Prospectus Filed Pursuant to Rule 424(b)(3) (424b3)

Date : 02/19/2019 @ 9:23PM
Source : Edgar (US Regulatory)
Stock : Navios Maritime Holdings Inc (NM)
Quote : 5.68  0.0 (0.00%) @ 10:06AM
Navios Maritime share price Chart

Prospectus Filed Pursuant to Rule 424(b)(3) (424b3)

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Filed Pursuant to Rule 424(b)(3)
Registration Statement No. 333-228976

 

PROSPECTUS

Navios Maritime Holdings Inc.

OFFER TO EXCHANGE

Cash and/or 9.75% Senior Notes Due 2024

For

946,100 American Depositary Shares, Each Representing 1/100 th of a Share of 8.75% Series G Cumulative Redeemable Perpetual Preferred Stock

and

1,907,600 American Depositary Shares, Each Representing 1/100 th of a Share of 8.625% Series H Cumulative

Redeemable Perpetual Preferred Stock

AND

CONSENT SOLICITATION STATEMENT

To Adopt The Proposed Amended and Restated

Certificates of Designation for Each Series of Preferred Stock

 

 

 

Title of Class of Securities    CUSIP No.    Consideration Offered
American Depositary Shares, each representing 1/100 th of a Share of 8.75% Series G Cumulative Redeemable Perpetual Preferred Stock (NYSE: NMpG)    63938Y 100    Either (a) $7.25 and/or (b) $8.28 principal amount of 9.75% Senior Notes due 2024, per Series G ADS.
American Depositary Shares, each representing 1/100 th of a Share of 8.625% Series H Cumulative Redeemable Perpetual Preferred Stock (NYSE: NMpH)    63938Y 308    Either (a) $7.16 and/or (b) $8.19 principal amount of 9.75% Senior Notes due 2024, per Series H ADS.

 

THE EXCHANGE OFFER AND THE CONSENT SOLICITATION (EACH AS DEFINED BELOW) WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON MARCH 1, 2019 UNLESS EXTENDED OR EARLIER TERMINATED BY US AT ANY TIME (SUCH DATE AND TIME, AS THE SAME MAY BE EXTENDED OR TERMINATED, THE “EXPIRATION DATE”). TENDERS MAY BE WITHDRAWN AT ANY TIME BEFORE 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.

The Depository Trust Company (“DTC”) and its direct and indirect participants will establish their own cutoff dates and times to receive instructions to tender in this Exchange Offer, which will be earlier than the Expiration Date. You should contact your broker or other securities intermediary to determine the cutoff date and time applicable to you.


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As of December 19, 2018, 1,419,055 Series G ADSs and 2,861,128 Series H ADSs were outstanding. The last reported sales price of the Series G ADSs on the New York Stock Exchange (the “NYSE”) on February 15, 2019 was $5.60 per Series G ADS. The last reported sales price of the Series H ADSs on the NYSE on February 15, 2019 was $5.36 per Series H ADS.

We are offering to exchange:

 

  (1)

cash; and/or

 

  (2)

newly issued 9.75% Senior Notes due 2024 (the “2024 Notes”),

on the terms and conditions set forth in this prospectus (the “Exchange Offer”), for

(1) 946,100 outstanding American Depositary Shares (“Series G ADSs”), each representing 1/100 th of a Share of 8.75% Series G Cumulative Redeemable Perpetual Preferred Stock (the “Series G Preferred Shares”) and

(2) 1,907,600 outstanding American Depositary Shares (“Series H ADSs” and, together with the Series G ADSs, the “ADSs”), each representing 1/100 th of a Share of 8.625% Series H Cumulative Redeemable Perpetual Preferred Stock (the “Series H Preferred Shares” and, together with the Series G Preferred Shares, the “Preferred Shares”).

If either or both Series G ADSs and Series H ADSs are validly tendered and not properly withdrawn in excess of the number of Series G ADSs or Series H ADSs set forth above that we are seeking in the Exchange Offer, they will be subject to the tender acceptance proration procedures described in this prospectus. Any Series G ADSs or Series H ADSs in excess of the number of Series G ADSs or Series H ADSs sought in the Exchange Offer will be not be accepted for exchange and will be returned to tendering holders promptly after the consummation of the Exchange Offer. See “Terms of the Exchange Offer and Consent Solicitation—Tender Acceptance Proration Procedures.”

If the Exchange Offer is completed with respect to the Series G ADSs and the Series H ADSs, the consideration to be received for the Series G ADSs and Series H ADSs shall be cash and/or 2024 Notes according to the applicable holder’s election, subject to the next sentence. No more than 50% of the number of Series G ADSs and no more than 50% of the number of Series H ADSs validly tendered and accepted will receive cash consideration (each, a “cash cap”). If more than 50% of the Series G ADSs and/or more than 50% of the Series H ADSs that are validly tendered and accepted for exchange, after giving effect to the tender acceptance proration described in the prior paragraph, have elected to receive cash consideration, they will be subject to consideration proration and all such Series G ADSs and/or Series H ADSs in excess of the applicable cash cap will be deemed to have been tendered for, and will automatically receive, 2024 Notes. However, to the extent the cash cap for one series of ADSs is not reached and the cash cap for the other series of ADSs is reached, we will allocate such unutilized cash amounts to satisfy cash elections in excess of the cash cap for the other series of ADSs, on a pro rata basis. In addition, no more than $7.8 million of 2024 Notes will be issued as consideration for Series G ADSs and no more than $7.8 million of 2024 Notes will be issued as consideration for Series H ADSs and any Series G ADSs or Series H ADSs tendered in excess of this limitation will be deemed to have made a cash election instead. To the extent that holders of either the Series G ADSs or Series H ADSs made elections that would cause fewer than $7.8 million of 2024 Notes to be issued in respect of such series then unused amounts of 2024 Notes will be allocated to the extent necessary to satisfy elections of 2024 Notes for the other series.

Navios Holdings plans to pay the cash consideration to tendering holders who elected cash consideration (subject to the consideration proration described above) and to issue the 2024 Notes to tendering holders who elected, or were deemed to have elected, the 2024 Notes consideration, promptly following the Expiration Date. Fractional interest in the 2024 Notes will not be issued in exchange for Series G ADSs or Series H ADSs. Instead, any holder who would otherwise receive a fractional interest in the 2024 Notes will have its distribution of 2024 Notes rounded down to the nearest $25.00 denomination and will receive a cash payment for the fractional interest. The 2024 Notes will bear interest at a rate of 9.75% per annum, payable semi–annually in arrears on each April 15 and October 15, commencing on October 15, 2019, and will mature on April 15, 2024. The 2024 Notes will be senior unsecured obligations and will not benefit from any guarantees. See “Description of Notes.” Navios Holdings does not intend to list the 2024 Notes on the NYSE or any other national or regional securities exchange.


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Concurrently with the Exchange Offer, we are also soliciting consents from holders of each of the Series G ADSs and the Series H ADSs to amend and restate the respective certificates of designation under which each of the Series G Preferred Shares and Series H Preferred Shares were issued (collectively, the “Proposed Amendments”) to eliminate substantially all of the restrictive covenants and our obligation to pay or accrue any unpaid dividends from any past periods or future periods and to amend certain voting rights (the “Consent Solicitation”). The tender by a holder of Series G ADSs or Series H ADSs that are accepted for exchange pursuant to this Exchange Offer will constitute the granting of consent by such holder to the respective proposed amended and restated Series G Preferred Shares or Series H Preferred Shares certificate of designation. Such consent will be provided as an instruction to The Bank of New York Mellon, the Depositary, as the only “holder” of Preferred Shares, to consent in favor of the Proposed Amendments with respect to the Preferred Shares underlying the tendered ADSs. However, the consent will not be deemed given and the Proposed Amendments will not become effective with respect to the Series G Preferred Shares and/or the Series H Preferred Shares unless (i) 66 2/3% of the Series G ADSs or Series H ADSs are tendered in the Exchange Offer and the Proposed Amendments are approved pursuant to the Consent Solicitation, and (ii) the amended and restated certificates of designation are approved by the holders of the majority of our outstanding Common Stock in a future vote.

The Exchange Offer is conditioned upon the satisfaction or waivers, where permitted, of the conditions set forth discussed under “Terms of the Exchange Offer and Consent Solicitation—Conditions of the Exchange Offer.”

The Exchange Offer is being made exclusively to existing holders of Series G ADSs and/or Series H ADSs.

You should consider carefully the “ Risk Factors ” beginning on page 16 of this prospectus and the risk factors set forth in Annex A to this prospectus before you decide whether to participate in the Exchange Offer and Consent Solicitation.

You must make your own decision whether to tender Series G ADSs and/or Series H ADSs in the Exchange Offer and, if so, how many of such Series G ADSs and/or Series H ADSs to tender and the form of consideration to be paid therefor. Neither we, our Board of Directors, the Information Agent, the Exchange Agent, the Depositary, nor any affiliate of any of the foregoing or any other person is making any recommendation as to whether or not you should tender your Series G ADSs and/or Series H ADSs in the Exchange Offer or which form of consideration you should elect as payment therefor. You are urged to discuss your decision with your own tax advisor, financial advisor and/or broker.

The Exchange Offer has not been approved or disapproved by the Securities and Exchange Commission (the “SEC”), any state securities commission, or the similar commission or governmental agency of any foreign jurisdiction, nor has the SEC, any state securities commission, or the similar commission or governmental agency of any foreign jurisdiction determined whether the information in this prospectus is truthful or complete. Any representation to the contrary is a criminal offense .

The date of this prospectus is February 19, 2019.

 

 


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WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed a registration statement on Form F-4 with the SEC under the Securities Act of 1933, as amended (the “Securities Act”), with regard to the Exchange Offer and the securities described in this prospectus. This prospectus, which forms a part of the registration statement, including amendments, does not contain all the information included in the registration statement. This prospectus is based on information provided by us and other sources that we believe to be reliable. This prospectus summarizes certain documents and other information and we refer you to them for a more complete understanding of what we discuss in this prospectus.

We are subject to the informational requirements of the Exchange Act, applicable to foreign private issuers. We, as a “foreign private issuer,” are exempt from the rules under the Exchange Act prescribing certain disclosure and procedural requirements for proxy solicitations, and our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions contained in Section 16 of the Exchange Act, with respect to their purchases and sales of shares. In addition, we are not required to file annual, quarterly and current reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we have in the past filed, and anticipate continuing to file, with the SEC, within 120 days after the end of each fiscal year, an annual report on Form 20-F containing financial statements audited by an independent registered public accounting firm. We also have in the past furnished, anticipate continuing to furnish, quarterly reports on Form 6-K containing unaudited interim financial information for the first three quarters of each fiscal year, within 75 days after the end of such quarter. Our SEC filings are available to the public through the SEC’s website at http://www.sec.gov .

General information about us, including our annual reports on Form 20-F and quarterly reports on Form 6-K, as well as any amendments and exhibits to those reports, are available free of charge through our website at http://www.navios.com as soon as reasonably practicable after we file them with, or furnish them to, the SEC. Information on our website is not incorporated into this prospectus or our other securities filings and is not a part of this prospectus. Our Annual Report on Form 20-F for the year ended December 31, 2017 is included in this prospectus as Annex A and our Quarterly Report on Form 6-K for the quarter ended September 30, 2018 is included in this prospectus as Annex B.

This information contained in this registration statement is available to you without charge upon your request. You can obtain a copy of the registration statement of which this prospectus forms a part, including the documents filed as exhibits to such registration statement, by requesting it in writing or by telephone. You should direct your requests to the Information Agent for the Exchange Offer:

Georgeson LLC

Call Toll-Free (888) 566-3252

Contact via E-mail at: Navios@georgeson.com

To ensure timely delivery of the documents in advance of the Expiration Date, please make your request as soon as practicable and, in any event, no later than February 22, 2019, which is five business days prior to the Expiration Date.


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You should rely only on the information contained in this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus does not constitute an offer to sell, or solicitation of an offer to buy, to any person in any jurisdiction in which such an offer to sell or solicitation would be unlawful. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus.

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WHERE YOU CAN FIND ADDITIONAL INFORMATION

  

ABOUT THIS PROSPECTUS

     ii  

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     iii  

ENFORCEABILITY OF CIVIL LIABILITIES AND INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

     iv  

TRADEMARKS, SERVICE MARKS AND TRADE NAMES

     iv  

QUESTIONS AND ANSWERS ABOUT THE EXCHANGE OFFER AND CONSENT SOLICITATION

     v  

PROSPECTUS SUMMARY

     1  

THE EXCHANGE OFFER

     3  

SUMMARY DESCRIPTION OF NOTES

     10  

SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA

     12  

RISK FACTORS

     16  

USE OF PROCEEDS

     31  

TRADING MARKET AND PRICE OF SERIES G ADSs AND SERIES H ADSs

     32  

CAPITALIZATION

     33  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

     34  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     37  

DESCRIPTION OF NOTES

     39  

TERMS OF THE EXCHANGE OFFER AND CONSENT SOLICITATION

     50  

COMPARISON OF RIGHTS BETWEEN THE PREFERRED SHARES AND THE 2024 NOTES

     66  

CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES

     70  

MARSHALL ISLANDS TAX CONSIDERATIONS

     78  

LEGAL MATTERS

     79  

EXPERTS

     80  

ANNEXES

  

Annex A: Annual Report on 20-F for the Year Ended December 31, 2017

  

Annex B: Quarterly Report on Form 6-K for the Quarter and Nine Months Ended September 30, 2018

  

Annex C-1: Form of the Proposed Amended and Restated Certificate of Designation for Series G Preferred Shares

  

Annex C-2: Form of the Proposed Amended and Restated Certificate of Designation for Series H Preferred Shares

  

 


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NEITHER WE, OUR BOARD OF DIRECTORS, THE INFORMATION AGENT, THE EXCHANGE AGENT, THE DEPOSITARY, NOR ANY AFFILIATE OF ANY OF THE FOREGOING NOR ANY OTHER PERSON IS MAKING ANY RECOMMENDATION AS TO WHETHER OR NOT YOU SHOULD TENDER YOUR SERIES G ADSs AND/OR SERIES H ADSs IN THE EXCHANGE OFFER OR WHICH FORM OF CONSIDERATION YOU SHOULD ELECT AS PAYMENT THEREFOR. YOU MUST MAKE YOUR OWN INVESTMENT DECISION REGARDING THE EXCHANGE OFFER BASED UPON YOUR OWN ASSESSMENT OF THE MARKET VALUE OF THE SERIES G ADSs OR SERIES H ADSs AND THE 2024 NOTES, YOUR LIQUIDITY NEEDS, YOUR INVESTMENT OBJECTIVES AND ANY OTHER FACTORS YOU DEEM RELEVANT. SEE “RISK FACTORS.”

This prospectus does not constitute an offer to participate in the Exchange Offer to any person in any jurisdiction where it is unlawful to make such an offer or solicitations. The Exchange Offer are being made on the basis of this prospectus and are subject to the terms described herein and those that may be set forth in any amendment or supplement thereto or incorporated by reference herein. Any decision to participate in the Exchange Offer should be based on the information contained in this prospectus, any amendment or supplement thereto, which should be read before making any decision to participate in the Exchange Offer and Consent Solicitation. In making an investment decision or decisions, prospective investors must rely on their own examination of us and the terms of the Exchange Offer and Consent Solicitation and the consideration being offered and the terms of the Proposed Amendments being sought, including the merits and risks involved. Prospective investors should not construe anything in this prospectus as legal, business or tax advice. Each prospective investor should consult its advisors as needed to make its investment decision and to determine whether it is legally permitted to participate in the Exchange Offer and Consent Solicitation under applicable legal investment or similar laws or regulations.

Each prospective investor must comply with all applicable laws and regulations in force in any jurisdiction in which it participates in the Exchange Offer and Consent Solicitation or possesses or distributes this prospectus and must obtain any consent, approval or permission required by it for participation in the Exchange Offer and Consent Solicitation under the laws and regulations in force in any jurisdiction to which it is subject, and neither we nor any of our respective representative shall have any responsibility therefor.

No action with respect to the offer of exchange consideration has been or will be taken in any jurisdiction (except the United States) that would permit a public offering of the offered securities, or the possession, circulation or distribution of this prospectus or any material relating to Navios Holdings or the offered securities where action for that purpose is required. Accordingly, the offered securities may not be offered, sold or exchanged, directly or indirectly, and neither this prospectus nor any other offering material or advertisement in connection with the Exchange Offer may be distributed or published, in or from any such jurisdiction, except in compliance with any applicable rules or regulations of any such country or jurisdiction.

This prospectus contains summaries believed to be accurate with respect to certain documents, but reference is made to the actual documents for complete information. All of those summaries are qualified in their entirety by this reference. Copies of documents referred to herein will be made available to prospective investors upon request to the Information Agent at the address and telephone number set forth on the back cover of this prospectus.

The delivery of this prospectus shall not under any circumstances create any implication that the information contained herein is correct as of any time subsequent to the date hereof or that there has been no change in the information set forth herein or in any attachments hereto or in the affairs of Navios Holdings or its affiliates since the date hereof.

 

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ABOUT THIS PROSPECTUS

As used in this prospectus, unless the context indicates otherwise:

 

   

References to “the company,” “Navios Holdings,” “we,” “our” and “us,” refer to Navios Maritime Holdings Inc. and its subsidiaries.

 

   

References to “Navios Logistics” are to Navios South American Logistics Inc., Navios Holding’s South American subsidiary and one of the largest logistics companies in the Hidrovia region of South America, focusing on the Hidrovia river system, the main navigable river system in the region, and on cabotage trades along the eastern coast of South America. Navios Holdings owns 63.8% of Navios Logistics as of the date of this prospectus.

 

   

References to “Navios Partners” are to Navios Maritime Partners L.P. (NYSE: NMM), a separate NYSE-listed limited partnership formed by us in August 2007. Navios Holdings owns a 20.2% interest in Navios Partners as of the date of this prospectus, which includes a 2% general partner interest.

 

   

References to “Navios Acquisition” are to Navios Maritime Acquisition Corporation (NYSE: NNA), a separate NYSE-listed company formed by us in March 2008. Navios Holdings owns 45.3% of the outstanding voting stock of Navios Acquisition as of September 30, 2018.

 

   

References to “Navios Europe I” are to Navios Europe Inc., a Republic of the Marshall Islands corporation formed by Navios Holdings, Navios Acquisition and Navios Partners in October 2013 to engage in the marine transportation industry. Navios Holdings, Navios Acquisition and Navios Partners as of the date of this Prospectus have economic interests in Navios Europe I of 47.5%, 47.5% and 5.0%, respectively and voting interests of 50%, 50% and 0%, respectively.

 

   

References to “Navios Europe II” are to Navios Europe (II) Inc., a Republic of the Marshall Islands corporation formed by Navios Holdings, Navios Acquisition and Navios Partners in February 2015 to engage in the marine transportation industry. Navios Holdings, Navios Acquisition and Navios Partners as of the date of this Prospectus have economic interests in Navios Europe II of 47.5%, 47.5% and 5.0%, respectively and voting interests of 50%, 50% and 0%, respectively.

 

   

References to “Navios Containers” are to Navios Maritime Containers L.P. (NASDAQ: NMCI), a publicly traded master limited partnership which is a growth vehicle dedicated to the container sector of the maritime industry. As of the date of this prospectus, Navios Holdings owns 3.7% of the common units in Navios Containers.

Unless otherwise indicated, all dollar references in this prospectus are to U.S. dollars and financial information presented in this prospectus that is derived from financial statements included in Annex A and Annex B is prepared in accordance with accounting principles generally accepted in the United States. The data related to our fleet reflected in this prospectus, including without limitation, the number of our owned vessels, the number of our chartered-in vessels and deadweight tons, is as of December 13, 2018 unless otherwise indicated.

This prospectus is part of a registration statement that we filed with the SEC.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus and any other written or oral statements made by us or on our behalf may include forward-looking statements, which reflect our current views with respect to future events and financial performance. The words “may,” “could,” “should,” “would,” “expect,” “plan,” “anticipate,” “intend,” “forecast,” “believe,” “estimate,” “predict,” “propose,” “potential,” “continue” and similar expressions identify forward-looking statements.

The forward-looking statements in this prospectus and in other written or oral statements we make from time to time are based upon current assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in our records, and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors and matters discussed elsewhere in this prospectus, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include, but are not limited to:

 

   

the strength of world economies,

 

   

fluctuations in currencies and interest rates,

 

   

general market conditions, including fluctuations in charter hire rates and vessel values,

 

   

changes in demand in the dry cargo shipping industry,

 

   

changes in Navios Holdings’ operating expenses, including bunker prices, drydocking and insurance costs,

 

   

expectations of dividends and distributions from affiliates,

 

   

Navios Holdings’ ability to maintain compliance with the continued listing standards of the NYSE,

 

   

changes in governmental rules and regulations or actions taken by regulatory authorities,

 

   

potential liability from pending or future litigation,

 

   

general domestic and international political conditions,

 

   

potential disruption of shipping routes due to accidents or political events,

 

   

the value of our publicly traded subsidiaries, and other important factors described in this prospectus.

See also “Risk Factors” in this prospectus, as well as the risk factors set forth in Annex A to this prospectus.

We undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events, except as required by law. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement.

 

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ENFORCEABILITY OF CIVIL LIABILITIES AND INDEMNIFICATION FOR

SECURITIES ACT LIABILITIES

We are incorporated under the laws of the Republic of the Marshall Islands. A majority of the directors and officers named in the prospectus reside outside the United States. In addition, a substantial portion of the assets and the assets of the directors and officers are located outside the United States. As a result, you may have difficulty serving legal process within the United States upon Navios Holdings or any of these persons. You may also have difficulty enforcing, both in and outside the United States, judgments you may obtain in United States courts against Navios Holdings or these persons in any action, including actions based upon the civil liability provisions of United States federal or state securities laws. Furthermore, there is substantial doubt that the courts of the Republic of the Marshall Islands would enter judgments in original actions brought in those courts predicated on United States federal or state securities laws. See “Risk Factors—Risks Associated with the Shipping Industry and Our Drybulk Operations—We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of corporate law” and “—We, and certain of our officers and directors, may be difficult to serve with process, as we are incorporated in the Republic of the Marshall Islands and such persons may reside outside of the United States” in Annex A to this prospectus.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

We have obtained directors’ and officers’ liability insurance against any liability asserted against such person incurred in the capacity of director or officer or arising out of such status, whether or not we would have the power to indemnify such person.

TRADEMARKS, SERVICE MARKS AND TRADE NAMES

This prospectus contains our trademarks, service marks and trade names, including our proprietary logos and the domain name for our website, and also contains the trademarks, service marks and trade names of other companies.

 

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QUESTIONS AND ANSWERS ABOUT THE EXCHANGE OFFER AND CONSENT SOLICITATION

The following are questions and answers regarding the Exchange Offer and Consent Solicitation. It does not contain all of the information that may be important to you. You should carefully read this prospectus, including the Annexes, to fully understand the terms of the Exchange Offer and Consent Solicitation, as well as the other considerations that are important to you in making your decision whether to participate in the Exchange Offer and Consent Solicitation. You should pay special attention to the financial and business information and risk factors set forth in Annex A and Annex B and the information included in this prospectus under the captions entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements”, as well as the descriptions of the Series G Preferred Shares, the Series H Preferred Shares, and the 2024 Notes included in this prospectus filed as exhibits to the registration statement of which the prospectus is a part.

What is the purpose of the Exchange Offer?

Navios Holdings is not required to, and over the last 11 quarters has exercised its discretion not to, pay cash dividends to its holders of the Series G ADSs or Series H ADSs. This Exchange Offer offers holders of the Series G ADSs or Series H ADSs the opportunity to exchange the substantial majority of their Series G ADSs or Series H ADSs for (i) cash, which will provide immediate liquidity, and/or (ii) 2024 Notes, which will require Navios Holdings to pay, and which Navios Holdings will not have the discretion to avoid paying, interest (aside from in a bankruptcy). This Exchange Offer may be appropriate for a holder seeking liquidity and/or greater certainty that it will receive current cash payments on its security and willing to forego the possibility that previously accrued dividends on the Series G ADSs and Series H ADSs might be paid in the future and that Navios Holdings will elect to redeem the Preferred Shares at their liquidation preference.

Accordingly, while we believe the Exchange Offer offers benefits to Navios Holdings and to holders of Series G ADSs and Series H ADSs, the Exchange Offer is not equally suitable for all holders of Series G ADSs and Series H ADSs, and the decision as to whether to tender Series G ADSs and/or Series H ADSs in the Exchange Offer will not be the same for all holders.

Neither we, our Board of Directors, the Information Agent, the Exchange Agent, the Depositary, nor any affiliate of any of the foregoing or any other person is making any recommendation as to whether or not you should tender your Series G ADSs and/or Series H ADSs in the Exchange Offer or which form of consideration you should elect as payment therefor. You must make your own investment decision regarding the Exchange Offer based upon your own assessment of the market value of the Series G ADSs or Series H ADSs and the 2024 Notes, your liquidity needs, your investment objectives and any other factors you deem relevant. See “Risk Factors” in this prospectus as well as the risk factors included in Annex A to this prospectus.

The Exchange Offer is being made exclusively to existing holders of Series G ADSs and/or Series H ADSs. The record date for participating in the Exchange Offer and Consent Solicitation is the Expiration Date.

Who is offering to buy my Series G ADSs or Series H ADSs? Who is seeking my consent to adopt the Proposed Amendments?

Navios Maritime Holdings Inc., a Republic of the Marshall Islands corporation and issuer of the Preferred Shares underlying your Series G ADSs or Series H ADSs, is offering to acquire 66 2/3% of each of the outstanding Series G ADSs and Series H ADSs and seeking relating consents of 66 2/3% of the outstanding Preferred Shares to the Proposed Amendments which will, if adopted, eliminate substantially all of the restrictive covenants and our obligation to pay or accrue any unpaid dividends from any past periods or future periods and amend certain voting rights relating to the Preferred Shares.

The address of Navios Holdings’ principal executive office is 7 Avenue de Grande Bretagne, Office 11B2, Monte Carlo, MC 98000 Monaco, and its telephone number is (011)+(377) 9798-2140.

 

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Who may participate in the Exchange Offer?

All holders of the Series G ADSs and Series H ADSs may participate in the Exchange Offer. However, upon the terms and subject to the conditions of the Exchange Offer, if more than 946,100 of the outstanding Series G ADSs and/or 1,907,600 Series H ADSs are validly tendered and not properly withdrawn, the Series G ADSs and/or Series H ADSs in excess of such amounts will, in each case, be subject to tender acceptance proration procedures. This means, if you tender all of your Series G ADSs and/or all of your Series H ADSs and the Exchange Offer and Consent Solicitation are consummated for each series of Preferred Shares and the tender acceptance proration procedures are applied in either case, your tendered Series G ADSs and/or Series H ADSs in excess of the proration threshold will be returned to you and such returned Series G ADSs and Series H ADSs will be subject to the Proposed Amendments discussed below, assuming the Consent Solicitation is consummated with respect to either or both such series and the requisite consent of the holders of Common Stock is received. In applying the proration procedure to the individual tenders made by holders of Series G ADSs or Series H ADSs, including DTC participants, the Exchange Agent may make adjustments approved by Navios Holdings, up or down, so that no fraction of an ADS is purchased from any holders, including DTC participants.

See “Terms of the Exchange Offer and Consent Solicitation—Tender Acceptance Proration Procedures.”

Is there a minimum tender condition to the Exchange Offer?

No.

However, with respect to the Consent Solicitation, we cannot waive or amend the requirement that we obtain:

 

  (i)

the consents of:

 

  (1)

the holders of approximately 66 2/3% of Series G ADSs for the Consent Solicitation as it relates to the Proposed Amendments relating to the Series G Preferred Shares; and/or

 

  (2)

the holders of approximately 66 2/3% of the Series H ADSs for the Consent Solicitation as it relates to the Proposed Amendments relating to the Series H Preferred Shares; and

 

  (ii)

the approval of the holders of the majority of our outstanding Common Stock,

before the Proposed Amendments to the amended and restated certificates of designation of each of the Series G Preferred Shares and Series H Preferred Shares, as applicable, can become effective.

See “Terms of the Exchange Offer and Consent Solicitation—Terms of the Consent Solicitation.”

What will I receive in the Exchange Offer if I tender my Series G ADSs or Series H ADSs and they are accepted?

We are offering to acquire Series G ADSs for either (a) $7.25 and/or (b) $8.28 principal amount of 9.75% Senior Notes due 2024, per Series G ADS.

We are offering to acquire Series H ADSs for either (a) $7.16 and/or (b) $8.19 principal amount of 9.75% Senior Notes due 2024, per Series H ADS.

You may elect to tender any portion of your Series G ADSs or Series H ADSs for cash and any portion of your Series G ADSs or Series H ADSs for 2024 Notes, subject to the applicable cash and 2024 Notes caps and related consideration proration procedures. See “Terms of the Exchange Offer and Consent Solicitation—Consideration Elections and Consideration Proration” for additional information.

The 2024 Notes will bear interest at a rate of 9.75% per annum, payable semi–annually and will mature on April 15, 2024. The 2024 Notes will be senior unsecured obligations effectively and structurally subordinated to Navios Holdings’ existing indebtedness, much of which is secured and guaranteed. See “Description of Notes.”

 

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What is sought in the Consent Solicitation?

We are seeking your consent to the Proposed Amendments. The Proposed Amendments, if adopted with respect to either or both of the Series G Preferred Shares or Series H Preferred Shares, will eliminate substantially all of the restrictive covenants and our obligation to pay or accrue any unpaid dividends for any past periods or future periods and will amend certain voting rights in our existing Preferred Shares’ respective certificates of designation, including:

 

   

eliminating the requirement that future unpaid dividends accrue for payment in the future;

 

   

eliminating all previously accrued and unpaid dividends on the Preferred Shares and any obligation of Navios Holdings to pay such accrued and unpaid dividends at any time in the future, including on liquidation;

 

   

prohibiting the payment of a dividend on the Common Stock in any quarter in which Navios Holdings does not pay a dividend on the Preferred Shares;

 

   

eliminating the increase of the dividend rate on the Preferred Shares in the event Navios Holdings Articles of Incorporation are not amended to permit the holders of the Preferred Shares to elect a director if and when six or more quarterly dividends are in arrears;

 

   

amending the requirement that, without the affirmative vote or consent of the holders of at least 66 2/3% of the outstanding series of Preferred Shares, voting as a class together with holders of any other parity securities, Navios Holdings shall not issue any parity securities if any dividends payable on outstanding Preferred Shares have not been declared or paid, to be revised to be the affirmative vote or consent of the holders of at least a majority of the outstanding series of Preferred Shares or of the holders of at least a majority of the outstanding series of Preferred Shares voting as a class together with holders of any other parity securities; and

 

   

eliminating the requirement that, in the event that full cumulative dividends on the Preferred Shares and any parity securities shall not have been declared or paid and set apart for payment, none of Navios Holdings or any Affiliate of Navios Holdings may repurchase, redeem or otherwise acquire any series of Preferred Shares or parity securities or any junior securities, including Common Stock.

How do I vote for the Proposed Amendments?

If a holder validly tenders Series G ADSs or Series H ADSs prior to 5:00 P.M., New York City time, on the Expiration Date, and we accept such Series G ADSs or Series H ADSs, such tender will be deemed to constitute the delivery of consent to the Proposed Amendments as a holder of Series G ADSs or Series H ADSs with respect to the tendered Series G ADSs or Series H ADSs. You may not consent to the Proposed Amendments without tendering your Series G ADSs and/or Series H ADSs in the Exchange Offer prior to the Expiration Date. See “Terms of the Exchange Offer and Consent Solicitation—Proposed Amended and Restated Certificates of Designation Sought in the Consent Solicitation.”

Any such consent will be provided as an instruction to The Bank of New York Mellon, the Depositary, as the only “holder” of Preferred Shares, to consent in favor of the Proposed Amendments with respect to the Preferred Shares underlying the tendered ADSs. Consents of at least 66 2/3% of the outstanding shares of the Series G Preferred Shares must be received in order to amend and restate the certificate of designation under which the Series G Preferred Shares were issued. Consents of at least 66 2/3% of the outstanding shares of the Series H Preferred Shares must be received in order to amend and restate the certificate of designation under which the Series H Preferred Shares were issued. In addition to approval by holders of the Preferred Shares, the amended and restated certificates of designation must also be approved by the holders of the majority of our outstanding Common Stock before the Proposed Amendments can become effective. If we complete the Exchange Offer and the Consent Solicitation with respect to one or both Series of ADSs, we intend to seek the approval of our holders of Common Stock at a special meeting of stockholders to the applicable Proposed Amendments which we intend to hold following the consummation of the Exchange Offer.

 

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What are the U.S. federal income tax consequences of the Exchange Offer to me?

The U.S. federal income tax consequences to you of participating in the Exchange Offer are complex and will vary depending on whether you tender all or less than all of your Series G ADSs or Series H ADSs (or a portion of your tendered Series G ADSs or Series H ADSs are returned to you under the tender offer acceptance proration procedures), whether you receive solely 2024 Notes, solely cash or a combination of 2024 Notes and cash, whether your receipt of such consideration is considered to have the effect of a dividend distribution for U.S. federal income tax purposes, the “issue price” for U.S. federal income tax purpose of the 2024 Notes (if any) that you receive, whether the Proposed Amendments are approved and become effective and other facts and circumstances. Even if you do not participate in the Exchange Offer, there may be U.S. federal income tax consequences to you if the Proposed Amendments are approved and become effective. Please see “Risk Factors—Tax Risks” and “Certain U.S. Federal Income Tax Consequences” in this prospectus. Because the U.S. federal income tax consequences of the Exchange Offer are complex, you are urged to consult with your own tax advisor.

Will I lose the right to receive distributions for past periods on any Series G ADSs or Series H ADSs that I tender in the Exchange Offer?

Yes, if you tender Series G ADSs or Series H ADSs in the Exchange Offer, you will lose your right to receive any unpaid distributions on the underlying Series G Preferred Shares or Series H Preferred Shares for periods during which you held such Series G ADSs or Series H ADSs. In addition, if Proposed Amendments governing each such series of Preferred Shares are adopted pursuant to the Consent Solicitation, and the holders of the majority of our outstanding Common Stock approve such amendments, you will lose your right to receive any unpaid distributions for past periods and future periods, even if you did not tender your Series G ADSs or Series H ADSs in the Exchange Offer or you tendered your Series G ADSs and Series H ADSs and a portion of such Series G ADSs or Series H ADSs were returned to you under the proration procedures applicable to the Exchange Offer.

Will the newly issued 2024 Notes received by tendering holders of Series G ADSs or Series H ADSs be freely tradable under the federal securities laws?

The 2024 Notes received in exchange for Series G ADSs and/or Series H ADSs tendered pursuant to the Exchange Offer will not be restricted securities for purposes of the Securities Act and will generally be tradable without regard to any holding period by those tendering holders who are not our “affiliates” (as the term is defined in the Securities Act). The 2024 Notes issued pursuant to the Exchange Offer to a holder of Series G ADSs and Series H ADSs who is deemed to be our affiliate would constitute control securities and may be sold or transferred only in accordance with the requirements of Rule 144 or other available exemption under the Securities Act.

We do not intend to list the 2024 Notes on the NYSE or any national or regional securities exchange. Therefore, it is unlikely that a trading market for the 2024 Notes will exist upon consummation of the Exchange Offer and we cannot assure you that an active trading market will develop. See “Risk Factors—Risks Relating to the Exchange Offer and the 2024 Notes—There is currently no market for the 2024 Notes and we cannot assure you that an active trading market will develop for the 2024 Notes.”

Will the Series G ADSs and Series H ADSs remain listed on the NYSE following the completion of the Exchange Offer?

We expect that the Series G ADSs and Series H ADSs will remain listed on the NYSE if the Exchange Offer is completed, however, the number of outstanding Series G ADSs and Series H ADSs, and likely the trading volume, will be reduced.

 

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Are you making a recommendation regarding whether I should tender in the Exchange Offer?

No. Neither we, our Board of Directors, the Information Agent, the Exchange Agent, the Depositary, nor any affiliate of any of the foregoing or any other person is making any recommendation as to whether or not you should tender your Series G ADSs or Series H ADSs in the Exchange Offer or which form of consideration you should elect as payment therefor. You must make your own investment decision regarding the Exchange Offer based upon your own assessment of the relative market value of the Series G ADSs or Series H ADSs and the 2024 Notes, your liquidity needs, your investment objectives and any other factors you deem relevant. You should carefully read this entire prospectus before deciding whether or not to tender your Series G ADSs or Series H ADSs. You should consult with your personal financial advisor or other legal, tax or investment professionals regarding your individual circumstances.

What is the maximum number of Series G ADSs or Series H ADSs Navios Holdings will acquire in the Exchange Offer?

We are offering to exchange cash and/or newly issued 2024 Notes for 66 2/3% of each of the outstanding Series G ADSs and Series H ADSs. If all conditions to the Exchange Offer are satisfied or waived, we will acquire up to 946,100 (representing approximately 66 2/3%) of the outstanding Series G ADSs and/or 1,907,600 (representing approximately 66 2/3%) of the outstanding Series H ADSs from tendering holders. You will receive cash in lieu of any entitlement to a fraction of a 2024 Note equal to the principal amount. If more than 66 2/3% of either of the outstanding Series G ADSs or Series H ADSs are tendered in the Exchange Offer, the tender acceptance proration procedures described under “Terms of the Exchange Offer and Consent Solicitation—Tender Acceptance Proration Procedures” will apply to such Series G ADSs or Series H ADSs, as applicable.

When and how will I receive cash and/or the 2024 Notes in exchange for my tendered Series G ADSs or Series H ADSs?

If all terms and conditions for completion of the Exchange Offer are satisfied or waived, we will pay cash and/or issue the 2024 Notes in exchange for up to 66 2/3% of each of the outstanding, validly tendered and not properly withdrawn Series G ADSs or Series H ADSs, promptly after the Expiration Date. We refer to the date on which such exchange is made as the “settlement date.” The settlement date is expected to be as soon as practicable after the Expiration Date. We currently anticipate the Exchange Offer settlement date will occur on or about March 6, 2019, although the date is subject to change as described in this prospectus. We reserve the right to delay settlement pending receipt of any required governmental or regulatory approvals.

If you are to receive cash for your Series G ADSs or Series H ADSs, we will pay cash by wire transfer to the Exchange Agent, which will then be paid to you. If you are to receive 2024 Notes for your Series G ADSs or Series H ADSs, we will issue the 2024 Notes in exchange for your Series G ADSs and/or Series H ADSs that are validly tendered, not properly withdrawn, and accepted by us by delivering the 2024 Notes to the Exchange Agent, which will act as your agent for purposes of receiving the 2024 Notes from us and delivering the 2024 Notes to you. In all cases, issuance of 2024 Notes in exchange for tendered Series G ADSs or Series H ADSs will be made only after timely receipt by the Exchange Agent of properly tendered Series G ADSs or Series H ADSs and any required documents for such Series G ADSs or Series H ADSs.

See “Terms of the Exchange Offer and Consent Solicitation—Tender of Series G ADSs or Series H ADSs; Acceptance of Series G ADSs or Series H ADSs.”

May I tender only a portion of the Series G ADSs or Series H ADSs that I hold?

Yes. You may choose to tender any or all of your Series G ADSs or Series H ADSs, except to the extent that more than 66 2/3% of the outstanding Series G ADSs and/or Series H ADSs are tendered, your tendered Series G

 

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ADSs or Series H ADSs may be subject to the tender acceptance proration procedure, as described under “Terms of the Exchange Offer and Consent Solicitation—Tender Acceptance Proration Procedures.” In such case, the prorated portion of the Series G ADSs or Series H ADSs in excess of the threshold will be returned to you promptly after the consummation of the Exchange Offer. See “Terms of the Exchange Offer and Consent Solicitation—Tender Acceptance Proration Procedures.”

Furthermore, if the Proposed Amendments with respect to either or both amended and restated certificates of designation are approved pursuant to the Consent Solicitation and by a majority of the holders of the Common Stock, substantially all of the restrictive covenants and our obligation to pay or accrue any unpaid dividends for any past periods or future periods and certain voting rights applicable to the Preferred Shares for which the Proposed Amendments have become effective, and, therefore, any Series G ADSs or Series H ADSs, as applicable, you continue to hold after completion of the Exchange Offer, will be eliminated or amended.

What will happen if I do not tender my Series G ADSs or Series H ADSs or my tendered Series G ADSs or Series H ADSs are prorated and the Exchange Offer is successfully completed?

If the Exchange Offer is successfully completed but you do not tender your Series G ADSs or Series H ADSs or you tendered your Series G ADSs and Series H ADSs and some or all of such Series G ADSs or Series H ADSs were returned to you under the tender acceptance proration procedure applicable to the Exchange Offer (as described under “Terms of the Exchange Offer and Consent Solicitation—Tender Acceptance Proration Procedures”), you will remain a holder of those Series G ADSs or Series H ADSs, and if the Proposed Amendments are adopted pursuant to the Consent Solicitation, and approved by the holders of the majority of our outstanding Common Stock, substantially all of the restrictive covenants and our obligation to pay or accrue any unpaid dividends for any past periods or future periods in the respective certificates of designation will be eliminated and certain voting rights will be amended. In addition the liquidity of the Series G ADSs and Series H ADSs will be reduced and the Series G ADSs or the Series H ADSs also may be delisted from the NYSE if the number of outstanding Series G ADSs and/or Series H ADSs falls below the requirement for such listings.

We currently have no plans or intentions to pay dividends on the Series G Preferred Shares and Series H Preferred Shares or on our Common Stock, however, the Proposed Amendments, if adopted, will provide that we cannot pay a dividend to holders of our Common Stock in respect to any given quarter unless we also pay a dividend to holders of our Series G Preferred Shares and Series H Preferred Shares in respect to such quarter.

Do I need to do anything if I do not wish to tender my Series G ADSs or Series H ADSs?

No. If you do not tender your Series G ADSs or Series H ADSs electronically through DTC’s system before the Expiration Date, your ADSs will remain outstanding subject to their terms (as amended pursuant to the Proposed Amendments resulting from the Consent Solicitation, if adopted).

What happens if my Series G ADSs or Series H ADSs are not accepted in the Exchange Offer or if my tendered Series G ADSs or Series H ADSs are subject to proration because more than 66 2/3% of the outstanding class was tendered?

If we decide for any reason not to accept your Series G ADSs or Series H ADSs for exchange, the Series G ADSs or Series H ADSs will be returned to you promptly after the expiration or termination of the Exchange Offer. In the case of Series G ADSs or Series H ADSs tendered by book entry transfer to the Exchange Agent’s account at DTC, any unaccepted Series G ADSs or Series H ADSs will be credited to your account at DTC. See “Terms of the Exchange Offer and Consent Solicitation—Terms of the Exchange Offer.”

If the proration procedures relating to the Exchange Offer are applied because more than 66 2/3% of either the Series G ADSs or Series H ADSs were tendered, and you have validly tendered and have not properly withdrawn your Series G ADSs or Series H ADSs, any tendered Series G ADSs and Series H ADSs not accepted for exchange will be returned to you promptly after the consummation of the Exchange Offer. Such returned Series G ADSs and Series H ADSs will be subject to the Proposed Amendments, if adopted.

 

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What are the conditions to the consummation of the Exchange Offer?

The Exchange Offer and Consent Solicitation are subject to, and conditional upon, the satisfaction or, where permitted, the waiver of, the following conditions:

 

  1.

The SEC having declared the registration statement of which this prospectus forms a part effective;

 

  2.

no litigation arises regarding the Exchange Offer and/or Consent Solicitation:

 

   

that challenges or seeks to make illegal, materially delay, restrain or prohibit the Exchange Offer or our acceptance of tendered Series G ADSs or Series H ADSs and is likely to be successful; or

 

   

which could have a material adverse effect on us;

 

  3.

no governmental authority issues an order or takes any action restraining, enjoining or prohibiting or materially delaying or preventing the consummation of the Exchange Offer;

 

  4.

the consummation of the Exchange Offer does not violate any law, rule or regulation applicable to us, including the distribution limitations under Republic of the Marshall Islands law;

 

  5.

no law, rule, regulation or governmental order becomes applicable to us or the transactions contemplated by the Exchange Offer that could result, directly or indirectly, in the consequences described under condition 2 above; or

 

  6.

no situation arises that could render the delivery of the 2024 Notes in exchange for Series G ADSs or Series H ADSs or the adoption of the Proposed Amendments impermissible under Republic of the Marshall Islands law.

We will, in our reasonable judgment, determine whether each condition to the Exchange Offer has been satisfied or may be waived and whether any such condition(s) should be waived. We may, at our option and sole discretion, waive any such condition, except the condition that the registration statement of which this prospectus forms a part has been declared effective by the SEC. If any condition to the Exchange Offer is unsatisfied on the Expiration Date and we do not or cannot waive such condition, the Exchange Offer will expire and we will not accept the Series G ADSs or Series H ADSs that have been validly tendered. In addition, we reserve the right, in our sole discretion, but subject to applicable law, to terminate the Exchange Offer at any time prior to the Expiration Date.

See “Terms of the Exchange Offer and Consent Solicitation—Conditions of the Exchange Offer” and “Terms of the Exchange Offer and Consent Solicitation—Extension, Termination and Amendment.”

When will the Exchange Offer expire?

The Exchange Offer is currently scheduled to expire at 5:00 p.m., New York City Time, on March 1, 2019, the Expiration Date. We may, however, extend the Exchange Offer with respect to one or both series of ADSs from time to time in our discretion until all the conditions to the Exchange Offer with respect to one or both series of ADSs have been satisfied or waived, or terminate the Exchange Offer with respect to one or both series of ADSs at any time prior to the Expiration Date in our sole discretion and subject to applicable law. We will also extend the Expiration Date if required by applicable law or regulation.

DTC and its direct and indirect participants will establish their own cutoff dates and times to receive instructions to tender in this Exchange Offer, which will be earlier than the Expiration Date. You should contact your broker or other securities intermediary to determine the cutoff date and time applicable to you. In addition:

 

   

the Exchange Agent must receive, before the Expiration Date, a timely confirmation of a book-entry transfer of the tendered outstanding Series G ADSs and Series H ADSs into the Exchange Agent’s account at DTC according to the procedure for book-entry transfer described below; or

 

   

the holder must comply with the guaranteed delivery procedures described below.

 

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See “Terms of the Exchange Offer and Consent Solicitation—Extension, Termination and Amendment” and “Terms of the Exchange Offer and Consent Solicitation—Guaranteed Delivery Procedure.”

Under what circumstances may the Exchange Offer be terminated, and what happens to my tendered Series G ADSs and/or Series H ADSs if that occurs?

The Exchange Offer with respect to one or both series of ADSs may be terminated if the conditions to the Exchange Offer with respect to one or both series of ADSs are not satisfied or (where within Navios Holdings’ discretion) waived. In addition, we reserve the right, in our sole discretion, but subject to applicable law, to terminate the Exchange Offer with respect to one or both series of ADSs at any time prior to the Expiration Date.

If the Exchange Offer with respect to one or both series of ADSs is terminated and you previously have tendered Series G ADSs or Series H ADSs, those Series G ADSs and/or Series H ADSs will be credited back to an appropriate account promptly following the termination of the Exchange Offer without expense to you.

See “Terms of the Exchange Offer and Consent Solicitation—Tender of Series G ADSs or Series H ADSs; Acceptance of Series G ADSs or Series H ADSs.”

How will I be notified if the Exchange Offer and Consent Solicitation are extended, amended or terminated?

If the Exchange Offer and Consent Solicitation with respect to one or both series of ADSs are extended, amended or terminated, we will promptly make a public announcement by issuing a press release. In the case of an extension, the announcement will be issued no later than 9:00 a.m., New York City Time, on the next business day after the previously scheduled Expiration Date.

See “Terms of the Exchange Offer and Consent Solicitation—Extension, Termination and Amendment.”

Will I have to pay any fees or commissions for participating in the Exchange Offer?

You will not pay any fees to Navios Holdings, the Exchange Agent, the Information Agent or the Depositary to participate in the Exchange Offer. Any fees due to the Depositary for cancellation of tendered Series G ADSs or Series H ADSs will be paid by Navios Holdings. If you hold Series G ADSs or Series H ADSs through a broker or other securities intermediary, and your broker or other securities intermediary tenders the Series G ADSs or Series H ADSs on your behalf, your broker, dealer or other nominee may charge you a fee for doing so. You should consult your broker, dealer or other nominee to determine whether any charges will apply.

See “Terms of the Exchange Offer and Consent Solicitation—Terms of the Exchange Offer” and “Terms of the Exchange Offer and Consent Solicitation—Expenses.”

How do I tender my Series G ADSs or Series H ADSs?

Series G ADSs or Series H ADSs held in a securities account with a broker or other securities intermediary can be tendered by your broker or other securities intermediary through DTC upon your request.

If you tender your Series G ADSs or Series H ADSs without indicating the number of ADSs being tendered or the consideration you wish to receive in exchange for the Series G ADSs or Series H ADSs that you tender, it will be assumed that you are electing to tender all of the Series G ADSs or Series H ADSs held by you for 2024 Notes.

If you have questions, please call the Information Agent at the toll-free number on the back cover of this prospectus.

See “Terms of the Exchange Offer and Consent Solicitation—Procedure for Tendering.”

 

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If I recently purchased Series G ADSs or Series H ADSs, can I still tender my Series G ADSs or Series H ADSs in the Exchange Offer?

Yes. If you have recently purchased Series G ADSs or Series H ADSs, you may tender those Series G ADSs or Series H ADSs in the Exchange Offer but you must make sure that your purchase transaction settles prior to the Expiration Date or you must comply with the guaranteed delivery procedures. See “Terms of the Exchange Offer and Consent Solicitation—Guaranteed Delivery Procedure.”

What must I do if I want to withdraw my Series G ADSs or Series H ADSs from the Exchange Offer?

You may withdraw previously tendered Series G ADSs or Series H ADSs at any time before the expiration of the Exchange Offer. Any Series G ADSs or Series H ADSs not accepted will be credited back to the appropriate account promptly following the expiration or termination of the Exchange Offer. In addition, after the expiration of the Exchange Offer, you may withdraw any Series G ADSs or Series H ADSs that you tendered that are not accepted by us for exchange after the expiration of 40 business days following commencement of the Exchange Offer. See “Terms of the Exchange Offer and Consent Solicitation—Withdrawal of Tenders and Revocation of Corresponding Consents.”

A withdrawal of your Series G ADSs or Series H ADSs will be effective if you and your broker or other securities intermediary comply with the appropriate procedures of DTC’s automated system prior to the expiration of the Exchange Offer or after the expiration of 40 business days following the commencement of the Exchange Offer. Any notice of withdrawal must identify the Series G ADSs or Series H ADSs to be withdrawn, including the name and number of the account at DTC to be credited and otherwise comply with the procedures of DTC. Your broker or other securities intermediary can assist you with this process.

See “Terms of the Exchange Offer and Consent Solicitation—Withdrawal of Tenders and Revocation of Corresponding Consents.”

Who can answer questions concerning the Exchange Offer and Consent Solicitation?

Requests for assistance in connection with the tender of your Series G ADSs or Series H ADSs pursuant to the Exchange Offer may be directed to the Information Agent at the address set forth on the back cover of this prospectus or by telephone toll free at (888) 566-3252.

 

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PROSPECTUS SUMMARY

This summary highlights information contained in this prospectus and does not contain all of the information that you should consider in deciding whether to participate in the Exchange Offer and Consent Solicitation. Before participating in the Exchange Offer and Consent Solicitation, you should carefully read this entire prospectus, including the financial and business information and risk factors set forth in Annex A and Annex B to this prospectus, and the information in “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in this prospectus.

Business Overview

Navios Holdings is a global, vertically integrated seaborne shipping and logistics company focused on the transport and transshipment of dry bulk commodities including iron ore, coal and grain. For over 60 years, Navios Holdings has had an in-house ship management expertise that has worked with producers of raw materials, agricultural traders and exporters, industrial end-users, ship owners, and charterers. Navios Holdings’ current core fleet (excluding the Navios Logistics fleet), the average age of which is approximately 7.9 years, basis fully delivered fleet, consists of a total of 67 vessels, aggregating approximately 6.9 million dwt. Navios Holdings owns 13 Capesize vessels (169,000-182,000 dwt), 11 modern Ultra Handymax vessels (50,000-59,000 dwt), 10 Panamax vessels (74,000-85,000 dwt) and one Handysize vessel. It also time charters-in and operates a fleet of three Ultra Handymax, one Handysize, 21 Panamax, and seven Capesize vessels under long-term time charters. Navios Holdings has options to acquire 24 time chartered-in vessels (on one of which Navios Holdings holds an initial 50% purchase option).

Recent Developments

Fleet Update

On December 6, 2018, Navios Holdings completed the sale to an unrelated third party of the Navios Magellan, a 2000-built Panamax vessel of 74,333 dwt, for a total net sale price of $7.0 million paid in cash.

In November 2018, two Ultra-Handymax chartered-in vessels of Navios Holdings were redelivered to owners.

In October 2018, Navios Holdings paid $2.8 million, representing a scheduled deposit for the option to acquire a 82,000 dwt newbuilding bulk carrier vessel, which in January 2018, Navios Holdings agreed to charter-in under a ten year bareboat contract.

Navios Acquisition—Agreement to acquire Navios Midstream

On October 8, 2018 Navios Midstream and Navios Acquisition announced that they entered into a definitive merger agreement under which Navios Acquisition will acquire all of the publicly held units of Navios Midstream in exchange for shares of Navios Acquisition.

The conflicts committee of the board of directors of Navios Midstream negotiated the transaction on behalf of Navios Midstream and its public unitholders. The merger closed on December 13, 2018.

Reverse stock split

On December 24, 2018 Navios Holdings announced that a one-for-ten reverse split of its common stock was approved by the company’s stockholders at its annual regular meeting held December 21, 2018. The reverse stock split was effected on January 3, 2019. The common stock began trading on January 3, 2019 on a split-adjusted basis on the NYSE, under the same ticker symbol, NM.



 

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Litigation Relating to the Exchange Offer and Consent Soliciation

On January 23, 2019, a putative class action complaint was filed against Navios Holdings and five of its directors in the United States District Court for the Southern District of New York by a purported holder of Series G ADSs and Series H ADSs. The complaint asserts claims for alleged breaches of fiduciary duties. The complaint seeks, among other things, unspecified monetary damages, a declaration that the defendants breached their fiduciary duties, a declaration that the consent solicitation is invalid, and an award of plaintiff’s costs. We believe that the asserted claims are without merit and intend to vigorously defend against the complaint.

Principal Executive Offices

The legal and commercial name of Navios Holdings is Navios Maritime Holdings Inc. Navios Holdings’ office and principal place of business is located at 7 Avenue de Grande Bretagne, Office 11B2, Monte Carlo, MC 98000 Monaco, and its telephone number is (011) + (377) 9798-2140. Navios Holdings is a corporation incorporated under the BCA and the laws of the Republic of the Marshall Islands. Trust Company of the Marshall Islands, Inc. serves as Navios Holdings’ agent for service of process, and Navios Holdings’ registered address, as well as address of its agent for service of process, is Trust Company Complex, Ajeltake Island P.O. Box 1405, Majuro, Marshall Islands MH96960. Our website address is https://www.navios.com. Our website and the information contained on our website are not part of this prospectus. Our Common Stock is listed on the NYSE under the symbol “NM”.



 

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THE EXCHANGE OFFER

The following is a summary of the terms of the Exchange Offer and Consent Solicitation being provided for your convenience. It highlights certain material information in this prospectus, but before you make any decision with respect to the Exchange Offer and Consent Solicitation, we urge you to read carefully this entire prospectus, including the Annexes, the section entitled “Risk Factors” and the “Comparison of Rights Between the Preferred Shares and the 2024 Notes.” See “Terms of the Exchange Offer and Consent Solicitation.”

 

Offeror and Issuer

Navios Maritime Holdings Inc., a Republic of the Marshall Islands corporation

 

Series G ADSs Outstanding

1,419,055

 

Series H ADSs Outstanding

2,861,128

 

The Exchange Offer

We are offering to exchange

 

  (1)

cash; and/or

 

  (2)

newly issued 2024 Notes,

 

  on the terms and conditions set forth in this prospectus, for

 

  (1)

946,100 Series G ADSs and

 

  (2)

1,907,600 Series H ADSs.

 

  For additional information regarding the terms of the 2024 Notes, see “Description of Notes.”

 

  If all conditions to the Exchange Offer are satisfied or waived as they relate to the Series G ADSs, we will acquire 946,100 (representing approximately 66 2/3%) of the Series G ADSs and/or if all conditions to the Exchange Offer are satisfied or waived as they relate to the Series H ADSs, we will acquire 1,907,600 (representing approximately 66 2/3%) of the Series H ADSs. If more than 946,100 Series G ADSs and/or more than 1,907,600 Series H ADSs are tendered, the tender acceptance proration procedures described under the heading “Tender Acceptance Proration Procedures” below will apply.

 

  The Exchange Offer is being made exclusively to existing holders of Series G ADSs and/or Series H ADSs. The record date for participating in the Exchange Offer and Consent Solicitation is the Expiration Date.

 

Exchange Offer Consideration

Series G ADSs

 

  We are offering to exchange either (a) $7.25 and/or (b) $8.28 principal amount of 9.75% Senior Notes due 2024, per Series G ADS.


 

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  Series H ADSs

 

  We are offering to exchange either (a) $7.16 and/or (b) $8.19 principal amount of 9.75% Senior Notes due 2024, per Series H ADS.

 

  See “Terms of the Exchange Offer and Consent Solicitation—Terms of the Exchange Offer.”

 

  You may elect to tender any portion of your Series G ADSs or Series H ADSs for cash and any portion of your Series G ADSs or Series H ADSs for 2024 Notes, subject to the applicable cash and 2024 Notes caps and related consideration proration procedures. See “Terms of the Exchange Offer and Consent Solicitation—Consideration Elections and Consideration Proration” for additional information.

 

Tender Acceptance Proration Procedures

Upon the terms and subject to the conditions of the Exchange Offer, we will accept for tender 66 2/3% of the outstanding Series G ADSs and 66 2/3% of the outstanding Series H ADSs. If either Series G ADSs or Series H ADSs are tendered in excess of this limit, they will be subject to the tender acceptance proration procedures outlined below. Any remaining tendered Series G ADSs and Series H ADSs that have not been accepted for exchange as a result of proration will be returned to tendering holders promptly after the consummation of the Exchange Offer.

 

   

Where more than 66 2/3% of the outstanding Series G ADSs are tendered for exchange, the Series G ADSs will be accepted for tender from holders who validly tendered and did not properly withdraw their Series G ADSs on a pro rata basis based on the following calculation (the “Series G Prorated Amount”): (A) (i) 946,100 (the Series G ADS Proration Threshold) divided by (ii) the cumulative number of Series G ADSs actually tendered by holders of the Series G ADSs multiplied by (B) the number of Series G ADSs actually tendered by the relevant holder of the Series G ADSs.

 

   

Where more than 66 2/3% of the outstanding Series H ADSs are tendered for exchange, the Series H ADSs will be accepted for tender from holders who validly tendered and did not properly withdraw their Series H ADSs on a pro rata basis based on the following calculation (the “Series H Prorated Amount”): (A) (i) 1,907,600 (the Series H ADS Proration Threshold ) divided by (ii) the cumulative number of Series H ADSs actually tendered by holders of the Series H ADSs multiplied by (B) the number of Series H ADSs actually tendered by the relevant holder of the Series H ADSs.



 

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In applying the proration procedure to the individual tenders made by holders of the Series G ADSs or Series H ADSs, including DTC participants, the Exchange Agent may make adjustments approved by the Navios Holdings, up or down, so that no fraction of an ADS is purchased from a holder of Series G ADSs or Series H ADSs, including any DTC participant.

 

  See “Terms of the Exchange Offer and Consent Solicitation—Tender Acceptance Proration Procedures.”

 

Guaranteed Delivery Procedures

If you wish to tender your Series G ADSs and/or Series H ADSs, but cannot properly do so prior to the Expiration Date, you may tender your Series G ADSs and/or Series H ADSs in accordance with the guaranteed delivery procedures described in “Terms of the Exchange Offer and Consent Solicitation—Procedure for Tendering” and “Terms of the Exchange Offer and Consent Solicitation—Guaranteed Delivery Procedures.”

 

Consent Solicitation

We are seeking the consent of holders of each of the Series G ADSs and the Series H ADSs to the Proposed Amendments.

 

  The tender by a holder of Series G ADSs or Series H ADSs and acceptance by us of such Series G ADSs or Series H ADSs pursuant to the Exchange Offer will constitute the granting of consent by such holder to the Proposed Amendments, as applicable. If 66 2/3% of either of the Series G ADSs or Series H ADSs consent to the Proposed Amendments, such consent will be provided as an instruction to The Bank of New York Mellon, the Depositary, as the only “holder” of Preferred Shares, to consent in favor of the Proposed Amendments with respect to the Preferred Shares underlying the tendered ADSs. Consents of holders of at least 66 2/3% of the outstanding Series G Preferred Shares must be received in order to amend and restate the certificate of designation under which the Series G Preferred Shares were issued. Consents of holders of at least 66 2/3% of the outstanding Series H Preferred Shares must be received in order to amend and restate the certificates of designation under which the Series H Preferred Shares were issued.

 

  In addition to approval by holders of the Preferred Shares, the amended and restated certificates of designation must also be approved by the holders of the majority of our outstanding Common Stock before the amendments can become effective. If we complete the Exchange Offer and Consent Solicitation, we intend to seek the approval of our holders of Common Stock at a special meeting of stockholders which we intend to hold following the consummation of the Exchange Offer and Consent Solicitation.

 

Proposed Amendments

The Proposed Amendments will eliminate substantially all of the restrictive covenants and our obligation to pay or accrue any unpaid dividends for any past periods or future periods and amend certain



 

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voting rights in our existing Preferred Shares certificates of designation, including:

 

   

eliminating the requirement that future unpaid dividends accrue for payment in the future;

 

   

eliminating all previously accrued and unpaid dividends on the Preferred Shares and any obligation of Navios Holdings to pay such accrued and unpaid dividends at any time in the future, including on liquidation;

 

   

amending the restriction on paying dividends on junior securities from being in effect so long as cumulative dividends on the Preferred Stock are in arrears to only being in effect in any quarter in which a dividend on the Preferred Shares has not been declared or paid in respect of such quarter;

 

   

eliminating the increase of the dividend rate on the Preferred Shares in the event Navios Holdings Articles of Incorporation are not amended to permit the holders of the Preferred Shares to elect a director if and when six or more quarterly dividends are in arrears;

 

   

eliminating the requirement that, without the affirmative vote or consent of the holders of at least 66 2/3% of the outstanding series of Preferred Shares, voting as a class together with holders of any other parity securities, if the cumulative dividends payable on outstanding Preferred Shares are in arrears, Navios Holdings shall not issue any parity securities; and

 

   

eliminating the requirement that, in the event that full cumulative dividends on the Preferred Shares and any parity securities shall not have been declared or paid and set apart for payment, none of Navios Holdings or any Affiliate of Navios Holdings may repurchase, redeem or otherwise acquire any series of Preferred Shares or parity securities or any junior securities, including Common Stock.

 

No Recommendation

Neither we, our Board of Directors, the Information Agent, the Exchange Agent, the Depositary, nor any affiliate of any of the foregoing or any other person is making any recommendation as to whether or not you should tender your Series G ADSs and/or Series H ADSs in the Exchange Offer or the form of consideration you should choose to receive if you tender Series G ADSs and/or Series H ADSs in the Exchange Offer. You must make your own investment decision regarding the Exchange Offer based upon your own assessment of the market value of the Series G ADSs or Series H ADSs and the 2024 Notes, your liquidity needs, your investment objectives and any other factors you deem relevant.

 

 

You should consider carefully all of the information set forth in this prospectus and, in particular, you should evaluate the specific factors set forth under “Risk Factors” in this prospectus and in



 

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Annex A to this prospectus before deciding whether to participate in the Exchange Offer and Consent Solicitation.

 

Conditions to Completion of the Exchange Offer and Consent Solicitation

The completion of the Exchange Offer and Consent Solicitation are subject to certain additional conditions. See “The Exchange Offer and Consent Solicitation—Conditions of the Exchange Offer” and “Terms of the Exchange Offer and Consent Solicitation—Proposed Amended and Restated Certificates of Designation Sought in the Consent Solicitation.”

 

Expiration of the Exchange Offer

The Exchange Offer and Consent Solicitation for the Series G ADSs and Series H ADSs will expire at 5:00 p.m., New York City Time, on March 1, 2019, unless extended or earlier terminated. DTC and its direct and indirect participants will establish their own cutoff dates and times to receive instructions to tender in the Exchange Offer, which will be earlier than the Expiration Date. You should contact your broker or other securities intermediary to determine the cutoff date and time applicable to you.

 

Closing Date

The closing date will be promptly after the Expiration Date. Assuming the Exchange Offer and Consent Solicitation is not extended, we expect the closing date will be on or about March 6, 2019.

 

How to Tender Your Series G ADSs or Series H ADSs

Series G ADSs or Series H ADSs held in a securities account with a broker or other securities intermediary can be tendered by your broker or other securities intermediary through DTC upon your request.

 

  If you tender your Series G ADSs or Series H ADSs without indicating the consideration you wish to receive in exchange for the Series G ADSs or Series H ADSs that you tender, it will be assumed that you are electing to tender all of your Series G ADSs or Series H ADSs tendered for 2024 Notes.

 

  If you have questions, please call the Information Agent at the toll-free number below. See “Terms of the Exchange Offer and Consent Solicitation—Procedure for Tendering.”

 

Fractional Interest in the 2024 Notes

Fractional interest in the 2024 Notes will not be issued in exchange for Series G ADSs or Series H ADSs. Instead, any holder who would otherwise receive a fractional interest in the 2024 Notes will receive a cash payment equal to the principal amount of the fractional interest.

 

  See “Terms of the Exchange Offer and Consent Solicitation—Terms of the Exchange Offer” and “Terms of the Exchange Offer and Consent Solicitation—Fractional 2024 Notes.”


 

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Withdrawal of Tendered Series G ADSs or Series H ADSs

You may withdraw previously tendered Series G ADSs or Series H ADSs at any time before the Expiration Date. Any Series G ADSs or Series H ADSs not accepted will be credited back to the appropriate account promptly following the expiration or termination of the Exchange Offer. In addition, after the expiration of the Exchange Offer, you may withdraw any Series G ADSs or Series H ADSs that you tendered that are not accepted by us for exchange after the expiration of 40 business days following commencement of the Exchange Offer. See “Terms of the Exchange Offer and Consent Solicitation—Withdrawal of Tenders and Revocation of Corresponding Consents.”

 

Consequences of Not Exchanging ADSs

If you currently hold Series G ADSs and Series H ADSs and do not tender them, or you tendered your Series G ADSs and Series H ADSs and some of such Series G ADSs or Series H ADSs were returned to you under the tender acceptance proration procedures applicable to the Exchange Offer, then, following the settlement date, your unexchanged ADSs will continue to be outstanding according to their terms (as amended pursuant to any amendments resulting from the Consent Solicitation). Moreover, if we complete the Exchange Offer, the liquidity of any Series G ADSs or Series H ADSs that remain outstanding after settlement of the Exchange Offer may be adversely affected and the value of the Series G ADSs or Series H ADSs may otherwise be affected by the completion of the Exchange Offer.

 

Amendment and Termination

We may terminate the Exchange Offer and Consent Solicitation with respect to one or both series of ADSs if the conditions to the Exchange Offer are not met on or prior to the Expiration Date. We reserve the right, subject to applicable law, (i) to waive any and all of the conditions of the Exchange Offer and Consent Solicitation with respect to one or both series of ADSs prior to the Expiration Date or (ii) to amend the terms of the Exchange Offer and Consent Solicitation with respect to one or both series of ADSs. In the event that the Exchange Offer and Consent Solicitation are terminated, withdrawn or otherwise not consummated prior to the Expiration Date, no 2024 Notes will be issued and no cash will become payable to holders who have tendered their Series G or Series H ADSs. In any such event, the Series G ADSs or Series H ADSs previously tendered pursuant to the Exchange Offer will be promptly returned to the tendering holders and the Proposed Amendments will not become effective. See “Terms of the Exchange and Consent Solicitation—Extension, Termination and Amendment.”

 

Use of Proceeds

We will not receive any cash proceeds from the Exchange Offer. In consideration for the cash consideration and/or the issuance of up to $15.6 million aggregate principal amount of 2024 Notes, we will receive up to 66 2/3% of each of the outstanding Series G ADSs and Series H ADSs validly tendered and accepted in the Exchange Offer.



 

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The Series G ADSs and Series H ADSs acquired by us pursuant to the Exchange Offer will be cancelled upon receipt thereof.

 

Certain U.S. Federal Income Tax Consequences

See “Certain U.S. Federal Income Tax Consequences.”

 

Appraisal Rights

Under Republic of the Marshall Islands law, holders of Preferred Shares that do not consent to the Proposed Amendments have a right to dissent from the Proposed Amendments and to receive payment for their Preferred Shares equal to the “fair value” of such shares, as determined by the High Court of the Republic of the Marshall Islands. However, the Depositary will not exercise those appraisal rights on behalf of a holder of Series G ADSs or Series H ADSs, even if requested to do so. In order for holders of Series G ADSs or Series H ADSs to exercise their appraisal rights, they would have to surrender their Series G ADSs or Series H ADSs as soon as possible with ample time to become a registered holder of Preferred Shares not later than March 1, 2019. See “Terms of the Exchange Offer and Consent Solicitation—Appraisal Rights.”

 

Information Agent

Georgeson LLC

 

Exchange Agent

The Bank of New York Mellon

 

Depositary

The Bank of New York Mellon

 

Soliciting Dealer Fee

With respect to any tender and acceptance of a Series G ADS or a Series H ADS, we will pay a soliciting dealer a fee of 2.0% of the original liquidation preference ($25.00) applicable to each Series G ADS and Series H ADS tendered on the terms and conditions set forth in the prospectus. See “Terms of the Exchange Offer and Consent Solicitation—Soliciting Dealer Fee.”

 

Additional Documentation; Further Information; Assistance

Any requests for assistance concerning the Exchange Offer may be directed to the Information Agent at the address set forth on the back cover of this prospectus or by telephone toll free at (888) 566-3252. Beneficial owners may also contact their broker or other securities intermediary.

 

  Any requests for additional copies of this prospectus may be directed to the Information Agent at the address set forth on the back cover of this prospectus or by telephone toll free at (888) 566-3252.

You should read this entire prospectus carefully before deciding whether or not to tender your Series G ADSs and/or Series H ADSs. You should consult with your personal financial advisor or other legal, tax or investment professional(s) regarding your individual circumstances.



 

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SUMMARY DESCRIPTION OF NOTES

The following summary contains basic information about the 2024 Notes and is not intended to be complete. It may not contain all the information that is important to you. For a more complete understanding of the 2024 Notes, you should read the section of this prospectus entitled “Description of Notes.”

 

Issuer

Navios Maritime Holdings Inc.

 

Securities Offered

Up to $15.6 million principal amount of 9.75% Senior Notes due 2024, assuming no cash consideration elections.

 

Issue Price

100%.

 

Maturity Date

April 15, 2024.

 

Interest

9.75% per annum on the principal amount, payable semi-annually in arrears in cash on April 15 and October 15 of each year, commencing on October 15, 2019. Interest on the 2024 Notes will accrue from and including the date that the 2024 Notes are issued.

 

Guarantees

None.

 

Ranking

The 2024 Notes will be our senior unsecured general obligations. Accordingly, they will rank:

 

   

senior in right of payment to any of our existing and future debt that expressly provides that it is subordinated to the 2024 Notes;

 

   

pari passu in right of payment with all of our existing and future senior obligations;

 

   

structurally subordinated in right of payment to the obligations of our subsidiaries; and

 

   

effectively subordinated in right of payment to any existing and future obligations of Navios Holdings that are secured by property or assets that do not secure the 2024 Notes, including the 2022 Senior Secured Notes and the 2022 Notes, to the extent of the value of any such property and assets securing such other obligations.

 

Sinking Fund

None.

 

Redemption

We will have the option to redeem the 2024 Notes, in whole or in part, at our option at any time, at a redemption price equal to 100% of the principal amount of the 2024 Notes to be redeemed, plus accrued interest on the 2024 Notes to be redeemed to, but excluding, the date on which the 2024 Notes are to be redeemed.

 

Events of Default

If an event of default on the 2024 Notes has occurred and is continuing, the aggregate principal amount of the 2024 Notes, plus any accrued and unpaid interest, may be declared immediately due and payable. These amounts automatically become due and payable upon certain events of default. See “Description of Notes—Events of Default and Remedies.”


 

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Restrictive Covenants

None.

 

United States Federal Income Tax Consequences

See “Certain U.S. Federal Income Tax Consequences.”

 

No Assurance of an Active Trading Market

We cannot assure you that an active and liquid market for the 2024 Notes will develop or be maintained. If an active and liquid market for the 2024 Notes does not develop or is not maintained, the market price of the 2024 Notes may be adversely affected.

 

Risk Factors

You should consider carefully all of the information set forth in this prospectus and, in particular, the information under the heading “Risk Factors” in this prospectus and in Annex A before participating in the Exchange Offer and Consent Solicitation and electing the form of consideration to be paid.

 

Trustee

Wilmington Trust, National Association

 

Governing Law

The governing law for the 2024 Notes and the indenture will be New York law.


 

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SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA

The summary consolidated financial and other data of Navios Holdings for the years ended December 31, 2017, 2016 and 2015 is derived from our audited consolidated financial statements included in this prospectus in Annex A, which have been audited by an independent registered public accounting firm. The summary consolidated statement of comprehensive (loss)/income data and other financial data of Navios Holdings for and as of the nine month periods ended September 30, 2018 and September 30, 2017 is derived from our unaudited consolidated financial statements included in this prospectus in Annex B. The summary consolidated balance sheet data as of September 30, 2017 have been derived from our unaudited interim financial statements, which are not included in this prospectus. The information is only a summary and should be read in conjunction with the historical financial statements and related notes included in the annexes to this prospectus. In the opinion of management, the unaudited financial statements referenced above include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the periods presented. The information below should be read in conjunction with Item 5. “Operating and Financial Review and Prospects” and the consolidated financial statements, related notes and other financial information included in our Annual Report on Form 20-F included in this prospectus as Annex A and our Form 6-K included in this prospectus as Annex B.

The historical results included below and elsewhere in this prospectus are not necessarily indicative of the future performance of Navios Holdings.

 

    Nine Months Ended     Fiscal Years Ended  
    September 30,
2018
    September 30,
2017
    December 31,
2017
    December 31,
2016
    December 31,
2015
 
(in thousands of U.S. dollars)   (unaudited)     (unaudited)                    

Statement of Comprehensive (Loss)/income Data

         

Revenue

  $ 390,386     $ 334,519     $ 463,049     $ 419,782     $ 480,820  

Administrative fee revenue from affiliates

    21,488       16,942       23,667       21,799       16,177  

Time charter, voyage and logistics business expenses

    (155,363     (161,628     (213,929     (175,072     (247,882

Direct vessel expenses

    (73,756     (90,566     (116,713     (127,396     (128,168

General and administrative expenses incurred on behalf of affiliates

    (21,488     (16,942     (23,667     (21,799     (16,177

General and administrative expenses

    (21,757     (19,203     (27,521     (25,295     (34,183

Depreciation and amortization

    (75,247     (77,893     (104,112     (113,825     (120,310

Interest expense and finance cost, net

    (97,797     (83,812     (114,780     (108,692     (110,781

Impairment losses

    (16,070     (14,239     (50,565     —       —  

Gain/(loss) on bond and debt extinguishment

    6,464       1,715       (981     29,187       —  

Other (expense)/income, net

    (8,928     (4,790     (6,826     5,206       (30,201
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before equity in net earnings of affiliated companies

  $ (52,068   $ (115,897   $ (172,378   $ (96,105   $ (190,705

Equity in net (losses)/earnings of affiliated companies

    (13,720     2,208       4,399       (202,779     61,484  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Losses before taxes

  $ (65,788   $ (113,689   $ (167,979   $ (298,884   $ (129,221

Income tax benefit/(expense)

    1,324       562       3,192       (1,265     3,154  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

  $ (64,464   $ (113,127   $ (164,787   $ (300,149   $ (126,067


 

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    Nine Months Ended     Fiscal Years Ended  
    September 30,
2018
    September 30,
2017
    December 31,
2017
    December 31,
2016
    December 31,
2015
 
(in thousands of U.S. dollars)   (unaudited)     (unaudited)                    

Less: Net income attributable to the noncontrolling interest

    (3,501     (1,182     (1,123     (3,674     (8,045
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to Navios Holdings common stockholders

  $ (67,965   $ (114,309   $ (165,910   $ (303,823   $ (134,112
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss attributable to Navios Holdings common stockholders, basic and diluted

  $ (75,644   $ (121,049   $ (175,298   $ (273,105   $ (150,314
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted net loss per share attributable to Navios Holdings common stockholders

  $ (0.63   $ (1.04   $ (1.50   $ (2.54   $ (1.42
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of shares, basic and diluted

  $ 119,423,025     $ 116,260,640     $ 116,673,459     $ 107,366,783     $ 105,896,235  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance Sheet Data

(at period end)

         

Current assets, including cash and cash equivalents and restricted cash

  $ 276,738     $ 232,865     $ 256,076     $ 273,140     $ 302,959  

Total assets

    2,488,857       2,660,607       2,629,981       2,752,895       2,958,813  

Total long-term indebtedness, including current portion

    1,599,331       1,643,215       1,682,488       1,651,095       1,581,308  

Navios Holdings’ stockholders’ equity

  $ 451,633     $ 566,687     $ 516,098     $ 678,287     $ 988,960  

Other Financial Data

         

Net cash provided by operating activities

  $ 39,591     $ 33,578     $ 50,784     $ 36,920     $ 43,478  

Net cash provided by/(used in) investing activities

    51,870       (32,987     (42,365     (150,565     (36,499

Net cash (used in)/provided by financing activities

    (82,670     (22,730     (16,779     86,225       (91,123

Book value per common share

    3.62       4.74       4.29       5.79       8.95  

Cash dividends per common share

    —       —       —       —       0.17  

Cash dividends per preferred share

    —       —       —       74.4       216.7  

Cash paid for Common Stock dividend declared

    —       —       —       —       19,325  

Cash paid for preferred stock dividend declared

    —       —       —       3,681       16,025  

Adjusted EBITDA

  $ 118,066     $ 61,144     $ 68,813     $ (62,827   $ 112,756  

 

(1)

EBITDA represents net (loss)/income attributable to Navios Holdings’ common stockholders before interest and finance costs, before depreciation and amortization and before income taxes. Adjusted EBITDA represents EBITDA before stock based compensation. We use Adjusted EBITDA as a liquidity measure and reconcile Adjusted EBITDA to net cash provided by operating activities, the most comparable U.S. GAAP liquidity measure. Adjusted EBITDA is calculated as follows: net cash provided by operating activities adding back,



 

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  when applicable and as the case may be, the effect of (i) net increase/(decrease) in operating assets, (ii) net (increase)/decrease in operating liabilities, (iii) net interest cost, (iv) deferred finance charges and gains/(losses) on bond and debt extinguishment, (v) (provision)/recovery for losses on accounts receivable, (vi) equity in affiliates, net of dividends received, (vii) payments for drydock and special survey costs, (viii) noncontrolling interest, (ix) gain/ (loss) on sale of assets/ subsidiaries, (x) unrealized (loss)/gain on derivatives, and (xi) loss on sale and reclassification to earnings of available-for-sale securities and impairment charges. Navios Holdings believes that Adjusted EBITDA is a basis upon which liquidity can be assessed and represents useful information to investors regarding Navios Holdings’ ability to service and/or incur indebtedness, pay capital expenditures, meet working capital requirements and pay dividends. Navios Holdings also believes that Adjusted EBITDA is used (i) by prospective and current lessors as well as potential lenders to evaluate potential transactions; (ii) to evaluate and price potential acquisition candidates; and (iii) by securities analysts, investors and other interested parties in the evaluation of companies in our industry.

Adjusted EBITDA has limitations as an analytical tool, and therefore, should not be considered in isolation or as a substitute for the analysis of Navios Holdings’ results as reported under U.S. GAAP. Some of these limitations are: (i) Adjusted EBITDA does not reflect changes in, or cash requirements for, working capital needs; (ii) Adjusted EBITDA does not reflect the amounts necessary to service interest or principal payments on our debt and other financing arrangements; and (iii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future. Adjusted EBITDA does not reflect any cash requirements for such capital expenditures. Because of these limitations, among others, Adjusted EBITDA should not be considered as a principal indicator of Navios Holdings’ performance. Furthermore, our calculation of Adjusted EBITDA may not be comparable to that reported by other companies due to differences in methods of calculation.



 

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The following table reconciles net cash provided by operating activities, as reflected in the consolidated statements of cash flows, to Adjusted EBITDA:

Adjusted EBITDA Reconciliation from Cash from Operations

 

    Nine Months Ended     Fiscal Years Ended  
    September 30,
2018
    September 30,
2017
    December 31,
2017
    December 31,
2016
    December 31,
2015
 
(in thousands of U.S. dollars)   (unaudited)     (unaudited)                    

Net cash provided by operating activities

  $ 39,591     $ 33,578     $ 50,784     $ 36,920     $ 43,478  

Net increase/(decrease) in operating assets

    13,742       (30,954     (25,052     20,599       (43,042

Net increase in operating liabilities

    (3,095     (12,103     (20,814     (38,928     (39,288

Payments for drydock and special survey costs

    6,189       10,024       10,824       11,096       24,840  

Net interest cost

    91,834       79,518       108,389       103,039       106,257  

(Provision)/recovery for losses on accounts receivable

    (418     276       (269     (1,304     (59

Impairment losses

    (16,070     (14,239     (50,565     —       —  

Gain on sale of assets

    28       1,075       1,064       —       —  

Gain on bond and debt extinguishment

    6,464       1,715       185       29,187       —  

(Losses)/earnings in affiliates and joint ventures, net of dividends received

    (16,698     (6,564     (4,610     (219,417     30,398  

Reclassification to earnings of available-for-sale securities

    —         —         —       (345     (1,783

Noncontrolling interest

    (3,501     (1,182     (1,123     (3,674     (8,045
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 118,066     $ 61,144     $ 68,813     $ (62,827   $ 112,756  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


 

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RISK FACTORS

You should carefully consider the risk factors set forth below as well as the risk factors set forth in Annex A to this prospectus, and the other information contained in this prospectus before deciding to participate in the Exchange Offer and Consent Solicitation. The risks described below and in Annex A are not the only risks facing us. Additional risks and uncertainties not currently known to us or those we currently view to be immaterial may also materially and adversely affect our business, financial condition or results of operations. Any of the following risks could materially and adversely affect our business, financial condition or results of operations. In such a case, you could lose all or part of your investment in the 2024 Notes.

Risks Relating to the Exchange Offer and the 2024 Notes

If you tender Series G ADSs or Series H ADSs, you may subject to proration as to the number of Series G ADSs and/or Series H ADSs we accept and you also may not receive all of your consideration for accepted Series G ADSs and/or Series H ADSs in the form you elect.

Upon the terms and subject to the conditions of the Exchange Offer, we will accept for exchange 946,100 (representing approximately 66 2/3%) of the outstanding Series G ADSs and/or 1,907,600 (representing approximately 66 2/3%) of the outstanding Series H ADSs. If either or both Series G ADSs and/or Series H ADSs are validly tendered and not properly withdrawn in excess of this limit, they will be subject to the tender acceptance proration procedures described in this prospectus. Any Series G ADSs or Series H ADSs in excess of the number of Series G ADSs or Series H ADSs sought in the Exchange Offer will be not be accepted for exchange and will be returned to tendering holders promptly after the consummation of the Exchange Offer. See “Terms of the Exchange Offer and Consent Solicitation—Tender Acceptance Proration Procedures.”

In addition, the consideration to be received for the Series G ADSs or Series H ADSs accepted by us for exchange shall be at the holder’s election, provided that, no more than 50% of the total number of Series G ADSs and no more than 50% of the total number of Series H ADSs tendered will receive cash consideration. If Series G ADSs and/or Series H ADSs are tendered in excess of these cash caps, they will be subject to consideration proration procedures and all such Series G ADSs and/or Series H ADSs in excess of these cash caps will be deemed to have been tendered for, and will automatically receive, 2024 Notes. In addition, no more than $7.8 million of 2024 Notes will be issued as consideration for Series G ADSs and no more than $7.8 million of 2024 Notes will be issued as consideration for Series H ADSs and any Series G ADSs or Series H ADSs tendered in excess of this limitation will be deemed to have made a cash election instead. To the extent that holders of either the Series G ADSs or Series H ADSs made elections that would cause fewer than $7.8 million of 2024 Notes to be issued in respect of such series then unused amounts of 2024 Notes will be allocated to the extent necessary to satisfy elections of 2024 Notes for the other series. Therefore, despite your election, the form of consideration you receive will be dependent on the elections of other holders of Series G ADSs and/or Series H ADSs that also tender their Series G ADSs or Series H ADSs in the Exchange Offer. Accordingly, some of the consideration you receive in the Exchange Offer may differ from the type of consideration you select. See “The Exchange Offer—Consideration Elections and Consideration Proration.”

We have not obtained a third-party determination that the Exchange Offer is fair to holders of Series G ADSs or Series H ADSs and Preferred Shares.

Neither we, our Board of Directors, the Information Agent, the Exchange Agent, the Depositary, nor any affiliate of any of the foregoing or any other person is making any recommendation as to whether or not you should tender your Series G ADSs or Series H ADSs in the Exchange Offer or the form of consideration you should choose to receive if you tender Series G ADSs or Series H ADSs in the Exchange Offer. We have not retained, and do not intend to retain, any unaffiliated representative to act solely on behalf of the holders of Series G ADSs and Series H ADSs and Preferred Shares for purposes of negotiating the Exchange Offer or preparing a report concerning the fairness of the Exchange Offer. You must make your own independent decision regarding your participation in the Exchange Offer.

 

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If the Exchange Offer is successfully completed and the Proposed Amendments are adopted, the holders of the remaining Series G ADSs and Series H ADSs will generally no longer have certain voting rights or the protection of restrictive covenants under the respective certificates of designation.

If the Exchange Offer is successfully completed and the Proposed Amendments are adopted pursuant to the Consent Solicitation, and we obtain the vote of a majority of the outstanding Common Stock, substantially all of the restrictive covenants and our obligation to pay or accrue any unpaid dividends for any past periods or future periods will be eliminated and certain voting rights will be amended in the certificates of designation of each of the Preferred Shares. Consequently, substantially all of the protections of holders of the Series G ADSs and Series H ADSs will be eliminated and certain voting rights will be amended. If you do not tender, or if your tender of Series G ADSs or Series H ADSs is subject to proration, and the Exchange Offer and Consent Solicitation is successful and we obtain the vote of a majority of the outstanding Common Stock then the Series G ADSs and/or Series H ADSs that we do not accept, or that are not tendered, will also lose the right to receive any unpaid dividends for past periods and future periods and substantially all of the restrictive covenants and certain voting rights that they previously had. Additionally, the liquidity of the Series G ADSs and Series H ADSs may be reduced.

The indenture governing the 2024 Notes will not contain restrictive covenants and only provides for limited events of default.

The indenture governing the 2024 Notes will not contain any negative covenants, including any restrictions on:

 

   

incurring or guaranteeing additional indebtedness;

 

   

creating liens on our assets;

 

   

making new investments;

 

   

engaging in mergers and acquisitions;

 

   

paying dividends or redeeming capital stock;

 

   

making capital expenditures; or

 

   

entering into transactions with affiliates.

There will be no limitation to the amount of indebtedness, including secured indebtedness, that we may incur under the indenture governing the 2024 Notes. While there are restrictive covenants in the terms of our other existing indebtedness, they are subject to significant exceptions and, there is no guarantee that such indebtedness will remain a part of our capital structure in the future, that we will not seek a consent to amend the restrictive covenants contained in such indebtedness or that any refinancing indebtedness will contain the same or similar restrictive covenants as our existing indebtedness. Additionally, the indenture governing the 2024 Notes will not contain any covenants or other provisions to afford protection to holders of the 2024 Notes in the event of a change of control. Further, the indenture governing the 2024 Notes will only provide for an event of default in the event of non-payment of interest due on or principal due of the 2024 Notes and upon certain events of bankruptcy or insolvency and does not provide for an event of default with respect to any covenants in the indenture, defaults on any other of our existing indebtedness or borrowings or defaults on court judgments that may be rendered in the future. See “Description of Notes—Events of Default and Remedies.” The lack of restrictive covenants and the limited events of default may limit your rights as holder of the 2024 Notes.

The 2024 Notes will not be, guaranteed by any of Navios Holdings’ subsidiaries or secured by the properties or assets of Navios Holdings or any of Navios Holdings’ subsidiaries. Accordingly, Navios Holdings secured creditors and Navios Holdings’ subsidiaries secured and unsecured creditors will have priority over you as a holder of the 2024 Notes with respect to substantially all of our properties, assets and earnings.

The 2024 Notes will not be guaranteed by any of our subsidiaries or secured by any of the properties or assets of Navios Holdings or Navios Holdings’ subsidiaries. As a consequence, the 2024 Notes will be

 

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structurally and/or effectively subordinated to substantially all of our existing and future liabilities (other than trade creditors of Navios Holdings) and those of our subsidiaries. Navios Holdings is a holding company without substantial assets other than the equity of its subsidiaries. Claims of creditors of our subsidiaries, including trade creditors, generally will have priority with respect to the properties, assets and earnings of such subsidiaries over our claims or those of our creditors, including you as a holder of the 2024 Notes. In the event that any of our subsidiaries become insolvent, liquidate, reorganize, dissolve or otherwise wind up, the properties, assets and earnings of those subsidiaries will be used first to satisfy the claims of their creditors, trade creditors, banks and other lenders and judgment creditors.

There is currently no market for the 2024 Notes and we cannot assure you that an active trading market will develop for the 2024 Notes.

The 2024 Notes are new securities for which there presently is no established market. Accordingly, we cannot give you any assurance as to the development or liquidity of any market for the 2024 Notes. We do not intend to apply for listing of the 2024 Notes on any securities exchange. Therefore, it is unlikely that a trading market for the 2024 Notes will exist upon consummation of the Exchange Offer.

Even if a limited trading market for the 2024 Notes does develop, you may not be able to sell your 2024 Notes at a particular time, if at all, or you may not be able to obtain the price you desire for your 2024 Notes. Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial fluctuations in the price of securities. If the 2024 Notes are traded after their initial issuance, they may trade at a discount from their initial offering price depending on many factors, including prevailing interest rates, the market for similar securities, our credit rating, the interest of securities dealers in making a market for the 2024 Notes, the price of any other securities we issue, our performance, prospects, operating results and financial condition, as well as of other companies in our industry.

The liquidity of, and trading market for the 2024 Notes also may be adversely affected by general declines in the market or by declines in the market for similar securities. Such declines may adversely affect such liquidity and trading markets independent of our financial performance and prospects.

The successful completion of the Exchange Offer and Consent Solicitation will result in an increase in our annual interest expense.

In February 2016, we announced the suspension of payment of quarterly dividends on the Series G ADSs and Series H ADSs. The issuance of the 2024 Notes pursuant to the Exchange Offer will result in us having an obligation to the holders of the 2024 Notes to make a semi-annual, cash interest payment of 9.75% whereas we are not currently under a legal obligation to pay the dividends on the Series G ADSs and Series H ADSs in arrears, or any future dividends, on the Series G ADSs and Series H ADSs. Assuming the Exchange Offer is successful, and we issue the maximum principal amount of 2024 Notes contemplated by this Exchange Offer, assuming no cash consideration elections, our annual interest expense will increase by $1.5 million per annum.

Series G ADSs and Series H ADSs that you continue to hold after the Exchange Offer are expected to become less liquid following the Exchange Offer.

Following consummation of the Exchange Offer, the number of Series G ADSs or Series H ADSs that are publicly traded will be reduced and the trading market for the remaining outstanding Series G ADSs or Series H ADSs may be less liquid and market prices may fluctuate significantly depending on the volume of trading in the Series G ADSs or Series H ADSs. Therefore, holders whose Series G ADSs or Series H ADSs are not repurchased will own a greater percentage interest in the remaining outstanding Series G ADSs or Series H ADSs following consummation of the Exchange Offer. This may reduce the volume of trading and make it more difficult to buy or sell significant amounts of Series G ADSs or Series H ADSs without affecting the market price. Decreased liquidity may make it more difficult for holders of Series G ADSs or Series H ADSs to sell their Series G ADSs or Series H ADSs.

 

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If you tender Series G ADSs and/or Series H ADSs in the Exchange Offer, a portion of the Series G ADSs and/or Series H ADSs that you tender may be rejected or subject to proration.

The amount of Series G ADSs and/or Series H ADSs that we intend to accept in the Exchange Offer in exchange for the 2024 Notes is limited to 66 2/3% of each of the Series G ADSs and Series H ADSs. As a result, we may not be able to accept for exchange a portion of the Series G ADSs and/or Series H ADSs that you validly tender and do not properly withdraw in the Exchange Offer and the amount of the Series G ADSs and/or Series H ADSs that you validly tender and do not properly withdraw that we accept may be subject to proration. See “Terms of the Exchange Offer and Consent Solicitation—Tender Acceptance Proration Procedure.” If you tender all of your Series G ADSs and/or all of your Series H ADSs and the Exchange Offer and Consent Solicitation are consummated and the proration procedures are applied, your tendered Series G ADSs and/or Series H ADSs in excess of the proration threshold will be returned to you and such returned Series G ADSs and Series H ADSs will be subject to the Proposed Amendments. Consequently, substantially all of the protections of holders of the Series G ADSs and Series H ADSs will be eliminated. See “Risk Factors—Risks Relating to the Exchange Offer and the 2024 Notes—If the Exchange Offer is successfully completed and the Proposed Amendments are adopted, the holders of the remaining Series G ADSs and Series H ADSs will generally no longer have voting rights or the protection of restrictive covenants under the respective certificates of designation” and “Risk Factors Risks—Relating to Our Series G Preferred Shares and Series H Preferred Shares and the American Depositary Shares.”

By participating in the Exchange Offer and tendering your Series G ADSs or Series H ADSs and having such Series G ADSs and Series H ADSs accepted in this Exchange Offer, you will relinquish any appraisal rights you may have under Republic of the Marshall Islands law with respect to the Preferred Shares.

If you participate in the Exchange Offer and we accept your outstanding Series G ADSs or Series H ADSs in exchange for cash consideration and/or the 2024 Notes, you will, as a matter of Marshall Islands law, effective upon our acceptance of your tendered ADSs and without any further action on your part, relinquish any appraisal rights you may have under Republic of the Marshall Islands law with respect to any Series G ADSs or Series H ADSs, and will have thereby automatically withdrawn any outstanding demand for appraisal rights you have made or make with respect thereto. As such, by participating in the Exchange Offer and relinquishing appraisal rights, you are foregoing any potential for such additional value that an appraisal proceeding may determine you would have been entitled to had you asserted your appraisal rights. See “Terms of the Exchange Offer and Consent Solicitation—Appraisal Rights.”

If you have claims against us resulting from your acquisition or ownership of Series G ADSs or Series H ADSs, you will give up those claims if you exchange such ADSs.

By tendering Series G ADSs and/or Series H ADSs in the Exchange Offer, upon closing of the Exchange Offer, holders of the Series G ADSs and Series H ADSs will be deemed to have released and waived any and all claims they, their successors and their assigns have or may have had against:

 

   

us, our subsidiaries, our affiliates and their stockholders, and

 

   

our directors, officers, employees, attorneys, accountants, advisors, agents and representatives, in each case whether current or former, as well as the directors, officers, employees, attorneys, accountants, advisors, agents and representatives of our subsidiaries, our affiliates and our stockholders,

arising from, related to, or in connection with their acquisition or ownership of the Series G ADSs and/or Series H ADSs , unless those claims arise under federal or state securities laws.

Because it is not possible to estimate the likelihood of their success in pursuing any legal claims or the magnitude of any recovery to which they ultimately might be entitled, it is possible that the consideration that the tendering holders receive in the Exchange Offer will have a value less than the value of any legal claims such

 

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holders are relinquishing. Moreover, holders who do not tender their Series G ADSs and/or Series H ADSs for exchange and former holders who have already sold their Series G ADSs and/or Series H ADSs will continue to have the right to prosecute their claims against us.

Tax Risks

The tax consequences of the Exchange Offer are complex and will vary depending on your particular facts and circumstances.

The U.S. federal income tax consequences to you of participating in the Exchange Offer are complex and will vary depending on whether the Proposed Amendments are approved and become effective, whether you tender all or less than all of your Series G ADSs or Series H ADSs (or a portion of your tendered Series G ADSs or Series H ADSs are returned to you under the tender offer acceptance proration procedures), whether you receive solely 2024 Notes, solely cash or a combination of 2024 Notes and cash, whether your receipt of such consideration is considered to have the effect of a dividend distribution for U.S. federal income tax purposes, the “issue price” for U.S. federal income tax purpose of the 2024 Notes (if any) that you receive and other facts and circumstances. Even if you do not participate in the Exchange Offer, there may be U.S. federal income tax consequences to you if the Proposed Amendments are approved and become effective.

If you participate in the Exchange Offer and you are a holder that is subject to U.S. federal income taxation, it is possible that you may be required to recognize gain (which may exceed the amount of any cash you receive), but not permitted to recognize loss, for U.S. federal income tax purposes on the exchange of your Series G ADSs or Series H ADSs. If you are permitted to recognize loss, such a loss generally would be a capital loss and would not be utilizable to offset ordinary income that you generally would be required to recognize for U.S. federal income tax purposes if you receive 2024 Notes and the 2024 Notes are issued with “original issue discount” for U.S. federal income tax purposes. Please see “Certain U.S. Federal Income Tax Consequences” in this prospectus. Because the U.S. federal income tax consequences of the Exchange Offer are complex, you are urged to consult with your own tax advisor.

The 2024 Notes may not be rated or may receive a lower rating than anticipated.

The 2024 Notes are not rated, and we do not intend to seek a rating on the 2024 Notes. However, if one or more rating agencies rates the 2024 Notes and assigns the notes a rating lower than the rating expected by investors, or reduces their rating in the future, the trading price of the 2024 Notes and the market price of our Common Stock could be harmed. In addition, the trading price of the 2024 Notes is directly affected by market perceptions of our creditworthiness. Consequently, if a credit ratings agency rates any of our debt in the future or downgrades or withdraws any such rating, or puts us on credit watch, the trading price of the 2024 Notes is likely to decline.

The 2024 Notes may be issued with original issue discount for U.S. federal income tax purposes.

If you receive 2024 Notes in the Exchange Offer and you are a holder that is subject to U.S. federal income taxation, your U.S. federal income tax consequences will depend in part on the “issue price” of the 2024 Notes (as defined in “Certain U.S. Federal Income Tax Consequences—Tax Consequences of Holding the 2024 Notes—Issue Price of the 2024 Notes” in this prospectus) for U.S. federal income tax purposes, which is uncertain and will not be determined until after consummation of the Exchange. If the principal amount of the 2024 Notes exceeds their issue price by an amount that equals or exceeds the statutory de minimis amount, then the 2024 Notes will be issued with original issue discount (“OID”) for U.S. federal income tax purposes in an amount equal to such excess. A holder that is subject to U.S. federal income taxation generally will be required to accrue and include OID in its gross income as it accrues as ordinary income using a constant yield method, in advance of the receipt of the cash payment attributable to the OID, regardless of the U.S. holder’s regular method of accounting for U.S. federal income tax purposes. You should review the discussion under “Certain U.S.

 

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Federal Income Tax Consequences—Tax Consequences of Holding the 2024 Notes” and consult your own tax advisor concerning the tax consequences to you of the acquisition, ownership and disposition of the 2024 Notes in light of your particular facts and circumstances.

Risks Relating to Our Series G Preferred Shares and Series H Preferred Shares and the American Depositary Shares

If the Proposed Amendments are adopted then we will not be obligated to pay accrued and unpaid dividends or future dividends on the Series G Preferred Shares and Series H Preferred Shares.

In February 2016, we announced the suspension of payment of quarterly dividends on the Series G Preferred Shares and Series H Preferred Shares and have not paid a quarterly dividend on the Series G Preferred Shares and Series H Preferred Shares since then. If the Proposed Amendments are adopted then we will no longer be obligated to pay accrued and unpaid dividends or future dividends on the Series G Preferred Shares and Series H Preferred Shares and future unpaid dividends in any quarter will not cumulate. We currently have no plans or intentions to pay dividends on the Series G Preferred Shares and Series H Preferred Shares or on our Common Stock, however, the Proposed Amendments, if adopted, will provide that we cannot pay a dividend to holders of our Common Stock in respect to any given quarter unless we also pay a dividend to holders of our Series G Preferred Shares and Series H Preferred Shares in respect of such quarter. Accordingly, if the Proposed Amendments are adopted then holders of the Series G Preferred Shares and Series H Preferred Shares, including the Series G ADSs and Series H ADSs, may not receive the investment return anticipated.

If the Proposed Amendments are adopted then we will have the ability to repurchase our Common Stock even in the event that dividends with respect to the Series G Preferred Shares and Series H Preferred Shares are unpaid.

If the Proposed Amendments are adopted then we will have the ability to repurchase, redeem or otherwise acquire any series of parity or junior securities, including Common Stock, even in the event that dividends are unpaid with respect to the Series G Preferred Shares and Series H Preferred Shares, including the Series G ADSs and Series H ADSs. Such, repurchase, redemption or acquisition of parity or junior securities, including Common Stock, may reduce the cash and cash equivalents on our balance sheet and could hinder our ability to service our existing indebtedness, repurchase the Series G Preferred Shares and Series H Preferred Shares or pay dividends on equity in the future.

Our Series G Preferred Shares and Series H Preferred Shares are subordinated to our debt obligations, including any new 2024 Notes issued pursuant to this Exchange Offer, and a holder’s interests could be diluted by the issuance of additional shares, including additional Series G Preferred Shares and Series H Preferred Shares and by other transactions.

Our Series G Preferred Shares, with a liquidation preference of $2,500.00 per share and our Series H Preferred Shares, with a liquidation preference of $2,500.00 per share, are subordinated to all of our existing and future indebtedness. As of September 30, 2018, our total debt was $1,628.6 million and, assuming the Exchange Offer is consummated and no cash consideration elections are made, we will issue approximately $15.6 million of 2024 Notes. We may incur substantial additional debt from time to time in the future, and the terms of the Series G Preferred Shares and Series H Preferred Shares do not, and will not, limit the amount of indebtedness we may incur. We announced the suspension of dividends on our Common Stock in November 2015 and on the Series G Preferred Shares and Series H Preferred Shares in February 2016. The payment of principal and interest on our debt reduces cash available for distribution to us and on our shares, including the Series G ADSs and Series H ADSs, should such dividends be reinstated. We currently have no plans or intentions to pay dividends on the Series G Preferred Shares and Series H Preferred Shares or on our Common Stock. The Proposed Amendments, if adopted, will provide that unpaid dividends on the Series G ADSs and Series H ADSs will not cumulate but also that we cannot pay a dividend to holders of our Common Stock in respect to any given quarter

 

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unless we also pay a dividend to holders of our Series G Preferred Shares and Series H Preferred Shares in respect to such quarter. The issuance of additional preferred shares on a parity with or senior to our Series G Preferred Shares and Series H Preferred Shares would dilute the interests of the holders of our Series G Preferred Shares and Series H Preferred Shares, and any issuance of any preferred shares senior to or on parity with our Series G Preferred Shares and Series H Preferred Shares or additional indebtedness could affect our ability to pay dividends on, redeem or pay the liquidation preference on our Series G Preferred Shares and Series H Preferred Shares. No provisions relating to our Series G Preferred Shares and Series H Preferred Shares protect the holders of our Series G Preferred Shares and Series H Preferred Shares in the event of a highly leveraged or other transaction, including a merger or the sale, lease or conveyance of all or substantially all our assets or business, which might adversely affect the holders of our Series G Preferred Shares and Series H Preferred Shares.

Our Series G Preferred Shares and Series H Preferred Shares will rank pari passu with any other class or series of our capital stock established after the original issue date of the Series G Preferred Shares and Series H Preferred Shares that is not expressly subordinated or senior to the Series G Preferred Shares and Series H Preferred Shares as to the payment of dividends and amounts payable upon liquidation or reorganization.

Our ability to redeem our Series G Preferred Shares and Series H Preferred Shares, and therefore holders’ ability to receive a return on their investment is limited by the requirements of Republic of the Marshall Islands law.

Republic of the Marshall Islands law provides that we may redeem the Series G Preferred Shares and Series H Preferred Shares only to the extent that assets are legally available for such purposes. Legally available assets generally are limited to our surplus, which essentially represents our retained earnings and the excess of consideration received by us for the sale of shares above the par value of the shares. In addition, under Republic of the Marshall Islands law we may not redeem Series G Preferred Shares and Series H Preferred Shares if we are insolvent or would be rendered insolvent by the payment of such a dividend or the making of such redemption.

The Series G Preferred Shares and Series H Preferred Shares represent perpetual equity interests.

The Series G Preferred Shares and Series H Preferred Shares represent perpetual equity interests in us and, unlike our indebtedness, will not give rise to a claim for payment of a principal amount at a particular date. As a result, holders of the Series G Preferred Shares and Series H Preferred Shares (and accordingly the Series G ADSs and Series H ADSs) may be required to bear the financial risks of an investment in the Series G Preferred Shares and Series H Preferred Shares (and accordingly the Series G ADSs and Series H ADSs) for an indefinite period of time. In addition, the Series G Preferred Shares and Series H Preferred Shares will rank junior to all our indebtedness and other liabilities, and any other senior securities we may issue in the future with respect to assets available to satisfy claims against us.

The Series G Preferred Shares and Series H Preferred Shares represented by the Series G ADSs and Series H ADSs have not been rated, and ratings of any other of our securities may affect the trading price of the Series G ADSs and Series H ADSs.

We have not sought to obtain a rating for the Series G Preferred Shares and Series H Preferred Shares, and both stocks may never be rated. It is possible, however, that one or more rating agencies might independently determine to assign a rating to either the Series G Preferred Shares and Series H Preferred Shares or that we may elect to obtain a rating of either our Series G Preferred Shares and Series H Preferred Shares in the future. In addition, we have issued securities that are rated and may elect to issue other securities for which we may seek to obtain a rating. Any ratings that are assigned to the Series G Preferred Shares and Series H Preferred Shares in the future, that have been issued on our outstanding securities or that may be issued on our other securities, if they are lower than market expectations or are subsequently lowered or withdrawn, could imply a lower relative value for the Series G Preferred Shares and Series H Preferred Shares and could adversely affect the market for

 

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or the market value of the Series G ADSs and Series H ADSs. Ratings only reflect the views of the issuing rating agency or agencies and such ratings could at any time be revised downward or withdrawn entirely at the discretion of the issuing rating agency. A rating is not a recommendation to purchase, sell or hold any particular security, including the Series G Preferred Shares and Series H Preferred Shares and the Series G ADSs and Series H ADSs. Ratings do not reflect market prices or suitability of a security for a particular investor and any future rating of the Series G Preferred Shares and Series H Preferred Shares and the Series G ADSs and Series H ADSs may not reflect all risks related to us and our business, or the structure or market value of the Series G Preferred Shares and Series H Preferred Shares and the Series G ADSs and Series H ADSs.

The amount of the liquidation preference of our Series G Preferred Shares and Series H Preferred Shares is fixed and holders will have no right to receive any greater payment regardless of the circumstances.

The payment due upon liquidation for both our Series G Preferred Shares and Series H Preferred Shares is fixed at the liquidation preference of $2,500.00 per share (equivalent to $25.00 per ADS). If the Exchange Offer is successfully completed and the Proposed Amendments are adopted pursuant to the Consent Solicitation, and we obtain the vote of a majority of the outstanding Common Stock with respect to either or both the Series G Preferred Shares and Series H Preferred Shares, unpaid dividends on the Series G ADSs and Series H ADSs will not cumulate. In the event of our liquidation, if there are remaining assets to be distributed after payment of the liquidation preference of $2,500.00 per share (equivalent to $25.00 per ADS), holders will have no right to receive or to participate in these amounts. Furthermore, if the market price for the Series G Preferred Shares and Series H Preferred Shares, as the case may be, is greater than the liquidation preference, holders will have no right to receive the market price from us upon our liquidation.

The Series G Preferred Shares and Series H Preferred Shares are only redeemable at our option and investors should not expect us to redeem either the Series G Preferred Shares and Series H Preferred Shares on the dates they respectively become redeemable or on any particular date afterwards.

We may redeem, at our option, all or from time to time part of the Series G Preferred Shares and Series H Preferred Shares on or after January 28, 2019 and July 8, 2019 respectively. If we redeem the Series G, holders of the Series G will be entitled to receive a redemption price equal to $2,500.00 per share (equivalent to $25.00 per ADS). If we redeem the Series H, holders of the Series H will be entitled to receive a redemption price equal to $2,500.00 per share (equivalent to $25.00 per ADS). Any decision we may make at any time to propose redemption of either the Series G or the Series H will depend upon, among other things, our evaluation of our capital position, the composition of our shareholders’ equity and general market conditions at that time. In addition, investors might not be able to reinvest the money they receive upon redemption of the Series G or the Series H, as the case may be, in a similar security or at similar rates. We may elect to exercise our partial redemption right on multiple occasions.

Holders of the Series G ADSs and Series H ADSs may be subject to additional risks related to holding the Series G ADSs and Series H ADSs rather than Preferred Shares.

Because holders of the Series G ADSs and Series H ADSs do not hold their Preferred Shares directly, they are subject to the following additional risks, among others:

 

   

a holder of either Series G ADSs and Series H ADSs will not be treated as one of our direct shareholders and may not be able to exercise shareholder rights;

 

   

distributions on the Series G Preferred Shares and Series H Preferred Shares represented by the Series G ADSs and Series H ADSs will be paid to the Depositary, and before the Depositary makes a distribution to holder on behalf of the Series G ADSs and Series H ADSs, withholding taxes or other governmental charges, if any, and fees of the Depositary that must be paid will be deducted;

 

   

we and the Depositary may amend or terminate the Deposit Agreement without the consent of holders of the Series G ADSs and Series H ADSs in a manner that could prejudice holders of Series G ADSs

 

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and Series H ADSs or that could affect their ability to transfer Series G ADSs and Series H ADSs, among others; and

 

   

the Depositary may take other actions inconsistent with the best interests of holders of the Series G ADSs and Series H ADSs.

Risks Relating to our Debt

We have substantial debt and may incur substantial additional debt, including secured debt and debt at the level of our subsidiaries, which could adversely affect our financial health and our ability to obtain financing in the future, react to changes in our business and make payments under the 2024 Notes.

As of September 30, 2018, we had $1,628.6 million in aggregate principal amount of debt outstanding, of which $402.9 million was unsecured.

Our substantial debt could have important consequences to holders of our equity and debt securities. Because of our substantial debt:

 

   

our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, vessel or other acquisitions or general corporate purposes and our ability to satisfy our obligations with respect to our debt may be impaired in the future;

 

   

a substantial portion of our cash flow from operations must be dedicated to the payment of principal and interest on our indebtedness, thereby reducing the funds available to us for other purposes;

 

   

we will be exposed to the risk of increased interest rates because our borrowings under the majority of our credit facilities will be at variable rates of interest;

 

   

it may be more difficult for us to satisfy our obligations to our lenders, resulting in possible defaults on and acceleration of such indebtedness;

 

   

we may be more vulnerable to general adverse economic and industry conditions;

 

   

we may be at a competitive disadvantage compared to our competitors with less debt or comparable debt at more favorable interest rates and, as a result, we may not be better positioned to withstand economic downturns;

 

   

our ability to refinance indebtedness may be limited or the associated costs may increase; and

 

   

our flexibility to adjust to changing market conditions and ability to withstand competitive pressures could be limited, or we may be prevented from carrying out capital expenditures that are necessary or important to our growth strategy and efforts to improve operating margins or our business.

We and our subsidiaries may be able to incur substantial additional indebtedness, including secured indebtedness, in the future as the terms of the indenture governing our 11.25% Senior Secured Notes due 2022 (the “2022 Senior Secured Notes”) and the indenture governing our 7.375% First Priority Ship Mortgage Notes due 2022 (the “2022 Notes”) do not fully prohibit us or our subsidiaries from doing so and the indenture governing the 2024 Notes does not contain any limitation to the amount of indebtedness, including secured indebtedness, that we may incur. The terms of the indenture governing the 7.25% Senior Notes due 2022 (the “2022 Logistics Senior Notes”) of Navios South American Logistics (“Navios Logistics”), the agreements governing the terms of Term Loan B Facility (the “Term Loan B Facility”) and the agreements governing the terms of the other indebtedness of Navios Logistics also permit Navios Logistics to incur substantial additional indebtedness in accordance with the terms of such agreements. If new debt is added to our current debt levels, the related risks that we now face would increase and we may not be able to meet all of our debt obligations.

 

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The agreements and instruments governing our debt other than the 2024 Notes contain restrictions and limitations that could significantly impact our ability to operate our business.

Our secured credit facilities and our indentures governing our 2022 Senior Secured Notes and our 2022 Notes impose certain operating and financial restrictions on us. These restrictions limit our ability to:

 

   

incur or guarantee additional indebtedness;

 

   

create liens on our assets;

 

   

make new investments;

 

   

engage in mergers and acquisitions;

 

   

pay dividends or redeem capital stock;

 

   

make capital expenditures;

 

   

engage in certain FFA trading activities;

 

   

change the flag, class or commercial and technical management of our vessels;

 

   

enter into long-term charter arrangements without the consent of the lender; and

 

   

sell any of our vessels.

The agreements governing the terms of Navios Logistics’ indebtedness impose similar restrictions upon Navios Logistics.

Therefore, we and Navios Logistics will need to seek permission from our respective lenders in order to engage in some corporate and commercial actions that believe would be in the best interest of our respective business, and a denial of permission may make it difficult for us or Navios Logistics to successfully execute our business strategy or effectively compete with companies that are not similarly restricted. The interests of our and Navios Logistics’ lenders may be different from our respective interests or those of our holders of our equity and debt securities, and we cannot guarantee that we or Navios Logistics will be able to obtain the permission of lenders when needed. This may prevent us or Navios Logistics from taking actions that are in best interests of us, Navios Logistics or our stockholders. Any future debt agreements may include similar or more restrictive restrictions.

Our ability to generate the significant amount of cash needed to pay interest and principal and otherwise service our debt and our ability to refinance all or a portion of our indebtedness or obtain additional financing depend on multiple factors, many of which may be beyond our control.

Our ability to make scheduled payments on or to refinance our respective debt obligations will depend on our respective financial and operating performance, which, in turn, will be subject to prevailing economic and competitive conditions and to the financial and business factors, many of which may be beyond the control of us and Navios Logistics.

The principal and interest on such debt will be paid in cash. The payments under our debt will limit funds otherwise available for our respective working capital, capital expenditures, vessel acquisitions and other purposes. As a result of these obligations, current liabilities may exceed our current assets. We may need to take on additional debt as we expand our fleet or other operations, which could increase our ratio of debt to equity. The need to service our debt may limit funds available for other purposes, and our inability to service debt in the future could lead to acceleration of such debt, the foreclosure on assets such as owned vessels or otherwise negatively affect us.

 

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The market values of our vessels, which have declined from historically high levels, may fluctuate significantly, which could cause us to breach covenants in our credit facilities and result in the foreclosure of our mortgaged vessels.

Factors that influence vessel values include:

 

   

number of newbuilding deliveries;

 

   

number of vessels scrapped or otherwise removed from the total fleet;

 

   

changes in environmental and other regulations that may limit the useful life of vessels;

 

   

changes in global dry cargo commodity supply;

 

   

types and sizes of vessels;

 

   

development viability and increase in use of other modes of transportation;

 

   

cost of vessel acquisitions;

 

   

cost of newbuilding vessels;

 

   

governmental or other regulations;

 

   

prevailing level of charter rates;

 

   

general economic and market conditions affecting the shipping industry; and

 

   

the cost of retrofitting or modifying existing ships to respond to technological advances in vessel design or equipment, changes in applicable environmental or other regulations or standards, or otherwise.

If the market values of our owned vessels decrease, we may breach covenants contained in our secured credit facilities. If we breach such covenants and are unable to remedy any relevant breach, our lenders could accelerate our debt and foreclose on their collateral, including our vessels. Any loss of vessels would significantly decrease our ability to generate positive cash flow from operations and, therefore, service our debt. In addition, if the book value of a vessel is impaired due to unfavorable market conditions, or a vessel is sold at a price below its book value, we would incur a loss.

In addition, as vessels grow older, they generally decline in value. We will review our vessels for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. We review certain indicators of potential impairment, such as undiscounted projected operating cash flows expected from the future operation of the vessels, which can be volatile for vessels employed on short-term charters or in the spot market. Any impairment charges incurred as a result of declines in charter rates would negatively affect our financial condition and results of operations. In addition, if we sell any vessel at a time when vessel prices have fallen and before we have recorded an impairment adjustment to our financial statements, the sale may be at less than the vessel’s carrying amount on our financial statements, resulting in a loss and a reduction in earnings.

We may require additional financing to acquire vessels or business or to exercise vessel purchase options, and such financing may not be available.

In the future, we may be required to make substantial cash outlays to exercise options or to acquire vessels or business and will need additional financing to cover all or a portion of the purchase prices. We intend to cover the cost of such items with new debt collateralized by the vessels to be acquired, if applicable, but there can be no assurance that we will generate sufficient cash or that debt financing will be available. Moreover, the covenants in our senior secured credit facility, the indentures or other debt, may make it more difficult to obtain such financing by imposing restrictions on what we can offer as collateral.

 

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The international nature of our operations may make the outcome of any bankruptcy proceedings difficult to predict.

We are incorporated under the laws of the Republic of the Marshall Islands and our subsidiaries are also incorporated under the laws of the Republic of the Marshall Islands, the Republic of Liberia, Malta, Belgium and certain other countries other than the United States, and we conduct operations in countries around the world. Consequently, in the event of any bankruptcy, insolvency or similar proceedings involving us or one of our subsidiaries, bankruptcy laws other than those of the United States could apply, which laws may differ materially from those of the United States in a number of important respects. We have limited operations in the United States. If we become a debtor under the United States bankruptcy laws, bankruptcy courts in the United States may seek to assert jurisdiction over all of our assets, wherever located, including property situated in other countries. There can be no assurance, however, that we would become a debtor in the United States or that a United States bankruptcy court would be entitled to, or accept, jurisdiction over such bankruptcy case or that courts in other countries that have jurisdiction over us and our operations would recognize a United States bankruptcy court’s jurisdiction if any other bankruptcy court would determine it had jurisdiction.

We are a holding company, and therefore our ability to make any required payments on our indebtedness depends upon the ability of our subsidiaries to pay dividends or to advance funds.

We have no direct operations and no significant assets other than the equity interests of our subsidiaries. Because we conduct our operations through our operating subsidiaries, we depend on those entities for dividends and other payments to generate the funds necessary to meet our financial obligations, including our required obligations under the 2024 Notes. The ability of our subsidiaries to pay dividends and make distributions to us will be subject to, among other things, the terms of any debt instruments of our subsidiaries then in effect and applicable law. If distributions from our subsidiaries to us were eliminated, delayed, reduced or otherwise impaired, our ability to make payments on the 2024 Notes would be substantially impaired.

We have substantial equity investments in six companies, five of which are not consolidated in our financial results, and our investment in such companies is subject to the risks related to their respective businesses.

As of the date of this prospectus, we had a 63.8% ownership interest in Navios Logistics, and, as a result, Navios Logistics is a consolidated subsidiary. As such, the income and losses relating to Navios Logistics and the indebtedness and other liabilities of Navios Logistics are shown in our consolidated financial statements.

We also have substantial equity investments in two public companies that are accounted for under the equity method—Navios Acquisition and Navios Partners. As of September 30, 2018, we held 45.3% of the voting stock and 48.6% of the economic interest of Navios Acquisition. As of the date of this prospectus, we held 20.2% of the equity interest in Navios Partners (including a 2.0% general partner interest). As of September 30, 2018, the carrying value of our investments in these two affiliated companies amounted to $149.3 million.

In addition to the value of our investment, we receive dividend payments relating to our investments. As a result of our investments, during the nine month period ended September 30, 2018, we received $4.4 million and $1.4 million in dividends from Navios Acquisition and Navios Partners, respectively. Furthermore, we receive management and general and administrative fees from Navios Acquisition and Navios Partners, which amounted to $76.3 million and $58.2 million, respectively, during the nine month period ended September 30, 2018.

On October 9, 2013, we, Navios Acquisition and Navios Partners established Navios Europe I and as of the date of this prospectus have economic interests of 47.5%, 47.5% and 5.0%, respectively and 50%, 50% and 0%, voting interests, respectively.

On February 18, 2015, we, Navios Acquisition and Navios Partners established Navios Europe II and as of the date of this prospectus have economic interests of 47.5%, 47.5% and 5.0%, respectively and voting interests of 50%, 50% and 0%, respectively.

 

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On June 8, 2017, Navios Containers completed a private placement in which we invested $5.0 million. On November 30, 2018, Navios Containers converted into to a limited partnership. In connection with the conversion, Navios Maritime Containers GP LLC, a Republic of the Marshall Islands limited liability company and wholly-owned subsidiary of Navios Holdings, was admitted as Navios Containers’ general partner and holds a non-economic interest that does not provide the holder with any rights to profits or losses of, or distribution by, the partnership.

Following the conversion of Navios Containers into a limited partnership, on December 3, 2018, Navios Partners distributed approximately 2.5% of the outstanding equity of Navios Containers to the unitholders of Navios Partners in connection with the listing of Navios Containers on The Nasdaq Global Select Market. As of the date of this prospectus, we had a 3.7% ownership interest in Navios Containers.

Our ownership interest in Navios Logistics, Navios Acquisition, Navios Partners, Navios Containers, Navios Europe I and Navios Europe II, and the reflection of such companies (or the investment relating thereto) on our balance sheets and any income generated from or related to such companies are subject to a variety of risks, including risks relating to the respective business of Navios Logistics, Navios Acquisition, Navios Partners, Navios Containers, Navios Europe I and Navios Europe II as disclosed in their respective public filings with the SEC or management reports. The occurrence of any such risks may negatively affect our financial condition.

We evaluate our investments in Navios Acquisition, Navios Partners, Navios Containers, Navios Europe I, Navios Europe II for “other-than-temporary impairment” (“OTTI”) on a quarterly basis. Consideration is given to (i) the length of time and the extent to which the fair value has been less than the carrying value, (ii) their financial condition and near term prospects, and (iii) our intent and ability to retain our investment in these companies, for a period of time sufficient to allow for any anticipated recovery in fair value.

As of September 30, 2018, we consider the decline in the market value of our investment in Navios Acquisition and Navios Partners to be temporary. However, there is the potential for future impairment charges relative to these equity securities if their respective fair values do not recover and an OTTI analysis indicates such write downs are necessary, which may have a material adverse impact on our results of operations in the period recognized. During the nine month period ended September 30, 2018 and during the year ended December 31, 2017, we did not recognize any impairment loss in earnings.

We and our subsidiaries are incorporated in the Republic of the Marshall Islands and in other non-U.S. jurisdictions, and certain of our and their officers and directors are non-U.S. residents. Although you may bring an original action in the courts of the Republic of the Marshall Islands or obtain a judgment against us, our directors or our management in the event you believe your rights have been infringed, it may be difficult to enforce judgments against us, our directors or our management.

We and our subsidiaries are organized under the laws of the Republic of the Marshall Islands and in other non-U.S. jurisdictions, and all of our assets are located outside of the United States. Our business is operated primarily from our office in Monaco and in Piraeus, Greece. In addition, our directors and officers are non-residents of the United States, and all or a substantial portion of the assets of these non-residents are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States if you believe that your rights have been infringed under securities laws or otherwise. Although you may bring an original action against us or our affiliates in the courts of the Republic of the Marshall Islands, and the courts of the Republic of the Marshall Islands may impose civil liability, including monetary damages, against us or our affiliates for a cause of action arising under Republic of the Marshall Islands law, it may impracticable for you to do so. See “Enforceability of Civil Liabilities and Indemnification for Securities Act Liabilities.”

 

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Our being subject to certain fraudulent transfer and conveyance statutes may have adverse implications for the holders of the 2024 Notes.

The 2024 Notes may be voided, subordinated, or limited under fraudulent transfer and insolvency laws.

The Republic of the Marshall Islands

Navios Holdings is organized under the laws of the Republic of the Marshall Islands. While the Republic of the Marshall Islands does not have a bankruptcy statute or general statutory mechanism for insolvency proceedings, a Republic of the Marshall Islands court could apply general U.S. principles of fraudulent conveyance, discussed below, in light of the provisions of the BCA. In such case, a Republic of the Marshall Islands court could void or subordinate the 2024 Notes.

United States

Federal and state fraudulent transfer and conveyance statutes may apply to the issuance of the 2024 Notes. Under U.S. federal bankruptcy law and comparable provisions of U.S. state fraudulent transfer or conveyance laws, if any such law would be deemed to apply, which may vary from state to state, the 2024 Notes could be voided as a fraudulent transfer or conveyance if (1) we issued the 2024 Notes with the intent of hindering, delaying or defrauding creditors or (2) we received less than reasonably equivalent value or fair consideration in return for issuing the 2024 Notes and, in the case of (2) only, one of the following is also true at the time thereof:

 

   

we were insolvent or rendered insolvent by reason of the issuance of the 2024 Notes;

 

   

the issuance of the 2024 Notes left us with an unreasonably small amount of capital to carry on the business;

 

   

we intended to incur debts beyond our ability to pay as they mature; or

 

   

we were a defendant in an action for money damages, or had a judgment for money damages docketed against us or after final judgment, the judgment is unsatisfied.

If a court were to find that the issuance of the 2024 Notes was a fraudulent transfer or conveyance, the court could void the payment obligations under the 2024 Notes or further subordinate the 2024 Notes. In the event of a finding that a fraudulent transfer or conveyance occurred, you may not receive any repayment on the 2024 Notes. Further, the voidance of the 2024 Notes could result in an event of default with respect to our and our subsidiaries’ other debt that could result in acceleration of such debt.

As a general matter, value is given for a transfer or an obligation if, in exchange for the transfer or obligation, property is transferred or an antecedent debt is secured or satisfied. A debtor will generally not be considered to have received value in connection with a debt offering if the debtor did not substantially benefit directly or indirectly from the transaction. In that regard, a debtor will generally not be considered to have received value if the proceeds of a debt offering were used to make a dividend payment or otherwise retire or redeem equity securities issued by the debtor.

The measures of insolvency for purposes of fraudulent transfer or conveyance laws vary depending upon the applicable jurisdiction’s governing law, such that we cannot be certain as to the standards a court would use to determine whether or not we were solvent at the relevant time. Generally, however, an entity would be considered insolvent if, at the time it incurred indebtedness:

 

   

the sum of its debts, including contingent liabilities, was greater than the fair value of all its assets; or

 

   

the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or

 

   

it could not pay its debts as they become due.

 

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In addition, any payment by us pursuant to the 2024 Notes at a time when we are subsequently found to be insolvent could be avoided and required to be returned to us or to a fund for the benefit of our creditors if such payment is made to an insider within a one-year period prior to a bankruptcy filing or within 90 days to any non-insider party and such payment would give the holders of the 2024 Notes more than such holders of the 2024 Notes would have received in a liquidation under Chapter 7 of the U.S. Bankruptcy Code.

If we file a bankruptcy petition, or if a bankruptcy petition is filed against us, you may receive a lesser amount for your claim under the 2024 Notes than you would have been entitled to receive under the indentures governing the 2024 Notes.

If we file a bankruptcy petition under the United States Bankruptcy Code after the issuance of the 2024 Notes, or if such a bankruptcy petition is filed against us, your claim against us for the principal amount of your 2024 Notes may be limited to an amount equal to:

 

   

the original issue price for the 2024 Notes; and

 

   

the portion of original issue discount that does not constitute “unmatured interest” for purposes of the United States Bankruptcy Code.

Any original issue discount that was not amortized as of the date of any bankruptcy filing would constitute unmatured interest. Accordingly, under these circumstances, you may receive a lesser amount than you would have been entitled to receive under the terms of the indenture that will govern the 2024 Notes, even if sufficient funds are available.

 

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USE OF PROCEEDS

We will not receive any cash proceeds from the Exchange Offer. In consideration for the cash consideration and/or the issuance of up to approximately $15.6 million aggregate principal amount of 2024 Notes, we will receive up to 66 2/3% of each of the outstanding Series G ADSs and Series H ADSs validly tendered and accepted in the Exchange Offer. The Series G ADSs and Series H ADSs acquired by us pursuant to the Exchange Offer will be cancelled upon receipt thereof.

 

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TRADING MARKET AND PRICE OF SERIES G ADSs AND SERIES H ADSs

Our Series G ADSs trade on the NYSE under the symbol “NMpG.” Our Series H ADSs trade on the NYSE under the symbol “NMpH.” The following table contains, for the periods indicated, the intraday high and low sale prices per Series G ADS and Series H ADS.

 

     Series G ADSs      Series H ADSs  
     High      Low      High      Low  

2017

           

First Quarter

     16.0900        7.3400        16.0000        7.2200  

Second Quarter

     18.8600        14.3000        18.4100        13.7300  

Third Quarter

     17.6600        13.5000        17.1400        13.0000  

Fourth Quarter

     19.9900        13.8700        18.8900        14.1400  

2018

           

First Quarter

     17.3250        12.1800        17.0000        12.1000  

Second Quarter

     14.2000        10.1800        13.7200        10.2705  

Third Quarter

     15.0000        9.9900        15.0000        10.0000  

Fourth Quarter

     11.4100        2.8300        10.9400        2.9000  

2019

           

First Quarter (through February 15, 2019)

     6.8242        3.0500        6.7300        2.9500  

There were two holders of record of our Series G ADSs and two holders of record of our Series H ADSs as of December 19, 2018.

As of February 15, 2019, the last reported sale prices of the Series G ADSs and the Series H ADSs on the NYSE were $5.60 and $5.36, respectively.

 

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CAPITALIZATION

 

The

following table sets forth our cash and cash equivalents and capitalization as of September 30, 2018:

 

  (i)

on a historical basis; and

 

  (ii)

on an as adjusted basis after giving effect to the exchange by us of $11.7 million aggregate principal amount of the 2024 Notes for 66 2/3% of each of our outstanding Series G ADSs and Series H ADSs, assuming the tender and acceptance of all of such ADSs in the Exchange Offer and the cash caps in respect to the consideration elections having been reached for each of the Series G ADSs and Series H ADSs. (1)

The information in this table should be read in conjunction with our unaudited condensed consolidated financial statements for the quarterly period ended September 30, 2018 and related notes thereto and other information included in this prospectus.

 

     As of September 30, 2018  
     Historical
(unaudited)
     As Adjusted
(unaudited)
 
     (expressed in thousands of
U.S. dollars)
 

Cash and cash equivalents including restricted cash

   $ 142,981      $ 132,722  
  

 

 

    

 

 

 

Long-term indebtedness (including current portion)

     

Senior secured credit facilities

   $ 167,393      $ 167,393  

7.375% First Priority Ship Mortgage Notes due 2022

     614,339        614,339  

11.25% Senior Secured Notes due 2022

     305,000        305,000  

Notes offered in the Exchange Offer (1)

     —          11,729  

Other long-term indebtedness

     541,853        541,853  
  

 

 

    

 

 

 

Total long-term indebtedness (including current portion) (2)(3)

   $ 1,628,585      $ 1,640,314  
  

 

 

    

 

 

 

Total Navios Holdings stockholders’ equity (4)

     451,633        429,645  
  

 

 

    

 

 

 

Total capitalization

   $ 2,080,218      $ 2,069,959  
  

 

 

    

 

 

 

 

(1)

Up to $15.6 million aggregate principal amount of the 2024 Notes.

(2)

The 2024 Notes are structurally and effectively subordinated to borrowings and other long-term indebtedness presented under “Total long-term indebtedness (including current portion).”

(3)

Total long-term indebtedness (including current portion) is presented gross of deferred financing costs of $29.3 million as of September 30, 2018.

(4)

Navios Holdings stockholders’ equity is adjusted for the $11.7 million aggregate principal amount of the 2024 Notes and the cash caps in respect to the consideration elections having been reached for each of the Series G ADSs and Series H ADSs.

 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

Navios Holdings’ selected historical financial information and operating results for the years ended December 31, 2017, 2016, 2015, 2014 and 2013 are derived from the consolidated financial statements of Navios Holdings. The selected consolidated statement of comprehensive (loss)/income data for the years ended December 31, 2017, 2016, and 2015 and the selected consolidated balance sheet data as of December 31, 2017 and 2016 have been derived from our audited consolidated financial statements, which are included in this prospectus in Annex A. The selected consolidated statement of comprehensive (loss)/income data for the years ended December 31, 2014 and 2013 and the selected consolidated balance sheet data as of December 31, 2015, 2014 and 2013 have been derived from our audited consolidated financial statements, which are not included in this prospectus.

Navios Holdings’ selected historical financial information and operating results for the nine month periods ended September 30, 2018 and September 30, 2017 are derived from the consolidated financial statements of Navios Holdings. The selected consolidated statement of comprehensive (loss)/income data for the nine months ended September 30, 2018 and September 30, 2017 and the selected consolidated balance sheet data as of September 30, 2018 have been derived from our unaudited interim financial statements, which are included in this prospectus in Annex B. The selected consolidated balance sheet data as of September 30, 2017 have been derived from our unaudited interim financial statements, which are not included in this prospectus.

The selected consolidated financial data should be read in conjunction with Item 5. “Operating and Financial Review and Prospects”, the consolidated financial statements, related notes and other financial information included in our Form 20-F included as Annex A and our Form 6-K included as Annex B to this prospectus. The historical data included below and elsewhere in this prospectus is not necessarily indicative of our future performance. Selected Financial Data is as follows (in thousands, except share and per share data):

 

    Nine Months Ended     Fiscal Years Ended  
    September 30,
2018
    September 30,
2017
    December 31,
2017
    December 31,
2016
    December 31,
2015
    December 31,
2014
    December 31,
2013
 
(in thousands of U.S. dollars)   (unaudited)     (unaudited)                                

Statement of Comprehensive (Loss)/income Data

             

Revenue

  $ 390,386     $ 334,519     $ 463,049     $ 419,782     $ 480,820     $ 569,016     $ 512,279  

Administrative fee revenue from affiliates

    21,488       16,942       23,667       21,799       16,177       14,300       7,868  

Time charter, voyage and logistics business expenses

    (155,363     (161,628     (213,929     (175,072     (247,882     (263,304     (244,412

Direct vessel expenses

    (73,756     (90,566     (116,713     (127,396     (128,168     (130,064     (114,074

General and administrative expenses incurred on behalf of affiliates

    (21,488     (16,942     (23,667     (21,799     (16,177     (14,300     (7,868

General and administrative expenses

    (21,757     (19,203     (27,521     (25,295     (34,183     (45,590     (44,634

Depreciation and amortization

    (75,247     (77,893     (104,112     (113,825     (120,310     (104,690     (98,124

Interest expense and finance cost, net

    (97,797     (83,812     (114,780     (108,692     (110,781     (108,145     (108,506

Impairment losses

    (16,070     (14,239     (50,565     —       —       —       —  

Loss on Derivatives

    —         —         —         —         —         —         (260

Gain/(loss) on bond and debt extinguishment

    6,464       1,715       (981     29,187       —       (27,281     (37,136

Other (expense)/income, net

    (8,928     (4,790     (6,826     5,206       (30,201     (9,673     5,972  

Loss before equity in net earnings of affiliated companies

  $ (52,068   $ (115,897   $ (172,378   $ (96,105   $ (190,705   $ (119,731   $ (128,895

Equity in net (losses)/earnings of affiliated companies

    (13,720     2,208       4,399       (202,779     61,484       57,751       19,344  

 

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Table of Contents
    Nine Months Ended     Fiscal Years Ended  
    September 30,
2018
    September 30,
2017
    December 31,
2017
    December 31,
2016
    December 31,
2015
    December 31,
2014
    December 31,
2013
 
(in thousands of U.S. dollars)   (unaudited)     (unaudited)                                

Losses before taxes

  $ (65,788   $ (113,689   $ (167,979   $ (298,884   $ (129,221   $ (61,980   $ (109,551

Income tax benefit/(expense)

    1,324       562       3,192       (1,265     3,154       (84     4,260  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

  $ (64,464   $ (113,127   $ (164,787   $ (300,149   $ (126,067   $ (62,064   $ (105,291

Less: Net (income)/loss attributable to the noncontrolling interest

    (3,501     (1,182     (1,123     (3,674     (8,045     5,861       (3,772
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to Navios Holdings common stockholders

  $ (67,965   $ (114,309   $ (165,910   $ (303,823   $ (134,112   $ (56,203   $ (109,063
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss attributable to Navios Holdings common stockholders, basic and diluted

  $ (75,644   $ (121,049   $ (175,298   $ (273,105   $ (150,314   $ (66,976   $ (110,990
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted net loss per share attributable to Navios Holdings common stockholders

  $ (0.63   $ (1.04   $ (1.50   $ (2.54   $ (1.42   $ (0.65   $ (1.09
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of shares, basic and diluted

    119,423,025       116,260,640       116,673,459       107,366,783       105,896,235       103,476,614       101,854,415  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance Sheet Data

(at period end)

             

Current assets, including cash and cash equivalents and restricted cash

  $ 276,738     $ 232,865     $ 256,076     $ 273,140     $ 302,959     $ 417,131     $ 339,986  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

    2,488,857       2,660,607       2,629,981       2,752,895       2,958,813       3,127,697       2,886,453  

Total long-term indebtedness, including current portion

    1,599,331       1,643,215       1,682,488       1,651,095       1,581,308       1,612,890       1,478,089  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Navios Holdings’ stockholders’ equity

  $ 451,633     $ 566,687     $ 516,098     $ 678,287     $ 988,960     $ 1,152,963     $ 1,065,695  

Other Financial Data

             

Net cash provided by operating activities

  $ 39,591     $ 33,578     $ 50,784     $ 36,920     $ 43,478     $ 56,323     $ 59,749  

Net cash provided by/(used in) investing activities

    51,870       (32,987     (42,365     (150,565     (36,499     (244,888     (258,571

Net cash (used in)/provided by financing activities

    (82,670     (22,730     (16,779     86,225       (91,123     248,290       128,785  

Book value per common share

    3.62       4.74       4.29       5.79       8.95       10.89       10.22  

Cash dividends per common share

    —       —       —       —       0.17       0.24       0.24  

Cash dividends per preferred share

    —       —       —       74.4       216.7       99.9       200.0  

Cash paid for Common Stock dividend declared

    —       —       —       —       19,325       25,228       24,710  

Cash paid for preferred stock dividend declared

    —       —       —       3,681       16,025       7,502       1,696  

Adjusted EBITDA

  $ 118,066     $ 61,144     $ 68,813     $ (62,827   $ 112,756     $ 176,698     $ 107,909  

 

(1)

EBITDA represents net (loss)/income attributable to Navios Holdings’ common stockholders before interest and finance costs, before depreciation and amortization and before income taxes. Adjusted EBITDA represents EBITDA before stock based compensation. We use Adjusted EBITDA as a liquidity measure and reconcile Adjusted EBITDA to net cash provided by operating activities, the most comparable U.S. GAAP liquidity measure. Adjusted EBITDA is calculated as follows: net cash provided by operating activities adding back, when applicable and as the case may be, the effect of (i) net increase/(decrease) in operating assets, (ii) net (increase)/decrease in operating liabilities, (iii) net interest cost, (iv) deferred finance charges and gains/

 

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  (losses) on bond and debt extinguishment, (v) (provision)/recovery for losses on accounts receivable, (vi) equity in affiliates, net of dividends received, (vii) payments for drydock and special survey costs, (viii) noncontrolling interest, (ix) gain/ (loss) on sale of assets/ subsidiaries, (x) unrealized (loss)/gain on derivatives, and (xi) loss on sale and reclassification to earnings of available-for-sale securities and impairment charges. Navios Holdings believes that Adjusted EBITDA is a basis upon which liquidity can be assessed and represents useful information to investors regarding Navios Holdings’ ability to service and/or incur indebtedness, pay capital expenditures, meet working capital requirements and pay dividends. Navios Holdings also believes that Adjusted EBITDA is used (i) by prospective and current lessors as well as potential lenders to evaluate potential transactions; (ii) to evaluate and price potential acquisition candidates; and (iii) by securities analysts, investors and other interested parties in the evaluation of companies in our industry.

Adjusted EBITDA has limitations as an analytical tool, and therefore, should not be considered in isolation or as a substitute for the analysis of Navios Holdings’ results as reported under U.S. GAAP. Some of these limitations are: (i) Adjusted EBITDA does not reflect changes in, or cash requirements for, working capital needs; (ii) Adjusted EBITDA does not reflect the amounts necessary to service interest or principal payments on our debt and other financing arrangements; and (iii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future. Adjusted EBITDA does not reflect any cash requirements for such capital expenditures. Because of these limitations, among others, Adjusted EBITDA should not be considered as a principal indicator of Navios Holdings’ performance. Furthermore, our calculation of Adjusted EBITDA may not be comparable to that reported by other companies due to differences in methods of calculation.

The following table reconciles net cash provided by operating activities, as reflected in the consolidated statements of cash flows, to Adjusted EBITDA:

Adjusted EBITDA Reconciliation from Cash from Operations

 

    Nine Months Ended     Fiscal Years Ended  
    September 30,
2018
    September 30,
2017
    December 31,
2017
    December 31,
2016
    December 31,
2015
    December 31,
2014
    December 31,
2013
 

(in thousands of U.S. dollars—except

per share data)

  (unaudited)     (unaudited)                                

Net cash provided by operating activities

  $ 39,591     $ 33,578     $ 50,784     $ 36,920     $ 43,478     $ 56,323     $ 59,749  

Net increase/(decrease) in operating assets

    13,742       (30,954     (25,052     20,599       (43,042     18,025       (57,792

Net (increase)/decrease in operating liabilities

    (3,095     (12,103     (20,814     (38,928     (39,288     (23,613     27,087  

Payments for drydock and special survey costs

    6,189       10,024       10,824       11,096       24,840       10,970       12,119  

Net interest cost

    91,834       79,518       108,389       103,039       106,257       104,084       103,122  

(Provision)/recovery for losses on accounts receivable

    (418     276       (269     (1,304     (59     (792     (630

Impairment losses

    (16,070     (14,239     (50,565     —       —       —       —  

Gain on sale of assets

    28       1,075       1,064       —       —       —       18  

Unrealized loss on FFA derivatives, warrants, interest rate swaps

    —         —         —       —       —       —       (69

Gain/(Loss) on bond and debt extinguishment

    6,464       1,715       185       29,187       —       (4,786     (12,142

(Losses)/earnings in affiliates and joint ventures, net of dividends received

    (16,698     (6,564     (4,610     (219,417     30,398       22,179       (19,781

Reclassification to earnings of available-for-sale securities

    —         —         —       (345     (1,783     (11,553     —  

Noncontrolling interest

    (3,501     (1,182     (1,123     (3,674     (8,045     5,861       (3,772
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 118,066     $ 61,144     $ 68,813     $ (62,827   $ 112,756     $ 176,698     $ 107,909  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Major Shareholders

The following table sets forth information regarding the beneficial ownership of the Common Stock of Navios Holdings as of December 19, 2018 based on shares of Common Stock outstanding as of such date of each person known by Navios Holdings to be the beneficial owner of more than 5% of its outstanding shares of Common Stock based upon the amounts and percentages as are contained in the public filings of such persons. All such stockholders have the same voting rights with respect to their shares of Common Stock. The information contained in this section does not reflect the one-for-ten reverse split that became effective on January 3, 2019. See “Prospectus Summary—Recent Developments—Reverse Stock Split.”

Unless otherwise indicated, based upon Schedules 13D filed with the SEC and Navios Holdings’ knowledge, Navios Holdings believes that all persons named in the table have sole voting and investment power with respect to all shares of Common Stock beneficially owned by them.

 

Name    Amount and
Nature of
Beneficial
Ownership
     Percentage of
Outstanding
Common Stock
 

Angeliki Frangou (1)(2)(3)

     39,665,352        30.6 %

 

(1)

The amount and nature of beneficial ownership and the percentage of outstanding Common Stock includes 5,111,991 options, each for one share, vested but not yet exercised.

(2)

As disclosed in a 13D Amendment dated March 29, 2018, Ms. Frangou has disclosed that she and her affiliates have pledged 14,511,171 of the shares of Common Stock disclosed in the table above.

(3)

Angeliki Frangou has filed a Schedule 13D amendment indicating that she intends, subject to market conditions, to purchase up to $20.0 million of Common Stock and as of December 19, 2018, she had purchased approximately $10.0 million in value of Common Stock.

Management

The following table sets forth information regarding the beneficial ownership of Common Stock as of December 19, 2018, based on 125,559,137 shares of Common Stock outstanding as of such day, by each of Navios Holdings’ executive officers and directors.

Unless otherwise indicated based upon Schedules 13D filed with the SEC and to Navios Holdings’ knowledge, Navios Holdings believes that all persons named in the table have sole voting and investment power with respect to all shares of Common Stock beneficially owned by them.

 

Name and Address of Beneficial Owner (1)

   Amount and Nature
of Beneficial
Ownership
     Percentage of
Outstanding
Common Stock
 

Angeliki Frangou (2)(3)

     39,665,352        30.6 %

George Achniotis

     *        *  

Ted C. Petrone

     *        *  

Vasiliki Papaefthymiou

     *        *  

Anna Kalathakis

     *        *  

Shunji Sasada

     *        *  

Leonidas Korres

     *        *  

Efstratios Desypris

     *        *  

Ioannis Karyotis

     *        *  

Erifili Tsironi

     *        *  

Chris Christopoulos

     *        *  

Spyridon Magoulas

     *        *  

John Stratakis

     *        *  

Efstathios Loizos

     *        *  

George Malanga

     *        *  

 

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*

Less than one percent

(1)

The business address of each of the individuals is c/o Navios Maritime Holdings Inc., 7 Avenue de Grande Bretagne, Office 11B2, Monte Carlo, MC 98000 Monaco.

(2)

Angeliki Frangou has filed a Schedule 13D amendment indicating that she intends, subject to market conditions, to purchase up to $20.0 million of Common Stock and as of December 19, 2018, she had purchased approximately $10.0 million in value of Common Stock.

(3)

The amount and nature of beneficial ownership and the percentage of outstanding Common Stock includes 5,111,991 options, each for one share, vested but not yet exercised.

 

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DESCRIPTION OF NOTES

You can find the definitions of certain terms used in this description under the subheading “Certain Definitions.” In this “Description of Notes”, the term “Issuer” refers only to Navios Maritime Holdings Inc. and not to any of its subsidiaries or affiliates.

The Issuer will issue the 9.75% Senior Notes due 2024 under an indenture to be dated the Issue Date, between the Issuer and Wilmington Trust, National Association, as trustee (the “Trustee”). The terms of the notes include those stated in the indenture and those made a part of the indenture by reference to the Trust Indenture Act of 1939, as amended.

The following description is a summary of the material provisions of the indenture. It does not restate that agreement in its entirety. We urge you to read the indenture because it, and not this description, defines your rights as holders of these notes. A copy of the indenture is filed as an exhibit to the registration statement of which this prospectus forms a part.

The registered holder of a note will be treated as the owner of it for all purposes. Only registered holders will have rights under the indenture.

Brief Description of the Notes

The notes will be:

 

   

general senior obligations of the Issuer;

 

   

senior in right of payment to any of our existing and future debt that expressly provides that it is subordinated to the notes;

 

   

pari passu in right of payment with all of our existing and future senior obligations;

 

   

structurally subordinated in right of payment to the obligations of our subsidiaries; and

 

   

effectively subordinated in right of payment to any existing and future obligations of the Issuer that are secured by property or assets that do not secure the notes, including the Issuer’s 2022 Senior Secured Notes and 2022 Notes, to the extent of the value of any such property and assets securing such other obligations.

As of September 30, 2018, the Issuer’s subsidiaries had approximately $1,628.6 million of indebtedness outstanding, all of which is structurally senior to the 2024 Notes. The Issuer is not prohibited from incurring additional indebtedness, including secured indebtedness.

Principal, Maturity and Interest

The Issuer will issue up to $15.6 million in aggregate principal amount of notes in the Exchange Offer, assuming no cash consideration elections. The final aggregate principal amount of notes to be issued is dependent upon the allocation of the Exchange Offer consideration elections made by tendering holders in the Exchange Offer. See “Terms of the Exchange Offer and Consent Solicitation—Consideration Elections and Consideration Proration.”

The Issuer is permitted to issue additional notes under the Indenture from time to time after the Issue Date (the “Additional Notes”). The notes and any Additional Notes that are issued will be treated as a single class for all purposes of the Indenture, including, without limitation, those with respect to waivers, amendments,

 

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redemptions and offers to purchase. Unless the context otherwise requires, references to the “notes” for all purposes of the Indenture and in this “Description of the Notes” include references to any Additional Notes that are issued.

The Issuer will issue the notes in minimum denominations of $25.00 and integral multiples of $25.00 in excess thereof. The notes will mature on April 15, 2024.

Interest on the notes will accrue at the rate of 9.75% per annum and will be payable semi-annually in arrears on each April 15 and October 15, commencing on October 15, 2019. Interest on overdue principal and interest, if any, will accrue at the then applicable interest rate on the notes. The Issuer will make each interest payment to the holders of record on the immediately preceding April 1 and October 1.

Interest on the notes will accrue from the Issue Date or, if interest has already been paid, from the date it was most recently paid. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

Additional Amounts

All payments made by the Issuer under or with respect to the notes will be made free and clear of and without withholding or deduction for or on account of any present or future Taxes imposed or levied by or on behalf of any Taxing Authority in any jurisdiction in which the Issuer is organized or is otherwise resident for tax purposes, or any jurisdiction from or through which payment is made (each, a “Relevant Taxing Jurisdiction”), unless the Issuer is required to withhold or deduct Taxes by law or by the official interpretation or administration thereof. If the Issuer is required to withhold or deduct any amount for or on account of Taxes imposed by a Relevant Taxing Jurisdiction, from any payment made under or with respect to the notes, the Issuer will pay such additional amounts (“Additional Amounts”) as may be necessary so that the net amount received by each holder of notes (including Additional Amounts) after such withholding or deduction will equal the amount the holder would have received if such Taxes had not been withheld or deducted; provided , however , that no Additional Amounts will be payable with respect to any Tax:

 

  (1)

that would not have been imposed, payable or due but for the existence of any present or former connection between the holder (or the beneficial owner of, or person ultimately entitled to obtain an interest in, such notes) and the Relevant Taxing Jurisdiction (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the Relevant Taxing Jurisdiction) other than the mere holding of the notes or enforcement of rights under such note;

 

  (2)

that would not have been imposed, payable or due but for the failure to satisfy any certification, identification or other reporting requirements whether imposed by statute, treaty, regulation or administrative practice; provided , however , that the Issuer has delivered a request to the holder to comply with such requirements at least 30 days prior to the date by which such compliance is required;

 

  (3)

that would not have been imposed, payable or due if the presentation of notes (where presentation is required) for payment had occurred within 30 days after the date such payment was due and payable or was duly provided for, whichever is later;

 

  (4)

subject to the last paragraph of this section, that is an estate, inheritance, gift, sales, excise, transfer or personal property tax, assessment or charge; or

 

  (5)

as a result of a combination of the foregoing.

In addition, Additional Amounts will not be payable if the beneficial owner of, or person ultimately entitled to obtain an interest in, such notes had been the holder of the notes and such beneficial owner would not be entitled to the payment of Additional Amounts by reason of clause (1), (2), (3), (4) or (5) above. In addition, Additional Amounts will not be payable with respect to any Tax which is payable otherwise than by withholding from any payment under or in respect of the notes.

 

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Whenever in the indenture or in this “Description of Notes” there is mentioned, in any context, the payment of amounts based upon the principal amount of the notes or of principal, interest or of any other amount payable under or with respect to any of the notes, such mention shall be deemed to include mention of the payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

Upon request, the Issuer will provide the Trustee with documentation satisfactory to the Trustee evidencing the payment of Additional Amounts.

The Issuer will pay any present or future stamp, court or documentary taxes, or any similar taxes, charges or levies which arise in any Relevant Taxing Jurisdiction from the execution, delivery or registration of the notes or any other document or instrument referred to therein, or the receipt of any payments with respect to or enforcement of the notes.

Methods of Receiving Payments on the Notes

If a holder of notes has given wire transfer instructions to the Issuer, the Issuer will pay all principal, interest and premium, if any, on that holder’s notes in accordance with those instructions so long as such holder holds at least $100,000 aggregate principal amount of notes. All other payments on the notes will be made at the office or agency of the paying agent and registrar within the United States unless the Issuer elects to make interest payments by check mailed to the holders of notes at their respective addresses set forth in the register of holders.

Paying Agent and Registrar for the Notes

The Trustee will initially act as paying agent and registrar. The Issuer may change the paying agent or registrar without prior notice to the holders of the notes, and the Issuer or any of its subsidiaries may act as paying agent or registrar other than in connection with the discharge or defeasance provisions of the indenture.

Transfer and Exchange

A holder may transfer or exchange notes in accordance with the provisions of the indenture. The registrar and the Trustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents in connection with a transfer of notes. Holders will be required to pay all taxes due on transfer. The Issuer is not required to transfer or exchange any note selected for redemption. Also, the Issuer is not required to transfer or exchange any note for a period of 15 days before a selection of notes to be redeemed.

The transferor of any note shall upon request by the Trustee provide or cause to be provided to the Trustee all information requested by the Trustee to allow the Trustee to comply with any applicable tax reporting obligations, including without limitation any cost basis reporting obligations under Section 6045 of the Internal Revenue Code of 1986, as amended. The Trustee may rely on information provided to it and shall have no responsibility to verify or ensure the accuracy of such information.

Optional Redemption

We will have the option to redeem the notes, in whole or in part, at our option at any time, at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest and Additional Amounts, if any, on the notes to be redeemed to, but excluding, the date on which the notes are to be redeemed.

Selection and Notice of Redemption

If less than all of the notes are to be redeemed at any time, the Trustee will select notes for redemption as follows:

 

  (1)

if the notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the notes are listed; or

 

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  (2)

if the notes are not listed on any national securities exchange, on a pro rata basis, by lot or by such method in accordance with the Trustee’s customary procedures (or, in the case of notes issued in global form based on the method required by DTC, if it is not so required, a method that most nearly approximates a pro rata selection in accordance with the Trustee’s customary procedures).

Notices of redemption will be delivered electronically or mailed by first class mail at least 15 but not more than 60 days before the redemption date to each holder of notes to be redeemed at its registered address, except that redemption notices may be delivered more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the notes or a satisfaction and discharge of the indenture. In connection with any redemption of notes, any such redemption may, at our discretion, be subject to one or more conditions precedent. In addition, if such redemption or notice is subject to one or more conditions precedent, such notice shall state that, in the Issuer’s discretion, the redemption date may be delayed until such time as any or all of such conditions shall be satisfied, or such redemption may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied by the redemption date, or by the redemption date so delayed. If any such condition precedent has not been satisfied, the Issuer shall provide written notice to the Trustee prior to the close of business two business days prior to the redemption date (or such shorter period as may be acceptable to the Trustee). Upon receipt of such notice, the notice of redemption shall be rescinded or delayed, and the redemption of the notes shall be rescinded or delayed as provided in such notice. Upon receipt, the Trustee shall provide such notice to each holder in the same manner in which the notice of redemption was given.

If any note is to be redeemed in part only, the notice of redemption that relates to that note will state the portion of the principal amount of that note that is to be redeemed. A new note in principal amount equal to the unredeemed portion of the original note will be issued in the name of the holder of notes upon cancellation of the original note. Notes called for redemption become due on the date fixed for redemption subject to the satisfaction of any conditions precedent. On and after the redemption date, interest, if any, shall cease to accrue on notes or portions of them called for redemption, unless the Issuer defaults in the payment of the redemption price or any conditions precedent are not satisfied.

Reports

The Issuer shall deliver to the Trustee, within 15 days after it files the same with the Commission, copies of the annual reports and the information, documents and other reports (or copies of those portions of any of the foregoing as the Commission may by rules and regulations prescribe) that the Issuer is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act. The Issuer shall also comply with the provisions of TIA Section 314(a).

Notwithstanding the foregoing, the Issuer will be deemed to have furnished in compliance with this covenant such reports referred to in the first paragraph of this covenant to the Trustee and the holders of notes if the Issuer has filed such reports with the Commission via the EDGAR filing system and such reports are publicly available.

The Trustee shall have no responsibility for the filing, timeliness or content of reports.

Delivery of the reports, information and documents in accordance with this covenant shall satisfy the Issuer’s obligation to make such delivery, but, in the case of the Trustee, such delivery shall be for informational purposes only, and the Trustee’s receipt of such reports, information and documents shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Issuer’s compliance with any of its covenants (as to which the Trustee is entitled to conclusively rely on an Officers’ Certificate).

 

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Events of Default and Remedies

Each of the following is an “Event of Default”:

 

  (1)

default by the Issuer for 30 consecutive days in the payment when due and payable of interest and Additional Amounts, if any, on the notes;

 

  (2)

default by the Issuer in payment when due and payable of the principal of or premium, if any, on the notes; and

 

  (3)

certain events of bankruptcy or insolvency described in the indenture with respect to the Issuer.

In the case of an Event of Default arising from certain events of bankruptcy or insolvency specified in clause (3), all outstanding notes will become due and payable immediately without further action or notice. If any Event of Default occurs and is continuing, the Trustee, by written notice to the Issuer, or the holders of at least 30% in principal amount of the then outstanding notes, by written notice to the Trustee and the Issuer, may declare all the notes to be due and payable. Any notice from the Trustee or noteholders shall specify the applicable Event(s) of Default and state that such notice is a “Notice of Acceleration.” Upon such declaration of acceleration pursuant to a Notice of Acceleration, the aggregate principal of and accrued and unpaid interest on the outstanding notes shall become due and payable without further action or notice.

Subject to certain limitations, holders of a majority in principal amount of the then outstanding notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from holders of the notes notice of any continuing Default or Event of Default if it determines that withholding notice is in their interest, except a Default or Event of Default relating to the payment of principal or interest.

The holders of a majority in aggregate principal amount of the notes then outstanding may, on behalf of the holders of all of the notes, rescind an acceleration or waive any existing Default or Event of Default and its consequences under the indenture except a continuing Default or Event of Default in the payment of interest or premium, if any, on, or the principal of, the notes.

The Issuer will be required to deliver to the Trustee annually a written statement regarding compliance with the indenture. Within 30 days of becoming aware of any Default or Event of Default, the Issuer will be required to deliver to the Trustee a written statement specifying such Default or Event of Default.

No Personal Liability of Directors, Officers, Employees and Stockholders

No past, future or present director, officer, employee, incorporator, member, manager, agent or shareholder of the Issuer will have any liability for any obligations of the Issuer under the notes, the indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of notes by accepting a note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the notes. The waiver may not be effective to waive liabilities under the federal securities laws of the United States or the laws of the Republic of the Marshall Islands.

Legal Defeasance and Covenant Defeasance

The Issuer may, at their option and at any time, elect to have all of their obligations discharged with respect to the outstanding notes (“Legal Defeasance”). Such Legal Defeasance means that the Issuer shall be deemed to have paid and discharged the entire indebtedness represented by the outstanding notes, except for:

 

  (1)

the rights of holders of outstanding notes to receive payments in respect of the principal of or interest or premium, if any, on such notes when such payments are due from the trust referred to below;

 

  (2)

the Issuer’s obligations with respect to the notes concerning issuing temporary notes, registration of notes, mutilated, destroyed, lost or stolen notes and the maintenance of an office or agency for payment and money for security payments held in trust;

 

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  (3)

the rights, powers, trusts, duties and immunities of the Trustee, and the Issuer’s obligations in connection therewith; and

 

  (4)

the Legal Defeasance provisions of the indenture.

In addition, the Issuer may, at their option and at any time, elect to have their obligations released with respect to certain covenants (including all the covenants described in this Description of Notes) in the indenture (“Covenant Defeasance”) and thereafter any omission to comply with those covenants will not, in each case, constitute a Default or Event of Default with respect to the notes.

In order to exercise either Legal Defeasance or Covenant Defeasance:

 

  (1)

the Issuer must irrevocably deposit with the Trustee, in trust, for the benefit of the holders of the notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in amounts as will be sufficient, without consideration of any reinvestment of interest, in the opinion of a nationally recognized investment bank, appraisal firm or firm of independent public accountants, to pay the principal of or interest and premium, if any, on the outstanding notes on the Stated Maturity or on the applicable redemption date, as the case may be, and the Issuer must specify whether the notes are being defeased to maturity or to a particular redemption date;

 

  (2)

in the case of Legal Defeasance, the Issuer must deliver to the Trustee an Opinion of Counsel confirming that (a) the Issuer has received from, or there has been published by, the U.S. Internal Revenue Service a ruling or (b) since the Issue Date, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel will confirm that, the holders of the outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

 

  (3)

in the case of Covenant Defeasance, the Issuer must deliver to the Trustee an Opinion of Counsel confirming that the holders of the outstanding notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

 

  (4)

no Default or Event of Default has occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from, or otherwise arising in connection with, the borrowing of funds to be applied to such deposit and the grant of any lien securing such borrowing);

 

  (5)

such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than the indenture) to which either the Issuer or any of its subsidiaries is a party or by which either the Issuer or any of its subsidiaries are bound;

 

  (6)

the Issuer must deliver to the Trustee an Officer’s Certificate stating that the deposit was not made by the Issuer with the intent of preferring the holders of notes over the other creditors of the Issuer or any of its subsidiaries or with the intent of defeating, hindering, delaying or defrauding creditors of the Issuer or any of its subsidiaries or others; and

 

  (7)

the Issuer must deliver to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.

Notwithstanding the foregoing, the Opinion of Counsel required by clause (2) above with respect to a Legal Defeasance need not be delivered if all notes not theretofore delivered to the Trustee for cancellation will become due and payable within one year under arrangements reasonably satisfactory to the Trustee for the giving of a notice of redemption by the Trustee in the name and at the expense of the Issuer.

 

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If the funds deposited with the Trustee to effect Covenant Defeasance are insufficient to pay the principal of and interest on the notes when due, then the obligations of the Issuer under the indenture will be revived and no such defeasance will be deemed to have occurred.

Satisfaction and Discharge

The indenture will be discharged and will cease to be of further effect as to all notes issued thereunder, when:

 

  (1)

either:

 

  (a)

all notes that have been authenticated, except lost, stolen or destroyed notes that have been replaced or paid and notes for whose payment money has been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from the trust, have been delivered to the Trustee for cancellation; or

 

  (b)

all notes that have not been delivered to the Trustee for cancellation have become due and payable by reason of the mailing of a notice of redemption or otherwise or will become due and payable within one year or have been called for redemption pursuant to the provisions described under “—Optional Redemption” and the Issuer has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the holders, cash or Cash Equivalents in U.S. dollars, non-callable Government Securities, or a combination thereof, in amounts as will be sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the notes not delivered to the Trustee for cancellation for principal and premium, if any, and accrued interest to the date of maturity or redemption;

 

  (2)

no Default or Event of Default has occurred and is continuing on the date of the deposit (other than an Event of Default resulting from the borrowing of funds to be applied to such deposit including the incurrence of liens in connection with such borrowings) and the deposit will not result in a breach or violation of, or constitute a default under, the indenture;

 

  (3)

the Issuer has paid or caused to be paid all sums payable by them under the indenture; and

 

  (4)

the Issuer has delivered irrevocable instructions to the Trustee under the indenture to apply the deposited money toward the payment of the notes at maturity or on the redemption date, as the case may be.

In addition, the Issuer must deliver an Officer’s Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

Amendment, Supplement and Waiver

Except as provided in the next two succeeding paragraphs, the indenture or the notes may be amended or supplemented with the consent of the Issuer and the holders of at least a majority in principal amount of the notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes), and any existing Default or Event of Default or compliance with any provision of the indenture or the notes may be waived with the consent of the holders of a majority in principal amount of the then outstanding notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes).

Without the consent of the Issuer and each holder of notes affected, an amendment, supplement or waiver may not (with respect to any notes held by a non-consenting holder to the extent permitted under the indenture):

 

  (1)

reduce the principal amount of notes whose holders must consent to an amendment, supplement or waiver;

 

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  (2)

reduce the principal of or change the fixed maturity of any note or alter the provisions with respect to the redemption of the notes (other than, subject to the procedures of the applicable securities depository, if applicable, the number of days in advance of the redemption of notes that notice of redemption must be given);

 

  (3)

reduce the rate of or change the time for payment of interest on any note;

 

  (4)

waive a Default or Event of Default in the payment of principal of, or interest or premium, if any, on the notes (except a rescission of acceleration of the notes by the holders of at least a majority in aggregate principal amount of the then outstanding notes in accordance with the provisions of the indenture and a waiver of the payment default that resulted from such acceleration);

 

  (5)

make any note payable in money other than that stated in the notes;

 

  (6)

make any change in the provisions of the indenture relating to waivers of past Defaults or the rights of holders of notes to receive payments of principal of, or interest or premium, if any, on the notes or Additional Amounts, if any;

 

  (7)

waive a redemption payment with respect to any note;

 

  (8)

[Reserved];

 

  (9)

expressly subordinate in right of payment the notes to any other indebtedness of the Issuer; or

 

  (10)

make any change in the preceding amendment and waiver provisions.

Notwithstanding the preceding, without the consent of any holder of notes, the Issuer and the Trustee may amend, waive, supplement or otherwise modify the indenture or the notes:

 

  (1)

to cure any ambiguity, omission, mistake, defect or inconsistency;

 

  (2)

to provide for uncertificated notes in addition to or in place of certificated notes;

 

  (3)

to provide for the assumption of the Issuer’s obligations to holders of notes in the case of a merger, amalgamation or consolidation or sale of all or substantially all of the Issuer’s assets, as applicable;

 

  (4)

to make any change that would provide any additional rights or benefits to the holders of notes or that does not materially adversely affect the legal rights under the indenture of any such holder as set forth in an Officer’s Certificate delivered to the Trustee;

 

  (5)

to comply with requirements of the Commission in order to effect or maintain the qualification of the indenture under the Trust Indenture Act;

 

  (6)

[Reserved];

 

  (7)

[Reserved];

 

  (8)

to evidence and provide for the acceptance of appointment under the indenture by a successor Trustee;

 

  (9)

to comply with the rules of any applicable securities depository;

 

  (10)

to conform the text of the indenture or the notes to any provision of this Description of Notes to the extent that such provision in this Description of Notes was intended by the Issuer (as demonstrated by an Officer’s Certificate) to be a substantially verbatim recitation of a provision of the indenture or the notes;

 

  (11)

to add to the covenants of the Issuer for the benefit of the noteholders or surrender any rights or powers conferred upon the Issuer;

 

  (12)

subject to any requirements of the applicable securities depository, to provide for a reduction in the minimum denomination of the notes; and

 

  (13)

to add collateral securing the notes.

 

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Concerning the Trustee

If the trustee becomes a creditor of the Issuer, the indenture limits the right of the Trustee to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days or resign.

The holders of a majority in principal amount of the then outstanding notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The indenture provides that in case an Event of Default occurs and is continuing, the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent person in the conduct of such person’s own affairs. The Trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request of any holder of notes, unless such holder has offered to the Trustee security and indemnity satisfactory to the Trustee against any loss, liability or expense.

The Trustee assumes no responsibility for the accuracy or completeness of the information concerning the Issuer or its affiliates or any other party contained in this document or the related documents or for any failure by us or any other party to disclose events that may have occurred and may affect the significance or accuracy of such information.

Additional Information

A copy of the form of the indenture is filed as an exhibit to the registration statement of which this prospectus forms a part.

Certain Definitions

Set forth below are certain defined terms used in the indenture. Reference is made to the indenture for a full definition of all such terms, as well as any other capitalized terms used herein for which no definition is provided.

“Cash Equivalents” means:

 

  (1)

United States dollars or Euro or other currency of a member of the Organization for Economic Cooperation and Development (including such currencies as are held as overnight bank deposits and demand deposits with banks);

 

  (2)

securities issued or directly and fully guaranteed or insured by the government of the United States or any Member State of the European Union or any other country whose sovereign debt has a rating of at least A3 from Moody’s and at least A- from S&P or any agency or instrumentality thereof having maturities of not more than one year from the date of acquisition;

 

  (3)

demand and time deposits and eurodollar time deposits and certificates of deposit or bankers’ acceptances with maturities of one year or less from the date of acquisition, in each case, with any financial institution organized under the laws of any country that is a member of the Organization for Economic Cooperation and Development (a) whose commercial paper is rated at least “A-2” or the equivalent thereof by S&P or at least “P-2” or the equivalent thereof by Moody’s (or if at the time neither is issuing comparable ratings, then a comparable rating of another Rating Agency) or (b) having capital and surplus and undivided profits in excess of US$250.0 million;

 

  (4)

repurchase obligations with a term of not more than 60 days for underlying securities of the types described in clause (2) above entered into with any financial institution meeting the qualifications specified in clause (3) above;

 

  (5)

commercial paper and variable or fixed rate notes rated P-l or higher by Moody’s or A-1 or higher by S&P and, in each case, maturing within one year after the date of acquisition;

 

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  (6)

money market funds that invest primarily in Cash Equivalents of the kinds described in clauses (1) through (5) of this definition;

 

  (7)

instruments equivalent to those referred to in clauses (1) through (6) above denominated in any other foreign currency and comparable in credit quality and tenor to those referred to above and customarily to the extent reasonably required in connection with (a) any business conducted by the Issuer in such jurisdiction or (b) any investment in the jurisdiction in which such investment is made; and

 

  (8)

local currency held by the Issuer from time to time in the ordinary course of business.

“Commission” means the U.S. Securities and Exchange Commission.

“Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended from time to time, or any successor statute or statutes thereto and, in each case, the rules and regulations promulgated by the Commission thereunder.

“Government Securities” means direct obligations of, or obligations guaranteed by, the United States of America, and the payment for which the United States pledges its full faith and credit.

“guarantee” means as to any Person, a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including through letters of credit and reimbursement agreements in respect thereof), of all or any part of any indebtedness of another Person.

“Issue Date” means,             , 2019 the date of the original issuance of the notes under the indenture.

Moody’s ” means Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and any successor to its rating agency business.

Officer ” means, with respect to any Person, any of the following: the Chairman of the board of directors or such equivalent entity, the Chief Executive Officer, the Chief Financial Officer, the President, the Chief Operating Officer, any Vice President, any Assistant Vice President, the Treasurer, any Assistant Treasurer, the Secretary, any Assistant Secretary, the Controller or any other officer designated by the relevant board of directors, or such equivalent entity, serving in a similar capacity.

Officer’s Certificate ” means a certificate delivered to the Trustee and signed on behalf of the Issuer by any one Officer of the Issuer, who must be the principal executive officer, the principal financial officer, the treasurer, the controller, the general counsel or the principal accounting officer of the Issuer.

Opinion of Counsel ” means a written opinion from legal counsel that meets the requirements of the indenture. The counsel may be an employee of, or counsel to, the Issuer. Opinions of Counsel required to be delivered under the indenture may have qualifications customary for opinions of the type required in the relevant jurisdiction or related to the items covered by the opinion and counsel delivering such Opinions of Counsel may rely on certificates of the Issuer or governmental authority or other officials customary for opinions of the type required, including certificates certifying as to matters of fact, including that various covenants have been complied with.

Person ” means any natural person, corporation, limited partnership, general partnership, limited liability company, limited liability partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof or any other entity, whether legal or not.

 

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Rating Agencies ” means Moody’s and S&P, or if Moody’s or S&P or both shall not make a rating on the notes publicly available, a nationally recognized statistical rating agency or agencies, as the case may be, selected by the Issuer which shall be substituted for Moody’s or S&P or both, as the case may be.

S&P ” means S&P Global Ratings (a division of S&P Global Inc.) or any successor to the rating agency business thereof.

Stated Maturity ” means, with respect to any installment of principal on any series of indebtedness, the date on which the payment of principal was scheduled to be paid in the documentation governing such indebtedness as of the Issue Date (or, if incurred after the Issue Date, as of the date of the initial incurrence thereof) and shall not include any contingent obligations to repay, redeem or repurchase any such principal prior to the date originally scheduled for the payment thereof.

Tax ” means any tax, duty, levy, impost, assessment or other governmental charge (including penalties, interest and any other liabilities related thereto).

Taxing Authority ” means any government or political subdivision or territory or possession of any government or any authority or agency therein or thereof having power to tax.

 

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TERMS OF THE EXCHANGE OFFER AND CONSENT SOLICITATION

No Recommendation

THE EXCHANGE OF SERIES G ADSs AND/OR SERIES H ADSs FOR CASH AND/OR 2024 NOTES IN THE EXCHANGE OFFER MAY NOT BE SUITABLE FOR YOU. NEITHER WE, OUR BOARD OF DIRECTORS, THE INFORMATION AGENT, THE EXCHANGE AGENT, THE DEPOSITARY, NOR ANY AFFILIATE OF ANY OF THE FOREGOING OR ANY OTHER PERSON IS MAKING ANY RECOMMENDATION AS TO WHETHER OR NOT YOU SHOULD TENDER YOUR SERIES G ADSs OR SERIES H ADSs IN THE EXCHANGE OFFER OR WHICH FORM OF CONSIDERATION YOU SHOULD ELECT AS PAYMENT THEREFOR. YOU MUST MAKE YOUR OWN INVESTMENT DECISION REGARDING THE EXCHANGE OFFER BASED UPON YOUR OWN ASSESSMENT OF THE MARKET VALUE OF THE SERIES G ADSs OR SERIES H ADSs AND THE 2024 NOTES, YOUR LIQUIDITY NEEDS, YOUR INVESTMENT OBJECTIVES AND ANY OTHER FACTORS YOU DEEM RELEVANT. BEFORE YOU MAKE YOUR DECISION, WE URGE YOU TO CAREFULLY READ THIS PROSPECTUS IN ITS ENTIRETY, INCLUDING THE INFORMATION SET FORTH UNDER “RISK FACTORS” AND THE INFORMATION INCLUDED IN THE ANNEXES TO THIS PROSPECTUS. WE ALSO URGE YOU TO CONSULT YOUR OWN FINANCIAL AND TAX ADVISORS IN MAKING YOUR OWN DECISIONS ON WHAT ACTION, IF ANY, TO TAKE IN LIGHT OF YOUR OWN PARTICULAR CIRCUMSTANCES.

Terms of the Exchange Offer

We are offering to acquire Series G ADSs for either (a) $7.25 and/or (b) $8.28 principal amount of 9.75% Senior Notes due 2024, per Series G ADS. We are offering to acquire Series H ADSs for either (a) $7.16 and/or (b) $8.19 principal amount of 9.75% Senior Notes due 2024, per Series H ADS. You may elect to tender any portion of your Series G ADSs or Series H ADSs for cash and any portion of your Series G ADSs or Series H ADSs for 2024 Notes, subject to the applicable cash and 2024 Notes caps and related consideration proration procedures described below under the heading “Tender Acceptance Proration Procedures.”

If all conditions to the Exchange Offer are satisfied or waived, we will acquire 66 2/3% of each of the outstanding Series G ADSs and/or Series H ADSs from tendering holders, subject to the tender acceptance proration procedures described below in the circumstance where more than 66 2/3% of outstanding Series G ADSs and/or Series H ADSs are validly tendered and not properly withdrawn.

Fractional interest in the 2024 Notes will not be issued in exchange for Series G ADSs or Series H ADSs. Instead, any holder who would otherwise receive a fractional interest in the 2024 Notes will have its distribution of 2024 Notes rounded down to the nearest $25.00 denomination. You will receive cash in lieu of any entitlement to a fraction of a 2024 Note.

For a detailed description of the 2024 Notes, see “Description of Notes.”

You may validly withdraw Series G ADSs or Series H ADSs that you tender at any time prior to the Expiration Date, which is 5:00 p.m., New York City Time, on March 1, 2019, unless we extend it. Any Series G ADSs or Series H ADSs not accepted will be credited back to the appropriate account promptly following the expiration or termination of the Exchange Offer. In addition, after the expiration of the Exchange Offer, you may withdraw any Series G ADSs or Series H ADSs that you tendered that are not accepted by us for exchange after the expiration of 40 business days following commencement of the Exchange Offer.

Our obligation to accept existing Series G ADSs and Series H ADSs that are tendered is subject to the conditions described below under “Conditions of the Exchange Offer.”

Terms of the Consent Solicitation

Concurrently with the Exchange Offer, we are also soliciting consents from holders of 66 2/3% of each of the Series G ADSs and the Series H ADSs to amend and restate the respective certificates of designation under

 

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which each of the Series G Preferred Shares and Series H Preferred Shares were issued to eliminate substantially all of the restrictive covenants and our obligation to pay or accrue any unpaid dividends from any past periods or future periods and to amend certain voting rights. The tender by a holder of Series G ADSs or Series H ADSs that are accepted for exchange pursuant to this Exchange Offer will constitute the granting of consent by such holder to the respective proposed amended and restated Series G Preferred Shares or Series H Preferred Shares certificate of designation with respect to the number of Preferred Shares represented by those ADSs. If 66 2/3% of either of the Series G ADSs or Series H ADSs consent to the Proposed Amendments, such consent will be provided as an instruction to The Bank of New York Mellon, the Depositary, as the only “holder” of Preferred Shares, to consent in favor of the Proposed Amendments with respect to the Preferred Shares underlying the tendered ADSs. However, the Proposed Amendments will not become effective until the Exchange Offer is completed and the amended and restated certificates of designation approved by the holders of the majority of our outstanding Common Stock in a future vote.

The Proposed Amendments, if adopted, will eliminate substantially all of the restrictive covenants and our obligation to pay or accrue any unpaid dividends for any past periods or future periods and to amend certain voting rights, including:

 

   

eliminating the requirement that future unpaid dividends accrue for payment in the future;

 

   

eliminating all previously accrued and unpaid dividends on the Preferred Shares and any obligation of Navios Holdings to pay such accrued and unpaid dividends at any time in the future, including on liquidation;

 

   

amending the restriction on paying dividends on junior securities from being in effect so long as cumulative dividends on the Preferred Stock are in arrears to only being in effect in any quarter in which a dividend on the Preferred Shares has not been declared or paid in respect of such quarter;

 

   

eliminating the increase of the dividend rate on the Preferred Shares in the event Navios Holdings Articles of Incorporation are not amended to permit the holders of the Preferred Shares to elect a director if and when six or more quarterly dividends are in arrears;

 

   

eliminating the requirement that, without the affirmative vote or consent of the holders of at least 66 2/3% of the outstanding series of Preferred Shares, voting as a class together with holders of any other parity securities, if the cumulative dividends payable on outstanding Preferred Shares are in arrears, Navios Holdings shall not issue any parity securities; and

 

   

eliminating the requirement that, in the event that full cumulative dividends on the Preferred Shares and any parity securities shall not have been declared or paid and set apart for payment, none of Navios Holdings or any Affiliate of Navios Holdings may repurchase, redeem or otherwise acquire any series of Preferred Shares or parity securities or any junior securities, including Common Stock.

Approval of the majority of our outstanding Common Stock, and at least 66 2/3% of each of the outstanding Preferred Shares of a given series must be received in order to amend and restate the applicable certificate of designation to reflect the Proposed Amendments. If the requisite approval is received with respect to the Series G Preferred Shares and/or the Series H Preferred Shares, and if we receive the approval of the holders of the majority of our outstanding Common Stock, we will be able to amend and restate the certificates of designation to give effect to the Proposed Amendments without the approval of any other holder of Series G ADSs and Series H ADSs. Each non-exchanging holder of Series G ADSs and/or Series H ADSs, including holders of Series G ADSs and/or Series H ADSs who tendered their Series G ADSs and/or Series H ADSs but had some of such ADSs returned as a result of the Tender Acceptance Proration Procedures described below, will be bound by the applicable amended and restated certificate of designation giving effect to the Proposed Amendments even if such holder did not give its consent. If the Exchange Offer is terminated or withdrawn, the Proposed Amendments will not become effective and all consents received as a result of this Exchange Offer will be deemed revoked. For more complete information regarding the restrictive covenants, dividend rights and voting rights affected, we urge you to review the existing certificates of designation for the Series G Preferred Shares

 

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and Series H Preferred Shares and the proposed amended and restated certificate of designation. See “Where You Can Find More Information” and see “Annex C-1—Form of Amended and Restated Series G Preferred Shares Certificate of Designation” and “Annex C-2—Form of Amended and Restated Series H Preferred Shares Certificate of Designation.”

Georgeson LLC is acting as Information Agent and The Bank of New York Mellon is acting as Exchange Agent in connection with the Exchange Offer. The Information Agent may contact holders of Series G ADSs or Series H ADSs by mail, telephone, facsimile and/or other customary means and may request brokers and other securities intermediaries to forward materials relating to the Exchange Offer to beneficial owners. The Information Agent and the Exchange Agent will each receive reasonable and customary compensation for their respective services and will be reimbursed by us for reasonable out-of-pocket expenses. The Information Agent and the Exchange Agent will be indemnified against certain liabilities in connection with the Exchange Offer, including certain liabilities under the federal securities laws.

In addition, we will request that brokers and other securities intermediaries forward copies of this prospectus to the beneficial owners of Series G ADSs and Series H ADSs, and will provide reimbursement for the cost of forwarding such material. In addition, we may pay certain fees or commissions to brokers, other securities intermediaries or other persons (other than as described above) for soliciting tenders and related consents of Series G ADSs and Series H ADSs.

You should rely only on the information contained in this prospectus. Except as described above, we have no arrangements for and have no understanding with any dealer, salesman or other person regarding the solicitation of tenders and related consents hereunder. None of us, the Depositary, the Exchange Agent or the Information Agent has authorized any other person to provide you with different or additional information. If anyone provides you with different or inconsistent information, you should not rely on it. Neither the delivery of this prospectus nor any exchange made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of Navios Holdings or its subsidiaries since the respective dates as of which information is given in this prospectus. We are offering to acquire, and are seeking tenders and related consents of, the Series G ADSs or Series H ADSs only in U.S. jurisdictions where the offers or tenders and related consents are permitted pursuant to the laws of such jurisdiction.

Any fees due to the Depositary for cancellation of the tendered Series G ADSs and Series H ADSs will be paid by Navios Holdings. Holders who tender their Series G ADSs or Series H ADSs through a broker or other securities intermediary may be charged a fee by their broker or other securities intermediary for doing so. Such holders should consult their broker or other securities intermediary to determine whether any charges will apply.

The Expiration Date is 5:00 p.m., New York City Time, on March 1, 2019, unless we extend the period of time for which the Exchange Offer with respect to Series G ADSs or Series H ADSs is open, in which case the Expiration Date would be the latest time and date on which the Exchange Offer with respect to such series of Series G ADSs or Series H ADSs, as so extended, expires.

DTC and its direct and indirect participants will establish their own cutoff dates and times to receive instructions to tender in this Exchange Offer, which will be earlier than the Expiration Date. You should contact your broker or other securities intermediary to determine the cutoff date and time applicable to you.

If the Exchange Offer expires or terminates without any Series G ADSs or Series H ADSs being accepted by us following the expiration or termination of the Exchange Offer, you will continue to hold your Series G ADSs or Series H ADSs, which will not be subject to the Proposed Amendments.

 

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Conditions of the Exchange Offer and Consent Solicitation

The Exchange Offer and Consent Solicitation are subject to, and conditional upon, the satisfaction or, where permitted, the waiver of, the following conditions:

 

  1.

The SEC having declared the registration statement of which this prospectus forms a part effective;

 

  2.

no litigation arises regarding the Exchange Offer and Consent Solicitation:

 

   

that challenges or seeks to make illegal, materially delay, restrain or prohibit the Exchange Offer or our acceptance of tendered Series G ADSs or Series H ADSs and is likely to be successful; or

 

   

which could have a material adverse effect on us;

 

  3.

no governmental authority issues an order or takes any action restraining, enjoining or prohibiting or materially delaying or preventing the consummation of the Exchange Offer;

 

  4.

the consummation of the Exchange Offer does not violate any law, rule or regulation applicable to us, including the distribution limitations under the Republic of the Marshall Islands law;

 

  5.

no law, rule, regulation or governmental order becomes applicable to us or the transactions contemplated by the Exchange Offer that could result, directly or indirectly, in the consequences described under condition 2 above; or

 

  6.

no situation arises that could render the delivery of the 2024 Notes in exchange for Series G ADSs or Series H ADSs or the adoption of the Proposed Amendments impermissible under the Republic of the Marshall Islands law.

With respect to one or both series of ADSs, we will, in our reasonable judgment, determine whether each condition to the Exchange Offer has been satisfied or may be waived and whether any such condition(s) should be waived. We may, at our option and sole discretion, waive any such condition, except the condition that the registration statement of which this prospectus forms a part has been declared effective by the SEC. If any condition to the Exchange Offer with respect to one or both series of ADSs is unsatisfied on the Expiration Date and we do not or cannot waive such condition, the Exchange Offer with respect to one or both series of ADSs will expire and we will not accept the Series G ADSs and/or Series H ADSs that have been validly tendered. In addition, we reserve the right, in our sole discretion, but subject to applicable law, to terminate the Exchange Offer at any time prior to the Expiration Date.

See “The Exchange Offer—Conditions of the Exchange Offer” and “The Exchange Offer—Extension, Termination and Amendment.”

Tender Acceptance Proration Procedures

Upon the terms and subject to the conditions of the Exchange Offer, we will accept for tender 946,100 (representing approximately 66 2/3%) of the outstanding Series G ADSs and 1,907,600 (representing approximately 66 2/3%) of the outstanding Series H ADSs. The tender acceptance proration procedures described below will apply if either the Series G ADSs or the Series H ADSs are tendered in excess the number of Series G ADSs or Series H ADSs sought in the Exchange Offer.

As of February 15, 2019, there were 1,419,055 outstanding Series G ADSs and 2,861,128 outstanding Series H ADSs. Accordingly, the proration thresholds are:

 

  (1)

946,100 Series G ADSs, validly tendered and not properly withdrawn (the “Series G ADS Proration Threshold”) and

 

  (2)

1,907,600 Series H ADSs, validly tendered and not properly withdrawn (the “Series H ADS Proration Threshold”).

 

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Where more than 946,100 (representing approximately 66 2/3%) of the outstanding Series G ADSs are tendered for exchange, the Series G ADSs will be accepted for tender from holders who validly tendered and did not properly withdraw their Series G ADSs on a pro rata basis based on the following calculation (the “Series G Prorated Amount”): (A) (i) the Series G ADS Proration Threshold divided by (ii) the cumulative number of Series G ADSs actually tendered by holders of the Series G ADSs multiplied by (B) the number of Series G ADSs actually tendered by the relevant holder of the Series G ADSs. However, in applying the proration procedure to the individual tenders made by holders of the Series G ADSs, including DTC participants, the Exchange Agent may make adjustments approved by Navios Holdings, up or down, so that no fraction of an ADS is purchased from any holder of Series G ADSs, including any DTC participant.

Where more than 1,907,600 (representing approximately 66 2/3%) of the outstanding Series H ADSs are tendered for exchange, the Series H ADSs will be accepted for tender from holders who validly tendered and did not properly withdraw their Series H ADSs on a pro rata basis based on the following calculation (the “Series H Prorated Amount”): (A) (i) the Series H ADS Proration Threshold divided by (ii) the cumulative number of Series H ADSs actually tendered by holders of the Series H ADSs multiplied by (B) the number of Series H ADSs actually tendered by the relevant holder of the Series H ADSs. However, in applying the proration procedure to the individual tenders made by holders of the Series H ADSs, including DTC participants, the Exchange Agent may make adjustments approved by Navios Holdings, up or down, so that no fraction of an ADS is purchased from any holder of Series H ADSs, including any DTC participant.

We will tender for the Series G Prorated Amount and the Series H Prorated Amount from each holder who validly tendered and did not properly withdraw their Series G ADSs and Series H ADSs, as applicable, if we effect a proration of the Exchange Offer with respect to either the Series G ADSs or the Series H ADSs. Any remaining tendered Series G ADSs and Series H ADSs that have not been accepted for exchange as a result of proration will be returned to tendering holders promptly after the consummation of the Exchange Offer. Such returned Series G ADSs and/or Series H ADSs all be subject to the Proposed Amendments, if adopted.

Consideration Elections and Consideration Proration

When you tender Series G ADSs or Series H ADSs, you may request:

(i) $7.25 in cash for every Series G ADS or $7.16 in cash for every Series H ADS validly tendered and not validly withdrawn (a “Cash Election”) and/or

(ii) $8.28 principal amount of 2024 Notes for every Series G ADS or $8.19 principal amount of 2024 Notes for every Series H ADS validly tendered and not validly withdrawn (a “2024 Notes Election”).

If the Exchange Offer is completed with respect to the Series G ADSs and/or the Series H ADSs, the consideration to be received for the Series G ADSs and Series H ADSs shall be at the holder’s election, subject to the next sentence. No more than 50% of the number of Series G ADSs and no more than 50% of the number of Series H ADSs validly tendered and accepted will receive cash consideration (each, a “cash cap”). If more than 50% of the Series G ADSs and/or more that 50% of the Series H ADSs are validly tendered and accepted for exchange, after giving effect to the proration described in “—Tender Acceptance Proration Procedures,” have made a Cash Election, they will be subject to consideration proration and all such Series G ADSs and/or Series H ADSs in excess of the applicable cash cap will be deemed to have been tendered for, and will automatically receive, 2024 Notes. However, to the extent the cash cap for one series of ADSs is not reached and the cash cap for the other series of ADSs is reached, we will allocate such unutilized amounts to satisfy cash elections in excess of the cash cap for the other series of ADSs, on a pro rata basis.

For example, if 60% of Series G ADSs tendered made a Cash Election and 40% made a 2024 Notes Election and 30% of Series H ADSs tendered made a Cash Election and 70% made a 2024 Notes Election, the amount of the Series G ADSs exchanged for cash under the Cash Election would be reduced to 50%, however, the

 

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unutilized cash cap relating to the Series H ADSs would be applied to satisfy additional Series G ADSs Cash Elections. Conversely, if 60% of both Series G ADSs and Series H ADSs tendered made a Cash Election and 40% made a 2024 Notes Election, a tendering holder making a full Cash Election would receive cash for approximately 83.3% of its tendered Series G ADSs or Series H ADSs, and would receive 2024 Notes for the remaining approximately 16.7% of its tendered Series G ADSs or Series H ADSs, subject to adjustment for fractional interests, if any.

No more than $7.8 million of 2024 Notes will be issued as consideration for Series G ADSs and no more than $7.8 million of 2024 Notes will be issued as consideration for Series H ADSs and any Series G ADSs or Series H ADSs tendered in excess of this limitation will be deemed to have made a cash election instead. To the extent that holders of either the Series G ADSs or Series H ADSs made elections that would cause fewer than $7.8 million of 2024 Notes to be issued in respect of such series then unused amounts of 2024 Notes will be allocated to the extent necessary to satisfy elections of 2024 Notes for the other series.

Fractional 2024 Notes

Fractional interest in the 2024 Notes will not be issued in exchange for Series G ADSs or Series H ADSs. Instead, any holder who would otherwise receive a fractional interest in the 2024 Notes will have its distribution of 2024 Notes rounded down to the nearest $25.00 denomination. You will receive cash in lieu of any entitlement to a fraction of a 2024 Note equal to the principal amount of that fraction.

Extension, Termination and Amendment

We expressly reserve the right, at any time and from time to time, to extend the period of time during which the Exchange Offer and Consent Solicitation with respect to the Series G ADSs and/or Series H ADSs is open, in our sole discretion. We will extend the Expiration Date if required by applicable law or regulation or for any reason we deem appropriate. During any such extension, all Series G ADSs or Series H ADSs previously tendered and not properly withdrawn will remain subject to the Exchange Offer and subject to your right to withdraw your Series G ADSs or Series H ADSs in accordance with the terms of the Exchange Offer.

Subject to the SEC’s applicable rules and regulations, we reserve the right, at any time or from time to time, to:

 

   

amend or make changes to the terms of the Exchange Offer and Consent Solicitation with respect to one or both series of ADSs, including the conditions to the Exchange Offer and Consent Solicitation;

 

   

delay our acceptance or our acquisition of any Series G ADSs or Series H ADSs pursuant to the Exchange Offer or terminate the Exchange Offer and not accept or acquire any Series G ADSs and/or Series H ADSs not previously accepted or acquired, upon the determination that any of the conditions of the Exchange Offer have not been satisfied, as determined by us; and

 

   

waive any condition.

We will follow any extension, termination, amendment or delay, as promptly as practicable, with a public announcement. In the case of an extension, any such announcement will be issued no later than 9:00 a.m., New York City Time, on the next business day after the previously scheduled Expiration Date. If we amend the Exchange Offer and Consent Solicitation with respect to one or both series of ADSs in a manner we determine to constitute a material change, we will promptly disclose the amendment as required by law and, depending on the significance of the amendment and the manner of disclosure to the registered holders, we will extend the Exchange Offer and Consent Solicitation with respect to one or both series of ADSs as required by law if the Exchange Offer and Consent Solicitation would otherwise expire during that period.

Without limiting the manner in which we may choose to make public announcements of any delay in acceptance, extension termination or amendment of the Exchange Offer and Consent Solicitation with respect to

 

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one or both series of ADSs, we will have no obligation to publish, advertise or otherwise communicate any public announcement, other than by making a timely release to an appropriate news agency.

If we make a material change in the terms of the Exchange Offer and Consent Solicitation with respect to one or both series of ADSs or the information concerning the Exchange Offer and Consent Solicitation, or if we waive a material condition of the Exchange Offer and Consent Solicitation with respect to one or both series of ADSs, we will extend the Exchange Offer and Consent Solicitation to the extent required under the Exchange Act. If, prior to the Expiration Date, we increase or decrease the percentage of Series G ADSs and/or Series H ADSs being sought or increase or decrease the consideration, or change the type of consideration, offered to holders of Series G ADSs and/or Series H ADSs, such modification will be applicable to all holders of Series G ADSs and/or Series H ADSs whose Series G ADSs or Series H ADSs are accepted pursuant to the Exchange Offer and Consent Solicitation and, if, at the time notice of any such modification is first published, sent or given to holders of Series G ADSs and/or Series H ADSs, the Exchange Offer and Consent Solicitation with respect to one or both series of ADSs is scheduled to expire at any time earlier than the tenth business day from and including the date that such notice is first so published, sent or given, the Exchange Offer and Consent Solicitation will be extended until the expiration of such ten business day period. For purposes of the Exchange Offer and Consent Solicitation, a “business day” means any day other than a Saturday, Sunday or a federal holiday and consists of the time period from 12:01 a.m. through 11:59 p.m., New York City Time.

We reserve the right, in our sole discretion, but subject to applicable law, to terminate the Exchange Offer and Consent Solicitation with respect to one or both series of ADSs at any time prior to the Expiration Date.

Proposed Amended and Restated Certificates of Designation Sought in the Consent Solicitation

The Proposed Amendments are provided in the form of amended and restated certificates of designation, copies of which are attached as Annex C-1 and Annex C-2, respectively. Upon our receipt of consents representing 66 2/3% of the outstanding Series G Preferred Shares and Series H Preferred Shares, respectively, and after a subsequent vote of the holders of the majority of our outstanding Common Stock, the respective amended and restated certificates of designation will become operative and effective. The amended and restated certificates of designation, if adopted, will be binding on all the holders of Preferred Shares who do not tender their Series G ADSs or Series H ADSs in the Exchange Offer or who tenders all or a portion of their Series G ADSs or Series H ADSs but some or all of such ADSs were returned as a result of the tender acceptance proration procedures described above. The Proposed Amendments if adopted and operative, will eliminate substantially all of the restrictive covenants and our obligation to pay or accrue any unpaid dividends for any past periods or future periods and amend certain voting rights in the Series G Preferred Shares and Series H Preferred Shares certificates of designation. For more complete information regarding the certificates of designation, you should consult our existing Series G Preferred Shares and Series H Preferred Shares certificates of designation, and the forms of amended and restated certificates of designation, copies of which are attached as Annex C-1 and Annex C-2, respectively.

The Proposed Amendments would:

 

   

eliminate the requirement that future unpaid dividends accrue for payment in the future;

 

   

eliminate all previously accrued and unpaid dividends on the Preferred Shares and any obligation of Navios Holdings to pay such accrued and unpaid dividends at any time in the future, including on liquidation;

 

   

amend the restriction on paying dividends on junior securities from being in effect so long as cumulative dividends on the Preferred Stock are in arrears to only being in effect in any quarter in which a dividend on the Preferred Shares has not been declared or paid in respect of such quarter;

 

   

eliminate the increase of the dividend rate on the Preferred Shares in the event Navios Holdings Articles of Incorporation are not amended to permit the holders of the Preferred Shares to elect a director if and when six or more quarterly dividends are in arrears;

 

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eliminate the requirement that, without the affirmative vote or consent of the holders of at least 66 2/3% of the outstanding series of Preferred Shares, voting as a class together with holders of any other parity securities, if the cumulative dividends payable on the outstanding Preferred Shares are in arrears; and

 

   

eliminate the requirement that, in the event that full cumulative dividends on the Preferred Shares and any parity securities shall not have been declared or paid and set apart for payment, none of Navios Holdings or any Affiliate of Navios Holdings may repurchase, redeem or otherwise acquire any series of Preferred Shares or parity securities or any junior securities, including Common Stock.

The definitions relating solely to the eliminated covenants will also be eliminated. Some other sections of the Preferred Shares certificates of designation may be amended to reflect the elimination or amendments of the foregoing provisions.

The Proposed Amendments require the consent of holders of 66 2/3% of the outstanding Series G Preferred Shares and Series H Preferred Shares, each acting as a separate class, as well as the affirmative vote of the holders of the majority of our outstanding Common Stock.

If the Proposed Amendments become effective with regards to either or both series of Preferred Shares:

 

   

we will, as soon as practicable, transmit a notice describing the amended and restated certificates of designation to all registered holders of our Series G Preferred Shares and/or Series H Preferred Shares, as applicable, that remain outstanding; and

 

   

non-tendering holders, including holders of Series G ADSs and/or Series H ADSs who tendered their Series G ADSs and/or Series H ADSs but had some of such ADSs returned as a result of the proration procedures described below, will hold their Preferred Shares under the respective Preferred Shares’ certificate of designation, as amended and restated, whether or not that holder consented to the Proposed Amendments.

The tender by a holder of Series G ADSs or Series H ADSs that are accepted for exchange pursuant to this Exchange Offer will constitute the granting of consent by such holder to the Proposed Amendments with respect to the number of Preferred Shares those ADSs represent, as applicable. If 66 2/3% of either of the Series G ADSs or Series H ADSs consent to the Proposed Amendments, such consent will be provided as an instruction to The Bank of New York Mellon, the Depositary, as the only “holder” of Preferred Shares, to consent in favor of the Proposed Amendments with respect to the Preferred Shares underlying the tendered ADSs. We are not soliciting and will not accept consents from holders who are not tendering their Series G ADSs or Series H ADSs pursuant to the Exchange Offer.

The Proposed Amendments constitute a single proposal with respect to each of the certificates of designation for each of the Series G Preferred Shares and Series H Preferred Shares, respectively, and a tendering and consenting holder must consent to the Proposed Amendments in their entirety and may not consent selectively with respect to certain of the Proposed Amendments.

The elimination and modification effected by the amended and restated certificates of designation for the Series G Preferred Share and/or the Series H Preferred Shares, as applicable, of the covenants and other provisions set forth in the Proposed Amendments will not become operative unless and until the Series G ADSs and/or Series H ADSs, as applicable, are accepted for exchange by us and, such amended and restated certificates of designation, as applicable, are approved by the holders of the majority of our outstanding Common Stock.

If the proposed amended and restated certificates of designation become effective, they will apply to all of the Series G Preferred Shares and/or Series H Preferred Shares and each holder of such shares that are not properly tendered and accepted for payment hereunder, including holders of Series G ADSs and/

 

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or Series H ADSs who tendered their Series G ADSs and/or Series H ADSs but had some of such ADSs returned as a result of the proration procedures described above, will be bound by Proposed Amendments regardless of whether the holder consented to the Proposed Amendments. The Preferred Shares underlying Series G ADSs or Series H ADSs that are not tendered and accepted for payment pursuant to the Exchange Offer will remain obligations of Navios Holdings.

Tender of Series G ADSs or Series H ADSs; Acceptance of Series G ADSs or Series H ADSs

Upon the terms and subject to the conditions of the Exchange Offer (including, if the Exchange Offer is extended or amended, the terms and conditions of any such extension or amendment), we will acquire, promptly after the Expiration Date, by accepting, Series G ADSs or Series H ADSs validly tendered and not properly withdrawn promptly after the Expiration Date. The settlement date is expected to be as soon as practicable after Expiration Date. In addition, subject to the applicable rules of the SEC, we expressly reserve the right to delay acceptance of, or the acquisition of, any Series G ADSs and/or Series H ADSs in order to comply with any applicable law. The reservation of this right to delay the acceptance or acquisition of, or payment for, the Series G ADSs and/or Series H ADSs is subject to the provisions of Rule 14e-1(c) under the Exchange Act, which requires us to pay the consideration offered or to return the Series G ADSs or Series H ADSs deposited by, or on behalf of, holders, promptly after the termination or withdrawal of the Exchange Offer.

For purposes of the Exchange Offer, we will be deemed to have accepted (and thereby acquired) Series G ADSs and Series H ADSs validly tendered, not properly withdrawn, and subject to proration if necessary, if and when we notify the Exchange Agent of our acceptance of the tenders of Series G ADSs or Series H ADSs pursuant to the Exchange Offer. Upon the terms and subject to the conditions of the Exchange Offer, (i) with respect to the cash consideration, we will pay cash by wire transfer to the Exchange Agent, which will then be paid to holders entitled to receive cash and (ii) with respect to 2024 Notes consideration, we will deliver the 2024 Notes to the Exchange Agent, which will act as agent for tendering holders entitled to receive 2024 Notes consideration for the purpose of receiving the 2024 Notes consideration from us and transmitting the 2024 Notes through a book-entry transfer or otherwise to such tendering holders receiving 2024 Notes consideration. 2024 Notes delivered to tendering holders of Series G ADSs and Series H ADSs that hold through securities accounts with direct or indirect participants in DTC will be registered in the name of DTC’s nominee and security entitlements will be allocated by DTC and DTC participants to those holders’ securities accounts.

Under no circumstances will we pay interest on the consideration payable for Series G ADSs or Series H ADSs, regardless of any delay in making such delivery or extension of the Expiration Date.

If, prior to the Expiration Date, we increase the consideration to be paid for each Series G ADS or Series H ADS tendered pursuant to this Exchange Offer, we will pay or deliver such increased consideration for all such Series G ADSs or Series H ADSs acquired pursuant to the Exchange Offer, whether or not such Series G ADSs or Series H ADSs were tendered prior to such increase in consideration.

If certain events occur, we may not be obligated to acquire Series G ADSs and/or Series H ADSs pursuant to the Exchange Offer. See “Summary—Conditions of the Exchange Offer.”

In all cases, delivery to a tendering holder of the consideration for Series G ADSs and/or Series H ADSs accepted pursuant to the Exchange Offer will be made only after timely receipt by the Exchange Agent of the confirmation of a book-entry transfer of the Series G ADSs or Series H ADSs into the designated account at DTC (the book-entry transfer facility) (a “Book-Entry Confirmation”) pursuant to the procedures set forth in “The Exchange Offer—Procedure for Tendering.”

If we do not accept any tendered Series G ADSs and/or Series H ADSs pursuant to the terms and conditions of the Exchange Offer for any reason, those Series G ADSs and/or Series H ADSs will be credited back to the appropriate account promptly following expiration or termination of the Exchange Offer.

 

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All Series G ADSs and Series H ADSs that are validly tendered and accepted by us in the Exchange Offer will, upon our instruction, be surrendered by the Exchange Agent to the Depositary for cancellation, and the Preferred Shares underlying those Series G ADSs or Series H ADSs will be delivered by the Depositary’s custodian to us for cancellation.

Procedure for Tendering

In order for a holder that holds Series G ADSs or Series H ADSs in a securities account with a broker or other securities intermediary to validly tender Series G ADSs or Series H ADSs pursuant to the Exchange Offer, the Series G ADSs and Series H ADSs must be tendered pursuant to the procedure for book-entry transfer described below and a Book-Entry Confirmation must be received by the Depositary prior to the Expiration Date. The Depositary will designate accounts with respect to the Series G ADSs and Series H ADSs at DTC, the book-entry transfer facility, for purposes of the Exchange Offer within two business days after the date of this prospectus. The holder should instruct its broker or other securities intermediary to make the appropriate election on its behalf when they tender Series G ADSs or Series H ADSs through DTC. The holder may change its election by transmitting, or instructing its broker, dealer or other nominee to transmit, revised election information through DTC. Any securities intermediary that is a participant in the system of DTC may make a book-entry delivery of Series G ADSs or Series H ADSs by causing DTC to transfer those Series G ADSs or Series H ADSs into a designated account at DTC in accordance with DTC’s procedures for transfer. The securities intermediary must also send the Exchange Agent an Agent’s Message, which is a message transmitted to the Exchange Agent by the tendering DTC participant confirming that the participant has received a copy of the Offer to Exchange and that Navios Holdings may enforce the terms of the Exchange Offer against the participant.

Holders of Series G ADSs and/or Series H ADSs who are unable to deliver confirmation of the book-entry tender of their Series G ADSs and/or Series H ADSs into the Exchange Agent’s account at DTC on or prior to the Expiration Date must tender their Series G ADSs and/or Series H ADSs according to the guaranteed delivery procedures described below.

Fees . If you tender your Series G ADSs or Series H ADSs, you will not be obligated to pay any charges or expenses of the Depositary or any brokerage commissions. If you own your Series G ADSs or Series H ADSs through a broker or other securities intermediary, and your broker or other securities intermediary tenders the Series G ADSs or Series H ADSs on your behalf, such institution may charge you a fee for doing so. You should consult your broker or other securities intermediary to determine whether any charges will apply.

Transfer Taxes. We will pay any transfer taxes imposed by the United States or the Republic of the Marshall Islands or any jurisdiction therein with respect to the exchange of Series G ADSs or Series H ADSs pursuant to the Exchange Offer (for the avoidance of doubt, transfer taxes do not include income or back-up withholding taxes). If a transfer tax is imposed for any reason other than the exchange of Series G ADSs or Series H ADSs pursuant to the Exchange Offer, or by any jurisdiction outside the United States or the Republic of the Marshall Islands, then the amount of such transfer tax (whether imposed on the registered holder or any other person) will be payable by the tendering holders.

Guaranteed Delivery Procedures

Holders wishing to tender their Series G ADSs and/or Series H ADSs but whose Series G ADSs and/or Series H ADSs are not immediately available or who cannot deliver such Series G ADSs and/or Series H ADSs or any other available required documents to the Exchange Agent or comply with the applicable procedures under DTC’s ATOP system prior to the Expiration Date may tender if:

 

   

the tender is made through an eligible institution;

 

   

prior to the Expiration Date, the Exchange Agent receives from the eligible institution a properly completed and duly executed notice of guaranteed delivery, by mail, overnight courier or pdf email

 

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guaranteeing that, within two NYSE trading days, a book-entry confirmation, and any other required documents will be deposited by the eligible institution with the Exchange Agent and the Exchange Agent receives a book-entry confirmation and all other documents required within two New York Stock Exchange trading days after the date of the notice of guaranteed delivery.

Upon request to the Exchange Agent, a notice of guaranteed delivery will be sent to holders who wish to tender their Series G ADSs and/or Series H ADSs according to the guaranteed delivery procedures set forth above.

Effects of Tenders

By tendering your Series G ADSs and/or Series H ADSs as set forth above, you irrevocably appoint the Exchange Agent and Navios Holdings and their designees as your attorneys-in-fact and proxies, each with full power of substitution, to the full extent of your rights with respect to your Series G ADSs and/or Series H ADSs tendered and accepted by us, including to (i) transfer the tendered Series G ADSs and/or Series H ADSs to, or to the order of, Navios Holdings, (ii) surrender the tendered Series G ADSs and/or Series H ADSs and instruct the Depositary to deliver the underlying Preferred Shares to, or to the order of, Navios Holdings and (iii) instruct the Depositary to consent in favor of the Proposed Amendments with respect to the Preferred Shares underlying the tendered ADSs, with respect to each applicable series of Preferred Shares. Such appointment will be automatically revoked with respect to any Series G ADSs or Series H ADSs that you have tendered but that are not accepted for exchange. All such powers and proxies shall be considered coupled with an interest in the tendered Series G ADSs or Series H ADSs and therefore shall not be revocable; provided that the Series G ADSs or Series H ADSs tendered pursuant to the Exchange Offer may be withdrawn at any time on or prior to the Expiration Date, as it may be extended by us, and unless theretofore accepted and not returned as provided for herein, may also be withdrawn after the expiration of 40 business days following the commencement of the Exchange Offer, subject to the withdrawal rights and procedures set forth below. Upon the effectiveness of such appointment, all prior proxies or consents given by you will be revoked, and no subsequent proxies or consents may be given (and, if given, will not be deemed effective) unless the tendered Series G ADSs and/or Series H ADSs are validly withdrawn.

We will determine all questions as to the validity, form, eligibility (including time of receipt) and acceptance of any tender of Series G ADSs or Series H ADSs in the Exchange Offer, and our determination shall be final and binding, subject to a holder challenging our determination in a court of competent jurisdiction and such court issuing a judgment to the contrary. We reserve the right to reject any and all tenders of Series G ADSs or Series H ADSs in the Exchange Offer determined by us not to be in proper form or the acceptance or acquisition of which may, in our opinion, be unlawful. No alternative, conditional or contingent tenders will be accepted and no fractional Series G ADSs or Series H ADSs will be purchased.

Subject to the applicable rules and regulations of the SEC, we also reserve the right to waive, prior to the Expiration Date, in our sole discretion, any of the conditions to the Exchange Offer, including the absolute right to waive any defect or irregularity in the tender of any Series G ADSs or Series H ADSs in the Exchange Offer. No tender of Series G ADSs or Series H ADSs in the Exchange Offer will be deemed to have been made until all defects and irregularities in the tender of such Series G ADSs or Series H ADSs in the Exchange Offer have been cured or waived. Neither we, the Exchange Agent, the Information Agent nor any other person will be under any duty to give notification of any defects or irregularities in the tender of any Series G ADSs or Series H ADSs in the Exchange Offer or will incur any liability for failure to give any such notification. Our interpretation of the terms and conditions of the Exchange Offer will be final and binding, subject to a challenge to our determination in a court of competent jurisdiction and such court issuing a judgment to the contrary.

Rule 14e-4 “Net Long Position” Requirement

It is a violation of Rule 14e-4 (promulgated under the Exchange Act) for a person, directly or indirectly, to tender securities in a partial tender offer for their own account unless the person so tendering their securities

 

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(a) has a net long position equal to or greater than the aggregate principal amount of the securities being tendered and (b) will cause such securities to be delivered in accordance with the terms of the tender offer. Rule 14e-4 provides a similar restriction applicable to the tender or guarantee of a tender on behalf of another person.

A tender of Series G ADSs or Series H ADSs in the Exchange Offer under any of the procedures described above will constitute the tendering holder’s representation and warranty that (a) such holder has a net long position in the Series G ADSs or Series H ADSs being tendered pursuant to the Exchange Offer within the meaning of Rule 14e-4 under the Exchange Act and (b) the tender of such Series G ADSs or Series H ADSs complies with Rule 14e-4.

The tender of Series G ADSs or Series H ADSs, pursuant to any of the procedures described above, will constitute a binding agreement between you and us upon the terms and subject to the conditions of the Exchange Offer.

Withdrawal of Tenders and Revocation of Corresponding Consents

You may validly withdraw Series G ADSs or Series H ADSs that you tender at any time prior to the Expiration Date, which is 5:00 p.m., New York City Time, on March 1, 2019, unless we extend it. Any Series G ADSs or Series H ADSs not accepted will be credited back to the appropriate account promptly following the expiration or termination of the Exchange Offer. In addition, after the expiration of the Exchange Offer, you may withdraw any Series G ADSs or Series H ADSs that you tendered that are not accepted by us for exchange after the expiration of 40 business days following commencement of the Exchange Offer.

For a withdrawal to be effective, a withdrawal of Series G ADSs or Series H ADSs must comply with the appropriate DTC procedures prior to the Expiration Date or, if your Series G ADSs or Series H ADSs are not previously accepted for exchange by us, after the expiration of 40 business days following the commencement of the Exchange Offer.

If we extend the Exchange Offer, are delayed in our acceptance of the Series G ADSs or Series H ADSs or are unable to accept Series G ADSs or Series H ADSs pursuant to the Exchange Offer for any reason, then, without prejudice to our rights under the Exchange Offer, the Exchange Agent may retain tendered Series G ADSs or Series H ADSs, and those Series G ADSs or Series H ADSs may not be withdrawn except as otherwise provided in this prospectus, subject to provisions under the Exchange Act that provide that an issuer making a tender offer shall either pay the consideration offered or return tendered securities promptly after the termination or withdrawal of the Exchange Offer.

All questions as to the validity, form and eligibility, including time or receipt, of notices of withdrawal will be determined by us. Our determination will be final and binding on all parties, subject to a holder challenging our determination in a court of competent jurisdiction and such court issuing a judgment to the contrary. Any Series G ADSs or Series H ADSs withdrawn will be deemed not to have been validly tendered for purposes of the Exchange Offer, and no consideration will be given, unless the Series G ADSs or Series H ADSs so withdrawn are validly re-tendered and not properly withdrawn. Properly withdrawn Series G ADSs or Series H ADSs may be re-tendered by following the procedures described above under “Terms of the Exchange Offer And Consent Solicitation—Procedure for Tendering” at any time prior to the Expiration Date.

None of us, the Exchange Agent, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or will incur any liability for failure to give any such notification. Any Series G ADSs or Series H ADSs properly withdrawn will be deemed to not have been validly tendered for purposes of the Exchange Offer.

 

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Source and Amount of Funds

The Exchange Offer is not conditioned upon our receipt of financing. We intend to fund all cash payments to the holders of Series G ADSs or Series H ADSs pursuant to the Exchange Offer, including any payments for fractional shares of 2024 Notes, with cash on hand.

Liquidity; Listing

The Series G ADSs and Series H ADSs are both currently listed and traded on the NYSE.

Following the completion of the Exchange Offer, the number of Series G ADSs or Series H ADSs that are publicly traded may be reduced. Therefore, holders who choose not to tender their Series G ADSs or Series H ADSs will own a greater percentage interest in our outstanding Series G ADSs or Series H ADSs. This may reduce the volume of trading and make it more difficult to buy or sell significant amounts of Series G ADSs or Series H ADSs without affecting the market price. See “Risk Factors—Risks Associated with the Exchange Offer—Series G ADSs or Series H ADSs that you continue to hold after the Exchange Offer are expected to become less liquid following the Exchange Offer.”

We do not intend to list the 2024 Notes on the NYSE or any national or regional securities exchange. Therefore, it is unlikely that a trading market for the 2024 Notes will exist upon consummation of the Exchange Offer. See “Risk Factors—Risks Relating to the Exchange Offer and the 2024 Notes.” There is currently no market for the 2024 Notes and we cannot assure you that an active trading market will develop for the 2024 Notes.

Appraisal Rights

Under Republic of the Marshall Islands law, holders of Preferred Shares that do not consent to the amended and restated certificates of designation have a right to dissent from the Proposed Amendments and receive payment for their Preferred Shares equal to the “fair value” of such shares, as determined by the High Court of the Republic of the Marshall Islands. However, the Depositary will not exercise those appraisal rights on behalf of a holder of Series G ADSs or Series H ADSs, even if requested to do so. In order for holders of Series G ADSs or Series H ADSs to exercise their appraisal rights, they would have to surrender their Series G ADSs or Series H ADSs as soon as possible with ample time to become a registered holder of Preferred Shares not later than March 1, 2019. A shareholder that elects to become a registered holder of Preferred Shares and exercise dissenters’ rights must comply with all provisions of Section 101 of the BCA in order to perfect such rights. Such provisions, which include but are not limited to (i) making an objection to the Proposed Amendments prior to their adoption and (ii) providing a notice of an election to dissent within 20 days after the Corporation provides notice the adoption of the amended and restated certificates of designation, are detailed and complicated, and failure to follow precisely any of the statutory procedures set forth in Section 101 of the BCA will result in a termination or waiver of appraisal rights. In view of the complexity of Section 101 of the BCA, holders who may wish to pursue appraisal rights should consult their legal advisors as soon as possible. In addition, relevant sections of the BCA can be made available at the request of a dissenting holder. See “Where You Can Find Additional Information.”

Certain Legal and Regulatory Matters

Except as set forth in this prospectus, we are not aware of any material filing, approval or other action by or with any governmental authority or administrative or regulatory agency that would be required for our acquisition or ownership of Preferred Shares underlying Series G ADSs or Series H ADSs. We intend to make all required filings under the Exchange Act.

Subsequent Repurchases of Series G ADSs or Series H ADSs

Whether or not the Exchange Offer is consummated, subject to applicable contractual restrictions, the terms of our Articles of Incorporation and applicable law, we or our affiliates may from time to time acquire Series G

 

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ADSs or Series H ADSs, other than pursuant to this Exchange Offer, through open market purchases, privately negotiated transactions, exchange offers, exercise of optional redemption rights, offers to purchase, upon such terms and at such prices as we may determine, which may be more or less than the amount to be paid pursuant to the Exchange Offer and could be paid in cash or other consideration not provided for in this Exchange Offer. So long as we remain in arrears, any subsequent acquisition of Series G ADSs or Series H ADSs cannot be executed other than on a pro rata basis, unless the Proposed Amendments become effective. However, we have no current plan or commitment to acquire Series G ADSs or Series H ADSs, other than pursuant to this Exchange Offer. Until the expiration of at least ten business days after the date of termination of the Exchange Offer, neither we nor any of our affiliates will make any purchases of Series G ADSs or Series H ADSs otherwise than pursuant to the Exchange Offer. If required by Rule 13e-3 under the Exchange Act, any subsequent repurchases will be made in accordance with Rule 13e-3 and any other applicable provisions of the Exchange Act.

Exchange Agent

We have retained The Bank of New York Mellon as the Exchange Agent. We will pay the Exchange Agent reasonable and customary compensation for its services in connection with the Exchange Offer and reimburse it for its reasonable out-of-pocket expenses. Requests for assistance in connection with the tender of the Series G ADSs or Series H ADSs pursuant to the Exchange Offer may be directed to the Exchange Agent for the Exchange Offer at the address set forth below:

The Bank of New York Mellon

 

By Mail:

 

The Bank of New York Mellon

Voluntary Corporation Actions—Suite V

P.O. Box 43031

Providence, Rhode Island 02940-3031

United States of America

  

By Hand or Courier:

 

The Bank of New York Mellon

Voluntary Corporate Actions—Suite V

250 Royall Street

Canton, Massachusetts 02021

United States of America

Information Agent

Georgeson LLC is serving as Information Agent in connection with the Exchange Offer and Consent Solicitation. The Information Agent will assist with the mailing of this prospectus and related materials to holders of Series G ADSs and Series H ADSs, respond to inquiries of and provide information to holders of Series G ADSs and Series H ADSs in connection with the Exchange Offer and Consent Solicitation, and provide other similar advisory services as we may request from time to time. Questions regarding the terms of the Exchange Offer and Consent Solicitation, and requests for assistance or for additional copies of this prospectus and any other required documents, may be directed to the Information Agent for the Exchange Offer and Consent Solicitation at the address and telephone numbers set forth below:

Georgeson LLC

Call Toll-Free (888) 566-3252

Contact via E-mail at: Navios@georgeson.com

Soliciting Dealer Fee

With respect to any tender and acceptance of Series G ADSs or Series H ADSs, we will pay a soliciting dealer, if applicable, a fee of 2.0 % of the original liquidation preference ($25.00) applicable to each Series G

 

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ADS and Series H ADS tendered (the “Soliciting Dealer Fee”). For example, for both the Series G ADSs and Series H ADSs, the Soliciting Dealer Fee would be calculated as (.02 x $25) per Series G ADSs or Series H ADSs tendered. The Soliciting Dealer Fee will only be paid with respect to Series G ADSs or Series H ADSs that are accepted for tender by us.

In order to be eligible to receive the Soliciting Dealer Fee, a properly completed soliciting dealer form must be delivered by a soliciting dealer to the Exchange Agent prior to the Expiration Date. We will, in our sole discretion, determine whether a broker has satisfied the criteria for receiving a Soliciting Dealer Fee (including, without limitation, the submission of the appropriate documentation without defects or irregularities and in respect of bona fide tenders). Other than the foregoing, no fees or commissions have been or will be paid by us to any broker, dealer or other person, other than the Information Agent and the Exchange Agent, in connection with the Exchange Offer and Consent Solicitation.

A soliciting dealer is a retail broker designated in the soliciting dealer form and is:

 

   

a broker or dealer in securities which is a member of any national securities exchange in the United States or of FINRA; or

 

   

a bank or trust company located in the United States.

Soliciting dealers will include any of the organizations described above even when the activities of such organization in connection with the Exchange Offer and Consent Solicitation consist solely of forwarding to clients materials relating to the Exchange Offer and Consent Solicitation and tendering ADSs as directed by beneficial owners thereof. Each soliciting dealer will confirm that each holder of ADSs that it solicits has received a copy of this prospectus, or concurrently with such solicitation provide the holder with a copy of this prospectus. No soliciting dealer is required to make any recommendation to holders of shares ADSs as to whether to tender or refrain from tendering in the Exchange Offer. No assumption is made, in making payment to any soliciting dealer, that its activities in connection with the Exchange Offer and Consent Solicitation included any activities other than those described in this paragraph. For all purposes noted in materials relating to the Exchange Offer and Consent Solicitation, the term “solicit” shall be deemed to mean no more than “processing ADSs tendered” or “forwarding to customers material regarding the Exchange Offer and Consent Solicitation.”

Soliciting dealers are not entitled to a Soliciting Dealer Fee with respect to ADSs beneficially owned by such soliciting dealer or with respect to any ADSs that are registered in the name of a soliciting dealer unless such ADSs are held by such soliciting dealer as nominee and are tendered for the beneficial owner of such ADSs.

Expenses

We expect to incur reasonable and customary fees and expenses of approximately $1.0 million in connection with the Exchange Offer and Consent Solicitation. We also will pay brokers and other securities intermediaries the reasonable out-of-pocket expenses incurred by them in forwarding copies of this prospectus and related documents to the beneficial owners of Series G ADSs or Series H ADSs and in handling or forwarding tenders and related consents of Series G ADSs or Series H ADSs by their customers, and we may also make payments to such brokers and other securities intermediaries for assisting their clients with tenders.

In connection with the Exchange Offer and Consent Solicitation, our officers, directors and employees may solicit tenders and related consents of Series G ADSs or Series H ADSs by use of the mails, personally or by telephone, facsimile, telegram, electronic communication or other similar methods.

No brokerage commissions will be payable by tendering holders of Series G ADSs or Series H ADSs to us, the Information Agent or the Depositary. Navios Holdings will pay any fees due to the Depositary for the cancellation of the tendered Series G ADSs and Series H ADSs. Holders who tender their Series G ADSs or Series H ADSs through a broker or other securities intermediary should contact such institution as to whether it charges any service fees.

 

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Additional Information

Pursuant to Exchange Act Rule 13e-4, we have filed with the SEC a Tender Offer Statement on Schedule TO (the “Schedule TO”), which contains additional information with respect to the Exchange Offer. We will file an amendment to the Schedule TO to report any material changes in the terms of the Exchange Offer and to report the final results of the Exchange Offer as required by Exchange Act Rule 13e-4(c)(3) and 13e-4(c)(4), respectively. The Schedule TO, including the exhibits and any amendments thereto, may be examined, and copies may be obtained, free of charge, by requesting it in writing or by telephone from the appropriate company at the following address:

Information Agent :

Georgeson LLC

Call Toll-Free (888) 566-3252

Contact via E-mail at: Navios@georgeson.com

To ensure timely delivery of the documents in advance of the Expiration Date, please make your request as soon as practicable and, in any event, no later than February 22, 2019, which is five business days prior to the Expiration Date.

 

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COMPARISON OF RIGHTS BETWEEN THE PREFERRED SHARES AND THE 2024 NOTES

The following briefly summarizes the material differences between the rights of holders of Series G Preferred Shares and Series H Preferred Shares (together with Series G Preferred Shares, the “Preferred Shares”) and of holders of the 2024 Notes to be issued in the Exchange Offer. This comparison is based on the existing Preferred Shares certificates of designation and does not take any of the Proposed Amendments included in the Preferred Shares’ amended and restated certificates of designation into account. The 2024 Notes issued in the Exchange Offer will be governed by the 2024 Notes Indenture (as defined below). The discussion below is a summary and is qualified in its entirety by reference to our Articles of Incorporation (including the certificates of designation establishing each of the Series G Preferred Shares and Series H Preferred Shares) and the form of the 2024 Notes Indenture, applicable Republic of the Marshall Islands law and other documents referred to herein and filed as exhibits or incorporated by reference to the registration statement of which this Prospectus forms a part. These documents are also available from the Information Agent upon request. See “Where You Can Find Additional Information.” We urge you to read these documents for a more complete understanding of the differences between the Preferred Shares and the 2024 Notes.

Governing Documents

Preferred Shares : The rights of holders of Preferred Shares are set forth in our Articles of Incorporation (including the certificates of designation establishing each of the Series G Preferred Shares and the Series H Preferred Shares) and Republic of the Marshall Islands law. These documents have been filed with the SEC and are available on EDGAR.

The 2024 Notes : The rights of holders of the 2024 Notes will be set forth in the indenture, the form of which is filed as an exhibit to the registration statement of which this prospectus forms a part.

Dividends/Coupon

Preferred Shares : Holders of the Series G Preferred Shares are entitled to receive preferential annual cash dividends at a rate of 8.75% per annum per $2,500.00 stated liquidation preference per Series G Preferred Share (equivalent to $25.00 per ADS), and holders of the Series H Preferred Shares are entitled to receive preferential annual cash dividends at a rate of 8.625% per annum per $2,500.00 stated liquidation preference per Series H Preferred Share (equivalent to $25.00 per ADS), when, as and if declared by our board of directors out of legally available funds for such purpose. Dividends on the Preferred Shares are payable quarterly in arrears on each January 15, April 15, July 15 and October 15. Distributions on the Preferred Shares will accrue whether or not we have earnings, whether or not there are funds legally available for the payment of such dividends, and whether or not dividends are declared.

The 2024 Notes : Holders of the 2024 Notes are entitled to receive 9.75% cash pay interest semi-annually in arrears on the principal amount on April 15 and October 15 of each year, commencing on October 15, 2019. Interest on the 2024 Notes will accrue from and including the issue date thereof.

Ranking

Preferred Shares : With respect to dividend rights and rights upon our voluntary or involuntary liquidation, dissolution or winding up, the Preferred Shares rank (i) senior to all classes or series of our Common Stock and to all classes or series of stock now or hereafter authorized, issued or outstanding, the terms of which specifically provide that such stock ranks junior to the Preferred Shares; (ii) on parity with any class or series of stock expressly designated as ranking on parity with the Preferred Shares; and (iii) junior to any class or series of stock expressly designated as ranking senior to the Preferred Shares. The Preferred Shares will also rank junior in right of payment to the Company’s other existing and future debt obligations including the 2024 Notes.

 

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The 2024 Notes : The 2024 Notes rank (i) senior in right of payment to any of our existing and future debt that expressly provides that it is subordinated to the 2024 Notes and all of our existing and future equity interest, including the Preferred Shares; (ii)  pari passu in right of payment with all of our existing and future senior obligations; (iii) structurally subordinated in right of payment to the obligations of our subsidiaries; and (iv) effectively subordinated in right of payment to any existing and future obligations of Navios Holdings that are secured by property or assets that do not secure the 2024 Notes, including the 2022 Senior Secured Notes and the 2022 Notes, to the extent of the value of any such property and assets securing such other obligations.

Voting Rights

Preferred Shares : The Preferred Shares have no voting rights except as set forth below or as otherwise provided by Republic of the Marshall Islands law. In the event that one quarterly dividend payable on the Preferred Shares is in arrears (whether or not such dividend shall have been declared and whether or not there are profits, surplus, or other funds legally available for the payment of dividends), we shall use commercially reasonable efforts to obtain an amendment to our Articles of Incorporation to effectuate any and all such changes thereto as may be necessary to permit the holders of the Preferred Shares to exercise the voting rights described in clause (x) of the following sentence. If and when dividends payable on the Preferred Shares are in arrears for six or more quarterly periods, whether or not consecutive (and whether or not such dividends shall have been declared and whether or not there are profits, surplus, or other funds legally available for the payment of dividends), then (x) if our Articles of Incorporation have been amended as described in the preceding sentence, the holders of Preferred Shares will have the right, voting as a class together with holders of any other parity securities upon which like voting rights have been conferred and are exercisable, to elect one member of our board of directors, and the size of our board of directors will be increased as needed to accommodate such change (unless the size of our board of directors already has been increased by reason of the election of a director by holders of parity securities upon which like voting rights have been conferred and with which the each series of Preferred Shares voted as a class for the election of such director), and (y) if our Articles of Incorporation have not been amended as described in the preceding sentence, then, until such amendment is fully approved and effective, the dividend rate on the Preferred Shares shall increase by 25 basis points. There can be no assurance that any such amendment to our Articles of Incorporation will be approved by our common stockholders and in past years our Common Stockholders have not approved such amendment. For avoidance of doubt, commercially reasonable efforts shall not be deemed to include the requirement to pay any consent or other fee to obtain such amendment. Dividends payable on the Preferred Shares will be considered to be in arrears for any quarterly period for which full cumulative dividends through the most recent dividend payment date have not been paid on all outstanding Preferred Shares. Any such amendment to our Articles of Incorporation, if obtained, shall also provide that the right of such holders of Preferred Shares to elect members of our board of directors will continue until such time as all dividends accumulated and in arrears on the Preferred Shares have been paid in full or sufficient funds for such payment have been declared and set apart for such purpose, at which time such right will terminate, subject to the revesting of such right in the event of each and every subsequent failure to pay six quarterly dividends as described above. Upon any termination of the right of the holders of the Preferred Shares and any other parity securities to vote as a class for such director, the term of office of such directors then in office elected by such holders voting as a class will terminate immediately. Any director elected by the holders of the Preferred Shares and any other parity securities shall each be entitled to one vote per director on any matter before our board of directors.

 

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Unless we have received the affirmative vote or consent of the holders of at least two-thirds of the outstanding Preferred Shares of each series, voting as a single class, we may not adopt any amendment to our Articles of Incorporation that materially and adversely alters the preferences, powers or rights of the Preferred Shares. In addition, unless we have received the affirmative vote or consent of the holders of at least two-thirds of the outstanding Preferred Shares, voting as a class together with holders of any other parity securities upon which like voting rights have been conferred and are exercisable, we may not:

 

   

issue any parity securities if the cumulative dividends payable on outstanding Preferred Shares are in arrears; or

 

   

create or issue any senior securities.

On any matter described above in which the holders of Preferred Shares are entitled to vote as a class, such holders will be entitled to one vote per share. Any Preferred Shares held by us or any of our subsidiaries or affiliates will not be entitled to vote.

No vote or consent of Preferred Shares shall be required for (i) the creation or incurrence of any indebtedness, (ii) the authorization or issuance of any Common Stock or other junior securities or (iii) except as expressly provided above, the authorization or issuance of any of our preferred stock.

Preferred Shares held in nominee or street name account will be voted by the broker or other nominee in accordance with the instruction of the beneficial owner unless the arrangement between the beneficial owner and his nominee provides otherwise.

The 2024 Notes : The 2024 Notes have no voting rights.

Mandatory Redemption Rights

Preferred Shares : Commencing on January 2, 2019 with respect to the Series G Preferred Shares and July 8, 2019 with respect to the Series H Series, we may redeem, at our option, in whole or in part, the Preferred Shares at a redemption price in cash equal to $2,500.00 per share (equivalent to $25.00 per ADS) plus an amount equal to all accumulated and unpaid dividends thereon to the date of redemption, whether or not declared. Any such optional redemption shall be effected only out of funds legally available for such purpose. We may undertake multiple partial redemptions.

In addition, with respect to the Series H Preferred Shares, at any time after the occurrence of a “fundamental change,” we may redeem, at our option, in whole or from time to time in part, the Series H Preferred Shares at a redemption price in cash equal to $2,500.00 per share (equivalent to $25.00 per ADS) plus an amount equal to all accumulated and unpaid dividends thereon to the date of redemption, whether or not declared. Any such optional redemption would be effected only out of funds legally available for such purpose.

A “fundamental change” means an event that shall be deemed to have occurred at the time after the date when our Common Stock cease to be listed or admitted for trading on the NYSE, the NASDAQ Capital Market, the NASDAQ Global Market or the NASDAQ Global Select Market (or any of their respective successors).

The 2024 Notes : We will have the option to redeem the 2024 Notes, in whole or in part, at our option at any time, at a redemption price equal to 100% of the principal amount of the 2024 Notes to be redeemed, plus accrued interest on the notes to be redeemed to, but excluding, the date on which the 2024 Notes are to be redeemed.

Restrictions on Ownership and Transfer

Preferred Shares : Generally, Preferred Shares are freely transferable, subject to restrictions imposed by the security laws with respect to affiliates. Notwithstanding the foregoing, transfers of Preferred Shares are subject to certain limitations described in the Articles of Incorporation. Transfers of Preferred Shares will be effective as of the first day of the next succeeding fiscal quarter of Navios Holdings.

 

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The 2024 Notes : Generally, the 2024 Notes are freely transferable, subject to restrictions imposed by the security laws with respect to affiliates. There are no restrictions on ownership of the 2024 Notes.

Listing

Preferred Shares : Series G ADSs and Series H ADSs are each listed on the NYSE.

The 2024 Notes : The 2024 Notes will not be listed on any securities exchange and we cannot guarantee that there will be an established market for their trading. Accordingly, we cannot give you any assurance as to the development or liquidity of any market for the 2024 Notes.

 

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CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES

The following summary describes certain U.S. federal income tax consequences of the Exchange Offer and the ownership and disposition of the 2024 Notes received in the Exchange Offer. This summary does not discuss all of the aspects of U.S. federal income taxation that may be relevant to a beneficial owner in light of its particular investment or other circumstances. This summary only applies to a beneficial owner of Series G ADSs or Series H ADSs, or 2024 Notes received in exchange for Series G ADSs or Series H ADSs, that holds the Series G ADSs or Series H ADSs, and will hold any 2024 Notes received in exchange therefor, as a capital asset (generally, investment property). This summary does not address U.S. federal income tax rules that may be applicable to certain categories of beneficial owners of Series G ADSs, Series H ADSs or 2024 Notes, such as:

 

   

dealers in securities or currencies;

 

   

traders securities;

 

   

U.S. holders (as defined below) whose functional currency is not the U.S. dollar;

 

   

persons holding Series G ADSs, Series H ADSs or 2024 Notes as part of a conversion, constructive sale, wash sale or other integrated transaction or a hedge, straddle or synthetic security;

 

   

persons subject to the alternative minimum tax;

 

   

certain U.S. expatriates;

 

   

financial institutions;

 

   

insurance companies;

 

   

controlled foreign corporations, passive foreign investment companies and regulated investment companies and shareholders of such corporations;

 

   

entities that are tax-exempt for U.S. federal income tax purposes and retirement plans, individual retirement accounts and tax-deferred accounts;

 

   

pass-through entities, including partnerships and entities and arrangements classified as partnerships for U.S. federal income tax purposes, and beneficial owners of pass-through entities;

 

   

persons that acquire 2024 Notes other than pursuant to the Exchange Offer; and

 

   

persons that exercise appraisal rights with respect to their Series G ADSs or Series H ADSs.

In addition, this summary only addresses U.S. federal income tax consequences, and does not address other U.S. federal tax consequences, including, for example, estate or gift tax consequences or the Medicare tax on certain investment income. This summary also does not address any U.S. state or local or non-U.S. income or other tax consequences.

If an entity or arrangement classified as a partnership for U.S. federal income tax purposes holds Series G ADSs, Series H ADSs or 2024 Notes, the U.S. federal income tax treatment of a partner in the partnership generally will depend upon the status of the partner, the activities of the partnership and certain determinations made at the partner level. Entities or arrangements classified as partnerships for U.S. federal income tax purposes, and partners in such partnerships, should consult their own tax advisors regarding the U.S. federal income tax consequences of the Exchange Offer and the ownership and disposition of the 2024 Notes.

This summary is based on U.S. federal income tax law, including the Internal Revenue Code of 1986, as amended (the “Code”), Treasury regulations, administrative rulings and judicial authority, all as in effect or in existence as of the date of this Offer to Exchange and Consent Solicitation Statement. Subsequent developments in U.S. federal income tax law, including changes in law or differing interpretations, which may be applied retroactively, could have a material effect on the U.S. federal income tax consequences set forth in this summary.

 

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We cannot assure you that the Internal Revenue Service (the “IRS”), will not challenge one or more of the tax consequences described in this summary, and we have not obtained, nor do we intend to obtain, any ruling from the IRS or opinion of counsel with respect to the tax consequences of the Exchange Offer or the ownership or disposition of the 2024 Notes. Each beneficial owner of Series G ADSs, Series H ADSs or 2024 Notes should consult its own tax advisor regarding the particular U.S. federal, state and local and non-U.S. income and other tax consequences of the Exchange Offer and the ownership and disposition of the 2024 Notes.

As used in this summary, a “U.S. holder” means a beneficial owner of Series G ADSs, Series H ADSs or 2024 Notes that is, for U.S. federal income tax purposes:

 

   

a citizen or individual resident of the United States;

 

   

a corporation (or entity treated as a corporation for such purposes) created or organized in or under the laws of the United States, or any state thereof or the District of Columbia;

 

   

an estate the income of which is subject to U.S. federal income taxation without regard to its source; or

 

   

a trust, if either (x) it is subject to the primary supervision of a court within the United States and one or more “United States persons” have the authority to control all substantial decisions of the trust or (y) it has a valid election in effect under applicable Treasury regulations to be treated as a “United States person.”

As used in this summary, a “non-U.S. holder” is a beneficial owner of Series G ADSs, Series H ADSs or 2024 Notes that is neither a U.S. holder nor an entity or arrangement classified as a partnership for U.S. federal income tax purposes.

U.S. holders that use an accrual method of accounting for U.S. federal income tax purposes generally are required to include certain amounts in income no later than the time such amounts are reflected on certain applicable financial statements. The application of this rule may require the accrual of income earlier than would be the case under the general U.S. federal income tax rules described below. U.S. holders that use an accrual method of accounting for U.S. federal income tax purposes should consult with their tax advisors regarding the potential applicability of this rule to their particular situation.

Tax Treatment of the Series G ADSs or Series H ADSs

A beneficial owner of the Series G ADSs or Series H ADSs is generally treated, for U.S. federal income tax purposes, as the owner of the applicable underlying Preferred Shares represented by such Series G ADSs or Series H ADSs. References in this summary to Series G ADSs and Series H ADSs should be deemed to also include the applicable underlying Preferred Shares represented by such Series G ADSs or Series H ADSs.

Tax Consequences of the Exchange Offer

Except as specifically described below, the following discussion applies to you only if you are a U.S. holder.

The Exchange . If you tender all of your Series G ADSs or Series H ADSs in the Exchange Offer (and none your tendered Series G ADSs or Series H ADSs are returned to you under the tender offer acceptance proration procedures) you generally will be treated as for U.S. federal income tax purposes as having your Series G ADSs or Series H ADSs redeemed by us in exchange for the cash, 2024 Notes or a combination thereof that you receive in the Exchange Offer. In such case, your U.S. federal income tax consequences generally will depend upon whether the “dividend non-equivalence tests” described below are satisfied.

If you tender only a portion of your Series G ADSs or Series H ADSs in the Exchange Offer (or a portion of your tendered Series G ADSs or Series H ADSs are returned to you under the tender offer acceptance proration procedures), your U.S. federal income tax treatment will depend on whether the Proposed Amendments are

 

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approved and become effective with respect to the Series G ADSs or Series H ADSs that you did not tender (or that were returned to you). If the Proposed Amendments are not approved or do not become effective, you generally will have the same U.S. federal income tax consequences with respect to your tendered Series G ADSs or Series H ADSs as are described above with respect to a holder that tendered all of its Series G ADSs or Series H ADSs. If the Proposed Amendments are approved and become effective with respect to the Series G ADSs or Series H ADSs that you did not tender (or that were returned to you), it is likely that the changes to the terms of the Preferred Shares would be substantial enough to cause you to be treated, for U.S. federal income tax purposes, as exchanging the Series G ADSs or Series H ADSs that you retained for deemed new preferred shares. In such case, your receipt of deemed new preferred shares and 2024 Notes, cash or a combination of 2024 Notes and cash for your Series G ADSs or Series H ADSs generally would be treated as a “recapitalization” for U.S. federal income tax purposes, subject to the discussion below of possible bifurcation treatment.

If your receipt of deemed new preferred shares and 2024 Notes, cash or a combination of 2024 Notes and cash for your Series G ADSs or Series H ADSs is treated as a recapitalization for U.S. federal income tax purposes, you generally will be required to recognize gain but will not be permitted to recognize a loss, for U.S. federal income tax purposes. The amount of gain that you will be required to recognize will equal the lesser of (i) the sum of the amount of cash and the “issue price” of the 2024 Notes (determined as discussed below under “—Tax Consequences of Holding the 2024 Notes—Issue Price of the 2024 Notes”) that you receive and (ii) the amount of gain that you “realize” in the exchange. The amount of gain that you “realize” will equal the amount by which (a) the sum of the “issue price” of the 2024 Notes, plus the cash, plus the fair market value of the deemed new preferred shares that you receive exceed (b) your tax basis in the Series G ADSs or Series H ADSs that you tender. If none of the “dividend non-equivalence tests” described above are satisfied, any gain that you are required to recognize generally will be treated as dividend income for U.S. federal income tax purposes. Conversely, if any of the “dividend non-equivalence tests” described above are satisfied, any gain that you are required to recognize generally will be treated as capital gain for U.S. federal income tax purposes. In either case, your tax basis in the deemed new preferred shares that you receive will be the same as your tax basis in the Series G ADSs or Series H ADSs that you tender, increased by the amount of gain, if any, that you are required to recognize and reduced by the issue price of the 2024 Notes and the amount of cash that you receive and your holding period for the deemed new preferred shares that you receive will include the holding period during which you held the Series G ADSs or Series H ADSs that you tendered.

If you tender more than one “block” of Series G ADSs or Series H ADSs (that is, groups of Series G ADSs or Series H ADSs that you purchased at different times or at different prices), you must calculate your recognized gain separately with respect to each block, and the results for each block may not be netted in determining your overall recognized gain. Instead, you will recognize gain on those shares on which gain is realized. If you tender more than one block of Series G ADSs or Series H ADSs, you are urged to consult your own tax advisor.

If the changes to the terms of the Preferred Shares are not substantial enough to cause you to be treated, for U.S. federal income tax purposes, as exchanging the Series G ADSs or Series H ADSs that you retained for deemed new preferred shares, you generally will have the same U.S. federal income tax consequences with respect to your tendered Series G ADSs or Series H ADSs as are described above with respect to a holder that tendered all of its Series G ADSs or Series H ADSs.

Possible Bifurcation Treatment . If you tender only a portion of your Series G ADSs or Series H ADSs in the Exchange Offer (or a portion of your tendered Series G ADSs or Series H ADSs are returned to you under the tender offer acceptance proration procedures), it is possible that the transaction could be bifurcated for U.S. federal income tax purposes and treated as an exchange of the Series G ADSs or Series H ADSs that you tender for the 2024 Notes and cash, or a combination thereof (and, if the changes to the terms of the Preferred Shares would be substantial enough to cause you to be treated, for U.S. federal income tax purposes, as exchanging the Series G ADSs or Series H ADSs that you retained for deemed new preferred shares, a separate deemed exchange of your remaining Series G ADSs or Series H ADSs for deemed new preferred shares). In such case, you generally will have the same U.S. federal income tax consequences with respect to your tendered Series G

 

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ADSs or Series H ADSs as are described above with respect to a holder that tendered all of its Series G ADSs or Series H ADSs (and you generally would not have any U.S. federal income tax consequences with respect to the Series G ADSs or Series H ADSs that you retain). However, you may not be permitted to recognize a loss for U.S. federal income tax purposes on any Series G ADSs or Series H ADSs that you tendered. It is unclear whether treatment as a bifurcated transaction could apply and you are urged to consult with your tax advisor about this possibility and whether it would be permitted to claim a loss in this circumstance for U.S. federal income tax purposes.

Dividend Non-Equivalence Tests. If any of the “dividend non-equivalence tests” are satisfied, you generally will be treated as recognizing capital gain or loss for U.S. federal income tax purposes, as described below under “Treatment as Capital Gain or Loss”. If none of the “dividend non-equivalence tests” are satisfied, you generally will be treated as recognizing dividend income for U.S. federal income tax purposes, as described below under “Treatment as Dividend Income”.

The “dividend non-equivalence tests” are as follows:

 

   

your percentage of our total outstanding voting shares that you actually and constructively own immediately following the Exchange Offer is less than 80% of the percentage of our total outstanding voting shares that you actually and constructively own immediately before the Exchange Offer and you have a similar reduction in your percentage ownership of our total outstanding stock;

 

   

as a result of the Exchange Offer, you no longer actually or constructively own any of our outstanding shares of stock; or

 

   

the Exchange Offer results in a meaningful reduction of your proportionate interest in our stock (which is determined based on your particular facts and circumstances; however, under published IRS guidance, the redemption of any preferred stock from a stockholder that does not own, actually or constructively, any common stock of the issuing corporation is treated as a meaningful reduction in that stockholder’s proportionate interest in the issuing corporation’s stock).

In determining whether any of the “dividend non-equivalence tests” is satisfied, you must take into account not only shares of our stock that you actually own, but also shares of our stock that you constructively own, including shares of our stock actually owned, and in some cases constructively owned, by certain related individuals and certain entities in which you have an interest, or that have an interest in you.

Contemporaneous dispositions or acquisitions of shares by you (or persons or entities related to you) may be deemed to be part of a single integrated transaction which will be taken into account in determining whether any of the “dividend non-equivalence tests” have been satisfied with respect to shares of our Series G ADSs or Series H ADSs exchanged pursuant to the Exchange Offer. For example, if you sell shares of our Series G ADSs or Series H ADSs to persons other than us at or about the time you participate in the Exchange Offer, and these transactions are part of an overall plan to reduce or terminate your proportionate interest in our stock, then the sales to persons other than us may, for U.S. federal income tax purposes, be integrated with your exchange of shares of our Series G ADSs or Series H ADSs pursuant to the Exchange Offer and, if integrated, should be taken into account in determining whether you satisfy any of the “dividend non-equivalence tests” described above.

If you are contemplating participating in the Exchange Offer, we urge you to consult your tax advisors regarding the “dividend non-equivalence tests” described above, including the effect of the attribution rules and the possibility that a substantially contemporaneous sale of Series G ADSs or Series H ADSs to persons other than us may assist in satisfying one or more of the “dividend non-equivalence tests.”

Treatment as Capital Gain or Loss . If any of the “dividend non-equivalence tests” described above are satisfied, you generally will be treated as recognizing capital gain or loss for U.S. federal income tax purposes. Except in the case of a “recapitalization” (as discussed above), your capital gain or loss would be an amount equal to the difference between (i) the sum the “issue price” of the 2024 Notes (determined as discussed below

 

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under “—Tax Consequences of Holding the 2024 Notes—Issue Price of the 2024 Notes”) and the amount of any cash payment that you receive in the Exchange Offer and (ii) your adjusted tax basis in the Series G ADSs or Series H ADSs that you tender. Any such capital gain or loss generally will be treated as long-term capital gain or loss if your holding period for the Series G ADSs or Series ADSs that you tender is greater than one year at the time of the exchange. Your ability to deduct capital losses against ordinary income is subject to limitations. Capital gain or loss that you recognize generally will be treated as a U.S.-source capital gain or loss for U.S. foreign tax credit purposes.

Treatment as Dividend Income . If none of the “dividend non-equivalence tests” described above are satisfied, you generally will be treated as recognizing dividend income for U.S. federal income tax purposes. Except in the case of a “recapitalization” (as discussed above), your dividend income would be an amount equal to the “issue price” of the 2024 Notes and the amount of any cash payment that you receive in the Exchange Offer. In such case, your tax basis in the Series G ADSs or Series H ADSs that you tender will be added to the tax basis of any Series G ADSs or Series H ADSs that you retain (or any Common Stock that you own, if you tender all of your Series G ADSs or Series H ADSs). Any amounts that are treated pursuant to the discussion above as dividend income generally will be taxable to you as either ordinary dividend income or “qualified dividend income” as described below (and without regard to the extent of our earnings and profits, since we do not maintain calculations of earnings and profits under U.S. federal income tax principles). Because we are not a U.S. corporation, if you are a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes), you will not be entitled to claim a dividends-received deduction with respect to any dividend income that you receive from us. Dividend income that you recognize generally will be treated as “passive category income” for U.S. foreign tax credit purposes.

If you are an individual, trust or estate, dividend income that you are treated as receiving from us pursuant to the Exchange Offer generally should be treated as “qualified dividend income,” provided that: (1) the Series G ADSs or Series H ADSs are readily tradable on an established securities market in the United States (such as the New York Stock Exchange), at the time of the exchange; (2) we are not a “passive foreign investment company” for the taxable year during which you are treated as receiving the dividend income or the immediately preceding taxable year (see the discussion under “E. Taxation–Material U.S. Federal Income Tax Considerations–Taxation of U.S. Holders of our Common Stock–Passive Foreign Investment Company Status” in our Annual Report on Form 20-F for the year ended December 31, 2017, attached hereto as Annex A); (3) you have owned the Series G ADSs or Series H ADSs for more than 60 days in the 121-day period beginning 60 days before the date on which the Series G ADSs or Series H ADSs become ex-dividend (and have not entered into certain risk limiting transactions with respect to such Series G ADSs or Series H ADSs); (4) you are not under an obligation to make related payments with respect to positions in substantially similar or related property; and (5) you do not treat the dividends as “investment income” for purposes of the investment interest deduction. Qualified dividend income is taxed at a preferential rates applicable to long-term capital gain, depending on the income level of the taxpayer. Dividends you receive from us that are not eligible for the preferential rates will be taxed at the ordinary income rates.

Special rules may apply to any dividend income you are treated as receiving from us pursuant to the Exchange Offer that is treated as an “extraordinary dividend.” Generally, an extraordinary dividend is a dividend with respect to a share of stock in an amount that is equal to or in excess of 10% of your tax basis (or fair market value in certain circumstances) in such share of stock. In addition, extraordinary dividends include dividends received within a one-year period that, in the aggregate, equal or exceed 20% of your tax basis (or fair market value in certain circumstances). If you are treated as receiving an extraordinary dividend that is treated as “qualified dividend income” on any share of our stock and you are an individual, estate or trust, then any loss you derive from a subsequent sale or exchange of such share of our stock will be treated as long-term capital loss to the extent of such dividend.

Basis and Holding Period of 2024 Notes. Regardless of whether you receipt of the 2024 Notes is treated as giving rise to capital gain or loss or dividend income, your initial tax basis in the 2024 Notes generally will be

 

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equal to the “issue price” of the 2024 Notes, and your holding period for the 2024 Notes generally will begin on the day after the Exchange.

Non-U.S. Holders . If you are a non-U.S. holder and you tender Series G ADSs or Series H ADSs in the Exchange Offer, your U.S. federal income tax consequences generally will be the same as described above. However:

 

   

Any amounts that are treated pursuant to the discussion above as dividend income generally will not be subject to U.S. federal income or withholding tax, unless the dividend income is effectively connected with your conduct of a trade or business in the United States. If you are entitled to the benefits of an applicable income tax treaty with the United States with respect to that income, such income generally will be taxable in the United States only if it is attributable to a permanent establishment maintained by you in the United States; and

 

   

Any amounts that are treated pursuant to the discussion above as capital gain generally will not be subject to U.S. federal income tax or withholding tax, unless:

 

  (A)

the gain is effectively connected with your conduct of a trade or business in the United States (and, if you are entitled to the benefits of an applicable income tax treaty with the United States with respect to that gain, that gain is attributable to a permanent establishment maintained by you in the United States); or

 

  (B)

you are an individual who is present in the United States for 183 days or more during the taxable year in which the gain is recognized and certain other conditions are met.

Any income or gain that is effectively connected with your conduct of a trade or business in the United States generally will be subject to U.S. federal income tax, net of certain deductions, at the U.S. federal income tax rates applicable to United States persons. If you are a corporation, your earnings and profits that are attributable to your effectively connected income (subject to certain adjustments) may be subject to an additional U.S. branch profits tax at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty).

Any gain described in clause (B) above (net of certain U.S.-source losses) will be taxed at a flat rate of 30% (or such lower rate as may be specified by an applicable income tax treaty).

Potential for Recharacterization . We intend for the 2024 Notes to be treated as indebtedness for U.S. federal income tax purposes. However, it is possible that this characterization could be challenged and the 2024 Notes could be treated as equity for U.S. federal income tax purposes. If such a challenge were sustained, your exchange of Series G ADSs or Series H ADSs for 2024 Notes in the Exchange Offer would likely have different U.S. federal income tax consequences than those described above. In particular, you may not be permitted to recognize a loss on the exchange and/or your 2024 Notes may be treated as having “preferred OID” which you would be required to recognize as taxable income over the term of the 2024 Notes (and, in the case of a non-U.S. holder, would be subject to withholding of U.S. federal income tax) in advance of your receipt of cash, and certain additional information reporting requirements may apply.

Tax Consequences of Holding the 2024 Notes

Except as specifically described below, the following discussion applies to you only if you are a U.S. holder.

Stated Interest. Stated interest on the 2024 Notes will be included in your gross income and taxed as ordinary interest income at the time it is paid or accrued in accordance with your usual method of accounting for U.S. federal income tax purposes. Stated interest on the 2024 Notes will constitute income from sources without the United States for foreign tax credit purposes. Such income generally will constitute “passive category income” or, in the case of certain U.S. holders, “general category income,” for foreign tax credit purposes.

 

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Issue Price of the 2024 Notes . The determination of the “issue price” of the 2024 Notes generally will depend on whether a substantial amount of the Series G ADSs or Series H ADSs for which such notes are exchanged, are treated as “traded on an established securities market” within the meaning of the applicable Treasury regulations at any time during the 31-day period ending 15 days after the issue date of the 2024 Notes. In general, the Series G ADSs or Series H ADSs will be treated as traded on an established securities market if, during the applicable period, (i) a price exists for an executed purchase or sale of the Series G ADSs or Series H ADSs, (ii) a firm price quote for the Series G ADSs or Series H ADSs is available form at least one broker, dealer or pricing service and the identity of the person providing the quote is reasonably ascertainable or (iii) under certain circumstances, an indicative price quote for the Series G ADSs or Series H ADSs is available. If the Series G ADSs or Series H ADSs are treated as traded on an established securities market, the issue price of the 2024 Notes generally will be determined by reference to the fair market value of the Series G ADSs or the Series H ADSs, as adjusted to take into account the cash consideration paid in the Exchange Offer. If the Series G ADSs or Series H ADSs are not treated as traded on an established securities market, the issue price of the 2024 Notes generally will be their stated principal amount. We will determine our position concerning the issue price of the 2024 Notes following consummation of the Exchange.

Original Issue Discount . If the principal amount of the 2024 Notes exceeds their issue price (as defined above) by an amount that equals or exceeds the statutory de minimis amount (generally, 25 basis points multiplied by the number of complete years to maturity of the 2024 Notes), then the 2024 Notes would be issued with original issue discount (“OID”) for U.S. federal income tax purposes in an amount equal to such excess.

If the 2024 Notes are issued with OID, you will be required to accrue and include OID in your gross income as it accrues as ordinary income using a constant yield method, in advance of the receipt of the cash payment attributable to the OID, regardless of your regular method of accounting for U.S. federal income tax purposes. The amount of OID that you must include in your gross income for each taxable year is the sum of the daily portions of OID that accrue on your 2024 Notes for each day of the taxable year during which you hold the 2024 Notes. The daily portion of OID is determined by allocating to each day of an accrual period (generally, the period between interest payment dates or compounding dates) a pro rata portion of the OID allocable to such accrual period. The amount of OID allocable to an accrual period is the product of the “adjusted issue price” of the 2024 Notes at the beginning of the accrual period multiplied by the yield to maturity of the 2024 Notes (adjusted to reflect the length of the accrual period), reduced by the amount of any qualified stated interest allocable to such accrual period. All of the stated interest on the 2024 Notes will be qualified stated interest. The adjusted issue price of the 2024 Notes at the beginning of an accrual period generally will equal their issue price, increased by the aggregate amount of OID that has accrued on the 2024 Notes in all prior accrual periods. You should consult your own tax advisor concerning the consequences of, and accrual of, OID on the notes.

Dispositions of the Notes. Upon the sale, exchange, redemption, retirement or other taxable disposition of a note, you will be required to recognize taxable gain or loss in an amount equal to the difference, if any, between the amount realized on the sale, exchange, redemption, retirement or other taxable disposition (other than amounts attributable to accrued stated interest or OID, which will be treated as described above) and your adjusted tax basis in the 2024 Note. Your adjusted tax basis in a 2024 Note will generally be equal to the issue price of the 2024 Note, increased by the amount of OID on the 2024 Note previously included in your gross income.

Gain or loss recognized by you on the sale, exchange, redemption, retirement or other taxable disposition of a 2024 Note will generally be capital gain or loss and will be long-term capital gain or loss if your holding period for the 2024 Note exceeds one year at the time of the disposition. Long-term capital gains recognized by individual and certain other non-corporate U.S. holders generally are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations. Capital gain or loss recognized by you generally will be U.S. source gain or loss for foreign tax credit purposes.

 

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Non-U.S. Holders. If you are a non-U.S. holder, subject to the discussion below regarding backup withholding, you generally will not be subject to U.S. federal income or withholding tax on:

 

   

interest and accruals of OID received in respect of the 2024 Notes, unless such interest or OID is effectively connected with your conduct of a trade or business in the United States; or

 

   

gain realized on the sale, exchange, redemption or retirement of the 2024 Notes, unless that gain is effectively connected with your conduct of a trade or business in the United States or, in the case of gain realized by an individual non-U.S. holder, you are present in the United States for 183 days or more in the taxable year of the disposition and certain other conditions are met.

Non-U.S. holders should consult their own tax advisors regarding their U.S. federal income and withholding tax consequences if they are subject to any of the exceptions noted above.

Information Reporting and Backup Withholding

In general, if you are a U.S. holder, information reporting requirements may apply to any 2024 Notes and payments of cash received by you pursuant to the Exchange Offer, payments of stated interest and OID on the 2024 Notes and the proceeds of a disposition of the 2024 Notes received by a U.S. Holder.

In general, “backup withholding” may apply to any 2024 Notes and payments of cash received by you pursuant to the Exchange Offer, payments of stated interest on your notes and the proceeds of a disposition of your notes, if you are a U.S. holder and you fail to provide a correct taxpayer identification number or otherwise comply with the applicable requirements of the backup withholding rules and you do not otherwise establish an exemption.

If you are a non-U.S. holder, you may be required to establish your exemption from information reporting and backup withholding by certifying your non-U.S. status on IRS Form W-8BEN, W-8BEN-E, W-8ECI or W-8IMY, as applicable.

Backup withholding tax is not an additional tax. Rather, you generally may obtain a refund of any amounts withheld under backup withholding rules that exceed your income tax liability by accurately completing and timely filing a refund claim with the IRS.

Certain Reporting Requirements. Individual U.S. holders (and to the extent specified in applicable Treasury regulations, certain individual non-U.S. holders and certain U.S. holders that are entities) that hold “specified foreign financial assets” (as defined in section 6038D of the Internal Revenue Code) are required to file a report on IRS Form 8938 with information relating to the assets for each taxable year in which the aggregate value of all such assets exceeds $75,000 at any time during the taxable year or $50,000 on the last day of the taxable year (or such higher dollar amounts as prescribed by applicable Treasury regulations). Specified foreign financial assets would include, among other assets, the 2024 Notes, unless the 2024 Notes are held in an account maintained by a U.S. financial institution. Substantial penalties apply to any failure to timely file IRS Form 8938, unless the failure is shown to be due to reasonable cause and not due to willful neglect. Additionally, in the event an individual U.S. holder (and to the extent specified in applicable Treasury regulations, an individual non-U.S. holder or a U.S. entity) that is required to file IRS Form 8938 does not file such form, the statute of limitations on the assessment and collection of U.S. federal income taxes of such holder for the related tax year may not close until three years after the date that the required information is filed. U.S. holders (including U.S. entities) and non-U.S. holders should consult their own tax advisors regarding their reporting obligations with respect to specified foreign financial assets.

 

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MARSHALL ISLANDS TAX CONSIDERATIONS

The following discussion is based upon the current laws of the Republic of the Marshall Islands applicable to persons who do not reside in, maintain offices in or engage in business in the Republic of the Marshall Islands.

Because we and our subsidiaries do not and do not expect to conduct business or operations in the Republic of the Marshall Islands, and because all documentation related to this Exchange Offer will be executed outside of the Republic of the Marshall Islands, under current Marshall Islands law you will not be subject to Marshall Islands taxation or withholding on any consideration you receive in the Exchange Offer. In addition, you will not be subject to Marshall Islands stamp, capital gains or other taxes on the exchange of Series G ADSs or Series H ADSs, and you will not be required by the Republic of the Marshall Islands to file a tax return relating to your ownership of 2024 Notes.

YOU ARE URGED TO CONSULT HIS YOUR OWN TAX, LEGAL AND OTHER ADVISORS REGARDING THE CONSEQUENCES OF UNDER YOUR PARTICULAR CIRCUMSTANCES.

 

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LEGAL MATTERS

Certain legal matters relating to the validity of the 2024 Notes will be passed upon for us by Fried, Frank, Harris, Shriver & Jacobson LLP, New York, New York. Certain legal matters governed by the laws of the Republic of the Marshall Islands will be passed upon for us by Reeder & Simpson P.C.

 

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EXPERTS

The consolidated financial statements of Navios Maritime Holdings Inc. as of December 31, 2017 and 2016 and for each of the three years in the period ended December 31, 2017, and management’s assessment of the effectiveness of internal control over financial reporting (which is included in Management’s Report on Internal Control over Financial Reporting) as of December 31, 2017 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers S.A., an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

 

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ANNEX A

 

 

 

 


Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 20-F

 

 

(Mark One)

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

 

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring shell company report                        

For the transition period from                         to                        

Commission file number

001-33311

 

 

Navios Maritime Holdings Inc.

(Exact name of Registrant as specified in its charter)

 

 

Not Applicable

(Translation of Registrant’s Name into English)

Republic of Marshall Islands

(Jurisdiction of incorporation or organization)

7 Avenue de Grande Bretagne, Office 11B2

Monte Carlo, MC 98000 Monaco

(Address of principal executive offices)

Stuart Gelfond

Fried, Frank, Harris, Shriver & Jacobson LLP

One New York Plaza

New York, New York 10004

Tel: (212) 859-8000

Fax: (212) 859-4000

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

 

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Table of Contents

Securities registered or to be registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Name of each exchange on which registered

Common Stock, par value $.0001 per share   The New York Stock Exchange
8.75% Series G Cumulative Redeemable Perpetual Preferred Stock, par value $0.0001 per share (“Series G”)   The New York Stock Exchange*
American Depositary Shares, each representing 1/100 th of a Share of Series G   The New York Stock Exchange

8.625% Series H Cumulative Redeemable Perpetual

Preferred Stock, par value $0.0001 per share (“Series H”)

  The New York Stock Exchange *
American Depositary Shares, each representing 1/100 th of a Share of Series H   The New York Stock Exchange

 

*

Not for trading, but in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission

Securities registered or to be registered pursuant to Section 12(g) of the Act. None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. None

 

 

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

120,386,472 shares of common stock, 14,191 shares of Series G and 28,612 shares of Series H as of December 31, 2017

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☐    No  ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934.    Yes  ☐    No  ☒

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definition of “accelerated filer” and “large accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ☐    Accelerated filer  ☒    Non-accelerated filer  ☐    Emerging growth company  ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

 

U.S. GAAP  ☒

    

International Financial Reporting Standards as issued

by the International Accounting Standards Board  ☐

   Other  ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.    Item 17  ☐    Item 18  ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No    ☒

 

 

 

 

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Table of Contents

TABLE OF CONTENTS

 

FORWARD-LOOKING STATEMENTS

     A-1  

Item 1. Identity of Directors, Senior Management and Advisers

     A-ii  

Item 2. Offer Statistics and Expected Timetable

     A-iii  

Item 3. Key Information

     A-iv  

Item 4. Information on the Company

     A-iv  

Item 4A. Unresolved Staff Comments

     A-90  

Item 5. Operating and Financial Review and Prospects

     A-90  

Item 6. Directors, Senior Management and Employees

     A-135  

Item 7. Major Shareholders and Related Party Transactions

     A-142  

Item 8. Financial Information

     A-149  

Item 9. The Offer and Listing

     A-151  

Item 10. Additional Information

     A-152  

Item 11. Quantitative and Qualitative Disclosures about Market Risk

     A-161  

Item 12. Description of Securities Other than Equity Securities

     A-162  

PART II

  

Item 13. Defaults, Dividend Arrearages and Delinquencies

     A-162  

Item  14. Material Modifications to the Rights of Security Holders and Use of Proceeds

     A-162  

Item 15. Controls and Procedures

     A-163  

Item 16A. Audit Committee Financial Expert

     A-164  

Item 16B. Code of Ethics

     A-164  

Item 16C. Principal Accountant Fees and Services

     A-164  

Item 16D. Exemptions from the Listing Standards for Audit Committees

     A-164  

Item  16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

     A-164  

Item 16F. Changes in Registrant’s Certifying Accountant

     A-165  

Item 16G. Corporate Governance

     A-165  

Item 16H. Mine Safety Disclosures

     A-165  

PART III

  

Item 17. Financial Statements

     A-165  

Item 18. Financial Statements

     A-165  

Item 19. Exhibits

     A-165  

EX-8.1

  

EX-12.1

  

EX-12.2

  

EX-13.1

  

EX-15.1

  

EX-15.2

  

EX-15.3

  

 

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Table of Contents

Please note in this Annual Report, “we”, “us”, “our”, the “Company” and “Navios Holdings” all refer to Navios Maritime Holdings Inc. and its consolidated subsidiaries, except as otherwise indicated or where the context otherwise requires.

FORWARD-LOOKING STATEMENTS

This Annual Report should be read in conjunction with the consolidated financial statements and accompanying notes included in this report.

Navios Maritime Holdings Inc. desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. This document and any other written or oral statements made by us or on our behalf may include forward-looking statements, which reflect our current views with respect to future events and financial performance. The words “may,” “could,” “should,” “would,” “expect,” “plan,” “anticipate,” “intend,” “forecast,” “believe,” “estimate,” “predict,” “propose,” “potential,” “continue” and similar expressions identify forward-looking statements.

The forward-looking statements in this document and in other written or oral statements we make from time to time are based upon current assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in our records, and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors and matters discussed elsewhere herein, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include, but are not limited to, the strength of world economies, fluctuations in currencies and interest rates, general market conditions, including fluctuations in charter hire rates and vessel values, changes in demand in the dry cargo shipping industry, changes in the Company’s operating expenses, including bunker prices, drydocking and insurance costs, expectations of dividends and distributions from affiliates, the Company’s ability to maintain compliance with the continued listing standards of the New York Stock Exchange (the “NYSE”), changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, the value of our publicly traded subsidiaries, and other important factors described from time to time in the reports we file with the Securities and Exchange Commission, or the SEC. See also “Risk Factors” below.

We undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events, except as required by law. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement.

PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not Applicable.

 

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Table of Contents

Item 2. Offer Statistics and Expected Timetable

Not Applicable.

Item 3. Key Information

A. Selected Financial Data

Navios Holdings’ selected historical financial information and operating results for the years ended December 31, 2017, 2016, 2015, 2014 and 2013 are derived from the consolidated financial statements of Navios Holdings. The selected consolidated statement of comprehensive (loss)/income data for the years ended December 31, 2017, 2016 and 2015 and the selected consolidated balance sheet data as of December 31, 2017 and 2016 have been derived from our audited consolidated financial statements included elsewhere in this Annual Report. The selected consolidated financial data should be read in conjunction with “Item 5. Operating and Financial Review and Prospects”, the consolidated financial statements, related notes and other financial information included elsewhere in this Annual Report. The historical data included below and elsewhere in this Annual Report is not necessarily indicative of our future performance.

 

     Year Ended
December 31,
2017
    Year Ended
December 31,
2016
    Year Ended
December 31,
2015
    Year Ended
December 31,
2014
    Year Ended
December 31,
2013
 
     (Expressed in thousands of U.S. dollars — except share and per share data)  

Statement of Comprehensive (Loss)/income Data

          

Revenue

   $ 463,049     $ 419,782     $ 480,820     $ 569,016     $ 512,279  

Administrative fee revenue from affiliates

     23,667       21,799       16,177       14,300       7,868  

Time charter, voyage and logistics business expenses

     (213,929     (175,072     (247,882     (263,304     (244,412

Direct vessel expenses

     (116,713     (127,396     (128,168     (130,064     (114,074

General and administrative expenses incurred on behalf of affiliates

     (23,667     (21,799     (16,177     (14,300     (7,868

General and administrative expenses

     (27,521     (25,295     (34,183     (45,590     (44,634

Depreciation and amortization

     (104,112     (113,825     (120,310     (104,690     (98,124

Provision for losses on accounts receivable

     (269     (1,304     (59     (792     (630

Interest income

     6,831       4,947       2,370       5,515       2,299  

Interest expense and finance cost

     (121,611     (113,639     (113,151     (113,660     (110,805

Impairment losses

     (50,565     —         —         —         —    

Loss on derivatives

     —         —         —         —         (260

Gain on sale of assets

     1,064       —         —         —         18  

(Loss)/gain on bond and debt extinguishment

     (981     29,187       —         (27,281     (37,136

Other income

     6,140       18,175       4,840       15,639       17,031  

Other expense

     (13,761     (11,665     (34,982     (24,520     (10,447
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before equity in net earnings of affiliated companies

   $ (172,378   $ (96,105   $ (190,705   $ (119,731   $ (128,895

 

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Table of Contents
     Year Ended
December 31,
2017
    Year Ended
December 31,
2016
    Year Ended
December 31,
2015
    Year Ended
December 31,
2014
    Year Ended
December 31,
2013
 
     (Expressed in thousands of U.S. dollars — except share and per share data)  

Equity/(loss) in net earnings of affiliated companies

   $ 4,399     $ (202,779   $ 61,484     $ 57,751     $ 19,344  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before taxes

   $ (167,979   $ (298,884   $ (129,221   $ (61,980   $ (109,551

Income tax benefit/(expense)

     3,192       (1,265     3,154       (84     4,260  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (164,787   $ (300,149   $ (126,067   $ (62,064   $ (105,291

Less: Net (income)/loss attributable to the noncontrolling interest

     (1,123     (3,674     (8,045     5,861       (3,772
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to Navios Holdings common stockholders

   $ (165,910   $ (303,823   $ (134,112   $ (56,203   $ (109,063
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss attributable to Navios Holdings common stockholders, basic and diluted

   $ (175,298   $ (273,105   $ (150,314   $ (66,976   $ (110,990
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted net loss per share attributable to Navios Holdings common stockholders

   $ (1.50   $ (2.54   $ (1.42   $ (0.65   $ (1.09
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of shares, basic and diluted

     116,673,459       107,366,783       105,896,235       103,476,614       101,854,415  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance Sheet Data (at period end)

          

Current assets, including cash and restricted cash

   $ 256,076     $ 273,140     $ 302,959     $ 417,131     $ 339,986  

Total assets

     2,629,981       2,752,895       2,958,813       3,127,697       2,886,453  

Total long-term debt, net including current portion

     1,682,488       1,651,095       1,581,308       1,612,890       1,478,089  

Navios Holdings’ stockholders’ equity

   $ 516,098     $ 678,287     $ 988,960     $ 1,152,963     $ 1,065,695  

 

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Table of Contents
     Year Ended
December 31,
2017
    Year Ended
December 31,
2016
    Year Ended
December 31,
2015
    Year Ended
December 31,
2014
    Year Ended
December 31,
2013
 
     (Expressed in thousands of U.S. dollars — except per share data)  

Other Financial Data

          

Net cash provided by operating activities

   $ 50,784     $ 36,920     $ 43,478     $ 56,323     $ 59,749  

Net cash used in investing activities

     (42,365     (150,565     (36,499     (244,888     (258,571

Net cash (used in)/ provided by financing activities

     (16,779     86,225       (91,123     248,290       128,785  

Book value per common share

     4.29       5.79       8.95       10.89       10.22  

Cash dividends per common share

     —         —         0.17       0.24       0.24  

Cash dividends per preferred share

     —         74.4       216.7       99.9       200.0  

Cash paid for common stock dividend declared

     —         —         19,325       25,228       24,710  

Cash paid for preferred stock dividend declared

     —         3,681       16,025       7,502       1,696  

Adjusted EBITDA (1)

   $ 68,813     $ (62,827   $ 112,756     $ 176,698     $ 107,909  

 

(1)

EBITDA represents net (loss)/income attributable to Navios Holdings’ common stockholders before interest and finance costs, before depreciation and amortization and before income taxes. Adjusted EBITDA represents EBITDA before stock based compensation. We use Adjusted EBITDA as liquidity measure and reconcile Adjusted EBITDA to net cash provided by operating activities, the most comparable U.S. GAAP liquidity measure. Adjusted EBITDA is calculated as follows: net cash provided by operating activities adding back, when applicable and as the case may be, the effect of (i) net increase/(decrease) in operating assets, (ii) net (increase)/decrease in operating liabilities, (iii) net interest cost, (iv) deferred finance charges and gains/(losses) on bond and debt extinguishment, (v) (provision)/recovery for losses on accounts receivable, (vi) equity in affiliates, net of dividends received, (vii) payments for drydock and special survey costs, (viii) noncontrolling interest, (ix) gain/ (loss) on sale of assets/ subsidiaries, (x) unrealized (loss)/gain on derivatives, and (xi) loss on sale and reclassification to earnings of available-for-sale securities and impairment charges. Navios Holdings believes that Adjusted EBITDA is a basis upon which liquidity can be assessed and represents useful information to investors regarding Navios Holdings’ ability to service and/or incur indebtedness, pay capital expenditures, meet working capital requirements and pay dividends. Navios Holdings also believes that Adjusted EBITDA is used (i) by prospective and current lessors as well as potential lenders to evaluate potential transactions; (ii) to evaluate and price potential acquisition candidates; and (iii) by securities analysts, investors and other interested parties in the evaluation of companies in our industry.

Adjusted EBITDA has limitations as an analytical tool, and therefore, should not be considered in isolation or as a substitute for the analysis of Navios Holdings’ results as reported under U.S. GAAP. Some of these limitations are: (i) Adjusted EBITDA does not reflect changes in, or cash requirements for, working capital needs; (ii) Adjusted EBITDA does not reflect the amounts necessary to service interest or principal payments on our debt and other financing arrangements; and (iii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future. Adjusted EBITDA does not reflect any cash requirements for such capital expenditures. Because of these limitations, among others, Adjusted EBITDA should not be considered as a principal indicator of Navios Holdings’ performance. Furthermore, our calculation of Adjusted EBITDA may not be comparable to that reported by other companies due to differences in methods of calculation.

 

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The following table reconciles net cash provided by operating activities, as reflected in the consolidated statements of cash flows, to Adjusted EBITDA:

Adjusted EBITDA Reconciliation from Cash from Operations

 

     Year Ended
December 31,
2017
    Year Ended
December 31,
2016
    Year Ended
December 31,
2015
    Year Ended
December 31,
2014
    Year Ended
December 31,
2013
 
     (Expressed in thousands of U.S. dollars — except per share data)  

Net cash provided by operating activities

   $ 50,784     $ 36,920     $ 43,478     $ 56,323     $ 59,749  

Net (decrease)/ increase in operating assets

     (25,052     20,599       (43,042     18,025       (57,792

Net (increase)/decrease in operating liabilities

     (20,814     (38,928     (39,288     (23,613     27,087  

Payments for drydock and special survey costs

     10,824       11,096       24,840       10,970       12,119  

Net interest cost

     108,389       103,039       106,257       104,084       103,122  

Provision for losses on accounts receivable

     (269     (1,304     (59     (792     (630

Impairment losses

     (50,565     —         —         —         —    

Gain on sale of assets

     1,064       —         —         —         18  

Unrealized loss on FFA derivatives, warrants, interest rate swaps

     —         —         —         —         (69

Gain/ (Loss) on bond and debt extinguishment

     185       29,187       —         (4,786     (12,142

(Losses)/earnings in affiliates and joint ventures, net of dividends received

     (4,610     (219,417     30,398       22,179       (19,781

Reclassification to earnings of available-for-sale securities

     —         (345     (1,783     (11,553     —    

Noncontrolling interest

     (1,123     (3,674     (8,045     5,861       (3,772
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 68,813     $ (62,827   $ 112,756     $ 176,698     $ 107,909  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

Some of the following risks relate principally to the industry in which we operate and our business in general. Other risks relate principally to the securities market and ownership of our common stock. You should carefully consider each of the following risks together with the other information incorporated into this Annual Report when evaluating the Company’s business and its prospects. The risks and uncertainties described below are not the only ones the Company faces. Additional risks and uncertainties not presently known to the Company or that the Company currently considers immaterial may also impair the Company’s business operations. If any of the following risks relating to our business and operations actually occur, our business, financial condition and results of operations could be materially and adversely affected and in that case, the trading price of our common stock could decline, and you could lose all or part of your investment.

 

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Table of Contents

Risks Associated with the Shipping Industry and Our Operations

The cyclical nature of the shipping industry may lead to decreases in charter rates and lower vessel values, which could adversely affect our and our affiliates’ results of operations and financial condition. In particular, charter rates in the dry cargo market are currently near historical lows and certain of our vessels may operate below operating cost.

The shipping business, including the dry cargo market, is cyclical in varying degrees, experiencing severe fluctuations in charter rates, profitability and, consequently, vessel values. For example, during the period from January 1, 2016 to December 31, 2017, the Baltic Exchange’s Panamax time charter average daily rates experienced a low of $2,260 and a high of $13,740. Additionally, during the period from January 1, 2016 to December 31, 2017, the Baltic Exchange’s Capesize time charter average (BCI-5TCA) daily rates experienced a low of $1,985 and a high of $30,475 and the Baltic Dry Index experienced a low of 290 points and a high of 1,743 points. There can be no assurance that the dry bulk charter market will not fluctuate or hit new lows. We anticipate that the future demand for our dry bulk carriers and dry bulk charter rates will be dependent upon demand for imported commodities, economic growth in the emerging markets, including the Asia Pacific region, of which China is particularly important, India, Brazil and Russia and the rest of the world, seasonal and regional changes in demand and changes to the capacity of the world fleet. Adverse economic, political, social or other developments can decrease demand and prospects for growth in the shipping industry and thereby could reduce revenue significantly. A decline in demand for commodities transported in dry bulk carriers or an increase in supply of dry bulk vessels could cause a further decline in charter rates, which could materially adversely affect our results of operations and financial condition. If we sell a vessel at a time when the market value of our vessels has fallen, the sale may be at less than the vessel’s carrying amount, resulting in a loss.

Demand for container shipments declined significantly from 2008 to 2009 in the aftermath of the global financial crisis but has increased each year from 2009 to 2017. In 2016, total container trade grew by 4.2%, influenced by strong trade growth worldwide. In 2017, total container trade is estimated to have gained 5.5%, led by recovering volumes going to the US as well as increases in intra-regional trade. Containership supply growth was less than demand growth during the year as there was elevated scrapping in the first part of the year, which allowed average daily rates to recover modestly. The oversupply in the market continued to prevent any significant rise in time charter rates for both short- and long-term periods. Additional orders for large and very large containerships continue to be placed during 2017 and so far in 2018, both increasing the expected future supply of larger vessels and having a spillover effect on the market segment for smaller vessels. Ordering of container ships slowed significantly in 2016 and 2017 while scrapping increased to a record volume in 2016 and was the third highest on record in 2017. The recent global economic slowdown and disruptions in the credit markets significantly reduced demand for products shipped in containers and, in turn, containership capacity, which has had an adverse effect on our and our affiliates’ results of operations and financial condition.

The continuation of such containership oversupply or any declines in container freight rates could negatively affect the liner companies to which our affiliates seek to charter their containerships.

Historically, the tanker markets have been volatile as a result of the many conditions and factors that can affect the price, supply and demand for tanker capacity. Demand for crude oil and product tankers is historically well correlated with the growth or contraction of the world economy. The past several years were marked by a major economic slowdown, which has had, and continues to have, a significant impact on world trade, including the oil trade. Global economic conditions remain fragile with significant uncertainty with respect to recovery prospects, levels of recovery and long-term economic growth effects. Energy prices sharply declined from mid-2014 to the end of March 2016 primarily as a result of increased oil production worldwide. In response to this increased production, demand for tankers to move oil and refined petroleum products increased significantly and average spot and period charter rates for product and crude tankers rose, but have since then declined as more tankers have been delivered. Keys to this demand growth have been steady increases in Chinese and Indian crude oil imports since 2001 and a steady increase in US oil production, which has led to a steady decline in US crude oil imports since 2005. Oil products shipments have increased due to refinery closures in

 

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Table of Contents

Europe, Japan and Australia with oil products being shipped to those regions from India, the Middle East and the US. With the increase in US crude oil production, the US became a net exporter of oil products since 2011 adding to the seaborne movement of oil products, recently however, large inventories of products have reduced arbitrage possibilities and spot rates for product tankers have moderated. The Organization of Petroleum Exporting Countries (“OPEC”) is currently producing and shipping oil at very high levels, even after it announced the continued production cuts. Should OPEC significantly reduce oil production or should there be significant declines in non-OPEC oil production or should China or other emerging market countries suffer significant economic slowdowns, that may result in a protracted period of reduced oil shipments and a decreased demand for our affiliated tanker vessels and lower charter rates, which could have a material adverse effect on our results of operations and financial condition.

The percentage of the total tanker fleet on order as a percent of the total fleet declined from 18% at the end of 2015 to 12% at the beginning of March 2018. An over-supply of tanker capacity may result in a reduction of charter hire rates. If a reduction in charter rates occurs, our affiliates may only be able to charter their tanker vessels at unprofitable rates or may not be able to charter these vessels at all, which could lead to a material