Greek Shipping News Cuts
Week 41 - 2007


Bulker price puts owner on defensive

---A Greek owner says it is gaining a strategic relationship with charterers.
Paragon Shipping boss Michael Bodouroglou has justified the record-breaking price of $178m that it paid for two modern panamax bulkers.
On Monday, US-listed Paragon announced it had snapped up a pair of 74,500-dwt ships built in 2006 for nearly $90m each from Greek owner Iolcos Hellenic Maritime Enterprises.
Some traditional shipowners at an Intercargo meeting in Naples this week described the price as "crazy" but Bodouroglou, who is Paragon's chairman and chief executive, is confident it is a financial and strategic success.
The self-made Greek shipping entrepreneur says the deal comes with fixtures to leading grain trader Bunge, which will net Paragon around $64m in charter revenue over the two-year period. He says he sees it as the start of a strategic relationship with Bunge. The new purchases are to be delivered to Paragon in November and December.
One of the units, to be renamed Golden Seas, comes with a charter for 11 to 13 months at $64,000 per day, while the other, to be renamed Coral Seas , is tied into a charter of between 23 and 25 months at $54,000.
The price of just under $90m for a panamax appears to be a record. Bodouroglou concedes it is "not the optimum" amount in comparison with purchases already made in its 11-strong bulker fleet.
But he points out that modern, prompt tonnage is hard to come by in the market and thus it is necessary to pay "top dollar".
Bodouroglou adds the deal further enables Paragon to establish cash flow and grow its operations in terms of economies of scale.
He says the deal is completely in line with a strategy of taking vessels on medium-term charters for one to three years. And it is one of a series of charters from which Paragon expects to net "a cash surplus". Bodouroglou says the cash will be used to pay debts or expand, depending on the view of the market.
He is confident that the bulker market will remain strong for another couple of years and he rejects the argument that the listed company is just using "other people's money" to expand its fleet.
Bodouroglou says the money being spent is also his own as he is the company's largest single shareholder with a 20% stake.
Paragon says it will finance the purchases through a mixture of cash and bank debt using its existing revolving credit facility. The latest arrivals will boost Paragon's fleet to seven panamaxes, three handymaxes and one supramax.
Before its August initial public offering (IPO), Paragon had a fleet of six units but this quickly grew to nine. It later raised $113m through a private placement.
Bodouroglou points out the company's investors are big institutional names who "are not naive and understand it is a cyclical business".
Late last month, New York investment bank Dahlman Rose slapped a "buy" rating on Paragon's stock and a $21 target share price, up fromits launch of $16 per share. This week the share broke the $20 barrier with a rise of 6.17% in early trading to $20.65.
By Ian Lewis, Naples. published: 12 October 2007

Barroso presents action plan for integrated maritime policy
---The European Commission October 10 proposed an action plan for an integrated maritime policy for the European Union. The plan is built on the so-called Greek Paper and the extensive public consultation that ended in June on proposals for a united EU maritime policy authored by Maritime & Fisheries policy Commissioner, Joe Borg.
The plan lists a range of actions to be launched during the mandate of the current Commission.
They include a European 'Maritime Transport Space' without barriers, a European Strategy for Marine Research, national integrated maritime policies to be developed by member states, an integrated network for maritime surveillance, a roadmap towards maritime spatial planning by member states, elimination of pirate fishing and destructive high seas bottom trawling, promotion of a European network of maritime clusters, a review of EU labour law exemptions for the shipping and fishing sectors, a European Marine Observation and Data Network and a strategy to mitigate the effects of climate change on coastal regions.
As the plan was being presented, Borg was warning the EU is preparing to crack down on ship emissions. He told another Brussels gathering: "It is our intention to drive forward a reduction in carbon dioxide emissions by various ways and means with regard to maritime transport." He said a number of schemes to restrict the maritime industry's environmental footprint were being considered by the EU, including tax changes, emissions trading and the use of cleaner fuels.
Borg's comments are further evidence the EU plans to include shipping in its carbon trading scheme by 2012. The European Federation for Transport and Environment's recently claimed the industry is the second fastest growing emitter of polluting gases, behind aviation.
Borg acknowledges it is easier to introduce alternative fuels to ships than it is to aircraft.
Source:, 12 October 2007 Vol. 8 / No. 38

Greek diver killed while examining hull of sunken cruise ship
---ATHENS, Greece: A diver was killed while examining the hull of the sunken Sea Diamond cruise ship off the island of Santorini, authorities said Sunday.
The 44-year-old man, who died Saturday, was part of a diving team gathering video and other evidence for a judicial investigation into what caused the ship to sink, the Merchant Marine Ministry said.
The Sea Diamond hit rocks off Santorini on April 5 and sank hours later. Nearly 1,600 people, mostly American tourists, were evacuated from ship, but two French passengers never were found and are presumed drowned.
An autopsy will be conducted to determine the cause of death, officials said.
Source:, The Associated Press, Published: October 7, 2007

Nikolov said he believed it would be better to continue with one bidder and provide a chance for a swift privatization rather than wait and miss the current favorable global trend for maritime assets.
State-owned Navibulgar is one of the leading cargo operators in the Black Sea basin, with a fleet of 71 ships, with combined capacity of some 1.35 million deadweight tons.
Source: By Tsvetelia Ilieva - Reuters,

DNV signs research collaboration agreement with NTUA
Athens: A strategic research and development collaboration agreement has been signed between DNV and the National Technical University of Athens (NTUA). This agreement will then be followed up by DNV establishing a research and innovation hub in Athens / Pireaus early next year.
The intention is to merge the expertise of two renowned organisations so that they can together develop new initiatives and achieve better results and more progress than could have been done separately.
DNV has for years cooperated with the Norwegian University of Science and Technology in Trondheim- Norway,M.I.T, Stanford University in USA and others .
Source: DNV Press Release, 8th October 2007

InterManager acts on officer recruitment, standards
Each InterManager member will be required to offer at least one cadet berth per ship under full management in its fleet. InterManager also says it will back efforts to convince ship owners to support their managers by investing more in their training and cadet programmes.
InterManager says that it is concerned about the tendency for newbuildings to be constructed without appropriate accommodation to train cadets onboard ship. It intends to use its influence to reinstate proper requirements for cadet berths onboard ships under construction.
In what it describes as a radical move, InterManager will also establish minimum standards for nautical schools with a view to these schools being accredited by the trade association and used as reputable and competent sources of future seafarers for its members.
Source: Wednesday, 10 October 2007,

World bank slams Greece
---Contrary to the conservatives' spin, Greece has only implemented onebusiness reform in the last year. The World Bank tells the Athens News whyGreece has one of the worst business climates in the European Union and islast out of all OECD high income countries
Squeezing out the best: Bulgaria came 46th in the World Bank's business rankings
WHILE countries such as Bulgaria and Egypt are racing ahead with reforms, Greece is lagging behind more than ever, according to the World Bank's newly-published "Doing Business" report. In an exclusive interview with the Athens News, Penelope Demetra Fidas, private sector development analyst at the World Bank and co-author of the report, explains the indicators.
Greece dropped five spots from 95th place last year to rank 100 this year in overall ease of doing business. "This compares poorly with regional neighbours. Bulgaria, for example, was the top performer ranking 46th, which was even better than Italy at 53rd place," she said.
Greece's neighbour the Former Yugoslav Republic of Macedonia (Fyrom) was ranked 75th, while Turkey was 57th, but Albania at 136th place fared worse than Greece.
Egypt tops the list of reformers with positive changes in five of the 10 areas studied by the report. "In terms of the ease of doing business, Greece ranks last out of all Organisation for Economic Co-operation and Development (OECD) high income countries. That group includes: Italy, Germany, Netherlands, Spain, Portugal, France and others," she added.
"The pace of reform in most [of Greece's] neighbouring countries has been very fast," Fidas said. "But it should be borne in mind that we added three countries to the [Doing Business] list this year. So a country can do nothing and still end up worse, as happened in the case of the Czech Republic, which was overtaken by Bulgaria and Croatia," she said.
Only one reform
"Greece has made one tax reform and no reforms in other areas. We do notice that countries slow down in the reform process in the run-up to an election, so this may go some way, in part, to explaining Greece's poor rankings," she said.
Greece ranks low in starting a business (152). It takes 15 steps and 38 days to start a business. A number of business people have told this newspaper that 38 days is a very optimistic number. "The reality is that there is so much bureaucracy that six months would be a more accurate picture," said one entrepreneur. "That doesn't surprise me at all from my own knowledge of Greece," said Fidas, who is of Greek origin.
"A quick and relatively easy reform would be to reduce the number of steps needed to start a limited liability company. If several procedures could be offered in one place - especially the collecting of the relevant stamps - it would simplify the process considerably. Also, the requirement for new entrepreneurs to have $22,000 [16,000 euros] is an old regulation that countries such as France and the UK scrapped long ago. It doesn't protect anyone as an individual can just withdraw the money the next day and, for many, they cannot raise such a sum (Greece rates 84th in raising credit)," she said.
Other secrets lie close at hand. "Bulgaria eased the tax burden on businesses and made it easier to pay taxes online. It also introduced private bailiffs to improve efficiency in enforcing judgements," she said. "And it made building inspections less burdensome. It is also notable that Bulgaria has simpler regulations when it comes to hiring and firing workers. While it costs the employer 24 weeks worth of pay to fire someone for redundancy in Greece, it takes only 9 weeks of pay to do this in Bulgaria."
Asked how she perceives these findings as a Greek, Fidas said, "I have friends that couldn't even enter the labour market in Greece, despite being highly qualified, as the firing costs are so high. Many employers won't hire young people or women; they prefer to pay under the table or offer temporary, low-paid contracts. The strict labour laws designed to protect workers, therefore, often do the opposite."
In another survey just released from Cushman & Wakefield, an international consultancy, Athens came last in quality rankings of business environments among the 33 European cities surveyed. In 2006 it was second from last. The annual survey draws on information from high-level officials from 500 European enterprises.
Athens scored poorly in most key categories, such as the supply of specialised personnel (32nd), accessibility to markets (27th), quality of telecommunications (26th) and the transport network (28th).
Source: ATHENS NEWS , 12/10/2007, page: A21, Article code: C13256A211

Bank of Greece says more reforms needed to maintain high economic growth rates
---The Bank of Greece on Wednesday tabled to Parliament and the cabinet its interim report on monetary policy for 2007. The report noted that the Greek economy, based on conditions of strong domestic and foreign demand, continues to grow with high rates this year, significantly exceeding the Eurozone and EU average rates for the 12th consecutive year. The central bank, in its report, estimated that the impact form a turbulence in international credit markets will be limited on the Greek economy, with GDP growth rate slightly up from 4.0 percent this year, after a 4.3 percent growth rate in 2006. Economic growth will continue to be based on domestic demand.
Investments are expected to rise by 8.0 percent this year, slightly down from 2006 due to a significant slowdown in investments on new homes. Higher economic growth is accompanied by an 1.4 percent annual increase in employment in the first half of the year, while the unemployment rate fell to 8.6 pct of the workforce during the same period.
The central bank said the contribution of external trade to GDP growth is expected to be negative this year, as in 2006, with the country's current accounts deficit expected to reach 14 percent of GDP in 2007, from 12.1 pct in 2006. This development reflects mainly a widening trade deficit, higher interest payments and a higher shortfall in the vessels balance. This negative trend overshadows improved developments in shipping and tourism foreign exchange receipts.
A persisting high current accounts deficit and its funding with capital inflows from abroad has lead to a worsening of the country's negative net international investment position (the public and private sectors' net obligations abroad) to 92.2 pct of GDP at the end of 2006 from 51.1 pct at the end of 2001.
The average annual inflation rate, measured by the harmonised consumer price index, is expected to ease this year, but the core inflation rate is expected to rise to 3.1 pct on average this year, from 2.9 pct in 2006, reflecting inflationary pressures from strong demand and higher labour cost per unit.
Greek households' debt (including securitized loans) totaled 46.9 pct of GDP in August 2007, up from 44 percent in December 2006, but down from a 53.5 percent average in the Eurozone. However, the interest rate margin remains high in Greece (4.19 pct in July) compared with a 3.05 percent figure in the Eurozone.
The Bank of Greece said the Greek credit system continued to enjoy a high degree of stability, based on return on equity, capital adequacy and liquidity indexes in the first half of the year. The central bank noted that credit risks eased in the system.
The central bank, in its report, said the Greek economy continued facing macro-economic imbalances and structural weaknesses that needed to be dealth with effectively to ensure long-term economic growth and employment. The bank noted that a persisting high inflation rate and a widening current accounts deficit could be attributed to: high consumption and home buying investments, a declining international economic competitiveness of the country (because of higher labour costs) and a lower production capacity growth rate compared with domestic demand growth rate.
The central bank bank, underlined that the Greek economy needed a transformation to ensure long-term high growth rates, from an economy based on domestic demand to an export-orientated economy. The main precondition for this transformation will be reducing macro-economic imbalances, such a continuing a fiscal consolidation effort and ensuring price stability. Also, the country needed to improve its savings rate and to improve the composition of its investments, while promoting structural reforms in the labour and product markets.
Achieving significant primary surpluses in the coming years needs first to reduce primary spending on a permanent base and ensuring higher revenues. The central bank said a further reform of the tax system was also needed along with structural changes in spending.
The Bank of Greece noted that reducing early retirement could significantly contribute in reducing imbalances and improving the financial position of social insurance funds, along with a better use of the country's workforce. A consolidation of social insurance funds will also help in the rationalisation of the system. The central bank also recommended measures to boost the country's demographic condition and strengthen the employment and productivity rates.
The announcement by the government of a wide social and political dialogue towards reforming the pension system is unquestionably a positive step, the report noted. The central bank also urged that wage increases be compatible with a price stability policy and further deregulate domestic markets.
The Bank of Greece said that average real wages grew markedly in the last decade, along with a significant convergence of average Greek wages with the Eurozone average level.