Sharesof Capital Product Partners (CPP) gained traction Monday after storming the linerspace with the acquisition of two containerships from its sponsor, CapitalMaritime & Trading.
The Nasdaq-quoted shipowner watched itsstock climb 4.71% to $7.51 in the hours following the opening bell as analystsraced to weigh in on deal in which the company traded a pair of VLCCs for the 7,943-teu Archimidis (built 2006) andAgamemnon (built 2007).
In subsequent notes to clients, shipping researchersat Deutsche Bank, Evercore Partners and Wells Fargo Securities applauded the EvangelosMarinakis-led operator’s commitment to the preservation of an annual distributionof $0.93 per unit.
"Thecontainerships are employed to AP Moller-Maersk at $34,000/day untilAugust/November,” wrote Evercore’s Jonathan Chappell. “As a result, CPP is notonly diversifying its end-market exposure, but it is lessening its counterpartyexposure to its sponsor and increasing the fixed-rate cash flow on its fleetfor the next three years.”
JustinYagerman of Deutsche Bank was quick to point out that the tankers CPP agreed to hand over to Capital Maritime were due to earn $28,000 per day and notedthat over a third of its fleet is still on charter to its sponsor “generally at orabove market rates” on the heels of the swap.
“Whatstill remains unclear is the catalyst for the transaction: was it driven byCapital Maritime’s desire to exit loss generating charters, CPP’s need forstronger cash flow or both?,” he asked. “Either way, it raises the question oflonger-term strategy of CPP and its relationship to its sponsor."
In a statement filed earlier in the day the Greek shipowner said the transaction was "unanimously" recommended by the partnership's Conflicts Committee and unanimously approved by its board of directors.
