Well, the book value reported is based on the price we paid for the ships -- Not their current value...As such its a useless number, IMO, since you can't sell those ships for those prices anymore.
Ian said he expects a 75-90% LTV, lets be conservative and assume 90%.
500M debt / 0.90 = 555M ship value. We also have 40M in cash.
Given all the other small liabilities, derivatives, etc... real common shareholder equity is pretty small (But then again, so is the marketcap). Thats why EdgeTrader, right so, focuses on cashflow being given off by the assets versus a 'book value' approach.
I guess I was naive to think GSL would never go down to $1.70 again once things seemed to stabalize post CGM debt fiasco. I'd like to buy more, but my Roth has just been gutted this year due to every stock I hold being in the wrong sector for 2011. Heh, guess I got a bit greedy and aggressive. Guess I'll just hold on, close my eyes, and wake back up 12 months from now and see what has changed. ;-)
The discussion on LTV in the release is striking. They are anticipating a ratio between 75% and 90%??? With another 20M of debt paid since the last valuation that is an enormous drop in value! Sounded like they were fearful of having some chunk of their cash swept to satisfy the covenant. Everything else looked to be in line and as Dave correctly noted, pretty much a yawner. Maybe Ian is holding the "big game changing shareholder spectacular" for the call. Or not......
If anything, not once since the inception of this company (due, hopefully, to external factors beyond the company's control), has management come up with a big game changer, or any game changer - just lots of kowtowing to the lender and ultra-conservative behavior.
I mean really, it's spring 2011, you're over $7, you just registered $500 million of securities, you passed the LTV test and can pay a dividend, and it's taken you years to get to this point and ..... you do nothing, and by doing nothing kill your ability to anything for a long long time. I'm still in for now, but this really shook up my faith in management.
And in the earnings release, they played up as a good thing the fact that they have no purchase obligations. I guess it is because other companies are getting killed by obligations of their own, but it's also saying, "We have no plan at all, yay!"
Not sure that it's all that shocking, if you've been following the asset market. I've posted here on two occasions that LTV would likely be violated. If you listened to the Danaos call, you'll remember that the panamax segment has taken a hit due to a number of re-deliveries in combination with removal from panamaxes from the East-West trades due to lack of scale. From discussions with industry participants, this will work off over time as panamaxes are re-deployed in north-south trades and other smaller trade lanes.
It took some "guts" to post that thought.
I am uncertain as to what bad news could show up. CMA not paying on time? That's not news.
Bad news regarding LTV? That's just coming at the end of November............"we are doing a report re: end of September, and we will see those reports in about two or three weeks. We can not speculate about those results".
The drydocks? We are accruing for them, as previously reported.
The re-ups? We are in negotiations, but have nothing to report at this time.
Ho-hum. I'll be buying as it drops below two bucks, if it drops drops below two bucks, as the weak hands give up again.
This is getting really old, but this is ultimately a win, geez, once again.........................Dave