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.
Well, it got awfully close to going under a buck/share. Ah, those were the days when George Soros was bailing out and some of us were grabbing shares for $1.10. How far (little?) we've come since then.
GSL took a dive today just like the rest of the sector. Given the long term nature of its charters, it seems like short-term market fluctuations shouldn't have such a strong impact. That said, I've been trying to put together a valuation based on discounted net income, interest expense and debt repayment, and it looks pretty grim. Unless you make some favorable assumptions regarding replacement charter rates or fleet growth, I have a hard time coming up with residual value from the current fleet after servicing current debt. Has anyone done a similar exercise with better results? For me, the bottom line is that current debt load (and interest expense) is so high, that I don't see GSL having much value left when the useful life of the current vessels has expired. Anyone disagree? If so, how are you calculating value?
RIG, PGN, etc. Looking bleak. Could we see GSL under a buck again? Global recession seems to be a real possibility.
Yeah, bad news for the whole global stock market! Ouch. Not sure I've seen so many companies posting 10+% losses in one day. Shipping got whacked the hardest for sure.
Wow, 630K shares traded today, on top of yesterday's 200K. The the stock price did not jump that much. There must be a big seller out there.
Could the announcement of the new ship have anything to do with it? Seems someone always has access to news before it's news with this one.
Maybe the Ocean Three Alliance between CMA CGM, China Shipping Container Lines and United Arab Shipping has something to do with the recent upswing. I guess it's the alternative to the P3 alliance but with different players. The agreement is pending approval from the U.S. Federal Maritime Commission.
I wonder if it was a political move- return some capital to CMA CGM in exchange for keeping Michael Gross on the board. At any rate, with the new preferreds plus the new bond deal, interest expense is through the roof. Has anyone run numbers on pro forma expected cash flow? Will there be anything left over for common shares after paying the bonds and the preferreds, or are we wholly reliant on accretive acquisitions to get cash flow high enough to pay a dividend?
I didn't know if he meant it that way. More like this is a piece of the puzzle to lead to sustainable dividends in the future. GSL management has always played it safe and smart.
I have mixed feelings about the quote above. I want dividends paid to the common stockholders from earnings, not from capital from a preferred stock IPO.
Before it issued the B series it bought back from institutions the series A at a 20% discount from par. This was not a publicly traded issue, but a private placement. I bought the B series in part management was astute enough to convince the A series owners to settle for less than par. I will probably add to the B seriesshares I already own.
very good question. i have been wondering also.
and ... adding to positions at lower price.
usually, drops in prices of new-issue prefs reflect debt buyers regard for company and ability to service debt longer term. so ... wonderings about sustainable solvency and management quality? any guidance?