Greek Shipping News Cuts
Week 40 - 2008


On and Off Akti Miaouli

---excerpts from Newsfront weekly newsletter.
# Apostolos Ventouris, president of the Association of Greek Coastal Shipping Companies and md of Nel Lines has vigorously defended the association's decision to go to the high court in a bid to get the process under which concessions are granted to operate unprofitable lines in the Greek domestic network annuled. Unless a timely decision is made, many ferry services could be curtailed from November 1. Addressing the 'Second Panhellenic Conference of Small Islands' held on Ithaki Island, September 26, Ventouris said the association went to court in an effort to have the "bidding process conducted on an equal footing" claiming that at present there is no transparency in the process and conditions imposed eleminated most operators from the process. Indeed, he told the conference which focussed on the needs of the small islands that there "is no longterm planning on the part of the state for the unprofitable lines". He said the government is always using the excuse "there is no money available for the unprofitable services", yet some Euro 175m is collected each year from levies for third parties imposed on all ferry tickets sold. Noting these levies are to provide funds for the transportation network, he said only about Euro 45m "actually finds its way back into the system". "What happens to the rest ," he asked delegates, many of them representing town halls which are said to be receiving funds from the levies to improve local infrastructure. By way of comparison he said for an older slow vessel on a unprofitable route will cost the taxpayer some three times more than it would for a modern highspeed vessel to do the service.
# Operator of ships on the subsidised routes, Athens Stock Exchange-listed SAOS Ferries, has informed the ASE it is facing cash flow problems due of a combination of "a huge increase in the cost of fuel", a delay in payment of subsidies due to it, the cost of renovating two ships and payment of amounts due to it from travel agents. SAOS has an outstanding obligation of Euro 2.55m but says this does not cause disruption to the operation of the company. In Newsfront Vol 9 Nr 36 it was reported the 10,729gt Panagia Agiasou and the 4,773gt Panagia Krimniotissa had been seized by Piraeus Port Authority (PPA) in pursuit of claims of Euro 11,846 and Euro 53,411 respectively against the registered owners, SAOS A.N.E.S.
# October 2 an agreement was signed by the Piraeus Port Authority (PPA) and an eight-member consortium for the 25-year concession to build and operate a major exhibition centre in the Palataki region of the Piraeus port. The project will involve an investment of Euro 90m and will comprise a 34,000sq mtr exhibition centre and a 36,000sq mtr area for carparking and shops, entertainment centre and offices. Those behind the project plan to have it ready to stage Posidonia 2010, set to open June 7 and run to June 11. Marine, Aegean and Island Policy minister, Anastasios Papaligouras hailed the signing of the agreement saying "it opens the way for the return of Posidonia to Piraeus". Under the agreement, the PPA is to receive a minimum annual rent of Euro 2.5m in 2010, which will increase 4.5% annually.
# The United Arab Emirates-backed Marfin Investment Group (MIG), owner of the Attica Group ferry banners, Blue Star Ferries and Superfast Ferries plans to move ahead with a Euro 5bn share capital increase, by placing new stocks "with a strategic investor". The scheduled October 27 general assembly of the Andreas Vgenopoulos-led equity group, which is 20% owned by Dubai Financial LLC, will be asked to vote on the share capital increase proposal, with the funds in place for opportunities in the banking sector which may arise from the global financial and credit crisis. In a statement, MIG said: "MIG believes that ongoing market conditions will eventually result in a series of significant opportunities in both Greece and Southeastern Europe." Some 834m shares are to be offered at Euro 6 a share.
# John M Lyras, chairman of the London P&I Club, has again emphasised the need to pay attention to the welfare of ships' crews. "Given the central role played by crews in keeping the seas safe and clean, thereby helping to control the Club's costs, we must pay continuing attention to the conditions they face during their service," writes Lyras in the club's newsletter. "The recent detentions of senior crew members of the Hebei Spirit in Korea look like being yet another example of the discouragement of valuable potential seafarers from making a career at sea. The London Club is not directly involved and the full story is yet to emerge, but the protestations of the ship's managers seem depressingly familiar."
Lyras also notes the club has from time to time received reports of heavy-handed boardings by representatives of government agencies in the USA, one of the effects of which has actually been to distract the crew to such an extent it prevents them from going about their normal duties and the wellbeing of the ships and the environment and people in and around them has potentially been compromised.
However, he writes: "I have seen a directive sent by the [USCG] Commandant, Admiral Thad Allen, to all Coast Guard districts, setting out his expectations and displaying a clear intention that conduct of the sort the club has heard reported will not be tolerated. The directive refers to the professionalism of ships' crews generally and an understanding of the desire of shipping to work in partnership with the Coast Guard with a view to enhancing safety. This forthright recognition that improvements can be made and that partnership is the way forward is immensely reassuring and it deserves publicity and a positive response."

Deal could return Posidonia home
---POSIDONIA could return to Piraeus, Greek shipping minister Anastasis Papaligouras has suggested in reaction to an accord to build a Piraeus Port Authority expo centre.
The port signed a deal yesterday with a consortium of local investors and real estate developers to build the centre in the Palataki region.
Last held at the port in 2004, Posidonia moved due to a lack of space to the site of the old Athens airport of Hellenikon.
Organisers might be reluctant to commit to a Piraeus return in the tight 2010 timeframe and have already begun planning for the next event in Hellenikon. But watch this space. POSIDONIA could return to Piraeus, Greek shipping minister Anastasis Papaligouras has suggested in reaction to an accord to build a Piraeus Port Authority expo centre.
Source: Fairplay Daily News 03 Oct 2008

No more smooth sailing
---Greece's most globalised industry, shipping, is the first to be affected bythe world economic slowdown
THE FAT years are over for Greek shipowners. The global economic slowdown and the credit crunch are stemming the tide of profits they enjoyed over much of this decade.
Chartering a capesize ship, as vessels with a capacity over 150,000 deadweight tonnes (dwt) are known, cost about $200,000 a day back in May, when freight rates reached historic highs. The price has fallen to as low as $60,000 today.
"There are clouds on the horizon," says David Glass, shipping analyst and editor of Newsfront, a trade website. "The Chinese have almost stopped buying raw materials. The market is mainly driven by Chinese demand, especially for iron ore, but since the Beijing Olympics the purchasing has dropped right off."
Greek shipowners have been playing a key role in carrying the metals and commodities that fuel the growth of Asia's tigers such as China and India. But now that the global slowdown is gripping those economic powerhouses as well, the bonanza is fading. Orders to build new container ships dried up in August, according to a report by Piraeus-based broker George Moundreas & Co.
"Global deceleration hits container shipping first because it's more directly linked to the merchandise trade," explains George Xiradakis, head of Piraeus-based shipping consultancy XRTC. "This trend may intensify even more in the future."
Greeks, who control about a fifth of the world's shipping, may find themselves with too many vessels chasing too few goods. Last year, when the market was still booming, they placed orders for the construction of a total of 918 ships with a capacity of 71.8 million dwt. That's nearly 20 percent of all the new capacity ordered worldwide, according to data by the Union of Greek Shipowners.
"Some shipowners find themselves now overstretched," says Glass. They had used freight earnings to modernise and expand their fleet, ordering more and more new ships, while selling older parts of their fleet to operators from China, India and, more recently, Vietnam. With freight rates sinking, these ships no longer seem to be a great investment. Their value as speculation objects has also dropped because their price on the sale and purchase market of vessels is also set to plummet.
"We had estimated that the crash test for overcapacity would be 2009 and 2010, but that may come sooner now," Xiradakis says.
The credit crunch is also knocking at shipping's door. Traditional shipping lenders, such as Dutch-Belgian bank Fortis, have stopped offering new loans for vessels. Fortis has a loan portfolio to Greek shipowners of about 1.5 billion euros, according to estimates.
Flush with cash
Surprisingly, Greek shipowners themselves don't seem to be overly concerned. Some of the biggest players, such as Victor Restis, continue to flaunt their wealth with prestigious, non-shipping acquisitions. On September 23, Restis emerged as part of an Abu Dhabi-led group that took over British football club Manchester City for about 250m euros. Two days later, it was announced that Restis increased his stake in Lambrakis Press (Greece's biggest publishing company which owns, for the moment, this newspaper) to 15 percent, compared to the 10 percent that he held in March.
Greek shipowners are also expected to cover part of a 5bn euro capital increase announced on September 29 by Marfin Investment Group, Greece's biggest investment company, which plans to benefit from the market turmoil by buying up liquidity-starved companies. What's the explanation?
For a start, it seems that it's mostly the newcomers to the shipping market who have over-ordered new vessels, according to Glass. Another explanation would be that the tanker trade and other niche shipping markets, such as the transport of cement and short-haul routes, seem to be less exposed to the global slowdown. But the main reason is simply that Greek shipowners have become so wealthy over the past five years that they can weather the current storm.
"They have a very good cash position," says George Grigoriades, an analyst at Moundreas & Co.
Greeks benefited disproportionately over the past five good years because they were particularly active in the flexible tramp-shipping market (bookings on the spot market, without fixed schedules, itineraries and ports-of-call). According to Xiradakis, Greek shipowners are under-borrowed and have already serviced much of their debt.
That means that they're less dependent on bank lending amid the current credit crunch. "The big, established players won't have a financing problem," says Glass.
Even Fortis' problems will have "a very limited impact, nothing beyond the usual", according to Grigoriades.
There's even a solution to the problem of overcapacity. Greek shipowners could simply demolish their older vessels to eliminate any spare ships. According to Grigoriades' estimates, a total 50m dwt could be dismantled if Indian scrapyards can handle the workload. Separately, Chinese shipyards may find they have taken on more Greek newbuilding orders than they can execute. Shortages of supply and equipment are already appearing.
"Chinese ship-building capacity has outgrown itself," says Glass.
Market watchers estimate that up to 20 percent of ships ordered may not be delivered. "This could help save the position by helping to bring some balance to supply and demand," he adds.
On balance, the outlook is far from being tragic. The fat years are definitely over, but one can't really say that the lean years are here yet.
Source: FRIDAY , 03 OCTOBER 2008 No. 13307,

Lukewarm reception for FFA scheme
---An attempt to drum up interest in a financing package linked to the freight-derivatives market is being viewed with scepticism.
A number of Greek shipping companies heard about the potential of financing a ship purchase with a forward-freight-agreement (FFA) hedge last week during a short seminar at the Yacht Club of Greece.
Both the Royal Bank of Scotland (RBS) and Greece's Marfin Egnatia Bank told owners that FFAs could increase their chances of securing financing for expansion.
Yet the latest attempt to court Greek owners comes at an inauspicious time with the banking crisis making any kind of financing deal increasingly hard to come by.
Some question the credibility of the idea that an FFA - which is inherently worth nothing more than the "signature" that it carries - would be accepted as collateral in the current financial environment.
Nevertheless, banks in Greece appear keen to test the derivatives market as they see potential in combining established financing tools and freight derivatives for new ship acquisitions.
They are marketing the idea of using an FFA in place of traditional time-charter contracts as security for a financial loan.
The idea has already had a limited success in the German (limited partnership) KG market but the potential of the Greek market has always appealed because of the number of owners there.
Sceptics question the viability of the project given how much the FFA market has fallen in the past week with drops of between 40% and 50% on some forward contracts.
They point out that even major players like Morgan Stanley are no longer automatic counterparts given the current exceptional circumstances.
Despite those doubts, Filimon Antonopoulos of Marfin referred to the example of financing a panamax-bulker purchase.
He says owners who are only able to secure a one-year charter in the physical market at the moment fall short of fulfilling 36-month income requirements by banks.
This contract in the physical market, however, can be supplemented by a two-year forward contract that will see the owner secure financing for expansion plans.
Douglas Garnsey from RBS told owners that banks are increasingly looking to FFAs as a staple risk-management tool for both bank and owners.
He says Greek owners are unable to secure FFAs with blue-chip players like Cargill and Bunge so turn their backs on the sector altogether.
He says the main reason for this is that Greek owners are often unwilling to fulfil the prerequisite of disclosing their balance sheets.
He says banks facilitate these agreements without compromising the position of each party.
The presentation was organised by the new joint venture between Greek broker Optima and London-based FFA brokerage FIS. Active since March, Optima FIS brought in a number of Greek owners, notably young company blood, for the seminar that included a basic introduction to the FFA market, which so far has been unable to reel in Greek owners.
The sceptical mood of the crowd was alleviated by a sense of reassurance that banks are openly getting behind the sector.
According to FIS managing director John Banaszkeiwicz, bank involvement in the FFA sector is not new but it is gaining momentum.
The audience also voiced concerns over the risk of counterparty default and the current banking crisis. The fact that FFA indexes were plummeting last week highlighted the risks.
Garnsey answered by saying "choose your bank well", while Optima brokers Yiannis Kontogiannis and George Siablis noted that clearing houses are increasingly gaining ground as they absorb the loss of defaults.
Yiota Gousas and Ian Lewis Athens and Genoa
published: 02 October 2008

Grimaldi launches mandatory bid for Minoan
---John McLaughlin - Monday 6 October 2008
THE Grimaldi Group has launched a mandatory public offering for Crete-based Minoan Lines after amassing a 33% share in the company.
Grimaldi managed to extricate itself rather neatly from an increasingly delicate situation, however, essentially swapping its shareholding in Anek for a 26.7% share in Minoan.
Change is coming nonetheless. Mr Grimaldi stressed the potential synergies between Minoan and Grimaldi, particularly given the increasingly damaging impact of steepling bunker prices and worsening economic conditions on an already competitive market.
Expansion in the Adriatic through Minoan is on the cards. Mr Grimaldi has already discussed putting two big new cruise ferries into service with Minoan, with Ancona-Igoumenitsa-Patras and Heraklion-Piraeus described as likely routings.
Grimaldi took delivery this year of Cruise Roma and Cruise Barcelona, both of which are now in service between Civitavecchia and Barcelona. The vessels, which have capacity for 2,140 passengers and 3,600 lane metres of rolling cargo, will be followed by sister ships in 2009 and 2010.

Tsakos Shipping and Trading S.A. awarded the ISO14001:2004 by Lloyd's Register
---1 October 2008
The CEO of the Lloyd's Register Group, Mr. Richard Sadler awarding the ISO14001:2004 Certificate to Tsakos Shipping AND Trading S.A.
Shipping remains the most efficient, environmentally friendly, and often the only, means of moving freight. But much can be done to reduce the impact of shipping on the environment and managing the environmental impact of ship operations is a paramount expectation of regulators and many charterers as well as recognising the need to make the most of resources. The increasing operational complexity of shipping and increased regulation in the industry requires management to use systems to help them meet goals for continuous improvement. The benefits are twofold, there is increasing evidence of significant cost savings generated while successfully reducing the use of natural resources through the effective implementation of environmental systems. This is a tool that will help industry to minimise risk and to continually develop the capabilities of assets and human capital by reducing operational inefficiencies and reducing risk.
Known for its commitment towards environmental protection Tsakos Shipping and Trading S.A. is aware of the importance of implementing management systems and standards. The company and its fleet were the first Greek shipping company to be accredited by Lloyd's Register of Shipping under the ISO 14001 in April 2000. The company have again been successfully audited and certified, fulfilling the requirements of ISO 14001:2004 Environmental Standard.

Oceanaut, Inc. provides an update on Trust Account
About Oceanaut, Inc.
Oceanaut, Inc. (AMEX: OKN; OKN.U; OKN.WS) is a blank check company formed for the purpose of acquiring, through a merger, capital stock exchange, asset acquisition, stock purchase or other similar business combination, vessels or one or more operating businesses in the shipping industry.