The information contained in this Report is incorporated by reference into the Registration
Statements on Form S-8, File No. 333-147186, 333-202141 and 333-222002, and the
related prospectuses.
Sale of Ship Management Division and Related Transactions
On August 30, 2019, Navios Maritime Holdings Inc. (the “Company”) announced the sale of its ship management division, the
general partner interest in Navios Maritime Partners L.P. and the general partner of Navios Maritime Containers L.P. (the “Sale”) to N Shipmanagement Acquisition Corp. and related entities (“NSAC”), which are affiliated with the
Company’s Chairman and Chief Executive Officer.
In connection with the Sale, the Company and certain of its subsidiaries entered
into:
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(1)
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a management agreement with Navios Shipmanagement Inc. (“NSM”) whereby NSM agreed to provide certain
commercial and technical management services to the Company for an initial period of five years with an automatic extension period of five years thereafter (subject to certain termination events set forth therein), at a rate of (i) $3,700 per day
per owned vessel for the first two-year period with a 3% annual increase thereafter and (ii) $25 per day per chartered-in vessel, with (iii) drydocking expenses for
owned vessels reimbursed by the Company at cost;
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(2)
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an administrative services agreement with NSM whereby NSM agreed to provide administrative support services to
the Company for an initial period of five years with an automatic extension period of five years thereafter (subject to certain termination events set forth therein) in exchange for the reimbursement of certain costs and expenses incurred in
connection therewith;
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(3)
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a contribution agreement (the “Contribution Agreement”) whereby the Company and its subsidiaries
entered into certain internal restructuring transactions to facilitate the Sale;
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(4)
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a secured loan agreement (the “Secured Loan Agreement”) for $125,000,000 (as such amount may be
adjusted pursuant to Section 4 of the Contribution Agreement) between the Company and Navios Shipmanagement Holdings Corporation (“Shipmanagement Holdings”), which following the Sale became a subsidiary of NSAC; and
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(5)
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a purchase agreement whereby NSAC agreed to purchase the entities comprising the ship management division and
the general partner interest in Navios Maritime Partners L.P. and the general partner of Navios Maritime Containers L.P. from the Company and its subsidiaries for $20,000,000.
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The Sale and agreements related thereto referred to above are referred to collectively as the “Transaction.” A copy of the press
release related to the Transaction is furnished as Exhibit 99.1 to this Report and is incorporated herein by reference. The agreements referred to in paragraphs (1)—(5) above are furnished as Exhibits
99.2-99.6 to this Report and are incorporated herein by reference.
Secured Loan Agreement
In advance of the Sale, the Company entered into the Secured Loan Agreement with Shipmanagement Holdings. The Secured Loan Agreement provides
for a loan of $125,000,000, with such amount subject to adjustment as provided in Section 4 of the Contribution Agreement (as adjusted, the “Original Principal Amount”). The Secured Loan Agreement amortizes quarterly on each
February 15, May 15, August 15 and November 15, beginning on February 15, 2020, and matures on November 15, 2024. The first four amortization payments will be equal to $11,750,000 ($47,000,000 in aggregate)
(collectively, the “Year One Amortization Payments”), and the remaining sixteen amortization payments will be equal to 1/16th of the Original Principal Amount minus the Year One
Amortization Payments. All or a portion of the amortization payments can be deferred by the Company during the first three years depending on the Company’s available cash at the end of each quarter as described further in the Secured Loan
Agreement. Amounts outstanding under the Secured Loan Agreement bear interest at a rate of 5% per annum (7% per annum with respect to deferred principal amounts, if any). The Secured Loan Agreement contains restrictive covenants based on the
Company’s 7.375% First Priority Ship Mortgage Notes due 2022 (the “Ship Mortgage Notes”), including restrictions on indebtedness, liens, acquisitions and investments, restricted payments and dispositions. The Secured Loan Agreement
also provides for customary events of default, including change of control. The Company’s obligations under the Secured Loan Agreement are guaranteed by substantially the same subsidiaries that guarantee the 2022 Notes and secured by assets of
the Company that do not secure the Ship Mortgage Notes or the Company’s 11.25% Senior Secured Notes due 2022. See Exhibit 99.5 to this Report for the complete terms and conditions of the Secured Loan Agreement, which are incorporated herein by
reference.
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