Capital Product Partners to Fit Up to 14 Ships with Scrubbers

hyundaiGreek shipping company Capital Product Partners has decided to equip part of its fleet with exhaust gas cleaning systems (EGCS).

Namely, the partnership said it is planning to install scrubbers on up to 14 of its larger vessels, including ten containerships, three crude tankers and one bulk carrier.

The final decision for certain of these vessels is expected to be reached within the coming months and the installation of the scrubbers is expected to be completed throughout 2019 and 2020, the company informed.

“We believe that this move can help increase the appeal of the partnership’s larger vessels to period charterers post January 2020, but also potentially allow us to capture meaningful premiums, such as that negotiated with one of our charterers for five of our vessels,” Jerry Kalogiratos, Chief Executive Officer of the Partnership’s General Partner, said.

In connection with the deals to equip five 5,000 TEU container vessel series with scrubbers, Capital Product Partners has agreed with Hyundai Merchant Marine (HMM), the charterer of the vessels, to increase the daily charter rate by USD 4,900 for each unit. The ships in question are the Hyundai Prestige, Hyundai Premium, Hyundai Paramount, Hyundai Privilege and Hyundai Platinum.

The increase will be effective from January 1, 2020, or, if later, the installation date of the scrubbers until the expiry of each charter in 2024 and 2025, as applicable. The HMM vessels are currently earning USD 23,480 gross per day following a restructuring agreement with HMM dated July 15, 2016.

Under the restructuring agreement, the charter rate is set to be restored to the original daily gross rate of USD 29,350 from January 1, 2020 and will increase further to USD 34,250 once the scrubbers are installed in accordance with the scrubber deals.

Capital Product Partners revealed its decision as part of the company’s financial report for the third quarter ended September 30, 2018.

The partnership’s net loss for the period was USD 22.6 million, compared to a net income of USD 9,6 million. The result includes a non-cash impairment charge of USD 28.8 million from the sale of the 159,982 dwt crude oil carrier M/T Amore Mio II.

The 2001-built unit was sold to an unaffiliated third party for the amount of USD 11.2 million. The vessel was delivered to an unaffiliated third party on October 15, 2018.

Total revenue for the third quarter of 2018 was USD 73.4 million, corresponding to an increase of 17.1% compared to USD 62.7 million reported during the third quarter of 2017. The increase was primarily a result of the rise in the average number of vessels in the company’s fleet and the higher number of voyage charters performed by its vessels.