Michael Demaray

Global Ship Lease: Cash Flow More Important Than Dividends

Fair enough. If the dividends are canceled, I do expect to see some selling by those who purchased the stock for income. My point is, that the intrinsic value could remain the same.

Another scenario which I didn't spend time writing up but did do a little modeling on is...what happens if the credit line is restricted entirely, what is the company worth at that point based simply on the cash flows already in place? I did not include litigation expenses and other costs related to Zim and cancellation of newbuildings (I doubt CMA CGM would sue for not being able to close the purchase of the Berlioz...in fact they might finance it themselves via preferreds), my analysis concluded the intrinsic value was somewhere between $6 - 9 in such a scenario. So, let's just say it's $6. You're getting a double even if the covenant negotiation is unfavorable. Personally, I think you're being fairly compensated for the risk of entering pre-amendment, but I realize many don't feel comfortable until they see the "GSL amends credit agreement" headline.