Imminent Dividend Cut At Diana Containerships [View article]
This isn't the article I was looking for, but it does show the plan is under way. http://nyti.ms/1473tka
And Ill try to find the news from Maersk that outines a plan to skip the Panama Canal for East Coast operations. They are serious about saving money, and increased Canal fees are coming.
Imminent Dividend Cut At Diana Containerships [View article]
You are not out of line at all. The changes to be made were announced shortly after the announcement of the expansion of the Panama Canal. I'll try to find it, but the US government made it part of one of those Stimulus packages. Those are to handle the sub 10,000 TEU Post Panamax. I think it will be awhile before many ports catch up to the Triple E which is 18,000 TEU. There was talk of a Transshipment Hub in Europe to make better use of the 10,000 TEU and above. But as I've read comments by the big Liner companies, like Maersk. They talk about the 32 meter beam of the Panamax as being such an inefficient ship, that changing the cranes would be a high priority. Maersk is so big, they own their own shipyard. It sounds like they intend to get it done. They can change the entire logistics. I don't know how long it will take to make the changes. But as each port gets modified, the demand for Panamax goes down. Before they become obsolete, they will still suffer from too many Panamax looking for too few jobs. Which, in ship chartering always results in lower rates for that class.
Imminent Dividend Cut At Diana Containerships [View article]
The BDI really isn't relevant to this discussion, and I'm sorry I contributed to taking the discussion off topic. There is such a wealth of information on shipping that it seems folly to use technical analysis on shipping cycles. No cycle ever included this unprecedented build up of ships.
Imminent Dividend Cut At Diana Containerships [View article]
I'm sorry but we have a misunderstanding. I thought both of us were referring to a 100% increase in charter rates. From the current $7,000 per day Which would be barely above break even and not help the stock price.
Also a 200% increase in charter rates. Which would not have a corresponding effect on stock price. As I reread yours, and if you reread mine, you can see we were talking two different things.
A 200% increase in stock price would be quite good. I'm not trying to make any price targets, other than to assume a decline in the event of heavy dilution. I actually find charter rates and ship values far more predictable. Good talking to you.
Imminent Dividend Cut At Diana Containerships [View article]
Judy, the rise in the BDI is a seasonal rise in Panas and Supramax for the grain trade. And there should be also a rise due to the fact that in order for Capesize to break even, the spot price needs to triple. The Rise of the BDI from 700 to 900 merely brings rates from catastrophic, to horrendous. Anything below 1200 is miserable. The BDI will drop again this summer as the delivery of more excess tonnage continues. Look at last year. Nice rise after the Chinese new Year, followed by more historic lows.
Imminent Dividend Cut At Diana Containerships [View article]
Actually, I think JM and I are in a distinct minority in our negative assessment about a recovery in rates. I seriously doubt our concerns are priced in. It doesn't appear that people ARE aware that the sale-leasebacks are inflated, look at the comments on debt to asset ratios.
If a drop in the dividend doesn't bother you, that's fine. But it will bother many shareholders. And the drop in share price from that, and also from share offerings has to bother somebody. In order to continue this business plan, DCIX will need to sell a lot of shares. As they increase shares, the cost to pay the dividend becomes larger. and more shares, and more sale- leasebacks become necessary. (Sorry to be so basic here, I'm just trying to connect the dots.)
I don't like the fact that they are doing this with old, nearly obsolete ships. It's time for them to move on to ships that will be more than scrap in three years. I can't express it enough, It doesn't matter whether the average life expectancy of these ships was 25-30 years old. Or what kind of mechanical great shape they are in. When the Panama Canal is finished, these narrow beam Panamax will be an inefficient, financial liability. Part of this whole supply/demand equilibrium equation relies on high scrapping levels of 20 plus year old ships, and that is the majority of DCIX fleet. Three years from now DCIX (unlike DSX), will be a high share count, low debt, but very low equity company, that will have to raise even more capital to stay in the game with actual modern tonnage.
No, that isn't my point on the idle tonnage. What I'm saying is that on top of the 7% growth this year, and again next year, that there is also the idle tonnage to be absorbed when rates become merely profitable. That pushes the timeline to profitable rates back at least another year. I don't think merely profitable is going to feed a dividend, and I don't think it will attract growth investors, or even value. And I still don't believe that 2015 is the end of the oversupply. Keep your eye on the newbuild numbers. A further 113,000 TEU were ordered in January. I saw this in the Dry Bulk sector. Everyone's estimate of when the build out would end, were grossly optimistic. The glut continues to get worse, and the "new normal" for rates is not going to be impressive.
The 100% gain in rates just brings you to profit, there is more expense beyond Op Ex. I am stunned that you would consider waiting five years to get to 200% increase. A rate I doubt will come. To each his own. It's been a good discussion. And GL.
Imminent Dividend Cut At Diana Containerships [View article]
Raymond, Have you done some research that makes you such an optimist? I've been singing the praises of Diana management for years, but that doesn't mean they can maintain the dividend, or the stock price, in a horrible freight environment. Just ask DSX shareholders. You severely underestimate the oversupply of ships, and the first category to become obsolete is the Panamax narrow beam. On top of the ships arriving over the next two years, there is 4.6% of the fleet laid up now, mostly under 5,000 TEU. Nobody has demand projections that are going to absorb that extra tonnage,
This is from Alphaliner, if you don't find them reputable, let me know. There are lots more brokers or trade papers with the same outlook. """Container ship deliveries will hit an all-time high in 2013 even as shipowners and ocean carriers defer the arrival of some of their vessels on order, according to industry analyst Alphaliner. Around 200,000 20-foot-equivalent units of capacity originally scheduled for 2013 have been pushed back to 2014, and more deferrals are expected in the coming months. The number of ships of more than 10,000 TEUs set for delivery this year has been reduced to 41 units. Still, the capacity scheduled for delivery in 2013 stood at 1.68 million TEUs on March 1, just above the historical high of 1.57 million TEUs in 2008, and equivalent to 10.3 percent of the world fleet as of January, according to Alphaliner’s figures. Even assuming an additional 100,000 TEUs could be deferred in the coming months, total new vessel deliveries will still be significantly higher than during the previous four years, raising fresh fears that the oversupply in container ship market could persist beyond 2014. Deteriorating market conditions also have prompted a surge in the scrapping of older tonnage, with 37 ships of 80,000 TEUs delivered for demolition or de-celled in the first two months of the year, and a further 20,000 TEUs already committed to the breakers’ yards in March. Alphaliner expects full year deletions from the fleet to top 400,000 TEUs in 2013, if the current rate of scrapping continues the highest level of container ship demolitions. After adjusting for 100,000 TEUs of additional slippage in deliveries and 400,000 TEUs of scrapping, the container fleet will expand by a net 7 percent in 2013, outpacing expected demand growth of only 4 to 6 percent. The deferral of new ship deliveries from 2013 to 2014 has raised capacity additions next year to 7 percent net of forecast scrapping."""
Imminent Dividend Cut At Diana Containerships [View article]
Thanks Jack, Yeah, I would think that modern tonnage would be preferred. Especially being wide beamed. I have faith in this management to make the best choice. I'm just trying to foresee the consequences of this strategy when the artificial charters end. I'm sure Palios has a plan. Diana would be able to borrow quite a bit on the 2004, 5,500 TEU because it's market value is around $25 million. But if it's a sale-leaseback, the lease could be inflated, and the sale price would be inflated accordingly. And it would require more cash.
The 5,000 TEU are not becoming obsolete, there are some new ones being built. But the narrow beam Panamax is lousy on fuel. And Liners are looking to cut costs. Maersk is really shaking things up, much the way Vale did when they built the Valemax. Logistics will be different, and I don't know how DCIX will fit in. I'm sure they will look to get into the right size and age ship, I'm not sure when.
Imminent Dividend Cut At Diana Containerships [View article]
Judy, Is there any special reason you think an article about the BDI and DSX, a Dry Bulk owner, is in any way relevant to DCIX, or any other container ship owner? Not to mention that Cramer has proven once again, as he has for five years, that he knows nothing about shipping. And the "great Wilbur Ross", the shippers that he is buying, are product tankers and offshore drillers. DSX earnings will continue to drop this year as those formerly lucrative charters have been coming to an end, and the new charters are below break even. Anyone who tells you the overcapacity in dry bulk is coming to an end soon is wrong.
Imminent Dividend Cut At Diana Containerships [View article]
Hey, While I do believe management when they say these ships are in great shape, as far as maintenance. I still think they will be tough to charter out after the Panama Canal expansion. All of the older Panamax are narrow beam (32 meters), and the new Post Panamax will hold twice the TEU, for one third the extra fuel. Since the charterer pays the fuel expenses, the new ships are going to be the ones the charterer wants. Add in the expenses of keeping old ships maintained, and it's likely DCIX will be moving on to modern tonnage. Check out the information about the difference in narrow beam ships efficiency, then listen to the Mearsk comments on the importance of the fuel efficient designs in a future where margins remain thin. Maersk has big plans. Hopefully, DCIX doesn't buy another twenty year old dinosaur with leaseback. I don't think that business model will work after 2014.
Imminent Dividend Cut At Diana Containerships [View article]
None in the US yet. There are 4 ports in Europe that can handle them. And China. Ports in the US are supposed to be upgraded in response to the widening of the Panama Canal. There will be a cascading effect, that will push the E class into traditionally smaller class ports. And the 8,000 TEU ships will be used to replace the Panamax class. The E class isn't much smaller, at 16,000 TEU. But the preference will be to use the more efficient ships , obviously it gives better margins for Maersk.
As for what advantage these sale-leasebacks have for Maersk? I could speculate that, Yes it does give Maersk the added cash for their extensive CapEx project, and it keeps the ships available to them until their shift to larger vessels is done. And they don't have to take impairments, depending on what value they carry on the balance sheet. A win/ win for both companies.
Imminent Dividend Cut At Diana Containerships [View article]
I'm not sure what you've been reading to come to that conclusion. Most of my sources are paid subscription, so I can't link them. But this is from BIMCO. http://bit.ly/1405qyK Maersk will be launching it's first of 20 new Triple E class ship, 18,000 TEU. There is 4.6% of the fleet laid up, waiting for rates to increase. The fleet is expected to grow by a further 21% over the next few years. And they are not done ordering new, more efficient ships. The opening of the third lane of the Panama Canal will make the current Panamax size ship less desirable due to economies of scale. And as far as economies of scale, there is a huge push to move to the larger sized ships. Maersk is planning to abandon the Panama canal in favor of serving the US East coast by way of the Suez Canal to China. More importantly, don't confuse a rise in Box Rates for the big container lines, with the time charter rates for a company like DCIX. They DO NOT go hand in hand.
I'm sure we can debate the future beyond 2013. But it is still important to discuss 2013. Some of you will come on and say you are in this for the "long haul", for the dividend. Really? That 30 cent dividend wouldn't console me, while the stock price is down $2 per share. And dilution might not bother you, but think of the market as a whole.
And, at the end of last quarter, DCIX had $32 million in cash. This month they pay $9.6 million to dividends, and $22 million for the Malta. In May, the Malacca, the Merlion, and the Madrid, will come off charters of $21,450 per day, and will be getting charters in the range of $7,000 per day. Op Ex is $9,500- $10,000 per day. Not including interest expense. In order to maintain the dividend, DCIX will have to dilute, and do at least three sale-lease backs. That will be a large dilution.
And, If you are going to bring up scrapping, as a means to end the overcapacity. Then you need to accept the fact that the average age for scrapping has dropped to 23 years old. And 56 ships less than 20 years old were scrapped last year. 26% of container-ships scrapped last year were Panamx class. In that case, several of DCIX ships should not be around for the recovery.
Float Your Boat With Hapag-Lloyd Yankee Bonds Yielding 7.84% [View article]
If you did business with EXM, or DRYS, or EGLE, you were shipping Dry Bulk. Iron ore, coal, grains, fertilizer, cement. (DRYS has a few tankers, but no container-ships)
If you were doing business with Moeller-Maersk and Hapag-Lloyd, you were shipping finished goods in containers. Different types of ships, and customers.
Also, whether you are talking about dry bulk, or containers, when a company goes bankrupt, the creditors sell off the ships and they continue to do business somewhere else. A few less competitors doesn't make up for the massive glut of ships. It is a fragmented industry with hundreds of companies. And the companies range in size from a few ships, to hundreds of ships.
Imminent Dividend Cut At Diana Containerships [View article]
Mintz, Not to go off topic here......... .........but did you just say that PRGN was trading at 25% of book???? We gotta debate that somewhere, but not on this article.
And.... TEU was supposed to have paid off that $14 million loan to PRGN by now. Instead, they are going to pay it off at $1 million per month. So, PRGN dilutes shareholders because TEU can't pay off loan. Nice job Bodouroglou. Also, TEU just filed to dilute shareholders by around 4.7 million shares, including over allotment. Take that into consideration when valuing PRGN.
Also, on the credit worthiness issues you are having with others. DCIX has good credit, however, when Diana buys a 1995 ship for $25 million, with attached charter. They can only borrow $5 million on the credit facility. Because the market value of the ship is only $8 million. And banks only lend 60-70% of the market value. Not the price paid for the above market charter. That's why DCIX will dilute.
Nice article. I see the title is still too inflammatory for some. I think your next article should be: "I LOVE DCIX ( i just have one, tiny problem with them)."
Imminent Dividend Cut At Diana Containerships [View article]
This isn't the article I was looking for, but it does show the plan is under way.
http://nyti.ms/1473tka
And Ill try to find the news from Maersk that outines a plan to skip the Panama Canal for East Coast operations.
They are serious about saving money, and increased Canal fees are coming.
Imminent Dividend Cut At Diana Containerships [View article]
The changes to be made were announced shortly after the announcement of the expansion of the Panama Canal.
I'll try to find it, but the US government made it part of one of those Stimulus packages.
Those are to handle the sub 10,000 TEU Post Panamax.
I think it will be awhile before many ports catch up to the Triple E which is 18,000 TEU.
There was talk of a Transshipment Hub in Europe to make better use of the 10,000 TEU and above.
But as I've read comments by the big Liner companies, like Maersk. They talk about the 32 meter beam of the Panamax as being such an inefficient ship, that changing the cranes would be a high priority.
Maersk is so big, they own their own shipyard. It sounds like they intend to get it done. They can change the entire logistics.
I don't know how long it will take to make the changes. But as each port gets modified, the demand for Panamax goes down.
Before they become obsolete, they will still suffer from too many Panamax looking for too few jobs.
Which, in ship chartering always results in lower rates for that class.
Imminent Dividend Cut At Diana Containerships [View article]
The BDI really isn't relevant to this discussion, and I'm sorry I contributed to taking the discussion off topic.
There is such a wealth of information on shipping that it seems folly to use technical analysis on shipping cycles.
No cycle ever included this unprecedented build up of ships.
Imminent Dividend Cut At Diana Containerships [View article]
I'm sorry but we have a misunderstanding.
I thought both of us were referring to a 100% increase in charter rates.
From the current $7,000 per day
Which would be barely above break even and not help the stock price.
Also a 200% increase in charter rates.
Which would not have a corresponding effect on stock price.
As I reread yours, and if you reread mine, you can see we were talking two different things.
A 200% increase in stock price would be quite good.
I'm not trying to make any price targets, other than to assume a decline in the event of heavy dilution.
I actually find charter rates and ship values far more predictable.
Good talking to you.
Imminent Dividend Cut At Diana Containerships [View article]
Judy, the rise in the BDI is a seasonal rise in Panas and Supramax for the grain trade.
And there should be also a rise due to the fact that in order for Capesize to break even, the spot price needs to triple.
The Rise of the BDI from 700 to 900 merely brings rates from catastrophic, to horrendous.
Anything below 1200 is miserable.
The BDI will drop again this summer as the delivery of more excess tonnage continues.
Look at last year. Nice rise after the Chinese new Year, followed by more historic lows.
Imminent Dividend Cut At Diana Containerships [View article]
I seriously doubt our concerns are priced in.
It doesn't appear that people ARE aware that the sale-leasebacks are inflated, look at the comments on debt to asset ratios.
If a drop in the dividend doesn't bother you, that's fine. But it will bother many shareholders. And the drop in share price from that, and also from share offerings has to bother somebody.
In order to continue this business plan, DCIX will need to sell a lot of shares. As they increase shares, the cost to pay the dividend becomes larger. and more shares, and more sale- leasebacks become necessary.
(Sorry to be so basic here, I'm just trying to connect the dots.)
I don't like the fact that they are doing this with old, nearly obsolete ships. It's time for them to move on to ships that will be more than scrap in three years.
I can't express it enough, It doesn't matter whether the average life expectancy of these ships was 25-30 years old. Or what kind of mechanical great shape they are in.
When the Panama Canal is finished, these narrow beam Panamax will be an inefficient, financial liability.
Part of this whole supply/demand equilibrium equation relies on high scrapping levels of 20 plus year old ships, and that is the majority of DCIX fleet.
Three years from now DCIX (unlike DSX), will be a high share count, low debt, but very low equity company, that will have to raise even more capital to stay in the game with actual modern tonnage.
No, that isn't my point on the idle tonnage.
What I'm saying is that on top of the 7% growth this year, and again next year, that there is also the idle tonnage to be absorbed when rates become merely profitable. That pushes the timeline to profitable rates back at least another year.
I don't think merely profitable is going to feed a dividend, and I don't think it will attract growth investors, or even value.
And I still don't believe that 2015 is the end of the oversupply.
Keep your eye on the newbuild numbers.
A further 113,000 TEU were ordered in January.
I saw this in the Dry Bulk sector.
Everyone's estimate of when the build out would end, were grossly optimistic.
The glut continues to get worse, and the "new normal" for rates is not going to be impressive.
The 100% gain in rates just brings you to profit, there is more expense beyond Op Ex.
I am stunned that you would consider waiting five years to get to 200% increase.
A rate I doubt will come.
To each his own. It's been a good discussion.
And GL.
Imminent Dividend Cut At Diana Containerships [View article]
Have you done some research that makes you such an optimist?
I've been singing the praises of Diana management for years, but that doesn't mean they can maintain the dividend, or the stock price, in a horrible freight environment. Just ask DSX shareholders.
You severely underestimate the oversupply of ships, and the first category to become obsolete is the Panamax narrow beam.
On top of the ships arriving over the next two years, there is 4.6% of the fleet laid up now, mostly under 5,000 TEU. Nobody has demand projections that are going to absorb that extra tonnage,
This is from Alphaliner, if you don't find them reputable, let me know. There are lots more brokers or trade papers with the same outlook.
"""Container ship deliveries will hit an all-time high in 2013 even as shipowners and ocean carriers defer the arrival of some of their vessels on order, according to industry analyst Alphaliner.
Around 200,000 20-foot-equivalent units of capacity originally scheduled for 2013 have been pushed back to 2014, and more deferrals are expected in the coming months. The number of ships of more than 10,000 TEUs set for delivery this year has been reduced to 41 units.
Still, the capacity scheduled for delivery in 2013 stood at 1.68 million TEUs on March 1, just above the historical high of 1.57 million TEUs in 2008, and equivalent to 10.3 percent of the world fleet as of January, according to Alphaliner’s figures.
Even assuming an additional 100,000 TEUs could be deferred in the coming months, total new vessel deliveries will still be significantly higher than during the previous four years, raising fresh fears that the oversupply in container ship market could persist beyond 2014.
Deteriorating market conditions also have prompted a surge in the scrapping of older tonnage, with 37 ships of 80,000 TEUs delivered for demolition or de-celled in the first two months of the year, and a further 20,000 TEUs already committed to the breakers’ yards in March.
Alphaliner expects full year deletions from the fleet to top 400,000 TEUs in 2013, if the current rate of scrapping continues the highest level of container ship demolitions.
After adjusting for 100,000 TEUs of additional slippage in deliveries and 400,000 TEUs of scrapping, the container fleet will expand by a net 7 percent in 2013, outpacing expected demand growth of only 4 to 6 percent.
The deferral of new ship deliveries from 2013 to 2014 has raised capacity additions next year to 7 percent net of forecast scrapping."""
Imminent Dividend Cut At Diana Containerships [View article]
Thanks Jack,
Yeah, I would think that modern tonnage would be preferred. Especially being wide beamed.
I have faith in this management to make the best choice.
I'm just trying to foresee the consequences of this strategy when the artificial charters end. I'm sure Palios has a plan.
Diana would be able to borrow quite a bit on the 2004, 5,500 TEU because it's market value is around $25 million.
But if it's a sale-leaseback, the lease could be inflated, and the sale price would be inflated accordingly. And it would require more cash.
The 5,000 TEU are not becoming obsolete, there are some new ones being built. But the narrow beam Panamax is lousy on fuel.
And Liners are looking to cut costs.
Maersk is really shaking things up, much the way Vale did when they built the Valemax.
Logistics will be different, and I don't know how DCIX will fit in.
I'm sure they will look to get into the right size and age ship, I'm not sure when.
Imminent Dividend Cut At Diana Containerships [View article]
Is there any special reason you think an article about the BDI and DSX, a Dry Bulk owner, is in any way relevant to DCIX, or any other container ship owner?
Not to mention that Cramer has proven once again, as he has for five years, that he knows nothing about shipping.
And the "great Wilbur Ross", the shippers that he is buying, are product tankers and offshore drillers.
DSX earnings will continue to drop this year as those formerly lucrative charters have been coming to an end, and the new charters are below break even.
Anyone who tells you the overcapacity in dry bulk is coming to an end soon is wrong.
Imminent Dividend Cut At Diana Containerships [View article]
Hey,
While I do believe management when they say these ships are in great shape, as far as maintenance.
I still think they will be tough to charter out after the Panama Canal expansion.
All of the older Panamax are narrow beam (32 meters), and the new Post Panamax will hold twice the TEU, for one third the extra fuel.
Since the charterer pays the fuel expenses, the new ships are going to be the ones the charterer wants.
Add in the expenses of keeping old ships maintained, and it's likely DCIX will be moving on to modern tonnage.
Check out the information about the difference in narrow beam ships efficiency, then listen to the Mearsk comments on the importance of the fuel efficient designs in a future where margins remain thin. Maersk has big plans.
Hopefully, DCIX doesn't buy another twenty year old dinosaur with leaseback.
I don't think that business model will work after 2014.
Imminent Dividend Cut At Diana Containerships [View article]
There are 4 ports in Europe that can handle them. And China.
Ports in the US are supposed to be upgraded in response to the widening of the Panama Canal.
There will be a cascading effect, that will push the E class into traditionally smaller class ports. And the 8,000 TEU ships will be used to replace the Panamax class.
The E class isn't much smaller, at 16,000 TEU.
But the preference will be to use the more efficient ships , obviously it gives better margins for Maersk.
As for what advantage these sale-leasebacks have for Maersk?
I could speculate that, Yes it does give Maersk the added cash for their extensive CapEx project, and it keeps the ships available to them until their shift to larger vessels is done.
And they don't have to take impairments, depending on what value they carry on the balance sheet.
A win/ win for both companies.
Imminent Dividend Cut At Diana Containerships [View article]
Most of my sources are paid subscription, so I can't link them.
But this is from BIMCO.
http://bit.ly/1405qyK
Maersk will be launching it's first of 20 new Triple E class ship, 18,000 TEU.
There is 4.6% of the fleet laid up, waiting for rates to increase.
The fleet is expected to grow by a further 21% over the next few years. And they are not done ordering new, more efficient ships.
The opening of the third lane of the Panama Canal will make the current Panamax size ship less desirable due to economies of scale.
And as far as economies of scale, there is a huge push to move to the larger sized ships.
Maersk is planning to abandon the Panama canal in favor of serving the US East coast by way of the Suez Canal to China.
More importantly, don't confuse a rise in Box Rates for the big container lines, with the time charter rates for a company like DCIX.
They DO NOT go hand in hand.
I'm sure we can debate the future beyond 2013.
But it is still important to discuss 2013.
Some of you will come on and say you are in this for the "long haul", for the dividend.
Really?
That 30 cent dividend wouldn't console me, while the stock price is down $2 per share. And dilution might not bother you, but think of the market as a whole.
And, at the end of last quarter, DCIX had $32 million in cash. This month they pay $9.6 million to dividends, and $22 million for the Malta.
In May, the Malacca, the Merlion, and the Madrid, will come off charters of $21,450 per day, and will be getting charters in the range of $7,000 per day. Op Ex is $9,500- $10,000 per day. Not including interest expense.
In order to maintain the dividend, DCIX will have to dilute, and do at least three sale-lease backs.
That will be a large dilution.
And, If you are going to bring up scrapping, as a means to end the overcapacity.
Then you need to accept the fact that the average age for scrapping has dropped to 23 years old. And 56 ships less than 20 years old were scrapped last year. 26% of container-ships scrapped last year were Panamx class.
In that case, several of DCIX ships should not be around for the recovery.
Float Your Boat With Hapag-Lloyd Yankee Bonds Yielding 7.84% [View article]
Iron ore, coal, grains, fertilizer, cement.
(DRYS has a few tankers, but no container-ships)
If you were doing business with Moeller-Maersk and Hapag-Lloyd, you were shipping finished goods in containers.
Different types of ships, and customers.
Also, whether you are talking about dry bulk, or containers, when a company goes bankrupt, the creditors sell off the ships and they continue to do business somewhere else.
A few less competitors doesn't make up for the massive glut of ships. It is a fragmented industry with hundreds of companies.
And the companies range in size from a few ships, to hundreds of ships.
Float Your Boat With Hapag-Lloyd Yankee Bonds Yielding 7.84% [View article]
Imminent Dividend Cut At Diana Containerships [View article]
Not to go off topic here.........
.........but did you just say that PRGN was trading at 25% of book????
We gotta debate that somewhere, but not on this article.
And.... TEU was supposed to have paid off that $14 million loan to PRGN by now. Instead, they are going to pay it off at $1 million per month. So, PRGN dilutes shareholders because TEU can't pay off loan. Nice job Bodouroglou.
Also, TEU just filed to dilute shareholders by around 4.7 million shares, including over allotment.
Take that into consideration when valuing PRGN.
Also, on the credit worthiness issues you are having with others. DCIX has good credit, however, when Diana buys a 1995 ship for $25 million, with attached charter. They can only borrow $5 million on the credit facility.
Because the market value of the ship is only $8 million.
And banks only lend 60-70% of the market value.
Not the price paid for the above market charter.
That's why DCIX will dilute.
Nice article. I see the title is still too inflammatory for some.
I think your next article should be:
"I LOVE DCIX ( i just have one, tiny problem with them)."