Fair point, either way the numbers are extremely strong for the preferred coverage. If they were to balk at the preferred distribution, it would be the end for the them in my opinion. That would effectively shut them out of debt markets and they have already closed the door on equity offerings. Funny thing, if they had just diluted the heck out of the equity positions when the stock was at 6.40 recently, we'd be in roughly the same boat sp wise but have no debt at all. Who would have thunk it??
So suddenly, instantly, the strategy of GSL has moved from a mixture of revenue and income generation to one of deleveraging and growth via acquisition with no discussion of income at all, even in out quarters. This is like trying to parse the Fed's words on the economy. Are they saying any potential dividend is out the window for the next year? two years? longer? Dependent on financing and charter outlook? Any equity for debt swap just went out the window. Only hope now is deleverage through operating cash flows and hope like hell that the container segment rebounds (along with ship values) by the time the current bonds need to be rolled over. Scary part is that some of what are their most lucrative charters will be coming up for renewal at the same time. Clearly the income folks are running for the hills today and rightfully so given today's events, but what, if any, is the compelling reason to hold the common anymore?
Used to be true when DRZ held a huge chunk but there doesn't seem to be a single entity that scooped up that void. I do find it a bit curious that after holding GSL for years in a small cap income fund when the shares paid no dividend that DRZ had the foresight to liquidate their entire position (over 5M shares) one quarter after the dividend was finally reinstated (and guidance was a 25% increase this quarter) and one quarter before the dividend was completely suspended. The timing is "serendipitous" to say the least. Anyone else find that unusual?
Looks like they picked up ~6x additional coverage on the preferred offering just by suspending the common. Hard to believe that is in jeopardy. That said the suspension of the common after guiding higher is a huge black eye for management. This was a disappointing day but from a pure capital allocation measure, the correct action to take.