I recently estimated the value of the NNA fleet at $600M. Someone told me that I am way off and that the fleet is worth as much as $970M. OK. Let's say the fleet is $970M, cash is $46M and debt is 1.06B. Add those up and we get a positive value of $6M. Selling the ships would actually cost $6M (or more) so really we are exactly at zero per share. That means that every cent that investors paid for the 40.52M outstanding shares is gone. Book value is zero. Oh but wait! I'm forgetting about 'good will'. NNA 'good will' is worth exactly $227, 317, 200 which brings the book value to five dollars and sixty one cents per share exactly.
I think it is patently silly to mark brand new vessels to market. What matters is what these vessels can be expected to earn over their useful lives. It is more appropriate to think about CMV in the S&P market for older vessels. In the case of the Shinyo Splendor, however, the vessel will be 21 years old when the current charter is up, so it is a candidate for scraping, so a diminution of the rate on recharter is immaterial really. Unless it gets a rate above its value at that time, it'll get torched or sold. Same with the Navigator, although 2016 is a little too far off to worry about now.
They are losing money now because they have debt/debt service on vessels that are not yet in the water earning money. Essentially the same amount of debt is funding a fleet with 5880 days of availability this year versus 9190 days next year. That's alot of unabsorbed costs. EBITDA is a better gauge than NI in the shipping business, especially in a down market.
The problem, as I recall, is that the newbuild charters are not all that rich. In order to get a charter that was above break-even, they had to offer the vessels with years of options. Options that would suppress profits to NNA in those out-years, if there were increased profits to be had. Options on these terms reveal the true weakness of the market NNA has been chartering its new-builds into.
Two things: Some of that debt is prepayment for assests yet to be delivered. Plus every VLCC is chartered out at a rate way higher than the current spot market. Those VLCC's with charters attached would sell for much higher than any comparable VLCC with no current charter.
Let's see what the 1993 Shinyo Splendor re-charters at just seventeen months from now. These rates way over spot are only a good long term thing if the market rebounds before the charters come to an end. Doesn't look like there will be a rebound anytime soon. NNA is losing money now. As high paying charters come to an end over the next several years the losses will mount. And that begs the question...why are they losing money now if they have charters that are way over current spot?