ZachStocks: Four Recommendations for 2010 [View article]
Your Mea Culpa notwithstanding, this is the problem with an advisor who tries to make choices across multiple sectors. A Jack of all trades and master of none. An expert in shipping would have told you first off, that the growth of the fleet would outpace the growth in worldwide demand, and the rate of economic recovery. And specifically that TBSI has a fleet of small bulkers that are 80% over 20 years old. This is why they are in breach of loan covenants, and their debt situation is worse than many others They will have to sell shares to avoid defaulting, and more shares to pay for their ships on order. Their Handies and Tweendeckers are not helped by the one savior of bulk. The appetite for iron ore and coal by China. Their Tweendeckers set them apart from the other US traded bulkers, they are able to use retractable decks to accommodate finished products. They have scheduled stops in several South and North American ports. Some day that will again be an advantage, but not now. In the meantime, the waivers on their breach will expire on April 1, 2010. At which time their loans must be paid down, they will have to dilute.
The Baltic Dry Index: What's Driving It Up? [View article]
Mark Anthony, according to these trade publications, 63% of the order book is comprised of dry bulk ships. In your strange little world, would that constitute 1/3 or 1/4 of the new ships being built? Have you ever done research? Or do you prefer to make things up to fit your delusions. Thousands of stocks are up over 100% in 2009, how are your dry bulk stocks doing?
Shipping: The World's Cheapest Sector Is About to Break Out [View article]
I don't think you want to use the p/book values that are reported on these companies balance sheet. They are based on what the company paid for the ships, minus depreciation. The real value of the ships is much less. Take EXM, they claim their fleet of 40 owned ships is worth $2.7 billion. That would average $66 million each, they would be lucky to get half that. A new Cape can be bought for $61 million, and EXM has many ships that are much older and much smaller. Ship values at: cotzias.gr brs-paris.com reports.platou.com Most of these companies are in breach of loan covenants, those covenants stipulate that the value of their ships being held as collateral, must be worth 125% of the debt. Since they are in breach, then obviously the ship values are not what is stated on their balance sheets. Which is why so many of these companies have sold so much stock lately, it's not just to buy new ships, but to pay down debt. Part of those waivers of covenants states that the company cannot buy or sell ships without paying down debt. OCNF sold some of it's older ships, and not only took a loss on the sale, but had to come up with more cash to pay off the mortgages on those ships, they owed more than the selling price. The reason it seems that OCNF's stock is being given away, is because the company is doing just that. They have gone from 16 million shares in 2008 to 150 million shares now, and they have filed to sell a total of 350 million to YA Global. Many people have been speculating about how many ships will be built and how many will be demolished, the links provided above will show you what the people in the shipping business think, as well as drewry.co.uk weberseas.com worldyards.com lloydslist.com fearnleys.com nilimar.com You will see that most expect the rise in the supply of ships to greatly outweigh the demand , even accounting for demolition. Over 500 Bulkers were delivered in 2009, over 100 were pushed into 2010, and 1500 are expected to be built in 2010. Many will be pushed into 2011. TBSI has a fleet of ships that is 80% over 20 years old, they haven't scrapped any. EXM has several over 25, and hasn't scrapped any. China has become the largest buyer of older tonnage in the world. The scrap steel price has risen, but the BDI is actually high enough to make money, so most companies keep the ships, rather than sell them for $5 million and be forced to pay off the loan. The Breakers have a huge choice of ships to buy, and old single hull tankers are preferred, and readily available. The Dry Bulk companies would have been better served if the BDI stayed below 1000, that would have forced the older ships to scrap. Vale , the largest Iron Ore miner in the world has purchased 20 older Capes and VLOC's over the last year and has on order, 28 new VLOC's, each carries 400,000 dwt. They expect to become self sufficient, and rarely require the services of independent carriers. Vale has also signed 20 year charters with the largest shippers in Japan and China. POSCO, the second largest steelmaker in the world has also been buying it's own ships, in order to have control of its costs.
OceanFreight: Why It's Now a Must Buy [View article]
Do you ever try to back up your wild claims with proof? And no, capital letters don't constitute proof. A new Capesize ships costs $67 million. cotzias.gr OCNF paid an average $57 million for it's used Capes. DSX paid $60.2 million and signed 5 year charters for $50,000 per day. OCNF signed 5 year charters for $26,000 per day. OCNF is in breach of loan covenants and pays a higher interest rate on loans, it's in their earnings report. DSX has never been in breach and pays a lower rate, and they have much more cash. Any shipping company can sell millions of shares of stock to pay for used ships, if they find it accretive. All of the other shipping companies can sell shares for much more than a dollar a share. OCNF is in no way, in a more advantageous position. Name one reason why any other dry bulker can't sell shares to buy more ships. Several of them have, or sold senior secured notes. Most know that constant dilution is not appreciated on wall street. The OCNF year to date chart says that all this crap you've been spouting all year about how great they are, is a flat out lie. Thousands of stocks are up huge this year, "how're you doin".
The Baltic Dry Index: What's Driving It Up? [View article]
Mark Anthony is a complete lying phony. You were told months ago that there is a huge difference between 50 million cgt. (compensated gross tons), and 50 million DWT. Obviously, since you are still trying to fool people about it, you are a fraud, and should be exposed. Dozens of Independent shipping publications have published the amount of new ships being built, and the amount being demolished. You have never substantiated any of your hair brained theories. drewry.co.uk weberseas.com brs-paris.com cotzias.gr worldyards.com lloydslist.com fearnleys.com nilimar.com platou.com drybulkindex.com steelguru.com tradewinds.no Do some research for once. You have been dead wrong since you started pumping dry bulk in January, it's time to admit you were wrong. Thousands of stocks are up, you aren't, stop trying to deceive people about dry bulk and go back to pumping your sad palladium stocks.
If There's a Recovery Underway, How Come No One Is Shipping Anything? [View article]
As usual, the BDI is misused and misunderstood as an indicator of the health of the economy. It is an index reflecting only the prices paid for chartering a short term charter of a dry bulk ship. No containers or tankers, only Iron Ore, Coal, grains, fertilizers, cement, and lesser bulk. 80% of these dry bulk shipments are made on long term charters and are not reflected in spot rates, or the BDI. If you are sitting on a dock in San Pedro, looking at the activity in Long Beach, you are looking at Containers. If you've been talking to the head of one of the largest Shipping companies in Dry Bulk, then maybe something was lost in translation, the largest Dry Bulk Co's are from China, Japan, and Korea. North America accounts for only 5% of the world wide dry bulk traffic. The Dry Bulk companies are in fact very busy, however, the worldwide fleet is growing more rapidly than the rate of demand. There have been several dramatic spikes in the BDI, most caused by port congestion when customers have shipped more on speculation rather than physical demand. A 10% rise in shipping can cause a 100% rise in the BDI when there are 100's of ships waiting to load or unload at ports that can't handle excess capacity. Or too few ships are available in the Atlantic, because most are employed in the Pacific.
Paragon Shipping Income Statement Analysis for September 2009 Quarter [View article]
You've made no mention of their changes to charters that have been signed since June. The Fleet deployment page is the most important place to do research for dry bulk companies. Between July 2008, and April 2009, seven of their remaining 11 ships, will have reductions in charter rates amounting to over $110,000 per day, or $9 million less revenue per quarter.
OceanFreight: Why It's Now a Must Buy [View article]
OCNF claimed $8 million in "Imputed deferred revenue". last quarter, that's 8 cents per share. The definition of Imputed revenue is: estimated to have certain cash value, although no money has been received, or credited. Analysts don't count it, smart money doesn't count it. The six Panamax were built between '95 and 2000, they are worth at best $25 million each. The new Capes are worth $61 million. The old Suezmax is worth $45 million, the three old Aframax are worth $20 million. cotzias.gr nilimar.com Debt of $279 million. In case you are using net asset value.
I'd like to add to Alan Young's comment. The BDI has had some greatly exaggerated movements this year, sometimes caused by port congestion. When ships are waiting for weeks at certain busy ports it decreases the availability of ships for hire, and affects the supply and demand, and therefore the rates. Sometimes the port delays are caused by weather, washed out rail lines, interruptions of port operations, but not always an indication of increased shipments. The ports, especially the coal port of Newcastle, Australia, and Qingdao in China for unloading Iron Ore, and their limitations have long been a major factor in fluctuations in the spot rate. Another factor is the stockpiling of ore preceding the annual iron ore price negotiations. In may, 2008 there was a tremendous spike in the BDI, greatly influenced by an effort by BHP to grab all available Capes to make the cost of VALE's ore from Brazil prohibitive. That was followed by the huge crash. Really, the use of the BDI as an economic indicator is a false indicator if the many variables are not taken into consideration.
Testing the Performance of Price-to-Book Value [View article]
Every one of the shipping companies you listed have greatly overstated the real value of their ships. They are based on the purchase price of the ships. That may be acceptable to their accountants, but not their Banks. Which is why many of them are in breach of loan covenants, meaning that the ships do not provide enough collateral value against the loans taken on them. Don't expect ship values to make a return any time soon. The growth of the word wide fleet will outpace even the most optimistic projections of world wide GDP growth. Shipping rates fall when the supply of ships outnumbers the cargoes needing to be shipped. Many of the shippers have had to sell shares to raise money to pay down debt. They say they are raising money for accretive acquisitions, but much of the money is needed for operations, and debt. And shippers are considered cyclical, so their traditional PE range is 6-9. Another problem with screeners. Those must be trailing PE ratios, and some must be ancient. TBSI has lost money for the last 3 quarters, and will continue to do so. And SBLK, and PRGN have set charters that will result in falling earnings for the next two earnings releases. Also, some Dry Bulk companies have been counting "Amortization of above and below market charters" as revenue. That might be a generally accepted accounting practice, but it is not part of the analysts estimates and should not be included in a "clean number". Certainly not when computing PE ratios.
The Death of Shipping and BDI Is Premature [View article]
Sorry colonel, I never try to predict what the price will do. I think the dry bulk stocks can be traded often, but if you are waiting for a double then it could be a long frustrating wait. They have become a darling of the traders, and you never know what will cause it to spike up. The dry bulk fundamentals suck for a few years, there are just too many ships being built. But that doesn't seem to dampen the unbridled enthusiasm of people who think a stock that fell to $3 from $130, will somehow get back there.
The Death of Shipping and BDI Is Premature [View article]
Look at SEC form 424B filed 9-25-09, they will be selling 335 million more shares to YA Global. Add that to the 90 million they have now. They lost money with rates in the $20,000 to $30,000 per day range and rates are not expected to get better soon. Tanker rates are expected to be worse. They sold the Richmond and Juneau which earned a combined 77,000 per day and took a loss on the sale. They are being replaced by 3 Capes which will earn a combined 80,000 per day, and cost them a combined 180 million.
The Death of Shipping and BDI Is Premature [View article]
The growth of the fleet is expected to be much greater than even the highest expectations of the growth in demand for the next two years. China is importing Iron Ore and Coal at a pace that surpasses demand for Steel, and can't be expected to add more demand than it already does. Arcelor Mittal, the biggest steel maker in the world, projected a tepid recovery for worldwide Steel demand, especially given the pricing pressure from China's massive production. One thing that should not go unnoticed, Vale, the largest Iron Ore producer in the world has purchased 20 older Capes and VLOC's this year and has ordered 28 new VLOC's to be built. They have also signed several long term charters with the big Japanese and Korean shippers to secure a consistent freight rate. They will become nearly self sufficient in transporting their product. I can't express enough, the effect this will have on the BDI, when Vale no longer needs to hire spot ships to deliver it's ore. Much of the recent rise in the BDI can be attributed to port congestion in the Coal ports of Australia, and the annual grain shipments. The FFA's are showing a precipitous fall in rates through 2010. It's simply too early to jump into Dry Bulk. Make money elsewhere and return to this sector next year. And yes DSX, NMM and NM are in very good shape, most of the rest have serious consequences from breaches of loan covenants, high debt, dilution at poor prices, and commitments to purchase ships at inflated prices. PRGN, SBLK, and EGLE have reset charters at much lower rates, EXM, and DRYS have massive debt. TBSI has a fleet of small ships that are 80% over 20 years old, and 40% over 25. OCNF is a total disaster, soon to have 450 million shares outstanding. Fearnleys is a great source, as well as: drewreys.co.uk weberseas.com brs-paris.com cotzias.gr worldyards.com lloydslist.com nilimar.com platou.com steelguru.com chinamining.org tradewinds.no drybulkindex.com
Four Shippers Emerging from the Mire [View article]
It didn't bother you that PRGN diluted shares from 27 million to 48 million? And yes they did sign long term charters on 6 of their 12 ships that will cover 98% of 2009, but the changes to those charters will result in $110,000 less per day, over $8 million less revenue per quarter. The next two earnings reports will be a major disappointment. EGLE will be selling shares, they have 22 new Supramax to pay for. And they reset some charters lower. They have filed a shelf offering. TBSI has a fleet of very old, small Handymax and Tweendeckers. Their value has fallen so much as to put them in breach of loan covenants, they will have to pay down the debt to be in compliance when the waivers expire. They also have 6 new ships to pay for when they are losing money. They have filed a shelf offering. Most of these companies are in breach of loan covenants because of low ship valuations, and most have to sell stock to reduce debt, they also had increases in interest and restricted cash as part of their waivers. Those waivers expire in one year at which point they must have a 125% collateral to debt maintenance ratio. Ship values are not rising. DSX has little debt, and Cash to pick up distressed assets. And NM has secured senior notes to cover new ships and consolidate debt. They have new ships arriving with financing in place. OCNF is a disaster, massive dilution like DRYS. EXM is deep in debt. And phony earnings. Read the SEC filings and by all means, read the Fleet Deployment Page to see when these companies will take an earnings hit. It is a very transparent sector. The biggest problem is the growth of the fleet will far outpace the growth in demand for two years. drewry.co.uk weberseas.com brs-paris.com cotzias.gr worldyards.com lloydslist.com fearnleys.com nilimar.com platou.com steelguru.com drybulkindex.com
BDI Signals Slack Demand for Raw Materials [View article]
parkwood, you just made the case where the BDI is not an ACCURATE gauge of economic activity. "If China stopped purchasing, the BDI would crash, plain and simple". Well, China didn't stop, they slowed slightly, and yet the BDI dropped by 50% from June highs. What has changed? The imports of ore dropped only 10%. The imports of Coal increased in China and India. The production of steel products rose to a record in August. What has changed is the long lines of ships waiting to unload. There are fifty fewer Capes waiting to unload, increasing the supply of ships available. After a flurry of activity that imported more ore than could be processed, the shipping normalized to an orderly schedule of delivery. Add to that the addition of more new ships and the BDI gives a false impression that things came to a screeching halt in China. The fact that Vale has pretty much stopped leasing ships on spot, will have a huge impact on BDI. They signed long contracts with Japanese and Korean shippers, and most importantly, they bought 20 Capes and VLOC's, and have 12 VLOC's on order.
ZachStocks: Four Recommendations for 2010 [View article]
An expert in shipping would have told you first off, that the growth of the fleet would outpace the growth in worldwide demand, and the rate of economic recovery. And specifically that TBSI has a fleet of small bulkers that are 80% over 20 years old. This is why they are in breach of loan covenants, and their debt situation is worse than many others They will have to sell shares to avoid defaulting, and more shares to pay for their ships on order. Their Handies and Tweendeckers are not helped by the one savior of bulk. The appetite for iron ore and coal by China. Their Tweendeckers set them apart from the other US traded bulkers, they are able to use retractable decks to accommodate finished products. They have scheduled stops in several South and North American ports. Some day that will again be an advantage, but not now.
In the meantime, the waivers on their breach will expire on April 1, 2010. At which time their loans must be paid down, they will have to dilute.
The Baltic Dry Index: What's Driving It Up? [View article]
Have you ever done research? Or do you prefer to make things up to fit your delusions. Thousands of stocks are up over 100% in 2009, how are your dry bulk stocks doing?
Shipping: The World's Cheapest Sector Is About to Break Out [View article]
cotzias.gr
brs-paris.com
reports.platou.com
Most of these companies are in breach of loan covenants, those covenants stipulate that the value of their ships being held as collateral, must be worth 125% of the debt. Since they are in breach, then obviously the ship values are not what is stated on their balance sheets. Which is why so many of these companies have sold so much stock lately, it's not just to buy new ships, but to pay down debt. Part of those waivers of covenants states that the company cannot buy or sell ships without paying down debt.
OCNF sold some of it's older ships, and not only took a loss on the sale, but had to come up with more cash to pay off the mortgages on those ships, they owed more than the selling price.
The reason it seems that OCNF's stock is being given away, is because the company is doing just that. They have gone from 16 million shares in 2008 to 150 million shares now, and they have filed to sell a total of 350 million to YA Global.
Many people have been speculating about how many ships will be built and how many will be demolished, the links provided above will show you what the people in the shipping business think, as well as drewry.co.uk
weberseas.com
worldyards.com
lloydslist.com
fearnleys.com
nilimar.com
You will see that most expect the rise in the supply of ships to greatly outweigh the demand , even accounting for demolition. Over 500 Bulkers were delivered in 2009, over 100 were pushed into 2010, and 1500 are expected to be built in 2010. Many will be pushed into 2011. TBSI has a fleet of ships that is 80% over 20 years old, they haven't scrapped any. EXM has several over 25, and hasn't scrapped any. China has become the largest buyer of older tonnage in the world.
The scrap steel price has risen, but the BDI is actually high enough to make money, so most companies keep the ships, rather than sell them for $5 million and be forced to pay off the loan. The Breakers have a huge choice of ships to buy, and old single hull tankers are preferred, and readily available. The Dry Bulk companies would have been better served if the BDI stayed below 1000, that would have forced the older ships to scrap.
Vale , the largest Iron Ore miner in the world has purchased 20 older Capes and VLOC's over the last year and has on order, 28 new VLOC's, each carries 400,000 dwt. They expect to become self sufficient, and rarely require the services of independent carriers. Vale has also signed 20 year charters with the largest shippers in Japan and China. POSCO, the second largest steelmaker in the world has also been buying it's own ships, in order to have control of its costs.
OceanFreight: Why It's Now a Must Buy [View article]
A new Capesize ships costs $67 million. cotzias.gr
OCNF paid an average $57 million for it's used Capes.
DSX paid $60.2 million and signed 5 year charters for $50,000 per day. OCNF signed 5 year charters for $26,000 per day.
OCNF is in breach of loan covenants and pays a higher interest rate on loans, it's in their earnings report. DSX has never been in breach and pays a lower rate, and they have much more cash.
Any shipping company can sell millions of shares of stock to pay for used ships, if they find it accretive. All of the other shipping companies can sell shares for much more than a dollar a share.
OCNF is in no way, in a more advantageous position.
Name one reason why any other dry bulker can't sell shares to buy more ships. Several of them have, or sold senior secured notes. Most know that constant dilution is not appreciated on wall street.
The OCNF year to date chart says that all this crap you've been spouting all year about how great they are, is a flat out lie.
Thousands of stocks are up huge this year, "how're you doin".
The Baltic Dry Index: What's Driving It Up? [View article]
You were told months ago that there is a huge difference between 50 million cgt. (compensated gross tons), and 50 million DWT. Obviously, since you are still trying to fool people about it, you are a fraud, and should be exposed.
Dozens of Independent shipping publications have published the amount of new ships being built, and the amount being demolished. You have never substantiated any of your hair brained theories.
drewry.co.uk
weberseas.com
brs-paris.com
cotzias.gr
worldyards.com
lloydslist.com
fearnleys.com
nilimar.com
platou.com
drybulkindex.com
steelguru.com
tradewinds.no
Do some research for once.
You have been dead wrong since you started pumping dry bulk in January, it's time to admit you were wrong. Thousands of stocks are up, you aren't, stop trying to deceive people about dry bulk and go back to pumping your sad palladium stocks.
If There's a Recovery Underway, How Come No One Is Shipping Anything? [View article]
It is an index reflecting only the prices paid for chartering a short term charter of a dry bulk ship. No containers or tankers, only Iron Ore, Coal, grains, fertilizers, cement, and lesser bulk. 80% of these dry bulk shipments are made on long term charters and are not reflected in spot rates, or the BDI.
If you are sitting on a dock in San Pedro, looking at the activity in Long Beach, you are looking at Containers.
If you've been talking to the head of one of the largest Shipping companies in Dry Bulk, then maybe something was lost in translation, the largest Dry Bulk Co's are from China, Japan, and Korea.
North America accounts for only 5% of the world wide dry bulk traffic.
The Dry Bulk companies are in fact very busy, however, the worldwide fleet is growing more rapidly than the rate of demand.
There have been several dramatic spikes in the BDI, most caused by port congestion when customers have shipped more on speculation rather than physical demand. A 10% rise in shipping can cause a 100% rise in the BDI when there are 100's of ships waiting to load or unload at ports that can't handle excess capacity. Or too few ships are available in the Atlantic, because most are employed in the Pacific.
Paragon Shipping Income Statement Analysis for September 2009 Quarter [View article]
OceanFreight: Why It's Now a Must Buy [View article]
The definition of Imputed revenue is: estimated to have certain cash value, although no money has been received, or credited. Analysts don't count it, smart money doesn't count it.
The six Panamax were built between '95 and 2000, they are worth at best $25 million each. The new Capes are worth $61 million.
The old Suezmax is worth $45 million, the three old Aframax are worth $20 million.
cotzias.gr
nilimar.com
Debt of $279 million. In case you are using net asset value.
Two Telling Charts - TRANQ and BDI [View article]
The BDI has had some greatly exaggerated movements this year, sometimes caused by port congestion. When ships are waiting for weeks at certain busy ports it decreases the availability of ships for hire, and affects the supply and demand, and therefore the rates. Sometimes the port delays are caused by weather, washed out rail lines, interruptions of port operations, but not always an indication of increased shipments. The ports, especially the coal port of Newcastle, Australia, and Qingdao in China for unloading Iron Ore, and their limitations have long been a major factor in fluctuations in the spot rate. Another factor is the stockpiling of ore preceding the annual iron ore price negotiations. In may, 2008 there was a tremendous spike in the BDI, greatly influenced by an effort by BHP to grab all available Capes to make the cost of VALE's ore from Brazil prohibitive. That was followed by the huge crash.
Really, the use of the BDI as an economic indicator is a false indicator if the many variables are not taken into consideration.
Testing the Performance of Price-to-Book Value [View article]
Don't expect ship values to make a return any time soon. The growth of the word wide fleet will outpace even the most optimistic projections of world wide GDP growth. Shipping rates fall when the supply of ships outnumbers the cargoes needing to be shipped.
Many of the shippers have had to sell shares to raise money to pay down debt. They say they are raising money for accretive acquisitions, but much of the money is needed for operations, and debt. And shippers are considered cyclical, so their traditional PE range is 6-9.
Another problem with screeners. Those must be trailing PE ratios, and some must be ancient. TBSI has lost money for the last 3 quarters, and will continue to do so. And SBLK, and PRGN have set charters that will result in falling earnings for the next two earnings releases.
Also, some Dry Bulk companies have been counting "Amortization of above and below market charters" as revenue. That might be a generally accepted accounting practice, but it is not part of the analysts estimates and should not be included in a "clean number". Certainly not when computing PE ratios.
The Death of Shipping and BDI Is Premature [View article]
I think the dry bulk stocks can be traded often, but if you are waiting for a double then it could be a long frustrating wait. They have become a darling of the traders, and you never know what will cause it to spike up.
The dry bulk fundamentals suck for a few years, there are just too many ships being built. But that doesn't seem to dampen the unbridled enthusiasm of people who think a stock that fell to $3 from $130, will somehow get back there.
The Death of Shipping and BDI Is Premature [View article]
They lost money with rates in the $20,000 to $30,000 per day range and rates are not expected to get better soon. Tanker rates are expected to be worse.
They sold the Richmond and Juneau which earned a combined 77,000 per day and took a loss on the sale. They are being replaced by 3 Capes which will earn a combined 80,000 per day, and cost them a combined 180 million.
The Death of Shipping and BDI Is Premature [View article]
Arcelor Mittal, the biggest steel maker in the world, projected a tepid recovery for worldwide Steel demand, especially given the pricing pressure from China's massive production.
One thing that should not go unnoticed, Vale, the largest Iron Ore producer in the world has purchased 20 older Capes and VLOC's this year and has ordered 28 new VLOC's to be built. They have also signed several long term charters with the big Japanese and Korean shippers to secure a consistent freight rate. They will become nearly self sufficient in transporting their product.
I can't express enough, the effect this will have on the BDI, when Vale no longer needs to hire spot ships to deliver it's ore. Much of the recent rise in the BDI can be attributed to port congestion in the Coal ports of Australia, and the annual grain shipments. The FFA's are showing a precipitous fall in rates through 2010.
It's simply too early to jump into Dry Bulk. Make money elsewhere and return to this sector next year. And yes DSX, NMM and NM are in very good shape, most of the rest have serious consequences from breaches of loan covenants, high debt, dilution at poor prices, and commitments to purchase ships at inflated prices. PRGN, SBLK, and EGLE have reset charters at much lower rates, EXM, and DRYS have massive debt. TBSI has a fleet of small ships that are 80% over 20 years old, and 40% over 25. OCNF is a total disaster, soon to have 450 million shares outstanding.
Fearnleys is a great source, as well as:
drewreys.co.uk
weberseas.com
brs-paris.com
cotzias.gr
worldyards.com
lloydslist.com
nilimar.com
platou.com
steelguru.com
chinamining.org
tradewinds.no
drybulkindex.com
Four Shippers Emerging from the Mire [View article]
And yes they did sign long term charters on 6 of their 12 ships that will cover 98% of 2009, but the changes to those charters will result in $110,000 less per day, over $8 million less revenue per quarter. The next two earnings reports will be a major disappointment.
EGLE will be selling shares, they have 22 new Supramax to pay for. And they reset some charters lower. They have filed a shelf offering.
TBSI has a fleet of very old, small Handymax and Tweendeckers. Their value has fallen so much as to put them in breach of loan covenants, they will have to pay down the debt to be in compliance when the waivers expire. They also have 6 new ships to pay for when they are losing money. They have filed a shelf offering.
Most of these companies are in breach of loan covenants because of low ship valuations, and most have to sell stock to reduce debt, they also had increases in interest and restricted cash as part of their waivers. Those waivers expire in one year at which point they must have a 125% collateral to debt maintenance ratio. Ship values are not rising.
DSX has little debt, and Cash to pick up distressed assets.
And NM has secured senior notes to cover new ships and consolidate debt. They have new ships arriving with financing in place.
OCNF is a disaster, massive dilution like DRYS. EXM is deep in debt. And phony earnings.
Read the SEC filings and by all means, read the Fleet Deployment Page to see when these companies will take an earnings hit.
It is a very transparent sector. The biggest problem is the growth of the fleet will far outpace the growth in demand for two years.
drewry.co.uk
weberseas.com
brs-paris.com
cotzias.gr
worldyards.com
lloydslist.com
fearnleys.com
nilimar.com
platou.com
steelguru.com
drybulkindex.com
BDI Signals Slack Demand for Raw Materials [View article]
"If China stopped purchasing, the BDI would crash, plain and simple".
Well, China didn't stop, they slowed slightly, and yet the BDI dropped by 50% from June highs.
What has changed? The imports of ore dropped only 10%. The imports of Coal increased in China and India. The production of steel products rose to a record in August. What has changed is the long lines of ships waiting to unload. There are fifty fewer Capes waiting to unload, increasing the supply of ships available.
After a flurry of activity that imported more ore than could be processed, the shipping normalized to an orderly schedule of delivery. Add to that the addition of more new ships and the BDI gives a false impression that things came to a screeching halt in China.
The fact that Vale has pretty much stopped leasing ships on spot, will have a huge impact on BDI. They signed long contracts with Japanese and Korean shippers, and most importantly, they bought 20 Capes and VLOC's, and have 12 VLOC's on order.