Greek Shipping News Cuts
Week 50 - 2007


Hellenic shipowners continue to pour billions in newbuildings

---Monday, 10.12.2007, 12:26am (GMT)
With China earning the ''lion's share'', newbuildings remained a rather hot commodity among Hellenic shipping companies during November. According to the latest report issued by shipbroking company G.Moundreas & Co., almost $2.2 billion were invested last month, virtually unchanged from the previous month. As a result, from the beginning of the year, a staggering $30 billion have been poured in newbuildings, representing a total of 522 vessels (with 43 more being contracted in November). This means that 2007 has undoubtedly been the year with the most intense fleet renewal among Hellenic shipowners, since the outstanding orderbook only for 2007 represents about 14% of the Hellenic-owned fleet. This is based on the 3,669 vessels reported as owned by Hellenic interests, at least until the end of February, according to figures provided by Greek Shipowners Cooperation Committee, based in London.
During November, ''shipping was troubled as to the freight market tensions, under the shadow of the U.S. credit crunch, whose consequences threaten the whole development of the world economy, with possible impact on world trade and - as a result - in transportation'' notes Moundreas report. Nevertheless, the endless source of demand called China, coupled with the rest of the developing world, don't seem to allow for a negative development, ending in stabilizing newbuilding orders into high levels.
Bulkcarriers of course remained the centre of interest, since they represent the 37 out of 43 total vessel orders for November. Metrostar's 16 handysize carriers order to Jinse shipyard was the eyecatching event of last month. Theodore Angelopoulos' company is back in newbuildings, focusing to smaller sizes this time around. After reselling its fleet of supramax carriers to Quintana Maritime, Metrostar was reported investing $560 million for the new vessels. NY-listed Danaos is continuing its heavy newbuilding programme, with three more container vessels at the 10,000-TEU mark, with the new ships expected for delivery during 2011. The investment stands at a remarkable $450 million. In the tanker side, chemical tankers remained at the forefront of interest, with Cosmos contracting three 25,000-dwt vessels for a price tag of $41 million each, bringing the total value of the order at $123 million.
Source: Nikos Roussanoglou, Hellenic Shipping News

LR's Greek owners back holistic approach on emissions
---Thursday, 13 December 2007
Apostolos Poulovassilis, Area Business Manager for Greece and Eastern Mediterranean stressed the importance of open policy and technical discussions between all involved in shipping. The Hellenic Advisory and Greek Technical committees are important conduits of information both from and to a large, highly experienced ship management and ownership base.

Christodoulou in top job
---Irrepressible shipping financier James Christodoulou has re-emerged at the head of a new shipowning company just a week after his noisy departure from Greek bulker owner OceanFreight.
His new employer is rumoured to be aiming at an initial public offering (IPO) early in 2008.
The chief executive position, Christodoulou's first, is with Industrial Shipping Enterprises Corp (ISEC), a recent Connecticut start-up that owns two ageing double-hull products tankers, the 27,000-dwt Baffin and Biscaglia (both built 1986).
ISEC has not enjoyed a smooth road to its apparent goal of an IPO and reportedly failed last year in an attempt to purchase US chemical-tanker owner Chembulk before that company went to Indonesia's Berlian Laju Tanker. But financial sources report talk that ISEC has lately received a fresh infusion of private equity from Indian investors with a view to preparations for a public capital-markets transaction.
Although Christodoulou declines to confirm the position with Regent Private Capital-associated ISEC, his appointment there is widely viewed as a done deal in New York shipping circles.
Christodoulou, a much travelled initial public offering (IPO) specialist, has had financial posts with General Maritime, Eastwind, the pre-IPO Top Tankers, Prime Marine, investment bank Dahlman Rose and until a week ago, George Economou-affiliated OceanFreight. At each shipowner he is thought to have been involved with an IPO either planned or carried out.
Last week TradeWinds reported that Christodoulou and Robert Cowen, respectively chief financial officer and chairman, and chief executive officer and president of OceanFreight, had suddenly departed and that the company's main shareholder, Economou's nephew Anthony Kandylidis, was taking over Cowen's job permanently and Christodoulou's pending a search. Cowen subsequently confirmed rumours that his departure was involuntarily, telling TradeWinds he meant to pursue all available legal remedies to his sacking.
OceanFreight and Christodoulou have both said that the latter's departure was motivated by another opportunity. But some speculate that the offer from ISEC may have been a standing one that suddenly became opportune.
ISEC has had four chief executives in its brief lifespan, including Tucker Jeffrey, Bob Burke, Tony Gurnee and now Christodoulou.
Bob Rust Stamford,published: 14 December 2007

Greek ferry sector puzzled by Laskaridis 250M sell-off
---In move to stave-off the aspirations of Italy's Grimaldi group, a major restructuring of the Greek ferry sector seems to be in play. December 11 the Laskaridis family appeared to have sold its entire interest in Greece's passenger shipping sector for EUR 249.6m to John Vardinoyiannis interests.
However, the deal opens the way for the consolidation of Crete's two major ferry companies, Anek Lines and Minoan Lines plus the country's largest ferry group Hellenic Seaways under one roof, or at least inside a single consortium, something sources inside the Marine and Islands Policy ministry have said is not welcome.
With Vardinoyiannis said to be set to meet minister Giorgos Voulgarakis, December 14, ministry officials were unhappy with the reduction of players in the passenger ship market saying "the sitiuation is not good" and that the Competition Committee will likely be asked to "examine the situation", as investment funds become more involved in the Greek domestic seatransportation sector.
In an announcement December 11, Cyprus-listed Sea Star Capital, controlled by Vardinoyiannis, said it had acquired the 26.4% stake controlled by Panos Laskaridis in Iraklion, Crete-based Minoan Lines for EUR 5 a share and confirmed the deal included the 34.7% stake Laskaridis had in Piraeus-based Hellenic Seaways. Laskaridis reportedly acquired his stakes for a total investment of EUR 180m so has made a profit of just on EUR 70m on the deal.
In previous stock dealings, SSC has been building up its stake in Chania Crete-based Anek of which Vardinoyiannis is managing director. Both Minoan and Anek are listed on the Athens Stock Exchange.The Cyprus announcement said the acquisition of the Laskaridis shares had been financed by Deutsche Schiffsbank, Credit Suisse and Bank of Piraeus. A stronger entry of Sea Star follows the acquisition by Marfin Investment Group of the Attica Group in October.
Over the next few days the position will become clearer. However, Panos Laskaridis, one of the world's most prominent operators of reefer ships, is unlikely to have abandoned the sector, although on December 13 he issued a statement saying "the Laskaridis Group has nothing to do directly or indirectly with the passenger ship sector".
This statement followed speculation within the Piraeus shipping and banking circles that Laskaridis and Vardis and George Vardinoyiannis will soon emerge as being behind SSC, along with John Vardinoyiannis. Laskaridis aslo said the possible merging of Minoan Lines and Hellenic Seaways "would be a good thing" and presented "good prospects for both companies".
He also believes the entrance of new shareholders into the sector will make it more profitable in the future".
Further, SSC also recently purchased a 75% stake in Agapitos Shipmanagement's six-ship fleet of multi purpose ro-ro ships for EUR 40m ($56.8m), with the units expected to be merged into the Anek operation. It is also felt Costas Agapitos will emerge as a stakeholder in Sea Star, while Nel Lines' boss Apostolos Ventouris is known to already have a small stake in the Cypriot company.
Indeed, the Lesvos-based Nel has raised a number of issues with Cypriot regulators over the ongoing growth in the Greek marketplace of Sea Star, alleging a possible conflict of interests regarding the share dealings of SSC and the role of John Vardinoyiannis.
It has also been revealed that December 10, Morgan Stanley purchased a 5.11% stake in Anek on behalf of an unnamed client. Some are suggesting it is Laskaridis, while others say it may be Italy's Grimaldi group which already has a 14.2% holding in Anek.
Grimaldi has been to Athens and announced it intends to aggressively expand its operations in the Adriatic and wider Eastern Mediterranean. Company md, Emanauele Grimaldi has said he hopes this can be achieved in co-operation with Anek, and it is this declaration which has probably spurred the restructuring now in play. Grimaldi has spoken to Anek and Vardinoyiannis about a venture with two newbuildings going to Anek as the bait.
Grimaldi has also protested against a meeting of Anek shareholders scheduled for December 19 when, among other things, approval of the issuing of a EUR 120m bond will be sought. Grimaldi says this bond puts existing shareholders at a disadvantage and will lead to a dilution of their shareholding.
Source: Issue 47 (14 December 2007) of Newsfront Greek Shipping Intelligence newsletter.

Sea Star Cyprus takes Adriatic, Greek seas by storm
Sea Star Capital (SEAS), the CSE listed group controlled by Greek shipping tycoon Ioannis Vardinoyannis has taken a 26.71% controlling stake in Minoan Lines and a 34.70% stake in Hellenic Seaways for a total deal value of EUR 249.6 mln, becoming a major player in the Greek passenger and freight shipping market.
SEAS bought 18.481.487 shares of Minoan or a 26.05% stake in the company at EUR 5 per share for EUR 92.407.435 and 26.935.378 shares of Hellenic Seaways or 34.70% of the capital of the non-listed company at EUR 5.75 per share for a deal valued EUR 154.878.423 from companies controlled by Greek entrepreneur Laskarides. The smaller stakes were also purchased on the same terms.
Sea Star financed the whole deal valued at EUR 250 mln from bank borrowing, but expects to pay up to EUR 100 mln in borrowing from the proceeds of its planned rights issue of EUR 169 mln of which EUR 58 mln was used to buy a 14.9% stake in Anek. SEAS was advised by Credit Suisse Securities (Europe) Limited and Deutsche Bank AG, London branch.
Sea Star Board said in an announcement that the decision to acquire the significant stakes in Minoan Lines and Hellenic Seaways was in line with its expansion strategy.
-- Goodwill
Established in 1972, Minoan Lines is active in the passenger and freight market serving the Greek domestic and Greece-to-Italy routes with six ships. By end September, Minoan had a net asset value of EUR 4.18 per share, which means that the goodwill that Sea Star is paying to get the 26.71% stake amounts to EUR 15.5 mln.
Minoan controls 33.31% of the capital of Hellenic Seaways, established in 1999 and with 30 vessels that is also active in the domestic and Adriatic markets. By end September, the NAV of the non-listed Hellenic Seaways amounted to EUR 156.9 mln with net after tax profit of EUR 34.6 mln. The NAV per share of HS as at end of September amounted to EUR 3.20 per share, which means that for Sea Star to acquire a 34.70% stake in the company, the goodwill will amount to EUR 68.8 mln.
Sea Star will treat the total of EUR 84.3 mln as accounting goodwill in its books and write it off over a number of years. For investors the value of the stakes acquired is significantly higher taking into account the fact that the ships are never revalued and are kept in the books at cost, less depreciation.
-- Competition rules
As of May 2006, Greece liberalised fares for domestic routes; operators now can optimise pricing policy and there is a free route allocation. Greece has also abolished the age ceiling, but operators and their vessels need to meet more strict international safety standards and regulations.
On first impression, Sea Star may be viewed as forming a dominant position in the market, but effectively, there should be no issue of abusing competition rules since Sea Star has only significant stakes in Anek, Minoan and Hellenic Seaways with ample competition from Attica Holdings/Blue Star (controlled by Marfin strongman Andreas Vgenopoulos and Dubai investors) and NEL Lines.
The Chairman of NEL, Apostolos Ventouris, did not wish to make a statement to the Financial Mirror regarding the deal.
Marine transport experts told the Financial Mirror that they did not fear a monopolistic situation with cross-holdings of major investors in various ferry or shipping companies, nor of a few cornering the market.
-- Lucrative market
The domestic Greek routes constitute a EUR 450 mln market, primarily served by Anek, Blue Star, Hellenic Seaways, Minoan Lines and NEL.
In 2006, more than 9.5 mln passengers, 1.1 mln cars and 380.000 trucks were transported to and from the Greek islands. Listed operators hold a 65% market share of passenger traffic, 74% of car traffic and 87% of truck traffic.
In passenger terms, the routes from Piraeus serving the Argosaronikos islands (3.4 mln), Crete (2.7 mln) and the Eastern Cyclades (2.2 mln) are the most popular.
Piraeus-Crete (380,000), Piraeus-Argosaronikos islands (250,000) and the Rafina-Cyclades routes (200,000) are the most popular car routes.
For trucks, the routes from Piraeus serving Crete (209,000), the Dodecanese Islands (78,000), and the Eastern Cyclades (47,000) are the most popular.
The Adriatic routes constitute a EUR 500 mln market primarily served by Anek, Superfast, Minoan Lines and Blue Star. In 2006 more than 1.9 mln passengers, 439.000 cars and 334.000 trucks were transported in the Adriatic
-- Grimaldi attacks Vardinoyannis
A shareholders meeting is due on December 19 to discuss the proposal, at which the required quorum is only one-third of the outstanding shares. Grimaldi said he would exercise his right to force a one-month postponement to rally opposition from other shareholders.
With shares eventually sold to bondholders to be priced at EUR 2 - 3.25 the process could see as many as 60 mln new shares issued. Anek now has 161.3 mln shares outstanding.

Greek shipping company fined $4.9M for dumping waste oil
---December 14, 2007 [AP]
Ionia Management was convicted in September after a two-week trial on 13 counts of violating the Act to Prevent Pollution from Ships, three counts of falsifying records in a federal investigation, one count of obstruction of justice, and one count of conspiracy.
Prosecutors say Ionia dumped waste oil several times between January 2006 and March 2007. The crew of its ship Kriton routinely dumped sludge and bilge water into the sea without recording the discharges, prosecutors said. The company was accused of presenting false discharge records to the Coast Guard in ports in Connecticut, Florida, New York and the Virgin Islands.
In addition to the fine, U.S. District Judge Janet Bond Arterton appointed a Special Master to oversee the company's record keeping and hold hearing every six months to review Ionia's records. The judge also ruled that no ships owned by Ionia Management will be permitted into U.S. ports without first installing special monitoring equipment.
The company said in court documents that it has cooperated with the investigation, took significant measures to improve its supervision of staff and suffered significant costs and business disruptions as a result of the case. Senior company officials were not aware of and would not condone intentional oil discharges into the sea, the company said.
Prosecutors were seeking fines of $9 million, but say the penalties imposed Friday should send a clear message that intentional pollution of the international waters will not be tolerated.
The U.S. Coast Guard and Environmental Protection Agency conducted the investigation, with assistance from authorities in the Netherlands.

Withdrawal date approaching for most single-hulled tankers
---By D.S. Sigalas - Kathimerini
The experiment of the withdrawal of single-hulled tankers is of extraordinary interest to the world of shipping.
The regulations suggest that ships must be withdrawn even if they have been built after 1982, although their use is allowed under certain circumstances but not past their 25th year of age, or by 2015 at the latest, whichever comes first.
According to the regulations in place, four very large crude carriers (VLCCs) are set for withdrawal by 2009, while another 19 will go to the scrapyard either due to their age or due to their country of registration deciding not to utilize them beyond 2010. The rest are expected to continue operation beyond 2010, with their owners deciding on the time of their withdrawal, obviously keeping in mind the level and the fluctuation of freight fares, and with alternative solutions for their transformation from tankers into dry-bulk carriers or their continued utilization under the key condition that they successfully pass the costly process of inspections.
At least eight single-hulled VLCCs were sold last year to be transformed into metal carriers, investing in the market of dry-bulk ships, while several tankers built in the 1990s were sold for the same purpose. Today, with the exception of west Africa, countries on the Atlantic do not accept single-hulled tankers, so the sole market remains that of the Far East. Trips between the Arab Gulf and India or Taiwan, China and Japan are the most common.
Regarding the VLCC fleet, the number of new orders is considered low compared with the number of the vessels set to be withdrawn. At present, there are 157 single-hulled VLCCs and six with double hulls, while 152 are expected for delivery by the end of 2010.
There is general realization that in practice the number of the tankers to be withdrawn and the ships to be delivered is virtually the same. However, the picture is not as optimistic as it seems. It is true that several tankers will be delivered ahead of their delivery date. In fact, 36 VLCCs will be delivered in 2008 and another 68 in 2009, while very few are expected to head for the scrapyard in that time, thus increasing their total number and reducing any chances of a major rise in freight fares.
It is also interesting to note that at least half of the single-hulled VLCCs are over 15 years old, and will inevitably be heading to the scrapyard, although the exceptional market of dry-bulk vessels provides for the alternative solution of their transformation for that purpose. There are already plans for the transformation of 114 vessels, including 60 VLCCs destined to carry loads of metal.
Given the transformation and withdrawal options, it will be useful to see the consequences on the market of the withdrawal of 60 VLCCs in 2008 and 2009 and the delivery of the expected 104 VLCCs, which will change significantly the size of the global fleet in this important type of tankers.