I think it's good because it shows that our newish relationship with Xpress feeders is growing stronger as Ian has talked about expanding our portfolio of customers, and I also doubt we expected to get as much money out a '96 ship as we have.
I think it's good to have a new charter in place, and I like the direction rates are heading. In terms of actual cash flow improvement, it's pretty negligible. By my math, increase in current cash flow will be about $165K for a six month charter. That's about 0.3 cents per share of extra cash. That said, it's a lot better than having an idle ship!
Any ideas on whether the 12% increase of lease rate is 'Usual and Customary', based on recent comparables in the rest of the fleet (and industry)?
Is this a good thing, an OK thing, or a GREAT thing?
Opinions of knowledgeable folks?
I'm here too, but I decided to buy the PrB shares. Wish I'd gotten those 2000 below $21.00, but my average is $21.75, which gives me a yield of 10%/yr. That's great, but considering jumping into the common....Is it worth buying now or waiting till they are more likely to have a common dividend as well (as some think a 60 cent/yr is doable, but not sure of the timeframe...)?
Same here (sold out a little over a year ago) but just bought some of the new preferreds when they dropped under $21.00 this week and am considering getting back into the common again.
Took a look at the restriction on dividend. Have to get a 2.25x fixed coverage ratio. Looks like they are around 2x with recent acquisition. They'll probably need to make 2 more purchases to get there (or 1 really good deal).
Also, they have to set aside up to $20M/year for bond buybacks. So, looks like dividend still a ways a way.
The numbers seem fairly reflective of where GSL is at right now. Taking the adjusted net incoming and adding back in depreciation, they should have about $8M/quarter or $32M per year of cash. Add in the $9M from new purchase and you are looking at $41M/year. They can probably do one more ship purchase like the one they just did with cash on hand, so you are looking at somewhere in the neighborhood $50M/year. Not sure what the covenants are with regards to dividends or their strategy going forward, but I expect they will target a dividend in the neighborhood of $0.60/year once they deploy available cash. This is sustainable and would give a nice lift to stock price, while leaving sufficient cash on hand to potentially make additional strategic purchases or pay down debt. I got out a while back, but bought a few shares when price dropped to 3's. Always thought this was a 6 dollar stock and still do.
From the Earnings Release:
Global Ship Lease owns 18 vessels with a total capacity of 74,412 TEU and an average age, weighted by TEU capacity, at October 28, 2014 of 10.6 years. All 18 vessels are currently fixed on time charters, 15 of which are with CMA CGM. The average remaining term of the charters is 5.7 years or 6.5 years on a weighted basis.
Ave age of 10.6 years with an useful life of 25-30 years. So there is still some meat on the bone.
That said the value of our fleet is our charters. We valued the OOCL Tianjin at 55 mil with 40 mil of contracted revenue. Well we have about 900 mil of contracted revenues outstanding for our fleet. Wouldn't it be safe to value the fleet at least at 900mil? 900 mil - 420 debt = 480 - 35 pref equity = 445 common equity value. $9.36 / share.
I look at it this way: the market looked at the re-fi as pretty sh#tty (And the 10% rate we got was sh*tty). It looked at the pref exchange as a non issue. Ok fine how many "bad surprises" can we really have in the next 3 years? There is no gun to our head to refi and really revenues can only go up. Buy 1 or 2 ships here or there and our ebitda is back over 100m a year. That would be a good surprise. Establish dividend? = another good surprise.
I sold the last of my GSL about 1 year ago. I lost faith and got tired of waiting for anything good to happen. I keep checking back in though.
I'm wonderig now about the age of the ships. Any concerns as a couple of ships approach 20 years, and a couple more cross 15?
No, at least not compared to how deflated we have felt in the past few years at times regarding GSL. I think we are executing a solid plan and the refinancing was a necessary evil. They got out from under the bank restriction and more importantly freed up cash to make a great ship purchase. I'm not a finance guy but isn't this quarter's negative income just a one-time representation of the all the refinancing maneuvering? I don't know what the debt expense is per day but I'd imagine the 34k per day income from the new ship will offset it.
Regarding charters, GSL has always had an good history of chartering out their ships so not worried about new charters. I would guess that CMA CGM's pending Ocean's Three Alliance would make that even easier for us to do. I've been in and out of GSL for around five years and feel more then ever that we have a solid plan and see less obstacles standing in our way. My guess is we make another ship purchase in the next quarter or two to give us an even more solid revenue stream, and then get serious about the dividend.
I feel like you, me and MDX are the only ones lurking around here any more. Do either of you feel kind of deflated about GSL since the refinancing?
I own far more shares of this than I should, so I'm definitely not trying to bash the company. That said, the thing that stood out to me about this quarter's results is that net income for the first nine months of this year (backing out non-cash items) has been negative. That really worries me. Before the refinancing, GSL was throwing off tons of cash. Now all of its revenues seem to get eaten up by interest expense, fees, etc. We don't even have spare revenue to pay down debt at this point (although the notes are non-callable for a few years anyway, so it's a moot point).
GSL's future is pretty much dependent on its ability to charter new ships, and from what I can tell, after paying for the recent acquisition, it will have $40MM under its credit facility and about $9MM in cash to work with. That's one more acquisition's worth of money. If we get a similar deal to the current acquisition, we're looking at $18MM in extra EBITDA per year. If you consider that GSL is operating at break-even right now (or a little worse, especially when you factor in a full quarter of servicing the new 8.75% preferred shares), I just don't see how $18MM of extra revenue per year is going to pay off (or even make a dent in) $420MM in debt (plus extra under the credit facility) when it comes due in 5 years.
Any reasons to be optimistic here?
to me the latest ship purchase mitigates the higher bond interest rate than the previous credit facility. Also with the freed up cash flow of the new bonds we have the capacity to buy 1 or 2 more ships (with charters) over the next year which is a net plus for cash flow as well.
So last quarter we had a net loss of $2.2MM. The things I can think of that have changed are (i) the d'Orion and Aquarius were chartered for the whole quarter and (ii) the Marie Delmas is back to the normal charter rate. Just a wild guess, but all things being equal, I think we'll still be at a net loss, but maybe like $1.5MM?
For cash flow, I'd guess $10MM or so, but I'm really not an expert on this stuff, so I'd defer to others. For the long term, my big concern is that the company isn't going to kick off enough cash to satisfy its debt obligations and then have a worthwhile amount left over. The $10MM in cash flow is about equal to quarterly amortization, so we're not really building value at the moment. The new ship will help, but that's only a 3-year charter. The two big things I am hoping for are (i) that GSL can lock down some more vessels at favorable rates and (ii) that charter rates firm up by the time we get our next wave of charter expirations in a few years.
I can see this quarter's investor presentation with my eyes closed though! Revenue chart, charter duration chart, supply/demand chart...
Any guesses regarding next quarter? Good charter revenue but also lots of interest and debt expense as rofflecoptes mentioned. I think it's realistic to have very good hopes for our longer term future beyond that considering our current long term charters, the latest ship purchase and lease-back, and most importantly getting out from under the bank restrictions. I feel very good about GSL for the long term right now, anyone else have any opinions?
Dennis, a private placement has a lot of disadvantages to an exchange traded preferred stock. The company will be under a lot of pressure to pay the preferred dividend and continue to suspend the common stock dividend.
I think concerns about debt load should be eased by the fact that we got a steal on the latest ship purchase and charter agreement. The fact that Moody's declared the purchase a positive credit event and gave us an upgrade is not a bad thing. I think GSL is just being strategic as always and making sure they have available cash to take advantage of opportunities.
I guess I just don't see the same risks. We have over 900 million of contracted revenue coming in and that is before the newest ship purchase. With over 7 years left avg on the charters we got plenty of buffer to acquire more ships and pay down some debt. That said the price action here has been brutal and you would think that half our ship just got sunk.