Greek Shipping News Cuts
Week 51 - 2004


Shipping maintains position as chief currency earner

---Shipping outpaced all Greek exports of goods and commodities, as well as tourism, as a currency earner in the January-October 2004 period, bringing in 10.9 billion euros, against 10.2 billion and 9.8 billion respectively, Bank of Greece data released yesterday show.
The country's current account deficit narrowed by 2,088 million, or 36 percent, over the corresponding period in 2003, and came down to 3,716 million. This development mainly reflects a substantial rise in the services surplus, an increase in the transfers surplus, as well as a small decrease in the income account deficit, which more than offset a strong rise in the trade deficit.
The trade deficit grew by 2,139 million euros, or 11.3 percent, year-on-year, to 20,700 million euros. Imports rose by 435 million due to higher oil prices.
By contrast, developments in the services account were very favorable, mainly due to shipping receipts, with the surplus growing by 3,472 million euros, or 32.3 percent.
Net transport receipts grew 2,404 million euros and net travel receipts by 704 million. Receipts from tourism in the 10 months totaled 9,870 million euros, against 9,020 million in the same period of 2003.
Transfers from the European Union totaled 5,320 million euros, against 4,250 million in January-October 2003.
The deficit in the "other" services account virtually came to zero.
Non-residents' direct investment in Greece reached 1,044 million euros, while residents' direct investment abroad came to 431 million. The most important direct investments in Greece by non-residents over the first 10 months of 2004 included the acquisition of Panafon mobile phone operator Vodafone, which had taken place partly in 2003 and was completed in January and February of the current year; the acquisition of Geniki Bank by Societe Generale in March; the acquisition of Delta Singular Outsourcing Services by the US company First Data in July; the increase in the participation of Paneuropean Oil and Industrial Holdings in the share capital of Hellenic Petroleum in August, and the acquisition of electrical goods retailer Kotsovolos by the UK's Dixons in September.
Over the same period, a substantial net inflow of 11,690 million euros was recorded under portfolio investment. Finally, a net outflow of 8,721 million euros was recorded under ''other'' investment, largely associated with the sizable outflow of domestic credit institutions' funds to deposits and repos abroad.
In October alone, the current account deficit was smaller by 39 million euros, compared with the corresponding month of 2003. This improvement is mainly accounted for by an increase in the services surplus and - to a lesser extent - by a decline in the income account deficit. No remarkable flows were recorded under direct investment.
At the end of October, Greece's reserve assets came to 3.0 billion euros.
Source:, 18 Dec 04

Greek shiprepair sector in crisis as registration deadline looms
---With the threat of extinction hanging over them, shipbuilders and shiprepairers in the Piraeus/Perama shipyard zones have called on the government to re-think its policy on company registration and development of the sector. The plea comes as time runs out for the facilities, as the government is yet to recind its decision to close companies not formally registered, certified and categorised by the end of the year.
Many companies in the shipbuilding and shiprepair zone have said they will not apply for registration, a move which would bring the industry to the brink of collapse. This has dismayed industry leaders. The Piraeus prefect, John Michas admitting "the crisis in the zone is serious and one of the biggest problems facing the Piraeus region" says however, that "meetings with companies and the representatives of the sector must continue with the view to having them registered by the end of the year".
According to the Union of Shiprepairers of Piraeus (USP), some 639 enterprises should apply to be registered, 33 shipyards and 606 companies. Of this total only 52 have been certified, while 56 have been rejected outright. Those that have applied and have not been accepted or rejected are having their paperwork examined with most of them failing to meet the necessary criteria. Many of these are considered to be well organised, efficient and professional enterprises but are not able to meet the required levels regarding revenue and number of employees. Aim of the programme is to ensure all facilities are up to standard and from the beginning of 2005 the yards and workshops will have to display a seal of compliance.
The Industrial Chamber of Piraeus has proposed to the Development ministry that enterprises which meet all the criteria except that of turnover and wage bill be given temporary registration for three years at the end of which time they must meet all criteria. The ministry is said to be considering either a one year postponement for registration or the 'temporary registration' idea which has the support of seven of the eight unions in the repair zone.
USP president, Vassilis Kokkinos said: "At such a critical time for companies to say they will not apply has surprised me." He said he "is disappointed" for the registration must continue because "it is the result of years of efforts to ensure professional standards".
Stephanos Rissakis, vice president of the production and manufacturers union, says that any extension to the registration deadline will have a negative impact, even on the healthy companies with the result that eventually they will not be able to comply with the criteria either.
Thanassis Kalambokas, president of the body representing small engineering enterprises, says the registration must continue, and points out that the companies which have been accepted or are having their application considered represent a large percentage of the whole production. "A postponement of the registration is no good," he says.
Meanwhile, a special committee set up to examine ways of developing and upgrading the Perama repair zone agrees the registration must continue, but says the legal framework should be looked at again and conditions for registration simplified. It also contends the end-of-year deadline be extended.
This was one of seven proposals made by the committee which looked at longstanding prospects, the results of measures already taken and ways of reviving the area. Committee suggestions include: Purchase of two floating docks able to accommodate panamax size vessels; Creation of a sister company to the Piraeus Port Authority to promote the services of the area; Look at ways of easing the debt burden of the companies to the state through payment plans and discounts; Re-structuring of social welfare payments which would add to the competitiveness of the area; Establish training centres within the state's unemployment organisation which would provide initial training as well as re-training for workers; and Ensure the existing laws covering safety and security in the workplace are strictly complied with.
Source:, 17 Dec 2004

International Shipping Enterprises raises $171 Million
---To the surprise of the many who doubted the success of this deal, yesterday Angelika Frangou's International Shipping Enterprises (ISE) priced $171 million in theoretical equity using a "blank check" structure. If underwriter Sunrise Securities exercises the over allotment, or "green shoe," the proceeds will rise to $196 million.
According to sources close to the deal, the transaction was sold to major mutual funds and institutional investors, many of whom are heavily invested in companies such as Teekay, OSG and Frontline.
Using leverage, ISE could have buying power of up to $1 billion depending on the strength of the cashflows they are purchasing.
As we have described in these pages previously, this structure, which has never been used before in shipping, involves an asset-free issuer raising money for as yet unidentified acquisitions - or a so-called "blind pool." The proceeds of the offering will be placed in trust except for the funds required to fund the company's day-to-day operations. Once an acquisition has been identified, ISE will issue a proxy statement to investors, and if a majority of the investors vote in favor of the deal, it will be funded.
This type of structure has both strengths and weakness. One of the most appealing things about using a Blank Check company is that they are not required to time both the equity markets and the shipping markets at the same time. Since ISE can effectively hang onto the cash without incurring any negative interest carry, the Company can wait for as long as two years to find the sort of market opportunities that are in short supply these days.
The challenge presented by this type of deal is that it can take as long as two months to get shareholder approval to fund a transaction or even a deposit on a transaction. In a cash rich, "sellers" market like the one we will have for years to come, buyers need to move fast and lodge large deposits to capture value. ISE will not be in a position to do this, unless deposits are lodged from a third party and reimbursed upon shareholder approval. Therefore, ISE might have to make up for the long time delay and execution risk by agreeing to pay a higher price.
It has clearly been a great week for the majority owner and also for the company, as it has succeeded in attracting solid US institutional investors who are well known to shipping. We should not be surprised to see the company considering a listing in NY next year.
Source:, Freshly Minted, 16 Dec 2004

Frontline considers takeover bid for oil tanker rival Genmar
---Frontline Ltd., the world's biggest tanker company, said it's considering a bid for General Maritime Corp., a move that would create a company able to ship about five days of OPEC oil production.
Frontline wants ``closer integration'' with New York-based General Maritime, known as Genmar, after declaring a 4.3 percent stake in the company. That ``could include several different forms, from a full merger to a marketing joint venture,'' Bermuda- based Frontline said in a regulatory filing.
Buying Genmar, valued at $1.8 billion, in the world's biggest tanker takeover would boost Frontline's capacity to about 150 million barrels. The move comes as tanker companies' shares surge on record earnings and as Overseas Shipholding Group, the No.1 U.S.-based tanker owner, yesterday agreed to buy Stelmar Shipping Ltd. for $843 million.
``It gives the owners more bargaining power against the oil majors,'' said Thomas Soederberg, a director of Tribini Capital, a Hong Kong-based ship finance adviser. ``When you're looking at doing contracts you have a lot more flexibility. The scope of having a big fleet is a definite issue.''
Genmar's chief executive, Peter Georgiopoulos, rejected a Dec. 3 request to discuss closer co-operation, Frontline said in the filing to the Securities and Exchange Commission yesterday in New York after the stock market closed.
``Frontline has reason to believe the concept of integrating Frontline and General Maritime has support in General Maritime's shareholder base,'' the company said.
Fidelity Investments is the biggest shareholder in Genmar, with a 14.4 percent stake, according to data compiled by Bloomberg. Boston-based Fidelity is also the largest independent shareholder in Frontline, with 5.8 percent, Bloomberg data shows.
Analysts including JPMorgan Chase & Co.'s Jon Chappell said Frontline Chairman John Fredriksen, Norway's richest man, may be able to run Genmar's 43 ships more profitably.
``Fredriksen has so much money. There are definitely upsides from doing it at the moment,'' Tribini's Soederberg said.
Tanker owners have had record profits as shipping rates soared this year on a surge in oil demand.
The Bloomberg Tanker Index, which tracks the shares of seven New-York listed tanker companies including Frontline, Genmar, Overseas Shipholding and Stelmar, has more than doubled this year, making it the best performing of 480 equity indices followed by Bloomberg.
Track Record
Fredriksen took control of Frontline, then a Stockholm- listed company, in 1996. A series of takeovers -- London Overseas Freighters in 1997, ICB in 1999 and Golden Ocean in 2000 -- made it the world's largest tanker company.
The company operates 35 very large crude carriers, each able to take on 2 million barrels of oil, and 31 tankers half that size, known as Suezmax vessels. Genmar has 17 Suezmax tankers and 26 so-called Aframax ships, which can carry about 600,000 barrels of oil each.
Frontline had bought more than 5 percent of Genmar's stock on Dec. 3, the filing said. It has since reduced its holding. The company gave no reason for selling shares.
Genmar's management issued a regulatory filing on Dec. 8 that said Frontline had bought a stake and that there were no plans to sell the company.
Frontline's shares rose 5 percent yesterday to $52.81, bringing gains for the past year to 180 percent. The company has a market value of $3.9 billion. Genmar's its shares surged 200 percent over the same period. The company has $655 million of debt, according to Bloomberg data.
Frontline may reap as much as $95 million in annual benefits and oversee a fifth of the world's million-barrel vessels by taking over Genmar, analysts including Bjoern Knutsen at Pareto Securities said last week.
JPMorgan said the companies could get benefits of $66.5 million if Genmar's Suezmax tankers earned as much and were operated at the same cost level as Frontline's.
Genmar's fleet of million-barrel tankers has earned $1,000 to $9,000 a day less than Frontline's over the past two years, while operating costs are about $1,000 per day higher, JPMorgan's Chappell said in a note to clients.
``The good thing about consolidating a market like the tanker market is you get a lot more stability in your rates versus the old fragmented market you used to have with a lot of small owners,'' Tribini's Soederberg said.
Frontline already has a marketing joint venture with Stamford, Connecticut-based OMI Corp., the world's No. 3 owner of Suezmax tankers with 15 vessels.
New York-based Overseas Shipholding agreed to buy Stelmar for $48 a share in cash, an 8.3 percent premium to Stelmar's closing price Dec. 10, and assume $457 million in debt, Athens- based Stelmar said in a statement yesterday.
Tanker rates have dropped over the past four weeks, with the cost to ship 2 million barrels of crude oil on a very large crude carrier, or VLCC, from the Middle East to Japan about 15 percent lower than the record high reached Nov. 10.
Source: Dec. 14, 2004 (

U.S. shipper buys Stelmar for $843 Mln
---NEW YORK (Reuters) - Greek shipping company Stelmar Shipping Ltd. (NYSE:SJH - News) on Monday agreed to be acquired by shipbuilder Overseas Shipholding Group Inc. (NYSE:OSG - News) for $843 million, after two previous bids for the company failed.
Paving the way for the deal to go through, Stelmar's founder and top shareholder, Stelios Haji-Ioannou, said he was pleased that OSG had raised its previous offer by $170 million. He said he had "no misgivings" about the deal.
That would put an end to a saga that began in May with an unsolicited stock offer for Stelmar initially worth $562.8 million from Stamford, Connecticut-based OMI Corp. (NYSE:OMM - News). Stelmar management rejected that bid.
Last month, Stelmar shareholders voted down a subsequent $703 million cash buyout by private equity firm Fortress Investment Group LLC, due in part to efforts by Haji-Ioannou, who with his family controls a 20 percent stake in Stelmar.
Haji-Ioannou had backed the OMI bid and argued that the Fortress bid was lower. The value of the OMI bid had risen over the months with OMI's stock price.
New York-based OSG said it would pay $48 per share for Stelmar, a premium of 8 percent above Stelmar's closing stock price of $44.32 on Friday on the New York Stock Exchange. The value of the deal, including Stelmar debt to be assumed by OSG, is $1.3 billion.
Stelmar shares rose $3.41, or 7.7 percent, to $47.73 in morning New York Stock Exchange trading. OSG shares rose $4.25, or 7.5 percent, to $60.76.
OSG largely focuses on crude oil shipping on a spot basis, while Stelmar focuses on "time charters," in which it hires out a ship for a contracted period of time.
OSG has said it is interested in expanding in other areas such as the transport of liquefied natural gas.
Stelmar's board approved the OSG offer, which it aims to close by the end of January.
The rejection of the Fortress bid last month started a new sales process that was handled by a special committee that excluded Stelmar management.
After the Fortress bid was rejected, Stelmar Chief Financial Officer Stamatis Molaris resigned on Nov. 17.
Haji-Ioannou was not a member of the committee that evaluated the OSG offer but said he had been consulted by Stelmar's investment bankers as the deal was negotiated.
OSG was advised by UBS and Stelmar was advised by Morgan Stanley & Co. and Jefferies & Co. (Additional reporting by Jessica Hall)
Source:, Monday December 13, 11:44 am ET

Stelios, who together with his brother owns 20 per cent of Stelmar, said the offer from OSG had vindicated his opposition to the Fortress bid, which he maintained undervalued Stelmar even though it was supported by the board of the company. The Fortress offer was subsequently voted down at a shareholders' meeting.
After the defeat, Stelmar's non-executives set up a new committee which excluded the management of the company, to consider bids for the business.
In a statement on his website yesterday, Stelios said he had no misgivings about the bid process this time but declined to expressly approve the OSG offer before the shareholder vote. "Like all Stelmar shareholders, I am delighted to have a new floor to our share price and I will be evaluating the deal in relation to market conditions closer to the vote date," he said.
Stelmar was the first business to be created by Stelios after he left his father's shipping business Troodos in 1992, aged 25, to branch out on his own. It listed on the New York Stock Exchange in 2001.
Apart from airlines, Stelios has since gone into car rental, cinemas, personal finance, hotels and, his latest venture, men's grooming products. A spokesman declined to say what Stelios would do with the money if the Stelmar takeover goes ahead.
Source:, By Michael Harrison, Business Editor, 14 December 2004

Other people's money
---A parade of shipping companies offered shares publicly for the first time in 2004, and some are promising dividends. Maritime-related share prices have hit record highs, but are prospective investors riding for a fall?
And it appears there will be no shortage of publicity-seekers in 2005. Teekay has announced its intention to list up to 22% of its LNG division on the 'Big Board' (the New York Stock Exchange), and Cosco Container Lines has revealed plans for its own $3Bn IPO. Baker also reports that up to 12 Greek shipping companies are discussing plans to list, "which would be astounding," he thinks. Why now? "Timing has never been better for shipping issues. It's a cheap way of raising financing," shrugs David Beaves, another Ince partner. Going public also gives a firm a stack of cash and a valuable new currency that it can use to acquire other companies. Camillo Eitzen is a fine example.
Having completed a $45m IPO back in June, the company promptly went shopping and acquired stakes in a couple of tanker companies. Camillo Eitzen has recently gone back to the market to finance its proposed acquisition of the remainder of Sigloo Gas.
Shipping too cyclical?
Yet some critics have blasted the fashion for going public. One KG fund manager declares: "If you are a public market you are pushed and driven by quarterly results. I think it is dangerous in an industry that has a 10-12 year cycle. I'm very much IPO adverse." So is shipping too cyclical for the equity markets? Securities lawyer Robert Lustrin of US-based Seward & Kissell dismisses the argument. "Many industries are cyclical. As long as you disclose cyclicality, it is up to [investors] to make an informed decision," he reasons. So should shipping companies opt for an IPO? "Absolutely, yes."
"Is there going to be pressure? Absolutely. The pressure will be on those companies that have promised dividends," declared one banker at the London Ship Finance conference. With booming rates, it is clear that in the short- to medium-term that firms will easily be able to maintain their dividend payments. Yet experts point out that operating costs are increasing and freight rates are far above their historical norms. Long term, will investors get their large returns via dividends? "No," declares Ince partner Fred Vroom, "nor in capital appreciation,". Our banking source is pessimistic too: "People investing for yield are going to be surprised when the dividend goes down and stock prices drop," he states darkly.
Caution: values can go down as well as up
"We find that whole communities suddenly fix their minds upon one object, and go mad in its pursuit" - historian Charles McKay (1841)
1636 - Tulipmania! A single flower traded on the Amsterdam Stock Exchange is worth 5,500 florins whereas average yearly income is only 150 florins. It can't last. "Prices fell ... and a universal panic seized upon the dealers," chronicles McKay. Bubble collapses.
1840s - Railway Madness! The unfortunate people of England again finance a mad investment boom. Railway shares increase dramatically and money is poured in by speculators before the bubble collapses.
1929 - Black Thursday! Speculative and, particularly, margin trading inflates a stock market bubble. Realisation kicks-in, panic selling ensues and bubble bursts. New York Stock Exchange crashes, ushering in the Great Depression, suicides on Wall Street, the end of the Weimar Republic in Germany and, indirectly, World War II. In the US, 100,000 companies were forced to close shortly after the crash. 1996 - "Irrational Exuberance"! With these words Federal Reserve Board Chairman Alan Greenspan implies that stock-markets are overvalued. Share prices immediately slump worldwide. Greenspan presumably vows never to repeat that phrase.
2002 - Dotcom Days! Stockmarkets boom as speculators pour money into dotcoms - usually retail businesses selling low-value goods over the internet. Following several high profile bankruptcies, the bubble bursts. The Dow Jones loses around 27% of its value.
2004-05 - Shippingmania! Numerous shipping IPOs. Share prices of marine-related companies hit record high. Money pours in from speculators. Experts deny bubble exists.
Source: Cover Story, Fairplay International Shipping Weekly, 16 Dec 2004

Marine Money Greece announce first Gulf Ship Finance Forum
--Marine Money Greece announce that their Dubai event, the 1st Annual Gulf Ship Finance Forum, will take place 2 February 2005 at the Grand Hyatt Hotel.
Marine Money has chosen Dubai because it is a location which epitomises growth and development. But it is not only Dubai which is growing in the region. Look at Abu Dhabi; look at Kuwait; look at Qatar. Look at shipping companies in Iran. Not least look at the potential in Iraq.
Brokers will present International and Regional Market Outlook, Shipowners will Define Opportunities, Bankers will discuss Traditional and Alternative Ship Financing including Islamic Finance, Leasing structures and Construction Finance.
Speakers and Delegates to-date are chief executives of: Tufton Oceanic Ltd. * Transworld Group - Orient Express Lines * Simpson Spence & Young Ltd * Simatech Shipping LLC * Ports Customs and Free Zone Corporation * Norton Rose * National Bank of Fujairah * IRISL Group (IR Iran Shipping Lines) * International Tanker Management * Gulf Management International Ltd * Gulf Energy Maritime * Galbraith's Holdings * First Ship Lease * Emirates Ship Investment Company * Emirates National Oil Co - ENOC * Emarat Maritime LLC * DVB Bank AG London Branch * Dubai Maritime City * Caterpillar Financial Services (UK) Limited * Barry Rogliano Salles * ArabCapital * Access Maritime Corp.
Final Program and Registration Form are available at Further information: E-mail:
Source: Announcement, 13 Dec 2004