Greek Shipping News Cuts
Week 18 - 2009
---It is out with the old and likely in with the new for cash-rich owners.
Greek owners of older and smaller bulkers continue their selling spree as they "happily" reposition themselves to become buyers.
Oceanstar Management has sold three more of its multipurpose (MPP) cargoships with the most recent sale concluded this week. The company confirms it has sold the 17,300-dwt MPP Clio (built 1980) for further trading to undisclosed interests.
Oceanstar sale-and-purchase (S&P) manager George Ringos is not willing to reveal the price.
The other two MPP vessels were also sold for further trading, the 15,120-dwt Renata (built 1979) going to undisclosed interests and 12,600-dwt Marine (built 1983) to Middle Eastern buyers. Oceanstar confirms it has also disposed of the 16,600-dwt Louis (built 1979).
Brokers says such ships are now getting well above $1.5m each.
Ringos dismisses reports that the company has sold its last bulker, the 34,000-dwt Marilia (built 1982), for a reported $3.5m. He says it will be next to exit the fleet but no deal has yet been concluded.
Ringos adds that he has been "kept very busy" as Oceanstar has sold a total of nine ships since the beginning of the year, eight of them MPP vessels. The company controls another seven such ships.
Oceanstar, led by Konstantinos Priftis, is just one of a number of Greek shipping companies that are shedding older tonnage. They include in recent weeks owners of older handysize bulkers. Among them, Mayamar Marine Enterprises has reduced its fleet to one ship from the three it controlled in December, while Pendulum Shipping has sold three handysize bulkers since January, to name just two. Others are Tide Line Inc and Goumas Shipping.
One small-bulker broking specialist in Greece says the market should not view any of these moves as distress sales. Owners like Priftis, the broker adds, refrained from expansion through higher-risk newbuilding projects while the market was booming. Now that the opportunity has arisen, such owners have become sellers and are "happily" sitting on piles of cash waiting to make acquisitions, which in most cases will involve younger and larger tonnage.
The broker points to one of Oceanstar's recent sales, described as a "golden earner" during the boom years. The 26,900-dwt bulker Alexis (built 1981) was bought in 2002 at a $1.3m and sold a few weeks ago for a reported $2.6m. He adds that the handysize was earning around $34,000 per day in the high market, yielding over $12m in just one year.
"Why shouldn't Priftis, and every Priftis for that matter, be happy?" the broker said.
By Yiota Gousas Athens Published: 23:00 GMT, 30 Apr 2009 | last updated: 11:48 GMT, 30 Apr 2009
Piraeus welcomes return of 'Lost' Clients
---With operations in Piraeus port now going relatively smoothly following the end of 15 months of industrial stoppages and bans by port workers, Greece's top port continues to welcome back lost clients and table plans for the future.
The Piraeus Port Authority's (PPA) largest customer, MSC has announced it will resume its direct service to Piraeus, which had been stopped at the beginning of the year. The service is part of MSC's Dragon Line, connecting ports of the Far East with Greece's primary port. MSC's service uses 12 container ships ranging in capacity of 8,000 - 8,500teus each and covers the bulk of the industrial regions of North and South China, Korea, indeed the whole of Southeast Asia.
MSC stopped the service to Piraeus, initially run through JADE line, because of the port's low productivity. The end to industrial action saw MSC return.
Zim is also to resume its direct weekly call at the port on the ZCS service between the
Mediterranean and North America. Zim, which for years has been serving the Greek market offering a regular container service, is now renewing this service operating 15 x 5,000teu vessels.
The first vessel will be the Zim Panama which is set to arrive in Piraeus May 17, as part of an updated 23-port rotation.
Early April, K-Line began a three-ship a month car carrier service to the port, confident it can develop Piraeus into a transshipment centre for cars bound for the East Med and Black Sea. The 6,250 car-capacity newbuilding Athens Highway arrived in Piraeus as the first of three new ships.
K-Line said the naming of the new ship the Athens Highway and the second newbuilding the Aegean Highway is a display of its confidence in the new service.
Each announcement of a new or re-activated call to Piraeus brings a smile to the faces of the country's import/export sectors as well the ship agents who have been in discussions with the port's management over ways of attracting customers to Piraeus.
Agents through their association, the International Maritime Union, have been engaged in talks with the PPA with regard to increasing traffic through the car terminal. Just as K-Line has opted for the port, the agents believe the terminal has great potential as the countries of Eastern Europe become more affluent. The agents have placed 10 proposals before the PPA management aimed at building movements, including freezing tariffs to June 2010 and giving tariff and service preference to shippers which guarantee a certain volume of movement.
Still, despite the new calm it remains a fingers crossed situation as port workers continue to oppose the 35-year concession agreement reached by the PPA with Cosco Pacific to operate two container terminals in the port. The workers are known to be behind a probe by the European Commission into whether the concession breeches EU competition rules. There are allegations the government gave favourable tax terms to Cosco which could distort the market, illegal under EU rules. The government denies this saying "the agreement is bound by the same regulations as all agreements when a big investment is involved".
Anangel gets new bulkers
---Anangel Maritime Services IncHudong-Zhonghua Shipbuilding (Group) Co Ltd
HUDONG Zhonghua Shipbuilding of China has delivered the latest in a series of standard-design Panamax bulkers to Anangel Maritime Services of Greece.
The 75,000dwt Lady Z and Tina IV are the first pair of a total of six sisters on order for this owner. They have a LOA of 225m, a beam of 32.26m and are powered by a a MAN B&W 5S60MC-C main engine rated at 9,600kw.
Hudong Zhonghua has a further backlog of four ships in this class for Greek operator Dryships. HUDONG Zhonghua Shipbuilding of China has delivered the latest in a series of standard-design Panamax bulkers to dry cargo for Anangel Maritime Services of Greece.
Source: Fairplay Daily News 28 Apr 2009
--- In its first quarter report, Danaos provided further clarification with respect to the re-arranged delivery schedule of its newbuildings.
China Shipbuilding Trading Company agreed to delay by 200 days on average the delivery of five 8,530 TEU containerships currently under construction. In addition Hanjin Heavy Industries agreed to delay the deliveries of five 6,500 TEU and the five 3,400 TEU containerships under construction by approximately one quarter each. In terms of the schedule, as of today, Danaos is expecting to take delivery of six vessels this year, twelve in 2010, of which three can rollover to the following year as they are scheduled to be delivered in December 2010, and eleven in 2010. Presuming the three 2010 deliveries roll over into 2011, the remaining capital expenditure installments are approximately $465 million for the balance of the year, $875 million for 2010 and $785 million for 2011.
The new $299 million loan facility with Deutsche Schiffsbank together with available undrawn capacity under existing credit facilities and cash from operations will cover the funding needs for 2009 and part of 2010. To meet the shortfall the company is in the midst of discussions with banks to arrange additional funding as well further negotiations to delay construction payments and subsequent deliveries of certain vessels for which no financing has been arranged. The company remains hopeful that they will be able to arrange financing based upon the long-term charter commitments on the vessels.
With respect to the existing debt, the company has either received waivers or is in discussions with the lead arrangers of such debt to receive waivers covering breaches of financial covenants, principally the loan to value requirements, the required ratio of total liabilities (after deducting cash and cash equivalents) to market value adjusted total assets and the book and market value adjusted net worth requirements. The company expects that the necessary waivers will be obtained.
A lot of hard work has been done and much more needs to be accomplished. But by any measure, progress is being made.
Source: Marine Money Freshly Minted Thursday, April 30, 2009 Page 2
DryShips turns corner with fresh equity
---The worst appears to be over for DryShips. The future of the Athens-based dry bulk carrier, ultra deep- water drillship and rig owner was in doubt a few months ago in the wake of the sharp fall in dry bulk charter rates and ship values late last year.
The company has now raised $500M in fresh equity through an At The Market (ATM) offering that ended on 16 April, whereby it sold small numbers of shares over a period of two months at the going price of each trading day.
After issuing new equity and being able to amend covenants and repayment terms for about $815M of outstanding debt, the risks related to liquidity and financing have been dramatically reduced, say Rikard Vabo and Lars Erich Nilsen, shipping analysts at Fearnleys in Oslo.
However, they also note that DryShips remains in breach of covenants of $1.8Bn of debt, although the company should be out of danger as a result of two successful ATM offerings that raised a total of $667M.
With the fairly large cash balance after the two equity issues the company is in a position to pay down part of this debt in combination with re-negotiated covenant terms.
The average duration of its fixtures was 4.1 years, the average rate $45,000/day and the total value of the contracts was $1.1Bn.
Prior to this, it had cancelled 17 newbuilding contracts worth $2Bn and agreed amendments to covenants of an $800M credit facility with HSH Nordbank and DnB Nor.
In a research report dated 21 April, Vabo and Nilsen forecast DryShips to reverse a $361.3M net loss of last year to a profit of $135M this year, which should rise to $261M and further to $326M in 2010 and 2011 respectively.
However, they recommend to their customers that they sell their shares in the company.
Full company name: DryShips Inc
Headquarters: Athens, Greece
Listed: Nasdaq, New York
Trading code: DRYS
Share price: $6.94 on 21 April; 52-week low $3.04, high $116.43
Market capitalisation: $1.07Bn
Source: Fairplay International Shipping Weekly - Companies 30 Apr 2009
George Weltman goes to Delphi to find answers
---Often we need a fresh perspective or even confirmation of what we are thinking. We are certain that there is much going on behind the scenes, between negotiations with banks and with charterers. Yet we feel that we are missing the proverbial forest through the trees. So for both affirmation and guidance, we sat down with two close friends who gave us their perspective of what, in their view, is going on today, in wide ranging discussions. There are questions but no answers for the moment.
Our other keen observer reminded us that, historically, Greeks kept cash or invested in real estate or ships. With theadvent of a new generation and its comfort with capital markets, there is the likelihood that some of this wealth may have found its way here and been invested in bonds and stocks and, consequently, has been decimated. There are even rumors that some of this wealth may have been invested with Bernie Madoff.
Given the hard hit container markets, we then wondered about the Japanese liner companies, which are highly leveraged with little equity. With debt problematic in a country reliant upon debt financing and negative cash flow, where will the necessary funding come from?
And perhaps an even more crucial question is how this country will respond not only to declining demand in both Europe and the United States but also the shift of manufacturing to China. The economies of Japan and China have depended in recent years on exports of manufactured goods. When U.S. and European markets for those goods become stressed, as households switch from consuming to saving, Japan has no ready answer, and we are seeing double-digit percentage declines in GDP. China, however, does have a countermove: stimulate the vast domestic market to support many, even most, of the country's manufacturers. So Chinese GDP doesn't decline at all; in fact, it should increase by several percent in 2009. This is good news for the dry bulk shipping market, but not (yet) for the container shipping industry.
For the moment at least, banks, owners, charterers and shipyards are dealing with each other as partners. Wisdom has prevailed as the parties realize there is nothing to be gained by taking an adversarial position. All have to deal with what is possible in light of the current reality. Unfortunately, the foundation is soft. Will government controlled banks be compelled to dispose of shipping assets? Valuations which are perhaps being artificially held up by a thin trading market could very well collapse under that scenario, forcing the hands of the bank.
Not surprisingly, M&A activity is at a virtual standstill, lacking a debt market and papercurrency. On the other hand, hedge funds and private equity are studying many opportunities including shipping. This is a simple case of whoever has the most compelling story will get the cash.
The containership market is confused. Instead of large ships displacing smaller, based upon economies of scale, smaller ships are now replacing larger. A possible explanation might be that, unlike the more mature bulk and tanker markets, the container industry is evolving and an optimum size vessel has yet to be defined.
Given their size and importance, it is likely that the major lines will be able to delay and/or cancel orders. Would a shipyard chance offending a client who builds expensive, but not sophisticated, ships in numbers? We laughed at the thought of a yard taking an adversarial position with the likes of an AP Moeller, which would simply turn around, buy the yard and then close it down.
Floating just under the surface, there are two critical imponderables. The first is the lack of disclosure on the private side, and the other is the status and collectability of receivables (i.e. charter payments) in that arena. The public entities are providing some disclosures of payment failures and restructurings, but this could be one big black hole.
Source: Marine Money Magazine, April Issue 2009
University honours IMO secretary-general
---The University of Malta has conferred the Degree of Doctor of Laws (Honoris Causa) on Efthimios E. Mitropoulos, Secretary General of the International Maritime Organisation.
Mr Mitropoulos was elected Secretary-General of IMO in 2003 and his four-year mandate ending in 2008 was extended to 2011.
Source: Malta Independent Online - ?May 3, 2009?, http://www.independent.com.mt/news.asp?newsitemid=87330
Onassis Prize awarded
--- London (ANA-MPA/L. Tsirigotakis) - Eugene Fama, professor of finance at Chicago University's Graduate School of Business received the inaugural Onassis Prize for finance at an official banquet on Monday night at the City of London's Guildhall, which was attended by more than 700 distinguished guests from all over the world.
Fama, the founder of the efficient market hypothesis, is the first recipient of the Alexander S. Onassis Public Benefit Foundation's newly-instituted Aristotelis Onassis Award for the Economy, Commerce and Shipping, in recognition of the leading academic's lifetime contribution to the study of finance.
The new biennial award is named after the late Greek shipping magnate Aristotle Onassis, who in his hand-written will bequeathed half his fortune for the establishment of the Foundation, named after his son Alexander who died in private plane crash, for the purpose of providing funds in a wide range of areas such as medicine, education, literature, religion, science, journalism, art and exploration, and for the promotion and encouragement of Hellenic culture and studies.
"The Onassis Prizes are evolving into an international institution with immense recognition," Foundation president Anthony Papadimitriou said after the award ceremony.
Professor Fama, in a brief acceptance speech, referred to the present global financial crisis and stressed that the crisis was not over yet, and the markets be left free to adjust to the new realities without governmental interventions.
City University, London Pro-Vice Chancellor, Prof. Costas Grammenos, the driving force behind the new award, noted that "today we inaugurated an institution that will become very significant over time" as "it has all the elements of success because working together for the promotion of the institution are three important factors: the City of London, the City University of London, and the Onassis Foundation".
"This award is a tribute to Aristotle Onassis, who had distinguished himself in the City of London with his business activities".
Source: ANA - ?Apr 28, 2009?, http://www.ana-mpa.gr/anaweb/user/showplain?maindoc=7547115&maindocimg=3700214&service=100