Boston, MA 05/28/2014 (wallstreetpr) – NewLead Holdings Ltd (NASDAQ:NEWL) continues to improve its fleet as per the restructuring plan and expects to add three new handy size and fuel efficient vessels by August 2014 as per the agreement signed in September 2013 and March 2014. Accordingly, the Company added one of the Newlead Albion vessels into its fleet.
As per the agreement, NewLead agreed to purchase two eco-type vessels for $35 million ($18.5 million per vessel). Both the vessels built in 2012 and had the capacity of 32,318 dwt. Currently, the market value of both the vessels estimated to be ~$20.25 million each.
The Newlead Albion is one of the vessels that delivered on May and another vessel expected to deliver into Newlead’s fleet by July 2014.
As of May 2014, Newlead owns two dry bulk vessels having the capacity of 0.15 million dwt and the average age of the vessels are 18.2 years. The addition of three new vessels will further increase the capacity and also increase the Company’s operating efficiency.
The Newlead Albion is currently trading on the spot market and expects to generate EBITDA of $2.0 million while considering operating expenses of $1.73 million per year.
Funding for the charter
Newlead funded the entire operation with a combination of cash and external financing. As of March 2104, NewLead Holdings Ltd (NASDAQ:NEWL) paid cash deposit of $1.85 million and the remaining funds paid through a combination of cash and 75% financing from Pareto Project Finance AS. Institutional investors also supported the financing.
Newlead usually operates in highly fragmented and competitive shipping industry that depends on the demand supply proposition of dry bulk cargos. As of March 2014, the world’s dry bulk fleet consists of ~10K vessels with a total capacity of ~ 730 million dwt.
Therefore, NewLead Holdings Ltd (NASDAQ:NEWL) intends to increase the fleet size while focusing on long-term charter business; however, the growing competition may create a price war among companies.