Greek Shipping News Cuts
Week 37 - 2009
---Port workers have signalled their intention to use the run-up to the October 4 national elections to reignite chaos in Greece's top port Piraeus. With just three weeks to go before Cosco Pacific is due to cement its $3.5bn deal to take over operation of the port's container terminals two and three port employee leaders are ready to resume their battle to stop the concession agreement between the Piraeus Port Authority and the Chinese terminal operator.
Unable to accept the 'battle"'may be lost, union leaders have vowed they will do whatever they can to abort Cosco's 35-year concession plans. The agreement between the PPA and Cosco, which has been ratified into law by Parliament, is set to commence October 1.
This agreement marks the first time in the port's history, there will indeed be competition between two port operators, Cosco and the PPA. As a result the PPA is planning an upgrade of its cargo piers, through an investment of Euro 160m, to be completed by next May. This upgrade will enable the port to handle the latest generation of container ships, through new equipment and berths of up to 18mts draught, something few Mediterranean ports can offer.
With opposition parties declaring they will re-look at the PPA / Cosco agreement, if elected, the unions have sent a letter to them and the the PPA's management, demanding the agreement with Cosco be frozen. Otherwise they will go on strike.
Unions claim Cosco "does not have legal, political and social recognition". Among arguments put forward is that a judicial hearing by the Council of State is expected on October 9; opposition parties have expressed their disagreement with the port having a private operator; the country has officially entered a pre-election period; and the European Union is still to answer allegations by the union's that the PPA agreement gives tax benefits to Cosco.
Industrial action during 2008 brought chaos to Piraeus and plunged it into heavy loss. The PPA is still struggling to regain lost clients though there has been relative industrial peace during 2009, and there has been a trickle of lost clients returning. Maersk Hellas, has just announced the introduction of a new direct route between Asia and Greece, with the first ship slated to arrive in Piraeus September 17.
-- Filed: 2009-09-11
---(Sep 11 2009) The IMO secretary general has reiterated his call not to let the current economic problems faced by shipping companies impact on safety standards.
Phrixos B Papachristidis Appointed Chairman of Executive Board of Hellespont
---Tuesday, September 8th, 2009. Papachristidis previously worked for Poten & Partners in New York. In 2007, he joined the family business, serving in various functions in the Group. His most recent position was Managing Director of Hellespont Tankers GmbH & Co KG, manager of the newly formed Seatramp Intermediate Tanker Pool.
Phrixos B Papachristidis has been appointed Chairman of the Executive Board and Managing Director of Hellespont AG & Co KG, the parent company of the German-based Hellespont ship management and marine services group. His appointment follows the recent resignation of Christian von Oldershausen, who had been CEO since 2007.
Phrixos Papachristidis was born in London and educated in the UK. He worked for Poten & Partners in New York after graduating from New York University. In 2007, he joined the family business, serving in various functions in the Group. His most recent position was Managing Director of Hellespont Tankers GmbH & Co KG, manager of the newly formed Seatramp Intermediate Tanker Pool.
Meanwhile, in other appointments at Hellespont, Christian Ramm, Managing Director of Hellespont Hammonia GmbH & Co KG, will join Phrixos Papachristidis and Matthias Imreke on the Executive Board of Hellespont AG & Co KG, and Christian Stensaker, Commercial Director of Hellespont Tankers AG & Co KG, will become Managing Director of that company
FMG settles another shipping dispute
--- 11-September-09 by Rebecca Lawson.
Fortescue Metals Group has settled its third shipping dispute, today agreeing to pay an upfront $6.1 million to a Greek shipping company which had launched a $US130 million lawsuit against the iron ore miner last year.
In a statement today, FMG said Splendour Special Maritime Enterprise, part of the Angelicoussis Shipping Group, has agreed to discontinue its legal proceedings.
Under the agreement, FMG will restructure its future cargo obligations with ASG into three, new five-year charters that will start as early as next month.
The freight rate under the restructure charter arrangements has been set at a base daily rate, slightly under the current market rate, with a hire incentive payment of an additional 50 per cent on top.
"The incentive payment includes a profit share arrangement where the amount paid is reduced if future market rates trade above the base rate during the term of the charters," FMG said in a statement.
"Under the share agreement if rates trade above the base rate up to the 'incentive' rate, then all profits are retained by Fortescue. When rates trade above the incentive level, the profits are split 50 / 50 between Fortescue and ASG."
FMG said it still has three outstanding disputes.
"Fortescue will continue to negotiate with these parties and expects to be able to reach satisfactory terms given its track record of mutually agreed settlement arrangements," it said.
Late last year, ASG filed a $US130 million lawsuit against FMG after the miner cancelled its shipping contracts after a drop in iron ore demand.
Earlier this year, FMG settled its dispute with Belgium shipping company Bocimar with the issue of $US22 million worth of shares and establishing a shipping joint venture, and made an $US23.35 million upfront payment to Classic Maritime and restructure the shipping arrangement.
---No discount is being offered to a Spanish outfit which defaulted on the charter of a Goldenport Holdings boxship, the Greek owner has insisted.
The default by Contenemar forced London-listed Goldenport to circulate the 976-teu Gitte (built 1992) in the spot market where the Greek has yet to receive any satisfactory offers.
TradeWinds reported last week that the Greek was negotiating to receive the differential in the spot market and the charter rate, which could be around $5,000 a day. Contenemar had the ship on charter at a daily rate of around $7,300 until August and then around $9,000 until April next year. Current spot market rates for this size of vessel are around the $4,000-a-day mark.
By Eoin O'Cinneide in London
Published: 10:03 GMT, 09 Sep 2009 | last updated: 07:02 GMT, 10 Sep 2009
Exerts of coverage:
Mr. Margaronis of Diana Shipping spoke of opportunities. With its strong balance sheet, enhanced by its decision to suspend dividends, the company is positioned for growth. And their plans are both judicious and realistic. They have no specific price level in mind, but intend, instead, to purchase vessels starting in the next couple of quarters. Admitting they, like everyone else, will not be able to call the bottom, they feel that with purchases staggered over 18 to 30 months they will have average purchase prices at attractive levels. The intention is to buy vessels in small numbers with large acquisitions unlikely, although possible if an opportunity does present itself. As an example of the potential returns, Mr. Margaronis gave the example of a vessel ordered in 1999 that was delivered in 2001 and was put into the IPO in 2005. The IRR was 46%.
DryShips is a different company. With the bulk fleet largely fixed for the next couple of years, the dry business is largely a bond, with the upside centered in the deepwater drilling business. Pankaj Khanna provided a rationale for fixing the ships by highlighting supply data. In 2009, only 35 to 40 million DWT will be delivered versus the 70 million DWT scheduled. For 2010, 110 million DWT are scheduled for delivery and even if half are delayed or cancelled, there will still be 50 million DWT delivered which represents a 10% growth in the fleet size. The focus is now turning to the financing and fixing of the four newbuilding drillships. On the banking side, DryShips has obtained waivers for all but $300 million of its bank debt. This last piece is held by German banks, which have bigger issues to deal with, according to Mr. Khanna. The message for investors is to buy DRYS and get a free option on the drilling business.
For SafeBulkers, it is all about fine-tuning the fleet. During this period, the company cancelled 2 Kamsamax newbuilds, which had no employment, and 1 Capesize newbuild, which did have a charter. They agreed to purchase a new Capesize to be delivered in April 2010 for $63 million and with the agreement of the charterer moved the charter to this cheaper vessel. The oldest Panamax in the fleet was sold for $33 million. The delivery of another Capesize and Post-Panamax were delayed until the 2nd half of 2011. Of concern, however is the fact that quality is down even in the good shipyards as they cut costs. As a consequence, the company has achieved a price reduction of $2.5 million on a Post-Panamax that delivered Tuesday and a $1.5 million reduction through an amendment of an MOA. This company is surely on top of the situation.
Greece. Safe Bulkers, Inc. reports Q2 and fist half year 09 results
---Wednesday, 09 September 2009. Safe Bulkers, Inc. (the "Company") (NYSE: SB), an international provider of marine drybulk transportation services, announced today its unaudited financial results for the three and six months periods ended June 30, 2009.
Summary of Second Quarter 2009 Results
Net revenue for the second quarter of 2009 decreased by 14% to $44.3 million from $51.4 million during the same period in 2008. The Company operated 13 vessels on average during the second quarter of 2009, earning a Time Charter Equivalent ("TCE")(1) rate of $37,555, compared to 11 vessels and a TCE rate of $52,069 during the second quarter of 2008. The decrease in the TCE rate resulted mainly from lower average period time charter rates contracted in previous periods, and to a lesser extent from the lower prevailing spot market charter rates.
Net income was $58.1 million, or earnings per share of $1.07, in the second quarter of 2009, an increase of 31% from net income of $44.5 million, or earnings per share of $0.82, in the second quarter of 2008. The increase in net income of $13.6 million reflects: (i) early redelivery income of $42.4 million, compared to an early redelivery cost of $0.2 million, (ii) loss on asset cancellations, related to our cancellation of certain newbuilds, of $20.7 million compared to none, and (iii) net revenue of $44.3 million compared to $51.4 million, for the relevant quarters in 2009 and 2008, respectively.
EBITDA(2) of $64.3 million for the second quarter of 2009, an increase of 26% from $51.1 million in the second quarter of 2008, mainly due to higher net income as described above.
Declaration and payment of a dividend of $0.15 per share for the second quarter of 2009.
Summary of First Half 2009 Results
Net revenue for the first half of 2009 decreased by 10% to $91.1 million from $100.7 million during the same period in 2008. The Company operated 12.77 vessels on average during the first half of 2009, earning a TCE rate of $39,479, compared to 11 vessels and a TCE rate of $50,889 during the first half of 2008.
Net income was $120.1 million or earnings per share of $2.20 in the first half of 2009, an increase of 76% from net income of $68.1 million or earnings per share of $1.25, in the first half of 2008. The increase in net income of $52.0 million reflects: (i) early redelivery income of $72.1 million, compared to early redelivery cost of $0.6 million, (ii) loss on asset cancellations of $20.7 million, compared to none, (iii) foreign exchange gain of $1.0 million, compared to a foreign exchange loss of $9.9 million and (iv) net revenue of $91.1 million compared to $100.7 million, for the corresponding periods of 2009 and 2008, respectively.
EBITDA of $132.7 million for the first half of 2009, an increase of 64% from $81.0 million in the first half of 2008, mainly due to higher net income as described above.
Fleet and Employment Profile
The Company's operational fleet is comprised of 13 drybulk vessels with an average age of 3.56 years as of June 30, 2009.
As of August 31, 2009, the contracted employment of the Company's fleet under period time charters is as follows: 85% of fleet ownership days for the remaining days of 2009, 80% for 2010 and 60% for 2011. This includes vessels which will be delivered to us in the future.
During the second quarter of 2009 our subsidiaries:
i) cancelled the MOAs for two newbuild Kamsarmax class vessels and entered into an agreement to cancel the shipbuilding contract for one newbuild Capesize class vessel (aggregate cancellation cost amounted to $20.7 million and was recorded as loss on asset cancellations in the second quarter 2009);
ii) entered into agreements to delay the deliveries of one Capesize class newbuild vessel from 2010 to September 2011 and one Post-Panamax class newbuild from 2010 to June-August 2011;
iii) entered into MOAs to acquire a 177,000 dwt Capesize class newbuild vessel with delivery in April 2010 at a price of $63 million and to sell its oldest vessel, MV Efrossini, a 76,000 dwt 2003-built Panamax class vessel, for $33 million with delivery in December 2009.
There were no associated charter party agreements for the two cancelled Kamsarmax vessels, while MV Efrossini is operated in the spot market. In the case of the cancelled Capesize vessel, the relevant charterer has agreed to accept delivery of the 177,000 dwt Capesize class newbuild vessel in substitution. In the case of the postponed Capesize class newbuild vessel, the relevant charterer has agreed to postponed delivery during 2012 with a decrease in the gross daily charter rate from $40,000 to $38,000.
Our subsidiary Maxdodeka Shipping Corporation has taken delivery today of the newbuild vessel Andreas K, a 92,000 dwt Post-Panamax class vessel to be initially operated in the spot market. The vessel's purchase price was financed from surplus from operations. This expands our current operational fleet to 14 drybulk vessels.
Following negotiations with the relevant counterparties under existing MOAs, our subsidiaries Maxdodeka Shipping Corporation and Maxdekatria Shipping Corporation have entered into addenda to such MOAs which reduce the purchase price for the relevant vessels by $2.5 million and $1.5 million, respectively.
Polys Hajioannou, Chairman of the Board of Directors and Chief Executive Officer of the Company, said: "We are actively managing our day-to-day operations, intensifying our focus on operating a young, high-quality fleet and seeking to take advantage of current market conditions with respect to vessel sales and newbuild acquisitions. We believe that our high charter coverage positions us well for turbulent times ahead in the maretplace. At the same time, we have maintained our dividend of $0.15 per share for the second quarter of 2009, consistent with our policy to pay out a portion of our free cash flows."
On Wednesday, September 09, 2009 at 9:00 A.M. EDT, the Company's management team will host a conference call to discuss the financial results.
Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 (866) 819-7111 (US Toll Free Dial In), 0(800) 953-0329 (UK Toll Free Dial In) or +44 (0)1452-542-301 (Standard International Dial In). Please quote "Safe Bulkers" to the operator.
In case of any problem with the above numbers, please dial 1 (866) 223-0615 (US Toll Free Dial In), 0(800) 694-1503 (UK Toll Free Dial In) or +44 (0)1452 586-513 (Standard International Dial In). Please quote "Safe Bulkers" to the operator.
A telephonic replay of the conference call will be available until September 18, 2009 by dialing 1 (866) 247-4222 (US Toll Free Dial In), 0(800) 953-1533 (UK Toll Free Dial In) or +44 (0)1452 550-000 (Standard International Dial In). Access Code: 1859591#
Slides and Audio Webcast
There will also be a live, and then archived, webcast of the conference call, available through the Company's website (www.safebulkers.com). Participants in the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.
Management Discussion of Second Quarter 2009 Results
Net income increased by 31% to $58.1 million for the second quarter of 2009 from $44.5 million for the second quarter of 2008. This increase is attributable to the following factors:
Net revenues: Net revenues were $44.3 million for the second quarter of 2009, a 14% decrease compared to $51.4 million for the second quarter in 2008. Net revenues decreased due to lower average period time charter rates contracted in previous periods and to a lesser extent from the lower prevailing spot market charter rates.
Vessel operating expenses: Vessel operating expenses decreased to $4.6 million for the second quarter of 2009, a 4% decrease compared to $4.8 million for the same period in 2008. Consequently, daily vessel operating expenses decreased by 19% to $3,914 for the second quarter 2009, compared to $4,826 for the second quarter of 2008. The decline mainly resulted from the number of dry-dockings which were completed during the relevant periods. During the second quarter of 2009, one scheduled dry-docking was partially completed, compared to two dry-dockings that were completed in the same period of 2008.
Early redelivery income/cost: During the second quarter of 2009, we recorded $42.4 million of early redelivery income, relating to the early termination of period time charters of our vessels Maria and Katerina, versus $0.2 million of expense for the same period in 2008. Maria was redelivered on June 28, 2009 instead of January 2, 2011, which was the contracted earliest redelivery date. In connection with the early redelivery, we recognized income of $20.0 million comprising cash compensation paid by the relevant charterer on July 1, 2009 of $15.5 million net of commissions, and $4.5 million representing the unearned revenue from the terminated time charter contract. Katerina was redelivered on June 26, 2009 instead of November 26, 2010, which was the contracted earliest redelivery date. In connection with the early redelivery, we recognized income of $22.4 million comprising cash compensation paid by the relevant charterer on July 1, 2009 of $21.5 million net of commissions, and $0.9 million representing the unearned revenue from the terminated time charter contract.
Maria and Katerina are both currently employed in the period time charter market.
Loss on asset cancellations: During the second quarter of 2009, $20.7 million was recorded as loss on asset cancellations compared to none during the same period in 2008. In April 2009, the Company cancelled the MOAs for two Kamsarmax class vessels and forfeited the advance deposits. The aggregate loss on terminating these contracts amounted to $13.7 million net of interest earned on the advance deposits. In May 2009, the Company entered into an agreement to cancel the newbuild contract for one Capesize class vessel. The cost of cancelling this contract amounted to $7.0 million, inclusive of brokerage commissions.
Interest expense: Interest expense decreased to $3.1 million in the second quarter of 2009 from $4.2 million for the same period in 2008, attributable to the declining USD LIBOR levels as reflected in the decrease of weighted average interest rate from 4.165% in the second quarter of 2008, to 2.541% in the second quarter of 2009. The weighted average of loans outstanding during the second quarter of 2008 was $401.9 million, compared to $490.1 million during the second quarter of 2009. The higher average indebtedness reflects additional indebtedness to finance vessel acquisitions and indebtedness used for general corporate purposes.
Gain on derivatives: Gain on derivatives decreased to $5.1 million in the second quarter of 2009, compared to $7.2 million for the same period in 2008, as a result of the mark-to-market valuation of certain interest rate swap transactions to manage the risk and interest rate exposure of our loan and credit facilities. At the end of the second quarter of 2008 there were seven interest rate swap transactions outstanding, while 12 such transactions were outstanding at the end of the second quarter of 2009. The valuation of these interest rate swap transactions at the end of each quarter is affected by the prevailing long-term interest rates at that time.
Cash, time deposits & restricted cash: Cash, time deposits & restricted cash as of June 30, 2009 include cash and cash equivalents and short-term bank deposits amounting to $23.4 million, and the current portion of restricted cash of $126.1 million. The restricted cash represents collateral pledged in favor of our banks in connection with performance guarantees issued on our behalf for payments to shipyards due in 2009 totaling $32.6 million, and cash pledged in favor of our lenders of $93.5 million pursuant to our loan agreements, as amended.
Last Updated ( Wednesday, 09 September 2009 )
Aegean commences 2nd phase of drilling at Epsilon offshore Greece
---Published Sep 11, 2009. Aegean Energy has commenced new drilling operations in the Epsilon Field, according to the development plan approved by the Ministry of Development.
The Company announces the signing of a drilling contract for the Ensco 85 (E85) jackup drilling rig, which will undertake the drilling operations, the signing of a $50 million financing agreement with Standard Chartered Bank and the appointment of Schlumberger to provide drilling management services.
The E85 constitutes one of the 42 jackup rigs of Ensco International, designed to operate reliably all year round assisted by a staff of 80 people on a 24 hour basis. E85 is a Jackup Rig type independent leg cantilever, with maximum drilling depth of up to 7,600 meters and 2,000 HP drawworks. Additionally the Ensco85 was awarded the best performing Ensco Rig in 2007, ensuring operational excellence in 2008 and 2009.
The new well is expected to reach a total depth of 5,500 meters and vertical depth of 2,900 meters, while the drilling operations are estimated to last approximately 90 days. Based on these significant data, the Epsilon well represents the deepest and longer ever drilled in Greece. The commencement of the operations for Aegean Energy with the Ensco85 rig will start by the end of September.
Mathios Rigas, Chairman and Managing Director of Aegean Energy S.A., stated, "Aegean Energy and Kavala Oil enter a new phase of this long term investment, which actually represents a landmark in the realization of our business plan. Our company has made significant steps towards the effective exploitation of our national resources, in order to secure a safe business environment for the company, as well as for the sustainable growth of the local and national economy. In this aspect, we proceed with a team driven by clear vision, solid expertise and long experience in its sector. We would like to sincerely thank Standard Chartered Bank, for its trust and confidence in this successful collaboration. Moreover, the agreements with leading companies of the sector, such as Ensco International Incorporated and Schlumberger, guarantee excellent execution of the Project.
Mr. Evaggelos Pappas, President of the Board of Directors of Kavala Oil, commented, "The exploitation of the Epsilon field represents a long awaited demand by the employees of the company and the local community of Kavala. Today, we are grateful and happy to see that we have achieved our highest goal. We strongly believe that the completion of this investment project will bring significant benefits for both local and national economy."