Operating surplus prior to allocations to the capital reserve and distributions to the Class B units for 3Q17 amounted to $30.3 mill, compared to $31.7 mill for 3Q16 (before the $29.7 mill in proceeds from the sale of shares in Hyundai Merchant Marine (HMM) that was received in connection with HMM’s financial restructuring), and $30.5 mill for the previous quarter.
Capital allocated $14.6 mill to the capital reserve during the third quarter, unchanged compared to the previous quarter. Operating surplus after the quarterly allocation to the capital reserve and distributions to the Class B Unitholders was $12.9 mill for 3Q17.
Total revenues for the third quarter reached $62.7 mill corresponding to an increase of 4%, compared to $60.3 mill during 3Q16. The increase in total revenues was primarily a result of fleet expansion and the lower number of off hire days during 3Q17, compared to the same period in 2016, partly offset by lower charter rates earned by certain of the vessels, compared to charter rates earned during 3Q16.
As of 30th September, 2017, total partners’ capital amounted to $936.8 mill, an increase of $9 mill compared to $927.8 mill as of 31st December, 2016. The increase primarily reflects net income for the first nine months of this year and the net proceeds from the issuance of common units under an at-the-market equity offering, partly offset by distributions declared and paid during the first nine months of $38.5 mill.
Total cash as at the end of the third quarter amounted to $176.2 mill, of which restricted cash (under the credit facilities) amounted to $18 mill.
As of September 30, 2017, the Partnership’s total debt was $592 mill, a decrease of $13 mill, compared to $605 mill as of 31st December, 2016, due to scheduled loan principal payments during the first nine months of this year.
On 6th September, 2017, CPLP entered into a loan agreement for a new senior secured term loan facility for an aggregate amount of up to $460 mill with a syndicate of lenders led by HSH Nordbank and ING Bank as mandated lead arrangers and bookrunners and BNP Paribas and National Bank of Greece as arrangers.
On 2nd October, 2017, the Partnership fully repaid $14 mill outstanding under its credit facility with Credit Agricole Bank entered into in 2011. Finally, on 4th October, 2017, the Partnership drew the full amount of $460 mill and together with available cash of around $102.2 mill, fully repaid total debt of $562.2 mill.
Jerry Kalogiratos, CEO and CFO, commented: “We are pleased to have completed a major milestone for the Partnership with the refinancing of substantially all of the Partnership’s indebtedness at the beginning of the fourth quarter 2017. As previously announced, there are a number of benefits to the completed refinancing. First, the refinancing provides our unit holders enhanced visibility on our financial position and the maturity profile of our indebtedness, as our new credit facility does not mature until the fourth quarter of 2023. Second, the refinancing has significantly reduced our indebtedness, with our pro forma debt to capitalisation ratio amounting to 33.7 % as of 30th September, 2017 (after giving effect to the refinancing).
“Additionally, we believe that the dual tranche structure of our new facility mitigates refinancing risk in the future, as the tranche collateralised by our vessels with an average age of 10.6 years will be fully amortising without a balloon payment at maturity of the loan. The only bullet payment upon maturity of our new facility amounts to $143 mill, compared to projected net book value of the collateral fleet of $846.1 mill, assuming depreciation and amortisation is in line with our accounting policies and no write-offs through 2023.
“Finally, the annual amortisation of $52.8 mill under our new credit facility is lower than the amount we currently allocate to our capital reserve, in addition to any interest cost savings from our reduced indebtedness. As a result, we expect that we will consider a potential reduction in the capital reserve from the next quarter onwards, which should translate to a corresponding contribution to our operating surplus after the quarterly allocation to the capital reserve and Class B Units distribution. Any such reduction would be subject to Board approval.
“With the refinancing transaction behind us, we expect to turn our focus to growth. As previously disclosed, we have access to a range of acquisition opportunities from Capital Maritime. We aim, subject to market conditions and the availability of financing, to take advantage of these opportunities going forward with the objective of further increasing the long-term distributable cash flow of the Partnership and our common unit distributions, ” he concluded.