Greek Shipping News Cuts
Week 12 - 2010
---A Greek player has teamed up with an equity fund to target boxships.
Major Greek containership owner Costamare is set to pounce on distressed boxship opportunities through a partnership with a private-equity fund.
Finance sources confirm the move but details such as the name of the equity partner and the amount they have agreed to spend remain undisclosed.
Costamare was not available for comment but TradeWinds understands the venture is ready to act.
It is the second such scheme to have emerged in the past week. George Economou is said to have clinched a partnership with another fund but details on that front are also scarce. The partners are believed to be the buyers of the 6,500-teu containership Miramarin (ex- CMA CGM Kessel , built 2010). Economou confirmed in January that his privately held management company, Cardiff Marine, would manage the ship.
Talk is also rife in Piraeus over a third private owner/equity-fund partnership that is set to buy distressed boxship assets from listed entities.
While boxships are not one of Economou's better-known areas of expertise, Costamare has been synonymous with the sector since it was established in 1975 by Vassilis Constandakopoulos. Today the company is run by his son, Costis. Constandakopoulos's other son, Achilleas, known for his involvement in the tourism industry, is understood to be playing an important role in the new venture.
The company currently controls a fleet of 47 containerships on charter to various majors including China's Cosco, Maersk Line, Sealand and Mediterranean Shipping Co (MSC), among others.
Unlike many of its German competitors, Costamare did not take on a large newbuilding orderbook in 2006 and quickly moved to cancel once the shipping market plunged into crisis in late 2008.
The owner placed an order for four 8,250-teu boxships at Hudong-Zhonghua Shipbuilding costing $118m each. Two were slated for delivery last year and the other two for this year.
Costamare had cancelled three of the orders by January 2009, forfeiting between $110m and $120m, and took delivery of the one remaining vessel just this month, the 8,250-teu MSC Navarino (built 2010).
The owner is believed to have a large war chest of capital after being an earner rather than an asset player during the five-year boom prior to 2008. It was also quick to shed older tonnage once the crisis hit container shipping - during 2009 and up to January, Costamare has scrapped 10 vessels.
The troubled sector has gained a number of new fans in recent months. Private Greek owners not previously involved in the sector have emerged as buying ships, including George Procopiou and Embiricos-family controlled Aeolos Ship Management ( see story, page 12 ).
On the listed front, Diana Shipping has confirmed a 38% ownership stake in a new containership-investment venture. Late last year, Euroseas, already an owner of boxships, announced a partnership with two hedge funds in a $175m initiative that was expected to buy containerships.
By Yiota Gousas Athens
Published: 00:00 GMT, 26 Mar 10 | updated: 15:20 GMT, 25 Mar 10
OceanFreight in VLOC order spree
---Owner makes rare foray in ore sector with acquisition of $204m trio
Nigel Lowry - Thursday 25 March 2010
ATHENS-based dry bulk and tanker owner OceanFreight has inked contracts worth a total $204m for three very large ore carrier newbuildings to be built by a top Chinese shipyard.
The trio of large bulkers, all of 206,000 dwt, have all been pre-chartered for minimum periods ranging from three years for the first ship to seven years for the third of the series.
The move is a surprise new departure by Anthony Kandylidis-led OceanFreight, which is taking action to preserve its Nasdaq listing with a proposed reverse stock split of one for three shares, a move that is expected to decisively boost a share price that has been lurking below $1.
The company last year modernised and upscaled its fleet with several capesize bulkers but the ore carrier programme will be a rare entry by the Greek shipping fraternity into the VLOC segment.
Shanghai Waigaoqiao Shipbuilding, the appointed builder, is scheduled to complete the vessels in the second and fourth quarters of 2012 and first quarter of 2013.
OceanFreight executives emphasised that the expansion would not require the company to raise more equity.
OceanFreight said that the first VLOC has been chartered for a minimum three years at a daily rate of $25,000. The second of the 2012 deliveries has been fixed for a minimum of five years at a base rate of $23,000 per day with 50:50 profit sharing agreement on market levels up to $40,000 per day.
The final ship, due in January 2013, has been committed for seven years at a base rate of $21,500 per day with a 50:50 profit split up to $38,000 per day.
OceanFreight owns 13 vessels, with nine capesize and panamax bulkers on the dry side and four tankers.
Euroseas Ltd. Announces Entrance into Joint Venture
---03/25/10 Maroussi, Athens, Greece - March 25, 2010 - Euroseas Ltd. (NASDAQ: ESEA), an owner and operator of container carrier and drybulk vessels, announced today that the Company has executed definitive documentation and entered into a joint venture (the "Joint Venture") with companies managed by Eton Park Capital Management, L.P. ("Eton Park") and an affiliate of Rhone Capital III L.P. ("Rhone"), two recognized private investment firms, to form Euromar LLC, a Marshall Islands limited liability company ("Euromar"). Eton Park's investments are made through Paros Ltd., a Cayman Islands exempted company, and Rhone's investments through the Cayman Islands limited companies All Seas Investors I Ltd., All Seas Investors II Ltd., and the Cayman Islands exempted limited partnership All Seas Investors III LP. Euromar will acquire, maintain, manage, operate and dispose of shipping vessels.
Pursuant to the terms of the Joint Venture, Euroseas will invest up to $25 million, while Eton Park and Rhone will each invest up to $75 million for a total of $175 million, with each holding a proportionate ownership interest in Euromar. Euroseas will also receive options in Euromar which are triggered if certain performance milestones are achieved. Euromar will be managed by a board of six directors, composed of two directors appointed by each of Euroseas, Eton Park and Rhone. Management of the vessels and various administrative services pertaining to the vessels will be performed by Euroseas and its affiliates, Eurobulk Ltd. and Eurochart S.A.
The Joint Venture includes the option by Eton Park and Rhone, exercisable in certain instances and at any time after the two year anniversary of the Joint Venture, to convert all or part of their equity interests in Euromar into common shares of Euroseas at a price to be based on the comparable values of Euromar and Euroseas at the time of exercise, with such conversion happening at not less than the net asset value of each entity. Depending upon the share percentage of Euroseas owned by Eton Park and Rhone following any such conversion, the number of directors on Euroseas' Board of Directors may be increased from 7 up to a maximum of 11 directors for so long as the respective ownership thresholds are met. As part of the Joint Venture, Euroseas? largest shareholder, Friends Investment Company, Inc. ("Friends"), has entered into a shareholder voting agreement with Eton Park and Rhone whereby Friends has agreed to vote its shares in favor of any directors nominated by Eton Park and Rhone to fill such additional board seats. Under the same shareholder voting agreement, the parties have agreed that Eton Park and Rhone may vote a certain percentage of their shares in their sole discretion (based upon their percentage interest on the Euroseas Board of Directors and the number of shares outstanding), with the remainder of their shares being voted in accordance with the vote of all other Euroseas shareholders. The Joint Venture also permits Euroseas to redeem for fair market value its interest in the Joint Venture in certain instances and at any time following the three year anniversary of the Joint Venture. In addition, Euroseas and its affiliates have granted Euromar certain rights of first refusal in respect of vessel acquisitions, and made certain arrangements with respect to vessel dispositions and chartering opportunities presented to Euroseas and its affiliates.
Aristides Pittas, Chairman and CEO of Euroseas commented: "We are excited to announce the official commencement of our joint venture agreement with Eton Park and Rhone and look forward to jointly pursuing investment opportunities in shipping. We believe that this arrangement is beneficial to our shareholders as it will give us access to a greater number and larger size of opportunities, allow our investments to be spread over a more diversified portfolio of vessels, and enable us to achieve overhead and operating costs savings. In addition, we will have the opportunity to earn incremental returns if our joint investments perform well. We are very proud to work with such well-reputed and successful partners and believe their decision to work with us is a vote of confidence for the management and strategy of our Company."
The Company was advised by the law firm of Seward & Kissel LLP. Rhone was advised by the law firms of Reed Smith LLP and Norton Rose LLP. Eton Park was advised by the law firms of Paul, Weiss, Rifkind, Wharton & Garrison LLP and Norton Rose LLP.
Forward Looking Statement
This document contains forward-looking statements (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events and the Company's growth strategy and measures to implement such strategy; including our expected joint venture. Words such as "expects," "intends," "plans," "believes," "anticipates," "hopes," "estimates," and variations of such words and similar expressions are intended to identify forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to changes in the demand for drybulk vessels and containerships, competitive factors in the market in which the Company operates; risks associated with operations outside the United States; and other factors listed from time to time in the Company's filings with the Securities and Exchange Commission. The Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.
Andriaki to install VSAT
---(Mar 22 2010). Andriaki Shipping of Athens, Greece, has agreed a deal with Setel Hellas to install CapRock VSAT communication services aboard an unspecified number of ships.
Andriaki will use the VSAT service to expand its corporate IT network and enhance software applications within its vessel environment, and to provide onboard welfare services.
Under the terms of the agreement Setel, in a cooperation with CapRock Communications, will provide Andriaki Shipping with a managed turnkey service enabling VoIP, internet access, e-mail service, crew-calling and corporate networking capabilities.
The companies say that the satcom connection will be used for the real time exchange of reports and monitoring data between Andriaki vessels and shore offices.
Andriaki manages more than 100 vessels of various types and sizes, including both tankers and bulk carriers, all flying the Greek Flag.
DNV is launching a new organisation
---Wednesday, 24 March 2010 18:19
The main emphasis of the new DNV organisation will be on further decentralisation, a stronger customer focus and offering a wider range of competent resources to the maritime and energy sector for the benefit of the customers. The reorganisation will be completed on 1 April.
As part of the organisational changes, Mr. Nikos Boussounis will be appointed Regional Manager of Region East Mediterranean, Black & Caspian Seas and be located in Piraeus.
The new region covers all DNV operations in Greece, Cyprus, Turkey, Egypt, Israel, Croatia and the Black & Caspian Seas countries.
DNV is steadily increasing its presence in Piraeus. The recently established Research and Innovation Centre in Piraeus is now fully operational and employs four full-time PhD researchers working closely with the Greek maritime industry and academia.
Commission clears special tax regime for international maritime transport companies in Cyprus
---Michael Roberts - 24.03.2010
The European Commission has approved under EU state aid rules a proposal by the Cypriot government to impose a special reduced tax on companies engaged in international maritime transport, which replaces the corporate tax. The Commission found that the scheme, which exists in several other EU countries, will enhance the competitiveness of the Cypriot fleet without unduly distorting competition.
The Cypriot government has notified a tonnage tax measure for companies engaged in international maritime transport and liable to corporate tax in Cyprus. The scheme allows companies to opt for a tax calculated on the net tonnage of the fleet that they operate (tonnage tax) instead of being taxed on the actual profits of their maritime transport activities. The tonnage tax scheme would also be applicable under certain conditions to tugboats, dredgers and cable-layers.
The Commission authorised the scheme until 31 December 2019. It is aimed at supporting the shipping sector in Cyprus and other EU countries with a strong maritime sector have a similar scheme.
The Cypriot maritime industry is one of the largest in the EU and the 10th largest worldwide. Moreover, Cyprus is the biggest third party ship management centre in the EU.
The non-confidential version of the decision will be made available under the case number N 37/2010 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News
Source European Commission Press Release
Back in stock
Today, roughly the same number of private shipping firms is plotting a Wall Street debut. The new sales pitch is very different, of course, because markets have radically changed since the pre-crisis IPOs.
In addition, a top broker source with insider knowledge confirmed to Fairplay that about 20 additional private companies, mostly Greek, hope to launch IPOs.
All the new offerings seek to convince public investors that their interests will be aligned with sponsors, who are themselves providing substantial equity.
But sceptics believe conflict-of-interest issues persist. Only Baltic Trading bought its initial fleet entirely from third parties. Crude Carriers, Alma and Scorpio all took assets from their sponsors and contract technical management to related parties.
Source: Fairplay - Story of the Week 25 Mar 2010
Alma IPO woes put damper on other hopefuls
--- Rajesh Joshi and Nigel Lowry - Friday 26 March 2010
NEW York has delivered a dose of reality to shipping companies aspiring to launch initial public offerings, with the Stamatis Molaris-backed Alma Maritime understood to have pulled out of an intended issue of some $225m.
The impact of the Alma cancellation on other aspirants, or their timing, remains to be seen. But Compass Maritime vice-president Basil Karatzas said each IPO aspirant would, to an extent, be judged distinctly.
This cautionary attitude appeared to have dissipated in the last three weeks after Baltic Trading and Crude Carriers pulled off IPOs.
Alma was hoping to raise about $225m to help fund two modern secondhand suezmax tankers and a capesize bulker, as well as a series of four suezmax newbuildings and unidentified additional vessels.
If it does not return for another stab at a public listing, Alma is deemed likely to be able to grow as a private company and looks to have solid support from its bankers.
Alma received a $111.6m loan for the suezmax newbuildings in June 2008 from BNP Fortis Bank and Bayerische Hypo-und Vereinsbank.
The references were to commodities mogul Hans Mende, who controls 51% of Alma, and Fortis Bank Nederland private equity affiliate Maas Capital Investments, with a 37.7% stake, as well as to Mr Molaris as chief executive, who controls a 7.7% stake.
bank loan portfolios to Greek shipping, as of 31st December 2009.
The portfolios show both the loans outstanding, as well as loans committed but undrawn. The committed but
its involvement in newbuilding finance.
March 2010, Main findings
> Drawn Loans, however, are up: $54.607 as of end 2009, up by +1.93% from $53.574bn as of end 2008, compared to $45.37bn in 2007 (see Table 3).
> This year there was a large fall in the Committed but Undrawn loans to $12.412bn, i.e. by -36.84% from $19.563, bringing down the total of Greek ship finance loan exposure (see Table 3).
> Greek banks loan portfolios in overall terms fell only by -4.74% to $16.74bn, however the Committed but Undrawn loans are down by -30.14%, whereas the Drawn loans are down only by -3.54%. Overall, Greek banks account for 24.08% of Greek ship finance.
> The loan portfolios of the International Banks with a Greek Presence also show an overall decline of -5.66% down to $36.777bn, but with their Committed but Undrawn portfolio down by a very significant -40.63%. The Drawn portfolio of this group of banks is the only one that went up during 2009, by +6.34% to $30.861bn.
> International Banks without a Greek presence show the biggest overall decrease in their Greek exposure by -18.49%, down to $14.101bn. More specifically, their Drawn loan portfolio is down by -10.71% and their Committed but Undrawn loan portfolio has fallen by -35.07%.
> The number of banks involved in Greek shipfinance is in essence 39 (39 different bank entities). However, the different shipping portfolios are 41. The reasons are, firstly, Deutsche Schiffsbank, although merged with Commerzbank and Dresdner, still hold separately their shipping portfolios. Furthermore, Deutsche Schiffsbank has a Greek representation office, whereas Commerzbank/Dresdner does not. Secondly, Fortis Bank Belgium still holds a separate shipping portfolio from BNP Paribas, which we also present separately. It is interesting to observe that although there have been quite a few mergers and acquisitions, the overall number is almost the same as last year, since this year we have added 2 Far Eastern banks as well as a Swiss bank and a German bank, that the market has reported as having Greek exposure.
> The top 10 banks still hold approx. 65% of the market (64.13%), the same as last year and 63.52% the year before last. The top 10 banks still dominate the market.
> European banks continue to account for the vast majority of total loans. This year we have market reports of two Far Eastern banks being involved in Greek ship finance (KEXIM and CHINA Import and Export).
> The Lead Managers in syndication loans have decreased their managed portfolios from $18.977bn to $17.635bn, i.e. down by -7.07%. The number of Lead Managers has also come down to 23 from 25 banks last year.
The outlook for 2010 and beyond
There is no doubt that 2009 was a catalyst for Greek ship finance. It was a year when the locomotive stopped and went into reverse. Should one consider the depth of the crisis in global banking, international illiquidity, loss of confidence by consumers and firms, the collapse of international trade and the plummeting of vessel values and freights, the effects on Greek ship finance have been modest. This remark applies not only to the loan volumes as of end 2009 but also given that there have been hardly any owner failures.
The year was a year of adaptation by both owners and banks with both treading warily so as to find a way to ride the storm and grapple together the cash flow and vessel values problems.
Shipping banks scrutinised their undrawn commitments seeking to minimise these by adjusting facilities to asset values and erasing, if possible, or postponing, commitments.
For the drawn portfolios, banks sought to utilise loan run-offs to fund some of the newbuilding related loans and to reduce if possible, their overall loan portfolios.
Some also sought to selectively lend to existing target clients on advantageous terms thereby maintaining their loan portfolio size.
Given the widely reported problems of some major German and UK banks, the reported slightly reduced portfolios is hardly significant and probably reflects their inability to find buyers for part of their exposure on terms acceptable to the sellers.
The high new loan yields did entice some banks to entership finance. Additionally, some Far Eastern banks began lending to Greek clients to support shipyards for new orders and / or to keep existing newbuildings orders from cancellation.
Looking at 2010, and from other published Petrofin Bank Research analysis, we believe that the rate of decline of Greek ship finance has slowed down. There is increasing evidence that some fresh lending has begun and about 4 in 10 banks have expanded budgets for 2010.
We anticipate that the Committed but Undrawn overall Greek shipping finance total shall continue to shrink in 2010 but at a lesser rate as a number of Greek owners are seeking to take advantage of the relatively low new vessel prices and the demand for newbuilding committed finance shall increase.
Consequently, any recovery, let alone new growth, is likely to be very tentative for 2010 and driven by the appetite of Far Eastern banks.