Buying Ships From Related Parties Can Be Expensive
Earlier this week, Heidmar Maritime Holdings Corp (NASDAQ: HMR) purchased the “feeder” container ship A. Obelix from Capital Maritime Management (Capital). Capital through an affiliated company owns 45.1% of HMR.
Container ships are measured in TEU, or twenty foot equivalent units, to gauge how many containers these vessels can carry. “Feeder” container ships, approximately 1,700 TEU, connect the world’s larger “hub” ports with its smaller “spoke” ports.
Feeder container ships’ prices have trended upwards in recent months, but the A. Obelix’s sale price is at a noticeable premium to similarly sized vessels’.
April: Torres Strait (1,713 TEU / built 2008) | $17 million
May: Galen (1,841 TEU / built 2007) and Garwood (1,841 TEU / built 2008) | $18.5 million each
June: Hansa Horneburg (1,732 TEU / built 2007) | $19.5 million
July: A. Obelix (1,702 TEU / built 2008) | $25.25 million
So, who gains the advantage, or disadvantage, in the A. Obelix’s premium?
Capital (the seller) owns 45.1% of HMR shares; Pankaj Khanna (HMR’s CEO) owns 45.1%; and other HMR executives and directors own 0.3%—totaling 90.5% of HMR shareholders (who all presumably voted to approve the transaction).
The next question is: is this truly the end of the A. Obelix’s story? HMR’s press release announcing the transaction implies the story will continue:
“(T)he Company intends to partner with investors, arranging the acquisition of assets … In these transactions, investors will acquire and hold an equity stake in the vessel-owning company … We are working with some potential joint venture partners for this vessel and others in the future.”
So if you are one of these “potential joint venture partners” that gets a call from your friendly shipping investment banker in the coming weeks, I’d implore you to do your own due diligence on the valuation of the A. Obelix.
Addendum: In follow-up communications since publishing the above post, Heidmar CEO Pankaj Khanna validly suggested I specify the vessels’ shipyards of origin since German-built vessels, such as the A. Obelix, are typically valued higher than Chinese-built vessels, such as the Hansa Horneburg.
Khanna also confirmed the A. Obelix’s time charter rate is at a “$7.0 - 8.5 kpd” premium to other recently reported charters. Since comparable charters range from $21,500-$23,000/day, this puts A. Obelix’s charter rate at approximately $30,000/day—the same rate the vessel was reported fixed to Unifeeder in October 2024 for a period of 11-13 months.
This premium spread “over 2.5 years … undiscounted is $6.4 - $7.8 million”.
Given the A. Obelix’s premium charter rate, one would then discount the vessel’s excess earnings at a rate to reflect the risk associated in those cash flows. The resulting net present value would then be added to the charter-free value of the vessel (assessed by “independent broker valuations at $21.5 and $22.0 million”) to arrive at an appropriate value-adjusted purchase price for the vessel.
Thinking about risk, one must note that, in her current charter, the A. Obelix is one of a few container vessels regularly calling war-torn Ukraine directly. It has been reported that Maersk, via an arrangement with Unifeeder, has been using the vessel to run a service connecting Chornomorsk in Ukraine to Port Said in Egypt beginning in November 2024. Ukrainian port infrastructure has been targeted repeatedly in Russian attacks, with TradeWinds recently noting Ukraine’s budget of $510 million to rebuild its maritime sector.
