Euroseas Ltd. (NASDAQ:ESEA)
Euroseas Ltd. (NASDAQ:ESEA) plans to expand its fleet of Drybulk vessels after signing an agreement with Euromar LLC. The agreement details the terms of the acquisition of M/V EM Astoria – a feeder size containership vessel built in 2004.
Euroseas Fleet Expansion
Under terms of the agreement, Euroseas Ltd. (NASDAQ:ESEA) is to acquire the vessel utilizing 100% bank financing. As part of the agreement, the bank is entitled to profits generated by the vessel.
“We are very pleased to proceed with the acquisition of EM Astoria which increases our fleet in the containership feeder sector and is accretive to our shareholders. We remain optimistic that both the containership and Drybulk sectors will keep improving in the near and medium term and we continue positioning our assets to take advantage of such developments,” said CEO, Aristides Pittas.
The acquisition of M/V EM Astoria follows the signing of an addendum, with Jiangsu Yangzijiang Shipbuilding Co early in the year, for the construction of a new vessel. The new building contract reduced the price for an eco-design fuel efficient Kamsarmax dry bulk carrier.
A contract price reduction is a welcome relief for Euroseas Ltd. (NASDAQ:ESEA) given that it had contemplated terminating the contract. Delivery of the Kamsarmax dry bulk carrier next year will bolster the company’s fleet even further. The dry bulk carrier is aggressively expanding its fleet in both the dry bulk and containership sector as it looks to generate maximum value at a time of growing rates in the shipping business.
Shipping Industry Recovery
Dry bulk and containership markets have recovered from the historically low levels observed last year. The company’s chief executive expects the rebound to continue as the world economy continues to improve. Employing vessels in short-term charters is one of the strategies that Euroseas Ltd. (NASDAQ:ESEA) is using as it tries to take advantage of the ongoing rebound.
“In addition to the improving market prospects, our strengthened balance sheet, as a result of raising funds via both private placements and our at-the-market offering, has given us the confidence to continue the construction of our second Kamsarmax vessel due to be delivered by June 2018 as we announced last month.,” said Mr. Pittas
Separately, Euroseas plans to hold an annual general meeting of shareholders on June 23, 2017, at the offices of Seward & Kissel LLP.
Euroseas Ltd. (NASDAQ:ESEA) stock was unchanged in Thursday’s trading session ending the day at $1.26 a share.
I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.
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About the author: James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.