General Maritime Corporation Q4 2007 Earnings Call Transcript

General Maritime Corporation (GMR)

Q4 2007 Earnings Call

February 28, 2008 8:30 am ET

Executives

Brian Kerr - IR

John Tavlarios - Chief Administrative Officer

Jeff Pribor- Chief Financial Officer

Peter Georgiopoulos - Chairman, CEO and President

Analysts

Doug Mavrinac - Jefferies & Company

Jon Chappell - JPMorgan

Noah Parquette - Cantor Fitzgerald

Terese Fabian - Sidoti & Company

Jeremy Newman - QVT Financial

Daniel Burke - Johnson Rice

Anja Soderstrom - Maxim Group

Presentation

Operator

Good morning everyone and welcome to the General Maritime Corporation Conference Call. Today's call is being recorded. We will conduct a question-and-answer session after the opening remarks, and instructions will follow at that time. Also a replay of the call will be accessible at any time during the next two weeks by dialing 888-203-1112 for US callers and 719-457-0820 for non-US callers. And to access the replay please enter the pass code 8075456.

And at this time, I'd like to turn the call over to Mr. Brian Kerr. Please go ahead, sir.

Brian Kerr

Welcome ladies and gentlemen to the General Maritime Corporation conference call to discuss the company's 2007 fourth quarter and full year 2007 results. I would like to remind everyone that this conference call is now being webcast at the company's website, www.generalmaritimecorp.com. There are also additional materials relating to our earnings announcement, including a slide presentation on our website.

You should be aware that on today's conference call, we will be making certain forward-looking statements that discuss future events and performance. These statements are subject to risks and uncertainties that could cause actual results to differ from the forward-looking statements.

For a discussion of factors that could cause results to differ, please see the company's press release that was issued yesterday and the company's filings with the Securities and Exchange Commission including without limitation the company's Annual Report on Form 10-K for the year-ended December 31, 2006 and the subsequent reports on Form 10-Q and Form 8-K.

Now I would like to introduce Mr. John Tavlarios, President and Chief Executive Officer of General Maritime Management LLC.

John Tavlarios

Good morning. Welcome to General Maritime's earning conference call for the fourth quarter and full year 2007. With me today are Peter Georgiopoulos, Chairman and Chief Executive Officer and President of General Maritime Corporation; Jeff Pribor, Chief Financial Officer; and John Georgiopoulos, Chief Administrative Officer.

As outlined on Slide 3 of the presentation, I will begin today's call by discussing the highlights of the quarter and year followed by Jeff's review of our financial results for the quarter. Following this, Peter will provide some remarks on our company outlook and overview of the industry. We will then be happy to take your questions.

During 2007, General Maritime continued to achieve notable accomplishments as we further differentiated the company by providing, both strong results and unlocking shareholder value in diverse shipping rate environment.

Specifically, our success during the year included posting solid financial results in a challenging market, unlocking additional value for shareholders by distributing $15 per share special dividend, providing a sizable quarterly fixed dividend during the time in which we continue to grow our fleet with modern double-hull vessels and opportunistically repurchasing shares.

Importantly, we continued to deliver such strong results and value to shareholders while maintaining significant financial strength and flexibility, which we believe will continue to serve us well in the future.

On Slide 4, I will discuss our success at posting solid financial results for the fourth quarter and full year 2007. For the quarter ended December of 31, 2007, we recorded net income of $9.6 million or basic and diluted earnings per share of $0.32 and $0.31 respectively, which excludes $4.4 million in other expenses. These other expenses are related to an unrealized $2.6 million non-cash loss associated with the change in fair value of our freight derivatives as well a $2 million loss associated with a monthly cash settlement of freight derivatives.

For the year, we recorded net income of $44.5 million or basic and diluted earnings per share of $1.46 and $1.43 respectively. EBITDA totaled $25.7 million for the fourth quarter and a $117.3 million for the full year 2007. A moment ago I highlighted General Maritime's ongoing success distributing sizeable dividends to shareholders. Specifically during the year, we drew upon the company's significant timecharter coverage to declare dividends of $2 per share, consistent with the target rate we established at the beginning of the year.

Since the inception of our quarterly dividend policy in January 2005, I am pleased to report that General Maritime has declared quarterly dividends totaling $10.28 per share. The sizeable quarterly dividend we have distributed to shareholders combined with the company’s $15 per share special dividend which was paid on March 23, 2007, totaled $25.28 per share of value returned to shareholders, and highlights General Maritime's significant earning power as well as its commitment and success entering into transactions that serve the interest of shareholders.

Turning to Slide 5, I would now like to review our timecharter coverage. With a goal of providing shareholders with visibility in terms of revenue and cash flows, we further increased our timecharter coverage during 2007. Specifically we grew our timecharter coverage to 67%, which we believe provides a strong contracted revenue and cash flow stream for over three years.

We currently have 13 vessels on timecharter, and one synthetic timecharter. With the delivery of the last of our Suezmax newbuildings in February 2008, we now have 14 vessels or vessels equivalent on timecharters extending into 2009, representing 67% of our fleet. Our total contracted revenue for 2008 is expected to be $175.8 million.

On Slide 6, we provided charter details on the timecharter coverage. It is important to know that our timecharters have been entered into at what we believe to be favorable rates with leading international charters. This serves to further support our fixed annual dividend target of $2 per share, while retaining the ability to benefit from an improving rate environment in the future. Going forward, we intend to continue to remain true to our proven approach of seeking opportunities to sign contracts with leading charters when our strict return criteria is met.

Turning to Slide 7, I'll provide an overview of our fleet. I am pleased to report that during 2007, we took delivery of two Suezmax newbuildings; the Genmar Kara G and the Genmar George T. In February of 2008, we also took delivery of the Genmar St. Nikolas. With the delivery of this most recent vessel on February 5, 2008, we've successfully taken delivery of all four of our Suezmax newbuildings and are pleased to have done so on budget and on schedule.

With the addition of the three double-hull Suezmax vessels, the company has once again solidified its reputation as an owner of high-quality, modern double-hull vessels. Notably, the average age of our fully double-hull fleet is now approximately 8.9 years down 22% from 10.9 years two years ago.

I would now like to turn the call over to Jeff.

Jeff Pribor

Thanks John and good morning everyone. Beginning on Slide 9, I would like to review our Q4 financial results. For the fourth quarter of 2007 excluding $4.4 million of other expense, we reported net income of $9.6 million or $0.32 basic and $0.31 diluted earnings per share. Including other expense, net income was $5.2 million or $0.17 basic and $0.17 diluted earnings per share, compared to December 31, 2006 net income of $22.4 million, or $0.73 basic and $0.71 diluted earnings per share.

The decrease in net income was principally the result of the rise in other expense and net interest expense, compared with the prior year period. Other expense included $2.6 million unrealized, non-cash loss associated with the change in fair value of our freight derivatives, as well a $2 million loss associated with the monthly cash settlement of our derivatives, which is offset by $200,000 of other income.

Net interest expense was higher due to increased borrowings to fund that $15 special dividend paid in March 2007. Net income in the quarter was also impacted by a 5.5% decrease in average daily TCE and lower utilization due to additional of hire. To analyze revenue, we look at net voyage revenue per vessel day, referred to as timecharter equivalent or TCE. TCE is calculated by dividing net voyage revenue by voyage days for the applicable time period. You'll find the total number of voyage days used in this computation in the appendix to our press release.

On slide 10, we've provided a fourth quarter 2007 spot TCE analysis. Full fleet TCE, including timecharters, decreased 5.5% to $32,510 for the quarter ended December 31, 2007, compared to $34,410 for the prior year period. The TCE earned by our Suezmax vessels decreased 5.7% to $35,203 from $37,327 in the prior year period. And our Aframax vessels decreased by 9.4% to $29,312 for the quarter ended December 31, 2007, from $32,340 for the period year period.

The company's total average daily spot rate decreased 8.5% to $28,157, compared to $34,537 in the prior year period. The spot rates earned on the company's double-hull, Aframax and Suezmax for Q4, 2007 was 30,000 for '08 for Aframax and 16,878 for Suezmax respectively. For the quarter ended December 31, 2007, EBITDA was $25.7 million compared to $32. 8 million for the quarter ended December 31, 2006.

Depreciation and amortization for the quarter ended December 31, 2007 was $12.6 million compared to $11.2 million for the quarter ended December 31, 2006. This increase is primarily attributable to the delivery of two Suezmax vessels since the prior year period.

Our net interest expense increased to $7.9 million during the quarter ended December 31, 2007, compared to a net interest gain of $833,000 for the prior year period. The increase in interest expense is primarily due to our increased debt position from the additional leverage the company incurred to pay our $15 special dividend in the first quarter of 2007.

I would now like to discuss our balance sheet which is detailed on Slide 11. As of December 31, 2007, our cash position was $44.5 million and our debt was $565 million. With over $350 million in liquidity at year-end, we are very excited about our strong balance sheet and feel that our capital structure gives us the stability and flexibility we need to continue to find and execute future growth and consolidation opportunities.

Turning to Slide 12, we provide a fourth quarter and full year 2007 operating expense analysis. To analyze expenses we look at the cost per vessel day which adjust for changes in size of our fleet. Per vessel day cost are calculated by dividing total expense by the aggregate number of calendar days that owned each vessels during the period. Daily direct vessel operating expenses increased by 5.7% to $7,032 per vessel days for the quarter ended December 31, 2007, compared to $6650 for the prior year period. The increase was attributable to higher crew costs and insurance as well as higher costs for lubricating oil and maintenance and repair.

General and administrative expenses increased 10.7% to $11.9 million for the quarter ended December 31, 2007, compared to $10.6 million for the prior year period 1.5 vessels were dry docked in the fourth quarter for a total of 111 associated offhire days. Our outlook for 2008 is detailed on Slide 13. We estimate daily direct vessel operating expenses of approximately $7,255 per day for the Aframax vessels to $7,225 per day for our Suezmax vessels. These amounts represents an increase over 2007 actual expenses, and are attributable to increased costs experienced industry wide associated with crewing, insurance and lube oils.

We expect our total G&A for 2008 to be $42.8 million, approximately $4 million lower than our 2007 actual numbers. Of the total $42.8 million in G&A expense, $31.7 in the cash expense with the balance of $11.1 million being amortization of restricted stock a non-cash expense. We project $55.3 million in depreciation and amortization for 2007. Additionally, for 2008 -- I am sorry, that's for 2008. Additionally for 2008 we have a total of two dry docks with approximately 100 associated offhire days. Total costs associated with these dry docks are anticipated to be $6.5 million and costs of $3.5 million in addition are budgeted for capital improvements of our fleet. Both dry docks are Aframax vessels and are scheduled for Q1 and Q2 of '08.

On slide 14 and 15, we provide a description of our dividend policy and dividend history. As previously announced on February 20, 2007, the company's Board of Directors voted to change the company's variable dividend policy and institute a fixed target dividend of $0.50 per quarter per share, or $2.00 per share annually. The company intends to declare these dividends in May, August, November and February of each year. We are pleased to have been able to declare dividends of $25.28, since we first started paying dividends in May of 2005, including a one-time special dividend of $15, and a recently declared $0.50 dividend relating to Q4 of 2007, which is payable on March 28, 2008 to shareholders of record as of March 14, 2008.

I'd like to conclude my remarks by going through an estimated 2008 breakeven summary on page 16, which demonstrates General Maritime's very strong financial position. With a substantial timecharter coverage and approximately $176 million in 2008 contracted timecharter revenue, General Maritime has a very favorable free cash flow and net income breakeven. Even including our projected quarterly dividend, the company's spot fleet will only need to earn approximately $6,000 per vessel day in order to breakeven.

That concludes my remarks. Now I'd like to turn the call over to our CEO, Peter Georgiopoulos.

Peter Georgiopoulos

Thank you, Jeff, and good morning. 2007 represented our seventh year as a public company, and another year in which we continue to achieving important milestones for our shareholders. The $15 per share special dividend that we distributed to shareholders in 2007 is the most recent example of our success in this area. At the core of our ability meeting milestones for shareholders is our disciplined approach focused on growing the company, managing our assets through shipping cycles, and unlocking shareholder value.

Unlocking future shareholder value remains a top priority for General Maritime. Going forward, we intend to remain true to our prudent approach, which has resulted in the company returning close to $1 billion to its shareholders since May 2005 in the forms of buybacks, quarterly and one-time dividends.

Turn to Slide 18, I will discuss our approach in more details. First we tend to continue to draw upon our significant liquidity which is currently approximately $300 million and seek opportunities to further consolidate the industry. By pursuing this growth, we intend to actively explore opportunities and meet a set of stringent financial criteria. We believe that our current liquidity should provide us with sufficient equity in purchase of vessels having approximately $1 billion of market value. Please keep in mind we do not plan to waiver from our proven approach and do not tend to grow simply for growth sake.

Complimenting our long term strategy, we will further seek opportunities to buyback shares under our share repurchase program that has $100 million remaining. For the full year 2007, the company repurchased 1.35 million shares at an average price of $24.16. The company continued purchasing its shares in the first quarter of 2008, having brought another 711,300 shares at an average price of $23.03. Obviously we intend to return value to our shareholders by distributing both sizeable and consistent dividends to our fixed annual dividend target which remains at $2 per share.

Turn to Slide 19; I would like to briefly discuss current market conditions. With 70% of our available days booked on our Aframax fleet, our vessels are averaging around $38,000 per day. With 57% of our available spot days booked for our Suezmax, our vessel is earning over $42,000 a day. Currently rates for Suezmax tankers in the West African trade are around $33,000 a day with Aframax rates, particularly in the Caribbean also around $35,000 a day.

Turn to Slide 20, we give a brief industry outlook. On our last call we noted that the usual seasonal pick up in rates expected in the fourth quarter had been delayed by OPEC's decision to hold off a shipment that promised additional production until inventories have been significantly drawn down. We stated at the time that that rate increases, if they came at all, would be late in the quarter and spilling over into Q1. As it turned out, OPEC's shipments were ultimately spurred by Saudi Arabia's decision to lower its pricing in late November. This incentive to Western refiners along with incremental demand from Chinese refineries, combined to increase December [orders] from the AG despite the SEC rates by about $200,000 a day. This uptick initially impacted VLCCs primarily and spreads to Suezmax and Aframax markets at only at the end of the year.

Entering 2008, the spike, while dramatic turned out to be relatively short-lived, as raise in January declined from the peaks was still maintaining very healthy levels by historical standards. Looking ahead to the rest of 2008, it is interesting to note that even after two downward revisions, primarily to reflect expected weakness in US demand, the IEA is forecasting strong global oil demand of 1.7 million barrels per day or 2% compared to a growth rate of 1.5% in 2007. This robust demand is primarily drive by expectations of continued strong growth in energy demand in developing countries and OPEC economies. However, even with this projected growth, the resulting 3% to 5% demand for tankers, depending upon ton miles is below the baseline and growth in the fleet from newbuildings deliveries of approximately 8%, which suggest a modestly lower rate environment for the year on average versus 2007.

However, as we have said a number of times before, we believe that the wild card is removals from the fleet, from the scrapings, conversions and the construction removal of vessels resulting from increasing commercial obsolescence of single-hull vessels. The variables surroundings projected dry bulk conversion figures are so great that we don't endorse a particular forecasted amount or assuming combination of all the above factors will work to bring that supply of tankers in 2008 more closely and in balance to demand than previously thought.

We'd now like to open the call for questions. Hello.

Question-and-Answer Session

Operator

(Operator Instruction). And our first question will come from Doug Mavrinac with Jefferies & Company.

Doug Mavrinac - Jefferies & Company

Thank you. Good morning, all. Just had a few questions for you guys. And the first one relates to Peter your commentary on the market conditions as you see them right now. We are seeing the Koreans on board, now with the IMO phaseout deadline and found implementing the phase out of single-hulled even sooner than 2010, we are seeing a single-hulled VLCC circulator for scrap last week for the first time in a couple of years. And we're seeing one-year timecharter is firming. At what point do you guys believe it is prudent to start looking at additional expansion opportunities now that you have taken, delivered your final Suezmax newbuild?

Peter Georgiopoulos

We always had expansion opportunities and we've been looking at things, we've been actually pretty busy this first quarter looking at things. So, it's stuff that we are constantly looking for it, I don't know if I could be more specific than that.

Doug Mavrinac - Jefferies & Company

Okay.

Peter Georgiopoulos

But we're always just looking for things like that.

Doug Mavrinac - Jefferies & Company

Okay. Now that's helpful. And then when looking at the outlook, it appears that '08 could be good, but '09 may be challenging. Does that take the form of maybe second hand assets and newbuilds with prompt delivery before the IMO phase out deadline or is that something that you guys keep in the back your mind as far as the timing of when any expansion opportunity may hit your fleet?

Peter Georgiopoulos

Our hope is that, if there is some weakness of that then we'll be able to take advantage something and find an opportunity.

Doug Mavrinac - Jefferies & Company

Okay. Got you, and then how would that.

Peter Georgiopoulos

As you've seen, we're looking to drive both business. There have been a couple of big deals that hadn't been able to get done because of the credit crunch, that's been done because the players are marginal. I think we are well-capitalized players with good trackers and can get things done, so hopefully, you might see something like that spill over in the tanker business.

Doug Mavrinac - Jefferies & Company

Okay, great, great. And then how would that impact if you decide to get a little more aggressive on that front, your dividend policy at all. I mean would it impact it at all?

Peter Georgiopoulos

The ploy would not be the change in dividend policy.

Doug Mavrinac - Jefferies & Company

Right, got you.

Peter Georgiopoulos

So if you found some great opportunity and for a couple of quarters we had to scale things back, I don't think that will happen. I think if we do the deal it would be a deal where the dividend policy stays in place.

Doug Mavrinac - Jefferies & Company

Got you.

Jeff Pribor

And Doug this Jeff, you know from your model that free cash flow cushion we had in excess of the dividend we pay out, it's pretty healthy.

Doug Mavrinac - Jefferies & Company

Yeah I know it's huge. Just thought I would ask that just to be safe. And then one --

Peter Georgiopoulos

Can I ask you a question, how much coffee did you have this morning?

Doug Mavrinac - Jefferies & Company

I don't need coffee. I hit the ground running like this every day.

Peter Georgiopoulos

No what I was going to say is I'm sorry, I'm giving you a hard time. You're one of our favorites. What I was going to say is, every time we do a deal, if you look historically, we've done deals, they've been deals where there has been a significant amount of cash flow upfront. So I think if anything, it would only help the dividend.

Doug Mavrinac - Jefferies & Company

I hear you. I hear you. Okay, good. And then, one final question and then I will turn it over to someone less enthusiastic. You guys are Aframax owners, operating vessels in the spot market and people are talking about the conversions to VLCCs to VLOCs. Can you describe how that is going to help you guys as Aframax owners? Even though some may think that there's not a direct correlation of the two, can you talk about how you would benefit if some of the LCCs leave the fleet?

Peter Georgiopoulos

First of all, I don't think it's going to be as big of a thing as people think it is. Yes, I wouldn't sort of bet the ranch on it. But I think what happens is, if you watch the way the freight rate developed between the classes, VLs go up, Suezmaxes go up, Aframaxes go up. So I think if for some reason, whether it was conversions or compliance or some other reason, a bunch of VLCCs came on the market, and those rates went up, you would watch the other sectors go up.

And the reason is, if you think about it, they are all, in a way -- they're not in a way. As you move down, they are fungible. You know if Suezmax rates -- if VLCC rates got very high, well then a charter could take two Suezmaxes. If Suezmax rates got very high, a charter could take two Aframaxes theoretically. So you can always move down to a smaller ship and take two of them to keep the bigger ships on it. So if rates got to such a crazy level because there were very few VLCCs, it would just be more work for Aframaxes and Suezmaxes.

Doug Mavrinac - Jefferies & Company

Perfect. That's all I have. Thanks a lot.

Operator

And next we move on to Jon Chappell with JPMorgan.

Jon Chappell - JPMorgan

Thank you. Good morning all.

Peter Georgiopoulos

Hi, Jon.

Jon Chappell - JPMorgan

Peter, to follow up on the expansion question, there's been some talk in brokerage reports about Aframax newbuilds for 2011. Not going to ask you specifically about those, but I'm just going to ask has the return dynamics change when you look at potentially growing out in the next decade?

Peter Georgiopoulos

Have the return -- no. Returns have not. We have looked at newbuildings. We haven't done anything, and I could tell you that the returns on ordering a newbuilding in 2011 aren't very good.

Jon Chappell - JPMorgan

Okay. If I can ask about the Carib's market, whether it's John or Peter Bell, it's obviously been very volatile lately; you got down to some really low levels a couple weeks ago and now it spiked back pretty hard. What's causing the volatility in the Carib's market? And then if we can look longer term, do you see any material impact to the Caribbean Aframax market if Chavez goes through on some of his threats and all of a sudden we are not getting as much Venezuelan oil to the U.S. Gulf anymore?

Peter Bell

John, it's Peter Bell. Good morning.

Jon Chappell - JPMorgan

Good morning.

Peter Bell

Hey Jon it's Peter Bell, good morning. We did see a lot of volatility in the Caribbean markets this past quarter and some of it has been -- a lot of it has been down to some refinery turnarounds that went on earlier in the quarter. We're closing out in the third quarter, and also we saw the position list would sort of expand and contract around some of that activity. So what you have is you have, on a given set of dates, you might have just one or two ships that would push the rates up high and then a few days later, or a week later, you would find more ships in that position and it would be harder to uphold those rate increases. That, over the last few weeks, has abated a bit and we are seeing a much more stable market there.

As far as the Chavez question goes, there are two things there. There's a lot of talk about the Exxon situation, and that had almost no impact on the market. They weren't lifting a lot of barrels out of Venezuela anyway. So, while that made a lot of headlines, it didn't really have a lot of impact.

But the bigger question is; I don't know where he would put that oil. That oil is really -- refineries in the U.S. are built to take that heavy sour crude. And if he sells it overseas, he's going to wind up taking a big discount for it. And if you read some of the things or reports about Venezuela these days, it sounds like he's in a bit of a cash situation himself.

Jon Chappell - JPMorgan

Right. Okay and one last one to Jeff to keep everyone involved. The $565 million of total debt at year end has been pretty stable throughout the year since you took it on to pay the dividend. Are there any required paydowns of debt this year? And if so, or even if not, do you have any plans to pay down some debt proactively with the excess cash that you are generating?

Jeff Pribor

The answer -- no, there are no required paydowns this year. You should probably factor in the comment we gave you about share repurchases in the Q1 to date, but that's probably about all you need to know. Thanks for keeping me involved, Jon.

Jon Chappell - JPMorgan

No problem. All right, thanks.

Operator

We'll now hear from Noah Parquette with Cantor Fitzgerald.

Noah Parquette - Cantor Fitzgerald

Good morning guys. I just have a couple modeling questions really. For the current shares outstanding, looks to be a little higher than they were in the fourth quarter yet you've been buying back shares. Can you say what -- kind of talk about what's driving that? Is it stock options or anything?

Jeff Pribor

The only thing that moved our shares is new grant restricted shares at the end of every year. And we've been buying back shares. So the numbers there I think are all right. So it's just a combination of two factors. But we've been certainly buying back more shares than we've been --

Peter Georgiopoulos

Giving out.

Noah Parquette - Cantor Fitzgerald

Okay. And then for the interest rate swaps that you guys have put in place, what's the economy going to be for that? Those cash flow hedges -- will they be marked to market?

Jeff Pribor

No, it's hedge accounting.

Noah Parquette - Cantor Fitzgerald

So they qualify for hedge accounting?

Jeff Pribor

Yes.

Noah Parquette - Cantor Fitzgerald

Okay. That's Jeff.

Jeff Pribor

Okay, thanks

Operator

Then we'll move on to Terese Fabian with Sidoti & Company.

Terese Fabian - Sidoti & Company

Good morning. I have a question on your utilization levels. Appears lower for the Aframax and I assume for the Suezmax that you have on the spot market on the synthetic hedge. Is this unique to the quarter or is it something that we should expect going forward?

Peter Bell

This is Peter Bell. We had some more significant off hire time during the fourth quarter on our Aframax fleet, which affected the utilization, but those were unplanned events and they are behind us now. So --

Terese Fabian - Sidoti & Company

Were they due to the slower market?

Peter Bell

The slower market? No, they were technical issues related to the vessels -- repair work that needed to be done.

Terese Fabian - Sidoti & Company

Okay. And so that is behind you?

Peter Bell

Yes.

Terese Fabian - Sidoti & Company

And with the Suezmax?

Peter Bell

The Suezmax number that you are seeing there is reflective of one vessel. She's an older ship, 1991 built, and when you start to fixing these markets that have actually become a bit more volatile, you wind up, if you are not -- there's an element of luck involved in getting the higher charter rates. Because when you fix these ships over longer periods of time, if you have only had one ship, if the market is weak when you fix, you wind up with that rate for the quarter, and that's why that voyage -- that number looks relatively low.

Jeff Pribor

But Terese, if you are asking about utilization on Suezmax, there was no drydocking of Suezmax in the fourth quarter or much off hire at all, so that was a high utilization.

Peter Bell

Yeah, the utilization.

Jeff Pribor

The drydock and off hire that we did experience in the company in the fourth quarter was actually in the Aframax part of our fleet.

Peter Bell

Correct.

Terese Fabian - Sidoti & Company

So then with the Suezmax, it's more just wait time and turnaround time?

Jeff Pribor

Yes. The rates reflect purely just what Peter Bell was talking about a minute ago, which just reflects the market for one vessel.

Terese Fabian - Sidoti & Company

Okay. And then, can you talk about your synthetic timecharter? Because it appears -- I'm not concerned about the non-cash portion, but with the cash portion, it appears that you are not guaranteed $35,500 per day on that; that it's tied into other metrics?

Jeff Pribor

No -- well, that's not correct Terese. It does -- we're going to always report a spot Suezmax result that reflects the actual results of that ship. The synthetic timecharter doesn't change that. What the synthetic timecharter does mean is that we will have other income or other expense in a given quarter that is -- the cash portion will essentially be the difference of the market from $35,500 a day. So for example, in Q4 '07, the Baltic market for the TB5 West Africa trade was in excess of $35,500 a day. So we paid out a little bit on that. So they are two separate events.

Terese Fabian - Sidoti & Company

Okay, right. So the revenue is reported at $35,500, but then you have the other expense or income based on the Baltic market comparison?

Jeff Pribor

On the TB5. Yes. The synthetic timecharter other income or expense, the variance from $35,500 goes straight into other income or expense.

Terese Fabian - Sidoti & Company

Okay. And that lasts through June of '09?

Jeff Pribor

May of '09.

Terese Fabian - Sidoti & Company

May of '09.

Jeff Pribor

It is June of '09, sorry, thanks.

Terese Fabian - Sidoti & Company

Okay, thank you.

Jeff Pribor

Sure.

Operator

And we’ll hear from Jeremy Newman with QVT Financial.

Jeremy Newman - QVT Financial

Thank you. Your G&A expenses have been running at about $6,000 to $7,000 per ship day and that's about four times higher than a lot of other shipping companies. I was wondering if you could talk about why that is and if you have any plans or goals in terms of reducing that in the future.

Jeff Pribor

This is Jeff. I don't know if you've been on the calls for a long time or not, but this G&A level reflects the size of a company that once ran 47 ships and it's positioned to do that again. So we have, since we downsized from 47 to 21 shrunk G&A. In fact, if you go back, the cash G&A number for the company was close to $40 million in '05 and we brought that number down to where the actual number is; 35 and our budget for '08 is almost $32 million, down to $32 million of cash G&A.

So we're taking steps to reduce the cash G&A. However, as we said a number of times before, we are maintaining our ability to be able to grow, and we could easily take on a doubling or more of a number of ships that we have with very low incremental addition to G&A. And that's the time when G&A per ship per day will come down.

Jeremy Newman - QVT Financial

Thank you.

Operator

We'll take a question from Daniel Burke with Johnson Rice.

Daniel Burke - Johnson Rice

Good morning. Jeff, just one question I had left. Reading too closely here, but you now talk about $300 million in liquidity. I think the number used to be $400 million. It doesn't seem like the net debt levels have changed too materially. Is that related to I guess Q1 '08 payments that you've made, I guess newbuild completions or is there something I'm missing in terms of why that number slipped a bit?

Jeff Pribor

No, you're not missing anything. You hit it right on. There's two things happened in Q1 so far. One was taking the last newbuilding, which was about $35 million roughly of CapEx, which has been disclosed in all of our filings. And the other was the share repurchases that we just gave you today; those amounts have let us just to be conservative and say $300 million of liquidity. It might be a little more than that, but just want to be conservative.

So that's it. But we feel that's a nice balance. We still have -- are able to do share repurchases but still keep plenty of dry powder. That's our philosophy.

Daniel Burke - Johnson Rice

I agree. That's it for me. Thanks.

Jeff Pribor

Thank you.

Operator

And we'll take our last question from Anja Soderstrom with Maxim Group.

Anja Soderstrom - Maxim Group

Hi this is Anja, and I'm just wondering if you could give me some information about your timecharter coverage going forward, and your strategy with that?

Peter Georgiopoulos

Specifically, what are you looking for?

Anja Soderstrom - Maxim Group

I mean how many vessels are you planning on having on timecharter for '08 and '09?

Jeff Pribor

It's all -- let me jump in here. It's all listed pretty fully in the slides. We have the complete timecharter schedule is on one of the slides that's posted on the Internet for this call. So that gives you --

Peter Georgiopoulos

Page 6.

Jeff Pribor

Page 6, I guess it is, that gives you every bit of information you need. So you see the coverage for '08, '09 and extending into 2010; I think our last timecharter starts at the beginning of 2011. And I think that we feel in general that those are the nice periods of time to have an option to either renew the timecharters or choose to deploy vessels on spot. Either way we like seeing the vessels roll off in that time period.

Anja Soderstrom - Maxim Group

Okay. And then also for the spot rate for first quarter, is that what you have on your slide as well?

Peter Georgiopoulos

I discussed the first quarter where the Aframax has done about I think it was $38,000 a day and the Suezmax has done about $42,000 a day.

Jeff Pribor

Yeah, we started this sometime ago. What we're trying to do is to make it easier for the sell-side and buy-side analysts to do their modeling. We give -- we've always given very full transparency on the cost side, and so on the timecharter that you asked about, it should allow you to model most of our fleet very easily. What remains to model is the revenue from the spot vessels, so what we're doing is giving you as much as we know about the spot performance to date. It's up to you to fill in the rest of the quarter based on your estimates. But we got you most of the way there. That’s the --.

Anja Soderstrom - Maxim Group

Okay. Thank you.

Jeff Pribor

If you have any further questions about that, certainly feel free to call us.

Anja Soderstrom - Maxim Group

Okay, thanks.

Operator

And there appear to be no further questions at this time. I would like to turn the conference back over to management for additional or closing remarks.

Peter Georgiopoulos

2007 was another year of success for General Maritime as we posted solid results and continue to unlock significant value for our shareholders in a challenging market environment. With 67% of our fleet currently on timecharter, representing contracted revenues of $176 million for 2008, General Maritime is in a strong position to distribute dividends through our fixed annual dividend target, which remains at $2 per share. Complementing this approach, we intend to draw upon our significant financial strength to seek additional opportunities to unlock future shareholder value.

I would like to thank everyone for listening and we look forward to providing updates in the future. Thank you.

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