The interim financial report for Q3 2024 shows a great result for ZITON, building on the solid performance from the first half of 2024. Year to date EBITDA amounted to EUR 48.6m compared to EUR 29.7m in 2023.

Highlights of Q3 2024

• EBITDA amounted to EUR 19.5m in Q3 2024 compared to EUR 9.9m in Q3 2023, an increase of 97%. The improvement was due to an increase in revenue reflecting that J/U WIND ENERGY went on time charter with Siemens Gamesa at the end of February 2024, as well as improved contribution from the three smaller vessels due to a stronger market for major component replacements.
• Macquarie Asset Management, via Macquarie European Infrastructure Fund 7, has entered into a share purchase agreement with funds advised by Permira Credit and other existing shareholders to acquire all issued and outstanding shares of Zappy TopCo ApS and its wholly-owned subsidiary ZITON A/S.
• The terms of the first lien bond loan (ISIN NO0012928185) and the second lien bond loan (ISIN NO0012928169) include a definition of margins that if the leverage ratio is reduced below 4.25x the margin will be reduced by 300 bps. The leverage ratio at the end of Q3 2024 was at 3.83x and thereby below 4.25x. The consequence is that the margins will be reduced on the bonds issued, and therefore the margin on the first lien bond loan will be reduced from 9 December 2024.

KPI guidance for 2024
Following the performance in Q3 2024, our expectations for 2024 are unchanged. The following sets out our revised KPI guidance for 2024:

• Weighted average utilisation rate. We expect a utilisation rate in the range of 90-100%.
• EBITDA. We expect EBITDA to be in the range of EUR 55-59m.
• Cash flow from operating activities. We expect cash flows from operating activities to be in the range of EUR 50-54m. This takes the reversal of trade payables related to the upgrade of J/U WIND ENERGY amounting to EUR 6.5m at the end of 2023 into account.
• CAPEX. We expect CAPEX of EUR 7-9m excluding CAPEX related to J/U WIND ENERGY. In addition, we expect CAPEX for J/U WIND ENERGY of approximately EUR 26-28m (up from approximately EUR 26m) including CAPEX for leg extension and capitalised interest costs of approximately EUR 2m related to the vessel.

Outlook for 2024 and beyond
The outlook for 2024, is based on the following key assumptions:

• The long-term charter agreement with Siemens Gamesa for J/U WIND ENERGY. The vessel has been upgraded and initiated the time charter at the end of February 2024. The vessel is expected to operate successfully with limited off-hire days. However, in late 2024 the vessel may undergo a leg extension, during which the day rate on the time charter will be reduced.
• The long-term charter agreement with Siemens Gamesa for J/U WIND ENTERPRISE. The vessel is expected to continue to operate successfully with limited off-hire days.
• The three smaller vessels, servicing the market below 6 MW, will carry out regular major component replacements on framework agreements and other tenders attained.
• Beyond 2024, the effect of having J/U WIND ENERGY on time charter with Siemens Gamesa for the full year will positively effect EBITDA. Further, when the time charter for J/U WIND ENTERPRISE was extended it was mutually agreed with Siemens Gamesa that the day rate for J/U WIND ENTERPRISE will increase materially from mid-2025. In summary, the contracted terms of the two long-term time charter contracts with Siemens Gamesa are, almost entirely, expected to enhance running twelve months EBITDA to around EUR 75m from mid-2025.

Macquarie Asset Management to acquire ZITON
Macquarie Asset Management, via Macquarie European Infrastructure Fund 7, has entered into a share purchase agreement with funds advised by Permira Credit and other existing shareholders to acquire all issued and outstanding shares of Zappy TopCo ApS and its wholly-owned subsidiary ZITON A/S.

Closing of the transaction is anticipated by the end of Q4 2024 or Q1 2025, subject to regulatory approvals, at which time Macquarie will obtain 100% ownership of ZITON.

The transaction is expected to have the following effects on ZITON’s capital structure:

• The first lien bond (ISIN NO0012928185), listed on Oslo Børs, the senior secured ESG-linked loan and the Super Senior Working Capital Facility are expected to be retained in the capital structure. On 11 October 2024, ZITON summoned a Written Resolution to seek bondholders’ approval of Macquarie as a Permitted Transferee under the bond terms. The voting period ends on 1 November 2024.
• The second lien bond (ISIN NO0012928169) will be purchased by Macquarie.

Further announcements regarding the transaction will be made if and when appropriate.

Read the full interim financial report for Q3 2024 here.