Greek Shipping News Cuts
Week 22 - 2004


OMI/STELMAR - the drama continues, the premium erodes

---Market talk of OMI's bid for Stelmar picked up this week with more details provided by OMI's formal offer and a 13D filing by Stelios Haji-Ioannou, who is represented by UBS in London, that shed some light on the transaction. JP Morgan's Jonathan Chappell published his views on the transaction, which is NEUTRAL on OMI and OVERWEIGHT on Stelmar, since at current levels that share price is close to fully valued versus the $35/share NAV and probably offers more downside if the transaction fails and SJH loses the appreciation that it has gained as a result of the offer. To put this in context, the premium that OMI is willing to pay above the May 14th closing share price has shrunk from 36% to 8%. So maybe it's time to sell - which is exactly what Stelios is doing.
This is a textbook deal. As the comp tables shows, SJH represents a good value relative to its peers, and especially when OMI is paying for 75% of the acquisition with paper. SJH is one of two companies trading around NAV and OMI's offer is slightly below that. The fleets fit together nicely and SJH is the perfect expansion of the charter strategy that has been so successful for OMI.
There are all sorts of different ways to value a company, so we'll go through a few. According to JP, the implied EV/EBITDA multiples of 7.9 times its 2004 estimate and 7.2 times its 2005 forecast is well above SJH's historical average of 6.0 times forward EBITDA, "but these levels are more in line with (and even slightly below) EV/EBITDA multiples of past industry acquisitions. However when looked at using P/E, the assumed price of $33.82 per SJH share implies 2004 and 2005 P/E multiples of 9.7 and 9.4 times, which is about double SJH's historical average and is closer to the mid-cycle P/E levels of industry leader Teekay Shipping. This view would show a large premium being paid by OMI."
For Stelios, the deal makes perfect sense. After the Haven incident, we would not be surprised that a businessman who is building a retail empire with the highest possible corporate profile would want to distance himself from the liabilities of being associated with an oil spill. Moreover, he gets out at the top of the tanker market. For Stelios' brother Polys, the deal is also reasonable. He has expressed interest in retaining his ownership and will undoubtedly end up on the OMI board of directors.
What has not been discussed in the public filings or offering statement is exactly what will become of Stelmar's executive team.
SJH shareholders will receive 3.1 shares of OMM stock
At OMM's May 14 closing price of $14.91 this would result in $33.82 per SJH share, or a 36% premium to SJH's May 14 closing price of $24.95.
OMI is willing to pay 25% of the purchase price in cash, up to a certain threshold of $175 million
OMI will fund the cash portion of the acquisition with cash balances and credit facilities.
SJH shareholders will own 40.5% OMI-Stelmar Corporation.
The newco will remain in OMI's Stamford, Connecticut headquarters
The newco will keep technical offices in Athens, Greece
SJH's founder, Stelios Haji-Ioannou, and his two siblings have entered into standstill agreements with OMI, under which they will not sell any shares for a 60-day initial period and will vote to support the proposed transaction.
These agreements cover 27.5% of the current shares outstanding.
As part of the agreements, Mr. Haji-Ioannou would refrain from competing against the new company for a five-year period.
Source:, Freshly Minted online, 27 May 04

Press Release: Stelmar Shipping Ltd. Retains Financial Advisors
---Stelmar Shipping Ltd. (NYSE: SJH) announced today that the Company has retained Morgan Stanley and Jefferies & Company as financial advisors to assist Stelmar's Board with the evaluation of OMI's proposal contained in its May 25, 2004 13D filing.
Nick Hartley, Stelmar's Chairman commented, "The Stelmar Board is very pleased to have engaged the services of Morgan Stanley and Jefferies & Company. The Board, with its financial and legal advisors, continues to assess the 13D filing by OMI and remains committed to making strategic decisions that are in the best interests of all of the Company's shareholders. Stelmar's commitment to value creation is evident from its success at growing one of the world's most modern tanker fleets while generating 37 consecutive quarters of profitability and industry leading returns throughout the tanker cycles."
Stelmar also announced that it has amended its Company by-laws to ensure that the Board has the appropriate time in which to discharge its fiduciary duties towards all shareholders. Further details of these amendments will be filed with the U.S. Securities and Exchange Commission on Tuesday June 1, 2004.
Source:, ATHENS, Greece May 28, 2004

Mare teams up with Moundreas
---Greek shipmanager Mare International is hoping a new tie-up with Piraeus broking house George Moundreas & Co will bring to an end a bumpy period in its recent history.
Mare is an established player while Moundreas is active in sale-and-purchase, newbuilding broking, repair and conversions and as a representative for a number of repair yards.
Moundreas and Mare plan to offer pre-purchase condition surveys and other kinds of ship inspections, preparation and supervision services for ship repairs, pre-contract newbuilding services and newbuilding supervision site teams, as well as attendance and preparation of vessels for OCIMF inspections.
Shipmanagement will also be on the menu.
Mare's operations team has already moved into Moundreas's Piraeus offices but retains its own base in the southern suburbs of Athens. Mare was founded in 1992 and took over the management of vessels formerly controlled by failed Atlas Maritime. It built a solid foundation as a third-party manager specialising in chemical and products tankers.
The company developed a fleet of vessels under its management but the 2000 merger of Ceres Hellenic group's Seachem and Norwegian chemical-tanker operator Odfjell led to a substantial number of ships being taken out of its management and placed in the Ceres-managed fleet. At the same time two tankers under Mare's management, which were owned by Dan Odfjell personally, were sold, leaving the manager scouting around for tonnage.
In 2001, a collaboration was announced with Glasgow-based shipmanager Denholm just two months before Denholm merged with Anglo-Eastern of Hong Kong. By the end of the year the co-operation had been ditched.
Last year Mare teamed up with Gulf Navigation to form Mare Gulf, with ambitious plans to build up a fleet of 60 vessels under management by 2006. But this joint operation was also disbanded.
Mare chairman Emmanuel Papalexis says the two sides in the new alliance hope to create a one-stop shop for owners. "We expect to be deeply involved in the Greek shipping community," he said.
Source:, Gillian Whittaker Athens, published: 28 May 2004

Ferry ticket feud between owners and ministry turns nasty
---The feud between Greece's ferry operators and Marine minister Manolis Kefaloyiannis is becoming more nasty, with the shipoperators insisting they have control over fare and tariff fixing. The owners have told the minister they intend exercising "their freedom" to set ticket prices for people and cars. Kefaloyiannis, insists the government, under presidential decree, sets the upper levels on prices.
On the back of rising fuel prices, the operators say fares must increase. Contending operational costs have risen by between 10% for conventional ferries up to 30% for high speed ships, the Union of Coastal Passengership Owners says it will invoke European Union law to impose hikes which exceed those desired by Greek government levels imposed under national law.
The owners' association president Stelios Sarris, said the increases will be made according to EU law covering the liberalised marketplace. He said EU law overrides Greek law. After a meeting of the union's board May 26 it was decided to call a extraordinary general meeting for June 8 or 10.
Sarris said it had been decided it is time for operators to act in a free market climate. Owner, Gerassimos Strintzis said that in the present climate owners are unable to meet their financial obligations endangering the entire ferry network. He agreed the minister is right to insist that public services be maintained, but said companies can't continue under the present circumstances.
The issue of liberalisation is yet to be finalised, with the European Commission and the Marine ministry still discussing some key elements of the Greek law.
Kefaloyiannis says the government wants the "market to operate in a free environment and, if this is positive for passengers, we will not intervene". The minister points out that a free market usually means a competitive one and clients often benefit from "special offers and packages" regardless of the official price of something. The minister adds "the high fuel prices are not going to last forever".
Source:, 28 May 2004

European ferries safe but risks remain
---Travelling by car ferry has become safer in Europe, however there are still some ships being used, which do not meet international safety standards, ccording to a new survey.
The German automobile club, ADAC, tested 34 ferries in Europe and found that two of them did not meet the standards while six were judged adequate.
According to ADAC this year's results were the "best ever" since the first survey in 1996. However, they believe that risks remain.
The ferries that failed were the Flaminia, which sails between Olbia, Sardinia and Civitavecchia, near Rome, and the Rodanthi, which shuttles between Piraeus on the Greek mainland and the Aegean island of Paros, writes the International Herlad Tribune.
Six other ferries, which had some problems, were all used in the Mediterranean.
Ferries in the English Channel, North Sea, Irish Sea and Baltic Sea were only given good or very good marks.
Source:, 27.05.2004 - 09:48 CET | By Marit Ruuda

Results of the 2004 Pan-European car ferry testing programme
Results in order of rating
Baltic/North Sea/Irish Sea/English Channel
- Ferry - Company - Route - Grade
2 Pride of Cherbourg P&O Cherbourg (F)-Portsmouth (UK) Very Good
3 European Highlander P&O Irish Sea Larne (UK)-Cairnryan (UK) Very Good
4 Dublin Swift* IRISH FERRIES Holyhead (UK)-Dublin (IRL) Very Good
5 Princesse Ragnhild Color Line Kiel (D)-Oslo (N) Good
6 Stena Hollandica Stena Line Harwich (UK)-Hook of Holland (NL) Good
7 Pride of Dover P&O Calais (F)-Dover (UK) Good
9 Lagan Viking NorsMerchant Belfast (UK)-Liverpool (UK) Good
11 Pride of York P&O North Sea Zebrugge (B)-Hull (UK) Good
12 Trelleborg Scandlines Trelleborg (S)-Sassnitz (D) Good
13 Normandy IRISH FERRIES Rosslare (IRL)-Cherbourg (F) Good
Western Mediterranean
- Ferry - Company - Route - Grade
14 Excelsior GRANDI NAVI VELOCI Palermo (I)-Genua(I) Very Good
15 Sorolla TRASMEDITERRANEA Barcelona (E)-Mallorca (Balearic) Very Good
16 Milenium Dos* TRASMEDITERRANEA Ibiza (Balearic)-Valencia (E) Very Good
17 Mega Express II Corsica & Sardinia Ferries Savona (I)-Bastia (Corsica) Very Good
18 Danielle Casanova SNCM Bastia (Corsica)-Marseille (F) Good
19 Scandola LA MERIDIONALE Marseille (F)-Propriano (Corsica) Good
21 Ichnusa saremar/tirrenia Bonifacio (Corsica)-S Teresa (Sardinia) Good
22 Vincenzo Florio Tirrenia Naples (I)-Palermo (Sicily) Good
24 Atlas IMTC Tangier (MA)- Algeciras (E) Acceptable
25 Flaminia Tirrenia Olbia (Sardinia)-Civitavecchia (I) Poor
Eastern Mediterranean
- Ferry - Company - Route - Grade
26 Superfast VI SUPERFAST FERRIES Patras (GR)-Ancona (I) Very Good
27 Pasiphae Palace MINOAN LINES Venice (I)-Igoumenitsa (GR) Good
28 Blue Star Paros Blue Star Ferries Paros (GR)-Piraeus (GR) Good
29 Blue Star Naxos Blue Star Ferries Paros (GR)-Santorini (GR) Good
30 Ivan Zajc JADROLINIJA Split (HR)-Rijeka (HR) Acceptable
31 Marko Polo JADROLINIJA Ancona (I)-Split (HR) Acceptable
32 Ekaterini P Hellenic Flame Igoumenitsa (GR)-Corfu (GR) Acceptable
33 Express Poseidon HELLAS Ferries Santorini (GR)-Paros (GR) Acceptable
34 Rodanthi GA FERRIES Piraeus (GR)- Paros (GR) Poor

Med ports feel strain of box surge
---Many hubs in the region have been caught out by the surprise increase in container volumes, writes Nick Savvides , ci-online
MUSHROOMING volumes, along with immense ships, are putting Mediterranean port infrastructure and feeder networks under severe strain and delaying cargo up to three weeks, say industry insiders.
Delays at Mediterranean ports are causing some ships to miss their berthing slots in northern Europe, causing more congestion and further delays.
In a rare show of unity, shippers, carriers and port operators all agree that the central and eastern Mediterranean hub ports are under severe pressure and are finding it difficult to cope with the surprise surge in container volumes.
A leading shipper told ci-online that a shipping line had said only yesterday it "would be able to give him a transit time for cargo but he might have to add two to three weeks". He blamed port capacity and infrastructure constraints.
Another global shipper said the worst hit appeared to be Piraeus, Cagliari, Malta and Taranto. "In Greece it is very bad, Piraeus is completely messed up with CMA CGM being forced out because of the delays at the port. It would have killed their Far East service."
A third said: "We have had a few instances of rollovers on shipments to Australia in Mediterranean transhipment hubs, including Damietta and Gioia Tauro.
"It should not normally happen. It was caused by port congestion as well as full ships."
According to both the lines and the ports the main cause of delay is the surge in volumes, causing congestion at ports and straining the feeder network, allied with the significant increase in the size of vessels that requires large numbers of boxes to be handled at one time.
Lines say the ports are not giving a high enough priority to feeder vessels and import cargo is either left behind by feeders after being discharged from the mother vessel or, for export cargo, not getting to the mother vessel on time.
One global carrier said that Cagliari did not have a sufficiently developed feeder network to cope with the levels of cargo. Cecilia Battistello, president of the board of directors of Contship Italia, which runs both Cagliari and Gioia Tauro, admitted the problem.
"Cagliari does not yet have sufficient volume to create a feeder network," she told ci-online. However, she denied claims by shippers and carriers of delays with "onward transhipment" at Gioia Tauro.
Tim Holhead, chief operating officer at Gioia Tauro, the Mediterranean's biggest hub, said there was the "odd hiccup at the port, but otherwise productivity and volumes are both up".
Malta and Taranto, which is an owned by the Evergreen Group, have similar problems to Cagliari's according to both the lines and shippers. An insider at Lloyd Triestino, an Evergreen subsidiary said: "We are having problems with feeders, both chartering enough ships and ships that are big enough.
"There could be up to a week's delay for import cargo, depending which feeder leg it is on."
Malta Freeport has admitted to a nightmare month in April where holidays closed the port for three days and heavy winds closed it for a further four days, compounding the backlog of cargo.
A number of CMA CGM mother vessels were diverted to Cagliari, as were at least two CP Ships vessels as well as feeder ships as Malta failed to cope with the deluge of boxes.
Source:, Friday May 28 2004