Himalaya Shipping Ltd 6-K, filed Aug 8, 2023
Himalaya Shipping Ltd. (HSHP)
6-K
2023-08-08
For: 2023-08-08
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Added on
July 04, 2026
About this 6-K
Himalaya Shipping Ltd filed this 6-K on August 8, 2023.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2023
Commission File Number 001-41676
Himalaya Shipping Ltd.
(Exact name of Registrant as specified in its charter)
Not applicable
(Translation of Registrant’s name into English)
S. E. Pearman Building
2nd floor, 9 Par-la-Ville Road
Hamilton HM 11
Bermuda
(Address of Principal Executive Office)
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 x Form 40-F o
Exhibits.
| Exhibit | Description | |||||||
| Himalaya Shipping Limited Earnings Release for the Second Quarter of 2023 | ||||||||
| Himalaya Shipping Limited Results Presentation for the Second Quarter of 2023 | ||||||||
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.
| Himalaya Shipping Ltd. | ||||||||||||||
| By: | /s/ Herman Billung | |||||||||||||
| Name: | Herman Billung | |||||||||||||
| Title: | Chief Executive Officer | |||||||||||||
| Date: August 8, 2023 | ||||||||||||||
Himalaya Shipping Limited Announces its Preliminary Results for the First Half of 2023
Hamilton, Bermuda, August 8, 2023
Himalaya Shipping Limited (“Himalaya”, “Himalaya Shipping” or the “Company”) announces preliminary unaudited results for the six months ended June 30, 2023.
Highlights for the First Half of 2023
•Completed Initial Public Offering (“IPO”) in the U.S. in April 2023, raising net equity proceeds of $44.9 million including the partial exercise of the over-allotment option.
•Successful delivery and commencement of operations of four of the twelve 210,000 dwt Newcastlemax dual fuel newbuildings ordered from New Times Shipyard, generating total operating revenues of $8.2 million, which is an average time charter equivalent (“TCE”) earnings of approximately $25,700 per day, gross1.
•Cash and cash equivalents of $24.2 million at the end of the first half of 2023.
•EBITDA2 of $4.2 million for the six months ended June 30, 2023.
•Amendment to the sale leaseback agreements in February 2023 with AVIC International Leasing Co. (“AVIC”) for the first four newbuildings to finance 90% of the cost to install the exhaust gas cleaning systems (EGCS) or “scrubbers” or $2.2 million for each vessel.
•Final installments for the first four delivered vessels were financed by sale leaseback facilities provided by AVIC totaling $200.0 million.
•Installment payments on five of our newbuilding vessels totaling $48.0 million financed by pre-delivery financing with CCB Financial Leasing Company Limited (“CCBFL”) and Jiangsu Financial Leasing Co. Ltd. (“Jiangsu”).
•Secured time charter agreements for two vessels for 22 to 26 months' time charter, plus an option exercisable by the counterparty for a further 11 to 13 months between January and July 2024. Both vessels will earn an index-linked rate, reflecting a significant premium to the Baltic 5TC index (BCI).
Subsequent events
•In July 2023, Mount Matterhorn was successfully delivered and commenced its 32-to-38 month index-linked time charter.
•In July 2023, the charterers of “Mount Norefjell” and “Mount Matterhorn” decided to bunker LNG on these vessels. The LNG bunker operations were completed successfully.
Contracted CEO, Herman Billung commented:
“The first half of 2023 has been transformational for Himalaya Shipping. From starting with an idea, to already having five ships in operations and being listed on the New York Stock Exchange (NYSE), we have achieved the first stepping stone in what is going to be many exciting years ahead.
We strongly believe that we have the right ships, at the right time. The order book for Capesize vessels is below 5%, a 25-year low. Most yards don’t have capacity to build large dry bulk ships before well into 2027, and the prices quoted are above $86 million for similar ships to ours. In addition, the aging fleet coupled with the new environmental regulations coming, means we should have improved utilization for the coming years. Further, we have the right ships. Our dual fueled Newcastlemaxes have demonstrated their attractiveness to charterers, and consequently have been fixed at the highest premium to Capesize index rates we know about. The ships can reduce CO2 emissions by more than 40% when running on LNG and are prepared to meet as well as benefit from, more environmental regulations coming into force. With natural gas prices decreasing, being able to fuel our
1 The Company uses certain financial information calculated on a basis other than in accordance with accounting principles generally accepted in the United States (US GAAP) including average daily TCE earnings, gross and EBITDA. Average daily TCE earnings, gross, as presented above, represents time charter revenues and voyage charter revenues adding back address commissions and divided by operational days. Please refer to the appendix of this report for a reconciliation of this non-GAAP measure to the most directly comparable financial measures prepared in accordance with US GAAP.
2 EBITDA as presented above represents our net loss plus depreciation of vessels and equipment; total financial expenses, net; and income tax expense. Please refer to the appendix of this report for a reconciliation of this non-GAAP financial measure to the most directly comparable financial measures prepared in accordance with US GAAP.
ships with LNG can give further economic benefit to Himalaya. We have the right financing with 7-years fixed rate interest rates, giving the Company an attractive cash break-even. Finally, the strategy we are following, with no plans for further investments in ships, means that most of the cash generated after debt service will be distributed to shareholder through monthly dividends. We think this is the right approach in a cyclical industry.”
Management discussion and analysis
The discussion below compares the preliminary unaudited results for the six months ended June 30, 2023 to the unaudited results of the six months ended December 31, 2022:
| (in $ millions) | Six months ended June 30, 2023 | Six months ended December 31, 2022 | Change ($) | Change (%) | ||||||||||
Total operating revenues | 8.2 | — | 8.2 | 100 | % | |||||||||
Vessel operating expenses | (2.0) | — | (2.0) | 100 | % | |||||||||
| Voyage expenses | (0.2) | — | (0.2) | 100 | % | |||||||||
General and administrative expenses | (1.8) | (1.0) | (0.8) | 80 | % | |||||||||
Depreciation and amortization | (2.4) | — | (2.4) | 100 | % | |||||||||
Total operating expenses | (6.4) | (1.0) | (5.4) | 540 | % | |||||||||
| Operating profit / (loss) | 1.8 | (1.0) | 2.8 | (280) | % | |||||||||
Total financial expenses, net | (2.9) | — | (2.9) | 100 | % | |||||||||
Net loss | (1.1) | (1.0) | (0.1) | 10 | % | |||||||||
EBITDA | 4.2 | (1.0) | 5.2 | (520) | % | |||||||||
| (in $ millions) | June 30, 2023 | December 31, 2022 | Change ($) | Change (%) | ||||||||||
| Cash and cash equivalents | 24.2 | 0.3 | 23.9 | 7967 | % | |||||||||
| Vessels and Equipment | 286.8 | — | 286.8 | 100 | % | |||||||||
| Newbuildings | 143.6 | 176.1 | (32.5) | (18) | % | |||||||||
| Total Equity | 134.4 | 90.3 | 44.1 | 49 | % | |||||||||
Total operating revenues for the six months ended June 30, 2023 were $8.2 million, a 100% increase compared to the second half of 2022. The overall increase is a result of the company’s first four vessels, Mount Norefjell, Mount Ita, Mount Etna and Mount Blanc, being successfully delivered from New Times Shipyard and commencing operation during the period. The Company achieved an average daily TCE earnings, gross, of $25,700.
Vessel operating expenses for the six months ended June 30, 2023 were $2.0 million, a 100% increase compared to the second half of 2022. The overall increase is a result of the company’s first four vessels commencing their operations. The Company achieved an average vessel operating cost per day rate3 of $6,200 for the six months ended June 30, 2023.
General and administrative expenses for the six months ended June 30, 2023 were $1.8 million, an $0.8 million increase compared to the second half of 2022. The overall increase is primarily a result of increased expenses due to additional regulatory requirements following the Company’s US IPO.
Depreciation and amortization for the six months ended June 30, 2023 were $2.4 million, a 100% increase compared to the second half of 2022. The overall increase is a result of the commencement of depreciation on the first four dual fuel Newcastlemax vessels following their delivery.
3 Average vessel operating cost per day is calculated by dividing vessel operating expenses by the number of calendar days.
Total financial expenses for the first half of 2023 were $2.9 million, a 100% increase compared to the second half of 2022. This is mainly due to the increase in interest expense. Upon delivery of the four vessels during the six months ended June 30, 2023, the Company entered into sale leaseback financing arrangements with subsidiaries of AVIC whereby upon delivery of the vessels, they were sold to special purpose vehicles (“SPVs”) owned by AVIC and leased back to the Company under bareboat charters. There was no interest expense recognized in the six months ended December 31, 2022 as all assets were under construction.
Vessels and equipment increased by $286.8 million or 100% for the six months ended June 30, 2023. During this period, the Company accepted delivery of the first four dual fuel Newcastlemax vessels (Mount Norefjell, Mount Ita, Mount Etna and Mount Blanc). Upon acceptance, the assets were reclassified from newbuildings to vessels and equipment and commenced depreciation.
Newbuildings decreased by $32.5 million or 18% for the six months ended June 30, 2023. The overall decrease is a result of the reclassification from newbuildings to vessels and equipment upon delivery of the first four vessels amounting to $289.2 million, offset by capitalization of expenditures including milestone payments and supervision costs of $252.9 million and capitalized interest of $3.8 million. The Company has drawn $248.0 million in the six months ended June 30, 2023 on the sale leaseback financing arrangements to fund these installments.
Liquidity and Cash Flows for the six-month period ended June 30, 2023
The Company’s cash and cash equivalents as of June 30, 2023 was $24.2 million, compared to $0.3 million as of December 31, 2022.
Net cash used in operating activities was $3.5 million, which includes prepayments of interest and insurance of $2.1 million and $1.5 million, respectively.
Net cash used in investing activities was $256.6 million, primarily consisting of $199.5 million for the final installment payments for the four vessels delivered, and $48.0 million for installment payments on the newbuilding vessels under construction.
Net cash provided by financing activities was $284.0 million as a result of $44.9 million in net proceeds from our IPO in the U.S. in April 2023, $200.0 million draw down from the sale and leaseback financing arrangements to pay scheduled delivery installments for the first four newbuildings, and $48 million from pre-delivery financing to pay scheduled pre-delivery installments for newbuildings under construction, offset by repayments on the sale and leaseback financing of $3.6 million and financing charges of $5.7 million.
Financing and corporate development
U.S. IPO
The Company issued 7,720,000 common shares at an offering price of $5.80 in its IPO in the U.S. which was completed in April 2023. A further 910,000 common shares were issued following the partial exercise of the over-allotment option which resulted in a total of 8,630,000 common shares being issued in our U.S. IPO. The common shares are listed on both the New York Stock Exchange and Euronext Expand in Oslo. Net equity proceeds from the IPO, including the partial exercise of the over-allotment option, was $44.9 million. Himalaya Shipping intends to use the remaining net proceeds of the IPO offering for general corporate purposes, which may include funding acquisitions of vessels on order or maintaining liquidity, repayment of indebtedness and funding working capital needs.
DNB Bridge Facility
In March 2023, the Company entered into an unsecured Bridge Facility with DNB Markets as arranger and DNB Bank ASA as lender and agent (the “Bridge Facility”), for a maximum amount of $15.0 million for general corporate purposes with a maturity date of September 1, 2023. Amounts outstanding under the Bridge Facility bear interest at SOFR plus a margin. The Company drew down $7.5 million in March 2023 which it fully repaid in April 2023 from the proceeds of the IPO. Subsequently, the Bridge Facility was terminated in April 2023.
Drew Revolving Credit Facility
In the six-month period ended June 30, 2023, the Company drew down $1.0 million to add to the $1.0 million that was outstanding under the facility as of December 31, 2022, and subsequently repaid the full outstanding amount of $2.0 million. As of June 30, 2023, the Company has $15.0 million available to drawdown from this facility until December 31, 2023 which must be repaid latest on December 31, 2024.
Amendment of the sale leaseback agreements with AVIC
In February 2023, the sale leaseback agreements with AVIC for the first four newbuildings were amended whereby AVIC agreed to finance 90% of the sixth installment under the newbuilding contract which relates to the cost to install the scrubbers or $2.2 million for each vessel. This is repayable in advance in 12 quarterly installments of $180,000 for each vessel, together with interest calculated as: a) LIBOR plus a margin for the period until June 30, 2023; and b) Overnight SOFR plus a margin and credit adjustment spread from July 1, 2023.
Newbuilding program
Four vessels were delivered from New Times Shipyard in the six months ended June 30, 2023 and one additional vessel was delivered in July 2023. The remaining vessels are scheduled to be delivered as follows:
| (numbers in $ million) | |||||||||||
| Vessel name | Target delivery date | Price | Remaining installments | ||||||||
| Mount Neblina | August 2023 | 72.8 | 52.2 | ||||||||
| Mount Bandeira | January 2024 | 72.8 | 52.2 | ||||||||
| Mount Hua | January 2024 | 72.8 | 52.2 | ||||||||
| Mount Elbrus | January 2024 | 73.3 | 59.5 | ||||||||
| Mount Denali | May 2024 | 73.3 | 59.5 | ||||||||
| Mount Aconcagua | July 2024 | 73.3 | 66.4 | ||||||||
| Mount Emai | July 2024 | 73.3 | 66.4 | ||||||||
| Total | 511.6 | 408.4 | |||||||||
The newbuilding program is progressing slightly ahead of schedule.
In August 2022, the Company decided to install scrubbers on the entire fleet of twelve vessels that were under construction at New Times Shipyard ("NTS") in China. The installation was done on the vessels that have been already delivered within the previously agreed delivery schedule from the shipyard at attractive prices and payment terms.
After installation of scrubbers, the vessels will have the ability to be fueled with LNG, Low Sulfur Fuel Oil (LSFO) or High Sulfur Fuel Oil (HSFO). This offers significant increased flexibility for our customers and has been valuable in employment discussions, with some customers already choosing to bunker LNG as discussed above.
The remaining installments under the Newbuilding program are mainly financed by sale leaseback financing arrangements which offers both pre- and post- delivery financing.
Market commentary
IMF latest global gross domestic product (GDP) forecast from July suggests a growth of 3% for both 2023 and 2024. China’s economy is expected to grow by 4.9% over the same period. Various reports indicate a willingness by the Chinese authorities to stimulate the housing market which should in turn support the dry bulk sector.
In spite of a challenging economic climate the dry bulk DWT – miles grew by 5.5% during the first half of 2023. The primary drivers were coal, iron ore and bauxite.
It is encouraging that Chinese port stockpiles of iron ore have fallen during the last twenty-one out of twenty-two weeks and are now at the lowest levels since September 2020.
Brazilian capsize iron ore exports stand at 191 million mt year to date, representing a 4.4% increase compared to 2022. Even if Vale is only reaching the lower end of its production guidance for 2023, we should expect long-haul iron ore exports from Brazil to increase in the coming months. Australian iron ore shipments have reached 531 million mt over the same period, an increase of 1.9% compared to 2022.
The guidance from Rio Tinto and Vale, supports some further growth in these exports. Longer-term the Guinean Simandou iron ore development could potentially add more than 100 million mt per year of seaborn iron ore, which if shipped to Asia will have a material impact on ton-mile demand.
The structural drives with dry bulk commodities being produced further away from the end clients have contributed to 6.9% ton-mile demand above the underlying volume growth which was 3.3% for Capesizes in the first half of 2023 compared to the first half of 2022. This trend is expected to continue.
The current order book for Capesize (100.000 dwt +) stands at less than 5%, both measured in number of vessels and DWT, the lowest ratio in over 25 years. The average age of the fleet is 10.2 years, the highest since 2010.
In addition, 313 Capesize vessels built before 2009 will face early non-compliance issues due to the operational carbon intensity indicator (“CII”). Compared to an order book of 90 vessels, this could potentially lead to a decline in the fleet within the next two years.
Limited yard capacity is evident for the larger sizes. Global yard capacity is down by 40 % from the peak in 2011 and serious yards are not able to offer significant Capesize berths until 2027, at prices significantly higher than Himalaya Shipping paid for its ships. From 2029 to 2032, potentially 750 ships will be more than 20 years old. To replace this capacity with newbuilding will be a significant challenge given the yard situation.
Operational update
In the first half of 2023, the first four vessels were delivered from New Times Shipyard slightly ahead of their original scheduled delivery dates and commenced their charters shortly thereafter. Following the delivery of these vessels, our fleet had 330 operational days with three unplanned offhire days in the first half of 2023. The vessels operated at approximately $6,200 per day in vessel operating costs in the first half of 2023, which is slightly lower than budget.
Outlook
The Management has a constructive market outlook for the coming years due to a historic low order book for large bulk carriers which in combination with impact from environmental regulations will favor the Himalaya fleet. Himalaya have fixed 9 of its 12 ships with high quality reputable counterparties, mostly on index related charters. These fixtures give Himalaya exposure to the expected improving market, giving a day-rate which exceeds the Capesize index rate by more than 40%. With one ship left to be delivered this year, and the rest coming in 2024, we are transitioning into a fully operational Company, which has the main focus of delivering solid operations and
profitable returns to shareholders through monthly dividends. With the limited supply growth, and currently solid underlying demand, we expect dry bulk earnings to improve going forward.
Forward looking statements
This press release and any related discussions contain forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are statements that do not reflect historical facts and may be identified by words such as “aim”, “believe,” “assuming,” “anticipate,” “could”, “expect”, “intend,” “estimate,” “forecast,” “project,” “likely to”, “plan,” “potential,” “will,” “may,” “should,” or other similar expressions and include statements about plans, objectives, goals, strategies, future events or performance, outlook, prospects, contracts to acquire newbuilding vessels and associated financing agreements, expected delivery of our vessels under our newbuilding program, statements about the benefits of our vessels, including lower CO2 emissions and benefits of ability to bunker with LNG, the terms of our charters, expectations regarding the dry bulk industry trends and market outlook, including activity levels in the industry, expected trends, including trends in the global fleet, expected demand for and offer of vessels and utilization of the global fleet and our fleet, no plans for investments in new shipments and plans for distribution of cash to shareholders through monthly dividends, environmental laws and regulations impacting the industry and the Company, including compliance with and expected benefits from regulatory requirements including environmental regulations, statements made in the sections above entitled “Market commentary” and “Outlook”, including the yard situation, guidance from other companies regarding ore exports and iron ore projects in other countries, expected trends relating to structural drivers of the production of dry bulk commodities, expected limited supply growth of dry bulk vessels, expectations on demand, expectation that the dry bulk earnings will improve, and other non-historical statements. These forward-looking statements are not statements of historical fact and are based upon current estimates, expectations, beliefs, and various assumptions, many of which are based, in turn, upon further assumptions, and a number of such assumptions are beyond our control and are difficult to predict. These statements involve significant risks, uncertainties, contingencies and factors that are difficult or impossible to predict and are beyond our control, and that may cause our actual results, performance or achievements to be materially different from what is expressed, implied or forecasted in such forward-looking statements. Numerous factors, risks and uncertainties that could cause our actual results, level of activity, performance or achievements to differ materially from those expressed, implied or forecasted in the forward-looking statements include but are not limited to:
•general economic, political and business conditions;
•general dry bulk market conditions, including fluctuations in charter hire rates and vessel values;
•our ability to complete the purchase of the vessels we have agreed to acquire;
•our ability to meet the conditions and covenants in our financing agreements;
•changes in demand in the dry bulk shipping industry, including the market for our vessels;
•changes in the supply of dry bulk vessels;
•our ability to successfully employ our dry bulk vessels and the terms of future charters;
•changes in our operating expenses, including fuel or bunker prices, dry docking and insurance costs;
•changes in governmental regulation, tax and trade matters and actions taken by regulatory authorities;
•compliance with, and our liabilities under, governmental, tax, environmental and safety laws and regulations;
•potential disruption of shipping routes due to accidents or political events;
•our ability to procure or have access to financing and to refinance our debt as it falls due;
•our continued borrowing availability under our sale and leaseback agreements in connection with our vessels and compliance with the financial covenants therein;
•fluctuations in foreign currency exchange rates;
•potential conflicts of interest involving members of our board and management and our significant shareholder;
•our ability to pay dividends;
•risks related to climate change, including climate-change or greenhouse gas related legislation or regulations and the impact on our business from climate-change related physical changes or changes in weather patterns, and the potential impact of new regulations relating to climate change, as well as the performance of our vessels;
•other factors that may affect our financial condition, liquidity and results of operations; and
•other risks described under “Risk Factors” in our registration statement on Form F-1/A filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 30, 2023.
You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, Himalaya Shipping undertakes no obligation to update publicly any forward-looking statements after the date of this press release whether as a result of new information, future events or otherwise, except as required by law..
Responsibility statement
We confirm that, to the best of our knowledge, the interim condensed consolidated financial statements for the first half of 2023, which have been prepared in accordance with accounting principles generally accepted in the United States (US GAAP) give a true and fair view of the Company’s consolidated assets, liabilities, financial position and results of operations. To the best of our knowledge, the interim report for the first half year of 2023 includes a fair review of the information required under the Norwegian Securities Trading Act section 5-6 fourth paragraph.
August 8, 2023
The Board of Directors
Himalaya Shipping Limited
Hamilton, Bermuda
Bjorn Isaksen (Chairman of the Board)
Carl Erik Steen (Director)
Georgina Sousa (Director)
Jehan Mawjee (Director)
Mi Hong Yoon (Director)
Questions should be directed to:
Herman Billung: Contracted CEO, +4791831590
APPENDIX
UNAUDITED NON GAAP MEASURES AND RECONCILIATIONS
Average TCE earnings is a non-U.S. GAAP measure of the average daily revenue performance of a vessel. Set forth below is a reconciliation of average TCE earnings to total operating revenues for the periods presented.
| In $ millions, except per day and number of days | Six months ended June 30, | |||||||||||||
| 2023 | 2022 | Change | % Change | |||||||||||
| Total operating revenues | 8.2 | — | 8.2 | 100 | % | |||||||||
| Add: Address commissions | 0.3 | — | 0.3 | 100 | % | |||||||||
| Total operating revenues, gross | 8.5 | — | 8.5 | 100 | % | |||||||||
| Fleet operational days | 330 | — | 330 | 100 | % | |||||||||
| Average TCE earnings | 25,700 | — | 25,700 | 100 | % | |||||||||
We present EBITDA because we believe this measure increases comparability of total business performance from period to period and against the performance of other companies. Set forth below is a reconciliation of EBITDA to net loss for the periods presented.
| Six months ended June 30, | ||||||||||||||
| In $ millions | 2023 | 2022 | Change | % Change | ||||||||||
| Net loss | (1.1) | (1.0) | (0.1) | 10 | % | |||||||||
| Depreciation and amortization | 2.4 | — | 2.4 | 100 | % | |||||||||
| Total financial expenses, net | 2.9 | — | 2.9 | 100 | % | |||||||||
| Income tax | — | — | 0 | 100 | % | |||||||||
| EBITDA | 4.2 | (1.0) | 5.2 | (520) | % | |||||||||
Non-GAAP financial measures may not be comparable to similarly titled measures of other companies and have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our operating results as reported under U.S. GAAP.
Please refer to “Non-GAAP Financial Measures” in the Unaudited Interim Financial Report for further information.
Himalaya Shipping Ltd.
Unaudited Consolidated Statements of Operations
(In $ millions except share and per share data)
Three months ended June 30, 2023 | Three months ended June 30, 2022 | Six months ended June 30, 2023 | Six months ended June 30, 2022 | |||||||||||
Operating revenues | ||||||||||||||
Time charter revenues | 6.7 | — | 8.2 | — | ||||||||||
Total operating revenues | 6.7 | — | 8.2 | — | ||||||||||
Operating expenses | ||||||||||||||
Vessel operating expenses | (1.8) | — | (2.0) | — | ||||||||||
Voyage expenses and commissions | (0.2) | — | (0.2) | — | ||||||||||
General and administrative expenses | (1.2) | (0.6) | (1.8) | (1.0) | ||||||||||
Depreciation and amortization | (2.0) | — | (2.4) | — | ||||||||||
Total operating expenses | (5.2) | (0.6) | (6.4) | (1.0) | ||||||||||
| Operating profit (loss) | 1.5 | (0.6) | 1.8 | (1.0) | ||||||||||
Financial income (expenses), net | ||||||||||||||
Interest income | 0.3 | — | 0.3 | — | ||||||||||
Interest expense, net of amounts capitalized | (2.6) | — | (2.9) | — | ||||||||||
Other financial expenses, net | (0.3) | — | (0.3) | — | ||||||||||
Total financial expenses, net | (2.6) | — | (2.9) | — | ||||||||||
Net loss before income tax | (1.1) | (0.6) | (1.1) | (1.0) | ||||||||||
Income tax (expense) / credit | — | — | — | — | ||||||||||
Net loss attributable to shareholders of Himalaya Shipping Ltd. | (1.1) | (0.6) | (1.1) | (1.0) | ||||||||||
Total comprehensive loss attributable to shareholders of Himalaya Shipping Ltd. | (1.1) | (0.6) | (1.1) | (1.0) | ||||||||||
Basic and diluted loss per share | (0.03) | (0.02) | (0.03) | (0.03) | ||||||||||
Himalaya Shipping Ltd.
Unaudited Consolidated Balance Sheets
(In $ millions except share and per share data)
June 30, 2023 | December 31, 2022 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | 24.2 | 0.3 | ||||||
Trade receivables | 0.3 | — | ||||||
Other current assets | 4.9 | 1.4 | ||||||
Total current assets | 29.4 | 1.7 | ||||||
Non-current assets | ||||||||
Newbuildings | 143.6 | 176.1 | ||||||
Vessels and equipment, net | 286.8 | — | ||||||
Total non-current assets | 430.4 | 176.1 | ||||||
Total assets | 459.8 | 177.8 | ||||||
LIABILITIES AND SHAREHOLDER’S EQUITY | ||||||||
Current liabilities | ||||||||
| Current portion of long-term debt | 13.0 | 7.0 | ||||||
Trade payables | 2.8 | 14.9 | ||||||
Accrued expenses | 2.7 | 1.1 | ||||||
Amounts due to related parties | — | 2.7 | ||||||
Other current liabilities | 0.2 | 0.3 | ||||||
Total current liabilities | 18.7 | 26.0 | ||||||
Non-current liabilities | ||||||||
Long-term debt | 292.9 | 60.5 | ||||||
| Amounts due to related parties | — | 1.0 | ||||||
Other non-current liabilities | 13.8 | — | ||||||
Total non-current liabilities | 306.7 | 61.5 | ||||||
Total liabilities | 325.4 | 87.5 | ||||||
| Commitment and contingencies | ||||||||
Shareholders’ Equity | ||||||||
Common shares of par value $1.0 per share: authorized 140,010,000 (2022: 140,010,000) shares, issued and outstanding 40,782,857 (2022: 32,152,857) shares | 40.8 | 32.2 | ||||||
| Additional paid-in capital | 97.7 | 61.1 | ||||||
Retained loss | (4.1) | (3.0) | ||||||
Total shareholders’ equity | 134.4 | 90.3 | ||||||
| Total liabilities and shareholders’ equity | 459.8 | 177.8 | ||||||
Himalaya Shipping Ltd.
Unaudited Consolidated Statements of Cash Flows
(In $ millions except share and per share data)
Three months ended June 30, 2023 | Three months ended June 30, 2022 | Six months ended June 30, 2023 | Six months ended June 30, 2022 | |||||||||||
| Cash Flows from Operating Activities | ||||||||||||||
| Net loss | (1.1) | (0.6) | (1.1) | (1.0) | ||||||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||
| Non-cash compensation expense related to stock options | 0.1 | 0.1 | 0.3 | 0.2 | ||||||||||
| Depreciation of vessels | 2.0 | — | 2.4 | — | ||||||||||
| Amortization of deferred finance charges | 0.5 | — | 0.7 | — | ||||||||||
| Change in assets and liabilities: | ||||||||||||||
| Accounts receivable | (0.3) | — | (0.3) | — | ||||||||||
| Amounts due to/from related parties | (2.7) | — | (2.7) | |||||||||||
| Accounts payable | (1.7) | (0.1) | 0.6 | (0.4) | ||||||||||
| Accrued expenses | (0.3) | 0.1 | 0.2 | 0.1 | ||||||||||
| Other current and non-current assets | (0.9) | — | (3.5) | (0.3) | ||||||||||
| Other current and non-current liabilities | (1.6) | — | (0.1) | 0.2 | ||||||||||
| Net cash used in operating activities | (6.0) | (0.5) | (3.5) | (1.2) | ||||||||||
| Cash Flows from Investing Activities | ||||||||||||||
Additions to newbuildings | (125.8) | (14.4) | (256.6) | (35.6) | ||||||||||
Net cash used in investing activities | (125.8) | (14.4) | (256.6) | (35.6) | ||||||||||
| Cash Flows from Financing Activities | ||||||||||||||
| Proceeds from issuance of common shares, net of paid issuance costs | 46.2 | — | 46.2 | — | ||||||||||
Proceeds from issuance of long-term and short-term debt | 120.4 | 13.6 | 255.6 | 34.4 | ||||||||||
Deferred loan costs paid | (1.7) | (1.8) | (5.7) | (4.8) | ||||||||||
Proceeds from issuance of long-term debt from related party | — | — | 1.0 | — | ||||||||||
| Repayment of long-term debt from related party | — | — | (2.0) | — | ||||||||||
| Repayment of long-term debt | (2.4) | — | (3.6) | — | ||||||||||
Repayment of short-term debt | (7.5) | — | (7.5) | — | ||||||||||
Net cash provided by financing activities | 155.0 | 11.8 | 284.0 | 29.6 | ||||||||||
Net increase/(decrease) in cash, cash equivalents and restricted cash | 23.2 | (3.1) | 23.9 | (7.2) | ||||||||||
Cash, cash equivalents and restricted cash at the beginning of the period | 1.0 | 7.2 | 0.3 | 11.3 | ||||||||||
Cash, cash equivalents and restricted cash at the end of the period | 24.2 | 4.1 | 24.2 | 4.1 | ||||||||||
Supplementary disclosure of cash flow information | ||||||||||||||
| Non-cash additions in respect of newbuildings | (13.8) | — | (13.8) | — | ||||||||||
| Issuance of liabilities for newbuilding installments | 13.8 | — | 13.8 | — | ||||||||||
| Interest paid, net of capitalized interest | (2.8) | (0.3) | (4.3) | (0.6) | ||||||||||
(In $ millions) | June 30, 2023 | December 31, 2022 | June 30, 2022 | December 31, 2021 | ||||||||||
Cash and cash equivalents | 24.2 | 0.3 | 4.1 | 11.3 | ||||||||||
Total cash and cash equivalents and restricted cash | 24.2 | 0.3 | 4.1 | 11.3 | ||||||||||
Himalaya Shipping Ltd.
Unaudited Consolidated Statements of Changes in Shareholders' Equity
(In $ millions except share and per share data)
| Number of outstanding shares | Common shares | Additional paid in capital | Accumulated deficit | Total equity | |||||||||||||
| Balance as at December 31, 2021 | 32,152,857 | 32.2 | 60.7 | (1.0) | 91.9 | ||||||||||||
| Share-based compensation | — | 0.1 | — | 0.1 | |||||||||||||
| Total comprehensive loss | — | — | (0.4) | (0.4) | |||||||||||||
| Balance as at March 31, 2022 | 32,152,857 | 32.2 | 60.8 | (1.4) | 91.6 | ||||||||||||
| Share-based compensation | — | 0.1 | — | 0.1 | |||||||||||||
| Total comprehensive loss | — | — | (0.6) | (0.6) | |||||||||||||
| Balance as at June 30, 2022 | 32,152,857 | 32.2 | 60.9 | (2.0) | 91.1 | ||||||||||||
| Number of outstanding shares | Common shares | Additional paid in capital | Accumulated deficit | Total equity | |||||||||||||
| Balance as at December 31, 2022 | 32,152,857 | 32.2 | 61.1 | (3.0) | 90.3 | ||||||||||||
| Share based compensation | — | 0.2 | — | 0.2 | |||||||||||||
| Total comprehensive loss | — | — | — | — | |||||||||||||
| Balance as at March 31, 2023 | 32,152,857 | 32.2 | 61.3 | (3.0) | 90.5 | ||||||||||||
| Issuance of common shares | 8,630,000 | 8.6 | 41.4 | — | 50.0 | ||||||||||||
| Equity issuance costs | — | (5.1) | — | (5.1) | |||||||||||||
| Share based compensation | — | 0.1 | — | 0.1 | |||||||||||||
| Total comprehensive loss | — | — | (1.1) | (1.1) | |||||||||||||
| Balance as at June 30, 2023 | 40,782,857 | 40.8 | 97.7 | (4.1) | 134.4 | ||||||||||||
1 Himalaya Shipping – H1 2023 result presentation 10 August 2023
2 Disclaimer and Important Information THE INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THE SECURITIES REFERRED TO HEREIN IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION, EXEMPTION FROM REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY JURISDICTION. THIS PRESENTATION DOES NOT CONTAIN ALL OF THE INFORMATION THAT IS MATERIAL TO AN INVESTOR. This presentation relating to Himalaya Shipping Ltd. and its subsidiaries (the “Company”) has been prepared on a confidential basis, solely for use as an investor presentation, is provided for informational purposes only and for purposes of considering an opportunity to participate in a potential offering of its securities which is under consideration, and is to be maintained in strict confidence. You may not disclose any information contained herein to any other parties without the Company's prior express written consent. The following applies to this document, the oral presentation of the information in this document by the Company or any person on behalf of the Company, and any question-and-answer session that follows the oral presentation (collectively, the “Information”). This presentation is being made pursuant to Section 5(d) or Rule 163B of the Securities Act of 1933, as amended (the “Securities Act”), and is intended solely for entities that are qualified institutional buyers (as defined in Rule 144A under the Securities Act) or institutions that are institutional accredited investors (as defined in Rule 501 under the Securities Act) solely for the purposes of familiarizing such entities or institutions with the Company and for determining whether such investors might have an interest in a potential securities offering contemplated by the Company. Any such offering of securities and any decision to purchase securities in any offering the Company may make in the future will only be made by means of a registration statement (including a prospectus and information thereunder) that may be filed in final form with the Securities and Exchange Commission (the “SEC”) in relation to any proposed offering, after such registration statement becomes effective, and which would supersede this presentation and information contained herein in its entirety. No such registration statement has been publicly filed or become effective as of the date of this presentation and the Company is not currently making any offer to sell, or soliciting any offer to buy, securities, and cannot accept any orders for securities at this time. The securities of the Company have not been registered under the Securities Act or any other applicable securities law. THE COMPANY’S SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY OTHER STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY OR GOVERNMENTAL AUTHORITY IN THE UNITED STATES, NOR HAVE ANY OF THE FOREGOING PASSED UPON THE ACCURACY, TRUTHFULNESS, COMPLETENESS OR ADEQUACY OF THE INFORMATION PRESENTED IN THIS PRESENTATION. Any representation to the contrary is a criminal offense. Information provided in this presentation and the accompanying oral presentation speak only as of the date hereof. The information contained herein does not constitute an offer to subscribe to or a solicitation of an offer to subscribe to securities in any member state within EEA in which such offer or solicitation is unlawful, unless in reliance upon applicable EEA prospectus exceptions, whereby no EEA prospectus, registration or similar action would be required within EEA. The offering is not subject to and has not received approval from either the Bermuda Monetary Authority or the Registrar of Companies in Bermuda and no statement to the contrary, explicit or implicit, is authorized to be made in this regard. The shares being offered may be offered or sold in Bermuda only in compliance with the provisions of the Companies Act 1981, Investment Business Act 2003, Exchange Control Act 1972 and related regulations of Bermuda. The industry and market data contained in this presentation has come from official or third party sources as well as from the Company's own information, own internal research and estimates based on the knowledge and experience of the Company’s management in the market in which it operates. Third party industry publications, studies and surveys generally state that the data contained therein have been obtained from sources believed to be reliable, but that there is no guarantee of the accuracy or completeness of such data. While the Company believes that each of these publications, studies and surveys has been prepared by a reputable source, the Company has not independently verified the data contained therein. The Information contains forward-looking statements. All statements other than statements of historical fact included in the Information are forward-looking statements. Forward-looking statements give the Company’s current expectations and projections relating to its financial condition, results of operations, plans, objectives, future performance and business. These statements may include, without limitation, any statements preceded by, followed by or including words such as “target,” “believe,” “expect,” “intend,” “may,” “anticipate,” “estimate,” “plan,” “project,” “will,” “aim,” “can have,” “likely,” “should,” “would,” “could” and other words and terms of similar meaning or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company’s control that could cause the Company’s actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company’s present and future business strategies and the environment in which it will operate in the future. No representation, warranty or undertaking, express or implied, is made as to, the merits of any offering, the condition, financial or otherwise, of the Company, or any other matter relating thereto, and nothing herein shall be construed as a recommendation to subscribe in any offering and no responsibility is or will be accepted by the Company, or by any of its respective affiliates or agents, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the Information or the opinions contained therein or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed. The Information has not been independently verified and will not be updated. The Information, including but not limited to forward-looking statements, applies only as of the date of this document and is not intended to give any assurances as to future results. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to the Information, including any financial data or forward-looking statements, and will not publicly release any revisions it may make to the Information that may result from any change in the Company’s expectations, any change in events, conditions or circumstances on which these forward-looking statements are based, or other events or circumstances arising after the date of this document. The contents of this presentation shall not be construed as legal, business, or tax advice. Each reader of this presentation should consult its own legal, business or tax advisor as to legal, business or tax advice. If you are in doubt about the contents of this presentation, you should consult your stockbroker, bank managers, lawyer, accountant, or other professional adviser.
3 Highlights 1H 2023 Highlights: • Completed Initial Public Offering (“IPO”) in the U.S. in April 2023, raising net equity proceeds of $44.9 million including the partial exercise of the Greenshoe option. • Successful delivery and commencement of operations of four Newcastlemax dual fuel newbuildings, generating total operating revenues of $8.2 million, an average time charter equivalent earnings of approximately US$25,700/day, gross. • Cash and cash equivalents of $24.2 million at the end of the first half of 2023. • EBITDA of $4.2 million for the six months ended June 30, 2023. • Final installments of vessels delivered financed by sale and leaseback facility provided by wholly-owned subsidiaries of AVIC International Leasing Co. (“AVIC”) totalling $200.0 million. • Installment payments of five newbuilding vessels totalling $48.0 million financed by pre-delivery financing with CCBFL and Jiangsu. • Secured time charter agreements for two vessels for 22 to 26 months' time charter commencing between January and July 2024, plus an option for a further 11 to 13 months. Both vessels will earn an index-linked rate plus premium plus scrubber benefits. Subsequent events: • Delivery of Mount Matterhorn in July 2023 and commencement of its 32-to-38 month index-linked time charter. • Completed LNG bunkering of “Mount Norefjell” and “Mount Matterhorn” in July 2023.
4 Key Financials 1H 2023 Income statement Comments US$ millions, except per share data 1H 2023 Operating revenues 8.2 Vessel operating expenses (2.0) Voyage expenses and commission (0.2) General and administrative expenses (1.8) Depreciation and amortization (2.4) Total operating expenses (6.4) Operating profit 1.8 Interest expense (2.9) Other financial items (0.0) Total financial expense, net (2.9) Tax expense - Net loss (1.1) Loss per share (0.03) • Net loss of $1.1 million • Operating profit of $1.8 million • EBITDA of $4.2 million • Operating revenues of $8.2 million on four vessels delivered. Average time charter equivalent earnings of approx. US$25,700/day, gross. • Vessel operating expenses of $2.0 million. Average vessel operating expenses of approx. $6,200 per day per vessel. • General and administrative expenses of $1.8 million, including $0.1 million in share-based compensation, $0.6 million in management fees including $0.2 million of IPO expenses. • Interest expense of $2.9 million on the sale & leaseback financing less interest capitalized.
5 Key Financials 1H 2023 Balance Sheet Summary Comments US$ millions June 30, 2023 December 31, 2022 Total assets 459.8 177.8 Total equity 134.4 90.3 Cash and cash equivalents 24.2 0.3 Vessels and equipment 286.8 - Newbuildings 143.6 176.1 Short-term and long-term debt 305.9 67.5 • Cash increased by $19.9 million primarily as a result of: • Net cash provided by financing activities of $284.0 million from net proceeds of $44.9 million on the U.S. IPO, drawdown on sale & leaseback financing of $200.0 on delivery of vessels and pre- delivery financing of $48.0 million on newbuilding installments; • Net cash used in operating activities of $3.5 million, which includes settlement of fees under the Corporate Services Agreement of $2.7 million and prepayment of interest and insurance of $2.1 million and $1.5 million, respectively. • Net cash used in investing activities of $256.6 million mainly on the delivery of the four vessels and newbuilding installments. • Vessels and equipment increased as a result of delivery of four vessels.
6 The investment thesis
7 0 50 100 150 200 250 300 350 1995 1998 2001 2004 2007 2010 2013 2016 2019 2022 Ac tiv e Sh ip ya rd s, T ot al No. Active Shipyards, Global 20,000+ dwt The right timing 25 year low orderbook at 5% Significant reduction in yard capacity Source: Clarksons Shipping Intelligence Network (https://sin.clarksons.net/) (59%) 118 5 0 20 40 60 80 100 120 140 1996 1999 2002 2005 2008 2011 2014 2017 2020 2023 Capesize orderbook % of fleet
8 Vessels built before 20093 Vessels built between 2009 and 20153 Vessels built post-2016 unaffected by 20303 313 ships – 15% 1,072 ships – 52% 680 ships – 33% The right timing 1. Capesize including sub-categories Newcastlemax and VLOC 2. Capesize fleet defined as all vessels delivered since 1996 until year-end 2022. 3. Non-compliant illustrated by vessels delivered before 2008, facing non-compliance illustrated by vessels delivered after 2008 but before 2015, and vessels unaffected illustrated by vessels delivered after 2015. Source: Clarksons Shipping Intelligence Network (https://sin.clarksons.net/) as of January 26, 2023, and Company assumptions Older vessels (non-eco) at risk 67% of Capesize vessels likely facing non-compliance by 2030 due to EEXI & CII C ap es iz e fle et a ve ra ge a ge ( ye ar s) Year # vessels scrapped p.a. Cum. scrapping candidates as % fleet2 (if scrapped @ 20 years) (@ 20 years) 2023 27 1% 2024 40 3% 2025 47 6% 2026 58 9% 2027 56 12% 2028 45 14% 2029 110 20% 2030 212 31% 2031 251 44% 2032 214 55% 1,385 ships – 67% N um be r o f C ap es iz e ve ss el s de liv er ed b y ye ar 9.5 5 6 7 8 9 10 11 12 0 50 100 150 200 250 300 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Capesize delivery (LHS) Capesize avg. age (RHS)
9 The right ships 43% more CO2 efficient than a standard Capesize4 1. Purchase price including variations orders, deducted Address Commissions, and cost of scrubbers ($2.4 million per vessel). 2. Address Commission to be deducted from the purchase price at delivery. 3. The contractual delivery dates are on an «on or before» basis, and the delivery dates being the basis for the Presentation are the latest indicated target delivery dates from New Times, which for some vessels are earlier dates than New Times’ contractual deadline for delivery. 4. When running on LNG, basis 43 mT pr day fuel consumption and 3.2 CO2 pr mT for a 180k dwt 2014/15 built Capesize vessel and 28 mT pr day fuel consumption and 2.8 CO2 pr mT for a Himalaya newbuild. Source: Bloomberg and Company estimates CO2 pr day (mT) Ship Price1,2 ($m) Yard Size (DWTk) Ship type Estimated delivery date3 Mount Norefjell 70.2 NTS 210 DF Newcastlemax Mar-23 Mount Ita 70.2 NTS 210 DF Newcastlemax Mar-23 Mount Etna 70.2 NTS 210 DF Newcastlemax Apr-23 Mount Blanc 70.2 NTS 210 DF Newcastlemax Jun-23 Mount Matterhorn 72.1 NTS 210 DF Newcastlemax Jul-23 Mount Neblina 72.1 NTS 210 DF Newcastlemax Aug-23 Mount Bandeira 72.1 NTS 210 DF Newcastlemax Jan-24 Mount Hua 72.1 NTS 210 DF Newcastlemax Jan-24 Mount Elbrus 72.6 NTS 210 DF Newcastlemax Jan-24 Mount Denali 72.6 NTS 210 DF Newcastlemax May-24 Mount Aconcagua 72.6 NTS 210 DF Newcastlemax Jul-24 Mount Emai 72.6 NTS 210 DF Newcastlemax Jul-24 Total / Average 859.7 / 71.6 Fleet overview 138 78 180k dwt 2014/15 built Capesize vessel Himalaya Newcastlemax LNG propulsion (43%) CO2
10 1. 2022 average of the 5 T/C Routes for Baltic Capesize Index of $16,177. 2. Scrubber benefit based on VLSFO – HSFO spread of $236 basis Singapore bunkering for average January 2023. 3. Premium achieved will depend on the terms Himalaya Shipping is able to achieve in contracts entered into, including the variable scrubber earnings. Source: Clarksons Shipping Intelligence Network (https://sin.clarksons.net/) as of January 26, 2023, Bloomberg and Company estimates Fuel flexibility unlocking premium potential vs. conventional vessels The right ships 2022 average Capesize Index1 17% larger cargo intake • 175k tonnes BIMCO BCI 5TC 2014-built Capesize • 205k tonnes Himalaya DF LNG Newcastlemax 26% lower laden fuel consumption • 43 mT3 BIMCO BCI 5TC 2014- built Capesize • 32 mT3 Himalaya DF LNG Newcastlemax ~30% scrubber earnings premium potential2 ~70% potential3 when reflecting theoretical size and fuel benefits combined with scrubber premium 16 200 2 754 4 212 4 858 28 024 $/day
11 LNG @ discount LNG @ discount Seasonality in LNG markets offer opportunity to bunker in LNG Any future carbon tax likely to make LNG a more appealing alternative HSFO preferred fuel with scrubber Some seasonal opportunities to use LNG The right ships LNG expected to be at a discount to VLSFO by 2026 1. HSFO = high Sulphur fuel oil, VLSFO = very low Sulphur fuel oil 2. Calorific adjusted kj/kg 40,500 (HSFO), 41,200 (VLSFO), 50,000 (LNG). Data shown from December 2018 through February 2023 reflect spot prices for respective fuels, data shown from March 2023 onward reflect forward curves for respective fuels. 3. Implied scrubber-driven savings illustrated 27.4 tonnes/day consumption, 75% retention of scrubber premium by the Company. LNG-driven saving illustrated by 22.7 tonnes/day consumption for LNG and 27.4 tonnes/day consumption for VLSFO, and $600/tonne VLSFO and $600/tonne LNG and spread based on increasing VLSFO. Source: Bloomberg and Company assumptions $/tonne, calorific value adjusted1,2 0 500 1,000 1,500 2,000 2,500 3,000 Dec-18 Oct-20 Aug-22 Jun-24 Apr-26 Feb-28 Dec-29 LNG HSFO VLSFO Himalaya ships bunkering LNG in July 2023
12 Value of ship (average purchase price) $m 71.6 Financing (average debt financing)1 " 63.1 Loan to purchase price % 88% Fixed bareboat day-rate2 $/day 16,567 Scrubber financing3 $/day 841 Estimated Opex " 6,200 Estimated SG&A " 732 Estimated cash break-even " 24,340 Estimated scrubber benefit when sailing4 $/day (2,050) Earnings premium5 42% (6,600) Capesize equivalent cash break-even rate $/day ~15,700 The right financing Estimated cash break-even of a fully delivered basis 1. Based on Company estimated average debt financing for 12 vessels, including scrubber financing for four vessels. 2. Blended fixed bareboat day-rate. 3. Floating interest rate scrubber financing for four vessels. 4. VLSFO – HSFO spread of $100 basis Singapore bunkering for average August 2023 for a consumption of 10,000 tons per year with 75% benefit to the Shipowner. 5. 8 index-linked charters with a contracted premium to BCI 5TC of 42%. Source: Clarksons Shipping Intelligence Network (https://sin.clarksons.net/) as of January 26, 2023 and Company estimates Last upcycle Capesize rates vs. est. equivalent cash break-even 1 year Capesize timecharter rates 2003 – 2010, ($/day) 0 50,000 100,000 150,000 200,000 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 ~ 15,700 Oct 2008 118.4% Orderbook to fleet %Dec 2003 20.2% Orderbook to fleet %
13 Himalaya has a brand new fleet No need for investments in fleet renewal Return cash-flow after debt service to shareholders Ambition to pay monthly dividends once ships are delivered The right strategy In the last cycle you made 6x just owning the assets Capital discipline $61k/day + 41% premium + $4.8k/day scrubber benefit. Cash break-even of $24.4k/day
14 1. Energy Efficiency Existing Ship Index (EEXI) and Carbon Intensity Indicator (CII) 2. Based on 6 index-linked charters with a contracted premium to BCI 5TC of 40-42% 3) Basis 43 mT pr day fuel consumption and 3.2 CO2 pr mT for a 180k dwt 2014/15 built Capesize vessel and 28 mT pr day fuel consumption and 2.8 CO2 pr mT for a Himalaya newbuild. Summary The right strategy – capital discipline and full alignment The right ships – reduction in CO2 emissions3 by >40% when running on LNG – earnings significant premium to Capesize index rates The right financing – fixed interest rate interest secures low CBE The right timing – record low orderbook and limited yard capacity1 2 4 3 Sea trial Mount Norefjell, November 2022