24/7 Wall St. » NM

Another Shipping Bankruptcy Filing Could Signal More on the Way (GMR, ONAVQ, TNK, OSG, NAT, FRO, NM, DRYS)

Paul Ausick — Fri, 18 Nov 2011 14:59:44 +0000

An over-supply of product leading to a steep drop in price has claimed another victim. No, this is not a story about a solar PV maker, but about shipping, where ships that were ordered in 2007 and 2008 have been hitting the water in big numbers this year at the same time that the global economy continues to get weaker.

General Maritime Corp. (NYSE: GMR) filed for bankruptcy protection yesterday citing low shipping rates for its fleet of 33 crude oil carriers and the company’s inability to comply with its debt covenants. Shipper Omega Navigation Enterprises Inc. (OTC: ONAVQ) filed for bankruptcy in July, and there is good reason to be concerned about other shippers like Teekay Tankers Ltd. (NYSE: TNK), Overseas Shipholding Group Inc. (NYSE: OSG), Nordic American Tanker Shipping Ltd. (NYSE: NAT), and Frontline Ltd. (NYSE: FRO).

Tanker rates are far below break-even rates and could stay there throughout 2012. The day rate for a very-large crude carrier (VLCC) is currently around $7,800, far below a break-even rate of around $30,000. To combat the low rates, some ship owners are considering selling their ships for scrap value. According to a report at Bloomberg, the cost to buy a 15-year old tanker is currently $23.5 million, while the scrap value of such a vessel is $17.25 million. That’s the narrowest difference in at least five years.

As much as 5% of the world’s oil tanker fleet could be scrapped in the next 18 months, but that would only raise rates to an estimated $12,817 by 2013, still less than half what is needed to hit a break-even rate. When profitability will return is anyone’s guess.

General Maritime and Omega Navigation depended heavily on the spot market for cargoes, which is a good position when prices are high, but a bad position when prices are low. Teekay has said that it has half its fleet booked through next summer, and could cover its costs even if the rest of the fleet remain idle. But in its third quarter earnings report, the company said it lost $291.2 million on fewer shipments and lower day rates. If there was any good news there, it was that Teekay didn’t lose as much as analysts had expected.

Tanker owners aren’t the only ones now struggling. Dry bulk shipper DryShips Inc. (NASDAQ: DRYS) actually beat estimates in its third quarter, primarily on the strength of the company’s move into offshore drilling vessels, not its shipping business. The company’s posted EPS loss of -$0.58 was better than the consensus estimate of -$0.61.

Navios Maritime Holdings Inc. (NYSE: NM), another dry bulk shipper, reported better-than-expected earnings yesterday, but net income was down year-over-year on increases in finance costs and higher depreciation/amortization charges. The company has said it is seeking a partner bank to acquire assets of distressed shippers at fire-sale prices. Frontline has also made the same claim.

Shares of Teekay Tankers are up about 1.4% in the first half hour of trading this morning, at $4.59, in a 52-week range of $3.48-$12.99. Navios shares are up about 0.8%, at $3.81, in a 52-week range of $2.88-$5.99. Frontline shares are down about -0.4%, at $5.72, in a 52-week range of $3.88-$28.93. DryShips is up nearly 0.8%, at $2.58 in a 52-week range of $1.75-$6.44.

Paul Ausick

Filed under: Bankruptcy, Oil & Gas, Transports Tagged: DRYS, FRO, GMR, NAT, NM, ONAVQ, OSG, TNK

Greece’s Rating Woes Weigh on Greek ADRs (NBG, OTE, CCH, DRYS, DSX, EXM, NM, TOPS, TNP)

247wallst — Tue, 08 Dec 2009 15:48:58 +0000

Fitch Ratings joined in with a downgrade of Greece’s credit rating following a similar action yesterday by Standard & Poor’s. The downgrade this morning was to “BBB+” from “A-”… and the ratings outlook remains negative. The downgrade was based upon medium-term outlook for public finances with weak credibility of fiscal institutions and the policy framework in Greece. This is weighing on Greek shares that trade in the U.S. to the tune of National Bank of Greece SA (NYSE: NBG), Hellenic Telecommunications Organization SA (NYSE: OTE), and Coca-Cola Hellenic Bottling Company S.A. (NYSE: CCH).

While international shipping companies operate globally, international maritime law and domicile has favored Greek flags for where corporate headquarters happen to be located. There is also a notion that Greeks have been among the world’s greatest seafarers for generations, but here is how these are performing today: DryShips, Inc. (NASDAQ: DRYS) is based in Athens, its shares are down 1.6% at $6.16. Diana Shipping Inc. (NYSE: DSX) is based in Athens, its shares are down 3.9% at $14.98. Excel Maritime Carriers, Ltd. (NYSE: EXM) is based in Athens, its shares are down 3.3% at $6.79. Navios Maritime Holdings Inc. (NYSE: NM) is based in Piraeus, its shares are down 1.5% at $5.86. Top Ships Inc. (NASDAQ: TOPS) is based in Athens, its shares are down 1% at $1.02. Tsakos Energy Navigation Ltd. (NYSE: TNP) is based in Athens, its shares are down 2.7% at $16.01.

Standard & Poor’s put Greece’s A- rating on CreditWatch negative yesterday, and it raised issues with government finances that could lead to downgrades in the future. Fitch referred to “fiscal slippage relative to current plans” could result in a further downgrade, but also noted that the emergence of a much stronger policy commitment and its consistent implementation could see the outlook revised to stable. This follows new policies the government has committed to and it further outlines some of the risks that the larger European Union members are taking on with each new less developed nation added to the E.U.

This has also driven up credit default swap rates in insuring against Greek default. Fitch further noted that Greece could now see its government debt burden reach close to 130% of gross domestic product. Also noted is an aging population and a highly generous and unreformed pension system at 15% of GDP.

Greek banks have a large part of their assets in Greek government bonds, and those bonds are used as collateral for their regular loans from the ECB. The new government increased its forecast this year noting that the budget deficit could be almost double prior targets at a new rate of 13% of GDP.

The top three ADRs are down on the day in NYSE trading: National Bank of Greece SA (NYSE: NBG) is down 9.7% at $5.43, Hellenic Telecommunications Organization SA (NYSE: OTE) is down 3.2% at $7.47, and Coca-Cola Hellenic Bottling Company S.A. (NYSE: CCH) is down 1.9% at $23.49 on thin volume.

There is a lesson here for all nations. While we have to take care of each other, the real question boils down to ‘at what cost’ and the implications are that paying for every aspect of the generations of today is going to drastically increase the burden on the generations of tomorrow.

Jon C. Ogg
December 8, 2009

Posted in ADR, Banking, Bonds, Trading Alert, Transports Tagged: CCH, DRYS, DSX, EXM, NBG, NM, OTE, TNP, TOPS

Dry Bulk Shipping Stocks Rally

247wallst — Mon, 16 Nov 2009 21:39:36 +0000

Tickerspy’s Dry Bulk Shipping Stock Index (*DBULK) rose 5.1% today, beating the S&P 500 by 1.3.%. Dry shipping stocks were given a boost by upgrades today. Deutsche Bank upgraded Genco (NYSE: GNK), Euroseas Ltd (NASDAQ: ESEA), and Eagle Bulk Shipping (NASDAQ: EGLE) today. All three made major moves today.

Over half of the dry shipping stocks in the Tickerspy index has risen over 100% off of their 52-week lows. The industry was placed in serious jeopardy as global trade entered a state of decline during the credit crunch. Shipping rates fell dramatically as recently as this summer, but have been on the rise in recent months.

Garrett W. McIntyre

Posted in Transports Tagged: *DBULK, DRYS, DSX, EGLE, ESEA, EXM, Global Trade, GNK, KEX, NM, OCNF, ONAV, PRGN, SB, SBLK, TRMD

Growing List of Damaged Post-IPO’s (SB, NM, RSOL, RAX, IPI, WES, PSE)

247wallst — Tue, 07 Oct 2008 16:17:44 +0000

We would be reporting the economic numbers from the government’s Department of Redundancy Department if we said it is an ugly bear market and if we told you that the IPO market was all but dead. But what is amazing here is the absolute poor performance we have seen out of the 2008 post-IPO companies. Many of these companies are still doing well, and some are not. But in our screen of the big IPO’s there is an astonishing number of post-IPO’s that are trading much worse than just busted IPO’s by being under the IPO price.

Our list of 2008 IPO’s here was 30% and a somewhat active stock volume. Below is the list of post-IPO’s we track with shares down more than 30% from the IPO price:

Stock (Ticker)                                  Loss Close IPO$
Safe Bulkers Inc. (SB)                   -62% $7.27 $19.00
Navios Maritime Acquis.(NM)       -61% $3.89 $10.00
Real Goods Solar (RSOL)          -57% $4.25 $10.00
RackSpace Hosting Inc. (RAX)    -48% $6.95 $12.50
Intrepid Potash (IPI)                      -36% $20.58 $32.00
Western Gas Partners (WES)       -32% $11.27 $16.50
Pioneer Southwest Energy (PSE) -31% $13.11 $19.00

Jon C. Ogg
October 7, 2008

Posted in General Tagged: IPI, NM, PSE, RAX, RSOL, SB, WES

IPO Pricing: Navios Maritime Acquisition Corporation (NNA.U, NM)

247wallst — Thu, 26 Jun 2008 08:40:22 +0000

Navios Maritime Acquisition Corporation (NYSE: NNA.U) has priced its IPO of 22,000,000 units at a price of $10.00 per unit for aggregate gross proceeds of $220,000,000. Each unit represents one share of common stock and one warrant to buy a share of stock at $7.00.

J.P. Morgan and Deutsche Bank were the joint book-running managers and S. Goldman Advisors LLC acted as the co-manager for the IPO.

If you check the filing dates and details we covered on this one, you might determine this was the fastest SPAC or Blank Check IPO in history.

Navios Maritime Holdings Inc. (NYSE: NM) is the sponsor company.

Jon C. Ogg
June 26, 2008

Blank Check IPO Filed: Navios Maritime Acquisition (NM, NNA)

247wallst — Tue, 17 Jun 2008 14:24:13 +0000

Navios Maritime Acquisition Corporation is a special purpose acquisition company, or SPAC/Blank Check company, that has filed to come public via an IPO. It has filed to sell some 22,000,000 units, with each unit representing one share of stock and one warrant with a $7.00 strike price, and has the applied ticker of "NNA" on the NYSE.

Navios Maritime Holdings Inc. (NYSE: NM) has committed to purchase from us 7,600,000 warrants at $1.00 per warrant for a total purchase price of $7,600,000, which will occur simultaneously with the completion of this offering.

The lead underwriters are listed as JPMorgan and Deutsche Bank Securities, and another company called S. Goldman Advisors LLC is listed as well.

Navios formed under the laws of the Marshall Islands for the purpose of acquiring, through a merger, capital stock exchange, asset acquisition, stock purchase or other similar business combination, one or more assets or operating businesses in the marine transportation and logistics industries, with a primary focus on target businesses outside of the drybulk shipping sector.

Jon C. Ogg
June 17, 2008