1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. đť•Ź Posts
Discussion
1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. đť•Ź Posts
Discussion
1. Investment Snapshot
2. Valuation
Discussion
Symbol
HSHP
Event Date
2023-03-31
Sector
Industrials
Subsector
Marine Transportation
Offer Range
$5.80
Shares Offered
7.72M
39.87M
$230.0M
19.4%
Implied Upside vs Midpoint
Description
We are an independent bulk carrier company with contracts to acquire 12 Newcastlemax dry bulk vessels, of which two vessels were delivered on March 2 and March 9, 2023, respectively, and are currently in operation and 10 are under construction. We were founded in March 2021 for the purpose of operating high-quality dry bulk vessels in the range of 210,000 dwt. We have agreements to acquire 12 Newcastlemax dry bulk vessels with an aggregate carrying capacity of 2.5 million dwt, of which two vessels have been delivered and are in operation and 10 are under construction at New Times Shipyard in China. These vessels will be equipped with the latest generation dual fuel LNG technology, with fuel-saving devices and exhaust gas cleaning systems or “scrubbers”, which we believe will make our vessels more fuel efficient, more cost effective, and environmentally friendly as compared to older dry bulk vessels without these features, which we believe will make our fleet more attractive to charterers. We expect the dual fuel capability to be a benefit when LNG is economical to use. The estimated delivery of our vessels is between April 2023 and July 2024. Pursuant to agreements with the Leasing Providers, upon delivery from New Times, each acquired vessel will be sold to a special purpose vehicle (“SPV”) owned by the Leasing Providers, and each SPV has agreed to charter back the vessels under bareboat charters, under Hell and High Water Terms, subject to the effective transfer of ownership of the vessels to the SPVs. Each of the vessels will be flagged in Liberia. Accordingly, the first two vessels recently delivered by New Times were sold to Avic SPVs and immediately thereafter chartered back to us under bareboat charters. Pursuant to the Shipbuilding Contracts, we agreed to acquire 12 vessels for an average purchase price of $69.3 million per vessel to be paid in four pre-delivery installments for each vessel, in the amount equal to approximately 5%, 5%, 10% and 10% of the initial purchase price of each vessel, respectively, with the remaining delivery installments, in the amount of approximately 70% of the initial purchase price payable upon the delivery of each vessel. The total average purchase price, including estimated variation orders, Address Commissions and the cost of scrubbers we are installing on each of our vessels is $71.6 million. The total purchase price payable for the vessels is $859.7 million, including estimated variation orders, Address Commissions and the cost of scrubbers we are installing on all our vessels. As of March 27, 2023, we have paid $277.2 million for certain pre-delivery installments under the Shipbuilding Contracts and the delivery installments on two vessels (including amounts paid by our Leasing Providers and Magni on our behalf), with the remaining installments totaling $582.5 million, and we have financing for substantially all of the remaining payments under the Shipbuilding Contracts other than the cost of scrubbers we are installing on our vessels with respect to eight vessels under the 5-8 and 9-12 Shipbuilding Contracts. We have entered into agreements for pre-delivery financing and delivery financing with Avic, CCBFL, and Jiangsu to provide the financing for a substantial portion of the installments under the newbuilding program for our vessels, other than the cost of scrubbers we are installing on our vessels with respect to eight vessels under the 5-8 and 9-12 Shipbuilding Contracts. We have agreements in place with New Times to install scrubbers on all of our vessels for a cost of $2.4 million per vessel. We have secured financing for a substantial portion of this cost for the four vessels under the 1-4 Shipbuilding Contracts and we intend to finance (i) the remaining cost of scrubbers for the third and fourth vessels with hull numbers 0120835 and 0120836 under the 1-4 Shipbuilding Contract, respectively, with the net proceeds from this offering; and (ii) the respective cost of scrubbers for the eight vessels under the 5-8 and 9-12 Shipbuilding Contracts with the net proceeds of this offering or through debt financing with our existing lenders, or a combination thereof. In case we decide to finance these scrubbers through debt financing, there is no assurance that we will be able to execute this scrubber financing. We are planning to raise financing through the offering contemplated by this prospectus. Assuming additional equity financing, based on our track record in terms of raising equity, and/or completion of debt financing for scrubber installation, we believe we will be able to meet anticipated liquidity requirements for our business for at least the next twelve months. The vessels will operate worldwide, with key trades for our Newcastlemax vessels expected to be Brazil to China and Australia to China. Our vessels are expected to transport a broad range of major bulk commodities, including iron ore, coal, and bauxite. We plan to employ our vessels on index-linked rate time charters, fixed rate time charters or voyage charters, with counterparties that are expected to typically be large dry bulk operators, commodity traders and end users. Currently, five of our vessels under construction have been chartered out on index-linked rate time charters for periods of between 24 to 38 months, plus certain extension options, and we have chartered the first vessel with hull number 0120833 on a fixed-rate time charter at $30,000 per day, gross, for two years, and the second vessel with hull number 0120834 on index-linked time charter for such same period. We expect to charter the remaining vessels prior to their respective delivery from New Times. Our Manager, 2020 Bulkers, has experience operating in the dry bulk shipping industry. Our Chief Executive Officer, Mr. Herman Billung, who is contracted from 2020 Bulkers under the Management Agreement, has extensive experience in the dry bulk shipping industry including overseeing newbuilding projects, sales and purchase activities and commercial and chartering activities. During his career, Mr. Billung has gained deep experience in and insight into the dry bulk market. --- The dry bulk shipping industry is highly cyclical and experiences volatility in profitability, vessel values and freight rates. Freight rates are strongly influenced by the supply of dry bulk vessels and the demand for dry bulk seaborne transportation. We plan to maximize shareholder returns from our fleet of 12 Newcastlemax vessels. We plan to charter the vessels to strong counterparties and will focus on returning capital to the shareholders in the form of monthly dividends, subject to available cash and capital requirements, including requirements under capital expenditure programs, market prospects, contractual restrictions under our Financing Arrangements, and other considerations. We may consider growth and acquisition opportunities if we believe they are in the best interest of our shareholders; however, our primary focus is the 12 newbuilding vessels we have agreed to acquire (two of which have already been delivered). --- We were incorporated in Bermuda on March 17, 2021. Our principal executive offices are located at S. E. Pearman Building, 2nd Floor, 9 Par-la-Ville Road, Hamilton HM11, Bermuda and our telephone number is +1 (441) 542-4577. Our principal website is www.himalaya-shipping.com. We maintain a registered office in Bermuda at S. E. Pearman Building, 2nd Floor, 9 Par-la-Ville Road, Hamilton HM11, Bermuda. The telephone number of our registered office is +1 (441) 542-4577.