Eagle Sinks On Inaccurate Reporting: Banks Need Shippers Badly [View article]
MR is a medium range tanker, not a company. Wilbur Ross took a large stake in Diamond S. A product tanker company. And he is investing in LNG tankers. Not Dry Bulk. If he ever does buy into dry bulk, he would buy the distressed assets, not the distressed companies.
Are you seriously going to lump all shipping into one. I wouldn't even lump all tankers with other size tankers, if you want to make an accurate analysis of a company. Same with dry Bulk. EGLEE owns all Supramax. Yes it has two Handies. DSX has mostly Capes and Panamax. And the future is different for each size.
You think when Containerships, or tankers, or car carriers, start doing better, then so will dry bulk? They are completely different, and have different demand metrics. One thing they do have in common is a massive glut of ships that have reduced charter rates to below break even.
You didn't make a single reference to the supply glut, and it is the single most important factor in this sector.
I have no idea where you are getting your ship valuations. But you should get them from the shipbrokers, who record the sales of ships. Try this one: http://bit.ly/12hlho8 or http://bit.ly/sdP9nU Where you will find that a 5 year old Japanese built Supra is worth $20 million, and a 10 year old Japanese built Supra is worth $15 million. Japanese built ships have higher resale value. EGLE has a fleet list so you can do the work yourself. So the $800 million fleet value stated before is accurate.
But given some of the wild statements made by you in your article. It appears this conversation is not worth having. EGLE never had a share price of over $100. Any thoughts about this company being worth $400 per share is absurd. The perfect storm of events that led to those astronomical rates in 2007 was a one time event. The dry bulk sector will be oversupplied for at least the next three years. After that, the supply demand ratio may meet parity. But since 9 million dwt. more ships have been ordered already this year, then reaching the point where there is a shortage of ships like 2007 is a fantasy.
MTF, Your profile says you are a swing trader. In which case I would assume you would take your profit today. Congratulations if you did. Today's jump was merely a result of an earnings report from EGLE, which apparently no one really attempted to read. There was a one time gain from a settlement on defaulted charters. Their situation remains grim. For "investors" to somehow plunge into shipping stocks, based on that, shows a complete ignorance of the shipping sector.
Your article attempts a fundamental analysis, and a longer term outlook. First, you are using the consolidated earnings reports for ORIG and DRYS, to state that there was a revenue increase. But the dry bulk and tanker segment has had no such increase. Just the drill rig segment, and it is solely the result of an increase in drill ships, not revenue per ship. ORIG revenue means nothing to DRYS shareholders, only ORIG's share price. It is just currency. And every time DRYS sells it's shares of ORIG, the value of DRYS goes down.
And charter rates are not on the rise. I suppose on some weekly time frame there might have been a slight uptrend. But, rates are not rising, and the futures contracts for rates this summer are worse. This summer will suck, try reading a shipping publication. There was a recent, temporary rally, from the port congestion when there was a bumper crop of soybeans, which had the effect of raising Panamax and Supramax rates all the way up to not quite break even. A slight, and temporary bump in Cape rates to about half of break even.
Calling DRYS ships young, is a stretch. Their dry bulk ships average 8.4 years old. The sector average is 10.6 years old. Certainly not a competitive advantage. Diana is younger, so is EGLE, and Navios And DRYS expenses are high because of their interest and finance charges, as well as far too many fees charged by George. They pay higher interest margin because of their multiple breaches of loan covenants.
Diversification only helps if the tanker sector was supporting the dry bulk sector during a lull in bulk charter rates. Or, vice versa. That's not happening. Both sectors are oversupplied, and while demand is expected to increase, the rise is not expected to outpace supply for some time. For now, diversification just means, misery loves company.
The troubling issues that are specific to DRYS are far more damaging than any perceived improvement in the sector, or the economy. And the outlook for the sector and the economy, continue to be downgraded.
Eagle Bulk Shipping: Enjoy The Good News For Now, But Tread Very Carefully [View article]
This jump in share price is laughable. Perhaps Soph didn't emphasize enough the fact that this is a one time item. A settlement from a bankrupt company that defaulted on their charters. And shares of a company emerging from bankruptcy, into a still dismal sector. That's encouraging. And they intend to value the amortization of above and below market charters as revenue? EXM pulled that charade for years, before it was realized as folly. EGLE still has a dismal future. RBS sweeps all cash above $20 million. The deal they made with lenders pushed principle payments out two years. Leading to a sizable, lump sum payment. Which they have no chance of paying.
DryShips: What Is The Best Course Of Action? [View article]
""Recently, some Chinese shipping companies have declared impressive earnings and charter rates are improving. There are two reasons for the improving charter rates: The decrease of vessels in the industry, which was one of the key reasons for the fall of the industry, and increased trade volumes."
The seaborne trade volumes increased every year from 2010 to 2012 to new record highs. At the same time as the BDI fell to a new 15 year low.
I'm aware of Chinese container companies that have profits. But not Dry bulk Shipping companies. Maybe you could point them out.
What charter rates are improving? Over what time frame? The seasonal grain trade that resulted in some Supramax and Panamax rates to rise to break-even? Or the recent rise in cape rates from $4,000 per day, to $6,000 per day. Which still leaves them well below break-even. These little fluctuations in the BDI, that is still below 1000 mean nothing. and they certainly do not represent a sustained rise in rates. Anything below 1200 is horrible.
There has NOT been a decrease in the number of vessels in the dry bulk industry. And 2013 will yet again see a net increase in the size of the fleet. And, since a further 2.5 million dwt of ships has been ordered every month this year. It if far too early to call the end to the oversupply anytime in the next two years.
DryShips: What Is The Best Course Of Action? [View article]
DRYS has no strategic advantage over it's "competitors". Almost half it's fleet of bulkers is over 10 years old. And 15 of it's Panamax are between 10 and 14 years old. And while that doesn't make them ready for the scrap heap, they are not young enough to save on maintenance. And they are soon becoming a burden, as more Eco ships are ordered and being delivered every day.
It's stunning how many people celebrate the transaction that has DRYS shareholders PAYING someone to take those two tankers off their hands. Yes it's a reduction in Capex. it's also the admission of a big mistake. One of several made of the same sort. This Tanker purchase was from Dec 23, 2010, After the glut of ships was well known. The falling ship values was also obvious. And it comes after several other failed purchases that resulted in forfeiture of deposits, and penalties for ships that were ordered, mostly from related parties, despite an obvious, and constant, deterioration in ship values. In three years, 13 ships were bought and cancelled. Hundreds of millions in penalties paid. How many times is management allowed to throw away money on ships they can't get financing for, before you call it either corruption or incompetence. Here's a hint: Most of those forfeited money went to Cardiff marine, a company owned by George Economou.
Well if they buy some Supramax, I would say it's a good move. Especially the new Ultramax. I'm really surprised that Supra rates have held up so well. Since much of their contracts came from shipping Iron Ore out of India. This is a huge dilution, but this could be the bottom for Newbuild ship prices. Not charter rates, and not second hand prices, but this could be as low as a shipbuilder can go.
And at this point, if they put 40-50% down, it could be an accretive acquisition. It's been a long time since I could say that. Up until now, too much of the proceeds have gone to staying afloat. And to pay down debt. Nothing wrong with paying down debt, but it isn't like paying down debt to increase shareholder equity. Most of these companies have been paying down debt to balance out the drop in net value of the ships.
A well funded company ordering ships for very good prices now, with delivery in 2015, can make money with rates being in the range of $12,000 per day for a Panamax, and $14,000 per day for a Cape. They can earn a small profit. A company that is already burdened by large debts, that are in excess of the market value of their fleets, and are paying higher interest costs because of their past breaches, will be losing money at those rates. Especially companies that had to have interest and principal payments pushed back two years because they couldn't pay. Those companies would be EXM, GNK, EGLE, and several others who have, and continue to renegotiate with lenders.
Why would they do it? These companies are publicly traded, and can go to the SPO well to raise money. Especially when their stocks rise on speculation of a less dismal future. These publicly traded companies usually have outside management of their fleet, usually a private company owned by the CEO of the public company. The private company will make healthy commissions regardless of the public company earnings. Many of them changed their commissions from 5% of the charter, to a straight daily charge of $3,000 plus per day, because the percentage was not enough since the drop in charter rates. The guys deciding to order ships, are the same guys that make more money by managing a larger fleet.
The Bloomberg article that quoted brokers as saying that the ordering of new ships was a sign of optimism in the industry. Well those same people ordering ships now, ordered many more Capes three years ago. And those Capes are being delivered today to some of the lowest Cape rates in years. The idea that "The Greeks have an eye for this sort of thing", is absurd. The Greeks or any other ship owner has in the past ordered ships when they see an opportunity to get a good price on a ship. That doesn't mean they are any more prescient than any of the other owners who have shot themselves in the foot continuously over the last six years. And produced this massive glut.
Don't blame it all on an unforeseen recession. There is more dry bulk being shipped now than ever before. If they thought 10% growth per year, was guaranteed forever, then they should not be depended on for their foresight.
Elegant Solution For DryShips And Ocean Rig [View article]
ORIG doesn't pump oil, they don't have any oil leases, they don't own a drop of oil. They have no need to transport oil. They drill a hole and move on.
George doesn't dump his nonperforming assets on ORIG. He dumps them on DRYS shareholders.
And Aframax, and Suezmax rates are expected to get better before Bulk rates do.
No, I'm not saying they are doomed. Charter rates will be lousy for several years. The low debt companies will do better. If the shares of ORIG were sold, and the older Panamax were sold off, DRYS could become a lower debt company too. And George would be the one to turn it around.
The problem is George has done too many things over the last five years that would suggest that is not a priority yet. Buying OCNF was absurd. There is no logical explanation for it other than he was bailing out his nephew, Anthony. He paid too much, and he paid using some ORIG shares, immediately after Anthony became 51% owner of the company. In buying OCNF, he got some Panamax that were the same age as ones that he was getting rid of at DRYS. He got some Capes with decent charters. He took on more debt, which is handcuffing him now. And he got some new builds that have fallen in value, and he can't get them financed. If he walks away from those newbuilds, he will have forfeited a total of $2 billion on ship deposits over the last six years. That's shareholders cash. This isn't just perfect hindsight. These moves were criticized by shipping analysts the whole way, because everyone knew the prices were too high, and the financing was not there. George knew too. He's considered one of the smartest guys in shipping. Many of the ships were bought from his private company, Cardiff. So Cardiff kept the deposits and the ships. DRYS bought the six Aframax Tankers, and six Suezmax Tankers for too high a price also. And has recently PAID someone $21 million to take 2 of them off DRYS hands. Nice "investment". Not coincidently, Cardiff ordered six Aframax, and six Suezmax Tankers a year before DRYS made that purchase. Given George's past of self dealing, it is speculated that those Tankers are one and the same. The forfeiting of millions of DRYS cash for Cardiff Capes and Panas in 2007, and 2008, in a failed transaction, are not speculation.
Imminent Dividend Cut At Diana Containerships [View article]
""Michael Webber of Wells Fargo Securities says the sale of the 4,206-teu Maersk Madrid (built 1989) will have a “positive” impact on the US-quoted operator’s balance sheet in the near term but also believes the deal is “emblematic” of hurdles it could face on the road to a recovery. In an email to clients he pointed out that the unit was at risk of operating at a loss upon conclusion of a lucrative charter with Maersk in the second quarter and noted the transaction illustrates the limited employment opportunities that ageing boxships face in today’s market. “From our perspective the sale serves as a reminder - DCIX is paying investors a lot to wait for a recovery,” the analyst continued. “However, given the age of its fleet, it can't wait forever. That said - we note that should DCIX sell the other Maersk vessels from its IPO fleet.” If the owner were to sell the 4,796-teu Maersk Merlion and 4,573-teu Malacca (both built 1990), which it acquired from Maersk Line UK at a cost of $22.5m in 2011, Webber believes it could pocket as much as $28m in proceeds. The Wall Street shipping researcher noted the company could use the funds, coupled with cash from the sale of the Madrid and outside financing, to pursue fleet renewal while providing dividend support. “While there are a number of scenarios in play at DCIX, we believe management is actively looking to extend its ‘dividend runway’ for at least another year, and we continue to view the next two quarters as pivotal for DCIX,” he added. As we reported, the Athens-based operator raked in $8.8m from the sale of the Madrid, which implies that the buyers paid around $462 per ldt. Brokers tell TradeWinds the figure represents a “significant” premium when compared to current averages in the demolition market. While the deal added approximately $0.04 to Webber’s 2013 earnings per share (EPS) forecast the analyst cut his full-year EPS estimate to -$0.11 from -$0.03 in response to renewed concerns about DCIX’s exposure to a market where older assets are struggling to break even.
Elegant Solution For DryShips And Ocean Rig [View article]
Well, I don't wish to belabor the point. Your first comment is correct, and it shows when DRYS had to sell ships on order because they couldn't get "Traditional financing."
And your second comment is correct in that people like Wilbur Ross are picking up the ships that are listed as "cancelled".
But that's the problem, People like John Fredriksen, who doesn't have any problem with getting financing, have been ordering dozens of new Eco ships from ship builders. And so the glut will continue. Given a choice, smart money is buying new ships for delivery in 2015-2016. They are cheaper to run. Companies like DRYS are paying huge finance and interest charges. They are mortgaged to the hilt. And they pay higher interest rates due to their constant violation of loan covenants. Break even for DRYS charters will be much higher than a company buying ships now, at these prices, with 40% down.
I can't debate the MLP choice. ORIG has announced the intention to have a dividend. But they have a very expensive newbuild drill ship expansion to pay for. The traditional financing for them requires a higher contribution from the company than they did before.
Imminent Dividend Cut At Diana Containerships [View article]
Hey Jack, I don't now if there was debt attached to the Madrid. They paid all cash for the latest ship because of the age.
Yes I think it was a good move. And it gives everyone food for thought, and debate. If you want to look at the business plan, it would appear that the price paid for the ship equals the Gross charter revenue plus the $8.8 for the scrap sale. But you need to remove op ex and commissions to figure if this is accretive or not. And whether this is worth the dilution. I'm not saying either way. I've just been trying to point out all the nuts and bolts of the deal. Investors should know what they are getting. People should expect to see drastic cuts in charter rates if the company should decide to keep the ships. People should also expect more dilution if they are to keep the high dividend.
Eagle Sinks On Inaccurate Reporting: Banks Need Shippers Badly [View article]
Wilbur Ross took a large stake in Diamond S.
A product tanker company.
And he is investing in LNG tankers.
Not Dry Bulk.
If he ever does buy into dry bulk, he would buy the distressed assets, not the distressed companies.
Are you seriously going to lump all shipping into one.
I wouldn't even lump all tankers with other size tankers, if you want to make an accurate analysis of a company.
Same with dry Bulk.
EGLEE owns all Supramax. Yes it has two Handies.
DSX has mostly Capes and Panamax.
And the future is different for each size.
You think when Containerships, or tankers, or car carriers, start doing better, then so will dry bulk?
They are completely different, and have different demand metrics.
One thing they do have in common is a massive glut of ships that have reduced charter rates to below break even.
You didn't make a single reference to the supply glut, and it is the single most important factor in this sector.
I have no idea where you are getting your ship valuations.
But you should get them from the shipbrokers, who record the sales of ships.
Try this one: http://bit.ly/12hlho8
or http://bit.ly/sdP9nU
Where you will find that a 5 year old Japanese built Supra is worth $20 million, and a 10 year old Japanese built Supra is worth $15 million.
Japanese built ships have higher resale value.
EGLE has a fleet list so you can do the work yourself.
So the $800 million fleet value stated before is accurate.
But given some of the wild statements made by you in your article.
It appears this conversation is not worth having.
EGLE never had a share price of over $100.
Any thoughts about this company being worth $400 per share is absurd.
The perfect storm of events that led to those astronomical rates in 2007 was a one time event.
The dry bulk sector will be oversupplied for at least the next three years.
After that, the supply demand ratio may meet parity.
But since 9 million dwt. more ships have been ordered already this year, then reaching the point where there is a shortage of ships like 2007 is a fantasy.
The Bottom Is Here With DryShips [View article]
Your profile says you are a swing trader.
In which case I would assume you would take your profit today.
Congratulations if you did.
Today's jump was merely a result of an earnings report from EGLE, which apparently no one really attempted to read.
There was a one time gain from a settlement on defaulted charters. Their situation remains grim.
For "investors" to somehow plunge into shipping stocks, based on that, shows a complete ignorance of the shipping sector.
Your article attempts a fundamental analysis, and a longer term outlook.
First, you are using the consolidated earnings reports for ORIG and DRYS, to state that there was a revenue increase.
But the dry bulk and tanker segment has had no such increase.
Just the drill rig segment, and it is solely the result of an increase in drill ships, not revenue per ship.
ORIG revenue means nothing to DRYS shareholders, only ORIG's share price. It is just currency.
And every time DRYS sells it's shares of ORIG, the value of DRYS goes down.
And charter rates are not on the rise.
I suppose on some weekly time frame there might have been a slight uptrend.
But, rates are not rising, and the futures contracts for rates this summer are worse.
This summer will suck, try reading a shipping publication.
There was a recent, temporary rally, from the port congestion when there was a bumper crop of soybeans, which had the effect of raising Panamax and Supramax rates all the way up to not quite break even. A slight, and temporary bump in Cape rates to about half of break even.
Calling DRYS ships young, is a stretch.
Their dry bulk ships average 8.4 years old.
The sector average is 10.6 years old.
Certainly not a competitive advantage.
Diana is younger, so is EGLE, and Navios
And DRYS expenses are high because of their interest and finance charges, as well as far too many fees charged by George.
They pay higher interest margin because of their multiple breaches of loan covenants.
Diversification only helps if the tanker sector was supporting the dry bulk sector during a lull in bulk charter rates.
Or, vice versa.
That's not happening.
Both sectors are oversupplied, and while demand is expected to increase, the rise is not expected to outpace supply for some time.
For now, diversification just means, misery loves company.
The troubling issues that are specific to DRYS are far more damaging than any perceived improvement in the sector, or the economy.
And the outlook for the sector and the economy, continue to be downgraded.
Eagle Bulk Shipping: Enjoy The Good News For Now, But Tread Very Carefully [View article]
Perhaps Soph didn't emphasize enough the fact that this is a one time item.
A settlement from a bankrupt company that defaulted on their charters.
And shares of a company emerging from bankruptcy, into a still dismal sector.
That's encouraging.
And they intend to value the amortization of above and below market charters as revenue?
EXM pulled that charade for years, before it was realized as folly.
EGLE still has a dismal future.
RBS sweeps all cash above $20 million.
The deal they made with lenders pushed principle payments out two years.
Leading to a sizable, lump sum payment.
Which they have no chance of paying.
DryShips: What Is The Best Course Of Action? [View article]
""Recently, some Chinese shipping companies have declared impressive earnings and charter rates are improving. There are two reasons for the improving charter rates: The decrease of vessels in the industry, which was one of the key reasons for the fall of the industry, and increased trade volumes."
The seaborne trade volumes increased every year from 2010 to 2012 to new record highs. At the same time as the BDI fell to a new 15 year low.
I'm aware of Chinese container companies that have profits.
But not Dry bulk Shipping companies.
Maybe you could point them out.
What charter rates are improving?
Over what time frame?
The seasonal grain trade that resulted in some Supramax and Panamax rates to rise to break-even?
Or the recent rise in cape rates from $4,000 per day, to $6,000 per day. Which still leaves them well below break-even.
These little fluctuations in the BDI, that is still below 1000 mean nothing. and they certainly do not represent a sustained rise in rates. Anything below 1200 is horrible.
There has NOT been a decrease in the number of vessels in the dry bulk industry.
And 2013 will yet again see a net increase in the size of the fleet.
And, since a further 2.5 million dwt of ships has been ordered every month this year.
It if far too early to call the end to the oversupply anytime in the next two years.
DryShips: What Is The Best Course Of Action? [View article]
Almost half it's fleet of bulkers is over 10 years old.
And 15 of it's Panamax are between 10 and 14 years old.
And while that doesn't make them ready for the scrap heap, they are not young enough to save on maintenance.
And they are soon becoming a burden, as more Eco ships are ordered and being delivered every day.
It's stunning how many people celebrate the transaction that has DRYS shareholders PAYING someone to take those two tankers off their hands.
Yes it's a reduction in Capex.
it's also the admission of a big mistake. One of several made of the same sort.
This Tanker purchase was from Dec 23, 2010, After the glut of ships was well known. The falling ship values was also obvious.
And it comes after several other failed purchases that resulted in forfeiture of deposits, and penalties for ships that were ordered, mostly from related parties, despite an obvious, and constant, deterioration in ship values.
In three years, 13 ships were bought and cancelled. Hundreds of millions in penalties paid.
How many times is management allowed to throw away money on ships they can't get financing for, before you call it either corruption or incompetence.
Here's a hint: Most of those forfeited money went to Cardiff marine, a company owned by George Economou.
Dryships' Survival Post-Recession [View article]
Well if they buy some Supramax, I would say it's a good move.
Especially the new Ultramax.
I'm really surprised that Supra rates have held up so well.
Since much of their contracts came from shipping Iron Ore out of India.
This is a huge dilution, but this could be the bottom for Newbuild ship prices. Not charter rates, and not second hand prices, but this could be as low as a shipbuilder can go.
And at this point, if they put 40-50% down, it could be an accretive acquisition.
It's been a long time since I could say that.
Up until now, too much of the proceeds have gone to staying afloat.
And to pay down debt.
Nothing wrong with paying down debt, but it isn't like paying down debt to increase shareholder equity.
Most of these companies have been paying down debt to balance out the drop in net value of the ships.
Dryships' Survival Post-Recession [View article]
A company that is already burdened by large debts, that are in excess of the market value of their fleets, and are paying higher interest costs because of their past breaches, will be losing money at those rates.
Especially companies that had to have interest and principal payments pushed back two years because they couldn't pay.
Those companies would be EXM, GNK, EGLE, and several others who have, and continue to renegotiate with lenders.
Why would they do it?
These companies are publicly traded, and can go to the SPO well to raise money. Especially when their stocks rise on speculation of a less dismal future.
These publicly traded companies usually have outside management of their fleet, usually a private company owned by the CEO of the public company.
The private company will make healthy commissions regardless of the public company earnings. Many of them changed their commissions from 5% of the charter, to a straight daily charge of $3,000 plus per day, because the percentage was not enough since the drop in charter rates.
The guys deciding to order ships, are the same guys that make more money by managing a larger fleet.
The Bloomberg article that quoted brokers as saying that the ordering of new ships was a sign of optimism in the industry.
Well those same people ordering ships now, ordered many more Capes three years ago. And those Capes are being delivered today to some of the lowest Cape rates in years.
The idea that "The Greeks have an eye for this sort of thing", is absurd.
The Greeks or any other ship owner has in the past ordered ships when they see an opportunity to get a good price on a ship.
That doesn't mean they are any more prescient than any of the other owners who have shot themselves in the foot continuously over the last six years. And produced this massive glut.
Don't blame it all on an unforeseen recession.
There is more dry bulk being shipped now than ever before.
If they thought 10% growth per year, was guaranteed forever, then they should not be depended on for their foresight.
Dryships' Survival Post-Recession [View article]
You've been reading too much Motley Fool.
There's blood in the streets over at EXM.
Which will be followed by bankruptcy.
Do you want to get in early on that?
Rally In The Shipping Sector - Is It Time To Invest In Bulk Shipping? [View article]
Or, the deal with banks will leave virtually nothing for shareholders.
First will be EXM.
The rest in no particular order:
EGLE
FREE
NEWL
GNK
And the ones most likely to see much more dilution.
PRGN
SBLK
ESEA
Elegant Solution For DryShips And Ocean Rig [View article]
ORIG doesn't pump oil, they don't have any oil leases, they don't own a drop of oil. They have no need to transport oil.
They drill a hole and move on.
George doesn't dump his nonperforming assets on ORIG.
He dumps them on DRYS shareholders.
And Aframax, and Suezmax rates are expected to get better before Bulk rates do.
Is It Time To Consider DryShips? [View article]
Charter rates will be lousy for several years.
The low debt companies will do better.
If the shares of ORIG were sold, and the older Panamax were sold off, DRYS could become a lower debt company too.
And George would be the one to turn it around.
The problem is George has done too many things over the last five years that would suggest that is not a priority yet.
Buying OCNF was absurd. There is no logical explanation for it other than he was bailing out his nephew, Anthony.
He paid too much, and he paid using some ORIG shares, immediately after Anthony became 51% owner of the company.
In buying OCNF, he got some Panamax that were the same age as ones that he was getting rid of at DRYS.
He got some Capes with decent charters.
He took on more debt, which is handcuffing him now.
And he got some new builds that have fallen in value, and he can't get them financed. If he walks away from those newbuilds, he will have forfeited a total of $2 billion on ship deposits over the last six years. That's shareholders cash.
This isn't just perfect hindsight. These moves were criticized by shipping analysts the whole way, because everyone knew the prices were too high, and the financing was not there.
George knew too. He's considered one of the smartest guys in shipping.
Many of the ships were bought from his private company, Cardiff.
So Cardiff kept the deposits and the ships.
DRYS bought the six Aframax Tankers, and six Suezmax Tankers for too high a price also. And has recently PAID someone $21 million to take 2 of them off DRYS hands. Nice "investment".
Not coincidently, Cardiff ordered six Aframax, and six Suezmax Tankers a year before DRYS made that purchase.
Given George's past of self dealing, it is speculated that those Tankers are one and the same.
The forfeiting of millions of DRYS cash for Cardiff Capes and Panas in 2007, and 2008, in a failed transaction, are not speculation.
Elegant Solution For DryShips And Ocean Rig [View article]
And why would ORIG buy the Tanker assets from DRYS?
Imminent Dividend Cut At Diana Containerships [View article]
In an email to clients he pointed out that the unit was at risk of operating at a loss upon conclusion of a lucrative charter with Maersk in the second quarter and noted the transaction illustrates the limited employment opportunities that ageing boxships face in today’s market.
“From our perspective the sale serves as a reminder - DCIX is paying investors a lot to wait for a recovery,” the analyst continued. “However, given the age of its fleet, it can't wait forever. That said - we note that should DCIX sell the other Maersk vessels from its IPO fleet.”
If the owner were to sell the 4,796-teu Maersk Merlion and 4,573-teu Malacca (both built 1990), which it acquired from Maersk Line UK at a cost of $22.5m in 2011, Webber believes it could pocket as much as $28m in proceeds.
The Wall Street shipping researcher noted the company could use the funds, coupled with cash from the sale of the Madrid and outside financing, to pursue fleet renewal while providing dividend support.
“While there are a number of scenarios in play at DCIX, we believe management is actively looking to extend its ‘dividend runway’ for at least another year, and we continue to view the next two quarters as pivotal for DCIX,” he added.
As we reported, the Athens-based operator raked in $8.8m from the sale of the Madrid, which implies that the buyers paid around $462 per ldt. Brokers tell TradeWinds the figure represents a “significant” premium when compared to current averages in the demolition market.
While the deal added approximately $0.04 to Webber’s 2013 earnings per share (EPS) forecast the analyst cut his full-year EPS estimate to -$0.11 from -$0.03 in response to renewed concerns about DCIX’s exposure to a market where older assets are struggling to break even.
Elegant Solution For DryShips And Ocean Rig [View article]
Well, I don't wish to belabor the point.
Your first comment is correct, and it shows when DRYS had to sell ships on order because they couldn't get "Traditional financing."
And your second comment is correct in that people like Wilbur Ross are picking up the ships that are listed as "cancelled".
But that's the problem, People like John Fredriksen, who doesn't have any problem with getting financing, have been ordering dozens of new Eco ships from ship builders.
And so the glut will continue.
Given a choice, smart money is buying new ships for delivery in 2015-2016. They are cheaper to run.
Companies like DRYS are paying huge finance and interest charges. They are mortgaged to the hilt. And they pay higher interest rates due to their constant violation of loan covenants.
Break even for DRYS charters will be much higher than a company buying ships now, at these prices, with 40% down.
I can't debate the MLP choice.
ORIG has announced the intention to have a dividend. But they have a very expensive newbuild drill ship expansion to pay for.
The traditional financing for them requires a higher contribution from the company than they did before.
Imminent Dividend Cut At Diana Containerships [View article]
I don't now if there was debt attached to the Madrid.
They paid all cash for the latest ship because of the age.
Yes I think it was a good move.
And it gives everyone food for thought, and debate.
If you want to look at the business plan, it would appear that the price paid for the ship equals the Gross charter revenue plus the $8.8 for the scrap sale.
But you need to remove op ex and commissions to figure if this is accretive or not.
And whether this is worth the dilution.
I'm not saying either way.
I've just been trying to point out all the nuts and bolts of the deal.
Investors should know what they are getting. People should expect to see drastic cuts in charter rates if the company should decide to keep the ships.
People should also expect more dilution if they are to keep the high dividend.