While Navios Logistics contributed $26.6 million in Adjusted EBITDA in Q1, the company has more than $550 million in debt principal outstanding with $500 million in 10.75% Senior Secured Notes scheduled to mature on July 1, 2025.

Navios Logistics Balance Sheet

Company Presentation

Assuming Navios Logistics to achieve $110 million in Adjusted EBITDA this year and assigning an Adjusted EBITDA multiple of 5x to the business, this would be barely sufficient to cover the company’s debt obligations.

In addition, Navios Logistics might experience difficulties refinancing the notes should the current interest environment persist into 2025.

Given these issues, I am having a hard time assigning any meaningful value to Navios Holdings’ 63.8% stake in Navios Logistics at this point.

Unfortunately, there appears to be no common equity value in Navios Holdings either, even when considering the company’s stake in Navios Partners and approximately $25 million in cash on its balance sheet as the company’s debt and preferred stock obligations exceed assets by more than $100 million:

NAV

Annual Report on Form 20-F / First Quarter 2023 Report

Please note that the terms of last year’s bailout agreement have resulted in Navios Shipmanagement Holdings Corporation or “Navios Management”, a private entity controlled by the company’s CEO and Chairwoman Angeliki Frangou, having accumulated almost $120 million in convertible debentures which are convertible into common stock at a conversion price of $3.93 per common share.

At the date of company’s annual report on form 20-F filed with the SEC in late March, Ms. Frangou beneficially owned approximately 64.1% of Navios Holdings including shares issuable upon conversion of the above-discussed debentures.

As the maximum number of common shares issuable under the debenture is limited to 35.5 million, Ms. Frangou’s stake in Navios Holdings won’t exceed 67.3% without her taking further action.

Apparently, Navios Holdings’ common equity holders will have to hope for:

  1. The Navios Logistics business to improve quite meaningfully
  2. Major price appreciation for the company’s stake in Navios Partners
  3. Angeliki Frangou taking Navios Holdings private at a substantial premium

As I do not expect any of the required catalysts to come to fruition in the near- to medium-term, investors should consider selling their shares and moving on.

That said, there has been some major price appreciation in the company’s Series G and Series H Preferred Stock in recent months despite the dividend having been suspended since 2015 already with both issues now trading substantially above last year’s tender offer prices.

Apparently, some investors are speculating on Ms. Frangou making a near-term move for Navios Holdings but as discussed above already, I consider this a highly unlikely scenario as there’s not much to gain for her at this point, particularly given the fact that she is in full control of the company anyway.

Bottom Line:

While last year’s bailout deal has saved Navios Maritime Holdings from a near-term bankruptcy filing, it’s difficult to assign any tangible value to the company’s common shares at this point.

Effectively, both the common and preferred shares now represent options on major improvements at Navios South American Logistics, substantial price appreciation of Navios Maritime Partners’ publicly-traded common units and particularly a buyout at favorable terms by Angeliki Frangou going forward.

As I consider none of the above-listed scenarios as likely in the near- to medium term, investors should avoid both the common and preferred shares or even consider selling existing positions.

Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.

Read the full article here

News Room May 25, 2023 May 25, 2023
Share this Article
Facebook Twitter Copy Link Print
Leave a comment Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Finance Weekly Newsletter

Join now for the latest news, tips, and analysis about personal finance, credit cards, dept management, and many more from our experts.
Join Now
Brussels plans new tax on big companies to boost EU budget

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

US pressed African countries to take in Venezuelan deportees, Nigeria says

Unlock the White House Watch newsletter for freeYour guide to what Trump’s…

Israel and Hamas inch closer to Gaza ceasefire deal

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

Donald Trump offers to send more arms to Ukraine via Nato allies

Unlock the White House Watch newsletter for freeYour guide to what Trump’s…

Return of the Houthis spooks Red Sea commercial vessels

A resurgent campaign by Yemen’s Houthi rebels against commercial ships in the…

- Advertisement -
Ad imageAd image

You Might Also Like

News

Brussels plans new tax on big companies to boost EU budget

By News Room
News

US pressed African countries to take in Venezuelan deportees, Nigeria says

By News Room
News

Israel and Hamas inch closer to Gaza ceasefire deal

By News Room
News

Donald Trump offers to send more arms to Ukraine via Nato allies

By News Room
News

Return of the Houthis spooks Red Sea commercial vessels

By News Room
News

Trump is sowing confusion in the markets

By News Room
News

Commodity firms poised for $300mn windfall from US copper tariff trade

By News Room
News

Google to agree cloud discount as US government squeezes Big Tech

By News Room
Facebook Twitter Pinterest Youtube Instagram
Company
  • Privacy Policy
  • Terms & Conditions
  • Press Release
  • Contact
  • Advertisement
More Info
  • Newsletter
  • Market Data
  • Credit Cards
  • Videos

Sign Up For Free

Subscribe to our newsletter and don't miss out on our programs, webinars and trainings.

I have read and agree to the terms & conditions
Join Community

2023 © Indepta.com. All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?