Eimskip Sells Three Reefer Vessels

Icelandic container line and a logistics company Eimskip has made an agreement to sell three of its reefer vessels in Norway for USD 12 million (EUR 10.9 million).

The vessels, Langfoss, Stigfoss and Vidfoss, are 30 years old and have been operated by Eimskip in Norway for 20 years and owned by the Company for the last 8 years. Eimskip has parallel to the sale agreed to charter one of the divested vessels for the next two years.

Eimskip is currently operating six reefer vessels but following the sale it will operate four, of which three are owned by Eimskip. This decrease in number of vessels will not affect the liner services in Norway, but capacity will be reduced in the spot services.

The operation of these vessels has been challenging in recent years and the operating results of the spot services has been unacceptable and negative taking into account depreciation and CAPEX.

The sale of these vessels is a part of continued streamlining and integration measures in Norway and is in line with the Company’s aim of improving operation and profitability, as has been announced in investor presentations this year.

Eimskip recently published a three-year target CAPEX plan and presented that maintenance CAPEX would amount to EUR 21 million in 2020.

As a result of the sale of the vessels the plan has been adjusted downwards by EUR 4 million and revised target is therefore EUR 17 million which will result in improved cash-flow. Estimated impact on next year’s EBITDA is a decrease of EUR 1-2 million, but on the other hand it is estimated that net earnings will increase by up to EUR 0,5 million.

The vessels are to be delivered to the buyer at the beginning of next year. Eimskip will provide a seller’s loan equaling 50% of the vessels purchase price with term of six years and quarterly installments and interest payments.

As the book value of the vessels exceeds the purchase price, Eimskip will realize EUR 2 million impairment loss through amortization in the fourth quarter of 2019.

The sale is subject to customary reservations in vessels sale and purchase.