Greek Shipping News Cuts
Week 27 - 2009


Impact of downturn yet to be reflected in Greek company makeup

---At the beginning of 2009 there were 773 Greek companies actively operating ships, 15 more than at the beginning of 2008, thus maintaining a growth trend established in recent years. However, Petrofin Research in its annual look at the profile of Greek shipping companies notes the pace of increase was smaller than in the year before, and that the data capture for the year 2008 reflects the first nine months of the 2008 boom and only partly reflects the last quarter, when "recession hit suddenly and will certainly have an impact in the results of our 2010 research".
In its research Petrofin has taken into account newbuildings that have a date of delivery up to and including 2010 only, contending "it is not certain all Greek newbuilding orders for 2011 onwards shall materialise, due to cancellations, sales and delays, in view of the financial and shipping crisis".
Most important development this year occurs in the area of fleet age, whereby the average age of the entire Greek fleet irrespective of type, tonnage or flag is 17.6 years, down from 18.4 years in 2007 and 23 years in 2005, reflecting the entry of newbuildings, and rigorous replacement of older vessels with younger tonnage over the last years. The number of Greek overage fleets is down 14, whereas last year there was an increase, as older ships remained trading in the boom. Petrofin notes most overage fleets are in the smallest ship size category of 1-2 vessels, where the number of fleets is 27 times higher than that of the larger fleet category, in other words the bigger the company, the less interest in older vessels.
Petrofin established the drive towards larger and more modern fleets continued in 2008. Although it is usually most pronounced for the bigger sized owners, the trend was also prominent among smaller owners. The excellent shipping market until 2008 had prolonged the survival of approx 500 owners with overage vessels. However, the current crisis will no doubt witness a significant reduction in their number via scrapping and sales. Interestingly enough, it is the Chinese that have been acquiring overage vessels recently, with Greeks opting for younger vessels. Thus, the Greeks continue to focus on modern vessels, as these have a longer life span and can better cope with shipping cycles.
Petrofin concludes that with the good markets from 2003 onwards, owners "especially small ones" took advantage of high vessel prices and continued selling or left the industry with some of them hoping to return when the market corrects itself, expected in 1-2 years time "at the most". However, as the market continued to boom, interest in shipping exploded from shipping related and non-shipping related sources including the rapid development of interest by the public markets and private equity providers. In addition, some owners returned to shipping having given up on the Owait and see' theory while a number of companies split into different ownership positions depending on the varying strategies of each party.
In numerical terms, Petrofin's research shows the small fleets account for 65% of the total, but only 11.33% of the total capacity, as measured in dwt terms.
-- Filed: 2009-07-01

Shipping resilient to imported crisis

Gang behind ship-owner kidnapping
---Sixteen people were charged on Saturday with criminal offences related to the kidnapping in January of ship-owner Periklis Panagopoulos and other crimes, based on evidence collected by a police investigation lasting more than six months.
Ten individuals belonging to a gang that police say was behind the abduction appeared before a public prosecutor on Saturday morning, while five suspected members of the gang are already in prison. The 16th member of the gang is still at large and is being sought by police for other offences.
All 16 were charged with forming a criminal organisation and acting in concert to carry out the kidnapping, while they also face charges of homicide and moral complicity in connection with the previously unsolved murder of George Gousios in Penteli in 2008.
Other charges brought against them included that of causing explosions (again in connection with the Gousios murder), supplying and manufacturing explosives and aggravated cases of theft as a habitual practice and a means of livelihood, as well as charges of moral complicity for all the above.
The case has now been assigned to the 25th examining magistrate, who has summoned the suspects to present their testimony on Wednesday and Thursday.
The 74-year-old ship-owner was abducted in mid-January and was released unharmed a week later, after his wife had paid the kidnappers a ransom. The ship-owner was the second wealthy Greek businessman to be the victim of a kidnapping in the space of six months, after the northern Greek industrialist George Mylonas in June 2008.
A police announcement released earlier on Saturday said that the gang was also involved in executing contract killings and other serious criminal offences, in addition to the kidnapping of Panagopoulos.
Attica Security director Brigadier Yiannis Dikopoulos said the case had been cracked by the Crimes against Life department, while the National Intelligence Service had provided advanced surveillance equipment and assisted in actions that helped to locate the suspects.
According to police, 10 members of the gang were involved in the kidnapping, while the remaining five were already in prison and a sixth was on the run, being sought for other offences.
Police identified the gang's leader as Panagiotis Vlastos, an inmate serving time at Trikala prison for homicides, protection rackets and other offences.
Other suspected members of the criminal gang that are already in custody were identified as Vassilis Stefanakos, Ioannis Skaftouros, Konstantinos Andreou and Servos Dejan alias Boban Ivanov or Rifstoschi.
The 10 individuals arrested on Saturday, who were directly involved in the kidnapping, were identified as Apostolos Petrakis, Emmanouil Skarlatos, Aristomenes Kleftoyiannis, Georgios Katsaganis, Georgios Tromboukis, Ioannis Theodorakis, Haralambos Moustakas, Ioanna Vlastou (the widow of Spyridonas Vlastos), Polytimi Georga (the partner of Skaftouros), and Ioannis Thodis.
The gang member still at large was identified as Panagiotis Soiledis or Soidelis.
Of the above, the ones that physically carried out the kidnapping or were present included Petrakis, Katsaganis, Kleftoyiannis and Moustakas, while secondary roles were played by Tromboukis, Skarlatos, Vlastou and Thodis and Panagiotis Vlastos masterminded the operation from inside prison.
In addition to the kidnapping, the group had carried out contract killings and several murder attempts and bomb attacks - including a contract to kill the police officers on their trail and the head of the police department coordinating the investigation.
According to Dikopoulos, the group organised and carried out the murder of businessman George Gousios on September 12, 2008 and attempted to set a large bomb in the home of a business man in Arta but were prevented by the Attica Crimes Against Life department, which received a tip-off and arrested two members of the gang - Ivanov and a Bulgarian - while they were carrying the bomb.
The gang is also accused of planning the contract killing of the Trikala prison governor and social worker because they had refused to grant Vlastos prison leave, and of making preparations for the murder of a nightclub owner that was averted through information obtained by police. The intended victim was then smuggled out of the country to Germany, so that he could be protected without forcing police to reveal what they knew and thus exposing their investigation.
The group had also apparently planned the murder of a Malandrinos prison inmate that was an arch enemy of Vlastos and head of a rival criminal gang, intending to kill him when he was taken to court for trial by placing large quantities of explosives in a booby-trapped car and showering him with bullets from Kalashnikov rifles. That plan fell through, however, when the prisoner's transfer was moved to another date.
Other planned murders attributed to the group included the killing of three individuals that were part of the rival criminal gang and of a businessman in Corinth, while they had also planned to place a bomb in a supermarket in Menidi in order to blackmail the owner.
Police said they were continuing their investigation to uncover additional criminal actions by the same gang.
Alternate Interior Minister Christos Markoyiannakis and Greek Police Chief Vassilis Tsiatouras arrived at Attica Security headquarters on Saturday afternoon and congratulated the detectives that cracked the case.
"I came to congratulate the officers of Attica Security, who methodically and professionally succeeded in dismantling a criminal organisation that carried out extremely serious criminal acts," Markoyiannakis stated, while Tsiatouras also extended thanks to the National Intelligence Service for their assistance.

Raising their game
---An influx of shipbrokers over the past few years has led to an intensely competitive broking environment in Piraeus. Konstantin Tsolakis reports
The ideal broker
Conflicts of interest
Source: Fairplay International Shipping Weekly - Feature 02 Jul 2009

Clutch of Greek owners lead charge to scoop up vessels at cheap levels
---Cyprus Maritime, Dynacom and Synergy Maritime are leading the charge of Greek shipowners back into the containership market.
Cyprus Maritime and Dynacom are building up interests in the deeply troubled panamax sector, while Andreas Papathomas's boxship-investment vehicle, Synergy Marine of Cyprus, is targeting smaller handysize boxships ( see story, page 8 ).
The shipowners are betting on the boxship market by snapping up vessels at bargain prices, even though immediate employment prospects remain dire.
After a long absence from the buying scene, Athens-based Cyprus Maritime is back spending money with a view to returning to the segment.
In the past month, the company has been linked to the purchase of five early 1990s-built vessels and may be on the lookout for more.
The first reported purchase was of the 3,720-teu Chang Jiang Bridge (built 1992) for $6m. The ship has been renamed Alexander and put under the management of Cyprus Sea Lines, the name previously used by Cyprus Maritime.
In mid-June, the Andreas Hadjiyiannis-controlled company purchased the 2,680-teu boxships Patmos II and Pacific (both built 1992) for around $5m each. These have already been delivered and are now named CSL Patmos and CSL Pacific .
This week, brokers suggested that Cyprus Maritime had snapped up the 3,750-teu Bauhinia Bridge and 3,456-teu Akashi Bridge (both built 1993) from K-Line of Japan for $15m en bloc.
Manolis Fotiades, head of sale and purchase (S&P) at Cyprus Maritime, says that while the company is interested in the ships, no deal has yet been sealed.
The owner has been conspicuously absent from purchasing over the past years and Fotiades confirms that the last deal it did was in 2002.
Cyprus Maritime operates 15 bulkers, including four capesizes, and seven multipurpose (MPP) vessels. The company used to control boxships. In 2003, it was said to have sold two 1,900-teu conbulkers and a 2,250-teu boxship for $20m en bloc to Gianluigi Aponte's Mediterranean Shipping Co (MSC).
"We wish to re-enter the market. Now, whether we are going to buy many more or just a few more I don't know. Time and prices will show," said Fotiades.
Meawhile, containership brokers say George Procopiou's Dynacom has entered the boxship sector.
The Greek owner is said to have bought the Japanese-owned, 4,706-teu MOL Mosel (built 1995) for $9.65m. Brokers suggest the move was made for investment purposes, as boxship values are at rock bottom.
They add that compatriot Transmed was also looking to buy the Imabari-built vessel.
The MOL Mosel is owned by privately controlled Japanese player Toyo Sangyo, which is said to have sold the unit after its charter to shipping giant Mitsui OSK Lines (MOL) expired. "We are going to see more of such [boxship] sales taking place," said a broker. "Traditional Japanese shipowners do not operate containerships and when liner companies redeliver, they can only sell off the vessels."
By Gillian Whittaker, Irene Ang and Ian Lewis Athens, Singapore and Genoa
Published: 23:00 GMT, 02 Jul 2009 | last updated: 09:22 GMT, 03 Jul 2009

Greeks concerned over criminalisation
Source: Safety At Sea - Magazine - News 02 Jul 2009

Bank loan backs 'environmentally friendly' maritime sector
---29th June 2009 11:59 GMT
Maritme transport has EU backing
In a statement released last week the bank said it had agreed to lend the Piraeus Port Authority $77 million (Euros 55 million) to prepare for increased container traffic and cross-border transhipment.
"Linked to north-south transport corridors it can be a hub for the Greek hinterland and the whole central and Eastern Europe."
He called the expansion of Piraeus a "European priority project".
The bank was set up to support the political and strategic objectives of the European Union.
The Port Authority gave no figures but statistics released in January showed the port handled 431,000 TEUs (twenty foot equivalent units) during the whole of 2008.
Nick Jameson, 29th June 2009 11:59 GMT

T. Aggelopoulos Sells Ships
The price set is lower than the price to build them.
The agreement of the Greek shipowner with the Korean shipyards on the order of two 160,000 tonnage each suezmax tankers was signed 2 years ago.
They were expected to be delivered on October 2009 and January 2010 respectively.
Metrostar went on to sell the 2 ships with a total loss of approx. 16 million euro, Tradewind reports.
The building cost of the ships was 80 million euro for each ship, and the company sold the two contracts for approx.144 million euro.
Some months ago, in the midst of the shipping crisis, Metrostar cancelled an order to build 10 handysize cargo ships, part of a total 16 bulk carriers, at Jinse Korean shipyards, after realising that the shipyard had violated part of the agreement.
Two other ships that were part of the agreement were sold to Turkish shipping company Marvel, while the other four are planned to be delivered in the second half of 2009.

TOP SHIPS Inc Announces Termination Of Four Leases
Additionally, the Company announced today that the MV Astrale, a 75,933 DWT Panamax drybulk vessel, has entered into a time charter employment with Daeyang Shipping Co. Ltd., a Korean charterer, for a period of two years at a gross rate of $18,000 per day.
About TOP Ships Inc.
TOP Ships Inc., formerly known as TOP Tankers Inc., is an international provider of worldwide seaborne crude oil and petroleum products and drybulk transportation services. The Company operates a combined tanker and drybulk fleet as follows:
? One newbuilding product tanker, which is expected to be delivered in 2009. The expected newbuilding has a fixed rate bareboat employment agreement for a period of ten years.
? A fleet of five drybulk vessels with a total carrying capacity of approximately 0.3 million dwt, of which 47% are sister ships. All of the Company's drybulk vessels have fixed rate employment contracts for an average period of 27 months.

Diana Shipping's President: Why We Win
---06/30/09 - 06:12 PM EDT, DSX , TK Scott Eden recently sat down with Anastassis "Stacey" Margaronis, president of Diana Shipping, the dry bulk carrier based in Athens.
Margaronis has worked for Diana nearly his entire career, joining the company in 1980, well before it went public. Like his boss, Diana CEO Simeon Palios, and like executives across the Greek dry-bulk trade, Margaronis comes from a long line of shipping pros whose histories interconnect in a complex network of familial and business relationships across the centuries. Margaronis's father was a shipping lawyer, and his uncle a ship owner. And in the early part of the twentieth century, his grandfather worked as a captain on a ship owned by the grandfather of Simeon Palios. How is Diana preparing for an eventual rebound in the economy, after such a severe collapse?
Anastassis "Stacey" Margaronis: I'll give you the answer I gave to many of the people with whom I've met over the last few days, who asked more or less the exact same question.
The collapse in rates that we witnessed last year -- and I doubt anybody would disagree with us on this -- was probably caused by problems in the credit markets. This affected shipping in two main ways. Firstly, they effectively denied ship owners of credit, when they needed it in order to go ahead with the purchasing of newbuilding ships, if they had not arranged that credit in advance. And even some, apparently, who had commitment letters signed by banks, had those commitments reneged. There's very little, unfortunately, that an owner can do when a bank suddenly decides not to go ahead.
Did this happen to Diana?
No. We did not have such problems. Firstly because we didn't have any deliveries during that period, and secondly because our banks didn't renege on any of their commitments to others, let alone to us.
But the main problem [of the credit crunch] was that shippers of goods from the producing areas -- raw materials such as iron ore and coal -- were denied letters of credit. And letters of credit, as you know, are the lifeline of international trade. So you can imagine the combined effect that the credit crunch had on shipping was a total collapse in the demand for commodities.
The problem now, this year, is that some people within or outside shipping have interpreted this collapse as having been a recession in shipping which was part of the shipping cycle. The shipping cycle, we know, was at its high point about a year ago. It suddenly collapsed last year, and then it picked up again this year. Now, shipping cycles are very, very rarely V-shaped. If this were the recessionary part of the cycle, it would be the first V-shaped recession in shipping in living memory.
We strongly believe we haven't seen the bottom of the shipping cycle proper. This was a sharp drop which was caused by extraneous factors to shipping. Lack of credit did not come about because of shipping problems. Now, we will have to cope over the next three quarters with the effects of the shipping cycle, per se. The real shipping cycle. In other words, we're going to be dealing with a downturn -- I'm not saying it's going to be deeper, I'm not saying it's going to be shallower. I'm just saying that now shipping is going to be allowed, effectively, to go through its own cycle, hopefully not influenced by another exogenous shock like the credit-market shock of last year.
And why will that happen? As usual, it's supply and demand factors. You know very well that there's a huge order book, and that economies are struggling with the recession, which will have the effect of keeping rates under pressure over the next few quarters. I'm not foreseeing doom, and I'm not foreseeing a total collapse, necessarily.
But we are expected weakness in freight trades for a few quarters, which will effectively establish once again that shipping cycles are not V shaped. They are either U or L shaped, depending how bad things are.
As far as the imbalance between supply and demand is concerned, that's where we differ quite a bit with our colleagues ... who, you may have heard, foresee steady growth during 2010, not only as far as world economic growth is concerned, but as far as shipping is concerned. In the first quarter, we do not disagree necessarily. We might have some sort of steady growth in the world economies. That is positive for shipping. But it will not, let's call it, save the day, or help us escape the basic cyclicality of the industry, which will be there long after we have gone from involving ourselves in this industry.
Why do you differ from competitors so much, if everyone's looking, essentially, at the same data?
We can afford to be honest, and the reason for that is our balance sheet, which is amongst the strongest in the shipping industry, not only the dry bulk industry. We have very little debt compared to the value of our ships and our cash flow.
And also, it is possible -- I'm not saying that that is the reason -- but some of our competitors might be coloring their views about the future based on what they hope will happen, in order to enable them to expand their fleets and not incur problems with their banks. Because the soft freight market is bound to create issues with asset covenants, and various covenants of their loan agreements, for which most of [those companies] are getting waivers now.
We have not been told for how long the waivers have been obtained. Because, I suspect, they don't want to tell us, for obvious reasons. But by telling us that they have received waivers, this usually results in strength in their share price, because people get more positive. Short-term loans are reclassified as long-term loans, because of the fact that they're not technically in default anymore, and investors rejoice as result. It's part of life now as part of the public market.
Therefore, even if they are coloring their views due to this, we don't have to do the same. Because we have no covenants which are anywhere near showing default situation from a technical standpoint.
We have to keep in mind that a company like Diana is not going to suffer if we are wrong in our prediction about the downside. We're just going to make less than we would have otherwise made had we invested our 220 million in cash now, together with 50% debt, in acquiring assets. Of course you could tell me that you're going to be making significantly less. Yes, but nobody's going to worry about the company's survival. They might be disappointed with the increase in our revenue and our cash flow, but they're not going to worry about the survival of the company. They could lose interest it in the stock -- because they would consider it, possibly, management being boringly conservative, and having missed the upturn. But we're quite sure we're not running the risk of missing an upturn in the medium term, over the next 10 to 12 months.
Having said that, toward the end of the year, we intend to start buying ships regardless of their price. And when I say 'regardless of price' I don't mean we're going to pay anything people are asking for. We're going to pay anything the market dictates at the time. We're going to start an acquisition program, which we're going to continue for about 18 months or so, on a gradual basis.
We don't want to get caught having made no acquisitions by waiting for the trough in the shipping market, because we don't know when that will happen. We don't know how shallow or deep it will be, as I mentioned earlier, and we don't know at what specific asset values the turn will happen. Whether a modern Capesize ship, for example, goes down to 50 million dollars, or 40 or 30.
And by implementing this acquisition program, we're absolutely certain we're going to be buying before, at and after the trough of the shipping cycle. We are not saying we're absolutely sure because we're such geniuses. We're saying it because that's how it works.
If you buy anything in a downturn, and you keep buying, whether it's bonds, stocks or real estate, you're bound to buy some at the very bottom, some before, and some after.
How much will you spend?
In an ideal world, as we've said during our presentations, we'd like to spend most of our liquidity. Not all, of course, because you have to keep a certain amount of money to support your loan repayments if the recession for longer than you anticipate, but most of our cash. And have the company leveraged 75% in total. That would be the ideal scenario.
But we're not going to do that, because we cannot pinpoint the trough of the market. Ideally you'd like to be in that position because it would maximize profitability during the upturn, but it's extremely dangerous. So you ask me how much, and I can't really answer the question.
But it will be -- as far as number of ships is concerned -- a possible doubling of the fleet over the next few years. That's a possibility, but it's not a target.
But the root of all this was fleet expansion.
Yes, aggressive fleet expansion at a time when asset values were high. And a relatively conservative loan has become nearly 100% of the value of the asset the purchase of which it financed, initially. And that in itself is a breach of covenants.
So Diana was much more conservative in the boom years?
Yes. We started with nine, and we're now at 19. We bought 10 ships over a period of four and half years. So we were not exactly going wild in purchasing. And we sold one ship in that period, too.
You more than doubled your fleet size, though.
But we were buying on average about two and a half ships a year. Others were buying whole fleets in a year: ten, 15, 20, 25 ships. And that's why they are much larger than we are now. We are amongst the smaller companies in the public markets on the dry bulk side. We don't care about that, but I'm just saying it as a fact. We are amongst the smallest. Market cap, we're amongst the largest. So it shows the effect of the policy.
We were pressed, not only by investors, but some analysts as well from investment banks, to increase our debt during the good years. But we tried to resist this by financing the acquisitions through equity offerings.
And because those ships were expensive, we would charter them long term. In other words, we were buying the ships for the cash flow -- and we secured that cash flow with very good charterers -- rather than for any other reason, like increasing earnings per share or a dividend. Well, OK, we wanted to be accretive to our dividends per share. That was one of the criteria. But it was important for us was to secure the future revenue stream, in order to bring down the cost of the acquisition. Because there are ships we have paid in excess of a hundred million for, but they came with 50,000 or higher dollars a day charters, for five years.
Any desire to get into other sectors of the shipping business, such as tankers?
We have lots of desires, but we have to control them, unfortunately. Because shipping now, it has become very sophisticated. And we feel that, as a public company, we have to have a real focus in a certain sector, so that people can identify us as experts in that sector of the market.
This business of having a bit of everything in order to diversify risk has lost strength as an argument since specialized companies have appeared in the public domain. Why should somebody buy Diana with six tankers and not buy Teekay(TK Quote) [a pure-play tanker concern]? They are better at it than we will ever be.
So we will concentrate on buying bulk and, possibly, container ships. We had 15 years experience in operating them before going public. But if we get into container ships, we will spin it off for the reasons we just explained, so people can invest in that if they want to invest in container ships. If they want to own container ships and bulkers and still have Diana management, they can have both these shares."
Would buying container ships be part of your upcoming expansion program?
Yes. Initially it would have to be, because we would be using part of the same war chest, or dry powder.
The container trade has the beauty of having very long term contracts. You don't end up spending too much time on it, as management. Once you sign the contracts, then it's a matter of operating a ship like any other ship. But we have the expertise in the sense of knowing how to keep the strict time table that a container chaterer wants to have. And we have contacts in the container trade.
But nothing is set in stone. It's something we might look at. The container shipping cycle is more advanced in sequence than the bulk trade. In other words, valuations have more or less collapsed in containers. Prices are down, rates are down, values are down. Ships are laid up. Things look as black as they ever did. And usually that is the time to invest.