Tufton Oceanic Assets (SHIP) has announced that it has agreed to acquire one general cargo vessel for $6.75m. This purchase will take the Company’s fleet to twelve vessels and, following the purchase, SHIP says that its “capital resources are now fully committed”. It has since announced its intention to raise up to $75m by way of a placing (see below).
Above target yield
The vessel will have a bareboat charter of seven years to what SHIP describes “as a leading general cargo shipping operator”. It says that the yield exceeds the targets expressed in the its September 2018 prospectus. SHIP says that the investment will increase its operating cash flow post fees and post capex to a level that will cover its stated 7% target dividend* by over 1.7x. It will also increase its average charter length.
$75m Capital raise proposed – via placing programme
SHIP’s investment manager says that has identified an attractive pipeline of secondhand vessels and in order to capitalise on these opportunities, SHIP is now planning to raise up to US$75 million by way of a placing of new Ordinary Shares. This is to take place under SHIP’s Placing Programme. The details for this can be found in SHIP’s September 2018 prospectus.
SHIP says that its investments will be diversified across the core shipping Segments in line with where the Investment Manager identifies attractive opportunities. It is intended that the portfolio will benefit from a mix of strong cash yield and moderate capital gain potential.
About Tufton Oceanic Assets
Tufton Oceanic Assets aims to provide investors with an attractive level of regular and growing income and capital returns through investing in a diversified portfolio of secondhand commercial sea-going vessels. The company will make investments through one or more underlying SPVs.
The company is targeting an initial dividend yield of 5% during the first 12 months following admission rising to a target dividend yield of 7% thereafter. The dividend is expected to grow modestly over the long term. The company will target an IRR of 12% per annum (net of expenses and fees) on a NAV basis on the issue price over the long term.
You can access the fund’s website here