Top Ships (TOPS) Q4 2024 earnings summary

Significant events and developments

• Acquired 100% of Roman Explorer Inc., owner of a newbuilding contract for a 60m, 1,150 GT megayacht (M/Y Sanlorenzo 1150Exp, Hull No. 158) from Evangelos J. Pistiolis for $27 million, with $9.35 million paid at closing and the balance due by December 31, 2026, subject to cash surplus and prepayment provisions.

• The newbuilding contract is with Sanlorenzo S.p.A., with a scheduled delivery date of May 31, 2027, and includes a refund guarantee for all pre-delivery installments except the final payment.

• The vessel will be a 60m megayacht, 1,150 GT, 6 guest cabins, 12 guests, 15 crew, built to Lloyd's Register class and Malta Passenger Yacht Code.

• The contract price is €49 million, subject to capped CPI adjustments, and is payable in milestone installments tied to construction progress.

• The contract includes detailed provisions for buyer's inspection, modifications, performance warranties, liquidated damages for delay, speed, range, noise, and vibration, and a 24-month warranty post-delivery.

• The builder is responsible for insurance until delivery, and the buyer is protected by refund guarantees from a first-class bank for all pre-delivery installments.

• The agreement is governed by English law, with disputes subject to LMAA arbitration in London.

Capital allocation and financing

• The $27 million purchase price is structured with an initial payment at closing and the remainder due by December 31, 2026, with prepayment required if the parent company raises capital via debt refinancing, equity issuance, or dividends.

• The contract price for the yacht is €49 million, with milestone payments and refund guarantees for each installment except the final payment.

Risk factors and uncertainties

• The contract includes provisions for permissible delays due to force majeure, buyer's or builder's default, and liquidated damages for late delivery, performance shortfalls, and termination rights for excessive delay or force majeure.

• The buyer is protected by refund guarantees for all pre-delivery installments except the final payment, and the builder's liability for liquidated damages is capped at 5% of the contract price.

• The contract is subject to English law, with arbitration in London, and includes detailed provisions for assignment, confidentiality, and sanctions compliance.