If they get the asset on a substantial discount it's accretion not dilution.
1 share exists for $1 in assets. Another asset worth $2 is added for $1 or 1 share. Now $3 in assets exist for 2 shares.
It all depends on what price point they acquire assets and what revenue the asset generates. Too early to claim dilution, or for that matter accretion.
Obtaining covenant waivers may be more opportunistic than necessity.
Just like the real estate concessions many are standing in line to get mortgage modifications not because they actually need them but because they can get them.
Actually the owners CAN be that stupid.
In a prior shipping cycle, so many VLCCs were built that a few never carried a cargo... went straight to the breakers.
A similar circumstance might be the only thing that saves some of the bulkers in the short term.
But three / four years ago it was as if any sense of sanity disappeared from the industry. Owners were buying ships like kids buy candy.
Just like sanity appears to have disappeared from many posting on this board. Securing a waiver of financial covenants is NOT a good thing. It means that the company believes it's balance sheet will weaken over the near term to the point where they might be in violation of those covenants.
The last thing a European bank needs right now is a major default. So both borrower and lender are just kicking-the-can-down-the-road.
One or more of the bulkers will probably need to go BK before the excesses of the past few years is worked out of the system.
There is, at present, NO reason to expect an uptick in freight rates. That may be why GNK went to the bankers for covenant revisions.
It truly is pathetic. He spends all of his time on virtually all of the message boards day in day out day in day out trying convince people how smart he is. Unfortunately, just like a coin toss and a broken clock, he's only right sometimes. Otherwise, as you say, he'd be in the inside.
A number of years ago he was spewing the very same thing and ranting constantly about George Ecomomu at DRYS and how the whole industry was going to collapse. DRYS went from 12 to 130. EXM from 8 to 79....you get the idea. Jeenyus!
LOL! The industry is in horrible shape. Who do you think caused it? The rest of the world has largely recovered from 2008, not shipping for the most part. Volume of trade is way up from then, rates are horrible. Who's fault is that?
Outrage ? Not here. The excessive postings, exclamation and expletives are all apparent indicators you are the one obtrusively angry with the shipping industry.
I was referring to authors that spend countless hours on message boards criticizing every shipping executive from the outside looking in. If they were that great they would be on the inside.
Of course there are poor performers in this industry. Every industry has poor performers. Calling nearly every shipping executive an imbecile while the entire industry is in a downturn is quite pompous and very hubristic.
"but making blanket statements that every ship operator has their head where the sun don't shine is only egotistical that one knows more than the rest."
LOL! I can only assume you are defending Peter G with this comment. This, the guy who told us that converted VLCCs would not haul a single ton of ore since they were doomed to failure and would crack in half at the loaders. The same guy who took on way more than he could handle expanding the tanker fleet at Genmar leading to it's bankruptcy. The guy who was warned by John Fredriksen not to buy the Metrostar fleet, but went ahead anyway.
Yeah, he's a real genius. You need to take a HARD look at the way these Greek CEO's have acted as a collective group and how POORLY the companies have fared and how dismal the returns for shareholders before you come charging to their defense.
I suspect your outrage is more a symptom of investment losses than genuine regard for the shipping executives.
trub, I applaud your perspective to recognize there are other factors out there than just the repetitive oversupply of ships. Yes there are a ton of ships that hit the water in the last two years with more to come this year but making blanket statements that every ship operator has their head where the sun don't shine is only egotistical that one knows more than the rest.
I for one don't believe that all the ship operators are so stupid as a collective group that they are building ships that will never have a cargo.
One such element that rarely is ever discussed in the doom and gloom circle is the Indian Urbanization. The Indian government is moving forward with an Urbanization plan to resolve the projected food shortages. Much like China, India needs to transition to hi yielding corporate farms so the rural population must be transplanted.
The plan has a 18 yr timetable and within that period the estimates are 1.5 equivalent New York cities to be built per year in those next 18 years. That will consume a ton of drybulk capacity.
Drawing conclusions on the forward demand for shipping based on even 10yr ago data is dangerous. The global economy is now in full force and the dynamics of such have upset the apple cart. Many don't realize the global economy as it exists today is really just an infant as Y2K was the dawn of what we see today.
I agree with you that the run up looks like it was sparked mostly by nonsense. I had no interest in shorting because I do not like getting in front of runaway freight trains no matter how certain the eventual crash in the trainyard. However, I am open to the possibility that the bounce in these equities may be affected by the wider environment. The VIX is down, junk spreads are tightening, Greece appears headed for a prepack rather than a full on Ch. 11, and the ECB is force-feeding liquidity into Euroland banks (major providers of shipping finance as you well know). What is still missing is stimulus from China, which may be on the horizon. So while I undoubtedly get what you are saying about the disconnect between bulker equities and rates, I am humble enough to think that there may be other factors out there that the market is taking into account and that we shouldn't focus so narrowly that we miss everything but the current sorry state of dry bulk.
Personally, I would like to see the pain persist for the rest of the year, watch massive scrapping and the dissolution of some unnecessary yards go on, and see the clear air of 2013 allow a rebound for the sector amid Chinese stimulus. Will that play out? We will all find out as time passes.
I would have nothing to do with Gorgeous George simply due to ethics. But given the change in the company the name of the firm is to the point of misleading these days.
I like DSX, but I think management is conservative to the point of leaving money on the table.
NM is where my interest lays, along with NNA. NM is almost not a bulker name any more, given the large tanker fleet and majority interest in NSALI. Given the prospectus they filed last week in connection with the registration of NSALI's bonds, it looks to me like they are thinking hard about an IPO for the South American Logistics business.