TOP Ships (TOPS) Stock Is Heading Up On Asset Purchase

TOP Ships TOPS Stock News

TOP Ships Inc (NASDAQ: TOPS) is headed for the top in the market early on after the company announced a 50% interest in two vessel owning companies. Here’s what’s going on:

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TOPS Stock Heads For The Top On 50% Ownership Of Two Companies

In the release, TOP Ships said that it acquired a 50% interest in two vessel owning companies. These companies own two ultra-high specification scrubber-fitted 50,000 dwt eco MR product tankers. These tankers are known as M/T Eco Yosemite Park and M/T Eco Joshua Park.

The company said that the total price paid for the 50% interest in the two companies came to a total of $27 million. Importantly, both vessels are relatively new, being delivered in March of 2020 from Hyundai Mipo shipyard in South Korea.

TOPS also said that the Seller had already entered into two joint venture agreements for the two vessels. Each of these agreements have an equal ownership interest of 50% with a wholly owned subsidiary of Gunvor Group, one of the world’s largest independent commodities trading houses.

Importantly, these tankers come with a strong backlog. In fact, the total potential gross revenue backlog from these contracts is expected to be about $91.7 million.

Why Investors Are So Excited

Ultimately, there’s good reason that TOP Ships stock is headed up this morning. The company has recently made some pretty big moves. First off, the company sold assets earlier in the year, strengthening its balance sheet.

Now, the company has purchased two new assets under a 50% ownership interest. Importantly, with revenue from these assets expected to come in at $91.7 million per year, the half of that revenue that TOPS will receive is well over the price the company paid for the equity interest, making this purchase a very strategic one.

This, combined with the incredibly low fuel prices at the moment, reducing operating costs for TOPS and others in the shipping sector, suggests that more gains may be ahead for the stock.

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