Greek Shipping News Cuts
Week 51 - 2006


Major ports face risk of being ditched

Already, Mediterranean Shipping Company (MSC), which accounts for about a third of the total volume handled in Piraeus, has given notice that it is scaling down its operations at the two ports.
Some other operators are said to be considering imposing surcharges, ranging from $200 for a 20-foot (6-meter) container to $400 for a 40-foot container.
The overtime ban and go-slow have caused shortages in more than 50 different seasonal products on the retail market, particularly dried fruits, spices, paper products, pulses, spare parts and toys. Traders said the backlog of containers is bound to feed inflationary pressures as of next month.
Source:, NIKOS BARDOUNIAS, 20 Dec 2006

Kefaloyiannis defends port privatisation
--- Speaking in Parliament on the fifth and final day of the debate on the 2007 budget, Merchant Marine Minister Manolis Kefaloyiannis on Thursday defended government efforts to open selected services in Greece's two major ports, Piraeus and Thessaloniki, to the private sector.
At the same time, he denied that the plan was a privatisation, pointing out that 75 percent would remain in the state sector.
Justifying the move, Kefaloyiannis pointed out that the payroll accounted for 75% of running costs for the Piraeus Port Organisation.
"There was a risk that, at the end of our four-year term, we would hand over a new, bankrupt "Olympic Airways", where 100% of the costs would be the payroll," he added.
He also claimed that there were distortions and excesses in the present system, with a few privileged employees earning up to 12,000 euros a month, or the payment of 2.5 million euros in overtime to 70 individuals for the maintenance of 12 vessels that were not currently sea-worthy.
Source:, Athens News Agency, Greece - Dec 21, 2006

Greek spending set to hit $10bn
---Greek owners have been hungrier than ever for tonnage.
Spending by Greek shipowners on secondhand ships and resale contracts looks set to reach $10bn by the end of the year.
TradeWinds calculates that a total of 316 ships have been bought by Greeks this year, totalling over 22 million dwt and costing some $9.6bn. The figure is almost invariably higher given that some deals go unreported.
The figures are already well up on 2005 year-end totals, when 289 ships of just over 19 million dwt were bought for about $8.2bn.
The 2006 spending gives a clear indication of how prices have risen, as compared to 2004, when TradeWinds calculated that some 370 ships of 24.4 million dwt cost $8.49bn.
On top of the Greek owners' newbuilding splurge this year, which has seen them commit an estimated $16bn on new ships, their impressive fleet renewal is also highlighted by the fact that out of the reported sale-and-purchase (S&P) deals, well over a third were ships built post-2000, including around 45 resale contracts. Out of the total purchases more than 100 ships were built in the 1990s, with 1980s-built units accounting for 85 ships and just seven 1970s-built ships, of which two were promptly resold for demolition.
Although there were a number of substantial tanker purchases, bulkers accounted for around 60.75% of the ships bought by Greek owners during the year.
A phenomenon observed during 2006 has been a number of companies rapidly flipping ships purchased earlier in the year for significant profits, with at least a dozen ships involved in such deals.
One of the most recent examples was this month's sale by Sea Justice of the 76,000-dwt Timeless (built 2002). Sea Justice bought the ship in April for $34.6m and, even taking into account a special survey to be carried out before delivery, which will cost between $1.5 and $2m, the company will make a handsome gain from the $47.9m compatriot owner Meadway is paying for the ship.
Meadway itself has been very active on both sides of the S&P market, buying four ships and selling six, including two it bought earlier in the year. The company made a whopping $7m profit on the 23,700-dwt bulker Lark (built 1996), purchased as the Gloire in March for $14.5m and sold in December for $21.5m. In November, it booked a solid $5.5m profit on the 53,000-dwt Delvina (built 2006), which it had purchased just three months previously for $38.5m.
Pacific & Atlantic also did well on two pairs of panamaxes built in 1996 and 1994 that it purchased in January and February for a total of $89m, selling them to listed player Dryships in August for $111m en bloc.
Listed Greek companies continued to feature as strong buyers in 2006, taking in about 68 ships.
Quintana single-handedly spent over $800m on 18 confirmed buys, including the $735m en-bloc purchase of 17 panamax and kamsarmax bulkers from Metrostar. It is also reported to have bought a capesize newbuilding from compatriot Transmed this week for $93m.
Tsakos Energy Navigation shelled out $530m to buy six panamax and three aframax tankers from Western Petroleum in March. It also confirmed two resale contracts for 73,000-dwt panamax products tankers at Sungdong Shipbuilding & Marine Engineering in September.
Dryships has confirmed seven additions to its fleet this year but has also been credited by brokers with a further three purchases, while LPG player Stealthgas has taken eight new vessels.
Gillian Whittaker Athens, published: 22 December 2006

Gourdomichalis brothers quit Nasdaq-listed FreeSeas
---Brothers George and Stathis Gourdomichalis are selling their stock and promissory notes in FreeSeas Inc the company they co-founded and took onto the Nasdaq. An announcement from FreeSeas says the brothers are stepping down as president and cfo of the Piraeus-based dry bulk shipowning company.
The December 19 announcement said the two are selling to ceo and co-founder, Ion Varouxakis, for a total $10.5m. The announcement said the Gourdomichalis brothers are selling 2.8m shares at $3.268 a share for a total of $9.19m, plus promissory notes for $1.3m, with the transaction scheduled for completed by early January. No explanation for the breakup was provided, though analysts say Varouxakis is keen to pursue a more aggressive strategy.
In thanking the Gourdomichalis brothers for their dedicated service, Varouxakis said "the top item on the Company's agenda now is to forge strategic alliances and create synergies with new partners in order to expand the company, taking immediate advantage of the booming dry bulk shipping markets".
The brothers, also cease to be company directors, but are free of liability to FreeSeas for they are to be indemnified for six years for claims arising from their role as executives or directors of the company. FreeSeas is also to maintain directors and officers liability insurance for the same six year period.
The three founders owned some 70% of the Marshall Islands corporated FreeSeas which has three bulkers ranging in size between 25,200dwt and 39,200dwt with an average age of over 23 years and since listing a year ago has operated in loss.
Source:, 22 December 2006 Vol. 7 / No. 48

Navios : $300M Bond brings flexibility
Around the market some commentators were suggestingthat this was a bizarre move. Why raise expensive high yield debt to repay cheaper commercial debt? We thought a visit to the Greek shipping newsmaker of the year was worthwhile to get the company rationale and logic.
Do the Math
What had been overlooked by the layman is the current pricing of the HSH facility, which depended on the tranche. Prior to the bond, the HSH financing was priced, on average, at Libor + 193 bps giving an effective rate of 7.30% on $545.4 million of debt. This HSH financing was secured by the owned vessels, the revenues of the chartered in vessels, and the Uruguay operation. While it might appear that the senior notes, priced at 9.5%, would result
in a substantially more expensive debt package than the HSH financing, this is not the case. The senior notes caused the re-pricing of the HSH $254 million balance (after prepayment from bond proceeds) to around Libor + 70 bps, for an effective rate of 6.07%. Thus, the arithmetic shows that the weighted average of the HSH debt plus the senior notes is about 7.93%. The real pricing differential is only 63 bps or about $4.1 million on $554 million of debt.
Flexible financing
So what are the other benefits to Navios of the bond financing? For a mere 63 bps Navios get a large, non-amortizing and unsecured tranche of finance; reduced amortization of $48 million in 2007; and a liquidity line of $125 million for corporate use. Add to this $100 million of cash on the balance sheet and it is clear to all that Navios now has a war chest with which to go confidently into the New Year.
What of 2007
But Navios is not really interested in individual vessel acquisitions from the market. What would really add value is the acquisition of a company, one filled with complexity. It is the evaluation and transformation of such companies where Navios has expertise and where value can be extracted.
Overall the senior note financing has strengthened the Navios balance sheet whilst the flexible covenant package permits vessel and company acquisitions, permits dividends and risk management, and permits a South American logistics play. In summary a smart move by the company means that Navios can continue to capitalize on consolidation opportunities in the sector.
Source:, Marine Money Freshly Minted. Thursday,December 21, 2006, Page 1

Top taps new auditor
Source: Fairplay Daily News, 20 Dec 2006

Tsavliris family fail in Appeal Court battle
---Papers were originally served on shipowner at an incorrect address, writes Roger Pearson- Friday December 22 2006
The Tsavlirises had appealed against a High Court ruling that the Greek judgment is unenforceable in English courts because papers were originally served on Mr Tavoulareas at an incorrect address.
However, Lord Justice Longmore, sitting with Lord Justice Buxton and Lord Justice Carnwath, backed the High Court ruling of Mr Justice Tomlinson.
In the decision under chalMr Justice Tomlinson said that the legal battle had its roots in a casualty suffered in August 1991 by a tanker called Atlas Pride when its bow fell off near the coast of South Africa, and in its subsequent salvage.
Also in November, 2001, George and Andrew Tsavliris, their brother Nicholas and four Tsavliris companies issued their own proceedings in the Greek courts in Piraeus.
Mr Tavoulareas, who now lives in Florida, became aware of the Greek proceedings on December 31, 2001, in papers from his solicitors Stephenson Harwood but, following an application to adjourn them in January, 2003, played no part in them.
In October, 2004, having heard the trial without attendance by Mr Tavoulareas, the Greek court found in favour of the Tsavliris claimants.
They claimed he was aware of the proceedings, took part in them at an early stage and could have attended the trial if he had wished. So, while there might have been a mere formal irregularity in the service, that should not be enough to render the judgment unenforceable, they argued.
They claimed that Mr Justice Tomlinson was wrong in principle to rule as he did.
Source:, Company News

Greek Pipeline Deal to Be Ready in 2007
The $1.3 billion, privately funded project involves a 175-mile pipeline to bring Russian oil from Bulgaria's Black Sea port of Burgas to Alexandroupolis, in northeastern Greece. Russia is expected to have a 51 percent share in the deal, with Bulgaria and Greece splitting the remaining 49 percent.
The deal originally was to have been signed in late 2006, but the project has frequently stalled due to disputes over the countries' shares in the pipeline.
Visits to Greece in September by Russian President Vladimir Putin and Bulgarian President Giorgi Parvanov, and the following month by Russian Prime Minister Mikhail Fradkov, gave the undertaking a much-needed political boost, while high oil prices have raised its economic potential for the three countries.
Foreign Ministry spokesman Giorgos Koumoutsakos said the Greek, Bulgarian and Russian governments were now making rapid progress towards settling the final details.
"Developments are moving toward the signing of an agreement for the Burgas-Alexandroupolis pipeline in the first days of the New Year," he told a press briefing.
Bulgaria has also been pressing for an agreement that would accompany its entry into the European Union on January 1. Greek Foreign Minister Dora Bakoyannis is scheduled to visit Sofia over the New Year to participate Bulgaria's EU entry celebrations.
The pipeline is expected to be operational by 2010, initially carrying 700,000 barrels a day to the Aegean Sea and by-passing Turkey's tanker-congested Bosporus Straits. Capacity could eventually rise to 1 million barrels a day.
Source: Dec. 21, 2006, 2:28PM,