SEC Form 6-K filed by Capital Clean Energy Carriers Corp.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the month of October 2024
COMMISSION FILE NUMBER:
(Translation of registrant’s name into English)
(Address of principal executive offices)
Indicate by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Attached as Exhibit I are the Unaudited Interim Condensed Consolidated Financial Statements of Capital Clean Energy Carriers Corp. (“CCEC”) formerly “Capital Product Partners L.P.” or the “Partnership” for the six-month periods ended June 30, 2024, and 2023 and the related Operating and Financial Review and Prospects discussion.
Attached as Exhibit 101 is the following financial information from this Report on Form 6-K for the six-month periods ended June 30, 2024, and 2023, filed as part of Exhibit I hereto, formatted in Inline Extensible Business Reporting Language (“iXBRL”):
| (i) | Unaudited Condensed Consolidated Balance Sheets as of June 30, 2024, and December 31, 2023; |
| (ii) | Unaudited Condensed Consolidated Statements of Comprehensive Income for the six-month periods ended June 30, 2024, and 2023; |
| (iii) | Unaudited Condensed Consolidated Statements of Changes in Partners’ Capital for the six-month periods ended June 30, 2024, and 2023; |
| (iv) | Unaudited Condensed Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2024, and 2023; and |
| (v) | Notes to the Unaudited Interim Condensed Consolidated Financial Statements. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CAPITAL CLEAN ENERGY CARRIERS CORP. | |||
| Dated: October 10, 2024 | |||
| /s/ Gerasimos (Jerry) Kalogiratos | |||
| Name: Gerasimos (Jerry) Kalogiratos | |||
| Title: Chief Executive Officer | |||
Exhibit I
CCEC
Financial Results for the six-month period ended June 30, 2024
Operating and Financial Review and Prospects
You should read the following discussion of our financial condition and results of operations in conjunction with our unaudited interim condensed consolidated financial statements for the six-month periods ended June 30, 2024, and 2023 and related notes included elsewhere herein. Among other things, the financial statements include more detailed information regarding the basis of presentation for the following information. This discussion contains forward-looking statements that are made based upon management’s current plans, expectations, estimates, assumptions and beliefs concerning future events impacting us and therefore involve a number of risks and uncertainties, including those risks and uncertainties discussed in our Annual Report on Form 20-F for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on April 23, 2024 and amended on May 22, 2024 (the “Annual Report”) and those discussed in Exhibit 99.8 to our Report on Form 6-K furnished to the SEC on August 26, 2024. These risks, uncertainties and assumptions involve known and unknown risks and are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements.
We were originally formed as a Marshall Islands limited partnership named “Capital Product Partners L.P.”, and on August 26, 2024 converted into a Marshall Islands corporation named “Capital Clean Energy Carriers Corp.” See “Recent Developments—Conversion and Name Change” below.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our Fleet
| I. | Operating Vessels: |
The eight Neo-Panamax container carrier vessels and the 12 X-DF LNG/C vessels currently on the water are all employed under time and bareboat charters. As of June 30, 2024, our charter coverage for the rest of 2024 and 2025 was 100% and 82%, respectively.
| Vessel Name | Charter Type (1) | Expiry of Charter (2) | Charterer | |||
| CONTAINER CARRIER VESSELS | ||||||
| Manzanillo Express (7) | 10-yr TC | Jul-32 | Hapag-Lloyd Aktiengesellschaft (“Hapag-Lloyd”) | |||
| Itajai Express (7) | 10-yr TC | Oct-32 | Hapag-Lloyd | |||
| Buenaventura Express (7) | 10-yr TC | Mar-33 | Hapag-Lloyd | |||
| Hyundai Prestige | 12-yr TC | Dec-24 | Hyundai Merchant Marine Co. Ltd. (“HMM”) | |||
| Hyundai Premium | 12-yr TC | Jan-25 | HMM | |||
| Hyundai Paramount | 12-yr TC | Feb-25 | HMM | |||
| Hyundai Privilege | 12-yr TC | Mar-25 | HMM | |||
| Hyundai Platinum | 12-yr TC | Apr-25 | HMM | |||
| LIQUEFIED NATURAL GAS CARRIER (“LNG/C”) VESSELS | ||||||
| Aristos I(3) | 5-yr TC | Oct-25 | BP Gas Marketing Limited (“BP”) | |||
| Aristarchos(4) | 10-yr TC | May-31 | Cheniere Marketing International LLP (“Cheniere”) | |||
| Aristidis I (3) | 5-yr TC | Dec-25 | BP | |||
| Attalos (3) | 4.2-yr TC | Oct-25 | BP | |||
| Adamastos(5) | 7.2-yr TC | Sep-28 | Engie Energy Marketing Singapore Pte Ltd. (“Engie”) | |||
| Asklipios(4) | 10-yr TC | Aug-31 | Cheniere | |||
| Asterix I(6) | 7-yr TC | Dec-29 | Hartree Partners Power & Gas Company (UK) Limited (“Hartree”) | |||
| Amore Mio I(8) | 3-yr TC | Sep-26 | QatarEnergy Trading LLC (“QatarEnergy”) | |||
| Axios II (9) | 7-yr BBC | Jan-32 | Bonny Gas Transport Limited (“BGT”) | |||
| Assos(10) | 10-yr TC | May-34 | Tokyo LNG Tanker Co. Ltd. (“Tokyo Gas”) | |||
| Aktoras (11) | 7-yr BBC | May-31 | BGT | |||
| Apostolos (12) | 10.5-yr TC | Nov-34 | LNG Marine Transport Limited (“Jera”) | |||
| 1 |
(1) TC: Time Charter and BBC: Bareboat Charter
(2) Earliest possible redelivery date.
(3) In 2019, each of the vessel-owning companies of the LNG/C Aristos I, the LNG/C Aristidis I and the LNG/C Attalos, entered into a time charter agreement with BP for a period of 3 years (+/- 30 days). The charterers have three two-year options (+/- 30 days) and one three-year option (+/- 30 days). The charters of the LNG/C Aristos I and the LNG/C Aristidis I commenced in November 2020 and January 2021 respectively. The charter of the LNG/C Attalos commenced in November 2022. Previously the vessel was under a 15-month (+/- 30 days) time charter with BP. In February and March 2023, the charterer exercised its option to extend the time charter of the LNG/C Aristos I and LNG/C Aristidis I by two years (+/- 30 days), respectively.
(4) In April 2021, each of the vessel-owning companies of the LNG/C Aristarchos and the LNG/C Asklipios, entered into a time charter agreement with Cheniere until March 15, 2025 (+/- 30 days) and February 5, 2025 (+/- 30 days). Each charter has two one-year options (+/- 30 days). The charters of the LNG/C Aristarchos and the LNG/C Asklipios commenced in June 2021 and September 2021, respectively. In August 2022 both vessels amended their time charter agreement with Cheniere and extended them until June 14, 2031 (+/- 30 days) and September 28, 2031 (+/- 30 days), respectively. After the amendment each charter has two two-year options (+/- 30 days).
(5) In July 2021, the vessel-owning company of the LNG/C Adamastos, entered into a time charter agreement with Engie for a period of 1,890 days (+90/-45 days) or for a period of 2,620 days (+90/-45 days) if the charterer exercises its option on or prior to May 2023. The charter of the LNG/C Adamastos commenced in August 2021. In May 2022, the charterer elected the second period of 2,620 days (+90/-45 days).
(6) In January 2022, the vessel-owning company of the LNG/C Asterix I, entered into a time charter agreement with Hartree for a period of 1,825 days (+/-60 days) or for a period of 2,555 days (+/-60 days) if the charterer exercises its option on or prior to January 2025. The charter has one two-year option (+/- 30 days). In January 2023, the charterer selected the period of 2,555 days (+/-60 days). The charter of the LNG/C Asterix I commenced in February 2023.
(7) In June 2021, the vessel-owning companies of the M/V Manzanillo Express, the M/V Itajai Express and the M/V Buenaventura Express, entered into a time charter agreement with Hapag-Lloyd for a period of 120 months (+/-90 days). The charterers have three two-year options (+/- 45 days). The charters of the M/V Manzanillo Express, the M/V Itajai Express and the M/V Buenaventura Express commenced in October 2022, January 2023, and June 2023, respectively.
(8) In October 2022, the company owning the LNG/C Amore Mio I, entered into a time charter agreement with QatarEnergy for a period of up to October 1, 2026 (+/-30 days). The time charter of the LNG/C Amore Mio I commenced on October 31, 2023.
(9) In November 2023, the company owning the LNG/C Axios II agreed with BGT to enter into a seven year (+/-30 days) bareboat charter commencing in the first quarter of 2025. The charterer has the option to extend the charter for 36 months (+/-30 days). In December 2023 the company owning the LNG/C Axios II entered into a one-year time charter at a market linked rate which commenced in January 2024. Upon the completion of the one-year time charter, the vessel will perform the seven-year bareboat charter with BGT.
(10) In November 2022, the company owning the LNG/C Assos, entered into a time charter agreement with Tokyo Gas for a period of 10 years (+/-30 days). The time charter of the LNG/C Assos commenced on May 31, 2024.
(11) In August 2023, the company owning the LNG/C Aktoras agreed with BGT to enter into a seven year (+/-30 days) bareboat charter. The charterer has the option to extend the charter for 36 months (+/-30 days). The bareboat charter of the LNG/C Aktoras commenced on June 5, 2024.
(12) In May 2023, the company owning the LNG/C Apostolos, entered into a time charter agreement with Jera for a period of up to December 31, 2034 (+/-60 days). The charterer has the option to extend the charter for 3 years (+/-60 days). The time charter of the LNG/C Apostolos commenced on June 28, 2024.
| 2 |
| II. | Vessels under construction: |
| Vessel Type1 | Hull No. | Cubic Meters (“CBM”) | Shipyard | Estimated Delivery | ||||
| LNG2 | 8198 | 174,000 | Hyundai Samho Heavy Industries Co., Ltd (“Hyundai Samho”) | Jan-26 | ||||
| LNG2 | 8199 | 174,000 | Hyundai Samho | Mar-26 | ||||
| LNG | 8202 | 174,000 | Hyundai Samho | Sep-26 | ||||
| LNG | 8203 | 174,000 | Hyundai Samho | Nov-26 | ||||
| LNG | 8206 | 174,000 | Hyundai Samho | Feb-27 | ||||
| LNG | 8207 | 174,000 | Hyundai Samho | Mar-27 | ||||
| MGC | 8424 | 45,000 | Hyundai Mipo Dockyard Co. Ltd, South Korea ("Hyundai Mipo") | Jun-26 | ||||
| MGC | 8425 | 45,000 | Hyundai Mipo | Sep-26 | ||||
| MGC | 8426 | 45,000 | Hyundai Mipo | Feb-27 | ||||
| MGC | 8427 | 45,000 | Hyundai Mipo | May-27 | ||||
| MGC | S1111 | 40,000 | Nantong CIMC Sinopacific Offshore & Engineering Co. Ltd, China ("CIMC SOE") | Mar-27 | ||||
| MGC | S1112 | 40,000 | CIMC SOE | Jul-27 | ||||
| LCO2 – HMGC | 8398 | 22,000 | Hyundai Mipo | Jan-26 | ||||
| LCO2 – HMGC | 8399 | 22,000 | Hyundai Mipo | Apr-26 | ||||
| LCO2 – HMGC | 8404 | 22,000 | Hyundai Mipo | Sep-26 | ||||
| LCO2 – HMGC | 8405 | 22,000 | Hyundai Mipo | Nov-26 | ||||
| Total |
| 1. | LNG: Liquified Gas Carrier, MGC: Medium Gas Carrier, LCO2: Liquefied CO₂ Carrier, HMGC: Handy Multi Gas Carrier. |
| 2. | On December 21, 2023, upon the closing of the umbrella agreement dated November 13, 2023 (the “Umbrella Agreement”), among us, Capital Maritime & Trading Corp. (“CMTC”) and Capital GP L.L.C. (“CGP”), we entered into two separate share purchase agreements (“SPAs”) to acquire 100% of the equity interest in each company owning the Hulls 8198 and 8199 respectively. The SPAs will be completed upon each hull’s delivery from Hyundai Samho, |
| 3 |
Recent Developments
Conversion and Name Change
On August 26, 2024 (the “Effective Date”), the Partnership completed its conversion from a Marshall Islands limited partnership to a Marshall Islands corporation in accordance with a Plan of Conversion pursuant to which, among other things (collectively, the “Conversion”):
| (i) | the Partnership converted from a Marshall Islands limited partnership previously named “Capital Product Partners L.P.” to a Marshall Islands corporation; | |
| (ii) | each of the common units of the Partnership (the “Common Units”) outstanding as of immediately prior to the Effective Date was converted into one common share, with par value $0.01 per share, of CCEC (“Common Shares”); and | |
| (iii) | the 348,570 General Partner units of the Partnership and all of the incentive distribution rights of the Partnership, in each case, outstanding as of immediately prior to the Effective Date, were converted into an aggregate of 3,500,000 Common Shares. |
Following the Conversion, CMTC, together with its affiliates CGP and Capital Gas Corp. beneficially own approximately 59.0% of the outstanding Common Shares of CCEC (based on 58,387,313 Common Shares outstanding and excluding 1,551,061 Common Shares held in treasury).
Following the Conversion on August 26, 2024, Common Units ceased to trade on the Nasdaq Global Select Market (“Nasdaq”) and Common Shares commenced trading on the Nasdaq under the name “Capital Clean Energy Carriers Corp.” with the ticker symbol “CCEC”.
Vessel acquisitions and advances for vessels under construction
Pursuant to the Umbrella Agreement during the six-month period ended June 30, 2024, we acquired from CMTC the shares of the vessel-owning companies of the following vessels:
| In millions of United States dollars | ||||||||||||
| Vessel | Delivery Date | Consideration | Debt | Umbrella Seller’s Credit | Advances paid as of December 31, 2023 | Cash paid to CMTC on the delivery date | ||||||
| Axios II | January 2, 2024 | $ | 314.0 | $ | 190.0 | $ | 92.6 | $ | 31.4 | $ | - | |
| Assos | May 31, 2024 | 277.0 | 240.0 | - | 27.7 | 9.3 | ||||||
| Aktoras | June 5, 2024 | 311.0 | 240.0 | 39.9 | 31.1 | - | ||||||
| Apostolos | June 28, 2024 | 302.0 | 192.0 | 2.3 | 30.2 | 77.5 | ||||||
| Total | $ | 1,204.0 | $ | 862.0 | $ | 134.8 | $ | 120.4 | $ | 86.8 | ||
On June 3, 2024, we announced an investment in 10 new gas carriers’ vessels under construction, including four unique handy multi gas carriers that can carry liquid CO2 (“LCO2”) collectively (the “Gas Vessels”) for a total amount of $756.0 million, with expected deliveries between the first quarter of 2026 and the third quarter of 2027. On June 17, 2024, and upon entry into 10 separate Share Purchase Agreements with CMTC, we paid to CMTC $74.7 million to acquire 100% of the equity interests in each of the vessel-owning companies of the Gas Vessels.
An analysis of the Gas Vessels is as follows:
| In millions of United States dollars | ||||||||||
| Vessel Type1 | Hull No. | Cubic Meters (“CBM”) | Shipyard | Estimated Delivery | Amount paid to CMTC for the acquisition of the vessel-owning companies of the Gas Vessels | |||||
| MGC | 8424 | 45,000 | Hyundai Mipo Dockyard Co. Ltd, South Korea ("Hyundai Mipo") | Jun-26 | — | |||||
| MGC | 8425 | 45,000 | Hyundai Mipo | Sep-26 | — | |||||
| MGC | 8426 | 45,000 | Hyundai Mipo | Feb-27 | — | |||||
| MGC | 8427 | 45,000 | Hyundai Mipo | May-27 | — | |||||
| MGC | S1111 | 40,000 | Nantong CIMC Sinopacific Offshore & Engineering Co. Ltd, China ("CIMC SOE") | Mar-27 | 9.8 | |||||
| MGC | S1112 | 40,000 | CIMC SOE | Jul-27 | 9.8 | |||||
| LCO2 – HMGC | 8398 | 22,000 | Hyundai Mipo | Jan-26 | 19.9 | |||||
| LCO2 – HMGC | 8399 | 22,000 | Hyundai Mipo | Apr-26 | 19.9 | |||||
| LCO2 – HMGC | 8404 | 22,000 | Hyundai Mipo | Sep-26 | 7.6 | |||||
| LCO2 – HMGC | 8405 | 22,000 | Hyundai Mipo | Nov-26 | 7.6 | |||||
| Total | $ | 74.7 | ||||||||
1. MGC: Medium Gas Carrier, LCO2: Liquefied CO₂ Carrier, HMGC: Handy Multi Gas Carrier.
The ship building contracts were initially entered into by CMTC. The acquisition/contract prices paid by us correspond to the actual ship building costs for all vessels except for the ones with expected delivery in January 2026 and April 2026, which were acquired pursuant to the rights of first refusal agreed under the Umbrella Agreement dated November 13, 2024. These vessels were ordered in July 2023 and were acquired by CCEC at the same cost as the last two LCO2 / handy multi gas carriers which were contracted in January 2024. The amount of $74.7 million we paid to CMTC represents advances made to the shipyards by CMTC under certain of the ship building contracts and a premium of $11.5 million.
| 4 |
Advances for the acquisition of vessel owning companies from a related party and vessels under construction
During the six-month period ended June 30, 2024, we paid advances for the acquisition of vessel owning companies from a related party and vessels under construction of $74.7 million and $101.1 million respectively. During the same period, we recognized initial expenses of $8.7 million, for the vessels under construction.
Vessel disposals
During the six-month period ended June 30, 2024, we entered into six memoranda of agreement (“MOA”) with third parties for the sale of the below vessels:
| In millions of United States dollars | ||||
| Vessel | MOA date | MOA Price | Delivery Date | |
| M/V Akadimos | January 31, 2024 | $ | 80.0 | March 8, 2024 |
| M/V Seattle Express | February 14, 2024 | 13.2 | April 26, 2024 | |
| M/V Fos Express | February 14, 2024 | 13.2 | May 3, 2024 | |
| M/V Athenian | March 1, 2024 | 51.0 | April 22, 2024 | |
| M/V Athos | March 1, 2024 | 51.0 | April 22, 2024 | |
| M/V Aristomenis | March 1, 2024 | 51.0 | May 3, 2024 | |
| Total | $ | 259.4 | ||
Furthermore, in September 2024, based on our strategic decision to focus on the energy transition and taking at the same time advantage of the attractive vessel valuations, we entered into five separate MOAs with a third party for the sale of the M/V Hyundai Premium, the M/V Hyundai Paramount, the M/V Hyundai Privilege, the M/V Hyundai Prestige and the M/V Hyundai Platinum, (each 63,010 DWT/ 5,023 TEU, container vessel, built 2013, Hyundai Heavy Industries Co., Ltd., S. Korea). The vessels’ carrying amount, including the unamortized portion of the above market acquired charters, amounting to $175.7 million. All five vessels are debt-free and the cash proceeds will be used to pay down debt and for general corporate purposes. The vessels are expected to be delivered to their new owner progressively between November 2024 and January 2025.
Financing arrangements:
Please see section “Borrowings (Financing arrangements)” in below
Quarterly Common Unit Cash Distributions
On January 25, 2024, the board of directors (the “Board”) declared a cash distribution of $0.15 per common unit for the fourth quarter of 2023 which was paid on February 13, 2024, to common unit holders of record on February 6, 2024.
On April 25, 2024, the Board declared a cash distribution of $0.15 per common unit for the first quarter of 2024 which was paid on May 14, 2024, to common unit holders of record on May 7, 2024.
On July 24, 2024, the Board declared a cash distribution of $0.15 per common unit for the second quarter of 2024 which was paid on August 12, 2024, to common unit holders of record on August 6, 2024.
Declaration and payment of any dividend is subject to the discretion of our board of directors. Our dividend policy may be changed at any time, and from time to time, by the board of directors. The timing and amount of dividend payments to holders of our shares will depend on, among other things, shipping market developments and the charter rates we are able to negotiate when we charter our vessels, our cash earnings, financial condition and cash requirements, and could be affected by a variety of factors, including increased or unanticipated expenses, the loss of a vessel, required capital expenditures, reserves established by the board of directors, refinancing or repayment of debt, additional borrowings, compliance with the covenants in our financing arrangements, our anticipated future cost of capital, access to financing and equity and debt capital markets, including for the purposes of refinancing or repaying existing debt, asset valuations, other factors described in our filings with the SEC from time to time and the applicable provisions of Marshall Islands law. See also the risks discussed in our Annual Report and in Exhibit 99.8 to our Report on Form 6-K furnished to the SEC on August 26, 2024, including in particular the risk factor entitled “We cannot assure you that we will pay any dividends on our common shares.” in that exhibit.
Factors Affecting Our Future Results of Operations
Please refer to our Annual Report, regarding the factors affecting our future results of operations.
Financial Results in thousands of United States dollars:
| For the six-month periods ended June 30, | ||||
| 2024 | 2023 | |||
| Revenues | $ | 202,165 | $ | 169,551 |
| Expenses / (income), net: | ||||
| Voyage expenses | 6,018 | 7,782 | ||
| Vessel operating expenses | 36,945 | 37,594 | ||
| Vessel operating expenses - related parties | 5,959 | 5,212 | ||
| General and administrative expenses | 7,723 | 5,115 | ||
| Vessel depreciation and amortization | 46,538 | 40,053 | ||
| Impairment of vessel | - | 7,956 | ||
| Gain on sale of vessels | (31,602) | - | ||
| Operating income, net | 130,584 | 65,839 | ||
| Other income / (expense), net: | ||||
| Interest expense and finance cost | (65,465) | (49,190) | ||
| Other income, net | 2,961 | 791 | ||
| Total other expenses, net | (62,504) | (48,399) | ||
| Partnership’s net income | $ | 68,080 | $ | 17,440 |
| Other comprehensive income: | ||||
| Unrealized gain on derivative instruments (Note 8) | 179 | 1,650 | ||
| Partnership’s comprehensive income | $ | 68,259 | $ | 19,090 |
| 5 |
Results of Operations
Six-Month Period Ended June 30, 2024, compared to the Six-Month Period Ended June 30, 2023
Our results of operations for the six-month periods ended June 30, 2024, and 2023 differ primarily due to:
| • | the increase in revenues due to the higher average daily charter rates earned by the vessels in our fleet resulting from the change in the composition of our fleet which now includes a higher number of LNG/Cs partly offset by the sale of certain of our container vessels; |
| • | the increase in depreciation and amortization due to the change in the composition of our fleet which now includes a higher number of LNG/Cs; |
| • | the gain on sale of vessels of $31.6 million during the six-month period ended June 30, 2024, compared to impairment charge of $8.0 million we recognized in the corresponding period in 2023; and |
| • | the increase in interest expense and finance cost during the six-month period ended June 30, 2024, compared to the corresponding period in 2023 mainly due to the increase in our average indebtedness and the increase in the weighted average interest rate. |
Total Revenues
Total revenues, consisting of time and bareboat charter revenues, amounted to $202.2 million for the six-month period ended June 30, 2024, compared to $169.6 million for the six-month period ended June 30, 2023. The increase of $32.6 million was primarily due to the higher average daily charter rates earned by the vessels in our fleet which resulted from the change in the composition of our fleet during the six-month period ended June 30, 2024, compared to the corresponding period in 2023.
Time and bareboat charter revenues are mainly comprised of the charter hires received from unaffiliated third-party charterers and are affected by the number of days our vessels operate, the average number of vessels in our fleet and the charter rates.
For the six-month period ended June 30, 2024, BP, Hapag-Lloyd, Cheniere, HMM, Hartree and QatarEnergy accounted for 19%, 18%, 14%, 13%, 10% and 10% of our total revenues, respectively.
Voyage Expenses
Total voyage expenses amounted to $6.0 million for the six-month period ended June 30, 2024, compared to $7.8 million for the six-month period ended June 30, 2023. The decrease of $1.8 million in voyage expenses was mainly due to the fact that none of our vessels operated under voyage charter during the six-month period ended June 30, 2024, compared to one vessel during the corresponding period in 2023.
Voyage expenses primarily consist of bunkers, port expenses and commissions. In voyage charters the shipowner generally is responsible for paying voyage expenses while voyage expenses incurred during time and bareboat charters are paid by the charterer, except for commissions, which are paid for by us. Voyage expenses incurred during off-hire periods are paid by us.
Vessel Operating Expenses
For the six-month period ended June 30, 2024, our total vessel operating expenses amounted to $42.9 million, in line with $42.8 million for the six-month period ended June 30, 2023.
Total vessel operating expenses for the six-month period ended June 30, 2024, include expenses of $6.0 million incurred under management agreements with Capital-Executive Ship Management Corp. (“Capital-Executive”) and Capital Gas Ship Management Corp., compared to $5.2 million during the six-month period ended June 30, 2023. Please also refer to Note 4 (Transactions with related parties) in the unaudited condensed consolidated financial statements for the six-month period ended June 30, 2024 included here-in.
General and Administrative Expenses
General and administrative expenses amounted to $7.7 million for the six-month period ended June 30, 2024, compared to $5.1 million for the six-month period ended June 30, 2023. The $2.6 million increase in general and administrative expenses was mainly attributable to costs associated with the Conversion and the amortization associated with our equity incentive plan.
General and administrative expenses include Board fees and expenses, audit and certain legal fees and other fees related to the requirements of being a publicly traded entity, the amortization associated with our equity incentive plan and the cost of the Conversion.
Gain on Sale of Vessels
During the six-month period ended June 30, 2024, we concluded the sale of six container vessels, namely the M/V Akadimos, the M/V Athos, the M/V Athenian, the M/V Seattle Express, the M/V Fos Express and the M/V Aristomenis, recognizing a gain of $31.6 million. No gain on sale of vessels was recognized during the six-month period ended June 30, 2023.
Impairment of Vessel
During the six-month period ended June 30, 2024, no impairment of vessel was recognized. On June 27, 2023, we agreed to sell the dry cargo vessel M/V Cape Agamemnon to an unaffiliated party. Upon the agreement, the vessel was classified as held for sale and we recognized a non-cash impairment charge of $8.0 million corresponding to the difference between the net book value of the vessel and its net selling price.
| 6 |
Vessel Depreciation and Amortization
Vessel depreciation and amortization increased to $46.5 million for the six-month period ended June 30, 2024, compared to $40.1 million for the six-month period ended June 30, 2023. The increase in vessel depreciation and amortization primarily reflects the change in the composition of our fleet which now includes a higher number of LNG/Cs partly offset by the decrease in the amortization of deferred dry-docking costs.
Total Other Expenses, Net
Total other expenses, net for the six-month period ended June 30, 2024, amounted to $62.5 million, compared to $48.4 million for the six-month period ended June 30, 2023. Total other expense, net includes interest expense and finance cost of $65.5 million for the six-month period ended June 30, 2024, compared to $49.2 million for the six-month period ended June 30, 2023. The increase of $16.3 million in interest expense and finance cost was mainly due to the increase in the average indebtedness and the increase in the weighted average interest rate for the six-month period ended June 30, 2024, to 6.8% compared to 6.2% for the six-month period ended June 30, 2023. Please also refer to Note 7 (Long-term debt, net) to our unaudited condensed consolidated financial statements.
Interest expense and finance cost include interest expense, amortization of financing charges, commitment fees and bank charges.
Partnership’s Net Income
The Partnership’s net income for the six-month period ended June 30, 2024, amounted to $68.1 million compared to $17.4 million for the corresponding period in 2023.
Liquidity and Capital Resources
As of June 30, 2024, total cash and cash equivalents amounted to $101.2 million. Total cash includes restricted cash of $12.9 million in total representing the minimum liquidity requirement under our credit facilities, sale and lease back agreements, seller’s credits and unsecured bonds (the “financing arrangements”).
Generally, our primary sources of funds have been cash from operations, bank borrowings, sale and lease back arrangements and, depending on our access to the capital markets, equity and debt securities offerings.
Cash from operations depends on our chartering activity. Depending on the prevailing market rates when our charters expire, we may not be able to re-charter our vessels at levels similar to their current charters, which may affect our future cash flows from operations. Five of our charters are expected to expire in the coming 12 months. Cash flows from operations may be further affected by other factors described in our Annual Report in “Item 3. Key Information—D. Risk Factors” and in Exhibit 99.8 to our Report on Form 6-K furnished to the SEC on August 26, 2024.
Subject to our ability to obtain required financing and access financial markets, we expect to continue to evaluate opportunities to acquire vessels and businesses. As of June 30, 2024, we have the following outstanding commitments for the acquisition of vessel owning companies from a related party and vessels under construction that will be financed through the issuance of debt and cash at hand:
| Year ending June 30, | Acquisition of vessel owning companies from CMTC pursuant to the Umbrella Agreement | Vessels under construction | Total | |||
| 2025 | $ | — | $ | 171.4 | $ | 171.4 |
| 2026 | 486.0 | 369.2 | 855.2 | |||
| 2027 | — | 913.6 | 913.6 | |||
| 2028 | — | 35.9 | 35.9 | |||
| Total | $ | 486.0 | $ | 1,490.1 | $ | 1,976.1 |
Furthermore, we have outstanding commitments relating to supervision services agreements for vessels under construction amounting to $6.4 million.
We do not anticipate any of our vessels to undergo a special survey in the next twelve months.
As of June 30, 2024, total partners’ capital amounted to $1,230.0 million, an increase of $55.1 million compared to $1,174.9 million as of December 31, 2023. The increase reflects net income of $68.1 million for the six-months ended June 30, 2024, other comprehensive income of $0.2 million relating to the net effect of the cross-currency swap agreement we designated as an accounting hedge and the amortization associated with the equity incentive plan of $3.5 million, partly offset by distributions declared and paid during the period in a total amount of $16.7 million.
Subject to shipping, charter and financial market developments, we believe that our working capital will be sufficient to meet our existing liquidity needs for at least the next 12 months.
Cash Flows
The following table summarizes our cash and cash equivalents and restricted cash provided by / (used in) operating, investing and financing activities for the periods, presented in millions of United States dollars:
| For the six-month periods ended June 30, | ||||
| 2024 | 2023 | |||
| Net Cash Provided by Operating Activities | $ | 103.4 | $ | 91.5 |
| Net Cash Used in Investing Activities | (863.7) | (455.8) | ||
| Net Cash Provided by Financing Activities | $ | 657.5 | $ | 314.1 |
| 7 |
Net Cash Provided by Operating Activities
Net cash provided by operating activities was $103.4 million for the six-month period ended June 30, 2024, compared to $91.5 million for the six-month period ended June 30, 2023. The increase of $11.9 million was mainly attributable to the increase in revenues, and the increase in accrued and other liabilities partly offset by the increase in interest expense and finance costs, in prepayments and other assets, in trade receivables and in inventories and the decrease in revenue received in advance and amounts due to related parties, net.
Net Cash Used in Investing Activities
Net cash used in investing activities refers primarily to cash used for vessel acquisitions and improvements. Net cash used in investing activities during the six-month period ended June 30, 2024, amounted to $863.7 million compared to $455.8 million during the corresponding period in 2023.
During the six-month period ended June 30, 2024 we paid $948.8 million to acquire the shares of the companies owning the LNG/C Axios II, the LNG/C Aktoras, the LNG/C Apostolos, and the LNG/C Assos and we paid advances for vessels under construction of $184.4 million and paid $2.3 million for vessel improvements. In addition, during the six-month period ended June 30, 2024, we received net sale proceeds of $271.8 million from the disposal of the M/V Long Beach Express, the M/V Akadimos, the M/V Athenian, the M/V Athos, the M/V Aristomenis, the M/V Seattle Express and the M/V Fos Express.
During the six-month period ended June 30, 2023, we paid $451.0 million to acquire the shares of the companies owning the M/V Itajai Express, the LNG/C Asterix I, and the M/V Buenaventura Express and we paid $4.8 million for vessel improvements.
Net Cash Provided by Financing Activities
Net cash provided by financing activities for the six-month period ended June 30, 2024, was $657.5 million representing cash proceeds of $1,017 million from the issuance of five new financing arrangements that we entered into in order to partly finance the acquisition of the shares of the companies owning the LNG/C Axios II, the LNG/C Apostolos, the LNG/C Aktoras, the LNG/C Assos, and the refinancing of the LNG/C Arisitidis I, partly offset by $333.8 million of long term debt payments, the $8.9 million we paid in financing costs, and the $16.7 million of dividends we paid to our unit holders.
Net cash provided by financing activities for the six-month period ended June 30, 2023, was $314.1 million representing mainly cash proceeds of $392.0 million from the issuance of three new financing arrangements that we entered into in order to partly finance the acquisition of the shares of the companies owning the M/V Itajai Express, the LNG/C Asterix I and the M/V Buenaventura Express, partly offset by $3.4 million we paid in financing costs, the $64.5 million in long term debt payments, $3.8 million paid to acquire CPLP units under our repurchase program and $6.2 million of dividends to our unit holders.
Borrowings (Financing Arrangements)
Our long-term borrowings are reflected in our balance sheet in long-term liabilities as “Long-term debt, net” and in current liabilities as “Current portion of long-term debt, net”.
As of June 30, 2024, and December 31, 2023, total borrowings of $2,596.5 million and $1,787.8 million were outstanding under our financing arrangements respectively.
Debt issuance:
Refinancing of “2021 CMBFL” Sale and lease-back facilities with the “2024 – 2xLNG/C Bocomm”
On August 23, 2024, CPLP entered into two separate sale and lease back agreements for the vessels LNG/C Asklipios and the LNG/C Attalos in an amount of $162.5 million each to refinance the outstanding balance of $250.4 million under the sale and lease back arrangements that the vessel-owning companies had entered into with CMB Financial Leasing Co., Ltd (“CMBFL”) in 2021. The new lease agreements of the LNG/C Attalos and the LNG/C Asklipios have remaining durations, starting from August 29, 2024, when the refinancing took place, of 7 years.
Refinancing of “2021 credit facility” with the “2024 – LNG/C Aristidis I credit facility”
On June 25, 2024, we entered into a new credit facility with National Bank of Greece S.A. (“NBG”), of up to $155.0 million, in order to fully repay the debt facility with ING Bank N.V., London Branch (“ING”) that we assumed in December 2021 amounting to $99.4 million, to partially finance the acquisition of the vessel-owning company of the LNG/C Aristidis I and for general corporate purposes. We drew down the full amount of the new facility on June 26, 2024. The facility has a duration of seven years.
the “2024 Jolco LNG/C Apostolos”
On June 25, 2024, we entered into a Japanese operating lease agreement with a call option of up to $240.0 million, with the purpose of replacing the bridge debt facility with BNP Paribas (“BNP”) that we entered into on June 20, 2024 (the “2024 – LNG/C Apostolos credit facility”) amounting to $192.0 million, to partially finance the acquisition of the vessel-owning company of the LNG/C Apostolos. We drew down the full amount of the 2024 Jolco LNG/C Apostolos on July 16, 2024. The sale and lease back agreement has a duration of eight years.
the “2024 – LNG/C Aktoras credit facility”
On May 31, 2024, we entered into a new credit facility with Piraeus Bank S.A. (“Piraeus”), of up to $240.0 million (the “2024 – LNG/C Aktoras credit facility”), in order to partially finance the acquisition of the vessel-owning company of the LNG/C Aktoras. We drew down the full amount of the facility in June 2024. The facility has a duration of seven years.
the “2021 Bocomm”
On May 14, 2024, we agreed with Bank of Communications Financial Leasing Co., Ltd (“Bocomm”) to amend certain of the terms included in two separate sale and lease back agreements that the companies owning the vessels LNG/C Aristos I and the LNG/C Aristarchos had entered into with Bocomm in 2021. Specifically, effective from May 14th , 2024, we agreed to reduce the interest we pay on the outstanding amount and extended the maturity for both facilities by two years.
| 8 |
the “2023 Jolco LNG/C Assos”
On December 22, 2023, we entered into a new Japanese operating lease agreement with a call option (the “2023 Jolco LNG/C Assos”) of up to $240.0 million, to partially finance the acquisition of the vessel-owning company of the LNG/C Assos. We drew down the full amount of the facility in May 2024. The 2023 LNG/C Assos Jolco, has a duration of eight years.
the “Umbrella Seller’s Credit”
On December 21, 2023, upon entering the Umbrella Agreement we entered into an unsecured seller’s credit agreement with CMTC, the (“Umbrella Seller’s Credit”) in an amount of up to $220.0 million in order to finance a portion of the purchase price of the 11 new 174,000 CBM LNG/C vessels. The Umbrella Seller’s Credit provides for interest at a rate of 7.5% per annum and matures on June 30, 2027. On June 28, June 5 and January 2, 2024, upon the deliveries of the LNG/C Apostolos, the LNG/C Aktoras and the LNG/C Axios II, we used $134.8 million in total of the amounts available under the Umbrella Sellers Credit. On February 28, March 11 and April 24, 2024, after the deliveries of the M/V Long Beach Express, the M/V Akadimos and the M/V Athenian to their new owners, we repaid $92.6 million in total, of the outstanding amounts under the Umbrella Sellers Credit.
“2024 – LNG/C Axios II credit facility”
On December 20, 2023, we entered into a new credit facility, the “2024 – LNG/C Axios II credit facility”, of up to $190,000 to partially financing the acquisition of the vessel-owning company of the LNG/C Axios II. We drew down the full amount of the facility on January 2, 2024. The facility has a duration of seven years.
Debt repayments:
On March 8, 2024 and on April 22 and 26, 2024 upon the delivery of the M/V Akadimos, the M/V Athos and the M/V Aristomenis to their new owners, we fully repaid the then outstanding balance of the “ICBCFL sale and lease back” and the “2020 CMBFL” (as defined in the Annual Report) in a total amount of $88.9 million.
For information relating to our credit facilities, sale and lease back agreements and unsecured bonds, please refer to Note 7 of our audited Consolidated Financial Statements included in our Annual Report and Note 7 to our unaudited interim condensed consolidated financial statements and the descriptions above in “Debt additions and repayments” and “Liquidity and Capital Resources”.
As of June 30, 2024, and December 31, 2023, we were in compliance with all financial debt covenants. Our ability to comply with the covenants and restrictions contained in our financing arrangements and any other debt instruments we may issue or enter into in the future may be affected by events beyond our control, including prevailing economic, financial and industry conditions, such as interest rate developments, changes in the funding costs offered by our banks and changes in asset valuations. If market or other economic conditions deteriorate, our ability to comply with these covenants may be impaired. If we are in breach of any of the restrictions, covenants, ratios or tests included in our financing arrangements, we are unlikely to be able to make any distributions to our unit holders, a significant portion of our obligations may become immediately due and payable and our lenders’ commitment to make further loans to us, if any, may terminate. We may not have, or be able to obtain, sufficient funds to make these accelerated payments. In addition, obligations under our financing arrangements are secured by certain of our vessels, and if we are unable to repay debt under our financing arrangements, the lenders could seek to foreclose on those assets. More specifically, 15 vessels with an aggregate net book value of $3.2 billion as of June 30, 2024, have been provided as collateral under the terms of our credit facilities or the title of ownership is held by the relevant lender under our sale and lease back agreements. This excludes five unencumbered vessels of an aggregate net book value of $0.2 billion as of June 30, 2024.
Any contemplated vessel acquisitions will have to be at levels that do not impair the required ratios, see “Item 5.B. Liquidity and Capital Resources—Borrowings (Financing Arrangements)” in our Annual Report. If the estimated asset values of vessels in our fleet decrease, we may be obligated to prepay part of our outstanding debt in order to remain in compliance with the relevant covenants in our financing arrangements. A decline in the market value of our vessels could also affect our ability to refinance our financing arrangements and/or limit our ability to obtain additional financing. As of June 30, 2024, a decrease of 10% in the aggregate fair market values of our vessels would not cause any violation of the total indebtedness to aggregate market value covenant contained in our financing arrangements.
Off-Balance Sheet Arrangements
As of June 30, 2024, we have not entered into any off-balance sheet arrangements.
Critical Accounting Estimates
A discussion of our critical accounting estimates can be found in our Annual Report.
Changes in Accounting Policies
See Note 2 to our unaudited interim condensed consolidated financial statements included elsewhere herein.
| 9 |
INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
| F- 1 |
Capital Product Partners L.P. Unaudited Condensed Consolidated Balance Sheets (In thousands of United States Dollars) |
| As of June 30, 2024 | As of December 31, 2023 | |||
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | $ | $ | ||
| Trade accounts receivable, net | ||||
| Prepayments and other assets | ||||
| Due from (Note 4) | ||||
| Inventories | ||||
| Claims | ||||
| Assets held for sale (Note 5) | ||||
| Total current assets | ||||
| Fixed assets | ||||
| Advances for vessels under construction – related party (Note 5) | ||||
| Vessels, net and vessels under construction (Note 5) | ||||
| Total fixed assets | ||||
| Other non-current assets | ||||
| Above market acquired charters (Note 6) | ||||
| Deferred charges, net | ||||
| Restricted cash | ||||
| Derivative asset (Note 8) | | |||
| Prepayments and other assets | ||||
| Total non-current assets | ||||
| Total assets | $ | $ | ||
| Liabilities and Partners’ Capital | ||||
| Current liabilities | ||||
| Current portion of long-term debt, net (Note 7) | $ | $ | ||
| Trade accounts payable | ||||
| Due to (Note 4) | ||||
| Accrued and other liabilities | ||||
| Deferred revenue | ||||
| Below market acquired charters associated with vessels held for sale | ||||
| Total current liabilities | ||||
| Long-term liabilities | ||||
| Long-term debt, net (including $ |
||||
| Derivative liabilities (Note 8) | ||||
| Below market acquired charters (Note 6) | ||||
| Deferred revenue | ||||
| Total long-term liabilities | ||||
| Total liabilities | ||||
| Commitments and contingencies (Note 13) | ||||
| Total partners’ capital | ||||
| Total liabilities and partners’ capital | $ | $ |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F- 2 |
Capital Product Partners L.P. Unaudited Condensed Consolidated Statements of Comprehensive Income (In thousands of United States Dollars, except for number of units and earnings per unit) |
| For the six-month periods ended June 30, | ||||
| 2024 | 2023 | |||
| Revenues (Note 3) | $ | $ | ||
| Expenses / (income), net: | ||||
| Voyage expenses | ||||
| Vessel operating expenses | ||||
| Vessel operating expenses - related parties (Note 4) | ||||
| General and administrative expenses (including $ |
||||
| Vessel depreciation and amortization (Note 5) | ||||
| Impairment of vessel | ||||
| Gain on sale of vessels (Note 5) | ( |
|||
| Operating income, net | ||||
| Other income / (expense), net: | ||||
| Interest expense and finance cost | ( |
( | ||
| Other income, net | ||||
| Total other expense, net | ( |
( | ||
| Partnership’s net income | $ | $ | ||
| General Partner’s interest in Partnership’s net income | ||||
| Partnership’s net income allocable to unvested units | ||||
| Common unit holders’ interest in Partnership’s net income | ||||
| Net income per (Note 12): | ||||
| · Common unit, basic and diluted | $ | $ | ||
| Weighted-average units outstanding: | ||||
| · Common unit, basic and diluted | ||||
| Partnership’s net income | ||||
| Other comprehensive income: | ||||
| Unrealized gain on derivative instruments (Note 8) | ||||
| Partnership’s comprehensive income | $ | $ | ||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F- 3 |
Capital Product Partners L.P. Unaudited Condensed Consolidated Statements of Changes in Partners’ Capital (In thousands of United States Dollars) |
| General Partner | Common Unitholders | Treasury units | Accumulated Other Comprehensive Loss | Total | ||||||
| Balance at January 1, 2023 | $ | $ | $ | ( |
$ | ( |
$ | |||
| Dividends declared / paid (distributions of $ per common unit) (Note 10) | ( |
( |
( | |||||||
| Partnership’s net income | |
|||||||||
| Equity compensation expense (Note 11) | ||||||||||
| Repurchase of common units | ( |
( | ||||||||
| Other Comprehensive income (Note 8) | ||||||||||
| Balance at June 30, 2023 | $ | $ | $ | ( |
$ | ( |
$ | |||
| General Partner | Common Unitholders | Treasury units | Accumulated Other Comprehensive Loss | Total | ||||||
| Balance at January 1, 2024 | $ | $ | $ | ( |
$ | ( |
$ | |||
| Dividends declared / paid (distributions of $ per common unit) (Note 10) | ( |
( |
( | |||||||
| Partnership’s net income | ||||||||||
| Equity compensation expense (Note 11) | ||||||||||
| Other comprehensive income (Note 8) | ||||||||||
| Balance at June 30, 2024 | $ | $ | $ | ( |
$ | ( |
$ | |||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F- 4 |
Capital Product Partners L.P. Unaudited Condensed Consolidated Statements of Cash Flows (In thousands of United States Dollars) |
| For the six-month periods ended June 30, | ||||
| 2024 | 2023 | |||
| Cash flows from operating activities: | ||||
| Net income | $ | $ | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||
| Vessel depreciation and amortization (Note 5) | ||||
| Gain on sale of vessels | ( |
|||
| Impairment of vessel | ||||
| Amortization and write-off of deferred financing costs | ||||
| Amortization / accretion of above / below market acquired charters (Note 6) | ||||
| Amortization of ineffective portion of derivatives | ( |
( | ||
| Equity compensation expense (Note 11) | ||||
| Change in fair value of derivatives (Note 8) | ( | |||
| Unrealized bonds exchange differences (Note 7) | ( |
|||
| Changes in operating assets and liabilities: | ||||
| Trade accounts receivable, net | ( |
( | ||
| Prepayments and other assets | ||||
| Due from related party | ||||
| Inventories | ||||
| Claims | ||||
| Trade accounts payable | ||||
| Due to related parties | ( |
|||
| Accrued and other liabilities | ||||
| Deferred revenue | ( |
|||
| Dry-docking costs paid | ( |
|||
| Net cash provided by operating activities | ||||
| Cash flows from investing activities: | ||||
| Vessel acquisitions, vessels under construction and improvements including time charter agreements (Notes 5, 6) | ( |
( | ||
| Net proceeds from sale of vessels (Note 5) | ||||
| Net cash used in investing activities | ( |
( | ||
| Cash flows from financing activities: | ||||
| Proceeds from long-term debt (Note 7) | ||||
| Deferred financing costs paid | ( |
( | ||
| Payments of long-term debt (Note 7) | ( |
( | ||
| Repurchase of common units | ( | |||
| Dividends paid (Note 10) | ( |
( | ||
| Net cash provided by financing activities | ||||
| Net decrease in cash, cash equivalents and restricted cash | ( |
( | ||
| Cash, cash equivalents and restricted cash at beginning of period | ||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | ||
| Supplemental cash flow information | ||||
| Cash paid for interest | ||||
| Non-Cash Investing and Financing Activities | ||||
| Capital expenditures included in liabilities | ||||
| Capitalized dry-docking costs included in liabilities | ||||
| Deferred financing costs included in liabilities | ||||
| Expenses for sale of vessels included in liabilities (Note 5) | ||||
| Seller’s credit agreement in connection with the acquisition of vessel-owning companies (Notes 4, 5, 7) | ||||
| Reconciliation of cash, cash equivalents and restricted cash | ||||
| Cash and cash equivalents | ||||
| Restricted cash - non-current assets | ||||
| Total cash, cash equivalents and restricted cash shown in the statements of cash flows | $ | $ | ||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F- 5 |
Capital Product Partners L.P. Notes to the Unaudited Condensed Consolidated Financial Statements (In thousands of United States Dollars) |
1. Basis of Presentation and General Information
Capital Product Partners L.P. (the “Partnership or CPP”) was formed on
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all the information and notes required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated financial statements and the accompanying notes should be read in conjunction with the Partnership’s consolidated financial statements for the year ended December 31, 2023, included in the Partnership’s Annual Report on Form 20-F for the fiscal year ended December 31, 2023, filed with the U.S. Securities and Exchange Commission (the“SEC”) on April 23, 2024.
These unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation of the Partnership’s financial position, results of operations and cash flows for the periods presented. Operating results for the six-month period ended June 30, 2024, are not necessarily indicative of the results that might be expected for the fiscal year ending December 31, 2024.
2. Significant Accounting Policies
A discussion of the Partnership’s significant accounting policies can be found in the Partnership’s Consolidated Financial Statements included in the Annual Report on Form 20-F for the year ended, December 31, 2023 (the “Consolidated Financial Statements for the year ended December 31, 2023”).
3. Revenues
The following table shows the net revenues earned from time and voyage charters contracts for the six-month periods ended June 30, 2024, and 2023:
| For the six-month periods ended June 30, | ||||
| 2024 | 2023 | |||
| Time and bareboat charters (operating leases) | $ | $ | ||
| Voyage charters | ||||
| Total | $ | $ | ||
As of June 30, 2024, all of the Partnership’s vessels were employed under time and bareboat charter agreements with remaining tenor ranging between
4. Transactions with related parties
Capital Maritime & Trading Corp. (“CMTC”) is an international shipping company with a long history of operating and investing in the shipping market. As of June 30, 2024, and December 31, 2023, CMTC may be deemed to beneficially own
Capital Gas Corp. is a privately held company controlled by Mr. Miltiadis Marinakis the son of Mr. Evangelos M. Marinakis who also controls Capital GP L.L.C. (“CGP”), our General Partner prior to our conversion from a Marshall Islands limited partnership to a Marshall Islands corporation on August 26, 2024 (Note 14). As of June 30, 2024, and December 31, 2023, Capital Gas Corp. may be deemed to have beneficially owned
On June 3, 2024, the Partnership announced an investment in
Upon entering the above SPAs each of the 10 vessel-owning companies of the Gas Vessels entered into a separate supervision services agreement with Capital Gas Ship Management Corp. (“Capital-Gas”). On June 17, 2024, the Partnership paid Capital Gas the amount of $
| F- 6 |
Capital Product Partners L.P. Notes to the Unaudited Condensed Consolidated Financial Statements (In thousands of United States Dollars) |
4. Transactions with related parties – Continued
An analysis of the Gas Vessels is as follows:
| Vessel Type | Hull No. | Cubic Meters (“CBM”) | Shipyard | Estimated Delivery | Amount paid to CMTC for the acquisition of the vessel-owning companies of the Gas Vessels |
| MGC1 | 8424 | ||||
| MGC | 8425 | ||||
| MGC | 8426 | ||||
| MGC | 8427 | ||||
| MGC | S1111 | ||||
| MGC | S1112 | ||||
| LCO22 – HMGC3 | 8398 | ||||
| LCO2 – HMGC | 8399 | ||||
| LCO2 – HMGC | 8404 | ||||
| LCO2 – HMGC | 8405 | ||||
| Total | $ |
| 1. | Medium Gas Carrier – 2. Liquefied CO₂ Multi Gas Carrier – 3. Handy Multi Gas Carrier |
During the six-month period ended June 30, 2024, pursuant to the umbrella agreement (the “Umbrella Agreement”) the Partnership entered into with Capital Maritime & Trading Corp. (“CMTC”) and CGP in November 2023, CPP acquired from CMTC the shares of the vessel-owning companies of the LNG/C Axios II, the LNG/C Assos, the LNG/C Aktoras and the LNG/C Apostolos for a total consideration of $
On February 28, March 11 and April 24, 2024, after the deliveries of the M/V Long Beach Express, the M/V Akadimos and the M/V Athenian to their new owners, the Partnership repaid the amounts of $
Further to the transactions described above with CMTC the Partnership and its subsidiaries have related party transactions with Capital Ship Management Corp. (“CSM”), Capital-Executive Ship Management Corp. (“Capital-Executive”), Capital-Gas, (collectively “Managers”), and the Partnership’s general partner, CGP arising from certain terms of the following management and administrative services agreements.
| 1. | Floating fee management agreements: Under the terms of these agreements the Partnership compensates its Managers for expenses and liabilities incurred on the Partnership’s behalf while providing the agreed services, including, but not limited to, crew, repairs and maintenance, insurance, stores, spares, lubricants and other operating costs. Costs and expenses associated with a managed vessel’s next scheduled dry docking are borne by the Partnership and not by the Managers. The Partnership also pays its Managers a daily technical management fee per managed vessel that is revised annually based on the United States Consumer Price Index. For the six-month period ended June 30, 2024, and 2023, management fees under the management agreements amounted to $ |
| 2. | Fixed fee management agreements: Under the terms of these agreements the Partnership pays a fixed daily fee per bareboat chartered vessel in its fleet, mainly to cover commercial and administrative costs. For the six-month period ended June 30, 2024, and 2023, management fees under the management agreements amounted to $ |
| F- 7 |
Capital Product Partners L.P. Notes to the Unaudited Condensed Consolidated Financial Statements (In thousands of United States Dollars) |
4. Transactions with related parties - Continued
| 3. | Administrative and service agreements: On April 4, 2007, the Partnership entered into an administrative services agreement with CSM, pursuant to which CSM has agreed to provide certain administrative management services to the Partnership such as accounting, auditing, legal, insurance, IT and clerical services. In addition, the Partnership reimburses CSM and CGP for reasonable costs and expenses incurred in connection with the provision of these services, after CSM submits to the Partnership an invoice for such costs and expenses together with any supporting detail that may be reasonably required. These expenses are included in “General and administrative expenses” in the unaudited condensed consolidated statements of comprehensive income. In 2015, the Partnership entered into an executive services agreement with CGP, which was amended in 2016, 2019 and 2023, according to which CGP provides certain executive officers services for the management of the Partnership’s business as well as investor relation and corporate support services to the Partnership. For the six-month periods ended June 30, 2024, and 2023 the fees under the executive services agreement with CGP amounted to $ |
Balances and transactions with related parties consisted of the following:
| Consolidated Balance Sheets | As of June 30, 2024 | As of December 31, 2023 | ||
| Assets: | ||||
| CMTC-amounts relating to vessels acquisitions (a) | $ | $ | ||
| Capital-Gas – advances from the Partnership (b) | ||||
| Due from related party | $ | $ | ||
| Liabilities: | ||||
| CSM – payments on behalf of the Partnership (c) | $ | $ | ||
| Capital-Executive – payments on behalf of the Partnership (c) | ||||
| CMTC-amounts relating to vessels acquisitions (a) | $ | $ | ||
| Capital-Gas – payments on behalf of the Partnership (c) | ||||
| Due to related parties | $ | $ | ||
| For the six-month periods ended June 30, | ||||
| Consolidated Statements of Comprehensive Income | 2024 | 2023 | ||
| Vessel operating expenses | $ | $ | ||
| General and administrative expenses (d) | ||||
(a) |
|
| (b) |
|
| (c) |
|
| (d) |
| F- 8 |
Capital Product Partners L.P. Notes to the Unaudited Condensed Consolidated Financial Statements (In thousands of United States Dollars) |
5. Fixed Assets and Assets Held for Sale
Fixed assets
| a. | Vessels, net |
The following table presents an analysis of vessels, net:
| Vessel cost | Accumulated depreciation | Net book value | ||||
| Balance as at January 1, 2024 | $ | $ | ( |
$ | ||
| Vessel acquisitions | — | |||||
| Vessel disposals | ( |
( | ||||
| Improvements | — | |||||
| Depreciation for the year | — | ( |
( | |||
| Balance as at June 30, 2024 | $ | ( |
||||
Vessel acquisitions
Pursuant to the Umbrella Agreement during the six-month period ended June 30, 2024, the Partnership acquired from CMTC the shares of the vessel-owning companies of the below vessels:
| Vessel | Delivery Date | Consideration | Debt (Note 7) | Umbrella Seller’s Credit (Note 7) | Advances paid to CMTC in December 2023 | Cash paid to CMTC on the delivery date | |||||
| Axios II | $ | $ | $ | $ | $ | ||||||
| Assos | |||||||||||
| Aktoras | |||||||||||
| Apostolos | |||||||||||
| Total | $ | $ | $ | $ | $ |
The Partnership accounted for these acquisitions as acquisitions of assets since the fair value of the vessels and the time and bareboat charters attached are concentrated in a single identifiable asset. The Partnership considered whether any value should be assigned to the attached charter party agreements acquired and concluded that the contracted daily charter rate was above the market rate on the acquisition date and therefore the total consideration was allocated to the vessel’s cost and the above market acquired charter for the LNG/C Axios II, the LNG/C Apostolos and the LNG/C Aktoras and for the LNG/C Assos the contracted daily charter rate was below the market rate on the acquisition date and therefore the total consideration was allocated to the vessel’s cost and the below market acquired charter (Note 6). The Partnership allocated the cost of the vessels and the time and bareboat charters acquired on the basis of their relative fair values.
The vessels were recorded in the Partnership’s financial statements at a total value of $
| F- 9 |
Capital Product Partners L.P. Notes to the Unaudited Condensed Consolidated Financial Statements (In thousands of United States Dollars) |
5. Fixed Assets and Assets Held for Sale – Continued
Fixed assets – Continued
| a. | Vessels, net - Continued |
Improvements
During the six-month periods ended June 30, 2024, and 2023, certain of the Partnership’s vessels underwent improvements. The costs of these improvements amounted to $
Vessel disposals
During the six-month period ended June 30, 2024, the Partnership entered into six memoranda of agreement (“MOA”) with third parties for the sale of the below vessels. The Partnership entered into these MOAs based on its strategic decision to focus on the energy transition while at the same time taking advantage of the attractive vessel valuations. The six vessels met the criteria to be classified as held for sale. As of the MOAs dates the vessels’ fair values less estimated costs to sell exceeded their carrying amount, so
| Vessel | MOA date | MOA Price | Delivery Date | |
| M/V Akadimos | $ | |||
| M/V Seattle Express | ||||
| M/V Fos Express | ||||
| M/V Athenian | ||||
| M/V Athos | ||||
| M/V Aristomenis | ||||
| Total | $ |
For the six-month period ended June 30, 2024, the Partnership recognized a gain on sale of vessels analysed as follows:
| Vessel | Sale price | Carrying value on sale | Other sale expenses | Gain on sale | ||||
| M/V Akadimos | $ | $ | ( |
$ | ( |
$ | ||
| M/V Seattle Express | ( |
( |
( | |||||
| M/V Fos Express | ( |
( |
( | |||||
| M/V Athenian | ( |
( |
||||||
| M/V Athos | ( |
( |
||||||
| M/V Aristomenis | ( |
( |
||||||
| Total | $ | $ | ( |
$ | ( |
$ | ||
| F- 10 |
Capital Product Partners L.P. Notes to the Unaudited Condensed Consolidated Financial Statements (In thousands of United States Dollars) |
5. Fixed Assets and Assets Held for Sale – Continued
Fixed assets – Continued
| b. | Vessels under construction |
The following table presents an analysis of vessels under construction:
| Vessels under construction cost | ||
| Balance as at January 1, 2024 | $ | |
| Advances for vessels under construction | ||
| Balance as at June 30, 2024 | $ | |
During the six-month period ended June 30, 2024, the Partnership paid advances of $
| c. | Advances for vessels under construction-related party |
Pursuant to the Umbrella Agreement in December 2023 the Partnership paid to CMTC a deposit of $
The following table presents an analysis of advances for vessels under construction-related party:
| Advances for vessels under construction-related party | ||
| Balance as at January 1, 2024 | $ | |
| Transfer to vessels, net | ( | |
| Balance as at June 30, 2024 | $ | |
| d. | Assets held for sale |
An analysis of assets held for sale is as follows:
| Assets held for sale | ||
| Balance as at January 1, 2024 | $ | |
| Disposal of vessel | ( | |
| Balance as at June 30, 2024 | $ | |
On December 15, 2023, the Partnership agreed to sell to an unaffiliated party the M/V Long Beach Express along with its time charter attached (Note 6), at a price of $
| F- 11 |
Capital Product Partners L.P. Notes to the Unaudited Condensed Consolidated Financial Statements (In thousands of United States Dollars) |
6. Above / below market acquired charters
During the six-month period ended June 30, 2024, the Partnership acquired the LNG/C Axios II, the LNG/C Apostolos and the LNG/C Aktoras with time and bareboat charter daily rates being above the market rates for equivalent time and bareboat charters prevailing at the time of acquisitions (Note 5a). During the six-month period ended June 30, 2024, the Partnership also acquired the LNG/C Assos with time charter attached to the vessel, with time charter daily rate being below market rate for equivalent time charter prevailing at the time of acquisition (Note 5a).
The fair value of the time and the bareboat charters attached to the vessels representing the difference between the time and the bareboat charter rates at which the vessels were fixed and the market rates for comparable charters as determined by reference to market data on the acquisition dates were recorded as “Above market acquired charters” under other non-current assets or “Below market acquired charters” under long-term liabilities in the unaudited condensed consolidated balance sheet as of the acquisition dates, respectively. The fair values of the time and the bareboat charters attached were determined using Level 2 inputs being market values on the acquisition dates (Note 9).
During the six-month period ended June 30, 2024, the Partnership disposed of the M/V Seattle Express and the M/V Fos Express along with their time charters attached (Note 5a).
Above / below market time and bareboat charters acquired are amortized / accreted using the straight-line method as a reduction / increase to revenues over the remaining term of the charters. For the six-month periods ended June 30, 2024, and 2023 such amortization and accretion to time and bareboat charter revenues for the above and below market acquired time and bareboat charters amounted to $
An analysis of above / below market acquired time and bareboat charters is as follows:
| Above market acquired charters | Below market acquired charters | |||
| Carrying amount as at January 1, 2024 | $ | $ | ( | |
| Additions | ( | |||
| Disposals | ||||
| (Amortization) / accretion | ( |
|||
| Carrying amount as at June 30, 2024 | $ | $ | ( |
As of June 30, 2024, the remaining carrying amount of unamortized above / below market acquired time and bareboat charters was $
| For the twelve-month periods ended June 30, | Above market acquired charters | Below market acquired charters | ||
| 2025 | $ | $ | ( | |
| 2026 | ( | |||
| 2027 | ( | |||
| 2028 | ( | |||
| 2029 | ( | |||
| Thereafter | ( | |||
| Total | $ | $ | ( |
| F- 12 |
Capital Product Partners L.P. Notes to the Unaudited Condensed Consolidated Financial Statements (In thousands of United States Dollars) |
7. Long-term debt, net
Long-term debt consists of the following credit facilities, sale and lease back agreements, seller’s credits and unsecured bonds collectively the “financing arrangements”. As of June 30, 2024 and December 31, 2023, the following amounts were outstanding under our financing arrangements:
| As of June 30, 2024 | As of December 31, 2023 | Rate of interest | ||||
| Credit facilities | ||||||
| (i) | Issued in January 2021 maturing in February 2026 (the “CMTC Seller’s Credit”) | $ | $ | |||
| (ii) | Issued in December 2023 maturing in June 2027 (the “Umbrella Seller’s Credit”) | |||||
| (iii) | Assumed in December 2021 fully repaid in June 2024 (the “2021 credit facility”) | |||||
| (iv) | Issued in October 2022 maturing in October 2028 (the “2022 credit facility”) | |||||
| (v) | Issued in June 2023 maturing in June 2031 (the “2023 credit facility”) | |||||
| (vi) | Issued in December 2023 maturing in December 2030 (the “2024 – LNG/C Axios II credit facility ”) | |||||
| (vii) | Issued in May 2024 maturing in June 2031 (the “2024 – LNG/C Aktoras credit facility”) | |||||
| (viii) | Issued in June 2024 maturing in June 2031 (the “2024 – LNG/C Aristidis I credit facility”) | |||||
| (ix) | Issued in June 2024 maturing in July 2032 (the “2024 – LNG/C Apostolos credit facility”) | |||||
| Sale and lease back agreements | ||||||
| (x) | Issued in January 2020 fully repaid in April 2024 (the “2020 CMBFL”) | |||||
| (xi) | Issued in January 2020 fully repaid in April 2024 (the “2020 CMBFL”) | |||||
| (xii) | Issued in May 2020 fully repaid in March 2024 (the “ICBCFL”) | |||||
| (xiii) | Assumed in September 2021 maturing in November 2029 (the “2021 Bocomm”) | |||||
| (xiv) | Assumed in September 2021 maturing in June 2030 (the “2021 Bocomm”) | |||||
| (xv) | Assumed in November 2021 maturing in August 2028 (the “2021 CMBFL - LNG/C”) | |||||
| (xvi) | Assumed in November 2021 maturing in September 2028 (the “2021 CMBFL - LNG/C”) | |||||
| (xvii) | Assumed in November 2021 maturing in July 2036 (the “2021 Shin Doun”) | |||||
| (xviii) | Issued in December 2022 maturing in January 2031 (the “2022 Jolco”) | |||||
| (xix) | Issued in February 2023 maturing in February 2033 (the “2023 CMBFL - LNG/C”) | |||||
| (xx) | Assumed in December 2023 maturing in October 2033 (the “2023 CMBFL - LNG/C AMI”) | |||||
| (xxi) | Issued in December 2023 maturing in May 2032 (the “2023 – LNG/C Assos Jolco”) | |||||
| Unsecured Bonds | ||||||
| (xxii) | Issued in October 2021 maturing in October 2026 (the “2021 Bonds”) | |||||
| (xxiii) | Issued in July 2022 maturing in July 2029 (the “2022 Bonds”) | |||||
| Total long-term debt | ||||||
| Less: Deferred loan and financing arrangements issuance costs | ||||||
| Total long-term debt, net | ||||||
| Less: Current portion of long-term debt | ||||||
| Add: Current portion of deferred loan and financing arrangements issuance costs | ||||||
| Long-term debt, net | $ | $ |
| F- 13 |
Capital Product Partners L.P. Notes to the Unaudited Condensed Consolidated Financial Statements (In thousands of United States Dollars) |
7. Long-term debt, net – Continued
Details of the Partnership’s financing arrangements are discussed in Note 7 of the Partnership’s Consolidated Financial Statements for the year ended December 31, 2023.
“2024 – LNG/C Aristidis I credit facility”
On June 25, 2024, the vessel-owning company of the LNG/C Aristidis I entered into a new credit facility, the “2024 – LNG/C Aristidis I credit facility”, of up to $
“2021 credit facility”
On June 28, 2024, the Partnership fully repaid $
“2024 – LNG/C Apostolos Jolco”
On June 25, 2024, the vessel-owning company of the LNG/C Apostolos entered into a new sale and lease back agreement, the “2024 – LNG/C Apostolos Jolco”, of up to $
“2024 – LNG/C Apostolos credit facility”
On June 20, 2024, the vessel-owning company of the LNG/C Apostolos entered into a new credit facility, the “2024 – LNG/C Apostolos credit facility”, of up to $
“2024 – LNG/C Aktoras credit facility”
On May 31, 2024, the vessel-owning company of the LNG/C Aktoras entered into a new credit facility, the “2024 – LNG/C Aktoras credit facility”, of up to $
“2021 Bocomm”
On May 14, 2024, we agreed with Bank of Communications Financial Leasing Co., Ltd (“Bocomm”) to
“2023 – LNG/C Assos Jolco”
On December 22, 2023, the Partnership entered into a new sale and lease back agreement of up to $
“2024 – LNG/C Axios II credit facility”
On December 20, 2023, the vessel-owning company of the LNG/C Axios II entered into a new credit facility, the “2024 – LNG/C Axios II credit facility”, of up to $
| F- 14 |
Capital Product Partners L.P. Notes to the Unaudited Condensed Consolidated Financial Statements (In thousands of United States Dollars) |
7. Long-term debt, net – Continued
“Umbrella Seller’s Credit”
On December 21, 2023, upon entering the Umbrella Agreement the Partnership entered into an unsecured seller’s credit agreement with CMTC, the “Umbrella Seller’s Credit” for an amount of up to $
“ICBCFL sale and lease back”
On March 8, 2024, upon the delivery of the M/V Akadimos to its new owner the Partnership repaid in full the ICBCFL sale and lease back agreement amounting to $
“2020 CMBFL sale and lease back”
On April 22 and 26, 2024 upon the delivery of the M/V Athos and the M/V Aristomenis to their new owners the Partnership fully repaid the 2020 CMBFL sale and lease back agreements amounting to $
During the six-month period ended June 30, 2024, the Partnership repaid the amount of $
As of June 30, 2024, an amount of $
For the six-month periods ended June 30, 2024, and 2023 interest expense amounted to $
8. Derivative Instruments
In connection with the issuance of the 2022 Bonds and the 2021 Bonds (Note 7), the Partnership entered into certain cross-currency swap agreements to manage the related foreign currency exchange risk by effectively converting the fixed-rate, Euro-denominated Bonds, including the semi-annual interest payments for the period from July 26, 2022 to July 26, 2029 and from October 21, 2021 to October 21, 2025, respectively to fixed-rate, U.S. Dollar-denominated debt. The economic effect of the swap agreements is to eliminate the uncertainty of the cash flows in U.S. Dollars associated with the issuance of the 2022 Bonds and the 2021 Bonds by fixing the principal amount of the 2022 Bonds and the 2021 Bonds, with a fixed annual interest rate. The cross-currency swap agreement related to the 2022 Bonds was designated as an accounting hedge.
Derivative instruments not designated as hedges are not speculative and are used to manage the Partnership’s exposure to identified risks but do not meet the strict hedge accounting requirements and/or the Partnership has not elected to apply hedge accounting. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in the consolidated statements of comprehensive income. Changes in the fair value of derivatives designated as accounting hedges are recorded in the consolidated statements of other comprehensive income (effective portion), until the hedged item is recognized in the consolidated statements of comprehensive income.
| F- 15 |
Capital Product Partners L.P. Notes to the Unaudited Condensed Consolidated Financial Statements (In thousands of United States Dollars) |
8. Derivative Instruments – Continued
The following table summarizes the terms of the cross-currency swap agreements and their respective fair value as of June 30, 2024.
| a) | Derivative Asset: |
| Effective Date | Termination Date | Notional Amount in thousands of EUROS | Notional Amount in United States Dollars | Fixed Rate the Partnership receives in EURO | Fixed Rate the Partnership pays in United States Dollars | Fair Value June 30, 2024, in United States Dollars | |
| Total Fair Value | $ | ||||||
| b) | Derivative Liabilities: |
| Effective Date | Termination Date | Notional Amount in thousands of EUROS | Notional Amount in United States Dollars | Fixed Rate the Partnership receives in EURO | Fixed Rate the Partnership pays in United States Dollars | Fair Value June 30, 2024, in United States Dollars | |
| $ | |||||||
| Total Fair Value | $ | ||||||
The fair value of the cross-currency swap agreements is presented net of accrued interest expense which is recorded in “Accrued and other liabilities” in the unaudited condensed consolidated balance sheets.
The following tables summarize the effect of the cross-currency swap agreements for the six-month periods ended June 30, 2024 and 2023:
- Derivative designated as accounting hedge
|
For the six-month periods ended June 30, | |||
| Amount of gain/(loss) recognized in other comprehensive income | 2024 | 2023 | ||
| Cross-currency swap agreement related to 2022 Bonds | $ | ( |
$ | |
| Reclassification to other income, net | ( | |||
| Total gain recognized in accumulated other comprehensive loss | $ | $ | ||
The estimated net expense that is expected to be reclassified within the next
- Derivatives not designated as accounting hedges:
| For the six-month periods ended June 30, | ||||
| Amount of gain/(loss) recognized in other income, net | 2024 | 2023 | ||
| Change in fair value of derivatives related to 2021 Bonds | $ | ( |
$ | |
| Realized interest expense of derivatives related to 2021 Bonds | ( |
( | ||
| Total (loss) / gain recognized in other income, net | $ | ( |
$ | |
9. Financial Instruments
(a) Fair value of financial instruments
Cash and cash equivalents, restricted cash and other assets and liabilities.
The carrying value of cash and cash equivalents and restricted cash, are considered Level 1 items as they represent liquid assets with short-term maturities, trade receivables, amounts due to and due from related parties, trade accounts payable and accrued liabilities approximate their fair value.
| F- 16 |
Capital Product Partners L.P. Notes to the Unaudited Condensed Consolidated Financial Statements (In thousands of United States Dollars) |
9. Financial Instruments – Continued
(a) Fair value of financial instruments – Continued
Long-term debt
The fair value of variable rate long-term debt (Note 7) approximates the recorded value, due to its variable interest being based on the SOFR rates and due to the fact that the lenders have the ability to pass on their funding cost to the Partnership under certain circumstances, which reflects their current assessed risk. We believe the terms of our loans are similar to those that could be procured as of June 30, 2024. SOFR rates are observable at commonly quoted intervals for the full term of the loans and hence bank loans are considered Level 2 items in accordance with the fair value hierarchy.
The fair value of the fixed rate long-term debt (Note 7 ((i), (ii), (xvii), (xviii) and (xxi))) as of June 30, 2024, was approximately $
The 2022 Bonds and the 2021 Bonds (Note 7 ((xxii) and (xxiii))) have a fixed rate, and their estimated fair values as of June 30, 2024, were determined through Level 1 inputs of the fair value hierarchy (quoted price under the ticker symbols CPLPB1 and CPLPB2 on Athens Stock Exchange) and were approximately $
Derivative instruments
As of June 30, 2024:
Items Measured at Fair Value on a recurring Basis - Fair Value Measurements
| Recurring Measurements: | June 30, 2024 | Quoted prices in active markets for identical assets (Level 1) | Significant other Observable inputs (Level 2) | Unobservable Inputs (Level 3) | ||||
| Cross Currency SWAP (100,000) - asset position | $ | $ | — | $ | $ | — | ||
| Cross Currency SWAP (120,000) – liability position | ( |
— | ( |
— | ||||
| Cross Currency SWAP (30,000) – liability position | ( |
— | ( |
— | ||||
| Total | $ | ( |
$ | — | $ | ( |
$ | — |
The fair value (Level 2) of cross-currency swap derivative agreements is the present value of the estimated future cash flows that we would receive or pay to terminate the agreements at the balance sheet date, taking into account, as applicable, current interest rates, foreign exchange rates and the credit worthiness of both us and the derivative counterparty. This line item is presented in “Derivative asset” and “Derivative liabilities” in the unaudited condensed consolidated balance sheets.
There were no Level 3 items.
(b) Concentration of credit risk
Financial instruments which potentially subject the Partnership to significant concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable, net. The Partnership places its cash and cash equivalents, consisting mostly of deposits, with a limited number of creditworthy financial institutions rated by qualified rating agencies. Most of the Partnership’s revenues were derived from a few charterers.
| F- 17 |
Capital Product Partners L.P. Notes to the Unaudited Condensed Consolidated Financial Statements (In thousands of United States Dollars) |
10. Partners’ Capital
As of June 30, 2024, and December 31, 2023, the Partnership’s partners’ capital was comprised of the following units:
| As of June 30, 2024 | As of December 31, 2023 | ||
| Common units | |||
| General partner units | |||
| Treasury Units | |||
| Total partnership units |
Details of the Partnership’s Partner’s Capital are discussed in Note 13 of the Partnership’s Consolidated Financial Statements for the year ended December 31, 2023.
During the six-month periods ended June 30, 2024, and 2023, the Partnership declared and paid the following distributions to its common unit holders:
| April 25, 2024 | January 25, 2024 | April 25, 2023 | January 26, 2023 | |
| Common unitholders | ||||
| Distributions per common unit declared | $ |
$ |
$ |
$ |
| Common units distribution | $ |
$ |
$ |
$ |
| General partner and incentive distribution rights (“IDR”) | $ |
$ |
$ |
$ |
In January 2024, the board of directors adopted an amended and restated Compensation Plan (the “Plan”), to reserve for issuance a maximum number of restricted common units which were recognized under treasury units.
On March 8, 2024, the Partnership awarded unvested units to Employees and Non-Employees with a grant-date fair value of $ per unit. The units were fully vested on the same date.
The following table contains details of our plan:
| Equity compensation plan | |||
| Unvested Units | Units | Value | |
| Unvested on January 1, 2024 | $ | ||
| Granted | |||
| Vested | ( |
( | |
| Unvested on June 30, 2024 | $ | ||
The unvested units accrue distributions as declared and paid, which distributions are retained by the custodian of the Plan until the vesting date at which time they are payable to the grantee. As unvested unit grantees accrue distributions on awards that are expected to vest, such distributions are charged to Partners’ capital. As of June 30, 2024, the unvested units accrued $
There were no forfeitures of awards during the six-month period ended June 30, 2024. The Partnership estimated the forfeitures of unvested units to be immaterial.
For the six-month periods ended June 30, 2024, and 2023 the equity compensation expense that has been charged in the unaudited condensed consolidated statements of comprehensive income was $ and $ respectively. This expense has been included in “General and administrative expenses” in the unaudited condensed consolidated statements of comprehensive income.
As of June 30, 2024, the total unrecognized compensation cost related to non-vested awards is $ and is expected to be recognized over a period of years. The Partnership uses the straight-line method to recognize the cost of the awards.
| F- 18 |
Capital Product Partners L.P. Notes to the Unaudited Condensed Consolidated Financial Statements (In thousands of United States Dollars) |
For the six-month periods ended June 30, 2024, and 2023 the Partnership excluded the effect of and non-vested unit awards in calculating dilutive EPU for its common unitholders, as they were anti-dilutive. The non-vested units were participating securities because they received distributions from the Partnership and these distributions did not have to be returned to the Partnership if the non-vested units were forfeited by the grantee.
The Partnership’s net income for the six-month periods ended June 30, 2024, and 2023 did not exceed the First Target Distribution Level and as a result, the assumed distribution of net income did not result in the use of increasing percentages to calculate CGP’s interest in net income.
The Two-Class Method was used to calculate EPU as follows:
| For the six-month periods ended June 30, | ||||
| BASIC and DILUTED | 2024 | 2023 | ||
| Numerators | ||||
| Partnership’s net income | $ | $ | ||
| Less: | ||||
| General Partner’s interest in Partnership’s net income | ||||
| Partnership’s net income allocable to unvested units | ||||
| Common unit holders’ interest in Partnership’s net income | $ | $ | ||
| Denominators | ||||
| Weighted average number of common units outstanding, basic and diluted | ||||
| Net income per common unit: | ||||
| Basic and diluted | $ | $ | ||
13. Commitments and Contingencies
Contingencies
Various claims, suits and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. In addition, losses may arise from disputes with charterers, agents, insurance and other claims with suppliers relating to the operations of the Partnership’s vessels.
The Partnership accrues for the cost of environmental liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the probable exposure. Currently, the Partnership is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying unaudited condensed consolidated financial statements.
Commitments
(a) Lease Commitments: Future minimum charter hire receipts, excluding any profit share revenue that may arise, based on non-cancellable time charter contracts, as of June 30, 2024 were:
| Year ending June 30, | Amount | |
| 2025 | $ | |
| 2026 | ||
| 2027 | ||
| 2028 | ||
| 2029 | ||
| Thereafter | ||
| Total | $ |
(b) Commitments for the acquisition of vessel owning companies from a related party and vessels under construction: As of June 30, 2024, the Partnership had outstanding commitments relating to acquisitions of vessel owning companies from a related party and vessels under construction amounting to $
| F- 19 |
Capital Product Partners L.P. Notes to the Unaudited Condensed Consolidated Financial Statements (In thousands of United States Dollars) |
13. Commitments and Contingencies - Continued
Commitments - Continued
(b) Commitments for the acquisition of vessel owning companies from a related party and vessels under construction - Continued
The following table contains details of the commitments for the acquisition of vessel owning companies from a related party and for vessels under construction:
| Year ending June 30, | Acquisition of vessel owning companies from CMTC | Vessels under construction | Total | |||
| 2025 | $ | $ | $ | |||
| 2026 | ||||||
| 2027 | ||||||
| 2028 | ||||||
| Total | $ | $ | $ |
(c) Supervision Services Commitments: As of June 30, 2024, the Partnership had outstanding commitments relating to supervision services agreements for vessels under construction, amounting to $
The following table contains details of supervision services commitments:
| Year ending June 30, | Amount | |
| 2025 | $ | |
| 2026 | ||
| 2027 | ||
| 2028 | ||
| Total | $ |
14. Subsequent events
(a) Dividends: On
(b) Partnership’s conversion into corporation and name change:
| • |
| • |
| • |
| • |
| • |
| F- 20 |
Capital Product Partners L.P. Notes to the Unaudited Condensed Consolidated Financial Statements (In thousands of United States Dollars) |
14. Subsequent events – Continued
(b) Partnership’s conversion into corporation and name change Continued:
| • |
(c) Refinancing of the two “2021 CMBFL - LNG/C”: On August 23, 2024, the Partnership entered into two separate sale and lease back agreements with subsidiaries of the Bank of Communications Financial Leasing Co., Ltd (“Bocomm”) for the LNG/C Asklipios and the LNG/C Attalos for an amount of $
(d) Sale of vessels: On September 12, 2024, the Partnership entered into