Greek Shipping News Cuts
Week 01 - 2008
---CHENNAI: Arrest' of a foreign ship in Indian waters or its forced sale for salary and tax defaults does not occur often. But, the Madras high
court rushed to the rescue of 23 foreign sailors 20 Myanmarese and three Viatnamese and ordered the arrest of a Greek vessel flying Panama flag last month.
Taking note of the fact that the owners of MV Vinashin Island had not come for the release of the vessel or bothered to settle the salary dues of sailors, Justice P R Shivakumar ordered its sale last week. The judge appointed an advocate to act as the court's commissioner to sell the ship and settle dues of sailors.
MV Vinashin Island, a cargo vessel, sailed into Tuticorin Port in October. After cargo was discharged on October 23, the ship owners tried to recruit new crew to sail out of the port. The existing crew, which had not been paid salary for over three months, decided to invoke the admiralty jurisdiction of the Madras high court as the essential supplies like diesel, water and food were depleting fast.
In the admiralty suit, advocate S Vasudevan, counsel for the sailors, contended that the owners had failed to honour their contractual obligations and that unless the supplies were restored, the vessel would lose its sea-worthiness. He said the dues approximately amounted to $3,00,000 payable to the crew, besides the statutory dues towards port and light house charges.
Acceding to his submissions, Justice Shivakumar appointed advocate Sanjay Gandhi as court's commissioner to get the arrested ship assessed by an expert. He shall then draft terms and conditions for the auction of the ship. He shall deposit the sale proceeds in the court without delay, the judge said.
The advocate-commissioner "shall make arrangements for the supply of bare minimum of necessary provisions to the crew on board and supply of diesel for a period of 20 days initially. he shall submit an action taken report in court on or before January 12, 2009," the order read.
Source: 3 Jan 2009, 0418 hrs IST, A Subramani, TNN, http://timesofindia.indiatimes.com/Chennai/HC_orders_arrest_of_a_Greek_vessel_/articleshow/3928587.cms
Greek tanker flees pirate attack
---A Greek-flagged tanker was the target of two failed piracy attempts in the Gulf of Aden early Friday, the merchant marine ministry in Piraeus reported.
According to the ministry, the two attempts by armed Somali pirates was thwarted by the "Kriti Episkopi" tanker crew's evasive actions, as the vessel was sailing in the Gulf of Aden carrying a cargo of oil.
According to reports, the vessel's Greek skipper ordered maximum speed and evasive maneuvers, while the 29-member crew repelled the pirates by shooting water at them with the vessel's high-pressure hoses. The tanker permanently avoided capture when a Spanish helicopter and Danish frigate arrived on the scene.
The ministry said there were also open lines of communication with the coast guard chief and the chief of the General Defence General Staff (GEEThA), and the headquarters of the EU's special naval operation, code-named EUnavfor, was also immediately alerted, while a warship and helicopter hastened to the scene, and a frigate was also dispatched.
According to a ministry announcement, the above coordinated actions averted the two attempts by pirates to seize the ship.
The ministry's latest information was that the pirates were some 10 nautical miles from the Kriti Episkopi, with which the ministry's Crisis Management Centre was in constant contact with the skipper and the shipowner company.
The European Union launched its first naval operation in history, code-named EUnavfor, in early December 2008, aimed at the interception, prevention and suppression of piracy off the Somali coasts and to protect vessels carrying humanitarian aid to the refugees in Somalia, replacing the NATO force that had been operating in the area since October, and assuming the task of protecting the vessels of the UN's World Food Program (WFP) carrying humanitarian aid to Somalia. At a second stage it will further undertake the job of escorting merchant ships under EU member states' flags in the area.
Eight countries -- Belgium, Germany, Greece, France, the Netherlands, Spain, Sweden and the UK -- are participating in the operation with six warships accompanied by three reconnaissance aircraft
Caption: A handout photo by the French navy taken at sea on 06 December 2008 shows members of the EPE, an embedded protection team, performing observation duty aboard the Frigate Jean de Vienne as it convoys merchant ships near the coast of Somalia, where numerous acts of piracy pose a constant danger to maritime traffic. To combat piracy off the coast of Somalia it has been launched the first EU naval military operation, Operation Atalante. Its mandate is to protect vessels chartered by the World Food Program which are delivering food aid to displaced Somalis, to protect merchant ships sailing in the area where it is deployed, to monitor the areas off the coast of Somalia at risk for maritime activities, and to take the necessary measures to deter and prevent acts of piracy and armed robbery off these coasts. ANA-MPA/EPA/ NICOLAS NELSON
Sources have said that Merchant Marine Minister Anastassis Papaligouras, and Finance Ministry and OLTH officials are scheduled to examine on January 7 or 8 whether to proceed with a new tender or delay it until economic conditions improve.
Putting off the privatization would provide time for a better decision to be made, said a port official.
---By Ben Fenton, Chief Media Correspondent, Published: January 2 2009 19:24 | Last updated: January 2 2009 19:24
He has already begun to assemble an advisory group of bankers, executives, lawyers and consultants in London to help him find a home for his money.
Recently, Guillaume de Posch, the former chief executive of ProSiebenSat1, the German broadcaster, was named as the first important member of the group.
But the group is also expected to include heavy hitters from the investment banking world and lawyers with experience of deal-making in the European media sector.
However, there is no reason to believe that is what he intends to do.
It also owns channels in the US and Australia, serving the large Greek-speaking populations in those places.
Eagle flies nest
---US-listed Eagle Bulk Shipping has reportedly sold the 56,000-dwt bulker newbuilding Crested Eagle.
The ship is set for delivery from IHI shipyard in February 2009 and is said to have gone to a Japanese buyer for $34m.
In November a similar ship the 54,000-dwt Pacific Island (built 2008) was sold to Nisshin Shipping for $33.5m.
Eagle Bulk ordered the supramax in 2007 for $33.6m.
A week ago the firm cancelled contracts for eight supramax bulkers at Yanghzou Dayang Shipbuilding in favour of options on the vessels. (Click here to read related article.)
Eagle Bulk had 33 supramaxes costing $1.4bn at IHI and Dayang for delivery by 2012.
By Trond Lillestolen in Oslo, Published: 11:40 GMT, 29 Dec 2008 | last updated: 11:49 GMT, 29 Dec 2008
Genco capesize newbuilding chartered at $65,000/day
---GENCO Shipping & Trading says it has fixed a capesize newbuilding at US$65,000 a day. The 170,500 dwt Genco Hadrian the sixth of nine capesize vessels is is buying from companies within the Metrostar Management Corporation group. The additional three vessels will take Genco's fleet to 35 dry bulk carriers comprising nine capesize, eight panamax, four supramax, six handymax and eight handysize vessels, with an aggregate carrying capacity of nearly 3m dwt.
Genco says the Genco Hadrian has been chartered to Cargill International, for 46 to 62 months at a gross rate of $65,000 per day, less a 5% third party brokerage commission. The charter, which is due to expire between October 2012 and February 2014, also includes a 50% index-based profit sharing component.
Genco says it has drawn upon its 10-year, $1.4bn revolving credit facility to finance the remaining balance for the Genco Hadrian of $96.8m. The Company expects the delivery of three additional newbuilding vessels by the end of 2009 and intends to utilize the undrawn portion of its credit facility as well as cash flow from operations to fund these acquisitions.
Euroseas Ltd. to Sell Panamax Drybulk Vessel and Renegotiation and Extension of Two Container Vessel Charters
---12/30/08 Maroussi, Athens, Greece - December 30, 2008. Euroseas Ltd. (NASDAQ: ESEA), an owner and operator of drybulk carriers, container ship and multipurpose vessels and provider of seaborne transportation for drybulk and containerized cargoes, announced today that it has signed a Memorandum of Agreement to sell M/V Ioanna P, a Panamax drybulk vessel of 64,873 dwt built in 1984 in Japan. The M/V Ioanna P was sold for approximately $3.85 million. The vessel will be delivered to her new owners within January 2009.
Furthermore the company has entered into an agreement to extend the charters of two of its containerships while adjusting their present charter rate. The charter of M/V OEL Transworld will be extended for an additional one year at Euroseas? option at a gross daily rate of $10,000 after the conclusion of the present charter while reducing her current charter from $18,500 to $12,000 starting on the 9th of November 2008. Additionally, the charter of M/V OEL Integrity will be extended for an additional six months at Euroseas? option at a gross daily rate of $7,000 while reducing her current charter from $16,500 to $11,000 starting on the 9th of November 2008.
Following the sale of the M/V Ioanna P, the previously acquired M/V Solar Europe and assuming Euroseas chooses to extend the above-mentioned charters, approximately 50% of Euroseas total fleet days of 2009 and approximately 27% in 2010 will be fixed under period charters, already concluded spot charters, FFA contracts, or, otherwise protected from market fluctuations.
Aristides Pittas, Chairman and CEO of Euroseas commented: "With the sale of M/V Ioanna P one of our eldest units we are continuing our fleet renewal and expansion program. We believe that the strength of our balance sheet will enable us to capitalize on opportunities to renew and grow our fleet in 2009. Our additional decision to renegotiate the two charters while securing optional extensions at our option trades off cash flow in early 2009 with additional flexibility and downside protection in the later part of 2009 and 2010 while maintaining any potential upside.
TOP SHIPS Announces Termination of Intrest Rate Derivative Contract
Will Shipping Stay Afloat In 2009? (DRYS, GNK, TDW)
---December 29, 2008 | By Will Ashworth,
Someone once told me that you could tell the state of the economy by the number of trucks on the highway at any given time. It occurs to me that the same law applies with the shipping business, the more tankers and container ships on the oceans, the better the world economy. As we approach the end of 2008, the Baltic Dry Index, which measures dry bulk shipping rates around the world, dropped to levels not seen in 22 years. I wonder what is in store in 2009.
This Past Year Was Half-Full
If the end of 2008 is a predictor of business in 2009, the shipping industry is in for one heck of a nightmare. On June 5, 2008, it cost $233,988 per day to charter a Capsize tanker, the largest ocean-going cargo vessel available for shipping dry bulk commodities. Six months later that same tanker charters for $2,773 per day, down 98.8% in less than half-a-year. To put that in perspective, imagine paying $15.00 for a cab ride home and six months later the same cab driver charges you $0.18. This is a problem shipping companies will continue to face in the coming months as demand for these tankers has fallen off a cliff.
What's The Problem?
Well, actually, there are three problems. Dry bulk shippers currently face drastically lower asset values for their ships, freight rates have bottomed out and stock prices are careening downward. Just as troubling as the dropping freight rates are the stumbling asset values, which have declined by as much as 70%, causing some to break their loan covenants. Those companies that have made long-term arrangements for their ships or are in pristine financial condition should survive this prolonged recession that could be with us until 2010. Some will look at going private including DryShips (Nasdaq:DRYS) and Genco Trading & Shipping (NYSE:GNK).
The Year Ahead
Anyone interested in investing in shipping companies in 2009, should look at those with little debt. Having the financial room to maneuver is going to be critical moving forward. Until companies know how long this recession is going to last, and most importantly, how long these ridiculously low shipping rates are going to be in play, there's little to do but wait it out. Going private is especially attractive right now because companies can be bought for less than net asset value. For those looking to acquire other companies, one analyst suggests that the combination of oversupply and lower demand makes acquiring troubled companies a tad premature. The reality is the market could get worse and a company is taking a real gamble acquiring assets it may never need. (Learn more in Digging Into Book Value.)
Who Looks Good
As I've already indicated, those companies with little debt should do better at weathering the economic slowdown and extreme drop in freight rates. Four I'd consider include Tidewater (NYSE:TDW), Diana Shipping (NYSE:DSX), Alexander & Baldwin (NYSE:AXB) and Overseas Shipbuilding Group (NYSE:OSG). Tidewater is a New Orleans-based company that provides marine service vehicles to the offshore energy industry. The most appealing part to me about the company is it provides a service that won't go away. Not to mention it has little debt ($300 million) and plenty of EBITDA ($517 million) to cover any increase in the debt position.
Athens-based Diana Shipping owns 13 Panamax and 6 Capesize dry bulk carriers, capable of shipping 2 million deadweight tonnage of commodities. In November, it suspended its dividend so that it could preserve cash to use for buying ships as other firms fail. Cantor Fitzgerald's earnings per share (EPS) estimate for 2009 is $1.79, down 40% year-over-year. Nonetheless, in this environment I'll take it.
Alexander & Baldwin is a Hawaii-based company that operates in several businesses besides shipping. On the islands themselves, it owns agribusinesses, real estate and transportation companies. Off-island, it ships containers via its Matson subsidiary between the Western United States, Hawaii and Asia; 2009 will most likely be a tough year. Overseas Shipbuilding Group has impressive financials with good operating margins almost 28%, low price-to-sales and price-to-book ratios (both under 1), manageable debt and excellent cash flow. You can't ask for much more from a stock. (Learn how to analyze financial reports in the Financial Statements Tutorial.)
The next year for shippers is going to be like getting a cavity filled without any freezing - dreadfully painful. If 2008 is any indication, shipping routes will see less containers shipped in the beginning months of 2009 as the world economy gets back on track.
By Will Ashworth
Will Ashworth lives and works in Toronto, Canada. He's worked in and around the financial services industry for much of his adult life. He loves investing and is passionate about helping others learn how to put their money to work. At the time of writing Will Ashworth did not own shares in any of the companies mentioned in this article.
Slowdown signs - Global freight market near record low
---Saturday, 03 Jan, 2009. It is reported that, with the freight market plunging near record lows in just a couple of months, shipbuilders around the world came across a not so unusual problem, but this time around the issue has more variables.
First of all, the current absence of a functioning financial market, owners problems, both credit problems and market related problems will contribute much more to cancellations and delays than construction problems at shipyards.
Traditional ship owners, many of which are Hellas based did the majority of their ordering quite some time ago, but quite a few owners place their orders near or at market highs. Also, this time around, many of the yards are also newcomers.
According to a Worldyards report, this downturn shipping cycle is quite different that the ones in the past. It said that "In today' inflationary world, there is substantial cost overrun so even strong established yards are not immune from financial problems. Established yards were also the first ones to take in orders so they are also likely to be plagued by the very low prices prevailing at the early stage of the cycle."
Furthermore, even owners that have secured their financing can't take things for granted, in terms of funds available for drawdown. Some banks have failed and will fail outright, the surviving banks may not be able to perform what they are committed to in terms of gearing ratio, length of financing and the margin.