NAVIOS MARITIME HOLDINGS INC.
UNAUDITED CONDENSED NOTES TO THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. dollars except share data)
Sale of vessels and sale of rights to Navios Partners: Upon the sale of vessels to
Navios Partners, Navios Holdings recognizes the gain immediately in earnings only to the extent of the interest in Navios Partners owned by third parties and defers recognition of the gain to the extent of its own ownership interest in Navios
Partners (the deferred gain). Subsequently, the deferred gain is amortized to income over the remaining useful life of the vessel. The recognition of the deferred gain is accelerated in the event that (i) the vessel is subsequently
sold or otherwise disposed of by Navios Partners or (ii) the Companys ownership interest in Navios Partners is reduced. In connection with the public offerings of common units by Navios Partners and the sale of Navios Partners general
partnership interest effected on August 30, 2019, referred in Note 3, a pro rata portion of the deferred gain is released to income upon dilution of the Companys ownership interest in Navios Partners. As of September 30, 2019 and
December 31, 2018, the unamortized deferred gain for all vessels and rights sold totaled $6,587 and $8,126, respectively. For the three month periods ended September 30, 2019 and 2018, Navios Holdings recognized $884 and $473,
respectively, of the deferred gain in Equity in net losses of affiliated companies and for the nine month periods ended September 30, 2019 and 2018, Navios Holdings recognized $1,540 and $1,419, respectively, of the deferred gain in
Equity in net losses of affiliated companies.
Participation in offerings of affiliates: Refer to Note 14 for Navios
Holdings participation in Navios Acquisitions and Navios Partners offerings. On February 4, 2015, Navios Holdings entered into a share purchase agreement with Navios Partners pursuant to which Navios Holdings made an
investment in Navios Partners by purchasing common units, and general partnership interests, in order to maintain its 20.0% partnership interest in Navios Partners following its equity offering in February 2015. In connection with this agreement,
Navios Holdings entered into a registration rights agreement with Navios Partners pursuant to which Navios Partners provided Navios Holdings with certain rights relating to the registration of the common units. Navios Holdings has entered into
additional share purchase agreements on December 30, 2016, March 3, 2017, March 23, 2017, March 31, 2017, January 11, 2018, February 21, 2018, December 20, 2018 and February 1, 2019 for the purchase up to a
total of 1,754,981 general partnership units.
Balance due from Navios Europe I: Balance due from Navios Europe I as of
September 30, 2019 amounted to $15,011 (December 31, 2018: $12,013) which included the net current receivable amount of $9,872 (December 31, 2018: $7,769) mainly consisting of management fees, drydocking, ballast water treatment
system and other expenses (for the period to August 30, 2019) and accrued interest income earned under the Navios Revolving Loans I (as defined in Note 14) and other expenses and the non-current amount
receivable of $5,139 (December 31, 2018: $4,244) related to the accrued interest income earned under the Navios Term Loans I (as defined in Note 14).
The Navios Revolving Loans I and the Navios Term Loans I earn interest and an annual preferred return, respectively, at 1,270 basis points per
annum, on a quarterly compounding basis and are repaid from free cash flow (as defined in the loan agreement) to the fullest extent possible at the end of each quarter. There are no covenant requirements or stated maturity dates.
As of September 30, 2019, the outstanding amount relating to Navios Holdings portion under the Navios Revolving Loans I is $23,125
(December 31, 2018: $19,125), under the caption Loan receivable from affiliate companies. During 2019, Navios Holdings funded with $4,000 Navios Europe I under the Navios Revolving Loans I. As of September 30, 2019, the amount
undrawn under the Revolving Loans I was $2,000, of which Navios Holdings may be required to fund an amount ranging from $0 to $2,000.
On
March 17, 2017, Navios Holdings transferred to Navios Partners its rights to the Navios Revolving Loans I and the Navios Term Loans I (including the respective accrued receivable interest), with a total carrying value of $21,384 for a
total consideration of $33,473, comprised of $4,050 in cash and 13,076,923 (before reverse stock split) newly issued common units of Navios Partners with a fair value of $29,423 (based on Navios Partners trading price as of the closing of the
transaction). The Company evaluated this transaction in accordance with ASC 860, classifying it as a secured borrowing arrangement. At the date of this transaction, the Company recognized a long-term liability of $33,473, including a premium of
$12,089 which will be amortized through Interest expense and finance cost, net over the term of the loans until 2023, and is included within Long-term payable to affiliate companies. Navios Holdings may be required from
Navios Partners, under certain conditions, to repurchase the loans after the third anniversary of the date of the transaction based on the then-outstanding balance of the loans. See also Note 14. As of September 30, 2019 and
December 31, 2018, the long-term payable to Navios Partners amounted to $36,669 and $35,417, respectively, including the unamortized premium of $6,921 and $8,359, respectively.
Balance due from Navios Europe II: Balance due from Navios Europe II as of September 30, 2019, amounted to $20,712
(December 31, 2018: $5,312), which included the net current receivable amount of $13,154 (December 31, 2018: $470 net current payable), mainly consisting of management fees, drydocking, ballast water treatment system and other expenses
(for the period to August 30, 2019) and accrued interest income earned under the Navios Revolving Loans II (as defined in Note 14) and other expenses and the net non-current amount receivable of $7,558
(December 31, 2018: $5,782) related to the accrued interest income earned under the Navios Term Loans II (as defined in Note 14).
The
Navios Revolving Loans II and the Navios Term Loans II earn interest and an annual preferred return, respectively, at 1,800 basis points per annum, on a quarterly compounding basis and are repaid from free cash flow (as defined in the loan
agreement) to the fullest extent possible at the end of each quarter. There are no covenant requirements or stated maturity dates.
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