Greek Shipping News Cuts
Week 33 - 2008
---It is not only shipowners who are enjoying the good times in Piraeus.
The maritime-services sector has mushroomed in Piraeus in recent years, thanks in no small part to the shipping boom.
It is not only Greek shipowners who are enjoying the good times. The strength of the shipping markets is producing a generation of company bosses in the services sector who are showing just as much entrepreneurial ambition as their owner counterparts and has encouraged a number of individuals to break from established outfits and strike out on their own.
There are now more brokers, lawyers and shipping consultants in Piraeus than ever before.
Getting accurate numbers is tricky as official statistics mostly deal with fleet and shipping-company growth, lumping all sectors into one.
But they are significant. According to the ministry of shipping, there are 12,000 people employed at Greek shipping companies and another 250,000 working in related areas.
The services sector has certainly seen some dramatic changes.
The Piraeus hub offered mostly technical support to owners 15 years ago. The non-technical companies were mainly a few foreign banks, a handful of local ship and insurance brokers, mostly Greek lawyers and an outpost of one protection-and-indemnity (P&I) mutual, the United Kingdom Mutual Steamship Assurance Association (UK Club).
The scene changed around 2000, when improved infrastructure saw services companies begin to move in, spearheaded by P&I clubs and UK law firms.
Owners can now walk into the Akti Miaouli branch of their P&I club at least those belonging to the International Group major classification society, law firm, bank and so on. But they also have access to risk-management operations, derivatives traders, equity funds and software providers services that until recently would have been sourced outside the country.
There is no shortage of brokers, either. According to the Hellenic Shipbroker's Association, the number of brokers working in Piraeus has risen from 325 to 350 in the past year alone.
The development is coinciding with an increasing number of Greeks transferring their shipping operations to Piraeus from other shipping centres, notably London.
Analyst Ted Petropoulos of Petrofin says the services sector has not only swelled in numbers but also also offers owners a broader spectrum of choices and niche activities. This, he says, is a sign of true growth.
The expansion is also persuading some more gutsy folks to try going it alone.
One example is 35-year-old Alexandros Koutalianos, who says he was willing to step out of the safety provided by former employer Meadway Shipping and open his own brokerage, Intelligence Trade&Consultancy Maritime Inc (ITCM).
Koutalianos adds that he made the move to fulfil his personal ambitions.
He set up his one-man show two years ago and today ITCM employs another two brokers. So far, it has handled 10 sale-and-purchase (S&P) deals for modern vessels and is now in the middle of sealing business for a series of newbuildings in South Korea. It may be small fry for the larger shops but Koutalianos says single deals yield a high commission these days.
Former chief executive of Athens-based Alpha Tankers&Freighters Vangelis Katsimantis has also spread his wings recently to launch Mistral Chartering. Before competitive broking, Katsimantis worked for George Economou-controlled Cardiff Marine and prior to that did a long stint at the London offices of the Angelicoussis group.
Katsimantis admits that competitive broking is a different game to what he was used to as an owner's in-house broker. The potential earnings, however, far outstrip the risk of going it alone, he says.
The traditional clusters are dispersing because technology allows people to work from almost anywhere, Katsimantis adds, saying he would never have thought of making such a move 10 years ago.
Other new broking outfits that have been launched since the beginning of the year include CassTechnava, headed up by a joint Greek and South Korean team, and Exantas Shipping Services.
Exantas was set up in the spring by Panos Vlahos, who previously worked for Bulker Shipbroking, another local upstart of a few years ago. The company is now headed by Athina Efstratiou following Vlahos's recent tragic death in a fishing accident.
London-trained lawyer Sotos Skinitis is another who has stepped out on his own, forming his own practice after a year working at the Pireaus office of Norton Rose.
Skinitis recalls that many of his friends saw his decision as a temporary one and that he would likely return to London to establish his operation. But Skinitis sees his future rooted in Piraeus.
Many of the major court decisions that are formulating shipping policy today are based on cases involving Greek-owned vessels, Skinitis argues. Greek owners, he adds, are setting the legal agenda and Piraeus is buzzing with shipping people on the streets something that is lacking in London these days.
"The place for my generation in shipping services is in the developing market of Piraeus," he commented.
Two years down the road, the 34-year-old now employs a legal executive and a trainee solicitor but he is quick to say he gets no favours from shipowners from his home towns on the islands of Oinousses and Chios. His clients, he concedes, are from Andros and Crete. There is a simple rule, he adds owners do not want the sons of their contemporaries to know their business.
By Yiota Gousas, Athens. published: 15 August 2008
Aegean Marine Petroleum Network Inc.: Second Quarter Sales Volumes Increase 55%
---PIRAEUS, Greece, Aug. 13 /PRNewswire-FirstCall/ -- Aegean Marine Petroleum Network Inc. (NYSE: ANW), an international marine fuel logistics company that markets and physically supplies refined marine fuel and lubricants to ships in port and at sea, today announced financial and operating results for the second quarter and six months ended June 30, 2008.
Second Quarter 2008 and Year-to-Date Highlights
-- Increased sales volumes to 1,232,438 metric tons in Q2 2008 and
2,292,572 metric tons for the six months ended June 30, 2008
-- Generated gross spread on marine petroleum products of $39.3 million in
Q2 2008 and $71.0 million for the six months ended June 30, 2008
-- Recorded operating income of $12.4 million in Q2 2008 and $20.9 million
for the six months ended June 30, 2008
-- Recorded net income of $9.9 million, or $0.23 basic and diluted
earnings per share, in Q2 2008 and $17.4 million, or $0.41 basic and
diluted earnings per share for the six months ended June 30, 2008
-- Adjusted net income for Q2 2008, which excludes certain nonrecurring
legal expenses related to Aegean's new U.K. service center, was
$10.8 million, or $0.25 basic and diluted earnings per share
-- Further expanded international marine fuel logistics infrastructure
-- Commenced physical supply operations in the U.K. on April 1, 2008
-- Took delivery of three double-hull bunkering tanker newbuildings
-- On July 1, 2008, completed the acquisition of ICS Petroleum, a
leading Vancouver-based marketer and physical supplier of marine
fuel in Canada and Mexico
The Company recorded net income of $9.9 million, or $0.23 basic and diluted earnings per share, for the three months ended June 30, 2008. For purposes of comparison, the Company reported net income of $7.0 million, or $0.17 basic and diluted earnings per share, for the three months ended June 30, 2007. The weighted average basic and diluted shares outstanding for the three months ended June 30, 2008 were 42,495,020 and 42,644,708, respectively. The weighted average basic and diluted shares outstanding for the three months ended June 30, 2007 were 42,410,000 and 42,471,826, respectively.
During the three months ended June 30, 2008, the Company incurred certain nonrecurring legal expenses totaling $0.9 million related to a dispute involving its service center in Portland, United Kingdom. This dispute has been settled. Adjusted net income, excluding these items, was $10.8 million or $0.25 basic and diluted earnings per share.
Total revenues for the three months ended June 30, 2008, increased by 162.2% to $741.0 million compared to $282.6 million for the same period in 2007. For the three months ended June 30, 2008, sales of marine petroleum products increased by 161.7% to $738.6 million compared to $282.2 million for the year-earlier period.
Results for the second quarter of 2008 were driven by a 96.5% increase in the gross spread on marine petroleum products to $39.3 million compared to $20.0 million for the same period in 2007. For the three months ended June 30, 2008, the volume of marine fuel sold increased 55.0% to 1,232,438 metric tons compared to 795,282 metric tons in the year-earlier period, as sales volumes improved significantly in the Company's service centers located in Greece, the United Arab Emirates and Singapore. Furthermore, results for the second quarter of 2008 included sales volumes from Aegean's acquired service centers in Northern Europe and Portland (UK) which commenced revenue-generating activities in October 2007 and April 2008, respectively, as well as sales volumes from Aegean's new service center in West Africa which was established during January 2008. During the three months ended June 30, 2008, the gross spread per metric ton of marine fuel sold increased to $31.7 per metric ton, compared to $25.1 per metric ton during the three months ended June 30, 2007.
Operating income for the second quarter of 2008 was $12.4 million compared to $7.1 million for the same period in 2007. Operating expenses, excluding the cost of fuel and cargo transportation costs (both of which are included in the calculation of gross spread on marine petroleum products explained above), increased to $29.3 million for the three months ended June 30, 2008 compared to $16.0 million for the same period in 2007. This increase was principally due to a larger fleet of bunkering tankers and floating storage facilities owned and operated by the Company during the second quarter of 2008 compared to the second quarter of 2007.
E. Nikolas Tavlarios, President, commented, "Our strong performance in the second quarter demonstrates management's success in expanding Aegean's logistics infrastructure and penetrating new markets. In addition, we once again utilized our disciplined approach to grow our global service center network with the acquisition of ICS Petroleum, which closed on July 1, 2008 and is expected to be immediately accretive to earnings and cash flows. Upon completing this acquisition, which provides a critical bunkering presence in North America, Aegean has more than doubled its global network for the physical supply of marine fuel over the past two years. Complementing this robust growth, we continue to significantly increase our delivery capacity with the addition of three double-hull bunkering tanker newbuildings to date this year. We remain on track to take delivery of 24 remaining newbuildings over the next two years under our well-capitalized growth plan, increasing our modern bunkering fleet to 52. By further expanding our full-service marine fuel platform, we expect to capitalize on the positive industry fundamentals and drive long-term sales volume growth."
For the six months ended June 30, 2008, the Company recorded net income of $17.4 million, or $0.41 basic and diluted earnings per share, compared to net income of $13.6 million, or $0.32 basic and diluted earnings per share, for the six months ended June 30, 2007. The weighted average basic and diluted shares outstanding for the six months ended June 30, 2008 were 42,483,292 and 42,629,293, respectively. The weighted average basic and diluted shares outstanding for the six months ended June 30, 2007 were 42,410,000 and 42,449,028, respectively.
Total revenues for the first six months in 2008 increased by 156.4% to $1,273.0 million compared to $496.4 million for the same period in 2007. For the six months ended June 30, 2008, sales of marine petroleum products increased by 156.9% to $1,269.0 million compared to $493.9 million for the same period in 2007.
Results for the six months ended June 30, 2008 were led by a 86.4% increase in the gross spread on marine petroleum products to $71.0 million compared to $38.1 million for the same period a year ago. For the six months ended June 30, 2008, the volume of marine fuel sold increased 51.5% to 2,292,572 metric tons compared to 1,513,727 metric tons in the year-earlier period. During the six months ended June 30, 2008, the gross spread per metric ton of marine fuel sold increased to $30.8 per metric ton, compared to $24.9 per metric ton during the six months ended June 30, 2007.
Operating income for the six months ended June 30, 2008 was $20.9 million compared to $13.1 million for the same period in 2007. The increase in operating income was attributable to higher gross spreads (i.e. net revenues) partially offset by higher vessel operating expenses as well as higher general and administrative costs.
Liquidity and Capital Resources
As of June 30, 2008, the Company had cash and cash equivalents of $16.1 million and working capital of $64.2 million. Non-cash working capital, or working capital excluding cash and debt, was $191.2 million as of June 30, 2008.
Net cash used in operating activities was $18.8 million for the three months ended June 30, 2008. Net income, as adjusted for non-cash items, was $14.6 million for the period. However, the net positive change in working capital accounts utilized $31.4 million in cash during the period and the Company made drydocking payments of $2.0 million during the period. Net cash provided by operating activities was $21.5 million for the six months ended June 30, 2008.
Net cash used in investing activities was $40.2 million for the three months ended June 30, 2008, mainly due to additional payments of $42.5 million under the Company's construction contracts with the shipyards as well as payments totaling $1.2 million relating to the acquisition of other assets. Furthermore, the reduction in restricted cash balances resulted in cash inflows to the Company of $3.5 million. Net cash used in investing activities was $52.1 million for the six months ended June 30, 2008.
Net cash provided by financing activities was $64.4 million for the three months ended June 30, 2008, mainly due to the $37.0 million increase in the Company's overdraft balances to finance working capital requirements as well as additional drawdowns, of $28.7 million, under the Company's term loan facilities to finance a portion of the Company's construction costs of its vessels. Net cash provided by financing activities was $44.7 million for the six months ended June 30, 2008.
As of June 30, 2008, the Company had approximately $49.1 million in available liquidity to finance working capital requirements, which includes unrestricted cash and cash equivalents and available undrawn amounts under the Company's short-term working capital facilities. Furthermore, as of June 30, 2008, the Company had a $150.0 million revolving guarantee and letter of credit facility under the Company's $300.0 million senior secured credit facility. Standby letters of credit are critical drivers of growth in the marine fuel industry as most suppliers of refined marine fuel transact on a secured basis. Finally, as of June 30, 2008, the Company had funds of approximately $156.5 million available under the Company's secured term loans to finance the construction of its new double-hull bunkering tankers.
Ziad Nakhleh, Chief Financial Officer, stated, "Our sound financial performance for the second quarter of 2008 was a direct result of our net revenue growth exceeding the growth in our operating and financing costs. Sales volumes improved significantly in our service centers located in Greece, Singapore and the United Arab Emirates and we realized fresh volume contributions from our new service centers in Northern Europe, the U.K. and West Africa. Our enhanced sales volumes were generated during a period of record-high marine fuel prices and, as a result, we drew upon our revolving credit facilities to finance the associated working capital requirements. Going forward, we believe Aegean's considerable financial flexibility combined with the execution of management's growth strategy bodes well for the Company to continue to improve its operating leverage for the benefit of shareholders."
Prees Release in full is available at: http://phx.corporate-ir.net/phoenix.zhtml?c=195297&p=irol-news
FreeSeas to Acquire Handysize Vessel; Increase Fleet to Nine Vessels
---PIRAEUS, Greece, Aug. 12, 2008 (PRIME NEWSWIRE) -- FreeSeas Inc. (Nasdaq:FREE), (Nasdaq:FREEW), (Nasdaq:FREEZ) ("FreeSeas" or "the Company"), a provider of seaborne transportation for drybulk cargoes, announced today that it has agreed to purchase one second-hand drybulk carrier from an unaffiliated third party for approximately US$39.6 million.
The vessel is a 1998-built, 23,994 dwt Handysize vessel built in Japan, and is scheduled for delivery to FreeSeas in late August or early September of 2008. The Free Maverick is currently employed on a time-charter through April/July 2009 at $32,000 per day, and will continue that employment once joining the FreeSeas fleet. The Company intends to finance the acquisition using cash on hand and financing from Hollandsche Bank-Unie NV.
"Even in the current volatile market environment, FreeSeas has been able to secure quality tonnage at a competitive price to enhance the profile of the fleet," said Mr. Ion Varouxakis, Chief Executive Officer of FreeSeas. "The addition of the Free Maverick is compelling for two extremely important reasons. First, she comes to FreeSeas with a charter through next year at a very competitive rate. Furthermore, she will be delivered within the next two to three weeks, and will be contributing revenue almost immediately."
Mr. Varouxakis concluded, "We are constantly seeking ways to expand our fleet and to increase our net income and free cash flow. The Free Maverick will bring our total number of vessels to nine, and we expect that there will be additional opportunities to grow even further before the end of the year. With 93% of our operating days fixed for 2008 and 49% already fixed for 2009, we remain confident that we can navigate the current market and further increase our earnings capacity."
Safe Bulkers (SB) 2Q Results Ahead of Expectations
---Safe Bulkers (SB / NYSE) reported 2Q08 EPS of $0.68, excluding $7.2 million in interest rate swap gains. The results beat our $0.65 estimate due to lower than expected OPEX and interest expense. The company declared a $0.146/share dividend for the quarter, the pro rated portion of its $0.475/share quarterly dividend as it came public in late May 2008. The dividend is payable August 29th to shareholders of record August 22nd.
>Since its IPO, Safe has been active in continuing to lock-in vessels on long term contract. During the past three months, the company has secured a 10-year contract for one of its newbuild Capesize vessels scheduled for 2Q10 delivery at a daily rate of $40,000/day. Additionally, the company has secured a one-year contract for a Post-Panamax newbuild scheduled for 4Q08 delivery at $70,000/day and a two-year Panamax contract for a Panamax commencing in 2Q09 at a staggered rate of $73,000/day the first year and $52,500/day the second year.
>Safe Bulkers is one of the most charter-covered dry bulkers in our coverage universe. Currently 95% of its remaining 2008 days are under fixed contract, 89% of its 2009 days and roughly 65% of its 2010 days are also under contract.
>SB shares have been more stable compared to its peers amidst the current dry bulk volatility. SB shares remain attractively valued at an 18% CF yield, particularly considering the expansive charter coverage and the attractive $1.90/share fixed annual dividend. Although pressure on the dry bulk market could continue to impede price action of the stock, SB shares remain one of the most secure plays in the dry bulk space paying out a dividend yield of 10.6%. We maintain our Buy rating and $23 target, targeting a 14% 2009CF yield.
Source: Dahlman Rose & Company, 12 August 2008
Star Bulk earnings up as Nobu Su share spat emerges
Nigel Lowry, Athens - Wednesday 13 August 2008
GREEK led Star Bulk Carriers has boosted first half earnings in its debut year of operations to $48.3m after a strong second quarter.
The Nasdaq listed capesize and supramax owner reported $31.6m in net income in the quarter ended June 30, including $17m in amortisation of fair value of time charters attached to vessels acquired.
Among other things, TMT allegedly demanded that Star Bulk repurchase approximately 3.8m shares from TMT at a share price of $14 per share, which was the closing price of Star Bulk shares on Nasdaq on June 2 this year.
Star Bulk is denying that it has any such obligation under the Master Agreement and has been discussing the matter with TMT.
Meanwhile Star has declared a dividend of $0.35 per share, representing about 57% of expected free cash flow in 2008.
In reporting second quarter financials, Star also declared it has has had to restate first quarter earnings, dropping net income from $17.8m to $16.7m in the process. There was no change in dividend policy as a result.
The company said that the change was necessary after determining the proper accounting treatment of a total 1.6m additional shares to be issued in two tranches to TMT in connection with the initial fleet acquisition.
It said that under US GAAP it should deem the shares as having been issued after delivery of all the ships was completed, whereas it had previously intended to report issuance of the shares in whichever quarter batch of additional stock would be issued
Top Ships (TOPS) Announces Departure of CFO
Mr. Tsantanis has been the CFO and a Director of the Company since its IPO as TOP Tankers Inc., and has initiated, managed and executed a significant number of financial and commercial transactions for the Company.
The company is currently searching for a replacement for Mr. Tsantanis.
Source: Friday, 15 August 2008 17:02