Capital Product Partners L.P. Announces Second Quarter 2013 Financial Results, Reports Sale of OSG Claims and Reiterates Its

Capital Product Partners L.P. Announces Second Quarter 2013 Financial Results, 
Reports Sale of OSG Claims and Reiterates Its Commitment to
Its $0.93 Per Unit Annual Distribution Guidance 
ATHENS, GREECE -- (Marketwired) -- 07/31/13 --  Capital Product
Partners L.P. (the "Partnership" or "CPLP") (NASDAQ: CPLP), an
international diversified shipping company, today released its
financial results for the second quarter ended June 30, 2013.  
The Partnership's net income for the quarter ended June 30, 2013, was
$39.3 million, including a $32.0 million gain related to the sale to
a third party of the Partnership's claims against Overseas
Shipholding Group Inc. ("OSG") and certain of OSG's subsidiaries. The
claims relate to the bankruptcy of OSG and the rejection by OSG of
three long term bareboat charters of the Partnership's product tanker
vessels.  
After taking into account the $5.3 million, preferred interest in net
income attributable to the unitholders of the 24,655,554 outstanding
Class B Convertible Preferred Units as of June 30, 2013, which were
issued during the second quarter of 2012 and the first quarter of
2013 (the "Class B Units" and the "Class B Unitholders"), the result
for the quarter ended June 30, 2013, was $0.48 net income per limited
partnership unit, which is $0.20 higher than the $0.28 net income per
unit of the previous quarter ended March 31, 2013, and $0.49 higher
than the $0.01 net loss per unit in the second quarter of 2012.  
Operating surplus for the quarter ended June 30, 2013 was $56.6
million, which is $34.0 million higher than the $22.6 million from
the first quarter of 2013, and $39.7 million higher than the $16.9
million of the second quarter of 2012. The operating surplus adjusted
for the payment of distributions to the Class B Unitholders was $51.4
million for the quarter ended June 30, 2013. Operating surplus is a
non-GAAP financial measure used by certain investors to measure the
financial performance of the Partnership and other master limited
partnerships. Please refer to the section "Appendix A" at the end of
the press release, for a reconciliation of this non-GAAP measure to
net income. 
Revenues for the second quarter of 2013 were $41.8 million compared
to $37.8 million in the second quarter of 2012.  
Total expenses for the second quarter of 2013 were $30.8 million
compared to $25.7 million in the second quarter of 2012 due to higher
operating expenses incurred as a result of the higher number of
vessels in our fleet. Vessel operating expenses for the second
quarter of 2013 amounted to $13.4 million, compared to $11.2 million
in the second quarter of 2012. The total expenses for the second
quarter of 2013 also include $12.8 million in depreciation and
amortization, compared to $12.0 million in the second quarter of
2012. General and administrative expenses for the second quarter of
2013 amounted to $3.4 million, which include a $1.6 million non-cash
charge related to the Partnership's Omnibus Incentive Compensation
Plans.  
In the second quarter of 2013, we reported a gain of $32.0 million
related to the sale to a third party of the Partnership's claims
against OSG and certain of OSG's subsidiaries regarding the long term
bareboat charters of three of the Partnership's product tanker
vessels.  
Excluding the gain of $32.0 million, total other expense net for the
second quarter of 2013 amounted to $3.6 million compared to $8.8
million for the second quarter of 2012. The decrease in the interest
expense and finance cost for the second quarter of 2013 reflects the
expiration of all interest rate swaps and the reduction of the
Partnership's total debt when compared to the second quarter of 2012. 
As of June 30, 2013, Partners' capital amounted to $672.4 million,
which is $98.6 million higher than Partners' capital, as of December
31, 2012, which amounted to $573.8 million. This increase primarily
reflects the issuance of the 9.1 million Class B Units, which raised
gross proceeds of approximately $75.1 million and the net income for
the six-month period ended June 30, 2013. 
As of June 30, 2013, the Partnership's total debt has increased by
$52.6 million to $511.0 million, compared to total debt of $458.4
million as of December 31, 2012, as a result of the $54.0 million
drawdown on the Partnership's credit facilities during the first
quarter of 2013 in connection with the acquisition of the 5,023 TEU
Container Vessels and the respective quarterly loan amortization
payment of $1.4 million in second quarter of 2013.  
OSG Claim 
As previously reported by the Partnership, on November 14, 2012, OSG
and certain of its subsidiaries made a voluntary filing for relief
under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy
Court for the District of Delaware (the "Bankruptcy Court"). The
Partnership had three IMO II/III Chemical/Product tankers (M/T
Alexandros II, M/T Aristotelis II and M/T Aris II, all built in 2008
by STX Offshore & Shipbuilding Co. Ltd.) employed on long term
bareboat charters to subsidiaries of OSG.  
After discussions with OSG, the Partnership agreed to enter into new
charters with OSG on substantially the same terms as the prior
charters, but at a bareboat rate of $6,250 per day. The new charters
were approved by the Bankruptcy Court on March 21, 2013, and were
effective as of March 1, 2013. On the same date, the Bankruptcy Court
also rejected the previous charters as of March 1, 2013. Rejection of
each charter constitutes a material breach of such charter.  
On May 24, 2013, the Partnership filed claims (the "Claims") for a
total of $54.1 million against each of the charterers and their
respective guarantors for damages resulting from the rejection of
each of the previous charters, including, among other things, for the
difference between the reduced amount of the new charters and the
amount due under each of the rejected charters.  
The Partnership has since transferred to Deutsche Bank Securities
Inc. ("Deutsche Bank") all of its rights, title, interest, claims and
causes of action in and to, or arising under or in connection with,
the Claims pursuant to three separate Assignment of Claim Agreements,
dated as of June 24, 2013, and effective as of June 26, 2013
(collectively, the "Assignment Agreements"). The total proceeds to be
received by the Partnership from the sale of claims to Deutsche Bank,
a substantial part of which has been already paid, is dependent on
the actual claim amount allowed by the Bankruptcy Court -- the
Partnership may be required to refund a portion of the purchase price
(up to a maximum of $9 million) or may receive an additional payment
from Deutsche Bank. In connection with the Assignment Agreements, on
July 2, 2013, Deutsche Bank filed with the Bankruptcy Court six
separate Evidences of Transfer of Claim, each pertaining to the
Partnership's vessel-owning subsidiaries' claims against each
charterer party to the original three charter agreements and each
respective guarantor thereof.  
Fleet Developments 
The M/T Avax (47,834 dwt built 2007, South Korea) and M/T Axios
(47,872 dwt, built 2007, South Korea) have both extended their
charters with our Sponsor, Capital Maritime, by a period of 12 months
(+/- 30 days) at a gross rate of $14,750 per day, which is $750 per
day higher than their previous employment day rate. The earliest
redelivery for each of the M/T Avax and the M/T Axios under these
charters is expected to be April 2014 and May 2014, respectively.  
In addition, the M/T Akeraios (47,782 dwt built 2007, South Korea)
extended its 
charter with our Sponsor, Capital Maritime, by a period
of 18 months (+/- 30 days) at a gross rate of $14,950 per day, which
is $950 per day higher than its previous employment day rate. The
earliest redelivery for the M/T Akeraios is expected to be December
2014. 
All transactions were unanimously approved by the conflicts committee
of our Board of Directors. 
Market Commentary 
Overall, product tanker spot earnings in the second quarter of 2013
continued their positive momentum as average earnings in the second
quarter of 2013 remained at elevated levels for the season. Demand
for product tankers benefited from a strong transatlantic market
early in the second quarter and from exports out of the United States
to Latin America and to Europe on the back of increased U.S. refinery
utilization.  
The product tanker period market remained active during the course of
the second quarter of 2013, as more charterers entered into time
charter contracts and at slightly higher time charter rates compared
to the previous quarter. 
On the supply side, the product tanker order book continues to
experience substantial slippage during 2013, as approximately 51% of
the expected MR and handy size tanker newbuildings were not delivered
on schedule. Analysts expect that net fleet growth for product
tankers for 2013 will be in the region of 3.7%, while growth in
overall demand for product tankers for the year is estimated at 4.6
%. We believe the improving demand and supply balance of the product
tanker market should continue to positively affect spot and period
charter rates going forward. 
The Suezmax spot market remained at seasonally low levels, as
increased vessel supply continued to put downward pressure on rates. 
Slippage for the Suezmax tanker order book increased over the last
few months and continued to affect tonnage supply as approximately
27% of the expected Suezmax newbuildings year to date were not
delivered on schedule. Industry analysts expect the crude tanker
order book slippage and cancellations to increase going forward due
to the historically weak spot market, the soft shipping finance
environment and downward pressure on asset values. Suezmax tanker
demand is expected to grow by 3.2% in the full year 2013 with net
fleet growth projected at 8.5%.  
Quarterly Common and Class B Unit Cash Distribution  
On July 22, 2013, the Board of Directors of the Partnership declared
a cash distribution of $0.2325 per common unit for the second quarter
of 2013, in line with management's annual distribution guidance. The
second quarter common unit cash distribution will be paid on August
15, 2013, to unit holders of record on August 7, 2013.  
In addition, on July 22, 2013, the Board of Directors of the
Partnership declared a cash distribution of $0.21375 per Class B Unit
for the second quarter of 2013, in line with the Partnership's Second
Amended and Restated Partnership Agreement, as amended. The second
quarter Class B Unit cash distribution will be paid on August 9,
2013, to Class B Unitholders of record on August 1, 2013. 
Results of Annual General Meeting 
On July 22, 2013, the Partnership held its Annual General Meeting in
Athens, at which both Keith Forman and Evangelos Bairactaris were
re-elected to act as Class III Directors until the 2016 Annual
Meeting of Limited Partners of the Partnership. No other actions were
taken at the meeting.  
Management Commentary 
Mr. Ioannis Lazaridis, Chief Executive and Chief Financial Officer of
the Partnership's General Partner, commented:  
"We are very pleased to see the improved operating surplus of the
Partnership for the second quarter 2013, which reflects the full
contribution of the two 5,023 TEU container vessels with 12 year
period charters, which we took delivery of at the end of the previous
quarter. The product tanker market continues to improve with solid
period fixture activity on the back of an improving spot market
following continuous growth of U.S. exports of refined products. To
that end, I would like to reiterate our commitment to the $0.93 per
unit annual distribution guidance going forward." 
"In addition, the successful assignment of the Partnership's claim
against OSG to Deutsche Bank and the funds received in connection
with this transaction, as well as the positive fundamentals of the
product tanker market going forward, further enhance our financial
flexibility in order to pursue growth opportunities and further forge
a pathway to distribution growth."  
Conference Call and Webcast
 Today, Wednesday, July 31, 2013 at 10:00
a.m. Eastern Time (U.S.), the Partnership will host an interactive
conference call. 
Conference Call Details:
 Participants should dial into the call 10
minutes before the scheduled time using the following numbers: 1 866
819 7111 (U.S. Toll Free Dial In), 0800 953 0329 (UK Toll Free Dial
In) or +44 (0)1452 542 301 (Standard International Dial In). Please
quote "Capital Product Partners." 
A replay of the conference call will be available until August 7,
2013 by dialing 1 866 247 4222 (U.S. Toll Free Dial In), 0800 953
1533 (UK Toll Free Dial In) or +44 (0)1452 550 000 (Standard
International Dial In). Access Code: 69648481# 
Slides and Audio Webcast: 
There will also be a simultaneous live webcast over the Internet,
through the Capital Product Partners website, www.capitalpplp.com.
Participants to the live webcast should register on the website
approximately 10 minutes prior to the start of the webcast. 
Forward-Looking Statements: 
 The statements in this press release
that are not historical facts, including our expectations regarding
employment of our vessels, redelivery dates and charter rates, fleet
growth and demand, newbuilding deliveries and slippage as well as
market and charter rate expectations and expectations regarding our
quarterly distributions, ability to pursue growth opportunities and
grow our distributions and annual distribution guidance as well as
the transactions described herein and their effects on the
Partnership, the actual claim amount allowed by the Bankruptcy Court
and any amounts we may be required to refund or additional amounts we
may receive from Deutsche Bank may be forward-looking statements (as
such term is defined in Section 21E of the Securities Exchange Act of
1934, as amended). These forward-looking statements involve risks and
uncertainties that could cause the stated or forecasted results to be
materially different from those anticipated. Unless required by law,
we expressly disclaim any obligation to update or revise any of these
forward-looking statements, whether because of future events, new
information, a change in our views or expectations, to conform them
to actual results or otherwise. We assume no responsibility for the
accuracy and completeness of the forward-looking statements. We make
no prediction or statement about the performance of our units. 
About Capital Product Partners L.P. 
Capital Product Partners L.P. (NASDAQ: CPLP), a Marshall Islands
master limited partnership, is an international diversified shipping
company. The Partnership currently owns 27 vessels, including four
Suezmax crude oil tankers, 18 modern MR (Medium Range) product
tankers, four post panamax container vessels and one Capesize bulk
carrier. All of its vessels are under period charters to large
charterers such as BP Shipping Limited, subsidiaries of OSG,
Petrobras, A.P. Moller-Maersk A.S, Hyundai Merchant Marine Co. Ltd.,
Arrendadora Ocean Mexicana, S.A. de C.V., Subtec S.A. de C.V., Cosco
Bulk Carrier Co. Ltd. and Capital Maritime & Trading Corp. 
For more information about the Partnership, please visit our website:
www.capitalpplp.com. 
CPLP-F  


 
                                                                            
                                                                            
Capital Product Partners L.P.                                               
Unaudited Condensed Consolidated Statements of Comprehensive Income         
(In thousands of United States Dollars, except number of units and earnings 
per unit)                                                                   
                                                                            
                            For the three-month    For the six-month period 
                           period ended June 30,        e
nded June 30,      
                             2013         2012         2013         2012    
                                                                            
Revenues                 $    27,215  $    20,124  $    53,726  $    43,783 
Revenues - related party      14,554       17,724       28,008       33,904 
                         -----------  -----------  -----------  ----------- 
Total Revenues                41,769       37,848       81,734       77,687 
                         -----------  -----------  -----------  ----------- 
                                                                            
Expenses:                                                                   
Voyage expenses                1,110          437        2,882        3,259 
Voyage expenses related                                                     
 party                            80          143          160          284 
Vessel operating                                                            
 expenses - related                                                         
 party                         4,199        6,133        8,496       13,422 
Vessel operating                                                            
 expenses                      9,223        5,038       17,522        9,830 
General and                                                                 
 administrative expenses       3,383        2,259        5,984        4,547 
Gain on sale of vessel                                                      
 to third parties                  -         (341)           -       (1,296)
Depreciation and                                                            
 amortization                 12,813       12,025       24,680       24,221 
                         -----------  -----------  -----------  ----------- 
Operating income              10,961       12,154       22,010       23,420 
                         -----------  -----------  -----------  ----------- 
Non operating income                                                        
 (expense), net:                                                            
Gain from bargain                                                           
 purchase                          -            -       17,475            - 
Other income /                                                              
 (expense), net:                                                            
Interest expense and                                                        
 finance cost                 (3,642)     (10,101)      (7,357)     (18,929)
Gain on sale of claim         32,000            -       32,000            - 
Gain on interest rate                                                       
 swap agreement                    -          808            4        1,447 
Interest and other                                                          
 income                            -          509          200          657 
                         -----------  -----------  -----------  ----------- 
Total other income /                                                        
 (expense), net               28,358       (8,784)      24,847      (16,825)
                         -----------  -----------  -----------  ----------- 
Net income               $    39,319  $     3,370  $    64,332  $     6,595 
                         -----------  -----------  -----------  ----------- 
Preferred unit holders'                                                     
 interest in                                                                
 Partnership's net                                                          
 income                        5,270        4,159       10,540        4,159 
General Partner's                                                           
 interest in                                                                
 Partnership's net                                                          
 income / (loss)         $       681  $       (16) $     1,076  $        49 
Common unit holders'                                                        
 interest in                                                                
 Partnership's net                                                          
 income / (loss)              33,368  $      (773)      52,716  $     2,387 
Net income / (loss) per:                                                    
  -- Common units basic  $      0.48  $     (0.01) $      0.76  $      0.03 
Weighted-average units                                                      
 outstanding:                                                               
  -- Common units basic   68,386,078   68,187,547   68,385,001   68,186,476 
Net income / (loss) per:                                                    
  -- Common unit diluted $      0.41  $     (0.01) $      0.70  $      0.03 
Weighted-average units                                                      
 outstanding:                                                               
  -- Common units                                                           
   diluted                94,027,631   68,187,547   89,980,394   68,186,476 
Comprehensive income:                                                       
Partnership's net income      39,319        3,370       64,332        6,595 
Other Comprehensive                                                         
 income:                                                                    
Unrealized gain on                                                          
 derivative instruments            -        5,668          462        9,840 
                                                                            
                         -----------  -----------  -----------  ----------- 
Comprehensive income     $    39,319  $     9,038  $    64,794  $    16,435 
                         -----------  -----------  -----------  ----------- 
                                                                            
                                                                            
                                                                            
Capital Product Partners L.P.                                               
Unaudited Condensed Consolidated Balance Sheets                             
(In thousands of United States Dollars, except number of units and earnings 
per unit)                                                                   
                                                                            
                                                  As of June  As of December
                                                   30, 2013      31, 2012   
Assets                                                                      
Current assets                                                              
Cash and cash equivalents                              74,648 $       43,551
Trade accounts receivable, net                          2,899          2,346
Prepayments and other assets                            1,319          1,259
Above market acquired charters                          1,863              -
Inventories                                             2,416          2,333
                                                ------------- --------------
Total current assets                                   83,145         49,489
                                                ------------- --------------
Fixed assets                                                                
Vessels, net                                        1,042,900        959,550
                                                ------------- --------------
Total fixed assets                                  1,042,900        959,550
                                                ------------- --------------
Other non-current assets                                                    
Trade accounts receivable, net                            848            848
Above market acquired charters                         79,753         47,720
Deferred charges, net                                   2,403          2,021
Restricted cash                                        13,500         10,500
                                                ------------- --------------
Total non-current assets                            1,139,404      1,020,639
                                                ------------- --------------
Total assets                                        1,222,549 $    1,070,128
                                                ------------- --------------
                                                                            
Liabilities and Partners' Capital                                           
Current liabilities                                                         
Current portion of long-term debt                       5,400 $            -
Trade accounts payable                                 5, 444        
  4,776
Due to related parties                                 21,062         17,447
Derivative instruments                                      -            467
Accrued liabilities                                     3,686          2,781
Deferred revenue                                        7,396         10,302
                                                ------------- --------------
Total current liabilities                              42,988         35,773
                                                ------------- --------------
Long-term liabilities                                                       
Long-term debt                                        505,615        458,365
Deferred revenue                                        1,561          2,162
                                                ------------- --------------
Total long-term liabilities                           507,176        460,527
                                                ------------- --------------
Total liabilities                                     550,164        496,300
                                                ------------- --------------
Commitments and contingencies                                               
                                                ------------- --------------
Partners' capital                                     672,385        573,828
                                                ------------- --------------
Total liabilities and partners' capital             1,222,549 $    1,070,128
                                                ------------- --------------
                                                                            
                                                                            
                                                                            
Capital Product Partners L.P.                                               
Unaudited Condensed Consolidated Statements of Cash Flows                   
(In thousands of United States Dollars)                                     
                                                                            
                                                                            
                                                        For the six-month   
                                                      period ended June 30, 
                                                        2013        2012    
Cash flows from operating activities:                                       
Net income                                               64,332       6,595 
Adjustments to reconcile net income to net cash                             
 provided by operating activities:                                          
Vessel depreciation and amortization                     24,680      24,221 
Gain from bargain purchase                              (17,475)          - 
Amortization of deferred charges                             98         304 
Gain on interest rate swap agreements                        (4)     (1,447)
Gain on sale of vessels to third parties                      -      (1,296)
Amortization of above market acquired charters            5,579       3,909 
Equity compensation expense                               2,739       1,991 
Changes in operating assets and liabilities:                                
Trade accounts receivable                                  (553)      1,515 
Prepayments and other assets                                (60)        282 
Inventories                                                 (83)      2,117 
Trade accounts payable                                      431      (2,004)
Due from related parties                                      -         (33)
Due to related parties                                    3,615      (1,424)
Accrued liabilities                                         788        (340)
Deferred revenue                                         (3,429)       (155)
Dry-docking costs                                          (196)          - 
                                                     ----------  ---------- 
Net cash provided by operating activities                80,462      34,235 
                                                     ----------  ---------- 
Cash flows from investing activities:                                       
Vessel acquisitions and improvements                   (130,000)       (185)
Increase in restricted cash                              (3,000)     (3,250)
Net proceeds from sale of vessels to third parties            -      19,675 
                                                     ----------  ---------- 
Net cash (used in) / provided by investing                                  
 activities                                            (133,000)     16,240 
                                                     ----------  ---------- 
Cash flows from financing activities:                                       
Proceeds from issuance of Partnership units              75,075     139,400 
Expenses paid for issuance of Partnership units          (2,568)          - 
Proceeds from issuance of long-term debt                 54,000           - 
Loan issuance costs                                         (11)       (133)
Payments of long-term debt                               (1,350)   (170,066)
Dividends paid                                          (41,511)    (32,916)
                                                     ----------  ---------- 
Net cash provided by / (used in) financing                                  
 activities                                              83,635     (63,715)
                                                     ----------  ---------- 
Net increase/(decrease) in cash and cash equivalents     31,097     (13,240)
                                                     ----------  ---------- 
Cash and cash equivalents at beginning of period         43,551      53,370 
                                                     ----------  ---------- 
Cash and cash equivalents at end of period               74,648      40,130 
                                                     ----------  ---------- 
Supplemental cash flow information                                          
Cash paid for interest                                    7,021      18,432 
Non-Cash Investing and Financing Activities                                 
Private placement costs relating to Class B                                 
 preferred units included in liabilities                    (28)      2,975 
Capitalised and dry-docking vessel costs included in                        
 liabilities                                                321          59 

 
Appendix A - Reconciliation of Non-GAAP Financial Measure
 (In
thousands of U.S. dollars) 
Description of Non-GAAP Financial Measure - Operating Surplus 
Operating Surplus represents net income adjusted for non-cash items
such as depreciation and amortization expense and deferred revenue.
Operating Surplus is a quantitative standard used in the
publicly-traded partnership investment community to assist in
evaluating a partnership's ability to make quarterly cash
distributions. Operating Surplus is a non-GAAP financial measure and
should not be considered as an alternative to net income or any other
indicator of the Partnership's performance required by accounting
principles generally accepted in the United States. The table below
reconciles Operating Surplus to net income for the three-month period
ended June 30, 2013. 


 
                                                                            
                                                                            
                                                        For the three-month 
Reconciliation of Non-GAAP Financial Measure -             period e
nded     
 Operating Surplus                                         June 30, 2013    
                                                                            
Net income                                              $            39,319 
Adjustments to reconcile net income to net cash                             
 provided by operating activities                                           
Depreciation and amortization                                        14,472 
Deferred revenue                                                      2,837 
                                                        ------------------- 
OPERATING SURPLUS PRIOR TO CLASS B PREFERRED UNITS                          
 DISTRIBUTION                                                        56,628 
                                                        ------------------- 
Class B preferred units distribution                                 (5,270)
                                                        ------------------- 
ADJUSTED OPERATING SURPLUS                                           51,358 
                                                        ------------------- 
Increase in recommended reserves                                    (34,900)
                                                        ------------------- 
AVAILABLE CASH                                          $            16,458 
                                                        ------------------- 

  
Contact Details:
Capital GP L.L.C. 
Ioannis Lazaridis
CEO and CFO 
+30 (210) 4584 950 
E-mail: i.lazaridis@capitalpplp.com  
Capital Maritime & Trading Corp.
Jerry Kalogiratos
Finance Director
+30 (210) 4584 950
j.kalogiratos@capitalpplp.com 
Investor Relations / Media
Matthew Abenante
Capital Link, Inc. (New York)
Tel. +1-212-661-7566
E-mail: cplp@capitallink.com 
 
 
Press spacebar to pause and continue. Press esc to stop.