Suezmax, turning 70k on spot, gonna be a big drop to the bottom line. Also the Afra's are kickiing it up, combine that with a more than double average spot for all those panamax, rev's will be up, yes you read it right rev's will be up significantly this quater.
Tuesday, 03 December 2013 | 00:00
Chinese demand driving tanker markets forward
Oil demand from Asia and especially China has intensified over the past couple of months and especially during the end of October, providing solid ground for gains across most of the large crude oil tanker Eastbound routes. As such, the Far East oil demand has provided the foundation for a strong boost in freight rates for several routes, like the TCE for MEG/Japan, which almost doubled at the start of November, reaching levels of $42,000/day.
Similarly, the WAF/F.East route gained by around 40% in just one day, touching the very lucrative level of USD 98,939/day. "It’s no wonder that we had media frenzy on the matter, with all of them quick to call on this accelerat-ed demand as the corner stone of a full on recovery of the market", said Mr. George Lazaridis, Research Analyst of shipbroker Intermodal. According to Lazaridis, "for one, the new found hope on Chinese demand might end up be-ing very short-lived, as we already have many noting that although imports are on the rise internal demand seems to have dropped compared to a year earlier. This means that most of the current imports have been potential for the purpose of re-stocking. This point may be even taken further as some propose possible build-up of commercial inventories ahead of the commissioning of some of the most recent refinery units. This may well be more cause for worries then you would think, as the most recent imports are for the use for China’s expansionary petroleum exports plan which once put into play may well cause crude oil shipments to drop to other refin-ery destinations some of which may lay further away from China and as such bring about a drop in overall market tonne-mile demand", Lazaridis noted.
I found this, but I guess where's theres smoke theres fire. Kind of a head scratcher at the price.
S&P, Newbuilding and Demolition Update (November 17th, 2013)
Posted on November 17, 2013
In the greater sale & purchase market, there has been strong activity in the VLCC market in addition to last week’s fairly heightened activity. Just as the capesize market popped in September at $40,000 pd, this week VLCC rates reached the same magic number on the back of seasonality, in our opinion, rather than any improvements in fundamentals. However, on the expectations that the worst is behind us, even in the VLCC market, Navios Maritime Acquisition Corp. (NNA) has confirmed the acquisition of three charter-free VLCC tankers for $163 million; the vessels are believed to be HOSCO‘s MT „GRAND CHINA”, MT „PEACE CHINA” (298,000 dwt, Dalian, 2010/2011 respectively) and MT „GREAT CHINA” (298,000 dwt, CSSC Jiangnan, 2009); breakdown in pricing was not provided, but it seems that the vessels collectively obtain several million dollar premium over ‘broker report’ pricing (in full disclosure, getting an en bloc deal of modern, comparable vessels done requires usually a premium over ‘last done’.) It’s also understood that NNA has sold their 1996-built VLCC MT „SHINYO NAVIGATOR” (300,000 dwt, Hyundai HI, 1996) at $20 mil for conversion; ss a reminder, back in August, NNA had acquired the VLCC MT „NAVE CELESTE” (299,000 dwt, Daewoo, 2003) at $35.4 million to substitute for the MT „SHINYO NAVIGATOR” with their Chinese charterers. Despite the conversion subject, the pricing for MT „SHINYO NAVIGATOR” has not been much above scrap levels at $20 mil, but definitely more favorable that the Fredriksen ‘twin sale’ from last week of MT „FRONT CHAMPION” (300,000 dwt, Hyundai Heavy I., 1998) and MT „GOLDEN VICTORY” (300,000 dwt, Hitachi Zosen, 1999), which although much younger fetched $32 mil en bloc for scrap sale; in any event, these three vessels will be leaving the leaving the world VLCC fleet for good, providing a miniscule improvement to tonnage supply-demand dynamics. Also, one more and much newer VLCC vessel is supposed to leave the world fleet for conversion, namely MT „BLUE JADE” (320,000 dwt, Daewoo, 2012) was sold to BW Offshore at $88 million (with seven month long subject) while the MT „BLUE OPAL” (320,000 dwt, Daewoo, 2012) was sold outright at $83 million (some reports have NNA as the buyer.) Both of these ‘Blue’ vessels are of the TMT (TODAY-MEANS-TOMORROW) and the ‘Elephant fame’ when they were built under MT „G ELEPHANT” and MT „H ELEPHANT’, respectively. Again, as a reminder, year-to-date, VLCCs have averaged $12,500 pd, vs $18,500 pd in calendar 2012; often it pays to think and act counter-cyclically, especially when product tankers right now are the flavor of the season and crude tankers are out, but it’s tough to really get excited at $83 million for a two-year old VLCC in this market.
Imo the 2012 is a rumor and not done deal. could be wrong but can't find any confirmation just rumors. Without a big charter seems like a giant stretch. Someone can point me to a confirmation of this transaction, i'd appreciate it.
George sold off Orig shares, and used the proceeds to pay off ALL Drys debt. Remember most debt is Orig's anyway. Only about 1.6 Billion is Drys debt. Seriously how much would a shipper this large be worth if it were debt free??? Fairy tale probably, but it could be done and could be one of the most genius moves ever. Market timing as US becomes energy independent, less oil gets drilled, Orig sold in 2015, taking their debt with them, bulk rates surging as oil drops on cheap oil global growth story. Could be a monster cash cow. Again could be. But it is possible. So just to ask, whats drys worth debt free??? Without Orig.
imo, don't know which way this one blows but she's looking to raise $100 million in Oslo, that market seems to be kook kook for shippers lately. I think lots of greeks are red eyed crazy right now that most of the survivor fleets are relative new builds with top of the market costs, and the abundance of cheap repo's and distressed sales is out off their ability to acheive due to their current balance sheet high carrying costs. Lots of new money, private equity, new issues scooping up the excess supply with a dramatically lower cost structure. Suriviving Greeks and others will be at a distinct price disadvantage if all these distressed vessels are loaded into new companies with no legacy debt. Its a shame that shippers are so short sighted and continue to allow so much excess suppy on the market that they just eat themselves. I guess if they put it into the family with the lower cost structure, ehh ok. If not it kinda confirms AF feels theres more to be had by starting over than adding to. jmo.
Frangou fronts Oslo issue
Dry-cargo start-up Maritime Investments is the latest venture seeking to tap the red hot capital markets in Oslo.
Scrap em all!!! The company’s shipping loan loans total 25 billion euros ($33.8 billion), of which 9 billion euros are part of the restructuring unit established in 2009, according to Wolfgang Topp, who heads its operations. Some 15 percent or about 165 of 1,100 vessels in the unit are not salvageable, while the remaining 85 percent may be restructured, he said in an interview last month.
HSH Nordbank May Scrap Dozens of Ships as Owners Default
HSH deals in doubt
Trouble with landmark Navios pact could mean bank’s efforts to sell 30 ships will fail.
Ok, that's what makes a market. But to start calling in debt now imo is kinda expensive, if they called the lot in november 2013 they would pay almost $22 million in early call fees, plus the new fees for the new bond and with their rating would thier rates really justifiy the savings if there are any? If they wait til nov 2014 the early call fees are about $11 million plus the fees and waiting til november 2015 get the call at par, zero early call fees and only new issuance costs. The risk of course is future rates and nobody knows for sure where they go, but waiting till november 2015 with no prepayment penalty and 2 years to left to refi? Dropping the current bond rate full point would save about 5 million a year. Don't think they would be able to get much lower than that, and going forward if they improve they probably wouldn't get worse. Again since we've found common ground, a cretin could be left to wonder true intent of the shelf. Besides current market price for the bond is below the call price anyway 103.50 last trade.
NM has always had the right to redeem the bonds early, they could do it today, yesterday, 6 months ago, or tommorrow. November 1st is not a really a day of significant significance in the the bond. To state this shelf is solely for the refinance in todays market is a leap of faith, which anyone is entitled to take. NM could have stated in it's filing that this was the sole purpose and left no doubt. Putting out a mixed shelf without stating its use for a specific item is an unknown and its ultimate use is complete conjecture. Is is possible they intend to call the notes in and refi, sure without a doubt, but I couldn't tell you for sure because the company didn't tell us for sure. Could it just sit on the shelf as dry powder, use it if opportunity was there and swoop, sure, again the company didn't tell us. For what its worth the shelf is fully open to debt instruments or share issuance to be used as the board sees fit when they see fit. trub may be completely right in this, but again he could be completely wrong. My view is they have been on a debt, dilution path with the children pretty strong this year and may feel the window is now closing to rip some deals. A $500 million dollar bill sittting in your back pocket may get you an itchy finger.
And below is a cut and paste from the SEC filing, maybe I'm just a cretin and can't understand english writing, but below is where I pulled my info from.
In November 2009, the Company and its wholly owned subsidiary, Navios Maritime Finance (US) Inc. (together, the “Mortgage Notes Co-Issuers”) issued $400.0 million of first priority ship mortgage notes due on November 1, 2017 at a fixed rate of 8.875%. In July 2012, the Mortgage Notes Co-Issuers issued an additional $88.0 million of the ship mortgage notes at par value.
The ship mortgage notes are senior obligations of the Mortgage Notes Co-Issuers and are secured by first priority ship mortgages on 17 vessels owned by certain subsidiary guarantors and other related collateral securities. The ship mortgage notes are fully and unconditionally guaranteed, jointly and severally by all of the Company’s direct and indirect subsidiaries that guarantee the 2019 Notes and Navios Maritime Finance II (US) Inc. The guarantees of the Company’s subsidiaries that own mortgage vessels are senior secured guarantees and the guarantees of the Company’s subsidiaries that do not own mortgage vessels are senior unsecured guarantees. In addition, the Mortgage Notes Co-Issuers have the option to redeem the ship mortgage notes in whole or in part, at any time (i) before November 1, 2013, at a redemption price equal to 100% of the principal amount plus a make whole price which is based on a formula calculated using a discount rate of treasury bonds plus 50 basis points, and (ii) on or after November 1, 2013, at a fixed price of 104.438%, which price declines ratably until it reaches par in 2015.
I've read it and NM does not have call of $488 million in november. just not true. They could get called for $88 million, but won't. (Maybe you just read it wrong) Also per the earnings presentation, no material debt repayments this year and only 36.4 million next year, can be funded from cash on hand if required. $509 million due in 2017. Will they refinance that now??? Hey maybe, will they play swashbuckler and try to buy more ships with more debt??? (10 capes on spot hitting the water today wouldn't be so bad) Hey maybe, they are certainly not afraid of debt or dilution and they might be feeling like "bulking up" with some more ships. The shelf provides zero direction on any specifics to where the raise would be spent and states that. Hey none of us sit on the board so who knows what the plan is, NM has a credit card due in full in 4 years, is that their focus or will they worry about it later and buy more ships???? Actually DRYS is looking pretty good right now with all those spot panamaxes and a rising bdi. Pana's getting almost the same as capes per ton. Read lots of pana's getting picked up for coal shipping for risk advervse coal buyers. GNK seems to be in the right spot (pun intended) right now. And yes, I lightened up on NM and NNA as they appear flat without much upside left. Moved Some to DRYS and looking at GNK. Still hold positions in both NM and NNA hope they realize more capital gains.
Imo, where the price is now will have the management salavating to do a large placement. Although since there are convenants in place that require AF to maintain a certain level of ownership I think around 25% or so, and she does have an open $10million insider purchase filing open, I could see a raise that hits that %. Also they have a lot of preferreds they can issue. But this price and the open "effective" shelf, combined with the highest price in about 5 years, imo they will get the money while they can. It's not like they are afraid to dilute and they have set the stage to legally dilute at will. jmo.
With a $500 million shelf offering finally effective today, and a pattern of dilution to aquire ships, ie: nna 3 atm's and nmm countless atm's, look for nm to finally join in the party and dilute to buy ships. And I'd look for it sooner than later. Dilution is the greek shiipper business model and this issue is no different. It becomes very difficutl to have capital appreciation in your stock ownership when they keep issuing stock. Wouldn't be suprised to see the float doubled in one fell swoop. But hey its ok, you still get 24 cents a year for each share!