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Lambros Papaeconomou

 
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  • Buy Baltic Trading: Dry Cargo Shipping Exposure At A Discount To NAV [View article]
    I am tempted to answer your question, but I would like to post a follow up article to better explain my current point of view. Please bear with me.
    Dec 19 09:22 AM | Likes Like |Link to Comment
  • Buy Baltic Trading: Dry Cargo Shipping Exposure At A Discount To NAV [View article]
    Thank you for your kind words. BALT has very little debt compared to GNK or compared to GMR prior to its bankruptcy filing. I believe this is key to the company’s surviving the current bear freight market.

    I have already addressed the issue of founder Peter Georgiopoulos in my article, and will just reiterate that GNK has pledged its ownership stake in BALT as security collateral against one of its senior credit facilities.

    BALT today announced that its underwriters exercised their overallotment option in full, underlying the positive reception by the stock market (The stock has consistently traded above its offering price of $3.60 per share).

    $15 per share would imply an average value per vessel in excess of $56 million, which seems like a very tall order in today’s Sale & Purchase market. I like the stock but cannot view it as a potential 4-bagger at the moment.
    May 28 01:52 PM | 1 Like Like |Link to Comment
  • Buy Baltic Trading: Dry Cargo Shipping Exposure At A Discount To NAV [View article]
    BALT had to raise funds because it was down to its last $1 million in cash reserves, and continues to trade its vessels below their cash break-even level. Short of raising cash it would have to draw from its credit facility. (In fact BALT did draw $1 million from the facility earlier this month, as disclosed in GNK 10Q report).

    This cash infusion buys the company a lot of time to tread through the bear freight market.

    I agree that current shareholders were diluted (based on my NAV analysis in the article, proforma NAV per share was lowered from $4.51 to $4.29 per share) but I think this was very a good trade-off for existing shareholders.
    May 24 09:36 AM | Likes Like |Link to Comment
  • Buy Baltic Trading: Dry Cargo Shipping Exposure At A Discount To NAV [View article]
    SB & BALT have different business models, & different risk-reward profiles.

    At today’s prices I would consider buying a little bit of both.
    May 24 09:22 AM | Likes Like |Link to Comment
  • Baltic Trading Is Still A Buy: Earnings Preview For Q4, 2012 [View article]
    Cliff,

    The earnings multiplier for BALT, on an annualized basis, is $0.14 for every $1,000 of average TCE. To calculate it you need to apply the following formula:

    (# of vessels * 365 days/year * $1,000) / (# of shares outstanding)

    BALT has nine vessels and approximately 23 million shares outstanding.

    Let me know if this helps.
    Apr 29 08:09 AM | Likes Like |Link to Comment
  • Baltic Trading Limited: Hidden Gem In Stormy Seas [View article]
    Genco’s lenders have no recourse over Baltic. I believe that if Genco goes belly up Baltic will continue to operate as a separate entity. In that scenario Genco’s lenders will assume control of its ownership stake in Baltic. (Genco pledged such ownership stake to its lenders in last month’s credit agreement). I don’t know who would take over management of Baltic if Genco were to go belly up, but Genco does have an exclusive management agreement in place.
    Sep 5 08:34 AM | Likes Like |Link to Comment
  • Baltic Trading Limited: Hidden Gem In Stormy Seas [View article]
    The rest is $23.5 million that they can borrow from the credit facility for working capital purposes. This amount counts as cash available to meet the minimum liquidity requirement, which is $750,000 per vessel or $6.75 million total.

    Regarding cash burning rate, the first two quarters of this year were pretty brutal, but the company still managed to eke out a positive cash flow from operations. As I mentioned in the article, Baltic has among the lowest cash break-even rates in the industry, primarily because it has very little interest expense vis-à-vis the competition. Its cash break-even is approximately $7,800 per day, compared to $9,500 for Eagle Bulk Shipping, and $10,700 for Genco Shipping & Trading.

    If the markets were to stay as bad as they are today for several quarters, I presume that Baltic will suspend the dividend, but it will still have access to the credit facility to keep it going.

    The companies that will survive this crisis are those with a low operating cost and the financial flexibility to serve the debt and meet the covenants.
    Aug 31 04:02 PM | 2 Likes Like |Link to Comment
  • Baltic Trading Limited: Hidden Gem In Stormy Seas [View article]
    Thanks for your comments. I will try to answer them below:

    FMV is fair market value of the fleet as of June 30th, 2012. FMV was $225 million and that figure is disclosed in the company’s quarterly report.

    NAV is the net asset value. It is equal to the FMV of the fleet, plus cash (at $3.29 million), less debt outstanding (at $101.25 million). That gives us an NAV of $128 million or $5.65 per share. Again this figure is based on fair market values for the vessels and not on book values.

    Regarding the collateral maintenance, the aggregate FMV of the vessels must be at all times at least 140% of the aggregate outstanding principal under the 2010 Credit Facility. Please note that the outstanding principal is only $101.25 million, even though the company can borrow up to $135 million.

    Based on debt outstanding of $101.25 million and the 140% collateral maintenance requirement, the minimum amount has to be $141.70 million. Given that the FMV is $225 million, the company easily meets the collateral maintenance requirement. (Please also look at the table in the article for the rest of the covenants).

    Regarding dividend payment, the company has pledged since its inception to distribute cash from operations to its shareholders, and has been doing so every quarter for the past nine quarters. You and I may agree or disagree with this policy, but at least management has kept its pledge.

    Regarding the shelf registration statement of last May, it is true that they filed it to amend an existing one. I cannot rule out a secondary offering, but as I explained in my article, I find it very unlikely to be able to do so given the current state of equity markets in general and the shipping industry in particular.
    Aug 31 03:07 PM | 1 Like Like |Link to Comment
  • Baltic Trading Limited: Hidden Gem In Stormy Seas [View article]
    I totally agree with your comment regarding what is on the books versus what a company can get in the market for their vessels.

    But just to clarify. The NAV (or break-up) figure in my article is based on current fair market values and not book values.

    For your guidance, as of the end of the second quarter, the NAV for Baltic was $5.65 per share. The book value was $12.13 per share! Book values are indeed meaningless.

    If you have time, please read my article Seeking Value In the Bulk Shipping Industry, where I describe in more detail the calculation of NAV.
    Aug 31 08:44 AM | 1 Like Like |Link to Comment
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