Greek Shipping News Cuts
Week 43 - 2004
---Hot markets are spinning $1.5bn per month for Greek shipowners.
The current hot freight markets have allowed Greek shipowners to build liquidity to such a level that they could pay off their total debt in just over a year, according to new research.
Ted Petropoulos of Athens-based analyst Petrofin says Greek shipping interests are making profits after operating expenses and interest and principal debt servicing of an astounding $1.5bn a month or $18bn annually. And the sum is still growing.
Based on Petrofin's own earlier research, at the end of 2003 Greek shipping finance stood at $25.5bn out of a world total estimated at between $160bn and $200bn.
According to Petropoulos, who was speaking at the sixth annual Greek Ship Finance Forum organised by Marine Money in Athens, loan pre-payments have become a regular feature as spare liquidity has been built up.
In addition to reducing debt, he says, Greek owners are channeling funds into fleet expansion and renewal through newbuildings but a substantial amount of the cash is going to increased deposits, non-shipping investments such as real estate and personal investments in shares, bonds and other instruments.
The high liquidity of Greek owners is increasingly attracting the attention of lenders' private-banking departments, he adds.
Looking back over the past 25 years, Petropoulos says that 105 banks were lending to Greek owners in 1979, a number slashed by the end of 2003 to just 54. UK and Irish banks with a Greek portfolio decreased from 18 to five. The most substantial drop was in US banks after 26 active in 1979 fell to just four that are lending to Greeks now.
Greek and Cypriot banks have slightly increased their presence from 12 to 15.
A new Greek entrant was Omega Bank, which has recently concluded its first secured ship loan.
Petropoulos says there are rumours that other banks are proceeding to enter or strengthen their position in shipping finance.
Petropoulos estimates that there are more than 100 Greek shipowners with an attractive fleet, management, financial characteristics and potential that form the target list of most banks.
However, the criteria applied by banks preparing to face Basel II have furthered the prevailing two-tier market, Petropoulos says.
Top owners can obtain reduced spreads but smaller owners frequently pay more, he adds.
Source: www.tradewinds.no, Paper, 22.10.2004, Gillian Whittaker-Athens
Top Tankers enjoys better P/NAV valuation than most
---A year ago, this sort of deal would have been thought impossible after the failure of the OMI PIPE, but no longer. In fact, in the last few months we have many first time events that lead us to conclude that this deal will be successful. Namely, an $80 million secondary offering from TEN Ltd and John Fredriksen's sale of more than $300 million of his own shares. Both shares jumped after these offerings. As you can see from the table, Top shares are trading at a healthy premium to our estimated net asset value (NAV).
Although Top does not specify how it intends to use the proceeds, the company has not been shy about its intention to buy more ships in its key markets: suezmax and handymax tankers. Top was rumored to be the buyer of Ishwari, a double sided, double bottomed, 154,000dwt, 1991 built suezmax tanker from Essar Shipping of India for about $41.5 million but we understand from brokers that the deal was never completed. The ship would have been a good fit for Top as it is a sister ship to two of the vessels Top purchased from Sovcomflot with the proceeds of its IPO, so we might see this deal come back to the table as the ship was not sold.
Moreover, the follow on offering is not surprising in that Top is both hungry to grow and reluctant to over-leverage the balance sheet. The company has stated publicly that it intends to limit the level of debt so that it can use excess cash to fund growth, pay dividends and survive in a down market. To put this into context, as of September 30th Top had a ratio of indebtedness to total capital of approximately 57%. Top currently has $219.7 outstanding with the Royal Bank of Scotland. The $22.5 million Top will raise from the offering will be just about enough equity to finance the acquisition of another double hulled suezmax. It looks like we have ourselves a Fredriksen in training.
Source: Freshly Minted at: www.marinemoney.com, 21 Oct 04
More public listings may emerge from 'bastion' Greek market
---More than 50 banks are counted as having a stake in the financing of Greek-owned ships and total portfolio now exceeds $25bn, writes Nigel Lowry in Athens-
DESPITE the small crop of publicly listed shipping companies of Greek origin and an increasingly sophisticated view of money matters within the industry, Greece remains a bastion of conventional ship finance.
Evangelos Pistiolis' Primal Tankers group earlier this year gained a listing in New York as TOP Tankers, using the funds to acquire a fleet of Sovcomflot handymax tankers, and financial circles suggest that one or two more public listings may emerge from the Greek market in the next few months.
There remains at least one application also pending for the Athens Stock Exchange where deep-sea shipping companies, with the exception of the ferry sector, have only been represented in the past through one or two special maritime affiliates of groups that are better known for their onshore businesses.
But Greece has been well served over the years by a legion of international banks that have supported the entrepreneurial local shipping sector and their lending has been supplemented in recent years by a crop of domestic banks that have made the mark in the industry for the first time.
While there has always been some turnover of institutions financing the Greek controlled fleet, as existing players occasionally drop out and new banks enter the market, a large contingent can consider themselves very mature partners of Greek shipowners.
That has been underlined this year by Dutch lender ABN-AMRO and the UK's Royal Bank of Scotland, both celebrating the 30th anniversaries of the founding of their respective branches in Piraeus.
Altogether, there are more than 50 banks that are counted as having a stake in the financing of Greek-owned ships, with the overall portfolio of lending on the fleet entering this year calculated at more than $25bn.
In the last few years the size of the portfolio has climbed dramatically as the Greek fleet has expanded and replenished itself, notably through a near-unprecedented investment in newbuildings of almost all types, spanning bulkers, tankers, container vessels, LNG carriers and others.
According to a study released by Petrofin Bank Research earlier this year, 10 foreign banks maintained a physical presence in Greece with a total portfolio of $10.1bn in loans to Greek owners.
Meanwhile, the number of non-Greek banks active in the market, but without a presence in the country, was larger - Petrofin counted 29 - although their collective lending portfolio was also very important at just under $10bn.
The total of Greek banks involved in ship finance rose from 12 to 15 by the end of last year. Their portfolio at the start of 2004 was estimated at $5.6bn.
In all, 16 banks were counted as having portfolios of more than $500m and overall the league table of top banks involved in the Greek market reflected a dramatic change over the last decade or so.
Nowadays, continental European and Greek domestic banks dominate the scene instead of the numerous British and American institutions that were to the fore in supporting an earlier phase of Greek shipping growth. There are exceptions, however, the main one being the Royal Bank of Scotland, the largest individual lender to the market with a portfolio now said to be close to $5bn.
Bankers generally agree that Greek owners are currently cash-rich from the recent boom times in most of the shipping markets.
"The high market has given the opportunity to most shipowners to accumulate large sums of cash. It is indeed a time for owners to sit back and wait," Lloyd's List was recently told by Nikolaos Vouyoukas, head of shipping for First Business Bank.
"We have noticed a slight shift in owners' appetite for investment, hence a lot fewer new financing enquiries, which is not a bad thing with highly inflated vessel values," he added.
"We believe that mortgage based finance will maintain its leading role in financing Greek shipping and that the capital markets locally or abroad will remain relatively limited sources of funds for Greek shipping," Mr Vouyoukas added.
Although FBB sees the Greek market as "very competitive", it felt there was a gap to exploit when it was launched under three years ago.
"We felt there was room for a new bank with substantial expertise and deep knowledge of the local market. FBB has already achieved market acceptance and doubled its loan portfolio and customer base."
Source: www.lloydslist.com, Tuesday October 19 2004
Morgan Stanley opens its first office in Athens
---Investment bank Morgan Stanley said on Friday it had opened its first office in the Greek capital to offer its domestic clients easier access to foreign capital markets.
"The Greek market has always been an important one for Morgan Stanley and our decision to open an office there demonstrates our continued and growing commitment to the region", the head of Morgan Stanley's Institutional Securities Group in Europe said.
Jonathan Chenevix-Trench also said that Morgan Stanley's presence in Athens will give the bank the flexibility to expand in the region.
The bank said Panos Goutakis, managing director for businees development in Greece and the greater Balkan region, would head the new office.
Source: www.reuters.co.uk, Fri 22 October, 2004 12:28
Gov't slammed on deregulation of ferry routes
---The Merchant Marine Ministry yesterday came under fire from both Greek coastal shipowners and the European Court of Justice on different grounds over Regulation 3577/92, which deals with the liberalization of the sea transport industry in the European Union.
Shipowners charged that certain actions by the ministry show regression back to the regime of a fully protected industry, rather than harmonization with the regulation.
The complaint was aired by President of the Coastal Shipowners Association (EEA) Stelios Sarris in the presence of the ministry's general secretary, Yiannis Tzoannos, and prominent industry leaders.
The ferry operators back their charge with examples, such as the setting of ship sailing times, determination of routes and a requirement for letters of guarantee. "They require us to deposit letters of guarantee for the routes we wish to operate. This is unacceptable and we shall certainly not apply it," said Sarris.
"We are asking that the current Law 2932/01 be harmonized with the Community regulation so that companies are able to plan and further upgrade the level of services we offer to the public," he added. The shipowners also believe the government must subsidize new investment in order to enable them speed up orders of new vessels, with a view to covering the vacuum projected with a planned mandatory withdrawal over the next 10 years of about 40 old ships.
European Court of Justice
Separately, the European court yesterday found Greece in violation of Community legislation regarding the free provision of sea transport services in member states' internal markets. Specifically, the court found that Greece's decision to include ports in the Peloponnese on the list of island areas and apply, as a host country, its own national regulations regarding crew composition to Community cruise ships above 650 in gross tonnage that sail to its islands, violates Regulation 3577/92.
The regulation, in force since January 1, 1993, determines that ships registered in an EU member country may provide services in any other member, provided they meet necessary standards. A temporary exemption is made for certain services, including sea transport between ports on the Mediterranean islands. For reasons of economic and social cohesion, the exemption was extended to Greece until January 1, 2004 for passenger ferries servicing regular routes and other vessels under 650 in gross tonnage. The court simply said that the Corinth Canal does not make the Peloponnese an island and that all matters regarding the composition of crews on cruise ships are the responsibility of the country in which the ship is registered rather than where it operates.
Sea transport is bound to face problems and companies are already asking for a rise in fares after oil prices skyrocketed, not to mention the bad summer for Greek tourism.
All the signs are that with the opening-up of the domestic market on November 1, 2004, the struggle for survival is under way as foreign liners will also be able to operate in the Aegean and Ionian seas.
Last year, there was a major effort to contain companies' expenses, while negotiations with banks about restructuring loans from the previous two years managed to secure better terms.
Last year, passenger shipping was the sector with the best results on the ASE, despite the Iraq war and the SARS virus that hurt international tourism.
The word, however, is that relations between companies are strained. Strintzis Lines and ANEK are still vying for the profitable Piraeus-Hania line. Minoan Lines is seeking partnerships, with ANEK considered a candidate despite locality hurdles.
Attica Enterprises' partnership with "Mitica" is more forward-looking and the investment firm's participation has already been mirrored in its share's rise.
Source: KATHIMERINI English Edition, 22 Oct 04
UGS comments on Goal-Based Standards, IACS common rules
---As the industry moves towards introducing regulations aimed at constructing more robust ships, the Union of Greek Shipowners (UGS) made the following observations in a statement received by Newsfront October 22.
The Union of Greek Shipowners represents one of the most traditional and committed shipping communities and one of the largest bulk fleets in the world. Greek operators have built and operated bulk ships since their introduction (the late 60's in the case of bulk carriers) and have thus accumulated a wealth of hands-on experience in both tankers and bulk carriers. The UGS is totally committed to the goal of improving safety and quality in shipping and protecting life at sea and the environment. The UGS is equally committed to the elimination of substandard practices in shipping operations which in turn will lead to the elimination of substandard ships.
Since the early 90's the UGS has been on record as supporting the "chain of responsibility" approach to quality shipping which was adopted by the EU as a consequence of its 1993 Communication on Safe Seas and by the Imo through the introduction of the ISM Code, the revision of the STCW Convention, the initiatives on Bulk Carrier Safety and Flag State Implementation. It has also been adopted by the OECD Maritime Transport Committee (MTC) in its own involvement in the effort to deal with substandard shipping. However, none of those Governmental initiatives made any reference to the shipyards and the standards for building ships as the initial and one of the most crucial links in the chain of responsibility.
Having pointed out this serious omission at the time, the UGS is therefore lending its full backing to proposals submitted by the governments of Greece and the Bahamas and supported by IACS to introduce through the Imo goal-based standards for the construction of more robust ships. The UGS is also lending its unequivocal support to the shipping industry's requirement that IACS formulate unified standard rules for the construction of more robust bulk vessels of the tried and tested conventional designs. This, we believe, will minimize the unhealthy aspect of competition between shipyards and between class societies for newbuilding business and put an end to the concept of so-called "optimization" in shipbuilding which is not what the industry requires or desires.
The public at large has been led by the media and policy makers to a "zero tolerance" stance regarding maritime accidents especially those responsible for extensive oil pollution.
This stance is manifestly unrealistic and based on the false premise that only substandard vessels fail. In reality human error and the hazards of the sea are the main causes of marine accidents, and therefore, cannot be entirely eliminated. However, accidents caused by the structural failure of vessels due to their poor design or construction and / or poor maintenance or unsatisfactory repairs can be eliminated.
The UGS is therefore particularly keen to see that the proposals on Goal-Based Standards and the IACS unified rules for the construction of bulk vessels are properly formulated and adopted without any compromises on the necessity for significantly higher standards than those that apply today.
The UGS wishes to register its concern regarding both these topics, as a result of recent proposals by some governments regarding Goal-Based Standards and the apparent haste with which IACS wishes to introduce its recently revealed unified rules without adequately taking into account the extensive comments made by the industry organisations.
The UGS has yet to come across a compelling argument against its view that both Goal- Based Standards and IACS unified rules are necessary and their adoption will ensure the construction of more robust longer-life vessels. This can be achieved at relatively small extra newbuilding cost, whereas the benefits in terms of enhanced safety at sea and protection of the environment will be substantial and are long overdue.
Source: www.newsfront, 22 October 2004,
"Prestige" claims at close to USD 1 billion
Source: The Scandinavian Shipping Gazette, Published: 22.10.04 16.13
Illegal immigrants rescued from sinking boat near Greek island
---ATHENS (AP) - Rescuers pulled 34 illegal immigrants, mostly Afghanis and Iranians, from a sinking wooden boat off the Greek island of Leros, the Merchant Marine Ministry said Sunday.
The immigrants, including three women and six children, had sailed to Greece from nearby Turkey.
They were reported to be in good health after being rescued by helicopter and a coast guard vessel.
Another boat believed to be carrying illegal immigrants was reported to have been nearby, around the eastern Aegean island of Mytilini. The coast guard was searching Sunday.
Tens of thousands of people from Asia, Eastern Europe and the Mideast attempt to reach European Union member each year. Many cross to Aegean Sea islands from nearby Turkey.
Source: http://canadaeast.com/, Canada East, Canada - Oct 17, 2004
Brussels tells yards to give back subsidies
Friday, 22 October 2004
---THE European Commission has told German, Spanish and Greek shipyards to pay back what it sees as illegal subsidies while the Greek government has been told to repeal laws Brussels says are "illegal".
Spain's IZAR must pay back euros556m, Greece's Hellenic Shipyards will pave to repay unspecified sums resulting from Greek legal provisions, which allow the state to cover the yards future employee retirement costs to relieve it from any tax or other duties with respect to reserves and amounts for the increase of share capital, which are used to offset losses of previous years.