F-4/A
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As filed with the Securities and Exchange Commission on September 23, 2021

Registration No. 333-259526

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

AMENDMENT NO. 1

TO

Form F-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

Navios Maritime Partners L.P.

(Exact name of registrant as specified in its charter)

 

 

 

Republic of the Marshall Islands   4412   N/A

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

 

Navios Maritime Partners L.P.

7 Avenue de Grande Bretagne, Office 11B2

Monte Carlo, MC 98000 Monaco

(011) + (377) 9798-2140

 

Trust Company of the Marshall Islands, Inc.

Trust Company Complex, Ajeltake Island

P.O. Box 1405

Majuro, Marshall Islands MH96960

(011) +30 210 429 3223

(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)
  (Name, address, including zip code, and telephone number,
including area code, of agent for service)

 

 

With copies to:

 

Philip Richter, Esq.

Fried, Frank, Harris,

Shriver & Jacobson LLP

One New York Plaza

New York, NY 10004

(212) 859-8000

 

Todd E. Mason, Esq.

Thompson Hine LLP

335 Madison Avenue, 12th Floor

New York, NY 10017

(212) 344-5680

 

Ryan J. Maierson, Esq.

Nick S. Dhesi, Esq.

Latham & Watkins LLP

811 Main Street, Suite 3700

Houston, Texas 77002

(713) 546-5400

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement is declared effective and all conditions to the merger contemplated by the Agreement and Plan of Merger, dated as of August 25, 2021, described in the enclosed proxy statement/prospectus, have been satisfied or waived and the merger has been completed as described in the enclosed proxy statement/prospectus.

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐


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If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

☐  Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)

☐  Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

Emerging growth company  ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

 

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of Each Class of
Securities to be Registered
  Amount
to be
Registered
  Proposed
Maximum
Offering Price
Per Unit
  Proposed
Maximum
Aggregate
Offering Price
  Amount of
Registration Fee

Common units

  3,448,388(1)   N/A   $105,175,600(2)   $11,475(3)(4)

 

 

(1)

The 3,448,388 common units of the registrant (“Navios Partners Common Units”) being registered represents the estimated maximum number of Navios Partners Common Units that may be issued in the merger described herein (the “Merger”). Such estimated maximum number of Navios Partners Common Units being registered is based on the product obtained by multiplying the 26,559,495 shares of common stock, par value $0.0001 per share, of Navios Maritime Acquisition Corporation (“Navios Acquisition Common Shares”) estimated to be outstanding and not held directly or indirectly by the registrant or Navios Maritime Acquisition Corporation or any of their respective subsidiaries immediately prior to the Merger by the exchange ratio of 0.1275 of a Navios Partners Common Unit for each Navios Acquisition Public Common Share. In accordance with Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”), this registration statement also covers an indeterminate number of additional Navios Partners Common Units as may be issuable as a result of unit splits, unit dividends or similar transactions.

(2)

Pursuant to Rules 457(f)(1) and 457(c) under the Securities Act, and solely for the purpose of calculating the registration fee, the proposed maximum aggregate offering price is (i) the product obtained by multiplying (x) $3.96 (the average of the high and low prices of Navios Acquisition Common Shares (the securities to be exchanged in the Merger) on September 10, 2021, as reported on the New York Stock Exchange LLC, by (y) 26,559,495 (the number of Navios Acquisition Public Common Shares estimated to be outstanding immediately prior to the Merger, each of which will be exchanged in the Merger for merger consideration consisting of Navios Partners Common Units).

(3)

Calculated pursuant to Section 6(b) of the Securities Act and SEC Fee Rate Advisory #1 for Fiscal Year 2021 at a rate equal to $109.10 per $1,000,000 (0.0001091) of the proposed maximum aggregate offering price.

(4)

Previously paid with the Registration Statement on Form F-4 filed on September 14, 2021.

 

 

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the U.S. Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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The information in this proxy statement/prospectus is not complete and may be changed. A registration statement relating to these securities has been filed with the U.S. Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This document shall not constitute an offer to sell nor the solicitation of an offer to buy, nor shall there be any sale of these securities, in any jurisdiction in which such offer, solicitation or sale is not permitted.

 

PRELIMINARY — SUBJECT TO COMPLETION — DATED SEPTEMBER 23, 2021

 

LOGO

Dear Shareholders of Navios Maritime Acquisition Corporation:

We are pleased to inform you that on August 25, 2021, Navios Maritime Acquisition Corporation, which we refer to as “Navios Acquisition” or “NNA,” entered into a merger agreement with Navios Maritime Partners L.P., which we refer to as “Navios Partners” or “NMM,” and Navios Partners’ direct, wholly-owned subsidiary Navios Acquisition Merger Sub. Inc., which we refer to as “Merger Sub.” Pursuant to the merger agreement, Merger Sub will be merged with and into Navios Acquisition, with Navios Acquisition becoming a wholly-owned subsidiary of Navios Partners. The accompanying Notice of Special Meeting and this proxy statement/prospectus describe the merger in greater detail and provide specific information about the Special Meeting referenced below. Please read these materials carefully.

In the merger, each share of Navios Acquisition common stock, par value $0.0001 per share, which we refer to as the “Navios Acquisition Common Shares,” that is outstanding immediately before the merger (other than shares held by Navios Acquisition, Navios Partners and their respective subsidiaries) will be automatically converted into the right to receive 0.1275 of a common unit of Navios Partners, which we refer to as the “Merger Consideration.”

The market value of the Merger Consideration will fluctuate with the market price of Navios Partners’ common units. You should obtain current price quotations for the Navios Partners common units, which are listed on the New York Stock Exchange under the ticker symbol “NMM.” On August 26, 2021, the trading day immediately preceding the public announcement of the merger agreement, the closing price of Navios Partners’ common units on the NYSE was $25.67 and the Merger Consideration represented a value per Navios Acquisition Common Share of approximately $3.27, representing a premium to Navios Acquisition shareholders of 55.7% based on the August 26, 2021 closing price of the Navios Acquisition Common Shares and 13.1% based on the 60-day volume weighted average price of the Navios Acquisition common shares for the period ending August 26, 2021. Based on the closing price of Navios Partners common units on the NYSE of $30.96 on September 10, 2021, the latest practicable date before the date of this proxy statement/prospectus, the Merger Consideration represented a value per Navios Acquisition Common Share of approximately $3.95.

You are cordially invited to attend a special meeting of the shareholders of Navios Maritime Acquisition Corporation, which we refer to as the “Special Meeting,” to be held at the offices of Navios Maritime Acquisition Corporation, located at Strathvale House, 90 N Church Street, Grand Cayman, KY1-1104 Cayman Islands, on [●], 2021 at [●] a.m., local time, to vote on the approval of the Merger Agreement.

The Board of Directors of Navios Acquisition delegated to a special committee of the Navios Acquisition Board, comprised solely of independent directors of Navios Acquisition, referred to as the “Navios Acquisition Special Committee,” the authority to review, evaluate, negotiate, reject and/or recommend to the Board of Directors of Navios Acquisition the proposed merger, the merger agreement and the related transactions and documents. In addition, the Navios Acquisition Special Committee was granted the authority to select and retain independent legal and financial advisors to assist the Navios Acquisition Special Committee in carrying out its responsibilities.

Each of the Navios Acquisition Special Committee and the Board of Directors of Navios Acquisition unanimously determined that the merger agreement and the transactions contemplated by the merger agreement are in the best interests of Navios Acquisition and the holders of Navios Acquisition Public Common Shares (as such term is defined in the proxy statement/prospectus), approved the merger agreement and the transactions contemplated thereby; and determined to recommend that the holders of Navios Acquisition Common Shares approve the merger agreement and the merger upon the terms and conditions set forth in the merger agreement.


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The Navios Acquisition Special Committee and the Board of Directors of Navios Acquisition recommend that the holders of Navios Acquisition Common Shares vote “FOR” the approval of the merger agreement. Under applicable law, the merger requires approval of Navios Acquisition shareholders holding at least a majority of the outstanding Navios Acquisition Common Shares. Under the terms of the merger agreement, Navios Partners, which owns approximately 62.4% of the outstanding Navios Acquisition Common Shares, has agreed to vote all of its Navios Acquisition Common Shares in favor of the merger and the merger agreement at the Special Meeting. The affirmative vote of Navios Partners alone will be sufficient to approve the merger and the merger agreement.

The notice of the Special Meeting and the proxy statement/prospectus that accompany this letter provide you with detailed information about the Special Meeting, the merger agreement, the merger, the other transactions contemplated by the merger agreement and other related matters. Navios Partners and Navios Acquisition both encourage you to read the entire document carefully. In particular, please read the section entitled “Risk Factors,” on page 12 of this proxy statement/prospectus, for a discussion of risks relevant to the merger and the combined company.

Whether or not you plan to attend the Special Meeting, please read the enclosed proxy statement/prospectus and complete, sign, date, and return the enclosed proxy card as soon as possible to ensure your representation at the Special Meeting. We have provided a postage-paid envelope for your convenience. If you plan to attend the Special Meeting and prefer to vote in person, you may still do so even if you have already returned your proxy card.

 

Angeliki Frangou

   Christos Kokkinis

Chairman of the Board of Directors of

Navios Maritime Acquisition Corporation

  

Chairman of the Special Committee of the Board of Directors of

Navios Maritime Acquisition Corporation

NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE NAVIOS PARTNERS COMMON UNITS TO BE ISSUED IN THE MERGER OR DETERMINED IF THIS PROXY STATEMENT/PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this proxy statement/prospectus is [●], 2021 and is first being mailed to holders of Navios Acquisition Common Shares on or about [●], 2021.


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ADDITIONAL INFORMATION

Navios Partners and Navios Acquisition file annual reports with and furnish other information to the U.S. Securities and Exchange Commission (the “SEC”). This proxy statement/prospectus incorporates by reference important business and financial information about Navios Partners and Navios Acquisition and their respective subsidiaries from documents that are not included in or delivered with this proxy statement/prospectus. You can obtain copies of the documents incorporated by reference into this proxy statement/prospectus, without charge, from the SEC’s website at http://www.sec.gov. You can also find information about Navios Partners and Navios Acquisition by visiting Navios Partners’ website at https://www.navios-mlp.com and Navios Acquisition’s website at https://www.navios-acquisition.com. Information contained on these websites does not constitute part of this proxy statement/prospectus.

You may also request copies of these documents, without charge, by writing or telephoning the appropriate company as follows:

Vasiliki (Villy) Papaefthymiou

Secretary

Navios Maritime Partners L.P.

Navios Maritime Acquisition Corporation

7 Avenue de Grande Bretagne, Office 11B2

Monte Carlo MC 98000 Monaco

(011) + (377) 9798-2140

In addition, if you have questions about the merger or the Special Meeting, need additional copies of this proxy statement/prospectus or need to obtain proxy cards or other information related to the proxy solicitation, you may contact Navios Acquisition as follows:

Vasiliki (Villy) Papaefthymiou

Secretary

Navios Maritime Acquisition Corporation

Strathvale House, 90 N Church Street

Grand Cayman

KY1-1104 Cayman Islands

+1 345 232 3066

You will not be charged for any of the documents that you request. If you would like to request documents, please do so by [], 2021 (which is five (5) business days before the date of the Special Meeting) in order to receive them before the Special Meeting.

For additional information about documents incorporated by reference into this proxy statement/prospectus, please see the section entitled “Where You Can Find More Information” beginning on page [] of this proxy statement/prospectus.


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ABOUT THIS PROXY STATEMENT/PROSPECTUS

References in this proxy statement/prospectus to “Excluded Shares” refer to (i) Navios Acquisition Common Shares held immediately prior to the effective time of the Merger by Navios Acquisition, Navios Partners and their respective subsidiaries (including the shares issued pursuant to the NMM Equity Issuance) and (ii) NNA Restricted Shares.

References to the “Merger Agreement” refer to the Agreement and Plan of Merger, dated August 25, 2021, by and among Navios Partners Navios Acquisition Merger Sub. Inc., a Republic of the Marshall Islands corporation and a wholly owned subsidiary of Navios Partners (“Merger Sub”), and Navios Acquisition, as it may be amended, pursuant to which Merger Sub will be merged with and into Navios Acquisition (the “Merger”), with Navios Acquisition surviving the Merger as a wholly-owned subsidiary of Navios Partners and each Navios Acquisition Common Shares that is outstanding immediately before the Merger (other than shares held by Navios Acquisition, Navios Partners and their respective subsidiaries) will be automatically converted into the right to receive 0.1275 of a Navios Partners Common Unit.

References to “Navios Acquisition” or “NNA” refer to Navios Maritime Acquisition Corporation and/or one or more of its subsidiaries, as the context requires.

References to “Navios Acquisition Common Shares” refer to common stock, par value $0.0001 per share, of Navios Acquisition.

References to “Navios Acquisition Public Common Shares” refer to outstanding Navios Acquisition Common Shares, other than Navios Acquisition Common Shares held by Navios Partners, Navios Acquisition and Navios Shipmanagement Holdings Corporation (“NSM”) or any of their affiliates.

References to “Navios Partners” or “NMM” refer to Navios Maritime Partners L.P. and/or one or more of its subsidiaries (other than Navios Acquisition and its subsidiaries), as the context requires.

References to “Navios Partners Common Units” refer to common units of Navios Partners. The holders of the Navios Partners Common Units are entitled to elect a majority of the Board of Directors of Navios Partners.

References to the “Navios Partners Subscription Consideration” refer to the aggregate subscription amount of $150.0 million in the NMM Equity Issuance.

References to the “NMM Equity Issuance” refer to the issuance and sale by Navios Acquisition as of August 25, 2021 of 44,117,647 newly issued Navios Acquisition Common Shares to Navios Partners at a price of $3.40 per share in cash or $150.0 million in accordance with the terms of the Merger Agreement as of 2021.

References to the “NMM Loan Agreement” refer to the Loan Agreement, dated as of August 24, 2021, between Navios Acquisition and Navios Partners under which Navios Partners made available to Navios Acquisition a working capital facility of up to $45.0 million.

References to “NNA Debt Financing” refer to the entry by Navios Acquisition and certain of its subsidiaries into financing arrangements with certain lenders pursuant to which Navios Acquisition and its subsidiaries borrowed from such lenders up to $291.4 million in the aggregate.

References to “NNA Restricted Shares” refer to Navios Acquisition Common Shares that are subject to vesting or other forfeiture conditions immediately prior to the effective time of the Merger.

References to the “NSM Equity Issuance” refer to the issuance of 8,823,529 newly issued Navios Acquisition Common Shares to NSM, as of August 25, 2021, in exchange the cancellation of $30.0 million ($3.40 per share) of the approximately $98.1 million outstanding balance of a loan from NSM to Navios Acquisition (the “NSM Loan”) in accordance with an amendment to the NSM Loan entered into as of August 25, 2021 by NSM and NNA (the “NSM Loan Amendment”) pursuant to which, among other things, NSM released all of the collateral


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securing the NSM Loan (to allow the Ship Mortgage Notes released collateral to be included in the collateral securing Navios Acquisition’s newly arranged secured term loan financings) and surrendered its option to exchange all or a portion of the NSM Loan for equity of Navios Acquisition’s material subsidiary, Navios Maritime Midstream Partners L.P.

References to the “NSM Subscription Consideration” refer to the amount of the NSM Loan that is cancelled in connection with the NSM Equity Issuance of $30.0 million.

References to the “Ship Mortgage Notes” refer to all of Navios Acquisition’s outstanding 8.125% First Priority Ship Mortgage Notes due November 15, 2021, which NNA called for redemption on August 26, 2021 and in respect of which NNA remitted to the indenture trustee the aggregate redemption price payable to the holders of the Ship Mortgage Notes to satisfy and discharge Navios Acquisition’s obligations under the indenture relating to the Ship Mortgage Notes using net proceeds from (i) the NMM Equity Issuance described below, and (ii) the NNA Debt Financing.

References to the “Transaction” refer collectively to the Merger, the NMM Equity Issuance, the NNA Debt Financing, the redemption of the Ship Mortgage Notes and the satisfaction and discharge of Navios Acquisition’s obligations under the indenture relating to the Ship Mortgage Notes, the transactions contemplated by the NSM Loan Amendment and the NMM Loan Agreement.

Unless otherwise indicated, all references to “dollars,” “US dollars” and “$” in this proxy statement/prospectus are to United States dollars. This proxy statement/prospectus uses the term deadweight tons, or dwt, expressed in metric tons, each of which is equivalent to 1,000 kilograms, in describing the size of tankers.

This proxy statement/prospectus, which forms part of a registration statement on Form F-4 (File No. 333-259526) filed with the SEC by Navios Partners, constitutes a prospectus of Navios Partners under Section 5 of the U.S. Securities Act of 1933, as amended (the “Securities Act”), with respect to the Navios Partners Common Units to be issued to holders of Navios Acquisition Common Shares pursuant to the Merger.

This proxy statement/prospectus also constitutes a notice of meeting and a proxy statement of Navios Acquisition with respect to the Special Meeting of holders of Navios Acquisition Common Shares (the “Special Meeting”) at which holders of Navios Acquisition Common Shares will be asked to consider and vote on a proposal to approve the Merger Agreement and the transactions contemplated thereby, including the Merger. Please see the section entitled “Questions and Answers About the Merger and the Special Meeting.”

You should rely only on the information contained in, or incorporated by reference into, this proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this proxy statement/prospectus. This proxy statement/prospectus is dated [●], 2021. The information contained in this proxy statement/prospectus is accurate only as of that date, or, in the case of information in a document incorporated by reference, as of the date of such document, unless the information specifically indicates that another date applies. Neither the mailing of this proxy statement/prospectus to holders of Navios Acquisition Common Shares nor the issuance by Navios Partners of Navios Partners Common Units pursuant to the Merger will create any implication to the contrary.

This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in which it is unlawful to make any such offer or solicitation.

The information concerning Navios Partners contained in, or incorporated by reference into, this proxy statement/prospectus has been provided by Navios Partners, and information concerning Navios Acquisition contained in, or incorporated by reference into, this proxy statement/prospectus has been provided by Navios Acquisition.


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LOGO

NOTICE OF SPECIAL MEETING

TO BE HELD ON [], 2021

To the Shareholders of Navios Maritime Acquisition Corporation:

You are invited to attend a special meeting of the shareholders (the “Special Meeting”) of Navios Maritime Acquisition Corporation (“Navios Acquisition” or “NNA”) to be held at the offices of Navios Maritime Acquisition Corporation, located at Strathvale House, 90 N Church Street, Grand Cayman, KY1-1104 Cayman Islands, on [●], 2021, at [●] a.m., to consider and vote upon a proposal to approve the Agreement and Plan of Merger, dated as of August 25, 2021 (as may be amended from time to time, the “Merger Agreement”), including the transactions contemplated therein, entered into with Navios Maritime Partners L.P. (“Navios Partners” or “NMM”) and Navios Acquisition Merger Sub. Inc., a wholly-owned subsidiary of Navios Partners (“Merger Sub”), pursuant to which, among other things, Merger Sub will merge with and into Navios Acquisition, and, following the Merger, Navios Acquisition will be a wholly-owned subsidiary of Navios Partners.

As described in the accompanying proxy statement/prospectus, a Special Committee of the Navios Acquisition Board of Directors and the Navios Acquisition Board of Directors unanimously: (i) determined that the Merger Agreement and the transactions contemplated thereby are in the best interests of Navios Acquisition and the holders of Navios Acquisition Public Common Shares; (ii) approved the Merger Agreement and the transactions contemplated thereby, including the Merger; and (iii) determined to recommend that the holders of Navios Acquisition Common Shares approve the Merger Agreement and the Merger upon the terms and conditions set forth in the Merger Agreement. The Special Committee of the Navios Acquisition Board of Directors and the Navios Acquisition Board of Directors recommend that you vote “FOR” the approval of the Merger Agreement.

The proxy statement/prospectus that accompanies this notice provides extensive information about the Special Meeting, the Merger Agreement, the Merger, related transactions and other matters. You are urged to read the accompanying proxy statement/prospectus, including any documents incorporated by reference into the accompanying proxy statement/prospectus, and its annexes carefully and in their entirety. A copy of the Merger Agreement is included in the proxy statement/prospectus as Annex A.

Whether or not you plan to attend the Special Meeting, please read the enclosed proxy statement/prospectus and complete, sign, date, and return the enclosed proxy card as soon as possible to ensure your representation at the Special Meeting. We have provided a postage-paid envelope for your convenience. If you plan to attend the Special Meeting and prefer to vote in person, you may still do so even if you have already returned your proxy card. Your vote is very important, regardless of the number of Navios Acquisition Common Shares you own. Accordingly, please submit your proxy whether or not you plan to attend the Special Meeting in person. Proxies must be received by 11:59 p.m., local time, on [●], 2021.

Only holders of record of Navios Acquisition Common Shares at the close of business on [●], 2021, the record date for the Special Meeting, are entitled to notice of, and to vote at, the Special Meeting and any adjournments or postponements thereof. Under the terms of the Merger Agreement, Navios Partners has agreed to vote all of its Navios Acquisition Common Shares in favor of the Merger and the Merger Agreement at the Special Meeting. The affirmative vote of Navios Partners alone will be sufficient to approve the Merger and the Merger Agreement.

Please note, however, that if your Navios Acquisition Common Shares are held of record by a bank, broker or other nominee and you wish to vote at the Special Meeting, you must obtain a legal proxy in your name from your bank, broker or other nominee and present it to the inspector of election with your ballot when you vote at


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the Special Meeting. Please also bring to the Special Meeting your account statement or letter from your bank, broker or other nominee evidencing your beneficial ownership of Navios Acquisition Common Shares as of the record date and valid government-issued photo identification.

If you have questions about the Merger or the Special Meeting, need additional copies of this proxy statement/prospectus or need to obtain proxy cards or other information related to the proxy solicitation, you may contact Navios Maritime Acquisition Corporation by writing to Vasiliki (Villy) Papaefthymiou, Secretary, Navios Maritime Acquisition Corporation, Strathvale House, 90 N Church Street, Grand Cayman, KY1-1104 Cayman Islands, or by telephone at +1 345 232 3066.

By Order of the Board of Directors,

Vasiliki Papaefthymiou

Secretary


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TABLE OF CONTENTS

 

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

     1  

SUMMARY

     9  

Parties to the Merger Agreement

     9  

Description of the Merger

     9  

The Special Meeting

     10  

COMPARATIVE PER UNIT MARKET PRICE INFORMATION

     11  

RISK FACTORS

     12  

Risks Related to the Merger

     12  

Risks Related to Navios Acquisition

     19  

Risks Related to Navios Partners

     19  

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     20  

THE SPECIAL MEETING

     23  

THE MERGER

     27  

Transactions Related to the Merger

     27  

Merger Structure

     28  

Navios Partners’ Ownership Interest in Navios Acquisition

     29  

Background of the Merger

     29  

Recommendation of the Navios Acquisition Special Committee and the Navios Acquisition Board

     33  

Reasons for the Navios Acquisition Special Committee’s Recommendation

     34  

Unaudited Financial Projections of Navios Partners and Navios Acquisition

     38  

Opinion of Financial Advisor to the Navios Acquisition Special Committee

     39  

Reasons for the Approval of the Navios Partners Conflicts Committee and the Navios Partners Board

     46  

Interests of Navios Acquisition’s Directors and Officers in the Merger

     49  

Regulatory Matters

     51  

Conversion of Navios Acquisition Common Shares

     51  

Accounting Treatment of the Merger

     51  

Listing of Navios Partners Common Units to be Issued in the Merger

     52  

Delisting and Deregistration of Navios Acquisition Common Shares

     52  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     53  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

     64  

THE MERGER AGREEMENT

     67  

RELATED PARTY TRANSACTIONS

     77  

DESCRIPTION OF NMM COMMON UNITS

     78  

COMPARISON OF SHAREHOLDER AND UNITHOLDER RIGHTS

     82  

ENFORCEABILITY OF NAVIOS PARTNERS CIVIL LIABILITIES AND INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

     94  

LEGAL MATTERS

     95  

EXPERTS

     96  

WHERE YOU CAN FIND MORE INFORMATION

     97  

ANNEXES

 

Annex A

   Agreement and Plan of Merger, dated as of August 25, 2021, by and among Navios Maritime Partners L.P., Navios Acquisition Merger Sub. Inc. and Navios Maritime Acquisition Corporation

Annex B

   Opinion of Pareto Securities AS

PART II INFORMATION NOT REQUIRED IN PROSPECTUS

 

i


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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

The following section provides brief answers to certain questions that you may have regarding the Merger and the matters being considered at the Special Meeting. Please note that this section does not address all issues that may be important to you as a holder of Navios Acquisition Common Shares with respect to the Merger and Special Meeting. Accordingly, you should carefully read this entire proxy statement/prospectus, including each of the annexes, and the documents that have been incorporated by reference into this proxy statement/prospectus. For more information, see the section entitled “Where You Can Find More Information” beginning on page [●] of this proxy statement/prospectus.

 

Q:

Why am I receiving this proxy statement/prospectus?

 

A:

Navios Acquisition, on the one hand, and Navios Partners and Merger Sub, on the other hand, have entered into the Merger Agreement, pursuant to which, among other things, Merger Sub will merge with and into Navios Acquisition, and, following the Merger, Navios Acquisition will be a wholly-owned subsidiary of Navios Partners. You are receiving this proxy statement/prospectus in connection with the solicitation by the Board of Directors of Navios Acquisition (the “Navios Acquisition Board”) of proxies of holders of Navios Acquisition Common Shares to vote in favor of the Merger Agreement.

Navios Acquisition is holding a Special Meeting to obtain the approval of the holders of Navios Acquisition Common Shares necessary to adopt the Merger Agreement.

This proxy statement/prospectus constitutes both a proxy statement of Navios Acquisition and a prospectus of Navios Partners. It is a proxy statement because the Navios Acquisition Board is soliciting proxies from its shareholders. It is a prospectus because Navios Partners will issue Navios Partners Common Units to holders of Navios Acquisition Common Shares (other than Excluded Shares) as consideration for the exchange of outstanding Navios Acquisition Common Shares in the Merger.

 

Q:

What am I being asked to vote on?

 

A:

You are being asked to vote to approve the Merger Agreement. As a condition to the completion of the Merger, the Merger Agreement must be approved by holders of a majority of the outstanding Navios Acquisition Common Shares. As of the record date of the Special Meeting, Navios Partners beneficially owned 44,117,647 outstanding Navios Acquisition Common Shares, amounting to approximately 62.4% of the outstanding Navios Acquisition Common Shares. Under the terms of the Merger Agreement, Navios Partners has agreed to vote all of its Navios Acquisition Common Shares in favor of the Merger and the Merger Agreement at the Special Meeting. The affirmative vote of Navios Partners alone will be sufficient to approve the Merger Agreement and the Merger.

In connection with the execution of the Merger Agreement, Navios Acquisition also completed several other transactions, including the NMM Loan Agreement, the NMM Equity Issuance, the NNA Debt Financing, the redemption of all of its Ship Mortgage Notes, the NSM Equity Issuance and the other transactions contemplated by the NSM Loan Amendment. Other than the Merger, you are not being asked to approve any of these transactions. For more information on these transactions, see “The Merger—Transactions Related to the Merger.”

 

Q:

What will happen to Navios Acquisition as a result of the Merger?

 

A:

If the Merger is successfully completed, Merger Sub will be merged with and into Navios Acquisition, with Navios Acquisition continuing as a wholly-owned subsidiary of Navios Partners. Additionally, if the Merger is successfully completed, the Navios Acquisition Common Shares currently listed on the New York Stock Exchange (the “NYSE”), will cease to be listed on the NYSE and will be deregistered under the Securities

 

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  Exchange Act of 1934, as amended (the “Exchange Act”), and Navios Acquisition will cease filing reports with the SEC.

 

Q:

What will I receive for my Navios Acquisition Common Shares if the Merger is completed?

 

A:

If the Merger is completed, each Navios Acquisition Common Share (other than Excluded Shares) will be converted into the right to receive 0.1275 of a Navios Partners Common Unit (the “Exchange Ratio”) and will be cancelled and cease to exist. Upon conversion of the Navios Acquisition Common Shares into Navios Partners Common Units, the former holders of Navios Acquisition Common Shares will have all of the rights, including all voting rights, including for the election of members of the Board of Directors of Navios Partners, and rights to receive distributions, associated with such Navios Partners Common Units.

Any Navios Acquisition Common Shares that are owned immediately prior to the effective time of the Merger by Navios Acquisition, Navios Partners or any of their respective subsidiaries (including shares issued pursuant to the NMM Equity Issuance) will be cancelled, and no Merger Consideration or other consideration will be delivered for those cancelled shares. The Navios Acquisition Common Shares issued to NSM pursuant to the NSM Equity Issuance will be exchanged in the Merger for Navios Partners Common Units on the same terms applicable to the other Navios Acquisition shareholders.

Navios Partners will not issue any fractional Navios Partners Common Units to holders of Navios Acquisition Common Shares in the Merger. Instead, each holder of Navios Acquisition Common Shares otherwise entitled to a fraction of a Navios Partners Common Unit of 0.5 or above will be entitled to receive a full Navios Partners Common Unit. Any holder of Navios Acquisition Common Shares otherwise entitled to a fraction of a Navios Partners Common Unit of less than 0.5 will receive no consideration for such fractional share, which will be forfeited. See the section entitled “The Merger Agreement—Exchange of Units; Fractional Shares—Fractional Units.”

Following the completion of the Merger, it is anticipated that the former holders of Navios Acquisition Public Common Shares will own, by virtue of the exchange of their Navios Acquisition Common Shares for Navios Partners Common Units, approximately 11.4% of the total Navios Partners Common Units.

 

Q:

What is the value of the Merger Consideration?

 

A:

The Navios Partners Common Units are traded on the NYSE under the symbol “NMM.” Because Navios Partners will issue a fixed number of Navios Partners Common Units in exchange for each outstanding Navios Acquisition Common Share (other than Excluded Shares), the market value of the Merger Consideration that such holders of Navios Acquisition Common Shares will receive will depend on the price per unit of Navios Partners Common Units at the time the Merger is completed. That price will not be known at the time of the Special Meeting and may be less or more than the current price or the price at the time of the Special Meeting. Based on the price of a Navios Partners Common Unit on the NYSE of $[●] on [●], 2021, which may be more or less than the price at the closing of the Merger, the consideration per each Navios Acquisition Common Share has a market value of $[●].

The aggregate number of Navios Partners Common Units to be issued as Merger Consideration will not be adjusted to reflect changes in the price of Navios Acquisition Common Shares or Navios Partners Common Units prior to the completion of the Merger.

 

Q:

Do the Navios Acquisition Special Committee and the Navios Acquisition Board recommend voting “FOR” the proposal to approve the Merger Agreement?

 

A:

Yes. Taking into consideration, among other factors, the fairness opinion of Pareto Securities AS (“Pareto”), the independent financial advisor to the Navios Acquisition Special Committee, a copy of which is attached

 

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  to this proxy statement/prospectus as Annex B, and the other reasons set forth in the section entitled “The Merger—Reasons for the Navios Acquisition Special Committee’s Recommendation,” the Navios Acquisition Special Committee has approved the Merger and the Merger Agreement, and recommends that the holders of Navios Acquisition Common Shares vote “FOR” the proposal to approve the Merger Agreement at the Special Meeting. Based on the recommendation of the Navios Acquisition Special Committee, the Navios Acquisition Board has also approved the Merger and the Merger Agreement, and recommends that the holders of Navios Acquisition Common Shares vote “FOR” the proposal to approve the Merger Agreement at the Special Meeting. For additional information, see the sections entitled “The Merger—Background of the Merger,” “The Merger—Recommendation of the Navios Acquisition Special Committee and the Navios Acquisition Board” and “The Merger—Reasons for the Navios Acquisition Special Committee’s Recommendation.”

 

Q:

Do any of Navios Acquisition’s directors, executive officers or major shareholders have interests in the Merger that may differ from or are in addition to my interests as a shareholder?

 

A:

Navios Partners beneficially owns 44,117,647, or approximately 62.4%, of the outstanding Navios Acquisition Common Shares. Navios Maritime Holdings Inc. (“Navios Holdings”), which owns approximately 9.6% of the common units of Navios Partners, beneficially owns (through one of its wholly owned subsidiaries) 4,865,147, or approximately 6.9%, of the outstanding Navios Acquisition Common Shares. Angeliki Frangou, who serves as the Chairman and Chief Executive Officer of Navios Acquisition, Navios Partners and Navios Holdings and the Chief Executive Officer of NSM, and is the indirect owner of all of the equity of NSM and of the general partner of Navios Partners, beneficially owns 9,384,633, or approximately 13.3% of the outstanding Navios Acquisition Common Shares (including 8,823,529 Navios Acquisition Common Shares Ms. Frangou owns through NSM and 100,000 Navios Acquisition Common Shares subject to an option with an exercise price of $58.65 per share).

The Navios Acquisition Common Shares beneficially owned by Navios Partners were issued to it as of August 25, 2021 by Navios Acquisition in the NMM Equity Issuance pursuant to the Merger Agreement at a price of $3.40 per share in cash, or $150.0 million, in the aggregate. Net proceeds from the NMM Equity Issuance and NNA Debt Financing were used to satisfy and discharge Navios Acquisition’s obligations under the indenture relating to the Ship Mortgage Notes due November 15, 2021. The Navios Acquisition Common Shares owned by Navios Partners will be cancelled in the Merger for no consideration.

The 4,865,147 Navios Acquisition Common Shares beneficially owned by Navios Holdings (through one of its wholly owned subsidiaries) will convert into Navios Partners Common Units in the Merger on the same terms as is applicable to the other shareholders of Navios Acquisition.

The 8,823,529 Navios Acquisition Common Shares that Ms. Frangou beneficially owns through NSM were issued to NSM by Navios Acquisition in the NSM Equity Issuance as of August 25, 2021 in exchange for the cancellation of $30.0 million ($3.40 per share) of the approximately $98.1 million of the then outstanding balance of the NSM Loan in accordance with the NSM Loan Amendment. Also, under the NSM Loan Amendment, NSM released all of the collateral securing the NSM Loan (to allow the Ship Mortgage Notes released collateral to be included in the collateral securing Navios Acquisition’s newly arranged secured term loan financings) and surrendered its option to exchange all or a portion of the NSM Loan for equity of Navios Acquisition’s material subsidiary, Navios Maritime Midstream Partners L.P., and NNA repaid on August 25, 2021, $35.0 million of the outstanding balance of the NSM Loan in cash and agreed to repay the remainder of the outstanding portion of the NSM Loan, of approximately $33.1 million, in cash on January 7, 2022.

The 9,284,633 Navios Acquisition Common Shares beneficially owned by Ms. Frangou (including the 8,823,529 Navios Acquisition Common Shares held by NSM, but excluding the 100,000 Navios Acquisition Common Shares subject to an option) will convert into Navios Partners Common Units in the Merger on the same terms as is applicable to the other shareholders of Navios Acquisition. The option held by Ms. Frangou

 

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to purchase 100,000 Navios Acquisition Common Shares at an exercise price of $58.65 per share will as a result of the Merger become an exercise to purchase 12,750 Navios Partners Common Units at a price of $460 per unit.

Navios Acquisition is a party to a management agreement and an administrative services agreement with Navios Tankers Management Inc. (the “NNA Manager”), a company all of the equity of which is indirectly owned by Ms. Frangou. Pursuant to those agreements NNA Manager provides commercial and technical ship management services and administrative management services to Navios Acquisition in exchange for fees. As a result of the Merger, these agreements will be indirectly assumed by Navios Partners by reason of Navios Acquisition becoming a wholly owned subsidiary of Navios Partners in the Merger.

In connection with the execution of the Merger Agreement, on August 24, 2021, Navios Acquisition and Navios Partners entered into the NMM Loan Agreement under which Navios Partners provided Navios Acquisition with a $45.0 million interim working capital facility. As of the date of this proxy statement/prospectus, the full amount of the facility has been drawn. The full amounts borrowed, including accrued and unpaid interest are due and payable on the date that is one year following the date of the draw. The facility bears interest at the rate of 11.50% per annum.

In addition, certain members of the Navios Acquisition Board and Navios Acquisition executive officers have interests with respect to indemnification and insurance coverage. In particular, the Merger Agreement provides for director and officer indemnification arrangements for each of Navios Acquisition’s directors and officers and provides existing directors’ and officers’ liability insurance to the Navios Acquisition directors and officers that will continue for six years following completion of the Merger. Excluding Ms. Frangou, the directors and executive officers of Navios Acquisition collectively hold less than 1.0% of Navios Acquisition Common Shares.

Navios Partners and its affiliates are also parties to several agreements and transactions with Navios Acquisition. For additional information, see the section entitled “Related Party Transactions.”

The Navios Acquisition Special Committee was aware of these additional and/or differing interests and potential conflicts and considered them, among other matters, in evaluating, negotiating and approving the Merger Agreement.

For additional information, please read the section entitled “The Merger—Interests of Navios Acquisition’s Directors and Officers in the Merger.”

 

Q:

How will directors, executive officers, and affiliates of Navios Acquisition and Navios Partners vote on the proposal to approve the Merger Agreement?

 

A:

As noted above, Navios Partners beneficially owns 44,117,647 Navios Acquisition Common Shares, or approximately 62.4% of the outstanding Navios Acquisition Common Shares. Under the Merger Agreement, Navios Partners has agreed to vote all Navios Acquisition Common Shares owned by it in favor of the Merger Agreement and the Merger. In addition, Navios Holdings beneficially owns (through one of its wholly owned subsidiaries) 4,865,147 Navios Acquisition Common Shares, or approximately 6.9% of the outstanding Navios Acquisition Common Shares, and Angeliki Frangou beneficially owns 9,384,633 Navios Acquisition Common Shares, or approximately 13.3% of the outstanding Navios Acquisition Common Shares (including 8,823,529 Navios Acquisition Common Shares Ms. Frangou owns through NSM and 100,000 Navios Acquisition Common Shares subject to an option with an exercise price of $58.65 per share). Navios Holdings and Ms. Frangou expect to vote, or cause to be voted, the Navios Acquisition Common Shares beneficially owned by them (other than, in the case of Ms. Frangou, the shares subject to the option) “FOR” the approval of the Merger Agreement.

 

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The affirmative vote of Navios Partners alone will be sufficient to approve the Merger Agreement and the Merger.

 

Q:

When and where is the Special Meeting?

 

A:

The Special Meeting of holders of Navios Acquisition Common Shares will be held at the offices of Navios Maritime Acquisition Corporation, located at Strathvale House, 90 N Church Street, Grand Cayman, KY1-1104 Cayman Islands, on [●], 2021, at [●] a.m. local time, unless adjourned or postponed to a later time.

 

Q:

Who can vote at the Special Meeting?

 

A:

Holders of Navios Acquisition Common Shares of record as of the close of business on [●], 2021, the record date for the Special Meeting, are entitled to receive notice of and to vote at the Special Meeting and are entitled to one vote per common share. As of the record date, 70,677,142 Navios Acquisition Common Shares were outstanding and entitled to vote at the Special Meeting.

Some of the shareholders hold their shares through a bank, broker or other nominee rather than directly in their own names. As summarized below, there are some distinctions between shares held of record and those owned beneficially:

 

   

If your Navios Acquisition Common Shares are registered directly in your name through Navios Acquisition’s transfer agent, Continental Stock Transfer & Trust Company, or you have physical certificates, then you are considered the holder of record of such shares, and these proxy materials are being sent directly to you by Navios Acquisition. As the shareholder of record, you have the right to grant a proxy or vote in person at the Special Meeting.

 

   

If your Navios Acquisition Common Shares are held in a brokerage account or otherwise by a bank, broker or other nominee, then you are considered to be the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by your bank, broker or other nominee that is considered the holder of record of those shares. As the beneficial owner, you have the right to direct your bank, broker or other nominee on how to vote your Navios Acquisition Common Shares. You are also invited to attend the Special Meeting. However, because you are not the holder of record, you may not vote these shares in person at the Special Meeting unless you obtain a legal proxy in your name from your bank, broker or other nominee and present it to the inspector of election with your ballot when you vote at the Special Meeting. You would also need to bring to the Special Meeting your account statement or letter from your bank, broker or other nominee evidencing your beneficial ownership of Navios Acquisition Common Shares as of the record date and valid government-issued photo identification.

 

Q:

What vote is required to approve the Merger Agreement?

 

A:

The approval and adoption of the Merger Agreement and the Merger by Navios Acquisition requires the approval of at least a majority of the outstanding Navios Acquisition Common Shares. Under the Merger Agreement, Navios Partners, which, as of the record date for the Special Meeting, beneficially owned 44,117,647 Navios Acquisition Common Shares, or approximately 62.4% of the outstanding Navios Acquisition Common Shares, has agreed to vote all of its Navios Acquisition Common Shares in favor of the Merger Agreement and the Merger. The affirmative vote of Navios Partners alone will be sufficient to approve the Merger Agreement and the Merger. See the section entitled “The Special Meeting—Vote Required” for additional information.

 

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Q:

What if I do not vote or do not fully complete my proxy card?

 

A:

If you do not vote your Navios Acquisition Common Shares with respect to the proposal to approve the Merger Agreement, it will have the same effect as a vote against the proposal. However, we expect the proposal to be approved as the affirmative vote of Navios Partners will be sufficient to approve the proposal. If the Merger is completed, your Navios Acquisition Common Shares (other than any Excluded Shares) will be converted into the right to receive the Merger Consideration even though you did not vote.

If you submit a proxy without specifying the manner in which you would like your Navios Acquisition Common Shares to be voted, such shares will be voted “FOR” approval of the Merger Agreement.

 

Q:

What do I need to do now?

 

A:

If you are a shareholder of record, after carefully reading and considering the information contained in, and incorporated by reference into, this document, please complete, date, sign and return the enclosed proxy card. See the section entitled “The Special Meeting—Voting; Proxies.” You should submit your proxy whether or not you plan to attend the Special Meeting in person. Proxies must be received no later than 11:59 p.m., local time, on [●], 2021.

If you are a beneficial owner, you should instruct your bank, broker or other nominee to vote your Navios Acquisition Common Shares. If you do not instruct your bank, broker or other nominee, it will not be able to vote your Navios Acquisition Common Shares. Please check with your bank, broker or other nominee and follow the voting procedures it provides. Your bank, broker or other nominee will advise you whether you may submit voting instructions by telephone or via the Internet. See the section entitled “The Special Meeting—Voting; Proxies.”

 

Q:

May I change my vote after I have submitted a proxy?

 

A:

Yes. If your Navios Acquisition Common Shares are registered directly in your name, there are three ways you can change your vote after you have submitted your proxy:

 

   

First, you may complete and submit a signed written notice of revocation to Navios Acquisition’s Secretary at the address below:

Navios Maritime Acquisition Corporation

Attn: Secretary

Strathvale House, 90 N Church Street,

Grand Cayman,

KY1-1104 Cayman Islands

Or by email to legal_corp@navios.com

 

   

Second, you may complete and submit a new proxy card. Your latest vote actually received by Navios Acquisition before the Special Meeting will be counted, and any earlier votes will be automatically revoked.

 

   

Third, you may attend the Special Meeting and vote in person. Any earlier proxy will thereby be automatically revoked. However, simply attending the Special Meeting without voting will not revoke any earlier proxy you may have given.

If your Navios Acquisition Common Shares are held in “street name” by a bank, broker or other nominee, you must follow the directions you receive from your bank, broker or other nominee in order to change or revoke your vote and any deadlines for the receipt of those instructions.

 

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Q:

If I want to attend the Special Meeting, what do I do?

 

A:

Holders of Navios Acquisition Common Shares that want to attend the Special Meeting should come to the offices of Navios Maritime Acquisition Corporation, located at Strathvale House, 90 N Church Street, Grand Cayman, KY1-1104 Cayman Islands, at 10:00 a.m. local time, on [●], 2021. You are entitled to attend the Special Meeting only if you were a shareholder of record as of the close of business on the record date or you hold a valid proxy for the Special Meeting. You should be prepared to present photo identification for admittance to the Special Meeting. In addition, if you are a shareholder of record, your name will be verified against the list of shareholders of record on the record date prior to your being admitted to the Special Meeting. If you are not a shareholder of record, but hold shares through a bank, broker or other nominee (i.e., in “street name”), you will need to bring your account statement or letter from your bank, broker or other nominee evidencing your beneficial ownership of Navios Acquisition Common Shares as of the record date and, if you intend to vote at the Special Meeting, a legal proxy in your name from your bank, broker or other nominee, which you will need to present to the inspector of election with your ballot.

 

Q:

What happens if I transfer or sell my Navios Acquisition Common Shares before the Special Meeting or before completion of the Merger?

 

A:

If you transfer or sell your Navios Acquisition Common Shares after the record date but before the Special Meeting, you will retain your right to vote at the Special Meeting. However, you will have transferred the right to receive the Merger Consideration in the Merger. In order to receive the Merger Consideration, you must hold your Navios Acquisition Common Shares through the effective time of the Merger.

 

Q:

What if I receive more than one set of voting materials?

 

A:

You may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus, the proxy card or the voting instruction form. This can occur if you hold your Navios Acquisition Common Shares in more than one brokerage account, if you hold shares directly as a holder of record and also in “street name,” or otherwise through another holder of record, and in certain other circumstances. If you receive more than one set of voting materials, please vote or return each set separately in order to ensure that all of your Navios Acquisition Common Shares are voted.

 

Q:

When is the Merger expected to be completed?

 

A:

Navios Acquisition and Navios Partners are working to complete the Merger as quickly as possible. Assuming the satisfaction or waiver of all of the conditions in the Merger Agreement, Navios Partners and Navios Acquisition expect to complete the Merger in the fourth quarter of 2021 promptly after the Special Meeting. For a discussion of the conditions to the completion of the Merger, see the section entitled “The Merger Agreement—Conditions to the Merger.”

 

Q:

Following the completion of the Merger, what percentage of Navios Partners Common Units will Navios Acquisition shareholders own?

 

A:

If the Merger is completed, the holders of Navios Acquisition Public Common Shares will receive 3,448,338 Navios Partners Common Units, respectively, representing an estimated 11.4% of the outstanding Navios Partners Common Units.

 

Q:

What are the material U.S. federal income tax consequences of the Merger to holders of Navios Acquisition Common Shares?

 

A:

It is intended that, for U.S. federal income tax purposes, the Merger, either alone or together with the Optional Second Merger (as defined below), if consummated, should qualify as a “reorganization” within the meaning of Section 368(a) of the United States Internal Revenue Code of 1986, as amended (the

 

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  “Code”) and that Section 367(a) of the Code should not cause Navios Partners to be treated as other than a corporation with respect to any transfer of property thereto in connection with the Merger (other than, in certain circumstances, a transfer by a holder of Navios Acquisition Common Shares that is a United States person and that holds 5% or more by vote or by value (within the meaning of Treasury Regulations Section 1.367(a)-3(b)(1)(i)) of Navios Partners immediately following the Merger) (the “Intended Tax Treatment”). If the Merger so qualifies, U.S. holders (as defined below) of Navios Acquisition Common Shares generally should not recognize any gain or loss for U.S. federal income tax purposes upon the exchange of Navios Acquisition Common Shares for Navios Partners Common Units. However, the completion of the Merger is not conditioned upon the receipt of an opinion of counsel to the effect that the Merger (either alone or together with the Optional Second Merger, if consummated) should qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Special rules may apply to U.S. holders of Navios Acquisition Common that acquired their Navios Acquisition Common Shares before 2011 or otherwise believe they may have held equity interests of Navios Acquisition while it was a “passive foreign investment corporation” as defined in Section 1297 of the Code. You should read the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” and consult your own tax advisors regarding the U.S. federal income tax consequences of the Merger to you in your particular circumstances, as well as tax consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction.

 

Q:

Are there risks I should consider in deciding whether to vote for the Merger Agreement?

 

A:

Yes. We have set forth a list of risk factors that you should consider carefully in connection with the Merger. See the section entitled “Risk Factors” beginning on page [●].

 

Q:

Do I have dissenters’ or appraisal rights for my Navios Acquisition Common Shares in connection with the Merger?

 

A:

No. Holders of Navios Acquisition Common Shares do not have dissenters’ or appraisal rights under applicable law or contractual dissenters’ or appraisal rights under the Merger Agreement

 

Q:

How will holders of Navios Acquisition Common Shares receive the Merger Consideration?

 

A:

Following the completion of the Merger, if you are a holder of record of Navios Acquisition Common Shares (other than Excluded Shares) at the effective time of the Merger, you will receive a letter of transmittal and instructions on how to obtain the Merger Consideration in exchange for your Navios Acquisition Common Shares. You must return the completed letter of transmittal and surrender your Navios Acquisition Common Shares as described in the instructions, and you will receive the Merger Consideration after the exchange agent receives your completed letter of transmittal and/or such other documents that may be required by the exchange agent. See the section entitled “The Merger—Conversion of Navios Acquisition Common Shares.”

 

Q:

What will happen if the Merger is not completed?

 

A:

If the Merger is not completed for any reason, you will not receive any consideration for your Navios Acquisition Common Shares, and Navios Acquisition’s common shares will continue to be traded on the NYSE.

 

Q:

Who can help answer my additional questions about the Merger or voting procedures?

 

A:

If you have questions about the Merger or the Special Meeting, need additional copies of this proxy statement/prospectus or need to obtain proxy cards or other information related to the proxy solicitation, you may contact Navios Maritime Acquisition Corporation by writing to Vasiliki (Villy) Papaefthymiou, Secretary, Navios Maritime Acquisition Corporation, Strathvale House, 90 N Church Street, Grand Cayman, KY1-1104 Cayman Islands, or by telephone at +1 345 232 3066. If a bank, broker or other nominee holds your Navios Acquisition Common Shares, then you should also contact your bank, broker or other nominee for additional information.

 

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SUMMARY

This summary highlights selected information in this proxy statement/prospectus and does not contain all the information that may be important to you. To fully understand the Merger Agreement and the transactions contemplated thereby, including the Merger, and for a more complete description of the terms of the Merger Agreement, you should read carefully this entire proxy statement/prospectus, including the attached annexes and the documents incorporated by reference into this proxy statement/prospectus. You may obtain the information incorporated by reference in this proxy statement/prospectus, without charge, by following the instructions in the section entitled “Where You Can Find More Information.”.

Parties to the Merger Agreement

Navios Maritime Partners L.P.

Navios Partners is an international owner and operator of dry cargo vessels, formed on August 7, 2007 under the laws of the Republic of the Marshall Islands. Navios Partners has been a public company since November 2007. Currently, Navios Partners’ general partner is Olympos Maritime Ltd. and holds a 2.0% general partner interest in Navios Partners.

The principal executive offices of Navios Partners are located at c/o Navios Maritime Partners L.P., 7 Avenue de Grande Bretagne, Office 11B2, Monte Carlo, MC 98000 Monaco, and its telephone number is (011) + (377) 9798-2140.

Navios Maritime Acquisition Corporation

Navios Acquisition is a publicly traded corporation, incorporated under the laws of The Republic of the Marshall Islands on March 14, 2008. Navios Acquisition owns a large fleet of modern crude oil, refined petroleum product and chemical tankers providing world-wide marine transportation services. Navios Acquisition’s strategy is to charter its vessels to international oil companies, refiners and large vessel operators under long, medium and short-term contracts. Navios Acquisition is committed to providing quality transportation services and developing and maintaining long-term relationships with its customers.

The principal executive offices of Navios Acquisition are located at c/o Navios Maritime Acquisition Corporation, Strathvale House, 90 N Church Street, Grand Cayman, KY1-1104 Cayman Islands, and its telephone number is +1 345 232 3066.

Navios Acquisition Merger Sub. Inc.

Merger Sub is a corporation incorporated under the laws of The Republic of the Marshall Islands and a wholly-owned subsidiary of Navios Partners. Merger Sub was formed on August 23, 2021, solely for the purpose of consummating the Merger and has no operating assets. Merger Sub has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the Merger.

The principal executive offices of Merger Sub are located at c/o Navios Maritime Partners L.P., 7 Avenue de Grande Bretagne, Office 11B2, Monte Carlo, MC 98000 Monaco, and its telephone number is (011) + (377) 9798-2140.

Description of the Merger (page [])

Navios Partners and Navios Acquisition agreed to combine businesses by merging Merger Sub, a wholly-owned subsidiary of Navios Partners, with and into Navios Acquisition, with Navios Acquisition becoming a wholly-


 

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owned subsidiary of Navios Partners and continuing as the surviving entity. If the Merger is successfully consummated, Navios Acquisition will become a wholly-owned subsidiary of Navios Partners. As a result of the Merger, each Navios Acquisition Common Share (other than Excluded Shares) will be converted into the right to receive 0.1275 of a Navios Partners Common Unit.

The Special Meeting (page [])

The Special Meeting of shareholders of Navios Acquisition will be held at the offices of Navios Maritime Acquisition Corporation, located at Strathvale House, 90 N Church Street, Grand Cayman, KY1-1104 Cayman Islands, on [●], 2021, at [●] a.m. local time, unless adjourned or postponed to a later time. At the Special Meeting, holders of Navios Acquisition Common Shares will be asked to approve the Merger Agreement.

The approval of the Merger requires the affirmative vote of the holders of a majority of the outstanding Navios Acquisition Common Shares (the “Shareholders Approval”). In addition, a quorum at the Special Meeting requires the presence in person or by proxy of holders of a majority of the shares represented and entitled to vote thereat.

Holders of Navios Acquisition Common Shares of record as of the close of business on [●], 2021, the record date for the Special Meeting, are entitled to receive notice of and to vote at the Special Meeting and are entitled to one vote per common share.

As of the date of this proxy statement/prospectus, Navios Partners beneficially owns 44,117,647 Navios Acquisition Common Shares, or approximately 62.4% of the outstanding Navios Acquisition Common Shares. Under the Merger Agreement, Navios Partners has agreed to vote all Navios Acquisition Common Shares owned by it in favor of the Merger Agreement and the Merger. The affirmative vote of Navios Partners alone will be sufficient to approve the Merger Agreement and the Merger.

In addition, Navios Holdings beneficially owns (through one of its wholly owned subsidiaries) 4,865,147 Navios Acquisition Common Shares, or approximately 6.9% of the outstanding Navios Acquisition Common Shares, and Angeliki Frangou beneficially owns 9,384,633 Navios Acquisition Common Shares, or approximately 13.3% of the outstanding Navios Acquisition Common Shares (including 8,823,529 Navios Acquisition Common Shares Ms. Frangou owns through NSM and 100,000 Navios Acquisition Common Shares subject to an option with an exercise price of $58.65 per share). Navios Holdings and Ms. Frangou expect to vote, or cause to be voted, the Navios Acquisition Common Shares beneficially owned by them (other than, in the case of Ms. Frangou, the shares subject to the option) “FOR” the approval of the Merger Agreement.

Aside from Ms. Frangou, directors and executive officers of Navios Acquisition, owned approximately less than 1.0% of the outstanding Navios Acquisition Common Shares.

As of the record date for the Special Meeting, Navios Acquisition had [●] shareholders of record, approximately [●] of which were located in the United States and held an aggregate of approximately [●] Navios Acquisition Common Shares, representing [●]% of the Navios Acquisition Common Shares. However, one of the U.S. shareholders of record is CEDE & CO., a nominee of The Depository Trust Company, which held [●] Navios Acquisition Common Shares as of the record date. Navios Acquisition believes that the shares held by CEDE & CO. include common stock beneficially owned by both holders in the United States and non-U.S. beneficial owners.


 

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COMPARATIVE PER UNIT MARKET PRICE INFORMATION

The following table sets forth the closing sale prices for each Navios Partners Common Unit and each Navios Acquisition Common Share as reported on the NYSE as of August 26, 2021, the closing price on the trading day immediately preceding the public announcement of the execution of the Merger Agreement on August 26, 2021 and as of September 10, 2021, the latest practicable date before the date of this proxy statement/prospectus. The table also shows the equivalent implied value of a Navios Acquisition Common Share on each of the dates, which has been determined by multiplying the market price of a Navios Partners Common Unit on each of the dates by 0.1275, which represents the ratio of Navios Partners Common Units to be received for each Navios Acquisition Common Share (other than Excluded Shares) in the Merger.

 

     Navios Partners
Common Unit
     Navios Acquisition
Common Share
     Navios Acquisition
Common Share
Equivalent
 

August 26, 2021

   $ 25.67      $ 2.10      $ 3.27  

September 10, 2021

   $ 30.96      $ 3.90      $ 3.95  

The market prices of Navios Partners Common Units and Navios Acquisition Common Shares have fluctuated since the date of the announcement of the Merger Agreement and will continue to fluctuate from the date of this proxy statement/prospectus to the Closing Date and thereafter. No assurance can be given concerning the market prices of Navios Partners Common Units and Navios Acquisition Common Shares before completion of the Merger or the units of the combined company after completion of the Merger.

 

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RISK FACTORS

The Merger, the Navios Partners business, and owning Navios Partners Common Units involve a high degree of risk. In addition to the other information included in or incorporated by reference into this proxy statement/prospectus, including the matters under the section entitled Cautionary Note Regarding Forward-Looking Statements, you should carefully consider all of the following risk factors. The matters described below may not contain all of the information that is important to you in evaluating the Merger. Accordingly, we urge you to read this entire proxy statement/prospectus, including the appendices and the information included in or incorporated by reference into this document. Please also refer to the additional risk factors identified in the periodic reports and other documents incorporated by reference into this proxy statement/prospectus. Please see the section entitled Where You Can Find More Information.

Risks Related to the Merger

Because the market price of Navios Partners Common Units may fluctuate, you cannot be certain of the precise value of the Merger Consideration that you will receive in the Merger.

The Exchange Ratio is fixed such that each Navios Acquisition Common Share (other than Excluded Shares) will be converted into the right to receive 0.1275 of a Navios Partners Common Unit in connection with the Merger. The Exchange Ratio will not be adjusted for changes in the market price of either Navios Acquisition Common Shares or Navios Partners Common Units between the date of signing the Merger Agreement and completion of the Merger. Accordingly, the value of the Merger Consideration to be received at closing will vary depending on the market price of Navios Partners Common Units on the date of the closing of the Merger.

In addition, the price of Navios Partners Common Units and the price of Navios Acquisition Common Shares at the Effective Time may vary from their respective prices on the date the Merger Agreement was executed and on the date of this proxy statement/prospectus. There is no “price protection” mechanism contained in the Merger Agreement that would adjust the number of Navios Partners Common Units that holders of Navios Acquisition Common Shares will receive based on any decreases in the trading price of Navios Partners Common Units.

These variations in Navios Partners Common Unit and Navios Acquisition Common Share prices may be the result of various factors, including:

 

   

changes in the demand and supply of vessels;

 

   

changes in the supply and demand of vessel capacity;

 

   

changes in the business prospects of Navios Partners or Navios Acquisition;

 

   

litigation developments;

 

   

market assessments as to whether and when the Merger will be consummated;

 

   

the timing of the consummation of the Merger;

 

   

increased competition in the respective markets; and

 

   

general market, economic and political conditions, including the impact of the COVID-19 pandemic.

The market price for Navios Partners Common Units may be affected by factors different from those affecting the Navios Acquisition Common Shares.

Upon completion of the Merger, holders of Navios Acquisition Common Shares (other than Excluded Shares) will become holders of Navios Partners Common Units. Navios Acquisition’s businesses differ from those of Navios Partners, and, accordingly, the results of operations of Navios Partners will be affected by some factors that are different from those currently affecting the results of operations of Navios Acquisition. For a discussion

 

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of the businesses of Navios Partners and Navios Acquisition and of other factors to consider in connection with those businesses, you should carefully review this document and the documents incorporated by reference into this document, including the risk factors described in Navios Partners’ annual report on Form 20-F for the fiscal year ended December 31, 2020, as filed with the SEC on March 31, 2021, Navios Acquisition’s annual report on Form 20-F for the fiscal year ended December 31, 2020, as filed with the SEC on April 28, 2021, and each of Navios Partners’ and Navios Acquisition’s other filings with the SEC, each of which is incorporated by reference into this proxy statement/prospectus.

The announcement and pendency of the Merger could adversely affect each of Navios Partners’ and Navios Acquisition’s business, results of operations and financial condition.

The announcement and pendency of the Merger could cause disruptions in and create uncertainty surrounding Navios Partners’ and Navios Acquisition’s business, including affecting Navios Partners’ and Navios Acquisition’s relationships with its existing and future customers and suppliers, which could have an adverse effect on Navios Partners’ or Navios Acquisition’s business, results of operations and financial condition, regardless of whether the Merger is completed. In particular, Navios Partners and Navios Acquisition could potentially lose customers or suppliers, and new customer or supplier contracts could be delayed or decreased. In addition, each of Navios Partners and Navios Acquisition has expended, and continues to expend, significant management resources, in an effort to complete the Merger, which are being diverted from Navios Partners’ and Navios Acquisition’s day-to-day operations.

If the Merger is not completed, the trading price of Navios Partners Common Units may fall to the extent that the current price of Navios Partners Common Units reflects a market assumption that the Merger will be completed. In addition, the failure to complete the Merger may result in negative publicity or a negative impression of Navios Partners in the investment community and may affect Navios Partners’ relationship with customers, suppliers and other partners in the business community.

The termination of the Merger Agreement could negatively impact Navios Acquisition and Navios Partners.

If the Merger is not completed for any reason, the ongoing business of Navios Acquisition and Navios Partners may be adversely affected and, without realizing any of the anticipated benefits of having completed the Merger, Navios Acquisition and Navios Partners may be subject to a number of risks, including the following:

 

   

Navios Acquisition and Navios Partners may experience negative reactions from the financial markets, including a decline of their share or unit price, respectively (which may reflect a market assumption that the Merger will be completed);

 

   

Navios Acquisition and Navios Partners may experience negative reactions from the investment community, their respective customers and other partners in the business community;

 

   

Navios Acquisition and Navios Partners may be required to pay certain costs relating to the Merger, whether or not the Merger is completed; and

 

   

matters relating to the Merger will have required substantial commitments of time and resources by Navios Acquisition’s and Navios Partners’ respective management, which would otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial had the Merger not been contemplated.

In addition, upon termination of the Merger Agreement under specified circumstances, Navios Partners or Navios Acquisition may be required to reimburse the other party for its costs and expenses incurred in connection with the Merger Agreement and the transactions contemplated thereby up to a maximum amount of $1.0 million. See the section entitled “The Merger Agreement—Termination.”

 

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Certain of the executive officers and members of the Navios Acquisition Board, as well as Navios Acquisition’s major shareholders, have interests that are different from, and/or in addition to, the interests of other holders of Navios Acquisition Common Shares.

Navios Partners beneficially owns 44,117,647, or approximately 62.4%, of the outstanding Navios Acquisition Common Shares.

Navios Holdings, which owns approximately 9.6% of the common units of Navios Partners, beneficially owns (through one of its wholly owned subsidiaries) 4,865,147, or approximately 6.9%, of the outstanding Navios Acquisition Common Shares.

Angeliki Frangou, who serves as the Chairman and Chief Executive Officer of Navios Acquisition, Navios Partners and Navios Holdings and as the Chief Executive Officer of NSM, and is also the indirect owner of all of the equity of NSM and of the general partner of Navios Partners, beneficially owns 9,384,633, or approximately 13.3% of the outstanding Navios Acquisition Common Shares (including 8,823,529 Navios Acquisition Common Shares Ms. Frangou owns through NSM, which is 100% indirectly owned by her and 100,000 Navios Acquisition Common Shares subject to an option with an exercise price of $58.65 per share).

The Navios Acquisition Common Shares beneficially owned by Navios Partners were issued to it by Navios Acquisition in the NMM Equity Issuance pursuant to the Merger Agreement as of August 25, 2021, at a price of $3.40 per share in cash, or $150.0 million in the aggregate. Net proceeds from the NMM Equity Issuance and NNA Debt Financing were used to satisfy and discharge Navios Acquisition’s obligations under the indenture relating to the Ship Mortgage Notes due November 15, 2021. The Navios Acquisition Common Shares owned by Navios Partners will be cancelled in the Merger for no consideration.

The 4,865,147 Navios Acquisition Common Shares beneficially owned by Navios Holdings (through one of its wholly owned subsidiaries) will convert into Navios Partners Common Units in the Merger on the same terms as is applicable to the other shareholders of Navios Acquisition.

The 8,823,529 Navios Acquisition Common Shares that Ms. Frangou beneficially owns through NSM were issued to NSM by Navios Acquisition in the NSM Equity Issuance as of August 25, 2021 in exchange for the cancellation of $30.0 million ($3.40 per share) of the approximately $98.1 million of the then outstanding balance of the NSM Loan in accordance with the NSM Loan Amendment. Also, under the NSM Loan Amendment NSM released all of the collateral securing the NSM Loan (to allow the Ship Mortgage Notes released collateral to be included in the collateral securing Navios Acquisition’s newly arranged secured term loan financings) and surrendered its option to exchange all or a portion of the NSM Loan for equity of Navios Acquisition’s material subsidiary, Navios Maritime Midstream Partners L.P., and NNA repaid on August 25, 2021, $35.0 million of the outstanding balance of the NSM Loan in cash and agreed to repay the remainder of the outstanding portion of the NSM Loan, of approximately $33.1 million, in cash on January 7, 2022.

The 9,284,633 Navios Acquisition Common Shares beneficially owned by Ms. Frangou (including the 8,823,529 Navios Acquisition Common Shares held by NSM, but excluding the 100,000 Navios Acquisition Common Shares subject to an option) will convert into Navios Partners Common Units in the Merger on the same terms as is applicable to the other shareholders of Navios Acquisition. The option held by Ms. Frangou to purchase 100,000 Navios Acquisition Common Shares at an exercise price of $58.65 per share will as a result of the Merger become an exercise to purchase 12,750 Navios Partners Common Units at a price of $460 per unit.

Navios Acquisition is a party to a management agreement and an administrative services agreement with Navios Tankers Management Inc. (the “NNA Manager”), a company all of the equity of which is indirectly owned by Ms. Frangou. Pursuant to those agreements, NNA Manager provides commercial and technical ship management services and administrative management services to Navios Acquisition in exchange for fees. As a result of the Merger, these agreements will be indirectly assumed by Navios Partners by reason of Navios Acquisition becoming a wholly owned subsidiary of Navios Partners in the Merger.

 

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In connection with the execution of the Merger Agreement, on August 24, 2021, Navios Acquisition and Navios Partners entered into the NMM Loan Agreement under which Navios Partners provided Navios Acquisition with a $45.0 million interim working capital facility. As of the date of this proxy statement/prospectus, the full amount of the facility has been drawn. The full amounts borrowed, including accrued and unpaid interest are due and payable on the date that is one year following the date of the draw. The facility bears interest at the rate of 11.50% per annum.

In addition, certain members of the Navios Acquisition Board and Navios Acquisition executive officers have interests with respect to indemnification and insurance coverage. In particular, the Merger Agreement provides for director and officer indemnification arrangements for each of Navios Acquisition’s directors and officers and provides existing directors’ and officers’ liability insurance to the Navios Acquisition directors and officers that will continue for six years following completion of the Merger. Excluding Ms. Frangou, the directors and executive officers of Navios Acquisition collectively hold less than 1.0% of Navios Acquisition Common Shares

Certain rights of the holders of Navios Acquisition Common Shares will change as a result of the Merger.

Upon completion of the Merger, holders of Navios Acquisition Common Shares will no longer be shareholders of Navios Acquisition but will be common unitholders of Navios Partners. There will be certain differences between your current rights as a holder of Navios Acquisition Common Shares, on the one hand, and the rights to which you will be entitled as a holder of Navios Partners Common Units, on the other hand. For a more detailed discussion of the differences in the rights of holders of Navios Acquisition Common Shares and Navios Partners Common Units, see the section entitled “Comparison of Shareholder and Unitholder Rights.”

While the Merger Agreement is in effect, Navios Acquisition and Navios Partners’ businesses are subject to restrictions on their business activities.

Under the Merger Agreement, Navios Acquisition, Navios Partners and their respective subsidiaries are subject to certain restrictions on the conduct of their respective businesses and, subject to certain exceptions, generally must operate their respective businesses in the ordinary course consistent with past practice prior to completing the Merger (unless Navios Acquisition or Navios Partners obtains the other’s consent, as applicable, which is not to be unreasonably withheld, delayed or conditioned), which may restrict Navios Acquisition’s and Navios Partners’ ability to exercise certain of their respective business strategies. These restrictions may prevent Navios Acquisition and Navios Partners from selling assets, issuing, delivering or selling their securities in excess of certain agreed limits, declaring or paying any dividend or distribution (other than, for Navios Partners, regular quarterly cash dividends or distributions in the ordinary course, which shall be no greater than $0.05 per NMM Common Unit), incurring indebtedness or making changes to their respective businesses or governing documents prior to the completion of the Merger or termination of the Merger Agreement, as applicable. These restrictions could have an adverse effect on Navios Acquisition’s and Navios Partners’ respective businesses, financial results, financial condition or common unit price.

Existing shareholders of Navios Acquisition will have a reduced ownership and voting interest in, and will exercise less influence over management of, the combined company after the completion of the Merger.

Upon the completion of the Merger, each holder of Navios Acquisition Common Shares that receives Navios Partners Common Units in the Merger will become a unitholder of Navios Partners, with a percentage ownership of, and voting interest in, the combined company that is significantly smaller than such shareholder’s percentage ownership of, and voting interest in, Navios Acquisition immediately prior to the Merger. Accordingly, existing shareholders of Navios Acquisition will have less influence on the management and policies of the combined company than they now have on the management and policies of Navios Acquisition.

Financial projections regarding Navios Partners and Navios Acquisition may not prove accurate.

In performing its financial analyses and rendering its fairness opinion, the financial advisor to the Navios Acquisition Special Committee reviewed and relied on, among other things, internal financial analyses and

 

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forecasts for Navios Partners and Navios Acquisition. These financial projections include assumptions of Navios Partners and Navios Acquisition, including with regards to future operating cash flows, expenditures and income. These financial projections were not prepared with a view toward public disclosure or toward compliance with U.S. GAAP, the published guidelines of the SEC, or the guidelines established by the American Institute of Certified Public Accountants. The financial projections should not be regarded as an indication that Navios Partners, Navios Acquisition, or their respective representatives considered or consider the projections to be a reliable or accurate prediction of future performance. The financial projections are subject to significant economic, competitive, industry and other uncertainties and may not be achieved in full, at all or within projected timeframes. The failure of Navios Partners or Navios Acquisition to achieve projected results, including projected cash flows, could have a material adverse effect on the price of Navios Partners Common Units, its financial position and its ability to maintain or increase its distributions following the Merger.

The successful execution of the integration strategy following the consummation of the Merger will involve risks and may not be successful.

The success of the Merger will depend, in part, on the ability of the combined company to realize the anticipated benefits from combining Navios Partners’ and Navios Acquisition’s businesses. Realizing the benefits of the Merger will depend in part on the integration of assets, operations, functions and personnel while maintaining adequate focus on the core businesses of the combined company. Any expected cost savings, economies of scale, enhanced liquidity or other operational efficiencies, as well as revenue enhancement opportunities anticipated from the combination of Navios Partners and Navios Acquisition, or other synergies, may not occur.

The combined company’s management team will face challenges inherent in efficiently managing the combined company’s fleet, including the need to implement appropriate systems, policies, benefits and compliance programs. If management of the combined company is unable to minimize the potential disruption of the combined company’s ongoing business caused by the integration efforts and the distraction of management during the integration process, the anticipated benefits of the Merger may not be realized or may only be realized to a lesser extent than expected. In addition, the inability to successfully manage the implementation of appropriate systems, policies, benefits and compliance programs for the combined company could have an adverse effect on the combined company after the Merger. These integration-related activities could also have an adverse effect on each of Navios Partners and Navios Acquisition pending the completion of the Merger.

It is possible that the integration process could result in the loss of key employees, as well as the disruption of each of Navios Partners’ and Navios Acquisition’s ongoing businesses or the creation of inconsistencies between Navios Partners’ and Navios Acquisition’s standards, controls, procedures and policies. Any or all of those occurrences could adversely affect the combined company’s ability to maintain relationships with service providers, customers and employees after the Merger or to achieve the anticipated benefits of the Merger.

The combined company’s operating expenses may increase significantly over the near term due to the expanded operations and expenses or other changes related to the Merger. In addition, the actual integration may result in additional and unforeseen expenses, which could reduce the anticipated benefits of the Merger and materially and adversely affect the combined company’s business, operating results and financial condition.

The combined company may not realize all of the anticipated benefits of the Merger.

Navios Partners and Navios Acquisition believe that the Merger will provide benefits to the combined company, as described elsewhere in this proxy statement/prospectus. However, there is a risk that some or all of the expected benefits of the Merger may fail to materialize, or may not occur within the time periods anticipated. The realization of such benefits may be affected by a number of factors, many of which are beyond the control of Navios Partners, including but not limited to the strength or weakness of the economy and competitive factors in the areas where Navios Partners and Navios Acquisition do business, the effects of competition in the markets in which Navios Partners or Navios Acquisition operate, and the impact of changes in the laws and regulations

 

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regulating the seaborne transportation industry or the dry container and/or tanker markets or affecting domestic or foreign operations. The challenge of coordinating previously separate businesses makes evaluating the business and future financial prospects of the combined company following the Merger difficult. The success of the Merger, including anticipated benefits and cost savings, will depend, in part, on the ability to successfully integrate the operations of both companies in a manner that results in various benefits, including, among other things, an expanded market reach and operating efficiencies, and that does not materially disrupt existing relationships nor result in decreased revenues or distributions. The past financial performance of each of Navios Partners and Navios Acquisition may not be indicative of their future financial performance.

Failure to realize all of the anticipated benefits of the Merger may impact the financial performance of the combined company, the price of Navios Partners Common Units and the ability of Navios Partners to pay distributions on the Navios Partners Common Units. The declaration of distributions by Navios Partners will be at the discretion of its board of directors.

The market value of Navios Partners Common Units may decline as a result of the Merger.

The market value of Navios Partners Common Units may decline as a result of the Merger if, among other things, the combined company is unable to achieve the expected growth in earnings, or if the operational cost savings estimates in connection with the integration of Navios Partners’ and Navios Acquisition’s businesses are not realized or if the transaction costs related to the Merger are greater than expected. The market value also may decline if the combined company does not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated by the market, or if the effect of the Merger on the combined company’s financial position, results of operations or cash flows is not consistent with the expectations of financial or industry analysts. In addition, resales of Navios Partners Common Units following the Merger may cause the market value of the Navios Partners Common Units to decline.

The opinion of the Navios Acquisition Special Committee’s financial advisor will not reflect changes in circumstances between the signing of the Merger Agreement and the completion of the Merger.

The Navios Acquisition Special Committee will not obtain an updated fairness opinion from its financial advisor as of the date of this proxy statement/prospectus, the Special Meeting or the consummation of the Merger. Changes in the operations and prospects of Navios Partners or Navios Acquisition, general market and economic conditions and other factors that may be beyond the control of Navios Partners or Navios Acquisition, and on which the opinion of the financial advisor of the Navios Acquisition Special Committee were based, may significantly alter the value of Navios Acquisition or the prices of Navios Partners Common Units by the time the Merger is completed. The opinion does not speak as of the time the Merger will be completed or as of any date other than the date of such opinion. Because the Navios Acquisition Special Committee currently does not anticipate asking its financial advisor to update its opinion, the opinion will not address the fairness of the Merger Consideration from a financial point of view at the time the Merger is completed.

Like Navios Acquisition, Navios Partners is organized under the laws of the Republic of the Marshall Islands and a substantial portion of its assets will continue to be, and most of its directors and officers will continue to reside, outside of the United States after the Merger and it may not be possible for unitholders to enforce civil liability provisions of the securities laws of the United States in the Marshall Islands.

Like Navios Acquisition, Navios Partners is organized under the laws of the Republic of the Marshall Islands. The Republic of the Marshall Islands has a less developed body of securities laws as compared to the United States and provides protections for investors to a significantly lesser extent. After the Merger, substantially all of the combined company’s assets will be located outside the United States, and most of the combined company’s directors and officers will reside outside the United States. As a result, it may be difficult for investors to effect service within the United States upon those directors and officers, or to realize in the United States upon judgments of courts of the United States predicated upon civil liability of the combined company and such directors and officers under the U.S. federal securities laws. There is uncertainty as to the enforceability in the

 

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Republic of the Marshall Islands by a court in original actions, or in actions to enforce judgments of United States courts, of the civil liabilities predicated upon the U.S. federal securities laws.

Certain holders of Navios Acquisition Common Shares may be required to recognize gain for U.S. federal income tax purposes at the time of the exchange of their Navios Acquisition Common Shares in the Merger.

It is intended that, for U.S. federal income tax purposes, the Merger, either alone or together with the Optional Second Merger, if consummated, should qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and that Section 367(a) of the Code should not cause Navios Partners to be treated as other than a corporation with respect to any transfer of property thereto in connection with the Merger (other than, in certain circumstances, a transfer by a holder of Navios Acquisition Common Shares that is a United States person and that holds 5% or more by vote or by value (within the meaning of Treasury Regulations Section 1.367(a)-3(b)(1)(i)) of Navios Partners immediately following the Merger). If the Merger, either alone or together with the Optional Second Merger, if consummated so qualifies, U.S. holders of Navios Acquisition Common Shares generally should not recognize any gain or loss for U.S. federal income tax purposes upon the exchange of Navios Acquisition Common Shares for Navios Partners Common Units. However, this determination depends on many factors, and neither Navios Partners nor Navios Acquisition is making any representation as to whether the Merger should qualify as a reorganization. Moreover, the Intended Tax Treatment will not be binding on the IRS or any court. Under the terms of the Merger Agreement, Navios Partners and Navios Acquisition have agreed to use reasonable efforts to obtain an opinion of Fried, Frank, Harris, Shriver, and Jacobson, LLP, dated as of the Closing Date, substantially to the effect that the Merger, either alone or together with the Optional Second Merger, if consummated, should qualify for the Intended Tax Treatment. However, the completion of the Merger is not conditioned upon the receipt of an opinion of counsel to the effect that the Merger, either alone or together with the Optional Second Merger, if consummated, should qualify for the Intended Tax Treatment. In addition, neither Navios Acquisition nor Navios Partners intends to request a ruling from the IRS regarding the U.S. federal income tax consequences of the Merger. Accordingly, no assurance can be given that the IRS will not challenge the Intended Tax Treatment or that a court would not sustain such a challenge. If the Merger fails to qualify for the Intended Tax Treatment, then a Navios Acquisition shareholder would recognize gain (but may not be able to recognize loss) for U.S. federal income tax purposes in an amount equal to the excess, if any, of the fair market value of the Navios Partners Common Units received by such holder in the Merger over such holder’s tax basis in the Navios Acquisition Common Shares surrendered. Holders of Navios Acquisition Common Shares are urged to consult with their own tax advisors regarding the consequences to them if the Merger is not treated as a reorganization. See “Material U.S. Federal Income Tax Consequences of the Merger.”

In addition, although Navios Acquisition does not believe it currently is, or that it was for the 2011 through 2020 taxable years, a “passive foreign investment company” (“PFIC”) within the meaning of Section 1297 of the Code for U.S. federal income tax purposes, Navios Acquisition was treated as a PFIC for the 2008 through 2010 taxable years. U.S. holders of Navios Acquisition Common Shares who owned equity interests in Navios Acquisition while Navios Acquisition was a PFIC may have to recognize gain, but not loss, in connection with the receipt of Navios Partners Common Units in the Merger, even if the Merger, either alone or together with the Optional Second Merger, if consummated, otherwise qualifies as a reorganization. U.S. holders of Navios Acquisition Common Shares who acquired their Navios Acquisition Common Shares prior to 2011 or otherwise believe they may have held equity interests of Navios Acquisition while it was a PFIC are urged to consult with their own tax advisors regarding the consequences to them of the Merger.

The Merger may be subject to litigation, which could delay the Merger and prevent the Merger from being completed.

Navios Partners and/or Navios Acquisition may in the future be party to legal proceedings and claims related to the Merger. Legal challenges to the Merger could result in an injunction, preventing or delaying the completion

 

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of the Merger. Any litigation relating to the Merger could require Navios Partners and Navios Acquisition to incur substantial costs in connection therewith and divert management’s attention from their respective businesses.

Risks Related to Navios Acquisition

You should read and consider the risk factors specific to Navios Acquisition that will also affect the combined company after completion of the Merger. For a comprehensive discussion of the risk factors relating to Navios Acquisition, please see the corresponding section in Navios Acquisition’s Annual Report for the fiscal year ended December 31, 2020, filed on Form 20-F, as filed with the SEC on April 28, 2021, and Navios Acquisition’s other filings with the SEC, each of which is incorporated by reference herein, and in other documents that are incorporated by reference into this proxy statement/prospectus. See the section entitled “Where You Can Find More Information.”

Risks Related to Navios Partners

You should read and consider the risk factors specific to Navios Partners that will also affect the combined company after completion of the Merger. For a comprehensive discussion of the risk factors relating to Navios Partners, please see the corresponding section in Navios Partners’ Annual Report for the fiscal year ended December 31, 2020, filed on Form 20-F, as filed with the SEC on March 31, 2021, and Navios Partners’ other filings with the SEC, each of which is incorporated by reference herein, and in other documents that are incorporated by reference into this proxy statement/prospectus. See the section entitled “Where You Can Find More Information.”

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements included in, or incorporated by reference into, this proxy statement/prospectus which are not historical facts (including Navios Partners’ and Navios Acquisition’s financial forecasts and any other statements concerning plans and objectives of management for future operations or economic performance, or assumptions related thereto) are forward-looking statements. In addition, Navios Partners, Navios Acquisition and their respective representatives may from time to time make other oral or written statements that are also forward-looking statements. Such statements include, in particular, statements about plans, strategies, business prospects, changes and trends in the business and the markets in which Navios Partners and Navios Acquisition operate as described in this proxy statement/prospectus. In some cases, you can identify the forward-looking statements by the use of words such as “may,” “might,” “could,” “should,” “would,” “will,” “expect,” “plan,” “anticipate,” “intend,” “forecast,” “believe,” “estimate,” “predict,” “propose,” “projects,” “potential,” “continue” or the negative of these terms or other comparable terminology.

Forward-looking statements appear in a number of places and include statements with respect to, among other things:

 

   

the possibility that the Merger does not close when expected or at all because the conditions to the closing of the Merger are not satisfied on a timely basis or at all;

 

   

the likelihood that the parties will complete the Merger and the expected timing of completion of the Merger;

 

   

the expected benefits of the Merger and the effects of the consummation of the Merger, including the ability of Navios Partners and Navios Acquisition to integrate their operations after the completion of the Merger;

 

   

the anticipated tax consequences of and the accounting treatment of the Merger;

 

   

the impact of the Merger on each of Navios Partners’ and Navios Acquisition’s business, results of operations and financial condition, as well as the value of Navios Partners Common Units;

 

   

potential litigation arising from the Merger Agreement and/or the Merger;

 

   

the Merger’s effect on the relationships of Navios Partners or Navios Acquisition with their respective customers and suppliers, whether or not the Merger is completed;

 

   

Navios Partners’ unitholders and Navios Acquisition’s shareholders reduction in their percentage ownership and voting power;

 

   

the possibility that the anticipated benefits of the Merger are not realized as a result of such things as the weakness of the economy and competitive factors in the seaborne transportation in which Navios Partners and Navios Acquisition do business, including the impact of the COVID-19 pandemic;

 

   

the ability to maintain or develop new and existing customer relationships with major commodity traders, oil majors, liner companies and operators, including the ability to enter into long-term charters for vessels;

 

   

global economic outlook and growth and changes in general economic and business conditions, including the impact of the COVID-19 pandemic and efforts throughout the world to contain its spread;

 

   

the ability to successfully grow business and capacity to manage expanding business;

 

   

future levels of cash flow and levels of distributions, as well as future cash distribution policy;

 

   

current and future business and growth strategies and other plans and objectives for future operations;

 

   

future operating and financial results;

 

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ability to identify and consummate desirable acquisitions, dispositions, joint ventures or strategic alliances, business strategy, areas of possible expansion, and expected capital expenditure or operating expenses;

 

   

container, dry and liquid cargo industry trends, including charter rates and vessel values and factors affecting vessel supply and demand;

 

   

the ability to take delivery of, integrate into the fleet and employ any newbuildings ordered or to be ordered in the future and the ability of shipyards to deliver vessels on a timely basis;

 

   

the aging of vessels and resultant increases in operation and drydocking costs;

 

   

the ability of vessels to pass classification inspection;

 

   

the ability to maximize the use of vessels, including the redeployment or disposition of vessels no longer under long-term time charter;

 

   

significant changes in vessel performance, including increased vessel breakdowns;

 

   

the creditworthiness of charterers and the ability of contract counterparties to fulfill their obligations;

 

   

the ability to repay outstanding indebtedness, to fulfill other financial obligations, to obtain additional financing and to obtain replacement charters for vessels, in each case, at commercially acceptable rates or at all;

 

   

changes to governmental rules and regulations or action taken by regulatory authorities and the expected costs thereof;

 

   

potential liability from litigation and vessel operations;

 

   

track records, and past and future performance, in safety, environmental and regulatory matters;

 

   

the impact of heightened environmental and quality concerns of insurance underwriters and charterers;

 

   

the adequacy of insurance arrangements and ability to obtain insurance and required certifications;

 

   

general domestic and international political conditions, including wars, pandemics, acts of piracy and terrorism;

 

   

changes in global production of raw materials, semi-finished or finished goods and products transported by containerships;

 

   

changes in seaborne and other transportation patterns, such as port congestion, canal closures or expansions, changes in distances over which cargo is transported due to geographic changes in where oil is produced, refined and used;

 

   

competition from alternative sources of energy;

 

   

changes in oil production and refining capacity and regional availability of petroleum refining capacity;

 

   

changes in the standard of service or the ability of technical managers to be approved as required;

 

   

public health threats, such as the COVID-19 pandemic, influenza and other highly contagious diseases or viruses;

 

   

the ability to leverage the scale, experience, reputation and relationships of Navios Holdings, and Navios Shipmanagement Inc. and its affiliates; and

 

   

other factors that may affect future results, including changes in trade policies, change in tax laws, technological and regulatory changes and adverse developments in general market, business, economic, labor, regulatory and political conditions.

These and other forward-looking statements are made based upon Navios Partners’ and Navios Acquisition’s current plans, expectations, estimates, assumptions, and beliefs concerning future events and therefore involve a

 

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number of risks and uncertainties, including, but not limited to, those risks discussed under the section entitled “Risk Factors.” The forward-looking statements contained in this proxy statement/prospectus are based on Navios Partners’ and Navios Acquisition’s current expectations and beliefs concerning future developments and their potential effects on Navios Partners and Navios Acquisition. There can be no assurance that future developments will be those that Navios Partners and Navios Acquisition have anticipated.

The foregoing list of important factors is not exhaustive, and other factors could also adversely affect the completion of the Merger and the future results of Navios Partners and Navios Acquisition, including the factors described in Navios Partners’ Annual Report for the fiscal year ended December 31, 2020, as filed on Form 20-F, and filed with the SEC on March 31, 2021, and other important factors described in Navios Partners’ filings with the SEC, and Navios Acquisition’s Annual Report for the fiscal year ended December 31, 2020, as filed on Form 20-F, as filed with the SEC on April 28, 2021, and other important factors described in Navios Acquisition’s filings with the SEC, each of which is incorporated by reference into this proxy statement/prospectus. You should carefully review and consider the various disclosures included in this joint proxy statement/prospectus and in other documents incorporated by reference into this proxy statement/prospectus that attempt to advise interested parties of the risks and factors that may affect Navios Acquisition’s and/or Navios Partners’ business, prospects, financial condition and results of operations.

The risks, uncertainties and assumptions involved are inherently subject to significant uncertainties and contingencies, many of which are beyond Navios Partners’ and/or Navios Acquisition’s control. You are cautioned that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements.

The forward-looking statements speak only as of the date of this proxy statement/prospectus, in the case of forward-looking statements contained in this proxy statement/prospectus, or the dates of the documents incorporated by reference into this proxy statement/prospectus, in the case of forward-looking statements made in those incorporated documents. Navios Partners and Navios Acquisition undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for Navios Partners and Navios Acquisition to predict all of these factors. Further, Navios Partners and Navios Acquisition cannot assess the impact of each such factor on business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement.

 

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THE SPECIAL MEETING

This proxy statement/prospectus is being provided to holders of Navios Acquisition Common Shares as part of a solicitation of proxies by the Navios Acquisition Board for use at the Special Meeting.

Date, Time and Place

The Special Meeting of shareholders of Navios Acquisition will be held at the offices of Navios Maritime Acquisition Corporation, located at Strathvale House, 90 N Church Street, Grand Cayman, KY1-1104 Cayman Islands, on [●], 2021, at [●] a.m. local time, unless adjourned or postponed to a later time.

Purpose of the Special Meeting

At the Special Meeting, we are asking holders of Navios Acquisition Common Shares to consider and vote upon the approval of the Merger Agreement, including the transactions contemplated therein, pursuant to which, among other things, Merger Sub will merge with and into Navios Acquisition, and, following the Merger, Navios Acquisition will continue as the surviving corporation and will be a wholly-owned subsidiary of Navios Partners.

Approval and Recommendation of the Navios Acquisition Special Committee and the Navios Acquisition Board

The Navios Acquisition Special Committee and the Navios Acquisition Board (based on the recommendation of the Navios Acquisition Special Committee) have each unanimously: (i) determined that the Merger Agreement and the transactions contemplated thereby are in the best interests of Navios Acquisition and the holders of Navios Acquisition Public Common Shares; (ii) approved the Merger Agreement and the transactions contemplated thereby, including the Merger; and (iii) determined to recommend that the holders of Navios Acquisition Common Shares approve the Merger Agreement and the Merger upon the terms and conditions set forth in the Merger Agreement. The Navios Acquisition Special Committee and the Navios Acquisition Board unanimously recommend that Navios Acquisition’s shareholders vote “FOR” the approval of the Merger Agreement. For a discussion of the material factors considered by the Navios Acquisition Special Committee in reaching its conclusions, see the sections entitled “The Merger—Recommendation of the Navios Acquisition Special Committee” and “The Merger—Reasons for the Navios Acquisition Special Committee’s Recommendation.”

In considering the recommendation of the Navios Acquisition Board with respect to the proposals, you should be aware that Navios Acquisition’s directors and executive officers have interests that are different from, or in addition to, the interests of holders of Navios Acquisition Common Shares generally. For more information, see the section entitled “The Merger—Interests of Navios Acquisition’s Directors and Officers in the Merger.”

Record Date; Quorum

Only holders of record of Navios Acquisition Common Shares at the close of business on the record date, [●], 2021, are entitled to notice of and to vote at the Special Meeting and are entitled to one vote per share.

A quorum at the Special Meeting requires the presence in person or by proxy of holders of a majority of the shares represented and entitled to vote thereat.

If you submit a properly executed proxy card, you will be considered part of the quorum. Holders of Navios Acquisition Common Shares present in person at the Special Meeting but not voting, and Navios Acquisition Common Shares for which Navios Acquisition has received proxies indicating that their holders have abstained, will be counted as present at the Special Meeting for purposes of determining whether a quorum is established, also subject to the limitations described below. Broker “non-votes,” if any, will be counted for purposes of

 

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determining whether a quorum exists at the Special Meeting. A broker “non-vote” occurs when a bank, broker or other nominee holding units for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner.

Upon request by a holder of Navios Acquisition Common Shares at or prior to the Special Meeting, Navios Acquisition will provide a list of registered shareholders as of the Record Date of the Special Meeting.

Vote Required

The approval of the Merger requires the affirmative vote of the holders of a majority of the outstanding Navios Acquisition Common Shares. Abstentions and broker non-votes, and shares not voted, will have the same effect as a vote “AGAINST” the proposal to approve the Merger Agreement.

Under the rules that govern brokers who have record ownership of common shares that are held in “street name” for their clients, the beneficial owners of the shares, brokers have discretion to vote these shares on routine matters but not on non-routine matters. The approval of the Merger Agreement is considered a non-routine matter. Accordingly, brokers will not have discretionary voting authority to vote your Navios Acquisition Common Shares on the Merger Agreement. A broker non-vote occurs when brokers do not have discretionary voting authority and have not received instructions from the beneficial owners of the common shares on a particular non-routine matter. A broker will not be permitted to vote on the proposal to approve the Merger Agreement without instruction from the beneficial owner of the Navios Acquisition Common Shares held by that broker. As a result, Navios Acquisition Common Shares beneficially owned that have been designated on proxy cards by the bank, broker or other nominee as not voted on the proposal to approve the Merger Agreement (broker “non-vote”) will have the same effect as a vote “AGAINST” the proposal to approve the Merger Agreement. If you hold Navios Acquisition Common Shares through a bank, broker or other nominee with custody of your shares, follow the voting instructions you receive from such nominee.

Adjournment

Under the terms of the Merger Agreement, Navios Acquisition may, and at the request of Navios Partners, will, adjourn or postpone the Special Meeting to ensure that any required supplement or amendment to this proxy statement/prospectus is provided to Navios Acquisition’s shareholders within a reasonable amount of time in advance of the Special Meeting.

Voting of Navios Acquisition Common Shares Owned by Affiliates, Directors and Executive Officers

Navios Partners beneficially owns 44,117,647 Navios Acquisition Common Shares, or approximately 62.4% of the outstanding Navios Acquisition Common Shares. Under the Merger Agreement, Navios Partners has agreed to vote all Navios Acquisition Common Shares owned by it in favor of the Merger Agreement and the Merger.    

The affirmative vote of Navios Partners alone will be sufficient to approve the Merger Agreement and the Merger.

In addition, Navios Holdings beneficially owns (through one of its wholly owned subsidiaries) 4,865,147 Navios Acquisition Common Shares, or approximately 6.9%, of the outstanding Navios Acquisition Common Shares, and Angeliki Frangou beneficially owns 9,384,633 Navios Acquisition Common Shares, or approximately 13.3% of the outstanding Navios Acquisition Common Shares (including 8,823,529 Navios Acquisition Common Shares Ms. Frangou owns through NSM and 100,000 Navios Acquisition Common Shares subject to an option with an exercise price of $58.65 per share). Navios Holdings and Ms. Frangou expect to vote, or cause to be voted, the Navios Acquisition Common Shares beneficially owned by them (other than, in the case of Ms. Frangou, the shares subject to the option) “FOR” the approval of the Merger Agreement.

 

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Aside from Ms. Frangou, directors and executive officers of Navios Acquisition, owned less than 1.0% of the outstanding Navios Acquisition Common Shares.

Voting; Proxies

If you were a holder of record of Navios Acquisition Common Shares at the close of business on the record date, you may vote in person by attending the Special Meeting or, to ensure that your shares are represented at the Special Meeting, you may authorize a proxy to vote. To vote by proxy, after carefully reading and considering the information contained in, and incorporated by reference into, this proxy statement/prospectus, please fill out, sign and date the proxy card and then mail your signed proxy card in the enclosed envelope, as soon as possible so that your shares may be voted at the Special Meeting.

All Navios Acquisition Common Shares represented by each properly executed and valid proxy received by 11:59 p.m., local time, on [●], 2021 will be voted in accordance with the instructions given on the proxy. If a holder of Navios Acquisition Common Shares executes a proxy card without giving instructions, the shares represented by that proxy card will be voted “FOR” the proposal to approve the Merger Agreement. Please submit your proxy whether or not you plan to attend the Special Meeting in person.

If your Navios Acquisition Common Shares are held beneficially in “street name,” you should instruct your bank, broker, or other nominee to vote your shares. If you do not instruct your bank, broker or other nominee, it will not be able to vote your shares. Please check with your bank, broker or other nominee and follow the voting procedures it provides. Your bank, broker or other nominee will advise you whether you may submit voting instructions by telephone or via the Internet.

Revocations

If your Navios Acquisition Common Shares are registered directly in your name, there are three ways you can change your vote after you have submitted your proxy:

 

   

First, you may complete and submit a signed written notice of revocation to Navios Acquisition’s Secretary at the address below:

Navios Maritime Acquisition Corporation

Attn: Secretary

Strathvale House, 90 N Church Street

Grand Cayman

KY1-1104

Cayman Islands

Or by email to legal_corp@navios.com

 

   

Second, you may complete and submit a new proxy card. Your latest vote actually received by Navios Acquisition before the Special Meeting will be counted, and any earlier votes will be automatically revoked.

 

   

Third, you may attend the Special Meeting and vote in person. Any earlier proxy will thereby be automatically revoked. However, simply attending the Special Meeting without voting will not revoke any earlier proxy you may have given.

If your Navios Acquisition Common Shares are held in “street name” by a bank, broker or other nominee, you must follow the directions you receive from your bank, broker or other nominee in order to change or revoke your vote and any deadlines for the receipt of those instructions.

 

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Failure to Vote or Specify Vote

If you do not vote your Navios Acquisition Common Shares with respect to the proposal to approve the Merger Agreement, it will have the same effect as a vote against the proposal. However, if the proposal to approve the Merger Agreement is approved and the Merger is completed, your Navios Acquisition Common Shares (other than Excluded Shares) will be converted into the right to receive the Merger Consideration even though you did not vote.

If you submit a proxy without specifying the manner in which you would like your Navios Acquisition Common Shares to be voted, your Navios Acquisition Common Shares will be voted “FOR” approval of the Merger Agreement.

No Dissenters’ Rights of Appraisal

Holders of Navios Acquisition Common Shares do not have dissenters’ or appraisal rights under applicable law or contractual dissenters’ or appraisal rights under the Merger Agreement.

Other Information

As of the date of this joint proxy statement/prospectus, the Navios Acquisition Board was unaware of any other matters that may be presented for action at the Special Meeting. If other matters properly come before the Special Meeting, or at any adjournment or postponement of the Special Meeting, Navios Acquisition intends that common shares represented by properly submitted proxies will be voted, or not voted, by and in accordance with the best judgment of the persons named as proxies on the proxy card.

Navios Acquisition will pay the costs of printing and mailing this proxy statement/prospectus to its shareholders and all other costs incurred in connection with the solicitation of proxies for the Special Meeting. In addition to the mailed proxy materials, Navios Acquisition’s and Navios Partners’ directors, officers, and other employees may also solicit proxies or votes in person, in writing, by telephone, e-mail, or other means of communication. Directors, officers and other employees of Navios Acquisition will not be paid any additional compensation for soliciting proxies. Navios Acquisition will also reimburse banks, brokers, nominees, and other record holders for their reasonable expenses in forwarding proxy materials to beneficial owners of Navios Acquisition Common Shares.

The matters to be considered at the Special Meeting are of great importance to Navios Acquisition’s shareholders. Accordingly, you are urged to read and carefully consider the information contained in or incorporated by reference into this proxy statement/prospectus and promptly complete, date, sign and return the enclosed proxy in the enclosed postage-paid envelope.

Questions and Additional Information

If you have questions about the Merger or the Special Meeting, need additional copies of this proxy statement/prospectus or need to obtain proxy cards or other information related to the proxy solicitation, you may contact Navios Maritime Acquisition Corporation by writing to Vasiliki (Villy) Papaefthymiou, Secretary, Navios Maritime Acquisition Corporation, Strathvale House, 90 N Church Street, Grand Cayman, KY1-1104 Cayman Islands, or by telephone at +1 345 232 3066. If a bank, broker or other nominee holds your Navios Acquisition Common Shares, then you should also contact your bank, broker or other nominee for additional information.

 

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THE MERGER

On August 25, 2021, Navios Partners and Navios Acquisition agreed to combine businesses by merging Merger Sub, a wholly-owned subsidiary of Navios Partners, with and into Navios Acquisition. If the Merger is successfully consummated, Navios Acquisition will become a wholly-owned subsidiary of Navios Partners.

Transactions Related to the Merger

Redemption and Discharge of Ship Mortgage Notes

Pursuant to the Merger Agreement, on August 26, 2021, Navios Acquisition called for redemption by delivery all of its Ship Mortgage Notes by delivery of a Redemption Notice to the registered holders of the Ship Mortgage Notes and remitted to the indenture trustee the aggregate redemption price payable to the holders of the Ship Mortgage Notes to satisfy and discharge Navios Acquisition’s obligations under the indenture relating to the Ship Mortgage Notes. The redemption date for the Ship Mortgage Notes will be September 25, 2021.

Navios Acquisition funded the approximately $397.5 million aggregate redemption price plus accrued and unpaid interest up to but not including the redemption date, with net proceeds from (i) the sale by Navios Acquisition pursuant to the Merger Agreement (in a private placement in reliance on the exemption from registration provided for under Section 4(a)(2) of the Securities Act) of 44,117,647 Navios Acquisition Common Shares to Navios Partners for an aggregate purchase price of $150.0 million, or $3.40 per share (referred to as the NMM Equity Issuance), and (ii) borrowings under the HCB Loan Agreement and BNP Loan Agreement described below. The Navios Acquisition Common Shares issued to Navios Partners pursuant to the NMM Equity Issuance will be cancelled in the Merger for no consideration.

NSM Loan Amendment

In connection with the execution of the Merger Agreement, on August 25, 2021, Navios Acquisition and NSM entered into a supplemental agreement (the “Supplemental Loan Agreement”) to amend an existing loan agreement dated March 19, 2021 by and among Navios Acquisition and NSM, among others (the “NSM Loan Agreement”). Under the NSM Loan Agreement, NSM had made available to Navios Acquisition a secured term loan (the “NSM Loan”) of up to $100.0 million, of which a balance of approximately $98.1 million was outstanding at the time of the execution of the Supplemental Loan Agreement. The Supplemental Loan Agreement has amended the NSM Loan Agreement to, among other things, release all of the collateral securing the NSM Loan (which has been granted as collateral to secure Navios Acquisition and/or its subsidiaries’ obligations under the HCB Loan Agreement and BNP Loan Agreement described below); eliminate NSM’s option under the NSM Loan Agreement to exchange all or a portion of the NSM Loan for equity of Navios Acquisition’s material subsidiary, Navios Maritime Midstream Partners L.P.; cancel $30.0 million of the outstanding balance of the NSM Loan in exchange for 8,823,529 newly-issued Navios Acquisition Common Shares ($3.40 per share) (referred to as the NSM Equity Issuance), which Navios Acquisition Common Shares will be converted into Navios Partners Common Units in the Merger on the same terms as is applicable to other outstanding Navios Acquisition Common Shares; provide for the repayment of $35.0 million of the outstanding balance of the NSM Loan in cash as of the date of the Supplemental Loan Agreement; and the repayment of the remainder of the outstanding balance of the NSM Loan, of approximately $33.1 million, in cash on January 7, 2022.

NNA Debt Financing

Hamburg Commercial Bank Loan Agreement

On August 23, 2021, Navios Acquisition and Hamburg Commercial Bank AG (“HCB”), among other lenders, entered into a loan agreement (the “HCB Loan Agreement”) under which HCB and other lenders, agreed to make available to Navios Acquisition a secured term loan facility of up to $195.4 million to provide financing on seven tankers, all of which secure the loan (the

 

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“HCB Loan”) of which $190.2 million was borrowed by Navios Acquisition on August 25, 2021. The first advance is repayable in fifteen quarterly installments of $4.7 million each beginning on October 29, 2021 with the final repayment to be made on April 29, 2025. The second advance is repayable in eleven quarterly installments of $2.8 million beginning on October 29, 2021 with the final repayment to be made on April 29, 2024. The first advance bears interest at LIBOR plus 3.9% per annum and the second advance bears interest at LIBOR plus 7.0% per annum.

BNP Loan Agreement

On August 25, 2021, certain subsidiaries of Navios Acquisition and BNP Paribas (“BNP”), among other lenders, entered into a loan agreement (the “BNP Loan Agreement”) under which BNP, and other lenders, agreed to make available to such Navios Acquisition subsidiaries a secured term loan facility of up to $96.0 million (the “BNP Loan”), secured by five vessels owned by Navios Acquisition of which the full amount was borrowed by the subsidiaries of Navios Acquisition on August 25, 2021. The BNP Loan is repayable in eight quarterly installments of $4.6 million beginning three months from the date of the initial drawdown, with the final repayment to be made in August 2023. The BNP Loan bears interest at LIBOR plus 3.55% per annum.

NMM Loan Agreement

In connection with the execution of the Merger Agreement, on August 24, 2021, Navios Acquisition and Navios Partners entered into the NMM Loan Agreement under which Navios Partners agreed to make available to Navios Acquisition a working capital facility of up to $45.0 million. As of the date of this proxy statement/prospectus, the full amount of the facility has been drawn. The full amounts borrowed, including accrued and unpaid interest are due and payable on the date that is one year following the drawdown date. The facility bears interest at the rate of 11.50% per annum.

Merger Structure

If the Merger is completed, each Navios Acquisition Common Share (other than Excluded Shares) will be converted into the right to receive 0.1275 of a Navios Partners Common Unit. Each NNA Restricted Share outstanding at the effective time of the Merger will be converted into an award with respect to a number of Navios Partners Common Units (rounded up or down to the nearest whole unit) equal to the product of (x) the number of Navios Acquisition Common Shares subject to such NNA Restricted Share award and (y) the Exchange Ratio. Additionally, such award of Navios Partners Common Units will be subject to the same terms and conditions (including, without limitation, the same vesting conditions) as were applicable to such NNA Restricted Share award immediately prior to the effective time.

Any Navios Acquisition Common Shares that are owned immediately prior to the effective time of the Merger by Navios Acquisition, Navios Partners or any of their respective subsidiaries (including shares issued pursuant to the NMM Equity Issuance) will be cancelled, and no Merger Consideration or other consideration will be delivered for those cancelled shares. The Navios Acquisition Common Shares issued to NSM in the NSM Equity Issuance will be exchanged in the Merger for Navios Partners Common Units on the same terms applicable to the other Navios Acquisition shareholders. Each share of common stock of Merger Sub issued and outstanding immediately prior to the effective time of the Merger will be converted into one share of common stock of the surviving entity.

The terms and conditions of the Merger are contained in the Merger Agreement, which is described in this proxy statement/prospectus and is included in this proxy statement/prospectus as Annex A. You are encouraged to read the Merger Agreement carefully and in its entirety because it is the legal agreement that governs the Merger. All descriptions in this summary and elsewhere in this proxy statement/prospectus of the terms and conditions of the Merger are qualified by reference to the Merger Agreement. In addition to approval by the shareholders of Navios Acquisition at the Special Meeting, other important conditions to the completion of the Merger exist.

 

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Assuming the satisfaction or waiver of all of the conditions in the Merger Agreement, Navios Partners and Navios Acquisition expect to complete the Merger in the fourth quarter of 2021. However, Navios Partners and Navios Acquisition cannot assure you when or if the Merger will occur.

For additional and more detailed information regarding the legal documents that govern the Merger, including information about the conditions to the completion of the Merger and the provisions for terminating or amending the Merger Agreement, please read the section entitled “The Merger Agreement.”

Navios Partners’ Ownership Interest in Navios Acquisition

Holders of Navios Acquisition Common Shares should be aware that, as of the date of this proxy statement/prospectus, Navios Partners owned 44,117,647 Navios Acquisition Common Shares, or approximately 62.4%, of the outstanding Navios Acquisition Common Shares. Navios Holdings, which owns approximately 9.6% of the outstanding common units of Navios Partners, beneficially owns (through one of its wholly owned subsidiaries) 4,865,147, or approximately 6.9%, of the outstanding Navios Acquisition Common Shares. Angeliki Frangou, who serves as the Chairman and Chief Executive Officer of Navios Acquisition, Navios Partners and Navios Holdings, as the Chief Executive Officer of NSM, and is the indirect owner of all of the equity of NSM and of the general partner of Navios Partners, beneficially owns 9,384,633, or approximately 13.3% of the outstanding Navios Acquisition Common Shares (including 8,823,529 Navios Acquisition Common Shares Ms. Frangou owns through NSM, which is 100% indirectly owned by her and 100,000 Navios Acquisition Common Shares subject to an option with an exercise price of $58.65 per share).

In addition, as of the date of this proxy statement/prospectus, excluding Ms. Frangou, directors and executive officers of Navios Acquisition and Navios Partners owned less than 1.0% of the outstanding Navios Acquisition Common Shares. Certain officers and directors of Navios Partners also serve as directors or officers of Navios Acquisition, and Navios Partners and its affiliates are parties to several agreements and transactions with Navios Acquisition. For additional information, see the section entitled “Related Party Transactions.”

Certain persons associated with Navios Acquisition have a relationship with Navios Partners. Angeliki Frangou, who serves as Navios Acquisition’s Chief Executive Officer and as Chairman of the Navios Acquisition Board, also serves as Navios Partners’ Chief Executive Officer and as Chairman of the Navios Partners Board and is the indirect owner of the general partner of Navios Partners. As of the date of this proxy statement/prospectus, Navios Partners owned approximately 62.4% of the outstanding Navios Acquisition Common Shares. Ms. Frangou also serves as the Chairman and Chief Executive Officer of Navios Holdings, which owns approximately 6.9% of the outstanding Navios Acquisition Common Shares and approximately 9.6% of the outstanding Navios Partners Common Units. Certain of the foregoing persons also serve as officers, directors and/or members of certain affiliates of Navios Acquisition and/or Navios Partners. For additional information, please see the section entitled “Related Party Transactions.” As a result of these conflicts, these individuals may have differing interests relative to the Merger than other holders of Navios Acquisition Common Shares.

Background of the Merger

The Navios Acquisition Board regularly reviews operational and strategic opportunities to maximize value for holders of Navios Acquisition Common Shares.

On July 22, 2021, during a quarterly meeting of the Navios Acquisition Board, Angeliki Frangou, as Chief Executive Officer and Chairman of the Navios Acquisition Board, notified the Navios Acquisition Board that Navios Partners was considering approaching Navios Acquisition regarding a potential transaction pursuant to which Navios Acquisition would be combined with Navios Partners.

 

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In anticipation of the possibility that Navios Partners may submit a proposal to the Navios Acquisition Board regarding a potential business combination of Navios Acquisition with Navios Partners, and in light of the potential conflicts that may exist between interests of Ms. Frangou and her affiliates, on the one hand, and the holders of Navios Acquisition Public Common Shares, on the other hand, the Navios Acquisition Board formed a special conflicts committee consisting of Christos Kokkinis, Brigitte Noury and Eleni Warren (each of whom are independent members of the Navios Acquisition Board) (the “Navios Acquisition Special Committee”). In connection therewith, the Navios Acquisition Board delegated to the Navios Acquisition Special Committee the power and authority to, among other things, engage in discussions, receive and address any proposals sent by Navios Partners relating to a proposed transaction (the “Proposed Transaction”), and to evaluate, negotiate and present to the Navios Acquisition Board the Navios Acquisition Special Committee’s recommendation with respect to the Proposed Transaction. The Navios Acquisition Board further resolved not to take any action to approve the Proposed Transaction without prior favorably recommendation by the Navios Acquisition Special Committee. The Navios Acquisition Special Committee was also authorized to retain independent legal and financial advisors.

In July 2021, the Navios Acquisition Special Committee interviewed several potential outside legal and financial advisors to advise the Navios Acquisition Special Committee in connection with evaluating and negotiating the Proposed Transaction. Following such interviews, the Navios Acquisition Special Committee decided to engage Latham & Watkins LLP (“Latham”) as legal counsel and Pareto as financial advisor because of each advisor’s knowledge, expertise and experience with public merger and acquisition transactions, including take-private transactions involving the industries in which the parties operate. In late July 2021, the Navios Acquisition Special Committee executed an engagement letter with Latham. With the assistance of Latham, the Navios Acquisition Special Committee negotiated and executed an engagement letter with Pareto effective July 28, 2021.

On July 29, 2021, Navios Partners delivered a letter to the Navios Acquisition Board to propose the Proposed Transaction (the “Initial Proposal”). The Initial Proposal contemplated that (a) Navios Acquisition would issue to Navios Partners $150.0 million of Navios Acquisition Common Shares (the “NMM Equity Issuance”) in exchange for $150.0 million in cash (the “NMM Subscription Consideration”), or $2.69 per Navios Acquisition Common Share, which represented an 8.6% premium over the most recent closing trading price of Navios Acquisition Common Shares, (b) Navios Acquisition and its subsidiaries would enter into loan agreements with certain lenders pursuant to which NNA and its subsidiaries would borrow (the “Debt Financing”) from such lenders approximately $260 million, in the aggregate, (c) Navios Acquisition would use the proceeds from the NMM Equity Issuance and the Debt Financing to defease the approximate $398 million of certain Ship Mortgage Notes issued by Navios Acquisition and its wholly owned subsidiary, Navios Acquisition Finance (US) Inc., which Ship Mortgage Notes were scheduled to mature in November 2021, (d) Navios Acquisition and NSM, would amend the terms of a secured loan (the “NSM Loan”) made by NSM to Navios Acquisition to, among other things, provide for the issuance to NSM of $30 million of Navios Acquisition Common Shares (the “NSM Equity Issuance”) in exchange for the cancellation of $30 million outstanding under the NSM Loan (the “NSM Subscription Consideration”), the forfeiture by NSM of certain rights under the NSM Loan and the release of collateral securing the NSM Loan and (e) Navios Acquisition would enter into a loan agreement with Navios Partners pursuant to which Navios Partners would provide to Navios Acquisition a working capital facility (such transactions, collectively, the “Initial Transactions”). Following the Initial Transactions, Navios Acquisition would merge with a wholly owned subsidiary of Navios Partners (the “Merger”) and each Navios Acquisition Common Share (other than Navios Acquisition Common Shares owned by Navios Partners or Navios Acquisition) would be exchanged for 0.1222 of a Navios Partners Common Unit, which represented an 8.6% premium over the most recent closing trading price of Navios Acquisition Common Shares.

On July 30, 2021, the Navios Acquisition Special Committee met via videoconference. At the meeting, representatives of Latham and Pareto discussed with the Navios Acquisition Special Committee, among other matters, the terms of the Initial Proposal and a potential process pursuant to which the Navios Acquisition

 

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Special Committee would evaluate, negotiate and review the Proposed Transaction in coordination with its advisors.

Commencing in August 2021, Latham and Pareto conducted diligence and analysis of the Proposed Transaction, providing periodic updates to the Navios Acquisition Special Committee.

On August 5, 2021, representatives of Pareto met via videoconference with certain management members of Navios Partners, including Efstratios Desypris, Chief Financial Officer of Navios Partners, and representatives of the financial advisors to Navios Partners. During the meeting, management of Navios Partners presented Navios Partners’ rationales for the terms of the Initial Proposal, and representatives of Pareto asked various financial diligence questions related to Pareto’s preliminary valuation of Navios Partners.

On August 10, 2021, the Navios Acquisition Special Committee met via videoconference with representatives of Pareto and Latham to further review the terms of the Initial Proposal and to discuss Pareto’s preliminary financial analysis of the Initial Proposal and the Proposed Transaction. After discussion, the Navios Acquisition Special Committee authorized representatives of Pareto to negotiate on behalf of the Navios Acquisition Special Committee for an increased exchange ratio.

That same day, representatives of Pareto met via videoconference with representatives of the financial advisors to Navios Partners. During the meeting, representatives of Pareto indicated that based on their financial analysis to date, Pareto believed the P/NAV pricing to be higher than the terms reflected in the Initial Proposal. Representatives of the financial advisors to Navios Partners agreed to discuss this point with Navios Partners.

On August 11, 2021, representatives of Pareto met via videoconference with representatives of the financial advisors to Navios Partners. During the meeting, representatives of the financial advisors to Navios Partners presented a revised offer on behalf of Navios Partners (the “Second Proposal”) consisting of an exchange ratio of 0.1265 of a Navios Partners Common Unit for each Navios Acquisition Common Share (other than the Excluded Shares), which represented a 31.67% premium over the most recent closing trading price of Navios Acquisition Common Shares.

Later that day, the Navios Acquisition Special Committee met via videoconference with representatives of Pareto and Latham to review the terms of the Second Proposal. Representatives from Pareto presented a revised financial analysis based on the terms of the Second Proposal. After discussion, the Navios Acquisition Special Committee authorized representatives of Pareto to negotiate on behalf of the Navios Acquisition Special Committee for a further increased exchange ratio.

That same day, representatives of Pareto met via videoconference with representatives of the financial advisors to Navios Partners. During the meeting, representatives of Pareto presented a revised offer (the “Counterproposal”) consisting of an exchange ratio of 0.1275 of a Navios Partners Common Unit for each Navios Acquisition Common Share (other than the Excluded Shares) (the “Exchange Ratio”), which represented a 32.58% premium over the most recent closing trading price of Navios Acquisition Common Shares. Later that day, representatives of the financial advisors to Navios Partners held a teleconference with representatives of Pareto wherein the financial advisors to Navios Partners, on behalf of Navios Partners, agreed to the terms of the Counterproposal, subject to negotiation of acceptable transaction documents.

On August 16, 2021, Fried, Frank, Harris, Shriver & Jacobson LLP (“Fried Frank”), legal advisor to Navios Partners, sent the initial draft of the Merger Agreement to Latham, who reviewed the draft with the Navios Acquisition Special Committee.

 

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On August 20, 2021, representatives of Latham’s tax team discussed tax-related structuring considerations with representatives of Fried Frank’s tax team.

On August 21, 2021, as authorized by the Navios Acquisition Special Committee, Latham sent a revised draft of the Merger Agreement to Fried Frank reflecting the comments discussed with the Navios Acquisition Special Committee. The revised draft of the Merger Agreement included transfer restrictions with respect to Navios Acquisition Common Shares held by Navios Partners during the interim period, eliminated the ability of either party to terminate the Merger Agreement in the event that the Navios Acquisition stockholder approval was not obtained at the special meeting of holders of Navios Acquisition Common Shares, deleted the right of Navios Partners to terminate the Merger Agreement upon an adverse recommendation change by the Navios Acquisition Board, added the right of Navios Acquisition to terminate the Merger Agreement to pursue a superior proposal and revised the termination fee provision such that the termination fee would be payable only in the event that Navios Acquisition terminated the Merger Agreement to pursue a superior proposal.

On August 22, 2021, Fried Frank sent a revised draft of the Merger Agreement to Latham. The revised draft of the Merger Agreement eliminated Navios Acquisition’s ability to terminate the Merger Agreement to pursue a superior proposal, reinserted Navios Partners’ ability to terminate the Merger Agreement upon an adverse recommendation change by the Navios Acquisition Board and revised the termination fee construct initially proposed by Navios Partners such that the termination fee (the “Termination Fee”) would be payable by Navios Acquisition to Navios Partners in the event that Navios Partners terminated the Merger Agreement upon an adverse recommendation change by the Navios Acquisition Board. Later that day, representatives of Fried Frank and Latham corresponded regarding further revisions to the Merger Agreement.

On August 23, 2021, the Navios Acquisition Special Committee met via videoconference with representatives of Latham and Pareto. Representatives of Latham reviewed with the Navios Acquisition Special Committee their duties and responsibilities under the Navios Acquisition Articles of Incorporation and the Marshall Islands Business Corporation Act (the “Marshall Islands Act”) in connection with reviewing and determining whether to approve the Merger and related transactions and summarized the terms of the Merger Agreement. After discussion regarding the terms of the Merger Agreement, the Navios Acquisition Special Committee determined to propose certain changes to the Merger Agreement, including deletion of the Termination Fee. The Navios Acquisition Special Committee requested a follow-up meeting later that day in order for representatives of Pareto to provide an updated financial analysis with respect to the Proposed Transaction.

Later that same day, the Navios Acquisition Special Committee met via videoconference with representatives of Latham and Pareto. Representatives of Pareto presented Pareto’s updated analysis of the Proposed Transaction, which included, among other things, a review of the due diligence performed to date, a summary of the valuation methodologies employed, a preliminary valuation of each of Navios Partners and Navios Acquisition, an overview of peer group benchmarks and trading multiples, a preliminary analysis of the value of the Navios Acquisition Public Common Shares in Navios Acquisition as a standalone company compared to the estimated value of such shares in the combined entity following the Merger and a preliminary analysis of the terms and conditions of the Proposed Transaction. The Navios Acquisition Special Committee then engaged in a discussion of the various components of the presentation, including the value that would be received by the holders of Navios Acquisition Public Common Shares under Navios Partners’ proposal.

Later on August 23, 2021, as authorized by the Navios Acquisition Special Committee, Latham sent a revised draft of the Merger Agreement to Fried Frank reflecting the comments discussed with the Navios Acquisition Special Committee, including the deletion of the Termination Fee.

Early in the morning of August 24, 2021, representatives of Fried Frank and Latham corresponded regarding further revisions to the Merger Agreement.

Later in the morning of August 24, 2021, the Navios Acquisition Special Committee met with representatives of Latham and Pareto. At the meeting, representatives of Pareto reviewed their financial analysis of the Merger and

 

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orally presented their opinion that, as of the date of the opinion, the Exchange Ratio is fair, from a financial point of view, to the holders of Navios Acquisition Public Common Shares, the NMM Subscription Consideration is fair, from a financial point of view, to Navios Acquisition, and the NSM Subscription Consideration is fair, from a financial point of view, to Navios Acquisition. Representatives of Latham then summarized the resolutions distributed to the Navios Acquisition Special Committee prior to the meeting. After discussing the presented materials, the Navios Acquisition Special Committee unanimously voted to (i) approve the Merger Agreement and the consummation of the transactions contemplated thereby, including the Merger, the NMM Equity Issuance and the Initial Transactions and (ii) recommend that the Navios Acquisition Board (A) approve the Merger Agreement and the consummation of the transactions contemplated thereby, including the Merger, the NMM Equity Issuance and the Initial Transactions, (B) submit the Merger Agreement to the holders of Navios Acquisition Common Shares for approval, (C) recommend that the holders of shares of Navios Acquisition Common Shares approve the Merger Agreement and the transactions contemplated thereby, including the Merger, upon the terms and conditions set forth in the Merger Agreement, and (D) cause Navios Acquisition to enter into the Merger Agreement and the agreements reflecting the Initial Transactions and consummate the NMM Equity Issuance, the Initial Transactions and the Merger upon the terms and conditions set forth in the Merger Agreement and the agreements reflecting the Initial Transactions (subject, in the case of the Merger, to obtaining the requisite approval of the holders of Navios Acquisition Common Shares).

On August 24, 2021, following the meeting of the Navios Acquisition Special Committee, the Navios Acquisition Board met, with representatives of Thompson Hine LLP, as corporate counsel to Navios Acquisition, and Latham present, to discuss the terms of the Merger Agreement and the recommendation of the Navios Acquisition Special Committee. Mr. Kokkinis reviewed the recommendation of the Navios Acquisition Special Committee. After discussing matters referenced above, the Navios Acquisition Board unanimously voted to (i) approve the Merger Agreement and the transactions contemplated thereby, including the Merger, (ii) submit the Merger Agreement to the holders of Navios Acquisition Common Shares for approval at a special meeting and (iii) authorize Navios Acquisition to enter into the Merger Agreement and, subject to obtaining the requisite approval of holders of Navios Acquisition Common Shares, consummate the Merger upon the terms and conditions set forth in the Merger Agreement.

Counsel to Navios Partners and the Navios Acquisition Special Committee subsequently finalized the negotiation of the Merger Agreement and the parties executed the Merger Agreement on August 25, 2021. On August 26, 2021, Navios Partners and Navios Acquisition issued a press release announcing the transaction.

Recommendation of the Navios Acquisition Special Committee and the Navios Acquisition Board

In anticipation of the possibility that Navios Partners may submit a proposal to the Navios Acquisition Board regarding a potential business combination of Navios Acquisition with Navios Partners, and in light of the potential conflicts that may exist between interests of Ms. Frangou and her affiliates, on the one hand, and the holders of Navios Acquisition Public Common Shares, on the other hand, the Navios Acquisition Board formed the Navios Acquisition Special Committee consisting of Christos Kokkinis, Brigitte Noury and Eleni Warren (each of whom are independent members of the Navios Acquisition Board). In connection therewith, the Navios Acquisition Board delegated to the Navios Acquisition Special Committee the power and authority to, among other things, engage in discussions, receive and address any proposals sent by Navios Partners relating to the Proposed Transaction, and to evaluate, negotiate and present to the Navios Acquisition Board the Navios Acquisition Special Committee’s recommendation with respect to the Proposed Transaction. The Navios Acquisition Board further resolved not to take any action to approve the Proposed Transaction without prior favorably recommendation by the Navios Acquisition Special Committee. The Navios Acquisition Special Committee was also authorized to retain independent legal and financial advisors.

The Navios Acquisition Special Committee, with the assistance of its advisors, reviewed, negotiated and evaluated the Merger Agreement and the transactions contemplated thereby, including the Merger, and certain related arrangements and agreements. Following that process, the Navios Acquisition Special Committee, by

 

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unanimous vote at a meeting held on August 24, 2021, (i) determined in good faith that the Merger Agreement and the transactions contemplated thereby, including the Merger, the NMM Equity Issuance and the Initial Transactions, are in the best interests of Navios Acquisition and the holders of Navios Acquisition Public Common Shares, (ii) approved the Merger Agreement and the consummation of the transactions contemplated thereby, including the Merger, the NMM Equity Issuance and the Initial Transactions and (iii) recommended that the Navios Acquisition Board (A) approve the Merger Agreement and the consummation of the transactions contemplated thereby, including the Merger, the NMM Equity Issuance and the Initial Transactions, (B) submit the Merger Agreement to the holders of Navios Acquisition Common Shares for approval, (C) recommend that the holders of shares of Navios Acquisition Common Shares approve the Merger Agreement and the transactions contemplated thereby, including the Merger, upon the terms and conditions set forth in the Merger Agreement, and (D) cause Navios Acquisition to enter into the Merger Agreement and the agreements reflecting the Initial Transactions and consummate the NMM Equity Issuance, the Initial Transactions and the Merger upon the terms and conditions set forth in the Merger Agreement and the agreements reflecting the Initial Transactions (subject, in the case of the Merger, to obtaining the requisite approval of the holders of Navios Acquisition Common Shares).

Based on the Navios Acquisition Special Committee’s recommendation, the Navios Acquisition Board, at a meeting held on August 24, 2021, unanimously approved the Merger Agreement and the transactions contemplated thereby, including the Merger, the NMM Equity Issuance and the Initial Transactions.

Reasons for the Navios Acquisition Special Committee’s Recommendation

The Navios Acquisition Special Committee considered many factors in making its determination, providing its approval and making its recommendation. The Navios Acquisition Special Committee consulted with its financial and legal advisors and viewed the following factors as being generally positive or favorable in coming to its determination, its decision to provide its approval and its related recommendation:

 

   

The Exchange Ratio of 0.1275 of a Navios Partners Common Unit for each Navios Acquisition Public Common Share represents a 65.05% premium to the closing price of a Navios Acquisition Common Share on August 24, 2021 (the last trading day before the announcement of the Merger Agreement) and a 17.6% premium to the 60-day VWAP of a Navios Acquisition Common Share for the period ending on August 24, 2021.

 

   

The Exchange Ratio is fixed, and therefore the value of the consideration payable to holders of Navios Acquisition Public Common Shares based on such amounts will increase in the event that the market price of Navios Partners Common Units increases relative to any change in the market price of Navios Acquisition Common Shares prior to the closing of the Merger.

 

   

The Merger is expected to provide holders of Navios Acquisition Public Common Shares with equity ownership in an entity with strong coverage with respect to distributions, which is anticipated to result in (i) greater market confidence in the combined company, (ii) an enhanced outlook for distribution growth and (iii) better positioning for varying and uncertain industry and commodity pricing environments.

 

   

Navios Partners is currently expected to pay distributions with respect to Navios Partners Common Units, while dividends with respect to Navios Acquisition Common Shares have been suspended beginning with the quarter ended December 31, 2020.

 

   

The Merger is expected to improve the combined company’s ability to de-leverage through an anticipated cash flow generation, which the combined company may use to drive organic growth.

 

   

The Merger will simplify Navios Partners’ corporate structure and eliminate potential conflicts of interest between Navios Partners and Navios Acquisition.

 

   

The Merger is expected to allow Navios Partners and Navios Acquisition to achieve synergies in the form of cost savings, sharing of best practices and capabilities, asset base diversity and other

 

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efficiencies, including cost savings related to reduced SEC filing requirements and a reduction in the number of public company boards and other costs associated with multiple public companies.

 

   

The Merger is expected to create a combined company with a larger, more diversified asset base that is capable of generating increased earnings capacity.

 

   

The Navios Acquisition Special Committee is familiar with, and understands, the businesses, assets, liabilities, results of operations, financial condition and competitive positions and prospects of Navios Acquisition and, in connection with evaluating the merits of the Merger, has become familiar with and has gained an understanding of the business, assets, liabilities, results of operations, financial condition and competitive positions and prospects of Navios Acquisition.

 

   

The Navios Acquisition Special Committee understands and has reviewed the overall current operating conditions and the outlook for the international shipping industry as they relate to Navios Acquisition’s competitive position, financial condition, future distributions and growth prospects.

 

   

The Merger will result in a combined company having increased scale and greater access to capital, which is anticipated to better position the combined company to enhance long-term growth potential in the recovering shipping market as compared to Navios Acquisition’s prospects as a standalone entity.

 

   

The Navios Acquisition Special Committee retained independent financial and legal advisors with knowledge and experience with respect to public merger and acquisition transactions, Navios Acquisition’s and Navios Partners’ industry generally, Navios Partners and Navios Acquisition particularly and substantial experience advising publicly traded corporations and other companies with respect to transactions similar to the proposed transaction.

 

   

The terms of the Merger Agreement, which were determined through arm’s-length negotiations between Navios Partners and the Navios Acquisition Special Committee and their respective representatives and advisors, provided certain benefits.

 

   

The Merger Agreement restricts Navios Partners’ ability to take certain actions without the consent of Navios Acquisition prior to the consummation of the Merger that could reduce the value of Navios Partners Common Units received by holders of Navios Acquisition Public Common Shares in the Merger, including:

 

   

issuing or selling any debt securities, or rights to acquire any debt securities, other than (i) debt issued to refinance existing indebtedness, (ii) aggregate indebtedness with a principal amount up to 20% of the aggregate principal amount of debt outstanding as of August 25, 2021 and (iii) intracompany debt; and

 

   

issuing or selling any equity interests or rights to acquire equity securities, other than Navios Partners Common Units or rights to acquire Navios Partners Common Units of $75.0 million or less in the aggregate.

 

   

The Merger Agreement includes provisions allowing the Navios Acquisition Special Committee and the Navios Acquisition Board to withdraw or change their recommendation in favor of the Merger in the event of (i) a Superior Proposal from a third party or (ii) a material change of circumstance that arises after the date of the Merger Agreement that was not reasonably foreseeable at the time of the Merger Agreement, in each case, provided that, among other things, the Navios Acquisition Board (upon the recommendation of the Navios Acquisition Special Committee) or the Navios Acquisition Special Committee, as applicable, makes a good faith determination, after consultation with its financial advisors and outside legal counsel, that the failure to change its recommendation would be reasonably likely to be inconsistent with its duties under applicable law, and that such recommendation change complies with the terms of the Merger Agreement.

 

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The Merger Agreement permits Navios Acquisition to provide information to, and participate in discussions and negotiations with, a third party in response to an unsolicited Alternative Proposal, which may, in certain circumstances, result in a Superior Proposal.

 

   

The Merger Agreement includes a requirement that Navios Partners pay the expenses of Navios Acquisition related to the Merger and related transactions in the event Navios Partners breaches or fails to perform a representation, warranty, covenant, obligation or other agreement in such a way that it constitutes a breach of a closing condition.

 

   

The Merger Agreement includes a prohibition against Navios Acquisition’s revocation or diminishment of the authority of the Navios Acquisition Special Committee and a prohibition against Navios Acquisition’s removal of any member of the Navios Acquisition Special Committee without the consent of the other members of the Navios Acquisition Special Committee, in each case, prior to the closing of the Merger.

 

   

The Merger Agreement provides that any amendments to, waivers of or termination of the Merger Agreement by Navios Acquisition requires the approval of the Navios Acquisition Special Committee.

 

   

The Navios Acquisition Special Committee believes that, after evaluating alternative strategic transactions (including maintaining the status quo), none of the alternatives are more attractive to Navios Acquisition than the Merger and the related transactions.

 

   

The Navios Acquisition Special Committee believes that Navios Acquisition will benefit from the elimination of indebtedness and the related restructuring of the terms of Navios Acquisition’s indebtedness in connection with the Initial Transactions. This is expected to mitigate Navios Acquisition’s risk of non-compliance with certain covenants in its existing indebtedness.

 

   

The probability that Navios Partners and Navios Acquisition will be able to consummate the Merger is significantly increased by Navios Partner’s agreement pursuant to the Merger Agreement requiring Navios Partners and its subsidiaries to vote in favor of the Merger Agreement, which, following the NMM Equity Issuance, is the only approval of holders of shares of Navios Acquisition Common Shares required to be obtained.

 

   

The Merger Consideration is not expected to generally be taxable for U.S. federal income tax purposes to holders of Navios Acquisition Common Shares.

 

   

Through negotiation, the Navios Acquisition Special Committee was able to increase the Merger Consideration from the exchange ratio initially proposed by Navios Partners of 0.1222 of a Navios Partners Common Unit for each Navios Acquisition Common Share (other than Navios Acquisition Common Shares owned by Navios Partners or Navios Acquisition) to the final Exchange Ratio of 0.1275, as discussed in the section entitled “The Merger—Background of the Merger.”

 

   

The Navios Acquisition Special Committee believes that the proposed consideration and other economic benefits of the Merger and related transactions represent the highest value for the holders of Navios Acquisition Public Common Shares to which Navios Partners was willing to agree.

The Navios Acquisition Special Committee considered the following factors to be generally negative or unfavorable in making its determination that the Merger Agreement and the transactions contemplated thereby are in the best interests of Navios Acquisition and the holders of Navios Acquisition Public Common Shares:

 

   

The Exchange Ratio is fixed, and therefore the value of the consideration payable to holders of Navios Acquisition Public Common Shares based on such amounts will decrease in the event that the market price of Navios Partners Common Units decreases relative to any change in the market price of Navios Acquisition Common Shares prior to the closing of the Merger.

 

   

There is a risk that the potential benefits expected to be realized in the Merger might not be fully realized, or might not be realized in the expected time period.

 

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The absence of certain procedural elements, including:

 

   

The fact that holders of Navios Acquisition Public Common Shares are not entitled to appraisal rights under the Merger Agreement, Navios Acquisition Articles of Incorporation or the Marshall Islands Act.

 

   

The Navios Acquisition Special Committee was not authorized to, and did not, conduct an auction process or other solicitation of interest from third parties for the acquisition of Navios Acquisition. Given control over Navios Acquisition by Navios Partners’ affiliates and the terms of Navios Acquisition’s indebtedness, it was unrealistic to expect or pursue an unsolicited third-party acquisition proposal or offer for the assets or control of Navios Acquisition, and it was unlikely that the Navios Acquisition Special Committee could conduct a meaningful auction for the acquisition of the assets or control of Navios Acquisition.

 

   

Certain members of Navios Acquisition management, the Navios Acquisition Board and the Navios Acquisition Special Committee may have interests that are different from those of the holders of Navios Acquisition Public Common Shares. Please see the section entitled “The Merger—Interests of Navios Acquisition’s Directors and Officers in the Merger.”

 

   

Certain terms of the Merger Agreement, which were determined through arm’s-length negotiations between Navios Partners and the Navios Acquisition Special Committee and their respective representatives and advisors, provided certain risks.

 

   

The Merger Agreement limits the ability of Navios Acquisition to solicit or consider unsolicited offers from third parties for Navios Acquisition.

 

   

The operating covenants to which Navios Acquisition is subject in the Merger Agreement restrict Navios Acquisition from taking certain actions prior to the closing of the Merger that could be beneficial to Navios Acquisition and the holders of Navios Acquisition Public Common Shares.

 

   

Navios Acquisition’s obligation to pay Navios Partners’ expenses in certain circumstances.

 

   

Litigation may occur in connection with the Merger, and any such litigation may result in significant costs and a diversion of management focus.

 

   

There is a risk that the Merger might not be completed in a timely manner, or that the Merger might not be consummated at all as a result of a failure to satisfy the conditions contained in the Merger Agreement, and a failure to complete the Merger could negatively affect the trading price of the Navios Acquisition Common Shares or could result in significant costs for Navios Acquisition, expenses owed to Navios Partners and disruption to Navios Acquisition’s normal business.

 

   

The holders of Navios Acquisition Public Common Shares will be foregoing the potential benefits, if any, that would be realized by remaining unitholders of Navios Acquisition on a standalone basis.

The foregoing discussion is not intended to be exhaustive, but is intended to address the material information and principal factors considered by the Navios Acquisition Special Committee in considering the Merger. In view of the number and variety of factors and the amount of information considered, the Navios Acquisition Special Committee did not find it practicable to, and did not make specific assessments of, quantify or otherwise assign relative weights to, the specific factors considered in reaching its determination. In addition, the Navios Acquisition Special Committee did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to its ultimate determination, and individual members of the Navios Acquisition Special Committee may have given different weights to different factors. The Navios Acquisition Special Committee made its determination, approval and recommendation based on the totality of information presented to, and the investigation conducted by, the Navios Acquisition Special Committee. It should be noted that certain statements and other information presented in this section are forward-looking in nature and, therefore, should be read in light of the factors discussed in the section entitled “Cautionary Note Regarding Forward-Looking Statements.”

 

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Unaudited Financial Projections of Navios Partners and Navios Acquisition

In connection with the Proposed Transactions, management of Navios Acquisition provided internal non-public projections relating to Navios Acquisition, and management of Navios Partners provided internal non-public projections relating to Navios Partners, in each case to the Navios Acquisition Special Committee and its financial advisor Pareto for their use in negotiating the terms of the Transaction with Navios Partners and for use by Pareto in connection with its performance of its financial analysis and delivery of its opinion to the Navios Acquisition Special Committee. The projections for Navios Acquisition were prepared on a stand-alone basis (assuming the consummation of the Initial Transactions) and the projections for Navios Partners did not reflect the ownership position in Navios Acquisition acquired as a result of the initial transactions. A summary of these projections, rounded to the nearest million, is included below to give holders of Navios Acquisition Common Shares access to certain non-public unaudited prospective financial information that was made available to Pareto, the Navios Acquisition Special Committee and the Navios Acquisition Board in connection with the Transaction.

You should be aware that uncertainties are inherent in prospective financial information of any kind. Neither Navios Partners nor Navios Acquisition, nor any of their respective affiliates, advisors, officers, directors or representatives, have made or make any representation or can give any assurance to any holder of Navios Acquisition Common Shares or any other person regarding the ultimate performance of Navios Acquisition or Navios Partners compared to the summarized information set forth below or that any such results will be achieved.

The inclusion of the following summary projections in this proxy statement/prospectus should not be regarded as an indication that Navios Partners, Navios Acquisition or their respective representatives considered or consider the projections to be a reliable or accurate prediction of future performance or events, and the summary projections set forth below should not be relied upon as such.

The projected financial information included in this proxy statement/prospectus has been prepared by, and is the responsibility of, Navios Acquisition’s and Navios Partners’ management. The Navios Acquisition and Navios Partners projections were not prepared with a view toward public disclosure or toward compliance with U.S. GAAP, the published guidelines of the SEC, or the guidelines established by the American Institute of Certified Public Accountants. Neither PricewaterhouseCoopers S.A. (“PwC”), Ernst & Young (Hellas) Certified Auditors Accountants S.A. (“EY”), nor any other independent registered public accounting firm has audited, reviewed, compiled, examined or applied agreed-upon procedures with respect to the accompanying prospective financial information contained in the projections and accordingly, PwC and EY express no opinion or any other form of assurance with respect thereto. The PwC report included in Navios Partners’ Annual Report on Form 20-F for the fiscal year ended December 31, 2020, which is incorporated by reference in this proxy statement/prospectus, relates to historical financial statements of Navios Partners, and the EY report included in Navios Acquisition’s Annual Report on Form 20-F for the fiscal year ended December 31, 2020, which is incorporated by reference in this proxy statement/prospectus, relates to historical financial information of Navios Acquisition. Such reports do not extend to the projected financial information and should not be read as if it does. None of the Navios Partners Board, Navios Acquisition Board or the Navios Acquisition Special Committee prepared the summarized information, and none of the Navios Partners Board, the Navios Acquisition Board, the Navios Acquisition Special Committee, Navios Partners or Navios Acquisition gives any assurance regarding the summarized information. The internal financial projections of Navios Acquisition and Navios Partners are inherently subjective in nature, susceptible to interpretation and, accordingly, such forecasts may not be achieved.

The projections summarized below reflect numerous assumptions made by management of Navios Partners and Navios Acquisition, including material assumptions that may not be realized and are subject to significant uncertainties and contingencies, all of which are difficult to predict and many of which are beyond the control of the preparing party. Accordingly, there can be no assurance that the assumptions made in preparing the projections will prove accurate. There will be differences between actual and forecasted results, and the differences may be material. The risk that these uncertainties and contingencies could cause the assumptions to fail to be reflective of actual results is further increased due to the length of time in the future over which these

 

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assumptions apply. Any inaccuracy of assumptions and projections in early periods could have a compounding effect on the projections shown for the later periods. Accordingly, any failure of an assumption or projection to be reflective of actual results in an early period could have a greater effect on the projected results failing to be reflective of actual events in later periods. The projections presented are forward-looking in nature, subject to risks and uncertainties and, therefore, should be read in light of the factors discussed under the heading “Cautionary Note Regarding Forward-Looking Statements.”

 

(in millions)    2021E      2022E      2023E  

Navios Acquisition

        

Revenue

   $ 242      $ 305      $ 374  

Adjusted EBITDA (1)

   $ 92      $ 143      $ 208  

Cash Flow from Operations

   $ 36      $ 99      $ 130  

Navios Partners

        

Revenue

   $ 627      $ 1,071      $ 1,215  

Adjusted EBITDA (1)

   $ 425      $ 846      $ 963  

Cash Flow from Operations

   $ 296      $ 808      $ 916  

Some of the above measures are not measures of financial performance under U.S. GAAP, and should not be considered as alternatives to net income (loss), operating income, or other performance measures derived in accordance with U.S. GAAP. Navios Partners’ and Navios Acquisition’s computations of these measures may differ from similarly titled measures used by others.

 

(1)

EBITDA represents net income/ (loss) before interest and finance costs, before depreciation and amortization and before income taxes. Adjusted EBITDA represents EBITDA excluding certain items, such as stock-based compensation, gain on sale of vessels, gain on bond repurchase, equity in net earnings of affiliated companies and bargain purchase gain.

NEITHER NAVIOS ACQUISITION NOR NAVIOS PARTNERS INTENDS TO UPDATE OR OTHERWISE REVISE THE ABOVE PROSPECTIVE FINANCIAL INFORMATION TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE SUCH PROSPECTIVE FINANCIAL INFORMATION WAS PREPARED OR TO REFLECT THE OCCURRENCE OF SUBSEQUENT EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING SUCH PROSPECTIVE FINANCIAL INFORMATION ARE NO LONGER APPROPRIATE.

Opinion of Financial Advisor to the Navios Acquisition Special Committee

On August 23, 2021, Pareto, financial advisor to the Navios Acquisition Special Committee, delivered its oral opinion to the Navios Acquisition Special Committee, which opinion was subsequently confirmed by delivery of a written opinion dated August 25, 2021, to the effect that, as of such date and based upon and subject to the various assumptions, qualifications and limitations set forth in Pareto’s opinion, (i) the Exchange Ratio was fair, from a financial point of view, to the holders of Navios Acquisition Public Common Shares, (ii) the Navios Partners Subscription Consideration was fair, from a financial point of view, to Navios Acquisition and (iii) the NSM Subscription Consideration was fair, from a financial point of view, to Navios Acquisition.

The full text of the written opinion of Pareto sets forth, among other things, the procedures followed, assumptions made, matters considered and qualifications and limitations on the scope of review undertaken by Pareto in rendering its opinion, and is attached hereto as Annex B. You are encouraged to read Pareto’s opinion carefully and in its entirety.

Pareto’s opinion was prepared at the request, and provided for the information, of the members of the Navios Acquisition Special Committee (solely in their capacity as such), in connection with and for the purpose of its evaluation of the Transaction and does not address any other term or agreement relating to the Transaction. Pareto was not requested to opine as to, and this opinion does not address, the underlying business decision of

 

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Navios Acquisition to effect the Transaction, including the Merger, the relative merits of the Transaction, including the Merger, as compared to any alternative business strategies that might exist for Navios Acquisition or the effect of any other transaction in which Navios Acquisition might engage. In addition, this opinion does not address what the value of the Navios Partners Common Units actually would be when issued pursuant to the Merger or the price at which the Navios Partners Common Units would trade at any time. Pareto expressed no opinion on, and its opinion does not in any manner address, the fairness of any consideration, other than the Exchange Ratio, the Navios Partners Subscription Consideration or the NSM Subscription Consideration, that is payable to or receivable from (i) Navios Acquisition or any entity that is partially or wholly owned, directly or indirectly, by Navios Acquisition, (ii) Navios Partners or any entity that is partially or wholly owned, directly or indirectly, by Navios Partners, excluding Navios Acquisition and any entity that is partially or wholly owned, directly or indirectly, by Navios Acquisition or (iii) NSM or its affiliates, in connection with the Transaction. Furthermore, Pareto expressed no opinion on, and its opinion does not in any manner address, the fairness (financially or otherwise) of the amount or nature or any other aspect of any compensation to any officers, directors or employees of any parties to the Transaction, or any class of such persons, relative to the Exchange Ratio, the Navios Partners Subscription Consideration or the NSM Subscription Consideration. Pareto was not requested to opine as to, and its opinion does not intend to be and does not constitute a recommendation to any holder of Navios Acquisition Common Shares as to, how such holder should vote or act on any matters relating to the Merger. The summary of the Pareto opinion set forth herein is qualified in its entirety by reference to the full text of the opinion attached hereto as Annex B.

In conducting its investigation and analyses and in arriving at its opinion, Pareto reviewed such information and took into account such financial and economic factors, investment banking procedures and considerations as it deemed relevant under the circumstances. Subject to the various assumptions, qualifications and limitations set forth in its opinion, Pareto has, among other things:

 

   

reviewed (i) a draft dated August 25, 2021 of the Merger Agreement, (ii) a draft dated August 24, 2021 of the Supplemental Loan Agreement, (iii) a draft dated August 24, 2021 of the NMM Loan Agreement, (iv) a draft dated August 24, 2021 of the HCB Loan Agreement and (v) a draft dated August 24, 2021 of the BNP Loan Agreement (collectively, the “Transaction Documents”);

 

   

conferred with senior officers, directors and other representatives and advisors of Navios Acquisition and Navios Partners with respect to the business, operations and prospects of Navios Acquisition and Navios Partners;

 

   

reviewed and analyzed relevant business and financial information relating to Navios Acquisition and Navios Partners, including certain financial forecasts and other information and data relating to Navios Acquisition and Navios Partners which were provided to or discussed with Pareto by the managements of Navios Acquisition and Navios Partners;

 

   

familiarized itself with the business, operations, properties, financial condition, capitalization and prospects of Navios Acquisition and Navios Partners;

 

   

reviewed and analyzed documents provided by Navios Acquisition, to assist Pareto with its analysis;

 

   

reviewed and analyzed vessel appraisals from the following independent ship brokers: Clarksons, Maersk and VesselsValue; and

 

   

performed such other analyses, diligence and services as are customary, or that Pareto deemed otherwise appropriate for the purposes of the opinion expressed therein.

In arriving at its opinion, Pareto assumed and relied upon, without independent verification, the accuracy and completeness of all financial, accounting, tax and other information that was available to Pareto from public sources, that was provided to Pareto by Navios Acquisition or its representatives, or that was otherwise reviewed by or discussed with Pareto and upon the assurances of the management of Navios Acquisition that they were not aware of any relevant information that had been omitted or that remained undisclosed to Pareto. With respect to financial projections and other information relating to Navios Acquisition and Navios Partners provided to or

 

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otherwise reviewed by or discussed with Pareto, Pareto was advised by the respective managements of Navios Acquisition and Navios Partners that such forecasts and other information were reasonably prepared on bases reflecting the best currently available estimates and judgments of the managements of Navios Acquisition and Navios Partners as to the future operating and financial performance of Navios Acquisition and Navios Partners. Pareto assumed no responsibility for and expressed no view or opinion as to such forecasts and other information or the assumptions on which they are based.

In arriving at its opinion, Pareto further assumed, with the consent of the Navios Acquisition Special Committee, that (i) the Transaction, including the Merger, would be consummated in accordance with its terms, without waiver, modification or amendment of any material term, condition or agreement, (ii) the final terms of the Merger Agreement and the other Transaction Documents would conform in all material respects to the terms of the drafts reviewed by Pareto, (iii) there would be no change in the assets, liabilities, financial condition, results of operations, business or prospects of Navios Acquisition or Navios Partners since the date of the most recent information made available to Pareto that would be material to the analyses conducted by Pareto, and that there was no information or facts that would make the information reviewed by Pareto incomplete or misleading, and (iv) all governmental, regulatory or other consents and approvals necessary for the consummation of the Transaction, including the Merger, would be obtained, and no delay, limitation, restriction or condition would be imposed that would have an adverse effect on the Navios Acquisition, Navios Partners or the contemplated benefits of the Transaction, including the Merger.

In each case, Pareto has made the assumptions and taken the actions or inactions described in the opinion with the knowledge and consent of the Navios Acquisition Special Committee. In conducting its review and arriving at its opinion, no due diligence review or other verification exercises were performed by Pareto in connection with the Transaction. Pareto has not conducted any analysis concerning the solvency of Navios Acquisition and Navios Partners or obtained any evaluations or appraisals, other than noting the imminent debt maturities of Navios Acquisition.

Pareto’s opinion necessarily was based on economic, monetary market and other conditions as in effect on, and the information made available to Pareto as of, the date of the opinion, and does not predict or take into account any changes which may occur, or information which may become available, after that date. Pareto assumes no responsibility for advising any person of any change in any matter affecting its opinion or for updating or revising its opinion based on circumstances or events occurring after the date thereof.

Pareto’s opinion was only one of many factors considered by the Navios Acquisition Special Committee in its evaluation of the Transaction and should not be viewed as determinative of the views of the members of the Navios Acquisition Special Committee with respect to the Transaction, including the Merger, or the Exchange Ratio, the Navios Partners Subscription Consideration or the NSM Subscription Consideration. Set forth below is a summary of the material financial analyses reviewed by Pareto with the Navios Acquisition Special Committee on August 25, 2021, in connection with the rendering of its opinion. The following summary, however, does not purport to be a complete description of the analyses performed by Pareto. The order of the analyses described and the results of these analyses do not represent the relative importance or weight given to these analyses by Pareto. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data that existed on or before August 25, 2021 and is not necessarily indicative of subsequent or current market conditions.

Merger Analysis

Methodologies

In arriving at Pareto’s opinion as to (i) the fairness to the holders of Navios Acquisition Public Common Shares, from a financial point of view, of the Exchange Ratio, (ii) the fairness to Navios Acquisition, from a financial point of view, of the Navios Partners Subscription Consideration and (iii) the fairness to Navios Acquisition, from a financial point of view, of the NSM Subscription Consideration, Pareto focused on the following

 

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valuation methodologies: net asset value (“NAV”) for each of Navios Acquisition and Navios Partners, and comparable company trading analysis. As both Navios Acquisition and Navios Partners are ship owning companies with similar assets, the NAV methodology was chosen as this compares the value of the underlying assets of the two companies. A comparable company trading analysis was conducted by calculating different value to earnings metrics for comparable companies, and the enterprise value (“EV”) to earnings before interest, taxes, depreciation, and amortization (“EBITDA”) multiple was emphasized as it is a commonly applied earnings metric for publicly traded ship owning companies.

NAV Analysis

In arriving at an estimate of NAV for each of Navios Acquisition and Navios Partners, Pareto reviewed vessel appraisals from independent third-party ship brokers and industry valuation databases. The fair market value estimates contained in such appraisals were, as is customary in ship valuations, based on an assessment of the values that could be achieved in transactions involving a willing buyer and a willing seller.

Pareto utilized an unadjusted NAV analysis to assess the value of the ships without charters attached to arrive at an implied asset value for Navios Acquisition’s and Navios Partners’ fleets.

In conducting the NAV analysis, Pareto included the gross asset value (“GAV”) based on broker quotes and Pareto Securities Equity Research estimates with the cash balance of Navios Acquisition and Navios Partners as of June 30, 2021. Further, Pareto subtracted Navios Acquisition’s and Navios Partners’ gross debt, as estimated by or for the respective managements of Navios Acquisition and Navios Partners as per June 30, 2021, from the total fair market value of Navios Acquisition’s and Navios Partners’ fleets, to arrive at a NAV for each of Navios Acquisition and Navios Partners.

A summary of the analyses is provided below (values in millions except per share/unit data):

 

Navios Acquisition

             

Items

   Broker
Quotes
     Pareto Securities
Equity Research Est.
 

GAV

   $ 1,001      $ 1,021  

Gross Debt

   $ 1,015      $ 1,015  

Cash

   $ 85      $ 85  
  

 

 

    

 

 

 

NAV

   $ 71      $ 91  

Shares Outstanding (as of June 30, 2021)

     17.38        17.38  

Price/Share (as of August 24, 2021)

   $ 2.06      $ 2.06  

Enterprise Value (EV)

   $ 965      $ 965  

NAV / Share

   $ 4.09      $ 5.26  

GAV / Share

   $ 57.57      $ 58.75  

P / NAV

     0.50x        0.39x  

EV / GAV

     0.96x        0.95x  

Implied Pricing Based on the Exchange Ratio

     

P / NAV

     0.83x        0.65x  

EV / GAV

     0.99x        0.97x  

 

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Navios Partners

             

Items

   Broker
Quotes
     Pareto Securities
Equity Research Est.
 

GAV

   $ 2,824      $ 2,574  

Gross Debt

   $ 796      $ 796  

Cash

   $ 233      $ 233  
  

 

 

    

 

 

 

NAV

   $ 2,261      $ 2,011  

Units Outstanding (as of July 16, 2021)

     27.36        27.36  

Price/Unit (as of August 24, 2021)

   $ 26.69      $ 26.69  

Enterprise Value (EV)

   $ 1,293      $ 1,293  

NAV / Unit

   $ 82.65      $ 73.49  

GAV / Unit

   $ 103.22      $ 94.06  

P / NAV

     0.32x        0.36x  

EV / GAV

     0.57x        0.50x  

From this NAV analysis, Pareto derived (i) an implied equity value range for Navios Acquisition of approximately $35.5 million to approximately $71 million, representing a range of approximately $2.04 per share to approximately $4.09 per share, and (ii) an implied equity value range for Navios Partners of approximately $723 million to approximately $2,261 million, representing a range of approximately $26.43 per unit to approximately $82.64 per unit.

Applying a relative NAV analysis, the implied percentage ownership of the combined company by existing shareholders of Navios Acquisition would be 3.7%. Based on the Exchange Ratio, the existing shareholders of Navios Acquisition excluding NSM will own, in the aggregate, approximately 7.2% of the Navios Partners equity immediately following the Merger.

Comparable Company Trading Analysis

In order to assess how the public market values equity shares/units of similar publicly traded companies, Pareto reviewed and compared specific financial data relating to Navios Acquisition to that of a group of selected companies that Pareto deemed to have similar business and industry characteristics as Navios Acquisition. The publicly traded companies that Pareto deemed to have similar characteristics to those of Navios Acquisition for the purposes of its analysis were the following:

 

   

Frontline Ltd.

 

   

Scorpio Tankers Inc.

 

   

Hafnia Ltd.

 

   

Okeanis Eco Tankers Corp.

 

   

Ardmore Shipping Corp.

None of the selected publicly traded companies are identical or directly comparable to Navios Acquisition. Such companies were selected on the basis of comparable characteristics, such as industry segment, business model and fleet composition. The selected companies have exposure towards product and/or tanker shipping by owning and/or operating vessels.

As part of its analysis, Pareto calculated and analyzed for each respective company (i) the ratios of EV to EBITDA from 2021 to 2024, (ii) the ratios of EV to EBIT from 2021 to 2024 and (iii) the price-to-earnings ratios from 2021 to 2024. Pareto calculated all multiples based on closing share/unit prices as of August 24, 2021 for each respective company. The financial data for the selected publicly traded companies were based on publicly available filings and financial consensus projections provided by FactSet. Due to limited research coverage of the selected companies by equity analysts, lack of forecasted financials and metrics represented a challenge for valuation purposes. However, consensus EBITDA numbers were available for all companies in the group of comparable companies, with the exception of Hafnia Ltd. Based on available data points, EV to (consensus) EBITDA was selected as the best valuation metric. Pareto limited the forward-looking analysis based on multiples to 2021 and 2022 to ensure sufficient and valid consensus estimates. EV to EBITDA is a commonly applied earnings metric for publicly traded ship owning companies. The valuation metric also makes it possible to compare market value to earnings without distorting effects from differences in capital structure.

 

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The calculations in the table below reflect a pricing in line with the results of the comparable company trading analysis:

 

EV/EBITDA 2021E

      

Ardmore Shipping Corp.

     16.8x  

Scorpio Tankers Inc.

     16.6x  

Frontline Ltd.

     14.7x  

Navios Acquisition

     10.5x  

Okeanis Eco Tankers Corp.

     10.4x  

EV/EBITDA 2022E

      

Scorpio Tankers Inc.

     8.0x  

Navios Acquisition

     7.7x  

Frontline Ltd.

     7.4x  

Okeanis Eco Tankers Corp.

     7.2x  

Ardmore Shipping Corp.

     7.0x  

From this comparable company trading analysis, Pareto derived an implied equity value range for Navios Acquisition of approximately $3 million to approximately $230.2 million, representing a range of approximately $0.17 per share to approximately $13.25 per share.

Further, the NAV analysis was complemented with comparable GAV and NAV metric analyses, comparing the valuation metrics of Navios Acquisition to that of the selected publicly traded companies.

In conducting a comparable NAV analysis, Pareto included GAV with the cash balances of the reference companies as of June 30, 2021. Further, Pareto subtracted the gross debt of each company, as publicly available, from the total fair market value of such company’s fleets, to arrive at a NAV for such company. Pareto calculated all multiples based on closing share/unit prices as of August 24, 2021 for each respective company, provided by FactSet.

Based on the calculations in the tables below, underlying asset values in Navios Acquisition is priced below peers:

 

EV/GAV

      

Navios Acquisition

     0.96x

Okeanis Eco Tankers Corp.

     0.94x

Scorpio Tankers Inc.

     0.92x

Frontline Ltd.

     0.92x

Ardmore Shipping Corp.

     0.85x

Hafnia Ltd.

     0.84x

 

P/NAV

      

Frontline Ltd.

     1.20x

Okeanis Eco Tankers Corp.

     0.78x

Scorpio Tankers Inc.

     0.73x

Hafnia Ltd.

     0.65x

Ardmore Shipping Corp.

     0.58x

Navios Acquisition

     0.44x

From this comparable company trading analysis, Pareto derived an implied equity value for Navios Acquisition of approximately $(51.83) million, representing approximately $(2.98) per share.

General

The foregoing summary of material financial analyses performed by Pareto does not purport to be a complete description of the analyses or data presented by Pareto to the Navios Acquisition Special Committee. In connection with the review of the Transaction by the Navios Acquisition Special Committee, Pareto performed a

 

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variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary described above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Pareto’s opinion. In arriving at its opinion, Pareto considered the results of all the analyses and did not draw, in isolation, conclusions from or with regard to any one analysis or factor considered by it for purposes of its opinion. Rather, Pareto made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all the analyses. In addition, Pareto may have considered various assumptions more or less probable than other assumptions, so that the valuations resulting from any particular analysis described above should therefore not be taken to be Pareto’s view of the value of Navios Acquisition or Navios Partners. No company or partnership used in the above analyses is directly comparable to Navios Acquisition or Navios Partners. Further, Pareto’s analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the acquisition, public trading or other values of the companies or partnerships, or transactions used, including judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Navios Acquisition or Navios Partners.

Pareto prepared these analyses for the purpose of providing an opinion to the Navios Acquisition Special Committee as to the fairness, from a financial point of view and as of the date of such opinion: (i) to the holders of Navios Acquisition Public Common Shares, of the Exchange Ratio; (ii) to Navios Acquisition, of the Navios Partners Subscription Consideration and (iii) to Navios Acquisition, of the NSM Subscription Consideration, and did not constitute a recommendation of the Transaction to Navios Acquisition or a recommendation to any holder of Navios Acquisition Common Shares as to how that holder should vote on any matters relating to the Merger. These analyses do not purport to be appraisals or necessarily to reflect the prices at which the business or securities actually may be sold. Any estimates contained in these analyses are not necessarily indicative of actual future results, which may be significantly more or less favorable than those suggested by such estimates. Accordingly, estimates used in, and the results derived from, Pareto’s analyses are inherently subject to substantial uncertainty, and Pareto assumes no responsibility if future results are materially different from those forecasted in such estimates. Each of the Exchange Ratio, the Navios Partners Subscription Consideration and the NSM Subscription Consideration was determined through arm’s length negotiations and was approved by the Navios Acquisition Special Committee and by the Navios Acquisition Board. Pareto did not recommend any specific consideration to the Navios Acquisition Special Committee or indicate that any given consideration constituted the only appropriate consideration.

The Navios Acquisition Special Committee agreed to cause Navios Acquisition to pay to Pareto $450,000, which became payable upon delivery of Pareto’s opinion and which was not contingent upon the conclusions of Pareto’s opinion or the consummation of the Merger. Additionally, the Navios Acquisition Special Committee agreed to cause Navios Acquisition to pay to Pareto $150,000, which will become payable upon closing of the Merger. The Navios Acquisition Special Committee has also agreed to cause Navios Acquisition to reimburse Pareto for its reasonable out-of-pocket expenses incurred in connection with its engagement and to indemnify and hold Pareto and its officers, employees, agents, affiliates and controlling persons, harmless from and against any losses, claims, damages, liabilities or expenses related to or arising out of Pareto’s engagement, any services provided thereunder or any transactions or proposed transactions related thereto.

During the last two years, Pareto has not had any material relationship with Navios Acquisition or Navios Partners in which compensation was received or is intended to be received by Pareto as a result of such relationship, except that certain affiliates of Pareto have provided certain financial services to certain companies affiliated with Navios Acquisition and Navios Partners, including acting as financial advisor to Navios Holdings in a business divestment transaction in 2019 and a financial advisor to the Special Committee of the board of directors of Navios Maritime Containers L.P. in a merger transaction in 2020. During 2019 and 2020, Navios Holdings and Navios Containers paid certain affiliates of Pareto $600,000 in total and $600,000 in total, respectively, and Navios Acquisition and Navios Partners have not paid any fees to affiliates of Pareto. Such affiliates of Pareto have received customary compensation for such services. Pareto and its affiliates may provide financial or other services to Navios Acquisition, Navios Partners and their affiliates in the future, and in connection with any such services, Pareto and its affiliates may receive compensation.

 

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As part of its investment banking business, Pareto is engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, private placements and related financings, bankruptcy reorganizations and similar recapitalizations, negotiated underwritings, secondary distributions of listed and unlisted securities, and valuations for corporate and other purposes. As of the date hereof, Pareto does not have any ownership of equity securities in Navios Acquisition or Navios Partners. In the ordinary course of its business, affiliates of Pareto may have long or short positions, either on a discretionary or nondiscretionary basis, for their own account or for those of its clients, in the debt and equity securities (or related derivative securities) of Navios Acquisition or Navios Partners.

Reasons for the Approval of the Navios Partners Conflicts Committee and the Navios Partners Board

On August 24, 2021, at a meeting of the Conflicts Committee of the Navios Partners Board attended by Navios Partners’ financial and legal advisors, the Conflicts Committee:

 

   

determined that the Merger Agreement and the transactions contemplated thereby, including the NMM Equity Issuance, the Merger, the Supplemental Loan Agreement, the HCB Loan, the BNP Loan, the NMM Loan Agreement and the issuance of Navios Partners Common Units in connection with the Merger, are in the best interests of Navios Partners and its unitholders (excluding the general partner of Navios Partners and its affiliates); and

 

   

approved the Merger Agreement and the transactions contemplated thereby, including the NMM Equity Issuance, the Merger, the Supplemental Loan Agreement, the HCB Loan, the BNP Loan, the NMM Loan Agreement and the issuance of Navios Partners Common Units in connection with the Merger.

Also on August 24, 2021, at a meeting of the Navios Partners Board attended by Navios Partners’ financial and legal advisors and members of management of Navios Partners, the Navios Partners Board:

 

   

determined that the Merger Agreement and the transactions contemplated thereby, including the NMM Equity Issuance, the Merger, the Supplemental Loan Agreement, the HCB Loan, the BNP Loan, the NMM Loan Agreement and the issuance of Navios Partners common units in connection with the Merger, are in the best interests of Navios Partners and its unitholders; and

 

   

authorized, approved and declared advisable the Merger Agreement and the related transaction agreements and the performance and consummation of the transactions contemplated thereby, including the NMM Equity Issuance, the Merger, the Supplemental Loan Agreement, the HCB Loan, the BNP Loan, the NMM Loan Agreement and the issuance of Navios Partners Common Units in connection with the Merger.

Each of the Conflicts Committee and the Navios Partners Board considered many factors in making its determination. Each of the Conflicts Committee and the Navios Partners Board consulted with Navios Partners’ financial and legal advisors and viewed the following factors as being generally positive or favorable in arriving at its determination:

 

   

Based on broker vessel valuations and publicly available vessel valuations as of August, 2021, Navios Acquisition had an aggregate charter-free fleet value ranging from $858.2 million to $1,000.5 million; based on this range, Navios Acquisition’s net debt, working capital and other assets as of June 30, 2021, and Navios Partner’s calculation of additional value associated with Navios Acquisition’s time charters, Navios Acquisition’s net asset value (NAV) per share ranged from $3.28 to $11.30, with an average NAV per share of $8.26; this compared to an implied price per Navios Acquisition Common Share in the Merger of $3.40 per share based on Navios Partners’ August 24, 2021 closing price of $26.69 per unit and the exchange ratio of 0.1275;

 

   

The transactions are expected to result in a combined company with industry-leading scale and diversified sector exposure:

 

   

The combined company is expected to be the largest U.S. publicly-listed shipping company ; and

 

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With 55 dry bulk vessels, 43 containerships and 45 tanker vessels, the combined company’s fleet will operate in three sectors through 15 different vessel types and serving over ten end markets.

 

   

The more diverse and balanced fleet that the combined company will have is expected to position the combined company to:

 

   

better mitigate individual segment volatility and industry cyclicality;

 

   

leverage fundamentals across sectors;

 

   

have greater balance sheet flexibility and more options for capital allocation;

 

   

utilize a chartering strategy to more optimally take advantage of opportunities that arise within each sector; and

 

   

generate more predictable financial results despite potentially uneven segment performance.

 

   

The combination is expected to eliminate duplicative public company costs, thereby benefiting Navios Partners;

 

   

The combined company is expected to have significant financial flexibility by reason of:

 

   

Its initial modest loan-to-value ratio of approximately 35% (based on a pro forma combined debt balance of approximately $1,472 million, after giving effect to the redemption of Navios Acquisition’s Ship Mortgage Notes, the incurrence of the HCB Loan of $190.2 million and the BNP Loan of $96 million and assuming the repayment in full of the approximately $33.1 million balance of the NSM Loan when due on January 7, 2022, and an aggregate charter-free fleet value of approximately $4,220 million based upon average of publicly available Vessel valuations as of August 20, 2021),

 

   

The staggered debt maturity profile it will be subject to ($20 million, 2021; $84 million, 2022, $167 million, 2023; $105 million, 2024; $225 million, 2025; $84 million, 2026; and $82 million from and after 2027); and

 

   

The large collateral value base it will be able to utilize to refinance maturing debt.

 

   

The acquisition of Navios Acquisition is expected to well position Navios Partners’ unitholders to benefit from upside to asset values and earnings in the tanker segment as a result of an expected short to medium term recovery in oil demand.

 

   

The acquisition of Navios Acquisition and its tanker fleet is expected to provide Navios Partners with a unique opportunity to acquire a large diversified tanker fleet with proven operating performance at an attractive valuation in light of current tanker segment duress.

 

   

The more diversified platform that the combined company will have is expected to make Navios Partner’s common units attractive to a broader set of investors seeking exposure to the global economy potentially resulting in a positive revaluation of Navios Partners.

 

   

As part of the transactions, NSM, an affiliate of Navios Partner’s general partner and Chairman and Chief Executive Officer, was willing to release all of the collateral securing the NSM Loan to Navios Acquisition and surrender NSM’s option to convert the NSM Loan into equity of Navios Acquisition’s material Subsidiary Navios Maritime Midstream Partners L.P. thereby making the assets securing the Ship Mortgage notes available to be included in the collateral securing the HCB Loan and the BNP Loan and helping enable those loans for the benefit of the combined company.

 

   

As part of the transactions, Navios Acquisition’s Ship Mortgage Notes would be redeemed and the related indenture discharged with net proceeds of the HCB Loan and the BNP Loan and the $150.0 million cash contribution by Navios Partners in connection with the NMM Equity Issuance and, as a result, the combined company would not assume such notes.

 

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By virtue of NSM willingness to cancel $30 million of the NSM Loan in exchange for shares of Navios Acquisition that will be converted into NMM common units in the Merger and by virtue of Navios Partners’ Chairman and Chief Executive Officer existing ownership of shares of Navios Acquisition, which will also be converted into NMM common units in the Merger, Navios Partners’ Chairman and Chief Executive will have meaningful personal equity exposure to the combined company further aligning her interests with that of the other common unit holders.

Each of the Conflicts Committee and the Navios Partners Board also considered a variety of risks and other potential negative factors with respect to the transactions, including the following:

 

   

That in the transactions Navios Partners was to utilize $150.0 million of its cash to fund the NMM Equity Issuance thereby precluding the use of such cash for other purposes, including distributions to unit holders;

 

   

That the issuance of common units in the Merger that will represent approximately 11.4% of the outstanding common units of the combined company after the Merger, and will thereby modestly reduce the percentage equity interest in Navios Partners of its pre-Merger unit holders;

 

   

The risks and costs associated with the Merger not being completed in a timely manner or at all, including the diversion of management and employee attention, the potential effect on business and customer relationships and potential litigation arising from the Merger Agreement or the transactions contemplated thereby, and the potential negative effects on the trading price of Navios Partners common units resulting therefrom;

 

   

The risk that the expected benefits of the combination may not be fully realized in the near term or at all as a result of market or industry developments or for other reasons;

 

   

That the Chairman and Chief Executive Officer of Navios Partners may have interests in the transactions not shared by other unit holders by virtue of her existing share ownership in Navios Acquisition the NSM Loan and her affiliate being party to management and services agreements with Navios Acquisition that will become agreements with the combined company with a meaningfully stronger credit profile by virtue of the Merger;

 

   

That pursuant to the Supplemental Loan Agreement, the repayment schedule of the NSM Loan was accelerated so that $35 million of the NSM Loan balance was repaid upon signing of the Supplemental Agreement and the approximately $33.1 million balance of the NSM Loan is due on January 7, 2022;

 

   

The matters described in this proxy statement/prospectus under the sections entitled “The Merger—Interests of Navios Acquisition’s Directors and Officers and Affiliates in the Transaction” and “Related Party Transactions.”

 

   

That in the NMM Equity Issuance Navios Partners would acquire for $150.0 million in cash shares of Navios Acquisition that would represent approximately 62.4% of the outstanding shares of Navios Acquisition and, if the Merger does not close, Navios Partners would not own all of the equity of Navios Acquisition;

 

   

The risk that Navios Partners may be required to consummate the Merger even if there are material negative developments or events at Navios Acquisition between signing the Merger Agreement and the closing of the Merger;

 

   

The restrictions on the conduct of Navios Partners’ business prior to the completion of the Merger as set forth in the Merger Agreement;

 

   

The risk that Navios Partners may be required to reimburse Navios Acquisition for up to $1.0 million in expenses in the event that the Merger Agreement is terminated because Navios Partners breaches its representations, warranties or agreements in the Merger Agreement;

 

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The transaction costs and expenses expected to be incurred by Navios Partners in connection with the Proposed Transaction; and

 

   

Various other applicable risks associated with Navios Partners and the Merger, including those described under the section entitled “Risk Factors.”

After taking into account all of the factors set forth above, as well as others, the Conflicts Committee concluded that the potential benefits of the Merger and the related transactions, including the NMM Equity Issuance, the Supplemental Loan Agreement, the HCB Loan, the BNP Loan, the NMM Loan Agreement and the issuance of Navios Partners common units in connection with the Merger, outweighed any negative or unfavorable considerations, and determined that the Merger Agreement and the transactions contemplated thereby, including the NMM Equity Issuance, the Merger, the Supplemental Loan Agreement, the HCB Loan, the BNP Loan, the NMM Loan Agreement and the issuance of Navios Partners Common Units in connection with the Merger, are in the best interests of Navios Partners and its unitholders (excluding the general partner of Navios Partners and its affiliates). The Navios Partners Board determined that the Merger Agreement and the transactions contemplated thereby, including the NMM Equity Issuance, Merger, the Supplemental Loan Agreement, the HCB Loan, the BNP Loan, the NMM Loan Agreement and the issuance of Navios Partners common units in connection with the Merger, are in the best interests of Navios Partners and its unitholders.

The foregoing discussion is not intended to be exhaustive, but is intended to address the material information and principal factors considered by the Conflicts Committee or the Navios Partners Board in considering the Merger and the related transactions. In view of the number and variety of factors and the amount of information considered, neither the Conflicts Committee nor the Navios Partners Board found it practicable to, and did not make specific assessments of, quantify or otherwise assign relative weights to, the specific factors considered in reaching its determination. In addition, neither the Conflicts Committee nor the Navios Partners Board undertook to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to its ultimate determination, and individual members of the Conflicts Committee and the Navios Partners Board may have given different weights to different factors. Each of the Conflicts Committee and the Navios Partners Board separately made its determination based on the totality of information presented to, and the investigation conducted by, it. It should be noted that certain statements and other information presented in this section are forward-looking in nature and, therefore, should be read in light of the factors discussed under the heading “Cautionary Note Regarding Forward-Looking Statements.”

Interests of Navios Acquisition’s Directors and Officers and Major Shareholders in the Transactions

Navios Partners beneficially owns 44,117,647, or approximately 62.4%, of the outstanding Navios Acquisition Common Shares. Navios Holdings, which owns approximately 9.6% of the common units of Navios Partners, beneficially owns (through one of its wholly owned subsidiaries) 4,865,147, or approximately 6.9%, of the outstanding Navios Acquisition Common Shares. Angeliki Frangou, who serves as the Chairman and Chief Executive Officer of Navios Acquisition, Navios Partners and Navios Holdings, as the Chief Executive Officer of NSM, and is the indirect owner of all of the equity of NSM and of the general partner of Navios Partners, beneficially owns 9,384,633, or approximately 13.3% of the outstanding Navios Acquisition Common Shares (including 8,823,529 Navios Acquisition Common Shares Ms. Frangou owns through NSM, which is 100% indirectly owned by her and 100,000 Navios Acquisition Common Shares subject to an option with an exercise price of $58.65 per share).

The Navios Acquisition Common Shares beneficially owned by Navios Partners were issued to it by Navios Acquisition in the NMM Equity Issuance pursuant to the Merger Agreement as of August 25, 2021, at a price of $3.40 per share in cash, or $150.0 million. Net proceeds from the NMM Equity Issuance and NNA Debt Financing were used to satisfy and discharge Navios Acquisition’s obligations under the indenture relating to the Ship Mortgage Notes due November 15, 2021. The Navios Acquisition Common Shares owned by Navios Partners will be cancelled in the Merger for no consideration.

 

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The 4,865,147 Navios Acquisition Common Shares beneficially owned by Navios Holdings (through one of its wholly owned subsidiaries) will convert into Navios Partners Common Units in the Merger on the same terms as is applicable to the other shareholders of Navios Acquisition.

The 8,823,529 Navios Acquisition Common Shares that Ms. Frangou beneficially owns through NSM were issued to NSM by Navios Acquisition in the NSM Equity Issuance as of August 25, 2021 in exchange for the cancellation of $30.0 million ($3.40 per share) of the approximately $98.1 million of the then outstanding balance of the NSM Loan in accordance with the NSM Loan Amendment. Also, under the NSM Loan Amendment,, NSM released all of the collateral securing the NSM Loan (to allow the Ship Mortgage Notes released collateral to be included in the collateral securing Navios Acquisition’s newly arranged secured term loan financings) and surrendered its option to exchange all or a portion of the NSM Loan for equity of Navios Acquisition’s material subsidiary, Navios Maritime Midstream Partners L.P., and NNA repaid on August 25, 2021, $35.0 million of the outstanding balance of the NSM Loan in cash and agreed to repay the remainder of the outstanding portion of the NSM Loan, of approximately $33.1 million, in cash on January 7, 2022.

The 9,284,633 Navios Acquisition Common Shares beneficially owned by Ms. Frangou (including the 8,823,529 Navios Acquisition Common Shares held by NSM, but excluding the 100,000 Navios Acquisition Common Shares subject to an option) will convert into Navios Partners Common Units in the Merger on the same terms as is applicable to the other shareholders of Navios Acquisition. The option held by Ms. Frangou to purchase 100,000 Navios Acquisition Common Shares at an exercise price of $58.65 per share will as a result of the Merger become an exercise to purchase 12,750 Navios Partners Common Units at a price of $460 per unit.

Navios Acquisition is a party to a management agreement and an administrative services agreement with Navios Tankers Management Inc. (the “NNA Manager”) pursuant to which NNA Manager provides commercial and technical ship management services and administrative management services to Navios Acquisition in exchange for fees. As a result of the Merger, these agreements will be indirectly assumed by Navios Partners by reason of Navios Acquisition becoming a wholly owned subsidiary of Navios Partners.

In connection with the execution of the Merger Agreement, on August 24, 2021, Navios Acquisition and Navios Partners entered into the NMM Loan Agreement under which Navios Partners provided Navios Acquisition with a $45.0 million interim working capital facility. As of the date of this proxy statement/prospectus, the full amount of the facility has been drawn. The full amounts borrowed, including accrued and unpaid interest are due and payable on the date that is one year following the date of the draw. The facility bears interest at the rate of 11.50% per annum.

Excluding Ms. Frangou, the directors and executive officers of Navios Acquisition collectively hold less than 1.0% of Navios Acquisition Common Shares.

Navios Partners and its affiliates are also parties to several agreements and transactions with Navios Acquisition. For additional information, see the section entitled “Related Party Transactions.”

The Navios Acquisition Special Committee was aware of these additional and/or differing interests and potential conflicts and considered them, among other matters, in evaluating, negotiating and approving the Merger Agreement.

Director and Officer Indemnification and Insurance

Under the terms of the Merger Agreement, from the Effective Time through the sixth anniversary of the Effective Time, Navios Partners will cause the surviving corporation to indemnify and hold harmless against any reasonable costs or expenses, judgments, fines, losses, claims, damages or liabilities, penalties and amounts paid in settlement in connection with any actual or threatened civil, criminal, regulatory or administrative actions, suits, claims, hearings, demands, arbitrations, inquiries, subpoenas, investigations or proceedings arising from acts or omissions occurring at or prior to the Effective Time.

 

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Under the terms of the Merger Agreement, for six years after the Effective Time, Navios Partners will cause the surviving corporation to maintain officers’ and directors’ liability insurance covering each current and former director and officer of Navios Acquisition and its subsidiaries, on terms substantially no less advantageous to such individuals than the insurance existing at the Effective Time, subject to a cap on the cost of such coverage.

Regulatory Matters

In connection with the Merger, Navios Partners intends to make all required filings under the Securities Act and the Exchange Act, as well as any required filings or applications with the NYSE. Navios Partners and Navios Acquisition are unaware of any other requirement for the filing of information with, or the obtaining of the approval of, governmental authorities in any jurisdiction that is applicable to the Merger.

Conversion of Navios Acquisition Common Shares

The conversion of Navios Acquisition Common Shares (other than Excluded Shares) into the right to receive the Merger Consideration will occur automatically upon completion of the Merger. As soon as reasonably practicable after completion of the Merger, an exchange agent engaged by Navios Partners will exchange certificates or book-entry shares representing Navios Acquisition Common Shares for Merger Consideration to be received by holders of Navios Acquisition Common Shares pursuant to the terms of the Merger Agreement.

Following the Merger, if you are a shareholder of record of Navios Acquisition Common Shares (other than Excluded Shares) at the Effective Time, you will receive a letter of transmittal and instructions on how to obtain the Merger Consideration in exchange for your Navios Acquisition Common Shares. You must return the completed letter of transmittal and surrender your Navios Acquisition Common Shares as described in the instructions, and you will receive the Merger Consideration after the exchange agent receives your completed letter of transmittal and/or such other documents that may be required by the exchange agent.

For each Navios Acquisition Common Share recorded as held by a shareholder of record at the Effective Time, each holder of such Navios Acquisition Common Shares (other than Excluded Shares) will be entitled to receive 0.1275 of a Navios Partners Common Unit. No fractional units shall be issued in the Merger. Each holder of Navios Acquisition Common Shares who would otherwise have been entitled to receive a fractional unit of Navios Partners Common Units in the Merger (after taking into account all Navios Acquisition Common Shares held by such holder immediately prior to the Effective Time) of 0.5 or above shall receive in the Merger, in lieu of such fractional unit, a full Navios Partners Common Unit, and each holder of Navios Acquisition Common Shares who would otherwise have been entitled to receive a fractional unit of Navios Partners Common Units (after taking into account all Navios Public Common Shares held by such holder immediately prior to the Effective Time) of less than 0.5 shall receive no consideration for such fractional unit, which shall be forfeited.

Accounting Treatment of the Merger

Navios Partners intends to account for the merger “as a business combination,” which will result in the application of the “acquisition method,” as defined under ASC 805, Business Combinations, as well as the recognition of the equity interest in Navios Acquisition not held by Navios Partners to its fair value at the date the controlling interest is acquired by Navios Partners as non-controlling interest on the consolidated balance sheet. Under the acquisition method, the consideration paid by Navios Partners in connection with the transaction will be allocated to Navios Acquisitions’ net assets based on their estimated fair values as of date of NMM Equity Issuance. The excess of the total purchase consideration, including the fair value of the recognized non-controlling interest at the NMM Equity Issuance date, over the fair value of the identifiable net assets acquired will be allocated to goodwill or negative goodwill as the case may be. This method may result in the carrying value of assets, including goodwill or negative goodwill, acquired from Navios Acquisition being substantially different from the former carrying values of those assets. The purchase price allocation is subject to refinement as Navios Partners completes the valuation of the assets acquired and liabilities assumed. The results

 

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of operations of Navios Acquisition will be included in Navios Partners’ consolidated results of operations only for periods subsequent to the completion of the acquisition. Upon closing of the Merger and the acquisition by Navios Partners of the remaining equity interest on Navios Acquisition, Navios Partners will recognize the fair value of the purchase consideration consisting of the fair value of the Units issued to the holders of Navios Acquisition shares not controlled by Navios Partners as an increase of Partners’ Capital and eliminate the previously recognized non-controlling interest. Any difference arising between the fair value of the purchase consideration and the carrying amount of the non-controlling interest at the date of the closing will be recorded to Partners’ Capital.

Listing of Navios Partners Common Units to be Issued in the Merger

Navios Partners expects to obtain approval to list the Navios Partners Common Units to be issued pursuant to the Merger Agreement on the NYSE, which approval is a condition to the closing of the Merger.

Delisting and Deregistration of Navios Acquisition Common Shares

Navios Acquisition Common Shares currently trade on the NYSE under the symbol “NNA.” When the Merger is completed, the Navios Acquisition Common Shares currently listed on the NYSE will cease to be listed on the NYSE and will be deregistered under the Exchange Act, and Navios Acquisition will cease filing reports with the SEC.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial information as of and for the six months ended June 30, 2021 and for the year ended December 31, 2020 have been derived from (i) the historical consolidated financial statements of Navios Partners, Navios Containers and Navios Acquisition, and (ii) applying to them transaction accounting adjustments based upon assumptions that management believes to be reasonable and which are described in the footnotes included hereto. The unaudited pro forma condensed combined balance sheet is presented as if the August 25, 2021 acquisition of 62.4% equity interest of Navios Acquisition had occurred on June 30, 2021 and as if the Merger had occurred on June 30, 2021. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2020 and the six month period ended June 30, 2021 are presented (i) as if the Merger had occurred on January 1, 2020 and (ii) to give effect to the March 31, 2021 acquisition of Navios Containers as if the acquisition had occurred on January 1, 2020. We refer to the Pro Forma Balance Sheet and the Pro Forma Statement of Operations together as the “unaudited pro forma financial information”.

Navios Partners and Navios Acquisition Merger

As a result of the Merger, each Navios Acquisition Common Share (other than Excluded Shares) will be converted into the right to receive 0.1275 of a Navios Partners Common Unit.

Basis of Presentation

The unaudited pro forma condensed combined financial statements reflect the application of transaction accounting adjustments that are preliminary (such as fair values of vessels, intangibles and debt) and are based upon available information and certain assumptions, described in the accompanying notes hereto, that management believes are reasonable under the circumstances. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma condensed combined financial statements. The unaudited pro forma condensed combined financial statements have been prepared by management and are not necessarily indicative of the financial position or results of operations that would have been realized had the Merger occurred as of the dates indicated above, nor is it meant to be indicative of any anticipated financial position or future results of operations that Navios Partners or Navios Acquisition will experience going forward. In addition, the accompanying unaudited pro forma condensed combined statement of operations does not reflect any expected cost savings or restructuring actions that Navios Partners, Navios Containers or Navios Acquisition expects to incur or generate.

The unaudited pro forma financial information is based upon, has been derived from and should be read in conjunction with, the audited historical consolidated financial statements of Navios Partners for the fiscal year ended December 31, 2020, filed on Form 20-F, as filed with the SEC on March 31, 2021, the audited historical consolidated financial statements of Navios Containers for the fiscal year ended December 31, 2020 included in Exhibit 15.3 to Navios Partners’ Annual Report, filed on Form 20-F, or filed with the SEC on March 31, 2021, the audited historical consolidated financial statements of Navios Acquisition for the fiscal year ended December 31, 2020, filed on Form 20-F, as filed with the SEC on April 28, 2021, the unaudited historical condensed consolidated financial statements of Navios Partners as of June 30, 2021 and for the three and six month periods ended June 30, 2021 filed on Form 6-K, as filed with the SEC on August 26, 2021, and the unaudited historical condensed consolidated financial statements of Navios Acquisition as of June 30, 2021 and for the three and six month periods ended June 30, 2021 filed on Form 6-K, as filed with the SEC on August 26, 2021 (in each case, prepared in accordance with U.S. GAAP), each of which is incorporated by reference herein, as well as the information set forth in this proxy statement/prospectus.

 

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Unaudited Pro Forma Condensed Combined Balance Sheet

As of June 30, 2021

(In thousands of U.S. dollars)

 

    Navios
Partners
    Navios
Acquisition
    Other
Material
Transactions
    Navios
Acquisition
Transaction
Accounting
Adjustments
    Notes     Pro Forma
Combined
 

ASSETS

           

Current assets

           

Cash and cash equivalents

  $ 227,117     $ 79,160     $ (79,098   $ —         $ 227,179  

Restricted cash

    5,736       5,976       —         —           11,712  

Accounts receivable, net

    20,896       4,047       —         —           24,943  

Prepaid expenses and other current assets

    28,214       16,887       —         —           45,101  
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total current assets

    281,963       106,070       (79,098     —           308,935  
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Vessels, net

    1,930,477       1,201,885       —         (201,385     (3     2,930,977  

Deposits for vessels acquisitions

    3,599       —         —         —           3,599  

Goodwill

    —         1,579       —         (1,579     (3     —    

Other long-term assets

    21,315       13,204       —         —           34,519  

Deferred dry dock and special survey costs, net

    51,310       48,629       —         (48,629     (3     51,310  

Due from related parties, long term

    —         13,789       —         —           13,789  

Favourable lease terms

    1,417       —         —         98,184       (3     99,601  

Operating lease assets

    45,862       128,511       —         14,422       (3     188,795  
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total non-current assets

    2,053,980       1,407,597       —         (138,987       3,322,590  
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total assets

  $ 2,335,943     $ 1,513,667     $ (79,098   $ (138,987     $ 3,631,525  
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

LIABILITIES AND PARTNERS’ CAPITAL/STOCKHOLDERS’ EQUITY

           

Current liabilities

           

Accounts payable

  $ 9,335     $ 7,117       —       $ —         $ 16,452  

Accrued expenses

    11,928       10,278       —         10,600       (3     32,806  

Deferred revenue

    10,187       2,914       —         —           13,101  

Operating lease liabilities, current portion

    4,065       8,265       —         5       (3     12,335  

Current portion of financial liabilities, net

    33,476       —         —         —           33,476  

Current portion of long-term debt, net

    81,967       639,341       (151,825     2,940       (3     572,423  

Current portion of loan payable to affiliate company

    —         6,924       60,173       —           67,097  

Amounts due to related parties

    17,181       31,653       —         —           48,834  
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total current liabilities

    168,139       706,492     $ (91,652     13,545         796,524  
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Unfavorable lease terms

    182,464       —         —         4,077       (3     186,541  

Operating lease liabilities, net

    41,604       120,056       —         14,607       (3     176,267  

Long-term financial liabilities, net

    227,108       —         —         —           227,108  

Long-term debt, net

    452,959       322,364       —         4,654       (3     779,977  

Deferred revenue

    1,626       —         —         —           1,626  

Loan payable to affiliate company, net of current portion

    —         37,373       (37,373     —           —    
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total non-current liabilities

    905,761       479,793       (37,373     23,338         1,371,519  
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total liabilities

  $ 1,073,900     $ 1,186,285     $ (129,025   $ 36,883       $ 2,168,043  
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Commitments and contingencies

    —         —         —         —           —    

Partners’ capital/stockholders’ equity

    1,262,043       327,382       49,927       (175,870     (3     1,463,482  
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total partners’ capital/stockholders’ equity:

    1,262,043       327,382       49,927       (175,870       1,463,482  
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total liabilities and partners’ capital/stockholders’ equity

  $ 2,335,943     $ 1,513,667     $ (79,098   $ (138,987     $ 3,631,525  
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information

 

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Unaudited Pro Forma Condensed Combined Statement of Operations

For the six month period ended June 30, 2021

(In thousands of U.S. dollars, except unit data)

 

    Navios
Partners
    Navios
Containers
    Navios
Containers
Transaction
Accounting
Adjustments
    Notes     Navios
Acquisition
    Navios
Acquisition
Transaction
Accounting
Adjustments
    Notes     Pro Forma
Combined
 

Time charter and voyage revenues

  $ 162,751     $ 97,974     $ —         $ 131,719     $ —         $ 392,444  

Time charter and voyage expenses

    (7,149     (2,088     —           (11,779     —           (21,016

Direct vessel expenses

    (6,918     (4,200     4,036       (1     (8,491     7,797       (3     (7,776

Vessel operating expenses (management fees entirely through related parties transactions)

    (47,541     (34,195     —           (62,321     —           (144,057

General and administrative expenses

    (12,691     (5,233     —           (10,479     —           (28,403

Depreciation and amortization of intangible assets

    (26,923     (5,175     (11,393     (1     (32,682     (924     (3     (77,097

Amortization of unfavorable lease terms

    —         —         31,998       (1     —         384       (3     32,382  

(Loss)/ gain on sale of
vessels

    (511     —         —           14,427       —           13,916  

Interest expense and finance cost, net

    (10,818     (5,413     659       (1     (36,814     3,019       (3     (49,367

Interest income

    859       —         —           3       —           862  

Gain on bond repurchase

    —         —         —           10,698       —           10,698  

Other (expense)/ income

    (2,337     (1,897     —           351       —           (3,883

Equity in net earnings/ (loss) of affiliated companies

    80,839       —         (80,839     (2     —         —           —    

Bargain purchase gain

    44,053       —         (44,053     (1     —         —           —    
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Net income/ (loss)

  $ 173,614     $ 39,773     $ (99,592     $ (5,368   $ 10,276       $ 118,703  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Net income attributable to common unitholders

                $ 116,329  

Pro forma basic income per unit attributable to common unitholders

                (4   $ 4.75  

Pro forma basic weighted average common units

                  24,489,136  

Pro forma diluted income per unit attributable to common unitholders

                (4   $ 4.73  

Pro forma diluted weighted average common units

                  24,575,486  

See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information

 

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Unaudited Pro Forma Condensed Combined Statement of Operations

For the year ended December 31, 2020

(In thousands of U.S. dollars, except unit data)

 

    Navios
Partners
    Navios
Containers
    Navios
Containers
Transaction
Accounting
Adjustments
    Notes     Navios
Acquisition
    Other
Material
Transactions
    Notes     Navios
Acquisition
Transaction
Accounting
Adjustments
    Notes     Pro Forma
Combined
 

Time charter and voyage revenues

  $ 226,771     $ 127,188     $ —         $ 361,438       —         $ —         $ 715,397  

Time charter and voyage expenses

    (11,028     (6,327     —           (17,820     —           —           (35,175

Direct vessel expenses

    (10,337     (5,488     5,311       (1     (14,119     —           13,493       (3     (11,140

Vessel operating expenses (management fees entirely through related parties transactions)

    (93,732     (69,147     —           (127,611     —           —           (290,490

General and administrative expenses

    (24,012     (10,890     —           (22,097     —           —           (56,999

Transaction costs

    —         (1,626     —           —         —           (10,600     (3     (12,226

Depreciation and amortization of intangible assets

    (56,050     (16,598     (16,537     (1     (66,629     —           (9,841     (3     (165,655

Amortization of unfavorable lease terms

    —         —         126,710       (1     —         —           3,692       (3     130,402  

Vessels impairment loss

    (71,577     —         —           (17,168     —           —           (88,745

Impairment of receivable in affiliated company

    (6,900     —         —           —         —           —           (6,900

Interest expense and finance cost, net

    (24,159     (13,912     2,361       (1     (82,278     —           5,671       (3     (112,317

Interest income

    639       —         —           32       —           —           671  

Gain on bond repurchase

    —         —         —           15,786       19,927       (1     —           35,713  

Other income

    5,055       409       —           341       —           —           5,805  

Other expense

    (4,344     (261     —           (2,266     —           —           (6,871

Equity in net earnings of affiliated companies

    1,133       —         79,706       (2     —         —           —           80,839  

Bargain purchase gain

    —         —         44,053       (1     —         —           2,955       (3     47,008  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

     

 

 

     

 

 

 

Net (loss)/ income

  $ (68,541   $ 3,348     $ 241,604       $ 27,609     $ 19,927       $ 5,370       $ 229,317  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

     

 

 

     

 

 

 

Net income attributable to common unitholders

                    $ 224,731  

Pro forma basic income per unit attributable to common unitholders

                    (4   $ 9.97  

Pro forma basic weighted average common units

                      22,548,358  

Pro forma diluted income per unit attributable to common unitholders

                    (4   $ 9.93  

Pro forma diluted weighted average common units

                      22,641,057  

Certain reclassifications have been made to the historical presentation of Navios Acquisition to conform to the financial statement presentation of Navios Partners, as follows: (a) Navios Partners classifies “Inventories” within “Prepaid expenses and other current assets”, while Navios Acquisition presents “Inventories” as a separate caption in the condensed consolidated balance sheets. An amount of $5,718 relating to “Inventories” of Navios Acquisition has been classified within “Prepaid Expenses and other current assets” in the Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2021, in order to conform to Navios Partners presentation. (b) In the six month period ended June 30, 2021, Navios Partners recognized $(511) relating to “Loss on sale of vessels” and Navios Acquisition recognized $14,427 relating to “Gain on sale of vessels and impairment loss”. Amounts are included in “(Loss)/ gain on sale of vessels” in the Unaudited Pro Forma Condensed Combined Statement of Operations for the six month period ended June 30, 2021.

See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information

 

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Other Material Transactions

Adjustments included in the column under the heading “Other Material Adjustments” are adjustments for nonrecurring items (i.e. items that will not recur beyond twelve months after the acquisition) that reflect only the application of required accounting for these items, linking their effects to the historical financial information of Navios Partners.

In July 2021, Navios Acquisition drew an additional amount of $52,800 under the NSM Loan and utilized such funds, along with available cash balances, to repurchase an amount of $151,825 of its Ship Mortgage Notes for a cash consideration of $131,898. “Current portion of long term debt, net” is reduced by the amount of $151,825, “Cash and cash equivalents” is reduced by the amount of cash consideration paid of $131,898 and “Partners’ Capital/ stockholders Equity” is increased by an amount of $19,927 in the Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2021. A gain of $19,927 is recognized in “Gain on bond repurchase” in the Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 2020.

On August 25, 2021, in accordance with the NSM Loan Amendment, Navios Acquisition issued 8,823,529 Navios Acquisition Common Shares in exchange for the cancellation of $30,000 ($3.40 per share) of the $98,112 of the then outstanding balance of the NSM Loan. The amount of the NSM Loan cancelled reduced the balance of the “Current portion of loan payable to affiliated company” by $30,000 with a corresponding increase on “Partners’ Capital/ Stockholders Equity” in the Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2021. Under the terms of the NSM Loan agreement, Navios Acquisition prepaid an amount of $35,000 of the NSM Loan on August 25, 2021 using proceeds from the NMM Loan. Amounts drawn from NSM Loan and NMM Loan increased “Cash and cash equivalents” by $87,800 and amounts repaid under the NSM Loan reduced “Cash and cash equivalents” by $35,000 in the Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2021. The remaining outstanding balance of the NSM Loan of $33,112 and the NMM Loan of $35,000, has been classified under “Current portion of loan payable to affiliated company” in the Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2021.

On August 24, 2021, Navios Partners loaned to Navios Acquisition an amount of $45,000. Upon the closing of the transaction, this loan will become an intercompany loan and has not been reflected in the unaudited pro forma financial statements as the impact is nil to the Unaudited Pro Forma Condensed Combined Balance Sheet.

Furthermore, the impact of the share issuance and related investment in Navios Acquisition that occurred following the issuance of 44,117,647 new shares in Navios Acquisition on August 25, 2021 for $150,000 has not been reflected in the Navios Partners unaudited pro forma financial statements. Upon closing of the Merger, Navios Partners’ investment in Navios Acquisition is eliminated in the Unaudited Pro Forma Condensed Combined Balance Sheet.

 

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Notes to the Unaudited Pro Forma Condensed Combined Financial Statements

Fair Value of Consideration

On August 25, 2021, the Company acquired 62.4% of the equity interest in Navios Acquisition through the sale by Navios Acquisition pursuant to the Merger Agreement (in a private placement in reliance on the exemption from registration provided for under Section 4(a)(2) of the Securities Act) of 44,117,647 Navios Acquisition’s Common Shares to Navios Partners for an aggregate purchase price of $150,000, or $3.40 per share in cash (the “Equity Issuance”).

Upon closing of the Merger, the Company will acquire the remaining non-controlling interest in Navios Acquisition, which following the Equity Issuance, will be a consolidated subsidiary of the Company.

For the purpose of the preparation of the unaudited pro forma condensed combined financial statements, it has been assumed that all the holders of Navios Acquisition Common Shares (other than Excluded Shares) will exchange their Navios Acquisition Common Shares for Merger Consideration.

The preliminary fair value estimate of $207,634 was calculated based on the purchase consideration of $150.0 million plus the fair value of the non-controlling interest of $57,634 calculated based on the closing stock price of Navios Acquisition on August 25, 2021.

The preliminary fair value of the consideration for the acquisition of the remaining non-controlling interest of $46,818 of Navios Acquisition by the Company was calculated based on the closing stock price of Navios Partners Common Units on September 2, 2021 of $30.29 and represents the fair value of 37.6% of the conversion of the outstanding shares of Navios Acquisition of 70,677,142 at an exchange rate of 0.1275.

The preliminary estimate of the consideration reflected in the unaudited pro forma financial information does not purport to represent the actual consideration to be transferred upon closing of the Merger. In accordance with GAAP, the fair value of Navios Partners Common Units to be issued as part of the consideration transferred in connection with the Merger will be measured on the completion date of the exchange of units at the then-current market price of Navios Partners Common Units. This requirement will likely result in a consideration different from the amount assumed in the unaudited pro forma financial information. A change of 5% per share in the price of Navios Partners Common Units would increase or decrease the consideration by approximately $5.2 million, which would be reflected in the unaudited pro forma financial information as a decrease or increase to Navios Partners’ Capital, respectively.

Transaction Accounting Adjustments

In May 2020, the SEC adopted Release No. 33-10786 entitled “Amendments to Financial Disclosures about Acquired and Disposed Businesses,” or the Final Rule. The Final Rule was effective on January 1, 2021 and the unaudited pro forma condensed combined financial information herein is presented in accordance therewith.

Navios Containers Transaction Accounting Adjustments

On March 31, 2021, Navios Partners completed the merger contemplated by the Agreement and Plan of Merger dated as of December 31, 2020, by and among Navios Partners, its direct wholly-owned subsidiary NMM Merger Sub LLC (“Merger Sub”), Navios Maritime Containers L.P. (“Navios Containers”) and Navios Maritime Containers GP LLC, Navios Containers’ general partner. Pursuant to the Merger Agreement, Merger Sub merged with and into Navios Containers, with Navios Containers continuing as the surviving partnership. As a result of the merger, Navios Containers became a wholly-owned subsidiary of Navios Partners. Pursuant to the terms of the Merger Agreement, each outstanding common unit of Navios Containers that was held by a unitholder other than Navios Partners, Navios Containers and their respective subsidiaries was converted into the right to receive 0.39 of a common unit of Navios Partners.

 

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Adjustments included in the column under the heading “Navios Acquisition Containers Transaction Adjustments” are required adjustments that reflect only the application of required accounting to the transaction linking the effects of the acquisition of Navios Containers to the historical financial information of Navios Partners.

 

(1)

Pro forma adjustments are necessary to reflect the acquisition consideration exchanged and to adjust amounts related to tangible and intangible assets and liabilities of Navios Containers to reflect the assessment of the fair value of the assets acquired and liabilities assumed and is based upon reasonable estimates that are subject to revision as additional information becomes available.

The following table summarizes the consideration exchanged and the fair value of assets acquired and liabilities assumed on March 31, 2021:

 

Purchase price:

  

Fair value of previously held interest (35.7%)

   $ 106,997  

Equity issuance (8,133,452 Navios Partners units * $23.56)

     191,624  
  

 

 

 

Total purchase price

     298,621  

Fair value of assets and liabilities acquired:

  

Vessels

     770,981  

Current assets (including cash of $10,282)

     29,033  

Unfavourable lease terms

     (224,490

Long term debt assumed (including current portion)

     (227,434

Current liabilities

     (5,416

Fair value of net assets acquired

     342,674  
  

 

 

 

Bargain purchase gain

   $ 44,053  
  

 

 

 

Vessels: Represents the fair value adjustment to bring the carrying value of the vessels to their fair value as well as their respective incremental depreciation. Deferred dry docking and special survey costs of Navios Containers have been eliminated. The useful lives used to calculate the incremental depreciation are consistent with the useful lives used in the financial statements of the acquirer and the remaining useful lives which range from 15 to 20 years.

Unfavorable Lease Terms: Represents the fair value adjustment to bring the carrying value of the unfavorable lease liabilities to their fair values as well as their respective incremental amortization. The useful lives used to calculate the incremental amortization are consistent with the lease terms of the underlying charter contracts and the remaining lives of the lease terms which range from 0.2 to 5.1 years.

Current Assets and Current Liabilities: Consist of the historical Navios Containers’ balances of cash and cash equivalents, other long-term assets, accounts receivable, due from related parties current and non-current, prepaid expenses and other current assets, accounts payable, prepaid revenue and accrued expenses. The straight line of leases has been eliminated. The carrying value of all other working capital items are assumed to approximate fair value.

Long term debt assumed (including current portion): Represents the fair value of the debt. The outstanding balance of the floating rate debt approximates its fair value as estimated based on currently available debt with similar contract terms, interest rate and remaining maturity, as well as taking into account Navios Partners’ creditworthiness. The debt discount and the deferred finance costs related to Navios Containers are eliminated. In addition, the income statement reflects the adjustments to amortization expense of $2,361 and $659 for the year ended December 31, 2020 and the six-month period ended June 30, 2021, respectively, had the fair value of debt discount and deferred financing costs been eliminated as of January 1, 2020.

Bargain Purchase Gain: Navios Partners accounted for the merger “as a business combination achieved in stages”, which results in the application of the “acquisition method,” as defined under ASC 805, Business

 

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Combinations. Navios Partners’ previously held equity interest in Navios Containers was remeasured to its fair value at March 31, 2021, the date the controlling interest was acquired and the resulting gain was recognized in earnings. Under the acquisition method, the fair value of the consideration paid by Navios Partners in connection with the transaction was allocated to Navios Containers’ net assets based on their estimated fair values at the date of the completion of the merger. The excess of the fair value of the identifiable net assets acquired of $342,674 over the total purchase price consideration of $298,621, resulted in a bargain purchase gain of $44,053 and is presented in “Bargain purchase gain” in the Unaudited Pro Forma Condensed Combined Statement of Operations for the six month period ended June 30, 2021. The transaction resulted in a bargain purchase gain as a result of the share price of Navios Containers trading at a discount to their net asset value (“NAV”).

As the unaudited pro forma condensed combined financial information assumes the acquisition of Navios Containers occurred as of January 1, 2020, this gain has been recorded as a transaction accounting adjustment for the year ended December 31, 2020.

 

(2)

Represents the elimination of the equity method investment held by Navios Partners in Navios Containers and the earnings and the gain recognized at the date the controlling interest was acquired. As of March 31, 2021, Navios Partners previously held interest of 35.7% in Navios Containers was remeasured, in accordance with ASC 805-10-25-10, to a fair value of $106,997, resulting in aggregate to a gain on acquisition of control in the amount of $80,839 and is presented in, “Equity in net earnings of affiliated companies”. The acquisition of the remaining non-controlling interest of 64.3% through the issuance of newly issued common units in Navios Partners was recorded at a fair value of $191,624 on the basis of 8,133,452 common units issued at a closing price per common unit of $23.56 as of the closing date of the merger.

The gain on the equity method investment is reflected in the pro forma statement of operations for the year ended December 31, 2020, as the acquisition of Navios Containers is assumed to have occurred on January 1, 2020 for purposes of the unaudited pro forma condensed combined financial information.

 

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Navios Acquisition Transaction Accounting Adjustments

Adjustments included in the column under the heading “Navios Acquisition Transaction Accounting Adjustments” are solely based on information contained within the Merger Agreement. Navios Acquisition Transaction Accounting Adjustments are required adjustments that reflect only the application of required accounting to the transaction linking the effects of the acquisition of Navios Acquisition to the historical financial information of Navios Partners.

 

(3)

Pro forma adjustments are necessary to reflect the acquisition consideration exchanged and to adjust amounts related to assets and liabilities of Navios Acquisition to reflect the preliminary assessment of the fair value of the assets to be acquired and liabilities to be assumed and is based upon reasonable estimates that are subject to revision as additional information becomes available. The preliminary fair values, as well as their incremental effects, are as follows:

 

    Carrying
Value as of
June 30,
2021
    Other
Material
Transactions

(A)
    Pro Forma
Estimated
Fair Value

(B)
    Total
(A)+(B)
    Pro Forma
Fair Value
Adjustment
 

Vessels, including deferred drydock and special survey costs, net

  $ 1,250,514     $ —       $ 1,000,500     $ 1,000,500     $ 250,014  

Goodwill

    1,579       —         —         —         1,579  

Favorable lease assets

    —         —         98,184       98,184       (98,184

Unfavorable lease liabilities

    —         —         (4,077     (4,077     4,077  

Net working capital

    81,101       (79,098     79,651       553       80,548  

Operating lease assets

    128,511       —         142,933       142,933       (14,422

Operating lease liabilities, including current portion

    (128,321     —         (142,933     (142,933     14,612  

Long-term borrowings, including current portion

    (969,299     151,825       (969,299     (817,474     (151,825

Loan payable to affiliated company, including current portion

    (44,297     (22,800     (44,297     (67,097     22,800  

Deferred finance costs

    7,594       —         —         —         7,594  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net assets

  $ 327,382     $ 49,927     $ 160,662     $ 210,589     $ 116,793  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Fair value of consideration and non-controlling interest

          207,634    
       

 

 

   

Bargain purchase gain

        $ 2,955    
       

 

 

   

Vessels: Represents the preliminary fair value adjustment to bring the carrying value of the vessels to their fair value as well as their respective incremental depreciation. Deferred dry docking and special survey costs of Navios Acquisition have been eliminated. The useful lives used to calculate the incremental depreciation are consistent with the useful lives used in the financial statements of the acquirer and the remaining useful lives which range from 9 to 18 years.

Goodwill: Represents the preliminary fair value adjustment to bring goodwill recognized by Navios Acquisition from a business combination completed in 2010 to its fair value.

Favorable Lease Terms: Represents the preliminary fair value adjustment to bring the carrying value of the favorable lease assets to their fair values as well as their respective incremental amortization. The useful lives used to calculate the incremental amortization are consistent with the lease terms of the underlying charter contracts and the remaining lives of the lease terms up to 9.5 years.

Unfavorable Lease Terms: Represents the preliminary fair value adjustment to bring the carrying value of the unfavorable lease liabilities to their fair values as well as their respective incremental amortization. The useful lives used to calculate the incremental amortization are consistent with the lease terms of the underlying charter contracts and the remaining lives of the lease terms which range from 0.1 to 1.4 years.

 

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Operating Lease Assets and Operating Lease Liabilities, including current portion: Represents the preliminary adjustment for leases to which Navios Acquisition is a lessee, to measure the Operating Lease Liabilities at the present value of the remaining lease payments, as if the acquired leases were a new lease of Navios Partners at the acquisition date. Operating Lease Assets are measured at the same amount as the Operating Lease Liabilities.

Net Working Capital: Net working capital consists of the historical Navios Acquisition balances of cash and cash equivalents, amounts due from/to related parties current and non-current, prepaid expenses and other current assets, accounts payable, prepaid revenue and accrued expenses. The carrying value of all other working capital items are assumed to approximate fair value.

Transaction Costs: Reflects an accrual of $1,450 for estimated transaction expenses out of $10,600 total in the unaudited pro forma condensed combined Balance Sheet and the unaudited pro forma condensed combined Statement of Operations for the year ended December 31, 2020. These transaction costs are one-time non-recurring expenses directly associated with the Merger.

Long-term borrowings, including current portion and deferred finance costs: Represents the preliminary fair value of the debt. The outstanding balance of the floating rate debt approximates its fair value as estimated based on currently available debt with similar contract terms, interest rate and remaining maturity, as well as taking into account Navios Partners’ creditworthiness. The debt discount and the deferred finance costs related to Navios Acquisition are eliminated. In addition, the income statement reflects the adjustments to amortization expense of $5,671 and $3,019 for the year ended December 31, 2020 and the six-month period ended June 30, 2021, respectively, had the fair value of debt discount and deferred financing costs been eliminated as of January 1, 2020.

Loan payable to affiliated Company: Represents the preliminary fair value of the loan payable to affiliated Company. The fair value of the Navios Acquisition’s loan payable to affiliated company is estimated based on currently available debt with similar contract terms, interest rate and remaining maturities as well as taking into account the Company’s creditworthiness.

Bargain Purchase Gain: The estimated fair value of the net assets exceeds the fair value of the consideration and the fair value of the non-controlling interest as of the date control is obtained as a result of the Equity Issuance. As the unaudited pro forma condensed combined financial information assumes the Merger occurred as of January 1, 2020, this gain has been recorded as a transaction accounting adjustment for the year ended December 31, 2020. This bargain purchase gain will not affect the Navios Partners statement of operations beyond 12 months after the closing of the Merger.

 

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The difference of the fair value of the consideration exchanged pursuant to the closing of the Merger amounting to $104,452 and the recognized non-controlling interest in Navios Acquisition pursuant to the Equity Issuance amounting to $57,634, had the Merger occurred on June 30, 2021 amounting to $46,818 reflects a pro forma adjustment to eliminate the carrying amount of the non-controlling interest of $57,634 and reduce Partners’ Capital by $46,818.

 

  (4)

The calculation of the pro forma basic and diluted earnings per unit attributable to the holders of Navios Partners Common Units is based on: (i) the closing share price of Navios Partners Common Units of $30.29 on September 2, 2021, and (ii) the Exchange Ratio for Navios Acquisition Common Shares (other than Excluded Shares).

 

     For the six month
period ended
June 30, 2021
     For the year ended
December 31, 2020
 

Numerator:

     

Pro forma net income

   $ 118,703      $ 229,317  
  

 

 

    

 

 

 

Net income attributable to common unit holders (basic and diluted)

   $ 116,329      $ 224,731  
  

 

 

    

 

 

 

Denominator:

     

Weighted average units outstanding

     21,040,748        19,099,970  

Units issued as consideration for the Transaction

     3,448,388        3,448,388  

Denominator for basic and diluted net income per unit

     

Pro forma basic weighted average units

     24,489,136        22,548,358  

Net income per unit, basic

   $ 4.75      $ 9.97  

Proforma diluted weighted average units

     24,575,486        22,641,057  

Net income per unit, diluted

   $ 4.73      $ 9.93  

 

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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

The following is a general discussion of material U.S. federal income tax consequences of the Merger to U.S. holders (as defined below) of Navios Acquisition Common Shares. References to the Merger in this discussion include the Optional Second Merger, if consummated. This discussion applies only to U.S. holders who hold their Navios Acquisition Common Shares as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion is based on current provisions of the Code, the Treasury Regulations promulgated thereunder, judicial interpretations thereof and administrative authorities, rulings and decisions, each as in effect as of the date of this proxy statement/prospectus, and all of which are subject to change or differing interpretations, possibly with retroactive effect, any of which changes could affect the accuracy of this discussion. This discussion assumes that the Merger will be completed in accordance with the Merger Agreement and as further described in this proxy/prospectus. This discussion is not a complete description of all of the tax consequences of the Merger and, in particular, does not address any tax consequences arising under the unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010, nor does it address any tax consequences arising under the laws of any state, local or non-U.S. jurisdiction, or under any U.S. federal laws other than those pertaining to the income tax.

This discussion does not purport to address all aspects of U.S. federal income taxation that may be relevant to particular U.S. holders of Navios Acquisition Common Shares in light of their particular facts and circumstances and does not apply to U.S. holders of Navios Acquisition Common Shares that are subject to special rules under the U.S. federal income tax laws (including, for example, banks or other financial institutions, dealers in stocks and securities, commodities or currencies, traders in securities that elect to apply a mark-to-market method of accounting, insurance companies, mutual funds, tax-exempt entities, entities or arrangements treated as partnerships for U.S. federal income tax purposes or other flow-through entities (and investors therein), subchapter S corporations (and investors therein), retirement plans, individual retirement accounts or other tax-deferred accounts, real estate investment trusts, regulated investment companies, controlled foreign corporations, passive foreign investment companies, U.S. holders liable for the alternative minimum tax, certain former citizens or former long-term residents of the United States, U.S. holders having a functional currency other than the U.S. dollar, and U.S. holders who hold their Navios Acquisition Common Shares as part of a hedge, straddle, constructive sale, conversion transaction or other integrated transaction). In addition, this discussion does not address the consequences of the Merger to U.S. holders of Navios Acquisition Common Shares who actually or constructively own 5% or more by vote or value of Navios Acquisition Common Shares (immediately prior to the Merger) or of Navios Partners Common Units (immediately after the Merger), U.S. holders who acquired their Navios Acquisition Common Shares through the exercise of an employee option or otherwise as compensation or through a tax-qualified retirement plan, and any holder that is not a U.S. holder (as defined below). This discussion does not address any considerations under U.S. federal tax laws other than those pertaining to the income tax, nor does it address any considerations under any state, local or non-U.S. tax laws.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds Navios Acquisition Common Shares, the tax treatment of a partner in such partnership generally will depend on the status of the partner and the activities of the partnership. An entity or arrangement treated as a partnership for U.S. federal income tax purposes and any partners in such partnership should consult their own tax advisors regarding the tax consequences of the Merger to them.

ALL U.S. HOLDERS OF NAVIOS ACQUISITION COMMON SHARES SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING THE APPLICABILITY AND EFFECT OF ANY U.S. FEDERAL, STATE, LOCAL, NON-U.S. AND OTHER TAX LAWS.

For purposes of this discussion, the term “U.S. holder” means a beneficial owner of Navios Acquisition Common Shares that is, for U.S. federal income tax purposes:

 

   

an individual who is a citizen or resident of the United States;

 

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a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the laws of the United States, any state thereof or the District of Columbia;

 

   

an estate the income of which is subject to U.S. federal income tax regardless of its source; or

 

   

a trust (a) if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust or (b) that has a valid election in effect under applicable Treasury Regulations to be treated as a United States person for U.S. federal income tax purposes.

U.S. Federal Income Tax Consequences of the Merger to U.S. Holders of Navios Acquisition Common Shares

It is intended that, for U.S. federal income tax purposes, the Merger, either alone or together with the Optional Second Merger, if consummated, should qualify as a “reorganization” within the meaning of Section 368(a) of the Code and that Section 367(a) of the Code should not cause Navios Partners to be treated as other than a corporation with respect to any transfer of property thereto in connection with the Merger (other than, in certain circumstances, a transfer by a holder of Navios Acquisition Common Shares that is a United States person and that holds 5% or more by vote or by value (within the meaning of Treasury Regulations Section 1.367(a)-3(b)(1)(i)) of Navios Partners immediately following the Merger). Under the terms of the Merger Agreement, Navios Partners and Navios Acquisition have agreed to use reasonable efforts to obtain an opinion of Fried, Frank, Harris, Shriver, and Jacobson LLP, dated as of the Closing Date, substantially to the effect that the Merger, either alone or together with the Optional Second Merger, if consummated, should qualify for the Intended Tax Treatment. However, the completion of the Merger is not conditioned upon the receipt of an opinion of counsel to the effect that the Merger should qualify for the Intended Tax Treatment. In addition, neither Navios Acquisition nor Navios Partners intends to request a ruling from the IRS regarding the U.S. federal income tax consequences of the Merger. Accordingly, no assurance can be given that the IRS will not challenge the Intended Tax Treatment or that a court would not sustain such a challenge.

If the Merger fails to qualify for the Intended Tax Treatment, a U.S. holder of Navios Acquisition Common Shares would recognize gain (but may not be able to recognize loss) in an amount equal to the excess, if any, of the fair market value of the Navios Partners Common Units received by such holder in the Merger over such holder’s tax basis in the Navios Acquisition Common Shares surrendered. Gain must be calculated separately for each block of Navios Acquisition Common Shares exchanged by such U.S. holder if such blocks were acquired at different times or for different prices. Any gain so recognized generally would be long-term capital gain if the U.S. holder’s holding period in a particular block of Navios Acquisition Common Shares exceeds one year at the Effective Time. Long-term capital gain of non-corporate U.S. holders (including individuals) currently is eligible for preferential U.S. federal income tax rates. The deductibility of capital losses is subject to limitations. A U.S. holder’s holding period in Navios Partners Common Units received in the Merger would begin on the day following the Merger. In addition, a U.S. holder generally would be subject to information reporting and would, under certain circumstances, be subject to backup withholding (currently at a rate of 24%) with respect to the Navios Partners Common Units received in the Merger, unless such holder properly establishes an exemption or provides, on a properly completed IRS Form W-9, its correct tax identification number and otherwise complies with the applicable requirements of the backup withholding rules. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules can be refunded or credited against the holder’s U.S. federal income tax liability, if any, provided that an appropriate claim is timely filed with the IRS.

The Biden administration has announced a proposed budget that, in addition to increasing income tax rates for corporate and non-corporate U.S. holders, would make significant changes to the tax treatment of capital gains, including ending retroactively the preferential tax rate on capital gains for some individual U.S. holders. If the Merger fails to qualify for the Intended Tax Treatment, whether any such tax proposals could impact any U.S. holders on the exchange of Navios Acquisition Common Shares for Navios Partner Common Units would depend on whether any such tax proposals are enacted and, if so, whether the Effective Time is before or after the effective date of any enacted tax proposals.

 

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The remainder of this discussion assumes that the Merger, either alone or together with the Optional Second Merger, if consummated, should qualify for the Intended Tax Treatment.

A U.S. holder receiving Navios Partners Common Units in exchange for Navios Acquisition Common Shares pursuant to the Merger should not recognize any gain or loss.

The U.S. holder’s aggregate tax basis in the Navios Partners Common Units received in the Merger should be equal to the U.S. holder’s aggregate tax basis in the Navios Acquisition Common Shares surrendered, and the U.S. holder’s holding period for the Navios Partners Common Units received in the Merger should include the U.S. holder’s holding period of the Navios Acquisition Common Shares surrendered.

Where a U.S. holder acquired different blocks of Navios Acquisition Common Shares at different times and at different prices, such U.S. holder’s tax basis and holding period of such Navios Acquisition Common Shares should be determined with reference to each block of Navios Acquisition Common Shares.

Notwithstanding the above, although Navios Acquisition does not believe it currently is, or that it was for the 2011 through 2020 taxable years, a “passive foreign investment company” within the meaning of Section 1297 of the Code for U.S. federal income tax purposes, Navios Acquisition was treated as a PFIC for the 2008 through 2010 taxable years. U.S. holders of Navios Acquisition Common Shares who owned equity interests in Navios Acquisition while Navios Acquisition was a PFIC may have to recognize gain, but not loss, in connection with the receipt of Navios Partners Common Units in the Merger, even if the Merger, either alone or together with the Optional Second Merger, if consummated, otherwise qualifies as a reorganization. U.S. holders of Navios Acquisition Common Shares who acquired their Navios Acquisition Common Shares prior to 2011 or otherwise believe they may have held equity interests of Navios Acquisition while it was a PFIC are urged to consult with their own tax advisors regarding the consequences to them of the Merger.

For general information about the taxation of holders of Navios Partners Common Units, please see “Item 10.E. Additional Information – Taxation of Holders” in Navios Partners’ Annual Report for the fiscal year ended December 31, 2020, filed on Form 20-F incorporated by reference in this proxy statement/prospectus. For general information about the taxation of holders of Navios Acquisition Common Shares, please see “Item 10.E. Additional Information – Taxation of Holders” in Navios Acquisition’s Annual Report for the fiscal year ended December 31, 2020, filed on Form 20-F incorporated by reference in this proxy statement/prospectus.

 

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THE MERGER AGREEMENT

The following is a summary of the material terms of the Merger Agreement. This summary is qualified in its entirety by reference to the Merger Agreement, a copy of which is attached to this proxy statement/prospectus as Annex A. You should read the Merger Agreement because it, and not this proxy statement/prospectus, is the legal document that governs the terms of the Merger.

Explanatory Note Regarding the Merger Agreement and the Summary of the Merger Agreement: Representations, Warranties and Covenants in the Merger Agreement Are Not Intended to Function or Be Relied on as Public Disclosures.

The Merger Agreement and the summary of its terms in this proxy statement/prospectus have been included to provide information about the terms and conditions of the Merger Agreement. The representations, warranties and covenants contained in the Merger Agreement were made by the parties thereto only for the purposes of the Merger Agreement and were qualified and subject to certain limitations and exceptions agreed to by the parties thereto in connection with negotiating the terms of the Merger Agreement. In particular, in your review of the representations and warranties contained in the Merger Agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated for the purpose of allocating contractual risk among the parties to the Merger Agreement rather than to establish matters as facts. The representations and warranties may also be subject to a contractual standard of materiality or material adverse effect different from those generally applicable to unitholders and reports and documents filed with the SEC and in some cases may be qualified by disclosures made by one party to the other, which are not necessarily reflected in the Merger Agreement. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement/prospectus, may have changed since the date of the Merger Agreement, and subsequent developments or new information qualifying a representation or warranty may have been included in or incorporated into this proxy statement/prospectus.

For the foregoing reasons, the representations, warranties and covenants or any descriptions of those provisions should not be read alone. Instead, such provisions or descriptions should be read only in conjunction with the other information provided elsewhere in this proxy statement/prospectus or incorporated into this proxy statement/prospectus.

Navios Acquisition and Navios Partners will provide additional disclosure in their public reports to the extent they become aware of the existence of any material facts that are required to be disclosed under federal securities law and that might otherwise contradict the representations and warranties contained in the Merger Agreement and will update such disclosure as required by the federal securities laws.

Structure of the Merger

Under the terms of the Merger Agreement, Merger Sub will merge with and into Navios Acquisition and each Navios Acquisition Common Share (other than Excluded Shares) will be converted into the right to receive 0.1275 of a Navios Partners Common Unit. As a result of the Merger, the separate existence of Merger Sub will cease and Navios Acquisition and its subsidiaries will become wholly-owned subsidiaries of Navios Partners. Following the Merger, Navios Partners will hold all of the outstanding Navios Acquisition Common Shares.

When the Merger Becomes Effective

Navios Partners and Navios Acquisition will cause a certificate of merger to be executed and filed with the Office of the Registrar of Corporations of The Republic of the Marshall Islands on the third business day after the day on which the last condition to completing the Merger is satisfied or waived, or at such other time as Navios Partners and Navios Acquisition may agree. The Merger will become effective at the time and on the date on which the certificate of merger is filed or at such later time and date on which the parties agree as specified in the certificate of merger.

 

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Effect of the Merger

At the Effective Time:

 

   

Each Navios Acquisition Common Share (other than Excluded Shares) will be converted into the right to receive 0.1275 of a Navios Partners Common Unit, and, at the Effective Time, each Navios Acquisition Common Share will be cancelled and retired and will cease to exist;

 

   

The Navios Acquisition Common Shares owned by Navios Acquisition or any of its subsidiaries immediately prior to the Effective Time will cease to be outstanding and will be cancelled and will cease to exist without consideration therefor;

 

   

The Navios Acquisition Common Shares that are owned directly or indirectly by Navios Partners or any of its subsidiaries (including the NMM Equity Issuance Shares) immediately prior to the Effective Time will cease to be outstanding and will be cancelled and will cease to exist without consideration therefor;

 

   

Each share of common stock of Merger Sub issued and outstanding immediately prior to the Effective Time will be converted into one share of common stock of the surviving entity.

For a description of the Navios Partners Common Units, and for a description of the comparative rights of holders of the Navios Partners Common Units and the Navios Acquisition Common Shares, please read the sections entitled “Description of Navios Partners Common Units,” and “Comparison of Shareholder and Unitholder Rights.”

Exchange of Units; Fractional Units

Exchange Agent

Navios Partners appointed Continental Stock Transfer & Trust Company (the “exchange agent”) to act as exchange agent for the payment of the Merger Consideration and any dividends or distributions declared by Navios Partners on the Navios Partners Common Units with a record date after the Effective Time and a payment due on or before the date the holder of Navios Acquisition Common Shares surrendered its Navios Acquisition Common Shares.

At or prior to the Effective Time, Navios Partners will (i) reserve with the exchange agent the Navios Partners Common Units to be issued in the Merger and (ii) authorize the exchange agent to exchange Navios Partners Common Units as described above under the section entitled “The Merger Agreement—Effect of the Merger.” Navios Partners will deposit with the exchange agent cash as and when necessary to pay any dividends or distributions as described above. Navios Partners will pay all costs and fees of the exchange agent and all expenses associated with the exchange process.

After the Effective Time, there will be no further transfers on the records of Navios Acquisition or its transfer agent of Navios Acquisition Common Shares. If Navios Acquisition Common Shares are presented to Navios Acquisition or its transfer agent for transfer after the Effective Time, they will be cancelled against delivery of Navios Partners Common Units and unpaid distributions.

Exchange of Units

Holders of Navios Acquisition Common Shares who deliver a properly completed and signed transmittal letter and any other documents required by the instructions to the transmittal letter to the exchange agent, together with their Navios Acquisition Common Share certificates (if any), will be entitled to receive, after giving effect to any required tax withholding:

 

   

the number of whole units of Navios Partners Common Units to which such holder is entitled in accordance with the Merger Agreement and as described above under the section entitled “The Merger Agreement—Effect of the Merger”; and

 

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any cash distributions declared by Navios Partners on the Navios Partners Common Units with a record date after the Effective Time and a payment due on or before the date the holder of Navios Acquisition Common Shares surrendered its Navios Acquisition Common Shares.

Fractional Units

No fractional units shall be issued in the Merger. Each holder of Navios Acquisition Common Shares who would otherwise have been entitled to receive a fractional unit of Navios Partners Common Units in the Merger (after taking into account all Navios Acquisition Common Shares held by such holder immediately prior to the Effective Time) of 0.5 or above shall receive in the Merger, in lieu of such fractional unit, a full Navios Partners Common Unit, and each holder of Navios Acquisition Common Shares who would otherwise have been entitled to receive a fractional unit of Navios Partners Common Units (after taking into account all Navios Acquisition Common Shares held by such holder immediately prior to the Effective Time) of less than 0.5 shall receive no consideration for such fractional unit, which shall be forfeited.

Conditions to the Merger

The obligation of the parties to the Merger Agreement to complete the Merger is subject to the satisfaction or waiver of certain conditions, including, among others:

 

   

the receipt of the Shareholders Approval;

 

   

the registration statement of which this proxy statement/prospectus forms a part having been declared effective by the SEC and its continued effectiveness thereof;

 

   

the absence of any decree, order, injunction, law or impediment prohibiting the transactions contemplated by the Merger Agreement; and

 

   

the approval of the listing on the NYSE, subject to official notice of issuance, of the Navios Partners Common Units to be issued in the Merger.

The parties’ obligations are also separately subject to the satisfaction or waiver of the following conditions:

 

   

the representations and warranties of the other party relating to organization and existence, authorization to enter into the Merger Agreement and to complete the transactions contemplated thereby and capitalization shall be true and correct in all material respects as of the Closing Date as if made as of the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date);

 

   

the representations and warranties of the other party relating to all other matters (other than organization and existence, authorization to enter into the Merger Agreement and to complete the transactions contemplated thereby, capitalization and “no adverse changes”) shall be true and correct (without regard to any materiality, material adverse effect and similar qualifiers therein) as of the closing of the Merger, as if remade on the date thereof (except for representations and warranties made as of a specific date, which shall be true and correct as of such specific date), except where the failure of such representations and warranties to be true and correct would not, individually or in the aggregate, result in a material adverse effect;

 

   

the representation and warranty relating to “no adverse changes” shall be true and correct as of the Closing Date as if made on the date thereof; and

 

   

the other party shall have performed or complied with all agreements and covenants required to be performed by it under the Merger Agreement prior to the Closing Date that have materiality, material adverse effect or similar qualifiers, and shall have performed or complied in all material respects with all other agreements and covenants required to be performed by it under the Merger Agreement prior to the Closing Date that are not so qualified.

 

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Representations and Warranties

The Merger Agreement contains generally reciprocal representations and warranties by each of the parties to the Merger Agreement, many of which provide that the representation and warranty does not extend to matters where the failure of the representation and warranty to be accurate would not result in a material adverse effect on the party making the representation and warranty. These representations and warranties concern, among other things:

 

   

organization and existence;

 

   

authority and approval to enter into the Merger Agreement and consummate the transactions contemplated thereby;

 

   

absence of defaults, breaches and other conflicts caused by entering into the Merger Agreement and completing the Merger;

 

   

capitalization and ownership of limited partnership interests, common shares and other equity interests;

 

   

reports filed with the SEC and internal controls;

 

   

accuracy of financial statements and absence of undisclosed liabilities;

 

   

absence of litigation and violations of laws and regulations;

 

   

absence of changes that would have a material adverse effect;

 

   

tax matters;

 

   

compliance with applicable licenses and permits;

 

   

material contracts and agreements;

 

   

insurance matters;

 

   

condition of assets;

 

   

U.S. Investment Company Act of 1940, as amended (the “Investment Company Act”);

 

   

brokerage arrangements;

 

   

opinion of financial advisor; and

 

   

accuracy of information in this proxy statement/prospectus.

For purposes of the Merger Agreement, “material adverse effect” means any change, effect, event or occurrence that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on or a material adverse change in (i) the business, assets, liabilities, properties, condition (financial or otherwise) or results of operations of Navios Acquisition and its subsidiaries, taken as a whole, on the one hand, or on Navios Partners and its subsidiaries, taken as a whole, on the other hand; provided, however, that any adverse changes, effects, events or occurrences resulting from or due to any of the following shall be disregarded in determining whether there has been a material adverse effect: (a) changes, effects, events or occurrences affecting the markets or geographic locations in which such party operates, (b) changes, effects, events or occurrences affecting the United States or global economic conditions or financial, credit, debit, securities or other capital markets in general, (c) any outbreak of, acts of or escalation of hostilities, terrorism, war or other similar national emergency, including any event, fact, condition or circumstance from COVID-19 or the worsening thereof, (d) the announcement or pendency of the Merger Agreement or the transactions contemplated thereby, (e) changes in any laws applicable to such party or in accounting regulations or principles or the interpretation thereof that materially affects the Merger Agreement or the transactions contemplated thereby, (f) such party taking any action required or contemplated by the Merger Agreement, (g) any change in the market price or trading volume of the equity securities of such party, (h) changes, effects, events or occurrences

 

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generally affecting the prices of oil, natural gas, natural gas liquids and other similar commodities, (i) any failure of such party to meet any internal or external projections, forecasts or estimates of revenues, earnings or other financial or operating metrics for any period, or, in the case of a material adverse effect in respect of Navios Partners or Merger Sub, or (j) changes, effects, events or occurrences at Navios Acquisition or any of its subsidiaries; provided that, in the case of clauses (a), (b), (c), (e) and (h), the adverse impact on such party, taken as a whole, is not materially disproportionate to the adverse impact on similarly situated parties, or (ii) the ability of such party to perform its obligations under the Merger Agreement or to consummate the transactions contemplated thereby.

Covenants and Other Agreements

Prior to the closing of the Merger, the parties have agreed to promptly notify the other party in writing of (i) any event, condition or circumstance that could reasonably be expected to result in any of the conditions to the consummation of the Merger not being satisfied, and (ii) any material breach by the notifying party of any covenant, obligation or agreement contained in the Merger Agreement. In addition, Navios Acquisition has agreed to, as promptly as practicable following the execution of the Merger Agreement, establish a record date for, duly call, give notice of, convene and hold the Special Meeting for the purpose of obtaining the Shareholders Approval.

Prior to the closing of the Merger, the parties have agreed that, subject to specified exceptions or as consented to by the other party in writing, each party agrees to (i) conduct its business, in all material respects, in the ordinary course of business consistent with past practice, (ii) use commercially reasonable efforts to maintain and preserve intact its business organization and the goodwill of those having business relationships with it and retain the services of its present officers and key employees, and (iii) use commercially reasonable efforts to keep in full force and effect all material permits and all material insurance policies maintained by such party, other than changes to such policies made in the ordinary course of business.

Prior to the closing of the Merger and unless the other party consents in writing (which consent may not be unreasonably withheld, delayed or conditioned), and subject to certain specified exceptions, each party has generally agreed not to (and has agreed to cause their respective subsidiaries not to):

 

   

make any material change in the nature of its business and operations;

 

   

make any change in its governing documents in any manner that would reasonably be expected to (i) prohibit or materially impede or delay the Merger or the consummation of the other transactions contemplated thereby or (ii) adversely affect in a material way the rights of holders of its securities;

 

   

recommend, propose, announce, adopt or vote to adopt a plan or agreement of complete or partial dissolution or other reorganization or business combination transaction or agreement, in each case, that would reasonably be expected to (i) prevent or materially impede or delay the ability of the parties to satisfy any of the conditions to, or the consummation of, the transactions set forth in the Merger Agreement, or (ii) adversely affect in a material way the rights of holders of the securities of any party thereto;

 

   

declare, authorize, set aside or pay any dividend or distribution payable in cash or property in respect of the Navios Acquisition Common Shares or the Navios Partners Common Units, other than in the case of Navios Partners, regular quarterly cash dividends or distributions in the ordinary course, consistent with past practice, in respect of the Navios Partners Common Units, which shall be no greater than $0.05 per Navios Partners Common Unit;

 

   

waive, release, assign, settle or compromise any claims, demands, lawsuits or proceedings seeking damages or an injunction or other equitable relief where such waivers, releases, assignments, settlements or compromises would, in the aggregate, have a material adverse effect;

 

   

issue, deliver or sell equity securities, or rights to acquire equity securities of such party, other than (i) in the case of Navios Acquisition, the Navios Acquisition Common Shares issued in the NMM

 

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Equity Issuance and the NSM Equity Issuance and (ii) in the case of Navios Partners, Navios Partners Common Units or rights to acquire Navios Partners Common Units having a fair market value (as reasonably determined by the Navios Partners Board) not to exceed $75 million in the aggregate;

 

   

make any changes in financial accounting methods, principles or practices (or change an annual financial accounting period), except insofar as may be required by a change in GAAP or applicable law;

 

   

incur any indebtedness or issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of such party, other than (i) in the case of Navios Partners, any (A) indebtedness issued to refinance other indebtedness of Navios Partners or its subsidiaries, (B) additional indebtedness with a principal amount of up to 20% of the aggregate principal amount of the existing indebtedness of the Navios Partners and its subsidiaries in effect as of the date of the Merger Agreement, and (C) intercompany indebtedness between Navios Partners and its subsidiaries, and (ii) in the case of Navios Acquisition, (A) the NNA Debt Financing and the NMM Loan Agreement (each term as defined in the Merger Agreement) and (B) any intercompany indebtedness between Navios Acquisition and its subsidiaries;

 

   

(i) make (other than consistent with past practice), change or revoke any material tax election, (ii) file any amended tax return with respect to any material tax, (iii) adopt (other than consistent with past practice) or change any method of tax accounting or tax accounting period or (iv) enter into any closing agreement to any material tax; or

 

   

agree, authorize or commit to do any of the foregoing.

Prior to the closing of the Merger, Navios Acquisition will not, without the prior written consent of Navios Partners, (i) solicit, initiate, knowingly facilitate, knowingly encourage (including by way of furnishing confidential information) or knowingly induce or take any other action intended to lead to any inquiring or any proposals that constitute or could reasonably be expected to lead to an Alternative Proposal, (ii) grant any waiver or release of any standstill or similar agreement with respect to any shares or units of Navios Acquisition or of any of its subsidiaries or (iii) effect any Adverse Recommendation Change. Notwithstanding the first sentence of this paragraph, if at any time following the date of the Merger Agreement and prior to obtaining the Shareholders Approval, (A) Navios Acquisition has received a written Alternative Proposal that the Navios Acquisition Special Committee believes is bona fide, (B) the Navios Acquisition Special Committee, after consultation with its financial advisors and outside legal counsel, determines in good faith that (x) such Alternative Proposal constitutes or could reasonably be expected to lead to or result in a Superior Proposal and (y) failure to take such action would be inconsistent with its duties under applicable law, and (C) such Alternative Proposal did not result from a material breach of the Merger Agreement, then at the direction of the Navios Acquisition Special Committee, Navios Acquisition may (subject to certain exceptions and limitations) take certain actions to provide confidential information to, and participate in discussions or negotiations in connection with, the third party providing such Alternative Proposal.

Navios Acquisition will promptly advise Navios Partners, orally and in writing, and in no event later than 36 hours after receipt, if any proposal, offer, inquiry or other contact is received by, any information is requested from, or any discussions or negotiations are sought to be initiated or continued with, Navios Acquisition in respect of any Alternative Proposal, indicating the identity of the person making such proposal, offer, inquiry or other contact and the terms and conditions of any proposals or offers or the nature of any inquiries or contacts, among other things, and thereafter will shall promptly keep Navios Partners reasonably informed of all material developments.

At any time prior to obtaining the Shareholders Approval and under certain specified circumstances, the Navios Acquisition Special Committee may effect an Adverse Recommendation Change in response to an Alternative Proposal or a Changed Circumstance if the Navios Acquisition Special Committee, after consultation by the Navios Acquisition Special Committee with its outside legal counsel and financial advisors, determines in good

 

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faith that the failure to take such action would be reasonably likely to be inconsistent with its duties under applicable law. See the section entitled “The Merger Agreement—Termination” below for additional information regarding such termination right.

The Merger Agreement contains additional agreements between the parties thereto including agreements regarding, among other things (and subject to certain exceptions and limitations):

 

   

cooperating regarding the preparation of this proxy statement/prospectus, (ii) causing the Navios Partners Common Units issued in the Merger to be approved for trading on the NYSE and (iii) making all required filings under applicable state securities and “blue sky” laws, subject to certain exceptions;

 

   

using commercially reasonable efforts to (i) take, or cause to be taken, all appropriate action, and to do or cause to be done, all things necessary, proper or advisable under applicable laws to consummate and make effective the transactions contemplated by the Merger Agreement and (ii) defend any lawsuits or other proceedings challenging the Merger Agreement or the consummation of the transactions contemplated thereby or seek to have lifted or rescinded any injunction or restraining order or other order adversely affecting the ability of the parties to consummate the transactions contemplated thereby;

 

   

making certain public announcements in connection with the Merger Agreement or the transaction contemplated thereby;

 

   

paying expenses incurred in connection with the Merger Agreement;

 

   

cooperating fully with respect to any filing, submission or communication with a governmental entity having jurisdiction over the Merger;

 

   

cooperating with respect to tax opinion matters;

 

   

participating in any defense or settlement with respect to securityholder litigation against Navios Acquisition or the Navios Acquisition Board;

 

   

prior to the Effective Time, eliminating or revoking or diminishing the authority of the Navios Acquisition Special Committee, or removing any director of the Navios Acquisition Board that is a member of the Navios Acquisition Special Committee either as a member of such board or such committee without the affirmative vote of the members of the Navios Acquisition Board, including the affirmative vote of each of the other members of the Navios Acquisition Special Committee; and

 

   

using reasonable best efforts to (i) cause the Navios Partners Common Units issued in the Merger to be approved for listing on the NYSE, and (ii) cause the delisting of the Navios Acquisition Common Shares from the NYSE as promptly as practicable following the closing of the Merger in compliance with applicable law.

The Merger Agreement provides that, at the request of Navios Acquisition or the election of Navios Partners, Navios Partners shall cause the surviving entity of the Merger, as promptly as practicable after both the Effective Time shall have occurred and all third party consents necessary to consummate the Optional Second Merger (as defined below) shall have been obtained, and as part of a plan of reorganization, to merge with and into a newly organized entity that is treated as an entity disregarded as separate from Navios Partners for U.S. federal income tax purposes (“Newco”), with Newco as the surviving entity (such merger, the “Optional Second Merger”). See “Material U.S. Federal Income Tax Consequences of the Merger” on page [●] for additional information.

Indemnification and Insurance

Subject to certain terms and conditions specified in the Merger Agreement, Navios Partners has agreed to:

 

   

honor all rights to indemnification, advancement of expenses, elimination of liability and exculpation from liabilities for acts or omissions occurring at or prior to the Effective Time (including the transactions contemplated by the Merger Agreement) existing as of the date of the Merger Agreement in favor of certain past and present directors and officers of Navios Acquisition and its subsidiaries;

 

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ensure that the governing documents of Navios Acquisition (or its successor entity), for a period of six years following the Effective Time, contain provisions substantially no less advantageous with respect to indemnification, advancement of expenses, elimination of liability and exculpation of their present and former directors, officers, employees and agents than are set forth in the governing documents of Navios Acquisition as of the date of the Merger Agreement; and

 

   

maintain officers’ and directors’ liability insurance covering certain past and present directors and officers of Navios Acquisition and its subsidiaries who are or were covered by the existing officers’ and directors’ liability insurance applicable to Navios Acquisition and its subsidiaries, as applicable, for a period of six years following the Effective Time, on terms substantially no less advantageous to such directors and officers, than such existing insurance.

Termination

Prior to the Effective Time, the Merger Agreement may be terminated:

 

   

by mutual written agreement of the parties thereto;

 

   

by either Navios Partners or Navios Acquisition, if:

 

   

the Merger is not consummated on or before the Outside Date, as long as the party seeking to terminate has not otherwise prevented the Merger from occurring by failing to perform or observe in any material respect its obligations under the Merger Agreement; or

   

a governmental entity has issued a final and non-appealable order, decree or ruling or has taken any other action that permanently restrains, enjoins or otherwise prohibits the Merger, so long as the party seeking termination has complied with certain of its obligations under the Merger Agreement.

 

   

by Navios Acquisition, if Navios Partners or Merger Sub breaches any of their respective representations, warranties, covenants or agreements in the Merger Agreement or if any of their respective representations or warranties become untrue, resulting in a condition to the Merger not being satisfied, and such breach or failure cannot be cured, or is not cured, prior to the Outside Date, provided that Navios Containers is not likewise in breach of the Merger Agreement.

 

   

by Navios Partners:

 

   

if Navios Acquisition breaches or fails to perform any of its representations, warranties, covenants or agreements in the Merger Agreement or if any of its representations or warranties become untrue, resulting in a condition to the Merger not being satisfied, and such breach or failure cannot be cured, or is not cured, prior to the Outside Date, provided that Navios Partners is not likewise in breach of the Merger Agreement; or

 

   

prior to the receipt of the Shareholders Approval, if an Adverse Recommendation Change shall have occurred.

Upon termination of the Merger Agreement in connection with a material breach by Navios Partners or Navios Acquisition (as applicable), the other party will be entitled to reimbursement of its expenses not to exceed $1.0 million.

Amendment and Waiver

Subject to compliance with applicable law, prior to the closing of the Merger, any provision of the Merger Agreement may be (i) consented to or waived in writing by the party benefited by the provision or (ii) amended or modified at any time by an agreement in writing by the parties to the Merger Agreement; provided, however, that, in addition to any other approvals required by Navios Acquisition’s constituent documents or under the Merger Agreement, the foregoing consents, waivers, amendments or modifications in clauses (i) and (ii), and any

 

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decision or determination by Navios Acquisition under the Merger Agreement (including, for the avoidance of doubt, any decision or determination by Navios Acquisition to (a) terminate the Merger Agreement or (b) enforce the Merger Agreement), must be approved by, in the case of consents, waivers, amendments or modifications, or such decisions or determinations, by the Navios Acquisition Special Committee.

Certain Merger Agreement Definitions

For purposes of the summary of the Merger Agreement contained in this section entitled “The Merger Agreement,” the following terms have the following meanings:

“Adverse Recommendation Change” means (i) the entry by Navios Acquisition into any merger agreement, letter of intent, agreement in principle, share or unit purchase agreement, asset purchase agreement or share or unit exchange agreement, option agreement or other similar agreement relating to an Alternative Proposal or (ii) any action of the Navios Acquisition Board and the Navios Acquisition Special Committee to withdraw, modify or qualify, or propose to publicly to withdraw, modify or qualify, in a manner adverse to Navios Partners, the recommendation of the Navios Acquisition Special Committee or the recommendation of the Navios Acquisition Board or publicly recommend the approval or adoption of, or publicly approve or adopt, or propose to publicly recommend, approve or adopt, any Alternative Proposal.

“Alternative Proposal” means any inquiry, proposal or offer from any Person or “group” (as defined in Section 13(d) of the Exchange Act), relating to any (i) direct or indirect acquisition (whether in a single transaction or a series of related transactions), outside of the ordinary course of business, of assets of Navios Acquisition and its subsidiaries (including securities of its subsidiaries) equal to 20% or more of Navios Acquisition’s consolidated assets or to which 20% or more of Navios Acquisition’s revenues or earnings on a consolidated basis are attributable, (ii) direct or indirect acquisition (whether in a single transaction or a series of related transactions) of beneficial ownership (within the meaning of Section 13 of the Exchange Act) of 20% or more of the outstanding equity securities of Navios Acquisition, (iii) tender offer or exchange offer that if consummated would result in any Person or “group” (as defined in Section 13(d) of the Exchange Act) beneficially owning 20% or more of the outstanding equity securities of Navios Acquisition or (iv) merger, consolidation, unit exchange, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction (whether in a single transaction or a series of related transactions) involving Navios Acquisition that is structured to permit such Person or group to acquire beneficial ownership of 20% or more of Navios Acquisition’s consolidated assets or outstanding equity interests; in each case, other than the transactions contemplated by the Merger Agreement.

“Changed Circumstance” means a material event, circumstance, effect, condition, change or development, in each case that arises or occurs after the date of the Merger Agreement and was not, prior to the date of the Merger Agreement, known to or reasonably foreseeable by the Navios Acquisition Special Committee and did not result from or arise out of the announcement or pendency of, or any actions required to be taken by (or to be refrained from being taken by) Navios Acquisition pursuant to the Merger Agreement; provided, however, that in no event shall the following events, circumstances, or changes in circumstances constitute a Changed Circumstance: (i) any event, fact, development or occurrence that involves or relates to an Alternative Proposal or any inquiry or communications or matters relating thereto, (ii) any change in the price, or change in trading volume, of the Navios Acquisition Common Shares, (iii) the fact that Navios Acquisitions meets or exceeds internal or published projections, budgets, forecasts or estimates of revenues, earnings or other financial results for any period (provided, however, that the exception in this clause (iii) shall not apply to the underlying causes giving rise to or contributing to such change or prevent any of such underlying causes from being taken into account in determining whether a Changed Circumstance has occurred), (iv) the NMM Equity Issuance, the NNA Debt Financing, the NMM Loan Agreement, the NNA Notes Cancellation and Discharge or the NSM Loan Amendment (each term as defined in the Merger Agreement), or (v) any change in the price, or change in trading volume, of the Navios Partners Common Units.

 

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“Superior Proposal” means a bona fide unsolicited written Alternative Proposal (except that references to “20%” within the definition of “Alternative Proposal” shall be replaced by “50%”), obtained after the date of the Merger Agreement and not in breach of the Merger Agreement (other than an immaterial breach), which is on terms and conditions that the Navios Acquisition Special Committee determines in good faith to be (i) reasonably capable of being consummated in accordance with its terms, taking into account legal, regulatory, financial, financing and timing aspects of the proposal, and (ii) if consummated, more favorable to the holders of Navios Acquisition Common Shares (in their capacity as holders of Navios Acquisition Common Shares) from a financial point of view than the transactions contemplated thereby, taking into account at the time of determination any changes to the terms of the Merger Agreement that as of that time had been committed to by Navios Partners in writing.

 

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RELATED PARTY TRANSACTIONS

Navios Partners and Navios Acquisition and their respective affiliates have engaged in certain related party transactions. The disclosures contained in “Item 7. Major Unitholders and Related Party Transaction – B. Related Party Transactions” of Navios Partners’ annual report for the fiscal year ended December 31, 2020, filed on Form 20-F, as filed with the SEC on March 31, 2021, “Related Party Transactions” of Navios Partners’ Operating and Financial Review for the three and six month periods ended June 30, 2021, filed on a Report on Form 6-K with the SEC on August 26, 2021, “Item 7. Major Stockholders and Related Party Transaction – B. Related Party Transactions” of Navios Acquisition’s annual report for the fiscal year ended December 31, 2020, filed on Form 20-F, as filed with the SEC on April 28, 2021, and “Related Party Transactions” of Navios Acquisition’s Operating and Financial Review for the three and six month periods ended June 30, 2021, filed on a Report on Form 6-K with the SEC on August 26, 2021, are incorporated by reference into this proxy statement/prospectus.

The information incorporated by reference into this proxy statement/prospectus should be read in conjunction with the other information in this proxy statement/prospectus, including the section entitled “The Merger—Navios Partners’ Ownership Interest in Navios Acquisition.”

 

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DESCRIPTION OF THE NAVIOS PARTNERS COMMON UNITS

The Units

The Navios Partners Common Units represent limited partner interests in Navios Partners. The holders of Navios Partners Common Units are entitled to participate in partnership distributions and exercise the rights and privileges available to limited partners under Navios Partners’ Partnership Agreement (defined below).

For a description of the rights and privileges of limited partners under the Navios Partners Partnership Agreement, including voting rights, please read the detailed Navios Partners Fourth Amended and Restated Agreement of Limited Partnership (the “Navios Partners Partnership Agreement”), which is filed as an exhibit to Navios Partners’ Form 20-F for the fiscal year ended December 31, 2017, filed with the SEC on April 4, 2018.

Cash Distribution Policy

General: Limitations on Cash Distributions and Navios Partners’ Ability to Change its Cash Distribution Policy

There is no guarantee that holders of Navios Partners Common Units will continue to receive quarterly distributions from Navios Partners. Beginning with the quarter ending December 31, 2015, the Navios Partners Board elected to suspend distributions on the Navios Partners Common Units in order to preserve cash and improve liquidity. In March 2018, the Navios Partners Board announced a new distribution policy under which it paid quarterly cash distributions in the amount of $0.30 per unit, or $1.20 annually. In July 2020, Navios Partners amended its distribution policy under which it intends to pay quarterly cash distributions in the amount of $0.05 per unit, or $0.20 annually.

Navios Partners’ distribution policy is subject to certain restrictions and may be changed at any time, including:

 

   

Holders of Navios Partners Common Units have no contractual or other legal right to receive distributions other than the obligation under the Navios Partners Partnership Agreement to distribute available cash on a quarterly basis, which is subject to the broad discretion of the Navios Partners Board to establish reserves and other limitations.

 

   

While the Navios Partners Partnership Agreement requires Navios Partners to distribute all of its available cash, the Navios Partners Partnership Agreement, including provisions requiring Navios Partners to make cash distributions contained therein, may be amended with the approval of a majority of the outstanding common units.

 

   

Even if Navios Partners’ cash distribution policy is not modified or revoked, the amount of distributions it pays under its cash distribution policy and the decision to make any distribution is determined by the Navios Partners Board, taking into consideration the terms of the Navios Partners Partnership Agreement.

 

   

Under Section 51 of the Republic of the Marshall Islands Limited Partnership Act, Navios Partners may not make a distribution to its unitholders if the distribution would cause its liabilities to exceed the fair value of its assets.

 

   

Navios Partners may lack sufficient cash to pay distributions to its unitholders due to decreases in net revenues or increases in operating expenses, principal and interest payments on outstanding debt, tax expenses, working capital requirements, maintenance and replacement capital expenditures or anticipated cash needs.

 

   

Navios Partners’ distribution policy is affected by restrictions on distributions under its credit facilities or other debt instruments. Specifically, Navios Partners’ credit facilities contain material financial tests that must be satisfied, and Navios Partners will not pay any distributions that will cause it to violate its credit facilities or other debt instruments. Should Navios Partners be unable to satisfy these restrictions

 

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included in its credit facilities or if it is otherwise in default under its credit facilities, its ability to make cash distributions to unitholders, notwithstanding its cash distribution policy, would be materially adversely affected.

 

   

If Navios Partners make distributions out of capital surplus, as opposed to operating surplus, such distributions will constitute a return of capital and will result in a reduction in the minimum quarterly distribution and the target distribution levels. Navios Partners does not anticipate that it will make any distributions from capital surplus.

Navios Partners’ ability to make distributions to its unitholders depends on the performance of its subsidiaries and their ability to distribute funds to Navios Partners. The ability of Navios Partners’ subsidiaries to make distributions to it may be restricted by, among other things, the provisions of existing and future indebtedness, applicable partnership and limited liability company laws and other laws and regulations.

Quarterly Distribution

There is no guarantee that Navios Partners will pay the quarterly distribution on the Navios Partners Common Units in any quarter. The amount of distributions paid under its policy and the decision to make any distribution is determined by the Navios Partners Board, taking into consideration the terms of the Navios Partners Partnership Agreement. Navios Partners is prohibited from making any distributions to unitholders if such distribution would cause an event of default, or an event of default exists, under its existing credit facilities.

Quarterly distributions were paid by Navios Partners through September 2015. For the quarter ended December 31, 2015, the Navios Partners Board determined to suspend payment of the quarterly distributions in order to preserve cash and improve liquidity. In March 2018, the Navios Partners Board announced a new distribution policy under which it paid quarterly cash distributions in the amount of $0.30 per unit, or $1.20 annually. In July 2020, Navios Partners amended its distribution policy under which it intends to pay quarterly cash distributions in the amount of $0.05 per unit, or $0.20 annually.

The declaration and payment of any further dividends remain subject to the discretion of the Navios Partners Board and will depend on, among other things, Navios Partners’ cash requirements as measured by market opportunities and restrictions under its credit agreements and other debt obligations and such other factors as the Navios Partners Board may deem advisable.

Incentive Distribution Rights

The following description of Navios Partners’ incentive distribution rights reflects such rights and the indicated levels are achieved, of which there can be no assurance. Incentive distribution rights represent the right to receive an increasing percentage of quarterly distributions of available cash from operating surplus after the minimum quarterly distribution and the target distribution levels have been achieved. Navios GP L.L.C. currently holds Navios Partners’ incentive distribution rights, but may transfer these rights, provided the transferee agrees to be bound by the terms of the Navios Partners Partnership Agreement.

The following table illustrates the percentage allocations of the additional available cash from operating surplus among the unitholders, Navios Partners’ general partner and the holder of Navios Partners’ incentive distribution rights up to the various target distribution levels. The amounts set forth under “Marginal Percentage Interest in Distributions” are the percentage interests of the unitholders in any available cash from operating surplus Navios Partners distributes up to and including the corresponding amount in the column “Total Quarterly Distribution Target Amount,” until available cash from operating surplus Navios Partners distributes reaches the next target distribution level, if any. The percentage interests shown for the holders for the minimum quarterly distribution are also applicable to quarterly distribution amounts that are less than the minimum quarterly distribution. The

 

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percentage interests shown for Navios Partners’ general partner assume that the general partner maintains its 2.0% general partner interest.

 

          Marginal Percentage Interest in Distributions  
     Total Quarterly Distribution
Target Amount
   Common
Unitholders
    Incentive
Distribution
Right Holder
    General
Partner
 

Minimum Quarterly Distribution

   up to $5.25      98     —         2

First Target Distribution

   up to $6.0375      98     —         2

Second Target Distribution

   above $6.0375 up to $6.5625      85     13     2

Third Target Distribution

   above $6.5625 up to $7.875      75     23     2

Thereafter

   above $7.875      50     48     2

In August 2019, Navios Holdings sold the general partnership interests in Navios Partners to N Shipmanagement Acquisition Corp. and related entities, an entity affiliated with Navios Partners’ Chairman and Chief Executive Officer. The incentive distribution rights remained with Navios GP L.L.C.

Transfer Agent and Registrar

Duties

Continental Stock Transfer & Trust Company serves as registrar and transfer agent for the Navios Partners Common Units. Navios Partners pays all fees charged by the transfer agent for transfers of the Navios Partners Common Units, except the following, which must be paid by unitholders:

 

   

surety bond premiums to replace lost or stolen certificates, taxes and other governmental charges;

 

   

special charges for services requested by a holder of an NMM Common Unit; and

 

   

other similar fees or charges.

There is no charge to unitholders for disbursements of Navios Partners’ cash distributions. Navios Partners will indemnify the transfer agent, its agents and each of their shareholders, directors, executive officers and employees against all claims and losses that may arise out of acts performed or omitted for its activities in that capacity, except for any liability due to any gross negligence or intentional misconduct of the indemnified person or entity.

Resignation or Removal

The transfer agent may resign, by notice to Navios Partners, or be removed by Navios Partners. The resignation or removal of the transfer agent will become effective upon Navios Partners’ appointment of a successor transfer agent and registrar and its acceptance of the appointment. If a successor has not been appointed or has not accepted its appointment within 30 days after notice of the resignation or removal, Navios Partners’ general partner may, at the direction of the Navios Partners Board, act as the transfer agent and registrar until a successor is appointed.

Transfer of Navios Partners Common Units

By transfer of Navios Partners Common Units in accordance with the Navios Partners Partnership Agreement, each transferee of Navios Partners Common Units shall be admitted as a limited partner with respect to the Navios Partners Common Units transferred when such transfer and admission is reflected in Navios Partners’ books and records. Each transferee:

 

   

represents that the transferee has the capacity, power and authority to become bound by the Navios Partners Partnership Agreement;

 

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automatically agrees to be bound by the terms and conditions of, and is deemed to have executed, the Navios Partners Partnership Agreement; and

 

   

gives the consents and approvals contained in the Navios Partners Partnership Agreement.

A transferee will become a substituted limited partner of Navios Partners’ partnership for the transferred Navios Partners Common Units automatically upon the recording of the transfer on Navios Partners’ books and records. Navios Partners’ general partner will cause any transfers to be recorded on Navios Partners’ books and records no less frequently than quarterly. Navios Partners may, at its discretion, treat the nominee holder of a Navios Partners Common Unit as the absolute owner. In that case, the beneficial holder’s rights are limited solely to those that it has against the nominee holder as a result of any agreement between the beneficial owner and the nominee holder.

Navios Partners Common Units are securities and are transferable according to the laws governing transfer of securities. In addition to other rights acquired upon transfer, the transferor gives the transferee the right to become a limited partner in Navios Partners’ partnership for the transferred Navios Partners Common Units. Until a Navios Partners Common Unit has been transferred on its books, Navios Partners and the transfer agent may treat the recordholder of the unit as the absolute owner for all purposes, except as otherwise required by law or stock exchange regulations.

 

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COMPARISON OF SHAREHOLDER AND UNITHOLDER RIGHTS

As a result of the Merger, holders of Navios Acquisition Common Shares will receive Navios Partners Common Units in exchange for their Navios Acquisition Common Shares. Navios Acquisition is incorporated under the laws of the Republic of the Marshall Islands and subject to the laws of the Republic of the Marshall Islands, including the Marshall Islands Business Corporations Act (the “MIBCA”), as amended from time to time, and Navios Partners is formed under the laws of the Republic of the Marshall Islands and subject to the laws of the Republic of the Marshall Islands, including the Republic of the Marshall Islands Limited Partnership Act. The rights of holders of Navios Partners Common Units are governed by Republic of the Marshall Islands law and the Navios Partners Partnership Agreement, while the rights of holders of Navios Acquisition Common Shares are governed by Republic of the Marshall Islands law and the Amended and Restated Articles of Incorporation, as amended (the “NNA Articles”), and Amended and Restated Bylaws (the “NNA Bylaws”) of Navios Acquisition. Following the Merger, the rights of holders of Navios Acquisition Common Shares who become unitholders of Navios Partners in the Merger will be governed by the laws of the Republic of the Marshall Islands and the Navios Partners Partnership Agreement, as currently in effect and as will be in effect at the completion of the Merger.

The following is a summary comparison of material differences between the rights of holders of Navios Acquisition Common Shares and the rights of holders of Navios Partners Common Units. This summary is qualified in its entirety by reference to the full text of the Navios Partners Partnership Agreement, the full text of the NNA Articles and NNA Bylaws and the full text of the MIBCA and Republic of the Marshall Islands Limited Partnership Act.

 

Navios Acquisition

  

Navios Partners

Authorized Capital Stock / Units
Navios Acquisition is authorized to issue up to (i) 250,000,000 shares of common stock, par value $0.0001 per share, and (ii) 10,000,000 shares of preferred stock, par value $0.0001 per share.    Navios Partners may issue additional partnership securities from time to time on such terms and conditions as the Navios Partners Board may determine without the approval of any limited partners of Navios Partners, but subject to the approval of the general partner of Navios Partners. (“Navios Partners GP”) in the case where issuances of equity are not reasonably expected to be accretive to equity within twelve months of issuance or which would otherwise have a material adverse impact on Navios Partners GP.
As of September [●], 2021, Navios Acquisition had outstanding [●] Navios Acquisition Common Shares.    As of September [●], 2021, Navios Partners had outstanding (i) [●] Navios Partners Common Units and (ii) [531,995] General Partner Unit[s] (as defined in the Navios Partners Partnership Agreement).
Navios Acquisition Common Shares are traded on the NYSE under the symbol “NNA.”    Navios Partners Common Units are traded on the NYSE under the symbol “NMM.”
The Navios Acquisition Board is authorized to establish one or more series of preferred stock and to determine, with respect to any series of Navios Acquisition preferred stock, the terms and rights of that series, including (i) the designation of the series; (ii) the preferences and relative, participating, option or other special rights, if any, and any qualifications, limitations    The Navios Partners Board is authorized to issue any class or series of partnership securities in Navios Partners and to determine the designations, preferences, rights, powers and duties of such class or series, including (i) the right to share in distributions, (ii) the rights upon dissolution and liquidation, (iii) whether, and the terms and conditions upon

 

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or restrictions of such series; and (iii) the voting rights, if any, of the holders of the series.    which, Navios Partners may or shall be required to redeem such class or series (including sinking fund provisions), (iv) whether such class or series is issued with the privilege of conversion or exchange and, if so, the terms and conditions of such conversion or exchange, (v) the terms and conditions upon which the class or series will be issued, evidenced by certificates and assigned or transferred, (vi) the method for determining the percentage interest as to such class or series and (vii) the voting rights, if any, of the holders of the class or series.
Dividends
Navios Acquisition does not currently pay dividends in respect of its outstanding capital stock.    Navios Partners currently pays a quarterly distribution of $0.05 per Navios Partners Common Unit.
Dividends upon the capital stock of Navios Acquisition may be declared by the Navios Acquisition Board at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock of Navios Acquisition. Before payment of any dividend, there may be set aside out of any funds of Navios Acquisition available for dividends such sum or sums as the Navios Acquisition Board from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of Navios Acquisition, or for such other purpose as the Navios Acquisition Board shall think conducive to the interest of Navios Acquisition.   

Cash available for distribution, as determined by the Navios Partners Board with respect to any quarter, that is deemed to be Operating Surplus (as defined in the Navios Partners Partnership Agreement) is distributed as follows:

 

(a) First, 100% to Navios Partners GP and all holders of Navios Partners Common Units in accordance with their respective ownership percentage, until there has been distributed in respect of each Navios Partners Common Unit then outstanding an amount equal to the $5.25, the Minimum Quarterly Distribution, for such quarter;

 

(b) Second, 100% to Navios Partners GP and all holders of Navios Partners Common Units in accordance with their respective ownership percentage, until there has been distributed in respect of each Navios Partners Common Unit then outstanding an amount equal to the excess of $6.0375, the First Target Distribution, over the Minimum Quarterly Distribution for such quarter;

 

(c) Third, (i) to Navios Partners GP in accordance with its ownership percentage, (ii) 13.0% to the holders of the Navios Partners incentive distribution rights, pro rata, and (iii) to all holders of Navios Partners Common Units, pro rata, a percentage equal to 100% less the sum of the percentages applicable to subclauses (i) and (ii) of this clause (c), until there has been distributed in respect of each Navios Partners Common Unit then outstanding an amount equal to the excess of $6.5625, the Second Target Distribution, over the First Target Distribution for such quarter;

 

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(d) Fourth, (i) to Navios Partners GP in accordance with its ownership percentage, (ii) 23.0% to the holders of the Navios Partners incentive distribution rights, pro rata and (iii) to all holders of Navios Partners Common Units, pro rata, a percentage equal to 100% less the sum of the percentages applicable to subclause (i) and (ii) of this clause (d), until there has been distributed in respect of each Navios Partners Common Unit then outstanding an amount equal to the excess of $7.875, the Third Target Distribution, over the Second Target Distribution for such quarter; and

 

(e) Thereafter, (i) to Navios Partners GP in accordance with its ownership percentage; (ii) 48.0% to the holders of the Navios Partners incentive distribution rights, pro rata; and (iii) to all holders of Navios Partners Common Units, a percentage equal to 100% less the sum of the percentages applicable to subclauses (i) and (ii) of this clause (e); provided, however, that if the Minimum Quarterly Distribution, the First Target Distribution, the Second Target Distribution and the Third Target Distribution have been reduced to zero, the distribution will be made solely in accordance with this clause (e).

 

Cash available for distribution, as determined by the Navios Partners Board with respect to any quarter, that is deemed to be Capital Surplus (as defined in the Navios Partners Partnership Agreement) shall be distributed as follows: 100% to Navios Partners GP and all holders of Navios Partners Common Units in accordance with their respective ownership percentage, until a hypothetical holder of a Navios Partners Common Unit acquired on the Closing Date (as defined in the Navios Partners Partnership Agreement) has received with respect to such Navios Partners Common Unit, during the period since the Closing Date through such date, distributions that are deemed to be Capital Surplus in an aggregate amount equal to the initial Navios Partners Common Unit price. Thereafter, all cash available for distribution shall be distributed as if it were Operating Surplus and shall be distributed in accordance with the foregoing.

Voting Rights
If a quorum is present, and unless otherwise required by law, any question (other than the election of directors) brought before any meeting of shareholders is decided by the vote of the holders of a majority of the shares represented and entitled to vote thereat.    The Navios Partners Partnership Agreement provides that if a quorum is present, the act of limited partners holding outstanding units that in the aggregate represent a majority of the outstanding units entitled to vote and represented in person or by proxy at such

 

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The holders of Navios Acquisition Common Shares are entitled to cast one vote for each share of the capital stock entitled to vote thereat held by such shareholder, unless otherwise provided by the NNA Articles.

   meeting shall be deemed to constitute the act of all limited partners, unless a greater or different percentage is required with respect to such action under the provisions of the Navios Partners Partnership Agreement. The holders of the outstanding Navios Partners Common Units are entitled to one vote for each Navios Partners Common Unit held by a limited partner, except as provided in the Navios Partners Partnership Agreement.
Management; Board of Directors

The NNA Bylaws provide that the business and affairs of the Navios Acquisition are to be managed by or under the direction of the Navios Acquisition Board, except as may be otherwise provided by law or in the Articles of Incorporation of Navios Acquisition.

 

The number of directors of Navios Acquisition which constitute the Navios Acquisition Board may not be less than 1 nor more than 9. The Navios Acquisition Board currently has 8 members, four of whom are independent directors.

  

The Navios Partners Partnership Agreement provides that the management powers over the business and affairs of Navios Partners are vested exclusively in the Navios Partners Board, except as set forth in the Navios Partners Partnership Agreement. Thus, except as expressly provided in the Navios Partners Partnership Agreement, the business and affairs of Navios Partners are managed by or under the direction of the Navios Partners Board.

 

The Navios Partners Partnership Agreement provides that the Navios Partners Board is to consist of, and the Navios Partners Board currently consists of, seven directors, four of whom are elected by the holders of the Navios Partners Common Units (the “elected directors”) and three of whom are appointed by the Navios Partners GP (“appointed directors”). The elected directors, all of whom are currently independent directors, are divided into three classes serving staggered three-year terms.

 

Elected directors are elected by a plurality of the votes of the outstanding Navios Partners Common Units present in person or represented by proxy at a Navios Partners’ annual meeting.

The Navios Acquisition Board is divided into three classes serving three staggered terms.

 

At all meetings of shareholders for the election of directors, a plurality of the votes cast shall be sufficient to elect a director. Each director shall hold office until the next annual meeting at which his or her class stands for election or until such director’s earlier resignation, removal from office, death or incapacity.

  

Each elected director holds office until the next annual meeting at which his or her class stands for election or until such director’s earlier resignation, removal from office, death or incapacity.

 

Each appointed director shall hold office until his or her successor is duly appointed by Navios Partners GP and qualified or until his or her earlier death, resignation or removal.

The entire Navios Acquisition Board or any individual director may be removed from office with or without cause by a majority vote of the holders of the outstanding shares then entitled to vote in an election of directors.    Any and all of the elected directors may be removed at any time, with cause, only by the affirmative vote of a majority of the other members of the Navios Partners Board or at a properly called meeting of the limited partners only by the affirmative vote of the holders of a majority of the outstanding Navios Partners Common Units.

 

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   Any and all of the elected directors may be removed at any time, with cause, only by the affirmative vote of a majority of the other members of the Navios Partners Board or at a properly called meeting of the limited partners only by the affirmative vote of the holders of a majority of the outstanding Navios Partners Common Units.
Quorum and Action by the Board of Directors
At all meetings of the Navios Acquisition Board or any committee thereof, a majority of the entire Navios Acquisition Board or such committee, as the case may be, shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Navios Acquisition Board or any committee thereof.    A majority of the number of members of the Navios Partners Board or any committee thereof then in office shall constitute a quorum for the transaction of business at any meeting of the Navios Partners Board or such committee thereof, and the act of a majority of the members of the Navios Partners Board present at a meeting at which a quorum is present shall be the act of the Navios Partners Board.
Director and Officer and General Partner Limitation on Liability and Indemnification
The NNA Bylaws provide that no Navios Acquisition director or officer shall be personally liable to Navios Acquisition or to any shareholder for monetary damages for breach of fiduciary duty as a director or officer, provided that this provision shall not limit the liability of a director or officer (i) for any breach of the director’s or the officer’s duty of loyalty to Navios Acquisition or its shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law or (iii) for any transaction from which the director or officer derived an improper personal benefit.    The Navios Partners Partnership Agreement provides no general partner, director and officer shall be liable for monetary damages to Navios Partners or any the limited partners o for losses sustained or liabilities incurred as a result of any act or omission of such person unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter in question, such person acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that such person’s conduct was criminal.
The NNA Bylaws provide that Navios Acquisition shall indemnify any director or officer of Navios Acquisition if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of Navios Acquisition, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.    The Navios Partners Partnership Agreement provides that to the fullest extent permitted by law but subject to the limitations expressly provided in the Navios Partners Partnership Agreement, any general partner, director and officer shall be indemnified and held harmless by Navios Partners unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter for which indemnification is sought, such person acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the such conduct was unlawful.
Navios Acquisition shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of Navios Acquisition, or is or was serving at the request of Navios Acquisition as a director, officer, employee or agent of    Navios Partners may purchase and maintain (or reimburse Navios Partners GP or its affiliates for the costs of) insurance, on behalf of the Navios Partners Board and Navios Partners GP, its affiliates and such other persons as the Navios Partners Board shall

 

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another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his or her status as such, whether or not Navios Acquisition would have the power to indemnify him against such liability.    determine, against any liability that may be asserted against, or expense that may be incurred by, such person in connection with Navios Partners’ activities or such person’s activities on behalf of Navios Partners, regardless of whether Navios Partners would have the power to indemnify such person against such liability under the provisions of the Navios Partners Partnership Agreement or law.
Shareholder / Unitholder Meetings
Annual Meetings. The NNA Bylaws provide that the annual meeting of shareholders shall be held on such date and at such time as may be fixed by the Navios Acquisition Board and stated in the notice of the meeting for the purpose of electing directors and for the transaction of only such other business as is properly brought before the meeting in accordance with the NNA Bylaws. Written notice of an annual meeting stating the place, date and hour of the meeting shall be given to each shareholder entitled to vote at such meeting not less than 15 nor more than 60 days before the date of the annual meeting.    Annual Meetings. The Navios Partners Partnership Agreement provides that an annual meeting of limited partners shall be held to elect directors to the Navios Partners Board.

Special Meetings. The NNA Bylaws provide that special meetings of the shareholders, unless otherwise prescribed by statute or by the NNA Articles, may only be called by a majority of the entire Navios Acquisition Board, or the Chief Executive Officer or the Chairman of Navios Acquisition, and shall be called by the Secretary of Navios Acquisition at the request in writing of shareholders owning a majority in amount of the entire capital stock of Navios Acquisition issued and outstanding and entitled to vote.

 

Unless otherwise provided by law, written notice of a special meeting of shareholders, stating the time, place and purpose or purposes thereof, shall be given to each shareholder entitled to vote at such meeting, not less than 15 or more than 60 days before the date fixed for the meeting. Business transacted at any special meeting of shareholders shall be limited to the purposes stated in the notice.

  

Special Meetings. The Navios Partners Partnership Agreement provides that special meetings of the limited partners may be called by Navios Partners GP, the Navios Partners Board or by limited partners owning 20% or more of the outstanding units of the class or classes for which a meeting is proposed. Limited partners shall call a special meeting by delivering to the Navios Partners Board one or more requests in writing stating that the signing limited partners wish to call a special meeting and indicating the general or specific purposes for which the special meeting is to be called, it being understood that the purposes of such special meeting may only be to vote on matters that require the vote of the unitholders pursuant to the Navios Partners Partnership Agreement.

 

A meeting shall be held at a time and place determined by the Navios Partners Board on a date not less than 10 days nor more than 60 days after the mailing of notice of the meeting. Limited partners shall not vote on matters that would cause the limited partners to be deemed to be taking part in the management and control of the business and affairs of Navios Partners so as to jeopardize the limited partners’ limited liability under the Republic of the Marshall Islands Limited Partnership Act or the law of any other jurisdiction in which Navios Partners is qualified to do business.

 

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Quorum of Shareholders / Unitholders
The holders of a majority of the capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the shareholders for the transaction of business, except as otherwise provided by the MIBCA or by NNA Articles.    The holders of 33% of the outstanding units of the class or classes for which a meeting has been called (including outstanding units deemed owned by Navios Partners GP) represented in person or by proxy shall constitute a quorum at a meeting of limited partners of such class or classes unless any such action by the limited partners requires approval by holders of a greater percentage of such units, in which case the quorum shall be such greater percentage.
Shareholder / Unitholder Proposals and Nominations
Nominations of persons for election to the Navios Acquisition Board at a meeting of shareholders may be made at such meeting by or at the direction of the Navios Acquisition Board, by any committee or persons appointed by the Navios Acquisition Board or by any shareholder of Navios Acquisition entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in the NNA Bylaws. To be timely, a shareholder’s notice shall be delivered to or mailed and received at the principal executive offices of Navios Acquisition not less than 60 days nor more than 90 days prior to the meeting; provided, however, that in the event that less than 70 days’ notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder, to be timely, must be received no later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs.    Any limited partner or group of limited partners that beneficially owns 10% or more of the outstanding Navios Partners Common Units shall be entitled to nominate one or more individuals to stand for election as elected directors at an annual meeting by providing written notice thereof to the Navios Partners Board not more than 120 days and not less than 90 days prior to the date of such annual meeting. In the event the date of the annual meeting was not publicly announced by Navios Partners by mail, press release or otherwise more than 100 days prior to the date of such meeting, such notice, to be timely, must be delivered to the Navios Partners Board not later than the close of business on the tenth day following the date on which the date of the annual meeting was announced.
Shareholder / Unitholder Action Without a Meeting
Unless otherwise provided by the NNA Articles, any action required to be taken at any annual or special meeting of shareholders, or any action which may be taken at any annual or special meeting of such shareholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by all of the holders of outstanding shares entitled to vote thereon.    If authorized by the Navios Partners Board, any action that may be taken at a meeting of the limited partners may be taken without a meeting if an approval in writing setting forth the action so taken is signed by limited partners owning not less than the minimum percentage of the outstanding units (including units deemed owned by Navios Partners GP) that would be necessary to authorize or take such action at a meeting at which all the limited partners were present and voted (unless such provision conflicts with any rule, regulation, guideline or requirement of any national securities exchange on which the units are listed or admitted to trading, in which case the rule, regulation, guideline or requirement of such national securities exchange shall govern).

 

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Amendments of Governing Instruments
Amendment of Bylaws. Bylaws may be adopted, amended or repealed by the shareholders entitled to vote thereon at any regular or special meeting or by the Navios Acquisition Board. The fact that such power has been so conferred upon the Navios Acquisition Board shall not divest the shareholders of the power nor limit their power to adopt, amend or repeal Bylaws.   

Amendment of the Navios Partners Partnership Agreement

1.  Amendments by the Navios Partners Board. The Navios Partners Board, without the approval of any limited partner or Navios Partners GP, may amend any provision of the Navios Partners Partnership Agreement to reflect:

 

(a)   a change in the name of Navios Partners, the location of the principal place of business of Navios Partners, the registered agent of Navios Partners or the registered office of Navios Partners;

 

(b)   admission, substitution, withdrawal or removal of partners in accordance with the agreement;

 

(c)   a change that the Navios Partners Board determines to be necessary or appropriate to qualify or continue the qualification of Navios Partners as a limited partnership or a partnership in which the limited partners have limited liability under the laws of The Republic of the Marshall Islands;

 

(d)   a change that the Navios Partners Board determines (i) does not adversely affect the limited partners (including any particular class of partnership interests as compared to other classes of partnership interests) in any material respect, (ii) to be necessary or appropriate to (A) satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any Republic of the Marshall Islands authority (including the Republic of the Marshall Islands Limited Partnership Act) or (B) facilitate the trading of the units or comply with any rule, regulation, guideline or requirement of any national securities exchange on which the units are or will be listed, (iii) to be necessary or appropriate in connection with action taken by the Navios Partners Board pursuant to provisions relating to splits and combinations or (iv) is required to effect the intent expressed in the Navios Partners Registration Statement on Form F-1 or the intent of the provisions of the agreement or is otherwise contemplated by the Navios Partners Partnership Agreement;

 

(e)   a change in the fiscal year or taxable year of Navios Partners and any other changes that the Navios Partners Board determines to be

 

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necessary or appropriate as a result of a change in the fiscal year or taxable year of Navios Partners including, if the Navios Partners Board shall so determine, a change in the definition of “Quarter” and the dates on which distributions are to be made by Navios Partners;

 

(f)   an amendment that is necessary, in the opinion of counsel, to prevent Navios Partners, the members of the Navios Partners Board, or Navios Partners GP or its or their directors, officers, trustees or agents from in any manner being subjected to the provisions of the Investment Company Act of 1940, as amended, the U.S. Investment Advisers Act of 1940, as amended, or “plan asset” regulations adopted under the U.S. Employee Retirement Income Security Act of 1974, as amended, regardless of whether such regulations are substantially similar to plan asset regulations currently applied or proposed by the United States Department of Labor;

 

(g)   an amendment that the Navios Partners Board, and if required by the Navios Partners Partnership Agreement, Navios Partners GP, determines to be necessary or appropriate in connection with the authorization of issuance of any class or series of Navios Partners’ securities;

 

(h)   any amendment expressly permitted in the Navios Partners Partnership Agreement to be made by the Navios Partners Board acting alone;

 

(i) an amendment effected, necessitated or contemplated by a merger agreement approved in accordance with the Navios Partners Partnership Agreement;

 

(j) an amendment that the Navios Partners Board determines to be necessary or appropriate to reflect and account for the formation by Navios Partners of, or investment by Navios Partners in, any corporation, partnership, joint venture, limited liability company or other person, in connection with the conduct by Navios Partners of permitted activities;

 

(k)   a conversion, merger or conveyance pursuant to the terms of the Navios Partners Partnership Agreement; or

 

(l) any other amendments substantially similar to the foregoing.

 

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2.  Amendments requiring approval of the Navios Partners Board and the holders of Navios Partners Common Units. Amendments to the Navios Partners Partnership Agreement may be proposed only by, or with the written consent of, the Navios Partners Board. A proposed amendment shall be effective upon its approval by the Navios Partners Board and the holders of a majority of the outstanding units of Navios Partners, unless a greater or different percentage is required under the Navios Partners Partnership Agreement or by the Republic of the Marshall Islands Limited Partnership Act. Each proposed amendment that requires the approval of the holders of a specified percentage of outstanding units shall be set forth in a writing that contains the text of the proposed amendment.

 

3.  Other Amendments.

 

(a)   No provision of the Navios Partners Partnership Agreement that establishes a percentage of outstanding units (including units deemed owned by Navios Partners GP or its affiliates) required to take any action shall be amended, altered, changed, repealed or rescinded in any respect that would have the effect of reducing such voting percentage unless such amendment is approved by the written consent or the affirmative vote of holders of outstanding units whose aggregate outstanding units constitute not less than the voting requirement sought to be reduced.

 

(b)   No amendment to the Navios Partners Partnership Agreement may (i) enlarge the obligations of any limited partner without its consent, unless such enlargement shall be deemed to have occurred as a result of an amendment approved pursuant to clause (c) below, (ii) enlarge the obligations of, restrict in any way any action by or rights of, or reduce in any way the amounts distributable, reimbursable or otherwise payable to, Navios Partner GP or any of its affiliates without its consent, which consent may be given or withheld at Navios Partners GP’s option, (iii) change Section 12.1(a) of the Navios Partners Partnership Agreement, or (iv) change the term of Navios Partners or, except as set forth in Section 12.1(a) of the Navios Partners Partnership Agreement, give any person the right to dissolve Navios Partners.

 

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(c)   Except the limited partner approval required in the cases of mergers and consolidation, and without limitation of the Navios Partners Board’s authority to adopt amendments to the Navios Partners Partnership Agreement without the approval of any limited partners, any amendment that would have a material adverse effect on the rights or preferences of any class of partnership interests in relation to other classes of partnership interests must be approved by the holders of not less than a majority of the outstanding partnership interests of the class affected.

 

(d)   Notwithstanding any other provision of the Navios Partners Partnership Agreement, except as provided for in the agreement, no amendments shall become effective without the approval of the holders of at least 90% of the outstanding units voting as a single class unless Navios Partners obtains an opinion of counsel to the effect that such amendment will not affect the limited liability of any limited partner under applicable law.

Preemptive Rights
Holders of Navios Acquisition shares do not have preferential or preemptive rights to subscribe to any of Navios Acquisition’s shares or securities convertible or exchangeable into such shares.    No person shall have any preemptive, preferential or other similar right with respect to the issuance of any security of Navios Partners, whether unissued, held in the treasury or hereafter created. Navios Partners GP shall have the right, which it may from time to time assign in whole or in part to any of its affiliates, to purchase any security of Navios Partners from Navios Partners whenever, and on the same terms that, Navios Partners issues such security of Navios Partners to persons other than Navios Partners GP and its affiliates, to the extent necessary to maintain the percentage interests of Navios Partners GP and its affiliates equal to that which existed immediately prior to the issuance of such security of Navios Partners.
Derivative Actions
Under the MIBCA, any Navios Acquisition shareholder may bring an action in Navios Acquisition’s name to procure a judgment in Navios Acquisition’s favor, also known as a derivative action, provided that the shareholder bringing the action is a holder of Navios Acquisition Common Shares both at the time the derivative action is commenced and at the time of the transaction to which the action relates.    Under the Republic of the Marshall Islands Limited Partnership Act, any partner of Navios Partners may bring an action in Navios Partners’ name to procure a judgment in Navios Partners’ favor, also known as a derivative action, provided that the partner bringing the action is a partner of Navios Partners both at the time the derivative action is commenced and at the time of the transaction to which the action relates.

 

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Liquidation
In the event of a liquidation, dissolution or winding up of Navios Acquisition, all property and all cash in excess of that required to discharge liabilities of Navios Acquisition shall be distributed to the holders of Navios Acquisition Common Stock on a pro rata basis.   

In the event of a liquidation, dissolution or winding up of Navios Partners, all property and all cash in excess of that required to discharge liabilities of Navios Partners as provided in the Navios Partners Partnership Agreement shall be distributed as follows:

 

(i) If the average of the daily closing prices for the 20 consecutive trading days of the Navios Partners Common Units (the “Current Market Price”) as of the date three trading days prior to the announcement of the proposed liquidation exceeds the initial unit price, minus all distributions received in respect of such unit:

 

(a) First, (x) to Navios Partners GP in accordance with its ownership percentage and (y) to all the holders of Navios Partners Common Units, pro rata, a percentage equal to 100% less Navios Partners GP’s ownership percentage, until there has been distributed in respect of each Navios Partners Common Unit then outstanding an amount equal to such Current Market Price of a Navios Partners Common Unit; and

 

(b) Thereafter (x) to Navios Partners GP in accordance with its ownership percentage; (y) 48.0% to the holders of the Navios Partners incentive distribution rights, pro rata; and (z) to all holders of Navios Partners Common Units, pro rata, a percentage equal to 100% less the sum of the percentages applicable to subclauses (x) and (y) of this clause (i)(b).

 

(ii) If the Current Market Price of the Navios Partners Common Units as of the date three trading days prior to the announcement of the proposed liquidation is equal to or less than the initial unit price, minus all distributions received in respect of such unit:

 

(a) First, (x) to Navios Partners GP in accordance with its ownership percentage and (y) to all the holders of Navios Partners Common Units, pro rata, a percentage equal to 100% less Navios Partners GP’s ownership percentage, until there has been distributed in respect of each Navios Partners Common Unit then outstanding an amount equal to the initial unit price, minus all distributions received in respect of such unit; and

 

(b) Thereafter, (x) to Navios Partners GP in accordance with its ownership percentage; (y) 48.0% to the holders of the Navios Partners incentive distribution rights, pro rata and (z) to all holders of Navios Partners Common Units, pro rata, a percentage equal to 100% less the sum of the percentages applicable to subclauses (x) and (y) of this clause (ii)(b).

 

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ENFORCEABILITY OF NAVIOS PARTNERS CIVIL LIABILITIES AND INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

Navios Partners is organized under the laws of the Republic of the Marshall Islands as a limited partnership. Navios Partners’ general partner is organized under the laws of the Republic of the Marshall Islands as a limited liability company. The Republic of the Marshall Islands has a less developed body of securities laws as compared to the United States and provides protections for investors to a significantly lesser extent.

Most of Navios Partners’ directors and the directors and officers of Navios Partners’ general partner and those of Navios Partners’ subsidiaries are residents of countries other than the United States. Substantially all of Navios Partners’ and its subsidiaries’ assets and a substantial portion of the assets of Navios Partners’ directors and the directors and officers of Navios Partners’ general partner are located outside the United States. As a result, it may be difficult or impossible for United States investors to effect service of process within the United States upon Navios Partners, its directors, its general partner, its subsidiaries or the directors and officers of its general partner or to realize against Navios Partners or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. However, Navios Partners has expressly submitted to the jurisdiction of the U.S. federal and New York state courts sitting in the City of New York for the purpose of any suit, action or proceeding arising under the securities laws of the United States or any state in the United States, and Navios Partners has appointed the Trust Company of the Marshall Islands, Inc., Trust Company Complex, Ajeltake Island, P.O. Box 1405, Majuro, Marshall Islands MH96960, to accept service of process on its behalf in any such action.

Reeder & Simpson P.C., Navios Partners’ counsel as to Republic of the Marshall Islands law, has advised Navios Partners that there is uncertainty as to whether the courts of the Republic of the Marshall Islands would (1) recognize or enforce against Navios Partners, its general partner or its general partner’s directors or officers judgments of courts of the United States based on civil liability provisions of applicable U.S. federal and state securities laws or (2) impose liabilities against Navios Partners, its directors, its general partner or its general partner’s directors and officers in original actions brought in the Republic of the Marshall Islands, based on these laws.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling Navios Partners pursuant to the foregoing provisions, Navios Partners has been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Navios Partners has obtained directors’ and officers’ liability insurance against any liability asserted against such person incurred in the capacity of director or officer or arising out of such status, whether or not Navios Partners would have the power to indemnify such person.

 

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LEGAL MATTERS

The validity of the Navios Partners Common Units offered hereby and other matters relating to Republic of the Marshall Islands and U.S. law will be passed upon for Navios Partners by Reeder & Simpson P.C., counsel to Navios Partners.

 

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EXPERTS

The financial statements of Navios Martitime Partners L.P. and management’s assessment of the effectiveness of internal control over financial reporting (which is included in Management’s Annual Report on Internal Control over Financial Reporting) incorporated in this Prospectus by reference to the Annual Report on Form 20-F of Navios Maritime Partners L.P. for the year ended December 31, 2020 have been so incorporated in reliance on the report of PricewaterhouseCoopers S.A., an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

The consolidated financial statements of Navios Maritime Acquisition Corporation at December 31, 2020 and 2019 and for each of the two years in the period ended December 31, 2020 appearing in Navios Maritime Acquisition Corporation’s Annual Report (Form 20-F) for the year ended December 31, 2020 and the effectiveness of Navios Maritime Acquisition Corporation’s internal control over financial reporting as of December 31, 2020 have been audited by Ernst & Young (Hellas) Certified Auditors Accountants S.A., independent registered public accounting firm, as set forth in their reports thereon (which contain an explanatory paragraph describing conditions that raise substantial doubt about Navios Maritime Acquisition Corporation’s ability to continue as a going concern as described in Note 2 to the consolidated financial statements), incorporated herein by reference in reliance upon such reports given on the authority of such firm as experts in accounting and auditing. The address of Ernst & Young (Hellas) Certified Auditors Accountants S.A. is 8B Chimarras Street, 15125 Maroussi, Greece.

The financial statements of Navios Maritime Acquisition Corporation for the year ended December 31, 2018 incorporated in this Prospectus by reference to the Annual Report on Form 20-F of Navios Maritime Acquisition Corporation for the year ended December 31, 2020 have been so incorporated in reliance on the report of PricewaterhouseCoopers S.A., an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

The consolidated financial statements of Navios Maritime Containers LP at December 31, 2020 and 2019 and for each of the three years in the period ended December 31, 2020 appearing in Navios Maritime Partners LP’s Annual Report (Form 20-F) for the year ended December 31, 2020 have been audited by Ernst & Young (Hellas) Certified Auditors Accountants S.A., independent registered public accounting firm, as set forth in their report thereon, included therein in Exhibit 15.3, and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

In April 2021, the audit committee of Navios Maritime Partners LP engaged Ernst & Young (Hellas) Certified Auditors Accountants S.A. in Athens, Greece as Navios Maritime Partners LP’s independent registered public accounting firm for the fiscal year ending December 31, 2021. Please refer to the relevant disclosure reported under the heading “Change in Registrant’s Certifying Accountant” of Navios Maritime Partners LP’s Report on Form 6-K, dated May 18, 2021, filed with the SEC on May 18, 2021 and to the accompanying Exhibit 16.1 of such Report on Form 6-K incorporated herein by reference.

 

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WHERE YOU CAN FIND MORE INFORMATION

Each of Navios Partners and Navios Acquisition files annual reports with, and furnishes other reports and information to, the SEC. The SEC maintains an internet website at http://www.sec.gov that contains the reports and other information Navios Partners and Navios Acquisition electronically file with or furnish to the SEC. The information that Navios Partners and Navios Acquisition file with or furnish to the SEC are available for inspection on the SEC’s website free of charge as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. The address of the SEC’s website is provided solely for the information of shareholders and is not intended to be an active link. Please visit the website or call the SEC at 1-800-SEC-0330 for further information. Navios Partners Common Units are listed on the NYSE under the trading symbol “NMM.” Navios Acquisition Common Shares are listed on the NYSE under the trading symbol “NNA.”

Navios Partners has filed with the SEC a registration statement on Form F-4 under the Securities Act. This proxy statement/prospectus forms a part of the registration statement, as permitted by SEC rules and regulations. The registration statement registers the Navios Partners Common Units to be issued to holders of Navios Acquisition Common Shares (other than Excluded Shares) in connection with the Merger. The registration statement, including the attached exhibits, contains additional relevant information about Navios Partners and Navios Partners Common Units. As allowed by SEC rules, this proxy statement/prospectus does not contain all the information you can find in the registration statement on Form F-4 filed by Navios Partners and the exhibits to the registration statement, and the statements in this proxy statement/prospectus about the contents of any contracts or other documents Navios Partners has filed as an exhibit are not necessarily complete. You should refer to the copy of each contract or other document Navios Partners has filed or incorporated by reference as an exhibit to the registration statement for complete information.

Navios Partners is a “foreign private issuer” and, under the rules adopted under the Exchange Act, is exempt from certain of the requirements of the Exchange Act, including the proxy and information provisions of Section 14 of the Exchange Act and the reporting and liability provisions applicable to officers, directors and significant securityholders under Section 16 of the Exchange Act. Navios Partners files annual reports on Form 20-F with the SEC and also furnishes reports on Form 6-K to the SEC.

Information Incorporated by Reference

The SEC allows Navios Partners and Navios Acquisition to “incorporate by reference” into this proxy statement/prospectus information that Navios Partners and Navios Acquisition, respectively, files with the SEC. This means that Navios Partners and Navios Acquisition can disclose important information to you without actually including the specific information in this proxy statement/prospectus by referring you to other documents filed separately with the SEC. The information incorporated by reference is an important part of this proxy statement/prospectus. Information that Navios Partners and Navios Acquisition later provides to the SEC prior to the date of the Special Meeting, as it may be adjourned, and which is deemed to be “filed” with the SEC, will also be considered to be part of this proxy statement/prospectus and will automatically update and supersede previously filed information, including information contained in this document.

Navios Partners incorporates by reference into this proxy statement/prospectus the documents listed below:

 

   

Navios Partners’ Annual Report on Form 20-F for the fiscal year ended December 31, 2020, filed with the SEC on March 31, 2021;

 

   

Navios Partners’ reports on Form 6-K filed with the SEC on January 4, 2021, March 24, 2021, April  1, 2021, April 9, 2021, May  18, 2021, May 21, 2021, August  26, 2021 (at 4:31 P.M. Eastern time) and August 26, 2021 (at 4:46 P.M. Eastern time); and

 

   

The description of the Navios Partners Common Units contained in Navios Partners’ Registration Statement on Form 8-A, filed with the SEC on November 7, 2007, including any subsequent amendments or reports filed for the purpose of updating such description.

 

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Navios Acquisition incorporates by reference into this proxy statement/prospectus the documents listed below:

 

   

Navios Acquisition’s Annual Report on Form 20-F for the year ended December 31, 2020, filed with the SEC on April 28, 2021;

 

   

Navios Acquisition’s reports on Form 6-K, filed with the SEC on June 14, 2021, August  26, 2021 (at 16:08 P.M. Eastern time), and August 26, 2021 (at 4:18 P.M. Eastern time); and

 

   

The description of the Navios Acquisition Common Shares contained in Navios Acquisition’s Registration Statement on Form 8-A, filed with the SEC on June 19, 2008, and including any subsequent amendments or reports filed for the purpose of updating such description.

Navios Partners and Navios Acquisition are also incorporating by reference any document that is filed by Navios Partners or Navios Acquisition after the date of the filing of the initial registration statement of which this proxy statement/prospectus forms a part and prior to the effectiveness of that registration statement, any future filings they make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, all subsequent annual reports on Form 20-F that they file with the SEC and certain reports on Form 6-K that they furnish to the SEC after the date of this proxy statement/prospectus (if they state that they are incorporated by reference into the registration statement of which this proxy statement/prospectus forms a part) until prior to the date of the Special Meeting, as it may be adjourned. In all cases, you should rely on the later information over different information included in this proxy statement/prospectus or any prospectus supplement.

Any statement contained herein or in a document incorporated by reference herein shall be deemed to be modified or superseded for all purposes to the extent that a statement contained in this proxy statement/prospectus, or in any other subsequently filed document that is also incorporated or deemed to be incorporated by reference, modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this proxy statement/prospectus.

You should rely only on the information incorporated by reference or provided in this proxy statement/prospectus or any prospectus supplement. Navios Partners and Navios Acquisition have not authorized anyone else to provide you with any information. Navios Partners and Navios Acquisition are not making an offer to sell securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information incorporated by reference or provided in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front of each document.

You may request a free copy of the above-mentioned filings or any subsequent filing Navios Partners incorporates by reference to this proxy statement/prospectus by writing or telephoning Navios Partners at the following address:

Vasiliki (Villy) Papaefthymiou

Secretary

Navios Maritime Partners L.P.

7, Avenue de Grande Bretagne, Office 11B2

Monte Carlo MC 98000 Monaco

(011) + (377) 9798-2140

 

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You may request a free copy of the above-mentioned filings or any subsequent filing Navios Acquisition incorporates by reference to this proxy statement/prospectus by writing or telephoning Navios Acquisition at the following address:

Vasiliki (Villy) Papaefthymiou

Secretary

Navios Maritime Acquisition Corporation

Strathvale House, 90 N Church Street

Grand Cayman

KY1-1104 Cayman Islands

+1 345 232 3066

If you would like to request documents, please do so by [], 2021, (which is five (5) business days before the date of the Special Meeting) in order to receive them before the Special Meeting.

 

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Annex A

AGREEMENT AND PLAN OF MERGER

dated as of

August 25, 2021

by and among

NAVIOS MARITIME PARTNERS L.P.,

NAVIOS ACQUISITION MERGER SUB. INC.

and

NAVIOS MARITIME ACQUISITION CORP.


Table of Contents

TABLE OF CONTENTS

 

         Page  
ARTICLE I.

 

DEFINITIONS

 

SECTION 1.1

  Definitions      5  

SECTION 1.2

  Rules of Construction      13  
ARTICLE II.

 

TRANSACTIONS

 

SECTION 2.1

  Initial Transactions      14  

SECTION 2.2

  Closing of the Merger      14  

SECTION 2.3

  Exchange of NNA Common Stock      16  

SECTION 2.4

  Plan of Reorganization      18  
ARTICLE III.

 

REPRESENTATIONS AND WARRANTIES OF NNA

 

SECTION 3.1

  Organization and Existence      18  

SECTION 3.2

  Authority and Approval      19  

SECTION 3.3

  No Conflict; Consents; Voting Requirements      19  

SECTION 3.4

  Capitalization      20  

SECTION 3.5

  SEC Documents; Internal Controls      20  

SECTION 3.6

  Financial Statements; Undisclosed Liabilities      21  

SECTION 3.7

  Litigation; Laws and Regulations      21  

SECTION 3.8

  No Adverse Changes      22  

SECTION 3.9

  Taxes      22  

SECTION 3.10

  Licenses; Permits      23  

SECTION 3.11

  Contracts      23  

SECTION 3.12

  Insurance      24  

SECTION 3.13

  Condition of Assets      24  

SECTION 3.14

  Investment Company Act      24  

SECTION 3.15

  Brokerage Arrangements      24  

SECTION 3.16

  Opinion of Financial Advisor      24  

SECTION 3.17

  Information Supplied      24  

SECTION 3.18

  Waivers and Disclaimers      24  
ARTICLE IV.

 

REPRESENTATIONS AND WARRANTIES OF PARENT

 

SECTION 4.1

  Organization and Existence      25  

SECTION 4.2

  Authority and Approval      25  

SECTION 4.3

  No Conflict; Consents      26  

SECTION 4.4

  Capitalization      26  

SECTION 4.5

  SEC Documents; Internal Controls; Investment Representations      27  

SECTION 4.6

  Financial Statements; Undisclosed Liabilities      28  

SECTION 4.7

  Litigation; Laws and Regulations      28  

SECTION 4.8

  No Adverse Changes      29  

SECTION 4.9

  Taxes      29  

SECTION 4.10

  Licenses; Permits      30  

SECTION 4.11

  Contracts      30  

SECTION 4.12

  Insurance      31  

SECTION 4.13

  Condition of Assets      31  

SECTION 4.14

  Investment Company Act      31  

 

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SECTION 4.15

  Brokerage Arrangements      31  

SECTION 4.16

  Opinion of Financial Advisor      31  

SECTION 4.17

  Information Supplied      31  

SECTION 4.18

  Waivers and Disclaimers      31  
ARTICLE V.

 

ADDITIONAL AGREEMENTS, COVENANTS, RIGHTS AND OBLIGATIONS

 

SECTION 5.1

  Preparation of Certain Filings; Meeting of Holders of NNA Common Stock; Commitment to Vote      32  

SECTION 5.2

  Conduct of Parties      33  

SECTION 5.3

  No Solicitation; Recommendation of Merger      35  

SECTION 5.4

  Commercially Reasonable Efforts; Further Assurances      37  

SECTION 5.5

  Public Announcement      37  

SECTION 5.6

  Expenses      38  

SECTION 5.7

  Regulatory Issues      38  

SECTION 5.8

  Tax Opinion      38  

SECTION 5.9

  D&O Insurance      39  

SECTION 5.10

  Litigation      40  

SECTION 5.11

  Special Committee      40  

SECTION 5.12

  Stock Exchange Listing; Delisting and Deregistration      40  
ARTICLE VI.

 

CONDITIONS TO CLOSING

 

SECTION 6.1

  Conditions to Each Party’s Obligations      40  

SECTION 6.2

  Conditions to the Parent Parties’ Obligations      41  

SECTION 6.3

  Conditions to NNA’s Obligations      41  

SECTION 6.4

  Frustration of Conditions      42  
ARTICLE VII.

 

TERMINATION

 

SECTION 7.1

  Termination by Mutual Consent      42  

SECTION 7.2

  Termination by NNA or Parent      42  

SECTION 7.3

  Termination by NNA      42  

SECTION 7.4

  Termination by Parent      42  

SECTION 7.5

  Expenses      43  

SECTION 7.6

  Effect of Certain Terminations      43  

SECTION 7.7

  Survival      43  

SECTION 7.8

  Enforcement of this Agreement      43  

SECTION 7.9

  No Waiver Relating to Claims for Fraud/Willful Misconduct      43  
ARTICLE VIII.

 

MISCELLANEOUS

 

SECTION 8.1

  Notices      44  

SECTION 8.2

  Governing Law; Jurisdiction; Waiver of Jury Trial      45  

SECTION 8.3

  Entire Agreement; Amendments, Consents and Waivers      45  

SECTION 8.4

  Binding Effect; No Third-Party Beneficiaries; and Assignment      46  

SECTION 8.5

  Severability      46  

SECTION 8.6

  Counterparts      46  

EXHIBIT A -

  Form of Amended NNA Articles of Incorporation   

 

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AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of August 25, 2021 (the “Execution Date”), is entered into by and among Navios Maritime Partners L.P., a Republic of the Marshall Islands limited partnership (“Parent”), Navios Acquisition Merger Sub. Inc., a Republic of the Marshall Islands corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and Navios Maritime Acquisition Corp., a Republic of the Marshall Islands corporation (“NNA”).

WITNESSETH:

WHEREAS, Parent desires to purchase from NNA, and NNA desires to issue and sell to Parent, simultaneously, or substantially simultaneously, herewith, 44,117,647 newly issued shares of NNA Common Stock at a price of $3.40 per share in cash and $150,000,000 in the aggregate in a private transaction exempt from registration under Section 4(a)(2) of the Securities Act (the “NNA Equity Issuance”);

WHEREAS, simultaneously, or substantially simultaneously, herewith, NNA and/or certain of its Subsidiaries are entering into Loan Agreements with certain lenders (together, the “Loan Agreement”) pursuant to which NNA and its Subsidiaries are borrowing from such lenders up to $291,385,000, in the aggregate (the “NNA Debt Financing”);

WHEREAS, simultaneously, or substantially simultaneously, herewith, NNA is canceling all of the NNA Notes owned by NNA and is using net proceeds of the NNA Equity Issuance and the NNA Debt Financing to satisfy and discharge in full the NNA Notes Indenture;

WHEREAS, at a meeting duly called and held, the NNA Special Committee, by unanimous vote, in good faith (a) determined that this Agreement and the transactions contemplated hereby are in the best interests of NNA and the Holders of NNA Public Stock, (b) approved this Agreement and the Transactions, (c) resolved to recommend to the NNA Board the approval of this Agreement and the consummation of the Transactions (such recommendation, the “NNA Special Committee Recommendation”), and (d) resolved to recommend, and to direct the NNA Board to recommend, the approval of this Agreement and the Merger, by the Holders of shares of NNA Common Stock;

WHEREAS, at a meeting duly called and held, upon the receipt of the recommendation of the NNA Special Committee, the NNA Board, by unanimous vote, (a) determined that this Agreement and the Transactions are in the best interests of NNA and the Holders of NNA Public Stock, (b) approved this Agreement and the Transactions and (c) directed that this Agreement be submitted to a vote of the Holders of shares of NNA Common Stock at the NNA Stockholders Meeting and recommended the approval of this Agreement and the Merger by the Holders of shares of NNA Common Stock (such recommendation, the “NNA Board Recommendation”);

WHEREAS, at a meeting duly called and held, the Parent Conflicts Committee, by unanimous vote, (a) determined that this Agreement and the Transactions are in the best interests of Parent and the Holders of common units of Parent (“Parent Common Units”) (excluding the general partner of Parent and its Affiliates), and (b) granted a Special Approval (as defined in the Parent Partnership Agreement) of this Agreement and the Transactions;

WHEREAS, at a meeting duly called and held, the Board of Directors of Parent, by unanimous vote, (a) determined that this Agreement and the Transactions are in the best interests of Parent and the Holders of the Parent Common Units, and (b) approved and declared advisable this Agreement and the Transactions to which the Parent Parties are party, including issuance of Parent Common Units in connection with the Merger (the “Parent Equity Issuance”);

 

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WHEREAS, Parent, as the sole stockholder of Merger Sub, has approved this Agreement and approved the execution, delivery and performance of this Agreement and the Merger on the terms and subject to the conditions set forth in this Agreement; and

WHEREAS, for U.S. federal income Tax purposes, the parties intend that the Merger (either alone or together with Second Merger, if applicable) qualify as a “reorganization” within the meaning of Section 368(a) of the Code and that Section 367(a) of the Code not cause Parent to be treated as other than a corporation with respect to any transfer of property thereto in connection with the Merger (other than, in certain circumstances, a transfer by a holder of NNA Common Stock that is a United States person and that holds 5% or more by vote or by value (within the meaning of Treasury Regulations Section 1.367(a)-3(b)(1)(i)) of Parent immediately following the Merger) (the “Intended Tax Treatment”).

NOW, THEREFORE, in consideration of the premises and the respective representations, warranties, covenants, agreements and conditions contained herein, the parties hereto agree as follows:

ARTICLE I.

DEFINITIONS

SECTION 1.1 Definitions. In this Agreement, unless the context otherwise requires, the following terms shall have the following meanings respectively:

Affiliate” has the meaning set forth in Rule 405 of the rules and regulations under the Securities Act, unless otherwise expressly stated herein; provided, however, that prior to the Closing (i) with respect to the Parent Group Entities, the term “Affiliate” shall exclude each of the NNA Group Entities, and (ii) with respect to the NNA Group Entities, the term “Affiliate” shall exclude each of the Parent Group Entities.

Agreement” has the meaning set forth in the Preamble.

Amended NNA Articles of Incorporation” means the Amended and Restated Articles of Incorporation of NNA, as amended, supplemented or restated from time to time.

Book-Entry NNA Common Stock” has the meaning set forth in Section 2.2(c)(ii).

Business Day” means any day on which commercial banks are generally open for business in New York, New York other than a Saturday, a Sunday or a day observed as a holiday in New York, New York under the Laws of the State of New York or the federal Laws of the United States of America.

Certificate of Merger” has the meaning set forth in Section 2.2(b).

Closing” has the meaning set forth in Section 2.2(a).

Closing Date” has the meaning set forth in Section 2.2(a).

Code” means the Internal Revenue Code of 1986, as amended.

COVID-19” means SARS-CoV-2 or COVID-19, and any evolutions, variants or mutations thereof or related or associated epidemics, pandemic or disease outbreaks.

D&O Insurance” has the meaning set forth in Section 5.9(b).

Effective Time” has the meaning set forth in Section 2.2(b).

 

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Equity Issuance Shares” has the meaning set forth in Section 2.1(a).

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

Exchange Agent” has the meaning set forth in Section 2.3(a).

Exchange Fund” has the meaning set forth in Section 2.3(a).

Exchange Ratio” has the meaning set forth in Section 2.2(c)(i).

Execution Date” has the meaning set forth in the Preamble.

GAAP” has the meaning set forth in Section 1.2.

Governing Documents” means, with respect to any Person, the certificate or articles of incorporation or formation, bylaws, articles of organization, limited liability company agreement, partnership agreement, formation agreement, joint venture agreement, operating agreement, unanimous equityholder agreement or declaration or other similar governing documents of such Person.

Governmental Entity” means any federal, state, tribal, provincial, municipal, foreign or other government, governmental court, department, commission, board, bureau, regulatory or administrative agency or instrumentality.

Holders” means, when used with reference to the Parent Common Units or the NNA Common Stock, the holders of such units of stock, as applicable, shown from time to time in the registers maintained by or on behalf of Parent or NNA, respectively.

Indenture Co-Issuers” has the meaning set forth in the definition of “NNA Notes Indenture.

Intended Tax Treatment” has the meaning set forth in the Preamble.

Latest NNA Quarter 6-K” has the meaning set forth in Section 3.6(a).

Latest Parent Quarter 6-K” has the meaning set forth in Section 4.6(a).

Laws” means all statutes, regulations, codes, tariffs, ordinances, decisions, administrative interpretations, writs, injunctions, stipulations, statutory rules, orders, judgments, decrees and terms and conditions of any grant of approval, permission, authority, permit or license of any court, Governmental Entity, statutory body or self-regulatory authority (including the NYSE).

Letter of Transmittal” has the meaning set forth in Section 2.3(b).

Liens” means any mortgage, restriction (including restrictions on transfer), deed of trust, lien, security interest, preemptive right, option, right of first offer or refusal, lease or sublease, claim, pledge, conditional sales contract, charge, encroachment or encumbrance.

Marshall Islands Business Corporations Act” means the Business Corporation Act of the Associations Law of The Republic of the Marshall Islands, as amended, supplemented or restated from time to time, and any successor to such statute.

Merger” means the merger of Merger Sub with and into NNA, with NNA as the sole surviving entity.

 

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Merger Consideration” has the meaning set forth in Section 2.2(c)(i).

Merger Sub” has the meaning set forth in the Preamble.

Merger Tax Opinion” has the meaning set forth in Section 5.8.

Newco” has the meaning set forth in Section 5.8(b).

NNA” has the meaning set forth in the Preamble.

NNA 20-F” has the meaning set forth in Section 3.6(a).

NNA Adverse Recommendation Change” has the meaning set forth in Section 5.3(a).

NNA Alternative Proposal” means any inquiry, proposal or offer from any Person or “group” (as defined in Section 13(d) of the Exchange Act), relating to any (i) direct or indirect acquisition (whether in a single transaction or a series of related transactions), outside of the ordinary course of business, of assets of NNA and its Subsidiaries (including securities of Subsidiaries) equal to 20% or more of NNA’s consolidated assets or to which 20% or more of NNA’s revenues or earnings on a consolidated basis are attributable, (ii) direct or indirect acquisition (whether in a single transaction or a series of related transactions) of beneficial ownership (within the meaning of Section 13 of the Exchange Act) of 20% or more of the outstanding equity securities of NNA, (iii) tender offer or exchange offer that if consummated would result in any Person or “group” (as defined in Section 13(d) of the Exchange Act) beneficially owning 20% or more of the outstanding equity securities of NNA or (iv) merger, consolidation, unit exchange, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction (whether in a single transaction or a series of related transactions) involving NNA which is structured to permit such Person or group to acquire beneficial ownership of 20% or more of the corporation’s consolidated assets or outstanding equity interests; in each case, other than the transactions contemplated by this Agreement.

NNA Board” means the Board of Directors of NNA.

NNA Board Recommendation” has the meaning set forth in the Preamble.

NNA Certificate” has the meaning set forth in Section 2.2(c)(ii).

NNA Changed Circumstance” means a material event, circumstance, effect, condition, change or development, in each case that arises or occurs after the date of this Agreement and was not, prior to the date of this Agreement, known to or reasonably foreseeable by the NNA Special Committee and did not result from or arise out of the announcement or pendency of, or any actions required to be taken by (or to be refrained from being taken by) NNA pursuant to this Agreement; provided, however, that in no event shall the following events, circumstances, or changes in circumstances constitute an NNA Changed Circumstance: (i) any event, fact, development or occurrence that involves or relates to an NNA Alternative Proposal or any inquiry or communications or matters relating thereto, (ii) any change in the price, or change in trading volume, of the shares of NNA Common Stock, (iii) the fact that NNA meets or exceeds internal or published projections, budgets, forecasts or estimates of revenues, earnings or other financial results for any period (provided, however, that the exception in this clause (iii) shall not apply to the underlying causes giving rise to or contributing to such change or prevent any of such underlying causes from being taken into account in determining whether an NNA Changed Circumstance has occurred), (iv) the NNA Equity Issuance, the NNA Debt Financing, the Working Capital Revolving Loan Facility, the NNA Notes Cancellation and Discharge or the NSH Loan Amendment, or (v) any change in the price, or change in trading volume, of the Parent Common Units.

NNA Common Stock” means the Common Stock, par value $0.0001 per share, of NNA.

 

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NNA D&O Indemnified Parties” means (a) any Person (together with such Person’s heirs, executors and administrators) who is or was, or at any time prior to the Effective Time becomes, an officer or director of any NNA Group Entity and (b) any Person (together with such Person’s heirs, executors and administrators) who is or was serving, or at any time prior to the Effective Time serves, at the request of any NNA Group Entity as an officer, director, member, partner, agent, fiduciary or trustee of another Person; provided that a Person shall not be an NNA D&O Indemnified Party by reason of providing, on a fee-for-services basis, trustee, fiduciary or custodial services.

NNA Debt Financing” has the meaning set forth in the Preamble.

NNA Equity Issuance” has the meaning set forth in the Preamble.

NNA Expenses” means an amount in cash equal to the reasonably documented out-of-pocket expenses (including all fees and expenses of counsel, accountants, investment bankers, experts and consultants) incurred by the NNA Group Entities in connection with this Agreement and the transactions contemplated hereby up to a maximum amount of $1,000,000.

NNA Fairness Opinion” has the meaning set forth in Section 3.16.

NNA Financial Statements” has the meaning set forth in Section 3.6(a).

NNA Group Entities” means NNA and the NNA Subsidiaries.

NNA Material Adverse Effect” means any change, effect, event or occurrence that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on or a material adverse change in (i) the business, assets, liabilities, properties, condition (financial or otherwise) or results of operations of the NNA Group Entities, taken as a whole; provided, however, that any adverse changes, effects, events or occurrences resulting from or due to any of the following shall be disregarded in determining whether there has been an NNA Material Adverse Effect: (a) changes, effects, events or occurrences affecting the markets or geographic locations in which the NNA Group Entities operate, (b) changes, effects, events or occurrences affecting the United States or global economic conditions or financial, credit, debit, securities or other capital markets in general, (c) any outbreak of, acts of or escalation of hostilities, terrorism, war or other similar national emergency, including any event, fact, condition or circumstance resulting from COVID-19 or the worsening thereof, (d) the announcement or pendency of this Agreement or the transactions contemplated hereby, (e) changes in any Laws applicable to NNA or any of the NNA Subsidiaries or in accounting regulations or principles or the interpretation thereof that materially affects this Agreement or the transactions contemplated hereby, (f) NNA taking any action required or contemplated by this Agreement, (g) any change in the market price or trading volume of the shares of NNA Common Stock (it being understood and agreed that the foregoing shall not preclude any other party to this Agreement from asserting that any facts or occurrences giving rise to or contributing to such change that are not otherwise excluded from the definition of NNA Material Adverse Effect should be deemed to constitute, or be taken into account in determining whether there has been, or would reasonably be expected to be, an NNA Material Adverse Effect) (h) changes, effects, events or occurrences generally affecting the prices of oil, natural gas, natural gas liquids and other similar commodities, or (i) any failure of NNA to meet any internal or external projections, forecasts or estimates of revenues, earnings or other financial or operating metrics for any period (it being understood and agreed that the foregoing shall not preclude any other party to this Agreement from asserting that any facts or occurrences giving rise to or contributing to such change that are not otherwise excluded from the definition of NNA Material Adverse Effect should be deemed to constitute, or be taken into account in determining whether there has been, or would reasonably be expected to be, an NNA Material Adverse Effect); provided that, in the case of clauses (a), (b), (c), (e) and (h) the adverse impact on the NNA Group Entities, taken as a whole, is not materially disproportionate to the adverse impact on similarly situated parties, or (ii) the ability of NNA to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement.

 

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NNA Material Contract” has the meaning set forth in Section 3.11(a).

NNA Notes” means the 8.125% First Priority Ship Mortgage Notes due 2021 issued by Indenture Co-Issuers pursuant to the NNA Notes Indenture.

NNA Notes Cancellation and Discharge” means (i) the delivery by NNA and its Subsidiaries of all of the NNA Notes held by the foregoing for cancellation as provided for in Section 2.11 of the NNA Notes Indenture and (ii) the satisfaction and discharge by the Indenture Co-Issuers of their obligations under the NNA Notes and the NNA Notes Indenture and the obligations of the Guarantors under the Note Guarantees (each as defined in the NNA Notes Indenture) and the NNA Notes Indenture pursuant to Article Eight of the NNA Notes Indenture and the termination and release of the Security Interests (as defined in the NNA Notes Indenture) pursuant to Section 11.11 of the NNA Notes Indenture by NNA irrevocably depositing with the trustee under the NNA Notes Indenture as trust funds in trust for the benefit of the holders of such NNA Notes an amount of cash sufficient to pay and discharge the entire indebtedness on the NNA Notes not delivered to the trustee for cancellation for principal, premium and accrued interest, if any, thereunder to the Redemption Date (as defined in the NNA Notes Indenture) in respect of a redemption of the outstanding NNA Notes and the Indenture Co-Issuers delivering, or causing to be delivered, to the trustee under the NNA Notes Indenture all necessary Officer’s Certificates and Opinion of Counsel (both as defined in the NNA Notes Indenture) to effect the foregoing.

NNA Notes Indenture” means the Indenture, dated as of November 13, 2013, among NNA and Navios Acquisition Finance (US) Inc., a wholly owned Subsidiary of NNA (together, the “Indenture Co-Issuers”), each of the guarantors thereunder and the trustee and collateral trustee thereunder, as such indenture shall have been supplemented from time to time.

NNA Proxy Statement” has the meaning set forth in Section 5.1(a).

NNA Public Stock” means the outstanding shares of NNA Common Stock, other than the shares of NNA Common Stock held directly or indirectly by the Parent Group Entities (including the shares of NNA Common Stock issued to Parent in connection with the NNA Equity Issuance), by the NNA Group Entities or by NSH or any of its Affiliates (including the shares of NNA Common Stock issued to NSH in connection with the NSH Equity Issuance).

NNA Recommendation Change Notice” has the meaning set forth in Section 5.3(d)(ii)(A).

NNA Recommendation Change Notice Period” has the meaning set forth in Section 5.3(d)(ii)(B).

NNA SEC Reports” has the meaning set forth in Section 3.5(a).

NNA Special Committee” means the special committee consisting of independent directors of the NNA Board.

NNA Special Committee Recommendation” has the meaning set forth in the Preamble.

NNA Subsidiaries” means the entities that are partially or wholly owned, directly or indirectly, by NNA.

NNA Superior Proposal” means a bona fide unsolicited written NNA Alternative Proposal (except that references to “20%” within the definition of “NNA Alternative Proposal” shall be replaced by “50%”), obtained after the date of this Agreement and not in breach of Section 5.3 (other than an immaterial breach), which is on terms and conditions which the NNA Special Committee determines in good faith to be (i) reasonably capable of being consummated in accordance with its terms, taking into account legal, regulatory, financial, financing and timing aspects of the proposal, and (ii) if consummated, more favorable to the Holders of shares of NNA Common Stock (in their capacity as Holders of shares of NNA Common Stock) from a financial point of view

 

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than the transactions contemplated hereby, taking into account at the time of determination any changes to the terms of this Agreement that as of that time had been committed to by Parent in writing.

NNA Superior Proposal Notice” has the meaning set forth in Section 5.3(d)(i)(C).

NNA Superior Proposal Notice Period” has the meaning set forth in Section 5.3(d)(i)(D).

NNA Stockholders Approval” has the meaning set forth in Section 3.3(c).

NNA Stockholders Meeting” has the meaning set forth in Section 5.1(c).

Notice” has the meaning set forth in Section 8.1.

NSH” means Navios Shipmanagement Holdings Corporation.

NSH Equity Issuance” means the issuance of 8,823,529 shares of NNA Common Stock to NSH pursuant to the NSH Loan Amendment.

NSH Loan Amendment” means the Amendment No. 1 to the Loan Agreement, dated March 19, 2021, between NNA and NSH being entered into simultaneously herewith.

NYSE” means the New York Stock Exchange.

Orders” has the meaning set forth in Section 3.7(a).

Outside Date” has the meaning set forth in Section 7.2(a).

Parent” has the meaning set forth in the Preamble.

Parent 20-F” has the meaning set forth in Section 4.6(a).

Parent Board” means the Board of Directors of Parent.

Parent Common Units” has the meaning set forth in the Recitals.

Parent Conflicts Committee” means the Conflicts Committee (as defined in the Parent Limited Partnership Agreement) of the Parent Board.

Parent Equity Issuance” has the meaning set forth in the Recitals.

Parent Expenses” means an amount in cash equal to the reasonably documented out-of-pocket expenses (including all fees and expenses of counsel, accountants, investment bankers, experts and consultants) incurred by any Parent Group Entities or the general partner of Parent in connection with this Agreement and the transactions contemplated hereby up to a maximum amount of $1,000,000.

Parent Financial Statements” has the meaning set forth in Section 4.6(a).

Parent Group Entities” means the Parent and the Parent Subsidiaries (excluding the NNA Group Entities).

Parent Common Units” has the meaning set forth in the Recitals.

Parent Incentive Distribution Rights” means the “Incentive Distribution Rights,” as defined in the Parent Partnership Agreement.

 

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Parent Material Adverse Effect” means any change, effect, event or occurrence that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on or a material adverse change in (i) the business, assets, liabilities, properties, condition (financial or otherwise) or results of operations of the Parent Group Entities (including their ownership of shares of NNA Common Stock), taken as a whole; provided, however, that any adverse changes, effects, events or occurrences resulting from or due to any of the following shall be disregarded in determining whether there has been a Parent Material Adverse Effect: (a) changes, effects, events or occurrences affecting the markets or geographic locations in which the Parent Group Entities operate, (b) changes, effects, events or occurrences affecting the United States or global economic conditions or financial, credit, debt, securities or other capital markets in general, (c) any outbreak of, acts of or escalation of hostilities, terrorism, war or other similar national emergency, including any event, fact, condition or circumstance resulting from COVID-19 or the worsening thereof, (d) the announcement or pendency of this Agreement or the transactions contemplated hereby, (e) changes in any Laws applicable to Parent or any of the Parent Subsidiaries or in accounting regulations or principles or the interpretation thereof that materially affects this Agreement or the transactions contemplated hereby, (f) the Parent Parties taking any action required or contemplated by this Agreement, (g) changes, effects, events or occurrences at any NNA Group Entity, (h) any change in the market price or trading volume of the Parent Common Units (it being understood and agreed that the foregoing shall not preclude any other party to this Agreement from asserting that any facts or occurrences giving rise to or contributing to such change that are not otherwise excluded from the definition of Parent Material Adverse Effect should be deemed to constitute, or be taken into account in determining, whether there has been, or would reasonably be expected to be, a Parent Material Adverse Effect), (i) changes, effects, events or occurrences generally affecting the prices of oil, natural gas, natural gas liquids and other similar commodities, or (j) any failure of Parent to meet any internal or external projections, forecasts or estimates of revenues, earnings or other financial or operating metrics for any period (it being understood and agreed that the foregoing shall not preclude any other party to this Agreement from asserting that any facts or occurrences giving rise to or contributing to such change that are not otherwise excluded from the definition of Parent Material Adverse Effect should be deemed to constitute, or be taken into account in determining whether there has been, or would reasonably be expected to be, a Parent Material Adverse Effect); provided that, in the case of clauses (a), (b), (c), (e) and (i) the adverse impact on the Parent Group Entities, taken as a whole, is not materially disproportionate to the adverse impact on similarly situated parties, or (ii) the ability of any of the Parent Parties to perform their obligations under this Agreement or to consummate the transactions contemplated by this Agreement.

Parent Material Contract” has the meaning set forth in Section 4.11(a).

Parent Partnership Agreement” means the Fourth Amended and Restated Agreement of Limited Partnership of Parent, dated as of March 19, 2018, as amended, supplemented or restated from time to time.

Parent Parties” means Parent and Merger Sub.

Parent SEC Reports” has the meaning set forth in Section 4.5(a).